EXFO Inc.
EXFO INC. (Form: 6-K, Received: 10/13/2011 16:29:23)




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 2011

EXFO 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-______.
 
 


 
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TABLE OF CONTENTS
 
 
Signatures
Press Release
Unaudited Interim Consolidated Balance Sheet
Unaudited Interim Consolidated Statements of Earnings
Unaudited Interim Consolidated Statements of Comprehensive Income and Accumulated Other Comprehensive Income (Loss)
Unaudited Interim Consolidated Statements of Retained Earnings and Contributed Surplus
Unaudited Interim Consolidated Statements of Cash Flows
 

 
Page 2 of 14


 
On October 11, 2011, EXFO Inc., a Canadian corporation, reported its results of operations for the fourth fiscal quarter and year end for the fiscal year ended August 31, 2011. 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 and year end for the fiscal year ended August 31, 2011. This press release and information relating to EXFO’s financial condition and results of operations for the fourth fiscal quarter and year end for the fiscal year ended August 31, 2011 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.


 
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SIGNATURES

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 INC.
 
 
 
   By:        /s/ Benoit Ringuette
  Name:  Benoit Ringuette
  Title:    General Counsel and Corporate Secretary
   

Date: October 13, 2011


 
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EXFO Reports Record Sales and Bookings for Fiscal 2011

§  
Annual sales increase 33.0% to US$269.7 million
§  
Annual bookings improve 28.8% to US$272.3 million
§  
Adjusted EBITDA * reaches US$30.6 million or 11.3% of sales
§  
Cash flows from operations attain US$23.3 million

QUEBEC CITY, CANADA, October 11, 2011—EXFO Inc. (NASDAQ: EXFO, TSX: EXF) reported today record sales and bookings for the fiscal year ended August 31, 2011.

Annual sales increased 33.0% to US$269.7 million in fiscal 2011 from US$202.8 million in 2010. In the fourth quarter of fiscal 2011, sales totaled US$64.4 million compared to US$67.6 million in the third quarter of 2011 and US$58.6 million in the fourth quarter of 2010. Sales exclude revenue from the divested Life Sciences and Industrial Division (referred to as “discontinued operations” in financial statements).

Overall for fiscal 2011, bookings improved 28.8% to US$272.3 million from US$211.4 million in 2010 for an annual book-to-bill ratio of 1.01. In the fourth quarter of 2011, bookings   totaled US$62.5 million for a book-to-bill ratio of 0.97 compared to US$61.3 million in the third quarter of 2011 and US$55.8 million in the fourth quarter of 2010.

Gross margin   reached 62.8% of sales in fiscal 2011 compared to 63.6% in 2010. In the fourth quarter of 2011, gross margin amounted to 63.6% of sales compared to 64.2% in the third quarter of 2011 and 64.8% in the fourth quarter of 2010.

In fiscal 2011, GAAP net earnings   totaled US$19.3 million, or US$0.31 per diluted share, including a foreign exchange loss of US$3.8 million. Net earnings from continuing operations (Telecom business) amounted to US$6.4 million, or US$0.10 per diluted share. It should be noted that EXFO recorded an after-tax gain of US$13.1 million, or US$0.21 per diluted share, from the disposal of discontinued operations (Life Sciences and Industrial business) in fiscal 2011. GAAP net earnings in 2011 also included US$9.2 million in amortization of intangible assets and US$2.3 million in stock-based compensation costs. The former item resulted in an income tax recovery of US$0.5 million.

In fiscal 2010, GAAP net earnings   totaled US$6.6 million, or US$0.11 per diluted share, including US$7.8 million in amortization of intangible assets and US$1.8 million in stock-based compensation costs. The former item resulted in an income tax recovery of US$1.3 million. GAAP net earnings included a loss of US$1.5 million in 2010.

In the fourth quarter of 2011, GAAP net earnings amounted to US$1.9 million, or US$0.03 per diluted share, including US$2.1 million in amortization of intangible assets and US$0.5 million in stock-based compensation costs. The former item resulted in an income tax recovery of US$0.1 million.

In the third quarter of fiscal 2011, GAAP net earnings totaled US$1.7 million, or US$0.03 per diluted share, including US$2.1 million in amortization of intangible assets and US$0.4 million in stock-based compensation costs. The former item resulted in an income tax recovery of US$0.1 million.

In the fourth quarter of 2010, GAAP net earnings amounted to US$5.0 million, or US$0.08 per diluted share, including US$2.5 million in amortization of intangible assets and US$0.5 million in stock-based compensation costs. The former item resulted in an income tax recovery of US$0.2 million.

“After posting exceptional 32% sales growth in fiscal 2010, I am quite pleased that we surpassed it with a 33% increase and solid earnings results in 2011, as we delivered robust growth across all geographic regions and product areas,” said Germain Lamonde, EXFO’s Chairman, President and CEO. “In the process, we expanded our percentage of business from two strategic sectors — the wireless industry at large and Tier-1 network operators — allowing us to increase revenues much faster than our end-markets. As a result, EXFO gained market share for a 26 th consecutive year based on relentless innovation, customer delight and focus on execution. I remain confident that EXFO is uniquely positioned to benefit from key growth opportunities in the telecom industry, despite uncertainty in the global economy.”
 

 
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Corporate Performance Objectives for Fiscal 2010-2012
Following are EXFO’s results after two years into its three-year plan:

Three-Year Objectives
(Base year: FY 2009 which included divested LSI Division)
Results After 2 Years
Increase sales by at least 25% CAGR
25.4% CAGR
Raise gross margin from 61.3% to 65%
62.7%
Increase adjusted EBITDA * in dollars by at least 30% CAGR:
45.4% CAGR

*
EBITDA is defined as net earnings (loss) before interest, income taxes, amortization of property, plant and equipment, amortization of intangible assets and impairment of goodwill. Adjusted EBITDA represents EBITDA excluding the gain from the disposal of discontinued operations.

Selected Financial Information (unaudited)
(In thousands of US dollars)

      Q4 2011       Q3 2011       Q4 2010    
FY 2011
   
FY 2010
 
Sales:
                                   
Continuing operations (formerly the Telecom Division)
  $ 64,414     $ 67,630     $ 58,583     $ 269,743     $ 202,757  
Discontinued operations (formerly the Life Sciences & Industrial Division)
                6,653       1,991       25,359  
Total
  $ 64,414     $ 67,630     $ 65,236     $ 271,734     $ 228,116  
                                         
Gross margin:
                                       
Continuing operations
  $ 40,967     $ 43,387     $ 37,954     $ 169,447     $ 128,856  
      63.6 %     64.2 %     64.8 %     62.8 %     63.6 %
Discontinued operations
  $     $     $ 3,448     $ 989     $ 13,563  
      %     %     52.4 %     49.7 %     53.5 %
Total
  $ 40,967     $ 43,387     $ 41,442     $ 170,436     $ 142,419  
      63.6 %     64.2 %     63.5 %     62.7 %     62.4 %
                                         
Other selected information:
                                       
Net earnings:
                                       
Continuing operations (formerly the Telecom Division)
  $ 1,890     $ 1,735     $ 4,124     $ 6,423     $ 3,550  
Discontinued operations (formerly the Life Sciences & Industrial Division)
                838       12,926       3,069  
Total
  $ 1,890     $ 1,735     $ 4,962     $ 19,349     $ 6,619  
                                         
Amortization of intangible assets
  $ 2,122     $ 2,128     $ 2,493     $ 9,187     $ 7,818  
Stock-based compensation costs
  $ 461     $ 432     $ 473     $ 2,256     $ 1,786  
Net income tax effect of the above items
  $ (60 )   $ (70 )   $ (184 )   $ (479 )   $ (1,347 )
Foreign exchange gain (loss)
  $ (57 )   $ (243 )   $ (1,765 )   $ (3,808 )   $ (1,496 )
Adjusted EBITDA *
  $ 6,925     $ 7,119     $ 11,466     $ 30,583     $ 27,306  
 
 
 
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Operating Expenses
Selling and administrative expenses amounted to US$87.1 million, or 32.3% of sales, in fiscal 2011 compared to US$66.6 million, or 32.9% of sales, in 2010. In the fourth quarter of 2011, selling and administrative expenses totaled US$21.8 million, or 33.9% of sales, compared to US$23.1 million, or 34.1% of sales, in the third quarter of 2011 and US$18.9 million, or 32.3% of sales, in the fourth quarter of 2010.

Gross research and development (R&D) expenses reached US$57.2 million, or 21.2% of sales, in fiscal 2011 compared to US$44.6 million, or 22.0% of sales, in 2010. In the fourth quarter of 2011, gross R&D expenses attained US$14.3 million, or 22.3% of sales, compared to US$15.4 million, or 22.7% of sales, in the previous quarter and US$12.4 million, or 21.1% of sales, in the fourth quarter of 2010.

Net R&D expenses totaled US$47.9 million, or 17.7% of sales, in fiscal 2011 compared to US$37.8 million, or 18.7% of sales, in 2010. In the fourth quarter of 2011, net R&D expenses amounted to US$12.1 million, or 18.8% of sales, compared to US$12.9 million, or 19.2% of sales, in the third quarter of 2011 and US$10.5 million, or 17.9% of sales, in the fourth quarter of 2010.

Fiscal 2011 Highlights

§  
IP Fixed and Mobile Network Convergence and Broadband Deployments — Growth in optical and high-speed networking, Ethernet/OTN, and 2G/3G/LTE revenues, market-share gains, a full-year revenue contribution from NetHawk, and calendar 2010 year-end budget spending contributed to deliver an annual sales increase of 33.0% to US$269.7 million in fiscal 2011. Optical, Protocol and Copper Access sales improved 27.9%, 38.4%, and 37.8%, respectively, in fiscal 2011. Geographically, sales increased 29.3% in the Americas, 41.7% in Europe, Middle East and Africa (EMEA), and 29.8% in Asia-Pacific in 2011. EXFO’s largest customer accounted for 7.2% of sales in 2011, while the company’s top three customers represented 16.3%.

§  
Profitable Growth Path — Adjusted EBITDA * in dollars increased 12.0% to $30.6 million in fiscal 2011 on total sales of US$271.7 million. Adjusted EBITDA * was negatively affected by a foreign exchange loss of US$3.8 million. Cash flows from operations reached US$23.3 million in 2011.

Business Outlook
EXFO forecasts sales between US$65 million and US$70 million for the first quarter of fiscal 2012, while net earnings should range between US$0.01 and US$0.05 per diluted share. Net earnings include US$0.04 per share in after-tax amortization of intangible assets and stock-based compensation costs. The company also anticipates a pre-tax, foreign exchange gain of US$0.02 per share following the significant decrease in the value of the Canadian dollar since August 31, 2011.

This guidance was established by management based on existing backlog as of the date of this press release, seasonality, expected bookings for the remaining of the quarter, as well as exchange rates as of the day of this press release.

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 2011.  To listen  to the  conference  call and  participate  in the  question  period via  telephone,  dial 1-416-981-9017.   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 18, 2011. The replay number is 1-402-977-9141 and the reservation number is 21537842. The live audio Webcast and replay of the conference call will also be available on EXFO’s Website at www.EXFO.com/investors .


 
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About EXFO
Listed on the NASDAQ and TSX stock exchanges, EXFO is among the leading providers of next-generation test and service assurance solutions for wireless and wireline network operators and equipment manufacturers in the global telecommunications industry. The company offers innovative solutions for the development, installation, management and maintenance of converged, IP fixed and mobile networks — from the core to the edge. Key technologies supported include 3G, 4G/LTE, IMS, Ethernet, OTN, FTTx, and various optical technologies (accounting for an estimated 35% of the portable fiber-optic test market). EXFO has a staff of approximately 1800 people in 25 countries, supporting more than 2000 telecom customers worldwide. 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 our forward-looking statements due to various factors including economic uncertainty (including our ability to quickly adapt cost structures with anticipated levels of business, ability to manage inventory levels with market demand); future economic, competitive, financial and market conditions; capital spending levels in the telecommunications industry; limited visibility with regards to customer orders and the timing of such orders; fluctuating exchange rates; our ability to successfully integrate our acquired and to-be-acquired businesses; consolidation in the global telecommunications test and service assurance industry and increased competition among vendors; concentration of sales; market acceptance of our new products and other upcoming products; our ability to successfully expand international operations; and the retention of key technical and management personnel. 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 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 press release. 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.

Non-GAAP Financial Measures
EXFO provides non-GAAP financial measures (EBITDA and Adjusted EBITDA * ) as supplemental information regarding its operational performance. The company uses these measures for the purposes of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help EXFO’s management to plan and forecast for future periods as well as to make operational and strategic decisions. EXFO believes that providing this information, in addition to GAAP measures, allows investors to see the company’s results through the eyes of management, and to better understand the company’s historical and future financial performance.

The presentation of this additional information is not prepared in accordance with GAAP. Therefore, the information may not necessarily be comparable to that of other companies and should be considered as a supplement to, not a substitute for, the corresponding measures calculated in accordance with GAAP.
 

 
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The following table summarizes the reconciliation of EBITDA and Adjusted EBITDA to GAAP net earnings (loss) in thousands of US dollars:

*
EBITDA is defined as net earnings (loss) before interest, income taxes, amortization of property, plant and equipment, amortization of intangible assets, impairment of goodwill. Adjusted EBITDA represents EBITDA excluding the gain from the disposal of discontinued operations.

EBITDA and Adjusted EBITDA (including discontinued operations)
 
   
Year ended
August 31, 2011
   
Year ended
August 31, 2010
   
Year ended
August 31, 2009
 
                   
GAAP net earnings (loss) for the year
  $ 19,349     $ 6,619     $ (16,585 )
                         
Add (deduct):
                       
                         
Amortization of property, plant and equipment
                       
Continuing operations
    6,772       5,757       4,453  
Discontinued operations
    14       154       154  
Amortization of intangible assets
                       
Continuing operations
    9,183       7,773       5,033  
Discontinued operations
    4       45       34  
Interest and other income (expenses)
                       
Continuing operations
    (511 )     292       (592 )
Discontinued operations
          1       (5 )
Income taxes
                       
Continuing operations
    8,783       5,529       266  
Discontinued operations
    201       1,136       (5 )
Impairment of goodwill (continuing operations)
                21,713  
                         
EBITDA for the year
    43,795       27,306       14,466  
Gain on disposal of discontinued operations
    (13,212 )            
Adjusted EBITDA for the year
  $ 30,583     $ 27,306     $ 14,466  
                         
Adjusted EDITDA in percentage of total sales
    11.3 %     12.0 %     8.4 %


For more information
Vance Oliver
Manager, Investor Relations
(418) 683-0913, Ext. 23733
[email protected]
 

 
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EXFO Inc.
Unaudited Interim Consolidated Balance Sheet
 
(in thousands of US dollars)
 
 
   
As at August 31,
 
   
2011
   
2010
 
Assets
           
             
Current assets
           
Cash
  $ 22,771     $ 21,440  
Short-term investments
    47,091       10,379  
Accounts receivable
               
Trade
    45,151       50,190  
Other
    6,329       5,217  
Income taxes and tax credits recoverable
    5,414       2,604  
Inventories
    52,754       40,328  
Prepaid expenses
    3,237       2,816  
Future income taxes
    6,130       6,191  
Current assets held for sale
          3,991  
      188,877       143,156  
                 
                 
Tax credits recoverable
    36,627       29,397  
Forward exchange contracts
    149        
Property, plant and equipment
    30,566       23,455  
Intangible assets
    22,901       27,947  
Goodwill
    30,942       29,355  
Future income taxes
    11,024       12,884  
Long-term assets held for sale
          7,308  
                 
    $ 321,086     $ 273,502  
Liabilities
               
                 
Current liabilities
               
Bank loan
  $ 784     $  
Accounts payable and accrued liabilities
    32,137       30,870  
Income taxes payable
    876       426  
Current portion of long-term debt
    645       568  
Deferred revenue
    10,590       10,354  
Current liabilities related to assets held for sale
          2,531  
      45,032       44,749  
                 
                 
Deferred revenue
    5,704       5,775  
Long-term debt
    968       1,419  
Other liabilities
    723       603  
Future income taxes
    4,913        
Long-term liabilities related to assets held for sale
          537  
                 
      57,340       53,083  
                 
Shareholders’ equity
               
Share capital
    110,341       106,126  
Contributed surplus
    18,017       18,563  
Retained earnings
    69,877       50,528  
Accumulated other comprehensive income
    65,511       45,202  
                 
      263,746       220,419  
                 
    $ 321,086     $ 273,502  
 
 
 
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EXFO Inc.
Unaudited Interim Consolidated Statements of Earnings
 
(in thousands of US dollars, except share and per share data)

 
   
Three months ended
August 31, 2011
   
Twelve months ended
August 31, 2011
   
Three months ended
August 31, 2010
   
Twelve months ended
August 31, 2010
 
                         
Sales
  $ 64,414     $ 269,743     $ 58,583     $ 202,757  
                                 
Cost of sales (1,2)
    23,447       100,296       20,629       73,901  
Gross margin
    40,967       169,447       37,954       128,856  
                                 
Operating expenses
                               
Selling and administrative (1)
    21,846       87,062       18,931       66,612  
Net research and development (1)
    12,139       47,927       10,508       37,847  
Amortization of property, plant and equipment
    1,697       6,772       1,623       5,757  
Amortization of intangible assets
    2,122       9,183       2,478       7,773  
Total operating expenses
    37,804       150,944       33,540       117,989  
Earnings from operations
    3,163       18,503       4,414       10,867  
                                 
Interest and other income (expense)
    21       511       (116 )     (292 )
Foreign exchange gain (loss)
    (57 )     (3,808 )     1,765       (1,496 )
Earnings before income taxes
    3,127       15,206       6,063       9,079  
                                 
Income taxes
    1,237       8,783       1,939       5,529  
                                 
Net earnings from continuing operations
    1,890       6,423       4,124       3,550  
                                 
Net earnings from discontinued operations
          12,926       838       3,069  
                                 
Net earnings for the period
  $ 1,890     $ 19,349     $ 4,962     $ 6,619  
                           
Basic net earnings from continuing operations per share
  $ 0.03     $ 0.11     $ 0.07     $ 0.06  
                                 
Diluted net earnings from continuing operations per share
  $ 0.03     $ 0.10     $ 0.07     $ 0.06  
                                 
Basic net earnings from discontinued operations per share
  $     $ 0.22     $ 0.01     $ 0.05  
                                 
Diluted net earnings from discontinued operations per share
  $     $ 0.21     $ 0.01     $ 0.05  
                                 
Basic net earnings per share
  $ 0.03     $ 0.32     $ 0.08     $ 0.11  
                                 
Diluted net earnings per share
  $ 0.03     $ 0.31     $ 0.08     $ 0.11  
                                 
Basic weighted average number of shares outstanding (000’s)
    60,253       60,000       59,569       59,479  
                                 
Diluted weighted average number of shares outstanding (000’s)
    61,607       61,488       60,910       60,616  
                                 
(1)     Stock-based compensation costs included in:
                               
 Cost of sales
  $ 62     $ 224     $ 42     $ 138  
 Selling and administrative
  $ 275     $ 1,281     $ 272     $ 1,042  
 Net research and development
  $ 124     $ 487     $ 125     $ 470  
 Net earnings from discontinued operations
  $     $ 264     $ 34     $ 136  

(2)    The cost of sales is exclusive of amortization, shown separately.
 

 
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EXFO Inc.
Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)
and Accumulated Other Comprehensive Income
 
(in thousands of US dollars)

 
Comprehensive income (loss)
                       
   
Three months ended
August 31, 2011
   
Twelve months ended
August 31, 2011
   
Three months ended
August 31, 2010
   
Twelve months ended
August 31, 2010
 
                         
Net earnings for the period
  $ 1,890     $ 19,349     $ 4,962     $ 6,619  
Foreign currency translation adjustment
    (1,872 )     19,399       (2,418 )     3,728  
Reclassification of realized losses on short-term investments in net earnings
    2       2              
Unrealized gains (losses) on forward exchange contracts
    (13 )     3,413       (927 )     940  
Reclassification of realized gains on forward exchange contracts in net earnings
    (746 )     (2,191 )     (281 )     (1,022 )
Future income taxes effect of the above items
    217       (314 )     374       24  
                                 
Comprehensive income (loss)
  $ (522 )   $ 39,658     $ 1,710     $ 10,289  



Accumulated other comprehensive income
           
   
Twelve months ended
August 31,
 
             
   
2011
   
2010
 
             
Foreign currency translation adjustment
           
Cumulative effect of prior periods
  $ 44,186     $ 40,458  
Current period
    19,399       3,728  
                 
      63,585       44,186  
                 
Unrealized gains (losses) on forward exchange contracts
               
Cumulative effect of prior periods
    1,018       1,076  
Current period, net of realized gains and future income taxes
    908       (58 )
                 
      1,926       1,018  
Unrealized losses on short-term investments
               
Cumulative effect of prior periods
    (2 )     (2 )
Current period
    2        
                 
            (2 )
                 
Accumulated other comprehensive income
  $ 65,511     $ 45,202  


 
Page 12 of 14



EXFO Inc.
Unaudited Interim Consolidated Statements of Retained Earnings
and Contributed Surplus
 
(in thousands of US dollars)

 
Retained earnings
     
   
Twelve months ended
August 31,
 
             
   
2011
   
2010
 
             
Balance – Beginning of the period
  $ 50,528     $ 43,909  
                 
Add
               
Net earnings for the period
    19,349       6,619  
                 
Balance – End of the period
  $ 69,877     $ 50,528  



Contributed surplus
           
   
Twelve months ended
August 31,
 
             
   
2011
   
2010
 
             
Balance – Beginning of the period
  $ 18,563     $ 17,758  
                 
Add (deduct)
               
Stock-based compensation costs
    2,217       1,756  
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
    (2,763 )     (954 )
Discount on redemption of share capital
          3  
                 
Balance – End of the period
  $ 18,017     $ 18,563  

 
 
Page 13 of 14



EXFO Inc.
Unaudited Interim Consolidated Statements of Cash Flows
 
(in thousands of US dollars)

 
   
Three months ended
August 31, 2011
   
Twelve months ended
August 31, 2011
   
Three months ended
August 31, 2010
   
Twelve months ended
August 31, 2010
 
                         
Cash flows from operating activities
                       
Net earnings for the period
  $ 1,890     $ 19,349     $ 4,962     $ 6,619  
Add (deduct) items not affecting cash
                               
Change in discount on short-term investments
    4       (42 )     (6 )     19  
Stock-based compensation costs
    461       2,256       473       1,786  
Amortization
    3,819       15,973       4,158       13,729  
Gain on disposal of discontinued operations
          (13,212 )            
Gain on disposal of capital assets
          (568 )            
Deferred revenue
    (3,543 )     (1,262 )     1,264       3,672  
Future income taxes
    774       7,032       1,529       5,787  
Change in unrealized foreign exchange gain/loss
    113       2,130       518       471  
                                 
      3,518       31,656       12,898       32,083  
                                 
Change in non-cash operating items
                               
Accounts receivable
    3,891       10,066       (4,265 )     (22,522 )
Income taxes and tax credits
    (1,714 )     (6,714 )     942       (4,073 )
Inventories
    200       (8,751 )     (2,205 )     (9,302 )
Prepaid expenses
    600       (232 )     262       105  
Accounts payable and accrued liabilities
    (4,506 )     (2,775 )     3,216       5,168  
Other liabilities
    (187 )     60       308       308  
                                 
      1,802       23,310       11,156       1,767  
Cash flows from investing activities
                               
Additions to short-term investments
    (95,023 )     (516,674 )     (20,506 )     (233,388 )
Proceeds from disposal and maturity of
short-term investments
    100,613       481,945       16,656       285,805  
Additions to capital assets
    (5,079 )     (12,164 )     (2,746 )     (8,966 )
Proceeds from disposal of capital assets
          568              
Net proceeds from disposal of discontinued operations
          22,063              
Business combination, net of cash acquired
    (289 )     (1,049 )     (346 )     (33,042 )
                                 
      222       (25,311 )     (6,942 )     10,409  
Cash flows from financing activities
                               
Bank loan
          772              
Repayment of long-term debt
    (323 )     (619 )     (274 )     (274 )
Exercise of stock options
    5       1,452       49       343  
Redemption of share capital
                      (14 )
                                 
      (318 )     1,605       (225 )     55  
                                 
Effect of foreign exchange rate changes on cash
    (76 )     1,058       (336 )     (733 )
                                 
Change in cash
    1,630       662       3,653       11,498  
Cash – Beginning of period
    21,141       22,109       18,456       10,611  
Cash – End of period
  $ 22,771     $ 22,771     $ 22,109     $ 22,109  


 
Page 14 of 14