In the reconciliations that follow, the "as reported" amounts for prior periods reflect the above reclassification of depreciation and amortization expenses.

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP

(UNAUDITED)

Three months ended September 30,

Nine months ended September 30,

(dollars in thousands, except per share data)

2019

2018

2019

2018

Total sales, as reported

$

90,516

$

99,705

$

277,624

$

290,783

GSA sales adjustment ⁽¹⁾

—

—

5,840

—

Non-GAAP total sales

$

90,516

$

99,705

$

283,464

$

290,783

Gross profit, as reported

$

50,772

$

50,612

$

154,531

$

158,712

GSA sales adjustment ⁽¹⁾

—

—

5,840

—

Stock-based compensation ⁽²⁾

270

241

771

620

Inventory reserve charge ⁽³⁾

—

4,734

—

4,734

Non-GAAP adjustments to gross profit

270

4,975

6,611

5,354

Non-GAAP gross profit

$

51,042

$

55,587

$

161,142

$

164,066

Gross margin, as reported

56.1

%

50.8

%

55.7

%

54.6

%

Non-GAAP gross margin

56.4

%

55.8

%

56.8

%

56.4

%

Operating expenses, as reported

$

56,663

$

53,324

$

164,957

$

158,804

Advisory fees for GSA Matter ⁽⁴⁾

—

—

(1,244)

—

Stock-based compensation ⁽²⁾

(3,117)

(1,925)

(7,932)

(5,097)

Executive severance costs

(1,217)

—

(1,217)

—

Executive sign-on bonuses & relocation costs

(270)

—

(845)

—

Purchase accounting intangible amortization

(924)

(1,131)

(2,665)

(2,601)

Non-GAAP adjustments to operating expenses

(5,528)

(3,056)

(13,903)

(7,698)

Non-GAAP operating expenses

$

51,135

$

50,268

$

151,054

$

151,106

Loss from operations, as reported

$

(5,891)

$

(2,712)

$

(10,426)

$

(92)

Non-GAAP adjustments to gross profit

270

4,975

6,611

5,354

Non-GAAP adjustments to operating expenses

5,528

3,056

13,903

7,698

Non-GAAP (loss) income from operations

$

(93)

$

5,319

$

10,088

$

12,960

Other expense, net, as reported

$

490

$

130

$

2,470

$

663

Interest expense increase due to GSA sales adjustment ⁽¹⁾

(145)

—

(632)

—

Present4D impairment ⁽⁵⁾

—

—

(1,535)

—

Non-GAAP adjustments to other expense, net

(145)

—

(2,167)

—

Non-GAAP other expense, net

$

345

$

130

$

303

$

663

Net loss, as reported

$

(6,199)

$

(2,488)

$

(12,452)

$

(828)

Non-GAAP adjustments to gross profit

270

4,975

6,611

5,354

Non-GAAP adjustments to operating expenses

5,528

3,056

13,903

7,698

Non-GAAP adjustments to other expense, net

145

—

2,167

—

Income tax effect of non-GAAP adjustments

(1,452)

(1,084)

(4,484)

(2,126)

Other tax adjustments ⁽⁶⁾

1,555

—

2,419

—

Non-GAAP net (loss) income

$

(153)

$

4,459

$

8,164

$

10,098

Net loss per share - Diluted, as reported

$

(0.36)

$

(0.15)

$

(0.72)

$

(0.05)

GSA sales adjustment ⁽¹⁾

—

—

0.34

—

Stock-based compensation ⁽²⁾

0.19

0.12

0.50

0.34

Inventory reserve charge ⁽³⁾

—

0.28

—

0.28

Advisory fees for GSA Matter ⁽⁴⁾

—

—

0.07

—

Executive severance costs

0.07

—

0.07

—

Executive sign-on bonuses & relocation costs

0.02

—

0.05

—

Purchase accounting intangible amortization

0.05

0.07

0.15

0.15

Interest expense increase due to GSA sales adjustment ⁽¹⁾

0.01

—

0.04

—

Present4D impairment ⁽⁵⁾

—

—

0.09

—

Income tax effect of non-GAAP adjustments

(0.08)

(0.06)

(0.26)

(0.13)

Other tax adjustments ⁽⁶⁾

0.09

—

0.14

—

Non-GAAP net (loss) income per share - Diluted

$

(0.01)

$

0.26

$

0.47

$

0.59