FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended

(in thousands)

September 30,
2017

September 30,
2016

Cash flows from:

Operating activities:

Net (loss) income

$

(3,458)

$

7,562

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

Depreciation and amortization

12,075

9,733

Stock-based compensation

4,823

4,068

Provision for bad debts

321

727

Loss on disposal of assets

263

814

Provision for excess and obsolete inventory

1,271

2,937

Deferred income tax expense (benefit)

224

(734)

Income tax benefit from exercise of stock options

—

(354)

Change in operating assets and liabilities:

Decrease (increase) in:

Accounts receivable

3,701

12,850

Inventories

(11,450)

(8,689)

Prepaid expenses and other current assets

(3,834)

(995)

(Decrease) increase in:

Accounts payable and accrued liabilities

(2,774)

1,128

Income taxes payable

(598)

—

Customer deposits

(6)

(1,155)

Unearned service revenues

(1,326)

559

Net cash (used in) provided by operating activities

(768)

28,451

Investing activities:

Proceeds from sale of investments

32,000

11,000

Purchases of property and equipment

(6,081)

(5,272)

Payments for intangible assets

(1,345)

(1,440)

Acquisition of business

(5,496)

(20,911)

Net cash provided by (used in) investing activities

19,078

(16,623)

Financing activities:

Payments on capital leases

(6)

(6)

Payment of contingent consideration for acquisitions

(521)

(434)

Income tax benefit from exercise of stock options

—

354

Proceeds from issuance of stock

387

519

Net cash (used in) provided by financing activities

(140)

433

Effect of exchange rate changes on cash and cash equivalents

5,502

1,732

Increase in cash and cash equivalents

23,672

13,993

Cash and cash equivalents, beginning of period

106,169

107,356

Cash and cash equivalents, end of period

$

129,841

$

121,349