Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 29, 2014 | Apr. 23, 2014 | |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 29-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Trading Symbol | 'FARO | ' |
Entity Registrant Name | 'FARO TECHNOLOGIES INC | ' |
Entity Central Index Key | '0000917491 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 17,233,558 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 29, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $122,716 | $124,630 |
Short-term investments | 64,994 | 64,994 |
Accounts receivable, net | 64,739 | 66,309 |
Inventories, net | 50,238 | 48,940 |
Deferred income taxes, net | 5,082 | 4,601 |
Prepaid expenses and other current assets | 15,183 | 14,645 |
Total current assets | 322,952 | 324,119 |
Property and equipment: | ' | ' |
Machinery and equipment | 38,079 | 36,924 |
Furniture and fixtures | 7,072 | 6,888 |
Leasehold improvements | 12,307 | 11,765 |
Property and equipment at cost | 57,458 | 55,577 |
Less: accumulated depreciation and amortization | -40,516 | -39,126 |
Property and equipment, net | 16,942 | 16,451 |
Goodwill | 19,336 | 19,358 |
Intangible assets, net | 8,273 | 8,112 |
Service inventory | 20,345 | 19,033 |
Deferred income taxes, net | 4,415 | 4,423 |
Total assets | 392,263 | 391,496 |
Current liabilities: | ' | ' |
Accounts payable | 10,381 | 14,881 |
Accrued liabilities | 18,533 | 20,133 |
Income taxes payable | 31 | 1,690 |
Current portion of unearned service revenues | 22,404 | 21,331 |
Customer deposits | 2,289 | 2,910 |
Current portion of obligations under capital leases | 6 | 8 |
Total current liabilities | 53,644 | 60,953 |
Unearned service revenues - less current portion | 13,608 | 13,414 |
Deferred income tax liability, net | 1,233 | 1,171 |
Obligations under capital leases - less current portion | 8 | 8 |
Total liabilities | 68,493 | 75,546 |
Commitments and contingencies - See Note Q | ' | ' |
Shareholders' equity: | ' | ' |
Common stock - par value $.001, 50,000,000 shares authorized; 17,913,793 and 17,868,372 issued; 17,233,558 and 17,188,137 outstanding, respectively | 18 | 18 |
Additional paid-in capital | 194,797 | 191,874 |
Retained earnings | 130,845 | 125,867 |
Accumulated other comprehensive income | 7,185 | 7,266 |
Common stock in treasury, at cost - 680,235 shares | -9,075 | -9,075 |
Total shareholders' equity | 323,770 | 315,950 |
Total liabilities and shareholders' equity | $392,263 | $391,496 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 29, 2014 | Dec. 31, 2013 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,913,793 | 17,868,372 |
Common stock, shares outstanding | 17,233,558 | 17,188,137 |
Treasury stock, shares | 680,235 | 680,235 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 29, 2014 | Mar. 30, 2013 |
SALES | ' | ' |
Product | $59,822 | $52,482 |
Service | 13,552 | 12,888 |
Total sales | 73,374 | 65,370 |
COST OF SALES | ' | ' |
Product | 25,153 | 21,339 |
Service | 8,138 | 7,206 |
Total cost of sales (exclusive of depreciation and amortization, shown separately below) | 33,291 | 28,545 |
GROSS PROFIT | 40,083 | 36,825 |
OPERATING EXPENSES: | ' | ' |
Selling | 17,433 | 16,650 |
General and administrative | 8,413 | 7,515 |
Depreciation and amortization | 1,847 | 1,833 |
Research and development | 5,430 | 5,125 |
Total operating expenses | 33,123 | 31,123 |
INCOME FROM OPERATIONS | 6,960 | 5,702 |
OTHER (INCOME) EXPENSE | ' | ' |
Interest income | -17 | -16 |
Other expense, net | 160 | 115 |
Interest expense | ' | 1 |
INCOME (LOSS) BEFORE INCOME TAX EXPENSE | 6,817 | 5,602 |
Income tax expense | 1,841 | 1,028 |
NET INCOME | $4,976 | $4,574 |
NET INCOME PER SHARE - BASIC | $0.29 | $0.27 |
NET INCOME PER SHARE - DILUTED | $0.29 | $0.27 |
Weighted average shares - Basic | 17,205,892 | 17,009,773 |
Weighted average shares - Diluted | 17,364,373 | 17,176,876 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 29, 2014 | Mar. 30, 2013 |
Net income | $4,976 | $4,574 |
Currency translation adjustments, net of tax | -81 | -3,429 |
Comprehensive income | $4,895 | $1,145 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 29, 2014 | Mar. 30, 2013 |
OPERATING ACTIVITIES: | ' | ' |
Net income | $4,976 | $4,574 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 1,847 | 1,833 |
Compensation for stock options and restricted stock units | 1,246 | 1,018 |
(Net recovery of) provision for bad debts | -120 | 274 |
Deferred income tax (benefit) expense | -410 | 1,162 |
Decrease (increase) in: | ' | ' |
Accounts receivable | 1,869 | 7,541 |
Inventories, net | -2,541 | -1,299 |
Prepaid expenses and other current assets | -539 | -2,069 |
Income tax benefit from exercise of stock options | -58 | -808 |
(Decrease) increase in: | ' | ' |
Accounts payable and accrued liabilities | -6,103 | -676 |
Income taxes payable | -1,619 | -1,658 |
Customer deposits | -645 | 5 |
Unearned service revenues | 1,274 | 376 |
Net cash (used in) provided by operating activities | -823 | 10,273 |
INVESTING ACTIVITIES: | ' | ' |
Purchases of property and equipment | -2,124 | -256 |
Payments for intangible assets | -419 | -494 |
Net cash used in investing activities | -2,543 | -750 |
FINANCING ACTIVITIES: | ' | ' |
Payments on capital leases | -50 | -63 |
Income tax benefit from exercise of stock options | 58 | 808 |
Proceeds from issuance of stock, net | 1,619 | 3,049 |
Net cash provided by financing activities | 1,627 | 3,794 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | -175 | -1,952 |
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | -1,914 | 11,365 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 124,630 | 93,233 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $122,716 | $104,598 |
Description_of_Business
Description of Business | 3 Months Ended |
Mar. 29, 2014 | |
Description of Business | ' |
NOTE A – DESCRIPTION OF BUSINESS | |
FARO Technologies, Inc. and its subsidiaries (collectively the “Company” or “FARO”) design, develop, manufacture, market and support software-based three-dimensional measurement and imaging systems for manufacturing, industrial, building construction and forensic applications. The Company’s principal products include the FaroArm, FARO Laser ScanArm and FARO Gage, all articulated electromechanical measuring devices, and the FARO Laser Tracker Vantage, FARO Focus3D and FARO 3D Imager AMP, all laser-based measuring devices. Markets for the Company’s products include automobile, aerospace, heavy equipment, universities and law enforcement agencies. The Company sells the vast majority of its products through a direct sales force located in many of the world’s largest industrialized countries. |
Principles_of_Consolidation
Principles of Consolidation | 3 Months Ended |
Mar. 29, 2014 | |
Principles of Consolidation | ' |
NOTE B – PRINCIPLES OF CONSOLIDATION | |
The consolidated financial statements of the Company include the accounts of FARO Technologies, Inc. and its subsidiaries, all of which are wholly owned. All intercompany transactions and balances have been eliminated. The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from financial statement translations are reflected as a separate component of accumulated other comprehensive income. |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 29, 2014 | |
Basis of Presentation | ' |
NOTE C – BASIS OF PRESENTATION | |
The accompanying unaudited interim consolidated financial statements of the Company include all normal recurring accruals and adjustments considered necessary by management for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The consolidated results of operations for the three months ended March 29, 2014 are not necessarily indicative of results that may be expected for the year ending December 31, 2014 or any future interim period. | |
The information included in this Quarterly Report on Form 10-Q, including the interim consolidated financial statements and the accompanying notes, should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. The accompanying December 31, 2013 consolidated balance sheet has been derived from those audited consolidated financial statements. |
Reclassifications
Reclassifications | 3 Months Ended |
Mar. 29, 2014 | |
Reclassifications | ' |
NOTE D – RECLASSIFICATIONS | |
From time to time the Company may reclassify certain amounts to conform to the current period presentation. No such reclassifications have been made to the Company’s prior period consolidated financial statements. |
Impact_of_Recently_Issued_Acco
Impact of Recently Issued Accounting Pronouncements | 3 Months Ended |
Mar. 29, 2014 | |
Impact of Recently Issued Accounting Pronouncements | ' |
NOTE E – IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”). ASU 2011-12 defers the specific requirement in ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”) to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. As part of this update, the FASB did not defer the requirement in ASU 2011-05 to report comprehensive income either in a single continuous statement or in two separate but consecutive financial statements. In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which became effective during the quarter ended March 30, 2013. The adoption of ASU 2013-02 in the quarter ended March 30, 2013 did not have any impact on the Company’s consolidated financial statements. |
ShareBased_Compensation
Share-Based Compensation | 3 Months Ended | ||||||||||||||||
Mar. 29, 2014 | |||||||||||||||||
Share-Based Compensation | ' | ||||||||||||||||
NOTE F – SHARE-BASED COMPENSATION | |||||||||||||||||
Share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, typically the vesting period. The vesting period for the share-based compensation awarded by the Company is generally three years. The Company uses the Black-Scholes option pricing model to determine the fair value of stock option grants. The Company uses the closing market price of its common stock on the date of grant to determine the fair value of restricted stock and restricted stock units. | |||||||||||||||||
The Company used the following assumptions for the Black-Scholes option-pricing model to determine the fair value of options granted during the three months ended March 29, 2014 and March 30, 2013: | |||||||||||||||||
Three Months Ended | |||||||||||||||||
March 29, 2014 | March 30, 2013 | ||||||||||||||||
Risk-free interest rate | 1.1 | % | 0.55 | % | |||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Expected option life | 4 years | 4 years | |||||||||||||||
Expected volatility | 42.5 | % | 48.4 | % | |||||||||||||
Weighted-average expected volatility | 42.5 | % | 48.4 | % | |||||||||||||
Historical information was the primary basis for the selection of the expected dividend yield, expected volatility and the expected lives of the options. The risk-free interest rate was based on yields of U.S. zero coupon issues and U.S. Treasury issues, with a term equal to the expected life of the option being valued. | |||||||||||||||||
The Company recorded total share-based compensation expense of $1,251 and $1,100 for the three months ended March 29, 2014 and March 30, 2013, respectively. | |||||||||||||||||
A summary of stock option activity and weighted-average exercise prices for the three months ended March 29, 2014 follows: | |||||||||||||||||
Options | Weighted- | Weighted-Average | Aggregate Intrinsic | ||||||||||||||
Average | Remaining | Value as of | |||||||||||||||
Exercise Price | Contractual Term | March 29, 2014 | |||||||||||||||
(Years) | |||||||||||||||||
Outstanding at January 1, 2014 | 814,291 | $ | 39.56 | ||||||||||||||
Granted | 213,229 | 57.54 | |||||||||||||||
Forfeited | (4,001 | ) | 46.57 | ||||||||||||||
Exercised | (43,826 | ) | 36.95 | ||||||||||||||
Outstanding at March 29, 2014 | 979,693 | $ | 43.52 | 4.8 | $ | 9,917 | |||||||||||
Options exercisable at March 29, 2014 | 539,644 | $ | 36.49 | 3.7 | $ | 8,631 | |||||||||||
The weighted-average grant-date fair value of the stock options granted during the three months ended March 29, 2014 and March 30, 2013 was $19.79 and $14.64 per option, respectively. The total intrinsic value of stock options exercised during the three months ended March 29, 2014 and March 30, 2013 was $0.9 million and $2.0 million, respectively. The fair value of stock options vested during the three months ended March 29, 2014 and March 30, 2013 was $3.6 million and $3.4 million, respectively. | |||||||||||||||||
The following table summarizes the restricted stock and restricted stock unit activity and weighted average grant-date fair values for the three months ended March 29, 2014: | |||||||||||||||||
Shares | Weighted-Average | ||||||||||||||||
Grant Date | |||||||||||||||||
Fair Value | |||||||||||||||||
Non-vested at January 1, 2014 | 31,448 | $ | 41.39 | ||||||||||||||
Granted | 832 | 57.54 | |||||||||||||||
Forfeited | — | — | |||||||||||||||
Vested | (2,382 | ) | 42.57 | ||||||||||||||
Non-vested at March 29,2014 | 29,898 | $ | 41.74 | ||||||||||||||
As of March 29, 2014, there was $8.2 million of total unrecognized stock-based compensation expense related to non-vested stock-based compensation arrangements. The expense is expected to be recognized over a weighted average period of 3.5 years. |
Supplemental_Cash_Flow_Informa
Supplemental Cash Flow Information | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Supplemental Cash Flow Information | ' | ||||||||
NOTE G – SUPPLEMENTAL CASH FLOW INFORMATION | |||||||||
Selected cash payments were as follows: | |||||||||
Three Months Ended | |||||||||
March 29, 2014 | March 30, 2013 | ||||||||
Cash paid for interest | $ | — | $ | 1 | |||||
Cash paid for income taxes | $ | 4,131 | $ | 3,923 | |||||
Cash_and_Cash_Equivalents
Cash and Cash Equivalents | 3 Months Ended |
Mar. 29, 2014 | |
Cash and Cash Equivalents | ' |
NOTE H – CASH AND CASH EQUIVALENTS | |
The Company considers cash on hand and all short-term, highly liquid investments that have maturities of three months or less at the time of purchase to be cash and cash equivalents. |
Short_Term_Investments
Short Term Investments | 3 Months Ended |
Mar. 29, 2014 | |
Short Term Investments | ' |
NOTE I – SHORT TERM INVESTMENTS | |
Short-term investments at March 29, 2014 and December 31, 2013 included U.S. Treasury Bills totaling $65.0 million that mature through September 18, 2014. The weighted-average interest rate on the U.S. Treasury bills is less than one percent. The investments are classified as held-to-maturity and recorded at cost. The fair value of the U.S. Treasury Bills at March 29, 2014 and December 31, 2013 approximated cost. | |
Accounts_Receivable
Accounts Receivable | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Accounts Receivable | ' | ||||||||
NOTE J – ACCOUNTS RECEIVABLE | |||||||||
Accounts receivable consist of the following: | |||||||||
As of | As of | ||||||||
March 29, 2014 | December 31, 2013 | ||||||||
Accounts receivable | $ | 68,263 | $ | 69,995 | |||||
Allowance for doubtful accounts | (3,524 | ) | (3,686 | ) | |||||
Total | $ | 64,739 | $ | 66,309 | |||||
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Inventories | ' | ||||||||
NOTE K – INVENTORIES | |||||||||
Inventories are stated at the lower of cost or net realizable value using the first-in first-out method. Shipping and handling costs are classified as a component of cost of sales in the consolidated statements of operations. Sales demonstration inventory is comprised of measuring devices utilized by sales representatives to present the Company’s products to customers. These products remain in sales demonstration inventory for approximately 6 to 12 months and are subsequently sold at prices that produce slightly reduced gross margins. Service inventory is comprised of inventory that is not expected to be sold within twelve months, such as training and loaned equipment. | |||||||||
Inventories consist of the following: | |||||||||
As of | As of | ||||||||
March 29, 2014 | December 31, 2013 | ||||||||
Raw materials | $ | 23,905 | $ | 23,692 | |||||
Finished goods | 7,962 | 7,176 | |||||||
Sales demonstration inventory | 19,926 | 19,545 | |||||||
Reserve for excess and obsolete | (1,555 | ) | (1,473 | ) | |||||
Inventory | $ | 50,238 | $ | 48,940 | |||||
Service inventory | $ | 20,345 | $ | 19,033 | |||||
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||||||||||||
Mar. 29, 2014 | |||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
NOTE L – EARNINGS PER SHARE | |||||||||||||||||
A reconciliation of the number of common shares used in the calculation of basic and diluted earnings per share (EPS) is presented below: | |||||||||||||||||
Three Months Ended | |||||||||||||||||
March 29, 2014 | March 30, 2013 | ||||||||||||||||
Shares | Per-Share | Shares | Per-Share | ||||||||||||||
Amount | Amount | ||||||||||||||||
Basic EPS | 17,205,892 | $ | 0.29 | 17,009,773 | $ | 0.27 | |||||||||||
Effect of dilutive securities | 158,481 | — | 167,103 | — | |||||||||||||
Diluted EPS | 17,364,373 | $ | 0.29 | 17,176,876 | $ | 0.27 | |||||||||||
The effect of 408,477 and 450,672 potentially dilutive securities were not included in the calculation of weighted average shares outstanding for the three months ended March 29, 2014 and March 30, 2013, respectively, as they were antidilutive. |
Accrued_Liabilities
Accrued Liabilities | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Accrued Liabilities | ' | ||||||||
NOTE M – ACCRUED LIABILITIES | |||||||||
Accrued liabilities consist of the following: | |||||||||
As of | As of | ||||||||
March 29, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accrued compensation and benefits | $ | 10,824 | $ | 11,591 | |||||
Accrued warranties | 2,238 | 2,364 | |||||||
Professional and legal fees | 1,301 | 1,203 | |||||||
Other accrued liabilities | 4,170 | 4,975 | |||||||
$ | 18,533 | $ | 20,133 | ||||||
Activity related to accrued warranties was as follows: | |||||||||
Three Months Ended | |||||||||
March 29, 2014 | March 30, 2013 | ||||||||
Beginning Balance | $ | 2,364 | $ | 2,359 | |||||
Provision for warranty expense | 869 | 873 | |||||||
Warranty expired | (995 | ) | (1,084 | ) | |||||
Ending Balance | $ | 2,238 | $ | 2,148 | |||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 29, 2014 | |
Income Taxes | ' |
NOTE N – INCOME TAXES | |
Income tax expense increased by $0.8 million to $1.8 million for the three months ended March 29, 2014 from $1.0 million for the three months ended March 30, 2013. This increase was primarily due to an increase in pretax income during the current period and $0.4 million of discrete tax benefit recognized during the three months ended March 30, 2013 related to the retroactive legislative reinstatement of the Research and Development tax credit for the year ended December 31, 2012. The Company’s effective tax rate increased to 27.0% for the three months ended March 29, 2014 from 18.4% in the prior year period and included a reduction in the effective income tax rates of 0.2% and 1.4%, respectively, related to the tax benefit of the exercise of certain employee stock options. The effective tax rate for the three months ended March 30, 2013 also included the discrete tax benefit of 7.5% related to the retroactive legislative reinstatement on January 2, 2013 of the Research and Development tax credit for the year ended December 31, 2012, which is required to be included in the period the reinstatement was enacted into law. The Company’s effective tax rate continued to be lower than the statutory tax rate in the United States, primarily as a result of favorable tax rates in foreign jurisdictions. However, the Company’s effective tax rate could be impacted positively or negatively by geographic changes in the manufacturing or sales of its products and the resulting effect on taxable income in each jurisdiction. | |
In September 2013, the U.S. Internal Revenue Service issued new regulations for capitalizing and deducting costs incurred to acquire, produce, or improve tangible property. These new regulations are effective for taxable years beginning on or after January 1, 2014; however, they are considered enacted as of the date of issuance. As a result of the new regulations, the Company is in the process of reviewing its existing income tax accounting methods related to tangible property. The Company believes that the new regulations will not have a material effect on the Company’s consolidated financial statements. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 29, 2014 | |
Fair Value of Financial Instruments | ' |
NOTE O – FAIR VALUE OF FINANCIAL INSTRUMENTS | |
The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivable, customer deposits, accounts payable and accrued liabilities. The carrying amounts of such financial instruments approximate their fair value due to the short-term nature of these instruments. |
Segment_Reporting
Segment Reporting | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Segment Reporting | ' | ||||||||
NOTE P – SEGMENT REPORTING | |||||||||
The Company has three reportable segments based upon geographic regions: Americas, Europe/Africa and Asia Pacific. The Company does not allocate corporate expenses to the Europe/Africa or Asia Pacific regions. These corporate expenses are included in the Americas region. The Company does not incur Research and Development expenses in its Asia Pacific region. | |||||||||
The Company develops, manufactures, markets, supports and sells Computer-Aided Design (“CAD”)-based quality assurance products integrated with CAD-based inspection and statistical process control software in each of these regions. These activities represent approximately 99% of consolidated sales. The Company evaluates performance and allocates resources based upon profitable growth and assets deployed. | |||||||||
The following table presents information about the Company’s reportable segments: | |||||||||
Three Months Ended | |||||||||
March 29, 2014 | March 30, 2013 | ||||||||
Americas Region | |||||||||
Net sales to external customers | $ | 29,594 | $ | 26,109 | |||||
Depreciation and amortization | 1,005 | 1,092 | |||||||
Operating loss | (78 | ) | (1,008 | ) | |||||
Long-lived assets | 24,384 | 21,499 | |||||||
Capital expenditures | 1,129 | 322 | |||||||
Total assets | 203,080 | 187,404 | |||||||
Europe/Africa Region | |||||||||
Net sales to external customers | $ | 23,836 | $ | 21,900 | |||||
Depreciation and amortization | 511 | 468 | |||||||
Operating income | 2,114 | 1,949 | |||||||
Long-lived assets | 17,615 | 16,233 | |||||||
Capital expenditures | 698 | 243 | |||||||
Total assets | 118,230 | 102,517 | |||||||
Asia Pacific Region | |||||||||
Net sales to external customers | $ | 19,944 | $ | 17,361 | |||||
Depreciation and amortization | 331 | 273 | |||||||
Operating income | 4,924 | 4,761 | |||||||
Long-lived assets | 2,552 | 2,400 | |||||||
Capital expenditures | 71 | 97 | |||||||
Total assets | 70,953 | 63,337 | |||||||
Totals | |||||||||
Net sales to external customers | $ | 73,374 | $ | 65,370 | |||||
Depreciation and amortization | 1,847 | 1,833 | |||||||
Operating income | 6,960 | 5,702 | |||||||
Long-lived assets | 44,551 | 40,132 | |||||||
Capital expenditures | 1,898 | 662 | |||||||
Total assets | 392,263 | 353,258 | |||||||
The geographical sales information presented above represents sales to customers located in each respective region, whereas the long-lived assets information represents assets held in the respective regions. There were no customers that individually accounted for 10% or more of total revenue in any of the periods presented above. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 29, 2014 | |
Commitments and Contingencies | ' |
NOTE Q – COMMITMENTS AND CONTINGENCIES | |
Leases – The Company is a party to leases arising in the normal course of business that expire on or before 2024. Total obligations under these leases are approximately $6.0 million for 2014. | |
Purchase Commitments – The Company enters into purchase commitments for products and services in the ordinary course of business. These purchases generally cover production requirements for 60 to 90 days. As of March 29, 2014, the Company does not have any long-term commitments for purchases. | |
Legal Proceedings – The Company is not involved in any legal proceedings other than routine litigation arising in the normal course of business, none of which the Company believes will have a material adverse effect on the Company’s business, financial condition or results of operations. |
Line_of_Credit
Line of Credit | 3 Months Ended |
Mar. 29, 2014 | |
Line of Credit | ' |
NOTE R – LINE OF CREDIT | |
On July 11, 2006, the Company entered into a loan agreement providing for an available line of credit of $30.0 million, which was most recently amended on March 15, 2012. Loans under the Amended and Restated Loan Agreement, as amended, bear interest at the rate of LIBOR plus a fixed percentage between 1.50% and 2.00% and require the Company to maintain a minimum cash balance and tangible net worth measured at the end of each of the Company’s fiscal quarters. As of March 29, 2014, the Company was in compliance with all of the covenants under the Amended and Restated Loan Agreement, as amended. The term of the Amended and Restated Loan Agreement, as amended, expires on March 31, 2015. The Company has not drawn on this line of credit. In March 2014, the Company entered into a letter of credit for $2.25 million which reduces the total borrowing capacity under the line of credit by that amount. |
ShareBased_Compensation_Tables
Share-Based Compensation (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 29, 2014 | |||||||||||||||||
Fair Value of Options Granted | ' | ||||||||||||||||
The Company used the following assumptions for the Black-Scholes option-pricing model to determine the fair value of options granted during the three months ended March 29, 2014 and March 30, 2013: | |||||||||||||||||
Three Months Ended | |||||||||||||||||
March 29, 2014 | March 30, 2013 | ||||||||||||||||
Risk-free interest rate | 1.1 | % | 0.55 | % | |||||||||||||
Expected dividend yield | 0 | % | 0 | % | |||||||||||||
Expected option life | 4 years | 4 years | |||||||||||||||
Expected volatility | 42.5 | % | 48.4 | % | |||||||||||||
Weighted-average expected volatility | 42.5 | % | 48.4 | % | |||||||||||||
Summary of Stock Option Activity | ' | ||||||||||||||||
A summary of stock option activity and weighted-average exercise prices for the three months ended March 29, 2014 follows: | |||||||||||||||||
Options | Weighted- | Weighted-Average | Aggregate Intrinsic | ||||||||||||||
Average | Remaining | Value as of | |||||||||||||||
Exercise Price | Contractual Term | March 29, 2014 | |||||||||||||||
(Years) | |||||||||||||||||
Outstanding at January 1, 2014 | 814,291 | $ | 39.56 | ||||||||||||||
Granted | 213,229 | 57.54 | |||||||||||||||
Forfeited | (4,001 | ) | 46.57 | ||||||||||||||
Exercised | (43,826 | ) | 36.95 | ||||||||||||||
Outstanding at March 29, 2014 | 979,693 | $ | 43.52 | 4.8 | $ | 9,917 | |||||||||||
Options exercisable at March 29, 2014 | 539,644 | $ | 36.49 | 3.7 | $ | 8,631 | |||||||||||
Summary of Restricted Stock Activity | ' | ||||||||||||||||
The following table summarizes the restricted stock and restricted stock unit activity and weighted average grant-date fair values for the three months ended March 29, 2014: | |||||||||||||||||
Shares | Weighted-Average | ||||||||||||||||
Grant Date | |||||||||||||||||
Fair Value | |||||||||||||||||
Non-vested at January 1, 2014 | 31,448 | $ | 41.39 | ||||||||||||||
Granted | 832 | 57.54 | |||||||||||||||
Forfeited | — | — | |||||||||||||||
Vested | (2,382 | ) | 42.57 | ||||||||||||||
Non-vested at March 29,2014 | 29,898 | $ | 41.74 | ||||||||||||||
Supplemental_Cash_Flow_Informa1
Supplemental Cash Flow Information (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Cash Payments | ' | ||||||||
Selected cash payments were as follows: | |||||||||
Three Months Ended | |||||||||
March 29, 2014 | March 30, 2013 | ||||||||
Cash paid for interest | $ | — | $ | 1 | |||||
Cash paid for income taxes | $ | 4,131 | $ | 3,923 | |||||
Accounts_Receivable_Tables
Accounts Receivable (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Accounts Receivable | ' | ||||||||
Accounts receivable consist of the following: | |||||||||
As of | As of | ||||||||
March 29, 2014 | December 31, 2013 | ||||||||
Accounts receivable | $ | 68,263 | $ | 69,995 | |||||
Allowance for doubtful accounts | (3,524 | ) | (3,686 | ) | |||||
Total | $ | 64,739 | $ | 66,309 | |||||
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Inventories | ' | ||||||||
Inventories consist of the following: | |||||||||
As of | As of | ||||||||
March 29, 2014 | December 31, 2013 | ||||||||
Raw materials | $ | 23,905 | $ | 23,692 | |||||
Finished goods | 7,962 | 7,176 | |||||||
Sales demonstration inventory | 19,926 | 19,545 | |||||||
Reserve for excess and obsolete | (1,555 | ) | (1,473 | ) | |||||
Inventory | $ | 50,238 | $ | 48,940 | |||||
Service inventory | $ | 20,345 | $ | 19,033 | |||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 29, 2014 | |||||||||||||||||
Reconciliation of Number of Common Shares used in Calculation of Basic and Diluted Earnings Per Share (EPS) | ' | ||||||||||||||||
A reconciliation of the number of common shares used in the calculation of basic and diluted earnings per share (EPS) is presented below: | |||||||||||||||||
Three Months Ended | |||||||||||||||||
March 29, 2014 | March 30, 2013 | ||||||||||||||||
Shares | Per-Share | Shares | Per-Share | ||||||||||||||
Amount | Amount | ||||||||||||||||
Basic EPS | 17,205,892 | $ | 0.29 | 17,009,773 | $ | 0.27 | |||||||||||
Effect of dilutive securities | 158,481 | — | 167,103 | — | |||||||||||||
Diluted EPS | 17,364,373 | $ | 0.29 | 17,176,876 | $ | 0.27 | |||||||||||
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Accrued Liabilities | ' | ||||||||
Accrued liabilities consist of the following: | |||||||||
As of | As of | ||||||||
March 29, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accrued compensation and benefits | $ | 10,824 | $ | 11,591 | |||||
Accrued warranties | 2,238 | 2,364 | |||||||
Professional and legal fees | 1,301 | 1,203 | |||||||
Other accrued liabilities | 4,170 | 4,975 | |||||||
$ | 18,533 | $ | 20,133 | ||||||
Activity Related to Accrued Warranties | ' | ||||||||
Activity related to accrued warranties was as follows: | |||||||||
Three Months Ended | |||||||||
March 29, 2014 | March 30, 2013 | ||||||||
Beginning Balance | $ | 2,364 | $ | 2,359 | |||||
Provision for warranty expense | 869 | 873 | |||||||
Warranty expired | (995 | ) | (1,084 | ) | |||||
Ending Balance | $ | 2,238 | $ | 2,148 | |||||
Segment_Reporting_Tables
Segment Reporting (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2014 | |||||||||
Segment Reporting Information | ' | ||||||||
The following table presents information about the Company’s reportable segments: | |||||||||
Three Months Ended | |||||||||
March 29, 2014 | March 30, 2013 | ||||||||
Americas Region | |||||||||
Net sales to external customers | $ | 29,594 | $ | 26,109 | |||||
Depreciation and amortization | 1,005 | 1,092 | |||||||
Operating loss | (78 | ) | (1,008 | ) | |||||
Long-lived assets | 24,384 | 21,499 | |||||||
Capital expenditures | 1,129 | 322 | |||||||
Total assets | 203,080 | 187,404 | |||||||
Europe/Africa Region | |||||||||
Net sales to external customers | $ | 23,836 | $ | 21,900 | |||||
Depreciation and amortization | 511 | 468 | |||||||
Operating income | 2,114 | 1,949 | |||||||
Long-lived assets | 17,615 | 16,233 | |||||||
Capital expenditures | 698 | 243 | |||||||
Total assets | 118,230 | 102,517 | |||||||
Asia Pacific Region | |||||||||
Net sales to external customers | $ | 19,944 | $ | 17,361 | |||||
Depreciation and amortization | 331 | 273 | |||||||
Operating income | 4,924 | 4,761 | |||||||
Long-lived assets | 2,552 | 2,400 | |||||||
Capital expenditures | 71 | 97 | |||||||
Total assets | 70,953 | 63,337 | |||||||
Totals | |||||||||
Net sales to external customers | $ | 73,374 | $ | 65,370 | |||||
Depreciation and amortization | 1,847 | 1,833 | |||||||
Operating income | 6,960 | 5,702 | |||||||
Long-lived assets | 44,551 | 40,132 | |||||||
Capital expenditures | 1,898 | 662 | |||||||
Total assets | 392,263 | 353,258 |
ShareBased_Compensation_Additi
Share-Based Compensation - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 29, 2014 | Mar. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Vesting period, years | '3 years | ' |
Allocated share-based compensation expense | $1,251,000 | $1,100,000 |
Weighted-average grant-date fair value | $19.79 | $14.64 |
Total intrinsic value of stock options exercised | 900,000 | 2,000,000 |
Fair value of stock options vested | 3,600,000 | 3,400,000 |
Unrecognized stock-based compensation expense | $8,200,000 | ' |
Weighted average, expected recognition period | '3 years 6 months | ' |
Fair_Value_of_Option_Granted_D
Fair Value of Option Granted (Detail) | 3 Months Ended | |
Mar. 29, 2014 | Mar. 30, 2013 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | ' | ' |
Risk-free interest rate | 1.10% | 0.55% |
Expected dividend yield | 0.00% | 0.00% |
Expected option life | '4 years | '4 years |
Expected volatility | 42.50% | 48.40% |
Weighted-average expected volatility | 42.50% | 48.40% |
Summary_of_Stock_Option_Activi
Summary of Stock Option Activity (Detail) (USD $) | 3 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 29, 2014 |
Options Outstanding | ' |
Outstanding, beginning balance | 814,291 |
Granted | 213,229 |
Forfeited | -4,001 |
Exercised | -43,826 |
Outstanding, ending balance | 979,693 |
Options exercisable at end of period | 539,644 |
Weighted-Average Exercise Price | ' |
Outstanding, beginning balance | $39.56 |
Granted | $57.54 |
Forfeited | $46.57 |
Exercised | $36.95 |
Outstanding, ending balance | $43.52 |
Options exercisable at end of period | $36.49 |
Weighted-Average Remaining Contractual Term | ' |
Outstanding at end of period | '4 years 9 months 18 days |
Options exercisable at end of period | '3 years 8 months 12 days |
Aggregate Intrinsic Value | ' |
Outstanding at end of period | $9,917 |
Options exercisable at end of period | $8,631 |
Summary_of_Restricted_Stock_Ac
Summary of Restricted Stock Activity (Detail) (USD $) | 3 Months Ended |
Mar. 29, 2014 | |
Shares | ' |
Non-vested at beginning of period | 31,448 |
Granted | 832 |
Forfeited | ' |
Vested | -2,382 |
Non-vested at end of period | 29,898 |
Weighted-Average Grant Date Fair Value | ' |
Non-vested at beginning of period | $41.39 |
Granted | $57.54 |
Forfeited | ' |
Vested | $42.57 |
Non-vested at end of period | $41.74 |
Cash_Payments_Detail
Cash Payments (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 29, 2014 | Mar. 30, 2013 |
Schedule of Cash Flow, Supplemental [Line Items] | ' | ' |
Cash paid for interest | ' | $1 |
Cash paid for income taxes | $4,131 | $3,923 |
Cash_and_Cash_Equivalents_Addi
Cash and Cash Equivalents - Additional Information (Detail) (Maximum) | 3 Months Ended |
Mar. 29, 2014 | |
Maximum | ' |
Cash and Cash Equivalents [Line Items] | ' |
Cash and cash equivalents maturity period | '3 months |
Short_Term_Investments_Additio
Short Term Investments - Additional Information (Detail) (USD $) | Mar. 29, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items] | ' | ' |
Short-term investments | $64,994 | $64,994 |
Weighted average interest rate on U.S. Treasury bills, maximum | 1.00% | 1.00% |
US Treasury Bill Securities | ' | ' |
Securities Purchased Under Agreements to Resell and Other Short Term Investment Securities [Line Items] | ' | ' |
Short-term investments | $65,000 | $65,000 |
Accounts_Receivable_Detail
Accounts Receivable (Detail) (USD $) | Mar. 29, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | $68,263 | $69,995 |
Allowance for doubtful accounts | -3,524 | -3,686 |
Total | $64,739 | $66,309 |
Inventories_Additional_Informa
Inventories - Additional Information (Detail) | 3 Months Ended |
Mar. 29, 2014 | |
Inventory [Line Items] | ' |
Shelf life demonstration inventory, months | '12 months |
Minimum | ' |
Inventory [Line Items] | ' |
Shelf life demonstration inventory, months | '6 months |
Maximum | ' |
Inventory [Line Items] | ' |
Shelf life demonstration inventory, months | '12 months |
Inventories_Detail
Inventories (Detail) (USD $) | Mar. 29, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory [Line Items] | ' | ' |
Raw materials | $23,905 | $23,692 |
Finished goods | 7,962 | 7,176 |
Sales demonstration inventory | 19,926 | 19,545 |
Reserve for excess and obsolete | -1,555 | -1,473 |
Inventory | 50,238 | 48,940 |
Service inventory | $20,345 | $19,033 |
Reconciliation_of_Number_of_Co
Reconciliation of Number of Common Shares used in Calculation of Basic and Diluted Earnings Per Share (EPS) (Detail) (USD $) | 3 Months Ended | |
Mar. 29, 2014 | Mar. 30, 2013 | |
Earnings Per Share [Line Items] | ' | ' |
Basic EPS, shares | 17,205,892 | 17,009,773 |
Effect of dilutive securities, shares | 158,481 | 167,103 |
Diluted EPS, shares | 17,364,373 | 17,176,876 |
Basic EPS | $0.29 | $0.27 |
Effect of dilutive securities | ' | ' |
Diluted EPS | $0.29 | $0.27 |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 3 Months Ended | |
Mar. 29, 2014 | Mar. 30, 2013 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 408,477 | 450,672 |
Accrued_Liabilities_Detail
Accrued Liabilities (Detail) (USD $) | Mar. 29, 2014 | Dec. 31, 2013 | Mar. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Schedule of Accrued Liabilities [Line Items] | ' | ' | ' | ' |
Accrued compensation and benefits | $10,824 | $11,591 | ' | ' |
Accrued warranties | 2,238 | 2,364 | 2,148 | 2,359 |
Professional and legal fees | 1,301 | 1,203 | ' | ' |
Other accrued liabilities | 4,170 | 4,975 | ' | ' |
Accrued liabilities | $18,533 | $20,133 | ' | ' |
Activity_Related_to_Accrued_Wa
Activity Related to Accrued Warranties (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 29, 2014 | Mar. 30, 2013 |
Product Warranty Liability [Line Items] | ' | ' |
Beginning Balance | $2,364 | $2,359 |
Provision for warranty expense | 869 | 873 |
Warranty expired | -995 | -1,084 |
Ending Balance | $2,238 | $2,148 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | |
Mar. 29, 2014 | Mar. 30, 2013 | |
Income Taxes [Line Items] | ' | ' |
Income tax expense | $1,841,000 | $1,028,000 |
Income tax expense increase (decrease) | 800,000 | ' |
Discrete tax benefit recognized | ' | $400,000 |
Effective tax rate | 27.00% | 18.40% |
Reduction in income tax rate related to tax benefit of exercise of employee stock option | 0.20% | 1.40% |
Discrete tax benefit percentage | 7.50% | ' |
Segment_Reporting_Additional_I
Segment Reporting - Additional Information (Detail) | 3 Months Ended |
Mar. 29, 2014 | |
Customer | |
Segment | |
Segment Reporting Disclosure [Line Items] | ' |
Number of reportable segments | 3 |
Percentage of product sales to consolidated sales | 99.00% |
Customers that individually accounted for 10% or more of total revenue | 0 |
Segment_Reporting_Information_
Segment Reporting Information (Detail) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 29, 2014 | Mar. 30, 2013 | Dec. 31, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales to external customers | $73,374 | $65,370 | ' |
Depreciation and amortization | 1,847 | 1,833 | ' |
Operating (loss) income | 6,960 | 5,702 | ' |
Long-lived assets | 44,551 | 40,132 | ' |
Capital expenditures | 1,898 | 662 | ' |
Total assets | 392,263 | 353,258 | 391,496 |
Americas Region | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales to external customers | 29,594 | 26,109 | ' |
Depreciation and amortization | 1,005 | 1,092 | ' |
Operating (loss) income | -78 | -1,008 | ' |
Long-lived assets | 24,384 | 21,499 | ' |
Capital expenditures | 1,129 | 322 | ' |
Total assets | 203,080 | 187,404 | ' |
Europe/Africa Region | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales to external customers | 23,836 | 21,900 | ' |
Depreciation and amortization | 511 | 468 | ' |
Operating (loss) income | 2,114 | 1,949 | ' |
Long-lived assets | 17,615 | 16,233 | ' |
Capital expenditures | 698 | 243 | ' |
Total assets | 118,230 | 102,517 | ' |
Asia Pacific Region | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Net sales to external customers | 19,944 | 17,361 | ' |
Depreciation and amortization | 331 | 273 | ' |
Operating (loss) income | 4,924 | 4,761 | ' |
Long-lived assets | 2,552 | 2,400 | ' |
Capital expenditures | 71 | 97 | ' |
Total assets | $70,953 | $63,337 | ' |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 29, 2014 |
Commitments and Contingencies [Line Items] | ' |
Lease future expiration date, year | '2024 |
Total operating lease obligations | $6 |
Minimum | ' |
Commitments and Contingencies [Line Items] | ' |
Length of purchase commitments, in days | '60 days |
Maximum | ' |
Commitments and Contingencies [Line Items] | ' |
Length of purchase commitments, in days | '90 days |
Line_of_Credit_Additional_Info
Line of Credit - Additional Information (Detail) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 29, 2014 |
Line of Credit Facility [Line Items] | ' |
Available line of credit | $30 |
Line of credit, variable rate basis | 'LIBOR plus |
Letter of credit | 2.25 |
Total borrowing capacity amount reduced | $2.25 |
LIBOR | Minimum | ' |
Line of Credit Facility [Line Items] | ' |
Line of credit basis spread on variable rate | 1.50% |
LIBOR | Maximum | ' |
Line of Credit Facility [Line Items] | ' |
Line of credit basis spread on variable rate | 2.00% |