EXFO Inc.
EXFO INC. (Form: 6-K, Received: 10/12/2016 16:57:24)
 
 

 
 
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 2016

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
Form 40-F

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
No


If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-______.
 
 

 
 

 
 
TABLE OF CONTENTS
 
 
Signatures
Press Release
Condensed Unaudited Interim Consolidated Balance Sheets
Condensed Unaudited Interim Consolidated Statements of Earnings
Condensed Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)
Condensed Unaudited Interim Consolidated Statements of Changes in Shareholders' Equity
Condensed Unaudited Interim Consolidated Statements of Cash Flows
 
 
 
 
On October 12, 2016, 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, 2016. 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 the fiscal year ended August 31, 2016. 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, 2016 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.
 
 
Page 1 of 12

 
 
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 12, 2016
 

Page 2 of 12

 
 
 
 
EXFO Reports Fourth-Quarter and Fiscal 2016 Results

Q4 2016
§
Sales increase 11.1% year-over-year to US$62.9 million
§
Bookings improve 13.7% year-over-year to US$62.4 million
§
Adjusted EBITDA rises 24.4% year-over-year to US$6.2 million

Fiscal 2016
§
Sales increase 4.7% to US$232.6 million
§
Bookings improve 7.7% to US$240.3 million
§
Adjusted EBITDA surges 59.9% to US$22.0 million
§
Cash position improves US$19.9 million to US$47.3 million

QUEBEC CITY, CANADA, October 12, 2016 — EXFO Inc. (NASDAQ: EXFO) (TSX: EXF) announced today financial results for the fourth quarter and fiscal year ended August 31, 2016.

Sales in the fourth quarter of fiscal 2016 reached US$62.9 million compared to US$60.9 million in the third quarter of 2016 and US$56.6 million in the fourth quarter of 2015. Annual sales increased 4.7% to US$232.6 million in fiscal 2016 from US$222.1 million in 2015.

Bookings totaled US$62.4 million for a book-to-bill ratio of 0.99 in the fourth quarter of fiscal 2016 compared to US$59.7 million in the third quarter of 2016 and US$54.9 million in the fourth quarter of 2015. Overall for fiscal 2016, bookings increased 7.7% to US$240.3 million for a book-to-bill ratio of 1.03 from US$223.1 million in 2015.

Gross margin before depreciation and amortization* attained 61.6% of sales in the fourth quarter of fiscal 2016 compared to 60.8% in the third quarter of 2016 and 61.2% in the fourth quarter of 2015. In fiscal 2016, gross margin improved to 62.6% of sales from 61.7% in 2015.

In the fourth quarter of fiscal 2016, IFRS net earnings amounted to US$2.3 million, or US$0.04 per diluted share, compared to net earnings of US$0.9 million, or US$0.02 per diluted, share in the third quarter of 2016 and US$2.3 million, or US$0.04 per diluted share, in the fourth quarter of 2015. IFRS net earnings in the fourth quarter of 2016 included US$0.3 million in after-tax amortization of intangible assets, US$0.3 million in stock-based compensation costs and a foreign exchange loss of US$0.3 million. In comparison, the company reported a foreign exchange gain of US$2.4 million in the fourth quarter of 2015.

In fiscal 2016, IFRS net earnings totaled US$8.9 million, or US$0.16 per diluted share, compared to US$5.3 million, or US$0.09 per diluted share, in 2015. IFRS net earnings in 2016 included US$1.1 million in after-tax amortization of intangible assets, US$1.4 million in stock-based compensation costs and a foreign exchange gain of US$0.2 million. In comparison, the company reported a foreign exchange gain of US$7.2 million in fiscal 2015.

Adjusted EBITDA* totaled US$6.2 million, or 9.8% of sales, in the fourth quarter of fiscal 2016 compared to US$5.3 million, or 8.7% of sales, in the third quarter of 2016 and US$5.0 million, or 8.8% of sales, in the fourth quarter of 2015. In fiscal 2016, adjusted EBITDA surged 59.9% to US$22.0 million from US$13.8 million in 2015.

Cash and short-term investments increased by US$19.9 million to US$47.3 million at the end of fiscal 2016 from US$27.4 million at the end of 2015.
 
 
Page 3 of 12

 




"I am quite pleased with EXFO's progress in fiscal 2016 in terms of sales, bookings and profitability, including a 60% increase in adjusted EBITDA to US$22.0 million, ahead of the US$20 million target we had set at the beginning of the year," said Germain Lamonde, EXFO's Chairman, President and CEO. "Many of the transformations implemented in 2015 started to pay off, contributing to market-share gains in strategic areas and delivering expected bookings and revenue growth in both our Physical-layer and Protocol-layer product groups. Our fourth quarter was particularly gratifying with double-digit sales, bookings and adjusted EBITDA growth year-over-year."

"Throughout 2016, we continued redefining EXFO for ongoing success and market-share gains by strengthening our innovation edge, strategic position and go-to-market capabilities, while leveraging new growth vectors and market segments," Mr. Lamonde added. "Combined with our solid foundation in high-speed optical testing and holistic test and systems offering, we are well positioned to sustain profitable growth in 2017 as the pace of network transformation is accelerating. With a heightened focus on execution, disciplined spending and improving our gross margin, I am confident we will increase adjusted EBITDA faster than revenue to achieve at least US$26 million in 2017."

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

     
Q4 2016
     
Q3 2016
     
Q4 2015
   
FY 2016
   
FY 2015
 
                                     
  Physical-layer sales
 
$
39,777
   
$
42,074
   
$
34,967
   
$
151,910
   
$
144,060
 
  Protocol-layer sales
   
23,445
     
19,260
     
22,419
     
83,324
     
80,591
 
  Foreign exchange losses on forward exchange contracts
   
(364
)
   
(438
)
   
(792
)
   
(2,651
)
   
(2,562
)
  Total Sales
 
$
62,858
   
$
60,896
   
$
56,594
   
$
232,583
   
$
222,089
 
                                         
  Physical-layer bookings
 
$
39,826
   
$
41,797
   
$
35,521
   
$
155,320
   
$
144,673
 
  Protocol-layer bookings
   
22,969
     
18,389
     
20,187
     
87,631
     
80,948
 
  Foreign exchange losses on forward exchange contracts
   
(364
)
   
(438
)
   
(792
)
   
(2,651
)
   
(2,562
)
  Total Bookings
 
$
62,431
   
$
59,748
   
$
54,916
   
$
240,300
   
$
223,059
 
  Book-to-bill ratio (Bookings/Sales)
   
0.99
     
0.98
     
0.97
     
1.03
     
1.00
 
                                         
  Gross margin before depreciation and amortization*
 
$
38,713
   
$
37,016
   
$
34,619
   
$
145,517
   
$
137,050
 
     
61.6
%
   
60.8
%
   
61.2
%
   
62.6
%
   
61.7
%
                                         
  Other selected information:
                                       
  Net earnings
 
$
2,252
   
$
919
   
$
2,323
   
$
8,900
   
$
5,298
 
  Amortization of intangible assets
 
$
292
   
$
294
   
$
322
   
$
1,172
   
$
2,883
 
  Stock-based compensation costs
 
$
302
   
$
386
   
$
133
   
$
1,378
   
$
1,295
 
  Restructuring charges
 
$
   
$
   
$
1,637
   
$
   
$
1,637
 
  Net income tax effect of the above items
 
$
(31
)
 
$
(31
)
 
$
(371
)
 
$
(120
)
 
$
(531
)
  Foreign exchange gain (loss)
 
$
(293
)
 
$
(957
)
 
$
2,425
   
$
161
   
$
7,212
 
  Adjusted EBITDA *
 
$
6,172
   
$
5,301
   
$
4,962
   
$
22,039
   
$
13,779
 

 
Page 4 of 12

 
 

 
 
Operating Expenses
Selling and administrative expenses totaled US$21.6 million, or 34.3% of sales, in the fourth quarter of fiscal 2016 compared to US$20.8 million, or 34.2% of sales, in the third quarter of 2016 and US$20.5 million, or 36.3% of sales, in the fourth quarter of 2015. In fiscal 2016, selling and administrative expenses amounted to US$82.2 million, or 35.3% of sales, compared to US$82.2 million, or 37.0% of sales, in 2015.

Net R&D expenses amounted to US$11.3 million, or 18.0% of sales, in the fourth quarter of fiscal 2016 compared to US$11.3 million, or 18.6% of sales, in the third quarter of 2016 and US$10.9 million, or 19.3% of sales, in the fourth quarter of 2015. In fiscal 2016, net R&D expenses decreased to US$42.7 million, or 18.4% of sales, from US$44.0 million, or 19.8% of sales, in 2015.

Fiscal 2016 Highlights
 
§
Sales . Total sales increased 4.7% to US$232.6 million in fiscal 2016 largely due to EXFO's leadership in portable optical testing and a 100G investment cycle, especially in the United States. Sales of Physical-layer solutions (optical and copper access) increased 5.4% year-over-year, while sales of Protocol-layer solutions (transport, datacom, service assurance, analytics and wireless products) improved 3.4%.

Annual sales in the Americas and Asia-Pacific regions increased by 6.7% and 5.6%, respectively, while sales in Europe, Middle East and Africa (EMEA) were relatively stable.

EXFO's largest customer accounted for 7.1% of sales in fiscal 2016, while the company's top-three customers represented 15.6%. In comparison, EXFO's largest customer accounted for 7.1% of sales in 2015, while the company's top-three customers represented 14.4%.

§
Profitability . EXFO generated adjusted EBITDA of US$22.0 million, or 9.5% of sales, in fiscal 2016 compared to US$13.8 million, or 6.2% of sales, in 2015. The company also delivered US$24.4 million in cash flows from operating activities in 2016.

§
Innovation . EXFO launched 15 new products or major enhancements in fiscal 2016. Key new product introductions included TestFlow, a unique cloud-based, field test automation solution simplifying and accelerating complex, labor-intensive deployment activities for home-broadband and wireless radio access networks (RAN); LTB-8 platform, a multi-module test and software-sharing automation suite accelerating high-speed optical testing in lab and manufacturing environments; a whole new family of OTDRs (a segment in which EXFO dominates), raising industry standards for technical specifications and time savings in characterizing optical networks; iSAM, an intelligent service activation software bringing speed and simplicity to testing Ethernet services; MaxTester-940 Fiber Certifier OLTS (optical loss test set) for data center and enterprise markets; and the telecom industry's first G.fast handheld test set for the roll out of ultra-broadband services on copper links.
 
Business Outlook
EXFO forecasts sales between US$59.0 million and US$64.0 million for the first quarter of fiscal 2017, while IFRS net results are expected to range between a loss of US$0.01 per share and earnings of US$0.03 per share.
IFRS net results include US$0.01 per share in after-tax amortization of intangible assets and stock-based compensation costs.
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.
For fiscal 2017, EXFO is targeting double-digit growth in adjusted EBITDA to least US$26 million.
 
 
Page 5 of 12

 
 

 
 
Conference Call and Webcast
EXFO will host a conference call today at 5 p.m. (Eastern time) to review fourth quarter and year-end financial results for fiscal 2016. To listen to the conference call and participate in the question period via telephone, dial 1- 704-288-0432.   Please take note the following conference ID number will be required: 78994192. Germain Lamonde, Chairman, President and CEO, and Pierre Plamondon, CPA, CA, Vice-President of Finance and Chief Financial Officer, will participate in the call. An audio replay of the conference call will be available two hours after the event until 11:59 p.m. on October 19, 2016. The replay number is 1-855-859-2056 and the conference ID number is 78994192. The audio Webcast and replay of the conference call will also be available on EXFO's Website at  www.EXFO.com , under the Investors section.
About EXFO
EXFO provides communications service providers (CSPs) with test orchestration and 3D analytics solutions to ensure the smooth deployment, maintenance and management of next-generation, physical, virtual, fixed and mobile networks. The company has also forged strong relationships with network equipment manufacturers (NEMs) to develop deep expertise that migrates from the lab to the field and beyond. EXFO's key differentiation comes from combining intelligent, automated and cloud-based test and monitoring solutions with real-time analytics to deliver unmatched end-to-end visibility and assurance—from a network, services and end-user level. EXFO is no. 1 in portable optical testing and boasts the largest active service assurance deployment worldwide. For more information, visit www.EXFO.com and follow us on the EXFO Blog .

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, expect, believe, plan, anticipate, intend, could, estimate, continue, or similar expressions or the negative of such expressions are intended to identify forward-looking statements. In addition, any statement that refers 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, but not limited to, macroeconomic uncertainty as well as capital spending and network deployment levels in the telecommunications industry (including our ability to quickly adapt cost structures with anticipated levels of business and our ability to manage inventory levels with market demand); future economic, competitive, financial and market conditions; consolidation in the global telecommunications test and service assurance industry and increased competition among vendors; capacity to adapt our future product offering to future technological changes; limited visibility with regards to timing and nature of customer orders; longer sales cycles for complex systems involving customers' acceptances delaying revenue recognition; fluctuating exchange rates; concentration of sales; timely release and market acceptance of our new products and other upcoming products; our ability to successfully expand international operations; our ability to successfully integrate businesses that we acquire; 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 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 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.

Page 6 of 12

 
 
 
*Non-IFRS Measures
EXFO provides non-IFRS measures (constant currency data, gross margin before depreciation and amortization and adjusted EBITDA) as supplemental information regarding its operational performance. The company uses these measures for the purpose of evaluating historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the company to plan and forecast future periods as well as to make operational and strategic decisions. EXFO believes that providing this information, in addition to IFRS measures, allows investors to see the company's results through the eyes of management, and to better understand its historical and future financial performance.
The presentation of this additional information is not prepared in accordance with IFRS. 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 IFRS.
Constant currency data represents data before foreign currency impact. Data for the current period is translated using foreign exchange rates of the corresponding period from the preceding year.
Gross margin before depreciation and amortization represents sales less cost of sales, excluding depreciation and amortization.
Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, restructuring charges, stock-based compensation costs and foreign exchange gain or loss.
The following table summarizes the reconciliation of adjusted EBITDA to IFRS net earnings in thousands of US dollars:
Adjusted EBITDA
     
Q4 2016
     
Q3 2016
     
Q4 2015
   
FY 2016
   
FY 2015
 
                                     
IFRS net earnings for the period
 
$
2,252
   
$
919
   
$
2,323
   
$
8,900
   
$
5,298
 
                                         
Add (deduct):
                                       
                                         
Depreciation of property, plant and equipment
   
957
     
958
     
1,171
     
3,814
     
4,835
 
Amortization of intangible assets
   
292
     
294
     
322
     
1,172
     
2,883
 
Interest and other (income) expenses
   
(112
)
   
(309
)
   
61
     
(828
)
   
(155
)
Income taxes
   
2,188
     
2,096
     
1,740
     
7,764
     
5,198
 
Restructuring charges
   
     
     
1,637
     
     
1,637
 
Stock-based compensation costs
   
302
     
386
     
133
     
1,378
     
1,295
 
Foreign exchange (gain) loss
   
293
     
957
     
(2,425
)
   
(161
)
   
(7,212
)
Adjusted EBITDA for the period
 
$
6,172
   
$
5,301
   
$
4,962
   
$
22,039
   
$
13,779
 
                                         
Adjusted EBITDA in percentage of sales
   
9.8
%
   
8.7
%
   
8.8
%
   
9.5
%
   
6.2
%

For more information
Vance Oliver
Director, Investor Relations
(418) 683-0913, Ext. 23733
[email protected]
 
 
Page 7 of 12

 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Balance Sheets
 
(in thousands of US dollars)
 
 
         As at August 31,      
   
2016
   
2015
 
Assets
           
             
Current assets
           
Cash
 
$
43,208
   
$
25,864
 
Short-term investments
   
4,087
     
1,487
 
Accounts receivable
               
Trade
   
45,076
     
48,068
 
Other
   
2,474
     
2,384
 
Income taxes and tax credits recoverable
   
4,208
     
3,855
 
Inventories
   
33,004
     
27,951
 
Prepaid expenses
   
3,099
     
2,801
 
     
135,156
     
112,410
 
                 
Tax credits recoverable
   
34,594
     
35,625
 
Property, plant and equipment
   
35,978
     
35,695
 
Intangible assets
   
3,391
     
4,096
 
Goodwill
   
21,928
     
21,860
 
Deferred income tax assets
   
7,681
     
8,900
 
Other assets
   
589
     
416
 
                 
   
$
239,317
   
$
219,002
 
Liabilities
               
                 
Current liabilities
               
Accounts payable and accrued liabilities
 
$
37,174
   
$
34,126
 
Provisions
   
299
     
427
 
Income taxes payable
   
971
     
779
 
Deferred revenue
   
9,486
     
7,647
 
     
47,930
     
42,979
 
                 
Deferred revenue
   
5,530
     
2,957
 
Deferred income tax liabilities
   
2,857
     
1,524
 
Other liabilities
   
75
     
791
 
     
56,392
     
48,251
 
                 
Shareholders' equity
               
Share capital
   
85,516
     
86,045
 
Contributed surplus
   
18,150
     
17,778
 
Retained earnings
   
127,833
     
118,933
 
Accumulated other comprehensive loss
   
(48,574
)
   
(52,005
)
     
182,925
     
170,751
 
                 
   
$
239,317
   
$
219,002
 
 
 
Page 8 of 12

 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Earnings
 
(in thousands of US dollars, except share and per share data)
 
 
   
Three months
ended
August 31, 2016
   
Twelve months
ended
August 31, 2016
   
Three months
ended
August 31, 2015
   
Twelve months
ended
August 31, 2015
 
                         
Sales
 
$
62,858
   
$
232,583
   
$
56,594
   
$
222,089
 
                                 
Cost of sales   (1,2)
   
24,145
     
87,066
     
21,975
     
85,039
 
Selling and administrative   (2)
   
21,554
     
82,169
     
20,511
     
82,200
 
Net research and development   (2)
   
11,289
     
42,687
     
10,916
     
44,003
 
Depreciation of property, plant and equipment
   
957
     
3,814
     
1,171
     
4,835
 
Amortization of intangible assets
   
292
     
1,172
     
322
     
2,883
 
Interest and other (income) expense
   
(112
)
   
(828
)
   
61
     
(155
)
Foreign exchange (gain) loss
   
293
     
(161
)
   
(2,425
)
   
(7,212
)
Earnings before income taxes
   
4,440
     
16,664
     
4,063
     
10,496
 
                                 
Income taxes
   
2,188
     
7,764
     
1,740
     
5,198
 
                                 
Net earnings for the period
 
$
2,252
   
$
8,900
   
$
2,323
   
$
5,298
 
                                 
Basic net earnings per share
 
$
0.04
   
$
0.17
   
$
0.04
   
$
0.09
 
                                 
Diluted net earnings per share
 
$
0.04
   
$
0.16
   
$
0.04
   
$
0.09
 
                                 
Basic weighted average number of shares outstanding (000's)
   
53,769
     
53,863
     
53,806
     
56,804
 
                                 
Diluted weighted average number of shares outstanding (000's)
   
54,709
     
54,669
     
54,473
     
57,457
 
 
(1)
The cost of sales is exclusive of depreciation and amortization, shown separately.
(2)
Restructuring charges included in:
Cost of sales
 
$
   
$
   
$
290
   
$
290
 
Selling and administrative
   
     
     
586
     
586
 
Net research and development
   
     
     
761
     
761
 
                                 
   
$
   
$
   
$
1,637
   
$
1,637
 
 
 
Page 9 of 12

 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)
 
(in thousands of US dollars)
 
 
   
Three months
ended
August 31, 2016
   
Twelve months
ended
August 31, 2016
   
Three months
ended
August 31, 2015
   
Twelve months
ended
August 31, 2015
 
                         
Net earnings for the period
 
$
2,252
   
$
8,900
   
$
2,323
   
$
5,298
 
Other comprehensive income (loss), net of income taxes
                               
Items that will not be reclassified subsequently to net earnings
                               
Foreign currency translation adjustment
   
(68
)
   
707
     
(9,676
)
   
(39,175
)
Items that may be reclassified subsequently to net earnings
                               
Unrealized gains/losses on forward exchange contracts
   
37
     
862
     
(1,419
)
   
(5,583
)
Reclassification of realized gains/losses on forward exchange contracts in net earnings
   
414
     
2,797
     
669
     
2,107
 
Deferred income tax effect of gains/losses on forward exchange contracts
   
(111
)
   
(935
)
   
180
     
905
 
Other comprehensive income (loss)
   
272
     
3,431
     
(10,246
)
   
(41,746
)
                                 
Comprehensive income (loss) for the period
 
$
2,524
   
$
12,331
   
$
(7,923
)
 
$
(36,448
)
 
 
Page 10 of 12

 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Changes in Shareholders' Equity
 
(in thousands of US dollars)
 
 
   
Twelve months ended August 31, 2015
 
   
Share capital
   
Contributed surplus
   
Retained earnings
   
Accumulated other comprehensive loss
   
Total
shareholders' equity
 
                               
Balance as at September 1, 2014
 
$
111,491
   
$
16,503
   
$
113,635
   
$
(10,259
)
 
$
231,370
 
Redemption of share capital
   
(26,827
)
   
1,333
     
     
     
(25,494
)
Reclassification of stock-based compensation costs
   
1,381
     
(1,381
)
   
     
     
 
Stock-based compensation costs
   
     
1,323
     
     
     
1,323
 
Net earnings for the year
   
     
     
5,298
     
     
5,298
 
Other comprehensive loss
                                       
Foreign currency translation adjustment
   
     
     
     
(39,175
)
   
(39,175
)
Changes in unrealized losses on forward exchange contracts, net of deferred income taxes of $905
   
     
     
     
(2,571
)
   
(2,571
)
                                         
Total comprehensive loss for the year
                                   
(36,448
)
                                         
Balance as at August 31, 2015
 
$
86,045
   
$
17,778
   
$
118,933
   
$
(52,005
)
 
$
170,751
 


   
Twelve months ended August 31, 2016
 
   
Share capital
   
Contributed surplus
   
Retained earnings
   
Accumulated other comprehensive loss
   
Total
shareholders' equity
 
                               
Balance as at September 1, 2015
 
$
86,045
   
$
17,778
   
$
118,933
   
$
(52,005
)
 
$
170,751
 
Redemption of share capital
   
(1,768
)
   
217
     
     
     
(1,551
)
Reclassification of stock-based compensation costs
   
1,239
     
(1,239
)
   
     
     
 
Stock-based compensation costs
   
     
1,394
     
     
     
1,394
 
Net earnings for the year
   
     
     
8,900
     
     
8,900
 
Other comprehensive income
                                       
Foreign currency translation adjustment
   
     
     
     
707
     
707
 
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $935
   
     
     
     
2,724
     
2,724
 
                                         
Total comprehensive income for the year
                                   
12,331
 
                                         
Balance as at August 31, 2016
 
$
85,516
   
$
18,150
   
$
127,833
   
$
(48,574
)
 
$
182,925
 

 
Page 11 of 12

 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Cash Flows
 
(in thousands of US dollars)
 
 
   
Three months
ended
August 31, 2016
   
Twelve months
ended
August 31, 2016
   
Three months
ended
August 31, 2015
   
Twelve months
ended
August 31, 2015
 
                         
Cash flows from operating activities
                       
Net earnings for the period
 
$
2,252
   
$
8,900
   
$
2,323
   
$
5,298
 
Add (deduct) items not affecting cash
                               
Stock-based compensation costs
   
302
     
1,378
     
133
     
1,295
 
Depreciation and amortization
   
1,249
     
4,986
     
1,493
     
7,718
 
Deferred revenue
   
(638
)
   
4,238
     
(962
)
   
396
 
Deferred income taxes
   
293
     
1,578
     
366
     
565
 
Changes in foreign exchange gain/loss
   
1
     
(332
)
   
(967
)
   
(3,842
)
     
3,459
     
20,748
     
2,386
     
11,430
 
Changes in non-cash operating items
                               
Accounts receivable
   
(712
)
   
2,682
     
(3,017
)
   
(10,828
)
Income taxes and tax credits
   
307
     
939
     
(98
)
   
(2,062
)
Inventories
   
1,914
     
(4,713
)
   
1,803
     
820
 
Prepaid expenses
   
138
     
(280
)
   
(107
)
   
(982
)
Other assets
   
(33
)
   
170
     
32
     
61
 
Accounts payable, accrued liabilities and provisions
   
(1,524
)
   
4,882
     
(862
)
   
8,132
 
Other liabilities
   
(6
)
   
(65
)
   
(25
)
   
(87
)
     
3,543
     
24,363
     
112
     
6,484
 
Cash flows from investing activities
                               
Additions to short-term investments
   
(416
)
   
(3,546
)
   
(558
)
   
(20,067
)
Proceeds from disposal and maturity of short-term investments
   
372
     
873
   
     
23,685
 
Additions to capital assets
   
(982
)
   
(4,356
)
   
(1,308
)
   
(5,933
)
     
(1,026
)
   
(7,029
)
   
(1,866
)
   
(2,315
)
Cash flows from financing activities
                               
Bank loan
   
(468
)
 
   
   
 
Redemption of share capital
   
(1,149
)
   
(1,551
)
   
(320
)
   
(25,494
)
     
(1,617
)
   
(1,551
)
   
(320
)
   
(25,494
)
Effect of foreign exchange rate changes on cash
   
35
     
1,561
     
(957
)
   
(6,932
)
                                 
Change in cash
   
935
     
17,344
     
(3,031
)
   
(28,257
)
Cash – Beginning of the period
   
42,273
     
25,864
     
28,895
     
54,121
 
                                 
Cash – End of the period
 
$
43,208
   
$
43,208
   
$
25,864
   
$
25,864
 
 
 
 
 
 
Page 12 of 12