FORM 10-K
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Florida
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59-3157093
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(State or Other Jurisdiction
of Incorporation or Organization)
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(I.R.S. Employer
Identification Number)
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250 Technology Park, Lake Mary, FL
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32746
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $.001
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Nasdaq Global Select Market
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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an economic downturn in the manufacturing industry or the domestic and international economies in the regions of the world where we operate;
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our inability to further penetrate our customer base and target markets;
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development by others of new or improved products, processes or technologies that make our products less competitive or obsolete;
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our inability to maintain what we believe to be our technological advantage by developing new products and enhancing our existing products;
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the results of our internal review and our outside legal counsel's review of our pricing and other practices under our General Services Administration Federal Supply Schedule contracts, the outcome of the U.S. Government’s review of, or investigation into, our potential overcharging of the U.S. Government under such contracts, any resulting penalties, damages or sanctions imposed on us and the outcome of any resulting litigation to which we may become a party, loss of future government sales and potential impacts on customer and supplier relationships and our reputation;
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risks associated with expanding international operations, such as difficulties in staffing and managing foreign operations, increased political and economic instability, compliance with potentially evolving 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;
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changes in trade regulation, which result in rising prices of imported steel, steel byproducts, aluminum, and aluminum byproducts used as raw materials in the production of measurement devices, and our ability to pass those costs on to our customers or require our suppliers to absorb such costs;
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changes in foreign regulation, which may result in rising prices of our measurement devices sold as exports to our international customers, our customers’ willingness to absorb incremental import tariffs, and the corresponding impact on our profitability;
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our inability to successfully identify and acquire target companies and achieve expected benefits from, and effectively integrate, acquisitions that are consummated;
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the cyclical nature of the industries of our customers and material adverse changes in our customers’ access to liquidity and capital;
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change in the potential for the computer-aided measurement (“CAM2”) market and the potential adoption rate for our products, which are difficult to quantify and predict;
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our inability to protect our patents and other proprietary rights in the United States and foreign countries;
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our inability to adequately establish and maintain effective internal controls over financial reporting;
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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, shrinkage or other inventory losses due to product
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changes in gross margin due to a changing mix of products sold and the different gross margins on different products and sales channels;
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changes in applicable laws, rules or regulations, or their interpretation or enforcement, or the enactment of new laws, rules or regulations that apply to our business operations or require us to incur significant expenses for compliance;
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our inability to successfully comply with the requirements of the Restriction of Hazardous Substances (“ROHS2”) Directive and the Waste Electrical and Electronic Equipment (“WEEE”) Directive in the European Union;
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the inability of our products to displace traditional measurement devices and attain broad market acceptance;
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the impact of competitive products and pricing on our current offerings;
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our ability to successfully complete our Chief Executive Officer transition or the loss of other key personnel;
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difficulties in recruiting research and development engineers and application engineers;
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the failure to effectively manage the effects of any future growth;
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the impact of reductions or projected reductions in government spending, or uncertainty regarding future levels of government expenditures, particularly in the defense sector;
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variations in our effective income tax rate, which make it difficult to predict our effective income tax rate on a quarterly and annual basis, and the impact of the U.S. Tax Cuts and Jobs Act of 2017 on the global intangible low-taxed income of foreign subsidiaries;
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the loss of key suppliers and the inability to find sufficient alternative suppliers in a reasonable period of time or on commercially reasonable terms;
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the impact of fluctuations in exchange rates;
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the effect of estimates and assumptions with respect to critical accounting policies and the impact of the adoption of recently issued accounting pronouncements;
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the magnitude of increased warranty costs from new product introductions and enhancements to existing products;
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the sufficiency of our plants to meet manufacturing requirements;
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the continuation of our share repurchase program;
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the sufficiency of our working capital and cash flow from operations to fund our long-term liquidity requirements;
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the impact of geographic changes in the manufacturing or sales of our products on our effective income tax rate; and
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our ability to comply with the requirements for favorable income tax rates in foreign jurisdictions.
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Articulated Arm – The articulated arm is comprised of three major joints, each of which may consist of one, two or three axes of motion. The articulated arm is available in a variety of sizes, configurations and precision levels suitable for a broad range of applications. To take a measurement, the operator simply touches the object to be measured with a probe at the end of the arm and presses a button. Data can be captured at either individual points or a series of points. Optical encoders, located at each of the joints of the arm, measure the angles at those joints. This rotational measurement data is transmitted to an on-board controller that converts the arm angles to precise locations in 3D space using “xyz” position coordinates and “ijk” orientation coordinates.
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Computer – We pre-install our CAM2® software primarily on either a notebook or desktop-style computer, depending on the customer’s need, and the measurement arm, computer and installed software are sold as a system. We purchase the computers sold with our products from various suppliers.
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Laser Tracker Vantage – The FARO Laser Tracker Vantage utilizes an ultra-precise laser beam to measure objects of up to 80 meters. It enables manufacturing, engineering, and quality control professionals to measure and inspect large parts, machine tools and other large objects on-site and in-process.
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Laser Tracker ION – The FARO Laser Tracker ION is an interferometer (IFM)-based measurement system that provides the high accuracy and range to complete measurement tasks, such as in-line measurements, high-speed dynamic measurements, or high-accuracy machine calibration.
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6DoF FARO Vantage Laser Tracker – Together with the hand-held 6Probe, a fully-integrated hand-held probe, the 6DoF FARO Vantage Laser Tracker expands the capabilities of large volume measurement by allowing users to access hidden, hard-to-reach locations by probing and scanning.
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Computer – The FARO Laser TrackerTM includes a notebook or desktop-style computer, depending on the customer’s requirements, that includes the pre-installed CAM2® Software.
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CAM2® 2018 allows customers to complete measurement jobs quickly and gives customers the freedom to measure as required by the application.
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CAM2 SmartInspect is our CAM2 solution for measuring geometry and building dimensions. The software allows customers to quickly measure geometric features and report dimensions for control.
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BuildIT is a CAD-to-part inspection software that enables quick and easy dimensional verification of manufactured parts and assemblies for tool building, assembly, alignment, process automation, reverse engineering and quality control. BuildIT’s advanced analysis and reporting capabilities combine measurement data from multiple sources to produce detailed graphical and textual reports that are used to quickly identify manufacturing and production trends. With both numerical and graphical feedback of real-time deviations, BuildIT allows users to position parts with micrometer accuracy for high-precision assembly and alignment applications.
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FARO SCENE software combines ease-of-use, networking, and an enhanced 3D experience to deliver a complete scan processing solution. With SCENE, customers can display, analyze, administer and edit 3D measurements in point clouds.
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FARO Zone software makes diagramming and pre-planning easier for law enforcement officers, firefighters and loss control engineers by allowing the users who need to draw site plans or crash or crime scene diagrams to be able to do so in a fast and efficient manner.
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FARO As-BuiltTM software products enable and simplify the use of real world objects in CAD applications. Primarily serving the surveying and architecture, engineering and construction spaces, the offering allows the user to integrate 3D laser scan data with CAD environments.
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the inability to assimilate effectively the operations, products, technologies and personnel of the acquired companies (some of which may be located in diverse geographic regions);
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the inability to maintain uniform standards, controls, procedures and policies;
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the need or obligation to divest portions of the acquired companies; and
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the potential impairment of relationships with customers.
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adverse changes in the manufacturing industry and general economic conditions;
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the effectiveness of sales promotions;
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geographic expansion in our regions;
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training and ramp-up time for new sales people;
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investments in strategic sales, product or other initiatives;
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investments in technologies and new products and product enhancements, including costs associated with new development and product introductions, and the timing and market acceptance of new products and product enhancements;
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manufacturing inefficiencies related to new product introductions;
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excess or obsolete inventory, shrinkage or other inventory losses due to product obsolescence, change in demand for our products, scrap or material price changes;
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expansion of our manufacturing capability;
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the size and timing of customer orders, many of which are received towards the end of a quarter;
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the amount of time that it takes to fulfill orders and ship our products;
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the length of our sales cycle to new customers;
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customer order deferrals in anticipation of new products and product enhancements;
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start-up costs and ramp-up time associated with opening new sales offices outside of the United States;
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variations in our effective income tax rate and difficulty in predicting our effective tax rate on a quarterly and annual basis; and
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litigation and regulatory action brought against us.
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difficulties in staffing and managing foreign operations;
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political and economic instability;
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unexpected changes in regulatory requirements and laws;
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longer customer payment cycles and difficulty collecting accounts receivable;
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compliance with export and import regulations, including tariffs, and trade restrictions;
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governmental restrictions on the transfer of funds to us from our operations outside the United States; and
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burdens of complying with a wide variety of foreign laws and labor practices.
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increased complexity;
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increased responsibility for existing and new management personnel; and
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incremental strain on our operations and financial and management systems.
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facilitate the purchase and distribution of thousands of inventory items;
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receive, process and ship orders on a timely basis;
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accurately bill and collect from customers;
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process payments to suppliers and employees; and
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summarize results and manage our business.
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fluctuations in demand for, and sales of, our products or prolonged downturns in the industries that we serve;
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actual or anticipated variations in quarterly or annual operating results;
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general economic uncertainties;
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speculation in the press or investment community; and
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announcements of technological innovations or new products by us or our competitors.
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a limitation on shareholders’ ability to call a special meeting of our shareholders;
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advance notice requirements to nominate directors for election to our board of directors or to propose matters that can be acted on by shareholders at shareholder meetings;
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our classified board of directors, which means that approximately one-third of our directors are elected each year; and
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the authority of the board of directors to issue, without shareholder approval, preferred stock with such terms as the board of directors may determine.
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Company/Market/Peer Group
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2013
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2014
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2015
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2016
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2017
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2018
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FARO Technologies, Inc.
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$
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100.00
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$
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107.51
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$
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50.63
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$
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61.75
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$
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80.62
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$
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69.71
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Nasdaq Composite-Total Returns
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$
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100.00
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$
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114.75
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$
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122.74
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$
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133.62
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$
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173.22
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$
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168.30
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Morningstar Scientific & Technical Instruments
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$
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100.00
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$
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107.77
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$
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93.74
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$
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114.13
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$
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159.88
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$
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143.60
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Year ended December 31,
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in thousands, except share and per-share data
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2018
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2017
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2016
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2015
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2014
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Consolidated Statement of Operations Data:
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Sales
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$
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403,627
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$
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360,917
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$
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325,584
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$
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317,548
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$
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341,826
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Gross profit (1)
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228,345
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204,637
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177,960
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167,236
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188,510
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Income from operations
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5,754
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5,322
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13,284
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13,122
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37,340
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Income before income tax expense
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4,558
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5,827
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12,626
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12,806
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37,522
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Net income (loss)
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4,930
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(14,516
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)
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11,107
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12,813
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33,649
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Net income (loss) per common share:
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||||||||||
Basic
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$
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0.29
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$
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(0.87
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)
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$
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0.67
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$
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0.74
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$
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1.95
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Diluted
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$
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0.29
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$
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(0.87
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)
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$
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0.67
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$
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0.74
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$
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1.93
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Weighted average shares outstanding:
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Basic
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17,043,167
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16,711,534
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16,654,786
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17,288,665
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17,247,727
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|||||
Diluted
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17,348,456
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16,711,534
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16,681,710
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17,389,473
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17,416,453
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|||||
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As of December 31,
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||||||||||||||||||
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2018
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2017
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2016
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2015
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2014
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Consolidated Balance Sheet Data:
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Working capital (2) (3)
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$
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219,219
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$
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218,274
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$
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212,055
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$
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221,335
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$
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250,234
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Total assets
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506,244
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458,578
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423,714
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409,186
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425,463
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Total debt-capital leases
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360
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475
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21
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28
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8
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Total shareholders’ equity
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376,609
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352,066
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339,657
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327,644
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343,854
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(1)
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In 2016, certain prior year stock compensation expenses were reclassified between cost of sales, general and administrative, selling and marketing, and research and development expenses to reflect the appropriate departmental costs. As a result of this reclassification, gross profit for each of the years ended December 31, 2015 and 2014 was reduced by $0.4 million.
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(2)
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In 2015, management reassessed certain inventory policies based on the then-current sales and customer trends. As a result, we now expect our sales demonstration inventory to be held by our sales representatives for more than one year. To reflect this change in policy, we reclassified $18.5 million as of December 31, 2015 and December 31, 2014 from current assets to long-term assets, impacting the working capital calculation.
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(3)
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In 2017, we adopted Accounting Standards Update 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), as issued by the Financial Accounting Standards Board, which requires that deferred tax liabilities and assets be classified as non-current in a classified balance sheet. We adopted ASU 2015-17 on a retrospective basis. As a result, the working capital amounts as of December 31, 2016, 2015 and 2014 have been reduced by $7.6 million, $7.8 million and $5.9 million, respectively, to conform with the current year presentation of deferred tax assets as non-current assets.
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◦
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FARO ScanPlan - The FARO ScanPlan is a handheld mapper that captures 2D floor plans. The FARO ScanPlan performs real-time capturing and diagramming of as-built floor plans of buildings for threat assessment, pre-incident planning and fire protection engineering. The FARO ScanPlan comes with FARO Zone 2D software to turn any floor plan map into a completed diagram by adding doors, stairs, hazardous materials, notes and dimensions, among others.
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◦
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FARO TracerSI - The FARO TracerSI accurately projects a laser line onto a surface or object, providing a virtual template that operators and assemblers can use to quickly and accurately position components with confidence. The laser template is created using a 3D CAD model that enables the system to visually project a laser outline of parts, reference points, or areas of interest. The result is a virtual and collaborative 3D template to streamline a wide range of assembly and production applications.
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◦
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FARO Design ScanArm®2.5C and FARO PrizmTM - The FARO Design ScanArm®2.5C is a color-capable, portable lightweight 3D ScanArm. Using the new FARO PrizmTM full-color Laser Line Probe with 3D design and modeling software, the FARO Design ScanArm®2.5C delivers high-resolution, color point-cloud data, enabling more insight into object design and creation.
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◦
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FARO 8-Axis FaroArm® - This comprehensive solution combines either the portable Quantum FaroArm®, Quantum ScanArm or Design ScanArm® portfolio products with a functionally integrated, yet physically separate, 8th axis.
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◦
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6DoF FARO Vantage Laser Tracker – Together with the hand-held 6Probe, a fully-integrated hand-held probe, the 6DoF FARO Vantage Laser Tracker expands the capabilities of large volume measurement by allowing users to access hidden, hard-to-reach locations by probing and scanning.
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◦
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FARO Digi-Cube® – FARO Digi-Cube® is a high-precision, high scan rate, digital auto-controlled scan head that is easily integrated into a variety of laser scanning products. This product is used for exacting applications such as high accuracy laser marking, scribing and engraving, laser 3D printing, photovoltaic production and welding.
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Years ended December 31,
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2018
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2017
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Change
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(dollars in millions)
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|
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% of Sales
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|
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% of Sales
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2018 vs 2017
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||||||||
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|
|
|
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||||||||
Product sales
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$
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311.1
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|
77.1
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%
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|
$
|
277.9
|
|
77.0
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%
|
|
$
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33.2
|
|
Service sales
|
|
92.5
|
|
22.9
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%
|
|
83.0
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|
23.0
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%
|
|
9.5
|
|
|||
Total sales
|
|
403.6
|
|
100.0
|
%
|
|
360.9
|
|
100.0
|
%
|
|
42.7
|
|
|||
Product cost of sales
|
|
124.8
|
|
30.9
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%
|
|
110.1
|
|
30.5
|
%
|
|
14.7
|
|
|||
Service cost of sales
|
|
50.5
|
|
12.5
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%
|
|
46.1
|
|
12.8
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%
|
|
4.3
|
|
|||
Total cost of sales (exclusive of depreciation and amortization, shown separately below)
|
|
175.3
|
|
43.4
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%
|
|
156.3
|
|
43.3
|
%
|
|
19.0
|
|
|||
Gross profit
|
|
228.3
|
|
56.6
|
%
|
|
204.6
|
|
56.7
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%
|
|
23.7
|
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
|
116.9
|
|
29.0
|
%
|
|
103.5
|
|
28.7
|
%
|
|
13.4
|
|
|||
General and administrative
|
|
47.7
|
|
11.8
|
%
|
|
43.8
|
|
12.1
|
%
|
|
3.9
|
|
|||
Depreciation and amortization
|
|
18.3
|
|
4.5
|
%
|
|
16.6
|
|
4.6
|
%
|
|
1.7
|
|
|||
Research and development
|
|
39.7
|
|
9.8
|
%
|
|
35.4
|
|
9.8
|
%
|
|
4.3
|
|
|||
Total operating expenses
|
|
222.6
|
|
55.1
|
%
|
|
199.3
|
|
55.2
|
%
|
|
23.3
|
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Other expense (income)
|
|
1.2
|
|
0.3
|
%
|
|
(0.5
|
)
|
(0.1
|
)%
|
|
1.7
|
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Income tax (benefit) expense
|
|
(0.4
|
)
|
(0.1
|
)%
|
|
20.3
|
|
5.6
|
%
|
|
(20.7
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
4.9
|
|
1.2
|
%
|
|
$
|
(14.5
|
)
|
(4.0
|
)%
|
|
$
|
19.4
|
|
•
|
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 and 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.”
|
3D Manufacturing
|
|
Years ended December 31,
|
|||||
(dollars in millions)
|
|
2018
|
2017
|
||||
Total sales
|
|
$
|
264.4
|
|
$
|
243.5
|
|
Segment profit
|
|
$
|
80.8
|
|
$
|
77.5
|
|
Segment profit as a % of 3D Manufacturing segment sales
|
|
30.5
|
%
|
31.8
|
%
|
Construction BIM
|
|
Years ended December 31,
|
|||||
(dollars in millions)
|
|
2018
|
2017
|
||||
Total sales
|
|
$
|
96.2
|
|
$
|
86.3
|
|
Segment profit
|
|
$
|
27.5
|
|
$
|
21.1
|
|
Segment profit as a % of Construction BIM segment sales
|
|
28.6
|
%
|
24.4
|
%
|
Emerging Verticals
|
|
Years ended December 31,
|
|||||
(dollars in millions)
|
|
2018
|
2017
|
||||
Total sales
|
|
$
|
43.0
|
|
$
|
31.1
|
|
Segment profit
|
|
$
|
3.1
|
|
$
|
2.5
|
|
Segment profit as a % of Emerging Vertical segment sales
|
|
7.3
|
%
|
8.0
|
%
|
|
|
Years ended December 31,
|
|
|
||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||||||
(dollars in millions)
|
|
|
% of Sales
|
|
|
% of Sales
|
|
2017 vs 2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Product sales
|
|
$
|
277.9
|
|
77.0
|
%
|
|
$
|
256.0
|
|
78.6
|
%
|
|
$
|
21.9
|
|
Service sales
|
|
83.0
|
|
23.0
|
%
|
|
69.6
|
|
21.4
|
%
|
|
13.4
|
|
|||
Total sales
|
|
360.9
|
|
100.0
|
%
|
|
325.6
|
|
100.0
|
%
|
|
35.3
|
|
|||
Product cost of sales
|
|
110.1
|
|
30.5
|
%
|
|
108.0
|
|
33.2
|
%
|
|
2.2
|
|
|||
Service cost of sales
|
|
46.1
|
|
12.8
|
%
|
|
39.7
|
|
12.2
|
%
|
|
6.5
|
|
|||
Total cost of sales
|
|
156.3
|
|
43.3
|
%
|
|
147.6
|
|
45.3
|
%
|
|
8.7
|
|
|||
Gross profit
|
|
204.6
|
|
56.7
|
%
|
|
178.0
|
|
54.7
|
%
|
|
26.7
|
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
|
103.5
|
|
28.7
|
%
|
|
79.9
|
|
24.5
|
%
|
|
23.6
|
|
|||
General and administrative
|
|
43.8
|
|
12.1
|
%
|
|
40.8
|
|
12.5
|
%
|
|
3.0
|
|
|||
Depreciation and amortization
|
|
16.6
|
|
4.6
|
%
|
|
13.9
|
|
4.3
|
%
|
|
2.7
|
|
|||
Research and development
|
|
35.4
|
|
9.8
|
%
|
|
30.1
|
|
9.3
|
%
|
|
5.3
|
|
|||
Total operating expenses
|
|
199.3
|
|
55.2
|
%
|
|
164.7
|
|
50.6
|
%
|
|
34.6
|
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Other (income) expense
|
|
(0.5
|
)
|
(0.1
|
)%
|
|
0.7
|
|
0.2
|
%
|
|
(1.2
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
|
20.3
|
|
5.6
|
%
|
|
1.5
|
|
0.5
|
%
|
|
18.8
|
|
|||
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(14.5
|
)
|
(4.0
|
)%
|
|
$
|
11.1
|
|
3.4
|
%
|
|
$
|
(25.6
|
)
|
3D Manufacturing
|
|
Years ended December 31,
|
|||||
(dollars in millions)
|
|
2017
|
2016
|
||||
Total sales
|
|
$
|
243.5
|
|
$
|
236.3
|
|
Segment profit
|
|
$
|
77.5
|
|
$
|
73.7
|
|
Segment profit as a % of 3D Manufacturing segment sales
|
|
31.8
|
%
|
31.2
|
%
|
Construction BIM
|
|
Years ended December 31,
|
|||||
(dollars in millions)
|
|
2017
|
2016
|
||||
Total sales
|
|
$
|
86.3
|
|
$
|
65.1
|
|
Segment profit
|
|
$
|
21.1
|
|
$
|
14.8
|
|
Segment profit as a % of Construction BIM segment sales
|
|
24.4
|
%
|
22.7
|
%
|
Emerging Verticals
|
|
Years ended December 31,
|
|||||
(dollars in millions)
|
|
2017
|
2016
|
||||
Total sales
|
|
$
|
31.1
|
|
$
|
24.2
|
|
Segment profit
|
|
$
|
2.5
|
|
$
|
9.6
|
|
Segment profit as a % of Emerging Vertical segment sales
|
|
8.0
|
%
|
39.8
|
%
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
< 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
> 5 Years
|
||||||||||
Operating lease obligations
|
|
$
|
19,628
|
|
|
$
|
7,474
|
|
|
$
|
6,403
|
|
|
$
|
2,583
|
|
|
$
|
3,168
|
|
Capital lease obligations
|
|
360
|
|
|
117
|
|
|
243
|
|
|
—
|
|
|
$
|
—
|
|
||||
Purchase obligations
|
|
59,168
|
|
|
56,852
|
|
|
2,316
|
|
|
—
|
|
|
—
|
|
|||||
Transition tax liability
|
|
13,413
|
|
|
1,166
|
|
2,333
|
|
3,353
|
|
6,561
|
|||||||||
Other obligations
|
|
5,531
|
|
|
5,531
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
$
|
98,100
|
|
|
$
|
71,140
|
|
|
$
|
11,295
|
|
|
$
|
5,936
|
|
|
$
|
9,729
|
|
(in thousands, except share and per share data)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
|
||||
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
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
20,093
|
|
|
$
|
11,569
|
|
Accrued liabilities
|
|
36,327
|
|
|
27,362
|
|
||
Income taxes payable
|
|
5,081
|
|
|
4,676
|
|
||
Current portion of unearned service revenues
|
|
32,878
|
|
|
29,674
|
|
||
Customer deposits
|
|
3,144
|
|
|
2,604
|
|
||
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 - See Note 13
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
||||
Preferred stock - par value $0.01, 10,000,000 shares authorized; none issued
|
|
—
|
|
|
—
|
|
||
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
|
|
|
|
Years ended December 31,
|
|||||||||||
(in thousands, except share and per share data)
|
|
2018
|
|
2017
|
|
2016
|
|||||||
SALES
|
|
|
|
|
|
|
|||||||
Product
|
|
$
|
311,102
|
|
|
$
|
277,922
|
|
|
$
|
256,010
|
|
|
Service
|
|
92,525
|
|
|
82,995
|
|
|
69,574
|
|
||||
Total sales
|
|
403,627
|
|
|
360,917
|
|
|
325,584
|
|
||||
COST OF SALES
|
|
|
|
|
|
|
|||||||
Product
|
|
124,802
|
|
|
110,143
|
|
|
107,965
|
|
||||
Service
|
|
50,480
|
|
|
46,137
|
|
|
39,659
|
|
||||
Total 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
|
|
1
|
|
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 INCOME (LOSS) PER SHARE - BASIC
|
|
$
|
0.29
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.67
|
|
|
NET INCOME (LOSS) PER SHARE - DILUTED
|
|
$
|
0.29
|
|
|
$
|
(0.87
|
)
|
|
$
|
0.67
|
|
|
Weighted average shares - Basic
|
|
17,043,167
|
|
|
16,711,534
|
|
|
16,654,786
|
|
||||
Weighted average shares - Diluted
|
|
17,348,456
|
|
|
16,711,534
|
|
|
16,681,710
|
|
|
|
Years ended December 31,
|
||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
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
|
|
|
|
|
|
|
|
Accumulated
Other Comprehensive Income (Loss) |
|
Common
Stock in Treasury |
|
Total
|
|||||||||||||||||
|
|
|
|
Additional
Paid-in Capital |
|
Retained Earnings
|
|
||||||||||||||||||||
|
|
Common Stock
|
|
|
|
||||||||||||||||||||||
(in thousands, except share data)
|
|
Shares
|
|
Amounts
|
|
|
|
||||||||||||||||||||
BALANCE JANUARY 1, 2016
|
|
16,588,118
|
|
|
$
|
18
|
|
|
$
|
206,996
|
|
|
$
|
172,329
|
|
|
$
|
(19,861
|
)
|
|
$
|
(31,838
|
)
|
|
$
|
327,644
|
|
Net income
|
|
|
|
|
|
|
|
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
|
|
20,925
|
|
|
|
|
5,374
|
|
|
|
|
|
|
|
|
5,374
|
|
||||||||||
Stock options exercised
|
|
71,748
|
|
|
|
|
674
|
|
|
|
|
|
|
|
|
674
|
|
||||||||||
Tax impact from restricted stock and stock options
|
|
|
|
|
|
(442
|
)
|
|
|
|
|
|
|
|
(442
|
)
|
|||||||||||
BALANCE DECEMBER 31, 2016
|
|
16,680,791
|
|
|
$
|
18
|
|
|
$
|
212,602
|
|
|
$
|
183,436
|
|
|
$
|
(24,561
|
)
|
|
$
|
(31,838
|
)
|
|
$
|
339,657
|
|
Net 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
|
|
19,881
|
|
|
|
|
6,450
|
|
|
|
|
|
|
|
|
6,450
|
|
||||||||||
Stock options exercised, net of shares withheld for employee taxes
|
|
86,994
|
|
|
|
|
3,284
|
|
|
|
|
|
|
|
|
3,284
|
|
||||||||||
Reissuance of treasury shares
|
|
9,218
|
|
|
|
|
281
|
|
|
|
|
|
|
29
|
|
|
310
|
|
|||||||||
Cumulative effect of the adoption of ASU 2016-09
|
|
|
|
|
|
|
438
|
|
|
$
|
(296
|
)
|
|
|
|
|
|
142
|
|
||||||||
BALANCE DECEMBER 31, 2017
|
|
16,796,884
|
|
|
$
|
18
|
|
|
$
|
223,055
|
|
|
$
|
168,624
|
|
|
$
|
(7,822
|
)
|
|
$
|
(31,809
|
)
|
|
$
|
352,066
|
|
Net income
|
|
|
|
|
|
|
|
4,930
|
|
|
|
|
|
|
4,930
|
|
|||||||||||
Currency translation adjustment, net of income tax
|
|
|
|
|
|
|
|
|
|
(10,661
|
)
|
|
|
|
(10,661
|
)
|
|||||||||||
Restricted stock issued and stock based compensation under incentive plans
|
|
15,960
|
|
|
|
|
7,620
|
|
|
|
|
|
|
|
|
7,620
|
|
||||||||||
Stock options exercised, net of shares withheld for employee taxes
|
|
382,957
|
|
|
1
|
|
|
17,027
|
|
|
|
|
|
|
|
|
17,028
|
|
|||||||||
Reissuance of treasury shares
|
|
57,210
|
|
|
|
|
3,627
|
|
|
|
|
|
|
200
|
|
|
3,827
|
|
|||||||||
Cumulative effect of the adoption of ASU 2014-09
|
|
|
|
|
|
|
|
|
1,799
|
|
|
|
|
|
|
1,799
|
|
||||||||||
BALANCE DECEMBER 31, 2018
|
|
17,253,011
|
|
|
$
|
19
|
|
|
$
|
251,329
|
|
|
$
|
175,353
|
|
|
$
|
(18,483
|
)
|
|
$
|
(31,609
|
)
|
|
$
|
376,609
|
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
CASH FLOWS FROM:
|
|
|
|
|
|
|
||||||
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
|
|
—
|
|
|
—
|
|
|
(357
|
)
|
|||
Change in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
(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
|
|
|||
Customer deposits
|
|
513
|
|
|
(461
|
)
|
|
(1,310
|
)
|
|||
Unearned service revenues
|
|
7,330
|
|
|
(1,690
|
)
|
|
273
|
|
|||
Net cash provided by operating activities
|
|
6,323
|
|
|
10,355
|
|
|
37,583
|
|
|||
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
||||||
(Purchases of) Proceeds from sale of investments
|
|
(14,000
|
)
|
|
32,000
|
|
|
—
|
|
|||
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
|
)
|
|||
Equity investments
|
|
(1,786
|
)
|
|
—
|
|
|
—
|
|
|||
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
|
|
—
|
|
|
—
|
|
|
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
|
|
•
|
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.”
|
•
|
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.
|
Machinery, equipment and software
|
2 to 5 years
|
Furniture and fixtures
|
3 to 10 years
|
•
|
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 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 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.”
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
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
|
|
|
|
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
|
|
|
|
||
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
|
|
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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.
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
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
|
|
|
||
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
|
|
|
|
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
|
%
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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
|
|
|
|
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.
|
|
|
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
|
•
|
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.
|
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.
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
10.18
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
10.27
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34
|
|
|
|
|
|
10.35
|
|
|
|
|
|
21.1
|
|
|
|
|
|
23.1
|
|
|
|
|
|
24.1
|
|
|
|
|
|
31-A
|
|
|
|
|
|
31-B
|
|
|
|
|
|
32-A
|
|
|
|
|
|
32-B
|
|
|
|
|
|
99.1
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Labels Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document
|
|
|
|
*
|
Indicates management contracts or compensatory plans or arrangements
|
**
|
Schedules and exhibits are omitted pursuant to Item 601(b)(2) of Regulation S-K. Registrant agrees to furnish supplementally a copy of any omitted schedules or exhibits to the Securities and Exchange Commission upon request.
|
|
|
|
|
FARO TECHNOLOGIES, INC.
|
|
|
|
|
|
Date:
|
February 20, 2019
|
By:
|
|
/s/ Robert Seidel
|
|
|
|
|
Robert Seidel, Chief Financial Officer
|
|
|
|
|
(Duly Authorized Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Simon Raab
|
|
Chairman of the Board, Director, President and Chief Executive Officer (Principal Executive Officer)
|
|
February 20, 2019
|
Simon Raab
|
|
|
|
|
|
|
|
|
|
/s/ Robert Seidel
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
February 20, 2019
|
Robert Seidel
|
|
|
|
|
|
|
|
|
|
/s/ John Caldwell
|
|
Director
|
|
February 20, 2019
|
John Caldwell
|
|
|
|
|
|
|
|
|
|
/s/ Lynn Brubaker
|
|
Director
|
|
February 20, 2019
|
Lynn Brubaker
|
|
|
|
|
|
|
|
|
|
/s/ Stephen R. Cole
|
|
Director
|
|
February 20, 2019
|
Stephen R. Cole
|
|
|
|
|
|
|
|
|
|
/s/ John Donofrio
|
|
Director
|
|
February 20, 2019
|
John Donofrio
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey A. Graves
|
|
Director
|
|
February 20, 2019
|
Jeffrey A. Graves
|
|
|
|
|
|
|
|
|
|
/s/ Yuval Wasserman
|
|
Director
|
|
February 20, 2019
|
Yuval Wasserman
|
|
|
|
|
•
|
you are employed by FARO Technologies, Inc. or a participating affiliate (“the Company” or “FARO”) and on payroll in the United States;
|
•
|
you are classified by the Company at the Senior Vice President level or above;
|
•
|
you receive an official written notice from the Plan Administrator stating you are eligible to participate in this Plan; and
|
•
|
you are not covered by an individual agreement or other plan that provides severance benefits (other than severance benefits in connection with a change in control of the Company).
|
•
|
not voluntarily terminate your employment, resign or retire with or from the Company for any reason;
|
•
|
be involuntarily terminated from the Company other than (a) For Cause, (b) as a result of a disability or death, or (c) through automatic termination due to an extended leave of absence;
|
•
|
not have been offered a job with a company or organization that purchases (or has purchased) some or all of the operation in which you are employed, or is a direct or indirect successor in ownership or management of the operation in which you are employed;
|
•
|
not have been offered a job with a third-party service provider to which your position with the Company has been outsourced;
|
•
|
not have been transferred to or offered a job with a company or organization that is affiliated (directly or indirectly) with the Company;
|
•
|
not be eligible to receive severance pay or benefits under any other severance plan or an individual agreement with the Company due to the termination (including severance benefits under a change in control agreement or plan);
|
•
|
execute and deliver to the Company a complete a release of claims generally as described below and in the form provided to you by the Company following your notification of termination (the “Release”) and not revoke such Release;
|
•
|
continue as a satisfactory employee until your termination date as determined by the Company in accordance with its needs; and
|
•
|
abide by such other written terms and conditions as the Company may establish as a condition to participation in, or payment of benefits under, the Plan.
|
•
|
Examine, without charge, at the Plan Administrator's office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series) filed for the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.
|
•
|
Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated Summary Plan Description. The administrator may make a reasonable charge for the copies.
|
1.
|
A single lump sum severance payment equivalent to twelve (12) months’ base pay;
|
2.
|
If you are eligible for and you timely elect COBRA coverage following your termination of employment, the Company will pay the Company’s regular employer portion towards your COBRA premiums for any medical, dental and/or vision insurance coverage you elect to continue, based on your benefits plan elections in effect at the time of termination for up to twelve (12) months, or if earlier, the time period for which you are eligible for COBRA continuation. You will be required to pay the employee portion and after the end of the Company subsidy period, continuation under COBRA will be solely at your expense); and
|
3.
|
Use of the Employee Assistance Plan provided by the Company for the subsidized COBRA period.
|
•
|
Administrative offices, first floor, identified in the new territorial cadastre (NCT), sheet 23, cadastral parcel 7, sub-parcel 23, class A/10, Class 02, cadastral income EUR 557.77;
|
Cadastral identification
|
Proposed classification data
|
Prog.
|
Op.
|
Sheet
|
Number
|
Sub.
|
Location
|
ZC
|
Cat.
|
Cl.
|
Cons.
|
SupCat.
|
Cad. income
|
Rur
|
|
1
|
S
|
23
|
7
|
12
|
|
|
|
|
|
|
|
|
|
2
|
C
|
NCT
|
7
|
23
|
Via Matteotti G. no. 163/B, first floor
|
U
|
A10
|
02
|
3
|
75
|
557.77
|
|
Italian Revenue Agency
Land Registry for Buildings
Provincial Office
of Brescia
|
Protocol declaration no. of
Cadastral map of urban real estate unit
Via Matteotti G. 163/B
|
|
Cadastral ID data:
Section : NCT
Sheet : 23
Parcel : 7
Sub-parcel: 23
|
Prepared by:
Augusto Berardi
Entered in the Register of Surveyors
Province of Brescia under no. 2822
|
Name
|
|
Jurisdiction of Organization
|
|
|
|
Antares-Desenvolvimento de Software, Lda.
|
|
Portugal
|
|
|
|
Cam2 SRL
|
|
Italy
|
|
|
|
Cam2 Sweden AB
|
|
Sweden
|
|
|
|
FARO Benelux BV
|
|
Netherlands
|
|
|
|
FARO Business Technologies India Pvt. Ltd
|
|
India
|
|
|
|
FARO Cayman LP
|
|
Cayman Islands
|
|
|
|
FARO Cayman Ltd
|
|
Cayman Islands
|
|
|
|
FARO Delaware LLC
|
|
Delaware
|
|
|
|
FARO Deutschland Holding GmbH
|
|
Germany
|
|
|
|
FARO Europe GmbH & Co. KG
|
|
Germany
|
|
|
|
FARO FHN Netherlands Holdings BV
|
|
Netherlands
|
|
|
|
FARO Japan Inc.
|
|
Japan
|
|
|
|
FARO Scanning GmbH
|
|
Germany
|
|
|
|
FARO Scanner Production GmbH
|
|
Germany
|
|
|
|
FARO 3D Software GmbH
|
|
Germany
|
|
|
|
FARO International (Shanghai) Co., Ltd
|
|
China
|
|
|
|
FARO Singapore Pte Ltd
|
|
Singapore
|
|
|
|
FARO Spain SL
|
|
Spain
|
|
|
|
FARO Swiss Holding GmbH
|
|
Switzerland
|
|
|
|
FARO Swiss Manufacturing GmbH
|
|
Switzerland
|
|
|
|
FARO Technology Polska sp.zo.o
|
|
Poland
|
|
|
|
FARO Turkey Olcu Sistemleri Ltd. Sti
|
|
Turkey
|
|
|
|
FARO Verwaltungs GmbH
|
|
Germany
|
|
|
|
FARO Technologies (Thailand) Ltd
|
|
Thailand
|
|
|
|
Faro Laser Trackers, LLC
|
|
Delaware
|
|
|
|
3D Measurement Technologies, S de RL de CV
|
|
Mexico
|
|
|
|
OOO FARO RUS
|
|
Russia
|
|
|
|
FARO Technologies UK Ltd.
|
|
United Kingdom
|
|
|
|
FARO Technologies do Brasil Ltda
|
|
Brazil
|
|
|
|
FARO Technologies Canada, Inc.
|
|
Canada
|
|
|
|
MWF-Technology GmbH
|
|
Germany
|
|
|
|
Moldware GmbH
|
|
Germany
|
|
|
|
Open Technologies SRL
|
|
Italy
|
|
|
|
Opto-Tech SRL
|
|
Italy
|
|
|
|
Laser Control Systems Limited.
|
|
United Kingdom
|
|
|
|
Photocore AG
|
|
Switzerland
|
|
|
|
No.
|
|
Location
|
|
Sq. Ft.
|
|
Owned/
Leased
|
|
Purposes
|
1
|
|
125 Technology Park, Lake
Mary, Florida
|
|
35,000
|
|
Leased
|
|
Manufacturing, research and development, service
|
2
|
|
250 Technology Park, Lake
Mary, Florida
|
|
46,500
|
|
Leased
|
|
Headquarters, sales, marketing, administration
|
3
|
|
290 National Road
Exton, Pennsylvania
|
|
90,400
|
|
Leased
|
|
Manufacturing, research and development, service
|
4
|
|
One Wall Street Suite 115, Hudson, NH 03051
|
|
21,400
|
|
Leased
|
|
Manufacturing, research and development, service, sales
|
5
|
|
Lingwiesenstrasse 11/2
70825 Korntal-Muenchingen
BW, Germany
|
|
105,300
|
|
Leased
|
|
European headquarters, manufacturing, sales, research and development, service
|
6
|
|
Wiesengasse 20
CH-8222 Beringen
Switzerland
|
|
15,900
|
|
Leased
|
|
Manufacturing
|
7
|
|
Unit 1° Great Central Way
Butlers Leap
Rugby
Warwickshire
CV21 3Xh, Great Britain
|
|
12,700
|
|
Leased
|
|
Sales, service
|
8
|
|
716 Kumada Nagakute-shi,
Aichi 480-1144, Japan
|
|
15,900
|
|
Leased
|
|
Sales, service
|
9
|
|
188 Pingfu Road, Shanghai,
China
|
|
24,700
|
|
Leased
|
|
Sales, service
|
10
|
|
No. 3 Changi South St 2
#01-01 Xilin Districentre
Building B, Singapore
|
|
22,000
|
|
Leased
|
|
Asia headquarters, manufacturing, sales, service
|
11
|
|
215 Avenida Centuria, Parque Indutrial, Apodaca, Nuevo Leon 66600 - Mexico
|
|
36,000
|
|
Leased
|
|
Sales, service
|
12
|
|
Via Giancomo Matteotti, 161, 25086 Rezzato BS
|
|
21,420
|
|
Leased
|
|
Manufacturing, research and development, service, sales
|