LAKE MARY, Fla., July 30 /PRNewswire-FirstCall/ -- FARO
Technologies, Inc. (NASDAQ:FARO) today announced results for the
second quarter ended June 30, 2007. Net income for the second
quarter was $5.8 million, or $0.39 per diluted share, an increase
of $4.9 million, compared to $0.9 million, or $0.06 per diluted
share, in the second quarter of 2006. Sales for the second quarter
of 2007 were $47.6 million, an increase of $9.6 million, or 25.3%,
from $38.0 million in the second quarter of 2006. New order
bookings for the second quarter were $50.4 million, an increase of
$9.6 million, or 23.5%, compared with $40.8 million in the year-ago
quarter. "The second quarter established another new milestone for
the Company," stated Jay Freeland, President and CEO. "For the
first time ever, we exceeded $50 million in new orders in a single
quarter. Customer demand in all vertical markets remains strong and
all three regions continue to meet or beat the expectations we
established for them at the beginning of the year." Gross margin
for the second quarter of 2007 was 61.3%, compared to 59.3% in the
second quarter of 2006. Gross margin increased primarily as the
result of an increase in unit sales in product lines with lower
unit costs due to continuing productivity improvements. Selling
expenses as a percentage of sales decreased to 29.4% in the second
quarter of 2007 compared to 30.5% in the second quarter of 2006
primarily due to improved sales force productivity. General and
administrative expenses were 11.6% of sales for the second quarter
of 2007 compared to 18.7% of sales in the second quarter of 2006.
General and administrative expenses in the second quarter of 2007
included $0.5 million of professional fees related to the Company's
Foreign Corrupt Practices Act ("FCPA") matter and its recently
settled patent litigation compared to $2.6 million in the second
quarter of 2006 for these matters. Research and development
expenses were $2.3 million for the second quarter of 2007, up from
$1.8 million in the second quarter of 2006. Operating margin for
the second quarter of 2007 was 13.6%, compared to 2.5% in the year
ago quarter. Income tax expense was $1.4 million for the second
quarter of 2007 compared to $0.2 million in the second quarter of
2006 primarily as a result of an increase in pretax income. The
Company's effective tax rate was 19.6% in the second quarter of
2007 compared to 18.0% in the second quarter of 2006 due to an
increase in taxable income in jurisdictions with higher tax rates.
"Our second quarter results are tracking towards the Company's
long-term model. Looking at the second half of 2007, we are
maintaining our previously stated full year guidance ranges of
approximately 20% - 25% sales growth and 57% to 59% gross margin,"
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 the financial condition of our
customers; -- 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, but
not limited to (i) litigation and regulatory actions 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)
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, and (xx) 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 implement 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, and the burdens of complying with a wide variety of
foreign laws and labor practices; -- unforeseen developments in our
FCPA matter or in complying with the FCPA in the future; -- The
outcome of the class action securities litigation against us; --
higher than expected increases in expenses relating to our Asia
Pacific expansion or our Singapore manufacturing facility; -- our
inability to find less expensive alternatives to stock options to
attract and retain employees; -- the loss of our Chief Executive
Officer, our Chief Technology Officer, our Chief Financial 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 tax
rate and the difficulty predicting the tax rate on a quarterly and
annual basis; -- the loss of key suppliers and the inability to
find sufficient alternative suppliers in a reasonable period or on
commercially reasonable terms; and -- the other risks detailed in
the Company's Annual Report on Form 10-K and other filings from
time to time with the Securities and Exchange Commission.
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 more than 13,500 installations and 6,500
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 Laser Scanner LS; the FARO Gage,
Gage-PLUS and PowerGAGE; and the CAM2 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 Six Months Ended Jun 30, Jul 1, Jun 30, Jul 1,
(in thousands, except per share data) 2007 2006 2007 2006 SALES
$47,579 $38,042 $87,868 $70,098 COST OF SALES (exclusive of
depreciation and amortization, shown separately below) 18,355
15,480 34,808 28,701 GROSS PROFIT 29,224 22,562 53,060 41,397
OPERATING EXPENSES: Selling 14,022 11,610 26,326 21,861 General and
administrative 5,495 7,130 10,518 12,777 Depreciation and
amortization 951 1,062 2,042 2,073 Research and development 2,276
1,797 4,248 3,649 Total operating expenses 22,744 21,599 43,134
40,360 INCOME FROM OPERATIONS 6,480 963 9,926 1,037 OTHER (INCOME)
EXPENSE Interest (income) (336) (169) (592) (327) Other (income)
expense, net (382) 88 (707) (287) Interest expense 2 4 4 6 INCOME
BEFORE INCOME TAX 7,196 1,040 11,221 1,645 INCOME TAX EXPENSE 1,410
187 2,237 296 NET INCOME $5,786 $853 $8,984 $1,349 NET INCOME PER
SHARE - BASIC $0.39 $0.06 $0.61 $0.09 NET INCOME PER SHARE -
DILUTED $0.39 $0.06 $0.60 $0.09 FARO TECHNOLOGIES, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30,
December 31, (in thousands, except share data) 2007 2006 ASSETS
Current Assets: Cash and cash equivalents $19,213 $15,689
Short-term investments 21,021 15,790 Accounts receivable, net
44,959 42,706 Inventories 22,318 23,429 Deferred income taxes, net
2,070 1,845 Prepaid expenses and other current assets 6,197 3,222
Total current assets 115,778 102,681 Property and Equipment:
Machinery and equipment 11,540 9,131 Furniture and fixtures 4,347
3,988 Leasehold improvements 2,770 2,615 Property and equipment at
cost 18,657 15,734 Less: accumulated depreciation and amortization
(11,790) (8,889) Property and equipment, net 6,867 6,845 Goodwill
17,953 17,266 Intangible assets, net 5,857 6,221 Service Inventory
9,558 7,278 Deferred income taxes, net 4,016 3,985 Total Assets
$160,029 $144,276 LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities: Accounts payable $9,571 $11,182 Accrued liabilities
10,173 10,379 Income taxes payable 944 2,151 Current portion of
unearned service revenues 6,185 4,569 Customer deposits 322 618
Current portion of long-term debt and obligations under capital
leases 77 90 Total current liabilities 27,272 28,989 Unearned
service revenues - less current portion 4,465 2,917 Deferred tax
liability, net 1,229 1,200 Long-term debt and obligations under
capital leases - less current portion 78 115 Total Liabilities
33,044 33,221 Commitments and contingencies Shareholders' Equity:
Common stock - par value $.001, 50,000,000 shares authorized;
14,937,123 and 14,586,402 issued; 14,829,163 and 14,464,715
outstanding, respectively 15 14 Additional paid-in-capital 91,789
85,160 Retained earnings 34,437 25,452 Accumulated other
comprehensive (loss) 895 580 Common stock in treasury, at cost -
40,000 shares (151) (151) Total Shareholders' Equity 126,985
111,055 Total Liabilities and Shareholders' Equity $160,029
$144,276 FARO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended (in
thousands) Jun 30, 2007 Jul 1, 2006 CASH FLOWS FROM: OPERATING
ACTIVITIES: Net income $8,984 $1,349 Adjustments to reconcile net
income to net cash used in operating activities: Depreciation and
amortization 2,042 2,073 Amortization of stock options and
restricted stock units 573 148 Provision for bad debts 28 125
Deferred income tax (188) (736) Change in operating assets and
liabilities: Decrease (increase) in: Accounts receivable, net
(1,769) (4,757) Inventories (784) 2,220 Prepaid expenses and other
current assets (2,919) (743) Increase (decrease) in: Accounts
payable and accrued liabilities (1,703) (2,444) Income taxes
payable (1,163) 726 Customer deposits (270) 82 Unearned service
revenues 3,270 1,598 Net cash provided by (used in) operating
activities 6,101 (359) INVESTING ACTIVITIES: Purchases of property
and equipment (1,345) (2,122) Payments for intangible assets (148)
(589) (Purchases of) proceeds from short- term investments (5,230)
700 Net cash used in investing activities (6,723) (2,011) FINANCING
ACTIVITIES: Payments of capital leases (55) (107) Income tax
benefit from exercise of stock options 2,260 - Proceeds from
issuance of stock, net 3,356 1 Net cash provided by financing
activities 5,561 (106) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (1,415) 115 INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 3,524 (2,361) CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 15,689 9,278 CASH AND CASH EQUIVALENTS, END OF PERIOD
$19,213 $6,917 DATASOURCE: FARO Technologies, Inc. CONTACT: Keith
Bair, Senior Vice President and CFO, FARO Technologies, Inc.,
+1-407-333-9911, Web site: http://www.faro.com/
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