FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP

TOTAL SALES BY REPORTING SEGMENT

(UNAUDITED)

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in thousands)

2019

2018

2019

2018

3D Manufacturing total sales, as reported

$

59,002

$

63,989

$

115,569

$

124,646

GSA sales adjustment ⁽¹⁾

3,280

—

3,315

—

Non-GAAP 3D Manufacturing total sales

$

62,282

$

63,989

$

118,884

$

124,646

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in thousands)

2019

2018

2019

2018

Construction BIM total sales, as reported

$

24,161

$

23,567

$

49,600

$

46,249

GSA sales adjustment ⁽¹⁾

463

—

463

—

Non-GAAP Construction BIM total sales

$

24,624

$

23,567

$

50,063

$

46,249

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in thousands)

2019

2018

2019

2018

Emerging Verticals total sales, as reported

$

10,328

$

10,688

$

21,939

$

20,183

GSA sales adjustment ⁽¹⁾

2,062

—

2,062

—

Non-GAAP Emerging Verticals total sales

$

12,390

$

10,688

$

24,001

$

20,183

⁽¹⁾ Late in the fourth quarter of 2018, during an internal review we preliminarily determined that certain of our pricing practices may have resulted in the U.S. Government being overcharged under our General Services Administration ("GSA") Federal Supply Schedule contracts (the "Contracts"). In fourth quarter 2018, we reduced our total sales by an estimated cumulative adjustment of $4.8 million. We also retained outside legal counsel and forensic accountants to conduct a comprehensive review of our pricing and other practices under the Contracts (the "Review"). On July 15, 2019, we submitted a report to the GSA and its Office of Inspector General setting forth the findings of the Review. Based on the results of the Review, in second quarter 2019 we reduced our total sales by an incremental $5.8 million (the "GSA sales adjustment").