UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
report (Date of the earliest event
reported) February 12, 2009
FARO
TECHNOLOGIES, INC.
(Exact
Name of Registrant as Specified in Its Charter)
|
Florida
|
0-20381
|
59-3157093
|
|
(State or Other
Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
125 Technology Park,
Lake Mary, Florida
|
32746
|
|
(Address of
Principal Executive Offices)
|
(Zip
Code)
|
(407)
333-9911
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230
.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
2.02 Results of Operations and Financial
Statements
Item
7.01 Regulation FD
Disclosure
On
February 12, 2009, FARO Technologies, Inc. issued a press release announcing its
results of operations for the fourth quarter ended December 31,
2008. A copy of the press release is furnished as Exhibit 99.1 hereto
and is incorporated herein by reference.
The
information furnished herewith pursuant to Item 2.02 and Item 7.01 of this
Current Report shall not be deemed to be “filed” for the purpose of Section 18
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
otherwise subject to the liabilities of that section, and shall not be
incorporated by reference into any registration statement or other document
under the Securities Act of 1933, as amended, or the Exchange Act, except as
shall be expressly set forth by specific reference in such filing.
Item
9.01 Financial
Statements and Exhibits
(d) Exhibits
|
99.1
|
Press
Release dated February 12, 2009
|
Signature
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned thereunder duly authorized.
|
FARO Technologies, Inc.
(Registrant)
|
|||
|
Date:
February 13,
2009
|
By:
|
/s/ Jay Freeland | |
| Jay Freeland | |||
| Chief Executive Officer | |||
EXHIBIT
INDEX
Exhibit
No. Description
99.1 Press
Release dated February 12, 2009
|
NEWS
BULLETIN
 |
FARO Technologies
Inc.
250 Technology Park
Lake Mary, FL 32746
|
|
| The Measure of Success |
Keith
Bair, Senior Vice President and CFO
keith.bair@FARO.com,
407-333-9911
FARO
Reports Sales Growth of 9.2% for 2008;
Orders
Grow 6.8%
LAKE MARY, FL., February 12,
2009 – FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the
fourth quarter ended December 31, 2008. Net income for the fourth quarter was
$2.2 million, or $0.13 per diluted share, a decrease of $6.2 million, compared
to $8.4 million, or $0.50 per diluted share in the fourth quarter of
2007. Net income for fiscal 2008 was $14.0 million, or $0.83 per
diluted share, compared to $18.1 million, or $1.15 per diluted
share.
Sales for
the fourth quarter of 2008 were $56.3 million, a decrease of $2.9 million, or
4.9%, from $59.2 million in the fourth quarter of 2007. New order bookings for
the fourth quarter were $56.4 million, a decrease of $9.0 million, or 13.8%,
compared with $65.4 million in the fourth quarter of 2007. Fiscal
2008 sales were $209.2 million, an increase of 9.2% compared to 2007 sales of
$191.6 million. New order bookings for fiscal 2008 were $211.3
million, a 6.8% increase from $197.8 million in fiscal 2007.
“2008 was
a difficult year for most companies and that directly impacted FARO,” stated Jay
Freeland, FARO’s President & CEO. “The second half of the year
was particularly tough for us across all three regions. There was
good customer interest in our products. However, global economic
weakness caused significant delays in our customers’ decision-making processes
as they reviewed their capital equipment needs.”
Gross
margin for the fourth quarter of 2008 was 57.3%, compared to 60.0% in the fourth
quarter of 2007. Gross margin decreased primarily as the result of lower product
sales which carry high gross margins. As a result, service costs as a
percentage of sales had a larger impact than in previous
quarters. The gross margin for fiscal 2008 was 59.8% compared
to 60.0% in fiscal 2007.
Selling
expenses as a percentage of sales increased to 28.6% in the fourth quarter of
2008 from 27.3% in the fourth quarter of 2007 primarily as a result of the
decline in sales. Selling expenses in the fourth quarter of 2008
remained relatively flat, decreasing by $0.1 million to $16.1 million.
Selling
expenses as a percentage of sales for fiscal 2008 were 30.1% compared to 29.3%
in fiscal 2007.
General
and administrative expenses increased to 12.2% of sales for the fourth quarter
of 2008 from 11.8% in the fourth quarter of 2007. General and
administrative expenses in the fourth quarter of 2008 declined by $0.1 million
to $6.9 million. General and administrative expenses were 12.5% of
sales for fiscal 2008 compared to 13.3% in fiscal 2007.
R&D
expenses were $3.5 million in the fourth quarter of 2008, an increase from $3.1
million in the fourth quarter of 2007. R&D expenses for fiscal
2008 were $12.6 million, or 6.0% of sales, an increase of $2.3 million from
$10.3 million in fiscal 2007, or 5.4% of sales. The increase in
spending was tied to new product development of existing platforms and
establishing the R&D Center of Excellence in Cambridge for the Company’s new
3D Imaging technology.
Operating
margin for the fourth quarter of 2008 decreased to 8.1% from 13.8% in the fourth
quarter of 2007. Operating margin for fiscal 2008 was 9.1% compared
to 10.0% in fiscal 2007.
Income
tax expense increased by $0.3 million to $1.4 million for the fourth quarter of
2008 from $1.1 million for the fourth quarter of 2007. The Company’s
effective tax rate increased to 24.0% for 2008 from 21.5% in 2007 due to an
increase in income in higher tax jurisdictions.
“As
previously announced, we do not plan to issue specific guidance in
2009. Based on current economic conditions, we expect 2009 to be
extremely challenging. It is possible that we will experience sales
declines during this global recession. The Company has taken and will
continue taking appropriate actions which reflect the ongoing business climate,”
Freeland concluded.
This
press release contains forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995) that are subject to risks and
uncertainties, such as statements about our plans, objectives, projections,
expectations, assumptions, strategies, or future events. Statements that are not
historical facts or that describe the Company’s plans, objectives, projections,
expectations, assumptions, strategies, or goals are forward-looking statements.
In addition, words such as “may,” “believes,” “anticipates,” “expects,”
“intends,” “plans,” “seeks,” “estimates,” “will,” “should,” “could,” “projects,”
“forecast,” “target,” “goal,” and similar expressions or discussions of our
strategy or other intentions identify forward-looking statements. Other written
or oral statements, which constitute forward-looking statements, also may be
made by the Company from time to time. Forward-looking statements are not
guarantees of future performance and are subject to various known and unknown
risks, uncertainties, and other factors that may cause actual results,
performances, or achievements to differ materially from future results,
performances, or achievements expressed or implied by such forward-looking
statements. Consequently, undue reliance should not be placed on these
forward-looking statements.
Factors
that could cause actual results to differ materially from what is expressed or
forecasted in forward-looking statements include, but are not limited
to:
|
·
|
our inability to further
penetrate our customer base;
|
|
·
|
development by others of new
or improved products, processes or technologies that make our products
obsolete or less
competitive;
|
|
·
|
our inability to maintain our
technological advantage by developing new products and enhancing our
existing products;
|
|
·
|
our inability to successfully
identify and acquire target companies or achieve expected benefits from
acquisitions that are
consummated;
|
|
·
|
the cyclical nature of the
industries of our customers and material adverse changes in
our customers’ access to liquidity and
capital;
|
|
·
|
a slowdown or other adverse
changes in industries that the Company serves or the domestic and
international economies in the regions of the world where the Company
operates and other general economic,
business, and financing
conditions;
|
|
·
|
the fact that the market
potential for the CAM2 market and the potential adoption rate for our
products are difficult to quantify and
predict;
|
|
·
|
the inability to protect our
patents and other proprietary rights in the United States and foreign
countries;
|
|
·
|
fluctuations in our annual and
quarterly operating results and the inability to achieve our financial
operating targets as a result of a number of factors including, without
limitation (i) litigation and regulatory action brought against us, (ii)
quality issues with our products, (iii) excess or obsolete inventory, (iv)
raw material price fluctuations, (v) expansion of our manufacturing
capability and other inflationary pressures, (vi) the size and timing of
customer orders, (vii) the amount of time that it takes to fulfill orders
and ship our products, (viii) the length of our sales cycle to new
customers and the time and expense incurred in further penetrating our
existing customer base, (ix) increases in operating expenses required for
product development and new product, marketing, (x) costs associated with
new product introductions, such as product development, marketing,
assembly line start-up costs and low introductory period production
volumes, (xi) the timing and market acceptance of new products and product
enhancements, (xii) customer order deferrals in anticipation of new
products and product enhancements, (xiii) our success in expanding our
sales and marketing programs, (xiv) start-up costs associated with opening
new sales offices outside of the United States, (xv) fluctuations in
revenue without proportionate adjustments in fixed costs, (xvi) the
efficiencies achieved in managing inventories and fixed assets, (xvii)
investments in potential acquisitions or strategic sales, product or other
initiatives, (xviii) shrinkage or other inventory losses due to product
obsolescence, scrap or material price changes, (xix) adverse changes in
the manufacturing industry and general economic conditions,
(xx) compliance with government regulations including health,
safety, and environmental matters, (xxi) the ultimate costs of the
Company’s monitoring obligations in respect of the Foreign Corrupt
Practices Act (“FCPA”) matter; and (xxii) other factors noted
herein;
|
|
·
|
changes in gross margins due
to changing product mix of products sold and the different gross margins
on different products;
|
|
·
|
our inability to successfully
maintain the requirements of Restriction of use of Hazardous Substances
(“RoHS”) and Waste Electrical and Electronic Equipment (“WEEE”) compliance
into our products;
|
|
·
|
the inability of our products
to displace traditional measurement devices and attain broad market
acceptance;
|
|
·
|
the impact of competitive
products and pricing in the CAM2 market and the broader market for
measurement and inspection
devices;
|
|
·
|
the effects of increased
competition as a result of recent consolidation in the CAM2
market;
|
|
·
|
risks associated with
expanding international operations, such as fluctuations in currency
exchange rates, difficulties in staffing and managing foreign operations,
political and economic instability, compliance with import and export
regulations, and the burdens and potential exposure of complying with a
wide variety of U.S. and foreign laws and labor
practices;
|
|
·
|
the loss of our Chief
Executive Officer or other key
personnel;
|
|
·
|
difficulties in recruiting
research and development engineers, and application
engineers;
|
|
·
|
the failure to effectively
manage our growth;
|
|
·
|
variations in the effective
income tax rate and the difficulty in predicting the tax rate on a
quarterly and annual basis;
and
|
|
·
|
the loss of key suppliers and
the inability to find sufficient alternative suppliers in a reasonable
period or on commercially reasonable
terms.
|
|
·
|
the other risks detailed in
the Company’s Annual Report on Form 10-K and other filings from time to
time with the Securities and Exchange
Commission.
|
Forward-looking
statements in this release represent the Company’s judgment as of the date of
this release. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
About
FARO
With
approximately 19,000 installations and 9,000 customers globally, FARO
Technologies, Inc. designs, develops, and markets portable, computerized
measurement devices and software used to create digital models -- or to perform
evaluations against an existing model -- for anything requiring highly detailed
3-D measurements, including part and assembly inspection, factory planning and
asset documentation, as well as specialized applications ranging from surveying,
recreating accident sites and crime scenes to digitally preserving historical
sites.
FARO's
technology increases productivity by dramatically reducing the amount of on-site
measuring time, and the various industry-specific software packages enable users
to process and present their results quickly and more effectively.
Principal
products include the world's best-selling portable measurement arm -- the
FaroArm; the world's best-selling laser tracker -- the FARO Laser Tracker X and
Xi; the FARO Laser ScanArm; FARO Photon Laser Scanners; the FARO Gage, Gage-PLUS
and PowerGAGE; and the CAM2 Q family of advanced CAD-based measurement and
reporting software. FARO Technologies is ISO-9001 certified and ISO-17025
laboratory registered.
FARO
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED)
|
Three
Months Ended
|
Year
Ended
|
|||||||||||||||
|
(in
thousands, except share and per share data)
|
Dec
31, 2008
|
Dec
31, 2007
|
Dec
31, 2008
|
Dec
31, 2007
|
||||||||||||
|
SALES
|
$ | 56,315 | $ | 59,228 | $ | 209,249 | $ | 191,617 | ||||||||
|
COST
OF SALES (exclusive of depreciation and amortization, shown separately
below)
|
24,043 | 23,700 | 84,023 | 76,574 | ||||||||||||
|
GROSS
PROFIT
|
32,272 | 35,528 | 125,226 | 115,043 | ||||||||||||
|
OPERATING
EXPENSES:
|
||||||||||||||||
|
Selling
|
16,130 | 16,183 | 63,015 | 56,134 | ||||||||||||
|
General
and administrative
|
6,870 | 7,012 | 26,144 | 25,508 | ||||||||||||
|
Depreciation
and amortization
|
1,211 | 1,021 | 4,505 | 4,034 | ||||||||||||
|
Research
and development
|
3,502 | 3,127 | 12,625 | 10,256 | ||||||||||||
|
Total
operating expenses
|
27,713 | 27,343 | 106,289 | 95,932 | ||||||||||||
|
INCOME
FROM OPERATIONS
|
4,559 | 8,185 | 18,937 | 19,111 | ||||||||||||
|
OTHER
(INCOME) EXPENSE
|
||||||||||||||||
|
Interest
income
|
(546 | ) | (854 | ) | (2,170 | ) | (2,036 | ) | ||||||||
|
Other
(income) expense, net
|
1,460 | (471 | ) | 2,295 | (1,898 | ) | ||||||||||
|
Interest
expense
|
2 | 2 | 452 | 9 | ||||||||||||
|
INCOME
BEFORE INCOME TAX
|
3,643 | 9,508 | 18,360 | 23,036 | ||||||||||||
|
INCOME
TAX EXPENSE
|
1,443 | 1,104 | 4,408 | 4,943 | ||||||||||||
|
NET
INCOME
|
$ | 2,200 | $ | 8,404 | $ | 13,952 | $ | 18,093 | ||||||||
|
NET
INCOME PER SHARE - BASIC
|
$ | 0.13 | $ | 0.51 | $ | 0.84 | $ | 1.17 | ||||||||
|
NET
INCOME PER SHARE - DILUTED
|
$ | 0.13 | $ | 0.50 | $ | 0.83 | $ | 1.15 | ||||||||
|
Weighted
average shares - Basic
|
16,654,910 | 16,584,477 | 16,632,608 | 15,443,259 | ||||||||||||
|
Weighted
average shares - Diluted
|
16,702,090 | 16,777,426 | 16,734,403 | 15,722,215 | ||||||||||||
CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
|
December
31,
|
December
31,
|
|||||||
|
(in
thousands, except share data)
|
2008
|
2007
|
||||||
|
ASSETS
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 23,494 | $ | 25,798 | ||||
|
Short-term
investments
|
81,965 | 77,375 | ||||||
|
Accounts
receivable, net
|
49,713 | 54,767 | ||||||
|
Inventories
|
33,444 | 29,100 | ||||||
|
Deferred
income taxes, net
|
6,459 | 2,841 | ||||||
|
Prepaid
expenses and other current assets
|
7,879 | 6,719 | ||||||
|
Total
current assets
|
202,954 | 196,600 | ||||||
|
Property
and Equipment:
|
||||||||
|
Machinery
and equipment
|
22,685 | 12,895 | ||||||
|
Furniture
and fixtures
|
4,099 | 5,008 | ||||||
|
Leasehold
improvements
|
3,956 | 3,296 | ||||||
|
Property
and equipment at cost
|
30,740 | 21,199 | ||||||
|
Less:
accumulated depreciation and amortization
|
(16,604 | ) | (13,672 | ) | ||||
|
Property
and equipment, net
|
14,136 | 7,527 | ||||||
|
Goodwill
|
18,951 | 19,117 | ||||||
|
Intangible
assets, net
|
8,580 | 5,970 | ||||||
|
Service
inventory
|
12,843 | 10,865 | ||||||
|
Deferred
income taxes, net
|
1,850 | 3,460 | ||||||
|
Total
Assets
|
$ | 259,314 | $ | 243,539 | ||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
$ | 10,813 | $ | 12,450 | ||||
|
Accrued
liabilities
|
14,032 | 17,989 | ||||||
|
Income
taxes payable
|
1,988 | 2,266 | ||||||
|
Current
portion of unearned service revenues
|
11,501 | 8,594 | ||||||
|
Customer
deposits
|
425 | 337 | ||||||
|
Current
portion of obligations under capital leases
|
87 | 18 | ||||||
|
Total
current liabilities
|
38,846 | 41,654 | ||||||
|
Unearned
service revenues - less current portion
|
6,772 | 6,091 | ||||||
|
Deferred
tax liability, net
|
1,107 | 1,073 | ||||||
|
Obligations
under capital leases - less current portion
|
281 | 222 | ||||||
|
Total
Liabilities
|
47,006 | 49,040 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Shareholders'
Equity:
|
||||||||
|
Common
stock - par value $.001, 50,000,000 shares authorized; 16,741,488 and
16,700,966 issued; 16,654,988 and 16,604,052 outstanding,
respectively
|
17 | 17 | ||||||
|
Additional
paid-in-capital
|
149,298 | 146,489 | ||||||
|
Retained
earnings
|
57,497 | 43,545 | ||||||
|
Accumulated
other comprehensive income
|
5,742 | 4,599 | ||||||
|
Common
stock in treasury, at cost - 55,808 shares
|
(246 | ) | (151 | ) | ||||
|
Total
Shareholders' Equity
|
212,308 | 194,499 | ||||||
|
Total
Liabilities and Shareholders' Equity
|
$ | 259,314 | $ | 243,539 | ||||
FARO
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
Year
Ended December 31,
|
||||||||
|
(in
thousands)
|
2008
|
2007
|
||||||
|
CASH
FLOWS FROM:
|
||||||||
|
OPERATING
ACTIVITIES:
|
||||||||
|
Net
income
|
$ | 13,952 | $ | 18,093 | ||||
|
Adjustments
to reconcile net income to net cash (used in) provided
by operating
activities:
|
||||||||
|
Depreciation
and amortization
|
4,505 | 4,034 | ||||||
|
Amortization
of stock options and restricted stock units
|
2,237 | 1,216 | ||||||
|
Provision
for bad debts
|
1,092 | 373 | ||||||
|
Deferred
income tax benefit
|
(1,972 | ) | (464 | ) | ||||
|
Change
in operating assets and liabilities:
|
||||||||
|
Decrease
(increase) in:
|
||||||||
|
Accounts
receivable
|
2,993 | (9,121 | ) | |||||
|
Inventories
|
(6,429 | ) | (7,265 | ) | ||||
|
Prepaid
expenses and other current assets
|
(1,187 | ) | (3,208 | ) | ||||
|
Income
tax benefit from exercise of stock options
|
(45 | ) | (963 | ) | ||||
|
Increase
(decrease) in:
|
||||||||
|
Accounts
payable and accrued liabilities
|
(5,317 | ) | 9,884 | |||||
|
Income
taxes payable
|
(355 | ) | 1,278 | |||||
|
Customer
deposits
|
82 | (269 | ) | |||||
|
Unearned
service revenues
|
3,710 | 8,007 | ||||||
|
Net
cash provided by operating activities
|
13,266 | 21,595 | ||||||
|
INVESTING
ACTIVITIES:
|
||||||||
|
Purchases
of property and equipment
|
(9,705 | ) | (2,930 | ) | ||||
|
Payments
for intangible assets
|
(3,766 | ) | (359 | ) | ||||
|
Purchases
of short-term investments
|
(4,590 | ) | (61,585 | ) | ||||
|
Net
cash used in investing activities
|
(18,061 | ) | (64,874 | ) | ||||
|
FINANCING
ACTIVITIES:
|
||||||||
|
Payments
of capital leases
|
(11 | ) | (92 | ) | ||||
|
Income
tax benefit from exercise of stock options
|
45 | 963 | ||||||
|
Purchases
of Stock
|
(95 | ) | - | |||||
|
Proceeds
from issuance of stock, net
|
92 | 58,421 | ||||||
|
Net
cash provided by financing activities
|
31 | 59,292 | ||||||
|
EFFECT
OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
2,460 | (5,904 | ) | |||||
|
(DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS
|
(2,304 | ) | 10,109 | |||||
|
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
25,798 | 15,689 | ||||||
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 23,494 | $ | 25,798 | ||||
###