FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended

Twelve Months Ended

(in thousands, except share and per share data)

December 31, 2016

December 31, 2015

December 31, 2016

December 31, 2015

SALES

Product

$

73,778

$

77,558

$

256,010

$

259,842

Service

17,920

13,769

69,574

57,706

Total sales

91,698

91,327

325,584

317,548

COST OF SALES

Product

33,032

33,406

107,965

114,257

Service

9,989

9,398

39,659

36,055

Total cost of sales (exclusive of depreciation and amortization, shown separately below)

43,021

42,804

147,624

150,312

GROSS PROFIT

48,677

48,523

177,960

167,236

OPERATING EXPENSES

Selling and marketing

23,634

21,328

79,870

79,837

General and administrative

9,477

10,041

40,813

36,370

Depreciation and amortization

4,135

3,195

13,868

11,217

Research and development

7,815

7,195

30,125

26,690

Total operating expenses

45,061

41,759

164,676

154,114

INCOME FROM OPERATIONS

3,616

6,764

13,284

13,122

OTHER (INCOME) EXPENSE

Interest income, net

(45)

(19)

(164)

(55)

Other (income) expense, net

(2)

(1,150)

822

371

INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)

3,663

7,933

12,626

12,806

INCOME TAX EXPENSE (BENEFIT)

118

(952)

1,519

(7)

NET INCOME

$

3,545

$

8,885

$

11,107

$

12,813

NET INCOME PER SHARE - BASIC

$

0.21

$

0.52

$

0.67

$

0.74

NET INCOME PER SHARE - DILUTED

$

0.21

$

0.52

$

0.67

$

0.74

Weighted average shares - Basic

16,676,764

17,051,427

16,654,786

17,288,665

Weighted average shares - Diluted

16,720,571

17,103,622

16,681,710

17,389,473