0000917491-19-000012 | 10-K | XBRL Viewer

Goodwill (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Goodwill by Reporting Units



December 31, 2018	Beginning Balance		Additions		Foreign Currency Translation			Ending Balance
3D Manufacturing	$	40,802	$	—	$	(1,316	)	$	39,486
Construction BIM	6,521		1,010		(226		)	7,305
Public Safety Forensics	3,070		—		(107		)	2,963
3D Design	—		9,130		(180		)	8,950
Photonics	2,357		6,283		(70		)	8,570
Total	$	52,750	$	16,423	$	(1,899	)	$	67,274



December 31, 2017	Beginning Balance		Additions		Foreign Currency Translation		Ending Balance
3D Manufacturing	$	37,861	$	—	$	2,941	$	40,802
Construction BIM	6,078		—		443		6,521
Public Safety Forensics	2,805		55		210		3,070
3D Design	—		—		—		—
Photonics	—		2,357		—		2,357
Total	$	46,744	$	2,412	$	3,594	$	52,750

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 108,783	$ 140,960
Short-term investments	24,793	10,997
Accounts receivable, net	88,927	72,105
Inventories, net	65,444	53,786
Prepaid expenses and other current assets	28,795	16,311
Total current assets	316,742	294,159
Property and equipment:
Machinery and equipment	76,048	66,514
Furniture and fixtures	6,749	6,945
Leasehold improvements	20,304	19,872
Property and equipment at cost	103,101	93,331
Less: accumulated depreciation and amortization	(72,684)	(61,452)
Property and equipment, net	30,417	31,879
Goodwill	67,274	52,750
Intangible assets, net	33,054	22,540
Service and sales demonstration inventory, net	39,563	39,614
Deferred income tax assets, net	14,719	15,606
Other long-term assets	4,475	2,030
Total assets	506,244	458,578
Current liabilities:
Accounts payable	20,093	11,569
Accrued liabilities	36,327	27,362
Income taxes payable	5,081	4,676
Total current liabilities	97,523	75,885
Unearned service revenues - less current portion	15,505	11,815
Deferred income tax liabilities	736	695
Income taxes payable - less current portion	12,247	15,952
Other long-term liabilities	3,624	2,165
Total liabilities	129,635	106,512
Commitments and contingencies
Shareholders’ equity:
Preferred stock - par value $0.01, 10,000,000 shares authorized; none issued	0	0
Common stock - par value $.001, 50,000,000 shares authorized; 18,676,059 and 18,277,142 issued; 17,253,011 and 16,796,884 outstanding, respectively	19	18
Additional paid-in capital	251,329	223,055
Retained earnings	175,353	168,624
Accumulated other comprehensive loss	(18,483)	(7,822)
Common stock in treasury, at cost - 1,423,048 shares and 1,480,258, respectively	(31,609)	(31,809)
Total shareholders’ equity	376,609	352,066
Total liabilities and shareholders’ equity	506,244	458,578
Current portion of unearned service revenues
Current liabilities:
Contract with customer, liability, current	32,878	29,674
Customer deposits
Current liabilities:
Contract with customer, liability, current	$ 3,144	$ 2,604

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 4,930	$ (14,516)	$ 11,107
Currency translation adjustments	(10,661)	16,739	(4,700)
Comprehensive (loss) income	$ (5,731)	$ 2,223	$ 6,407

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales	$ 112,844	$ 99,705	$ 98,244	$ 92,834	$ 106,423	$ 90,250	$ 82,682	$ 81,562	$ 403,627	$ 360,917	$ 325,584
United States
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									156,242	141,595	133,924
EMEA
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									127,261	115,061	101,751
APAC
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									105,038	90,730	78,094
Other Americas
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									15,086	13,531	11,815
Service
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									92,525	82,995	69,574
Service \| Product or service transferred to customers at a point in time
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									42,932	36,164	31,529
Service \| Product or service transferred to customers over time
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									49,593	46,831	38,045
Product
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									311,102	277,922	256,010
Product \| Product or service transferred to customers at a point in time
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									311,102	277,922	256,010
Product \| Product or service transferred to customers over time
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Sales									$ 0	$ 0	$ 0

Stock Compensation Plans - Additional Information (Details)	1 Months Ended		12 Months Ended
	May 31, 2018 shares	Mar. 31, 2018 shares	Dec. 31, 2018 USD ($) plan $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) $ / shares	May 31, 2014 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of compensation plans \| plan			2
Total intrinsic value of stock options exercised \| $			$ 7,500,000	$ 1,200,000	$ 1,700,000
Fair value of stock options vested \| $			3,700,000	4,100,000	3,800,000
Allocated share-based compensation expense \| $			7,600,000	$ 6,500,000	$ 5,400,000
Unrecognized stock-based compensation expense \| $			$ 10,300,000
Weighted average, expected recognition period			1 year 9 months 18 days
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding			792,943	1,156,763
Number of stock options unvested (in shares)			17,160
Employee Stock Option \| Black-Scholes Option Valuation Model
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option weighted average grant date fair value (in dollars per share) \| $ / shares			$ 23.43	$ 14.51	$ 12.90
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			3 years
Number of restricted stock units vested (in shares)			18,618
Number of restricted stock units unvested (in shares)			640
Number of performance based shares granted (in shares)			102,458
Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock units vested (in shares)		266
Number of restricted stock units unvested (in shares)		640
Performance Based Restricted Stock Units \| Share-based Compensation Award, Tranche One \| Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Performance Based Restricted Stock Units \| Share-based Compensation Award, Tranche Two \| Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Performance Based Restricted Stock Units \| Share-based Compensation Award, Tranche Three \| Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Performance Based Employee Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options vested (in shares)		7,743
Number of stock options unvested (in shares)		17,160
Performance Based Employee Stock Options \| Share-based Compensation Award, Tranche One \| Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Performance Based Employee Stock Options \| Share-based Compensation Award, Tranche Two \| Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Performance Based Employee Stock Options \| Share-based Compensation Award, Tranche Three \| Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			3 years
Number of performance based shares granted (in shares)			0	0
Prior to Fiscal Year 2016 \| Employee Stock Option \| Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Prior to Fiscal Year 2016 \| Employee Stock Option \| Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Prior to Fiscal Year 2016 \| Employee Stock Option \| Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Prior to Fiscal Year 2016 \| Restricted Stock Units (RSUs) \| Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Prior to Fiscal Year 2016 \| Restricted Stock Units (RSUs) \| Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Prior to Fiscal Year 2016 \| Restricted Stock Units (RSUs) \| Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Fiscal Year 2017 \| Employee Stock Option \| Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Fiscal Year 2017 \| Employee Stock Option \| Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
Fiscal Year 2017 \| Employee Stock Option \| Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting installment percentage			33.33%
2004 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding			0
2009 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for grant awards			1,781,546
Options outstanding			122,943
Exercise price, lower range \| $ / shares			$ 43.33
Exercise price, upper range \| $ / shares			$ 57.54
Expiration period, years			10 years
2009 Plan \| Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			3 years
2009 Plan \| 2010 Change In Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period, years			7 years
2014 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for grant awards	2,974,543					1,974,543
Number of additional shares authorized	1,000,000
Options outstanding			670,047
Exercise price, lower range \| $ / shares			$ 29.98
Exercise price, upper range \| $ / shares			$ 61.30
Expiration period, years			7 years
2014 Plan \| Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			3 years
2004 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for grant awards	891,960
Director's Plan, Per Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted shares granted based on percent of director compensation			50.00%
Director's Plan, Per Director \| Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			3 years
Value of shares granted upon election \| $			$ 100,000
Director's Plan, Per Director \| Restricted Stock \| Board of Directors Chairman
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Value of shares granted upon election \| $			$ 40,000

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business—FARO Technologies, Inc. and its subsidiaries (collectively “FARO,” the “Company,” “us,” “we” or “our”) design, develop, manufacture, market and support software driven, three-dimensional (“3D”) measurement and imaging solutions. This technology permits high-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance processes. Our devices are used for inspection of components and assemblies, rapid prototyping, reverse engineering, documenting large volume or structures in 3D, surveying and construction as well as for investigation and reconstruction of accident sites or crime scenes. We sell the majority of our products through a direct sales force across a broad number of customers in a range of manufacturing, industrial, architecture, surveying, building information modeling, construction, public safety forensics, cultural heritage, dental and other applications. Our FaroArm^®, FARO ScanArm^®, FARO Laser Tracker^TM, FARO Cobalt Array Imager, FARO Laser Projector, and their companion CAM2^®, BuildIT, and BuildIT Projector software solutions, provide for Computer-Aided Design (“CAD”) based inspection, factory-level statistical process control, high-density surveying and laser-guided assembly and production. Together, these products integrate the measurement, quality inspection, and reverse engineering functions with CAD and 3D software to improve productivity, enhance product quality, and decrease rework and scrap in the manufacturing process, mainly supporting applications in our 3D Manufacturing (formerly known as “Factory Metrology” and “3D Factory”) vertical. Our FARO Focus, FARO ScanPlan and FARO Scanner Freestyle^3DX laser scanners, and their companion FARO SCENE, BuildIT, FARO As-Built^TM, and FARO Zone public safety forensics software offerings, are utilized for a wide variety of 3D modeling, documentation and high-density surveying applications in our Construction Building Information Modeling (“Construction BIM,” formerly known as “Construction BIM-CIM”) and Public Safety Forensics verticals. Our FARO ScanArm^®, FARO Cobalt Array Imager, FARO Scanner Freestyle^3DX laser scanners and their companion SCENE software, and other 3D structured light scanning solutions specific to the dental industry, also enable a fully digital workflow used to capture real world geometry for the purpose of empowering design, enabling innovation, and speeding up the design cycle, supporting our 3D Design (formerly known as “Product Design”) vertical. Our line of galvanometer-based scan heads and laser scan controllers are used in a variety of laser applications and are integrated into larger components and systems, supporting our Photonics vertical.

Reporting Segments—In 2016, we evaluated our reporting segment structure based on our new management organization and the changes implemented in connection with our initiatives to reorganize our business around certain vertical markets. We report our segment information in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting (“FASB ASC Topic 280”). We evaluate business performance based upon several metrics, using revenue growth and segment profit as the primary financial measures. During 2018, the following changes were made to our verticals and reporting segments:

•

In the first quarter of 2018, we combined our historical Factory Metrology and 3D Machine Vision verticals under a single reporting segment, 3D Factory, which replaced our Factory Metrology reporting segment, due to the linkage between the two historical verticals related to the type or class of customers served, the nature of the products and services provided, and the nature of the production processes. The 3D Machine Vision vertical was previously reported in our Other reporting segment.


•	In the first quarter of 2018, we renamed our Construction BIM-CIM vertical and reporting segment “Construction BIM.”


•	In the first quarter of 2018, we renamed our Other reporting segment “Emerging Verticals.”


•	In the third quarter of 2018, we merged the historical Factory Metrology and 3D Machine Vision verticals into one vertical named “3D Factory” for greater consistency with our realigned reporting segments.

•

In the third quarter of 2018, we segregated the operations of our acquisitions of Laser Control Systems Limited (“Laser Control Systems”) and Lanmark Controls, Inc. (“Lanmark”), along with the operations resulting from our acquisition of substantially all of the assets of Instrument Associates, LLC d/b/a Nutfield Technology (“Nutfield”), into a vertical that we named “Photonics.” The creation of this vertical enables us to better focus on our product range directed at laser steering. These operations were historically reported in the 3D Factory reporting segment in the first six months of 2018 and the historical Factory Metrology reporting segment in 2017 and are now included in the Emerging Verticals (formerly known as “Other”) reporting segment. Due to this change, we performed a qualitative goodwill impairment analysis in the third quarter of 2018, and management concluded there was no goodwill impairment at the time of this vertical reporting change.


•	In the third quarter of 2018, we renamed our Product Design vertical “3D Design.”


•	In the fourth quarter of 2018, we renamed our 3D Factory vertical and reporting segment “3D Manufacturing.”

There were no changes in our total consolidated financial condition or results of operations previously reported as a result of the changes in our verticals and reporting segments. The amounts related to our reporting segment information for the year ended December 31, 2017 have been restated throughout this Annual Report on Form 10-K to reflect the above changes in our reporting segments. The amounts related to our reporting segment information for the year ended December 31, 2016 were restated but were not impacted by the above changes in our reporting segments. Each of our reporting segments continue to employ consistent accounting policies. As a result of our assessments of our reporting segments, we now report our activities in the following three reporting segments:

•

The 3D Manufacturing reporting segment contains solely our 3D Manufacturing vertical, which provides both standardized and customized solutions for 3D measurement and inspection in an industrial or manufacturing environment. Applications include alignment, part inspection, dimensional analysis, first article inspection, incoming and in-process inspection, machine calibration, non-contact inspection, robot calibration, tool building and set-up, and assembly guidance.

•

The Construction BIM reporting segment contains solely our Construction BIM vertical and provides solutions for as-built data capturing and 3D visualization in building information modeling applications, allowing our customers in our architecture, engineering and construction markets to quickly and accurately extract two-dimensional (“2D”) and 3D measurement points. Applications include as-built documentation, construction monitoring, surveying, asset and facility management, and heritage preservation.

•

The Emerging Verticals reporting segment includes our 3D Design, Public Safety Forensics and Photonics verticals. Our 3D Design vertical provides advanced 3D solutions to capture and edit 3D shapes of products, people, and/or environments for design purposes in product development, computer graphics, and dental and medical applications. Our Public Safety Forensics vertical provides solutions to public safety officials and professionals to capture environmental or situational scenes in 2D and 3D for crime, crash and fire scene investigations and environmental safety evaluations. Our Photonics vertical develops and markets galvanometer-based laser measurement products and solutions.

All operating segments that do not meet the criteria to be reporting segments are aggregated in the Emerging Verticals reporting segment and have been combined based on the aggregation criteria and quantitative thresholds in accordance with the provisions of FASB ASC Topic 280. Our reporting segments have been determined in accordance with our internal management structure, which is based on operating activities. Each segment is responsible for its own product management, sales, strategy and profitability.

See Note 18, “Segment Reporting” for further information.

Principles of Consolidation—Our consolidated financial statements include the accounts of FARO Technologies, Inc. and its subsidiaries, all of which are wholly owned. All intercompany transactions and balances have been eliminated. The financial statements of our foreign subsidiaries are translated into U.S. dollars using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from financial statement translations are reflected as a separate component of accumulated other comprehensive loss. Foreign currency transaction gains and losses are included in net income (loss).

Variable Interest Entity—We do not invest in any investees over which we exert significant influence or have effective control. As such, our investee is currently accounted for using the equity method of accounting. Our equity in the net income (loss) from our equity method investment is recorded as income (loss) with a corresponding increase (decrease) in the investment. Distributions received from the equity investee reduce the investment. Distributions from the equity investee representing our share of the equity investee's earnings are treated as cash proceeds from operations, while distributions in excess of the equity investee's earnings are considered a return of capital and treated as cash proceeds from investing activities in our consolidated statements of cash flows.

Revenue Recognition, Product Warranty and Extended Warranty Contracts—Revenue is recognized as performance obligations within a contract are satisfied in an amount that reflects the consideration we expect to receive in exchange for satisfaction of those performance obligations, or standalone selling price. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenues to each performance obligation based on its relative standalone selling price. We make this allocation estimate utilizing data from the sale of our applicable products and services to customers separately in similar circumstances, with the exception of software licenses. With respect to software licenses, we use the residual method for allocating the contract price to performance obligations relating to software licenses. Revenue related to our measurement and imaging equipment and related software is generally recognized upon shipment from our facilities or when delivered to the customer location, as determined by the agreed upon shipping terms, at which time we are entitled to payment and title and control has passed to the customer. Fees billed to customers associated with the distribution of products are classified as revenue. We warrant our products against defects in design, materials and workmanship for one year. A provision for estimated future costs relating to warranty expense is recorded when products are shipped. We separately sell extended warranties. Extended warranty revenues are recognized on a straight-line basis over the term of the warranty. Costs relating to extended warranties are recognized as incurred. Revenue from sales of software only is recognized when no further significant production, modification or customization of the software is required and when the risks and rewards of ownership have passed to the customer. These software arrangements generally include short-term maintenance that is considered post-contract support (“PCS”), which is considered to be a separate performance obligation. We generally establish standalone sales price for this PCS component based on our maintenance renewal rate. Maintenance renewals, when sold, are recognized on a straight-line basis over the term of the maintenance agreement. Revenues resulting from sales of comprehensive support, training and technology consulting services are recognized as such services are performed and are deferred when billed in advance of the performance of services. Payment for products and services is collected within a short period of time following transfer of control or commencement of delivery of services, as applicable. Revenues are presented net of sales-related taxes.

Cash and Cash Equivalents—We consider cash on hand and amounts on deposit with financial institutions with maturities of three months or less when purchased to be cash and cash equivalents. We have deposits with foreign banks totaling $77.5 million and $98.8 million as of December 31, 2018 and 2017, respectively.

Accounts Receivable and Related Allowance for Doubtful Accounts—Credit is extended to customers based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are generally due within 30 to 90 days and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We make judgments as to the collectability of accounts receivable based on historical trends and future expectations. Management estimates an allowance for doubtful accounts, which adjusts gross trade accounts receivable to their net realizable value. The allowance for doubtful accounts is based on an analysis of all receivables for possible impairment issues and historical write-off percentages. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. We do not generally charge interest on past due receivables.

Inventories—Inventories are stated at the lower of cost or net realizable value using the first-in first-out (“FIFO”) method. Shipping and handling costs are classified as a component of cost of sales in the consolidated statements of operations. Sales demonstration inventory is comprised of measuring and imaging devices utilized by sales representatives to present our products to customers. Management expects sales demonstration inventory to be held by our sales representatives for up to three years, at which time it is refurbished and transferred to finished goods as used equipment, stated at the lower of cost or net realizable value. Management expects these refurbished units to remain in finished goods inventory and be sold within 12 months at prices that produce reduced gross margins. Sales demonstration inventory remains classified as inventory, as it is available for sale and any required refurbishment prior to sale is minimal.

Service inventory is typically used to provide a temporary replacement product to a customer covered by a premium warranty when the customer’s unit requires service or repair and as training equipment. Service inventory is available for sale; however, management does not expect service inventory to be sold within 12 months and, as such, classifies this inventory as a long-term asset. Service inventory that we utilize for training or repairs which we deem as no longer available for sale is transferred to fixed assets at the lower of cost or net realizable value and depreciated over its remaining useful life, typically three years. See Note 6, “Inventories” for further information regarding inventories.

Reserve for Excess and Obsolete Inventory—Since the value of inventory that will ultimately be realized cannot be known with exact certainty, we rely upon both past sales history and future sales forecasts to provide a basis for the determination of the reserve. Inventory is considered potentially obsolete if we have withdrawn those products from the market or had no sales of the product for the past 12 months and have no sales forecasted for the next 12 months. Inventory is considered potentially excess if the quantity on hand exceeds 12 months of expected remaining usage. The resulting potentially obsolete and excess parts are then reviewed to determine if a substitute usage or a future need exists. Items without an identified current or future usage are reserved in an amount equal to 100% of the FIFO cost of such inventory. Our products are subject to changes in technologies that may make certain of our products or their components obsolete or less competitive, which may increase our historical provisions to the reserve.

Property and Equipment—Property and equipment purchases exceeding a thousand dollars are capitalized and recorded at cost. Depreciation is computed beginning on the date that the asset is placed into service using the straight-line method over the estimated useful lives of the various classes of assets as follows:



Machinery, equipment and software	2 to 5 years
Furniture and fixtures	3 to 10 years

Leasehold improvements are amortized on a straight-line basis over the lesser of the life of the asset or the remaining term of the lease.

Depreciation expense was $12.9 million, $12.3 million and $10.9 million in 2018, 2017 and 2016, respectively. Accelerated methods of depreciation are used for income tax purposes in contrast to book purposes, and as a result, appropriate provisions are made for the related deferred income taxes.

Business Combinations—We allocate the fair value of purchase consideration to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth rates and margins, customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates. Critical estimates are also made in valuing earn-outs, which represent arrangements to pay former owners based on the satisfaction of performance criteria. Fair value estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

Goodwill and Intangible Assets—Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. We do not amortize goodwill; however, we perform an annual review each year, or more frequently if indicators of potential impairment exist, to determine if the carrying value of the recorded goodwill or indefinite lived intangible assets is impaired. We evaluate goodwill for impairment annually as of October 1, or when an indicator of impairment exists. If an asset is impaired, the difference between the carrying value of the asset reflected in the financial statements and its current fair value is recognized as an expense in the period in which the impairment occurs. See Note 7, “Goodwill” and Note 8, “Intangible Assets” for further information regarding goodwill and intangible assets, respectively.

Each period, and for any of our reporting units, we can elect to perform a qualitative assessment to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If we believe, as a result of our qualitative assessment, that it is not more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying amount, then the first and second steps of the quantitative goodwill impairment test are unnecessary. If we elect to bypass the qualitative assessment option, or if the qualitative assessment was performed and resulted in the Company being unable to conclude that it is not more likely than not that the fair value of a reporting unit containing goodwill is greater than its carrying amount, we will perform the two-step quantitative goodwill impairment test. We perform the first step of the two-step quantitative goodwill impairment test by calculating the fair value of the reporting unit using a discounted cash flow method and market approach method, and then comparing the respective fair value with the carrying amount of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, we perform the second step of the quantitative goodwill impairment test to measure the amount of the impairment loss, if any. Management has concluded there was no goodwill impairment for the years ended December 31, 2018, 2017, and 2016.

Other intangible assets principally include patents, existing product technology and customer relationships that arose in connection with our acquisitions. Other intangible assets are recorded at fair value at the date of acquisition and are amortized over their estimated useful lives of 3 to 20 years. As of December 31, 2018 and 2017, there were no indefinite-lived intangible assets.

Product technology and patents are recorded at cost. Amortization expense is computed using the straight-line method over the lives of the product technology and patents of 7 to 20 years.

The remaining weighted-average amortization period for all our intangible assets is eight years.

Long-Lived Assets—Long-lived assets, other than goodwill, are evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of an asset group may not be fully recoverable, comparing projected undiscounted future cash flows to the carrying value of the asset group. Management has concluded that there were no indicators of impairment of these assets during the years ended December 31, 2018, 2017 and 2016.

Research and Development—Research and development costs incurred in the discovery of new knowledge and the resulting translation of this new knowledge into plans and designs for new products prior to the attainment of the related products’ technological feasibility are recorded as expenses in the period incurred. To date, the time incurred between the attainment of the related products' technological feasibility and general release to customers has been short.

Reserve for Warranties—We establish at the time of sale a liability for the one-year warranty included with the initial purchase price of our products, based upon an estimate of the repair expenses likely to be incurred for the warranty period. The warranty period is measured in installation-months for each major product group. The warranty reserve is included in accrued liabilities in the accompanying consolidated balance sheets. The warranty expense is estimated by applying the actual total repair expenses for each product group in the prior period and determining a rate of repair expense per installation-month. This repair rate is multiplied by the number of installation-months of warranty for each product group to determine the provision for warranty expenses for the period. We evaluate our exposure to warranty costs at the end of each period using the estimated expense per installation-month for each major product group, the number of units remaining under warranty, and the remaining number of months each unit will be under warranty. We have a history of new product introductions and enhancements to existing products, which may result in unforeseen issues that increase our warranty costs. While such expenses have historically been within expectations, we cannot guarantee this will continue in the future.

Income Taxes—We review our deferred tax assets on a regular basis to evaluate their recoverability based upon expected future reversals of deferred tax assets and liabilities, projections of future taxable income, and tax planning strategies that we might employ to utilize such assets, including net operating loss carryforwards. Based on the positive and negative evidence for recoverability, we establish a valuation allowance against the net deferred tax assets of a taxing jurisdiction in which we operate unless it is “more likely than not” that we will recover such assets through the above means. Our evaluation of the need for the valuation allowance is significantly influenced by our ability to maintain profitability and our ability to predict and achieve future projections of taxable income.

We recognize tax benefits related to uncertain tax positions only if it is more likely than not that the tax position will be sustained upon examination by taxing authorities. For those positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. In the ordinary course of business, we are examined by various federal, state, and foreign tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of our provision for income taxes. See Note 12, “Income Taxes” for further information regarding income taxes.

Earnings (Loss) Per Share (“EPS”)—Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding. Diluted earnings per share is computed by also considering the impact of potential common stock on both net income and the weighted average number of shares outstanding. Our potential common stock consists of employee stock options, restricted stock, restricted stock units and performance-based awards. Our potential common stock is excluded from the basic earnings per share calculation and is included in the diluted earnings per share calculation when doing so would not be anti-dilutive. Performance-based awards are included in the computation of diluted earnings per share only to the extent that the underlying performance conditions (and any applicable market condition) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. When we report a loss for the period presented, the diluted loss per share calculation does not include our potential common stock, as the inclusion of these shares in the calculation would have an anti-dilutive effect. A reconciliation of the number of common shares used in the calculation of basic and diluted EPS is presented in Note 15, “Earnings (Loss) Per Share.”

Accounting for Stock-Based Compensation—We have two stock-based employee and director compensation plans, which are described more fully in Note 14, “Stock Compensation Plans.”

We expense stock-based compensation for stock options, restricted stock awards, and performance awards over the requisite service period. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with both performance and service conditions, we expense the stock-based compensation on a straight-line basis over the requisite service period for each separately vesting portion of the award, taking into account the probability that we will satisfy the performance conditions. Furthermore, we expense awards with a market condition over the three-year vesting period regardless of the value that the award recipients ultimately receive. All tax-related cash flows resulting from share-based payments are reported as operating activities in the statement of cash flows in the deferred income tax benefit line item. We elect to account for forfeitures related to the service condition-based awards as they occur.

Concentration of Credit Risk—Financial instruments that expose us to concentrations of credit risk consist principally of short-term investments and operating demand deposit accounts. Our policy is to place our operating demand deposit accounts with high credit quality financial institutions, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and believe we are not exposed to any significant credit risk on our operating demand deposit accounts.

Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Impact of Recently Adopted Accounting Standards—In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”) in order to clarify the definition of a business and provide additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. FASB ASC Topic 805 recognized three elements of a business: inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. Additionally, all the inputs and processes that a seller used in operating a set were not required if market participants could acquire the set and continue to produce outputs. ASU 2017-01 provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the new guidance (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace missing elements. The new guidance provides a framework to assist entities in evaluating whether both an input and a substantive process are present. This framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business. ASU 2017-01 provides more stringent criteria for sets without outputs and more narrowly defines the term output. ASU 2017-01 became effective for us on January 1, 2018 and was applied prospectively. Our adoption of the new guidance did not have a material impact on our consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory (“ASU 2016-16”), which removes the prohibition in FASB ASC Topic 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. This ASU requires the tax effects of intercompany transactions, other than sales of inventory, to be recognized when the transfer occurs, instead of deferred until the transferred asset is sold to a third party or otherwise recovered through use of the asset. The new guidance must be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU 2016-16 became effective for us on January 1, 2018 and was applied on a modified retrospective basis. Our adoption of the new guidance did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 became effective for us on January 1, 2018 and was applied on a modified retrospective basis. Our adoption of the new guidance did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: (Topic 606) (“ASU 2014-09”), amending its accounting guidance related to revenue recognition. Under this ASU and subsequently issued amendments, revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. We adopted ASU 2014-09 effective January 1, 2018 using the modified retrospective method of adoption. The following is a summary of impacts by significant revenue stream:

• Measurement equipment and related software: Under the prior accounting guidance, FASB ASC Topic 605, which is applicable to reporting periods before January 1, 2018, sales of measurement and imaging equipment and related software sales were generally recognized upon shipment, as we considered the earnings process complete as of the shipping date. The related software sold with our measurement and imaging equipment functions together with such equipment to deliver the tangible product’s essential functionality. Further, customers frequently purchase extended warranties with the purchase of measurement equipment and related software. Under the new adopted guidance, FASB ASC Topic 606, which is applicable to reporting periods beginning on or after January 1, 2018, we allocate the contract price to performance obligations based on our best estimate of the standalone selling price. We make this allocation estimate utilizing data from the sale of our applicable products and services to customers separately in similar circumstances, with the exception of software licenses. With respect to software licenses, we use the residual method for allocating the contract price to performance obligations relating to software licenses. Revenue related to our measurement and imaging equipment and related software is generally recognized upon shipment from our facilities or when delivered to the customer location, as determined by the agreed upon shipping terms, at which time we are entitled to payment and title and control has passed to the customer. Our adoption of the new guidance did not result in material changes to our accounting for revenue related to our measurement and imaging equipment and related software.

• Extended warranties: Under the prior accounting guidance, FASB ASC Topic 605, which is applicable to reporting periods before January 1, 2018, extended warranty sales were recognized on a straight-line basis over the term of the warranty. Extended warranty sales include contract periods that extend between one month and three years. The unearned service revenues reported in current and noncurrent liabilities on our consolidated balance sheets appropriately reflect the remaining performance obligations related to these contracts. Our adoption of the new guidance, FASB ASC Topic 606, which is applicable to reporting periods beginning on or after January 1, 2018, did not result in material changes to our accounting for revenue related to extended warranties.

• Software: Under the prior accounting guidance, FASB ASC Topic 605, which is applicable to reporting periods before January 1, 2018, software-only sales were recognized when no further significant production, modification or customization of the software was required and when the following criteria were met: persuasive evidence of a sales agreement existed, delivery had occurred, and the sales price was fixed or determinable and deemed collectible. These software arrangements generally include short-term maintenance that is considered post-contract support. Maintenance renewals, when sold, were recognized on a straight-line basis over the term of the maintenance agreement. Our adoption of the new guidance, FASB ASC Topic 606, which is applicable to reporting periods beginning on or after January 1, 2018, did not result in material changes to our accounting for revenue related to software-only sales and maintenance renewals.

The unearned service revenue liabilities reported on our consolidated balance sheets reflect the contract liabilities to satisfy the remaining performance obligations for extended warranties and software maintenance. The current portion of unearned service revenues on our consolidated balance sheets is what we expect to recognize to revenue within twelve months after the applicable balance sheet date relating to extended warranty and software maintenance contract liabilities. The Unearned service revenues - less current portion on our consolidated balance sheets is what we expect to recognize to revenue extending beyond twelve months after the applicable balance sheet date relating to extended warranty and software maintenance contract liabilities. Customer deposits on our consolidated balance sheets represent customer prepayments on contracts for performance obligations that we must satisfy in the future to recognize the related contract revenue. These amounts are generally related to performance obligations which are delivered in less than 12 months. During the year ended December 31, 2018, we recognized $25.0 million of service revenue that was deferred on our consolidated balance sheet as of December 31, 2017.

Under the prior accounting guidance, FASB ASC Topic 605, which is applicable to reporting periods before January 1, 2018, we recognized sales commission expense as incurred. Under the new guidance, FASB ASC Topic 606, which is applicable to reporting periods beginning on or after January 1, 2018, we must capitalize the commission expense and amortize such costs ratably over the term of the contract. In accordance with the practical expedient and modified retrospective method of adoption, we recorded a net increase to opening retained earnings as of January 1, 2018 of $1.8 million and recognized an associated $2.4 million deferred cost asset due to the cumulative impact of adopting the new guidance. As of December 31, 2018, the deferred cost asset related to deferred commissions was approximately $2.7 million. For classification purposes, $1.8 million and $0.9 million are comprised within the Prepaid expenses and other current assets and Other long-term assets, respectively, on our consolidated balance sheet as of December 31, 2018.

We have elected the practical expedient to account for shipping and handling as activities to fulfill the promise to transfer the good. As such, shipping and handling fees billed to customers in a sales transaction are recorded in Product Sales and shipping and handling costs incurred are recorded in Cost of Sales. Additionally, we have elected the practical expedient to exclude from Sales any value added, sales and other taxes that we collect concurrently with revenue-producing activities. These accounting policy elections are consistent with the manner in which we have historically recorded shipping and handling fees and taxes.

The nature of certain of our contracts gives rise to variable consideration, which may be constrained, primarily related to an allowance for sales returns. In accordance with the adoption of the new guidance, we are required to estimate the contract asset related to sales returns and record a corresponding adjustment to Cost of Sales. Historically, our allowance for sales returns has not been material and was approximately $0.1 million as of December 31, 2018. As such, our adoption of the new guidance did not result in material changes to our accounting for variable consideration related to sales returns, and the corresponding contract asset related to such returns. See Note 3 “Revenues” for further information.

Impact of Recently Issued Accounting Standards—In January 2017, the FASB issued ASU No. 2017-04, Intangible - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which is intended to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the current guidance, performance of Step 2 requires us to calculate the implied fair value of goodwill by following procedures that would be required to determine the fair value of assets acquired and liabilities assumed in a business combination. Under the new guidance, we will perform our goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge will be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value up to the amount of the goodwill allocated to the reporting unit. The new guidance also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test if it fails the qualitative assessment. As a result, all reporting units will be subject to the same impairment assessment. We will still have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 becomes effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for annual or any interim goodwill impairment tests after January 1, 2017. The amendments in this ASU will be applied on a prospective basis. Disclosure of the nature and reason for the change in accounting principle is required upon transition. This disclosure is required in the first annual period and in the interim period within the first annual period when we initially adopt the amendments in this ASU. We plan to adopt this guidance for our fiscal year ending December 31, 2020. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements to enable users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2018-11, Lease Topic 842: Targeted Improvements, was issued by the FASB in July 2018 and allows for a cumulative-effect adjustment transition method of adoption. The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those years. We plan to adopt ASU 2016-02 in the first quarter of 2019 with a cumulative-effect adjustment made on January 1, 2019. We are in the process of calculating the impact of adoption of this ASU on our consolidated financial statements, and are currently finalizing the implementation of a lease management software to assist in this task. We believe the most significant changes will be related to the recognition of new right-of-use assets and lease liabilities on our balance sheet for operating leases where we function as a lessee. We estimate the impact of the adoption of ASU 2016-02 will be between a $14 million to $17 million increase in right-of use assets and lease liabilities. We plan to elect certain practical expedients available under the transition provisions to (i) allow aggregation of non-lease components with the related lease components when evaluating accounting treatment, (ii) apply the modified retrospective adoption method, utilizing the simplified transition option, which allows entities to continue to apply the legacy guidance in FASB ASC Topic 840, including its disclosure requirements, in the comparative periods presented in the year of adoption, and (iii) use hindsight in determining the lease term (that is, when considering lessee options to extend or terminate the lease and to purchase the underlying asset) and in assessing impairment of the entity’s right-of-use assets. The adoption of ASU 2016-02 will also require any initial direct costs, which are incremental costs that would not have been incurred had the lease not been obtained, to be included in the right-of-use assets. We do not expect the recognition of these costs upon adoption to have a material impact on the right-of-use assets or on our consolidated financial statements.

Reclassifications—Certain prior year amounts have been reclassified in the accompanying consolidated financial statements to conform to the current period presentation:


•	Certain reclassifications were made between reporting segments for segment profit during the year ended December 31, 2016 in Note 18, “Segment Reporting” as a result of changes to our methodology for allocating manufacturing variances to our segments. These reclassifications only impacted our segment reporting footnote disclosure.

•


•	In the first quarter of 2018, we renamed our Construction BIM-CIM vertical and reporting segment “Construction BIM.”


•	In the first quarter of 2018, we renamed our Other reporting segment “Emerging Verticals.”


•	In the third quarter of 2018, we merged the historical Factory Metrology and 3D Machine Vision verticals into one vertical named “3D Factory” for greater consistency with our realigned reporting segments.

•

In the third quarter of 2018, we segregated the operations of our acquisitions of Laser Control Systems and Lanmark, along with the operations resulting from our acquisition of substantially all of the assets of Nutfield, into a vertical that we named “Photonics.” The creation of this vertical enables us to better focus on our product range directed at laser steering. These operations were historically reported in the 3D Factory reporting segment in the first six months of 2018 and the historical Factory Metrology reporting segment in 2017 and are now included in the Emerging Verticals (formerly known as “Other”) reporting segment. Due to this change, we performed a qualitative goodwill impairment analysis in the third quarter of 2018, and management concluded there was no goodwill impairment at the time of this vertical reporting change.


•	In the third quarter of 2018, we renamed our Product Design vertical “3D Design.”


•	In the fourth quarter of 2018, we renamed our 3D Factory vertical and reporting segment “3D Manufacturing.”

The amounts related to our reporting segment information for the year ended December 31, 2017 have been restated throughout this Annual Report on Form 10-K to reflect the above changes in our reporting segments. The amounts related to our reporting segment information for the year ended December 31, 2016 were restated but were not impacted by the above changes in our reporting segments. Each of our reporting segments continue to employ consistent accounting policies.

Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current:
Federal		$ (1,694)	$ 18,951	$ 409
State		120	507	40
Foreign		1,394	2,072	3,482
Current income tax (benefit) expense		(180)	21,530	3,931
Deferred:
Federal		(486)	1,038	(2,357)
State		(153)	(580)	(229)
Foreign		447	(1,645)	174
Deferred income tax benefit		(192)	(1,187)	(2,412)
Income tax (benefit) expense	$ 1,000	$ (372)	$ 20,343	$ 1,519

Earnings (Loss) Per Share - Reconciliation of Number of Common Shares Used in Calculation of Basic and Diluted Earnings Per Share (EPS) (Details) - $ / shares	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share [Abstract]
Basic ((loss) EPS (in shares)									17,043,167	16,711,534	16,654,786
Effect of dilutive securities (in shares)									305,289	0	26,924
Diluted (loss) EPS (in shares)									17,348,456	16,711,534	16,681,710
Securities excluded from the determination of weighted average shares for the calculation of diluted (loss) EPS, as they were antidilutive (in shares)									393,970	1,049,563	1,046,947
Basic (loss) EPS (in dollars per share)	$ 0.33	$ (0.15)	$ 0.07	$ 0.03	$ (0.66)	$ 0.10	$ (0.22)	$ (0.09)	$ 0.29	$ (0.87)	$ 0.67
Effect of dilutive securities (in dollars per share)									0	0	0
Diluted (loss) EPS (in dollars per share)	$ 0.33	$ (0.15)	$ 0.07	$ 0.03	$ (0.66)	$ 0.10	$ (0.22)	$ (0.09)	$ 0.29	$ (0.87)	$ 0.67

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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Summary of Significant Accounting Policies - Additional Information (Details)	12 Months Ended
	Dec. 31, 2018 USD ($) segment plan	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2018 USD ($)	Jan. 01, 2018 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Number of reportable segments \| segment	3
Standard product warranty period	1 year
Deposits with foreign banks	$ 77,500,000	$ 98,800,000
Sales demonstration inventory turnover period (up to)	3 years
Refurbished sales demonstration inventory turnover period	12 months
Service inventory turnover period	12 months
Service inventory not for sale, useful life	3 years
Reserve percentage of FIFO obsolete and excess inventory	100.00%
Depreciation expense	$ 12,900,000	12,300,000	$ 10,900,000
Indefinite-lived intangible assets	$ 0	0
Intangible assets weighted-average amortization period	8 years
Number of compensation plans \| plan	2
Revenue recognized	$ 25,000,000.0
Retained earnings	175,353,000	168,624,000
Capitalized contract cost, net	$ 2,700,000
Revenue, remaining performance obligation				$ 100,000
Performance Shares
Summary Of Significant Accounting Policies [Line Items]
Vesting period, years	3 years
Long Lived Assets
Summary Of Significant Accounting Policies [Line Items]
Assets impairment charges	$ 0	$ 0	$ 0
Minimum
Summary Of Significant Accounting Policies [Line Items]
Account receivable period due	30 days
Other intangible assets, useful life	3 years
Minimum \| Product technology and patents
Summary Of Significant Accounting Policies [Line Items]
Other intangible assets, useful life	7 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Account receivable period due	90 days
Other intangible assets, useful life	20 years
Maximum \| Product technology and patents
Summary Of Significant Accounting Policies [Line Items]
Other intangible assets, useful life	20 years
Accounting Standards Update 2016-02 \| Minimum
Summary Of Significant Accounting Policies [Line Items]
Right-of-use asset	$ 14,000,000
Lease liability	14,000,000
Accounting Standards Update 2016-02 \| Maximum
Summary Of Significant Accounting Policies [Line Items]
Right-of-use asset	17,000,000
Lease liability	17,000,000
Prepaid Expenses and Other Current Assets
Summary Of Significant Accounting Policies [Line Items]
Capitalized contract cost, net	1,800,000
Other Noncurrent Assets
Summary Of Significant Accounting Policies [Line Items]
Capitalized contract cost, net	$ 900,000
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] \| Accounting Standards Update 2014-09
Summary Of Significant Accounting Policies [Line Items]
Retained earnings					$ 1,800,000
Capitalized contract cost, net					$ 2,400,000

Intangible Assets

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

INTANGIBLE ASSETS

Intangible assets consist of the following:



	As of December 31, 2018
	Carrying Value		Accumulated Amortization		Net Intangible
Amortizable intangible assets:
Product technology	$	26,588	$	12,332	$	14,256
Patents and trademarks	14,647		6,601		8,046
Customer relationships	12,027		2,588		9,439
Other	8,693		7,380		1,313
Total	$	61,955	$	28,901	$	33,054



	As of December 31, 2017
	Carrying Value		Accumulated Amortization		Net Intangible
Amortizable intangible assets:
Product technology	$	19,459	$	10,885	$	8,574
Patents and trademarks	13,948		5,720		8,228
Customer relationships	5,889		1,685		4,204
Other	7,443		5,909		1,534
Total	$	46,739	$	24,199	$	22,540

Amortization expense was $5.4 million, $4.5 million and $2.9 million in 2018, 2017 and 2016, respectively. The estimated amortization expense for each of the years 2019 through 2023 and thereafter is as follows:




Years ending December 31,	Amount
2019	$	5,333
2020	4,886
2021	4,717
2022	4,231
2023	3,804
Thereafter	10,083
	$	33,054

Other (Income) Expense, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Other Income and Expenses [Abstract]
Foreign exchange transaction losses (gains)	$ 1,386	$ (162)	$ 1,356
Other	(247)	(28)	(534)
Total other expense (income), net	$ 1,139	$ (190)	$ 822

Segment Reporting - Reportable Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Segment Reporting Information [Line Items]
Net sales to external customers	$ 112,844	$ 99,705	$ 98,244	$ 92,834	$ 106,423	$ 90,250	$ 82,682	$ 81,562	$ 403,627	$ 360,917	$ 325,584
Segment profit	$ 64,551	$ 52,317	$ 57,691	$ 53,786	$ 62,094	$ 52,034	$ 46,760	$ 43,749	228,345	204,637	177,960
General and administrative									47,652	43,807	40,813
Depreciation and amortization									18,313	16,588	13,868
Research and development									39,706	35,376	30,125
Income from operations									5,754	5,322	13,284
Operating Segments
Segment Reporting Information [Line Items]
Segment profit									111,425	101,093	98,090
3D Manufacturing
Segment Reporting Information [Line Items]
Net sales to external customers									264,430	243,464	236,313
3D Manufacturing \| Operating Segments
Segment Reporting Information [Line Items]
Segment profit									80,775	77,537	73,656
Construction BIM
Segment Reporting Information [Line Items]
Net sales to external customers									96,185	86,349	65,056
Construction BIM \| Operating Segments
Segment Reporting Information [Line Items]
Segment profit									27,513	21,077	14,799
Emerging Verticals
Segment Reporting Information [Line Items]
Net sales to external customers									43,012	31,104	24,215
Emerging Verticals \| Operating Segments
Segment Reporting Information [Line Items]
Segment profit									$ 3,137	$ 2,479	$ 9,635

Subsequent Events - Building Rent (Details) - Subsequent Event	Jan. 29, 2019 USD ($) ft²
Subsequent Event [Line Items]
Area of Building Leased \| ft²	35,000
Monthly Base Rent
Approved Lease Improvement Reimbursement \| $	$ 100,000

Business Combinations - Additional Information (Details) $ in Thousands, € in Millions				1 Months Ended					12 Months Ended
	Jul. 13, 2018 USD ($)	Jul. 13, 2018 EUR (€)	Jul. 06, 2018 USD ($)	Apr. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Aug. 31, 2016 USD ($)	Jul. 31, 2016 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jul. 13, 2018 EUR (€)	Mar. 09, 2018 USD ($)
Business Acquisition [Line Items]
Payment to acquire business, paid with cash on hand									$ 27,067	$ 5,596	$ 27,708
Acquisition and integration costs									$ 900
Nutfield (Final)
Business Acquisition [Line Items]
Payment to acquire business, paid with cash on hand				$ 5,500				$ 5,496
Lanmark (Final)
Business Acquisition [Line Items]
Payment to acquire business, paid with cash on hand					$ 1,700
Laser Controls Systems (Final)
Business Acquisition [Line Items]
Payment to acquire business, paid with cash on hand							$ 1,749
Contingent consideration arrangements, range of outcomes, high													$ 700
Photocore AG (Final)
Business Acquisition [Line Items]
Payment to acquire business, paid with cash on hand						$ 2,445
Lanmark (Final)
Business Acquisition [Line Items]
Payment to acquire business, paid with cash on hand					$ 6,251
Consideration transferred			$ 6,300
Contingent consideration arrangements, range of outcomes, high			$ 1,000
Opto-Tech SRL
Business Acquisition [Line Items]
Consideration transferred	$ 21,600	€ 18.5
Contingent consideration arrangements, range of outcomes, high	$ 4,700											€ 4.0

Revenues - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Capitalized contract cost, net	$ 2.7
Revenue recognized	25.0
Revenue, remaining performance obligation		$ 0.1
Prepaid Expenses and Other Current Assets
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Capitalized contract cost, net	1.8
Other Noncurrent Assets
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Capitalized contract cost, net	$ 0.9
Minimum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Extended product warranty term	1 month
Maximum
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Extended product warranty term	3 years

Income Taxes - Components of Net Deferred Income Tax Asset and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Net deferred income tax asset - Non-current
Warranty cost	$ 533	$ 695
Inventory reserve	1,559	419
Unearned service revenue	6,684	5,364
Employee stock options	4,222	4,366
Tax Credits	485	1,785
Loss carryforwards	7,038	8,782
Other, net	759	1,479
Deferred income tax asset - Non-current	21,280	22,890
Valuation Allowance	(1,924)	(1,631)
Net deferred income tax asset - Non-current	19,356	21,259
Bad debt reserve	(116)	(2)
Depreciation	(2,996)	(3,675)
Goodwill amortization	(1,612)	(1,574)
Intangible assets	(649)	(1,097)
Total deferred tax liabilities	(5,373)	(6,348)
Net deferred tax assets	$ 13,983	$ 14,911

Variable Interest Entity	12 Months Ended
Variable Interest Entity	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Variable Interest Entities	VARIABLE INTEREST ENTITY A variable interest entity (“VIE”) is an entity that has one of three characteristics: (1) it is controlled by someone other than its shareowners or partners, (2) its shareowners or partners are not economically exposed to the entity's earnings (for example, they are protected against losses), or (3) it lacks sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties. On April 27, 2018, we invested $1.8 million in Present4D GmbH (“Present4D”), a software solutions provider for professional virtual reality presentations and training environments, in the form of an equity capital contribution. This contribution represents a minority investment in Present4D. This investment's business purpose is to coordinate the design and development of modules supporting compatibility with virtual reality for our existing software offerings. As of our investment date, Present4D was thinly capitalized and lacked the sufficient equity to finance its activities without additional subordinated financial support and is classified as a VIE. We do not have power over decisions that significantly affect Present4D’s economic performance and do not represent its primary beneficiary. After April 27, 2020, Present4D may request additional equity financing of up to $1.8 million from us in exchange for additional share capital, which additional equity financing would be at our discretion. We have not provided support to Present4D during the periods presented outside of our initial investment of $1.8 million. We do not intend to provide future support to Present4D, and we will continue to evaluate whether we intend to obtain the aforementioned additional share capital in the future. Our 16.5% portion of Present4D’s net loss for the year ended December 31, 2018 was approximately $0.1 million. Present4D is currently accounted for using the equity method of accounting. Our equity in the net loss from this equity method investment is recorded as loss with a corresponding decrease in the investment. Our investment in this unconsolidated VIE at December 31, 2018 was $1.7 million and is included in Other long-term assets in our consolidated balance sheet as of December 31, 2018. $1.8 million represents our maximum exposure to loss for our involvement with Present4D. We had no VIE investments as of December 31, 2017.

Business Combinations (Tables)

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Schedule of Purchase Price Allocation to the Fair Values of Assets Acquired and Liabilities Assumed

Following is a summary of our allocations of the purchase price to the fair values of the assets acquired and liabilities assumed as of the date of each acquisition:



	Nutfield (Final)			Laser Controls Systems (Final)			Photocore AG (Final)		Lanmark (Final)			Open Technologies⁽³⁾(Preliminary)

Accounts receivable	$	160		$	—		$	—	$	610		$	2,735
Inventory	539			—			—		299			1,852
Other assets	96			—			—		76			634
Deferred income tax assets	131			—			—		—			—
Intangible assets	2,329			1,400			1,435		1,366			10,388
Goodwill ⁽¹⁾	2,357			928			1,010		5,355			9,130
Accounts payable and accrued liabilities	(12		)	—			—		(159		)	(2,926		)
Other liabilities ⁽²⁾	(104		)	(579		)	—		(971		)	(5,201		)
Deferred income tax liabilities	—			—			—		(325		)	—
Total purchase price, net of cash acquired	$	5,496		$	1,749		$	2,445	$	6,251		$	16,612


⁽¹⁾	The goodwill arising from the acquisitions consists largely of the expected synergies from combining operations as well as the value of the workforce. A portion of the goodwill is expected to be tax deductible for Nutfield.


⁽²⁾	For Laser Control Systems, Lanmark and Open Technologies, this total consists primarily of the fair value of the projected contingent consideration.

⁽³⁾

Amounts converted from Euros to U.S. Dollars based on the foreign exchange rate on the closing date of the acquisition.

Summary of the Purchase Price Preliminarily Allocated to the Intangible Assets Acquired for the Acquisitions

Following are the details of the purchase price allocated to the intangible assets acquired for the acquisitions noted above:



	Nutfield (Final)			Laser Control Systems (Final)			Photocore AG (Final)			Lanmark (Final)			Open Technologies (Preliminary)
	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)
Trade name	$	29	1	$	—	0	$	—	0	$	—	0	$	—	0
Brand	—		0	26		1	22		1	26		1	103		1
Non-competition agreement	144		5	29		3	9		3	—		0	—		0
Technology	1,970		10	1,319		7	1,343		7	760		7	4,441		7
Customer relationships	95		10	26		10	61		10	580		10	5,844		10
Favorable in-place lease	91		12	—		0	—		0	—		0	—		0
Fair value of intangible assets acquired	$	2,329	10	$	1,400	7	$	1,435	7	$	1,366	8	$	10,388	8

Income Taxes - Income (Loss) Before Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Domestic	$ (1,723)	$ 2,468	$ (1,527)
Foreign	6,281	3,359	14,153
INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE	$ 4,558	$ 5,827	$ 12,626

Employee Retirement Benefit Plan	12 Months Ended
Employee Retirement Benefit Plan	Dec. 31, 2018
Retirement Benefits [Abstract]
Employee Retirement Benefit Plan	EMPLOYEE RETIREMENT BENEFIT PLANWe maintain a 401(k) defined contribution retirement plan for our eligible U.S. employees. Costs charged to operations in connection with the 401(k) plan during 2018, 2017 and 2016 aggregated $2.1 million, $1.7 million, and $1.4 million, respectively.

Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	3 years
Machinery, Equipment and Software \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	2 years
Machinery, Equipment and Software \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	5 years
Furniture and Fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	3 years
Furniture and Fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	10 years

Short Term Investments - Additional Information (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Short-term investments	$ 24,793		$ 10,997
Interest rate on U.S. Treasury Bills (less than for 2017)			1.00%
US Treasury Bill Securities
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Short-term investments	24,800		$ 11,000
U.S. Treasury Security, Maturing on March 14th 2019
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Interest rate on U.S. Treasury Bills		2.20%
U.S. Treasury Security, Maturing on March 14th 2019 \| US Treasury Bill Securities
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Short-term investments	9,000
U.S. Treasury Security, Maturing on June 6th 2019
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Interest rate on U.S. Treasury Bills		2.40%
U.S. Treasury Security, Maturing on June 6th 2019 \| US Treasury Bill Securities
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Short-term investments	10,900
U.S. Treasury Security, Maturing on June 20th 2019
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Interest rate on U.S. Treasury Bills		2.30%
U.S. Treasury Security, Maturing on June 20th 2019 \| US Treasury Bill Securities
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items]
Short-term investments	$ 4,900

Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Raw materials	$ 39,859	$ 36,328
Finished goods	25,585	17,458
Inventories, net	65,444	53,786
Service and sales demonstration inventory, net	$ 39,563	$ 39,614
Service Inventory
Property, Plant and Equipment [Line Items]
Inventory, remaining life	3 years

Subsequent Events (Tables)	12 Months Ended
Subsequent Events (Tables)	Dec. 31, 2018
Subsequent Events [Abstract]
Subsequent Events	.

Accrued Liabilities - Accrued Liabilities Schedule (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Accrued compensation and benefits	$ 17,745	$ 16,144
Accrued warranties	2,571	2,628	$ 2,594	$ 2,309
Professional and legal fees	2,154	1,541
Taxes other than income	3,550	3,787
General services administration liability	5,267	0
Other accrued liabilities	5,040	3,262
Total accrued liabilities	$ 36,327	$ 27,362

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended			72 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018
Commitments and Contingencies [Line Items]
Rent expense									$ 8,600	$ 7,500	$ 7,700
Purchase commitment, due in next twelve months	$ 56,900								56,900			$ 56,900
Long-term purchase commitments									2,300
Sales	112,844	$ 99,705	$ 98,244	$ 92,834	$ 106,423	$ 90,250	$ 82,682	$ 81,562	$ 403,627	$ 360,917	$ 325,584
Minimum
Commitments and Contingencies [Line Items]
Length of purchase commitments, in days									60 days
Maximum
Commitments and Contingencies [Line Items]
Length of purchase commitments, in days									120 days
Government Contract
Commitments and Contingencies [Line Items]
Sales												53,500
Charges to income from price adjustment clauses	4,800											4,800
Imputed interest related to price adjustment clauses	500
Total estimated liability	$ 5,300								$ 5,300			$ 5,300
Total sales \| Government Contract
Commitments and Contingencies [Line Items]
Total sales, percentage									3.50%

Other (Income) Expense, Net

12 Months Ended

Dec. 31, 2018

Other Income and Expenses [Abstract]

Other (Income) Expense, Net

OTHER EXPENSE (INCOME), NET

Other expense (income), net consists of the following:



	Years ended December 31,
	2018			2017			2016
Foreign exchange transaction losses (gains)	$	1,386		$	(162	)	$	1,356
Other	(247		)	(28		)	(534		)
Total other expense (income), net	$	1,139		$	(190	)	$	822

Segment Reporting - Additional Information (Details)	12 Months Ended
Segment Reporting - Additional Information (Details)	Dec. 31, 2018 segment
Segment Reporting Information [Line Items]
Number of reportable segments	3
Minimum
Segment Reporting Information [Line Items]
Percentage of product sales to consolidated sales	99.00%

Quarterly Result of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Results of Operations



Quarter ended	March 31, 2018		June 30, 2018		September 30, 2018			December 31, 2018
Sales⁽¹⁾	$	92,834	$	98,244	$	99,705		$	112,844
Gross profit⁽²⁾	53,786		57,691		52,317			64,551
Net income (loss)⁽³⁾	455		1,205		(2,488		)	5,758
Net income (loss) per share:
Basic	$	0.03	$	0.07	$	(0.15	)	$	0.33
Diluted	$	0.03	$	0.07	$	(0.15	)	$	0.33


⁽¹⁾	For the fourth quarter of 2018, sales were reduced by a $4.8 million estimated cumulative sales adjustment, representative of the last six years of estimated overcharges to the Government under the GSA Contracts.


⁽²⁾	For the third quarter of 2018, gross profit was reduced by a $4.7 million inventory reserve charge resulting from an analysis of our inventory reserves in connection with our new product introductions and acquisitions, which increased our reserve for excess and obsolete inventory.


⁽³⁾	For the fourth quarter of 2018, as additional guidance was released during the SAB 118 remeasurement period related to the U.S. Tax Reform, we completed our transition tax analysis, which resulted in an income tax benefit of $1.0 million.



Quarter ended	March 31, 2017			June 30, 2017			September 30, 2017		December 31, 2017
Sales	$	81,562		$	82,682		$	90,250	$	106,423
Gross profit	43,749			46,760			52,034		62,094
Net (loss) income⁽¹⁾	(1,461		)	(3,625		)	1,628		(11,058		)
Net (loss) income per share:
Basic	$	(0.09	)	$	(0.22	)	$	0.10	$	(0.66	)
Diluted	$	(0.09	)	$	(0.22	)	$	0.10	$	(0.66	)

⁽¹⁾

For the fourth quarter of 2017, $19.4 million of additional income tax expense was recorded pursuant to the U.S. Tax Reform. $17.4 million of this expense related to a provisional amount of transition tax on the mandatory deemed repatriation of foreign earnings. $2.0 million of this expense related to the remeasurement of our deferred tax assets and liabilities.

Segment Reporting - Net Sales to External Customers Based Upon Geographic Location (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Geographic Reporting Disclosure [Line Items]
Net sales to external customers	$ 112,844	$ 99,705	$ 98,244	$ 92,834	$ 106,423	$ 90,250	$ 82,682	$ 81,562	$ 403,627	$ 360,917	$ 325,584
United States
Geographic Reporting Disclosure [Line Items]
Net sales to external customers									156,242	141,595	133,924
Americas-Other
Geographic Reporting Disclosure [Line Items]
Net sales to external customers									15,086	13,531	11,815
Germany
Geographic Reporting Disclosure [Line Items]
Net sales to external customers									53,251	49,860	44,041
Europe-Other
Geographic Reporting Disclosure [Line Items]
Net sales to external customers									74,010	65,201	57,710
Japan
Geographic Reporting Disclosure [Line Items]
Net sales to external customers									37,607	35,270	32,530
Asia-Other
Geographic Reporting Disclosure [Line Items]
Net sales to external customers									$ 67,431	$ 55,460	$ 45,564

Inventories

12 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories are stated at the lower of cost or net realizable value using the first-in first-out method. We have three principal categories of inventory: 1) manufactured product to be sold; 2) sales demonstration inventory - completed product used to support our sales force, for demonstrations and held for sale; and 3) service inventory - completed product and parts used to support our service department and held for sale. Shipping and handling costs are classified as a component of cost of sales in our consolidated statements of operations. Sales demonstration inventory is held by our sales representatives for up to three years, at which time it is refurbished and transferred to finished goods as used equipment, stated at the lower of cost or net realizable value. We expect these refurbished units to remain in finished goods inventory and to be sold within 12 months at prices that produce reduced gross margins. Service inventory is used to provide a temporary replacement product to a customer covered by a premium warranty when the customer’s unit requires service or repair and as training equipment. Service inventory is available for sale; however, management does not expect service inventory to be sold within 12 months and, as such, classifies this inventory as a long-term asset. Service inventory that we utilize for training or repairs and which we deem as no longer available for sale is transferred to fixed assets at the lower of cost or net realizable value and depreciated over the remaining life, typically three years.

Inventories consist of the following:



	December 31, 2018		December 31, 2017
Raw materials	$	39,859	$	36,328
Finished goods	25,585		17,458
Inventories, net	$	65,444	$	53,786
Service and sales demonstration inventory, net	$	39,563	$	39,614

Segment Reporting - Long Lived Assets Attributed to Geographic Area (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Long-Lived Assets by Geographical Areas [Line Items]
Long-lived assets	$ 130,745	$ 107,076	$ 100,701
United States
Long-Lived Assets by Geographical Areas [Line Items]
Long-lived assets	61,557	54,703	54,157
Americas-Other
Long-Lived Assets by Geographical Areas [Line Items]
Long-lived assets	10,702	13,834	13,486
Germany
Long-Lived Assets by Geographical Areas [Line Items]
Long-lived assets	30,154	26,611	23,734
Europe-Other
Long-Lived Assets by Geographical Areas [Line Items]
Long-lived assets	24,935	9,124	6,949
Japan
Long-Lived Assets by Geographical Areas [Line Items]
Long-lived assets	1,039	558	460
Asia-Other
Long-Lived Assets by Geographical Areas [Line Items]
Long-lived assets	$ 2,358	$ 2,246	$ 1,915

Variable Interest Entity (Details) - Variable Interest Entity, Not Primary Beneficiary - USD ($) $ in Millions		12 Months Ended
	Apr. 27, 2018	Dec. 31, 2018	Sep. 30, 2018
Variable Interest Entity [Line Items]
Equity investments and advances to affiliates	$ 1.8
Net loss		$ 0.1
Potential additional investment (up to)		1.8
Investment in VIE			$ 1.7
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount		$ 1.8
Present4D
Variable Interest Entity [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent		16.50%

- Definition

This item represents the entity's proportionate share for the period of the net income (loss) of its investee (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied. This item includes income or expense related to stock-based compensation based on the investor's grant of stock to employees of an equity method investee.

+ References + Details

Stock Compensation Plans

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation Plans

STOCK COMPENSATION PLANS

We have two compensation plans that provide for the granting of stock options and other share-based awards to key employees and non-employee members of the Board of Directors. The 2009 Equity Incentive Plan (“2009 Plan”), and the 2014 Equity Incentive Plan (“2014 Plan”) provide for granting options, restricted stock, restricted stock units or stock appreciation rights to employees and non-employee directors.

We were authorized to grant awards for up to 1,781,546 shares of common stock under the 2009 Plan, as well as any shares underlying awards outstanding under our 2004 Equity Incentive Plan (the “2004 Plan”) as of the effective date of the 2009 Plan that thereafter terminated or expired unexercised or were canceled, forfeited or lapsed for any reason. There were 122,943 options outstanding at December 31, 2018 under the 2009 Plan at exercise prices between $43.33 and $57.54. The options outstanding under the 2009 Plan have a 10-year term (7 years on grants beginning in 2010) and vest over a 3-year period.

In May 2014, our shareholders approved the 2014 Plan authorizing us to grant awards for up to 1,974,543 shares of common stock, as well as any shares underlying awards outstanding under the 2004 Plan and 2009 Plan as of the effective date of the 2014 Plan that thereafter terminate or expire unexercised or are canceled, forfeited or lapse for any reason. In May 2018, our shareholders approved an amendment to the 2014 Plan, which increased the number of shares available for issuance under the 2014 Plan by 1,000,000 shares. A maximum of 2,974,543 shares are available for issuance under the 2014 Plan, as amended, plus the number of shares (not to exceed 891,960) underlying awards outstanding under the 2004 Plan and the 2009 Plan as of May 29, 2014 that thereafter terminate or expire unexercised or are canceled, forfeited or lapse for any reason. There were 670,047 options outstanding at December 31, 2018 under the 2014 Plan at exercise prices between $29.98 and $61.30. The options outstanding under the 2014 Plan have a 7-year term and generally vest over a 3-year period. No awards were outstanding under the 2004 Plan as of December 31, 2018, and we will not make any further grants under the 2004 Plan or the 2009 Plan.

Upon election to the Board, each non-employee director receives an initial equity grant of shares of restricted common stock with a value equal to $100,000, calculated using the closing share price on the date of the non-employee director’s election to the Board. The initial restricted stock grant vests on the third anniversary of the grant date, subject to the non-employee director’s continued membership on the Board. Annually, the non-employee directors are granted restricted shares equal to 50% of their compensation on the first business day following the annual meeting of shareholders, calculated using the closing price of our common stock on that day. In addition, the Lead Director is annually granted restricted shares with a value equal to $40,000 on the first business day following the annual meeting of shareholders, calculated using the closing price of our common stock on that day. The shares of restricted stock granted annually to our non-employee directors and our Lead Director vest on the day prior to the following year’s annual meeting date, subject to a non-employee director’s continued membership on the Board. We record compensation cost associated with our restricted stock grants on a straight-line basis over the vesting term. Also, beginning in October 2018, our non-employee directors may elect to have their annual cash retainers and annual equity retainers paid in the form of deferred stock units pursuant to the 2014 Plan and the 2018 Non-Employee Director Deferred Compensation Plan. Each deferred stock unit represents the right to receive one share of our common stock upon the non-employee director's separation of service from the Company. We record compensation cost associated with our deferred stock units over the period of service.

Annually, upon approval by our Compensation Committee, we grant stock options and restricted stock units to certain employees. We also grant stock options and restricted stock units to certain new employees throughout the year. Prior to 2016, these awards vested in three equal annual installments beginning one year after the grant date. The fair value of these stock-based awards is determined by using (a) the current market price of our common stock on the grant date in the case of restricted stock units or (b) the Black-Scholes option valuation model in the case of stock options.

In 2015, we granted performance-based stock options and restricted stock units to certain executives. These awards vested in three annual installments beginning one year after the grant date if the applicable performance measures or strategic objectives were achieved. The related stock-based compensation expense was recognized over the requisite service period, taking into account the probability that we would satisfy the performance measures or strategic objectives. In addition to certain strategic objectives, the performance-based stock options and restricted stock units granted in 2015 were earned and vested based on (1) our achievement of specified revenue and EPS targets, and (2) our total shareholder return (“TSR”) relative to the TSR attained by companies within our defined peer group.

Due to the TSR presence in certain performance-based grants, the fair value of these awards was determined using the Monte Carlo Simulation valuation model. We expensed these market condition awards over the three-year vesting period regardless of the value that the award recipients ultimately receive. In March 2018, our Compensation Committee determined that 7,743 performance-based stock options and 266 restricted stock units were earned and vested for the 2017 performance period and 17,160 stock options and 640 restricted stock units were determined to be unearned, as the required metrics were not achieved. As of December 31, 2018, all performance-based stock options and restricted stock units granted in 2015 were either vested or were forfeited because they were not earned.

We did not grant performance-based stock options and restricted stock units to our employees during 2018. Instead, our annual grant in March 2018 consisted of stock options and restricted stock units that are subject to only time-based vesting. The number of stock options and restricted stock units granted was based on the employee’s individual objectives, performance against operational metrics assigned to the employee, and overall contribution to the Company over the last year. The restricted stock unit awards vest in full on the three-year anniversary of the grant date. The stock options vest in three equal annual installments beginning one year after the grant date. The fair value of these stock-based awards is determined by using (a) the current market price of our common stock on the grant date in the case of restricted stock units or (b) the Black-Scholes option valuation model in the case of stock options.

The Black-Scholes option valuation model incorporates assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. The weighted-average grant-date fair value of the stock options that were granted during the years ended December 31, 2018, 2017, and 2016 and valued using the Black-Scholes option valuation model was $23.43, $14.51 and $12.90 per option, respectively. For stock options granted during the years ended December 31, 2018, 2017, and 2016 valued using the Black-Scholes option valuation model, we used the following assumptions:



	Years ended December 31,
	2018		2017		2016
Risk-free interest rate	2.65	%	1.88% - 2.02%		1.06% - 1.57%
Expected dividend yield	—	%	—	%	—	%
Expected option life	4 years		5 years		4 years
Expected volatility	45	%	45.2	%	45.0% - 47.0%
Weighted-average expected volatility	45.0	%	45.2	%	46.1	%

Historical information was the primary basis for the selection of the expected dividend yield, expected volatility and the expected lives of the options. The risk-free interest rate was based on the yields of U.S. zero coupon issues and U.S. Treasury issues, with a term equal to the expected life of the option being valued.

There were no market condition awards granted during the years ended December 31, 2018, 2017 and 2016 and, as such, the Monte Carlo Simulation valuation model was not used to determine the fair value of the stock options and restricted stock units granted during 2018.

A summary of stock option activity and weighted average exercise prices follows:



	Options		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value as of December 31, 2018
Outstanding at January 1, 2018	1,156,763		$	45.93
Granted	174,439		61.30
Forfeited	(81,222	)	51.66
Exercised	(439,877	)	47.21
Unearned performance-based options	(17,160	)	59.97
Outstanding at December 31, 2018	792,943		$	47.59	4.4	$	2,160
Options exercisable at December 31, 2018	427,006		$	48.84	2.1	$	862

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2018, 2017, and 2016 was $7.5 million, $1.2 million and $1.7 million, respectively. The total fair value of stock options vested during the years ended December 31, 2018, 2017, and 2016 was $3.7 million, $4.1 million and $3.8 million, respectively.

The following table summarizes the restricted stock and restricted stock unit activity and weighted average grant-date fair values for the year ended December 31, 2018:



	Shares		Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2018	257,492		$	34.75
Granted	102,458		60.26
Forfeited	(29,692	)	39.36
Vested	(18,618	)	35.03
Unearned performance-based awards	(640	)	51.15
Non-vested at December 31, 2018	311,000		$	42.66

We recorded total stock-based compensation expense associated with our stock incentive plans of $7.6 million, $6.5 million and $5.4 million in 2018, 2017 and 2016, respectively.

As of December 31, 2018, there was $10.3 million in total unrecognized stock-based compensation expense related to non-vested stock-based compensation arrangements. The expense is expected to be recognized over a weighted average period of 1.8 years.

Quarterly Result of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended			72 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018
Quarterly Financial Information Disclosure [Abstract]
Sales	$ 112,844	$ 99,705	$ 98,244	$ 92,834	$ 106,423	$ 90,250	$ 82,682	$ 81,562	$ 403,627	$ 360,917	$ 325,584
Segment profit	64,551	52,317	57,691	53,786	62,094	52,034	46,760	43,749	228,345	204,637	177,960
Net income	5,758	$ (2,488)	$ 1,205	$ 455	$ (11,058)	$ 1,628	$ (3,625)	$ (1,461)	4,930	(14,516)	11,107
INCOME TAX (BENEFIT) EXPENSE	$ 1,000								$ (372)	$ 20,343	$ 1,519
Net income (loss) per share:
Basic (loss) EPS (in dollars per share)	$ 0.33	$ (0.15)	$ 0.07	$ 0.03	$ (0.66)	$ 0.10	$ (0.22)	$ (0.09)	$ 0.29	$ (0.87)	$ 0.67
Diluted EPS (in dollars per share)	$ 0.33	$ (0.15)	$ 0.07	$ 0.03	$ (0.66)	$ 0.10	$ (0.22)	$ (0.09)	$ 0.29	$ (0.87)	$ 0.67
Disaggregation of Revenue [Line Items]
Provision for excess and obsolete inventory		$ 4,700							$ 5,757	$ 1,734	$ 4,134
Tax Cuts And Jobs Act of 2017, Incomplete Accounting, Provisional Income Tax Expense (Benefit)					$ (19,400)
Tax cuts and jobs act of 2017, incomplete accounting, transition tax for accumulated foreign earnings, provisional income tax expense					17,400				17,400
Tax Cuts And Jobs Act of 2017, Incomplete Accounting, Change in Tax Rate, Provisional Income Tax Expense (Benefit)					$ (2,000)				$ (2,000)
Government Contract
Quarterly Financial Information Disclosure [Abstract]
Sales												$ 53,500
Disaggregation of Revenue [Line Items]
Charges to income from price adjustment clauses	$ 4,800											$ 4,800

Goodwill

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

GOODWILL

Our goodwill at December 31, 2018 and 2017 is related to our acquisitions. We evaluate each reporting unit’s fair value as compared to its carrying value on October 1st of each year or more frequently if events or changes in circumstances indicate that the carrying value may exceed the fair value. As of December 31, 2017, we evaluated each reporting unit's fair value as compared to its carrying value, and used step 1 of the quantitative goodwill impairment test, where the fair value of the reporting units was measured using a discounted cash flow model and incorporated discount rates commensurate with the risks involved for each reporting unit and a market approach. The key assumptions used in this discounted cash flow model include discount rates, growth rates, cash flow projections and terminal value rates. These rates were susceptible to change and required significant management judgment. The market approach relied on an analysis of publicly-traded companies similar to us and derived a range of revenue and profit multiples. The publicly-traded companies used in the market approach were selected based on our defined peer group. The resulting multiples were then applied to each reporting unit to determine fair value. As of October 1, 2018, we performed a qualitative assessment, on a reporting unit level, to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We did not identify any such event or circumstance at that time. Impairments to goodwill are charged against earnings in the period the impairment is identified.

We focus on five operating segments: 3D Manufacturing, Construction BIM, Public Safety Forensics, 3D Design, and Photonics. As of December 31, 2018 and 2017, we did not have any goodwill that was identified as impaired. The increase in goodwill during 2018 and 2017 reflected the acquisitions completed in those periods and changes in foreign exchange rates.



December 31, 2018	Beginning Balance		Additions		Foreign Currency Translation			Ending Balance
3D Manufacturing	$	40,802	$	—	$	(1,316	)	$	39,486
Construction BIM	6,521		1,010		(226		)	7,305
Public Safety Forensics	3,070		—		(107		)	2,963
3D Design	—		9,130		(180		)	8,950
Photonics	2,357		6,283		(70		)	8,570
Total	$	52,750	$	16,423	$	(1,899	)	$	67,274



December 31, 2017	Beginning Balance		Additions		Foreign Currency Translation		Ending Balance
3D Manufacturing	$	37,861	$	—	$	2,941	$	40,802
Construction BIM	6,078		—		443		6,521
Public Safety Forensics	2,805		55		210		3,070
3D Design	—		—		—		—
Photonics	—		2,357		—		2,357
Total	$	46,744	$	2,412	$	3,594	$	52,750

Stock Compensation Plans - Schedule of Stock Option Activity and Weighted Average Exercise Prices (Details) - Employee Stock Option $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) $ / shares shares
Options
Outstanding at January 1, 2016 (in shares) \| shares	1,156,763
Granted (in shares) \| shares	174,439
Forfeited (in shares) \| shares	(81,222)
Exercised (in shares) \| shares	(439,877)
Unearned performance-based options (in shares) \| shares	(17,160)
Outstanding at December 31, 2016 (in shares) \| shares	792,943
Options exercisable at December 31, 2016 \| shares	427,006
Weighted- Average Exercise Price
Outstanding at January 1, 2017 (in dollars per share) \| $ / shares	$ 45.93
Granted (in dollars per share) \| $ / shares	61.30
Forfeited (in dollars per share) \| $ / shares	51.66
Exercised (in dollars per share) \| $ / shares	47.21
Unearned performance-based options (in dollars per share) \| $ / shares	59.97
Outstanding at December 31, 2017 (in dollars per share) \| $ / shares	47.59
Options exercisable at December 31, 2017 (in dollars per share) \| $ / shares	$ 48.84
Weighted-Average Remaining Contractual Term (Years)
Weighted-average remaining contractual term in years outstanding at December 31, 2017	4 years 4 months 24 days
Weighted-average remaining contractual term in years options exercisable at December 31, 2017	2 years 1 month 6 days
Aggregate Intrinsic Value as of December 31, 2018
Aggregate intrinsic value outstanding at December 31, 2017 \| $	$ 2,160
Aggregate intrinsic value of options exercisable at December 31, 2017 \| $	$ 862

Allowance for Doubtful Accounts Roll Forward (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Allowance for doubtful accounts
Balance, beginning of year	$ 1,957	$ 1,829	$ 1,417
Provision (net of recovery)	907	370	898
Amounts written off, net of recoveries	(1,116)	(242)	(486)
Balance, end of year	$ 1,748	$ 1,957	$ 1,829

Other (Income) Expense, Net (Tables)

12 Months Ended

Dec. 31, 2018

Other Income and Expenses [Abstract]

Schedule of Other (Income) Expense, Net

Other expense (income), net consists of the following:



	Years ended December 31,
	2018			2017			2016
Foreign exchange transaction losses (gains)	$	1,386		$	(162	)	$	1,356
Other	(247		)	(28		)	(534		)
Total other expense (income), net	$	1,139		$	(190	)	$	822

Inventories (Tables)

12 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories consist of the following:



	December 31, 2018		December 31, 2017
Raw materials	$	39,859	$	36,328
Finished goods	25,585		17,458
Inventories, net	$	65,444	$	53,786
Service and sales demonstration inventory, net	$	39,563	$	39,614

Business Combinations - Schedule of Purchase Price Allocation to the Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	1 Months Ended					12 Months Ended
	Apr. 30, 2017	Dec. 31, 2016	Aug. 31, 2016	Jul. 31, 2016	Mar. 31, 2015	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill		$ 46,744				$ 67,274	$ 52,750	$ 46,744
Total purchase price, net of cash acquired						$ 27,067	$ 5,596	27,708
Nutfield (Final)
Business Acquisition [Line Items]
Accounts receivable					$ 160
Inventory					539
Other assets					96
Deferred income tax assets					131
Intangible assets					2,329
Goodwill					2,357
Accounts payable and accrued liabilities					(12)
Other liabilities (2)					(104)
Deferred income tax liabilities					0
Total purchase price, net of cash acquired	$ 5,500				$ 5,496
Laser Controls Systems (Final)
Business Acquisition [Line Items]
Accounts receivable				$ 0
Inventory				0
Other assets				0
Deferred income tax assets				0
Intangible assets				1,400
Goodwill				928
Accounts payable and accrued liabilities				0
Other liabilities (2)				(579)
Deferred income tax liabilities				0
Total purchase price, net of cash acquired				$ 1,749
Photocore AG (Final)
Business Acquisition [Line Items]
Accounts receivable			$ 0
Inventory			0
Other assets			0
Deferred income tax assets			0
Intangible assets			1,435
Goodwill			1,010
Accounts payable and accrued liabilities			0
Other liabilities (2)			0
Deferred income tax liabilities			0
Total purchase price, net of cash acquired			$ 2,445
Lanmark (Final)
Business Acquisition [Line Items]
Accounts receivable		610						610
Inventory		299						299
Other assets		76						76
Deferred income tax assets		0						0
Intangible assets		1,366						1,366
Goodwill		5,355						5,355
Accounts payable and accrued liabilities		(159)						(159)
Other liabilities (2)		(971)						(971)
Deferred income tax liabilities		(325)						$ (325)
Total purchase price, net of cash acquired		$ 6,251
Open Technologies
Business Acquisition [Line Items]
Accounts receivable	2,735
Inventory	1,852
Other assets	634
Deferred income tax assets	0
Intangible assets	10,388
Goodwill	9,130
Accounts payable and accrued liabilities	(2,926)
Other liabilities (2)	(5,201)
Deferred income tax liabilities	0
Total purchase price, net of cash acquired	$ 16,612

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments Required under Non-Cancelable Operating Leases

The following is a schedule of future minimum lease payments required under non-cancellable operating leases with initial terms in excess of one year, in effect at December 31, 2018:




Years ending December 31,	Amount
2019	$	7,474
2020	4,679
2021	1,724
2022	1,313
2023	1,270
Thereafter	3,168
Total future minimum lease payments	$	19,628

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2018	Feb. 15, 2019	Jun. 29, 2018
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	FARO
Entity Registrant Name	FARO TECHNOLOGIES INC
Entity Central Index Key	0000917491
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		17,253,011
Entity Public Float			$ 906,879,697

Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2018

Supplemental Cash Flow Elements [Abstract]

Schedule of cash Payments and Non-Cash Activity

Selected cash payments and non-cash activities were as follows:



	Years ended December 31,
	2018		2017		2016
Supplemental cash flow information:
Cash paid for interest	$	4	$	9	$	28
Cash paid for income taxes	$	5,813	$	2,488	$	2,576
Supplemental noncash investing and financing activities:
Transfer of service and sales demonstration inventory to fixed assets	$	964	$	2,844	$	511

Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Leases — We lease buildings and equipment under non-cancellable operating leases through 2026. Some of these leases include cost-escalation clauses. Such cost-escalation clauses are recognized on a straight-line basis over the lease term. The following is a schedule of future minimum lease payments required under non-cancellable operating leases with initial terms in excess of one year, in effect at December 31, 2018:




Years ending December 31,	Amount
2019	$	7,474
2020	4,679
2021	1,724
2022	1,313
2023	1,270
Thereafter	3,168
Total future minimum lease payments	$	19,628

Rent expense for 2018, 2017, and 2016 was $8.6 million, $7.5 million and $7.7 million, respectively.

Purchase Commitments — We enter into purchase commitments for products and services in the ordinary course of business. These purchases generally cover production requirements for 60 to 120 days as well as materials necessary to service customer units through the product lifecycle and for warranty commitments. As of December 31, 2018, we had approximately $56.9 million in purchase commitments that are expected to be delivered within the next 12 months. To ensure adequate component availability in preparation for new product introductions, as of December 31, 2018, we also had $2.3 million in long-term commitments for purchases to be delivered after 12 months.

Legal Proceedings — We are not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which we believe will have a material adverse effect on our business, financial condition or results of operations.

U.S. Government Contracting Matter — We have sold our products and related services to the U.S. Government (the “Government”) under General Services Administration (“GSA”) Federal Supply Schedule contracts (the “GSA Contracts”) since 2002 and are currently selling our products and related services to the Government under two such GSA Contracts. Each GSA Contract is subject to extensive legal and regulatory requirements and includes, among other provisions, a price reduction clause (the “Price Reduction Clause”), which generally requires us to reduce the prices billed to the Government under the GSA Contracts to correspond to the lowest prices billed to certain benchmark customers.

Late in the fourth quarter of 2018, during an internal review we preliminarily determined that certain of our pricing practices may have resulted in the Government being overcharged under the Price Reduction Clauses of the GSA Contracts (the "GSA Matter"). As a result, we have begun remediation efforts, including but not limited to, the identification of additional controls and procedures to ensure future compliance with the pricing and other requirements of the GSA Contracts. We have also retained outside legal counsel to assist with these efforts and to conduct a review of our pricing and other practices under the GSA Contracts (the “Review”). On February 14, 2019, we reported the GSA Matter to the GSA and its Office of Inspector General.

Over the six-year period ended December 31, 2018, our sales to the Government under the GSA Contracts were approximately $53.5 million in the aggregate. Our sales to the Government under the GSA Contracts represented approximately 3.5% of our total sales for the year ended December 31, 2018. As a result of the GSA Matter, for fourth quarter 2018, we reduced our total sales by a $4.8 million estimated cumulative sales adjustment, representative of the last six years of estimated overcharges to the Government under the GSA Contracts. In addition, for the fourth quarter of 2018, we recorded $0.5 million of imputed interest related to the estimated cumulative sales adjustment, which increased other expense and resulted in an estimated total liability of $5.3 million for the GSA Matter. This estimate is based on our preliminary review as of the date of this Annual Report on Form 10-K and is subject to change based on the results of the Review being conducted by our outside legal counsel and discussions with the Government.

While we have reported this matter to the GSA, the Government may conduct its own investigation or review (including an audit). We intend to cooperate fully with any Government inquiry. The Government’s review of, or investigation into, this matter could result in civil and criminal penalties, administrative sanctions, and contract remedies being imposed on us, including but not limited to, termination of the GSA Contracts, repayments of amounts already received under the GSA Contracts, forfeiture of profits, damages, suspension of payments, fines, and suspension or debarment from doing business with the Government and possibly U.S. state and local governments. We may also be subject to litigation and recovery under the federal False Claims Act and possibly similar state laws, which could include claims for treble damages, penalties, fees and costs. As a result, we cannot reasonably predict the outcome of the Government’s review of, or investigation into, this matter at this time or the resulting future financial impact on us. Any of these outcomes could have a material adverse effect on our reputation, our sales, results of operations, cash flows and financial condition, and the trading price of our common stock. In addition, we have incurred, and will continue to incur, legal and related costs in connection with the Review and the Government’s response to this matter.

Stock Compensation Plans - Schedule of Restricted Stock Unit Activity and Weighted Average Grant Date Fair Value (Details) - Restricted Stock Units (RSUs)	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Shares
Non-vested at January 1, 2017 (in shares) \| shares	257,492
Granted (in shares) \| shares	102,458
Forfeited (in shares) \| shares	(29,692)
Vested (in shares) \| shares	(18,618)
Unearned performance-based awards (in shares) \| shares	(640)
Non-vested at December 31, 2017 (in shares) \| shares	311,000
Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2017 (in dollars per share) \| $ / shares	$ 34.75
Granted (in dollars per share) \| $ / shares	60.26
Forfeited (in dollars per share) \| $ / shares	39.36
Vested (in dollars per share) \| $ / shares	35.03
Unearned performance-based awards (in dollars per share) \| $ / shares	51.15
Non-vested at December 31, 2017 (in dollars per share) \| $ / shares	$ 42.66

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	18,676,059	18,277,142
Common stock, shares outstanding	17,253,011	16,796,884
Treasury stock, shares	1,423,048	1,480,258

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
OPERATING ACTIVITIES:
Net income (loss)	$ 4,930	$ (14,516)	$ 11,107
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	18,313	16,588	13,868
Compensation for stock options and restricted stock units	7,620	6,450	5,374
Provision for bad debts	907	370	898
Loss on disposal of assets	192	451	860
Provision for excess and obsolete inventory	5,757	1,734	4,134
Deferred income tax benefit	689	(1,740)	(2,002)
Income tax benefit from exercise of stock options	0	0	(357)
(Increase) decrease in:
Accounts receivable, net	(15,995)	(6,766)	6,727
Inventories	(20,532)	(10,926)	(6,729)
Prepaid expenses and other assets	(11,310)	(253)	3,588
Increase (decrease) in:
Accounts payable and accrued liabilities	11,195	1,103	534
Income taxes payable	(3,286)	20,011	618
Net cash provided by operating activities	6,323	10,355	37,583
INVESTING ACTIVITIES:
(Purchases of) Proceeds from sale of investments	(14,000)
(Purchases of) Proceeds from sale of investments		32,000	0
Purchases of property and equipment	(11,021)	(8,970)	(7,720)
Payments for intangible assets	(1,900)	(2,377)	(1,657)
Acquisition of business, net of cash received	(27,067)	(5,596)	(27,708)
Payments to Acquire Equity Method Investments	(1,786)	0	0
Net cash (used in) provided by investing activities	(55,774)	15,057	(37,085)
FINANCING ACTIVITIES:
Payments on capital leases	(157)	(108)	(8)
Payments of contingent consideration for acquisitions	(888)	(521)	(774)
Income tax benefit from exercise of stock options	0	0	357
Proceeds from issuance of stock related to stock option exercises	20,855	3,594	674
Net cash provided by financing activities	19,810	2,965	249
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(2,536)	6,414	(1,934)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(32,177)	34,791	(1,187)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	140,960	106,169	107,356
CASH AND CASH EQUIVALENTS, END OF YEAR	108,783	140,960	106,169
Customer deposits
Increase (decrease) in:
Increase (decrease) in contract with customer, liability	513	(461)	(1,310)
Unearned service revenues
Increase (decrease) in:
Increase (decrease) in contract with customer, liability	$ 7,330	$ (1,690)	$ 273

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations. Historically, we have presented short-term investments in the fair value table presented below. As our short-term investments in the accompanying consolidated balance sheets are comprised of U.S. Treasury Bills, these investments are classified as held-to-maturity investments and are not recorded at fair value on a recurring basis in our consolidated balance sheets. As such, we have removed short-term investments from the table below.



	December 31, 2018
	Level 1		Level 2		Level 3
Liabilities:
Contingent consideration ⁽¹⁾	$	—	$	—	$	5,531
Total	$	—	$	—	$	5,531

	December 31, 2017
	Level 1		Level 2		Level 3
Liabilities:
Contingent consideration ⁽¹⁾	$	—	$	—	$	412
Total	$	—	$	—	$	412

⁽¹⁾

Contingent consideration liability represents arrangements to pay the former owners of certain companies we acquired based on the former owners attaining future product release milestones. We use a probability-weighted discounted cash flow model to estimate the fair value of contingent consideration liabilities. These probability weightings are developed internally and assessed on a quarterly basis. For the year ended December 31, 2018, we paid $0.9 million as part of these arrangements. For the year ended December 31, 2017, we paid $0.5 million as part of these arrangements. The remaining change in the fair value of the contingent consideration from December 31, 2017 to December 31, 2018 was related to various business acquisitions we made during the year ended December 31, 2018, which included Laser Controls System, Lanmark and Opto-Tech SRL and its subsidiary Open Technologies SRL (collectively, “Open Technologies”), as well as changes in foreign currency exchange rates. The undiscounted maximum payment as of December 31, 2018 under the arrangements was $6.0 million, based on certain milestones.

Business Combinations

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Business Combinations

BUSINESS COMBINATIONS

In April 2017, we completed the acquisition of substantially all of the assets of Nutfield, a component technology business located in Hudson, New Hampshire, which specializes in the design and manufacture of advanced galvanometer-based optical scanners, scan heads and laser kits, for a total purchase price of approximately $5.5 million. This acquisition supports our long-term strategy to expand our presence in key markets and improve our existing product lines with innovative technology. The results of the acquired business’ operations as of and after the date of acquisition have been included in our consolidated financial statements as of and for the years ended December 31, 2018 and December 31, 2017.

On March 9, 2018, we acquired all of the outstanding shares of Laser Control Systems, a laser component technology business located in Bedfordshire, United Kingdom, which specializes in the design and manufacture of advanced digital scan heads and laser software, for a purchase price of $1.7 million. An additional $0.7 million in contingent consideration may be earned by the former owners if certain milestones are met. This acquisition supports our Photonics vertical and our long-term strategy to expand our presence and product portfolio in Photonics applications. The results of Laser Control Systems’ operations as of and after the date of acquisition have been included in our consolidated financial statements as of and for the year ended December 31, 2018.

On March 16, 2018, we acquired all of the outstanding shares of Photocore AG, a vision-based 3D measurement application and software developer in Zurich, Switzerland, for a total purchase price of $2.4 million. This acquisition supports our Construction BIM vertical and our long-term strategy to improve our existing software offerings with innovative technology in photogrammetry. The results of PhotoCore AG’s operations as of and after the date of acquisition have been included in our consolidated financial statements as of and for the year ended December 31, 2018.

On July 6, 2018, we acquired all of the outstanding shares of Lanmark, a high-speed laser marking control boards and laser marking software provider located in Acton, Massachusetts, for a purchase price of $6.3 million. An additional $1.0 million in contingent consideration may be earned by the former owners if certain milestones are met. This acquisition supports the development of components used in new 3D laser inspection product development in order to further expand the product portfolio of our Photonics vertical. The results of Lanmark’s operations as of and after the date of acquisition have been included in our consolidated financial statements as of and for the year ended, December 31, 2018.

On July 13, 2018, we acquired all of the issued and outstanding corporate capital of Open Technologies, a 3D structured light scanning solution company located in Brescia, Italy, for an aggregate purchase price of up to €18.5 million ($21.6 million), subject to post-closing adjustments based on actual net working capital, net financial position and transaction expenses. The aggregate purchase price includes up to €4.0 million ($4.7 million) in contingent consideration that may be earned by the former owners if certain product development milestones are met. The U.S. Dollar amounts have been converted from Euros based on the foreign exchange rate in effect on the closing date of the acquisition. This acquisition supports our 3D Design vertical and our long-term strategy to establish a presence in 3D measurement technology used in other industries and applications, especially dental and medical. The results of Open Technologies’ operations as of and after the date of acquisition have been included in our consolidated financial statements as of and for the year ended, December 31, 2018.

The acquisitions of Nutfield, Laser Control Systems, Photocore AG, Lanmark and Open Technologies constitute business combinations as defined by FASB ASC Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed were recorded at their fair values on the date of acquisition. The purchase price allocation marked as “Preliminary” below is based on the information that was available to make estimates of the fair value and may change as further information becomes available and additional analyses are completed. While we believe such information provides a reasonable basis for estimating the fair values, we may obtain more information and evidence during the measurement period that result in changes to the estimated fair value amounts. The measurement period ends on the earlier of one year after the acquisition date or the date we receive the information about the facts and circumstances that existed at the acquisition date. Subsequent adjustments, if necessary, will be recognized during the period in which the amounts are determined. These refinements include: (1) changes in the estimated fair value of certain intangible assets acquired; and (2) changes in deferred tax assets and liabilities related to the fair value estimates. The purchase price allocations marked as “Final” below represent our final determination of the fair value of the assets acquired and liabilities assumed for such acquisitions.

Following is a summary of our allocations of the purchase price to the fair values of the assets acquired and liabilities assumed as of the date of each acquisition:



	Nutfield (Final)			Laser Controls Systems (Final)			Photocore AG (Final)		Lanmark (Final)			Open Technologies⁽³⁾(Preliminary)

Accounts receivable	$	160		$	—		$	—	$	610		$	2,735
Inventory	539			—			—		299			1,852
Other assets	96			—			—		76			634
Deferred income tax assets	131			—			—		—			—
Intangible assets	2,329			1,400			1,435		1,366			10,388
Goodwill ⁽¹⁾	2,357			928			1,010		5,355			9,130
Accounts payable and accrued liabilities	(12		)	—			—		(159		)	(2,926		)
Other liabilities ⁽²⁾	(104		)	(579		)	—		(971		)	(5,201		)
Deferred income tax liabilities	—			—			—		(325		)	—
Total purchase price, net of cash acquired	$	5,496		$	1,749		$	2,445	$	6,251		$	16,612


⁽¹⁾	The goodwill arising from the acquisitions consists largely of the expected synergies from combining operations as well as the value of the workforce. A portion of the goodwill is expected to be tax deductible for Nutfield.


⁽²⁾	For Laser Control Systems, Lanmark and Open Technologies, this total consists primarily of the fair value of the projected contingent consideration.


⁽³⁾	Amounts converted from Euros to U.S. Dollars based on the foreign exchange rate on the closing date of the acquisition.

Following are the details of the purchase price allocated to the intangible assets acquired for the acquisitions noted above:



	Nutfield (Final)			Laser Control Systems (Final)			Photocore AG (Final)			Lanmark (Final)			Open Technologies (Preliminary)
	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)
Trade name	$	29	1	$	—	0	$	—	0	$	—	0	$	—	0
Brand	—		0	26		1	22		1	26		1	103		1
Non-competition agreement	144		5	29		3	9		3	—		0	—		0
Technology	1,970		10	1,319		7	1,343		7	760		7	4,441		7
Customer relationships	95		10	26		10	61		10	580		10	5,844		10
Favorable in-place lease	91		12	—		0	—		0	—		0	—		0
Fair value of intangible assets acquired	$	2,329	10	$	1,400	7	$	1,435	7	$	1,366	8	$	10,388	8

The goodwill for the Nutfield, Laser Control Systems, Lanmark and Open Technologies acquisitions has been allocated to the Emerging Verticals reporting segment. The goodwill for the Photocore AG acquisition has been allocated to the Construction BIM reporting segment.

Acquisition and integration costs are not included as components of consideration transferred, but are recorded as expense in the period in which such costs are incurred. To date, we have incurred approximately $0.9 million in acquisition and integration costs for the Nutfield, Laser Control Systems, Photocore AG, Lanmark and Open Technologies acquisitions. Pro forma financial results for Nutfield, Laser Control Systems, Photocore AG, Lanmark, and Open Technologies have not been presented because the effects of these transactions, individually and in the aggregate, were not material to our consolidated results of operations.

Allowance for Doubtful Accounts (Tables)

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Allowance for Doubtful Accounts Roll Forward

Activity in the allowance for doubtful accounts was as follows:



	Years ended December 31,
	2018			2017			2016
Balance, beginning of year	$	1,957		$	1,829		$	1,417
Provision (net of recovery)	907			370			898
Amounts written off, net of recoveries	(1,116		)	(242		)	(486		)
Balance, end of year	$	1,748		$	1,957		$	1,829

Fair Value Measurements

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring fair value, and requires enhanced disclosures about assets and liabilities measured at fair value. Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are used to determine fair value. These models employ valuation techniques that involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Assets and liabilities recorded at fair value on a recurring basis in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by the guidance on fair value measurements, are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and are as follows:

Level 1 - Valuation is based upon quoted market price for identical instruments traded in active markets.

Level 2 - Valuation is based on quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market. Valuation techniques include use of discounted cash flow models and similar techniques.

Fair Value on a Recurring Basis



	December 31, 2018
	Level 1		Level 2		Level 3
Liabilities:
Contingent consideration ⁽¹⁾	$	—	$	—	$	5,531
Total	$	—	$	—	$	5,531

	December 31, 2017
	Level 1		Level 2		Level 3
Liabilities:
Contingent consideration ⁽¹⁾	$	—	$	—	$	412
Total	$	—	$	—	$	412

⁽¹⁾

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Segment Reporting

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

We have three reporting segments: 3D Manufacturing, Construction BIM, and Emerging Verticals. These segments are based upon the vertical markets that we currently serve. Business activities that do not meet the criteria to be reporting segments are aggregated in the Emerging Verticals category.

We develop, manufacture, market, support and sell CAD-based quality assurance products integrated with CAD-based inspection and statistical process control software and 3D documentation systems in each of these reporting segments. These activities represent more than 99% of consolidated sales.

Our Chief Operating Decision Maker (CODM), our Chief Executive Officer, evaluates segment performance and allocates resources based upon profitable growth. We use segment profit to evaluate the performance of our reporting segments. Segment profit is calculated as gross profit, net of selling and marketing expenses, for the reporting segment. Our definition of segment profit may not be comparable to similarly-titled measures reported by other companies.

Our segment structure presented below represents a change from the prior year as further described in Note 1 “Summary of Significant Accounting Policies”. The amounts related to our reporting segment information for the year ended December 31, 2017 have been restated throughout this Annual Report on Form 10-K to reflect such changes in our reporting segments. The amounts related to our reporting segment information for the year ended December 31, 2016 were restated but were not impacted by such changes in our reporting segments. Each of our reporting segments continue to employ consistent accounting policies.

The following tables present information about our reporting segments, including a reconciliation of total segment profit to income (loss) from continuing operations included in the consolidated statements of operations for the years ended 2018, 2017, and 2016:



	3D Manufacturing		Construction BIM		Emerging Verticals		Total
2018
Total sales to external customers	$	264,430	$	96,185	$	43,012	$	403,627
Segment profit	$	80,775	$	27,513	$	3,137	$	111,425

General and administrative							47,652
Depreciation and amortization							18,313
Research and development							39,706
Income from operations							$	5,754



	3D Manufacturing		Construction BIM		Emerging Verticals		Total
2017
Total sales to external customers	$	243,464	$	86,349	$	31,104	$	360,917
Segment profit	$	77,537	$	21,077	$	2,479	$	101,093

General and administrative							43,807
Depreciation and amortization							16,588
Research and development							35,376
Income from operations							$	5,322



	3D Manufacturing		Construction BIM		Emerging Verticals		Total
2016
Total sales to external customers	$	236,313	$	65,056	$	24,215	$	325,584
Segment profit	$	73,656	$	14,799	$	9,635	$	98,090

General and administrative							40,813
Depreciation and amortization							13,868
Research and development							30,125
Income from operations							$	13,284

Total sales to external customers is based upon the geographic location of the customer.



	For the Years Ended December 31,
	2018		2017		2016
Total sales to external customers
United States	$	156,242	$	141,595	$	133,924
Americas-Other	15,086		13,531		11,815
Germany	53,251		49,860		44,041
Europe-Other	74,010		65,201		57,710
Japan	37,607		35,270		32,530
Asia-Other	67,431		55,460		45,564
	$	403,627	$	360,917	$	325,584

Long-lived assets consist primarily of property, plant, and equipment, goodwill, and intangible assets, and are attributed to the geographic area in which they are located or originated, as applicable.



	As of December 31,
	2018		2017		2016
Long-Lived Assets
United States	$	61,557	$	54,703	$	54,157
Americas-Other	10,702		13,834		13,486
Germany	30,154		26,611		23,734
Europe-Other	24,935		9,124		6,949
Japan	1,039		558		460
Asia-Other	2,358		2,246		1,915
	$	130,745	$	107,076	$	100,701

Accrued Liabilities

12 Months Ended

Dec. 31, 2018

Payables and Accruals [Abstract]

Accrued Liabilities

ACCRUED LIABILITIES

Accrued liabilities consist of the following:



	As of December 31,
	2018		2017
Accrued compensation and benefits	$	17,745	$	16,144
Accrued warranties	2,571		2,628
Professional and legal fees	2,154		1,541
Taxes other than income	3,550		3,787
General services administration contract contingent liability (see Note 13)	5,267		—
Other accrued liabilities	5,040		3,262
	$	36,327	$	27,362

Activity related to accrued warranties was as follows:



	Years ended December 31,
	2018			2017			2016
Balance, beginning of year	$	2,628		$	2,594		$	2,309
Provision for warranty expense	4,096			4,045			3,544
Fulfillment of warranty obligations	(4,153		)	(4,011		)	(3,259		)
Balance, end of year	$	2,571		$	2,628		$	2,594

Earnings (Loss) Per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding. Diluted earnings per share is computed by also considering the impact of potential common stock on both net income and the weighted average number of shares outstanding. Our potential common stock consists of employee stock options, restricted stock, restricted stock units and performance-based awards. Our potential common stock is excluded from the basic earnings per share calculation and is included in the diluted earnings per share calculation when doing so would not be anti-dilutive. Performance-based awards are included in the computation of diluted earnings per share only to the extent that the underlying performance conditions (and any applicable market condition) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. When we report a net loss for the period presented, the diluted loss per share calculation does not include our potential common stock, as the inclusion of these shares in the calculation would have an anti-dilutive effect. A reconciliation of the number of common shares used in the calculation of basic and diluted earnings (loss) per share is presented below:



	Years Ended December 31,
	2018				2017				2016
	Shares		Per-Share Amount		Shares	Per-Share Amount			Shares	Per-Share Amount
Basic earnings (loss) per share	17,043,167		$	0.29	16,711,534	$	(0.87	)	16,654,786	$	0.67
Effect of dilutive securities	305,289		—		—	—			26,924	—
Diluted earnings (loss) per share	17,348,456	—	$	0.29	16,711,534	$	(0.87	)	16,681,710	$	0.67
Securities excluded from the determination of weighted average shares for the calculation of diluted earnings (loss) per share, as they were potentially antidilutive	393,970				1,049,563				1,046,947

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
SALES
Sales	$ 403,627	$ 360,917	$ 325,584
COST OF SALES
Cost of sales (exclusive of depreciation and amortization, shown separately below)	175,282	156,280	147,624
GROSS PROFIT	228,345	204,637	177,960
OPERATING EXPENSES
Selling and marketing	116,920	103,544	79,870
General and administrative	47,652	43,807	40,813
Depreciation and amortization	18,313	16,588	13,868
Research and development	39,706	35,376	30,125
Total operating expenses	222,591	199,315	164,676
INCOME FROM OPERATIONS	5,754	5,322	13,284
OTHER EXPENSE (INCOME)
Interest income	(429)	(319)	(212)
Other expense (income), net	1,139	(190)	822
Interest expense	486	4	48
INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE	4,558	5,827	12,626
INCOME TAX (BENEFIT) EXPENSE	(372)	20,343	1,519
NET INCOME (LOSS)	$ 4,930	$ (14,516)	$ 11,107
NET (LOSS) INCOME PER SHARE - BASIC (in dollars per share)	$ 0.29	$ (0.87)	$ 0.67
NET (LOSS) INCOME PER SHARE - DILUTED (in dollars per share)	$ 0.29	$ (0.87)	$ 0.67
Weighted average shares - Basic (in shares)	17,043,167	16,711,534	16,654,786
Weighted average shares - Diluted (in shares)	17,348,456	16,711,534	16,681,710
Product
SALES
Sales	$ 311,102	$ 277,922	$ 256,010
COST OF SALES
Cost of sales (exclusive of depreciation and amortization, shown separately below)	124,802	110,143	107,965
Service
SALES
Sales	92,525	82,995	69,574
COST OF SALES
Cost of sales (exclusive of depreciation and amortization, shown separately below)	$ 50,480	$ 46,137	$ 39,659

Goodwill - Changes in Goodwill by Reporting Units (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Goodwill [Roll Forward]
Beginning Balance	$ 52,750	$ 46,744
Additions	16,423	2,412
Foreign Currency Translation	(1,899)	3,594
Ending Balance	67,274	52,750
3D Manufacturing
Goodwill [Roll Forward]
Beginning Balance	40,802	37,861
Additions	0	0
Foreign Currency Translation	(1,316)	2,941
Ending Balance	39,486	40,802
Construction BIM
Goodwill [Roll Forward]
Beginning Balance	6,521	6,078
Additions	1,010	0
Foreign Currency Translation	(226)	443
Ending Balance	7,305	6,521
Public Safety Forensics
Goodwill [Roll Forward]
Beginning Balance	3,070	2,805
Additions	0	55
Foreign Currency Translation	(107)	210
Ending Balance	2,963	3,070
3D Design
Goodwill [Roll Forward]
Beginning Balance	0	0
Additions	9,130	0
Foreign Currency Translation	(180)	0
Ending Balance	8,950	0
Photonics
Goodwill [Roll Forward]
Beginning Balance	2,357	0
Additions	6,283	2,357
Foreign Currency Translation	(70)	0
Ending Balance	$ 8,570	$ 2,357

Stock Compensation Plans - Assumptions Used to Estimate The Fair Value of The Performance-based Stock Options and Restricted Stock Units (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Option, Quantitative Disclosures [Line Items]
Expected volatility	45.00%	45.20%
Employee Stock Option
Fair Value, Option, Quantitative Disclosures [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	2.65%
Risk-free interest rate, minimum		1.88%	1.06%
Risk-free interest rate, maximum		2.02%	1.57%
Expected dividend yield	0.00%	0.00%	0.00%
Expected option life	4 years	5 years	4 years
Weighted-average expected volatility	45.00%	45.20%	46.10%
Performance Shares
Fair Value, Option, Quantitative Disclosures [Line Items]
Risk-free interest rate, minimum			0.95%
Risk-free interest rate, maximum			1.48%

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Taxes [Line Items]
Tax cuts and jobs act of 2017, incomplete accounting, change in tax rate, deferred tax asset, provisional income tax expense		$ 19,400
Tax cuts and jobs act of 2017, incomplete accounting, transition tax for accumulated foreign earnings, provisional income tax expense		17,400	$ 17,400
Income tax expense (benefit)	$ 1,000		(372)	$ 20,343	$ 1,519
Decrease in deferred income taxes	1,800		689	(1,740)	(2,002)
Tax Cuts And Jobs Act of 2017, Incomplete Accounting, Change in Tax Rate, Provisional Income Tax Expense (Benefit)		(2,000)	(2,000)
Deferred income tax assets, domestic	7,200	7,700	7,200	7,700
Deferred income tax assets, foreign	6,500	7,900	6,500	7,900
Deferred Tax Assets, Valuation Allowance	$ 1,924	$ 1,631	1,924	1,631
Net increase (decrease) in total valuation allowance			$ (300)	$ (700)	$ 100
Minimum
Income Taxes [Line Items]
Deferred income tax assets, operating loss carryforwards expiration period			1 year
Tax returns examination statute of limitations period			3 years
Maximum
Income Taxes [Line Items]
Deferred income tax assets, operating loss carryforwards expiration period			9 years
Tax returns examination statute of limitations period			4 years

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income (loss) before income tax (benefit) expense consists of the following:



	Years ended December 31,
	2018			2017		2016
Domestic	$	(1,723	)	$	2,468	$	(1,527	)
Foreign	6,281			3,359		14,153
Income before income taxes	$	4,558		$	5,827	$	12,626

The components of the income tax (benefit) expense for income taxes are as follows:



	Years ended December 31,
	2018			2017			2016
Current:
Federal	$	(1,694	)	$	18,951		$	409
State	120			507			40
Foreign	1,394			2,072			3,482
Current income tax (benefit) expense	(180		)	21,530			3,931
Deferred:
Federal	(486		)	1,038			(2,357		)
State	(153		)	(580		)	(229		)
Foreign	447			(1,645		)	174
Deferred income tax benefit	(192		)	(1,187		)	(2,412		)
Income tax (benefit) expense	$	(372	)	$	20,343		$	1,519

Reconciliations of the income tax expense at the U.S. federal statutory income tax rate compared to our actual income tax (benefit) expense are summarized below:



	Years ended December 31,
	2018			2017			2016
Tax expense at statutory rate	$	956		$	1,981		$	4,427
State income taxes, net of federal benefit	(195		)	81			(50		)
Foreign tax rate difference	(1,003		)	(2,057		)	(1,939		)
Research and development credit	(919		)	(1,037		)	(917		)
Change in valuation allowance	464			678			162
Equity based compensation	(198		)	33			(255		)
Manufacturing credit	—			(191		)	(61		)
Permanent impact of non-deductible cost	1,120			766			412
Provision to return adjustments	345			777			(61		)
Impact of Tax Cuts and Jobs Act of 2017	(1,000		)	19,355			—
Other	58			(43		)	(199		)
Income tax (benefit) expense	$	(372	)	$	20,343		$	1,519

The components of our net deferred income tax asset and liabilities are as follows:



	As of December 31,
	2018			2017
Net deferred income tax asset - Non-current
Warranty cost	$	533		$	695
Inventory reserve	1,559			419
Unearned service revenue	6,684			5,364
Employee stock options	4,222			4,366
Tax Credits	485			1,785
Loss carryforwards	7,038			8,782
Other, net	759			1,479
Total deferred tax assets	21,280			22,890
Valuation Allowance	(1,924		)	(1,631		)
Total deferred tax assets net of valuation allowance	19,356			21,259
Net deferred income tax liability - Non-current
Bad debt reserve	(116		)	(2		)
Depreciation	(2,996		)	(3,675		)
Goodwill	(1,612		)	(1,574		)
Intangible assets	(649		)	(1,097		)
Total deferred tax liabilities	(5,373		)	(6,348		)
Net deferred tax assets	$	13,983		$	14,911

On December 22, 2017, the United States enacted the U.S. Tax Cuts and Jobs Act of 2017 (the “U.S. Tax Reform”), resulting in significant modifications to existing law. Under the U.S. Tax Reform, changes include lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory tax on accumulated earnings in foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to United States taxation. The statutory corporate tax rate reduction is effective for tax years beginning on or after January 1, 2018. In accordance with the U.S. Tax Reform, we recorded a provisional amount of $19.4 million of additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The portion of this $19.4 million provisional amount that related to the transition tax on the mandatory deemed repatriation of foreign earnings was $17.4 million based on our best estimate and guidance available at that time. The portion of the $19.4 million that related to the remeasurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $2.0 million at that time. Securities and Exchange Commission Staff Accounting Bulletin 118 (“SAB 118”) was issued and provided additional clarification regarding the application of FASB ASC Topic 740 if a company did not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the U.S. Tax Reform. December 22, 2018 marked the end of the measurement period for SAB 118. As additional guidance was released during the SAB 118 remeasurement period, we completed our transition tax analysis, which resulted in an income tax benefit of $1.0 million and a $1.8 million decrease of our deferred tax assets recorded in the fourth quarter of 2018 related to adjustments to the transition tax on mandatory deemed repatriation of foreign earnings.

Our domestic entities had deferred income tax assets in the amount of $7.2 million and $7.7 million as of December 31, 2018 and December 31, 2017, respectively. At December 31, 2018 and 2017, our foreign subsidiaries had deferred tax assets primarily relating to net operating losses of $6.5 million and $7.9 million, respectively, some of which expire in the next 1 to 9 years and others which can be carried forward indefinitely. The valuation allowance for deferred tax assets as of December 31, 2018 and 2017 was $1.9 million and $1.6 million, respectively. The net change in the total valuation allowance for each of the years ended December 31, 2018, 2017 and 2016 was a $0.3 million, a $0.7 million and a $0.1 million increase, respectively.

The valuation allowance as of December 31, 2018 and 2017 was primarily related to foreign net operating loss carryforwards that, in the judgment of management, were not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected taxable income, and tax-planning strategies in making this assessment.

Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of a global business, there are many transactions for which the ultimate tax outcome is uncertain. We review our tax contingencies on a regular basis and make appropriate accruals as necessary.

We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The table below summarizes the open tax years and ongoing tax examinations in major jurisdictions as of December 31, 2018:



Jurisdiction	Open Years	Examination in Process
United States - Federal Income Tax	2015-2018	N/A
United States - various states	2014-2018	N/A
Germany	2014-2018	N/A
Switzerland	2018	N/A
Singapore	2014-2018	N/A

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is not material. We do not currently anticipate that the total amount of unrecognized tax benefits will result in material changes to our financial position. We are subject to income taxes at the federal, state and foreign country level. Our tax returns are subject to examination at the U.S. federal level from 2015 forward and at the state level are subject to a three to four year statute of limitations depending on the state.

Intangible Assets - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 5.4	$ 4.5	$ 2.9

Quarterly Result of Operations (Unaudited)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly Result of Operations (Unaudited)

QUARTERLY RESULT OF OPERATIONS (UNAUDITED)



Quarter ended	March 31, 2018		June 30, 2018		September 30, 2018			December 31, 2018
Sales⁽¹⁾	$	92,834	$	98,244	$	99,705		$	112,844
Gross profit⁽²⁾	53,786		57,691		52,317			64,551
Net income (loss)⁽³⁾	455		1,205		(2,488		)	5,758
Net income (loss) per share:
Basic	$	0.03	$	0.07	$	(0.15	)	$	0.33
Diluted	$	0.03	$	0.07	$	(0.15	)	$	0.33


⁽¹⁾	For the fourth quarter of 2018, sales were reduced by a $4.8 million estimated cumulative sales adjustment, representative of the last six years of estimated overcharges to the Government under the GSA Contracts.


⁽²⁾	For the third quarter of 2018, gross profit was reduced by a $4.7 million inventory reserve charge resulting from an analysis of our inventory reserves in connection with our new product introductions and acquisitions, which increased our reserve for excess and obsolete inventory.


⁽³⁾	For the fourth quarter of 2018, as additional guidance was released during the SAB 118 remeasurement period related to the U.S. Tax Reform, we completed our transition tax analysis, which resulted in an income tax benefit of $1.0 million.



Quarter ended	March 31, 2017			June 30, 2017			September 30, 2017		December 31, 2017
Sales	$	81,562		$	82,682		$	90,250	$	106,423
Gross profit	43,749			46,760			52,034		62,094
Net (loss) income⁽¹⁾	(1,461		)	(3,625		)	1,628		(11,058		)
Net (loss) income per share:
Basic	$	(0.09	)	$	(0.22	)	$	0.10	$	(0.66	)
Diluted	$	(0.09	)	$	(0.22	)	$	0.10	$	(0.66	)

⁽¹⁾

Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2018

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

SUPPLEMENTAL CASH FLOW INFORMATION

Selected cash payments and non-cash activities were as follows:



	Years ended December 31,
	2018		2017		2016
Supplemental cash flow information:
Cash paid for interest	$	4	$	9	$	28
Cash paid for income taxes	$	5,813	$	2,488	$	2,576
Supplemental noncash investing and financing activities:
Transfer of service and sales demonstration inventory to fixed assets	$	964	$	2,844	$	511

Allowance for Doubtful Accounts

12 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Allowance for Doubtful Accounts

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Activity in the allowance for doubtful accounts was as follows:



	Years ended December 31,
	2018			2017			2016
Balance, beginning of year	$	1,957		$	1,829		$	1,417
Provision (net of recovery)	907			370			898
Amounts written off, net of recoveries	(1,116		)	(242		)	(486		)
Balance, end of year	$	1,748		$	1,957		$	1,829

Intangible Assets - Schedule (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets, carrying Value	$ 61,955	$ 46,739
Amortizable intangible assets, accumulated Amortization	28,901	24,199
Amortizable intangible assets, net Intangible	33,054	22,540
Product technology
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets, carrying Value	26,588	19,459
Amortizable intangible assets, accumulated Amortization	12,332	10,885
Amortizable intangible assets, net Intangible	14,256	8,574
Patents and trademarks
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets, carrying Value	14,647	13,948
Amortizable intangible assets, accumulated Amortization	6,601	5,720
Amortizable intangible assets, net Intangible	8,046	8,228
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets, carrying Value	12,027	5,889
Amortizable intangible assets, accumulated Amortization	2,588	1,685
Amortizable intangible assets, net Intangible	9,439	4,204
Other
Finite-Lived Intangible Assets [Line Items]
Amortizable intangible assets, carrying Value	8,693	7,443
Amortizable intangible assets, accumulated Amortization	7,380	5,909
Amortizable intangible assets, net Intangible	$ 1,313	$ 1,534

Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Schedule of Reportable Segment Information



	3D Manufacturing		Construction BIM		Emerging Verticals		Total
2018
Total sales to external customers	$	264,430	$	96,185	$	43,012	$	403,627
Segment profit	$	80,775	$	27,513	$	3,137	$	111,425

General and administrative							47,652
Depreciation and amortization							18,313
Research and development							39,706
Income from operations							$	5,754



	3D Manufacturing		Construction BIM		Emerging Verticals		Total
2017
Total sales to external customers	$	243,464	$	86,349	$	31,104	$	360,917
Segment profit	$	77,537	$	21,077	$	2,479	$	101,093

General and administrative							43,807
Depreciation and amortization							16,588
Research and development							35,376
Income from operations							$	5,322



	3D Manufacturing		Construction BIM		Emerging Verticals		Total
2016
Total sales to external customers	$	236,313	$	65,056	$	24,215	$	325,584
Segment profit	$	73,656	$	14,799	$	9,635	$	98,090

General and administrative							40,813
Depreciation and amortization							13,868
Research and development							30,125
Income from operations							$	13,284

Schedule of Net Sales to External Customers Based Upon Geographic Location

Total sales to external customers is based upon the geographic location of the customer.



	For the Years Ended December 31,
	2018		2017		2016
Total sales to external customers
United States	$	156,242	$	141,595	$	133,924
Americas-Other	15,086		13,531		11,815
Germany	53,251		49,860		44,041
Europe-Other	74,010		65,201		57,710
Japan	37,607		35,270		32,530
Asia-Other	67,431		55,460		45,564
	$	403,627	$	360,917	$	325,584

Schedule of Long Lived Assets Attributed to Geographic Area



	As of December 31,
	2018		2017		2016
Long-Lived Assets
United States	$	61,557	$	54,703	$	54,157
Americas-Other	10,702		13,834		13,486
Germany	30,154		26,611		23,734
Europe-Other	24,935		9,124		6,949
Japan	1,039		558		460
Asia-Other	2,358		2,246		1,915
	$	130,745	$	107,076	$	100,701

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Reportable Segments Policy

In 2016, we evaluated our reporting segment structure based on our new management organization and the changes implemented in connection with our initiatives to reorganize our business around certain vertical markets. We report our segment information in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting (“FASB ASC Topic 280”). We evaluate business performance based upon several metrics, using revenue growth and segment profit as the primary financial measures. During 2018, the following changes were made to our verticals and reporting segments:

•


•	In the first quarter of 2018, we renamed our Construction BIM-CIM vertical and reporting segment “Construction BIM.”


•	In the first quarter of 2018, we renamed our Other reporting segment “Emerging Verticals.”


•	In the third quarter of 2018, we merged the historical Factory Metrology and 3D Machine Vision verticals into one vertical named “3D Factory” for greater consistency with our realigned reporting segments.

•


•	In the third quarter of 2018, we renamed our Product Design vertical “3D Design.”


•	In the fourth quarter of 2018, we renamed our 3D Factory vertical and reporting segment “3D Manufacturing.”

•

See Note 18, “Segment Reporting” for further information.

Principles of Consolidation Policy

Our consolidated financial statements include the accounts of FARO Technologies, Inc. and its subsidiaries, all of which are wholly owned. All intercompany transactions and balances have been eliminated.

Foreign Currency Translations Policy

The financial statements of our foreign subsidiaries are translated into U.S. dollars using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from financial statement translations are reflected as a separate component of accumulated other comprehensive loss. Foreign currency transaction gains and losses are included in net income (loss).

Revenue Recognition, Product Warranty and Extended Warranty Contracts Policy

Fees billed to customers associated with the distribution of products are classified as revenue. We warrant our products against defects in design, materials and workmanship for one year. A provision for estimated future costs relating to warranty expense is recorded when products are shipped. We separately sell extended warranties. Extended warranty revenues are recognized on a straight-line basis over the term of the warranty. Costs relating to extended warranties are recognized as incurred. Revenue from sales of software only is recognized when no further significant production, modification or customization of the software is required and when the risks and rewards of ownership have passed to the customer. These software arrangements generally include short-term maintenance that is considered post-contract support (“PCS”), which is considered to be a separate performance obligation. We generally establish standalone sales price for this PCS component based on our maintenance renewal rate. Maintenance renewals, when sold, are recognized on a straight-line basis over the term of the maintenance agreement. Revenues resulting from sales of comprehensive support, training and technology consulting services are recognized as such services are performed and are deferred when billed in advance of the performance of services. Payment for products and services is collected within a short period of time following transfer of control or commencement of delivery of services, as applicable. Revenues are presented net of sales-related taxes.

Cash and Cash Equivalents Policy

We consider cash on hand and amounts on deposit with financial institutions with maturities of three months or less when purchased to be cash and cash equivalents.

Accounts Receivable and Related Allowance for Doubtful Accounts Policy

Credit is extended to customers based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are generally due within 30 to 90 days and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We make judgments as to the collectability of accounts receivable based on historical trends and future expectations. Management estimates an allowance for doubtful accounts, which adjusts gross trade accounts receivable to their net realizable value. The allowance for doubtful accounts is based on an analysis of all receivables for possible impairment issues and historical write-off percentages. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. We do not generally charge interest on past due receivables.

Inventories Policy

Inventories are stated at the lower of cost or net realizable value using the first-in first-out (“FIFO”) method. Shipping and handling costs are classified as a component of cost of sales in the consolidated statements of operations. Sales demonstration inventory is comprised of measuring and imaging devices utilized by sales representatives to present our products to customers. Management expects sales demonstration inventory to be held by our sales representatives for up to three years, at which time it is refurbished and transferred to finished goods as used equipment, stated at the lower of cost or net realizable value. Management expects these refurbished units to remain in finished goods inventory and be sold within 12 months at prices that produce reduced gross margins. Sales demonstration inventory remains classified as inventory, as it is available for sale and any required refurbishment prior to sale is minimal.Service inventory is typically used to provide a temporary replacement product to a customer covered by a premium warranty when the customer’s unit requires service or repair and as training equipment. Service inventory is available for sale; however, management does not expect service inventory to be sold within 12 months and, as such, classifies this inventory as a long-term asset. Service inventory that we utilize for training or repairs which we deem as no longer available for sale is transferred to fixed assets at the lower of cost or net realizable value and depreciated over its remaining useful life, typically three years.

Reserve for Excess and Obsolete Inventory Policy

Since the value of inventory that will ultimately be realized cannot be known with exact certainty, we rely upon both past sales history and future sales forecasts to provide a basis for the determination of the reserve. Inventory is considered potentially obsolete if we have withdrawn those products from the market or had no sales of the product for the past 12 months and have no sales forecasted for the next 12 months. Inventory is considered potentially excess if the quantity on hand exceeds 12 months of expected remaining usage. The resulting potentially obsolete and excess parts are then reviewed to determine if a substitute usage or a future need exists. Items without an identified current or future usage are reserved in an amount equal to 100% of the FIFO cost of such inventory. Our products are subject to changes in technologies that may make certain of our products or their components obsolete or less competitive, which may increase our historical provisions to the reserve.

Property and Equipment Policy

Property and equipment purchases exceeding a thousand dollars are capitalized and recorded at cost. Depreciation is computed beginning on the date that the asset is placed into service using the straight-line method over the estimated useful lives of the various classes of assets as follows:



Machinery, equipment and software	2 to 5 years
Furniture and fixtures	3 to 10 years

Leasehold improvements are amortized on a straight-line basis over the lesser of the life of the asset or the remaining term of the lease.

Business Combinations Policy

We allocate the fair value of purchase consideration to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth rates and margins, customer attrition rates, future changes in technology and brand awareness, loyalty and position, and discount rates. Critical estimates are also made in valuing earn-outs, which represent arrangements to pay former owners based on the satisfaction of performance criteria. Fair value estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

Goodwill and Intangible Assets Policy

Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. We do not amortize goodwill; however, we perform an annual review each year, or more frequently if indicators of potential impairment exist, to determine if the carrying value of the recorded goodwill or indefinite lived intangible assets is impaired. We evaluate goodwill for impairment annually as of October 1, or when an indicator of impairment exists. If an asset is impaired, the difference between the carrying value of the asset reflected in the financial statements and its current fair value is recognized as an expense in the period in which the impairment occurs. See Note 7, “Goodwill” and Note 8, “Intangible Assets” for further information regarding goodwill and intangible assets, respectively.

Product technology and patents are recorded at cost. Amortization expense is computed using the straight-line method over the lives of the product technology and patents of 7 to 20 years.

The remaining weighted-average amortization period for all our intangible assets is eight years.

Long-Lived Assets Policy

Long-lived assets, other than goodwill, are evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of an asset group may not be fully recoverable, comparing projected undiscounted future cash flows to the carrying value of the asset group.

Research and Development Policy

Research and development costs incurred in the discovery of new knowledge and the resulting translation of this new knowledge into plans and designs for new products prior to the attainment of the related products’ technological feasibility are recorded as expenses in the period incurred.

Reserve for Warranties Policy

We establish at the time of sale a liability for the one-year warranty included with the initial purchase price of our products, based upon an estimate of the repair expenses likely to be incurred for the warranty period. The warranty period is measured in installation-months for each major product group. The warranty reserve is included in accrued liabilities in the accompanying consolidated balance sheets. The warranty expense is estimated by applying the actual total repair expenses for each product group in the prior period and determining a rate of repair expense per installation-month. This repair rate is multiplied by the number of installation-months of warranty for each product group to determine the provision for warranty expenses for the period. We evaluate our exposure to warranty costs at the end of each period using the estimated expense per installation-month for each major product group, the number of units remaining under warranty, and the remaining number of months each unit will be under warranty. We have a history of new product introductions and enhancements to existing products, which may result in unforeseen issues that increase our warranty costs. While such expenses have historically been within expectations, we cannot guarantee this will continue in the future.

Income Taxes Policy

We review our deferred tax assets on a regular basis to evaluate their recoverability based upon expected future reversals of deferred tax assets and liabilities, projections of future taxable income, and tax planning strategies that we might employ to utilize such assets, including net operating loss carryforwards. Based on the positive and negative evidence for recoverability, we establish a valuation allowance against the net deferred tax assets of a taxing jurisdiction in which we operate unless it is “more likely than not” that we will recover such assets through the above means. Our evaluation of the need for the valuation allowance is significantly influenced by our ability to maintain profitability and our ability to predict and achieve future projections of taxable income.

(Loss) Earnings Per Share Policy

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding. Diluted earnings per share is computed by also considering the impact of potential common stock on both net income and the weighted average number of shares outstanding. Our potential common stock consists of employee stock options, restricted stock, restricted stock units and performance-based awards. Our potential common stock is excluded from the basic earnings per share calculation and is included in the diluted earnings per share calculation when doing so would not be anti-dilutive. Performance-based awards are included in the computation of diluted earnings per share only to the extent that the underlying performance conditions (and any applicable market condition) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. When we report a loss for the period presented, the diluted loss per share calculation does not include our potential common stock, as the inclusion of these shares in the calculation would have an anti-dilutive effect. A reconciliation of the number of common shares used in the calculation of basic and diluted EPS is presented in Note 15, “Earnings (Loss) Per Share.”

Accounting for Stock-Based Compensation Policy

We measure and record compensation expense using the applicable accounting guidance for share-based payments related to stock options, restricted stock, and performance-based awards granted to our directors and employees. The fair value of stock options, including performance awards, without a market condition is estimated, at the date of grant, using the Black-Scholes option-pricing model. The fair value of restricted stock awards and stock options with a market condition is estimated, at the date of grant, using the Monte Carlo Simulation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate and dividend yield. In valuing our stock options, significant judgment is required in determining the expected volatility of our common stock and the expected life that individuals will hold their stock options prior to exercising. Expected volatility for stock options is based on the historical and implied volatility of our own common stock while the volatility for our restricted stock units with a market condition is based on the historical volatility of our own stock and the stock of companies within our defined peer group. The expected life of stock options is derived from the historical actual term of option grants and an estimate of future exercises during the remaining contractual period of the option. While volatility and estimated life are assumptions that do not bear the risk of change subsequent to the grant date of stock options, these assumptions may be difficult to measure as they represent future expectations based on historical experience. Further, our expected volatility and expected life may change in the future, which could substantially change the grant-date fair value of future awards of stock options and, ultimately, the expense we record. The fair value of restricted stock, including performance awards, without a market condition is estimated using the current market price of our common stock on the date of grant. We expense stock-based compensation for stock options, restricted stock awards, and performance awards over the requisite service period. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with both performance and service conditions, we expense the stock-based compensation on a straight-line basis over the requisite service period for each separately vesting portion of the award, taking into account the probability that we will satisfy the performance conditions. Furthermore, we expense awards with a market condition over the three-year vesting period regardless of the value that the award recipients ultimately receive. All tax-related cash flows resulting from share-based payments are reported as operating activities in the statement of cash flows in the deferred income tax benefit line item. We elect to account for forfeitures related to the service condition-based awards as they occur.

Concentration of Credit Risk Policy

Financial instruments that expose us to concentrations of credit risk consist principally of short-term investments and operating demand deposit accounts. Our policy is to place our operating demand deposit accounts with high credit quality financial institutions, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and believe we are not exposed to any significant credit risk on our operating demand deposit accounts.

Estimates Policy

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Impact of Recently Issued Accounting Standards Policy

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”) in order to clarify the definition of a business and provide additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. FASB ASC Topic 805 recognized three elements of a business: inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. Additionally, all the inputs and processes that a seller used in operating a set were not required if market participants could acquire the set and continue to produce outputs. ASU 2017-01 provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the new guidance (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace missing elements. The new guidance provides a framework to assist entities in evaluating whether both an input and a substantive process are present. This framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business. ASU 2017-01 provides more stringent criteria for sets without outputs and more narrowly defines the term output. ASU 2017-01 became effective for us on January 1, 2018 and was applied prospectively. Our adoption of the new guidance did not have a material impact on our consolidated financial statements.

Reclassifications Policy

Certain prior year amounts have been reclassified in the accompanying consolidated financial statements to conform to the current period presentation:

•

Certain reclassifications were made between reporting segments for segment profit during the year ended December 31, 2016 in Note 18, “Segment Reporting” as a result of changes to our methodology for allocating manufacturing variances to our segments. These reclassifications only impacted our segment reporting footnote disclosure.

Goodwill - Additional Information (Details)	12 Months Ended
Goodwill - Additional Information (Details)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) segment
Goodwill and Intangible Assets Disclosure [Abstract]
Number of operating segments \| segment		5
Goodwill impairment loss \| $	$ 0	$ 0

Subsequent Events

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

On January 9, 2019, we entered into a letter agreement (the “Letter Agreement”) with Dr. Simon Raab, setting forth the terms of Dr. Raab’s retirement as our President and Chief Executive Officer and as a member of our Board of Directors. Dr. Raab will continue as our President and Chief Executive Officer and will remain on the Board of Directors until his successor is appointed. The Letter Agreement provides for the following compensation arrangements with Dr. Raab as an incentive to retain his services through the transition period:


•	Base salary - Dr. Raab’s base salary of $775,000 will continue until his retirement date.

•

Short-term incentive plan - Dr. Raab will be eligible to participate in our short-term incentive plan for 2019 with a target payout of 100% of his base salary conditioned upon our achievement of the 2019 financial targets approved by our Compensation Committee. In the event Dr. Raab’s retirement occurs prior to the end of 2019, he will be eligible to receive this incentive without pro ration. The payout to Dr. Raab under our short-term incentive plan could range from 0% to 200% of his base salary depending upon our achievement of our 2019 financial targets.

•

Long-term incentives - In lieu of an annual grant of stock options and in consideration for Dr. Raab’s commitment to provide transition assistance to his successor for a period of six months following his retirement date, on January 9, 2019, Dr. Raab received a grant of 24,606 restricted stock units, which will vest six months following his retirement date. In addition, all of Dr. Raab’s outstanding unvested stock options will fully vest as of his retirement date, and he will be permitted to exercise such options over the full term of each option grant.

On January 29, 2019, we entered into a Second Amendment to Amended and Restated Lease Agreement (the “Second Amendment”) with Emma Investments, LLC (“Landlord”) with respect to our facility located at 125 Technology Park, Lake Mary, Florida (the “Building”). Pursuant to the Second Amendment, we have agreed to, among other items, extend the initial term of the lease for the approximately 35,000 square feet of production, research and development, service operations and manufacturing space in the Building leased under the original Amended and Restated Lease Agreement effective October 12, 2009, from June 30, 2019 to March 31, 2025.

The Second Amendment also provides us with a tenant improvement allowance of up to $0.1 million toward the design and construction of certain tenant improvements made to the Building on a reimbursement basis subject to the satisfaction of certain conditions. If the tenant improvements are not completed by March 31, 2021, the reimbursement allowance will be deemed waived by us.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Common Stock in Treasury
Beginning Balance (in shares) at Dec. 31, 2015		16,588,118
Beginning Balance at Dec. 31, 2015	$ 327,644	$ 18	$ 206,996	$ 172,329	$ (19,861)	$ (31,838)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	11,107			11,107
Currency translation adjustment, net of income tax	(4,700)				(4,700)
Restricted stock issued and stock based compensation under incentive plans (in shares)		20,925
Restricted stock issued and stock based compensation under incentive plans	5,374		5,374
Stock options exercised, net of shares withheld for employee taxes (in shares)		71,748
Stock options exercised, net of shares withheld for employee taxes	674		674
Tax impact from restricted stock and stock options	(442)		(442)
Ending Balance (in shares) at Dec. 31, 2016		16,680,791
Ending Balance at Dec. 31, 2016	339,657	$ 18	212,602	183,436	(24,561)	(31,838)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(14,516)			(14,516)
Currency translation adjustment, net of income tax	16,739				16,739
Restricted stock issued and stock based compensation under incentive plans (in shares)		19,881
Restricted stock issued and stock based compensation under incentive plans	6,450		6,450
Stock options exercised, net of shares withheld for employee taxes (in shares)		86,994
Stock options exercised, net of shares withheld for employee taxes	3,284		3,284
Reissuance of treasury shares (in shares)		9,218
Reissuance of treasury shares	$ 310		281			29
Ending Balance (in shares) at Dec. 31, 2017	16,796,884	16,796,884
Ending Balance at Dec. 31, 2017	$ 352,066	$ 18	223,055	168,624	(7,822)	(31,809)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of the adoption of ASU 2016-09 \| Accounting Standards Update 2014-09	142		438	(296)
Net income (loss)	4,930
Currency translation adjustment, net of income tax	(10,661)				(10,661)
Restricted stock issued and stock based compensation under incentive plans (in shares)		15,960
Restricted stock issued and stock based compensation under incentive plans	7,620		7,620
Stock options exercised, net of shares withheld for employee taxes (in shares)		382,957
Stock options exercised, net of shares withheld for employee taxes	17,028	$ 1	17,027
Reissuance of treasury shares (in shares)		57,210
Reissuance of treasury shares	$ 3,827					200
Ending Balance (in shares) at Dec. 31, 2018	17,253,011	17,253,011
Ending Balance at Dec. 31, 2018	$ 376,609	$ 19	$ 251,329	175,353	$ (18,483)	$ (31,609)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of the adoption of ASU 2016-09 \| Accounting Standards Update 2014-09	$ 1,799			$ 1,799

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of Income (Loss) Before Income Tax Expense (Benefit)

Income (loss) before income tax (benefit) expense consists of the following:



	Years ended December 31,
	2018			2017		2016
Domestic	$	(1,723	)	$	2,468	$	(1,527	)
Foreign	6,281			3,359		14,153
Income before income taxes	$	4,558		$	5,827	$	12,626

Schedule of Components of Income Tax Expense (Benefit)

The components of the income tax (benefit) expense for income taxes are as follows:



	Years ended December 31,
	2018			2017			2016
Current:
Federal	$	(1,694	)	$	18,951		$	409
State	120			507			40
Foreign	1,394			2,072			3,482
Current income tax (benefit) expense	(180		)	21,530			3,931
Deferred:
Federal	(486		)	1,038			(2,357		)
State	(153		)	(580		)	(229		)
Foreign	447			(1,645		)	174
Deferred income tax benefit	(192		)	(1,187		)	(2,412		)
Income tax (benefit) expense	$	(372	)	$	20,343		$	1,519

Reconciliation of Income Tax Expense (Benefit)

Reconciliations of the income tax expense at the U.S. federal statutory income tax rate compared to our actual income tax (benefit) expense are summarized below:



	Years ended December 31,
	2018			2017			2016
Tax expense at statutory rate	$	956		$	1,981		$	4,427
State income taxes, net of federal benefit	(195		)	81			(50		)
Foreign tax rate difference	(1,003		)	(2,057		)	(1,939		)
Research and development credit	(919		)	(1,037		)	(917		)
Change in valuation allowance	464			678			162
Equity based compensation	(198		)	33			(255		)
Manufacturing credit	—			(191		)	(61		)
Permanent impact of non-deductible cost	1,120			766			412
Provision to return adjustments	345			777			(61		)
Impact of Tax Cuts and Jobs Act of 2017	(1,000		)	19,355			—
Other	58			(43		)	(199		)
Income tax (benefit) expense	$	(372	)	$	20,343		$	1,519

Schedule of Components of Net Deferred Income Tax Assets and Liabilities

The components of our net deferred income tax asset and liabilities are as follows:



	As of December 31,
	2018			2017
Net deferred income tax asset - Non-current
Warranty cost	$	533		$	695
Inventory reserve	1,559			419
Unearned service revenue	6,684			5,364
Employee stock options	4,222			4,366
Tax Credits	485			1,785
Loss carryforwards	7,038			8,782
Other, net	759			1,479
Total deferred tax assets	21,280			22,890
Valuation Allowance	(1,924		)	(1,631		)
Total deferred tax assets net of valuation allowance	19,356			21,259
Net deferred income tax liability - Non-current
Bad debt reserve	(116		)	(2		)
Depreciation	(2,996		)	(3,675		)
Goodwill	(1,612		)	(1,574		)
Intangible assets	(649		)	(1,097		)
Total deferred tax liabilities	(5,373		)	(6,348		)
Net deferred tax assets	$	13,983		$	14,911

Summary of Income Tax Examinations

The table below summarizes the open tax years and ongoing tax examinations in major jurisdictions as of December 31, 2018:



Jurisdiction	Open Years	Examination in Process
United States - Federal Income Tax	2015-2018	N/A
United States - various states	2014-2018	N/A
Germany	2014-2018	N/A
Switzerland	2018	N/A
Singapore	2014-2018	N/A

Revenues (Tables)

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables present our revenues by Sales type as presented in our consolidated statements of operations disaggregated by the timing of transfer of goods or services (in thousands):



	Years ended December 31,
	2018		2017		2016
Product Sales
Products transferred to a customer at a point in time	$	311,102	$	277,922	$	256,010
Products transferred to a customer over time	—		—		—
	$	311,102	$	277,922	$	256,010



	Years ended December 31,
	2018		2017		2016
Service Sales
Service transferred to a customer at a point in time	$	42,932	$	36,164	$	31,529
Service transferred to a customer over time	49,593		46,831		38,045
	$	92,525	$	82,995	$	69,574

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers (in thousands):



	Years ended December 31,
	2018		2017		2016
Total Sales to External Customers
United States	$	156,242	$	141,595	$	133,924
EMEA ⁽¹⁾	127,261		115,061		101,751
APAC ⁽¹⁾	105,038		90,730		78,094
Other Americas ⁽¹⁾	15,086		13,531		11,815
	$	403,627	$	360,917	$	325,584

⁽¹⁾Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada, Mexico, and Brazil (Other Americas).

Stock Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2018

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Valuation Assumptions

For stock options granted during the years ended December 31, 2018, 2017, and 2016 valued using the Black-Scholes option valuation model, we used the following assumptions:



	Years ended December 31,
	2018		2017		2016
Risk-free interest rate	2.65	%	1.88% - 2.02%		1.06% - 1.57%
Expected dividend yield	—	%	—	%	—	%
Expected option life	4 years		5 years		4 years
Expected volatility	45	%	45.2	%	45.0% - 47.0%
Weighted-average expected volatility	45.0	%	45.2	%	46.1	%

Schedule of Stock Option Activity and Weighted Average Exercise Prices

A summary of stock option activity and weighted average exercise prices follows:



	Options		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value as of December 31, 2018
Outstanding at January 1, 2018	1,156,763		$	45.93
Granted	174,439		61.30
Forfeited	(81,222	)	51.66
Exercised	(439,877	)	47.21
Unearned performance-based options	(17,160	)	59.97
Outstanding at December 31, 2018	792,943		$	47.59	4.4	$	2,160
Options exercisable at December 31, 2018	427,006		$	48.84	2.1	$	862

Schedule of Restricted Stock and Restricted Stock Units Activity and Weighted-Average Grant Date Fair Value

The following table summarizes the restricted stock and restricted stock unit activity and weighted average grant-date fair values for the year ended December 31, 2018:



	Shares		Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2018	257,492		$	34.75
Granted	102,458		60.26
Forfeited	(29,692	)	39.36
Vested	(18,618	)	35.03
Unearned performance-based awards	(640	)	51.15
Non-vested at December 31, 2018	311,000		$	42.66

Employee Retirement Benefit Plan - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Retirement Benefits [Abstract]
401(K) plan costs	$ 2.1	$ 1.7	$ 1.4

Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Liabilities:
Payment for contingent consideration	$ 900	$ 500
Undiscounted maximum payment, based on certain milestone	6,000
Level 1 \| Fair Value, Measurements, Recurring
Liabilities:
Contingent consideration	0	0
Total	0	0
Level 2 \| Fair Value, Measurements, Recurring
Liabilities:
Contingent consideration	0	0
Total	0	0
Level 3 \| Fair Value, Measurements, Recurring
Liabilities:
Contingent consideration	5,531	412
Total	$ 5,531	$ 412

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Schedule

Intangible assets consist of the following:



	As of December 31, 2018
	Carrying Value		Accumulated Amortization		Net Intangible
Amortizable intangible assets:
Product technology	$	26,588	$	12,332	$	14,256
Patents and trademarks	14,647		6,601		8,046
Customer relationships	12,027		2,588		9,439
Other	8,693		7,380		1,313
Total	$	61,955	$	28,901	$	33,054



	As of December 31, 2017
	Carrying Value		Accumulated Amortization		Net Intangible
Amortizable intangible assets:
Product technology	$	19,459	$	10,885	$	8,574
Patents and trademarks	13,948		5,720		8,228
Customer relationships	5,889		1,685		4,204
Other	7,443		5,909		1,534
Total	$	46,739	$	24,199	$	22,540

Estimated Amortization Expense Schedule

The estimated amortization expense for each of the years 2019 through 2023 and thereafter is as follows:




Years ending December 31,	Amount
2019	$	5,333
2020	4,886
2021	4,717
2022	4,231
2023	3,804
Thereafter	10,083
	$	33,054

Supplemental Cash Flow Information - Cash Payments and Non-Cash Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Supplemental cash flow information:
Cash paid for interest	$ 4	$ 9	$ 28
Cash paid for income taxes	5,813	2,488	2,576
Supplemental noncash investing and financing activities:
Transfer of service and sales demonstration inventory to fixed assets	$ 964	$ 2,844	$ 511

Intangible Assets - Estimated Amortization Expense Schedule (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
2019	$ 5,333
2020	4,886
2021	4,717
2022	4,231
2023	3,804
Thereafter	10,083
Amortizable intangible assets, net Intangible	$ 33,054	$ 22,540

Revenues

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenues

REVENUES

The following tables present our revenues by Sales type as presented in our consolidated statements of operations disaggregated by the timing of transfer of goods or services (in thousands):



	Years ended December 31,
	2018		2017		2016
Product Sales
Products transferred to a customer at a point in time	$	311,102	$	277,922	$	256,010
Products transferred to a customer over time	—		—		—
	$	311,102	$	277,922	$	256,010



	Years ended December 31,
	2018		2017		2016
Service Sales
Service transferred to a customer at a point in time	$	42,932	$	36,164	$	31,529
Service transferred to a customer over time	49,593		46,831		38,045
	$	92,525	$	82,995	$	69,574

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers (in thousands):



	Years ended December 31,
	2018		2017		2016
Total Sales to External Customers
United States	$	156,242	$	141,595	$	133,924
EMEA ⁽¹⁾	127,261		115,061		101,751
APAC ⁽¹⁾	105,038		90,730		78,094
Other Americas ⁽¹⁾	15,086		13,531		11,815
	$	403,627	$	360,917	$	325,584

⁽¹⁾Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada, Mexico, and Brazil (Other Americas).

For revenue related to our measurement and imaging equipment and related software, we allocate the contract price to performance obligations based on our best estimate of the standalone selling price. We make this allocation estimate utilizing data from the sale of our applicable products and services to customers separately in similar circumstances, with the exception of software licenses. With respect to software licenses, we use the residual method for allocating the contract price to performance obligations relating to software licenses. Revenue related to our measurement and imaging equipment and related software is generally recognized upon shipment from our facilities or when delivered to the customer location, as determined by the agreed upon shipping terms, at which time we are entitled to payment and title and control has passed to the customer. Software arrangements generally include short-term maintenance that is considered post-contract support (“PCS”), which is considered to be a separate performance obligation. We generally establish standalone sales price for this PCS component based on our maintenance renewal rate. Maintenance renewals, when sold, are recognized on a straight-line basis over the term of the maintenance agreement. Payment for products and services is collected within a short period of time following transfer of control or commencement of delivery of services, as applicable.

Further, customers frequently purchase extended warranties with the purchase of measurement equipment and related software. Warranties are considered a performance obligation when services are transferred to a customer over time and as such, we recognize revenue on a straight-line basis over the warranty term. Extended warranty sales include contract periods that extend between one month and three years.

We capitalize commission expenses related to deliverables transferred to a customer over time and amortize such costs ratably over the term of the contract. As of December 31, 2018, the deferred cost asset related to deferred commissions was approximately $2.7 million. For classification purposes, $1.8 million and $0.9 million are comprised within the Prepaid expenses and other current assets and Other long-term assets, respectively, on our consolidated balance sheet as of December 31, 2018.

The nature of certain of our contracts gives rise to variable consideration, which may be constrained, primarily related to an allowance for sales returns. We are required to estimate the contract asset related to sales returns and record a corresponding adjustment to Cost of Sales. Our allowance for sales returns was approximately $0.1 million as of December 31, 2018.

Shipping and handling fees billed to customers in a sales transaction are recorded in Product Sales and shipping and handling costs incurred are recorded in Cost of Sales. We exclude from Sales, any value added, sales and other taxes that we collect concurrently with revenue-producing activities.

Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Payables and Accruals [Abstract]

Accrued Liabilities Schedule

Accrued liabilities consist of the following:



	As of December 31,
	2018		2017
Accrued compensation and benefits	$	17,745	$	16,144
Accrued warranties	2,571		2,628
Professional and legal fees	2,154		1,541
Taxes other than income	3,550		3,787
General services administration contract contingent liability (see Note 13)	5,267		—
Other accrued liabilities	5,040		3,262
	$	36,327	$	27,362

Schedule of Activity Related to Accrued Warranties

Activity related to accrued warranties was as follows:



	Years ended December 31,
	2018			2017			2016
Balance, beginning of year	$	2,628		$	2,594		$	2,309
Provision for warranty expense	4,096			4,045			3,544
Fulfillment of warranty obligations	(4,153		)	(4,011		)	(3,259		)
Balance, end of year	$	2,571		$	2,628		$	2,594

Income Taxes - Reconciliation of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Tax expense at statutory rate		$ 956	$ 1,981	$ 4,427
Tax expense (benefit), statutory rate		34.00%	34.00%	34.00%
State income taxes, net of federal benefit		$ (195)	$ 81	$ (50)
Foreign tax rate difference		(1,003)	(2,057)	(1,939)
Research and development credit		(919)	(1,037)	(917)
Change in valuation allowance		464	678	162
Equity based compensation		(198)	33	(255)
Manufacturing credit		0	(191)	(61)
Permanent impact of non-deductible cost		1,120	766	412
Provision to return adjustments		345	777	(61)
Impact of Tax Cuts and Jobs Act of 2017		(1,000)	19,355	0
Other		58	(43)	(199)
Income tax (benefit) expense	$ 1,000	$ (372)	$ 20,343	$ 1,519

Accrued Liabilities - Activity Related to Accrued Warranties (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning Balance	$ 2,628	$ 2,594	$ 2,309
Provision for warranty expense	4,096	4,045	3,544
Fulfillment of warranty obligations	(4,153)	(4,011)	(3,259)
Ending Balance	$ 2,571	$ 2,628	$ 2,594

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives of Property and Equipment

Depreciation is computed beginning on the date that the asset is placed into service using the straight-line method over the estimated useful lives of the various classes of assets as follows:



Machinery, equipment and software	2 to 5 years
Furniture and fixtures	3 to 10 years

Short Term Investments	12 Months Ended
Short Term Investments	Dec. 31, 2018
Investments Schedule [Abstract]
Short Term Investments	SHORT-TERM INVESTMENTSShort-term investments at December 31, 2018 consisted of U.S. Treasury Bills totaling $24.8 million, consisting of $9.0 million maturing on March 14, 2019, $10.9 million maturing on June 6, 2019, and $4.9 million maturing on June 20, 2019. Short-term investments at December 31, 2017 consisted of U.S. Treasury Bills totaling $11.0 million that matured on January 11, 2018. The interest rates on the U.S. Treasury Bills held on December 31, 2018 and maturing on March 14, 2019, June 6, 2019, and June 20, 2019 were 2.2%, 2.4%, and 2.3%, respectively, and were less than one percent for the U.S. Treasury Bills held as of December 31, 2017. The investments are classified as held-to-maturity and recorded at cost plus accrued interest, which approximates fair value.

Earnings (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule of Reconciliation of Number of Common Shares Used in Calculation of Basic and Diluted Earnings Per Share (EPS)

A reconciliation of the number of common shares used in the calculation of basic and diluted earnings (loss) per share is presented below:



	Years Ended December 31,
	2018				2017				2016
	Shares		Per-Share Amount		Shares	Per-Share Amount			Shares	Per-Share Amount
Basic earnings (loss) per share	17,043,167		$	0.29	16,711,534	$	(0.87	)	16,654,786	$	0.67
Effect of dilutive securities	305,289		—		—	—			26,924	—
Diluted earnings (loss) per share	17,348,456	—	$	0.29	16,711,534	$	(0.87	)	16,681,710	$	0.67
Securities excluded from the determination of weighted average shares for the calculation of diluted earnings (loss) per share, as they were potentially antidilutive	393,970				1,049,563				1,046,947

Stock Compensation Plans - Assumptions Used to Estimate The Fair Value of Time-Based Stock Options (Details)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Option, Quantitative Disclosures [Line Items]
Expected volatility	45.00%	45.20%
Employee Stock Option
Fair Value, Option, Quantitative Disclosures [Line Items]
Risk-free interest rate, minimum		1.88%	1.06%
Risk-free interest rate, maximum		2.02%	1.57%
Expected dividend yield	0.00%	0.00%	0.00%
Expected option life	4 years	5 years	4 years
Expected volatility, minimum			45.00%
Expected volatility, maximum			47.00%
Weighted-average expected volatility	45.00%	45.20%	46.10%
Performance Shares
Fair Value, Option, Quantitative Disclosures [Line Items]
Risk-free interest rate, minimum			0.95%
Risk-free interest rate, maximum			1.48%

Subsequent Events (Details) - President, Chief Executive Officer, Member of Board of Directors - Subsequent Event - USD ($) $ in Thousands	Jan. 09, 2019	Feb. 19, 2019
Subsequent Event [Line Items]
Base salary until retirement	$ 775
Restricted Stock Units (RSUs)
Subsequent Event [Line Items]
Shares of common stock authorized for grant awards	24,606
Short-term Incentive Plan
Subsequent Event [Line Items]
Target payout		100.00%
Minimum \| Short-term Incentive Plan
Subsequent Event [Line Items]
Target payout		0.00%
Maximum \| Short-term Incentive Plan
Subsequent Event [Line Items]
Target payout		200.00%

Commitments and Contingencies - Schedule of Future Minimum Lease Payments Required under Non-Cancelable Operating Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 7,474
2020	4,679
2021	1,724
2022	1,313
2023	1,270
Thereafter	3,168
Total future minimum lease payments	$ 19,628

Business Combinations - Summary of the Purchase Price Preliminarily Allocated to the Intangible Assets Acquired for the Acquisitions (Details) - USD ($) $ in Thousands	1 Months Ended					12 Months Ended
	Apr. 30, 2017	Dec. 31, 2016	Aug. 31, 2016	Jul. 31, 2016	Mar. 31, 2015	Dec. 31, 2018
Acquired Finite-Lived Intangible Assets [Line Items]
Intangible assets acquired, weighted average life						8 years
Nutfield (Final)
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired					$ 2,329
Intangible assets acquired, weighted average life					10 years
Nutfield (Final) \| Trade name
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired					$ 29
Intangible assets acquired, weighted average life					1 year
Nutfield (Final) \| Brand
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired					$ 0
Intangible assets acquired, weighted average life					0 years
Nutfield (Final) \| Non-competition agreement
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired					$ 144
Intangible assets acquired, weighted average life					5 years
Nutfield (Final) \| Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired					$ 1,970
Intangible assets acquired, weighted average life					10 years
Nutfield (Final) \| Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired					$ 95
Intangible assets acquired, weighted average life					10 years
Nutfield (Final) \| Favorable in-place lease
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired					$ 91
Intangible assets acquired, weighted average life					12 years
Laser Controls Systems (Final)
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired				$ 1,400
Intangible assets acquired, weighted average life				7 years
Laser Controls Systems (Final) \| Trade name
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired				$ 0
Intangible assets acquired, weighted average life				0 years
Laser Controls Systems (Final) \| Brand
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired				$ 26
Intangible assets acquired, weighted average life				1 year
Laser Controls Systems (Final) \| Non-competition agreement
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired				$ 29
Intangible assets acquired, weighted average life				3 years
Laser Controls Systems (Final) \| Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired				$ 1,319
Intangible assets acquired, weighted average life				7 years
Laser Controls Systems (Final) \| Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired				$ 26
Intangible assets acquired, weighted average life				10 years
Laser Controls Systems (Final) \| Favorable in-place lease
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired				$ 0
Intangible assets acquired, weighted average life				0 years
Photocore AG (Final)
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 1,435
Intangible assets acquired, weighted average life			7 years
Photocore AG (Final) \| Trade name
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 0
Intangible assets acquired, weighted average life			0 years
Photocore AG (Final) \| Brand
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 22
Intangible assets acquired, weighted average life			1 year
Photocore AG (Final) \| Non-competition agreement
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 9
Intangible assets acquired, weighted average life			3 years
Photocore AG (Final) \| Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 1,343
Intangible assets acquired, weighted average life			7 years
Photocore AG (Final) \| Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 61
Intangible assets acquired, weighted average life			10 years
Photocore AG (Final) \| Favorable in-place lease
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired			$ 0
Intangible assets acquired, weighted average life			0 years
Lanmark (Final)
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 1,366
Intangible assets acquired, weighted average life		8 years
Lanmark (Final) \| Trade name
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 0
Intangible assets acquired, weighted average life		0 years
Lanmark (Final) \| Brand
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 26
Intangible assets acquired, weighted average life		1 year
Lanmark (Final) \| Non-competition agreement
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 0
Intangible assets acquired, weighted average life		0 years
Lanmark (Final) \| Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 760
Intangible assets acquired, weighted average life		7 years
Lanmark (Final) \| Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 580
Intangible assets acquired, weighted average life		10 years
Lanmark (Final) \| Favorable in-place lease
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 0
Intangible assets acquired, weighted average life		0 years
Open Technologies
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 10,388
Intangible assets acquired, weighted average life	8 years
Open Technologies \| Trade name
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 0
Intangible assets acquired, weighted average life	0 years
Open Technologies \| Brand
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 103
Intangible assets acquired, weighted average life	1 year
Open Technologies \| Non-competition agreement
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 0
Intangible assets acquired, weighted average life	0 years
Open Technologies \| Technology
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 4,441
Intangible assets acquired, weighted average life	7 years
Open Technologies \| Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 5,844
Intangible assets acquired, weighted average life	10 years
Open Technologies \| Favorable in-place lease
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 0
Intangible assets acquired, weighted average life	0 years