FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended March 31,

(in thousands)

Cash flows from:

Operating activities:

Net loss

$            (7,267)

$          (21,164)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

3,621

4,413

Stock-based compensation

4,539

3,634

Deferred income tax (benefit) and other non-cash charges

(805)

562

Provision for excess and obsolete inventory

152

344

Amortization of debt discount and issuance costs

112

—

Loss on disposal of assets

96

69

Provisions for bad debts, net of recoveries

300

33

Change in operating assets and liabilities:

Decrease (Increase) in:

Accounts receivable

1,405

2,378

Inventories

1,957

(1,530)

Prepaid expenses and other current assets

5,587

(4,219)

(Decrease) Increase in:

Accounts payable and accrued liabilities

(5,721)

(2,450)

Income taxes payable

783

(102)

Customer deposits

819

(433)

Unearned service revenues

1,282

121

Other liabilities

(285)

—

Net cash provided by (used in) operating activities

6,575

(18,344)

Investing activities:

Purchases of property and equipment

(1,323)

(1,688)

Purchases of short-term investments

—

(20,024)

Cash paid for technology development, patents and licenses

(1,442)

(1,820)

Net cash used in investing activities

(2,765)

(23,532)

Financing activities:

Payments on finance leases

(40)

(44)

Cash settlement of equity awards

—

14

Proceeds from issuance of 5.50% Convertible Senior Notes, due 2028, net of discount,
issuance cost and accrued interest

—

72,310

Net cash (used in) provided by financing activities

(40)

72,280

Effect of exchange rate changes on cash and cash equivalents

(1,039)

348

Increase in cash and cash equivalents

2,731

30,752

Cash and cash equivalents, beginning of period

76,787

37,812

Cash and cash equivalents, end of period

$            79,518

$            68,564