FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Years Ended December 31,

(in thousands)

2020

2019

CASH FLOWS FROM:

OPERATING ACTIVITIES:

Net income (loss)

$

629

$

(62,147)

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

14,239

18,516

Compensation for stock options and restricted stock units

8,314

11,071

Provision for bad debts (net of recoveries)

440

2,090

Loss on disposal of assets

383

2,639

Provision for excess and obsolete inventory

1,349

16,886

Impairment of goodwill

—

21,233

Impairment of acquired intangibles

—

10,548

Impairment of loan to affiliate

—

549

Deferred income tax benefit

(28,444)

(6,304)

Change in operating assets and liabilities:

(Increase) decrease in:

Accounts receivable, net

12,346

10,406

Inventories

10,343

(4,136)

Prepaid expenses and other assets

3,862

1,188

Increase (decrease) in:

Accounts payable and accrued liabilities

2,390

(2,518)

Income taxes payable

(3,357)

1,041

Customer deposits

(374)

(30)

Unearned service revenues

(726)

11,436

Net cash provided by operating activities

21,394

32,468

INVESTING ACTIVITIES:

Purchases of investments

—

(50,000)

Proceeds from sale of investments

25,000

50,000

Purchases of property and equipment

(4,774)

(6,675)

Payments for internally capitalized patents

(1,298)

(2,118)

Acquisition of business, net of cash received

(6,036)

—

Other

1,015

(549)

Net cash provided by (used in) investing activities

13,907

(9,342)

FINANCING ACTIVITIES:

Payments on capital leases

(338)

(358)

Payments of contingent consideration for acquisitions

(733)

(3,101)

Payments for taxes related to net share settlement of equity awards

(2,602)

(2,199)

Proceeds from issuance of stock related to stock option exercises

14,731

7,901

Net cash provided by financing activities

11,058

2,243

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

5,640

(518)

INCREASE IN CASH AND CASH EQUIVALENTS

51,999

24,851

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

133,634

108,783

CASH AND CASH EQUIVALENTS, END OF YEAR

$

185,633

$

133,634