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
x
International Accounting Standards Board
|
Other
o
|
Identity of Directors, Senior Management and Advisers
|
Offer Statistics and Expected Timetable
|
Key Information
|
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
(in thousands of US dollars, except share and per share data)
|
||||||||||||
Consolidated Statements of Earnings Data:
|
||||||||||||
Sales
|
$ | 242,150 | $ | 249,966 | $ | 269,743 | ||||||
Cost of sales
(1)
|
92,469 | 91,792 | 100,296 | |||||||||
Selling and administrative
|
88,756 | 94,139 | 87,062 | |||||||||
Net research and development
|
45,444 | 49,854 | 47,927 | |||||||||
Depreciation of property, plant and equipment
|
6,028 | 6,169 | 6,655 | |||||||||
Amortization of intangible assets
|
6,643 | 7,819 | 9,183 | |||||||||
Changes in fair value of cash contingent consideration
|
─
|
(311 | ) | (2,685 | ) | |||||||
Interest and other income
|
(113 | ) | (131 | ) | (511 | ) | ||||||
Foreign exchange (gain) loss
|
(4,082 | ) | 657 | 3,808 | ||||||||
Earnings (loss) before income taxes
|
7,005 | (22 | ) | 18,008 | ||||||||
Income taxes
|
5,664 | 3,571 | 8,814 | |||||||||
Net earnings (loss) from continuing operations
|
1,341 | (3,593 | ) | 9,194 | ||||||||
Net earnings from discontinued operations
|
─
|
─
|
12,926 | |||||||||
Net earnings (loss) for the year
|
$ | 1,341 | $ | (3,593 | ) | $ | 22,120 | |||||
Basic and diluted net earnings (loss) from continuing operations per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.15 | |||||
Basic net earnings (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.37 | |||||
Diluted net earnings (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.36 | |||||
Basic weighted average number of shares used in per share calculations (000’s)
|
60,323 | 60,453 | 60,000 | |||||||||
Diluted weighted average number of shares used in per share calculations (000’s)
|
61,110 | 60,453 | 61,488 | |||||||||
Other consolidated statements of earnings data:
|
||||||||||||
Gross research and development
|
$ | 54,334 | $ | 59,282 | $ | 57,226 | ||||||
Net research and development
|
$ | 45,444 | $ | 49,854 | $ | 47,927 | ||||||
As at August 31,
|
||||||||||||
2013 | 2012 | 2011 | ||||||||||
(in thousands of US dollars)
|
||||||||||||
Consolidated Balance Sheets Data:
|
||||||||||||
Cash
|
$ | 45,386 | $ | 58,868 | $ | 22,771 | ||||||
Short-term investments
|
4,868 | 8,236 | 47,091 | |||||||||
Total assets
|
281,538 | 306,683 | 322,355 | |||||||||
Long-term debt (excluding current portion)
|
─
|
282 | 968 | |||||||||
Share capital
|
109,837 | 110,965 | 110,341 | |||||||||
Shareholders’ equity
|
$ | 236,452 | $ | 253,281 | $ | 264,511 |
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
·
|
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, write-off of deferred tax assets and tax credits, and impairment of intangible assets and goodwill;
|
·
|
customers’ financial difficulties and increased difficulty in collecting accounts receivable; and
|
·
|
additional restructuring costs.
|
·
|
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 from such acquisitions or alliances;
|
·
|
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 and effective 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 in 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;
|
·
|
changes in tax compliance in India and China;
|
·
|
cash management and repatriation of profit; and
|
·
|
high inflation rates which could increase our operating costs.
|
·
|
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.
|
·
|
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 our new products for us as well as those of 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;
|
·
|
general economic conditions, including a slowdown or recession; and
|
·
|
distorted effective tax rate due to non-taxable/deductible elements and unrecognized deferred tax assets.
|
Item 4
.
|
Information on the Company
|
·
|
Increase our presence with wireless operators;
|
·
|
Enable network operators to reduce their operating expenses;
|
·
|
Expand our sales to existing Tier-1 network operators; and
|
·
|
Accelerate profitability through execution.
|
·
|
Performance monitoring and analysis;
|
·
|
Advanced data correlation and analysis engine;
|
·
|
VoIP service assurance;
|
·
|
IP/MPLS service assurance;
|
·
|
Mobile backhaul and metro Ethernet service assurance;
|
·
|
IP video service assurance;
|
·
|
Advanced analytics and reports; and
|
·
|
Custom solutions services.
|
·
|
BrixCall: Voice quality and performance management;
|
·
|
BrixNGN: IP/MPLS and carrier Ethernet (mobile backhaul and metro Ethernet) service quality monitoring;
|
·
|
BrixVision: Comprehensive IP video quality and performance management;
|
·
|
BrixView: Advanced analytics and business intelligence software; and
|
·
|
BrixFlex: Adapted analytics and customized dashboards for integrated operations with operator backoffice and NOC systems.
|
Wireless Test and Solutions
|
||
Product Type
|
Product Line
|
Typical Application
|
Protocol Analyzer
|
PowerHawk &
PowerHawk Pro,
TravelHawk
& TravelHawk Pro
|
Protocol analysis to verify correct network behavior.
|
Network Simulator
|
EAST portfolio,
QA 600 &
800 family
|
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 our CRM toolset and evolution;
|
·
|
Sales Support –
Leverage the effectiveness of our 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 our 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 systems actualization of our network monitoring and converged service assurance systems;
|
·
|
Education Services –
Aggregate expertise, develop material, and deliver free and fee-based training;
|
·
|
Professional Services –
Provide value-added solution services for our 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;
|
·
|
solution’s contribution to productivity;
|
·
|
price and quality of products;
|
·
|
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.
|
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
|
80%
|
Owned
|
400 Godin Avenue
Quebec (Quebec)
G1M 2K2
|
Occupied for research and development, customer services, manufacturing, management and administration
|
129,000
(1)
|
80%
|
Owned
|
2500 Alfred-Nobel
Montreal (Quebec)
H4S 2C3
|
Occupied for research and development, management and administration
|
75,000
|
50%
|
Owned
|
2500 Alfred-Nobel
Montreal (Quebec)
H4S 2C3
|
Available for rent
|
50,000
|
0%
|
Owned
|
160 Drumlin Circle
Concord (Ontario)
L4K 3E5
|
Occupied for research and development, product management and administration
|
23,500
|
40%
|
Owned
|
270 Billerica Road
Chelmsford, MA 01824
United States
|
Occupied for research and development, manufacturing, management and administration
|
29,000
|
65%
|
Leased
|
Location
|
Use of Space
|
Square Footage
|
% of Utilization
|
Type of Interest
|
Winchester House
School Lane
Chandlers Ford, Eastleigh
Hampshire SO53 4DG
United Kingdom
|
Occupied for European customer service, sales management and administration
|
13,000
|
60%
|
Leased
|
3
rd
Floor, Building 10
Yu Sheng Industrial Park
(Gu Shu Crossing)
No. 467, National Highway 107
Xixiang, Bao An District
Shenzhen 518126
China
|
Occupied for manufacturing of products
|
56,000
|
80%
|
Leased
|
Offices No 102, 602, 603, 604, 701 and 702
Tower S-4 Cybercity
Magarpatta , Hadapsar
Pune 411 013
India
|
Occupied for research and development
|
39,960
|
80%
|
Owned
|
Elektroniikkatie 2
FI-90590 Oulu
Finland
|
Occupied for research and development, manufacturing, management and administration
|
30,241
|
100%
|
Leased
|
(1)
|
Including the warehouse space. Premises without the warehouse are approximately 115,000 square feet.
|
Unresolved Staff Comments
|
Operating and Financial Review and Prospects
|
Consolidated statements of earnings data:
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||||||||||||||
Sales
|
$ | 242,150 | $ | 249,966 | $ | 269,743 | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
Cost of sales
(1)
|
92,469 | 91,792 | 100,296 | 38.2 | 36.7 | 37.2 | ||||||||||||||||||
Selling and administrative
|
88,756 | 94,139 | 87,062 | 36.6 | 37.7 | 32.3 | ||||||||||||||||||
Net research and development
|
45,444 | 49,854 | 47,927 | 18.8 | 19.9 | 17.7 | ||||||||||||||||||
Depreciation of property, plant and equipment
|
6,028 | 6,169 | 6,655 | 2.5 | 2.5 | 2.5 | ||||||||||||||||||
Amortization of intangible assets
|
6,643 | 7,819 | 9,183 | 2.7 | 3.1 | 3.4 | ||||||||||||||||||
Changes in the fair value of cash contingent consideration
|
– | (311 | ) | (2,685 | ) | – | (0.1 | ) | (1.0 | ) | ||||||||||||||
Interest and other income
|
(113 | ) | (131 | ) | (511 | ) | – | (0.1 | ) | (0.2 | ) | |||||||||||||
Foreign exchange (gain) loss
|
(4,082 | ) | 657 | 3,808 | (1.7 | ) | 0.3 | 1.4 | ||||||||||||||||
Earnings (loss) before income taxes
|
7,005 | (22 | ) | 18,008 | 2.9 | – | 6.7 | |||||||||||||||||
Income taxes
|
5,664 | 3,571 | 8,814 | 2.3 | 1.4 | 3.3 | ||||||||||||||||||
Net earnings (loss) from continuing operations
|
1,341 | (3,593 | ) | 9,194 | 0.6 | % | (1.4 | )% | 3.4 | % | ||||||||||||||
Net earnings from discontinued operations
|
– | – | 12,926 | |||||||||||||||||||||
Net earnings (loss) for the year
|
$ | 1,341 | $ | (3,593 | ) | $ | 22,120 | |||||||||||||||||
Basic and diluted net earnings (loss) from continuing operations per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.15 | |||||||||||||||||
Basic net earnings (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.37 | |||||||||||||||||
Diluted net earnings (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.36 | |||||||||||||||||
Other selected information:
|
||||||||||||||||||||||||
Gross margin
(2)
|
$ | 149,681 | $ | 158,174 | $ | 169,447 | 61.8 | % | 63.3 | % | 62.8 | % | ||||||||||||
Research and development data:
|
||||||||||||||||||||||||
Gross research and development
|
$ | 54,334 | $ | 59,282 | $ | 57,226 | 22.4 | % | 23.7 | % | 21.2 | % | ||||||||||||
Net research and development
|
$ | 45,444 | $ | 49,854 | $ | 47,927 | 18.8 | % | 19.9 | % | 17.7 | % | ||||||||||||
Restructuring charges included in:
|
||||||||||||||||||||||||
Cost of sales
|
$ | – | $ | 264 | $ | – | – | % | 0.1 | % |
‒
|
% | ||||||||||||
Selling and administrative expenses
|
$ | – | $ | 1,181 | $ | – | – | % | 0.5 | % |
‒
|
% | ||||||||||||
Net research and development expenses
|
$ | 89 | $ | 884 | $ | – | – | % | 0.4 | % |
‒
|
% | ||||||||||||
Adjusted EBITDA
(2)
|
$ | 17,338 | $ | 18,372 | $ | 36,581 | 7.2 | % | 7.3 | % | 13.5 | % | ||||||||||||
Consolidated balance sheets data:
|
||||||||||||||||||||||||
Total assets
|
$ | 281,538 | $ | 306,683 | $ | 322,355 |
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(2)
|
Refer to page 55 for non-IFRS measures.
|
Expiry dates
|
Contractual
amounts
|
Weighted average contractual
forward rates
|
||||||
September 2013 to August 2014
|
$ | 22,200,000 | 1.0280 | |||||
September 2014 to August 2015
|
15,000,000 | 1.0529 | ||||||
September 2015 to August 2016
|
5,000,000 | 1.0716 | ||||||
Total
|
$ | 42,200,000 | 1.0420 |
(a)
|
Determination of functional currency
|
(b)
|
Determination of cash generating units and allocation of goodwill
|
(a)
|
Inventories
|
(b)
|
Income taxes
|
(c)
|
Tax credits recoverable
|
(d)
|
Impairment of non-financial assets
|
i)
|
Growth rates
|
ii)
|
Discount rate
|
EXFO CGU
|
$ | 10,791,000 | ||
Brix CGU
|
16,522,000 | |||
Total
|
$ | 27,313,000 |
*
|
Gross margin represents sales less cost of sales, excluding depreciation and amortization.
|
**
|
Adjusted EBITDA represents net earnings (loss) before interest, income taxes, depreciation and amortization, restructuring charges, changes in the fair value of the cash contingent consideration, stock-based compensation costs, foreign exchange gain or loss and gain from the disposal of discontinued operations.
|
Year ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
IFRS net earnings (loss) for the year
|
$ | 1,341 | $ | (3,593 | ) | $ | 22,120 | |||||
Add (deduct):
|
||||||||||||
Depreciation of property, plant and equipment
|
6,028 | 6,169 | 6,669 | |||||||||
Amortization of intangible assets
|
6,643 | 7,819 | 9,187 | |||||||||
Interest and other income
|
(113 | ) | (131 | ) | (511 | ) | ||||||
Income taxes
|
5,664 | 3,571 | 9,015 | |||||||||
Restructuring charges
|
89 | 2,329 | – | |||||||||
Changes in fair value of cash contingent consideration
|
– | (311 | ) | (2,685 | ) | |||||||
Stock-based compensation costs
|
1,768 | 1,862 | 2,256 | |||||||||
Foreign exchange (gain) loss
|
(4,082 | ) | 657 | 3,742 | ||||||||
Gain on disposal of discontinued operations
|
– | – | (13,212 | ) | ||||||||
Adjusted EBITDA for the year
|
$ | 17,338 | $ | 18,372 | $ | 36,581 | ||||||
Adjusted EBITDA in percentage of total sales
|
7.2 | % | 7.3 | % | 13.5 | % |
Directors, Senior Management and Employees
|
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
|
|
DARRYL EDWARDS
Weston Under Wetherley, United Kingdom
|
Independent Director
|
|
ÉTIENNE GAGNON
Quebec City, Quebec
|
Vice-President, Physical-Layer and Wireless Division
|
|
LUC GAGNON
St-Augustin-de-Desmaures, Quebec
|
Vice-President, Manufacturing Operations and Customer Service
|
|
GERMAIN LAMONDE
St-Augustin-de-Desmaures, Quebec
|
Chairman of the Board, President and Chief Executive Officer
|
|
GUY MARIER
Lakefield Gore, Quebec
|
Independent Director
|
|
CLAUDIO MAZZUCA
LaSalle, Quebec
|
Vice-President, Transport and Service Assurance Division
|
|
PIERRE PLAMONDON
Quebec City, Quebec
|
Vice-President, Finance and Chief Financial Officer
|
|
BENOIT RINGUETTE
Boischatel, Quebec
|
General Counsel and Corporate Secretary
|
|
SYLVAIN ROULEAU
Kirkland, Quebec
|
Vice-President, Human Capital
|
|
CLAUDE SÉGUIN
Montreal, Quebec
|
Independent Director
|
|
JOSEPH SOO
Singapore
|
Vice-President, Sales — Asia-Pacific
|
|
RANDY E. TORNES
Frisco, Texas
|
Independent Director
|
|
DANA YEARIAN
Lake Forest, Illinois
|
Vice-President, Sales — Americas
|
·
|
Mr. Guy Marier (Chairman)
|
·
|
Mr. Pierre-Paul Allard
|
·
|
Mr. Darryl Edwards
|
·
|
Mr. Pierre Marcouiller (until January 10, 2013)
|
·
|
Mr. Claude Séguin (since February 12, 2013)
|
·
|
Ms. Susan Spradley (until November 16, 2012)
|
Meeting
|
Main activities of the Human Resources Committee
|
|
October 9, 2012
|
●
|
Review of the Business Performance Measures results for the financial year ended August 31, 2012;
|
●
|
Review and approval of the Business Performance Measures for the financial year started September 1, 2012;
|
|
●
|
Review of the Short-Term Incentive Plan results for the financial year ended August 31, 2012;
|
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2012;
|
|
●
|
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, 2012;
|
|
●
|
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, 2012;
|
|
●
|
Review and approval of the executive compensation section of the management proxy circular for the financial year ended August 31, 2012;
|
|
●
|
Review of the succession planning program;
|
|
●
|
Review of the Mobilization / Motivation Plan;
|
|
●
|
Review and approval of the CEO objectives and compensation plan;
|
|
●
|
Review of the Risk Assessment of Executive Compensation disclosure obligations;
|
|
●
|
Review of the Annual Sales Force Achievement.
|
|
January 9, 2013
|
●
|
Review of the quarterly payments under the Short-Term Incentive Plan for the financial year started September 1, 2012 and being part of the Short-Term Incentive Plan;
|
●
|
Review and approval of the stock-based compensation plan for performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2012;
|
|
●
|
Review of the Management Structure;
|
|
●
|
Review and approval of the compensation plans of executive officers for the financial year started September 1, 2012 being the Base Salary, the Short-Term Incentive Plan and the stock-based compensation delivered through the Long-Term Incentive Plan.
|
|
March 27, 2013
|
●
|
Review of the quarterly payments under the Short-Term Incentive Plan for the financial year started September 1, 2012 and being part of the Short-Term Incentive Plan;
|
●
|
Review of the Key Human Capital Initiatives;
|
|
●
|
Review of the Management Structure;
|
|
●
|
Review of the sales compensation;
|
|
●
|
Review of the compensation study.
|
|
June 26, 2013
|
●
|
Review of the quarterly payments under the Short-Term Incentive Plan for the financial year started September 1, 2012 and being part of the Short-Term Incentive Plan;
|
●
|
Review of the compensation study;
|
|
●
|
Review of the Management Structure;
|
|
●
|
Review of the Key Human Capital Initiatives.
|
|
October 8, 2013
|
●
|
Review of the Business Performance Measures results for the financial year ended August 31, 2013;
|
●
|
Review and approval of the Business Performance Measures for the financial year started September 1, 2013;
|
|
●
|
Review of the Short-Term Incentive Plan results for the financial year ended August 31, 2013;
|
|
●
|
Review and approval of the Short-Term Incentive Plan for the financial year started September 1, 2013;
|
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2013;
|
|
●
|
Review and approval of the compensation plans of executive officers for the financial year started September 1, 2013 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, 2013;
|
|
●
|
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, 2013;
|
|
●
|
Review and approval of the executive compensation section of the management proxy circular for the financial year ended August 31, 2013;
|
|
●
|
Review of the succession planning program;
|
|
●
|
Review of the Mobilization / Motivation Plan;
|
|
●
|
Review of the Management Structure;
|
|
●
|
Review and approval of the CEO objectives and compensation plan;
|
|
●
|
Review of the Risk Assessment of Executive Compensation disclosure obligations.
|
Type of Fee
|
Financial 2012 Fees
|
Percentage of
Financial 2012 Fees
|
Financial 2013 Fees
|
Percentage of
Financial 2013 Fees
|
||||
Executive Compensation Related Fees
|
CA$1,780
|
(1)
|
3% |
|
CA$58,958
|
(2)
|
39% |
|
All Other Fees
|
CA$57,314
|
97% |
|
CA$91,300
|
61% |
|
||
Total
|
CA$59,094
|
100% |
|
CA$150,258
|
100% |
|
(1)
|
The aggregate fees paid to Aon-Hewitt and Mercer are $1,545 and $235 respectively.
|
(2)
|
The aggregate fees paid to Towers Watson are $58,958.
|
(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.; and 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
|
Germain Lamonde, CEO
|
65.0%
|
Pierre Plamondon, Vice-President, Finance and CFO
|
37.5%
|
Stephen Bull, Vice-President, Research and Development
|
35.0%
|
Étienne Gagnon, Vice-President, Physical-Layer and Wireless Division
|
37.0%
|
Dana Yearian, Vice-President, Sales Americas
|
89.0%
|
·
|
Short-Term Incentive Plan
|
Base Salary
|
X
|
Annual Incentive
Target (%)
|
X
|
Business Performance
Measures (%)
|
X
|
Individual Performance
Measures (%)
|
Business Performance Measure
|
Weight
|
Annual Target
|
Result (%)
|
Sales
(1)
|
25%
|
US$301.5 million
|
15.0%
|
EBITDA
(2)
|
20%
|
US$33.9 million
|
8.4%
|
Gross margin
(3)
|
25%
|
US$190.8 million
|
13.9%
|
Quality
(3)
|
20%
|
0.38%
|
18.6%
|
On-time delivery
(3)
|
10%
|
95%
|
10.8%
|
Total 100%
|
66.7%
|
(1)
|
For sales metric, results will range from nil to 100% of the weight upon attainment of 50% of the annual target up to the annual target and will range from 100% to 150% of the weight from the annual target up to 112.5% of the annual target.
|
(2)
|
For EBITDA metric, results will range from nil to 100% of the weight upon attainment of 0% of the annual target up to the annual target and will range from 100% to 150% of the weight from the annual target up to 112.5% of the annual target.
|
(3)
|
For gross margin, quality and on-time delivery metrics, results will range from nil to 100% of the weight upon attainment of a minimum threshold of $95.4M, 0.68% and 87%, respectively, up to the annual target and from 100% to 150% of the weight from the annual target to the maximum threshold of $214.7M, 0.18% and 98%, respectively.
|
·
|
The Sales Incentive Plan
|
(1)
|
The commission rate for the attainment of the contribution margin targets for the territory of the Americas is equal to the incentive target of commission on the contribution margins objectives defined at the beginning of the financial year. Such commission rate is used for all margins up to 100% attainment of the objective and an accelerator is applied after 100% attainment of the objective.
|
(2)
|
The compensation rate for the attainment of incentive targets for the territory of the Americas is equal to the Incentive Target of commission on the total bookings quotas defined at the beginning of the financial year. A lower commission rate is applied for less than 70% of the attainment of the bookings quotas. Another rate is applied from 70% to 100% of the attainment of the bookings quotas. An accelerator is applied after attaining 100% of the bookings quotas.
|
(3)
|
The compensation for product lines discretionary bonus is based on the achievement within such product lines of business development, efficiency and overall commitment of the Americas sales team.
|
(4)
|
The compensation for personal objectives is based on the quarterly achievement of the sales bookings within the territory of the Americas upon attainment of 75% and more of such sales objectives defined at the beginning of the financial year. A commission rate is applied from 50% to 100% of the attainment of the objective. An accelerator is applied after attaining 100% of the objective.
|
(5)
|
The compensation for strategic alliances discretionary bonus is based on the achievement within such alliances of business development, efficiency and overall commitment of the Americas sales team.
|
·
|
Long-Term Incentive Plan
|
Name & Position
|
Grant Levels
(1)
(% of base salary)
|
Pierre Plamondon, Vice-President, Finance and CFO
|
39.8%
|
Stephen Bull, Vice-President, Research and Development
|
42.5%
|
Étienne Gagnon, Vice-President, Physical-Layer and Wireless Division
|
42.5%
|
Dana Yearian, Vice-President, Sales ─ Americas
|
42.5%
|
(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, 2013
|
October 16, 2012
|
30,006
|
5.06
|
50% on each of the third and fourth anniversary dates of the grant.
|
January 16, 2013
|
145,750
|
5.61
|
||
October 16, 2012
|
140,404
|
5.06
|
100% on the fifth anniversary date of the grant subject to early vesting of 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, 2012
|
October 18, 2011
|
23,000
|
5.43
|
50% on each of the third and fourth anniversary dates of the grant.
|
January 17, 2012
|
8,321
|
6.61
|
||
January 18, 2012
|
122,000
|
6.47
|
||
January 23, 2012
|
7,576
|
6.55
|
||
April 3, 2012
|
2,571
|
7.06
|
||
October 18, 2011
|
163,651
|
5.43
|
100% on the fifth anniversary date of the grant subject to early vesting of 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.
|
|
January 23, 2012
|
6,330
|
6.55
|
100% on the fifth anniversary date of the grant subject to early vesting of 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 3, 2012
|
1,429
|
7.06
|
100% on the fifth anniversary date of the grant subject to early vesting of 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, 2011
|
October 19, 2010
|
30,250
|
6.03
|
50% on each of the third and fourth anniversary dates of the grant.
|
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 of 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.
|
|
October 19, 2010
|
128,348
|
6.03
|
100% on the fifth anniversary date of the grant subject to early vesting of 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% on each of the third and fourth anniversary dates of the grant.
|
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 dates 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 of 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% on each of the third and fourth anniversary dates of the grant.
|
January 20, 2009
|
243,700
|
3.22
|
||
April 7, 2009
|
11,000
|
3.52
|
||
July 8, 2009
|
3,000
|
2.99
|
100% after three (3) years of the grant date.
|
|
January 20, 2009
|
5,000
|
3.22
|
1/3 on the third, fourth and fifth anniversary dates of the grant.
|
Financial
year ended
|
Grant Date
|
RSUs granted (#)
|
Fair Value at the
Time
of Grant
(US$/RSU)
|
Vesting schedule
|
October 22, 2008
|
216,685
|
2.36
|
100% on the fifth anniversary date of the grant subject to early vesting of 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 three (3) years of the grant date if performance is achieved (long-term growth of revenue and profitability). Otherwise 100% vested after five (5) years of the grant date.
|
·
|
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)
(2)
|
Grant Date
|
Vesting schedule
(3)
|
Pierre
Plamondon
|
19,740
|
6.24%
|
5.06
|
October 16, 2012
|
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.
(4)
|
Stephen Bull
|
18,753
|
5.93%
|
5.06
|
October 16, 2012
|
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.
(4)
|
Étienne
Gagnon
|
17,955
|
5.68%
|
5.06
|
October 16, 2012
|
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.
(4)
|
Dana Yearian
|
17,994
|
5.69%
|
5.06
|
October 16, 2012
|
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.
(4)
|
(1)
|
Such percentage does not include any cancelled RSUs.
|
(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. The grant date market 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 Bank of Canada on the grant date to convert the Toronto Stock Exchange closing price to United States dollars.
|
(3)
|
All RSUs first vesting cannot be earlier than the third anniversary date of their grant.
|
(4)
|
Those RSUs granted in the financial year ended August 31, 2013 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 profitability metric. The sales growth metric is determined by the Compound Annual Growth Rate of sales of the Corporation for the period described below (SALES CAGR). The profitability metric is determined as the Cumulative Corporation’s IFRS net earnings before interest, income taxes, depreciation of property, plant and equipment, amortization of intangible assets, foreign exchange gain or loss, change in fair value of cash contingent consideration, and extraordinary gain or loss over the Cumulative Sales for the same period (LTIP EBITDA). 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, 2015; cumulated with ii) 100% for a LTIP EBITDA of 15% and 0% for a LTIP EBITDA of 7.5% or less for the three-year period ending on August 31, 2015. 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, 2016.
|
Number of
RSUs (#)
|
% of Issued and
Outstanding RSUs
|
Weighted Average Fair Value at
the Time of Grant ($US/RSU)
|
||||
President and CEO (one (1) individual)
|
198,439
|
14.89
|
%
|
4.42
|
||
Board of Directors (five (5) individuals)
(1)
|
–
|
–
|
–
|
|||
Management and Corporate Officers (ten (10) individuals)
|
623,538
|
46.77
|
%
|
4.41
|
(1)
|
Four (4) individuals from September 1, 2012 until November 16, 2012, three (3) individuals from November 16, 2012 until February 1, 2013, four (4) individuals from February 1, 2013 to February 12, 2013 and five (5) individuals from February 12, 2013 to August 31, 2013.
|
·
|
Option Grants in Last Financial Year
|
Number of
Options (#)
|
% of Issued and
Outstanding Options
|
Weighted Average Exercise Price
($US/Security)
|
||
President and CEO (one (1) individual)
|
29,160
|
14.49%
|
4.61
|
|
Board of Directors (one (1) individual)
|
12,500
|
6.21%
|
4.65
|
|
Management and Corporate Officers (two (2) individuals)
|
14,494
|
7.20%
|
4.98
|
·
|
Deferred Share
Unit Plan
|
·
|
Deferred Share
Unit Grants in Last Financial Year
|
DSUs
granted (#)
|
Weighted Average Fair Value
at the Time of Grant (US$/DSU)
|
Total of the Fair Value
at the Time of Grant (US$)
|
Vesting
|
23,872
|
4.84
|
115,540
|
At the time director ceases to be a member of the Board of Directors of the Corporation
|
·
|
Number of Subordinate Voting Shares Reserved for Future Issuance
|
·
|
Stock Appreciation Rights Plan
|
(1)
|
The vesting schedules are provided in the table under the heading “Long-Term Incentive Plan”.
|
Compensation Elements
|
2013
|
2012
|
2011
|
Three-Year Total
|
||||
Cash
|
||||||||
Base Salary
|
CA$498,663
|
CA$441,000
|
CA$420,000
|
CA$1,359,663
|
||||
Short-term incentive
|
CA$185,866
|
CA$143,784
|
CA$216,626
|
CA$546,276
|
||||
Equity
|
||||||||
Long-term incentive
|
–
|
CA$294,001
|
(1)
|
CA$280,003
|
(1)
|
CA$574,004
|
(1)
|
|
Total Direct Compensation
|
CA$684,529
|
CA$878,785
|
CA$916,629
|
CA$2,479,943
|
||||
Pension Value
|
–
|
–
|
–
|
–
|
||||
All Other Compensation
|
–
|
–
|
–
|
–
|
||||
Total Compensation
|
CA$684,529
|
CA$878,785
|
CA$916,629
|
CA$2,479,943
|
||||
Annual Average
|
–
|
–
|
–
|
CA$826,648
|
||||
Total Market Capitalization Growth (CA$ millions)
|
2.1
|
(2)
|
(105.6)
|
(2)
|
40.8
|
(2)
|
(62.7)
|
(2)
|
Total Cost as a % of Market Capitalization Growth
|
32.1%
|
(0.8)%
|
2.2%
|
(4.0)%
|
(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 Bank of Canada 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 and Analysis – Long-Term Incentive Plan”.
|
(2)
|
Includes the redemption of nil, 438,894 and 663,256 Subordinate Voting Shares respectively in financial years 2011, 2012 and 2013 under the normal course 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 CEO
|
2013
|
493,384
(US)
498,663
(CA)
|
─
─
|
(US)
(CA)
|
–
|
183,899
185,866
|
(US)
(CA)
|
–
|
–
|
–
|
677,283
(US)
684,529
(CA)
|
|
2012
|
436,893
(US)
441,000
(CA)
|
291,263
294,001
|
(US)
(CA)
|
–
|
142,446
143,784
|
(US)
(CA)
|
–
|
–
|
–
|
870,602
(US)
878,785
(CA)
|
||
2011
|
424,500
(US)
420,000
(CA)
|
283,003
280,003
|
(US)
(CA)
|
–
|
218,947
216,626
|
(US)
(CA)
|
–
|
–
|
–
|
926,450
(US)
916,629
(CA)
|
||
Pierre Plamondon,
Vice-President,
Finance and CFO
|
2013
|
252,673
(US)
255,377
(CA)
|
97,460
98,502
|
(US)
(CA)
|
–
|
58,709
59,337
|
(US)
(CA)
|
–
|
–
|
9,473
9,575
|
(US)
(CA)
|
418,315
(US)
422,791
(CA)
|
2012
|
245,149
(US)
247,453
(CA)
|
94,743
95,634
|
(US)
(CA)
|
–
|
63,948
64,549
|
(US)
(CA)
|
–
|
–
|
9,431
9,519
|
(US)
(CA)
|
413,271
(US)
417,155
(CA)
|
|
2011
|
241,646
(US)
239,085
(CA)
|
137,305
135,850
|
(US)
(CA)
|
–
|
76,569
75,757
|
(US)
(CA)
|
–
|
–
|
8,747
8,654
|
(US)
(CA)
|
464,267
(US)
459,346
(CA)
|
|
Stephen Bull,
Vice-President,
Research and
Development
|
2013
|
222,206
(US)
224,584
(CA)
|
92,587
93,577
|
(US)
(CA)
|
–
|
43,356
43,820
|
(US)
(CA)
|
–
|
–
|
6,636
6,707
|
(US)
(CA)
|
364,785
(US)
368,688
(CA)
|
2012
|
218,129
(US)
220,180
(CA)
|
84,709
85,505
|
(US)
(CA)
|
–
|
42,249
42,646
|
(US)
(CA)
|
–
|
–
|
7,982
8,057
|
(US)
(CA)
|
353,069
(US)
356,388
(CA)
|
|
2011
|
216,057
(US)
213,767
(CA)
|
90,323
93,020
|
(US)
(CA)
|
–
|
65,266
64,574
|
(US)
(CA)
|
–
|
–
|
12,819
12,683
|
(US)
(CA)
|
384,465
(US)
384,044
(CA)
|
|
Étienne Gagnon,
Vice-President,
Physical-Layer and
Wireless Division
|
2013
|
222,916
(US)
225,301
(CA)
|
88,647
89,595
|
(US)
(CA)
|
–
|
47,193
47,699
|
(US)
(CA)
|
–
|
–
|
5,293
5,350
|
(US)
(CA)
|
364,049
(US)
367,945
(CA)
|
2012
|
208,852
(US)
210,815
(CA)
|
79,945
80,697
|
(US)
(CA)
|
–
|
44,936
45,358
|
(US)
(CA)
|
–
|
–
|
5,292
5,342
|
(US)
(CA)
|
339,025
(US)
342,212
(CA)
|
|
2011
|
203,897
(US)
201,736
(CA)
|
104,138
107,247
|
(US)
(CA)
|
–
|
61,833
61,177
|
(US)
(CA)
|
–
|
–
|
5,535
5,476
|
(US)
(CA)
|
375,403
(US)
375,636
(CA)
|
|
Dana Yearian,
Vice-President,
Sales — Americas
|
2013
|
219,596
(US)
221,946
(CA)
|
91,050
92,024
|
(US)
(CA)
|
–
|
134,529
135,968
|
(US)
(CA)
|
–
|
–
|
7,009
7,084
|
(US)
(CA)
|
452,184
(US)
457,022
(CA)
|
2012
|
214,240
(US)
216,254
(CA)
|
83,198
83,980
|
(US)
(CA)
|
–
|
149,851
151,260
|
(US)
(CA)
|
–
|
–
|
7,293
7,361
|
(US)
(CA)
|
454,582
(US)
458,855
(CA)
|
|
2011
|
208,000
(US)
205,795
(CA)
|
123,410
122,102
|
(US)
(CA)
|
–
|
217,246
214,944
|
(US)
(CA)
|
–
|
–
|
7,350
7,272
|
(US)
(CA)
|
556,006
(US)
550,113
(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$1.0107 = US$1.00 for the financial year ended August 31, 2013, CA$1.0094 = US$1.00 for the financial year ended August 31, 2012 and CA$0.9894 = US$1.00 for the financial year ended August 31, 2011.
|
(3)
|
Indicates the dollar amount based on the grant date fair value of the RSUs awarded under the LTIP for the financial year. The grant date fair value is equal to the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Bank of Canada on the grant date to convert the NASDAQ National Market closing price to Canadian dollars. Grants of RSUs to NEOs are detailed under section “Compensation Discussion and Analysis – Long-Term Incentive Plan”.
|
(4)
|
Indicates the total bonus earned during the financial year whether paid during the financial year or payable on a later date:
|
Name
|
Paid during the
financial year ended
August 31, 2013
(i)
($)
|
Paid in the first quarter
of the financial year
ending on August 31, 2014
(i)
($)
|
Total bonus earned during
the financial year
ended August 31, 2013
(i)
($)
|
|||
Germain Lamonde
|
122,698
124,010
|
(US)
(CA)
|
61,201
(US)
61,856
(CA)
|
183,899
185,866
|
(US)
(CA)
|
|
Pierre Plamondon
|
36,181
36,568
|
(US)
(CA)
|
22,528
(US)
22,769
(CA)
|
58,709
59,337
|
(US)
(CA)
|
|
Stephen Bull
|
29,755
30,074
|
(US)
(CA)
|
13,601
(US)
13,747
(CA)
|
43,356
43,820
|
(US)
(CA)
|
|
Étienne Gagnon
|
30,856
31,186
|
(US)
(CA)
|
16,337
(US)
16,513
(CA)
|
47,193
47,699
|
(US)
(CA)
|
|
Dana Yearian
|
95,196
96,215
|
(US)
(CA)
|
39,333
(US)
39,754
(CA)
|
134,529
135,968
|
(US)
(CA)
|
(i)
|
Refer to note 2 above.
|
(5)
|
Indicates the amount contributed by the Corporation during the financial year to the DPSP as detailed under section “Compensation Discussion and Analysis – Deferred Profit-Sharing Plan”, the 401K plan as detailed under section “Compensation Discussion and Analysis – 401K Plan”, as applicable, for the benefit of the NEOs. Mr. Lamonde is not eligible to participate in the DPSP.
|
Name
|
Outstanding Option-based Awards (Options)
|
Outstanding Share-based Awards (RSUs)
|
|||||||
Number of
securities
underlying
unexercised
options
(#)
|
Option
Exercise
Price
(1)
|
Option
expiration
date
|
Value
(2)
of
unexercised
“in-the-money”
options
(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$)
(4)
|
Market or
payout value of
vested share-
based awards
not paid out or
distributed
(US$)
|
|||
Germain Lamonde
|
17,942
|
4.51
(US)
5.60
(CA)
|
Feb. 1, 2015
|
–
–
|
198,439
|
906,866
|
–
|
||
11,218
|
4.76
(US)
5.50
(CA)
|
Dec. 6, 2015
|
–
–
|
||||||
Pierre Plamondon
|
5,383
|
5.13
(US)
6.28
(CA)
|
Oct. 26, 2014
|
–
–
|
107,368
|
490,672
|
–
|
||
3,653
|
4.76
(US)
5.50
(CA)
|
Dec. 6, 2015
|
–
–
|
||||||
Stephen Bull
|
–
|
–
|
–
|
–
|
86,606
|
395,789
|
–
|
||
Étienne Gagnon
|
–
|
–
|
–
|
–
|
94,401
|
431,413
|
–
|
||
Dana Yearian
|
–
|
–
|
–
|
–
|
107,528
|
491,403
|
–
|
(1)
|
These options were granted in Canadian dollars. The exercise price 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 business day preceding the grant date using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars on the grant date.
|
(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, 2013. “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, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. For a Canadian resident, the value of unexercised “in-the-money” options is calculated using the option exercise price and the market value of the subordinate voting shares on the Toronto Stock Exchange in Canadian dollars.
|
(4)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2013, which was US$4.57 (CA$4.81). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2013 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
Name
|
Share-based awards – value
vested during the year (US$)
(1)
|
Non-equity incentive plan compensation –
Value earned during the year (US$)
(2)
|
||
Germain Lamonde
|
144,763
|
183,899
|
||
Pierre Plamondon
|
42,413
|
58,709
|
||
Stephen Bull
|
33,271
|
43,356
|
||
Étienne Gagnon
|
35,018
|
47,193
|
||
Dana Yearian
|
35,765
|
134,529
|
(1)
|
The aggregate dollar value realized is equivalent to the market value of the Subordinate Voting Shares underlying the RSUs at vesting. This value, as the case may be, has been converted from Canadian dollars to US dollars based upon the noon buying rate of the Bank of Canada on the day of vesting.
|
(2)
|
Includes total non-equity incentive plan compensation earned by each NEO in respect to the financial year ended on August 31, 2013 (as indicated under the “Summary Compensation Table”).
|
Named Executive Officer
|
Termination Payment Event
|
|||||
Without Cause ($)
(1) (2)
|
Change of Control ($)
(2) (3) (4)
|
Voluntary ($)
|
||||
Germain Lamonde
|
2,178,526
2,239,386
|
(US) (5)
(CA)
|
2,178,526
2,239,386
|
(US)
(CA)
|
906,866
954,492
|
(US) (6)
(CA)
|
Pierre Plamondon
|
556,513
575,194
|
(US)
(CA)
|
964,862
995,579
|
(US)
(CA)
|
–
|
|
Stephen Bull
|
457,698
472,443
|
(US)
(CA)
|
826,997
850,312
|
(US)
(CA)
|
–
|
|
Étienne Gagnon
|
488,545
505,087
|
(US)
(CA)
|
825,770
852,559
|
(US)
(CA)
|
–
|
|
Dana Yearian
|
540,241
559,430
|
(US)
(CA)
|
1,146,666
1,172,545
|
(US)
(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, 2013 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 6 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$1.0107 = US$1.00 for the financial year ended August 31, 2013.
|
(3)
|
“Change of Control” is defined as 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, 2013 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, 2013 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, 2013 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$49,471
|
(3)
|
Annual Retainer for Lead Director
|
CA$5,000
|
US$4,947
|
(3)
|
|
Annual Retainer for Committee Chairman
|
CA$5,000
|
US$4,947
|
(3)
|
|
Annual Retainer for Committee Members
|
CA$3,000
|
US$2,968
|
(3)
|
|
Fees for all Meetings Attended per day in Person
|
CA$1,000
|
US$989
|
(3)
|
|
Fees for all Meetings Attended per day by Telephone
|
CA$500
|
US$495
|
(3)
|
(1)
|
All the Directors elected to receive 50% of their Annual Retainer in form of DSUs.
|
(2)
|
The Annual Retainer for Mr. Pierre-Paul Allard and Mr. Randy E. Tornes is US$50,000 (CA$50,535), as it was for Ms. Susan Spradley.
|
(3)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.0107 = US$1.00 for the financial year ended August 31, 2013.
|
Name
|
Fees earned
(1)
($)
|
Share-based
Awards
($)
|
Option-
based
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Pension
Value
($)
|
All other
Compensation
($)
|
Total
($)
|
Pierre-Paul Allard
|
60,884
(US)
61,536
(CA)
|
–
|
–
|
–
|
–
|
–
|
60,884
(US)
61,536
(CA)
|
Darryl Edwards
|
63,514
(US)
64,194
(CA)
|
–
|
–
|
–
|
–
|
–
|
63,514
(US)
64,194
(CA)
|
Pierre Marcouiller
(2)
|
25,257
(US)
25,528
(CA)
|
–
|
–
|
–
|
–
|
–
|
25,257
(US)
25,528
(CA)
|
Guy Marier
|
65,796
(US)
66,500
(CA)
|
–
|
–
|
–
|
–
|
–
|
65,796
(US)
66,500
(CA)
|
Claude Séguin
(3)
|
32,299
(US)
32,645
(CA)
|
–
|
–
|
–
|
–
|
–
|
32,299
(US)
32,645
(CA)
|
Susan Spradley
(4)
|
12,668
(US)
12,804
(CA)
|
–
|
–
|
–
|
–
|
–
|
12,668
(US)
12,804
(CA)
|
Randy E. Tornes
(5)
|
32,296
(US)
34,664
(CA)
|
–
|
–
|
–
|
–
|
–
|
34,296
(US)
34,664
(CA)
|
(1)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.0107 = US$1.00 for the financial year ended August 31, 2013 except for compensation amounts paid to Mr. Pierre-Paul Allard, Ms. Susan Spradley and Mr. Randy E. Tornes which were paid in US dollars for the portion of their annual retainer for Directors. The fees are always payable in cash, but executives are provided the opportunity to elect to exchange all or a portion of their Annual Retainer for Directors into DSUs. The following table identifies the portion of the fees earned by the directors that were paid in DSUs and the portion that were paid in cash.
|
Name
|
Fees earned
|
|||||
DSUs ($)
(i)
|
Cash ($)
|
Total ($)
|
||||
Pierre-Paul Allard
(ii)
|
25,000
25,268
|
(US)
(CA)
|
35,884
36,268
|
(US)
(CA)
|
60,884
(US)
61,536
(CA)
|
|
Darryl Edwards
(ii)
|
24,735
25,000
|
(US)
(CA)
|
38,779
39,194
|
(US)
(CA)
|
63,514
(US)
64,194
(CA)
|
|
Pierre Marcouiller
(ii)
|
8,932
9,028
|
(US)
(CA)
|
16,325
16,500
|
(US)
(CA)
|
25,257
(US)
25,528
(CA)
|
|
Guy Marier
(ii)
|
24,735
25,000
|
(US)
(CA)
|
41,061
41,500
|
(US)
(CA)
|
65,796
(US)
66,500
(CA)
|
Name
|
Fees earned
|
|||||
DSUs ($)
(i)
|
Cash ($)
|
Total ($)
|
||||
Claude Séguin
(ii)
|
13,536
13,681
|
(US)
(CA)
|
18,763
18,964
|
(US)
(CA)
|
32,299
(US)
32,645
(CA)
|
|
Susan Spradley
(ii)
|
5,220
5,276
|
(US)
(CA)
|
7,448
7,528
|
(US)
(CA)
|
12,668
(US)
12,804
(CA)
|
|
Randy E. Tornes
(ii)
|
14,444
14,599
|
(US)
(CA)
|
19,852
20,065
|
(US)
(CA)
|
34,296
(US)
34,664
(CA)
|
(i)
|
The estimated value at the time of grant of a DSU is determined based on the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Bank of Canada on the grant date to convert the NASDAQ National Market closing price to Canadian dollars, as required. The value at vesting of a DSU is equivalent to the market value of a Subordinate Voting Share when a DSU is converted to such Subordinate Voting Share.
|
(ii)
|
Elected to receive 50% of his or her Annual Retainer for Directors in form of DSUs.
|
(2)
|
Mr. Marcouiller ceased to be a member of the Board of Directors as at January 10, 2013.
|
(3)
|
Mr. Séguin joined our Board of Directors on February 12, 2013.
|
(4)
|
Ms. Spradley ceased to be a member of the Board of Directors as at November 16, 2012.
|
(5)
|
Mr. Tornes joined our Board of Directors on February 1, 2013.
|
Name
|
Outstanding Option-based Awards (Options)
|
Outstanding Share-based Awards (DSUs)
|
||||||||
Number of
securities
underlying
unexercised
options
(#)
|
Option
Exercise
Price
(1)
|
Option
expiration
date
|
Value
(2)
of
unexercised
“in-the-money”
options
(3)
|
Number of
shares
or units of
shares
that have not
vested
(#)
|
Market or
payout value of
share-based
awards that
have not vested
(US$)
(4)
|
Market or
payout value of
vested share-
based awards
not paid out or
distributed
(US$)
|
||||
Pierre-Paul Allard
|
–
|
–
|
–
|
–
|
25,669
|
117,307
|
–
|
|||
Darryl Edwards
|
–
|
–
|
–
|
–
|
9,239
|
42,222
|
–
|
|||
Pierre Marcouiller
(5)
|
–
|
–
|
–
|
–
|
38,010
|
173,706
|
–
|
|||
Guy Marier
|
12,500
|
4.65
(US)
6.22
(CA)
|
Mar. 24, 2014
|
–
–
|
41,181
|
188,197
|
–
|
|||
Claude Séguin
|
–
|
–
|
–
|
–
|
2,777
|
12,691
|
–
|
|||
Susan Spradley
(6)
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
|||
Randy E. Tornes
|
–
|
–
|
–
|
–
|
3,032
|
13,856
|
–
|
(1)
|
These options were granted in Canadian dollars. The exercise price was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the business day preceding the grant date using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars on the grant date.
|
(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, 2013. “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, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. For a Canadian resident, the value of unexercised “in-the-money” options is calculated using the option exercise price and the market value of the subordinate voting shares on the Toronto Stock Exchange in Canadian dollars.
|
(4)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2013, which was US$4.57 (CA$4.81). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2013 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(5)
|
Mr. Marcouiller ceased to be a member of the Board of Directors as at January 10, 2013.
|
(6)
|
Ms. Spradley ceased to be a member of the Board of Directors as at November 16, 2012.
|
Name
|
Number of DSUs converted
|
Aggregate Value Realized (US$)
(1)
|
||
Susan Spradley
(2)
|
5,386
|
24,829
|
||
David A. Thompson
(3)
|
31,668
|
145,989
|
(1)
|
The aggregate value realized is equivalent to the market value of the securities underlying the DSUs at conversion.
|
(2)
|
Ms. Spradley ceased to be a member of the Board of Directors as of November 16, 2012.
|
(3)
|
Mr. Thompson ceased to be a member of the Board of Directors as of January 12, 2012.
|
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$)
(b)
|
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a)) (#)
(c)
|
||
LTIP – RSUs
|
1,333,092
|
n/a
|
(1)
|
1,997,288
|
|
LTIP – Options
|
201,254
|
4.37
|
|||
Deferred Share Unit Plan – DSUs
|
119,908
|
n/a
|
(1)
|
(1)
|
The value of RSUs and DSUs will be equal to the market value of the Subordinate Voting Shares of the Corporation on the date of vesting.
|
August 31,
|
||||||
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
|
EXFO Subordinate Voting Shares (CA$)
|
$100
|
$71
|
$127
|
$140
|
$102
|
$103
|
S&P/TSX Composite Index (CA$)
|
$100
|
$82
|
$90
|
$96
|
$90
|
$95
|
NEOs’ total compensation (in millions of CA$)
|
$2.1
|
$2.3
|
$2.5
|
$2.7
|
$2.5
|
$2.3
|
·
|
Our share performance improved from the financial year that began on September 1, 2009 to the financial year ended August 31, 2011 and decreased from the financial year that began on September 1, 2011 to the financial year ended August 31, 2012. This share performance is aligned with the respective increase and decrease in total compensation received by the NEOs during these periods. Such compensation for the NEOs is therefore aligned with shareholders’ interests.
|
·
|
Our share performance weakened in the financial year ended August 31, 2009 due to a significant downturn in the global economy; this share performance was similar to other technology companies. However, total compensation received by NEOs increased during this period, since we were expanding our activities, developing new markets and acquiring new businesses. This expansion significantly increased the complexity of our operations and organization.
|
·
|
The increase in the total compensation received by the NEOs in the financial years ended August 31, 2009, 2010 and 2011 is the result of an initiative to gradually close the compensation gap with respect to market rates. This decision was made pursuant to a three-year plan adopted in 2007 based on Mercer and Aon-Hewitt’s recommendations, and a plan adopted in 2010 previously defined herein as the Mercer Three Year Compensation Plan. In addition, total compensation received by the NEOs over the identified periods increased as a result of the additional roles and responsibilities of such individuals due to the increased complexity of our organization and to the addition of new senior executive members with higher compensation.
|
·
|
Despite the relative stability of the Corporation’s share price as at August 31, 2013 compared to the previous financial year, total compensation of the NEOs decreased, reflecting financial results below expectations for financial 2013 and aligning compensation with shareholders’ interests.
|
(1)
|
From September 1, 2012 until November 1, 2013, Mr. Lamonde attended seven (7) meetings in person and one (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, 2013, which was US$4.57 (CA$4.81). 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, 2013 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)
|
These options were granted in Canadian dollars. The exercise price 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 business day preceding the grant date using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars on the grant date.
|
(7)
|
Indicates an aggregate value of “in-the-money” unexercised options held at the financial year ended August 31, 2013. “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, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars as required. For a Canadian resident, the value of options unexercised is calculated using the exercise price and the market value of the subordinate voting shares on the Toronto Stock Exchange in Canadian dollars.
|
(1)
|
Avaya Inc. is a global provider of business collaboration and communications solutions.
|
(2)
|
From September 1, 2012 until November 1, 2013, Mr. Allard attended five (5) meetings in person and two (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, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States 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.
|
(1)
|
From September 1, 2012 until November 1, 2013, Mr. Edwards attended six (6) meetings in person and two (2) meetings by telephone.
|
(2)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States 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.
|
(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, 2012 until November 1, 2013, Mr. Marier attended seven (7) meetings in person and one (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, 2013, which was US$4.57 (CA$4.81). 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, 2013 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)
|
These options were granted in Canadian dollars. The exercise price 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 business day preceding the grant date using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars as required on the grant date.
|
(6)
|
Indicates an aggregate value of “in-the-money” unexercised options held at the financial year ended August 31, 2013. “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, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars as required. For a Canadian resident, the value of options unexercised is calculated using the exercise price and the market value of the subordinate voting shares on the Toronto Stock Exchange in Canadian dollars.
|
(1)
|
CGI Group Inc. is an information technology consulting, systems integration, outsourcing and solutions company.
|
(2)
|
Mr. Séguin joined our Board of Directors in February 2013. From February 12, 2013 until November 1, 2013, Mr. Séguin attended four (4) meetings in person and none 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, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States 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.
|
(1)
|
Juniper Networks is a manufacturer of networking equipment.
|
(2)
|
Mr. Tornes joined our Board of Directors in February 2013. From February 1, 2013 until November 1, 2013, Mr. Tornes attended four (4) meetings in person and none 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, 2013, which was US$4.57 (CA$4.81). 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, 2013 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States 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.
|
(a)
|
is, as at the date hereof, or has been, within ten (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 ten (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 ten (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.
|
Name
|
Subordinate Voting
Shares Owned
|
Currently Exercisable
Options Owned
as at November 1, 2013
|
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
|
4,229,358
|
(4)
|
14.72
|
29,160
|
15.61
|
–
|
*
|
4,258,518
|
14.81
|
31,643,000
|
(5)
|
100
|
92.90
|
|||
Pierre Plamondon
|
83,629
|
(6)
|
*
|
3,653
|
1.96
|
5,383
|
2.88
|
92,665
|
*
|
–
|
–
|
*
|
||||
Pierre-Paul Allard
|
8,000
|
*
|
–
|
*
|
–
|
*
|
8,000
|
*
|
–
|
–
|
*
|
|||||
Darryl Edwards
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
|||||
Guy Marier
|
1,000
|
*
|
–
|
*
|
12,500
|
6.69
|
13,500
|
*
|
–
|
–
|
*
|
|||||
Claude Séguin
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
|||||
Randy E. Tornes
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
|||||
Stephen Bull
|
28,192
|
*
|
–
|
*
|
–
|
*
|
28,192
|
*
|
–
|
–
|
*
|
|||||
Étienne Gagnon
|
5,000
|
*
|
–
|
*
|
–
|
*
|
5,000
|
*
|
–
|
–
|
*
|
|||||
Dana Yearian
|
34,181
|
*
|
–
|
*
|
–
|
*
|
34,181
|
*
|
–
|
–
|
*
|
|||||
Other executive
officers as a group
|
26,612
|
*
|
2,228
|
1.19
|
3,230
|
1.73
|
32,070
|
*
|
–
|
–
|
*
|
|||||
All of our Directors
and executive officers
as a group
|
4,415,972
|
15.37
|
35,041
|
18.76
|
21,113
|
11.31
|
4,472,126
|
15.54
|
31,643,000
|
100
|
92.96
|
*
|
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, 2013 the market value of a Subordinate Voting Share was US$5.60 or CA$5.85 as applicable.
|
(2)
|
“Out-the-money” options are options for which the market value of the underlying securities is lower than the price of which such securities may be bought from the Corporation.
|
(3)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Options that are currently exercisable or exercisable within sixty (60) days as at November 1, 2013 (including options that have an exercise price above the market price) are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Accordingly, DSUs and RSUs are not included.
|
(4)
|
The number of shares held by Germain Lamonde includes 4,000,000 subordinate voting shares held of record by G. Lamonde Investissements financiers inc.
|
(5)
|
The number of shares held by Germain Lamonde includes 1,900,000 multiple voting shares held of record by Fiducie Germain Lamonde and 29,743,000 multiple voting shares held of record by G. Lamonde Investissements Financiers inc.
|
(6)
|
The number of shares held by Pierre Plamondon includes 6,874 subordinate voting shares held of record by Fiducie Pierre Plamondon.
|
Name
|
Securities Under
Options Granted
(1)
(#)
|
Exercise Price
(2)
(US$/Security)
|
Expiration Date
|
||
Germain Lamonde
|
17,942
11,218
|
$4.51
$4.76
|
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
|
−
|
−
|
−
|
||
Guy Marier
|
12,500
|
$4.65
|
March 24, 2014
|
||
Claude Séguin
|
−
|
−
|
−
|
||
Randy E. Tornes
|
−
|
−
|
−
|
||
Stephen Bull
|
−
|
−
|
−
|
||
Étienne Gagnon
|
−
|
−
|
−
|
Name
|
Securities Under
Options Granted
(1)
(#)
|
Exercise Price
(2)
(US$/Security)
|
Expiration Date
|
||
Dana Yearian
|
−
|
−
|
−
|
||
Other Executive Officers as a group
|
3,230
2,228
|
$5.13
$4.76
|
October 26, 2014
December 6, 2015
|
(1)
|
Underlying securities: subordinate voting shares.
|
(2)
|
The exercise price of options granted is determined based on the highest of the closing prices of the subordinate voting shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Federal Reserve Bank of New York on the grant date to convert the NASDAQ National Market closing price to Canadian dollars, as required.
|
Name
|
DSUs
|
RSUs
|
||||||||
Number
|
Percentage
|
Estimated Average
Value at the time of
grant US$/DSU
(1)
|
Number
|
Percentage
|
Fair Value at the time of grant US$/RSU
(2)
|
|||||
Germain Lamonde
|
–
|
–
|
–
|
42,341
|
(3)
|
3.58
|
%
|
3.74
|
||
–
|
–
|
–
|
44,548
|
(4)
|
3.76
|
%
|
6.03
|
|||
–
|
–
|
–
|
53,261
|
(5)
|
4.50
|
%
|
5.43
|
|||
Pierre Plamondon
|
–
|
–
|
–
|
10,761
|
(3)
|
0.91
|
%
|
3.74
|
||
–
|
–
|
–
|
12,863
|
(4)
|
1.09
|
%
|
6.03
|
|||
–
|
–
|
–
|
8,857
|
(6)
|
0.75
|
%
|
6.03
|
|||
–
|
–
|
–
|
17,325
|
(5)
|
1.46
|
%
|
5.43
|
|||
–
|
–
|
–
|
19,740
|
(7)
|
1.67
|
%
|
5.06
|
|||
–
|
–
|
–
|
19,839
|
(8)
|
1.68
|
%
|
5.28
|
|||
Pierre-Paul Allard
|
25,669
|
(9)
|
21.4
|
%
|
4.87
|
–
|
–
|
–
|
||
Darryl Edwards
|
9,239
|
(9)
|
7.7
|
%
|
5.35
|
–
|
–
|
–
|
||
Pierre Marcouiller
|
38,010
|
(9)
|
31.7
|
%
|
5.11
|
–
|
–
|
–
|
||
Guy Marier
|
41,181
|
(9)
|
34.3
|
%
|
5.09
|
–
|
–
|
–
|
||
Claude Séguin
|
2,777
|
(9)
|
2.3
|
%
|
4.80
|
–
|
–
|
–
|
||
Randy E. Tornes
|
3,032
|
(9)
|
2.5
|
%
|
4.76
|
–
|
–
|
–
|
||
Stephen Bull
|
–
|
–
|
–
|
9,009
|
(3)
|
0.76
|
%
|
3.74
|
||
–
|
–
|
–
|
10,822
|
(4)
|
0.91
|
%
|
6.03
|
|||
–
|
–
|
–
|
4,026
|
(6)
|
0.34
|
%
|
6.03
|
|||
–
|
–
|
–
|
15,490
|
(5)
|
1.31
|
%
|
5.43
|
|||
–
|
–
|
–
|
18,753
|
(7)
|
1.58
|
%
|
5.06
|
|||
–
|
–
|
–
|
17,481
|
(8)
|
1.48
|
%
|
5.28
|
|||
Étienne Gagnon
|
–
|
–
|
–
|
9,515
|
(3)
|
0.80
|
%
|
3.74
|
||
–
|
–
|
–
|
10,699
|
(4)
|
0.90
|
%
|
6.03
|
|||
–
|
–
|
–
|
6,441
|
(6)
|
0.54
|
%
|
6.03
|
|||
–
|
–
|
–
|
14,619
|
(5)
|
1.23
|
%
|
5.43
|
|||
–
|
–
|
–
|
17,955
|
(7)
|
1.52
|
%
|
5.06
|
|||
–
|
–
|
–
|
17,148
|
(8)
|
1.45
|
%
|
5.28
|
|||
Dana Yearian
|
–
|
–
|
–
|
9,766
|
(3)
|
0.83
|
%
|
3.74
|
||
–
|
–
|
–
|
11,470
|
(4)
|
0.97
|
%
|
6.03
|
|||
–
|
–
|
–
|
8,857
|
(6)
|
0.75
|
%
|
6.03
|
|||
–
|
–
|
–
|
15,322
|
(5)
|
1.29
|
%
|
5.43
|
|||
–
|
–
|
–
|
17,994
|
(7)
|
1.52
|
%
|
5.06
|
|||
–
|
–
|
–
|
17,676
|
(8)
|
1.49
|
%
|
5.28
|
|||
Other executive officers as a group
|
–
|
–
|
–
|
13,300
|
(3)
|
1.12
|
%
|
3.74
|
||
–
|
–
|
–
|
3,200
|
(10)
|
0.27
|
%
|
5.13
|
|||
–
|
–
|
–
|
16,530
|
(4)
|
1.40
|
%
|
6.03
|
|||
–
|
–
|
–
|
11,272
|
(6)
|
0.95
|
%
|
6.03
|
|||
–
|
–
|
–
|
4,600
|
(11)
|
0.39
|
%
|
9.32
|
|||
–
|
–
|
–
|
22,566
|
(5)
|
1.91
|
%
|
5.43
|
|||
–
|
–
|
–
|
8,321
|
(17)
|
0.70
|
%
|
6.61
|
|||
–
|
–
|
–
|
4,000
|
(12)
|
0.34
|
%
|
6.47
|
|||
–
|
–
|
–
|
7,576
|
(15)
|
0.64
|
%
|
6.55
|
|||
–
|
–
|
–
|
6,330
|
(16)
|
0.53
|
%
|
6.55
|
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)
|
|||||
Other executive officers as a group
(continued)
|
–
|
–
|
–
|
1,429
|
(13)
|
0.12
|
%
|
7.06
|
||
–
|
–
|
–
|
65,962
|
(7)
|
5.57
|
%
|
5.06
|
|||
–
|
–
|
–
|
2,200
|
(14)
|
0.19
|
%
|
5.61
|
|||
–
|
–
|
–
|
66,089
|
(8)
|
5.58
|
%
|
5.28
|
|||
All of the directors and executive
officers
as a group
|
–
|
–
|
–
|
94,692
|
(3)
|
8.00
|
%
|
3.74
|
||
–
|
–
|
–
|
3,200
|
(10)
|
0.27
|
%
|
5.13
|
|||
–
|
–
|
–
|
106,932
|
(4)
|
9.03
|
%
|
6.03
|
|||
–
|
–
|
–
|
39,453
|
(6)
|
3.33
|
%
|
6.03
|
|||
–
|
–
|
–
|
4,600
|
(11)
|
0.39
|
%
|
9.32
|
|||
–
|
–
|
–
|
138,583
|
(5)
|
11.71
|
%
|
5.43
|
|||
–
|
–
|
–
|
8,321
|
(17)
|
0.70
|
%
|
6.61
|
|||
–
|
–
|
–
|
4,000
|
(12)
|
0.34
|
%
|
6.47
|
|||
–
|
–
|
–
|
7,576
|
(15)
|
0.64
|
%
|
6.55
|
|||
–
|
–
|
–
|
6,330
|
(16)
|
0.53
|
%
|
6.55
|
|||
–
|
–
|
–
|
1,429
|
(13)
|
0.12
|
%
|
7.06
|
|||
–
|
–
|
–
|
140,404
|
(7)
|
11.86
|
%
|
5.06
|
|||
–
|
–
|
–
|
2,200
|
(14)
|
0.19
|
%
|
5.61
|
|||
–
|
–
|
–
|
138,233
|
(8)
|
11.68
|
%
|
5.28
|
|||
Total
|
119,908
|
100
|
%
|
5.05
|
3,695,953
|
58.79
|
%
|
5.35
|
(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 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.
|
(4)
|
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.
|
(5)
|
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.
|
(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 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.
|
(7)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2012 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 2013 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.
|
(9)
|
Those DSUs will vest at the time Director ceases to be a member of the Board of the Corporation.
|
(10)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2010.
|
(11)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2011.
|
(12)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2012.
|
(13)
|
Those RSUs will vest on the fifth anniversary date of the grant in April 2012 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.
|
(14)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2013.
|
(15)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2012.
|
(16)
|
Those RSUs will vest on the fifth anniversary date of the grant in January 2012 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 2012.
|
|
Escrowed Securities
|
Major Shareholders and Related Party Transactions
|
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
|
100.00
|
%
|
4,229,358
|
14.72
|
%
|
92.90
|
%
|
||
Fiducie Germain Lamonde
(3)
|
1,900,000
|
6.00
|
%
|
–
|
–
|
5.50
|
%
|
|||
G. Lamonde Investissements Financiers inc.
(4)
|
29,743,000
|
94.00
|
%
|
4,000,000
|
13.92
|
%
|
87.33
|
%
|
||
EdgePoint Investment Group, Inc.
|
–
|
–
|
3,954,700
|
13.77
|
%
|
1.15
|
%
|
|||
Polar Securities
|
–
|
–
|
2,046,427
|
7.12
|
%
|
*
|
||||
Royce & Associates LLC
|
–
|
–
|
2,017,500
|
7.02
|
%
|
*
|
||||
Brown Investment Advisory, Inc.
|
–
|
–
|
1,591,655
|
5.54
|
%
|
*
|
*
|
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, 2013 (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.
|
Financial Information
|
Years ended August 31,
|
||||||||||||||||||||||||
2013
|
2012
|
2011
|
||||||||||||||||||||||
Export Sales
|
$ | 216,077 | 89 | % | $ | 220,022 | 88 | % | $ | 238,757 | 89 | % | ||||||||||||
Domestic Sales
|
26,073 | 11 | 29,944 | 12 | 30,986 | 11 | ||||||||||||||||||
$ | 242,150 | 100 | % | $ | 249,966 | 100 | % | $ | 269,743 | 100 | % |
The Offer and Listing
|
Offer and Listing Details
|
NASDAQ (US$)
|
TSX (CA$)
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
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 | ||||||||||||
September 1, 2011 to August 31, 2012
|
8.23 | 4.56 | 8.24 | 4.59 | ||||||||||||
September 1, 2012 to August 31, 2013
|
5.90 | 4.00 | 5.86 | 4.14 | ||||||||||||
September 1, 2011 to November 30, 2011 (2012 1
st
Quarter)
|
8.23 | 5.38 | 8.24 | 5.51 | ||||||||||||
December 1, 2011 to February 29, 2012 (2012 2
nd
Quarter)
|
8.01 | 5.26 | 7.98 | 5.40 | ||||||||||||
March 1, 2012 to May 31, 2012 (2012 3
rd
Quarter)
|
7.81 | 5.94 | 7.80 | 6.09 | ||||||||||||
June 1, 2012 to August 31, 2012 (2012 4
th
Quarter)
|
5.93 | 4.56 | 5.89 | 4.59 | ||||||||||||
September 1, 2012 to November 30, 2012 (2013 1
st
Quarter)
|
5.20 | 4.38 | 5.10 | 4.40 | ||||||||||||
December 1, 2012 to February 28, 2013 (2013 2
nd
Quarter)
|
5.90 | 4.51 | 5.86 | 4.40 | ||||||||||||
March 1, 2013 to May 31, 2013 (2013 3
rd
Quarter)
|
5.65 | 4.33 | 5.76 | 4.40 | ||||||||||||
June 1, 2013 to August 31, 2013 (2013 4
th
Quarter)
|
5.05 | 4.00 | 5.25 | 4.14 | ||||||||||||
May 2013
|
4.84 | 4.40 | 4.72 | 4.45 | ||||||||||||
June 2013
|
4.54 | 4.00 | 4.75 | 4.14 | ||||||||||||
July 2013
|
5.07 | 4.38 | 5.25 | 4.33 | ||||||||||||
August 2013
|
5.01 | 4.56 | 5.20 | 4.72 | ||||||||||||
September 2013
|
5.52 | 4.46 | 5.65 | 4.67 | ||||||||||||
October 2013
|
5.70 | 5.10 | 5.88 | 5.35 | ||||||||||||
November 2013
|
5.60 | 5.04 | 5.85 | 5.27 | ||||||||||||
(until November 12)
|
Markets
|
Additional Information
|
Share Capital
|
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.
|
Dividends and Paying Agents
|
Statement by Experts
|
Documents on Display
|
Subsidiary Information
|
Qualitative and Quantitative Disclosures about Market Risk
|
Years ending August 31,
|
||||||||||||
2014
|
2015
|
2016
|
||||||||||
Forward exchange contracts to sell US dollars in exchange for Canadian dollars
|
||||||||||||
Contractual amounts
|
$ | 22,200 | $ | 15,000 | $ | 5,000 | ||||||
Weighted average contractual forward rates
|
1.0280 | 1.0529 | 1.0716 |
Carrying/nominal
amount
(in thousands
of US dollars)
|
Carrying/nominal
amount
(in thousands
of euros)
|
|||||||
Financial assets
|
||||||||
Cash
|
$ | 9,728 | € | 2,106 | ||||
Accounts receivable
|
33,191 | 5,284 | ||||||
42,919 | 7,390 | |||||||
Financial liabilities
|
||||||||
Accounts payable and accrued liabilities
|
10,355 | 1,075 | ||||||
Forward exchange contracts (nominal amount)
|
3,800 | – | ||||||
14,155 | 1,075 | |||||||
Net exposure
|
$ | 28,764 | € | 6,315 |
·
|
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 and $2.7 million, or $0.04 per diluted share, as at August 31, 2013.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the euro would decrease (increase) net earnings by $870,000 or $0.01 per diluted share, as at August 31, 2013.
|
·
|
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 $3.0 million as at August 31, 2013.
|
Current
|
$ | 41,557 | ||
Past due, 0 to 30 days
|
6,210 | |||
Past due, 31 to 60 days
|
2,088 | |||
Past due, more than 60 days, less allowance for doubtful accounts of $766
|
262 | |||
Total trade accounts receivable
|
$ | 50,117 |
0-12
months
|
13-24
months
|
25-36
months
|
||||||||||
Accounts payable and accrued liabilities
|
$ | 25,679 | $ | – | $ | – | ||||||
Long-term debt
|
296 | – | – | |||||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
22,200 | 15,000 | 5,000 | |||||||||
Inflow
|
(21,673 | ) | (14,999 | ) | (5,088 | ) | ||||||
Total
|
$ | 26,502 | $ | 1 | $ | (88 | ) |
Description of Securities Other than Equity Securities
|
Defaults, Dividend Arrearages and Delinquencies
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
Controls and Procedures
|
[Reserved]
|
·
|
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 (Whistleblower).
|
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 September 1, 2012
|
‒
|
‒
|
‒
|
‒
|
171,742
|
|||
To September 30, 2012
|
||||||||
From October 1, 2012
|
64,200
|
4.68
|
4.79
|
64,200
|
107,542
|
|||
To October 31, 2012
|
||||||||
From November 1, 2012
|
96,300
|
4.62
|
4.68
|
96,300
|
‒
|
|||
To November 9, 2012
|
||||||||
From November 12, 2012
|
44,623
|
4.78
|
4.80
|
44,623
|
2,028,098
|
|||
To November 30, 2012
|
||||||||
From December 1, 2012
|
‒
|
‒
|
‒
|
‒
|
2,028,098
|
|||
To December 31, 2012
|
||||||||
From January 1, 2013
|
31,210
|
5.31
|
5.32
|
31,210
|
1,996,888
|
|||
To January 31, 2013
|
||||||||
From February 1, 2013
|
‒
|
‒
|
‒
|
‒
|
1,996,888
|
|||
To February 28, 2013
|
||||||||
From March 1, 2013
|
‒
|
‒
|
‒
|
‒
|
1,996,888
|
|||
To March 31, 2013
|
||||||||
From April 1, 2013
|
157,782
|
4.64
|
4.70
|
157,782
|
1,839,106
|
|||
To April 30, 2013
|
||||||||
From May 1, 2013
|
95,192
|
4.49
|
4.56
|
95,192
|
1,743,914
|
|||
To May 31, 2013
|
||||||||
From June 1, 2013
|
‒
|
‒
|
‒
|
‒
|
1,743,914
|
|||
To June 30, 2013
|
||||||||
From July 1, 2013
|
171,949
|
4.54
|
4.74
|
171,949
|
1,571,965
|
|||
To July 31, 2013
|
||||||||
From August 1, 2013
|
2,000
|
4.72
|
4.90
|
2,000
|
1,569,965
|
|||
To August 31, 2013
|
||||||||
From September 1, 2013
|
‒
|
‒
|
‒
|
‒
|
1,569,965
|
|||
To September 30, 2013
|
||||||||
From October 1, 2013
|
‒
|
‒
|
‒
|
‒
|
1,569,965
|
|||
To October 31, 2013
|
||||||||
From November 1, 2013
|
‒
|
‒
|
‒
|
‒
|
‒
|
|||
To November 11, 2013
|
||||||||
Total
|
663,256
|
663,256
|
Change in Registrant’s Certifying Accountant
|
Corporate Governance
|
Financial Statements
|
Financial Statements
|
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).
|
Number
|
Exhibit
|
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).
|
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).
|
Number
|
Exhibit
|
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).
|
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).
|
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).
|
4.50
|
Renewal of EXFO’s Share Repurchase Program by Way of Normal Course Issuer Bid dated November 7, 2012 (incorporated by reference to EXFO’s report on Form 6-K dated November 7, 2012, file No. 000-30895).
|
8.1
|
Subsidiaries of EXFO (list included in Item 4C of this Annual Report).
|
Number
|
Exhibit
|
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
A
ssets
|
||||||||
Current assets
|
||||||||
Cash
|
$ | 45,386 | $ | 58,868 | ||||
Short-term investments (note 6)
|
4,868 | 8,236 | ||||||
Accounts receivable (note 6)
|
||||||||
Trade
|
50,117 | 37,643 | ||||||
Other
|
2,778 | 4,283 | ||||||
Income taxes and tax credits recoverable (note 21)
|
6,525 | 9,024 | ||||||
Inventories (note 7)
|
35,705 | 41,212 | ||||||
Prepaid expenses
|
2,561 | 3,800 | ||||||
147,940 | 163,066 | |||||||
Tax credits recoverable
(note 21)
|
41,719 | 38,397 | ||||||
Property, plant and equipment
(notes 8 and 23)
|
45,523 | 49,848 | ||||||
Intangible assets
(notes 9 and 23)
|
7,543 | 14,132 | ||||||
Goodwill
(notes 9 and 23)
|
27,313 | 29,160 | ||||||
Deferred income tax assets
(note 21)
|
10,807 | 12,080 | ||||||
Other assets
|
693 | – | ||||||
$ | 281,538 | $ | 306,683 | |||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities (note 11)
|
$ | 26,253 | $ | 32,392 | ||||
Provisions (note 11)
|
756 | 952 | ||||||
Income taxes payable
|
679 | 917 | ||||||
Current portion of long-term debt (note 13)
|
296 | 565 | ||||||
Deferred revenue
|
9,467 | 10,583 | ||||||
37,451 | 45,409 | |||||||
Deferred revenue
|
3,932 | 4,997 | ||||||
Long-term debt
(note 13)
|
– | 282 | ||||||
Deferred income tax liabilities
(note 21)
|
3,226 | 2,105 | ||||||
Other liabilities
|
477 | 609 | ||||||
45,086 | 53,402 | |||||||
Commitments
(note 14)
|
||||||||
Shareholders’ equity
|
||||||||
Share capital (note 15)
|
109,837 | 110,965 | ||||||
Contributed surplus
|
17,186 | 17,298 | ||||||
Retained earnings
|
112,852 | 111,511 | ||||||
Accumulated other comprehensive income (loss) (note 16)
|
(3,423 | ) | 13,507 | |||||
236,452 | 253,281 | |||||||
$ | 281,538 | $ | 306,683 |
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,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Sales
(note 23)
|
$ | 242,150 | $ | 249,966 | $ | 269,743 | ||||||
Cost of sales
(1)
(note 19)
|
92,469 | 91,792 | 100,296 | |||||||||
Selling and administrative (note 19)
|
88,756 | 94,139 | 87,062 | |||||||||
Net research and development
(note 19)
|
45,444 | 49,854 | 47,927 | |||||||||
Depreciation of property, plant and equipment (note 19)
|
6,028 | 6,169 | 6,655 | |||||||||
Amortization of intangible assets (note 19)
|
6,643 | 7,819 | 9,183 | |||||||||
Changes in fair value of cash contingent consideration (note 12)
|
– | (311 | ) | (2,685 | ) | |||||||
Interest and other income
|
(113 | ) | (131 | ) | (511 | ) | ||||||
Foreign exchange (gain) loss
|
(4,082 | ) | 657 | 3,808 | ||||||||
Earnings (loss) before income taxes
|
7,005 | (22 | ) | 18,008 | ||||||||
Income taxes
(note 21)
|
5,664 | 3,571 | 8,814 | |||||||||
Net earnings (loss) from continuing operations
|
1,341 | (3,593 | ) | 9,194 | ||||||||
Net earnings from discontinued operations
(note 3)
|
– | – | 12,926 | |||||||||
Net earnings (loss) for the year
|
$ | 1,341 | $ | (3,593 | ) | $ | 22,120 | |||||
Basic and diluted net earnings (loss) from continuing operations per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.15 | |||||
Basic net earnings (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.37 | |||||
Diluted net earnings (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | 0.36 | |||||
Basic weighted average number of shares outstanding (000’s)
|
60,323 | 60,453 | 60,000 | |||||||||
Diluted weighted average number of shares outstanding (000’s)
(note 22)
|
61,110 | 60,453 | 61,488 |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Net earnings (loss) for the year
|
$ | 1,341 | $ | (3,593 | ) | $ | 22,120 | |||||
Other comprehensive income (loss), net of income taxes
|
||||||||||||
Items that will not be reclassified subsequently to net earnings
|
||||||||||||
Foreign currency translation adjustment
|
(15,830 | ) | (6,875 | ) | 19,123 | |||||||
Items that may be reclassified subsequently to net earnings
|
||||||||||||
Reclassification of realized losses on short-term investments in net earnings
|
─
|
─
|
2 | |||||||||
Unrealized gains/losses on forward exchange contracts
|
(1,256 | ) | 185 | 3,413 | ||||||||
Reclassification of realized gains/losses on forward exchange contracts in net earnings
|
(247 | ) | (1,108 | ) | (2,191 | ) | ||||||
Deferred income tax effect of gains/losses on forward exchange contracts
|
403 | 256 | (314 | ) | ||||||||
Other comprehensive income (loss)
|
(16,930 | ) | (7,542 | ) | 20,033 | |||||||
Comprehensive income (loss) for the year
|
$ | (15,589 | ) | $ | (11,135 | ) | $ | 42,153 |
Year ended August 31, 2011
|
||||||||||||||||||||
Share
capital
|
Contributed surplus
|
Retained
earnings
|
Accumulated other comprehensive income
|
Total
shareholders’ equity
|
||||||||||||||||
Balance as at September 1, 2010
|
$ | 106,126 | $ | 18,563 | $ | 92,984 | $ | 1,016 | $ | 218,689 | ||||||||||
Exercise of stock options (note 15)
|
1,452 | – | – | – | 1,452 | |||||||||||||||
Reclassification of stock-based compensation costs (note 15)
|
2,763 | (2,763 | ) | – | – | – | ||||||||||||||
Stock-based compensation costs
|
– | 2,217 | – | – | 2,217 | |||||||||||||||
Net earnings for the year
|
– | – | 22,120 | – | 22,120 | |||||||||||||||
Other comprehensive income
|
||||||||||||||||||||
Foreign currency translation adjustment
|
– | – | – | 19,123 | 19,123 | |||||||||||||||
Changes in unrealized losses on short-term investments
|
– | – | – | 2 | 2 | |||||||||||||||
Changes in unrealized gains on forward exchange contracts, net of deferred income taxes of $314
|
– | – | – | 908 | 908 | |||||||||||||||
Total comprehensive income for the year
|
– | – | 22,120 | 20,033 | 42,153 | |||||||||||||||
Balance as at August 31, 2011
|
$ | 110,341 | $ | 18,017 | $ | 115,104 | $ | 21,049 | $ | 264,511 |
Year ended August 31, 2012
|
||||||||||||||||||||
Share
capital
|
Contributed surplus
|
Retained
earnings
|
Accumulated other comprehensive income
|
Total
shareholders’ equity
|
||||||||||||||||
Balance as at September 1, 2011
|
$ | 110,341 | $ | 18,017 | $ | 115,104 | $ | 21,049 | $ | 264,511 | ||||||||||
Exercise of stock options (note 15)
|
310 | – | – | – | 310 | |||||||||||||||
Redemption of share capital (note 15)
|
(1,696 | ) | (540 | ) | – | – | (2,236 | ) | ||||||||||||
Reclassification of stock-based compensation costs (note 15)
|
2,010 | (2,010 | ) | – | – | – | ||||||||||||||
Stock-based compensation costs
|
– | 1,831 | – | – | 1,831 | |||||||||||||||
Net loss for the year
|
– | – | (3,593 | ) | – | (3,593 | ) | |||||||||||||
Other comprehensive loss
|
||||||||||||||||||||
Foreign currency translation adjustment
|
– | – | – | (6,875 | ) | (6,875 | ) | |||||||||||||
Changes in unrealized gains on forward exchange contracts, net of deferred income taxes of $256
|
– | – | – | (667 | ) | (667 | ) | |||||||||||||
Total comprehensive loss for the year
|
– | – | (3,593 | ) | (7,542 | ) | (11,135 | ) | ||||||||||||
Balance as at August 31, 2012
|
$ | 110,965 | $ | 17,298 | $ | 111,511 | $ | 13,507 | $ | 253,281 |
Year ended August 31, 2013
|
||||||||||||||||||||
Share
capital
|
Contributed surplus
|
Retained
earnings
|
Accumulated other comprehensive income (loss)
|
Total
shareholders’ equity
|
||||||||||||||||
Balance as at September 1, 2012
|
$ | 110,965 | $ | 17,298 | $ | 111,511 | $ | 13,507 | $ | 253,281 | ||||||||||
Exercise of stock options (note 15)
|
87 | – | – | – | 87 | |||||||||||||||
Redemption of share capital (note 15)
|
(2,565 | ) | (531 | ) | – | – | (3,096 | ) | ||||||||||||
Reclassification of stock-based compensation costs (note 15)
|
1,350 | (1,350 | ) | – | – | – | ||||||||||||||
Stock-based compensation costs
|
– | 1,769 | – | – | 1,769 | |||||||||||||||
Net earnings for the year
|
– | – | 1,341 | – | 1,341 | |||||||||||||||
Other comprehensive loss
|
||||||||||||||||||||
Foreign currency translation adjustment
|
– | – | – | (15,830 | ) | (15,830 | ) | |||||||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $403
|
– | – | – | (1,100 | ) | (1,100 | ) | |||||||||||||
Total comprehensive income (loss) for the year
|
– | – | 1,341 | (16,930 | ) | (15,589 | ) | |||||||||||||
Balance as at August 31, 2013
|
$ | 109,837 | $ | 17,186 | $ | 112,852 | $ | (3,423 | ) | $ | 236,452 |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Net earnings (loss) for the year
|
$ | 1,341 | $ | (3,593 | ) | $ | 22,120 | |||||
Add (deduct) items not affecting cash
|
||||||||||||
Change in discount on short-term investments
|
– | 45 | (42 | ) | ||||||||
Stock-based compensation costs
|
1,768 | 1,862 | 2,256 | |||||||||
Depreciation and amortization
|
12,671 | 13,988 | 15,856 | |||||||||
Gain on disposal of discontinued operations (note 3)
|
– | – | (13,212 | ) | ||||||||
Gain on disposal of capital assets
|
– | – | (568 | ) | ||||||||
Changes in fair value of cash contingent consideration (note 12)
|
– | (311 | ) | (2,685 | ) | |||||||
Deferred revenue
|
(1,266 | ) | (506 | ) | (1,262 | ) | ||||||
Deferred income taxes
|
2,951 | 2,050 | 7,063 | |||||||||
Changes in foreign exchange gain/loss
|
(1,091 | ) | (1,510 | ) | 2,130 | |||||||
16,374 | 12,025 | 31,656 | ||||||||||
Changes in non-cash operating items
|
||||||||||||
Accounts receivable
|
(14,765 | ) | 7,974 | 10,066 | ||||||||
Income taxes and tax credits
|
(4,205 | ) | (5,570 | ) | (6,714 | ) | ||||||
Inventories
|
2,916 | 10,879 | (8,751 | ) | ||||||||
Prepaid expenses
|
993 | (589 | ) | (232 | ) | |||||||
Other assets
|
(703 | ) | – | – | ||||||||
Accounts payable and accrued liabilities and provisions
|
(2,373 | ) | 643 | (2,775 | ) | |||||||
Other liabilities
|
(258 | ) | (105 | ) | 60 | |||||||
(2,021 | ) | 25,257 | 23,310 | |||||||||
Cash flows from investing activities
|
||||||||||||
Additions to short-term investments
|
(54,489 | ) | (115,886 | ) | (516,674 | ) | ||||||
Proceeds from disposal and maturity of short-term investments
|
57,514 | 152,797 | 481,945 | |||||||||
Additions to capital assets (notes 8 and 9)
|
(8,026 | ) | (23,849 | ) | (12,164 | ) | ||||||
Proceeds from disposal of capital assets
|
– | – | 568 | |||||||||
Net proceeds from disposal of discontinued operations (note 3)
|
– | – | 22,063 | |||||||||
Business combination
|
– | – | (1,049 | ) | ||||||||
(5,001 | ) | 13,062 | (25,311 | ) | ||||||||
Cash flows from financing activities
|
||||||||||||
Bank loan
|
– | (782 | ) | 772 | ||||||||
Repayment of long-term debt
|
(589 | ) | (577 | ) | (619 | ) | ||||||
Exercise of stock options
|
87 | 310 | 1,452 | |||||||||
Redemption of share capital
|
(3,096 | ) | (2,236 | ) | – | |||||||
(3,598 | ) | (3,285 | ) | 1,605 | ||||||||
Effect of foreign exchange rate changes on cash
|
(2,862 | ) | 1,063 | 1,058 | ||||||||
Change in cash
|
(13,482 | ) | 36,097 | 662 | ||||||||
Cash – Beginning of year
|
58,868 | 22,771 | 22,109 | |||||||||
Cash – End of year
|
$ | 45,386 | $ | 58,868 | $ | 22,771 | ||||||
Supplementary information
|
||||||||||||
Interest received
|
$ | 668 | $ | 591 | $ | 554 | ||||||
Interest paid
|
$ | 37 | $ | 76 | $ | 159 | ||||||
Income taxes paid
|
$ | 1,373 | $ | 1,494 | $ | 1,878 |
1 | Nature of Activities and Incorporation |
2 | Basis of Presentation |
a)
|
Foreign currency transactions
|
b)
|
Foreign operations
|
Cash
|
Loans and receivables
|
Short-term investments
|
Available for sale
|
Accounts receivable
|
Loans and receivables
|
Other assets
|
Loans and receivables
|
Accounts payable and accrued liabilities
|
Other financial
liabilities
|
Long-term debt
|
Other financial liabilities
|
Other liabilities
|
Other financial liabilities
|
Term
|
||
Land improvements
|
5 years
|
|
Buildings
|
20 to 60 years
|
|
Equipment
|
3 to 15 years
|
|
Leasehold improvements
|
The lesser of useful life and remaining lease term
|
a)
|
Determination of functional currency
|
b)
|
Determination of cash generating units and allocation of goodwill
|
a)
|
Inventories
|
b)
|
Income taxes
|
c)
|
Tax credits recoverable
|
d)
|
Impairment of non-financial assets
|
i)
|
Growth rates
|
ii)
|
Discount rate
|
3 | Discontinued Operations |
Year ended
August 31, 2011
(30 days)
|
||||
Sales
|
$ | 1,991 | ||
Cost of goods sold and operating expenses
|
$ | 1,997 | ||
Gain from disposal of discontinued operations
|
$ | 13,212 | ||
Net earnings from discontinued operations
|
$ | 12,926 | ||
Basic net earnings from discontinued operations per share
|
$ | 0.22 | ||
Diluted net earnings from discontinued operations per share
|
$ | 0.21 |
4 | Restructuring charges |
5 | 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.
|
6 | Financial Instruments |
As at August 31, 2013
|
||||||||||||||||||||
Loans and receivable
|
Available
for sale
|
Other financial liabilities
|
Derivatives used for hedging
|
Total
|
||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash
|
$ | 45,386 | $ | – | $ | – | $ | – | $ | 45,386 | ||||||||||
Short-term investments
|
$ | – | $ | 4,868 | $ | – | $ | – | $ | 4,868 | ||||||||||
Accounts receivable
|
$ | 52,895 | $ | – | $ | – | $ | – | $ | 52,895 | ||||||||||
Other assets
|
$ | 167 | $ | – | $ | – | $ | – | $ | 167 | ||||||||||
Financial liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
$ | – | $ | – | $ | 25,679 | $ | – | $ | 25,679 | ||||||||||
Forward exchange contracts
|
$ | – | $ | – | $ | – | $ | 722 | $ | 722 | ||||||||||
Long-term debt
|
$ | – | $ | – | $ | 296 | $ | – | $ | 296 |
As at August 31, 2012
|
||||||||||||||||||||
Loans and receivable
|
Available
for sale
|
Other financial liabilities
|
Derivatives used for hedging
|
Total
|
||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash
|
$ | 58,868 | $ | – | $ | – | $ | – | $ | 58,868 | ||||||||||
Short-term investments
|
$ | – | $ | 8,236 | $ | – | $ | – | $ | 8,236 | ||||||||||
Accounts receivable
|
$ | 41,128 | $ | – | $ | – | $ | – | $ | 41,128 | ||||||||||
Forward exchange contracts
|
$ | – | $ | – | $ | – | $ | 798 | $ | 798 | ||||||||||
Financial liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
$ | – | $ | – | $ | 32,392 | $ | – | $ | 32,392 | ||||||||||
Long-term debt
|
$ | – | $ | – | $ | 847 | $ | – | $ | 847 | ||||||||||
Other liabilities
|
$ | – | $ | – | $ | 163 | $ | – | $ | 163 |
Expiry dates
|
Contractual
amounts
|
Weighted average contractual
forward rates
|
|||||||
As at August 31, 2012
|
|||||||||
September 2012 to August 2013
|
$ | 23,000 | 1.0228 | ||||||
September 2013 to August 2014
|
3,600 | 1.0439 | |||||||
Total
|
$ | 26,600 | 1.0256 | ||||||
As at August 31, 2013
|
|||||||||
September 2013 to August 2014
|
$ | 22,200 | 1.0280 | ||||||
September 2014 to August 2015
|
15,000 | 1.0529 | |||||||
September 2015 to August 2016
|
5,000 | 1.0716 | |||||||
Total
|
$ | 42,200 | 1.0420 |
As at August 31,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
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
|
$ | 9,728 | € | 2,106 | $ | 9,781 | € | 1,555 | ||||||||
Accounts receivable
|
33,191 | 5,284 | 27,996 | 4,313 | ||||||||||||
42,919 | 7,390 | 37,777 | 5,868 | |||||||||||||
Financial liabilities
|
||||||||||||||||
Accounts payable and accrued liabilities
|
10,355 | 1,075 | 10,564 | 71 | ||||||||||||
Forward exchange contracts (nominal value)
|
3,800 | – | 4,400 | – | ||||||||||||
14,155 | 1,075 | 14,964 | 71 | |||||||||||||
Net exposure
|
$ | 28,764 | € | 6,315 | $ | 22,813 | € | 5,797 |
●
|
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 $2,053,000, or $0.03 per diluted share, and $2,702,000, or $0.04 per diluted share, as at August 31, 2012 and 2013 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 $709,000, or $0.01 per diluted share, and $870,000, or $0.01 per diluted share, as at August 31, 2012 and 2013 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 $1,575,000 and $2,951,000 as at August 31, 2012 and 2013 respectively.
|
As at August 31
|
||||||||
2013
|
2012
|
|||||||
Commercial paper denominated in Canadian dollars, bearing interest at an annual rate of 1.2%, maturing in October 2013
|
$ | 4,868 | $ | – | ||||
Bankers acceptance denominated in Canadian dollars, bearing interest at an annual rate of 1.1%, maturing in September 2012
|
– | 8,236 | ||||||
$ | 4,868 | $ | 8,236 |
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
Current
|
$ | 41,557 | $ | 31,856 | ||||
Past due, 0 to 30 days
|
6,210 | 3,770 | ||||||
Past due, 31 to 60 days
|
2,088 | 1,048 | ||||||
Past due, more than 60 days, net of allowance for doubtful accounts of $583 and $766 as at August 31, 2012 and 2013 respectively
|
262 | 969 | ||||||
$ | 50,117 | $ | 37,643 |
Years ended August 31,
|
||||||||
2013
|
2012
|
|||||||
Balance – Beginning of year
|
$ | 583 | $ | 1,245 | ||||
Addition charged to earnings
|
323 | 267 | ||||||
Write-off of uncollectible accounts
|
(140 | ) | (873 | ) | ||||
Recovery of uncollectible accounts
|
─
|
(56 | ) | |||||
Balance – End of year
|
$ | 766 | $ | 583 |
As at August 31, 2013
|
||||||||||||
0-12
months
|
13-24
Months
|
25-36
months
|
||||||||||
Accounts payable and accrued liabilities
|
$ | 25,679 | $ |
─
|
$ |
─
|
||||||
Long-term debt
|
296 |
─
|
─
|
|||||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
22,200 | 15,000 | 5,000 | |||||||||
Inflow
|
(21,673 | ) | (14,999 | ) | (5,088 | ) | ||||||
Total
|
$ | 26,502 | $ | 1 | $ | (88 | ) |
As at August 31, 2012
|
||||||||
0-12
months
|
13-24
months
|
|||||||
Accounts payable and accrued liabilities
|
$ | 32,392 | $ |
─
|
||||
Long-term debt
|
565 | 282 | ||||||
Other liabilities
|
─
|
163 | ||||||
Forward exchange contracts
|
||||||||
Outflow
|
23,000 | 3,600 | ||||||
Inflow
|
(23,851 | ) | (3,810 | ) | ||||
Total
|
$ | 32,106 | $ | 235 |
7 | Inventories |
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
Raw materials
|
$ | 16,645 | $ | 19,786 | ||||
Work in progress
|
1,179 | 1,511 | ||||||
Finished goods
|
17,881 | 19,915 | ||||||
$ | 35,705 | $ | 41,212 |
8 | Property, Plant and Equipment |
Land and land improvements
|
Buildings
|
Equipment
|
Leasehold improvements
|
Asset under construction
|
Total
|
|||||||||||||||||||
Cost as at September 1, 2011
|
$ | 4,705 | $ | 18,973 | $ | 44,034 | $ | 3,255 | $ | 2,942 | $ | 73,909 | ||||||||||||
Reclassification
|
‒
|
2,942 |
‒
|
‒
|
(2,942 | ) |
‒
|
|||||||||||||||||
Additions
|
918 | 16,419 | 6,064 | 804 |
‒
|
24,205 | ||||||||||||||||||
Disposals
|
‒
|
‒
|
(2,255 | ) | (1,745 | ) |
‒
|
(4,000 | ) | |||||||||||||||
Foreign currency translation adjustment
|
(38 | ) | 21 | 119 | 53 |
‒
|
155 | |||||||||||||||||
Cost as at August 31, 2012
|
5,585 | 38,355 | 47,962 | 2,367 |
‒
|
94,269 | ||||||||||||||||||
Additions
|
5 | 866 | 3,824 | 167 |
‒
|
4,862 | ||||||||||||||||||
Disposals
|
‒
|
‒
|
(6,569 | ) |
‒
|
‒
|
(6,569 | ) | ||||||||||||||||
Foreign currency translation adjustment
|
(358 | ) | (2,439 | ) | (2,661 | ) | (171 | ) |
‒
|
(5,629 | ) | |||||||||||||
Cost as at August 31, 2013
|
$ | 5,232 | $ | 36,782 | $ | 42,556 | $ | 2,363 | $ |
‒
|
$ | 86,933 | ||||||||||||
Accumulated depreciation as at September 1, 2011
|
$ | 1,317 | $ | 5,985 | $ | 32,470 | $ | 2,061 | $ |
‒
|
$ | 41,833 | ||||||||||||
Depreciation for the year
|
10 | 430 | 5,411 | 318 |
‒
|
6,169 | ||||||||||||||||||
Disposals
|
‒
|
‒
|
(2,082 | ) | (1,654 | ) |
‒
|
(3,736 | ) | |||||||||||||||
Foreign currency translation adjustment
|
(10 | ) | (173 | ) | 372 | (34 | ) |
‒
|
155 | |||||||||||||||
Accumulated depreciation as at August 31, 2012
|
1,317 | 6,242 | 36,171 | 691 |
‒
|
44,421 | ||||||||||||||||||
Depreciation for the year
|
62 | 664 | 4,935 | 367 |
‒
|
6,028 | ||||||||||||||||||
Disposals
|
‒
|
‒
|
(6,423 | ) |
‒
|
‒
|
(6,423 | ) | ||||||||||||||||
Foreign currency translation adjustment
|
(71 | ) | (437 | ) | (2,033 | ) | (75 | ) |
‒
|
(2,616 | ) | |||||||||||||
Accumulated depreciation as at August 31, 2013
|
$ | 1,308 | $ | 6,469 | $ | 32,650 | $ | 983 | $ |
‒
|
$ | 41,410 | ||||||||||||
Net carrying value as at:
|
||||||||||||||||||||||||
August 31, 2012
|
$ | 4,268 | $ | 32,113 | $ | 11,791 | $ | 1,676 | $ |
‒
|
$ | 49,848 | ||||||||||||
August 31, 2013
|
$ | 3,924 | $ | 30,313 | $ | 9,906 | $ | 1,380 | $ |
‒
|
$ | 45,523 |
9 | Intangible Assets and Goodwill |
Core technology
|
Customer relationships
|
Brand name
|
Software
|
Total
|
||||||||||||||||
Cost as at September 1, 2011
|
$ | 27,215 | $ | 7,519 | $ | 749 | $ | 13,722 | $ | 49,205 | ||||||||||
Additions
|
128 |
‒
|
‒
|
653 | 781 | |||||||||||||||
Disposals
|
‒
|
‒
|
‒
|
(53 | ) | (53 | ) | |||||||||||||
Foreign currency translation adjustment
|
(1,266 | ) | (937 | ) | (93 | ) | (253 | ) | (2,549 | ) | ||||||||||
Cost as at August 31, 2012
|
26,077 | 6,582 | 656 | 14,069 | 47,384 | |||||||||||||||
Additions
|
145 |
‒
|
‒
|
515 | 660 | |||||||||||||||
Disposals
|
‒
|
‒
|
‒
|
(66 | ) | (66 | ) | |||||||||||||
Foreign currency translation adjustment
|
(1,349 | ) | (416 | ) | (42 | ) | (1,509 | ) | (3,316 | ) | ||||||||||
Cost as at August 31, 2013
|
$ | 24,873 | $ | 6,166 | $ | 614 | $ | 13,009 | $ | 44,662 | ||||||||||
Accumulated amortization as at September 1, 2011
|
$ | 14,455 | $ | 2,211 | $ | 220 | $ | 9,418 | $ | 26,304 | ||||||||||
Amortization for the year
|
4,929 | 1,351 | 135 | 1,404 | 7,819 | |||||||||||||||
Disposals
|
‒
|
‒
|
‒
|
(19 | ) | (19 | ) | |||||||||||||
Foreign currency translation adjustment
|
(262 | ) | (310 | ) | (31 | ) | (249 | ) | (852 | ) | ||||||||||
Accumulated amortization as at August 31, 2012
|
19,122 | 3,252 | 324 | 10,554 | 33,252 | |||||||||||||||
Amortization for the year
|
4,068 | 1,285 | 128 | 1,162 | 6,643 | |||||||||||||||
Disposals
|
‒
|
‒
|
‒
|
(51 | ) | (51 | ) | |||||||||||||
Foreign currency translation adjustment
|
(1,334 | ) | (258 | ) | (26 | ) | (1,107 | ) | (2,725 | ) | ||||||||||
Accumulated amortization as at August 31, 2013
|
$ | 21,856 | $ | 4,279 | $ | 426 | $ | 10,558 | $ | 37,119 | ||||||||||
Net carrying value as at:
|
||||||||||||||||||||
August 31, 2012
|
$ | 6,955 | $ | 3,330 | $ | 332 | $ | 3,515 | $ | 14,132 | ||||||||||
August 31, 2013
|
$ | 3,017 | $ | 1,887 | $ | 188 | $ | 2,451 | $ | 7,543 | ||||||||||
Remaining amortization period as at August 31, 2013
|
1 year
|
2 years
|
2 years
|
3 years
|
Years ended August 31,
|
||||||||
2013
|
2012
|
|||||||
Balance – Beginning of year
|
$ | 29,160 | $ | 30,942 | ||||
Foreign currency translation adjustment
|
(1,847 | ) | (1,782 | ) | ||||
Balance – End of year
|
$ | 27,313 | $ | 29,160 |
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
EXFO CGU
|
$ | 10,791 | $ | 11,520 | ||||
Brix CGU
|
16,522 | 17,640 | ||||||
Total
|
$ | 27,313 | $ | 29,160 |
10 | Credit Facilities |
11 | Accounts Payable and Accrued Liabilities and Provisions |
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
Trade
|
$ | 10,002 | $ | 16,998 | ||||
Salaries and social benefits
|
12,883 | 13,084 | ||||||
Forward exchange contracts (note 6)
|
574 | – | ||||||
Other
|
2,794 | 2,310 | ||||||
$ | 26,253 | $ | 32,392 |
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
Warranty
|
$ | 721 | $ | 675 | ||||
Other
|
35 | 277 | ||||||
$ | 756 | $ | 952 |
Years ended August 31,
|
||||||||
2013
|
2012
|
|||||||
Balance – Beginning of year
|
$ | 675 | $ | 1,402 | ||||
Provision
|
650 | 861 | ||||||
Settlements
|
(604 | ) | (1,588 | ) | ||||
Balance – End of year | $ | 721 | $ | 675 |
12 | Contingent consideration arrangement |
13 | Long-Term Debt |
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
Loan collateralized by assets of NetHawk Oyj denominated in euros (€224), bearing interest at 2.95%, repayable in semi-annual instalments of $296 (€224), maturing in December 2013
|
$ | 296 | $ | 847 | ||||
Less: current portion
|
296 | 565 | ||||||
$ | – | $ | 282 |
14 | Commitments |
As at August 31
|
||||||||
2013
|
2012
|
|||||||
No later than 1 year
|
$ | 3,845 | $ | 3,628 | ||||
Later than 1 year and no later than 5 years
|
5,465 | 4,711 | ||||||
Later than 5 years
|
517 | 676 | ||||||
$ | 9,827 | $ | 9,015 |
15 | 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 September 1, 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 | |||||||||||||||
Exercise of stock options (note 17)
|
– | – | 109,700 | 310 | 310 | |||||||||||||||
Redemption of restricted share units (note 17)
|
– | – | 418,086 | – | – | |||||||||||||||
Redemption of share capital
|
– | – | (438,894 | ) | (1,696 | ) | (1,696 | ) | ||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
– | – | – | 2,010 | 2,010 | |||||||||||||||
Balance as at August 31, 2012
|
31,643,000 | 1 | 28,710,891 | 110,964 | 110,965 | |||||||||||||||
Exercise of stock options (note 17)
|
– | – | 30,675 | 87 | 87 | |||||||||||||||
Redemption of restricted share units (note 17)
|
– | – | 286,426 | – | – | |||||||||||||||
Redemption of deferred share units (note 17)
|
– | – | 37,054 | – | – | |||||||||||||||
Redemption of share capital
|
– | – | (663,256 | ) | (2,565 | ) | (2,565 | ) | ||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
– | – | – | 1,350 | 1,350 | |||||||||||||||
Balance as at August 31, 2013
|
31,643,000 | $ | 1 | 28,401,790 | $ | 109,836 | $ | 109,837 |
a)
|
On November 7, 2011, the company announced that its Board of Directors had approved the renewal of its share repurchase program, by way of a normal course issuer bid on the open market of up to 2% of its issued and outstanding subordinate voting shares, representing 575,690 subordinate voting shares at the prevailing market price. The normal course issuer bid started on November 10, 2011, and ended on November 9, 2012. All shares repurchased under the bid were cancelled.
|
b)
|
On November 7, 2012, the company announced that its Board of Directors approved the renewal of its share repurchase program, by way of a normal course issuer bid on the open market of up to 10% of the issued and outstanding subordinate voting shares, representing 2,072,721 subordinate voting shares at the prevailing market price. The normal course issuer bid started on November 12, 2012, and will end on November 11, 2013. All shares repurchased under the bid are cancelled.
|
16 | Accumulated Other Comprehensive Income (loss) |
Foreign currency translation adjustment
|
Available-for-sale financial instruments
|
Cash-flow
hedge
|
Accumulate other comprehensive income (loss)
|
|||||||||||||
Balance as at September 1, 2010
|
$ | – | $ | (2 | ) | $ | 1,018 | $ | 1,016 | |||||||
Foreign currency translation adjustment
|
19,123 | – | – | 19,123 | ||||||||||||
Changes in unrealized losses on short-term investments
|
– | 2 | – | 2 | ||||||||||||
Changes in unrealized gains on forward exchange contracts, net of deferred income taxes
|
– | – | 908 | 908 | ||||||||||||
Balance as at August 31, 2011
|
19,123 | – | 1,926 | 21,049 | ||||||||||||
Foreign currency translation adjustment
|
(6,875 | ) | – | – | (6,875 | ) | ||||||||||
Changes in unrealized gains on forward exchange contracts, net of deferred income taxes
|
– | – | (667 | ) | (667 | ) | ||||||||||
Balance as at August 31, 2012
|
12,248 | – | 1,259 | 13,507 | ||||||||||||
Foreign currency translation adjustment
|
(15,830 | ) | – | – | (15,830 | ) | ||||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes
|
– | – | (1,100 | ) | (1,100 | ) | ||||||||||
Balance as at August 31, 2013
|
$ | (3,582 | ) | $ | – | $ | 159 | $ | (3,423 | ) |
17 | Stock-Based Compensation Plans |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Stock-based compensation costs arising from equity-settled awards
|
$ | 1,769 | $ | 1,831 | $ | 2,217 | ||||||
Stock-based compensation costs arising from cash-settled awards
|
(1 | ) | 31 | 39 | ||||||||
$ | 1,768 | $ | 1,862 | $ | 2,256 |
Years ended August 31,
|
||||||||||||||||||||||||
2013
|
2012
|
2011
|
||||||||||||||||||||||
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
|||||||||||||||||||
(CA$)
|
(CA$)
|
(CA$)
|
||||||||||||||||||||||
Outstanding – Beginning of year
|
244,354 | $ | 5 | 641,357 | $ | 9 | 1,348,787 | $ | 19 | |||||||||||||||
Exercised
|
(30,675 | ) | 3 | (109,700 | ) | 3 | (306,825 | ) | 5 | |||||||||||||||
Forfeited
|
(2,000 | ) | 6 | (1,500 | ) | 5 | (43,541 | ) | 14 | |||||||||||||||
Expired
|
(10,425 | ) | 5 | (285,803 | ) | 15 | (357,064 | ) | 48 | |||||||||||||||
Outstanding – End of year
|
201,254 | $ | 6 | 244,354 | $ | 5 | 641,357 | $ | 9 | |||||||||||||||
Exercisable – End of year
|
201,254 | $ | 6 | 244,354 | $ | 5 | 641,357 | $ | 9 |
Stock options outstanding and exercisable
|
|||||||
Exercise price
|
Number
|
Weighted average
exercise price
|
Weighted average
remaining contractual life
|
||||
(CA$)
|
(CA$)
|
||||||
$4.64 to $6.28
|
201,254
|
$
|
5.59
|
1 year
|
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Outstanding – Beginning of year
|
1,337,730 | 1,551,658 | 1,603,048 | |||||||||
Granted
|
316,160 | 334,878 | 350,382 | |||||||||
Redeemed
|
(286,426 | ) | (418,086 | ) | (340,974 | ) | ||||||
Forfeited
|
(34,372 | ) | (130,720 | ) | (60,798 | ) | ||||||
Outstanding – End of year
|
1,333,092 | 1,337,730 | 1,551,658 |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Outstanding – Beginning of year
|
133,090 | 110,298 | 135,003 | |||||||||
Granted
|
23,872 | 22,792 | 12,786 | |||||||||
Redeemed
|
(37,054 | ) | – | (37,491 | ) | |||||||
Outstanding – End of year
|
119,908 | 133,090 | 110,298 |
Years ended August 31,
|
||||||||||||||||||||||||
2013
|
2012
|
2011
|
||||||||||||||||||||||
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
|||||||||||||||||||
Outstanding – Beginning of year
|
33,124 | $ | 3 | 29,124 | $ | 3 | 44,374 | $ | 8 | |||||||||||||||
Granted
|
4,100 | – | 4,000 | – | 4,500 | – | ||||||||||||||||||
Forfeited
|
─
|
─
|
─
|
─
|
(14,750 | ) | 5 | |||||||||||||||||
Expired
|
─
|
─
|
─
|
─
|
(5,000 | ) | 34 | |||||||||||||||||
Outstanding – End of year
|
37,224 | $ | 3 | 33,124 | $ | 3 | 29,124 | $ | 3 | |||||||||||||||
Exercisable – End of year
|
22,624 | $ | 4 | 15,787 | $ | 4 | 10,075 | $ | 5 |
Stock appreciation
rights outstanding
|
Stock appreciation
rights exercisable
|
|||||||
Exercise price
|
Number
|
Weighted average
remaining contractual
life
|
Number
|
|||||
$ –
|
12,600
|
8 years
|
–
|
|||||
$2.36
|
9,674
|
5 years
|
9,674
|
|||||
$3.74 to $4.65
|
10,500
|
3 years
|
8,500
|
|||||
$6.28 to $6.50
|
4,450
|
3 years
|
4,450
|
|||||
37,224
|
5 years
|
22,624
|
18 | Related Party Disclosures |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Salaries and short-term employee benefits
|
$ | 3,442 | $ | 3,398 | $ | 3,643 | ||||||
Restructuring charges
|
– | 177 | – | |||||||||
Stock-based compensation costs
|
907 | 793 | 853 | |||||||||
$ | 4,349 | $ | 4,368 | $ | 4,496 |
19 | Statements of earnings |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Gross research and development expenses
|
$ | 54,334 | $ | 59,282 | $ | 57,226 | ||||||
Research and development tax credits and grants
|
(8,890 | ) | (9,428 | ) | (9,299 | ) | ||||||
$ | 45,444 | $ | 49,854 | $ | 47,927 |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cost of sales
|
||||||||||||
Depreciation of property, plant and equipment
|
$ | 1,651 | $ | 2,009 | $ | 1,975 | ||||||
Amortization of intangible assets
|
4,027 | 5,076 | 6,093 | |||||||||
5,678 | 7,085 | 8,068 | ||||||||||
Selling and administrative expenses
|
||||||||||||
Depreciation of property, plant and equipment
|
1,100 | 1,037 | 1,341 | |||||||||
Amortization of intangible assets
|
1,687 | 1,806 | 2,092 | |||||||||
2,787 | 2,843 | 3,433 | ||||||||||
Net research and development expenses
|
||||||||||||
Depreciation of property, plant and equipment
|
3,277 | 3,123 | 3,339 | |||||||||
Amortization of intangible assets
|
929 | 937 | 998 | |||||||||
4,206 | 4,060 | 4,337 | ||||||||||
$ | 12,671 | $ | 13,988 | $ | 15,838 | |||||||
Depreciation of property, plant and equipment
|
$ | 6,028 | $ | 6,169 | $ | 6,655 | ||||||
Amortization of intangible assets
|
6,643 | 7,819 | 9,183 | |||||||||
$ | 12,671 | $ | 13,988 | $ | 15,838 |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Salaries and benefits
|
$ | 122,433 | $ | 127,007 | $ | 122,828 | ||||||
Restructuring charges
|
89 | 2,329 |
─
|
|||||||||
Stock-based compensation costs
|
1,768 | 1,862 | 2,256 | |||||||||
$ | 124,290 | $ | 131,198 | $ | 125,084 |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cost of sales
|
$ |
─
|
$ | 264 | $ |
─
|
||||||
Selling and administrative expenses
|
─
|
1,181 |
─
|
|||||||||
Net research and development costs
|
89 | 884 |
─
|
|||||||||
$ | 89 | $ | 2,329 | $ |
─
|
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cost of sales
|
$ | 226 | $ | 248 | $ | 224 | ||||||
Selling and administrative expenses
|
1,160 | 1,145 | 1,281 | |||||||||
Net research and development expenses
|
382 | 469 | 487 | |||||||||
Net earnings from discontinued operations
|
─
|
─
|
264 | |||||||||
$ | 1,768 | $ | 1,862 | $ | 2,256 |
20 | Other Disclosures |
●
|
Deferred profit-sharing plan
|
●
|
401K plan
|
21 | Income Taxes |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Income tax provision at combined Canadian federal and provincial statutory tax rate (27% in 2013 and 2012 and 29% in 2011)
|
$ | 1,891 | $ | (6 | ) | $ | 5,222 | |||||
Increase (decrease) due to:
|
||||||||||||
Foreign income taxed at different rates
|
(249 | ) | 285 | (402 | ) | |||||||
Non-taxable (income)/loss
|
(2,077 | ) | 535 | (4,102 | ) | |||||||
Non-deductible expenses
|
792 | 1,028 | 916 | |||||||||
Foreign exchange effect of translation of foreign subsidiaries
|
148 | (2,205 | ) | 2,541 | ||||||||
Recognition of previously unrecognized deferred income tax assets
|
─
|
(557 | ) |
─
|
||||||||
Utilization of previously unrecognized deferred income tax assets
|
─
|
─
|
(61 | ) | ||||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
4,385 | 4,509 | 5,111 | |||||||||
Other
|
774 | (18 | ) | (411 | ) | |||||||
$ | 5,664 | $ | 3,571 | $ | 8,814 | |||||||
The income tax provision consists of the following:
|
||||||||||||
Current
|
||||||||||||
Current income taxes
|
$ | 2,713 | $ | 1,521 | $ | 1,986 | ||||||
Benefit arising from previously unrecognized tax losses and deductible temporary differences
|
─
|
─
|
(61 | ) | ||||||||
2,713 | 1,521 | 1,925 | ||||||||||
Deferred
|
||||||||||||
Deferred income taxes relating to the origination and reversal of temporary differences
|
(1,434 | ) | (1,902 | ) | 1,778 | |||||||
Benefit arising from previously unrecognized tax losses and deductible temporary differences
|
─
|
(557 | ) |
─
|
||||||||
(1,434 | ) | (2,459 | ) | 1,778 | ||||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
4,385 | 4,509 | 5,111 | |||||||||
2,951 | 2,050 | 6,889 | ||||||||||
$ | 5,664 | $ | 3,571 | $ | 8,814 | |||||||
The income tax provision for the discontinued operations is as follows:
|
||||||||||||
Current
|
$ |
‒
|
$ |
‒
|
$ | 27 | ||||||
Deferred
|
‒
|
‒
|
174 | |||||||||
$ |
‒
|
$ |
‒
|
$ | 201 |
As at August 31,
|
||||||||
2013
|
2012
|
|||||||
Deferred income tax assets
|
||||||||
Deferred income tax assets recoverable within 12 months
|
$ | 3,193 | $ | 4,002 | ||||
Deferred income tax assets recoverable after 12 months
|
7,614 | 8,078 | ||||||
10,807 | 12,080 | |||||||
Deferred income tax liabilities
|
||||||||
Deferred income tax liabilities payable within 12 months
|
252 | 108 | ||||||
Deferred income tax liabilities payable after 12 months
|
2,974 | 1,997 | ||||||
3,226 | 2,105 | |||||||
Deferred income tax assets net
|
$ | 7,581 | $ | 9,975 |
Balance as at September 1, 2011
|
Credited (charged) to the statement of earnings
|
Credited (charged) to shareholders’ equity
|
Foreign currency translation adjustment
|
Balance as at August 31,
2012
|
||||||||||||||||
Deferred income tax assets
|
||||||||||||||||||||
Long-lived assets
|
$ | 4,644 | $ | (211 | ) | $ | 2 | $ | (46 | ) | $ | 4,389 | ||||||||
Provisions and accruals
|
2,925 | 274 | 256 | (24 | ) | 3,431 | ||||||||||||||
Deferred revenue
|
1,983 | 71 | (10 | ) | 2,044 | |||||||||||||||
Research and development expenses
|
2,598 | (209 | ) |
‒
|
(27 | ) | 2,362 | |||||||||||||
Losses carried forward
|
9,614 | (412 | ) |
‒
|
5 | 9,207 | ||||||||||||||
Deferred income tax liabilities
|
||||||||||||||||||||
Long-lived assets
|
(232 | ) | (254 | ) | (2 | ) | (6 | ) | (494 | ) | ||||||||||
Research and development tax credits
|
(9,698 | ) | (1,309 | ) |
‒
|
43 | (10,964 | ) | ||||||||||||
Total
|
$ | 11,834 | $ | (2,050 | ) | $ | 256 | $ | (65 | ) | $ | 9,975 | ||||||||
Classified as follows:
|
||||||||||||||||||||
Deferred income tax assets
|
$ | 16,913 | $ | 12,080 | ||||||||||||||||
Deferred income tax liabilities
|
(5,079 | ) | (2,105 | ) | ||||||||||||||||
$ | 11,834 | $ | 9,975 |
Balance as at September 1, 2012
|
Credited (charged) to the statement of earnings
|
Credited (charged) to shareholders’ equity
|
Foreign currency translation adjustment
|
Balance as at August 31,
2013
|
||||||||||||||||
Deferred income tax assets
|
||||||||||||||||||||
Long-lived assets
|
$ | 4,389 | $ | (449 | ) | $ |
‒
|
$ | (201 | ) | $ | 3,739 | ||||||||
Provisions and accruals
|
3,431 | 213 | 403 | (197 | ) | 3,850 | ||||||||||||||
Deferred revenue
|
2,044 | (164 | ) |
‒
|
(85 | ) | 1,795 | |||||||||||||
Research and development expenses
|
2,362 | (608 | ) |
‒
|
(125 | ) | 1,629 | |||||||||||||
Losses carried forward
|
9,207 | (808 | ) |
‒
|
(8 | ) | 8,391 | |||||||||||||
Deferred income tax liabilities
|
||||||||||||||||||||
Long-lived assets
|
(494 | ) | 45 |
‒
|
28 | (421 | ) | |||||||||||||
Research and development tax credits
|
(10,964 | ) | (1,180 | ) |
‒
|
742 | (11,402 | ) | ||||||||||||
Total
|
$ | 9,975 | $ | (2,951 | ) | $ | 403 | $ | 154 | $ | 7,581 | |||||||||
Classified as follows:
|
||||||||||||||||||||
Deferred income tax assets
|
$ | 12,080 | $ | 10,807 | ||||||||||||||||
Deferred income tax liabilities
|
(2,105 | ) | (3,226 | ) | ||||||||||||||||
$ | 9,975 | $ | 7,581 |
As at August 31
|
||||||||
2013
|
2012
|
|||||||
Temporary deductible differences
|
$ | 205 | $ | 270 | ||||
Losses carried forward
|
35,914 | 33,135 | ||||||
Research and development expenses
|
1,370 | 2,347 | ||||||
$ | 37,489 | $ | 35,752 |
Canada
|
||||||||||||||||||||
Year of expiry
|
Federal
|
Provincial
|
Finland
|
United States
|
Other
|
|||||||||||||||
2014
|
$ |
‒
|
$ |
‒
|
$ | 665 | $ | 1,404 | $ |
‒
|
||||||||||
2015
|
‒
|
1,131 | 2,650 | 997 |
‒
|
|||||||||||||||
2016
|
‒
|
‒
|
‒
|
553 |
‒
|
|||||||||||||||
2017
|
‒
|
‒
|
4 |
‒
|
‒
|
|||||||||||||||
2018
|
‒
|
‒
|
384 |
‒
|
‒
|
|||||||||||||||
2019
|
‒
|
‒
|
‒
|
741 |
‒
|
|||||||||||||||
2020
|
‒
|
‒
|
8,782 | 3,470 |
‒
|
|||||||||||||||
2021
|
‒
|
‒
|
7,609 | 10,202 |
‒
|
|||||||||||||||
2022
|
‒
|
‒
|
13,192 | 7,435 |
‒
|
|||||||||||||||
2023
|
‒
|
‒
|
8,444 | 1,972 |
‒
|
|||||||||||||||
2024
|
‒
|
‒
|
‒
|
1,351 |
‒
|
|||||||||||||||
2025
|
‒
|
‒
|
‒
|
1,351 |
‒
|
|||||||||||||||
2026
|
‒
|
1,021 |
‒
|
1,351 |
‒
|
|||||||||||||||
2027
|
‒
|
1,295 |
‒
|
1,351 |
‒
|
|||||||||||||||
2028
|
‒
|
‒
|
‒
|
2,447 |
‒
|
|||||||||||||||
2030
|
11 | 11 |
‒
|
2,713 |
‒
|
|||||||||||||||
2031
|
36 | 36 |
‒
|
109 |
‒
|
|||||||||||||||
2032
|
9 | 9 |
‒
|
‒
|
‒
|
|||||||||||||||
2033
|
45 | 45 |
‒
|
4,920 |
‒
|
|||||||||||||||
Indefinite
|
‒
|
‒
|
‒
|
‒
|
2,222 | |||||||||||||||
$ | 101 | $ | 3,548 | $ | 41,730 | $ | 42,367 | $ | 2,222 |
(1)
|
undistributed profits of its foreign subsidiaries will not be distributed in the foreseeable future; and
|
(2)
|
undistributed profits of its domestic subsidiaries will not be taxable when distributed.
|
22 | Earnings per Share |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Basic weighted average number of shares outstanding (000’s)
|
60,323 | 60,453 | 60,000 | |||||||||
Plus dilutive effect of (000’s):
|
||||||||||||
Stock options
|
24 | 149 | 266 | |||||||||
Restricted share units
|
648 | 910 | 1,106 | |||||||||
Deferred share units
|
115 | 118 | 116 | |||||||||
Diluted weighted average number of shares outstanding (000’s)
|
61,110 | 61,630 | 61,488 | |||||||||
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)
|
75 | 54 | 381 |
23 | Segment Information |
Years ended August 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
United States
|
$ | 87,145 | $ | 83,401 | $ | 89,240 | ||||||
Canada
|
26,073 | 29,944 | 30,986 | |||||||||
Other
|
14,910 | 17,838 | 17,303 | |||||||||
Americas
|
128,128 | 131,183 | 137,529 | |||||||||
United Kingdom
|
13,206 | 9,862 | 15,617 | |||||||||
Other
|
53,802 | 61,449 | 69,698 | |||||||||
Europe, Middle-East and Africa
|
67,008 | 71,311 | 85,315 | |||||||||
China
|
21,778 | 21,802 | 28,184 | |||||||||
Other
|
25,236 | 25,670 | 18,715 | |||||||||
Asia-Pacific
|
47,014 | 47,472 | 46,899 | |||||||||
$ | 242,150 | $ | 249,966 | $ | 269,743 |
As at August 31, 2013
|
As at August 31, 2012
|
|||||||||||||||||||||||
Property, plant and equipment
|
Intangible
assets
|
Goodwill
|
Property, plant and equipment
|
Intangible assets
|
Goodwill
|
|||||||||||||||||||
Canada
|
$ | 34,833 | $ | 2,274 | $ | – | $ | 38,436 | $ | 2,858 | $ | − | ||||||||||||
United States
|
1,305 | 186 | 16,522 | 1,335 | 2,067 | 17,640 | ||||||||||||||||||
Finland
|
589 | 4,762 | 10,791 | 849 | 8,265 | 11,520 | ||||||||||||||||||
India
|
6,190 | 42 | – | 5,866 | 16 | – | ||||||||||||||||||
China
|
1,517 | 25 | − | 2,094 | 43 | − | ||||||||||||||||||
Other
|
1,089 | 254 | − | 1,268 | 883 | − | ||||||||||||||||||
$ | 45,523 | $ | 7,543 | $ | 27,313 | $ | 49,848 | $ | 14,132 | $ | 29,160 |
|
1.1
|
General Policy
|
|
1.2
|
Outside employment and other activities
|
·
|
Do my outside activities interfere with my duties at EXFO?
|
·
|
Am I finding it hard to find time to do my work at EXFO?
|
·
|
Do my outside activities involve a lot of the same people as my activities at EXFO?
|
·
|
In my outside activities, do I use skills or tools paid for by EXFO?
|
|
1.3
|
Investment Activity
|
·
|
Using the network and systems to conduct private business;
|
·
|
Allowing friends or family members to use Company resources;
|
·
|
Downloading or transmitting any type of offensive material, chain letters, pornography, copyrighted material (e.g., songs, games, movie clips, text, and images), etc.
|
|
6.1
|
Legitimate Payments to Suppliers and Third Parties
|
|
6.2
|
Payments to Agents and Consultants
|
|
6.3
|
Foreign Practices and Their Limitations
|
|
6.4
|
Antitrust/Competition
|
|
6.5
|
Compliance with Environmental Laws
|
·
|
Is it legal?
|
·
|
Is it clearly business related?
|
·
|
Is it moderate, reasonable, and in good taste?
|
·
|
Would public disclosure embarrass the Company?
|
·
|
Is there any pressure to reciprocate or grant special favors?
|
·
|
Criminal conduct;
|
·
|
Fraud or deliberate error in the preparation, evaluation, review or audit of any of our financial statements;
|
·
|
Fraud, misappropriation, or other questionable practices related to the preparation or maintenance of our financial records;
|
·
|
Misrepresentations or false statements to or by a senior officer or accountant regarding a matter contained in our financial records, financial reports or audit reports;
|
·
|
Deviations from full and fair reporting of our financial condition;
|
·
|
Failure to comply with, or efforts to circumvent, our internal compliance policies or internal controls;
|
·
|
Failure to comply with legal or regulatory obligations;
|
·
|
Actions that endanger health or safety, or might cause environmental damage; and
|
·
|
Actions designed to that have the effect of concealing any of the foregoing.
|
/s/ Darryl Edwards
Darryl Edwards
Lead Director of the Board
|
/s/ Germain Lamonde
Germain Lamonde
President and Chief Executive Officer
|
/s/ Benoit Ringuette
Benoit Ringuette
General Counsel and Corporate Secretary
|
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 egularly 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
|
a.
|
Gifts
|
b.
|
Bribes and Kickbacks
|
c.
|
Relationships
|
a.
|
Anti-Trust and Fair Competition
|
b.
|
EXFO’s
Reputation and Image
|
c.
|
Insider Trading
|
d.
|
Anti-Boycott Laws
|
e.
|
Embargoes and Sanctions
|
●
|
The Agent hereby certifies that it complies and will continue to comply with the Agent Code of Conduct dated September 25, 2013 (“Code”) copy of which can be found at
http://investors.exfo.com/governance.cfm
.
|
●
|
As of the date of this certification, the Agent has not nor does it have any reason to believe that the Agent or any of its directors, employees and representatives involved in the Agent’s business relationship with EXFO have committed any breach to the Code.
|
●
|
The Agent agrees that it if it becomes aware of any breach of the Code by the Agent, its directors, employees or representatives, it shall duly report such breach to 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 on Form 20-F for the year ended August 31, 2013 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
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The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
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1.
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I have reviewed this Annual Report on Form 20-F of EXFO Inc. ("EXFO");
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2.
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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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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:
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a.
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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
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b.
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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.
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1.
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The Annual Report on Form 20-F for the year ended August 31, 2013 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
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