UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
Report
of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16
Under
the Securities Exchange Act of 1934
For the
month of October 2008
EXFO
Electro-Optical Engineering Inc.
(Translation
of registrant’s name into English)
400
Godin Avenue, Quebec, Quebec, Canada G1M 2K2
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.
|
Form
20-F þ
|
Form
40-F o
|
Indicate
by check mark whether the registrant by furnishing the information contained in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
|
Yes
o
|
No
þ
|
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-______.
On
October 15, 2008, EXFO Electro-Optical Engineering Inc., a Canadian corporation,
reported its results of operations for the fourth fiscal quarter and year end
for the fiscal year ended August 31, 2008. This report on Form
6-K sets forth the news release relating to EXFO’s announcement and certain
information relating to EXFO’s financial condition and results of operations for
the fourth fiscal quarter of the 2008 fiscal year. This press release
and information relating to EXFO’s financial condition and results of operations
for the fourth fiscal quarter of the 2008 fiscal year are hereby incorporated as
a document by reference to Form F-3 (Registration Statement under the Securities
Act of 1933) declared effective as of July 30, 2001 and to Form F-3
(Registration Statement under the Securities Act of 1933) declared effective as
of March 11, 2002 and to amend certain material information as set
forth in these two Form F-3 documents.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
EXFO
ELECTRO-OPTICAL ENGINEERING INC.
|
|
|
By: /s/ Benoit
Ringuette
Name: Benoit
Ringuette
Title: General
Counsel and Corporate Secretary
|
|
Date:
October 16, 2008
EXFO Reports Record Sales for Fiscal 2008
|
§
|
Annual
sales increase 20.2% to a record-high of US$183.8
million,
|
|
§
|
Telecom
Division sales grow 24.0% year over year, led by 97.4% growth for protocol
test business
|
|
§
|
Navtel
Communications and Brix Networks acquisitions strengthen next-generation,
IP testing and service assurance
offering
|
|
§
|
Gross
margin improves for a sixth consecutive year to reach
58.9%
|
|
§
|
Sales
from new products amount to 34.6% of total
revenue
|
QUEBEC
CITY, CANADA, October 15, 2008—EXFO Electro-Optical Engineering Inc. (NASDAQ:
EXFO, TSX: EXF) reported today record sales for the fiscal year ended August 31,
2008.
Annual
sales increased 20.2% to a record-high of US$183.8 million in fiscal 2008 from
US$152.9 million in 2007. In the fourth quarter of 2008, sales reached US$50.9
million compared to US$48.6 million in the previous quarter and US$43.0 million
in the fourth quarter of 2007. Overall for fiscal 2008, net accepted orders
increased 17.8% to a record-high of US$184.6 million for a book-to-bill ratio of
1.00. In the fourth quarter of 2008, net bookings totaled US$45.7 million
compared to US$50.7 million in the third quarter of 2008 and US$39.5 million in
the fourth quarter of 2007.
Gross
margin improved to 58.9% of sales in fiscal 2008 from 57.4% in 2007. In the
fourth quarter of 2008, gross margin amounted to 59.9% compared to 60.9% in the
previous quarter and 57.9% in the fourth quarter of 2007. Fiscal 2008 marked the
sixth consecutive year that the company raised its gross margin.
In fiscal
2008, GAAP net earnings reached US$18.4 million, or US$0.27 per diluted share,
including US$5.3 million for the recognition of previously unrecognized future
income tax assets, an extraordinary gain of US$3.0 million related to the
negative goodwill on the acquisition of Navtel Communications, and a net
recovery of income tax of US$1.2 million to account for new corporate tax rates
in Canada and a related review of the company’s tax strategy. These items were
partially offset by US$3.0 million in after-tax amortization of intangible
assets and US$1.3 million in stock-based compensation costs.
In 2007,
GAAP net earnings totaled US$42.3 million, or US$0.61 per diluted share,
including US$27.8 million in recognition of previously unrecognized future
income tax assets and tax credits and US$1.1 million for a government grant
recovery. These items were partially offset by US$2.9 million in after-tax
amortization of intangible assets and US$1.0 million in stock-based compensation
costs.
In the
fourth quarter of 2008, GAAP net earnings amounted to US$3.3 million, or US$0.04
per diluted share, including US$1.2 million in after-tax amortization of
intangible assets and US$0.4 million in stock-based compensation
costs.
In the
third quarter of 2008, GAAP net earnings reached US$11.2 million, or US$0.16 per
diluted share, including US$5.3 million for the recognition of previously
unrecognized future income tax assets and an extraordinary gain of US$3.0
million related to the negative goodwill on the acquisition of Navtel
Communications. These items were partially offset by US$0.8 million in
after-tax amortization of intangible assets and US$0.3 million in stock-based
compensation costs.
In the
fourth quarter of 2007, GAAP net earnings totaled US$33.5 million, or US$0.48
per diluted share, including US$27.8 million in recognition of previously
unrecognized future income taxes and tax credits and US$1.1 million from a
government grant recovery. These items were partially offset by
US$0.7 million in after-tax amortization of intangible assets and US$0.3
million in stock-based compensation costs.
“Fiscal
2008 has been a year of transformation at EXFO as we positioned ourselves as a
leader in next-generation, IP testing and service assurance through exceptional
growth of our protocol test business as well as the acquisitions of Navtel
Communications and Brix Networks,” said Germain Lamonde, EXFO’s Chairman,
President and CEO. “We also expanded our global presence with increased sales
and marketing initiatives in targeted countries, a new manufacturing facility in
China, and enhanced capabilities at our R&D software center in India. These
latest investments should accelerate earnings growth in 2009 and
beyond.
“We
balanced these longer-term initiatives with significant progress on a short-term
basis, namely annual sales growth of 20.2% ― or more than
twice the industry average. I’m especially proud of our higher-margin protocol
test business, which posted a sales CAGR of 74.4% during the last three years on
the strength of our focus on converged, IP networks. Not coincidentally, our
gross margin improved for a sixth consecutive year and I’m optimistic that it
will continue its upward trajectory in upcoming years.
“Our
EBITDA, however, didn’t grow faster than sales for the first time in five years,
as we accepted short-term losses for long-term benefits with the Brix
acquisition. Looking ahead, I’m confident that we’ll return to our customary
sales/EBITDA growth model, despite a visibly challenging macro-economic
environment.”
Selected
Financial Information
(In
thousands of US dollars)
|
Segmented
results:
|
Q4 2008 | Q3 2008 | Q4 2007 |
FY
2008
|
FY
2007
|
|||||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||||||
|
Sales:
|
||||||||||||||||||||
|
Telecom
Division
|
$ | 45,338 | $ | 42,843 | $ | 37,199 | $ | 160,981 | $ | 129,839 | ||||||||||
|
Life
Sciences & Industrial Division
|
5,605 | 5,738 | 5,776 | 22,809 | 23,095 | |||||||||||||||
|
Total
|
$ | 50,943 | $ | 48,581 | $ | 42,975 | $ | 183,790 | $ | 152,934 | ||||||||||
|
Earnings
from operations:
|
||||||||||||||||||||
|
Telecom
Division
|
$ | 2,867 | $ | 3,819 | $ | 8,108 | $ | 9,524 | $ | 13,132 | ||||||||||
|
Life
Sciences & Industrial Division
|
721 | 639 | 994 | 2,459 | 3,650 | |||||||||||||||
|
Total
|
$ | 3,588 | $ | 4,458 | $ | 9,102 | $ | 11,983 | $ | 16,782 | ||||||||||
|
Other
selected information:
|
||||||||||||||||||||
|
GAAP
net earnings
|
$ | 3,314 | $ | 11,179 | $ | 33,484 | $ | 18,424 | $ | 42,275 | ||||||||||
|
After-tax
amortization of intangible assets
|
$ | 1,177 | $ | 791 | $ | 699 | $ | 2,956 | $ | 2,864 | ||||||||||
|
Stock-based
compensation costs
|
$ | 368 | $ | 334 | $ | 277 | $ | 1,272 | $ | 981 | ||||||||||
|
Recognition
of previously unrecognized future income taxes
|
$ | − | $ | (5,324 | ) | $ | (24,566 | ) | $ | (5,324 | ) | $ | (24,566 | ) | ||||||
|
Recognition
of previously unrecognized R&D tax credits
|
$ | − | $ | − | $ | (3,162 | ) | $ | − | $ | (3,162 | ) | ||||||||
|
Extraordinary
gain (negative goodwill)
|
$ | − | $ | (3,036 | ) | $ | − | $ | (3,036 | ) | $ | − | ||||||||
|
Government
grant
|
$ | − | $ | − | $ | (1,079 | ) | $ | − | $ | (1,079 | ) | ||||||||
|
Net
recovery of income tax
|
$ | − | $ | − | $ | − | $ | (1,191 | ) | $ | − | |||||||||
Operating
Expenses
Selling
and administrative expenses amounted to US$61.2 million, or 33.3% of sales, in
fiscal 2008 compared to US$49.6 million, or 32.4% of sales, in 2007. In the
fourth quarter of 2008, selling and administrative expenses totaled US$17.0
million, or 33.4% of sales, compared to US$15.7 million, or 32.2% of sales, in
the third quarter of 2008 and US$13.0 million, or 30.3% of sales, in the fourth
quarter of 2007.
Gross
research and development (R&D) expenses reached US$32.5 million, or 17.7% of
sales, in fiscal 2008 compared to US$25.2 million, or 16.5% of sales, in 2007.
In the fourth quarter of 2008, gross R&D expenses attained US$8.6 million,
or 16.8% of sales, compared to US$8.8 million, or 18.2% of sales, in the
previous quarter and US$7.1 million, or 16.6% of sales, in the fourth quarter of
2007.
Net
R&D expenses totaled US$26.9 million, or 14.6% of sales in fiscal 2008,
compared to US$16.7 million (including US$3.2 million for the recognition of
previously unrecognized R&D tax credits), or 10.9% of sales, in 2007. In the
fourth quarter of 2008, net R&D expenses amounted to US$7.3 million, or
14.3% of sales, compared to US$7.4 million, or 15.2% of sales, in the third
quarter of 2008 and US$2.3 million (including US$3.2 million for the recognition
of previously unrecognized R&D tax credits), or 5.4% of sales, in the fourth
quarter of 2007.
Fiscal
2008 and Fourth-Quarter Business Highlights
|
§
|
Market expansion — EXFO
increased its annual sales 20.2% to US$183.8 million, while the company’s
stated goal was 20% for the fiscal year. Telecom Division sales improved
24.0% year over year, led by 97.4% growth in the protocol test business
(including a US$5.4 million revenue contribution from Brix and Navtel) and
12.7% increase in the optical test business. In terms of geographic
diversification, the Americas accounted for 55.8% of sales in 2008,
Europe, Middle East and Africa (EMEA) 28.4%, and Asia-Pacific 15.8%. The
Americas, EMEA and Asia-Pacific regions posted annual growth rates of
12.8%, 26.3% and 40.1% respectively. EXFO’s sales to its largest customer
dropped to 7.4% of total revenue in 2008, despite increasing market share
at this account. Excluding sales to this customer, Telecom Division sales
would have increased 37.3% year over year, while sales to the United
States would have increased 28.7% year over
year.
|
|
§
|
Profitability — GAAP
earnings from operations amounted to 6.5% of sales in 2008, including 7.0%
in the fourth quarter, while the company’s goal was 8% for the fiscal
year. The shortfall is mainly due to the short-term negative impact of the
Brix Networks acquisition. EXFO also generated US$13.8 million in cash
flows from operating activities in 2008, bringing its cash and short-term
investments to US$87.5 million.
|
|
§
|
Innovation — EXFO
launched 27 new products in fiscal 2008, including seven in the fourth
quarter, compared to 20 in 2007. Key product releases in the fourth
quarter of 2008 included amongst others a triple-play test set for
ADSL2+/VDSL2 network deployments and a new Gigabit Ethernet software
option for the Packet Blazer test modules that enables Internet
Protocol/Multi-Protocol Label Switching (IP/MPLS) testing. Following
the year-end, the company introduced an enhanced version of Navtel’s
InterWatch platform that simulates up to 256,000 unique IPv6 subscriber
addresses per chassis, and new software features on the Transport
Blazer test modules for characterizing 40G/43G SONET/SDH networks.
Products on the market two years or less accounted for 34.6% of sales in
fiscal 2008, including 29.0% in the fourth quarter, while the company’s
published goal was 30% for the fiscal
year.
|
Business
Outlook
EXFO
forecasts sales between US$45.0 million and US$50.0 million and GAAP net
earnings (net loss) between a net loss of US$0.03 per diluted share and net
earnings of US$0.01 per diluted share for the first quarter of fiscal 2009. The
GAAP net earnings/loss outlook includes US$0.02 per diluted share in after-tax
amortization of intangible assets and stock-based compensation
costs.
Corporate
Performance Results for Fiscal 2008
EXFO
reported the following corporate performance results for fiscal
2008:
|
Objective
|
2008
|
|
|
Metric
|
Result
|
|
|
Increase
sales (% of year-over-year growth)
|
20%
|
20.2%
|
|
Maximize
profitability (operating margin in %)
|
8%
|
6.5%
|
|
Focus
on innovation (sales % from products <2 years
on market)
|
30%
|
34.6%
|
Long-Term
Corporate Performance Objectives (Three-Year Plan)
EXFO
disclosed the following three corporate performance objectives and related
metrics for its three-year strategic plan ending at the close of fiscal 2011.
These long-term objectives are meant to replace the performance goals that the
company provided on an annual basis. These new objectives reflect the clear
direction management is taking towards long-term value creation.
|
Objective
|
Three-Year
Metric
|
|
Grow
sales approximately 2 times faster than the industry rate
|
20%
CAGR
|
|
Increase
EBITDA*
faster than sales
|
>20%
CAGR
|
|
Raise
gross margin to a sustainable level above 60% of sales
|
62%
|
*EBITDA is
defined as net earnings before interest, income taxes, amortization of property,
plant and equipment, amortization of intangible assets, and extraordinary
gain.
Conference
Call and Webcast
EXFO will
host a conference call today at 5 p.m. (Eastern time) to review its
fourth-quarter and year-end financial results for fiscal 2008. To listen to the
conference call and participate in the question period via telephone, dial
1-416-620-5690. Germain Lamonde,
Chairman, President and CEO, and Pierre Plamondon, CA, Vice-President of Finance
and Chief Financial Officer, will participate in the call. An audio replay will
be available one hour after the end of the conference call until 7 p.m. on
October 22, 2008. The replay number is 1-402-977-9141 and the reservation number
is 21393109. The live audio Webcast and replay of the conference call will also
be available on EXFO’s Website at www.EXFO.com/investors.
About
EXFO
EXFO is a
leading provider of test and monitoring solutions for network service providers
and equipment manufacturers in the global telecommunications industry. The
Telecom Division offers a wide range of innovative solutions extending across
the full technology
lifecycle ― from design to technology deployment and onto service assurance ―
and covering all layers on a network infrastructure to enable triple-play
services and next-generation, converged IP networking. The Life Sciences and
Industrial Division offers solutions in medical device and
opto-electronics assembly, fluorescence microscopy and other life science
sectors. For more information, visit www.EXFO.com.
Forward-Looking
Statements
This
press release contains forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995, and we intend that such
forward-looking statements be subject to the safe harbors created thereby.
Forward-looking statements are statements other than historical information or
statements of current condition. Words such as may, will, expect, believe,
anticipate, intend, could, estimate, continue, or the negative or comparable
terminology are intended to identify forward-looking statements. In addition,
any statements that refer to expectations, projections or other
characterizations of future events and circumstances are considered
forward-looking statements. They are not guarantees of future performance and
involve risks and uncertainties.
Actual
results may differ materially from those in forward-looking statements due to
various factors including consolidation in the global telecommunications test,
measurement and monitoring industry; capital spending levels in the
telecommunications, life sciences and high-precision assembly sectors;
concentration of sales; fluctuating exchange rates and our ability to execute in
these uncertain conditions; the effects of the additional actions we have taken
in response to such economic uncertainty (including our ability to quickly adapt
cost structures with anticipated levels of business, ability to manage inventory
levels with market demand); market acceptance of our new products and other
upcoming products; limited visibility with regards to customer orders and the
timing of such orders; our ability to successfully integrate our acquired and
to-be-acquired businesses; our ability to successfully expand international
operations; the retention of key technical and management personnel; and future
economic, competitive, financial and market conditions, including any slowdown
or recession in the global economy. Assumptions relating to the foregoing
involve judgments and risks, all of which are difficult or impossible to predict
and many of which are beyond our control. Other risk factors that may affect our
future performance and operations are detailed in our Annual Report, on Form
20-F, and our other filings with the U.S. Securities and Exchange Commission and
the Canadian securities commissions. We believe that the expectations reflected
in the forward-looking statements are reasonable based on information currently
available to us, but we cannot assure you that the expectations will prove to
have been correct. Accordingly, you should not place undue reliance on these
forward-looking statements. These statements speak only as of the date of this
document. Unless required by law or applicable regulations, we undertake no
obligation to revise or update any of them to reflect events or circumstances
that occur after the date of this document.
For
more information
Vance
Oliver
Manager,
Investor Relations
(418)
683-0913, Ext. 3733
vance.oliver@exfo.com
EXFO Electro-Optical Engineering Inc.
Interim
Consolidated Balance Sheet
(in thousands of US
dollars)
|
As
at August 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Assets
|
(unaudited)
|
|||||||
|
Current
assets
|
||||||||
|
Cash
|
$ | 5,914 | $ | 5,541 | ||||
|
Short-term
investments
|
81,626 | 124,217 | ||||||
|
Accounts
receivable
|
||||||||
|
Trade,
less allowance for doubtful accounts of $305
($206 as at August 31, 2007)
|
31,473 | 26,699 | ||||||
|
Other
|
4,753 | 2,479 | ||||||
|
Income
taxes and tax credits recoverable
|
4,836 | 6,310 | ||||||
|
Inventories
|
34,880 | 31,513 | ||||||
|
Prepaid
expenses
|
1,774 | 1,391 | ||||||
|
Future
income taxes
|
9,140 | 7,609 | ||||||
| 174,396 | 205,759 | |||||||
|
Tax
credits recoverable
|
20,657 | − | ||||||
|
Property,
plant and equipment
|
19,875 | 18,117 | ||||||
|
Intangible
assets
|
19,945 | 9,628 | ||||||
|
Goodwill
|
42,653 | 28,437 | ||||||
|
Future
income taxes
|
15,540 | 17,197 | ||||||
| $ | 293,066 | $ | 279,138 | |||||
|
Liabilities
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable and accrued liabilities
|
$ | 24,713 | $ | 22,721 | ||||
|
Deferred
revenue
|
5,079 | 2,598 | ||||||
| 29,792 | 25,319 | |||||||
|
Deferred
revenue
|
3,759 | 3,414 | ||||||
|
Future
income taxes
|
– | 240 | ||||||
| 33,551 | 28,973 | |||||||
|
Shareholders’
equity
|
||||||||
|
Share
capital
|
142,786 | 150,019 | ||||||
|
Contributed
surplus
|
5,226 | 4,453 | ||||||
|
Retained
earnings
|
60,494 | 42,275 | ||||||
|
Accumulated
other comprehensive income
|
51,009 | 53,418 | ||||||
| 259,515 | 250,165 | |||||||
| $ | 293,066 | $ | 279,138 | |||||
EXFO Electro-Optical Engineering Inc.
Interim
Unaudited Consolidated Statements of Earnings
(in thousands of US
dollars, except share and per share data)
|
Three months
ended
August 31, 2008
|
Twelve months
ended
August 31, 2008
|
Three months
ended
August 31, 2007
|
Twelve months
ended
August 31, 2007
|
|||||||||||||
|
Sales
|
$ | 50,943 | $ | 183,790 | $ | 42,975 | $ | 152,934 | ||||||||
|
Cost of sales (1,2)
|
20,416 | 75,624 | 18,109 | 65,136 | ||||||||||||
|
Gross
margin
|
30,527 | 108,166 | 24,866 | 87,798 | ||||||||||||
|
Operating
expenses
|
||||||||||||||||
|
Selling
and administrative (1)
|
16,993 | 61,153 | 13,035 | 49,580 | ||||||||||||
|
Net
research and development (1,
3)
|
7,297 | 26,867 | 2,308 | 16,668 | ||||||||||||
|
Amortization
of property, plant and equipment
|
1,247 | 4,292 | 801 | 2,983 | ||||||||||||
|
Amortization
of intangible assets
|
1,402 | 3,871 | 699 | 2,864 | ||||||||||||
|
Government
grants
|
– | – | (1,079 | ) | (1,079 | ) | ||||||||||
|
Total
operating expenses
|
26,939 | 96,183 | 15,764 | 71,016 | ||||||||||||
|
Earnings
from operations
|
3,588 | 11,983 | 9,102 | 16,782 | ||||||||||||
|
Interest
income
|
576 | 4,639 | 1,204 | 4,717 | ||||||||||||
|
Foreign
exchange gain (loss)
|
1,349 | 442 | (156 | ) | (49 | ) | ||||||||||
|
Earnings
before income taxes and extraordinary gain
|
5,513 | 17,064 | 10,150 | 21,450 | ||||||||||||
|
Income
taxes
|
||||||||||||||||
|
Current
|
(14 | ) | (7,094 | ) | 1,232 | 3,741 | ||||||||||
|
Future
|
2,213 | 14,094 | – | – | ||||||||||||
|
Recognition
of previously unrecognized future income tax assets
|
– | (5,324 | ) | (24,566 | ) | (24,566 | ) | |||||||||
| 2,199 | 1,676 | (23,334 | ) | (20,825 | ) | |||||||||||
|
Earnings
before extraordinary gain
|
3,314 | 15,388 | 33,484 | 42,275 | ||||||||||||
|
Extraordinary
gain
|
– | 3,036 | – | – | ||||||||||||
|
Net
earnings for the period
|
$ | 3,314 | $ | 18,424 | $ | 33,484 | $ | 42,275 | ||||||||
|
Basic
earnings before extraordinary gain per share
|
$ | 0.05 | $ | 0.22 | $ | 0.49 | $ | 0.61 | ||||||||
|
Diluted
earnings before extraordinary gain per share
|
$ | 0.05 | $ | 0.22 | $ | 0.48 | $ | 0.61 | ||||||||
|
Basic
net earnings per share
|
$ | 0.05 | $ | 0.27 | $ | 0.49 | $ | 0.61 | ||||||||
|
Diluted
net earnings per share
|
$ | 0.05 | $ | 0.27 | $ | 0.48 | $ | 0.61 | ||||||||
|
Basic
weighted average number of shares outstanding (000’s)
|
68,082 | 68,767 | 68,969 | 68,875 | ||||||||||||
|
Diluted
weighted average number of shares outstanding (000’s)
|
68,550 | 69,318 | 69,486 | 69,555 | ||||||||||||
|
(1)
Stock-based compensation
costs included in:
|
||||||||||||||||
|
Cost
of sales
|
$ | 36 | $ | 148 | $ | 25 | $ | 118 | ||||||||
|
Selling
and administrative
|
232 | 830 | 191 | 633 | ||||||||||||
|
Net
research and development
|
100 | 294 | 61 | 230 | ||||||||||||
| $ | 368 | $ | 1,272 | $ | 277 | $ | 981 | |||||||||
|
(2)
The cost of sales is exclusive of amortization, shown
separately.
|
||||||||||||||||
|
(3)
Net research and development expenses for the periods ended August 31,
2007 include recognition of unrecognized research and development tax
credits of $3,162.
|
||||||||||||||||
EXFO Electro-Optical Engineering Inc.
Interim
Unaudited Consolidated Statements of Comprehensive Income (Loss)
And
Accumulated Other Comprehensive Income
(in thousands of US
dollars)
|
Comprehensive
income (loss)
|
||||||||||||||||
|
Three months
ended
August 31, 2008
|
Twelve months
ended
August 31, 2008
|
Three months
ended
August 31, 2007
|
Twelve months
ended
August 31, 2007
|
|||||||||||||
|
Net
earnings for the period
|
$ | 3,314 | $ | 18,424 | $ | 33,484 | $ | 42,275 | ||||||||
|
Foreign
currency translation adjustment
|
(18,511 | ) | (2,289 | ) | 2,574 | 9,881 | ||||||||||
|
Changes
in unrealized gains (losses) on short-term investments
|
(9 | ) | 31 | – | – | |||||||||||
|
Unrealized
gains on forward exchange contracts
|
(1,882 | ) | 962 | – | – | |||||||||||
|
Reclassification
of realized gains on forward exchange contracts in net
earnings
|
(770 | ) | (3,915 | ) | – | – | ||||||||||
|
Future
income taxes effect of the above items
|
822 | 909 | – | – | ||||||||||||
|
Comprehensive
income (loss)
|
$ | (17,036 | ) | $ | 14,122 | $ | 36,058 | $ | 52,156 | |||||||
|
Accumulated
other comprehensive income
|
||||||||
|
Years
ended August 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Foreign
currency translation adjustment
|
||||||||
|
Cumulative
effect of prior years
|
$ | 53,418 | $ | 43,537 | ||||
|
Current
year
|
(2,289 | ) | 9,881 | |||||
| 51,129 | 53,418 | |||||||
|
Unrealized
gains (losses) on forward exchange contracts
|
||||||||
|
Adjustment
related to the implementation of new accounting standards
|
1,948 | – | ||||||
|
Current
year, net of realized gains and future income taxes
|
(2,044 | ) | – | |||||
| (96 | ) | – | ||||||
|
Unrealized
gains (losses) on short-term investments
|
||||||||
|
Adjustment
related to the implementation of new accounting standards
|
(55 | ) | – | |||||
|
Current
year, net of future income taxes
|
31 | – | ||||||
| (24 | ) | – | ||||||
|
Accumulated
other comprehensive income
|
$ | 51,009 | $ | 53,418 | ||||
EXFO
Electro-Optical Engineering Inc.
Interim
Unaudited Consolidated Statements of Retained Earnings
and
Contributed Surplus
(in thousands of US
dollars)
|
Retained
earnings
|
||||||||
|
Years
ended August 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Balance
– Beginning of year
|
$ | 42,275 | $ | – | ||||
|
Add
(deduct)
|
||||||||
|
Adjustment
related to the implementation of new accounting standards
|
55 | – | ||||||
|
Net
earnings for the year
|
18,424 | 42,275 | ||||||
|
Premium
on redemption of share capital
|
(260 | ) | – | |||||
|
Balance
– End of year
|
$ | 60,494 | $ | 42,275 | ||||
|
Contributed
surplus
|
||||||||
|
Years
ended August 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Balance
– Beginning of year
|
$ | 4,453 | $ | 3,776 | ||||
|
Add
(deduct)
|
||||||||
|
Stock-based
compensation costs
|
1,287 | 973 | ||||||
|
Reclassification
of stock-based compensation costs to share capital upon exercise of stock
awards
|
(514 | ) | (296 | ) | ||||
|
Balance
– End of year
|
$ | 5,226 | $ | 4,453 | ||||
EXFO Electro-Optical Engineering Inc.
Interim
Unaudited Consolidated Statements of Cash Flows
(in thousands of US
dollars)
|
Three months
ended
August 31, 2008
|
Twelve months
ended
August 31, 2008
|
Three months
ended
August 31, 2007
|
Twelve months
ended
August 31, 2007
|
|||||||||||||
|
Cash
flows from operating activities
|
||||||||||||||||
|
Net
earnings for the period
|
$ | 3,314 | $ | 18,424 | $ | 33,484 | $ | 42,275 | ||||||||
|
Add
(deduct) items not affecting cash
|
||||||||||||||||
|
Change
in discount on short-term investments
|
(486 | ) | 1,035 | (1,062 | ) | (404 | ) | |||||||||
|
Stock-based
compensation costs
|
368 | 1,272 | 277 | 981 | ||||||||||||
|
Amortization
|
2,649 | 8,163 | 1,500 | 5,847 | ||||||||||||
|
Gain
on disposal of capital assets
|
− | − | (17 | ) | (117 | ) | ||||||||||
|
Deferred
revenue
|
482 | 47 | 135 | 1,299 | ||||||||||||
|
Government
grants
|
− | − | (730 | ) | (752 | ) | ||||||||||
|
Future
income taxes
|
2,213 | 8,770 | (24,566 | ) | (24,566 | ) | ||||||||||
|
Extraordinary
gain
|
− | (3,036 | ) | − | − | |||||||||||
| 8,540 | 34,675 | 9,021 | 24,563 | |||||||||||||
|
Change
in non-cash operating items
|
||||||||||||||||
|
Accounts
receivable
|
(4,193 | ) | (4,338 | ) | 792 | (5,468 | ) | |||||||||
|
Income
taxes and tax credits
|
(1,396 | ) | (12,833 | ) | (2,006 | ) | (3,403 | ) | ||||||||
|
Inventories
|
712 | (2,166 | ) | (2,824 | ) | (5,456 | ) | |||||||||
|
Prepaid
expenses
|
379 | (127 | ) | 174 | 85 | |||||||||||
|
Accounts
payable and accrued liabilities
|
1,659 | (1,416 | ) | 1,564 | 4,105 | |||||||||||
| 5,701 | 13,795 | 6,721 | 14,426 | |||||||||||||
|
Cash
flows from investing activities
|
||||||||||||||||
|
Additions
to short-term investments
|
(72,800 | ) | (717,020 | ) | (80,267 | ) | (807,056 | ) | ||||||||
|
Proceeds
from disposal and maturity of short-term investments
|
73,939 | 760,310 | 75,073 | 793,435 | ||||||||||||
|
Additions
to capital assets
|
(1,452 | ) | (6,508 | ) | (2,011 | ) | (5,547 | ) | ||||||||
|
Net
proceeds from disposal of capital assets
|
− | − | 301 | 3,092 | ||||||||||||
|
Business
combinations, net cash acquired
|
(78 | ) | (41,016 | ) | − | − | ||||||||||
| (391 | ) | (4,234 | ) | (6,904 | ) | (16,076 | ) | |||||||||
|
Cash
flows from financing activities
|
||||||||||||||||
|
Change
in bank loan
|
(1,485 | ) | − | − | − | |||||||||||
|
Repayment
of long-term debt
|
− | − | (394 | ) | (472 | ) | ||||||||||
|
Redemption
of share capital
|
(4,675 | ) | (8,068 | ) | − | − | ||||||||||
|
Exercise
of stock options
|
− | 61 | 229 | 802 | ||||||||||||
| (6,160 | ) | (8,007 | ) | (165 | ) | 330 | ||||||||||
|
Effect
of foreign exchange rate changes on cash
|
(1,818 | ) | (1,181 | ) | (119 | ) | 8 | |||||||||
|
Change
in cash
|
(2,668 | ) | 373 | (467 | ) | (1,312 | ) | |||||||||
|
Cash
– Beginning of period
|
8,582 | 5,541 | 6,008 | 6,853 | ||||||||||||
|
Cash
– End of period
|
$ | 5,914 | $ | 5,914 | $ | 5,541 | $ | 5,541 | ||||||||
Page 14
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