LAKE MARY, Fla., Feb. 12 /PRNewswire-FirstCall/ -- 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, Dec 31, Dec 31, Dec 31, 2008 2007 2008 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 FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
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 DATASOURCE: FARO
Technologies, Inc. CONTACT: Keith Bair, Senior Vice President and
CFO, , +1-407-333-9911, of FARO Technologies, Inc. Web site:
http://www.faro.com/
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