Title of each class
|
Name of each exchange on which registered
|
Subordinate Voting Shares without par value
|
NASDAQ
|
Subordinate Voting Shares without par value
|
TSX
|
Large accelerated filer
o
|
Accelerated filer
x
|
Non-accelerated filer
o
|
U.S. GAAP
o
|
International Financial Reporting Standards as issued by the
o
International Accounting Standards Board
|
Other
x
|
Exchange
Con
trols
|
Item
1.
|
Identity of Directors, Senior Management and Advisers
|
Ite
m 2.
|
Offer Statistics and Expected Timetable
|
I
tem 3.
|
Key Information
|
A . | Selected Financial Data |
Years ended August 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
(in thousands of US dollars, except share and per share data)
|
||||||||||||||||||||
Consolidated Statements of Earnings Data:
|
||||||||||||||||||||
Amounts under Canadian GAAP
|
||||||||||||||||||||
Sales
|
$ | 269,743 | $ | 202,757 | $ | 153,082 | $ | 160,981 | $ | 129,839 | ||||||||||
Cost of sales
(1)
|
100,296 | 73,901 | 57,897 | 64,364 | 53,896 | |||||||||||||||
Gross margin
|
169,447 | 128,856 | 95,185 | 96,617 | 75,943 | |||||||||||||||
Operating expenses
|
||||||||||||||||||||
Selling and administrative
|
87,062 | 66,612 | 58,067 | 54,869 | 43,885 | |||||||||||||||
Net research and development
|
47,927 | 37,847 | 27,213 | 24,580 | 14,863 | |||||||||||||||
Amortization of property, plant and equipment
|
6,772 | 5,757 | 4,453 | 4,137 | 2,696 | |||||||||||||||
Amortization of intangible assets
|
9,183 | 7,773 | 5,033 | 3,862 | 2,861 | |||||||||||||||
Restructuring charges
|
− | − | 963 | − | − | |||||||||||||||
Government grants
|
− | − | − | − | (1,079 | ) | ||||||||||||||
Impairment of goodwill
|
− | − | 21,713 | − | − | |||||||||||||||
Total operating expenses
|
150,944 | 117,989 | 117,442 | 87,448 | 63,226 | |||||||||||||||
Earnings (loss) from operations
|
18,503 | 10,867 | (22,257 | ) | 9,169 | 12,717 | ||||||||||||||
Interest and other income (expenses)
|
511 | (292 | ) | 592 | 4,381 | 4,676 | ||||||||||||||
Foreign exchange gain (loss)
|
(3,808 | ) | (1,496 | ) | 1,074 | 404 | (44 | ) | ||||||||||||
Earnings (loss) before income taxes
|
15,206 | 9,079 | (20,591 | ) | 13,954 | 17,349 | ||||||||||||||
Income tax expense (recovery)
|
8,783 | 5,529 | 266 | 337 | (20,825 | ) | ||||||||||||||
Earnings (loss) from continuing operations before extraordinary gain
|
6,423 | 3,550 | (20,857 | ) | 13,617 | 38,174 | ||||||||||||||
Net earnings from discontinued operations
|
12,926 | 3,069 | 4,272 | 1,771 | 4,101 | |||||||||||||||
Earnings (loss) before extraordinary gain
|
19,349 | 6,619 | (16,585 | ) | 15,388 | 42,275 | ||||||||||||||
Extraordinary gain
|
− | − | − | 3,036 | − | |||||||||||||||
Net earnings (loss) for the year
|
$ | 19,349 | $ | 6,619 | $ | (16,585 | ) | $ | 18,424 | $ | 42,275 | |||||||||
Basic earnings (loss) from continuing operations before extraordinary gain per share
|
$ | 0.11 | $ | 0.06 | $ | (0.34 | ) | $ | 0.20 | $ | 0.55 | |||||||||
Diluted earnings (loss) from continuing operations before extraordinary gain per share
|
$ | 0.10 | $ | 0.06 | $ | (0.34 | ) | $ | 0.20 | $ | 0.55 | |||||||||
Basic net earnings from discontinued operations per share
|
$ | 0.22 | $ | 0.05 | $ | 0.07 | $ | 0.02 | $ | 0.06 | ||||||||||
Diluted net earnings from discontinued operations per share
|
$ | 0.21 | $ | 0.05 | $ | 0.07 | $ | 0.02 | $ | 0.06 | ||||||||||
Basic and diluted extraordinary gain per share
|
$ | − | $ | − | $ | − | $ | 0.05 | $ | – | ||||||||||
Basic net earnings (loss) per share
|
$ | 0.32 | $ | 0.11 | $ | (0.27 | ) | $ | 0.27 | $ | 0.61 | |||||||||
Diluted net earnings (loss) per share
|
$ | 0.31 | $ | 0.11 | $ | (0.27 | ) | $ | 0.27 | $ | 0.61 | |||||||||
Basic weighted average number of shares used in per share calculations (000’s)
|
60,000 | 59,479 | 61,845 | 68,767 | 68,875 | |||||||||||||||
Diluted weighted average number of shares used in per share calculations (000’s)
|
61,488 | 60,616 | 61,845 | 69,318 | 69,555 | |||||||||||||||
Other consolidated statements of earnings data:
|
||||||||||||||||||||
Gross research and development
|
$ | 57,226 | $ | 44,551 | $ | 33,584 | $ | 30,167 | $ | 23,396 | ||||||||||
Net research and development
|
$ | 47,927 | $ | 37,847 | $ | 27,213 | $ | 24,580 | $ | 14,863 | ||||||||||
Amounts under U.S. GAAP
|
||||||||||||||||||||
Net earnings (loss) for the year
|
$ | 26,164 | $ | 3,777 | $ | (8,179 | ) | $ | 18,424 | $ | 42,257 | |||||||||
Basic net earnings (loss) per share
|
$ | 0.44 | $ | 0.06 | $ | (0.13 | ) | $ | 0.27 | $ | 0.61 | |||||||||
Diluted net earnings (loss) per share
|
$ | 0.43 | $ | 0.06 | $ | (0.13 | ) | $ | 0.27 | $ | 0.61 | |||||||||
Basic weighted average number of shares used in per share calculations (000’s)
|
60,000 | 59,479 | 61,845 | 68,767 | 68,875 | |||||||||||||||
Diluted weighted average number of shares used in per share calculations (000’s)
|
61,488 | 60,616 | 61,845 | 69,318 | 69,555 |
As at August 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
(in thousands of US dollars)
|
||||||||||||||||||||
Consolidated Balance Sheets Data:
|
||||||||||||||||||||
Amounts under Canadian GAAP
|
||||||||||||||||||||
Cash
|
$ | 22,771 | $ | 21,440 | $ | 9,777 | $ | 5,329 | $ | 5,175 | ||||||||||
Short-term investments
|
47,091 | 10,379 | 59,105 | 81,626 | 124,217 | |||||||||||||||
Total assets
|
321,086 | 273,502 | 240,371 | 293,066 | 279,138 | |||||||||||||||
Long-term debt (excluding current portion)
|
968 | 1,419 | − | − | − | |||||||||||||||
Share capital
|
110,341 | 106,126 | 104,846 | 142,786 | 150,019 | |||||||||||||||
Shareholders’ equity
|
$ | 263,746 | $ | 220,419 | $ | 208,045 | $ | 259,515 | $ | 250,165 | ||||||||||
Amounts under U.S. GAAP
|
||||||||||||||||||||
Cash
|
$ | 22,771 | $ | 21,440 | $ | 9,777 | $ | 5,329 | $ | 5,175 | ||||||||||
Short-term investments
|
47,091 | 10,379 | 59,105 | 81,626 | 124,217 | |||||||||||||||
Total assets
|
321,133 | 269,556 | 236,492 | 280,426 | 268,389 | |||||||||||||||
Long-term debt (excluding current portion)
|
968 | 1,419 | − | − | − | |||||||||||||||
Share capital
|
422,837 | 418,622 | 417,342 | 568,917 | 599,519 | |||||||||||||||
Shareholders’ equity
|
$ | 263,382 | $ | 213,740 | $ | 204,093 | $ | 246,802 | $ | 239,343 |
(1)
|
The cost of sales is exclusive of amortization, shown separately.
|
B . | Capitalization and Indebtedness |
·
|
Difficulty forecasting, budgeting and planning due to the uncertain spending plans of current or prospective customers;
|
·
|
Increased competition for fewer network projects and sales opportunities;
|
·
|
Increased pricing pressure that may adversely affect revenue and gross margin;
|
·
|
Higher cost structure compared to revenue level;
|
·
|
Increased risk of charges related to excess and obsolete inventories and the write off of other intangible assets and
|
·
|
Customer financial difficulty and increased difficulty in collecting accounts receivable.
|
·
|
increased competition for business;
|
·
|
reduced demand;
|
·
|
limited number of potential customers;
|
·
|
competition from companies with lower production costs, including companies operating in lower-cost environments;
|
·
|
introduction of new products by competitors;
|
·
|
greater economies of scale for higher-volume competitors;
|
·
|
large customers, who buy in high volumes, can exert substantial negotiating leverage over us; and
|
·
|
resale of used equipment.
|
·
|
issue shares that would dilute individual shareholder percentage ownership;
|
·
|
incur debt;
|
·
|
assume liabilities and commitments;
|
·
|
incur significant expenses related to acquisition costs;
|
·
|
incur significant expenses related to amortization of additional intangible assets;
|
·
|
incur significant impairment losses of goodwill and intangible assets related to such acquisitions; and
|
·
|
incur losses from operations.
|
·
|
the risk of not realizing the expected benefits or synergies of such acquisitions;
|
·
|
problems integrating the acquired operations, technologies, products and personnel;
|
·
|
risks associated with the transfer of acquired know-how and technology;
|
·
|
unanticipated costs or liabilities;
|
·
|
diversion of management’s attention from our core business;
|
·
|
adverse effects on existing business relationships with suppliers and customers;
|
·
|
risks associated with entering markets in which we have no or limited prior experience; and
|
·
|
potential loss of key employees, particularly those of acquired organizations.
|
·
|
challenges in staffing and managing foreign operations due to the limited number of qualified candidates, employment laws and business practices in foreign countries, any of which could increase the cost and reduce the efficiency of operating in foreign countries;
|
·
|
fluctuations among currencies;
|
·
|
our inability to comply with import/export, environmental and other trade compliance regulations of the countries in which we do business, together with unexpected changes in such regulations;
|
·
|
measures to ensure that we design, implement and maintain adequate controls over our financial processes and reporting in the future;
|
·
|
failure to adhere to laws, regulations and contractual obligations relating to customer contracts in various countries;
|
·
|
difficulties in establishing and enforcing our intellectual property rights;
|
·
|
inability to maintain a competitive list of distributors for indirect sales;
|
·
|
tariffs and other trade barriers;
|
·
|
economic instability in foreign markets;
|
·
|
wars, acts of terrorism and political unrest;
|
·
|
language and cultural barriers;
|
·
|
lack of integration of foreign operations;
|
·
|
potential foreign and domestic tax consequences;
|
·
|
technology standards that differ from those on which our products are based, which could require expensive redesign and retention of personnel familiar with those standards;
|
·
|
longer accounts receivable payment cycles and possible difficulties in collecting payments which may increase our operating costs and hurt our financial performance; and
|
·
|
failure to meet certification requirements.
|
·
|
difficulty hiring and retaining appropriate engineering and manufacturing resources due to intense competition for such resources and resulting wage inflation;
|
·
|
exposure to misappropriation of intellectual property and proprietary information;
|
·
|
heightened exposure to changes in the economic, regulatory, security, and political conditions of these countries;
|
·
|
fluctuations in currency exchange rates and tax compliance in India and China;
|
·
|
cash management and repatriation of profit; and
|
·
|
high inflation rates which could increase our operating costs.
|
·
|
costly repairs;
|
·
|
product returns or recalls;
|
·
|
damage to our brand reputation;
|
·
|
loss of customers, failure to attract new customers or achieve market acceptance;
|
·
|
diversion of development and engineering resources;
|
·
|
legal actions by our customers, including claims for consequential damages and loss of profits; and
|
·
|
legal actions by governmental entities, including actions to impose product recalls and/or forfeitures.
|
·
|
length of the sales cycle for certain products, especially those that are higher priced and more complex;
|
·
|
sales cycle prolonged by lengthy customer acceptance;
|
·
|
timing of product launches and market acceptance of new products for us as well as our competitors;
|
·
|
our ability to sustain product volumes and high levels of quality across all product lines;
|
·
|
timing of shipments for large orders;
|
·
|
effect of seasonality on sales and bookings; and
|
·
|
losing key accounts and not successfully developing new ones.
|
·
|
fluctuating demand for telecommunications test and service assurance equipment;
|
·
|
changes in the capital spending and operating budgets of our customers, which may cause seasonal or other fluctuations in product mix, volume, timing and number of orders we receive from our customers;
|
·
|
order cancellations or rescheduled delivery dates;
|
·
|
pricing changes by our competitors or suppliers;
|
·
|
variations in the mix between higher and lower-margin products and services;
|
·
|
customer bankruptcies and difficulties in collecting accounts receivable;
|
·
|
restructuring and impairment charges;
|
·
|
foreign exchange rate fluctuations; and
|
·
|
general economic conditions, including a slowdown or recession.
|
·
|
properly identify and anticipate customer needs;
|
·
|
innovate and develop new products;
|
·
|
gain timely market acceptance for new products;
|
·
|
manufacture and deliver our new products on time, in sufficient volume and with adequate quality;
|
·
|
price our products competitively;
|
·
|
continue investing in our research and development programs; and
|
·
|
anticipate competitors’ announcements of new products.
|
Ite
m 4.
|
Information on the Company
|
A . | History and Development of the Company |
B . | Business Overview |
·
|
Capitalize on bandwidth explosion in the telecom industry with the introduction of innovative, market-driven test and service assurance solutions;
|
·
|
Focus on the convergence of IP fixed and mobile networks, including emerging technologies like high-speed Ethernet and 4G/LTE;
|
·
|
Leverage our leadership in optical testing for new opportunities like wireless backhaul, fiber-to-the-home, and 40G and 100G network upgrades;
|
·
|
Move up the value chain on IP networks by leveraging the intelligence, or computing capabilities, of our modular test platforms to develop a series of value-added solutions; and
|
·
|
Accelerate profitability through globalization and execution.
|
*
|
Compound annual growth rate.
|
**
|
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.
|
·
|
Performance monitoring and analysis;
|
·
|
Correlation and analysis engine;
|
·
|
VoIP service assurance;
|
·
|
IP/MPLS service assurance;
|
·
|
Mobile backhaul and metro Ethernet service assurance;
|
·
|
Mobile service assurance;
|
·
|
IP video service assurance;
|
·
|
Advanced analytics; and
|
·
|
Custom solutions services.
|
·
|
BrixCall: Voice quality and performance management;
|
·
|
BrixNGN: IP/MPLS and carrier Ethernet (mobile backhaul and metro Ethernet) service quality monitoring;
|
·
|
BrixHawk SA: Mobile network service quality monitoring and customer experience management;
|
·
|
BrixVision: Comprehensive IP video quality and performance management; and
|
·
|
BrixView: Advanced analytics and business intelligence software.
|
Wireless Test and Solutions
|
||
Product Type
|
Product Line
|
Typical Application
|
Protocol Analyzer, Distributed Analyzer bridging to Service Assurance
|
Hawk portfolio
|
Protocol analysis to verify correct network behavior.
|
Network Simulator
|
EAST portfolio, Navtel portfolio
|
Regression and load testing.
|
Mobile Communications Intelligence Tools
|
NetHawk F10, NetHawk X6 and NetHawk C2
|
Intelligence tools for police, armed forces and other governmental organizations to fight organized crime and terrorists.
|
·
|
market study and research feasibility;
|
·
|
product definition;
|
·
|
development feasibility;
|
·
|
development;
|
·
|
qualification; and
|
·
|
transfer to production.
|
·
|
Customer Relationship Management (CRM) Administration –
Business Ownership of EXFO’s CRM toolset and evolution.
|
·
|
Sales Support –
Leverage the effectiveness of its sales force by providing pre-sales and demo support, as well as guiding customers in purchasing the correct equipment for their respective applications, issuing quotations, and promoting our extended warranty service and support program.
|
·
|
Order Management –
Accurately process customer orders from entry through fulfillment and delivery, and manage order changes.
|
·
|
Customer Service
–
Serve as a primary interface for inbound and outbound customer communication. Provide customers with one central point of contact and work with the customer from purchasing equipment to helping them arrange for service, if necessary.
|
·
|
Product Support –
Provide expert technical support and deliver product service worldwide. Directly manage EXFO’s Worldwide Service Centers, and the Service Partner Program. Where applicable, furnish installation and on-site servicing for more complex equipment and applications.
|
·
|
Systems Services –
Provide pre-sale, delivery, post-sale technical support, and system actualization of EXFO’s test and service assurance systems.
|
·
|
Education Services –
Aggregate expertise, develop material, and deliver free and fee-based training.
|
·
|
Professional Services –
Provide value-added solution services for EXFO’s test and system customers.
|
·
|
Production.
From production planning to product shipment, our production department is responsible for manufacturing high-quality products on time. Factories are organized in work cells; each cell consists of specialized technicians and equipment and has full responsibility over a product family. Technicians are cross-trained and versatile enough, so that they can carry out specific functions in more than one cell. This allows shorter lead times by alleviating bottlenecks.
|
·
|
Product Engineering and Quality.
This department, which supports our production cells, acts like a gatekeeper to ensure the quality of our products and the effectiveness of our manufacturing processes. It is responsible for the transfer of products from research and development to manufacturing, product improvement, documentation, metrology, and the quality control and regulatory compliance process. Quality control represents a key element in our manufacturing operations. Quality is assured through product testing at numerous stages in the manufacturing process to ensure that our products meet stringent industry requirements and our customers’ performance requirements.
|
·
|
Supply-Chain Management.
This department is responsible for sales forecasting, raw material procurement, material-cost reduction and vendor performance management. Our products consist of optical, electronic and mechanical parts, which are purchased from suppliers around the world. Approximately one-third of our parts are manufactured to our specifications. Materials represent the largest portion of our cost of goods. Our performance is tightly linked to vendor performance, requiring greater emphasis on this critical aspect of our business.
|
·
|
product performance and reliability;
|
·
|
price;
|
·
|
level of technological innovation;
|
·
|
product lead times;
|
·
|
breadth of product offerings;
|
·
|
ease of use;
|
·
|
brand-name recognition;
|
·
|
customer service and technical support;
|
·
|
strength of sales and distribution relationships; and
|
·
|
financial stability.
|
·
|
a method and apparatus for characterizing optical power levels in three-wavelength, bidirectional fiber-to-the-home systems. This invention describes how the optical power can be measured at the two-downstream and one upstream wavelengths used to connect a residence or business customer, while maintaining the signal continuity necessary to keep the home-based Optical Network Terminal operating. This invention underlies the two-port version of our PPM-350 series of PON power meters;
|
·
|
a method for determining the optical signal-to-noise ratio employing an optical spectrum analyzer, which is particularly advantageous for use with tightly-filtered DWDM signals used in high-bandwidth optical networks. This invention is a key value-added option to our FTB-5240-S series of portable optical spectrum analyzers;
|
·
|
a method and apparatus to determine the theoretical and practical data rates for a cable under test. This invention forms the basis of the EXFO CableSHARK product, describing how two test devices, communicating with each other via the cable under test, can predict the performance of a pair of ADSL (Asymmetric Digital Subscriber Line) modems, and in case of problems, analyze the cause of the modems’ failure to synchronize;
|
·
|
a method and system for hardware time stamping packetized data to provide sub-microsecond accuracy in test measurements, which is embedded in the Brix100M, Brix1000, and Brix2500 Series Verifiers;
|
·
|
a method for actively analyzing a data packet delivery path to provide diagnostics and root cause analysis of network delivery path issues, which is embedded in BrixCall, BrixNGN, and BrixVision applications of EXFO Service Assurance;
|
·
|
a distributed protocol analyzer for quality-of-service measurement. This invention underlies the combined QoS measurements offered in the NetHawk iPro and NetHawk M5 products; and
|
·
|
a communication methodology used to perform independent bi-directional protocol testing over a connection or connectionless network between two test instruments, wherein the transfer mechanism of status and intermediate test results during an active test and the transmission of the final results to one of the instruments enables the user to perform a bidirectional single-ended test. This invention is at the heart of the EXFO Datacom product families, including applications in conformity with our EtherSAM standard test suite.
|
C . | Organizational Structure |
D . | Property, Plants and Equipment |
Location
|
Use of Space
|
Square
Footage
|
% of
Utilization
|
Type of
Interest
|
436 Nolin Street
Quebec (Quebec)
G1M 1E7
|
Occupied for manufacturing of products
|
44,000
|
50%
|
Owned
|
400 Godin Avenue
Quebec (Quebec)
G1M 2K2
|
Occupied for research and development, customer services, manufacturing, management and administration
|
129,000
(1)
|
80%
|
Owned
|
2650 Marie-Curie
St-Laurent (Quebec)
H4S 2C3
|
Occupied for research and development, management and administration
|
26,000
|
100%
|
Leased
|
160 Drumlin Circle
Concord (Ontario)
L4K 3E5
|
Occupied for research and development, product management and administration
|
23,500
|
60%
|
Owned
|
270 Billerica Road
Chelmsford, MA 01824
United States
|
Occupied for research and development, manufacturing, management and administration
|
29,000
|
60%
|
Leased
|
(1)
|
Including the warehouse space. Premises without the warehouse are approximately 115,000 square feet.
|
It
em 4A.
|
Unresolved Staff Comments
|
It
em 5.
|
Operating and Financial Review and Prospects
|
·
|
Capitalize on bandwidth explosion in the telecom industry with the introduction of innovative, market-driven test and service assurance solutions;
|
·
|
Focus on the convergence of IP fixed and mobile networks, including emerging technologies like 4G/LTE and high-speed Ethernet;
|
·
|
Leverage our leadership in optical testing for new opportunities like wireless backhaul, fiber- to-the-home, and 40G and 100G network upgrades;
|
·
|
Move up the IP networks value chain by leveraging the intelligence, or computing capacities, of our modular test platforms with our service assurance systems to develop a series of value-added solutions; and
|
·
|
Accelerate profitability through globalization and execution.
|
o
|
Increase sales by a CAGR* of at least 25%
|
o
|
Raise gross margin to 65%
|
o
|
Increase adjusted EBITDA** in dollars by a CAGR of at least 30%
|
*
|
Compound annual growth rate
|
**
|
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.
|
·
|
Diagnostic phase – This phase involves an initial scoping of significant accounting differences between Canadian GAAP and IFRS, a preliminary evaluation of IFRS 1 exemptions for first-time IFRS adopters, and a high-level assessment of potential consequences on financial reporting, business processes, internal controls and information systems.
|
·
|
Design and Solutions Development phase – This phase involves a detailed analysis of identified accounting treatment differences, reviewing and approving accounting policy choices, performing a detailed impact assessment and designing changes to systems and business processes, developing IFRS training material, and drafting IFRS financial statement content.
|
·
|
Implementation phase – This phase involves embedding changes to systems, business processes and internal controls, determining the opening IFRS transition balance sheet and tax impacts, parallel accounting under Canadian GAAP and IFRS, and preparing detailed reconciliations of Canadian GAAP to IFRS financial statements.
|
·
|
Post-Implementation phase – This phase involves conversion assessment, evaluating improvements for a sustainable operational IFRS model, and testing the internal controls environment.
|
a)
|
Tax credits recoverable
|
b)
|
Property, plant and equipment
|
c)
|
Business combinations
|
d)
|
Presentation of financial statements
|
e)
|
Hedge accounting
|
f)
|
Impairment of assets
|
g)
|
Leases
|
h)
|
Translation of foreign operations
|
As at September 1, 2010
|
||||||||||||||||
Note
|
Assets
|
Liabilities
|
Shareholders' equity
|
|||||||||||||
Under Canadian GAAP
|
$ | 273,502 | $ | 53,083 | $ | 220,419 | ||||||||||
Tax credits recoverable
|
a) | (2,510 | ) | – | (2,510 | ) | ||||||||||
Property, plant and equipment
|
b) | 1,275 | – | 1,275 | ||||||||||||
Deferred income taxes
|
a), b) | 333 | – | 333 | ||||||||||||
Cash contingent consideration
|
c) | – | 2,660 | (2,660 | ) | |||||||||||
(902 | ) | 2,660 | (3,562 | ) | ||||||||||||
Under IFRS
|
$ | 272,600 | $ | 55,743 | $ | 216,857 |
Year ended August 31, 2011
|
||||||||||||||||||||
Note
|
Earnings from operations
|
Net
earnings
|
Basic net earnings
per share
|
Diluted net earnings
per share
|
||||||||||||||||
Under Canadian GAAP
|
$ | 18,503 | $ | 19,349 | $ | 0.32 | $ | 0.31 | ||||||||||||
Depreciation of property, plant and equipment
|
b) | 117 | 117 | |||||||||||||||||
Change in the fair value of the cash contingent consideration
|
c) | 2,685 | 2,685 | |||||||||||||||||
Interest income
|
a) | – | 227 | |||||||||||||||||
Deferred income taxes
|
a), b) | – | (93 | ) | ||||||||||||||||
Under IFRS
|
$ | 21,305 | $ | 22,285 | $ | 0.37 | $ | 0.36 |
As at August 31, 2011
|
||||||||||||||||
Note
|
Assets
|
Liabilities
|
Shareholders' equity
|
|||||||||||||
Under Canadian GAAP
|
$ | 321,086 | $ | 57,340 | $ | 263,746 | ||||||||||
Tax credits recoverable
|
a) | (2,507 | ) | – | (2,507 | ) | ||||||||||
Property, plant and equipment
|
b) | 1,510 | – | 1,510 | ||||||||||||
Deferred income taxes
|
a), b) | 160 | (110 | ) | 270 | |||||||||||
Cash contingent consideration
|
c) | – | 338 | (338 | ) | |||||||||||
(837 | ) | 228 | (1,065 | ) | ||||||||||||
Under IFRS
|
$ | 320,249 | $ | 57,568 | $ | 262,681 |
Consolidated statements of earnings data:
|
2011
|
2010
|
2009
|
2011
|
2010
|
2009
|
||||||||||||||||||
Sales
|
$ | 269,743 | $ | 202,757 | $ | 153,082 | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
Cost of sales
(1)
|
100,296 | 73,901 | 57,897 | 37.2 | 36.4 | 37.8 | ||||||||||||||||||
Gross margin
|
169,447 | 128,856 | 95,185 | 62.8 | 63.6 | 62.2 | ||||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Selling and administrative
|
87,062 | 66,612 | 58,067 | 32.3 | 32.9 | 37.9 | ||||||||||||||||||
Net research and development
|
47,927 | 37,847 | 27,213 | 17.7 | 18.7 | 17.8 | ||||||||||||||||||
Amortization of property, plant and equipment
|
6,772 | 5,757 | 4,453 | 2.5 | 2.8 | 2.9 | ||||||||||||||||||
Amortization of intangible assets
|
9,183 | 7,773 | 5,033 | 3.4 | 3.8 | 3.3 | ||||||||||||||||||
Restructuring charges
|
– | – | 963 | – | – | 0.6 | ||||||||||||||||||
Impairment of goodwill
|
– | – | 21,713 | – | – | 14.2 | ||||||||||||||||||
Total operating expenses
|
150,944 | 117,989 | 117,442 | 55.9 | 58.2 | 76.7 | ||||||||||||||||||
Earnings (loss) from operations
|
18,503 | 10,867 | (22,257 | ) | 6.9 | 5.4 | (14.5 | ) | ||||||||||||||||
Interest and other income (expenses)
|
511 | (292 | ) | 592 | 0.1 | (0.1 | ) | 0.4 | ||||||||||||||||
Foreign exchange gain (loss)
|
(3,808 | ) | (1,496 | ) | 1,074 | (1.4 | ) | (0.8 | ) | 0.7 | ||||||||||||||
Earnings (loss) before income taxes
|
15,206 | 9,079 | (20,591 | ) | 5.6 | 4.5 | (13.4 | ) | ||||||||||||||||
Income taxes
|
8,783 | 5,529 | 266 | 3.2 | 2.7 | 0.2 | ||||||||||||||||||
Net earnings (loss) from continuing operations
|
6,423 | 3,550 | (20,857 | ) | 2.4 | % | 1.8 | % | (13.6 | ) % | ||||||||||||||
Net earnings from discontinued operations
|
12,926 | 3,069 | 4,272 | |||||||||||||||||||||
Net earnings (loss) for the year
|
$ | 19,349 | $ | 6,619 | $ | (16,585 | ) | |||||||||||||||||
Basic net earnings (loss) from continuing operations per share
|
$ | 0.11 | $ | 0.06 | $ | (0.34 | ) | |||||||||||||||||
Diluted net earnings (loss) from continuing operations per share
|
$ | 0.10 | $ | 0.06 | $ | (0.34 | ) | |||||||||||||||||
Basic net earnings (loss) per share
|
$ | 0.32 | $ | 0.11 | $ | (0.27 | ) | |||||||||||||||||
Diluted net earnings (loss) per share
|
$ | 0.31 | $ | 0.11 | $ | (0.27 | ) | |||||||||||||||||
Research and development data:
|
||||||||||||||||||||||||
Gross research and development
|
$ | 57,226 | $ | 44,551 | $ | 33,584 | 21.2 | % | 22.0 | % | 21.9 | % | ||||||||||||
Net research and development
|
$ | 47,927 | $ | 37,847 | $ | 27,213 | 17.7 | % | 18.7 | % | 17.8 | % | ||||||||||||
Consolidated balance sheets data:
|
||||||||||||||||||||||||
Total assets
|
$ | 321,086 | $ | 273,502 | $ | 240,371 |
(1)
|
The cost of sales is exclusive of amortization, shown separately.
|
Year ended
August 31, 2011
|
Year ended
August 31, 2010
|
Change
in $
|
Change
in %
|
|||||||||||||
Sales
|
$ | 269,743 | $ | 202,757 | $ | 66,986 | 33.0 | % | ||||||||
Gains on forward exchange contracts
|
(2,795 | ) | (1,517 | ) | (1,278 | ) | ||||||||||
Sales, excluding gains on forward exchange contracts (non-GAAP measure)
|
266,948 | 201,240 | 65,708 | 32.7 | ||||||||||||
Impact of the recent acquisition (NetHawk)
|
(29,652 | ) | (14,483 | ) | (15,169 | ) | ||||||||||
Organic sales (non-GAAP measure)
|
$ | 237,296 | $ | 186,757 | $ | 50,539 | 27.1 | % |
Year ended
August 31, 2011
|
Year ended
August 31, 2010
|
Change in %
|
||||||||||
Optical test solutions
|
$ | 139,525 | $ | 109,124 | 27.9 | % | ||||||
Protocol test solutions
|
108,946 | 78,709 | 38.4 | |||||||||
Copper -access test solutions
|
18,477 | 13,407 | 37.8 | |||||||||
Sales, excluding gains on forward exchange contracts (non-GAAP measure)
|
$ | 266,948 | $ | 201,240 | 32.7 | % |
Year ended
August 31, 2010
|
Year ended
August 31, 2009
|
Change
in $
|
Change
in %
|
|||||||||||||
Sales
|
$ | 202,757 | $ | 153,082 | $ | 49,675 | 32.4 | % | ||||||||
(Gains) losses on forward exchange contracts
|
(1,517 | ) | 3,178 | (4,695 | ) | |||||||||||
Sales, excluding gains/losses on forward exchange contracts (non-GAAP measure)
|
201,240 | 156,260 | 44,980 | 28.8 | ||||||||||||
Impact of the recent acquisition (NetHawk)
|
(14,483 | ) | – | (14,483 | ) | |||||||||||
Organic sales (non-GAAP measure)
|
$ | 186,757 | $ | 156,260 | $ | 30,497 | 19.5 | % |
Year ended
August 31, 2010
|
Year ended
August 31, 2009
|
Change in %
|
||||||||||
Optical test solutions
|
$ | 109,124 | $ | 95,532 | 14.2 | % | ||||||
Protocol test solutions
|
78,709 | 54,929 | 43.3 | |||||||||
Copper -access test solutions
|
13,407 | 5,799 | 131.2 | |||||||||
Sales, excluding gains on forward exchange contracts (non-GAAP measure)
|
$ | 201,240 | $ | 156,260 | 28.8 | % |
Expiry dates
|
Contractual
amounts
|
Weighted average contractual
forward rates
|
||||||
September 2011 to August 2012
|
$ | 27,500,000 | 1.0555 | |||||
September 2012 to July 2013
|
11,400,000 | 1.0063 | ||||||
Total
|
$ | 38,900,000 | 1.0411 |
*
|
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.
|
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 | % |
Year ended
August 31, 2011
|
Year ended
August 31, 2010
|
Year ended
August 31, 2009
|
||||||||||
Sales from continued operations
|
$ | 269,743 | $ | 202,757 | $ | 153,082 | ||||||
Sales from discontinued operations
|
1,991 | 25,359 | 19,796 | |||||||||
Total sales
|
$ | 271,734 | $ | 228,116 | $ | 172,878 |
Year ended
August 31, 2011
|
Year ended
August 31, 2010
|
Year ended
August 31, 2009
|
||||||||||
Gross margin from continued operations
|
$ | 169,447 | $ | 128,856 | $ | 95,185 | ||||||
Gross margin from discontinued operations
|
989 | 13,563 | 10,801 | |||||||||
Total gross margin
|
$ | 170,436 | $ | 142,419 | $ | 105,986 |
Name and Municipality of Residence
|
Positions with EXFO
|
|
PIERRE-PAUL ALLARD
Pleasanton, California
|
Independent Director
|
|
JON BRADLEY
Worminghall, United Kingdom
|
Vice-President, Sales — EMEA
|
|
STEPHEN BULL
Quebec City, Quebec
|
Vice-President, Research and Development
|
|
NORMAND DUROCHER
St-Sauveur, Quebec
|
Vice-President, Human Resources
|
|
DARRYL EDWARDS
Weston Under Wetherley, United Kingdom
|
Independent Director
|
|
ÉTIENNE GAGNON
Quebec City, Quebec
|
Vice-President, Wireline Division and Corporate Marketing
|
|
LUC GAGNON
St-Augustin-de-Desmaures, Quebec
|
Vice-President, Manufacturing Operations and Customer Service
|
|
VIVIAN HUDSON
Beaconsfield, Quebec
|
Vice-President, Service Assurance Division
|
|
JOHN J. JONES, IV
Hong Kong, China
|
Vice-President, Sales — APAC
|
|
GERMAIN LAMONDE
St-Augustin-de-Desmaures, Quebec
|
Chairman of the Board, President and Chief Executive Officer
|
|
PIERRE MARCOUILLER
Magog, Quebec
|
Independent Lead Director
|
|
GUY MARIER
Lakefield Gore, Quebec
|
Independent Director
|
|
MATTI PALOMÄKI
Kauniainen, Finland
|
Vice-President, Wireless Division
|
|
PIERRE PLAMONDON
Quebec City, Quebec
|
Vice-President, Finance and Chief Financial Officer
|
|
BENOIT RINGUETTE
Boischatel, Quebec
|
General Counsel and Corporate Secretary
|
|
SUSAN SPRADLEY
Dallas, Texas
|
Independent Director
|
|
DAVID A. THOMPSON
Newton, North Carolina
|
Independent Director
|
|
DANA YEARIAN
Lake Forest, Illinois
|
Vice-President, Sales — Americas
|
B . | Compensation |
·
|
Mr. Guy Marier (Chairman)
|
·
|
Mr. Pierre-Paul Allard
|
·
|
Mr. Pierre Marcouiller
|
·
|
Mr. David A. Thompson
|
·
|
Mr. André Tremblay (until January 20, 2011)
|
Meeting
|
Main activities of the Human Resources Committee
|
|
October 12, 2010
|
●
●
●
●
●
●
●
●
●
●
●
●
●
|
Review and approval of the Short-Term Incentive Plan for the financial year started September 1, 2010;
Review of the proposed salary scales and salary increases for the year started September 1, 2010;
Review and approval of the compensation plans of executive officers for the financial year started September 1, 2010 being the Base Salary, the Short-Term Incentive Plan and the stock-based compensation delivered through the Long-Term Incentive Plan;
Review and approval of the stock-based compensation plan for the sales force delivered through the Long-Term Incentive Plan for the financial year started September 1, 2010;
Review and approval of the quantum for the stock-based compensation plan for the performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2010;
Review and approval of the executive compensation section of the management proxy circular for the financial year ended August 31, 2010 during a Board of Directors meeting;
Review of the succession planning program;
Review of the Management Improvement Performance Program;
Review of the Mobilization / Motivation Plan;
Human Resources Integration Plan following acquisition;
Review of the sales forces achievement and percentage of commissions;
Review of a coaching program for the CEO;
Selection of new Board Members.
|
January 12, 2011
|
●
●
●
●
●
●
●
●
●
|
Review of the quarterly payments under the Short-Term Incentive Plan
for the financial year started September 1, 2010 and being part of the Short-Term Incentive Plan;
Review and approval of the stock-based compensation plan for the performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2010;
Review and approval of the CEO objectives;
Review of the Mobilization / Motivation Plan;
Review of the Management Improvement Performance Program;
Review of the sales forces commissions plans;
Review of a coaching program for the CEO;
Selection of new Board Members;
Review of the succession planning program.
|
Meeting
|
Main activities of the Human Resources Committee
|
|
March 31, 2011
|
●
●
●
●
●
●
|
Review of the quarterly payments under the Short-Term Incentive Plan
for the financial year started September 1, 2010 and being part of the Short-Term Incentive Plan;
Review and approval of the stock-based compensation delivered through the Long-Term Incentive Plan;
Review of benchmarks for our sales forces;
Review of a coaching program for the CEO;
Selection of new Board Members;
Review of the succession planning program.
|
June 28, 2011
|
●
●
●
|
Review of the quarterly payments under the Short-Term Incentive Plan for the financial year started September 1, 2010 and being part of the Short-Term Incentive Plan;
Selection of new Board Members;
Determination by the Members of their respective DSU percentage of their Annual Retainer.
|
October 11, 2011
|
●
●
●
●
●
●
●
●
●
●
●
●
|
Review and approval of the Short-Term Incentive Plan for the financial year started September 1, 2011;
Review of the proposed salary scales and salary increases for the year started September 1, 2011;
Review and approval of the compensation plans of executive officers for the financial year started September 1, 2011 being the Base Salary, the Short-Term Incentive Plan and the stock-based compensation delivered through the Long-Term Incentive Plan;
Review and approval of the stock-based compensation plan for the sales force delivered through the Long-Term Incentive Plan for the financial year started September 1, 2011;
Review and approval of the quantum for the stock-based compensation plan for the performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2011;
Review and approval of the executive compensation section of the management proxy circular for the financial year ended August 31, 2011 during a Board of Directors meeting;
Review of the succession planning program;
Review of the Mobilization / Motivation Plan;
Review of a coaching program for the CEO;
Review and approval of the CEO objectives;
Review of the 2012 Executive compensation disclosure obligations;
Review of the Management Improvement Performance Program.
|
Type of Fee
|
Financial 2011 Fees
|
Percentage of Financial 2011 Fees
|
Fees for Board of Directors and Human Resources Committee mandates
|
CA$7,035
|
43%
|
Fees for other Corporation mandates
|
CA$9,245
|
57%
|
Total
|
CA$16,280
|
100%
|
(1)
|
2009 Mercer Benchmark Database, which contains compensation data for selected Canadian companies with median annual revenues of CA$325 million. The following is a list of the main companies, with a particular emphasis on the High-Technology/Telecommunications and Manufacturing-Durable Goods Industries, servicing industries, revenue categories and geography, used for the purposes of setting 2010 compensation: Arcan Resources Ltd.; Linamar Corporation; Arsenal Energy Inc.; Livingston International; Baytex Energy Trust; Logistec Corporation; Canadian Hydro Developers Inc.; MacDonald, Dettwiler and Associates Corporation – Quebec; Canadian Pacific; Pason Systems Inc.; CE Franklin Ltd.; Precision Drilling Trust; Centerra Gold Inc.; RDM Corporation; Compton Petroleum Corporation; SNC-Lavalin; Computer Modelling Group Ltd.; Softchoice Corp.; Crew Energy Inc.; Stantec Inc.; Enerflex Systems Ltd.; Teck Resources Limited; Labopharm Inc.; TeraGo Networks Inc.; Velan Inc. Mercer can only disclose the identities of the publicly-traded participating organizations due to confidentiality covenants with survey participants;
|
(2)
|
2009 US Mercer Benchmark Database (2,771 participants); and
|
(3)
|
2009 UK Mercer Benchmark Database (193 participants), which contains compensation data for companies in all industries of all sizes and scopes. Focuses on companies with revenues lower than CA$500 million.
|
·
|
Performance-based:
Executive compensation levels reflect both the results of the Corporation and individual results based on specific quantitative and qualitative objectives established at the beginning of each financial year in keeping with the Corporation’s long-term strategic objectives.
|
·
|
Aligned with shareholder interests:
An important portion of incentive compensation for executives is composed of equity awards to ensure that executives are aligned with the principles of sustained long-term shareholder value growth.
|
·
|
Market competitive:
Compensation of executives is designed to be externally competitive when compared against executives of comparable peer companies, and in consideration of the Corporation’s results.
|
·
|
Individually equitable:
Compensation levels are also designed to reflect individual factors such as scope of responsibility, experience, and performance against individual measures.
|
Name & Position
|
Annual incentive
target as % of
base salary
|
Business Performance
|
Individual
Performance
Multiplier
(2)
|
||
Measure
|
Weight
|
Multiplier
(1)
|
|||
Germain Lamonde, CEO
|
60%
|
Ÿ
Sales
Ÿ
EBITDA
Ÿ
Gross margin
Ÿ
Customer satisfaction
(3)
|
Telecom
35%
20%
20%
25%
Total: 100%
|
0% to 150%
|
0% to 125%
|
Pierre Plamondon, CFO
|
37.5%
|
||||
Vivian Hudson,
Vice-President,
Service
Assurance Division
|
32.5%
|
||||
Jon Bradley,
Vice-President,
Sales-
EMEA
|
66.7%
|
Ÿ
Revenue target
(4)
Ÿ
Margin target
(5)
Ÿ
Contribution Margin
(6)
Ÿ
Personal objectives
(7)
Ÿ
Specific Incentives
(8)
|
45%
30%
15%
5%
5%
|
–
|
|
Dana Yearian,
Vice-President,
Sales-
Americas
|
66.7%
|
(1)
|
For sales, EBITDA and gross margin metrics, NEO begins to be compensated upon attainment of 50% of the target objective and up to the attainment of 150% of the target objective. For customer satisfaction metric, NEO’s compensation is pro-rated from a minimal threshold up to the attainment of 150% of the target objective.
|
(2)
|
The personal objectives of each NEO are based on the position and role he or she has with the Corporation. Such personal objectives are based mostly on the attainment of departmental objectives and the others objectives are based on the attainment of personal management objectives all of which attainments are determined by an evaluation of the individual’s supervisor or the Human Resources Committee, as the case may be.
|
(3)
|
Includes on time delivery and quality.
|
(4)
|
The compensation rate for the attainment of revenue targets (billings) is equal to the total billings potential amount of commission on the total billings quotas defined at the beginning of the financial year. A lower rate is applied for less than 70% of the attainment of the objective. The regular rate is applied from 70% to 100% of the attainment of the objective. An accelerator is applied after 100%.
|
(5)
|
The commission rate for the attainment of the margin targets is equal to the total margins potential amount of incentives on the total margins quotas defined at the beginning of the financial year. This rate is used for all margins up to 100% attainment of the objective and an accelerator is applied after 100% attainment of the objective.
|
(6)
|
The commission rate for the attainment of the contribution margin targets is equal to the total margins potential amount of incentives on the contribution margins objectives defined at the beginning of the financial year. This rate is used for all margins up to 100% attainment of the objective and an accelerator is applied after 100% attainment of the objective.
|
(7)
|
The compensation for personal objectives is a maximum amount based on the quarterly achievement of the sales bookings target for their specific territory. It is pro-rated between 70% and 100% achievement and no compensation will be attributed to this element if less than 70% of the objective is attained.
|
(8)
|
Additional bonuses are also available, one being based on revenues and integration of recent acquisitions and the other on the implementation of the Corporation development program. Accordingly, a total sales achievement figure target of recent acquisitions and a commission rate are determined at the beginning of the financial year. The commission rate is applied when total sales achievement figure of recent acquisitions reaches 50% of the target. Another portion of these additional bonuses is based on the result of the implementation of an integration plan following an acquisition. The compensation for the attainment of the implementation of an integration plan following an acquisition target is a maximum amount based on the achievement of such target and is pro-rated up to 100% achievement. The Corporation development program implementation target is determined at the beginning of the financial year. The compensation for the attainment of the Corporation development program target is a maximum amount based on the achievement of such target and is pro-rated up to 100% achievement.
|
·
|
Long-Term Incentive Plan
|
Positions
|
Grant Levels
(1)
(% of base salary)
|
CEO
|
70%
|
Other NEOs
|
32.5% - 35%
|
(1)
|
Actual grant value may differ from the grant level guidelines as the stock price may vary between the time of the grant and its approval.
|
Financial
year ended
|
Grant Date
|
RSUs
granted
(#)
|
Fair Value at the
Time of Grant
(US$/RSU)
|
Vesting schedule
|
August 31, 2011
|
October 19, 2010
|
30,250
|
6.03
|
50% after 3 and 4 years of the grant date.
|
January 19, 2011
|
119,900
|
9.32
|
||
April 7, 2011
|
7,297
|
8.28
|
||
April 18, 2011
|
8,226
|
8.64
|
||
October 19, 2010
|
56,361
|
6.03
|
100% on the fifth anniversary date of the grant subject to early vesting up to 100% on the third or fourth anniversary of the grant when performance objectives related to revenue, as determined by the Board of Directors of the Corporation are fully attained.
|
|
October 19, 2010
|
128,348
|
6.03
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
|
|
August 31, 2010
|
October 20, 2009
|
36,500
|
3.74
|
50% after 3 and 4 years of the grant date.
|
January 19, 2010
|
130,000
|
5.13
|
||
April 7, 2010
|
37,900
|
5.68
|
||
April 7, 2010
|
6,155
|
5.68
|
1/3 on the third, fourth and fifth anniversary date of the grant.
|
|
July 7, 2010
|
3,759
|
5.32
|
||
October 20, 2009
|
174,686
|
3.74
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
|
|
April 7, 2010
|
7,575
|
5.68
|
||
July 7, 2010
|
18,963
|
5.32
|
||
August 31, 2009
|
October 22, 2008
|
71,003
|
2.36
|
50% after 3 and 4 years of the grant date.
|
January 20, 2009
|
243,700
|
3.22
|
||
April 7, 2009
|
11,000
|
3.52
|
||
July 8, 2009
|
3,000
|
2.99
|
100% after 3 years of the grant date.
|
|
January 20, 2009
|
5,000
|
3.22
|
1/3 on the third, fourth and fifth anniversary date of the grant.
|
|
October 22, 2008
|
216,685
|
2.36
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
|
|
October 22, 2008
|
135,584
|
2.36
|
100% after 3 years of the grant if performance is achieved (long-term growth of revenue and profitability). Otherwise 100% vested after 5 years of the grant date.
|
|
August 31, 2008
|
October 23, 2007
|
29,000
|
6.28
|
50% after 3 and 4 years of the grant date.
|
January 15, 2008
|
76,200
|
4.16
|
||
April 8, 2008
|
21,600
|
6.09
|
||
April 22, 2008
|
185,570
|
5.82
|
||
July 7, 2008
|
71,310
|
4.39
|
||
October 23, 2007
|
86,167
|
6.28
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
|
Financial
year ended
|
Grant Date
|
RSUs
granted
(#)
|
Fair Value at the
Time of Grant
(US$/RSU)
|
Vesting schedule
|
August 31, 2007
|
September 29, 2006
|
1,200
|
5.83
|
50% after 3 and 4 years of the grant date.
|
January 19, 2007
|
34,250
|
6.42
|
||
January 26, 2007
|
60,200
|
7.32
|
||
July 5, 2007
|
2,000
|
7.14
|
||
September 11, 2006
|
2,000
|
5.38
|
1/3 on the third, fourth and fifth anniversary date of the grant.
|
|
October 25, 2006
|
25,000
|
6.02
|
||
January 19, 2007
|
22,550
|
6.42
|
||
October 25, 2006
|
71,802
|
6.02
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
|
·
|
Restricted Share Unit Grants in Last Financial Year
|
Name
|
RSUs
Granted
(#)
|
Percentage of Total
RSUs Granted to
Employees in
Financial Year (%)
(1)
|
Fair Value
at the Time
of Grant
(US$/RSU)
|
Grant Date
|
Vesting schedule
(2)
|
Germain Lamonde
|
45,089
|
12.87%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
(3)
|
Pierre Plamondon
|
13,019
|
3.72%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
(3)
|
8,857
|
2.53%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 100% on the third or fourth anniversary date of the grant when performance objectives related to revenue, as determined by the Board of Directors of the Corporation are fully attained.
(4)
|
|
Jon Bradley
|
8,443
|
2.41%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
(3)
|
8,857
|
2.53%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 100% on the third or fourth anniversary date of the grant when performance objectives related to revenue, as determined by the Board of Directors of the Corporation are fully attained.
(4)
|
|
Vivian Hudson
|
10,252
|
2.93%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
(3)
|
11,272
|
3.22%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 100% on the third or fourth anniversary date of the grant when performance objectives related to revenue as determined by the Board of Directors of the Corporation are fully attained.
(4)
|
|
6,297
|
1.80%
|
8.28
|
April 7, 2011
|
50% on the third and fourth anniversary date of the grant.
|
Name
|
RSUs
Granted
(#)
|
Percentage of Total
RSUs Granted to
Employees in
Financial Year (%)
(1)
|
Fair Value
at the Time
of Grant
(US$/RSU)
|
Grant Date
|
Vesting schedule
(2)
|
Dana Yearian
|
11,609
|
3.31%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained.
(3)
|
8,857
|
2.53%
|
6.03
|
October 19, 2010
|
100% on the fifth anniversary date of the grant subject to early vesting up to 100% on the third or fourth anniversary date of the grant when performance objectives related to revenue, as determined by the Board of Directors of the Corporation are fully attained.
(4)
|
(1)
|
Such percentage does not include any cancelled RSUs.
|
(2)
|
All RSUs first vesting cannot be earlier than the third anniversary date of their grant.
|
(3)
|
Those RSUs granted in the financial year ended August 31, 2011 vest on the fifth anniversary date of the grant but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives, as determined by the Board of Directors of the Corporation. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant. The early vesting shall be subject to the attainment of performance objectives. Such performance objectives are based on the attainment of a sales growth metric combined with a profitability metric. The sales growth metric is determined according to the Compound Annual Growth Rate (CAGR) of the sales of the Corporation (SALES CAGR). The profitability metric is determined according to the Compound Annual Growth Rate (CAGR) of the Corporation’s net earnings before interest, income taxes, amortization of property, plant and equipment, amortization of intangible assets, impairment of goodwill and extraordinary gain (EBITDA) (EBITDA CAGR). Accordingly, the first early vesting performance objectives will be attained, calculated on a pro-rated basis as follows: i) 100% for a SALES CAGR of 20% or more and 0% for a SALES CAGR of 5% or less for the three-year period ending on August 31, 2013, cumulated with ii) 100% for an EBITDA CAGR of the highest of a) 20% or b) the SALES CAGR for the three-year period ending on August 31, 2013 and 0% for an EBITDA CAGR of 10% or less for the three-year period ending on August 31, 2013. The second early vesting performance objectives will be attained on the same premises as described above but for the four-year period ending on August 31, 2014.
|
(4)
|
Those RSUs granted in the financial year ended August 31, 2011 vest on the fifth anniversary date of the grant but are subject to early vesting on the third or fourth anniversary date of the grant on the attainment of performance objectives, as determined by the Board of Directors of the Corporation. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 100% of the units on the third anniversary date of the grant or, if not attained, the second early vesting is up to 100% of the units on the fourth anniversary date of the grant. The early vesting shall be subject to the attainment of performance objectives. Such performance objectives are based on the attainment of a sales metric in any fiscal year period following the date of the grant.
|
Number of RSUs (#)
|
% of Issued and
Outstanding RSUs
|
Weighted Average Fair Value at
the Time of Grant ($US/RSU)
|
|
President and CEO (one individual)
|
222,899
|
14.37%
|
4.31
|
Board of Directors (four individuals)
(1)
|
–
|
–
|
–
|
Management and Corporate Officers (eleven individuals)
|
597,127
|
38.48%
|
4.18
|
(1)
|
Five individuals from September 1, 2010 until January 20, 2011.
|
Number of
Options (#)
|
% of Issued and
Outstanding Options
|
Weighted Average Exercise
Price ($US/Security)
|
|
President and CEO (one individual)
|
149,160
|
23.26%
|
5.71
|
Board of Directors (three individuals)
|
44,003
|
6.86%
|
6.34
|
Management and Corporate Officers (four individuals)
|
74,494
|
11.62%
|
6.84
|
·
|
Deferred Share Unit
Plan
|
·
|
Deferred Share Unit Grants in Last Financial Year
|
DSUs #
|
Weighted Average Fair Value
at the Time of Grant (US$/DSU)
|
Total of the Fair Value at the Time
of Grant (US$)
|
Vesting
|
12,786
|
7.87
|
100,688
|
At the time director ceases to be a member of the Board
of Directors of the Corporation
|
Number of DSUs (#)
|
% of Issued and
Outstanding DSUs
|
Total of the Fair Value at
the Time of Grant (US$)
|
Weighted Average Fair Value
at the Time of Grant (US$/DSU)
|
|
Board of Directors (four individuals)
|
110,298
|
100%
|
545,302
|
4.94
|
·
|
Number of Subordinate Voting Shares reserved for future issuance
|
·
|
Stock Appreciation Rights Plan
|
Number of SARs exercised
|
Aggregate Value Realized (US$)
(1)
|
14,750
|
56,069
|
(1)
|
The aggregate value realized is equivalent to the market value of the securities underlying the SARs at exercise. This value, as the case maybe, has been converted from Canadian dollars to U.S. dollars based on the noon buying rate of the Bank of Canada on the day of exercise.
|
2011 Performance Indicators
|
Corporation’s Performance
|
Short-Term Incentive Plan (STIP)
|
Telecom (% of achievement)
|
Financial
·
Sales
·
EBITDA
·
Gross margin
|
85%
98%
65%
|
||
Customer Satisfaction
·
Quality
·
On-time delivery
|
102%
61%
|
||
Sales Vice-Presidents
·
Revenue (billings)
·
Margins (quotas)
·
Contribution Margins
|
83%
95%
87%
|
||
Long-Term Incentive Plan (LTIP) - RSUs
|
|||
Date of Grant
|
Vesting Date
|
% of early vesting achievement
(1)
|
|
October 23, 2007
|
October 24, 2011
|
50%
|
|
October 22, 2008
|
October 24, 2011
|
96%
|
|
October 22, 2008
|
October 24, 2011
|
0%
|
(1)
|
The vesting schedules are provided in the table under the heading “Long-Term Incentive Plan”.
|
Compensation Elements
|
2011
|
2010
|
2009
|
3-Year Total
|
|
Cash
|
|||||
Base Salary
|
CA$420,000
|
CA$400,000
|
CA$371,000
|
CA$1,191,000
|
|
Short-term incentive
|
CA$216,626
|
CA$257,127
|
CA$159,452
|
CA$633,205
|
|
Equity
|
|||||
Long-term incentive
|
CA$280,003
(1)
|
CA$259,698
(1)
|
CA$192,499
(1)
|
CA$732,200
(1)
|
|
Total Direct Compensation
|
CA$916,629
|
CA$916,825
|
CA$722,951
|
CA$2,556,405
|
|
Pension Value
|
–
|
–
|
–
|
–
|
|
All Other Compensation
|
–
|
–
|
–
|
–
|
|
Total Compensation
|
CA$916,629
|
CA$916,825
|
CA$722,951
|
CA$2,556,405
|
|
Annual Average
|
–
|
–
|
–
|
CA$852,135
|
|
Total Market Capitalization Growth (CA$ millions)
|
40.8
|
156.2
(2)
|
(106.0)
(2)
|
90.9
(2)
|
|
Total Cost as a % of Market Capitalization Growth
|
2.2%
|
0.6%
|
–
|
2.8%
|
(1)
|
Indicates the dollar amount based on the grant date fair value of the RSUs awarded under the LTIP for the financial year. The grant date fair value is equal to the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Federal Reserve Bank of New York (for grants of RSUs prior to January 1, 2009) or the Bank of Canada (for grants of RSUs on or after January 1, 2009) on the grant date to convert the NASDAQ National Market closing price to Canadian dollars. Grants of RSUs to NEOs are detailed under section “Compensation Discussion & Analysis – Long-Term Incentive Plan”.
|
(2)
|
Includes the redemption of 3,600 and 8,181,093 Subordinate Voting Shares respectively in fiscal 2010 and 2009 under the normal course issuer bid and substantial issuer bid of the Corporation during these years.
|
Name and
Principal Position
|
Financial
Year
|
Salary
(1) (2)
($)
|
Share-Based
Awards
(2)
(3)
($)
|
Option-
based
Awards
($)
|
Non-equity incentive
plan compensation ($)
|
Pension
value ($)
|
All other
compensation
(2) (5)
($)
|
Total
Compensation
($)
|
||||||||||
Annual
Incentive
plans
(2) (4)
|
Long-term
Incentive
plans
|
|||||||||||||||||
Germain Lamonde,
President and Chief
Executive Officer
|
2011
|
424,500
(US)
420,000
(CA)
|
283,003
(US)
280,003
(CA)
|
–
|
218,947
(US)
216,626
(CA)
|
–
|
–
|
–
|
926,450
(US)
916,629
(CA)
|
|||||||||
2010
|
382,922
(US)
400,000
(CA)
|
248,610
(US)
259,698
(CA)
|
–
|
246,149
(US)
257,127
(CA)
|
–
|
–
|
–
|
877,681
(US)
916,825
(CA)
|
||||||||||
2009
|
314,887
(US)
371,000
(CA)
|
163,384
(US)
192,499
(CA)
|
–
|
135,335
(US)
159,452
(CA)
|
–
|
–
|
–
|
613,606
(US)
722,951
(CA)
|
||||||||||
Pierre Plamondon,
Vice-President,
Finance and
Chief Financial
Officer
|
2011
|
241,646
(US)
239,085
(CA)
|
137,305
(US)
135,850
(
CA)
|
–
|
76,569
(US)
75,757
(CA)
|
–
|
–
|
8,747
(US)
8,654
(CA)
|
464,267
(US)
459,346
(CA)
|
|||||||||
2010
|
221,137
(US)
231,000
(CA)
|
63,182
(US)
66,000
(CA)
|
–
|
92,060
(US)
96,166
(CA)
|
–
|
–
|
5,777
(US)
6,035
(CA)
|
382,156
(US)
399,202
(CA)
|
||||||||||
2009
|
186,726
(US)
220,000
(CA)
|
102,614
(US)
120,900
(
CA)
|
–
|
51,033
(US)
60,127
(CA)
|
–
|
–
|
5,033
(US)
5,930
(CA)
|
345,406
(US)
406,957
(CA)
|
||||||||||
Jon Bradley,
Vice-President,
Sales — EMEA
|
2011
|
158,312
(US)
156,634
(CA)
98,708
(£)
|
108,584
(US)
107,433
(
CA)
69,396
(£)
|
–
|
103,761
(US)
102,661
(CA)
64,695
(£)
|
–
|
–
|
–
|
370,657
(US)
366,728
(CA)
232,799
(£)
|
|||||||||
2010
|
151,044
(US)
157,780
(CA)
96,532
(£)
|
39,003
(US)
40,742
(CA)
24,927
(£)
|
–
|
96,363
(US)
100,661
(CA)
61,585
(£)
|
–
|
–
|
–
|
286,410
(US)
299,183
(CA)
183,044
(£)
|
||||||||||
2009
|
133,799
(US)
157,642
(CA)
86,100
(£)
|
105,766
(US)
124,614
(
CA)
68,061
(£)
|
–
|
65,578
(US)
77,264
(CA)
42,200
(£)
|
–
|
–
|
–
|
305,143
(US)
359,520
(CA)
196,361
(£)
|
||||||||||
Vivian Hudson,
Vice-President,
Service Assurance
|
2011
|
194,880
(US)
192,814
(CA)
|
185,630
(US)
183,662
(
CA)
|
–
|
49,274
(US)
48,752
(CA)
|
–
|
–
|
6,489
(US)
6,420
(CA)
|
436,273
(US)
431,648
(CA)
|
|||||||||
2010
|
174,134
(US)
181,900
(CA)
|
48,822
(US)
51,000
(CA)
|
–
|
50,664
(US)
52,924
(CA)
|
–
|
–
|
4,387
(US)
4,582
(CA)
|
278,007
(US)
290,406
(CA)
|
||||||||||
2009
|
140,403
(US)
165,423
(CA)
|
36,073
(US)
42,501
(CA)
|
–
|
33,640
(US)
39,635
(CA)
|
–
|
–
|
1,458
(US)
1,718
(CA)
|
211,574
(US)
249,277
(CA)
|
||||||||||
Dana Yearian,
Vice-President,
Sales — Americas
|
2011
|
208,000
(US)
205,795
(CA)
|
123,410
(US)
122,102
(
CA)
|
–
|
217,246
(US)
214,944
(CA)
|
–
|
–
|
7,350
(US)
7,272
(
CA)
|
556,006
(US)
550,113
(CA)
|
|||||||||
2010
|
200,000
(US)
208,920
(CA)
|
57,001
(US)
59,544
(CA)
|
–
|
170,297
(US)
177,892
(CA)
|
–
|
–
|
8,502
(US)
8,881
(CA)
|
435,801
(US)
455,237
(CA)
|
||||||||||
2009
|
190,000
(US)
223,858
(CA)
|
114,451
(US)
134,846
(
CA)
|
–
|
97,508
(US)
114,884
(CA)
|
–
|
–
|
6,536
(US)
7,701
(CA)
|
408,495
(US)
481,289
(CA)
|
(1)
|
Base salary earned in the financial year, regardless when paid.
|
(2)
|
The compensation information for Canadian residents has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$0.9894 = US$1.00 for the financial year ended August 31, 2011, CA$1.0446 = US$1.00 for the financial year ended August 31, 2010 and CA$1.1782 = US$1.00 for the financial year ended August 31, 2009. The compensation information for UK resident has been converted from British Pounds to US dollars based upon an average foreign exchange rate of £0.6235 = US$1.00 for the financial year ended August 31, 2011, £0.6391 = US$1.00 for the financial year ended August 31, 2010 and £0.6435 = US$1.00 for the financial year ended August 31, 2009 and the conversion from US dollars to Canadian dollars is made as described above.
|
(3)
|
Indicates the dollar amount based on the grant date fair value of the RSUs awarded under the LTIP for the financial year. The grant date fair value is equal to the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Federal Reserve Bank of New York (for grants of RSUs prior to January 1, 2009) or the Bank of Canada (for grants of RSUs on or after January 1, 2009) on the grant date to convert the NASDAQ National Market closing price to Canadian dollars. Grants of RSUs to NEOs are detailed under section “Compensation Discussion & Analysis – Long-Term Incentive Plan”.
|
(4)
|
Indicates the total bonus earned during the financial year whether paid during the financial year or payable on a later date:
|
Name
|
Paid during the
financial year ended
August 31, 2011
(i)
($)
|
Paid in the first quarter
of the financial year
ending on August 31, 2012
(i)
($)
|
Total bonus earned during
the financial year
ended August 31, 2011
(i)
($)
|
|
Germain Lamonde
|
115,697
(US)
114,471
(CA)
|
103,250
(US)
102,155
(CA)
|
218,947
(US)
216,626
(CA)
|
|
Pierre Plamondon
|
42,953
(US)
42,497
(CA)
|
33,616
(US)
33,260
(CA)
|
76,569
(US)
75,757
(CA)
|
|
Jon Bradley
|
83,024
(US)
82,144
(CA)
51,765
(£)
|
20,737
(US)
20,517
(CA)
12,930
(£)
|
103,761
(US)
102,661
(CA)
64,695
(£)
|
|
Vivian Hudson
|
30,021
(US)
29,703
(CA)
|
19,253
(US)
19,049
(CA)
|
49,274
(US)
48,752
(CA)
|
|
Dana Yearian
|
181,639
(US)
179,714
(CA)
|
35,607
(US)
35,230
(CA)
|
217,246
(US)
214,944
(CA)
|
(i) Refer to note 2 above. |
(5)
|
Indicates the amount contributed by the Corporation during the financial year to the Deferred Profit-Sharing Plan as detailed under section “Compensation Discussion & Analysis – Deferred Profit-Sharing Plan”, 401K Plan as detailed under section “Compensation Discussion & Analysis – 401K Plan”, as applicable, for the benefit of the NEOs. Mr. Lamonde is not eligible to participate in the Deferred Profit Sharing Plan and Mr. Bradley did not participate but received an allocation to be used at his discretion.
|
Name
|
Outstanding Option-based Awards (Options)
|
Outstanding Share-based Awards (RSUs)
|
||||||||||
Number of securities
underlying
unexercised options
(#)
|
Option
Exercise
Price
(US$)
(1)
|
Option
expiration date
|
Value
(2)
of
unexercised in-
the-money
options (US$)
(3)
|
Number of shares
or units of shares
that have not
vested (#)
|
Market or payout
value of share-based
awards that have
not vested (US$)
(4)
|
|||||||
Germain Lamonde
|
70,000
|
9.13
|
Oct. 10, 2011
|
–
|
222,899
|
1,491,194
|
||||||
50,000
|
1.58
|
Sept. 25, 2012
|
255,500
|
|||||||||
17,942
|
4.51
|
Feb. 1, 2015
|
39,114
|
|||||||||
11,218
|
4.76
|
Dec. 6, 2015
|
21,651
|
|||||||||
Pierre Plamondon
|
19,000
|
9.13
|
Oct. 10, 2011
|
–
|
96,331
|
644,454
|
||||||
5,383
|
5.13
|
Oct. 26, 2014
|
8,397
|
|||||||||
3,653
|
4.76
|
Dec. 6, 2015
|
7,050
|
Name
|
Outstanding Option-based Awards (Options)
|
Outstanding Share-based Awards (RSUs)
|
||||||||||
Number of securities
underlying
unexercised options
(#)
|
Option
Exercise
Price
(US$)
(1)
|
Option
expiration date
|
Value
(2)
of
unexercised in-
the-money
options (US$)
(3)
|
Number of shares
or units of shares
that have not
vested (#)
|
Market or payout
value of share-based
awards that have
not vested (US$)
(4)
|
|||||||
Jon Bradley
|
–
|
–
|
–
|
–
|
75,398
|
504,413
|
||||||
Vivian Hudson
|
–
|
–
|
–
|
–
|
55,205
|
369,321
|
||||||
Dana Yearian
|
–
|
–
|
–
|
–
|
95,834
|
641,129
|
(1)
|
Prices noted are the grant date exercise price for each option under each award.
|
(2)
|
The unexercised options have not been and may never be exercised and actual gains if any, on exercise will depend on the value of the Subordinate Voting Shares on the date of exercise. There can be no assurance that these options will be exercised or any gain realized.
|
(3)
|
Indicates an aggregate value of “in-the-money” unexercised options held at the financial year ended August 31, 2011. “In-the-money” options are options for which the market value of the underlying securities is higher than the exercise price. The value of unexercised in-the-money options at financial year end is the difference between its exercise or base price and the market value of the underlying Subordinate Voting Share at August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required.
|
(4)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
Name
|
Exercised Option-based Awards (Options)
|
|||
Number of securities underlying
exercised options (#)
|
Option Exercise Price
(US$)
|
Option grant date
|
Gains realized (US$)
|
|
Germain Lamonde
|
–
|
–
|
–
|
–
|
Pierre Plamondon
|
20,000
|
1.58
|
September 25, 2002
|
135,829
|
Jon Bradley
|
–
|
–
|
–
|
–
|
Vivian Hudson
|
–
|
–
|
–
|
–
|
Dana Yearian
|
–
|
–
|
–
|
–
|
Name
|
Option-based awards – value
vested during the year (US$)
(1)
|
Share-based awards – value
vested during the year (US$)
(2)
|
Non-equity incentive plan
compensation – Value earned
during the year (US$)
(3)
|
|||
Germain Lamonde
|
–
|
123,254
|
207,474
|
|||
Pierre Plamondon
|
–
|
61,123
|
77,025
|
|||
Jon Bradley
|
–
|
3,588
|
103,761
|
|||
Vivian Hudson
|
–
|
–
|
53,835
|
|||
Dana Yearian
|
–
|
21,874
|
217,246
|
(1)
|
Indicates the aggregate dollar value that would have been realized on the vesting date if the options under the option-based awards had been exercised on the vesting date. The value of option-based awards vested during the year at the vesting date is the difference between its exercise or base price and the market value of the underlying Subordinate Voting Share on the date of the vesting. The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on the date of the vesting using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required.
|
(2)
|
The aggregate dollar value realized is equivalent to the market value of the Subordinate Voting Shares underlying the RSUs at vesting. This value, as the case may be, has been converted from Canadian dollars to US dollars based upon the noon buying rate of the Bank of Canada on the day of vesting.
|
(3)
|
Includes total non-equity incentive plan compensation earned by each NEO in respect to the financial year ended on August 31, 2011 (as indicated under the “Summary Compensation Table”).
|
Named Executive Officer
|
Termination Payment Event
|
||
Without Cause ($)
(1) (2)
|
Change of Control ($)
(2) (3) (4)
|
Voluntary ($)
|
|
Germain Lamonde
|
3,148,756
(US) (5)
3,045,566
(CA)
|
3,148,756
(US)
3,045,566
(CA)
|
1,807,459
(US) (6)
1,691,312
(CA)
|
Pierre Plamondon
|
577,478
(US)
558,054
(CA)
|
1,160,462
(US)
1,139,134
(CA)
|
–
|
Jon Bradley
|
341,029
(US)
334,983
(CA)
212,632
(£)
|
674,196
(US)
665,387
(CA)
421,363
(£)
|
–
|
Vivian Hudson
|
182,142
(US)
179.001
(CA)
|
492,093
(US)
484,462
(CA)
|
–
|
Dana Yearian
|
487,047
(US)
478,645
(CA)
|
1,208,575
(US)
1,203,244
(CA)
|
–
|
(1)
|
The aggregate amount disclosed includes an evaluation of the amount that the NEO would have been entitled to should a termination of employment without cause have occurred on August 31, 2011 and includes, as the case may be for each NEO, the base salary that would have been received and total value of RSUs and options that would have vested (with the exception of Mr. Lamonde’s evaluation which is described in note 4 below and includes: the base salary, STIP compensation, and total value of RSUs and options that would have vested). The amount for base salary compensation is calculated according to those amounts provided under the section entitled “Summary Compensation Table” included in this Annual Report. The amount for the total value attached to the vesting of RSUs and options determined pursuant to the LTIP as described in the section entitled “Long-Term Incentive Compensation – Long-Term Incentive Plan”
for termination without cause.
|
(2)
|
The aggregate amount for Canadian residents has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$0.9894 = US$1.00 for the financial year ended August 31, 2011. The aggregate amount disclosed for UK resident has been converted from British Pounds to US dollars based upon an average foreign exchange rate of £0.6235 = US$1.00 for the financial year ended August 31, 2011 and the conversion from US dollars to Canadian dollars is made as described above.
|
(3)
|
Is considered a “Change of Control” a merger or an acquisition by a third party of substantially all of the Corporation’s assets or of the majority of its share capital.
|
(4)
|
The aggregate amount disclosed includes, as the case may be for each NEO, an evaluation of the amount that the NEO would have been entitled to should a termination of employment for Change of Control have occurred on August 31, 2011 and includes, as the case may be, namely, the base salary, STIP or SIP compensation and total value of RSUs and options that would have vested. The amount for base salary and STIP or SIP compensation are calculated according to those amounts provided under the section entitled “Summary Compensation Table” included in this Annual Report, the total value attached to the vesting of RSUs and options is calculated according to those amounts provided in the columns named “Value of unexercised in-the-money options” and “Market or payout value of share-based awards that have not vested” of the table included under the heading entitled – “Outstanding share-based awards and option-based awards”.
|
(5)
|
The aggregate amount disclosed includes an evaluation of the amount that Mr. Lamonde would have been entitled to should a termination of employment without cause have occurred on August 31, 2011 and includes: the base salary, STIP compensation, and total value of RSUs and options that would have vested. The amount for base salary and STIP compensation are calculated according to those amounts provided under the section entitled “Summary Compensation Table” included in this Annual Report; the total value attached to the vesting of RSUs and options are calculated according to those amounts provided in the columns named “Value of unexercised in-the-money options” and “Market or payout value of share-based awards that have not vested” of the table included under the heading entitled – “Outstanding share-based awards and option-based awards”.
|
(6)
|
The aggregate amount disclosed includes an evaluation of the amount that Mr. Lamonde would have been entitled to should a voluntary termination of employment have occurred on August 31, 2011 and includes: the total value of RSUs and options that would have vested. The amount for the total value attached to the vesting of RSUs and options are calculated according to those amounts provided in the columns named “Value of unexercised in-the-money options” and “Market or payout value of share-based awards that have not vested” of the table included under the heading entitled – “Outstanding share-based awards and option-based awards”.
|
Annual Retainer for Directors
(1)
|
CA$50,000
(2)
|
US$50,536
(3)
|
Annual Retainer for Lead Director
|
CA$5,000
|
US$5,054
(3)
|
Annual Retainer for Committee Chairman
|
CA$5,000
|
US$5,054
(3)
|
Annual Retainer for Committee Members
|
CA$3,000
|
US$3,032
(3)
|
Fees for all Meetings Attended per day in Person
|
CA$1,000
|
US$1,011
(3)
|
Fees for all Meetings Attended per day by Telephone
|
CA$500
|
US$505
(3)
|
(1)
|
All the Directors elected to receive 50% of their Annual Retainer in form of DSUs with the exception of Mr. André Tremblay who elected to receive 0% of his Annual Retainer in form of DSUs.
|
(2)
|
The Annual Retainer for Mr. Pierre-Paul Allard and Mr. David A. Thompson is US$50,000 (CA$49,470).
|
(3)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$0.9894 = US$1.00 for the financial year ended August 31, 2011.
|
Name
|
Fees earned
(1)
($)
|
Share-based
Awards
($)
|
Option-
based
awards
($)
|
Non-equity
incentive plan
compensation ($)
|
Pension
Value
($)
|
All other
Compensation
($)
|
Total
($)
|
Pierre-Paul Allard
|
61,623
(US)
60,970
(CA)
|
–
|
–
|
–
|
–
|
–
|
61,623
(US)
60,970
(CA)
|
Pierre Marcouiller
|
64,729
(US)
64,062
(CA)
|
–
|
–
|
–
|
–
|
–
|
64,729
(US)
64,062
(CA)
|
Guy Marier
|
68,401
(US)
67,675
(CA)
|
–
|
–
|
–
|
–
|
–
|
68,401
(US)
67,675
(CA)
|
David A. Thompson
|
61,118
(US)
60,470
(CA)
|
–
|
–
|
–
|
–
|
–
|
61,118
(US)
60,470
(CA)
|
André Tremblay
(2)
|
25,487
(US)
25,217
(CA)
|
–
|
–
|
–
|
–
|
–
|
25,487
(US)
25,217
(CA)
|
(1)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$0.9894 = US$1.00 for the financial year ended August 31, 2011 except for Mr. Pierre-Paul Allard and Mr. David A. Thompson who are paid in US dollars for the portion of their annual retainer for Directors. The fees are always payable in cash, but executives are provided the opportunity to elect to exchange all or a portion of their Annual Retainer for Directors in DSUs. The following table identifies the portion of the fees earned by the directors that were paid in DSUs and the portion that were paid in cash.
|
(i)
|
The estimated value at the time of grant of a DSU is determined based on the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Federal Reserve Bank of New York (for grants of DSUs prior to January 1, 2009) or the Bank of Canada (for grants of DSUs on or after January 1, 2009) on the grant date to convert the NASDAQ National Market closing price to Canadian dollars, as required. The value at vesting of a DSU is equivalent to the market value of a Subordinate Voting Share when a DSU is converted to such Subordinate Voting Share.
|
(ii)
|
Elected to receive 50% of his Annual Retainer for Directors in form of DSUs.
|
(iii)
|
Elected to receive his Annual Retainer for Directors in cash and ceased to be a member of the Board of Directors as at January 20, 2011.
|
(2)
|
Mr. Tremblay ceased to be a member of the Board of Directors as at January 20, 2011.
|
Name
|
Outstanding Option-based Awards (Options)
|
Outstanding Share-based Awards (DSUs)
|
||||
Number of securities
underlying
unexercised options
(#)
|
Option
Exercise
Price
(US$)
(1)
|
Option
expiration date
|
Value
(2)
of
unexercised in-
the-money
options (US$)
(3)
|
Number of shares
or units of shares
that have not
vested (#)
|
Market or payout
value of share-based
awards that have
not vested (US$)
(4)
|
|
Pierre-Paul Allard
|
–
|
–
|
–
|
–
|
16,270
|
108,846
|
Pierre Marcouiller
|
17,966
|
9.13
|
Oct. 10, 2011
|
–
|
31,942
|
213,692
|
1,037
|
12.69
|
Dec. 1, 2011
|
–
|
|||
Guy Marier
|
12,500
|
4.65
|
Mar. 24, 2014
|
25,500
|
31,942
|
213,692
|
David A. Thompson
|
12,500
|
3.51
|
Oct. 27, 2013
|
39,750
|
30,144
|
201,663
|
André Tremblay
(5)
|
–
|
–
|
–
|
–
|
–
|
–
|
(1)
|
Prices noted are the grant date exercise price for each option under each award.
|
(2)
|
The unexercised options have not been and may never be exercised and actual gains if any, on exercise will depend on the value of the Subordinate Voting Shares on the date of exercise. There can be no assurance that these options will be exercised or any gain realized.
|
(3)
|
Indicates an aggregate value of “in-the-money” unexercised options held at the financial year ended August 31, 2011. “In-the-money” options are options for which the market value of the underlying securities is higher than the exercise price. The value of unexercised in-the-money options at financial year end is the difference between its exercise or base price and the market value of the underlying Subordinate Voting Share at August 31, 2011 which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required.
|
(4)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(5)
|
Mr. Tremblay ceased to be a member of the Board of Directors as at January 20, 2011.
|
Name
|
Exercised Option-based Awards (Options)
|
|||
Number of securities underlying exercised options (#)
|
Option Exercise Price
(US$)
|
Option
grant date
|
Gains realized (US$)
|
|
Pierre-Paul Allard
|
–
|
–
|
–
|
–
|
Pierre Marcouiller
|
12,500
|
1.58
|
Sept. 25, 2002
|
117,270
|
12,500
|
3.51
|
Oct. 27, 2003
|
89,282
|
|
2,479
|
5.65
|
March 1, 2002
|
7,150
|
|
Guy Marier
|
–
|
–
|
–
|
–
|
David A. Thompson
|
12,500
|
1.58
|
Sept. 25, 2002
|
123,457
|
15,334
|
9.13
|
Oct. 10, 2001
|
35,728
|
|
André Tremblay
(1)
|
–
|
–
|
–
|
–
|
(1)
|
Mr. Tremblay ceased to be a member of the Board of Directors as at January 20, 2011.
|
Name
|
Number of DSUs converted
|
Aggregate Value Realized (US$)
(1)
|
André Tremblay
(2)
|
37,491
|
371,094
|
(1)
|
The aggregate value realized is equivalent to the market value of the securities underlying the DSUs at conversion. This value has been converted from Canadian dollars to U.S. dollars based on the noon buying rate of the Bank of Canada on the day of conversion.
|
(2)
|
Mr. Tremblay ceased to be a member of the Board of Directors as at January 20, 2011.
|
Plan category
|
Number of securities to be issued
upon exercise of outstanding
options, RSUs and DSUs (#)
(a)
|
Weighted-average exercise price
of outstanding options, RSUs and
DSUs (US$)
(b)
|
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a)) (#)
(c)
|
LTIP – RSUs
|
1,551,658
|
n/a
(1)
|
2,230,170
|
LTIP – Options
|
641,357
|
6.27
|
|
DSUP – DSUs
|
110,298
|
n/a
(1)
|
(1)
|
The value of RSUs and DSUs will be equal to the market value of the Subordinate Voting Shares of the Corporation on the date of vesting.
|
August 31,
|
||||||
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
|
EXFO Subordinate Voting Share
|
100
|
120
|
76
|
56
|
100
|
110
|
S&P/TSX Stock Index
|
100
|
112
|
113
|
89
|
98
|
105
|
Sum of NEO’s total compensation
(in millions of CA$)
|
$1.8
|
$2.0
|
$2.1
|
$2.3
|
$2.5
|
$2.7
|
·
|
Our share performance improved from the financial year ended August 31, 2006 to the financial year ended August 31, 2007 and from the financial year ended August 31, 2009 to the financial year ended August 31, 2011, which is aligned with the increase of the total compensation received by the NEOs during such periods reflecting the implementation of the revised Long-Term Incentive Plan in fiscal year 2005.
|
·
|
Our share performance weakened in financial years ended August 31, 2008 and 2009 as a result of the significant downturn in the economy; this is similar to other technology sector companies. It should be noted that during these two fiscal years, we delivered EBITDA* of 11.2 % and 8.4 % respectively for 2008 and 2009 while we were expanding our activities, developing new market territories and acquiring new businesses. This expansion significantly increased the complexity of our operations and the organization.
|
·
|
The increase in the total compensation received by the named executive officers over the identified five-year period is the result of an initiative to gradually close the compensation gap with respect to market rates pursuant to our three-year plan adopted in 2007 based on Mercer’s and Aon’s recommendations and our plan adopted in 2010 being defined herein as the Mercer Three Year Compensation Plan. In addition, total compensation received by the named executive officers over the identified period roses as a result of the additional roles and responsibilities of such individual due to the increased complexity of our organization and to the addition of new senior members in the named executives with higher compensation.
|
*
|
EBITDA is defined as net earnings (loss) before interest, income taxes, amortization of property, plant and equipment, amortization of intangible assets, impairment of goodwill and extraordinary gain.
|
C . | Board Practices |
GERMAIN LAMONDE
|
|||||||||||||
|
St-Augustin-de-Desmaures, Quebec, Canada
Director since
September 1985
Not Independent (Management)
Principal Occupation: Chairman of the Board of Directors, President and Chief Executive Officer, EXFO Inc.
|
Germain Lamonde
,
a company founder, has been President and Chief Executive Officer of EXFO since its inception in 1985. He has also been Chairman of the Board since EXFO went public in 2000. Responsible for the overall management and strategic direction of EXFO, Mr. Lamonde has grown the company from the ground up into a global leader in the wireline and wireless telecommunication test and service assurance industry. Mr. Lamonde has served on the board of directors of several organizations such as the Canadian Institute for Photonic Innovations, the POLE QCA Economic Development Corporation and the National Optics Institute of Canada (INO), to name a few. Germain Lamonde holds a bachelor's degree in physics engineering from the University of Montreal's School of Engineering (
École Polytechnique
), a master's degree in optics from
Université Laval
in Quebec City, and is also a graduate of the Ivey Executive Management Program offered by the University of Western Ontario.
|
|||||||||||
Board/Committee Membership
|
Attendance
(1)
|
Principal Board Memberships
|
|||||||||||
Chairman of the Board of Directors
|
8/8
|
100%
|
–
|
||||||||||
Securities Held
|
|||||||||||||
As at
|
Subordinate
Voting Shares(#)
|
Multiple Voting
Shares(#)
|
RSUs(#)
|
Total Shares
(2)
and RSUs(#)
|
Total Market Value
(3)
of Shares
(2)
and RSUs
(US$)
|
||||||||
August 31, 2011
|
4,043,348
(4)
|
31,643,000
(5)
|
222,899
|
35,909,247
|
240,232,862
|
||||||||
Options Held as at August 31, 2011
|
|||||||||||||
Date Granted
|
Number(#)
|
Exercise Price (US$)
|
Total Unexercised(#)
|
Value of Options
Unexercised (US$)
(6)
|
|||||||||
October 10, 2001
September 25, 2002
February 1, 2005
December 6, 2005
|
70,000
50,000
17,942
11,218
|
9.13
1.58
4.51
4.76
|
70,000
50,000
17,942
11,218
|
–
255
,500
39,113
21,651
|
|||||||||
Total
|
149,160
|
316,264
|
(1)
|
From September 1, 2010 until November 1, 2011, Mr. Lamonde attended 7 meetings in person and 1 meeting by telephone.
|
(2)
|
Includes both Subordinate Voting Shares and Multiple Voting Shares.
|
(3)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares and Multiple Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting of RSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Mr. Lamonde exercises control over 4,000,000 of Subordinate Voting Shares through G. Lamonde Investissements Financiers inc., a company controlled by Mr. Lamonde.
|
(5)
|
Mr. Lamonde exercises control over this number of Multiple Voting Shares through G. Lamonde Investissements Financiers inc., a company controlled by Mr. Lamonde and through Fiducie Germain Lamonde, a family trust for the benefit of Mr. Lamonde’s family.
|
(6)
|
Indicates an aggregate value of “in-the-money” unexercised options held at the financial year ended August 31, 2011. “In-the-money” options are options for which the market value of the underlying securities is higher than the exercise price. The value of unexercised in-the-money options at financial year end is the difference between its exercise or base price and the market value of the underlying Subordinate Voting Share as at August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required.
|
(1)
|
Cisco Systems Inc. is a leading network equipment manufacturer in the global telecommunications industry.
|
(2)
|
From September 1, 2010 until November 1, 2011, Mr. Allard attended 6 meetings in person and 2 meetings by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
DARRYL EDWARDS
|
|||||||||
|
Weston Under Wetherley
Warwickshire
United Kingdom
Director since
September 2011
Independent
Principal Occupation:
Executive Consultant
|
Darryl Edwards
was appointed a member of our Board of Directors in September 2011. He brings to EXFO more than 30 years of telecommunications experience gained from a number of senior executive leadership positions; from 2009 to 2011, he was the Chief Executive Officer of AIRCOM International, successfully leading the company through to business sale. Mr. Edwards was previously at Nortel Networks for 17 years, where he held various executive officer positions, including President of EMEA Sales from 2006 to 2009 and in 2009 President of Global Sales (Carrier Networks). He also was the Chief Executive Officer for two of Nortel’s key joint ventures, first in the Middle East and later in Germany. Prior to his time at Nortel, Mr. Edwards spent 13 years at GEC-Plessey Telecommunications where he worked in engineering, quality assurance and international sales. Mr. Edwards has held a number of chairs, including Chairman of the Board of Nortel’s interests in Turkey, Nortel Netas, which was listed on the Istanbul Stock Exchange. He also was a member of the Advisory Counsel to the Turkish government between 2004 and 2008, and previously served on the UK Government Broadband Stakeholders Group and the Information Age Partnership. Darryl Edwards holds a Higher National Certificate (Physics) from Birmingham Polytechnic in the UK.
|
|||||||
Board/Committee Membership
|
Attendance
(1)
|
Principal Board Memberships
|
|||||||
Board of Directors
Audit Committee
Human Resources Committee
Independent Board of Directors
|
2/2
1/1
1/1
2/2
|
100%
100%
100%
100%
|
Aircom International (Africa) Pty Ltd.
|
||||||
Securities Held
|
|||||||||
As at
|
Subordinate
Voting Shares (#)
|
DSUs (#)
|
Total Shares
and DSUs (#)
|
Total Market Value
(2)
of Shares
(3)
and DSUs
(US$)
|
|||||
August 31, 2011
|
–
|
–
|
–
|
–
|
|||||
Options Held as at August 31, 2011
|
|||||||||
Date Granted
|
Number (#)
|
Exercise Price (US$)
|
Total Unexercised (#)
|
Value of Options
Unexercised (US$)
|
|||||
–
|
–
|
–
|
–
|
–
|
(1)
|
Mr. Edwards joined our Board of Directors in September 2011. From September 1, 2011 until November 1, 2011, Mr. Edward attended 2 meetings in person.
|
(2)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(3)
|
Refers to Subordinate Voting Shares.
|
PIERRE MARCOUILLER
|
||||||||
|
Magog, Quebec, Canada
Director since May 2000
Lead Director since
January 2011
Independent
Principal Occupation:
Chairman of the Board and
Chief Executive Officer,
Camoplast Solideal Inc.
(1)
|
Pierre Marcouiller
has served as our Director since May 2000. Mr. Marcouiller is Chairman of the Board and CEO of Camoplast Solideal Inc. a world leader in the design, manufacturing and distribution of off-road tires, rubber tracks, undercarriage systems and wheels and a NA leader in under-the-hood plastic components and assemblies for the automotive industry. Prior to joining Camoplast, Mr. Marcouiller was President and General Manager of Venmar Ventilation Inc. (1988-1996), where he was the controlling shareholder from 1991 to 1996. Mr. Marcouiller is also a Director of Canam Group Inc., an industrial company specialized in the design and fabrication of construction products and solutions in the commercial, industrial, institutional, residential, and bridge and highway infrastructures markets. Mr. Marcouiller also holds directorships in other privately held companies. Pierre Marcouiller holds a bachelor’s degree in business administration from the
Université du Québec à Trois-Rivières
and an MBA from the
Université de Sherbrooke
.
|
||||||
Board/Committee Membership
|
Attendance
(2)
|
Principal Board Memberships
|
||||||
Board of Directors
Audit Committee
Human Resources Committee
Independent Board of Directors
|
7/8
5/5
5/5
7/7
|
88%
100%
100%
100%
|
Canam Group Inc.
|
|||||
Securities Held
|
||||||||
As at
|
Subordinate
Voting Shares(#)
|
DSUs(#)
|
Total Shares
and DSUs(#)
|
Total Market Value
(3)
of Shares
(4)
and DSUs
(US$)
|
||||
August 31, 2011
|
5,000
|
31,942
|
36,942
|
247,142
|
||||
Options Held as at August 31, 2011
|
||||||||
Date Granted
|
Number(#)
|
Exercise Price (US$)
|
Total Unexercised(#)
|
Value of Options
Unexercised (US$)
(5)
|
||||
October 10, 2001
December 1, 2001
|
17,966
1,037
|
9.13
12.69
|
17,966
1,037
|
–
–
|
||||
Total
|
19,003
|
–
|
(1)
|
Camoplast Solideal is a world leader in the design, manufacturing and distribution of off-road tires, rubber tracks, undercarriage systems, wheels, body dressing parts, under-the-hood plastic components and assemblies, molded skis, engine covers, thermal and air induction systems for the construction, agricultural, industrial, powersports, defense and automotive markets (industries).
|
(2)
|
From September 1, 2010 until November 1, 2011, Mr. Marcouiller attended 7 meetings in person and no meeting by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
(5)
|
Indicates an aggregate value of “in-the-money” unexercised options held at the financial year ended August 31, 2011. “In-the-money” options are options for which the market value of the underlying securities is higher than the exercise price. The value of unexercised in-the-money options at financial year end is the difference between its exercise or base price and the market value of the underlying Subordinate Voting Share at August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required.
|
GUY MARIER
|
|||||||||
|
Lakefield Gore, Quebec, Canada
Director since January 2004
Lead Director from January 2007 to January 2011
Independent
Principal Occupation:
Executive Consultant
|
Guy Marier
has served as our Director since January 2004. Formerly President of Bell Québec (1999 to 2003), Mr. Marier completed his successful 33-year career at Bell
(1)
as Executive Vice-President of the Project Management Office, before retiring at the end of 2003. From 1988 to 1990, Mr. Marier headed Bell Canada International’s investments and projects in Saudi Arabia and, for the three following years, served as President of Télébec. He then returned to the parent company to hold various senior management positions. Guy Marier holds a Bachelor of Arts from the University of Montreal and a Bachelor of Business Administration from the
Université du Québec à Montréal.
|
|||||||
Board/Committee Membership
|
Attendance
(2)
|
Principal Board Memberships
|
|||||||
Board of Directors
Audit Committee
Human Resources Committee
Independent Board of Directors
|
8/8
5/5
5/5
7/7
|
100%
100%
100%
100%
|
–
|
||||||
Securities Held
|
|||||||||
As at
|
Subordinate
Voting Shares (#)
|
DSUs (#)
|
Total Shares
and DSUs (#)
|
Total Market Value
(3)
of Shares
(4)
and DSUs
(US$)
|
|||||
August 31, 2011
|
1,000
|
31,942
|
32,942
|
220,382
|
|||||
Options Held as at August 31, 2011
|
|||||||||
Date Granted
|
Number (#)
|
Exercise Price (US$)
|
Total Unexercised (#)
|
Value of Options
Unexercised (US$)
(5)
|
|||||
March 24, 2004
|
12,500
|
4.65
|
12,500
|
25,500
|
(1)
|
Bell is Canada's largest communications company, providing consumers with solutions to all their communications needs, including telephone services, wireless communications, high-speed Internet, digital television and voice over IP. Bell also offers integrated information and communications technology services to businesses and governments.
|
(2)
|
From September 1, 2010 until November 1, 2011, Mr. Marier attended 7 meetings in person and 1 meeting by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
(5)
|
Indicates an aggregate value of “in-the-money” unexercised options held at the financial year ended August 31, 2011. “In-the-money” options are options for which the market value of the underlying securities is higher than the exercise price. The value of unexercised in-the-money options at financial year end is the difference between its exercise or base price and the market value of the underlying Subordinate Voting Share at August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required.
|
SUSAN LOUISE SPRADLEY
|
|||||||||
|
Dallas, Texas
USA
Director since
October 2011
Independent
Principal Occupation:
Executive Consultant
|
Susan Louise Spradley
was appointed a member of our Board of Directors in October 2011. She brings to EXFO more than 20 years of experience in the wireless telecommunications industry in which she has held senior executive positions in sales, product line management, operations, services and customer support. From 2007 to 2011, she was Head of the North American Region at Nokia Siemens Networks and also a member of the company’s Executive Board. Prior to joining Nokia Siemens Networks, from 1997 to 2005, Ms. Spradley held prominent leadership roles at Nortel Networks including President of Global Services and Operations, President of Global Product Line Management and North American Sales, and Vice-President of Customer Service and Operations. She also served as Vice-President of Marketing and Product Development for North America at Siemens Communications. In addition, she previously was a member of the National Security Telecommunications Advisory Committee reporting to the President of the United States. Susan Spradley holds a bachelor’s degree in Computer Science from the University of Kansas and completed the Advanced Management Program at Harvard University Business School.
|
|||||||
Board/Committee Membership
|
Attendance
(1)
|
Principal Board Memberships
|
|||||||
Board of Directors
Audit Committee
Human Resources Committee
Independent Board of Directors
|
1/1
1/1
1/1
1/1
|
100%
100%
100%
100%
|
Museum of Nature and Science, Dallas, Texas
Tango Networks
|
||||||
Securities Held
|
|||||||||
As at
|
Subordinate
Voting Shares (#)
|
DSUs (#)
|
Total Shares
and DSUs (#)
|
Total Market Value
(2)
of Shares
(3)
and DSUs
(US$)
|
|||||
August 31, 2011
|
–
|
–
|
–
|
–
|
|||||
Options Held as at August 31, 2011
|
|||||||||
Date Granted
|
Number (#)
|
Exercise Price (US$)
|
Total Unexercised (#)
|
Value of Options
Unexercised (US$)
|
|||||
–
|
–
|
–
|
–
|
–
|
(1)
|
Ms. Spradley joined our Board of Directors in October 2011. From October 1, 2011 until November 1, 2011, Ms. Spradley attended 1 meeting in person.
|
(2)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2011, which was US$6.69 (CA$6.55). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2011 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(3)
|
Refers to Subordinate Voting Shares.
|
(a)
|
is, as at the date hereof, or has been, within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company that (i) was subject to an order that was issued while such individual was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after such individual ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;
|
(b)
|
is, as at the date hereof, or has been within 10 years before the date hereof, a director or executive officer of any company that, while such individual was acting in that capacity, or within a year of that individual ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;
|
(c)
|
has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets; or
|
(d)
|
has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for such individual.
|
D . | Employees |
E . | Share Ownership |
Name
|
Subordinate Voting
Shares Owned
|
Currently Exercisable Options Owned
as at November 1, 2011
|
Total Subordinate
Voting Shares
Beneficially Owned
(3)
|
Multiple Voting
Shares Beneficially
Owned
(3)
|
Total Percentage
of Voting Power
|
||||||
In-the-money
(1)
|
Out-the-money
(2)
|
||||||||||
Number
|
Percent
|
Number
|
Percent
|
Number
|
Percent
|
Number
|
Percent
|
Number
|
Percent
|
Percent
|
|
Germain Lamonde
|
4,090,588
(
4)
|
14.21
|
79,160
|
17.54
|
–
|
*
|
4,169,748
|
14.45
|
31,643,000
(5)
|
100
|
92.85
|
Pierre Plamondon
|
59,889
(6)
|
*
|
3,653
|
*
|
5,383
|
1.19
|
68,925
|
*
|
–
|
–
|
*
|
Pierre-Paul Allard
|
8,000
|
*
|
–
|
*
|
–
|
*
|
8,000
|
*
|
–
|
–
|
*
|
Darryl Edwards
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
Pierre Marcouiller
|
5,000
|
*
|
–
|
*
|
1,037
|
*
|
6,037
|
*
|
–
|
–
|
*
|
Guy Marier
|
1,000
|
*
|
–
|
*
|
12,500
|
2.77
|
13,500
|
*
|
–
|
–
|
*
|
Susan Spradley
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
David A. Thompson
|
2,100
|
*
|
12,500
|
2.77
|
–
|
*
|
14,600
|
*
|
–
|
–
|
*
|
Jon Bradley
|
–
|
*
|
–
|
*
|
1,000
|
*
|
1,000
|
*
|
–
|
–
|
*
|
Vivian Hudson
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
Dana Yearian
|
3,137
|
*
|
–
|
*
|
–
|
*
|
3,137
|
*
|
–
|
–
|
*
|
Other executive
officers as a group
|
54,113
|
*
|
17,228
|
3.82
|
3,230
|
*
|
74,571
|
*
|
–
|
–
|
*
|
All of our Directors
and executive
officers as a group
|
4,223,827
|
14.67
|
112,541
|
24.94
|
23,150
|
5.13
|
4,359,518
|
15,07
|
31,643,000
|
100
|
92.89
|
*
|
Less than 1%.
|
(1)
|
“In-the-money” options are options for which the market value of the underlying securities is higher than the exercise price at which such securities may be bought from the Corporation. As at November 1, 2011 the market value of a Subordinate Voting Share was US$5.87 or CA$6.04, as applicable.
|
(2)
|
“Out-the-money” options are options for which the market value of the underlying securities is lower than the price of which such securities may be bought from the Corporation.
|
(3)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Options that are currently exercisable or exercisable within sixty (60) days as at November 1, 2011 (including options that have an exercise price above the market price) are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Accordingly, DSUs and RSUs are not included.
|
(4)
|
The number of shares held by Germain Lamonde includes 4,000,000 subordinate voting shares held of record by G. Lamonde Investissements financiers inc.
|
(5)
|
The number of shares held by Germain Lamonde includes 1,900,000 multiple voting shares held of record by Fiducie Germain Lamonde and 29,743,000 multiple voting shares held of record by G. Lamonde Investissements Financiers inc.
|
(6)
|
The number of shares held by Pierre Plamondon includes 6,874 subordinate voting shares held of record by Fiducie Pierre Plamondon.
|
Name
|
Securities Under Options
Granted
(1)
(#)
|
Exercise Price
(2)
(US$/Security)
|
Expiration Date
|
Germain Lamonde
|
50,000
17,942
11,218
|
$1.58
$4.51
$4.76
|
September 25, 2012
February 1, 2015
December 6, 2015
|
Pierre Plamondon
|
5,383
3,653
|
$5.13
$4.76
|
October 26, 2014
December 6, 2015
|
Pierre-Paul Allard
|
−
|
−
|
−
|
Darryl Edwards
|
−
|
−
|
−
|
Pierre Marcouiller
|
1,037
|
$12.69
|
December 1, 2011
|
Guy Marier
|
12,500
|
$4.65
|
March 24, 2014
|
Susan Spradley
|
−
|
−
|
−
|
David A. Thompson
|
12,500
|
$3.51
|
October 27, 2013
|
Jon Bradley
|
1,000
|
$12.22
|
January 3, 2012
|
Vivian Hudson
|
−
|
−
|
−
|
Dana Yearian
|
−
|
−
|
−
|
Other Executive Officers as a group
|
15,000
3,230
2,228
|
$1.58
$5.13
$4.76
|
September 25, 2012
October 26, 2014
December 6, 2015
|
(1)
|
Underlying securities: subordinate voting shares
|
(2)
|
The exercise price of options granted is determined based on the highest of the closing prices of the subordinate voting shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Federal Reserve Bank of New York on the grant date to convert the NASDAQ National Market closing price to Canadian dollars, as required.
|
Name
|
DSUs
|
RSUs
|
|||||
Number
|
Percentage
|
Estimated Average Value at the time of grant US$/DSU
(1)
|
Number
|
Percentage
|
Fair Value at the
time of grant
US$/RSU
(2)
|
||
Germain Lamonde
|
–
|
–
|
–
|
20,115
(3)
|
1.30%
|
6.28
|
|
–
|
–
|
–
|
44,374
(4)
|
2.86%
|
2.36
|
||
–
|
–
|
–
|
66,081
(5)
|
4.26%
|
3.74
|
||
–
|
–
|
–
|
45,089
(6)
|
2.91%
|
6.03
|
||
–
|
–
|
–
|
53,261
(7)
|
3.43%
|
5.43
|
||
Pierre Plamondon
|
–
|
–
|
–
|
6,481
(3)
|
0.42%
|
6.28
|
|
–
|
–
|
–
|
14,039
(4)
|
0.91%
|
2.36
|
||
–
|
–
|
–
|
20,339
(8)
|
1.31%
|
2.36
|
||
–
|
–
|
–
|
16,794
(5)
|
1.08%
|
3.74
|
||
–
|
–
|
–
|
13,019
(6)
|
0.84%
|
6.03
|
||
–
|
–
|
–
|
8,857
(9)
|
0.57%
|
6.03
|
||
–
|
–
|
–
|
17,325
(7)
|
1.12%
|
5.43
|
(1)
|
The estimated average value at the time of grant of a DSU is the average of the estimated value at the time of grant of a DSU which is determined based on the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Federal Reserve Bank of New York (for grants of DSUs prior to January 1, 2009) or the Bank of Canada (for grants of DSUs on or after January 1, 2009) on the grant date to convert the NASDAQ National Market closing price to Canadian dollars, as required. The value at vesting of a DSU is equivalent to the market value of a Subordinate Voting Share when a DSU is converted to such Subordinate Voting Share.
|
(2)
|
The fair value at the time of grant of a RSU is equal to the market value of Subordinate Voting Shares at the time RSUs are granted.
|
(3)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2007 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(4)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2008 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(5)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2009 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(6)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2010 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(7)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2011 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(8)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2008 but are subject to early vesting on the third anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the early vesting is up to 100% of the units on the third anniversary date of the grant.
|
(9)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2010 but are subject to early vesting on the third or fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the early vesting is up to 100% of the units on the third or fourth anniversary date of the grant.
|
(10)
|
Those DSUs will vest at the time Director ceases to be a member of the Board of the Corporation.
|
(11)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in April 2011.
|
(12)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2008.
|
(13)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2009.
|
(14)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2010.
|
(15)
|
Those RSUs will vest at a rate of 1/3 annually commencing on the third anniversary date of the grant in July 2010.
|
(16)
|
Those RSUs will vest on the fifth anniversary date of the grant in July 2010 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(17)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2011.
|
Multiple Voting Shares
Beneficially Owned
(1)
|
Subordinate Voting Shares
Beneficially Owned
(1)
|
Total Percentage of Voting Power
|
||||||||||||||||||
Name
|
Number
|
Percent
|
Number
|
Percent
|
Percent
|
|||||||||||||||
Germain Lamonde
(2)
|
31,643,000 | 100 | % | 4,090,588 | 14.21 | % | 92.85 | % | ||||||||||||
Fiducie Germain Lamonde
(3)
|
1,900,000 | 6 | % | – | – | 5.50 | % | |||||||||||||
G. Lamonde Investissements Financiers inc.
(4)
|
29,743,000 | 94 | % | 4,000,000 | 13.90 | % | 86.16 | % | ||||||||||||
EdgePoint Investment Group, Inc.
|
– | – | 2,891,500 | 10.05 | % | * | ||||||||||||||
Brown Investment Advisory, Inc.
|
– | – | 1,558,333 | 5.41 | % | * |
*
|
Less than 1%
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Options that are currently exercisable within 60 days of November 1, 2011 (including options that have an exercise price above the market price) are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
|
(2)
|
The number of shares held by Germain Lamonde includes 1,900,000 multiple voting shares held of record by Fiducie Germain Lamonde, 29,743,000 multiple voting shares held of record by G. Lamonde Investissements Financiers inc. and 4,000,000 subordinate voting shares held of record by G. Lamonde Investissements Financiers inc.
|
(3)
|
Fiducie Germain Lamonde is a family trust for the benefit of Mr. Lamonde and members of his family.
|
(4)
|
G. Lamonde Investissements Financiers inc. is a company controlled by Mr. Lamonde.
|
B . | Related Party Transactions |
C . | Interests of Experts and Counsel |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Balance – Beginning of year
|
$ | 21,277 | $ | 15,458 | $ | 14,393 | ||||||
Change charged to earnings
|
5,049 | 3,185 | 777 | |||||||||
Change in tax rates
|
− | − | 366 | |||||||||
Business combination/disposal
|
6,823 | 3,065 | − | |||||||||
Foreign currency translation adjustment
|
1,367 | (431 | ) | (78 | ) | |||||||
Balance – End of year
|
$ | 34,516 | $ | 21,277 | $ | 15,458 |
Years ended August 31,
|
||||||||||||||||||||||||
2011
|
2010
|
2009
|
||||||||||||||||||||||
Export Sales
|
$ | 238,757 | 89 | % | $ | 184,479 | 91 | % | $ | 135,751 | 89 | % | ||||||||||||
Domestic Sales
|
30,986 | 11 | 18,278 | 9 | 17,331 | 11 | ||||||||||||||||||
$ | 269,743 | 100 | % | $ | 202,757 | 100 | % | $ | 153,082 | 100 | % |
B . | Significant changes |
It
em 9.
|
The Offer and Listing
|
A . | Offer and Listing Details |
NASDAQ (US$)
|
TSX (CA$)
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
September 1, 2006 to August 31, 2007
|
7.57 | 4.89 | 8.85 | 5.55 | ||||||||||||
September 1, 2007 to August 31, 2008
|
7.28 | 3.92 | 7.35 | 3.97 | ||||||||||||
September 1, 2008 to August 31, 2009
|
4.73 | 2.13 | 5.16 | 2.50 | ||||||||||||
September 1, 2009 to August 31, 2010
|
6.59 | 2.81 | 6.70 | 3.10 | ||||||||||||
September 1, 2010 to August 31, 2011
|
12.96 | 5.28 | 12.56 | 5.50 | ||||||||||||
2010 1st Quarter
|
3.85 | 2.81 | 4.13 | 3.10 | ||||||||||||
2010 2nd Quarter
|
6.00 | 3.65 | 6.25 | 3.82 | ||||||||||||
2010 3rd Quarter
|
6.59 | 4.79 | 6.70 | 5.12 | ||||||||||||
2010 4th Quarter
|
5.99 | 4.95 | 6.15 | 5.25 | ||||||||||||
2011 1st Quarter
|
6.35 | 5.28 | 6.44 | 5.50 | ||||||||||||
2011 2nd Quarter
|
11.90 | 6.19 | 11.83 | 6.31 | ||||||||||||
2011 3rd Quarter
|
12.96 | 7.89 | 12.56 | 7.61 | ||||||||||||
2011 4th Quarter
|
9.47 | 5.90 | 9.27 | 5.85 | ||||||||||||
2011 May
|
10.10 | 8.42 | 9.66 | 8.50 | ||||||||||||
2011 June
|
9.47 | 7.44 | 9.27 | 7.22 | ||||||||||||
2011 July
|
8.18 | 7.26 | 7.89 | 6.94 | ||||||||||||
2011 August
|
7.67 | 5.90 | 7.52 | 5.85 | ||||||||||||
2011 September
|
8.23 | 6.13 | 8.24 | 6.40 | ||||||||||||
2011 October
|
6.21 | 5.42 | 6.18 | 5.51 | ||||||||||||
2011 November
|
6.27 | 5.60 | 6.34 | 5.72 | ||||||||||||
(until November 14)
|
B . | Memorandum and Articles of Association |
C . | Mater i al Contracts |
D . | Exchange Controls |
E . | Taxation |
|
(a)
|
an individual citizen or resident of the United States;
|
|
(b)
|
a corporation created or organized under the laws of the United States or any state thereof and the District of Columbia;
|
|
(c)
|
an estate the income of which is subject to United States federal income taxation regardless of its source;
|
|
(d)
|
a trust if (1) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons as described in Section 7701 (a) (30) of the Code have authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or
|
|
(e)
|
any other person whose worldwide income or gain is otherwise subject to U.S. federal income taxation on a net income basis.
|
·
|
U.S. judicial decisions;
|
·
|
administrative pronouncements;
|
·
|
existing and proposed Treasury regulations; and
|
·
|
the Canada – U.S. Income Tax Treaty.
|
·
|
the holder’s holding period for the subordinate voting shares, with a preferential rate available for subordinate voting shares held for more than one year; and
|
·
|
the holder’s marginal tax rate for ordinary income.
|
·
|
such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States; or
|
·
|
in the case of any gain realized by an individual Non-U.S. Holder, such Non-U.S. Holder is present in the United States for 183 days or more in the taxable year of such sale and certain other conditions are met.
|
·
|
at least 75% of our gross income for the taxable year is passive income; or
|
·
|
at least 50% of the average value of our assets is attributable to assets that produce or are held for the production of passive income.
|
·
|
dividends;
|
·
|
interest;
|
·
|
rents or royalties, other than certain rents or royalties derived from the active conduct of trade or business;
|
·
|
annuities; and
|
·
|
gains from assets that produce passive income.
|
·
|
any gain realized on the sale or other disposition of subordinate voting shares; and
|
·
|
any “excess distribution” by us to the U.S. Holder.
|
·
|
the gain or excess distribution would be allocated ratably over the U.S. Holder’s holding period for the subordinate voting shares;
|
·
|
the amount allocated to the taxable year in which the gain or excess distribution was realized and to taxable years prior to the first year in which we were classified as a PFIC would be taxable as ordinary income; and
|
·
|
the amount allocated to each other prior year would be subject to tax as ordinary income at the highest tax rate in effect for that year, and the interest charge generally applicable to underpayments of tax would be imposed in respect of the tax attributable to each such year.
|
·
|
is resident in the United States and not resident in Canada,
|
·
|
holds the subordinate voting shares as capital property,
|
·
|
does not have a “permanent establishment” or “fixed base” in Canada, as defined in the Convention; and
|
·
|
deals at arm’s length with us. Special rules, which are not discussed below, may apply to “financial institutions”, as defined in the ITA, and to non-resident insurers carrying on an insurance business in Canada and elsewhere.
|
F . | Dividends and Paying Agents |
G . | Statement by Experts |
H . | Documents on Display |
I. | Subsidiary Information |
I
tem 11.
|
Qualitative and Quantitative Disclosures about Market Risk
|
Years ending August 31,
|
||||||||
2012
|
2013
|
|||||||
Forward exchange contracts to sell US dollars in exchange for Canadian dollars
|
||||||||
Contractual amounts
|
$ | 27,500 | $ | 11,400 | ||||
Weighted average contractual forward rates
|
1.0555 | 1.0063 |
As at August 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Carrying/
nominal
amount
(in thousands
of US dollars)
|
Carrying/
nominal
amount
(in thousands
of euros)
|
Carrying/
nominal
amount
(in thousands
of US dollars)
|
Carrying/
nominal
amount
(in thousands
of euros)
|
|||||||||||||
Financial assets
|
||||||||||||||||
Cash
|
$ | 10,553 | € | 1,502 | $ | 6,947 | € | 1,287 | ||||||||
Accounts receivable
|
25,040 | 4,332 | 30,218 | 3,860 | ||||||||||||
35,593 | 5,834 | 37,165 | 5,147 | |||||||||||||
Financial liabilities
|
||||||||||||||||
Accounts payable and accrued liabilities
|
8,706 | 37 | 8,932 | 438 | ||||||||||||
Forward exchange contracts (nominal amount)
|
5,400 | – | 5,900 | – | ||||||||||||
14,106 | 37 | 14,832 | 438 | |||||||||||||
Net exposure
|
$ | 21,487 | € | 5,797 | $ | 22,333 | € | 4,709 |
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would decrease (increase) net earnings by $2.1 million, or $0.03 per diluted share, and $1.9 million, or $0.03 per diluted share, as at August 31, 2010 and 2011 respectively.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the euro would decrease (increase) net earnings by $621,000, or $0.01 per diluted share, and $831,000, or $0.01 per diluted share, as at August 31, 20010 and 2011 respectively.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would increase (decrease) comprehensive income by $3.2 million and $2.4 million as at August 31, 2010 and 2011 respectively.
|
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Commercial paper denominated in Canadian dollars, bearing interest at annual rates of 1.0% to 1.3% in 2011 and 0.6% to 0.9% in 2010, maturing between September and November 2011 in fiscal 2011, and in September and October 2010 in fiscal 2010
|
$ | 31,765 | $ | 6,383 | ||||
Bankers acceptance denominated in Canadian dollars, bearing interest at annual rates of 1.0% to 1.2% in fiscal 2011 and 0.8% in 2010, maturing in September and November 2011 in fiscal 2011, and September 2010 in fiscal 2010
|
15,326 | 3,996 | ||||||
$ | 47,091 | $ | 10,379 |
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Current
|
$ | 33,149 | $ | 38,663 | ||||
Past due, 0 to 30 days
|
7,299 | 6,787 | ||||||
Past due, 31 to 60 days
|
2,590 | 1,991 | ||||||
Past due, more than 60 days, less allowance for doubtful accounts of $1,243 and $1,245 as at August 31, 2010 and 2011 respectively.
|
2,113 | 2,749 | ||||||
Total accounts receivable
|
$ | 45,151 | $ | 50,190 |
As at August 31, 2011
|
||||||||||||
0-12
months
|
13-24
months
|
25-36
months
|
||||||||||
Bank loan
|
$ | 784 | $ | – | $ | – | ||||||
Accounts payable and accrued liabilities
|
30,319 | – | – | |||||||||
Long-term debt
|
645 | 645 | 323 | |||||||||
Other liabilities
|
– | 201 | – | |||||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
27,500 | 11,400 | – | |||||||||
Inflow
|
(29,668 | ) | (11,725 | ) | – | |||||||
Total
|
$ | 29,580 | $ | 521 | $ | 323 |
As at August 31, 2010
|
||||||||||||||||
0-12
months
|
13-24
months
|
25-36
months
|
Over 36
months
|
|||||||||||||
Accounts payable and accrued liabilities
|
$ | 29,711 | $ | – | $ | – | $ | – | ||||||||
Long-term debt
|
568 | 568 | 568 | 283 | ||||||||||||
Other liabilities
|
– | 295 | – | – | ||||||||||||
Forward exchange contracts
|
||||||||||||||||
Outflow
|
29,500 | 20,400 | 1,500 | – | ||||||||||||
Inflow
|
(30,141 | ) | (20,662 | ) | (1,508 | ) | – | |||||||||
Total
|
$ | 29,638 | $ | 601 | $ | 560 | $ | 283 |
It
em 12.
|
Description of Securities Other than Equity Securities
|
It
em 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
I
tem 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
It
em 15.
|
Controls and Procedures
|
1
|
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in Canada (“Canadian GAAP”) and significant differences in measurement and disclosure from generally accepted accounting principles in United States (“U.S. GAAP”) are set out in note 22 to our consolidated financial statements included elsewhere in this Annual Report.
|
It
em 16.
|
[Reserved]
|
It
em 16A.
|
Audit Committee Financial Expert
|
·
|
Code of Ethics for our Principal Executive Officer and Senior Financial Officers;
|
·
|
Board of Directors Corporate Governance Guidelines;
|
·
|
Ethics and Business Conduct Policy;
|
·
|
Statement of Reporting Ethical Violations (Whistle Blower).
|
It
em 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
Item
16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Period
|
(a) Total Number
of Shares (or
Units) Purchased
(#)
|
(b) Average Price Paid
per Share (or Units)
|
(c) Total Number of Shares
(or Units) Purchased as Part
of Publicly Announced
Plans or Programs
(#)
|
(d) Maximum Number of
Shares (or Units) that May
Yet Be Purchased Under
the Plans or Programs
(#)
|
|
NASDAQ
(US$)
|
TSX
(CA$)
|
||||
From Oct. 1 2011
|
21,664
|
–
|
5.62
|
21,664
|
1,990,898
|
To Oct. 1, 2011
|
|||||
From Nov. 1 2011
|
13,282
|
–
|
5.91
|
13,282
|
1,977,616
|
To Nov. 9, 2011
|
|||||
Total
|
34,946
|
34,946
|
It
em 16G.
|
Corporate Governance
|
Item
17.
|
Financial Statements
|
Ite
m 19.
|
Exhibits
|
Number
|
Exhibit
|
1.1
|
Amended Articles of Incorporation of EXFO (incorporated by reference to Exhibit 3.1 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
1.2
|
Amended By-laws of EXFO (incorporated by reference to Exhibit 1.2 of EXFO’s Annual Report on Form-20F dated January 15, 2003, File No. 000-30895).
|
1.3
|
Amended and Restated Articles of Incorporation of EXFO (incorporated by reference to Exhibit 1.3 of EXFO’s Annual Report on Form 20-F dated January 18, 2001, File No. 000-30895).
|
1.4
|
Certificate of Amendment, Canada Business Corporations Act (incorporated by reference to Exhibit 10.1 of EXFO’s Annual Report on Form 20-F dated November 25, 2009, File No. 000-30895).
|
1.5
|
Certificate of Amendment (Change of Name), Canada Business Corporations Act (incorporated by reference to Exhibit 1.5 of EXFO’s Annual Report on Form 20-F dated November 24, 2010, File No. 000-30895).
|
2.1
|
Form of Subordinate Voting Share Certificate (incorporated by reference to Exhibit 4.1 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
2.2
|
Form of Registration Rights Agreement between EXFO and Germain Lamonde dated July 6, 2000 ) (incorporated by reference to Exhibit 10.13 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
3.1
|
Form of Trust Agreement among EXFO, Germain Lamonde, GEXFO Investissements Technologiques inc., Fiducie Germain Lamonde and G. Lamonde Investissements Financiers inc. (incorporated by reference to Exhibit 4.2 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.1
|
Agreement of Merger and Plan of Reorganization, dated as of November 4, 2000, by and among EXFO, EXFO Sub, Inc., EXFO Burleigh Instruments, Inc., Robert G. Klimasewski, William G. May, Jr., David J. Farrell and William S. Gornall (incorporated by reference to Exhibit 4.1 of EXFO’s Annual Report on Form 20-F dated January 18, 2001, File No. 000-30895).
|
4.2
|
Amendment No. 1 to Agreement of Merger and Plan of Agreement, dated as of December 20, 2000, by and among EXFO, EXFO Sub, Inc., EXFO Burleigh Instruments, Inc., Robert G. Klimasewski, William G. May, Jr., David J. Farrell and William S. Gornall (incorporated by reference to Exhibit 4.2 of EXFO’s Annual Report on Form 20-F dated January 18, 2001, File No. 000-30895).
|
4.3
|
Agreement of Merger, dated as of August 20, 2001, by and among EXFO, Buyer Sub, and Avantas Networks Corporation and Shareholders of Avantas Networks corporation (incorporated by reference to Exhibit 4.3 of EXFO’s Annual Report on Form 20-F dated January 18, 2002, File No. 000-30895).
|
4.4
|
Amendment No. 1 dated as of November 1, 2002 to Agreement of Merger, dated as of August 20, 2001, by and among EXFO, 3905268 Canada Inc., Avantas Networks Corporation and Shareholders of Avantas Networks (incorporated by reference to Exhibit 4.4 of EXFO’s Annual Report on Form 20-F dated January 18, 2002, File No. 000-30895).
|
4.5
|
Offer to purchase shares of Nortech Fibronic Inc., dated February 6, 2000 among EXFO, Claude Adrien Noel, 9086-9314 Québec inc., Michel Bédard, Christine Bergeron and Société en Commandite Capidem Québec Enr. and Certificate of Closing, dated February 7, 2000 among the same parties (including summary in English) (incorporated by reference to Exhibit 10.2 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.6
|
Share Purchase Agreement, dated as of March 5, 2001, among EXFO Electro-Optical Engineering, Inc., John Kennedy, Glenn Harvey and EFOS Corporation (incorporated by reference to Exhibit 4.1 of EXFO’s Registration Statement on Form F-3 filed on July 13, 2001, File No. 333-65122).
|
4.7
|
Amendment Number One, dated as of March 15, 2001, to Share Purchase Agreement, dated as of March 5, 2001, among EXFO Electro-Optical Engineering, Inc., John Kennedy, Glenn Harvey and EFOS Corporation. (incorporated by reference to Exhibit 4.2 of EXFO’s Registration Statement on Form F-3 filed on July 13, 2001, File No. 333-65122).
|
4.8
|
Share Purchase Agreement, dated as of November 2, 2001 between JDS Uniphase Inc. and 3905268 Canada Inc. (incorporated by reference to Exhibit 4.8 of EXFO’s Annual Report on Form 20-F dated January 18, 2002, File No. 000-30895).
|
4.9
|
Intellectual Property Assignment and Sale Agreement between EFOS Inc., EXFO Electro-Optical Engineering, Inc., John Kennedy, Glenn Harvey and EFOS Corporation. (incorporated by reference to Exhibit 4.3 of EXFO’s Registration Statement on Form F-3 filed on July 13, 2001, File No. 333-65122).
|
Number
|
Exhibit
|
4.10
|
Offer to acquire a building, dated February 23, 2000, between EXFO and Groupe Mirabau inc. and as accepted by Groupe Mirabau inc. on February 24, 2000 (including summary in English) (incorporated by reference to Exhibit 10.3 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.11
|
Lease Agreement, dated December 1, 1996, between EXFO and GEXFO Investissements Technologiques inc., as assigned to 9080-9823 Québec inc. on September 1, 1999 (including summary in English) (incorporated by reference to Exhibit 10.4 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.12
|
Lease Agreement, dated March 1, 1996, between EXFO and GEXFO Investissements Technologiques inc., as assigned to 9080-9823 Québec inc. on September 1, 1999 (including summary in English) (incorporated by reference to Exhibit 10.5 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.13
|
Lease renewal of the existing leases between 9080-9823 Québec inc. and EXFO, dated November 30, 2001(incorporated by reference to Exhibit 4.13 of EXFO’s Annual Report on Form 20-F dated January 18, 2002, File No. 000-30895).
|
4.14
|
Loan Agreement between EXFO and GEXFO Investissements Technologiques inc., dated May 11, 1993, as assigned to 9080-9823 Québec inc. on September 1, 1999 (including summary in English) (incorporated by reference to Exhibit 10.9 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.15
|
Resolution of the Board of Directors of EXFO, dated September 1, 1999, authorizing EXFO to acquire GEXFO Distribution Internationale inc. from GEXFO Investissements Technologiques inc. (including summary in English) (incorporated by reference to Exhibit 10.10 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.16
|
Form of Promissory Note of EXFO issued to GEXFO Investissements Technologiques inc. dated June 27, 2000 ) (incorporated by reference to Exhibit 10.12 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.17
|
Term Loan Offer, dated March 28, 2000, among EXFO and National Bank of Canada as accepted by EXFO on April 3, 2000 (including summary in English) (incorporated by reference to Exhibit 10.11 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.18
|
Employment Agreement of Germain Lamonde dated May 29, 2000 (incorporated by reference to Exhibit 10.15 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.19
|
Employment Agreement of Bruce Bonini dated as of September 1, 2000 (incorporated by reference to Exhibit 4.24 of EXFO’s Annual Report on Form 20-F dated January 18, 2002, File No. 000-30895).
|
4.20
|
Employment Agreement of Juan-Felipe Gonzalez dated as of September 1, 2000 (incorporated by reference to Exhibit 4.25 of EXFO’s Annual Report on Form 20-F dated January 18, 2002, File No. 000-30895).
|
4.21
|
Employment Agreement of David J. Farrell dated as of December 20, 2000 (incorporated by reference to Exhibit 4.26 of EXFO’s Annual Report on Form 20-F dated January 18, 2002, File No. 000-30895).
|
4.22
|
Deferred Profit Sharing Plan, dated September 1, 1998 (incorporated by reference to Exhibit 10.6 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.23
|
Stock Option Plan, dated May 25, 2000 (incorporated by Reference to Exhibit 10.7 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.24
|
Share Plan, dated April 3, 2000 (incorporated by reference to Exhibit 10.8 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.25
|
Directors’ Compensation Plan (incorporated by reference to Exhibit 10.17 of EXFO’s Registration Statement on Form F-1 filed on June 9, 2000, File No. 333-38956).
|
4.26
|
Restricted Stock Award Plan, dated December 20, 2000 (incorporated by reference to Exhibit 4.21 of EXFO’s Annual Report on Form 20-F dated January 18, 2001, File No. 000-30895).
|
4.27
|
Asset Purchase Agreement
by and Among EXFO Electro-Optical Engineering Inc., EXFO Gnubi Products Group Inc., gnubi communications, L.P., gnubi communications General Partner, LLC, gnubi communications Limited Partner, LLC, gnubi communications, Inc., Voting Trust created by The Irrevocable Voting Trust Agreement Among Carol Abraham Bolton, Paul Abraham and James Ray Stevens, James Ray Stevens and Daniel J. Ernst dated September 5, 2002 (incorporated by reference to Exhibit 4.30 of EXFO’s Annual Report on Form 20-F dated January 15, 2003, File No. 000-30895).
|
Number
|
Exhibit
|
4.28
|
EXFO Protocol Inc. Executive Employment Agreement with Sami Yazdi signed November 2, 2001 (incorporated by reference to Exhibit 4.28 of EXFO’s Annual Report on Form 20-F dated January 15, 2003, File No. 000-30895).
|
4.29
|
Second Amending Agreement to the Employment Agreement of Bruce Bonini dated as of September 1, 2002, (incorporated by reference to Exhibit 4.29 of EXFO’s Annual Report on Form 20-F dated January 15, 2004, File No. 000-30895).
|
4.30
|
Severance and General Release Agreement with Bruce Bonini dated August 8, 2003, (incorporated by reference to Exhibit 4.30 of EXFO’s Annual Report on Form 20-F dated January 15, 2004, File No. 000-30895).
|
4.31
|
Separation Agreement and General Release with Sami Yazdi dated April 1, 2003, (incorporated by reference to Exhibit 4.31 of EXFO’s Annual Report on Form 20-F dated January 15, 2004, File No. 000-30895).
|
4.32
|
Executive Employment Agreement of James Stevens dated as of October 4, 2003, (incorporated by reference to Exhibit 4.32 of EXFO’s Annual Report on Form 20-F dated January 15, 2004, File No. 000-30895).
|
4.33
|
Termination Terms for John Holloran Jr. dated May 28, 2003, (incorporated by reference to Exhibit 4.33 of EXFO’s Annual Report on Form 20-F dated January 15, 2004, File No. 000-30895).
|
4.34
|
Employment Agreement of Pierre Plamondon dated as of September 1, 2002, (incorporated by reference to Exhibit 4.34 of EXFO’s Annual Report on Form 20-F dated January 15, 2004, File No. 000-30895).
|
4.35
|
Long-Term Incentive Plan, dated May 25, 2000, amended in October 2004 and effective January 12, 2005 (incorporated by reference to Exhibit 4.35 of EXFO’s Annual Report on Form 20-F dated November 29, 2005, File No. 000-30895).
|
4.36
|
Deferred Share Unit Plan, effective January 12, 2005 (incorporated by reference to Exhibit 4.36 of EXFO’s Annual Report on Form 20-F dated November 29, 2005, File No. 000-30895).
|
4.37
|
Asset Purchase Agreement by and Among EXFO Electro-Optical Engineering Inc., Consultronics Limited., Andre Rekai, Consultronics Europe Limited, Consultronics Development Kft. and Consultronics Inc. dated January 5, 2006 (incorporated by reference to Exhibit 4.37 of EXFO’s Annual Report on Form 20-F dated November 23, 2006, File No. 000-30895).
|
4.38
|
Share Repurchase Program by Way of Normal Course Issuer Bid dated November 6, 2007 (incorporated by reference to EXFO’s report on Form 6-K dated November 6, 2007, file No. 000-30895).
|
4.39
|
Share Purchase Agreement by and Among EXFO Electro-Optical Engineering Inc., Navtel Communications Inc. and Vengrowth Investment Fund, BDC Capital Inc. and others, dated March 26, 2008 (incorporated by reference to Exhibit 4.38 of EXFO’s Annual Report on Form 20-F dated November 26, 2008, File No. 000-30895).
|
4.40
|
Agreement and Plan of Merger by and among Gexfo Distribution Internationale Inc., EXFO Service Assurance Inc. and Brix Networks, Inc. and Charles River Ventures, LLC dated April 2, 2008 (incorporated by reference to EXFO’s Material Change Report on Form 6-K dated May 2, 2008, File No. 000-30895).
|
4.41
|
Issuer Tender Offer, Letter of Transmittal and Notice of Guaranteed Delivery dated November 10, 2008 (incorporated by reference as Exhibits (a) (1) (i), (a) (1) (ii) and (a) (1) (iii) to EXFO’s Schedule TO dated November 10, 2008, File No. 000-30895).
|
4.42
|
Renewal of EXFO’s Share Repurchase Program by Way of Normal Course Issuer Bid dated November 6, 2008 (incorporated by reference to EXFO’s report on Form 6-K dated November 6, 2008, file No. 000-30895).
|
4.43
|
Final results of Issuer Bid Tender Offer, dated December 18, 2009 (incorporated by reference to EXFO’s Material Change Report on Form 6-K dated December 19, 2008, file No. 000-30895).
|
4.44
|
Share Transfer Agreement by and among GEXFO Distribution Internationale Inc. and AWS Holding AB (PicoSolve AB) and Patent Transfer Agreement by and among EXFO Electro-Optical Engineering Inc. and Starta Eget Boxen 11629 AB dated February 5, 2009 (incorporated by reference to Exhibit 4.44 of EXFO’s Annual Report on Form 20-F dated November 25, 2009, File No. 000-30895).
|
4.45
|
Renewal of EXFO’s Share Repurchase Program by Way of Normal Course Issuer Bid dated November 10, 2009 (incorporated by reference to EXFO’s report on Form 6-K dated November 6, 2009, file No. 000-30895).
|
4.46
|
Share Purchase Agreement by and among EXFO Finland Oy and NetHawk Oyj’s majority shareholders dated March 12, 2010 (incorporated by reference to EXFO’s Material Change Report on Form 6-K dated March 19, 2010, File No. 000-30895).
|
4.47
|
Share Purchase Agreement by and among EXFO Inc. and Photonic Acquisition Inc. dated October 1, 2010 (incorporated by reference to EXFO’s Material Change Report on Form 6-K dated October 8, 2010, File No. 000-30895).
|
Number
|
Exhibit
|
4.48
|
Renewal of EXFO’s Share Repurchase Program by Way of Normal Course Issuer Bid dated November 5, 2010 (incorporated by reference to EXFO’s report on Form 6-K dated November 5, 2010, file No. 000-30895).
|
4.49
|
Renewal of EXFO’s Share Repurchase Program by Way of Normal Course Issuer Bid dated November 7, 2011 (incorporated by reference to EXFO’s report on Form 6-K dated November 7, 2011, file No. 000-30895).
|
8.1
|
Subsidiaries of EXFO (list included in Item 4C of this Annual Report).
|
11.1
|
Code of Ethics for our Principal Executive Officer and Senior Financial Officers (incorporated by reference to Exhibit 11.1 of EXFO’s Annual Report on Form 20-F dated November 24, 2010, File No. 000-30895).
|
11.2
|
Board of Directors Corporate Governance Guidelines (incorporated by reference to Exhibit 11.2 of EXFO’s Annual Report on Form 20-F dated November 24, 2010, File No. 000-30895).
|
11.3
|
Ethics and Business Conduct Policy (incorporated by reference to Exhibit 11.3 of EXFO’s Annual Report on Form 20-F dated November 24, 2010, File No. 000-30895).
|
11.4
|
Statement of Reporting Ethical Violations (Whistle Blower) (incorporated by reference to Exhibit 11.4 of EXFO’s Annual Report on Form 20-F dated November 24, 2010, File No. 000-30895).
|
11.5
|
Audit Committee Charter.
|
11.6
|
Human Resources Committee Charter (incorporated by reference to Exhibit 11.6 of EXFO’s Annual Report on Form 20-F dated November 24, 2010, File No. 000-30895).
|
11.7
|
Corporate Governance Practices.
|
11.8
|
Majority Voting Policy.
|
11.9
|
Independent Members Committee Charter.
|
12.1
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2
|
Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
13.1
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
13.2
|
Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
1.
|
I have reviewed this Annual Report on Form 20-F of EXFO Inc. ("EXFO");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of EXFO as of, and for, the periods presented in this report;
|
4.
|
EXFO's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for EXFO and have:
|
a.
|
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to EXFO, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of EXFO's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in EXFO's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, EXFO's internal control over financial reporting; and
|
5.
|
EXFO's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to EXFO's auditors and the audit committee of EXFO's board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect EXFO's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in EXFO’s internal control over financial reporting.
|
1.
|
The Annual Report of Form 20-F for the year ended August 31, 2011 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
|
1.
|
I have reviewed this Annual Report on Form 20-F of EXFO Inc. ("EXFO");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of EXFO as of, and for, the periods presented in this report;
|
4.
|
EXFO's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for EXFO and have:
|
a.
|
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to EXFO, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of EXFO's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in EXFO's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, EXFO's internal control over financial reporting; and
|
5.
|
EXFO's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to EXFO's auditors and the audit committee of EXFO's board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect EXFO's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in EXFO's internal control over financial reporting.
|
1.
|
The Annual Report of Form 20-F for the year ended August 31, 2011 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
|
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash
|
$ | 22,771 | $ | 21,440 | ||||
Short-term investments (note 7)
|
47,091 | 10,379 | ||||||
Accounts receivable (note 7)
|
||||||||
Trade
|
45,151 | 50,190 | ||||||
Other
|
6,329 | 5,217 | ||||||
Income taxes and tax credits recoverable
|
5,414 | 2,604 | ||||||
Inventories (note 8)
|
52,754 | 40,328 | ||||||
Prepaid expenses
|
3,237 | 2,816 | ||||||
Future income taxes (note 19)
|
6,130 | 6,191 | ||||||
Current assets held for sale (note 4)
|
– | 3,991 | ||||||
188,877 | 143,156 | |||||||
Tax credits recoverable
|
36,627 | 29,397 | ||||||
Forward exchange contracts
(note 7)
|
149 | – | ||||||
Property, plant and equipment
(note 9)
|
30,566 | 23,455 | ||||||
Intangible assets
(note 10)
|
22,901 | 27,947 | ||||||
Goodwill
(notes 3, 5 and 10)
|
30,942 | 29,355 | ||||||
Future income taxes
(note 19)
|
11,024 | 12,884 | ||||||
Long-term assets held for sale
(note 4)
|
– | 7,308 | ||||||
$ | 321,086 | $ | 273,502 | |||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Bank loan
|
$ | 784 | $ | – | ||||
Accounts payable and accrued liabilities (note 12)
|
32,137 | 30,870 | ||||||
Income taxes payable
|
876 | 426 | ||||||
Current portion of long-term debt (note 13)
|
645 | 568 | ||||||
Deferred revenue
|
10,590 | 10,354 | ||||||
Current liabilities related to assets held for sale (note 4)
|
– | 2,531 | ||||||
45,032 | 44,749 | |||||||
Deferred revenue
|
5,704 | 5,775 | ||||||
Long-term debt
(note 13)
|
968 | 1,419 | ||||||
Other liabilities
|
723 | 603 | ||||||
Future income taxes
(note 19)
|
4,913 | – | ||||||
Long-term liabilities related to assets held for sale
(note 4)
|
– | 537 | ||||||
57,340 | 53,083 | |||||||
Commitments
(note 14)
|
||||||||
Contingency
(note 15)
|
||||||||
Shareholders’ equity
|
||||||||
Share capital (note 16)
|
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 |
On behalf of the Board
|
|
/s/ Germain Lamonde | /s/ Guy Marier |
GERMAIN LAMONDE | GUY MARIER |
Chairman, President and CEO | Chairman, Audit Committee |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Sales
(note 21)
|
$ | 269,743 | $ | 202,757 | $ | 153,082 | ||||||
Cost of sales
(1,2)
(note 8)
|
100,296 | 73,901 | 57,897 | |||||||||
Gross margin
|
169,447 | 128,856 | 95,185 | |||||||||
Operating expenses
|
||||||||||||
Selling and administrative
(1)
|
87,062 | 66,612 | 58,067 | |||||||||
Net research and development
(1)
(note 18)
|
47,927 | 37,847 | 27,213 | |||||||||
Amortization of property, plant and equipment
|
6,772 | 5,757 | 4,453 | |||||||||
Amortization of intangible assets
|
9,183 | 7,773 | 5,033 | |||||||||
Restructuring charges (note 5)
|
– | – | 963 | |||||||||
Impairment of goodwill (note 5)
|
– | – | 21,713 | |||||||||
Total operating expenses
|
150,944 | 117,989 | 117,442 | |||||||||
Earnings (loss) from operations
|
18,503 | 10,867 | (22,257 | ) | ||||||||
Interest and other income (expenses)
|
511 | (292 | ) | 592 | ||||||||
Foreign exchange gain (loss)
|
(3,808 | ) | (1,496 | ) | 1,074 | |||||||
Earnings (loss) before income taxes
(note 19)
|
15,206 | 9,079 | (20,591 | ) | ||||||||
Income taxes
(note 19)
|
8,783 | 5,529 | 266 | |||||||||
Net earnings (loss) from continuing operations
|
6,423 | 3,550 | (20,857 | ) | ||||||||
Net earnings from discontinued operations
(note 4)
|
12,926 | 3,069 | 4,272 | |||||||||
Net earnings (loss) for the year
|
$ | 19,349 | $ | 6,619 | $ | (16,585 | ) | |||||
Basic net earnings (loss) from continuing operations per share
|
$ | 0.11 | $ | 0.06 | $ | (0.34 | ) | |||||
Diluted net earnings (loss) from continuing operations per share
|
$ | 0.10 | $ | 0.06 | $ | (0.34 | ) | |||||
Basic net earnings (loss) per share
|
$ | 0.32 | $ | 0.11 | $ | (0.27 | ) | |||||
Diluted net earnings (loss) per share
|
$ | 0.31 | $ | 0.11 | $ | (0.27 | ) | |||||
Basic weighted average number of shares outstanding (000’s)
|
60,000 | 59,479 | 61,845 | |||||||||
Diluted weighted average number of shares outstanding (000’s)
(note 20)
|
61,488 | 60,616 | 61,845 | |||||||||
(1)
Stock-based compensation costs included in:
|
||||||||||||
Cost of sales
|
$ | 224 | $ | 138 | $ | 133 | ||||||
Selling and administrative
|
$ | 1,281 | $ | 1,042 | $ | 782 | ||||||
Net research and development
|
$ | 487 | $ | 470 | $ | 383 | ||||||
Net earnings from discontinued operations
|
$ | 264 | $ | 136 | $ | 111 | ||||||
(2) The cost of sales is exclusive of amortization, shown separately.
|
Comprehensive income (loss)
|
||||||||||||
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Net earnings (loss) for the year
|
$ | 19,349 | $ | 6,619 | $ | (16,585 | ) | |||||
Foreign currency translation adjustment
|
19,399 | 3,728 | (10,671 | ) | ||||||||
Changes in unrealized losses on short-term investments
|
2 | – | 22 | |||||||||
Unrealized gains (losses) on forward exchange contracts
|
3,413 | 940 | (1,467 | ) | ||||||||
Reclassification of realized (gains) losses on forward exchange contracts in net earnings (loss)
|
(2,191 | ) | (1,022 | ) | 3,167 | |||||||
Future income tax effect of the above items
|
(314 | ) | 24 | (528 | ) | |||||||
Comprehensive income (loss)
|
$ | 39,658 | $ | 10,289 | $ | (26,062 | ) |
Accumulated other comprehensive income
|
||||||||
Years ended August 31,
|
||||||||
2011
|
2010
|
|||||||
Foreign currency translation adjustment
|
||||||||
Cumulative effect of prior years
|
$ | 44,186 | $ | 40,458 | ||||
Current year
|
19,399 | 3,728 | ||||||
63,585 | 44,186 | |||||||
Unrealized gains on forward exchange contracts
|
||||||||
Cumulative effect of prior years
|
1,018 | 1,076 | ||||||
Current year, net of realized gains and future income taxes
|
908 | (58 | ) | |||||
1,926 | 1,018 | |||||||
Unrealized losses on short-term investments
|
||||||||
Cumulative effect of prior years
|
(2 | ) | (2 | ) | ||||
Current year
|
2 | – | ||||||
– | (2 | ) | ||||||
Accumulated other comprehensive income
|
$ | 65,511 | $ | 45,202 |
Retained earnings
|
||||||||||||
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Balance – Beginning of year
|
$ | 50,528 | $ | 43,909 | $ | 60,494 | ||||||
Add (deduct)
|
||||||||||||
Net earnings (loss) for the year
|
19,349 | 6,619 | (16,585 | ) | ||||||||
Balance – End of year
|
$ | 69,877 | $ | 50,528 | $ | 43,909 |
Contributed surplus
|
||||||||||||
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Balance – Beginning of year
|
$ | 18,563 | $ | 17,758 | $ | 5,226 | ||||||
Add (deduct)
|
||||||||||||
Stock-based compensation costs
|
2,217 | 1,756 | 1,407 | |||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards (note 16)
|
(2,763 | ) | (954 | ) | (540 | ) | ||||||
Discount on redemption of share capital (note 16)
|
– | 3 | 11,665 | |||||||||
Balance – End of year
|
$ | 18,017 | $ | 18,563 | $ | 17,758 |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Net earnings (loss) for the year
|
$ | 19,349 | $ | 6,619 | $ | (16,585 | ) | |||||
Add (deduct) items not affecting cash
|
||||||||||||
Change in discount on short-term investments
|
(42 | ) | 19 | 597 | ||||||||
Stock-based compensation costs
|
2,256 | 1,786 | 1,409 | |||||||||
Amortization
|
15,973 | 13,729 | 9,674 | |||||||||
Deferred revenue
|
(1,262 | ) | 3,672 | 1,706 | ||||||||
Gain on disposal of discontinued operations (note 4)
|
(13,212 | ) | – | – | ||||||||
(Gain) loss on disposal of capital assets
|
(568 | ) | – | 237 | ||||||||
Impairment of goodwill (note 5)
|
– | – | 21,713 | |||||||||
Future income taxes
|
7,032 | 5,787 | (300 | ) | ||||||||
Change in unrealized foreign exchange gain/loss
|
2,130 | 471 | (1,955 | ) | ||||||||
31,656 | 32,083 | 16,496 | ||||||||||
Change in non-cash operating items
|
||||||||||||
Accounts receivable
|
10,066 | (22,522 | ) | 9,654 | ||||||||
Income taxes and tax credits
|
(6,714 | ) | (4,073 | ) | (3,391 | ) | ||||||
Inventories
|
(8,751 | ) | (9,302 | ) | 2,624 | |||||||
Prepaid expenses
|
(232 | ) | 105 | (350 | ) | |||||||
Accounts payable and accrued liabilities
|
(2,775 | ) | 5,168 | (2,409 | ) | |||||||
Other liabilities
|
60 | 308 | – | |||||||||
23,310 | 1,767 | 22,624 | ||||||||||
Cash flows from investing activities
|
||||||||||||
Additions to short-term investments
|
(516,674 | ) | (233,388 | ) | (438,460 | ) | ||||||
Proceeds from disposal and maturity of short-term investments
|
481,945 | 285,805 | 456,612 | |||||||||
Additions to capital assets
|
(12,164 | ) | (8,966 | ) | (6,945 | ) | ||||||
Proceeds from disposal of capital assets
|
568 | – | – | |||||||||
Net proceeds from disposal of discontinued operations (note 4)
|
22,063 | – | – | |||||||||
Business combinations, net of cash acquired (note 3)
|
(1,049 | ) | (33,042 | ) | (2,414 | ) | ||||||
(25,311 | ) | 10,409 | 8,793 | |||||||||
Cash flows from financing activities
|
||||||||||||
Bank loan
|
772 | – | – | |||||||||
Repayment of long-term debt
|
(619 | ) | (274 | ) | – | |||||||
Redemption of share capital
|
– | (14 | ) | (26,871 | ) | |||||||
Exercise of stock options
|
1,452 | 343 | 56 | |||||||||
1,605 | 55 | (26,815 | ) | |||||||||
Effect of foreign exchange rate changes on cash
|
1,058 | (733 | ) | 95 | ||||||||
Change in cash
|
662 | 11,498 | 4,697 | |||||||||
Cash – Beginning of year
|
22,109 | 10,611 | 5,914 | |||||||||
Cash – End of year
|
$ | 22,771 | $ | 22,109 | $ | 10,611 | ||||||
Supplementary information
|
||||||||||||
Interest paid
|
$ | 159 | $ | 34 | $ | 23 | ||||||
Income taxes paid
|
$ | 1,878 | $ | 796 | $ | 86 | ||||||
Cash related to:
|
||||||||||||
Continuing operations
|
$ | 22,771 | $ | 21,440 | $ | 9,777 | ||||||
Discontinued operations (note 4)
|
– | 669 | 834 | |||||||||
$ | 22,771 | $ | 22,109 | $ | 10,611 |
1 | Nature of Activities |
2 | Summary of Significant Accounting Policies |
Term
|
||
Land improvements
|
5 years
|
|
Buildings
|
20 and 25 years
|
|
Equipment
|
2 to 10 years
|
|
Leasehold improvements
|
The lesser of useful life and remaining lease term
|
3 | Business Combination |
Assets acquired, net of cash acquired
|
||||
Accounts receivable
|
$ | 7,710 | ||
Inventories
|
2,315 | |||
Other current assets
|
797 | |||
Property, plant and equipment
|
2,994 | |||
Core technology
|
8,638 | |||
Customer relationships
|
7,180 | |||
Other intangible assets
|
2,033 | |||
Current liabilities assumed
|
||||
Accounts payable and accrued liabilities
|
(5,710 | ) | ||
Deferred revenue
|
(1,615 | ) | ||
Long-term debt
|
(2,464 | ) | ||
Net identifiable assets acquired
|
21,878 | |||
Goodwill
|
12,560 | |||
Purchase price, net of cash acquired
|
$ | 34,438 |
4 | Discontinued Operations |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
(30 days)
|
||||||||||||
Sales
|
$ | 1,991 | $ | 25,359 | $ | 19,796 | ||||||
Gross margin
|
$ | 989 | $ | 13,563 | $ | 10,801 | ||||||
Earnings (loss) from operations
|
$ | (6 | ) | $ | 4,281 | $ | 4,179 | |||||
Gain from disposal of discontinued operations
|
$ | 13,212 | $ | – | $ | – | ||||||
Net earnings from discontinued operations
|
$ | 12,926 | $ | 3,069 | $ | 4,272 | ||||||
Basic net earnings from discontinued operations per share
|
$ | 0.22 | $ | 0.05 | $ | 0.07 | ||||||
Diluted net earnings from discontinued operations per share
|
$ | 0.21 | $ | 0.05 | $ | 0.07 |
Assets
|
||||
Current assets
|
||||
Cash
|
$ | 669 | ||
Accounts receivable
|
84 | |||
Income taxes and tax credits recoverable
|
188 | |||
Inventories
|
2,670 | |||
Prepaid expenses
|
158 | |||
Future income taxes
|
222 | |||
Current assets held for sale
|
3,991 | |||
Tax credits recoverable
|
2,142 | |||
Property, plant and equipment
|
349 | |||
Intangible assets
|
48 | |||
Goodwill
|
4,769 | |||
Long-term assets held for sale
|
7,308 | |||
$ | 11,299 | |||
Liabilities
|
||||
Current liabilities related to assets held for sale
|
$ | 2,531 | ||
Long-term liabilities related to assets held for sale
|
537 | |||
$ | 3,068 |
5 | Special Charges |
Balance as at
August 31, 2009
|
Additions
|
Payments
|
Balance as at
August 31, 2010
|
|||||||||||||
Fiscal 2009 plan
|
||||||||||||||||
Severance expenses
|
$ | 24 | $ | − | $ | (24 | ) | $ | − |
Balance as at
August 31, 2008
|
Additions
|
Payments
|
Balance as at
August 31, 2009
|
|||||||||||||
Fiscal 2009 plan
|
||||||||||||||||
Severance expenses
|
$ | − | $ | 963 | $ | (939 | ) | $ | 24 | |||||||
Fiscal 2008 plan
|
||||||||||||||||
Severance expenses
|
292 | − | (292 | ) | − | |||||||||||
Total for all plans
|
$ | 292 | $ | 963 | $ | (1,231 | ) | $ | 24 |
6 | Capital Disclosures |
·
|
To maintain a flexible capital structure that optimizes the cost of capital at acceptable risk;
|
·
|
To sustain future development of the company, including research and development activities, market development, and potential acquisitions of complementary businesses or products; and
|
·
|
To provide the company’s shareholders with an appropriate return on their investment.
|
7 | Financial Instruments |
Cash
|
Held for trading
|
Short-term investments
|
Available for sale
|
Accounts receivable
|
Loans and receivables
|
Forward exchange contracts
|
Cash flow hedge
|
Expiry dates
|
Contractual
amounts
|
Weighted average contractual
forward rates
|
|||||||
September 2011 to August 2012
|
$ | 27,500 | 1.0555 | ||||||
September 2012 to July 2013
|
11,400 | 1.0063 | |||||||
Total
|
$ | 38,900 | 1.0411 |
As at August 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Carrying/
nominal
amount
(in thousands
of US dollars)
|
Carrying/
nominal
amount
(in thousands
of euros)
|
Carrying/
nominal
amount
(in thousands
of US dollars)
|
Carrying/
nominal
amount
(in thousands
of euros)
|
|||||||||||||
Financial assets
|
||||||||||||||||
Cash
|
$ | 10,553 | € | 1,502 | $ | 6,947 | € | 1,287 | ||||||||
Accounts receivable
|
25,040 | 4,332 | 30,218 | 3,860 | ||||||||||||
35,593 | 5,834 | 37,165 | 5,147 | |||||||||||||
Financial liabilities
|
||||||||||||||||
Accounts payable and accrued liabilities
|
8,706 | 37 | 8,932 | 438 | ||||||||||||
Forward exchange contracts (nominal value)
|
5,400 | – | 5,900 | – | ||||||||||||
14,106 | 37 | 14,832 | 438 | |||||||||||||
Net exposure
|
$ | 21,487 | € | 5,797 | $ | 22,333 | € | 4,709 |
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would decrease (increase) net earnings by $2,101,000, or $0.03 per diluted share, and $1,943,000, or $0.03 per diluted share, as at August 31, 2010 and 2011, respectively.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the euro would decrease (increase) net earnings by $621,000, or $0.01 per diluted share, and $831,000, or $0.01 per diluted share, as at August 31, 2010 and 2011, respectively.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would increase (decrease) comprehensive income by $3,238,000 and $2,404,000 as at August 31, 2010 and 2011, respectively.
|
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Commercial paper denominated in Canadian dollars, bearing interest at annual rates of 1.0% to 1.3% in fiscal 2011 and 0.6% to 0.9% in fiscal 2010, maturing between September and November 2011 in fiscal 2011, and in September and October 2010 in fiscal 2010
|
$ | 31,765 | $ | 6,383 | ||||
Bankers acceptance denominated in Canadian dollars, bearing interest at annual rates of 1.0% to 1.2% in fiscal 2011 and 0.8% in fiscal 2010, maturing in September and November 2011 in fiscal 2011 and in September 2010 in fiscal 2010
|
15,326 | 3,996 | ||||||
$ | 47,091 | $ | 10,379 |
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Current
|
$ | 33,149 | $ | 38,663 | ||||
Past due, 0 to 30 days
|
7,299 | 6,787 | ||||||
Past due, 31 to 60 days
|
2,590 | 1,991 | ||||||
Past due, more than 60 days, less allowance for doubtful accounts of $1,243 and $1,245 as at August 31, 2010 and 2011, respectively
|
2,113 | 2,749 | ||||||
Total accounts receivable
|
$ | 45,151 | $ | 50,190 |
Years ended August 31,
|
||||||||
2011
|
2010
|
|||||||
Balance – Beginning of year
|
$ | 1,243 | $ | 1,220 | ||||
Addition charged to earnings
|
148 | 150 | ||||||
Write-off of uncollectible accounts
|
(111 | ) | – | |||||
Recovery of uncollectible accounts
|
(35 | ) | (127 | ) | ||||
Balance – End of year
|
$ | 1,245 | $ | 1,243 |
As at August 31, 2011
|
||||||||||||
0-12
months
|
13-24
months
|
25-36
months
|
||||||||||
Bank loan
|
$ | 784 | $ | – | $ | – | ||||||
Accounts payable and accrued liabilities
|
30,319 | – | – | |||||||||
Long-term debt
|
645 | 645 | 323 | |||||||||
Other liabilities
|
– | 201 | – | |||||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
27,500 | 11,400 | – | |||||||||
Inflow
|
(29,668 | ) | (11,725 | ) | – | |||||||
Total
|
$ | 29,580 | $ | 521 | $ | 323 |
As at August 31, 2010
|
||||||||||||||||
0-12
months
|
13-24
months
|
25-36
months
|
Over 36
months
|
|||||||||||||
Accounts payable and accrued liabilities
|
$ | 29,711 | $ | – | $ | – | $ | – | ||||||||
Long-term debt
|
568 | 568 | 568 | 283 | ||||||||||||
Other liabilities
|
– | 295 | – | – | ||||||||||||
Forward exchange contracts
|
||||||||||||||||
Outflow
|
29,500 | 20,400 | 1,500 | – | ||||||||||||
Inflow
|
(30,141 | ) | (20,662 | ) | (1,508 | ) | – | |||||||||
Total
|
$ | 29,638 | $ | 601 | $ | 560 | $ | 283 |
8 | Inventories |
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Raw materials
|
$ | 30,280 | $ | 21,505 | ||||
Work in progress
|
2,206 | 1,975 | ||||||
Finished goods
|
20,268 | 16,848 | ||||||
$ | 52,754 | $ | 40,328 |
9 | Property, Plant and Equipment |
As at August 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Cost
|
Accumulated
amortization
|
Cost
|
Accumulated
amortization
|
|||||||||||||
Land and land improvements
|
$ | 4,705 | $ | 1,317 | $ | 2,287 | $ | 1,200 | ||||||||
Buildings
|
17,346 | 5,868 | 14,395 | 4,987 | ||||||||||||
Equipment
|
44,034 | 32,470 | 39,734 | 28,282 | ||||||||||||
Leasehold improvements
|
3,255 | 2,061 | 2,976 | 1,468 | ||||||||||||
Asset under construction (note 14)
|
2,942 | – | – | – | ||||||||||||
72,282 | $ | 41,716 | 59,392 | $ | 35,937 | |||||||||||
Less:
|
||||||||||||||||
Accumulated amortization
|
41,716 | 35,937 | ||||||||||||||
$ | 30,566 | $ | 23,455 |
10 | Intangible Assets and Goodwill |
As at August 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Cost
|
Accumulated
amortization
|
Cost
|
Accumulated
amortization
|
|||||||||||||
Core technology
|
$ | 27,215 | $ | 14,455 | $ | 34,858 | $ | 17,496 | ||||||||
Customer relationships
|
7,519 | 2,211 | 6,615 | 622 | ||||||||||||
Brand name
|
749 | 220 | 659 | 62 | ||||||||||||
Software
|
13,722 | 9,418 | 11,557 | 7,562 | ||||||||||||
49,205 | $ | 26,304 | 53,689 | $ | 25,742 | |||||||||||
Less:
|
||||||||||||||||
Accumulated amortization
|
26,304 | 25,742 | ||||||||||||||
$ | 22,901 | $ | 27,947 |
Years ended August 31,
|
||||||||
2011
|
2010
|
|||||||
Balance – Beginning of year
|
$ | 29,355 | $ | 17,840 | ||||
Addition from business combination (note 3)
|
– | 12,560 | ||||||
Foreign currency translation adjustment
|
1,587 | (1,045 | ) | |||||
Balance – End of year
|
$ | 30,942 | $ | 29,355 |
11 | Credit Facilities |
12 | Accounts Payable and Accrued Liabilities |
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Trade
|
$ | 15,717 | $ | 14,244 | ||||
Salaries and social benefits
|
12,649 | 12,400 | ||||||
Warranty
|
1,402 | 579 | ||||||
Forward exchange contracts (note 7)
|
– | 232 | ||||||
Other
|
2,369 | 3,415 | ||||||
$ | 32,137 | $ | 30,870 |
Years ended August 31,
|
||||||||
2011
|
2010
|
|||||||
Balance – Beginning of year
|
$ | 579 | $ | 647 | ||||
Provision
|
1,608 | 810 | ||||||
Settlements
|
(785 | ) | (878 | ) | ||||
Balance – End of year
|
$ | 1,402 | $ | 579 |
13 | Long-Term Debt |
Years ended August 31,
|
||||||||
2011
|
2010
|
|||||||
Loan collateralized by assets of NetHawk Oyj denominated in euros (€1,120), bearing interest at 2.95%, repayable in semi-annual installments of $323 (€224), maturing in December 2013 (note 3)
|
$ | 1,613 | $ | 1,987 | ||||
Less: current portion
|
645 | 568 | ||||||
$ | 968 | $ | 1,419 |
14 | Commitments |
15 | Contingency |
16 | Share Capital |
Authorized – unlimited as to number, without par value
|
|
Subordinate voting and participating, bearing a non-cumulative dividend to be determined by the Board of Directors, ranking
pari passu
with multiple voting shares
|
|
Multiple voting and participating, entitling to 10 votes each, bearing a non-cumulative dividend to be determined by the Board of Directors, convertible at the holder’s option into subordinate voting shares on a one-for-one basis, ranking
pari passu
with subordinate voting shares
|
Multiple voting shares
|
Subordinate voting shares
|
|||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Total
amount
|
||||||||||||||||
Balance as at August 31, 2008
|
36,643,000 | $ | 1 | 30,783,705 | $ | 142,785 | $ | 142,786 | ||||||||||||
Exercise of stock options (note 17)
|
– | – | 27,500 | 56 | 56 | |||||||||||||||
Redemption of restricted share units (note 17)
|
– | – | 106,190 | – | – | |||||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
– | – | – | 540 | 540 | |||||||||||||||
Redemption of share capital
|
– | – | (8,181,093 | ) | (38,536 | ) | (38,536 | ) | ||||||||||||
Balance as at August 31, 2009
|
36,643,000 | 1 | 22,736,302 | 104,845 | 104,846 | |||||||||||||||
Exercise of stock options (note 17)
|
– | – | 83,700 | 343 | 343 | |||||||||||||||
Redemption of restricted share units (note 17)
|
– | – | 120,307 | – | – | |||||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
– | – | – | 954 | 954 | |||||||||||||||
Redemption of share capital
|
– | – | (3,600 | ) | (17 | ) | (17 | ) | ||||||||||||
Balance as at August 31, 2010
|
36,643,000 | 1 | 22,936,709 | 106,125 | 106,126 | |||||||||||||||
Conversion of multiple voting shares into subordinate voting shares
|
(5,000,000 | ) | – | 5,000,000 | – | – | ||||||||||||||
Exercise of stock options (note 17)
|
– | – | 306,825 | 1,452 | 1,452 | |||||||||||||||
Redemption of restricted share units (note 17)
|
– | – | 340,974 | – | – | |||||||||||||||
Redemption of deferred shares units (note 17)
|
– | – | 37,491 | – | – | |||||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
– | – | – | 2,763 | 2,763 | |||||||||||||||
Balance as at August 31, 2011
|
31,643,000 | $ | 1 | 28,621,999 | $ | 110,340 | $ | 110,341 |
|
a)
|
On November 6, 2008, the company announced that its Board of Directors had authorized a renewal of its share repurchase program, by way of a normal course issuer bid on the open market, of up to 10% of its public float (as defined by the Toronto Stock Exchange), or 2,738,518 subordinate voting shares, at the prevailing market price. The period of the normal course issuer bid commenced on November 10, 2008, and ended on November 9, 2009. The company redeemed for cancellation 488,786 subordinate voting shares for an aggregate net purchase price of $1,416,000 under that program.
|
|
b)
|
On November 10, 2008, the company announced that its Board of Directors had authorized a substantial issuer bid (the “Offer”) to purchase for cancellation subordinate voting shares for an aggregate purchase price not to exceed CA$30,000,000. On December 18, 2008, pursuant to the Offer, the company purchased for cancellation 7,692,307 subordinate voting shares for the aggregate purchase price of CA$30,000,000 (US$24,879,000), plus related fees of $576,000.
|
|
c)
|
On November 6, 2009, the company announced that its Board of Directors had authorized the second renewal of its share repurchase program, by way of a normal course issuer bid on the open market, of up to 10% of its public float (as defined by the Toronto Stock Exchange), or 2,256,431 subordinate voting shares, at the prevailing market price. The period of the normal course issuer bid started on November 10, 2009, and ended on November 9, 2010. The company redeemed for cancellation 3,600 shares under that program for an aggregate net purchase price of $14,000.
|
|
d)
|
On November 5, 2010, the company announced that its Board of Directors had authorized the third renewal of its share repurchase program, by way of a normal course issuer bid on the open market, of up to 10% of its public float (as defined by the Toronto Stock Exchange), or 2,012,562 subordinate voting shares, at the prevailing market price. The period of the normal course issuer bid started on November 10, 2010, and will end on November 9, 2011. As at November 7, 2011, the company had redeemed for cancellation 25,055 shares under that program for an aggregate net purchase price of $144,197.
|
|
e)
|
On November 7, 2011 the company announced that its Board of Directors approved the fourth renewal of its share repurchase program, by way of a normal course issuer bid on the open market of up to 2% of issued and outstanding subordinate voting share, representing 575,690 subordinate voting shares at the prevailing market price. The company expects to use cash, short-term investments or future cash flow from operations to fund the repurchase of shares. The normal course issuer bid will start on November 10, 2011, and will end on November 9, 2012, or on an earlier date if the company repurchases the maximum number of shares permitted under the bid. The program does not require that the company repurchases any specific number of shares, and it may be modified, suspended or terminated at any time and without prior notice. All shares repurchased under the bid will be cancelled.
|
17 | Stock-Based Compensation Plans |
Years ended August 31,
|
||||||||||||||||||||||||
2011
|
2010
|
2009
|
||||||||||||||||||||||
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
|||||||||||||||||||
(CA$)
|
(CA$)
|
(CA$)
|
||||||||||||||||||||||
Outstanding – Beginning of year
|
1,348,787 | $ | 19 | 1,666,589 | $ | 21 | 1,821,481 | $ | 21 | |||||||||||||||
Exercised
|
(306,825 | ) | 5 | (83,700 | ) | 4 | (27,500 | ) | 3 | |||||||||||||||
Forfeited
|
(43,541 | ) | 14 | − | − | (1,000 | ) | 6 | ||||||||||||||||
Expired
|
(357,064 | ) | 48 | (234,102 | ) | 36 | (126,392 | ) | 26 | |||||||||||||||
Outstanding – End of year
|
641,357 | $ | 9 | 1,348,787 | $ | 19 | 1,666,589 | $ | 21 | |||||||||||||||
Exercisable – End of year
|
641,357 | $ | 9 | 1,348,787 | $ | 19 | 1,660,090 | $ | 21 |
Stock options outstanding and exercisable
|
||||||||||||||||||
Exercise price
|
Number
|
Weighted
average
exercise price
|
Intrinsic
value
|
Weighted
average
remaining
contractual life
|
||||||||||||||
(CA$)
|
(CA$)
|
(CA$)
|
||||||||||||||||
$ | 2.50 | 112,025 | $ | 2.50 | $ | 453 |
1 year
|
|||||||||||
$ | 4.64 to $6.28 | 243,529 | 5.48 | 261 |
3 years
|
|||||||||||||
$ | 9.02 | 10,000 | 9.02 | – |
1 year
|
|||||||||||||
$ | 14.27 to $20.00 | 275,803 | 15.73 | – | – | |||||||||||||
641,357 | $ | 9.42 | $ | 714 |
1 year
|
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Outstanding – Beginning of year
|
1,603,048 | 1,339,619 | 847,791 | |||||||||
Granted
|
350,382 | 415,538 | 685,972 | |||||||||
Redeemed
|
(340,974 | ) | (120,307 | ) | (106,190 | ) | ||||||
Forfeited
|
(60,798 | ) | (31,802 | ) | (87,954 | ) | ||||||
Outstanding – End of year
|
1,551,658 | 1,603,048 | 1,339,619 |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Outstanding – Beginning of year
|
135,003 | 114,924 | 79,185 | |||||||||
Granted
|
12,786 | 20,079 | 35,739 | |||||||||
Redeemed
|
(37,491 | ) | − | − | ||||||||
Outstanding – End of year
|
110,298 | 135,003 | 114,924 |
Years ended August 31,
|
||||||||||||||||||||||||
2011
|
2010
|
2009
|
||||||||||||||||||||||
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
|||||||||||||||||||
Outstanding – Beginning of year
|
44,374 | $ | 8 | 40,374 | $ | 8 | 30,700 | $ | 10 | |||||||||||||||
Granted
|
4,500 | – | 4,000 | 4 | 9,674 | 2 | ||||||||||||||||||
Exercised
|
(14,750 | ) | 5 | – | – | – | – | |||||||||||||||||
Expired
|
(5,000 | ) | 34 | – | – | – | – | |||||||||||||||||
Outstanding – End of year
|
29,124 | $ | 3 | 44,374 | $ | 8 | 40,374 | $ | 8 | |||||||||||||||
Exercisable – End of year
|
10,075 | $ | 5 | 28,318 | $ | 10 | 24,475 | $ | 11 |
Stock appreciation
rights outstanding
|
Stock appreciation
rights exercisable
|
||||||||||
Exercise price
|
Number
|
Weighted average
remaining contractual
life
|
Number
|
||||||||
$ | – | 4,500 |
9 years
|
– | |||||||
$ | 2.36 | 9,674 |
7 years
|
6,500 | |||||||
$ | 3.74 to $4.65 | 10,500 |
5 years
|
3,575 | |||||||
$ | 6.28 to $6.50 | 4,450 |
5 years
|
– | |||||||
29,124 |
6 years
|
10,075 |
18 | Other Disclosures |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Gross research and development expenses
|
$ | 57,226 | $ | 44,551 | $ | 33,584 | ||||||
Research and development tax credits and grants
|
(9,299 | ) | (6,704 | ) | (6,371 | ) | ||||||
$ | 47,927 | $ | 37,847 | $ | 27,213 |
·
|
Deferred profit-sharing plan
|
·
|
401K plan
|
19 | Income Taxes |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Income tax provision at the combined Canadian federal and provincial statutory tax rate (29% in 2011, 30% in 2010 and 31% in 2009)
|
$ | 4,410 | $ | 2,724 | $ | (6,383 | ) | |||||
Increase (decrease) due to:
|
||||||||||||
Foreign income taxed at different rates
|
(327 | ) | (459 | ) | 56 | |||||||
Non-taxable income
|
(3,404 | ) | (787 | ) | (211 | ) | ||||||
Non-deductible expenses
|
916 | 851 | 5,200 | |||||||||
Change in tax rates
|
– | 97 | – | |||||||||
Foreign exchange effect of translation of foreign integrated subsidiaries
|
2,541 | (55 | ) | 189 | ||||||||
Other
|
(402 | ) | (27 | ) | 638 | |||||||
Utilization of previously unrecognized future income tax assets
|
(61 | ) | (349 | ) | (68 | ) | ||||||
Unrecognized future income tax assets on temporary deductible differences and unused tax losses and deductions
|
5,110 | 3,534 | 845 | |||||||||
$ | 8,783 | $ | 5,529 | $ | 266 | |||||||
The income tax provision consists of the following:
|
||||||||||||
Current
|
||||||||||||
Canada
|
$ | 9 | $ | 13 | $ | 87 | ||||||
Other
|
1,916 | 702 | 500 | |||||||||
1,925 | 715 | 587 | ||||||||||
Future
|
||||||||||||
Canada
|
5,999 | 4,316 | 1,045 | |||||||||
Finland
|
(3,156 | ) | (928 | ) | – | |||||||
United States
|
(738 | ) | (1,501 | ) | (2,511 | ) | ||||||
Other
|
(296 | ) | (258 | ) | 368 | |||||||
1,809 | 1,629 | (1,098 | ) | |||||||||
Valuation allowance
|
||||||||||||
Canada
|
426 | 7 | 236 | |||||||||
Finland
|
3,156 | 928 | – | |||||||||
United States
|
1,426 | 2,203 | 604 | |||||||||
Other
|
41 | 47 | (63 | ) | ||||||||
5,049 | 3,185 | 777 | ||||||||||
6,858 | 4,814 | (321 | ) | |||||||||
$ | 8,783 | $ | 5,529 | $ | 266 | |||||||
The income tax provision for the discontinued operations is as follows:
|
||||||||||||
Current
|
$ | 27 | $ | 163 | $ | (25 | ) | |||||
Future
|
(6,649 | ) | 972 | 21 | ||||||||
Valuation allowance
|
6,823 | – | – | |||||||||
$ | 201 | $ | 1,135 | $ | (4 | ) |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Details of the company’s income taxes:
|
||||||||||||
Earnings (loss) before income taxes
|
||||||||||||
Canada
|
$ | 21,894 | $ | 12,403 | $ | (15,611 | ) | |||||
Finland
|
(14,760 | ) | (1,921 | ) | – | |||||||
United States
|
3,128 | (4,546 | ) | (5,026 | ) | |||||||
Other
|
4,944 | 3,143 | 46 | |||||||||
$ | 15,206 | $ | 9,079 | $ | (20,591 | ) |
As at August 31,
|
||||||||
2011
|
2010
|
|||||||
Future income tax assets
|
||||||||
Long-lived assets
|
$ | 5,262 | $ | 5,473 | ||||
Provisions and accruals
|
3,279 | 3,797 | ||||||
Deferred revenue
|
1,983 | 1,983 | ||||||
Research and development expenses
|
5,515 | 9,954 | ||||||
Losses carried forward
|
45,584 | 34,322 | ||||||
61,623 | 55,529 | |||||||
Valuation allowance
|
(34,516 | ) | (21,277 | ) | ||||
27,107 | 34,252 | |||||||
Future income tax liabilities
|
||||||||
Research and development tax credits
|
(9,698 | ) | (7,793 | ) | ||||
Long-lived assets
|
(5,168 | ) | (7,161 | ) | ||||
Deferred revenue
|
– | (223 | ) | |||||
(14,866 | ) | (15,177 | ) | |||||
Future income tax assets, net
|
$ | 12,241 | $ | 19,075 |
Canada
|
||||||||||||||||||||
Year of expiry
|
Federal
|
Provincial
|
Finland
|
United States
|
Other
|
|||||||||||||||
2012
|
$ | – | $ | – | $ | 2,417 | $ | – | $ | – | ||||||||||
2013
|
– | – | 8,096 | – | – | |||||||||||||||
2014
|
– | – | 4,896 | – | – | |||||||||||||||
2015
|
1,217 | 1,217 | 3,172 | – | 67 | |||||||||||||||
2016
|
– | – | – | – | 75 | |||||||||||||||
2017
|
– | – | 4 | – | 4 | |||||||||||||||
2018
|
– | – | 418 | – | 103 | |||||||||||||||
2019
|
– | – | – | 741 | 86 | |||||||||||||||
2020
|
– | – | 10,197 | 3,470 | – | |||||||||||||||
2021
|
– | – | 7,997 | 10,202 | – | |||||||||||||||
2022
|
– | – | – | 7,434 | – | |||||||||||||||
2023
|
– | – | – | 6,033 | – | |||||||||||||||
2024
|
– | – | – | 3,954 | – | |||||||||||||||
2025
|
– | – | – | 8,449 | – | |||||||||||||||
2026
|
1,099 | 1,099 | – | 4,126 | – | |||||||||||||||
2027
|
1,394 | 1,394 | – | 1,355 | – | |||||||||||||||
2028
|
– | – | – | 2,472 | – | |||||||||||||||
2029
|
– | – | – | 2,621 | – | |||||||||||||||
2030
|
12 | 12 | – | 2,713 | – | |||||||||||||||
2031
|
39 | 39 | – | 664 | – | |||||||||||||||
Indefinite
|
– | – | – | 8,824 | 5,137 | |||||||||||||||
$ | 3,761 | $ | 3,761 | $ | 37,197 | $ | 63,058 | $ | 5,472 |
Canada
|
||||||||||||||||
Carry-forward period
|
Federal
|
Provincial
|
Finland
|
United States
|
||||||||||||
2012
|
$ | – | $ | – | $ | 1,806 | $ | – | ||||||||
2013
|
– | – | 1,375 | 1,726 | ||||||||||||
2014
|
– | – | 724 | 1,404 | ||||||||||||
2015
|
– | – | 113 | 997 | ||||||||||||
2016
|
– | – | – | 553 | ||||||||||||
Indefinite
|
12,293 | 5,925 | – | – | ||||||||||||
$ | 12,293 | $ | 5,925 | $ | 4,018 | $ | 4,680 |
Canada
|
||||||||
Year of expiry
|
Federal
|
Provincial
|
||||||
2018
|
$ | 537 | $ | – | ||||
2019
|
1,170 | – | ||||||
2020
|
1,541 | – | ||||||
2021
|
1,774 | – | ||||||
2022
|
1,498 | – | ||||||
2023
|
1,532 | – | ||||||
2024
|
391 | – | ||||||
2025
|
3,074 | – | ||||||
2026
|
3,425 | – | ||||||
2027
|
3,931 | – | ||||||
2028
|
4,306 | – | ||||||
2029
|
4,443 | 280 | ||||||
2030
|
4,045 | 206 | ||||||
2031
|
4,237 | 230 | ||||||
$ | 35,904 | $ | 716 |
20 | Earnings per Share |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Basic weighted average number of shares outstanding (000’s)
|
60,000 | 59,479 | 61,845 | |||||||||
Plus dilutive effect of (000’s):
|
||||||||||||
Stock options
|
266 | 228 | 131 | |||||||||
Restricted share units
|
1,106 | 786 | 311 | |||||||||
Deferred share units
|
116 | 123 | 94 | |||||||||
Diluted weighted average number of shares outstanding (000’s)
|
61,488 | 60,616 | 62,381 | |||||||||
Stock awards excluded from the calculation of the diluted weighted average number of shares outstanding because their exercise price was greater than the average market price of the common shares (000’s)
|
381 | 960 | 1,602 |
21 | Segment Information |
Years ended August 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
United States
|
$ | 89,240 | $ | 76,669 | $ | 61,757 | ||||||
Canada
|
30,986 | 18,278 | 17,331 | |||||||||
Latin America
|
17,303 | 11,454 | 7,729 | |||||||||
Americas
|
137,529 | 106,401 | 86,817 | |||||||||
United Kingdom
|
15,617 | 10,936 | 6,188 | |||||||||
Other
|
69,698 | 49,288 | 36,466 | |||||||||
Europe, Middle-East and Africa
|
85,315 | 60,224 | 42,654 | |||||||||
China
|
25,799 | 17,610 | 13,784 | |||||||||
Other
|
21,100 | 18,522 | 9,827 | |||||||||
Asia-Pacific
|
46,899 | 36,132 | 23,611 | |||||||||
$ | 269,743 | $ | 202,757 | $ | 153,082 |
As at August 31,
|
||||||||||||||||||||||||
2011
|
2010
|
|||||||||||||||||||||||
Property,
plant and
equipment
|
Intangible
assets
|
Goodwill
|
Property,
plant and
equipment
|
Intangible
assets
|
Goodwill
|
|||||||||||||||||||
Canada
|
$ | 19,696 | $ | 3,164 | $ | − | $ | 13,753 | $ | 3,316 | $ | − | ||||||||||||
United States
|
1,402 | 4,834 | 17,782 | 1,829 | 7,828 | 17,782 | ||||||||||||||||||
Finland
|
1,544 | 13,324 | 13,160 | 1,606 | 14,906 | 11,573 | ||||||||||||||||||
India
|
4,709 | 43 | – | 3,134 | 43 | – | ||||||||||||||||||
China
|
2,696 | 27 | − | 2,665 | 33 | − | ||||||||||||||||||
Other
|
519 | 1,509 | − | 468 | 1,821 | − | ||||||||||||||||||
$ | 30,566 | $ | 22,901 | $ | 30,942 | $ | 23,455 | $ | 27,947 | $ | 29,355 |
22 | United States Generally Accepted Accounting Principles |
Years ended August 31,
|
||||||||||||||||
2011
|
2010
|
2009
|
||||||||||||||
Net earnings (loss) for the year in accordance with Canadian GAAP
|
$ | 19,349 | $ | 6,619 | $ | (16,585 | ) | |||||||||
Gain on disposal of discontinued operations
|
a | ) | 4,130 | − | − | |||||||||||
Acquisition-related costs on business combination
|
b | ) | − | (2,842 | ) | – | ||||||||||
Impairment of goodwill
|
c | ) | − | − | 8,406 | |||||||||||
Changes in fair value of cash contingent consideration
|
b | ) | 2,685 | − | − | |||||||||||
Net earnings (loss) for the year in accordance with U.S. GAAP
|
26,164 | 3,777 | (8,179 | ) | ||||||||||||
Foreign currency translation adjustment
|
b | ) | 19,264 | 3,952 | (10,671 | ) | ||||||||||
Changes in unrealized losses on available-for-sale securities
|
2 | − | 22 | |||||||||||||
Unrealized gains (losses) on forward exchange contracts
|
3,413 | 940 | (1,467 | ) | ||||||||||||
Reclassification of realized (gains) losses on forward exchange contracts in net earnings (loss)
|
(2,191 | ) | (1,022 | ) | 3,167 | |||||||||||
Future income taxes effect of the above items
|
(314 | ) | 24 | (528 | ) | |||||||||||
Comprehensive income (loss) under U.S. GAAP
|
$ | 46,338 | $ | 7,671 | $ | (17,656 | ) | |||||||||
U.S. GAAP net earnings (loss) are comprised of:
|
||||||||||||||||
Net earnings (loss) from continuing operations
|
$ | 9,108 | $ | 708 | $ | (12,451 | ) | |||||||||
Net earnings from discontinued operations
|
17,056 | 3,069 | 4,272 | |||||||||||||
$ | 26,164 | $ | 3,777 | $ | (8,179 | ) | ||||||||||
Basic net and diluted earnings (loss) from continuing operations per share in accordance with U.S. GAAP
|
$ | 0.15 | $ | 0.01 | $ | (0.20 | ) | |||||||||
Basic and diluted net earnings from discontinued operations per share in accordance with U.S. GAAP
|
$ | 0.28 | $ | 0.05 | $ | 0.07 | ||||||||||
Basic net earnings (loss) per share in accordance with U.S. GAAP
|
$ | 0.44 | $ | 0.06 | $ | (0.13 | ) | |||||||||
Diluted net earnings (loss) per share in accordance with U.S. GAAP
|
$ | 0.43 | $ | 0.06 | $ | (0.13 | ) |
As at August 31,
|
||||||||||||
2011
|
2010
|
|||||||||||
Shareholders’ equity in accordance with Canadian GAAP
|
$ | 263,746 | $ | 220,419 | ||||||||
Goodwill
|
c | ) | 47 | 42 | ||||||||
Long-term assets held for sale
|
c | ) | − | (3,988 | ) | |||||||
Cash contingent consideration payable
|
b | ) | (338 | ) | (2,660 | ) | ||||||
Stock appreciation rights
|
d | ) | (73 | ) | (73 | ) | ||||||
Shareholders’ equity in accordance with U.S. GAAP
|
$ | 263,382 | $ | 213,740 |
a)
|
Gain on disposal of discontinued operations
|
b)
|
Business combination
|
c)
|
Goodwill
|
d)
|
Stock-based compensation costs related to stock appreciation rights
|
e)
|
Research and development tax credits
|
f)
|
Gross margin
|
g)
|
New accounting standards and pronouncements
|
Years ended August 31,
|
||||||||
2010
|
2009
|
|||||||
(unaudited)
|
||||||||
Sales
|
$ | 220,621 | $ | 191,040 | ||||
Net earnings (loss)
|
$ | 2,119 | $ | (19,317 | ) | |||
Basic and diluted net earnings (loss) per share
|
$ | 0.04 | $ | (0.31 | ) |
I.
|
Purpose
|
II.
|
Organization
|
III.
|
Meetings
|
IV.
|
Authority and Responsibilities
|
|
1.
|
Be directly responsible for the appointment, compensation and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing its audit report or related work.
|
|
2.
|
Have the sole authority to review in advance, and grant any appropriate pre-approvals, of (a) all auditing services to be provided by the independent auditors and (b) all non-audit services to be provided by the independent auditors as permitted by Section 10A of the Securities Exchange Act, and in connection therewith to approve all fees and other terms of engagement. The Audit Committee shall also review and approve disclosures required by applicable regulatory requirements.
|
|
3.
|
Review on an annual basis the performance of the independent auditors including the lead audit partner.
|
|
4.
|
Ensure that the independent auditors submit to the Audit Committee on an annual basis a written statement consistent with Independent Standards Board Standard No. 1, discuss with the independent auditors any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and satisfy itself as to the independent auditors’ independence.
|
|
5.
|
Confirm that the lead audit partner and the audit partner responsible for reviewing the audit, has not performed audit services for the Corporation for each of the five previous fiscal years, taking into account years prior to adoption of S/O Act.
|
|
6.
|
Review all reports required to be submitted by the independent auditors to the Audit Committee under Section 10A of the Securities Exchange Act.
|
|
7.
|
Review, based upon the recommendation of the independent auditors and management, the scope and plan of the work to be done by the independent auditors.
|
|
8.
|
Review and discuss with management and the independent auditors the Corporation’s annual audited financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the independent auditors’ audit of the annual financial statements prior to submission to stockholders, any government body, any stock exchange or the public.
|
|
9.
|
Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, relating to the conduct of the audit.
|
|
10.
|
Recommend to the Board, if appropriate, that the Corporation’s annual audited financial statements be included in the Corporation’s annual report on Form 20-F or 40-F for filing with the Securities and Exchange Commission.
|
|
11.
|
Review and discuss with management the Corporation’s quarterly financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the independent auditors’ review of the quarterly financial statements, prior to submission to stockholders, any government body, any stock exchange or the public.
|
|
12.
|
Obtain and review an annual report from management relating to the accounting principles used in the preparation of the Corporation’s financial statements, including those policies for which management is required to exercise discretion or judgments regarding the implementation thereof. If requested, discuss with management and the independent auditors any issues regarding accounting principles used by the Corporation.
|
|
13.
|
Periodically review separately with each of management and the independent auditors (a) any significant disagreement between management and the independent auditors in connection with the preparation of the financial statements, (b) any difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information and (c) management’s response to each.
|
|
14.
|
Periodically discuss with the independent auditors, without management being present, (a) their judgments about the quality and appropriateness of the Corporation’s accounting principles and financial disclosure practices as applied in its financial reporting and (b) the completeness and accuracy of the Corporation’s financial statements.
|
|
15.
|
Consider and approve, if appropriate, significant changes to the Corporation’s accounting principles and financial disclosure practices as suggested by the independent auditors or management. Review with the independent auditors and management, at appropriate intervals, the extent to which any changes in accounting principles or financial disclosure practices, as approved by the Audit Committee, have been implemented.
|
|
16.
|
Review and discuss with management, the independent auditors and the Corporation’s in-house and independent counsel, as appropriate, any legal, regulatory or compliance matters that could have a significant impact on the Corporation’s financial statements, including applicable changes in accounting standards or rules.
|
|
17.
|
Review and discuss with management the Corporation’s earnings press releases, including the use of “Pro forma” or “Adjusted” non-GAAP information as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussions maybe done generally (i.e., discussion of the types of information to be disclosed and the types of presentation to be made).
|
|
18.
|
Review and discuss with management all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Corporation with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses.
|
|
19.
|
Review
and discuss with management the Company’s major risk exposures and the steps management has taken to monitor, control and manage such exposures.
|
|
20.
|
In consultation with the independent auditors, review the adequacy to the Corporation’s internal controls and disclosure controls and procedures designed to insure compliance with laws and regulations, and discuss the responsibilities, budget and staffing needs for support of internal controls and disclosure controls and procedures.
|
|
21.
|
Establish procedures for (a) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by employees of the Corporation of concerns regarding the questionable accounting or auditing matters.
|
|
22.
|
Review, when required by regulation, (i) the internal control report prepared by management, including management’s assessment of the effectiveness of the Corporation’s internal controls for financial reporting and (ii) the independent auditor’s attestation, and report, on the assessment made by management.
|
|
23.
|
Review and approve all related-party transactions.
|
|
24.
|
Review and approve (a) any change or waiver in the Corporation’s code of ethics for senior financial officers and (b) any disclosure regarding such change or waiver.
|
|
25.
|
Establish a policy addressing the Corporation’s hiring of employees or former employees of the independent auditors who were engaged on the Corporation’s account that provides as a minimum that the positions of CEO, CFO, Chief Accounting Officer, Controller or any person serving in an equivalent position cannot be filled by a person employed by the independent auditor and that participated in the audit of the Corporation during the preceding twelve month period.
|
|
26.
|
Review and reassess the adequacy of this Charter annually and recommend to the Board any changes deemed appropriate by the Audit Committee.
|
|
27.
|
Report regularly to the Board. Review with the full Board any issues that have arisen with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditors.
|
|
28.
|
Perform any other activities consistent with this Charter, the Corporation’s by-laws and governing law, as the Audit Committee or the Board deems necessary or appropriate.
|
V.
|
Resources
|
CSA Guidelines
|
EXFO’s Corporate Governance Practices
|
|||||||||||
1.
|
Board of Directors
|
|||||||||||
(a)
|
Disclose the identity of directors who are independent.
|
The following directors are independent:
Mr. Pierre-Paul Allard
Mr. Pierre Marcouiller
Mr. Guy Marier
Dr. David A. Thompson
Mr. André Tremblay (until January 20, 2011)
|
||||||||||
(b)
|
Disclose the identity of directors who are not independent, and describe the basis for that determination.
|
Mr. Germain Lamonde – non-independent – is President and Chief Executive Officer of the Corporation and the majority shareholder of the Corporation as he has the ability to exercise a majority of the votes for the election of the Board of Directors.
|
||||||||||
(c)
|
Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors does to facilitate its exercise of independent judgment in carrying out its responsibilities.
|
The majority of directors are independent.
From September 1, 2010 until January 20, 2011, 5 out of 6.
From January 20, 2011, until September 1, 2011, 4 out of 5.
From September 1, 2011 to October 1, 2011, 5 out of 6.
From October 1, 2011 until November 1, 2011, 6 out of 7.
|
||||||||||
(d)
|
If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.
|
Pierre Marcouiller is a Director of Canam Group Inc., a publicly listed corporation of Saint-Georges de Beauce, Quebec, Canada. André Tremblay is a Director of Transcontinental Inc., a publicly listed corporation of Montreal, Quebec, Canada.
|
||||||||||
(e)
|
Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held since the beginning of the issuer’s most recently completed financial year. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.
|
The independent Directors hold as many meeting, as needed, annually and any Director may request such meeting at any time. Since September 1, 2010 and prior to November 1, 2011, seven (7) meetings of independent Directors without management occurred.
In June 2011, an Independent Members Committee Charter was adopted.
|
(g)
|
Disclose the attendance record of each director for all board meetings held since the beginning of the issuer’s most recently completed financial year
|
The table below indicates the directors' record of attendance at meetings of the Board of Directors and its committees during the financial year ended August 31, 2011:
|
(b)
|
Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO.
|
No written position description has been developed for the CEO. The President and Chief Executive Officer, along with the rest of management placed under his supervision, is responsible for meeting the corporate objectives as determined by the strategic objectives and budget as they are adopted each year by the Board of Directors.
|
||||||||||
4.
|
Orientation and Continuing Education
|
|||||||||||
(a)
|
Briefly describe what measures the board takes to orient new directors regarding
|
|||||||||||
i.
|
the role of the board, its committees and its directors, and
|
The Human Resources Committee Charter foresees that the Human Resource Committee maintains an orientation program for New Directors.
|
||||||||||
ii.
|
the nature and operation of the issuer’s business.
|
Presentations and reports relating to the Corporation’s business and affairs are provided to new Directors. In addition, new Board of Directors members meet with senior management of the Corporation to review the business and affairs of the Corporation.
|
||||||||||
(b)
|
Briefly describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.
|
The Human Resources Committee Charter foresees that the Human Resources Committee maintains a continuing education program for Directors. In March 2010, the independent directors of the Corporation attended a training session that concerned director liability and governance. The training session addressed the legal duties of directors and governance as a way to discharge director’s duties. In October 2010, the independent directors of the Corporation attended a training session that concerned independence practices, governance best practices and upcoming topics in governance best practices. In June 2011, the independent directors of the Corporation attended a training session that concerned executive compensation and related governance developments.
|
(d)
|
If a compensation consultant or advisor has, at any time since the beginning of the issuer’s most recently completed financial year, been retained to assist in determining compensation for any of the issuer’s directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work.
|
In 2007, the Corporation engaged two human resources consultants, Mercer (Canada) Ltd. (“Mercer”) and Aon Corporation (“Aon”), to advise whether the compensation positioning of the Corporation was still aligned with the comparative market. Further to recommendations from Mercer and Aon, the Corporation decided to gradually align the compensation positioning (for the base salary, short-term and long-term incentives) from the fiftieth percentile to the sixtieth percentile for selected position (hereinafter in this Circular referred to as the “Target Compensation Positioning”) over the following three (3) years.
In 2008, the Corporation engaged Hewitt Associates LLC to conduct a world-wide market analysis for selected international positions. The survey included annual base salary, bonuses and commission plans.
|
|
Purpose
|
|
Committee Membership
|
|
Meetings
|
|
Responsibilities and duties
|
1.
|
Evaluate the independence of the members of the Board of Directors pursuant to applicable securities legislation.
|
2.
|
Annually evaluate the qualifications of current members of the Board of Directors who are available for re-election.
|
3.
|
Upon a significant change in a director’s personal circumstances or in the event a significant ongoing time commitment arises that may be inconsistent with a director’s service to the Board of Directors, the Committee shall review, as appropriate and in light of the then current Board policies as reflected in the Code of Conduct or other corporate governance principles, the continued Board membership of such director.
|
4.
|
Annually review and evaluate the Board of Directors and Board of Directors’ Committees including the Independent Members Committee annually.
|
5.
|
Make recommendations to the Human Resources Committee on continuing education for independent directors, such trainings to be provided to the independent directors during Committee meetings.
|
6.
|
Discuss and make recommendations to the Board of Directors of the Corporation on any other matters that the Committee deems relevant to be addressed by the Committee.
|
7.
|
Have authority to create subcommittees with such powers as the Committee shall occasionally confer.
|
I.
|
Resources
|
II.
|
Charter review
|
1.
|
I have reviewed this Annual Report on Form 20-F of EXFO Inc. ("EXFO");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of EXFO as of, and for, the periods presented in this report;
|
4.
|
EXFO's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for EXFO and have:
|
a.
|
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to EXFO, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of EXFO's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in EXFO's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, EXFO's internal control over financial reporting; and
|
5.
|
EXFO's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to EXFO's auditors and the audit committee of EXFO's board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect EXFO's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in EXFO’s internal control over financial reporting.
|
1.
|
The Annual Report of Form 20-F for the year ended August 31, 2011 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
|
1.
|
I have reviewed this Annual Report on Form 20-F of EXFO Inc. ("EXFO");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of EXFO as of, and for, the periods presented in this report;
|
4.
|
EXFO's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for EXFO and have:
|
a.
|
Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to EXFO, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of EXFO's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in EXFO's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, EXFO's internal control over financial reporting; and
|
5.
|
EXFO's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to EXFO's auditors and the audit committee of EXFO's board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect EXFO's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in EXFO's internal control over financial reporting.
|
1.
|
The Annual Report of Form 20-F for the year ended August 31, 2011 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
|