EXFO Inc.
EXFO INC. (Form: 6-K, Received: 10/12/2017 16:56:09)
 
 


 
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 2017

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
Condensed Unaudited Interim Consolidated Statements of Changes of Shareholders' Equity
Condensed Unaudited Interim Consolidated Statements of Cash Flows
 
 

 
 
On October 12, 2017, 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, 2017. 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, 2017. 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, 2017 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, 2017
 
 
 
Page 2 of 12

 
 
 
 
 
PRESS RELEASE
For immediate release

EXFO Reports Fourth Quarter and Fiscal 2017 Results

Q4 2017
§
Sales reach US$63.0 million, top of guidance range
§
Bookings attain US$66.3 million, book-to-bill ratio of 1.05
§
Adjusted EBITDA totals US$8.5 million, 13.6% of sales

Fiscal 2017
§
Sales increase 4.6% to US$243.3 million
§
Bookings improve 4.8% to US$251.8 million
§
Adjusted EBITDA totals US$22.0 million, 9.1% of sales

QUEBEC CITY, CANADA, October 12, 2017 — EXFO Inc. (NASDAQ: EXFO) (TSX: EXF), the network test, monitoring and analytics experts, announced today financial results for the fourth quarter and fiscal year ended August 31, 2017.

Sales in the fourth quarter of fiscal 2017 reached US$63.0 million compared to US$58.5 million in the third quarter of 2017 and US$62.9 million in the fourth quarter of 2016. Annual sales increased 4.6% to US$243.3 million in fiscal 2017 from US$232.6 million in 2016.
 
Bookings totaled US$66.3 million for a book-to-bill ratio of 1.05 in the fourth quarter of fiscal 2017 compared to US$63.7 million in the third quarter of 2017 and US$62.4 million in the fourth quarter of 2016. Overall for fiscal 2017, bookings increased 4.8% to US$251.8 million for a book-to-bill ratio of 1.03 from US$240.3 million in 2016.

Gross margin before depreciation and amortization* attained 61.9% of sales in the fourth quarter of fiscal 2017 compared to 58.0% in the third quarter of 2017 and 61.6% in the fourth quarter of 2016. Gross margin included restructuring charges of 0.2% of sales in the fourth quarter of 2017, 2.7% of sales in the third quarter of 2017 and nil in the fourth quarter of 2016. In fiscal 2017, gross margin reached 61.2% of sales compared to 62.6% in 2016. Gross margin included restructuring charges of 0.7% of sales in 2017 and nil in 2016.  

In the fourth quarter of fiscal 2017, IFRS net earnings amounted to US$0.8 million, or US$0.02 per diluted share, compared to a net loss of US$4.3 million, or US$0.08 per share, in the third quarter of 2017 and net earnings of US$2.3 million, or US$0.04 per diluted share, in the fourth quarter of 2016. Net earnings in the fourth quarter of 2017 included net expenses totaling US$5.3 million: US$0.9 million in after-tax amortization of intangible assets, US$0.4 million in stock-based compensation costs, US$1.2 million in after-tax restructuring changes, US$0.4 million for the positive change in the fair value of the cash contingent consideration related to the Ontology Systems acquisition, US$0.3 million in after-tax acquisition-related costs, and a foreign exchange loss of US$2.9 million.

In fiscal 2017, IFRS net earnings totaled US$0.9 million, or US$0.02 per diluted share, compared to US$8.9 million, or US$0.16 per diluted share, in 2016. Net earnings in 2017 included net expenses totaling US$10.6 million: US$2.7 million in after-tax amortization of intangible assets, US$1.4 million in stock-based compensation costs, US$4.8 million in after-tax restructuring charges, US$0.4 million for the positive change in the fair value of the cash contingent consideration related to the Ontology Systems acquisition, US$1.1 million in after-tax acquisition-related costs, and a foreign exchange loss of US$1.0 million.
 
 
Page 3 of 12

 
 
 
 
Adjusted EBITDA* totaled US$8.5 million, or 13.6% of sales, in the fourth quarter of fiscal 2017 compared to US$2.3 million, or 3.9% of sales, in the third quarter of 2017 and US$6.2 million, or 9.8% of sales, in the fourth quarter of 2016. In fiscal 2017, adjusted EBITDA totaled US$22.0 million compared to US$22.0 million in 2016.

On September 8, 2017, EXFO acquired a 33.1% stake in Astellia, a global leader in the performance analysis of mobile networks and subscriber experience. EXFO intends to purchase publicly traded Astellia's remaining equity through a public tender offer. On October 2, 2017, EXFO closed the acquisition of Yenista Optics, a supplier of high-end optical test equipment for the laboratory and manufacturing markets.

"I am very pleased with EXFO's financial results in the fourth quarter of 2017, highlighted by revenue at the top of our guidance range, even stronger bookings and our best adjusted EBITDA margin in recent memory," said EXFO's CEO Philippe Morin. "Overall in fiscal 2017, we delivered 5% revenue growth and healthy profitability amid a competitive environment. Equally important, we established a solid foundation for future growth with investments—both internally and through acquisitions—in key technology areas like fiber, the Cloud, network virtualization and 5G.  These growth initiatives, combined with heightened sales efficiency and recent restructuring measures, should enhance profitability in 2018."

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

     
Q4 2017
     
Q3 2017
     
Q4 2016
   
FY 2017
   
FY 2016
 
                                     
  Physical-layer sales
 
$
40,802
   
$
41,007
   
$
39,777
   
$
161,864
   
$
151,910
 
  Protocol-layer sales
   
22,122
     
17,678
     
23,445
     
81,905
     
83,324
 
  Foreign exchange gains (losses) on forward exchange contracts
   
57
     
(180
)
   
(364
)
   
(468
)
   
(2,651
)
  Total Sales
 
$
62,981
   
$
58,505
   
$
62,858
   
$
243,301
   
$
232,583
 
                                         
  Physical-layer bookings
 
$
39,322
   
$
47,157
   
$
39,826
   
$
165,886
   
$
155,320
 
  Protocol-layer bookings
   
26,943
     
16,691
     
22,969
     
86,348
     
87,631
 
  Foreign exchange gains (losses) on forward exchange contracts
   
57
     
(180
)
   
(364
)
   
(468
)
   
(2,651
)
  Total Bookings
 
$
66,322
   
$
63,668
   
$
62,431
   
$
251,766
   
$
240,300
 
  Book-to-bill ratio (Bookings/Sales)
   
1.05
     
1.09
     
0.99
     
1.03
     
1.03
 
                                         
  Gross margin before depreciation and amortization*
 
$
39,009
   
$
33,950
   
$
38,713
   
$
148,972
   
$
145,517
 
     
61.9
%
   
58.0
%
   
61.6
%
   
61.2
%
   
62.6
%
                                         
  Other selected information:
                                       
IFRS net earnings (loss)
 
$
844
   
$
(4,304
)
 
$
2,252
   
$
851
   
$
8,900
 
Amortization of intangible assets
 
$
1,048
   
$
1,046
   
$
292
   
$
3,289
   
$
1,172
 
Stock-based compensation costs
 
$
431
   
$
372
   
$
302
   
$
1,414
   
$
1,378
 
Restructuring charges
 
$
1,266
   
$
3,813
   
$
   
$
5,079
   
$
 
Change in fair value of cash contingent consideration
 
$
(383
)
 
$
   
$
   
$
(383
)
 
$
 
Net income tax effect of the above items
 
$
(275
)
 
$
(357
)
 
$
(31
)
 
$
(858
)
 
$
(120
)
Foreign exchange (gain) loss
 
$
2,943
   
$
(1,725
)
 
$
293
   
$
978
   
$
(161
)
Adjusted EBITDA *
 
$
8,545
   
$
2,300
   
$
6,172
   
$
22,041
   
$
22,039
 

 
Page 4 of 12

 
 
 
 
 
 
Operating Expenses
Selling and administrative expenses totaled US$20.8 million, or 33.1% of sales, in the fourth quarter of fiscal 2017 compared to US$22.6 million, or 38.6% of sales, in the third quarter of 2017 and US$21.6 million, or 34.3% of sales, in the fourth quarter of 2016. In fiscal 2017, selling and administrative expenses amounted to US$86.3 million, or 35.5% of sales, compared to US$82.2 million, or 35.3% of sales, in 2016.
 
Net R&D expenses amounted to US$11.3 million, or 17.9% of sales, in the fourth quarter of fiscal 2017 compared to US$13.3 million, or 22.7% of sales, in the third quarter of 2017 and US$11.3 million, or 18.0% of sales, in the fourth quarter of 2016. In fiscal 2017, net R&D expenses totaled US$47.2 million, or 19.4% of sales, compared to US$42.7 million, or 18.4% of sales, in 2016.

Fiscal 2017 Highlights

§
Sales . Total sales increased 4.6% to US$243.3 million in fiscal 2017 mainly due to EXFO's leadership in optical testing, ongoing 100G investment cycle among communications service providers and the company's growing business with web-scale operators. Sales of Physical-layer solutions (optical and copper access) increased 6.6% year-over-year, while sales of Protocol-layer solutions (transport, datacom, service assurance, analytics and wireless products) dipped 1.7%.

Annual sales in the Americas as well as Europe, Middle East and Africa (EMEA) increased by 5.6% and 8.6%, respectively, while sales in the Asia-Pacific region dropped 2.9%.

EXFO's largest customer accounted for 10.1% of sales in fiscal 2017, while the company's top-three customers represented 18.4%. In comparison, EXFO's largest customer accounted for 7.1% of sales in 2016, while the company's top-three customers represented 15.6%.

§
Profitability . EXFO generated adjusted EBITDA of US$22.0 million, or 9.1% of sales, in fiscal 2017 compared to US$22.0 million, or 9.5% of sales, in 2016. The company also delivered US$12.9 million in cash flows from operating activities in 2017 compared to US$24.4 million in 2016.

·
Innovation . EXFO launched 16 new products and/or major enhancements in fiscal 2017, addressing four key technology areas: fiber, Cloud, network virtualization and 5G. New product introductions included a 400 Gbit/s optical transport test solution for the lab and manufacturing markets; an automated inspection probe for testing multi-fiber connectors in data centers and radio access networks; a software-based solution, Universal Virtual Synch, enabling communications service providers to accurately and cost-effectively measure network latency; and optical RF over OBSAI (open base station architecture initiative) link test capabilities to complement optical RF over CPRI (common public radio interface) test technology for centralized radio access networks.

Business Outlook
EXFO forecasts sales between US$60 million and US$65 million for the first quarter of fiscal 2018, while IFRS net results are expected to range between a net loss of US$0.01 per share and net earnings of US$0.03 per share.
IFRS net results include US$0.02 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 news release, seasonality, expected bookings for the remaining of the quarter, as well as exchange rates as of the day of this release.
 
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 2017. To listen to the conference call and participate in the question period via telephone, dial 1- 323-794-2093.   Please take note the following conference ID number will be required: 6482663. EXFO's Executive Chairman Germain Lamonde, CEO Philippe Morin, and Pierre Plamondon, CPA, 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 8:00 p.m. on October 19, 2017. The replay number is 1-719-457-0820 and the conference ID number is 6482663. 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 develops smarter network test, monitoring and analytics solutions for the world's leading communications service providers, network equipment manufacturers and webscale companies. Since 1985, we've worked side by side with our customers in the lab, field, data center, boardroom and beyond to pioneer essential technology and methods for each phase of the network lifecycle. Our portfolio of test orchestration and real-time 3D analytics solutions turn complex into simple and deliver business-critical insights from the network, service and subscriber dimensions. Most importantly, we help our customers flourish in a rapidly transforming industry where "good enough" testing, monitoring and analytics just aren't good enough anymore—they never were for us, anyway.  For more information, visit 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; our ability to successfully integrate businesses that we acquire; 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; 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 (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.
Gross margin before depreciation and amortization represents sales less cost of sales, excluding depreciation and amortization.
Adjusted EBITDA represents net earnings (loss) before interest, income taxes, depreciation and amortization, stock-based compensation costs, restructuring charges,   change in fair value of cash contingent consideration, and foreign exchange gain or loss.
The following table summarizes the reconciliation of adjusted EBITDA to IFRS net earnings (loss) in thousands of US dollars:
Adjusted EBITDA
     
Q4 2017
     
Q3 2017
     
Q4 2016
   
FY 2017
   
FY 2016
 
                                     
IFRS net earnings (loss) for the period
 
$
844
   
$
(4,304
)
 
$
2,252
   
$
851
   
$
8,900
 
                                         
Add (deduct):
                                       
                                         
Depreciation of property, plant and equipment
   
1,008
     
1,029
     
957
     
3,902
     
3,814
 
Amortization of intangible assets
   
1,048
     
1,046
     
292
     
3,289
     
1,172
 
Interest and other (income) expenses
   
275
     
57
     
(112
)
   
303
     
(828
)
Income taxes
   
1,113
     
2,012
     
2,188
     
6,608
     
7,764
 
Stock-based compensation costs
   
431
     
372
     
302
     
1,414
     
1,378
 
Restructuring charges
   
1,266
     
3,813
     
     
5,079
     
 
Change in fair value of cash
      contingent consideration
   
(383
)
   
     
     
(383
)
   
 
Foreign exchange (gain) loss
   
2,943
     
(1,725
)
   
293
     
978
     
(161
)
Adjusted EBITDA for the period
 
$
8,545
   
$
2,300
   
$
6,172
   
$
22,041
   
$
22,039
 
                                         
Adjusted EBITDA in percentage of sales
   
13.6
%
   
3.9
%
   
9.8
%
   
9.1
%
   
9.5
%
 
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 thousand of US dollars)
 
 
   
As at August 31,
 
   
2017
   
2016
 
Assets
           
             
Current assets
           
Cash
 
$
38,435
   
$
43,208
 
Short-term investments
   
775
     
4,087
 
Accounts receivable
               
Trade
   
41,130
     
42,993
 
Other
   
3,907
     
2,474
 
Income taxes and tax credits recoverable
   
4,955
     
4,208
 
Inventories
   
33,832
     
33,004
 
Prepaid expenses
   
4,202
     
3,099
 
                 
     
127,236
     
133,073
 
                 
Tax credits recoverable
   
38,111
     
34,594
 
Property, plant and equipment
   
40,132
     
35,978
 
Intangible assets
   
11,183
     
3,391
 
Goodwill
   
35,077
     
21,928
 
Deferred income tax assets
   
6,555
     
8,240
 
Other assets
   
947
     
589
 
                 
   
$
259,241
   
$
237,793
 
Liabilities
               
                 
Current liabilities
               
Accounts payable and accrued liabilities
 
$
36,776
   
$
37,174
 
Provisions
   
3,889
     
299
 
Income taxes payable
   
663
     
971
 
Deferred revenue
   
11,554
     
9,486
 
                 
     
52,882
     
47,930
 
                 
Deferred revenue
   
6,257
     
5,530
 
Deferred income tax liabilities
   
3,116
     
2,857
 
Other liabilities
   
196
     
75
 
                 
     
62,451
     
56,392
 
                 
Shareholders' equity
               
Share capital
   
90,411
     
85,516
 
Contributed surplus
   
18,184
     
18,150
 
Retained earnings
   
127,160
     
126,309
 
Accumulated other comprehensive loss
   
(38,965
)
   
(48,574
)
                 
     
196,790
     
181,401
 
                 
   
$
259,241
   
$
237,793
 
 
 
 
 
Page 8 of 12

 
 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Earnings
 
(in thousand of US dollars, except share and per share data)
 
 
   
Three months
ended
August 31, 2017
   
Twelve months
ended
August 31, 2017
   
Three months
ended
August 31, 2016
   
Twelve months
ended
August 31, 2016
 
                         
Sales
 
$
62,981
   
$
243,301
   
$
62,858
   
$
232,583
 
                                 
Cost of sales (1,2)
   
23,972
     
94,329
     
24,145
     
87,066
 
Selling and administrative   (2)
   
20,834
     
86,256
     
21,554
     
82,169
 
Net research and development   (2)
   
11,327
     
47,168
     
11,289
     
42,687
 
Depreciation of property, plant and equipment
   
1,008
     
3,902
     
957
     
3,814
 
Amortization of intangible assets
   
1,048
     
3,289
     
292
     
1,172
 
Change in fair value of cash contingent consideration
   
(383
)
   
(383
)
 
   
 
Interest and other (income) expense
   
275
     
303
     
(112
)
   
(828
)
Foreign exchange (gain) loss
   
2,943
     
978
     
293
     
(161
)
Earnings before income taxes
   
1,957
     
7,459
     
4,440
     
16,664
 
                                 
Income taxes
   
1,113
     
6,608
     
2,188
     
7,764
 
                                 
Net earnings for the period
 
$
844
   
$
851
   
$
2,252
   
$
8,900
 
                                 
Basic net earnings per share
 
$
0.02
   
$
0.02
   
$
0.04
   
$
0.17
 
                                 
Diluted net earnings per share
 
$
0.02
   
$
0.02
   
$
0.04
   
$
0.16
 
                                 
Basic weighted average number of shares outstanding (000's)
   
54,708
     
54,423
     
53,769
     
53,863
 
                                 
Diluted weighted average number of shares outstanding (000's)
   
55,784
     
55,555
     
54,709
     
54,669
 

(1)
The cost of sales is exclusive of depreciation and amortization, shown separately.
(2)
Restructuring charges included in:
 
        Cost of sales
   $
115
     $
1,697
     $
     $
 
        Selling and administrative      231       1,150              
        Net research and development
   
920
     
2,232
     
     
 
                                 
 
 
$
1,266
   
$
5,079
   
$
   
$
 
 
 
 
Page 9 of 12

 
 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Comprehensive Income
 
(in thousand of US dollars)
 
 
   
Three months
ended
August 31, 2017
   
Twelve months
ended
August 31, 2017
   
Three months
ended
August 31, 2016
   
Twelve months
ended
August 31, 2016
 
                         
Net earnings for the period
 
$
844
   
$
851
   
$
2,252
   
$
8,900
 
Other comprehensive income (loss), net of income taxes
                               
Items that will not be reclassified subsequently to net earnings
                               
Foreign currency translation adjustment
   
13,028
     
8,262
     
(68
)
   
707
 
Items that may be reclassified subsequently to net earnings
                               
Unrealized gains/losses on forward exchange contracts
   
1,765
     
1,403
     
37
     
862
 
Reclassification of realized gains/losses on forward exchange contracts in net earnings
   
64
     
423
     
414
     
2,797
 
Deferred income tax effect of gains/losses on forward exchange contracts
   
(510
)
   
(479
)
   
(111
)
   
(935
)
Other comprehensive income
   
14,347
     
9,609
     
272
     
3,431
 
                                 
Comprehensive income for the period
 
$
15,191
   
$
10,460
   
$
2,524
   
$
12,331
 
 
 
Page 10 of 12

 
 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Changes in Shareholders' Equity
 
(in thousand of US dollars)
 
 
   
Year 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
   
$
117,409
   
$
(52,005
)
 
$
169,227
 
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
   
$
126,309
   
$
(48,574
)
 
$
181,401
 


   
Year ended August 31, 2017
 
   
Share
capital
   
Contributed
surplus
   
Retained
earnings
   
Accumulated
other
comprehensive
loss
   
Total
shareholders'
equity
 
                               
Balance as at September 1, 2016
 
$
85,516
   
$
18,150
   
$
126,309
   
$
(48,574
)
 
$
181,401
 
Issuance of share capital
   
3,490
     
     
     
     
3,490
 
Reclassification of stock-based compensation costs
   
1,405
     
(1,405
)
   
     
     
 
Stock-based compensation costs
   
     
1,439
     
     
     
1,439
 
Net earnings for the year
   
     
     
851
     
     
851
 
Other comprehensive income
                                       
Foreign currency translation adjustment
   
     
     
     
8,262
     
8,262
 
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $479
   
     
     
     
1,347
     
1,347
 
                                         
Total comprehensive income for the year
                                   
10,460
 
                                         
Balance as at August 31, 2017
 
$
90,411
   
$
18,184
   
$
127,160
   
$
(38,965
)
 
$
196,790
 

 
Page 11 of 12

 
 
 
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Cash Flows
 
(in thousand of US dollars)
 
 
   
Three months
ended
August 31, 2017
   
Twelve months
ended
August 31, 2017
   
Three months
ended
August 31, 2016
   
Twelve months
ended
August 31, 2016
 
                         
Cash flows from operating activities
                       
Net earnings for the period
 
$
844
   
$
851
   
$
2,252
   
$
8,900
 
Add (deduct) items not affecting cash
                               
Stock-based compensation costs
   
494
     
1,477
     
302
     
1,378
 
Depreciation and amortization
   
2,056
     
7,191
     
1,249
     
4,986
 
Change in fair value of cash contingent consideration
   
(383
)
   
(383
)
 
   
 
Deferred revenue
   
(1,303
)
   
1,723
     
(638
)
   
4,238
 
Deferred income taxes
   
(109
)
   
1,054
     
293
     
1,578
 
Changes in foreign exchange gain/loss
   
2,051
     
1,096
     
1
     
(332
)
     
3,650
     
13,009
     
3,459
     
20,748
 
Changes in non-cash operating items
                               
Accounts receivable
   
2,254
     
3,955
     
(712
)
   
2,682
 
Income taxes and tax credits
   
(1,154
)
   
(2,386
)
   
307
     
939
 
Inventories
   
920
     
911
     
1,914
     
(4,713
)
Prepaid expenses
   
(157
)
   
(918
)
   
138
     
(280
)
Other assets
   
6
     
(121
)
   
(33
)
   
170
 
Accounts payable, accrued liabilities and provisions
   
(3,501
)
   
(1,745
)
   
(1,524
)
   
4,882
 
Other liabilities
   
165
     
165
     
(6
)
   
(65
)
     
2,183
     
12,870
     
3,543
     
24,363
 
Cash flows from investing activities
                               
Additions to short-term investments
   
(23
)
   
(2,910
)
   
(416
)
   
(3,546
)
Proceeds from disposal and maturity of short-term investments
   
2,778
     
6,374
     
372
     
873
 
Purchases of capital assets
   
(1,727
)
   
(7,175
)
   
(982
)
   
(4,356
)
Business combinations, net of cash acquired
   
(313
)
   
(12,792
)
 
   
 
     
715
     
(16,503
)
   
(1,026
)
   
(7,029
)
Cash flows from financing activities
                               
Bank loan
 
   
     
(468
)
 
 
Repayment of long-term debt
 
     
(1,480
)
 
   
 
Redemption of share capital
 
   
     
(1,149
)
   
(1,551
)
   
     
(1,480
)
   
(1,617
)
   
(1,551
)
Effect of foreign exchange rate changes on cash
   
1,164
     
340
     
35
     
1,561
 
                                 
Change in cash
   
4,062
     
(4,773
)
   
935
     
17,344
 
Cash – Beginning of the period
   
34,373
     
43,208
     
42,273
     
25,864
 
                                 
Cash – End of the period
 
$
38,435
   
$
38,435
   
$
43,208
   
$
43,208
 

 
 
 
 
Page 12 of 12