Thank you, and good morning, everyone. My name is Vic Allgeier of the TTC Group, FARO’s Investor Relations firm.

Yesterday, after the market closed, FARO released its second quarter results. By now, you should have received a copy of the press release.

If you have not received the release, please call Nancy Setteducati at 407-333-9911. Press release is also available on FARO’s website at www.faro.com.

Representing the company today are Jay Freeland, President and Chief Executive Officer; and Keith Bair, Senior Vice President and Chief Financial Officer. Keith and Jay will deliver prepared remarks first and will then be available for questions.

I would like to remind you that in order to help you understand the company and its results, management may make some forward-looking statements during the course of this call. These statements can be identified by words such as we expect, we believe, we predict, we target, our growth targets, our goals, our guidance and similar words.

It is possible that the company’s actual results may differ materially from those projected in these forward-looking statements. Important factors that may cause actual results to differ materially are the risk factors set forth in yesterday’s press release and in the company’s filings with the SEC.

I will now turn the call over to Keith.

Thank you, Vic and good morning everyone. Sales in the second quarter of 2012 were $66.8 million, an 11.8% increase from $59.7 million in the second quarter of 2011.

On a regional basis, second quarter sales in 2011 in the Americas increased $3.8 million or 17.4% to $25.7 million, compared to $21.9 million in the second quarter of 2011.

Sales decreased $700,000 or 2.9% in Europe to $23.2 million from $23.9 million in the second quarter of 2011. A weaker euro relative to the U.S.

dollar on average resulted in lower sales of approximately $3 million as sales denominated in euros were translated into U.S. dollars.

In euro terms, sales increased 9.4% to approximately EUR 18.2 million from EUR 16.6 million in the second quarter of 2011.

Sales in the Asia-Pacific region increased $4 million or 28.8% to $17.9 million from $13.9 million in the second quarter of 2011. The effective changes in foreign exchange rates, on total sales was a decrease of approximately $3.4 million in the second quarter of 2012 compared to the second quarter of 2011.

New orders increased 13.6% in the second quarter of 2012 to approximately $71 million compared to approximately $62.5 million in the second quarter of 2011. On a regional basis, second quarter orders in 2012 in the Americas increased 17.1% to $27.4 million compared to $23.4 million in the second quarter of 2011.

Orders increased 4.5% in Europe to $25.8 million from $24.7 million in the second quarter of 2011. Orders in the Asia-Pacific region increased 23.6% to $17.8 million compared to $14.4 million in the year ago quarter.

The top 5 customers by sales volume in the second quarter of 2012 were Airbus, Mitsubishi, Electric Corporation, PT Smart Mitra Solutions, General Electric, and Electroimpact, which represented only 3.1% of sales. The top 10 customers in the second quarter of 2012 represented only 4.9% of our sales, once again indicating our lack of dependence on any one or a handful of customers.

Gross profit increased $3.6 million or 10.6% to $37.1 million in the second quarter of 2012 from $33.5 million in the prior year quarter. Our gross margin was 55.5% in the second quarter of 2012 compared to 56.1% in the year ago quarter, primarily due to a decrease in gross margin from product sales to 59.7% in the 3 months ended June 30, 2012 from 61.1% in the 3 months ended July 2, 2011 as a result of lower average selling prices due to promotions and preparation for new product introductions and an increase in the sales of laser scanner products sold through our distributor channel.

As a percentage of sales, selling expenses decreased to 23.7% of sales in the second quarter of 2012 compared to 25.6% in the year ago quarter. Selling expenses increased $500,000 to $15.8 million in the second quarter of 2012 from $15.3 million in the second quarter of 2011, primarily due to an increase in compensation and commissions expenses of $300,000 and marketing and advertising cost of $200,000.

As a percentage of sales, administrative expenses increased to 12.2% of sales in the second quarter of 2012 compared to 11.6% in the second quarter of 2011. Administrative expenses in the second quarter of 2012 increased by $1.2 million to $8.1 million from $6.9 million in the second quarter of 2011 primarily as a result of an increase in professional fees of $1.2 million related to the FCPA matter in connection with the DoJ and SEC settlement and $400,000 related to patent litigation offset by reduction in bad debt expenses of $400,000.

The monitor completed its follow-up review and submitted its final report to the SEC and DoJ on June 29, 2012. The company expects that the monitoring period will not be extended beyond submission of the final report, but the company has not yet received any response from either the SEC or the DoJ to the final report.

Either or both of them could require additional steps including extension of the monitor ship under the terms of the agreement that the company entered into with the SEC and DoJ. The company does not expect to incur further expenses related to the FCPA matter going forward.

Research and development expenses increased to $4.5 million in the second quarter of 2012 were 6.8% of sales compared to $3.8 million or 6.4% of sales in the second quarter of 2011. The increase is primarily related to an increase in compensation expenses of $400,000, subcontractors expense of $400,000 and materials expense of $200,000, offset by $400,000 related to the closing and relocation of the R&D facility in Andover, Massachusetts to our existing facility in Kennett Square, PA in the quarter ended July 2, 2011.

Total operating expenses were $30.2 million for the second quarter of 2012 or 45.2% of sales compared to $27.8 million or 46.5% of sales in the year ago quarter. Operating profit increased $1.1 million or 19.4% to $6.9 million in the second quarter of 2012 from $5.8 million in the year ago quarter.

Operating margin for the second quarter of 2012 was 10.3% compared to 9.6% in the year ago quarter.

Other income and expenses net increased by $300,000 to expense of $400,000 in the second quarter of 2012 from expense of $100,000 in the second quarter of 2011. And primarily represents the effect of changes in foreign exchange rates on the inter-company account balances denominated in different currencies.

Income tax expense increased $1.7 million in the second quarter of 2012 compared to $1.4 million in the second quarter of 2011 due to an increase in pre-tax income. The company’s effective tax rate for the second quarter of 2012 was 27% compared to 25.3% in the second quarter of 2011, which included a reduction of 4.7% related to the tax benefit of the exercise of employee stock options in the prior year period.

Net income increased by $500,000 or 11.8% to $4.7 million or $0.28 per share in the second quarter of 2012 from $4.2 million or $0.25 per share in the second quarter of 2011. The number of fully diluted shares outstanding in the second quarter of 2012 was 17.1 million compared to 16.8 million in the second quarter of 2011.

I’ll now briefly discuss a few balance sheet and cash flow items. Cash and short-term investments were $139.7 million at June 30, 2012, compared to $129.5 million at December 31, 2011 and includes $65 million of U.S.

Treasury bills.

Accounts receivable was $53.2 million at June 30, 2012, compared to $57.5 million at December 31, 2011. Days sales outstanding at June 30, 2011 increased to 73 days from 68 days at December 31, 2011 primarily as a result of an increase in the collection cycle in Europe.

Inventory has increased to $72.3 million at June 30, 2012 from $67.2 million at December 31, 2011 primarily due to an increase in raw materials related to the production of the FARO Laser Scanner, but declined sequentially by $2.5 million from the end of first quarter of 2012.

Finally, I’ll conclude with some statistics regarding our headcount numbers. We had 938 employees at June 30, 2012 compared to 885 at December 31, 2011, an increase of 53 or 6%.

Account manager headcount increased 10.6% to 177 at June 30, 2012 from 160 at December 31, 2012, with 58 account managers in the Americas, 56 account managers in Europe, and 63 account managers in Asia. Geographically, we now have 374 employees in the Americas, 317 employees in Europe, and 247 employees in the Asia-Pacific region.

Before I hand the call over to Jay, I’d like to provide a summary of the EPS shortfall of $0.28 compared to the street estimates of $0.46 by stating that, we had a sales miss of $6 million, $3 million of that was related to foreign exchange translation related to the euro at a 50% margin after deducting commissions and net of tax, that’s approximately $0.13 per share. The additional monitor costs on Nikon litigation also on an after-tax basis added approximately $0.06 per share.

I will now hand the call over to Jay.

Thanks, Keith. We had good result from the second quarter despite a challenging economic environment.

Growth in Asia continued to be very strong with orders and sales both growing approximately 25%. Orders and sales in Americas both increased approximately 17%, leaving the Americas with 23% sales growth year-to-date.

In Europe, we experienced a combination of a weaker economic environment and a weaker euro.

Sales growth in euro was 9.4% translation into U.S. dollars, which resulted in a slight decline of 2.9%.

We believe we will continue to see pressure in that region throughout the remainder of this year, and as a result, that may prove difficult for us to achieve our historical growth rates of 20% to 25% in fiscal 2012. We’ve continued to make changes in Europe, including restructuring the sales organization both at the leadership level as well as the account manager level.

Underperforming account managers have been changed out as have weaker regional leaders. We named the new VP of Sales at the beginning of the second quarter, and he has refocused the organization on the most critical metrics and has provided more oversight to ensure we are maximizing our selling activities in the region.

In total, approximately 30% of the account manager force has turned over in the first 6 months of this year. Market demand for our products, particularly the Edge Arm and the Focus Laser Scanner continues to be strong.

Cash rates for the Edge Arm Laser Line Probe continue to be approximately 60% globally. The Focus Laser Scanner remains best-in-class with low-viable competitive alternative.

We added several new distributors for the focus during the second quarter, many of them in Asia. We remain on course to have the surveying distribution network for the focus completed at the end of this year and we are also continuing to experiment with new distribution channels into additional verticals such as architecture, insurance, and forensics.

We believe we will start penetrating those markets before the year is over.

Demand for the Focus Laser Scanner continues to grow and our distributors are increasing their contribution to FARO’s top line. In the second quarter, sales to distributors for the Focus Laser Scanner reached 58%, more than double our rate in the second quarter of last year.

Our sell-through was improving as well with 94% of distributors reordering at least 2 times in the last 12 months.

During the second quarter of 2012, we also held our second annual 3D Documentation Conference in Switzerland attracting more than 250 attendees and included displays of applications covering construction, surveying, building information management, historical preservation, and many others.

Our manufacturing capacity is fully supporting our normal court cycle of 4 weeks or less, and we are starting to reduce the sizable inventory for the laser scanner that we added in 2011 to meet the accelerated demand we were seeing in the market. In total, the scanner continues to be our second highest volume product, a position that achieved last year, only 3 quarters after its launch.

Two weeks ago, we launched the new Vantage FARO Laser Tracker, the latest generation of the tracker product line. This marks another disruptive product release for FARO.

The Vantage tracker is 25% smaller and lighter than the previous generation. It features an expanded measurement range and offers unique gesturing capability for reacquiring the laser beam if it’s lost during measurement.

We have launched the Vantage under the campaign slogan of no compromise ensuring customers that this delivers the accuracy and performance that our customers expect. The Vantage tracker is another example of the aggressive push we are making in our research and development initiative.

The trial for our patent dispute with Nikon started on Monday, attempted one more court mandated settlement during the second quarter, but had no progress in that regard. We continue to believe that we have a strong position in the suit and look forward to resolving it.

Finally, as Keith mentioned, the monitor assigned to us in our FCPA settlement with the SEC and DOJ has completed its final review of the business. We believe it’s a very good report and anticipate that this will end our monitorship by the government.

Like many companies, market demand is strong, but we believe the economic situation in Europe will create pressure throughout the rest of this year. We are aggressively driving our sales and marketing activities, controlling our costs, and continuing to innovate in our R&D labs around the world.

As I stated earlier, there is no doubt that economic conditions have deteriorated, particularly in Europe, and as a result, there will be top line pressure throughout the remainder of this year. However, I’m confident that the FARO team is doing everything possible to execute as we always have.

I’d like to thank the FARO team for their constant dedication and execution as well as our customer suppliers and investors. Thank you for your attention.

And I’ll now open the call to questions.

Question on the bookings number in the Americas, is there any way that you can help us or quantify the amount of orders that had slipped in Q1 into Q2, just give us some sense as to what -- how the bookings were trending in the Americas, I mean, you clearly showed growth, but there was some slippage?

I don’t -- Jim, this is Keith I don’t think we’ve actually quantified that number. There was quite a few deals that slipped, but I don’t think we ever actually quantified that number.

Was it meaningful, Keith?

I think it was a meaningful number. And I think that we had that slowdown, we have some deals delayed, but we did not experience that same effect at the end of the second quarter.

Okay. And Jay, with respect to the way we think about the year, I think, have shown 18% top-line growth through their first 6 months of the year.

You seem to suggest and understandably so that with the pressure you are seeing in Europe, the weakness on the macro side that -- achieving that 20% to 25% growth is going to be difficult, but help us understand how much is the macro influencing this and how much is just the internal issues that you are facing in Europe affecting the business?

Yes, so let me -- I’ll try to give a little color there. I may not give you an exact percentage, Jim as to how much has been impacted by each, but let me tell you what the key sort of drivers are.

Obviously, you are right. Number one is the economic situation in Europe.

It definitely got worse in the last 6 weeks of the quarter. That’s not a surprise.

I think we have seen that in all the general economic data and the news as well. We haven’t necessarily seen impact in Asia from it.

Obviously, when you look at their numbers, and we don’t think we are seeing impact yet in the Americas from that falloff, but no question that creates pressure that’s number one.

Number two also in Europe continues to be just the overall execution. I referenced the fact that roughly 30% of the account managers had turned over in the first 6 months of the year.

As you know, it does take sometimes as long as 6 to 9 months to really get sales people ramped up. So, as a result what you have is new sales leader, he has restructurable leadership team and you have multiple new account managers in the field now, not just new account managers that we added to derive incremental growth, but you also have account managers that are new who were replacing underperformers and people that were removed from the company.

So, there is a portion of that is us needing to reset the deck there and get those guys fully productive. That does create the potential for the improvement in the second half of the year.

Obviously, that’s a little bit dependent also on the economic situation. So, some of that is our own execution.

And then the 2 others that I’d point to is the laser tracker, you have a brand new laser tracker that came out at the beginning of Q3. No question, the market knew that the tracker was on its way, and so as a result, we had a little bit of customers holding up waiting for the new tracker.

We had a little bit lower pricing as we moved out some of the remaining tracker inventory from our current portfolio, because we knew once we released Vantage that the previous generation would not be of interest at that point. So, you did have a little bit of sales pressure from that, both the combinations and just customers waiting for the new vantage, so that potentially creates improvement in the back half of the year.

And then the last one certainly is the laser scanner, as we have continued to add additional distributors, we continue to see the impact, we are now at 58% of them generating our sales to the laser scanner, that probably continues to grow. The repeat -- reorders that category has jumped 94% as it linked from where we were even in the first quarter.

So, those are the things that could have potentially positive impact to the back half of the year. Overall though, at least I guess to take the conservative view of it, no question that economic pressure in Europe creates a bit of a gap that still makes it harder to fill and that’s why ultimately getting to our historical rates of 20% to 25% which we have always said we thought we should be able to do as a company in general.

It probably does create pressure there in the second half to get there.

Okay. And then Keith, on the sequential decline in gross margins, about 150 basis points, I think, how much of that was due to the markdown on clearing out some of the old tracker product?

Yes. We actually haven’t quantified that specific number, but it certainly did have an impact.

We ran quite a bit of promotions on the old tracker as well as the increase in sales of the laser scanner product through our distribution channel. So, both of those really have an impact.

Which was bigger in terms of the impact?

We really haven’t quantified that.

I’d like to -- can you talk about sort of the sequential performance in revenue and order flow, typically you have a significant increase with somewhere approaching 20% sequentially from the weaker first quarter. In the Americas, was there a change in terms of either the demo demand or close rates that you saw that would have caused the weaker performance domestically?

We haven’t seen anything. I think our demos per account manager, is still right on track with the closure rate certainly has not changed.

So, no, I really haven’t seen any impact from either of those 2.

Looking at your gross margins then, would you assume then on a go-forward basis that some of these issues we addressed -- you addressed that you would expect to see a potentially couple of 100 basis point improvement on average through the second half of the year on the product side?

Well, I think as a result, the introduction of the Vantage tracker will pickup some points there, because we’ll no longer have that promotions running through in the old ION, but to the extent that we continue to grow the distribution channel for the laser scanner, that, that two will have impact. 58% of our total sales went through distributors in this quarter and that had an impact on the gross margin as well, but as you know that certainly benefits our operating margin, because we are saving all those commissions and those types of costs.

Okay. Final question relative to litigation expense, do you have a sense of what the run rate might be for the suit -- for the quarter and what was it specifically in the second?

Well, as you know we started the trial yesterday. So, this is somewhat of a unpredictable number depending on how long that takes.

But for the second quarter it was a little over $0.5 million in the second quarter of 2012 compared to the $200,000 in the second quarter 2011.

Mark, I’ll add a little more color to that -- to the trial itself it’s actually Monday that it started. Each side has 20 hours plus the cross examination time.

So, when you look at it in total the trial itself would be a couple of weeks give or take, depending on how everything pans out. So, just to put sort of framework around that and then obviously depending on the outcome that would determine is there additional and continued follow-up work and what else comes beyond that.

So, the trial itself not expected to last a very long time, it’s really more what the outcome is beyond that.

So would you expect doubling in the expenses relative to litigation in Q3 versus Q2?

I certainly wouldn’t predict it doubling I don’t know if we give any number out there I mean again given the trial itself is occurring right now it’s possible that you could have less in the third quarter as well -- that’s the part it’s a little bit hard to predict obviously its time dependent.

Yes, good morning. Jay can you just talk about the sequential sales trend in Focus Laser Scanner, were sales up sequentially and can you just maybe give us a feel for again I’m speaking sequentially I mean were they up mid-single digits or double-digits just a sequential trend?

I think I will quantify I don’t know we ever had before, it was up sequentially for sure any good volume on the Laser Scanner side. Keith, I don’t think we’ve disclosed before whether it’s single of double or even give a general feel for that, have we?

We have not disclosed sales growth rate, but it has increased sequentially from Q1 to Q2.

Okay and then was the book-to-bill on the FLS, was that also better than 1?

It’s a little bit better than 1. When you look at the quarter we had a couple of new distributors come online I wouldn’t say that it’s anything extraordinary, but it’s a little bit better than one.

Okay and Jay I noticed just as a general comment the backlog increased in the second quarter. I’m curious was that planned, I mean typically you can have a little better book-to-bill in the second.

But I’m curious of backlog -- my math suggest maybe you’re north of $21 million is that -- is there a reason for that, did you have any shipping issues or is that just a little bit higher than we expect?

Yes I won’t say we had any shipping issues necessarily. You do sometimes get customers who say look I’m going to place the order, I’m not ready for the unit for a couple of weeks.

So, you have a little bit about. You did have a little bit of getting the last few ION laser trackers out the doors, some of which rolled into the quarter 3.

I won’t say that it’s necessarily dramatic. And there is a little bit of increased orders just customers placing orders and saying we’re going to take delivery over a couple of months versus taking them over all at once.

Particularly when you look at Laser Scanner distributors you’ll see that sometimes, we’ll say, hey look I’m placing an order for X amount and I’ll take a certain percentage this month, a certain percentage next month and a certain percentage a month after that.

Okay, so really timing there is no strategy does that backlog coming down some?

It could obviously it depends on obviously expenses coming in the front door during the third quarter. So, if it’s possible it come down some at that point it depends on the order rates from distributors and another customers as you go through Q3.

Given Q3 is always a little bit lighter quarter for many companies just given the August shutdowns, it’s possible it could come down a little bit.

Okay and then just I just wanted to double back to question I believe you’ve answered this, but when you’re looking -- when you looked at the orders, the order linearity in the Americas, did you see anything in the month of June in particular in the Americas that would suggest any hesitancy on the buying side or?

Yes, I can’t say that we did. The biggest concern for us was, are we seeing any leakage from Europe into Asia or the Americas and we don’t think we’ve seen -- definitely don’t think we’ve seen anything there in Asia yet.

We don’t believe we have seen anything in the Americas at this point. The overall -- the flow, the responses from customers, the leads coming in, the demos that are being executed by the sales team all feel fairly normal still at this point.

Okay. And just sorry, one last question on the pricing side, thinking about the arms kind of the core business, has there been any pricing pressure either in Europe just given the demand or even in the U.S.

on the core side to close any business. Have you needed to use price there?

There is a little bit more price pressure in Europe, at least there has been for the last couple of years than there is in the Americas and in Asia. On the arms side itself, that is still a relatively stable product and when you look at the attached rate for the Laser Line Probe, it actually for the most part, the net average price has increased still, given how many arms are being sold at the Laser Line Probe versus being sold without it.

And that obviously has margin -- incremental margin to it as well, because of the size of the gross margin on the Laser Line Probe. As Keith had pointed out earlier and I think I had mentioned too, the tracker was really the one area, where there is a little bit more price pressure this quarter, less so from the market standpoint, a little bit of it was us, like I said ensuring that we had no ION inventory left when we launched the Vantage tracker, we did not want to be sitting on that.

Good morning. Just a couple of follow-ups on the margin question, so I think you might have just answered the last one, did we enter this quarter with no inventory in the legacy tracker?

Yes. Certainly, none that we feel would be excess or obsolete.

We do have the -- there is an interferometer version of the tracker, which a small select set of customers still buy and that is available only in the old configuration. What we have on hand is we’ll supply that and only that.

That should be contributed to further margin pressure?

No, actually, sorry, that’s a good point, Rick. That’s a little different.

The IFM is a very specific type of measurement source inside the device, so it would not contribute to margin pressure there. There was actually a higher price on that laser tracker in the marketplace, and there would not be a demand or requirement to lower it just to move inventory because that’s a very specified type of unit.

So, now that the Vantage is in the marketplace. The price is a little higher on the Vantage than the previous generation tracker.

The list price is higher and so certainly compared to the pricing we had in Q2, it’s definitely higher. We would expect to see a little bit of margin improvement there on the tracker side.

So, just actually since you hit on that, is the Vantage not compared against the Ion, but is it accretive to growth margin companywide with the lowest price or with the current price?

Yes, we certainly believe it would be, given that where we have the pricing and given how disruptive the unit is, and just given even the initial response at the launch events we have done over the last couple of weeks. We believe that it should be accretive.

Okay. Was there some, I know you sort of telegraphed this coming, so was there some pent-up demand for that product as you launched it?

Definitely. When I look at in hindsight, I may decide to keep myself much more quiet in the future, which I know will be frustrating to everybody in this phone call, but probably beneficial in the long run.

We definitely saw some of that, particularly the experience with laser tracker customers, newer customers, it’s less a concern, so they are just being introduced to the product, but the experienced ones, we know there is volume opportunity, no doubt, there were people holding out for the Vantage to arrive.

Okay. Back on the focus, it’s been trending up as the greater percentage going through distribution, do you expect that to continue or well, do you think it levels out in the high 50s?

I think it continues, Rick. I've always kind thought 75-ish percent was a real possibility in terms of the percentage going through distribution.

Currently we’re at 58% that’s up from 20% -- low 20s a year ago. So, I think we’ll see that improve some more it obvious -it’s dependent upon how quickly the -- both the existing distributors and some of the newer ones that we just signed up, how quickly they are able to generate volume.

But I think until we get deeper into other verticals which may or may not use the same type of channel, certainly at least as it relates to surveying and construction in that space I’d think 75% is the right target. What do we get there by the end of the year is a little bit harder to predict obviously.

Has there been any progress in penetrating other new end markets with that?

There is a little bit, it’s been slower, right now that a big piece of it is identifying with sort of definitively what's the opportunity, what's the demand look like, does it solve the problem in a right way. And then what is -- is there a slightly different work flow that’s required to help the customer to enable that.

Where are best places to market the product, what's the best way to go to market, you’re marketing it and then actually trying to transact it both are a little bit different. So, that’s the piece that we’re still sort of flushing through.

Okay and then I think you’ve already outlined, but everything sold through distribution has the higher operating margin its dilutive to gross margin, but it has a higher operating margin, is that correct?

Yes, you are not paying for the account managers, you’re not paying their commissions and their travel and all of those infrastructure costs related to the sales and marketing channel.

Okay. And then lastly, so I believe there is at least one more “disruptive launch” this year, is that still on track?

I would not guarantee that there is one more disruptive launch this year. I would say that we do have several things that we're working on that are back in the pipeline.

Obviously, I’d call it sort of normal flow to be expected whether it’s the back half of this year or the first half of next year. I'm going to hold off on kind of committing that one.

Okay, but are they -- are you taking away that the disruptive description or are you just changing the timing?

Not taking away disruptive description, timing, I think and just also again a little bit of it being the experience that we just went through with trackers. Some of it is me I think be more cautious about how openly I share sort of the what.

But I would say that we do have multiple things in the pipeline that are still disruptive, some of which are products that we don’t have today and some of which could be next generations of other products.

Jay, can you talk a little bit about the order rates in July year-over-year and to what extent just regarding this pent-up demand that you saw for the new tracker. Would you assume that there is some easing of orders coming in for that product as you satisfy the initial demand?

I won’t talk about July specifically since we don’t normally talk about the current quarter. But I will say is that the level of interest we've done launch events in -- multiple launch events now in the U.S., in Europe and the initial ones starting in Asia.

The response coming out of those, the requests for demos has been extremely high. And it is a nice mix of a lot of existing customers, but also good mix of new -- brand new don’t have trackers yet type of customers as well.

As there was the demand further previous product or was that the volume typically stronger in Europe or in the U.S.?

I’ll say it's like many elements of our business, it could rotate back and forth quarter-to-quarter depending on the projects, depending on the timing. The laser tracker, it’s one of those products that it’s not as broader market as the ARM is, and so it depends on where sort of the project load is.

Europe has had the benefit of the Airbus contract for last few years, which has a certain number of units that sort of rolls through every year, not necessarily every quarter. So, that can drive some fluctuation back and forth.

Europe would be strong one quarter, next quarter it’ll be a little bit less than it had the previous because Airbus is in there, and it will pick-up again the following quarter. But generally speaking it's hard to say that one is naturally stronger than the other in any given quarter, so that does tend to swap back and forth.

Okay. Lastly, if you could talk a little bit about the verticals, your major verticals in terms of where you’re seeing some changing demand, which markets perhaps are weakening which are holding up better?

Yes, it’s harder to do it by vertical, certainly if you do it by, obviously we know that where it looks like a region. What I would say is that aerospace is still strong there, there are lots of projects that are not just existing, but new projects both -- I mean that’s across both commercial and military and that’s global around that’s all 3 regions.

Auto has continued to be pretty darn strong too. When you look at results of the auto companies, they are all doing extremely well.

They are definitely investing in the technology. The heavy manufacturers, I’m not going to say it’s a little bit lighter than it has been.

But it’s probably not quite as strong as auto and aero. That being said that’s one of those verticals where we are not nearly as penetrated.

So, there is plenty of not pent-up demand, but plenty of opportunity where we haven’t touched yet. And then on the laser scanners side, I’ll say that construction and surveying continues to be really strong.

And again a lot of it is less dependent upon the current market environment. And it’s more dependent upon brand new technology and a space where they haven’t had this before, lots of interest from distributors who want to move that product.

And conceptually you got customers who already understand large volume or large distance 3D measurement, it’s a little bit different than some of the machinery, so you go through on the manufacturing side when frequently still they aren’t 100% sure of why measuring earlier in the process even makes a difference to their business, so that you are clearing the different hurdle on the sales side with manufacturers particularly newer ones that don’t have the technology today than you are with surveying and construction where they’ve already been doing a lot of this. This is a different better more efficient, more detail depending on what the customer application is way to do it.

And your characterization it sounds like that’s more a company wide, which you just talked about. I mean, if we think about what you are seeing in terms of macro pressures in Europe, we are hearing about the declining -- auto sales being down potentially some production, some assembly capacity being removed.

What specifically in the verticals are you seeing in Europe that are making it more challenging for you?

It’s continued to be more tied to -- they are seeing what’s happening and no question like the last 6 weeks, you have seen we’ve a couple of companies to flag potentially less demand in the back half of the year and so they’ve -- if they weren’t already slowing down, they’ve definitely slowed down and they are watching more carefully their purchasing decisions. We certainly do not feel like when we saw that’ll lead into the 2009 downturn.

There is a fairly dramatic shift that occurred pretty quickly and quite frankly, it’s over like a 6-day week period as well in 2008 leading into that the back half of ’08 certainly got really ugly, really fast. We certainly have not seen anything like that it’s been sort of this long slow, particularly Europe has been like that a year.

They are watching cautiously the decision process takes longer, they may still pull the trigger, but instead of doing it in Q1, they did it in Q2. And you’ve got some who didn’t do in Q2 and maybe we will do in Q3 or Q4.

And it’s -- there is always the demand and the need for the technology to improve their facilities, improve their productivity and so forth. It’s more tied to, is it still okay to spend the CapEx, do we feel like we need to clamp down harder.

I think a lot of the customers are gauging how big is the shift in demand in the second half of the year, is it down a little bit, is it down a lot, is it flat, where we are expecting 10% growth and it’s only 1%. A lot of them are still I think going through that sort of assessment, and that puts them in that pause mode for sure until they get the hands around that.

Once they get the hands around it, then that determines whether the pause becomes a stop or it become sort of slower trickle back in again.

But there is reassessment that you may be seeing from your customers at this point is it fair to say that’s occurring more in Europe as opposed to the Americas or Asia?

Yes, fair points and yeah, we are seeing very little of that in Asia, the Americas right now. They -- what they are all watching what’s going on, but it’s not like in the first quarter we’re -- if you looked at more than Europe, they were watching what was going on in Southern Europe and it was definitely affecting the decision making.

It’s a little different, Asia, we know the customers in Asia and the Americas are watching what’s happening in Europe, but it is not affected their decision-making. It may be slowing their process a bit, but I do can’t say it’s meaningful or anything that we would fly again at this point.

Yes. But Keith could you just speak to do you have an order number for Europe in local currency?

I mean, again there seem to be about a 12 point delta between sales and local currency sales. Would a similar thing apply on the orders side?

Yes, on the order side in euro terms were about EUR 20.2 million versus roughly about EUR 17.2 million in the second quarter of 2011, but 17.5%-17.6% increase in euro terms for the orders.

Okay and then also Jay in Europe 2 things about Europe one did you -- as you’ve reorganized the sales leadership, the sales effort, have you split the sales teams between the metrology products and the Focus Laser Scanner is that separate at this point?

It has always been and it separate for sure. So, you had individual account managers only responsible by product line that’s always been the case and remains the case.

So, you have account managers who only sell laser scanners. On the leadership side you do have those groups reporting within the country manager and we’ve done several country manager change outs and responsibilities, so that’s a fairly large leadership role particularly when you think of some of the bigger countries over there.

We’ve elevated or switched territories for a leader to give them that responsibility now. And then the distribution for the laser scanner that is managed separately, because obviously managing the distribution process is a totally different animal, those guys work closely with the laser scanner account managers.

And in each of the three regions they certainly still assist somewhat with the distributors as they get them up in running and they get some benefit for doing that. But for the most part that is completely a separate management channel.

Okay and if you in Europe, as you’ve been moving the sales organization around and making the changes, have you just -- have you reduced the fixed cost structure in Europe just in general. Have you made any changes to the cost structure outside of the sales changes?

Yes, we haven’t really. What I’d say is that if you look at the improvement in margins in Europe overall, that team has done a very nice job of controlling their costs substantially.

What I’d say is even still from where we were at the going into the downturn in 2009, our total headcount 3 years later and at sizably higher revenue, it’s still below where we were going into the downturns. The teams have held back on adding people back to the organization.

We’ve added selectively where we needed to a lot of it was sales. A lot of it was R&D.

So, it’s been less about kind of peeling back or cutting back there. But I’ll say that they’ve done a very good job compared to last year of controlling costs within the budget that we assigned which overall lowers the growth of those costs.

So, it gives you the same impact without necessarily taking people out of the equation so to speak.

Just a couple of questions for you, Jay first can you give us an update on Europe in terms of the senior leadership position there my understanding is spending good bit of time in the Europe became market as you’ve been working through that change any close for identifying who that leader would be for that European market, and how much of your time are you spending currently and do you expect to continue be spending in that marketplace?

Yes so you’re correct that I’ve been spending a lot of time there, roughly every third week. So, I’ll do 2 weeks not in Europe could be anywhere else, so then one week in Europe.

And that pattern has been fairly consistent since making the change at the beginning of February. And going forward, I anticipate continuing to do that, until we have the new Managing Director in place.

It’s not to say that team isn’t operating obviously without the person because they can execute, but for me it’s to make sure that we’re all ducks in the row. And it’s an opportunity to kind of flush some additional changes through it, which we’ve already done by being over there, particularly in the sales side, which we’ve already seen.

What I’d say is that we’ve seen several good candidates in the process. And I think we are pretty close to having our person.

And then at that point, it’s just a matter of the timing. So, do I think the position will be hired by the end of the year, I certainly still think that is possible, we have our person at least names by the time we get through the end of third quarter.

I think that’s really possible. Obviously, when you get to a point where you feel like you have a couple of good candidates, then you are in the sales mode as much as you are at the assessment mode of that person.

So, we are doing that, what I believe is to the best of our ability right now. There has been real excitement about the opportunity, I will say that, people look at it and say look we love the technology.

We can’t believe how much market opportunity there is, so the people that I’ve talked to are really interested in being able to come on board and we’ve seen some really strong talent coming from places that you might not normally expect who have said yeah, I really want to crack at this, this is my shot of doing some increase substantially.

Okay. And second question is there as you mentioned in the press release regarding emphasis on cost containment as you work through this period.

Can you elaborate a little bit more in terms of what you can do along those lines because my impression is that you’ve running relatively, we haven’t added a lot of excess cost back into the company since the downturn, what opportunities do you see on the cost side?

Yes, and to be fair, Joe, I think we have done a decent job there this year, it’s much keeping that focus and ensuring that we don’t do anything that is not 105% necessary in the back half of the year. Are we still going to add some account managers in the second half, absolutely in all 3 regions even with what’s going on in Europe, we know there are still a couple of gaps there that we just have to fill.

And in less, there were some massive downturn in the marketplace, I would continue doing that. We still have a few more slots in R&D that we’d like to add in the second half of the year.

But outside of that is going to be relatively controlled in all the other areas. So, to be fair, it’s probably as much continuing to be as tight as we were in the first half as we are in the second half.

Okay. And then on the Focus Laser Scanner, you are obviously coming or you’ve been going against more difficult comparisons as you go through the ramp that you had last year , I know you don’t normally talk in terms of individual product performance.

But can you tell us that you see growth year-over-year in the laser scanner sales in the second quarter?

Absolutely.

Okay. Do you continue to expect to see growth in that area?

Yes. Yes, I think with the number of distributors we have on board the sell through that we are starting to see from them the return -- the return visits to place more order, the passive idea I said are able to sell through to the end customer, we would anticipate continued growth in that product through the back half of the year again, barring some massive economic decline that’s showed everything down.

Okay. And serving has been the market that you’ve talked about most frequently early on with that product line, have you begun to see any meaningful impacts from other end markets?

The big 3 have been surveying and construction, historical preservation, and then the other big one would be sort of a general category of, for a lack of better word, what we call the 3D documentation has we call it. There are customers are just continuously capturing as built to their facilities and whether using it for future planning clearly for asset management just to have the day that we have customers who are now just scanned the facility, three, four, times a year depending on the size the facility and the need and they don’t do anything with the data.

They just tuck it away. They know they have it and they can use it if they have to.

We are seeing a lot of activity there as well. Those are kind of the big 3 and then all the others at this point would be very early stage preliminary.

We are really just figuring out the best way to address and insert ourselves into that market.

Okay. Any significant changes in the competitive front in that market?

None.

Okay. And then last question I have for you, the Vantage laser track, can you talk a little bit in terms of how you see the market opportunity there?

Is this something that we should look at? Does the available market for this change at all from what you had in the past with the laser tracker?

Does it open any new particular avenues for you or is this something that we just kind of see as the new and better within the existing kind of market profile?

Yes, I think it’s the addressable market remains the same for sure. It’s definitely a more niche market than say the arm.

There aren’t many objects that need measurement range from 12 feet up to 300. That being said, given the size it’s possible that we have enabled a slightly broader portion of the addressable market, those that we knew they could use one in the past, but they might not have gone after just because they weren’t sure about the size of it, ease, etcetera.

Yes, I think we may have improved that a little bit, but the overall markets for sure is still for the tracker as the same, it does not suddenly open up a brand new vertical that might not have been available to us before.

Very good. Thanks very much everybody and we look forward to updating you again at the end of the third quarter and we will be seeing some of you at the conferences over the next few weeks.

Thanks.