Form 20-F
x
|
Form 40-F
o
|
Yes
o
|
No
x
|
EXFO INC.
|
|
By:
/s/ Germain Lamonde
Name: Germain Lamonde
Title: President and Chief Executive Officer
|
|
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Assets
|
||||||||||||
Current assets
|
||||||||||||
Cash
|
$ | 58,868 | $ | 22,771 | $ | 21,440 | ||||||
Short-term investments (note 7)
|
8,236 | 47,091 | 10,379 | |||||||||
Accounts receivable (note 7)
|
||||||||||||
Trade
|
37,643 | 45,151 | 50,190 | |||||||||
Other
|
4,283 | 6,329 | 5,217 | |||||||||
Income taxes and tax credits recoverable
|
9,024 | 5,414 | 2,604 | |||||||||
Inventories (note 8)
|
41,212 | 52,754 | 40,328 | |||||||||
Prepaid expenses
|
3,800 | 3,237 | 2,816 | |||||||||
Current assets held for sale (note 4)
|
– | – | 3,769 | |||||||||
163,066 | 182,747 | 136,743 | ||||||||||
Tax credits recoverable
(note 22)
|
38,397 | 36,627 | 29,397 | |||||||||
Forward exchange contracts
(note 7)
|
– | 149 | – | |||||||||
Property, plant and equipment
(note 9)
|
49,848 | 32,076 | 24,730 | |||||||||
Intangible assets
(note 10)
|
14,132 | 22,901 | 27,947 | |||||||||
Goodwill
(note 10)
|
29,160 | 30,942 | 29,355 | |||||||||
Deferred income taxes
(note 22)
|
12,080 | 16,913 | 18,730 | |||||||||
Long-term assets held for sale
(note 4)
|
– | – | 7,530 | |||||||||
$ | 306,683 | $ | 322,355 | $ | 274,432 | |||||||
Liabilities
|
||||||||||||
Current liabilities
|
||||||||||||
Bank loan
|
$ | – | $ | 784 | $ | – | ||||||
Accounts payable and accrued liabilities (note 12)
|
32,392 | 30,320 | 29,943 | |||||||||
Provisions (note 12)
|
952 | 1,817 | 927 | |||||||||
Income taxes payable
|
917 | 876 | 426 | |||||||||
Contingent liability (note 13)
|
– | 338 | – | |||||||||
Current portion of long-term debt (note 14)
|
565 | 645 | 568 | |||||||||
Deferred revenue
|
10,583 | 10,590 | 10,354 | |||||||||
Current liabilities related to assets held for sale (note 4)
|
– | – | 2,531 | |||||||||
45,409 | 45,370 | 44,749 | ||||||||||
Deferred revenue
|
4,997 | 5,704 | 5,775 | |||||||||
Long-term debt
(note 14)
|
282 | 968 | 1,419 | |||||||||
Contingent liability
(note 13)
|
– | – | 2,660 | |||||||||
Other liabilities
|
609 | 723 | 603 | |||||||||
Deferred income taxes
(note 22)
|
2,105 | 5,079 | – | |||||||||
Long-term liabilities related to assets held for sale
(note 4)
|
– | – | 537 | |||||||||
53,402 | 57,844 | 55,743 | ||||||||||
Commitments
(note 15)
|
||||||||||||
Shareholders’ equity
|
||||||||||||
Share capital (note 16)
|
110,965 | 110,341 | 106,126 | |||||||||
Contributed surplus
|
17,298 | 18,017 | 18,563 | |||||||||
Retained earnings
|
111,511 | 115,104 | 92,984 | |||||||||
Accumulated other comprehensive income (note 17)
|
13,507 | 21,049 | 1,016 | |||||||||
253,281 | 264,511 | 218,689 | ||||||||||
$ | 306,683 | $ | 322,355 | $ | 274,432 |
On behalf of the Board
|
||
/s/ Germain Lamonde
GERMAIN LAMONDE
Chairman, President and CEO
|
/s/ Guy Marier
GUY MARIER
Chairman, Audit Committee
|
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Sales
(note 24)
|
$ | 249,966 | $ | 269,743 | ||||
Cost of sales
(1)
(note 20)
|
91,792 | 100,296 | ||||||
Selling and administrative (note 20)
|
94,139 | 87,062 | ||||||
Net research and development
(note 20)
|
49,854 | 47,927 | ||||||
Depreciation of property, plant and equipment (note 20)
|
6,169 | 6,655 | ||||||
Amortization of intangible assets (note 20)
|
7,819 | 9,183 | ||||||
Changes in fair value of cash contingent consideration (note 13)
|
(311 | ) | (2,685 | ) | ||||
Earnings from operations
|
504 | 21,305 | ||||||
Interest and other income
|
131 | 511 | ||||||
Foreign exchange loss
|
(657 | ) | (3,808 | ) | ||||
Earnings (loss) before income taxes
|
(22 | ) | 18,008 | |||||
Income taxes
(note 22)
|
3,571 | 8,814 | ||||||
Net earnings (loss) from continuing operations
|
(3,593 | ) | 9,194 | |||||
Net earnings from discontinued operations
(note 4)
|
– | 12,926 | ||||||
Net earnings (loss) for the year
|
$ | (3,593 | ) | $ | 22,120 | |||
Basic and diluted net earnings (loss) from continuing operations per share
|
$ | (0.06 | ) | $ | 0.15 | |||
Basic net earnings (loss) per share
|
$ | (0.06 | ) | $ | 0.37 | |||
Diluted net earnings (loss) per share
|
$ | (0.06 | ) | $ | 0.36 | |||
Basic weighted average number of shares outstanding (000’s)
|
60,453 | 60,000 | ||||||
Diluted weighted average number of shares outstanding (000’s)
(note 23)
|
60,453 | 61,488 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Net earnings (loss) for the year
|
$ | (3,593 | ) | $ | 22,120 | |||
Other comprehensive income (loss), net of income taxes
|
||||||||
Foreign currency translation adjustment
|
(6,875 | ) | 19,123 | |||||
Reclassification of realized losses on short-term investments in net earnings
|
– | 2 | ||||||
Unrealized gains on forward exchange contracts
|
185 | 3,413 | ||||||
Reclassification of realized gains on forward exchange contracts in net earnings (loss)
|
(1,108 | ) | (2,191 | ) | ||||
Deferred income tax effect of the components of other comprehensive income (loss)
|
256 | (314 | ) | |||||
Other comprehensive income (loss)
|
(7,542 | ) | 20,033 | |||||
Comprehensive income (loss) for the year
|
$ | (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 16)
|
1,452 | – | – | – | 1,452 | |||||||||||||||
Reclassification of stock-based compensation costs (note 16)
|
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 16)
|
310 | – | – | – | 310 | |||||||||||||||
Redemption of share capital (note 16)
|
(1,696 | ) | (540 | ) | – | – | (2,236 | ) | ||||||||||||
Reclassification of stock-based compensation costs (note 16)
|
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 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Cash flows from operating activities
|
||||||||
Net earnings (loss) for the year
|
$ | (3,593 | ) | $ | 22,120 | |||
Add (deduct) items not affecting cash
|
||||||||
Change in discount on short-term investments
|
45 | (42 | ) | |||||
Stock-based compensation costs
|
1,862 | 2,256 | ||||||
Depreciation and amortization
|
13,988 | 15,856 | ||||||
Gain on disposal of discontinued operations (note 4)
|
– | (13,212 | ) | |||||
Gain on disposal of capital assets
|
– | (568 | ) | |||||
Changes in fair value of cash contingent consideration (note 13)
|
(311 | ) | (2,685 | ) | ||||
Deferred revenue
|
(506 | ) | (1,262 | ) | ||||
Deferred income taxes
|
2,050 | 7,063 | ||||||
Changes in foreign exchange gain/loss
|
(1,510 | ) | 2,130 | |||||
12,025 | 31,656 | |||||||
Change in non-cash operating items
|
||||||||
Accounts receivable
|
7,974 | 10,066 | ||||||
Income taxes and tax credits
|
(5,570 | ) | (6,714 | ) | ||||
Inventories
|
10,879 | (8,751 | ) | |||||
Prepaid expenses
|
(589 | ) | (232 | ) | ||||
Accounts payable and accrued liabilities and provisions
|
643 | (2,775 | ) | |||||
Other liabilities
|
(105 | ) | 60 | |||||
25,257 | 23,310 | |||||||
Cash flows from investing activities
|
||||||||
Additions to short-term investments
|
(115,886 | ) | (516,674 | ) | ||||
Proceeds from disposal and maturity of short-term investments
|
152,797 | 481,945 | ||||||
Additions to capital assets (note 9)
|
(23,849 | ) | (12,164 | ) | ||||
Proceeds from disposal of capital assets
|
– | 568 | ||||||
Net proceeds from disposal of discontinued operations (note 4)
|
– | 22,063 | ||||||
Business combination
|
– | (1,049 | ) | |||||
13,062 | (25,311 | ) | ||||||
Cash flows from financing activities
|
||||||||
Bank loan
|
(782 | ) | 772 | |||||
Repayment of long-term debt
|
(577 | ) | (619 | ) | ||||
Exercise of stock options
|
310 | 1,452 | ||||||
Redemption of share capital
|
(2,236 | ) | – | |||||
(3,285 | ) | 1,605 | ||||||
Effect of foreign exchange rate changes on cash
|
1,063 | 1,058 | ||||||
Change in cash
|
36,097 | 662 | ||||||
Cash – Beginning of year
|
22,771 | 22,109 | ||||||
Cash – End of year
|
$ | 58,868 | $ | 22,771 | ||||
Supplementary information
|
||||||||
Interest received
|
$ | 679 | $ | 554 | ||||
Interest paid
|
$ | 76 | $ | 159 | ||||
Income taxes paid
|
$ | 1,494 | $ | 1,878 |
a)
|
Foreign currency transactions
|
b)
|
Foreign operations
|
Cash
|
Loans and receivables
|
Short-term investments
|
Available for sale
|
Accounts receivable
|
Loans and receivables
|
Bank loan
|
Other financial liabilities
|
Accounts payable and accrued liabilities
|
Other financial liabilities
|
Long-term debt
|
Other financial liabilities
|
Contingent liability
|
Financial liabilities at fair value through profit and loss
|
Other liabilities
|
Other financial liabilities
|
Term
|
||
Land improvements
|
5 years
|
|
Buildings
|
20 to 60 years
|
|
Equipment
|
2 to 10 years
|
|
Leasehold improvements
|
The lesser of useful life and remaining lease term
|
a)
|
Inventories
|
b)
|
Income taxes
|
c)
|
Impairment of non-financial assets
|
i)
|
Growth rates
|
ii)
|
Discount rate
|
·
|
The company has elected not to apply IFRS 3R, “
Business Combinations
’’, to business combinations that occurred before the date of transition (September 1, 2010);
|
·
|
The company elected to deem the cumulative foreign currency translation adjustment from the translation of consolidated financial statements in the reporting currency (US dollars) to be zero as at the transition date to IFRS. Accordingly, the cumulative translation adjustment as at September 1, 2010 was eliminated in the opening balance of retained earnings. Any foreign currency translation adjustment from the translation of consolidated financial statements in the reporting currency arising after the transition date is recorded in accumulated other comprehensive income in the shareholders’ equity in the balance sheet.
|
Description under Canadian GAAP
|
Notes
|
Canadian
GAAP
|
Adjustments
|
Reclassification
|
IFRS
|
Description under IFRS
|
|||||||||||||||
Assets
|
Assets
|
||||||||||||||||||||
Current assets
|
Current assets
|
||||||||||||||||||||
Cash
|
$ | 21,440 | $ | – | $ | – | $ | 21,440 |
Cash
|
||||||||||||
Short-term investments
|
10,379 | – | – | 10,379 |
Short-term investments
|
||||||||||||||||
Accounts receivable
|
Accounts receivable
|
||||||||||||||||||||
Trade
|
50,190 | – | – | 50,190 |
Trade
|
||||||||||||||||
Other
|
5,217 | – | – | 5,217 |
Other
|
||||||||||||||||
Income taxes and tax credits recoverable
|
2,604 | – | – | 2,604 |
Income taxes and tax credits recoverable
|
||||||||||||||||
Inventories
|
40,328 | – | – | 40,328 |
Inventories
|
||||||||||||||||
Prepaid expenses
|
2,816 | – | – | 2,816 |
Prepaid expenses
|
||||||||||||||||
Future income taxes
|
a) | 6,191 | – | (6,191 | ) | – |
Deferred income taxes
|
||||||||||||||
Current assets held for sale
|
a) | 3,991 | – | (222 | ) | 3,769 |
Current assets held for sale
|
||||||||||||||
143,156 | – | (6,413 | ) | 136,743 | |||||||||||||||||
Tax credits recoverable
|
29,397 | – | – | 29,397 |
Tax credits recoverable
|
||||||||||||||||
Property, plant and equipment
|
c) | 23,455 | 1,275 | – | 24,730 |
Property, plant and equipment
|
|||||||||||||||
Intangible assets
|
27,947 | – | – | 27,947 |
Intangible assets
|
||||||||||||||||
Goodwill
|
29,355 | – | – | 29,355 |
Goodwill
|
||||||||||||||||
Future income taxes
|
a), c) | 12,884 | (345 | ) | 6,191 | 18,730 |
Deferred income taxes
|
||||||||||||||
Long-term assets held for sale
|
a) | 7,308 | – | 222 | 7,530 |
Long-term assets held for sale
|
|||||||||||||||
$ | 273,502 | $ | 930 | $ | – | $ | 274,432 | ||||||||||||||
Liabilities
|
Liabilities
|
||||||||||||||||||||
Current liabilities
|
Current liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
e) | $ | 30,870 | $ | – | $ | (927 | ) | $ | 29,943 |
Accounts payable and accrued liabilities
|
||||||||||
e) | – | – | 927 | 927 |
Provisions
|
||||||||||||||||
Income taxes payable
|
426 | – | – | 426 |
Income taxes payable
|
||||||||||||||||
Current portion of long-term debt
|
568 | – | – | 568 |
Current portion of long-term debt
|
||||||||||||||||
Deferred revenue
|
10,354 | – | – | 10,354 |
Deferred revenue
|
||||||||||||||||
Current liabilities related to assets held for sale
|
2,531 | – | – | 2,531 |
Current liabilities related to assets held for sale
|
||||||||||||||||
44,749 | – | – | 44,749 | ||||||||||||||||||
Deferred revenue
|
5,775 | – | – | 5,775 |
Deferred revenue
|
||||||||||||||||
Long-term debt
|
1,419 | – | – | 1,419 |
Long-term debt
|
||||||||||||||||
b) | – | 2,660 | – | 2,660 |
Contingent liability
|
||||||||||||||||
Other liabilities
|
603 | – | – | 603 |
Other liabilities
|
||||||||||||||||
Long-term liabilities related to assets held for sale
|
537 | – | – | 537 |
Long-term liabilities related to assets held for sale
|
||||||||||||||||
53,083 | 2,660 | – | 55,743 | ||||||||||||||||||
Shareholders’ equity
|
Shareholders’ equity
|
||||||||||||||||||||
Share capital
|
106,126 | – | – | 106,126 |
Share capital
|
||||||||||||||||
Contributed surplus
|
18,563 | – | – | 18,563 |
Contributed surplus
|
||||||||||||||||
Retained earnings
|
b), c), d) | 50,528 | (1,730 | ) | 44,186 | 92,984 |
Retained earnings
|
||||||||||||||
Accumulated other comprehensive income
|
c), d) | 45,202 | – | (44,186 | ) | 1,016 |
Accumulated other comprehensive income
|
||||||||||||||
220,419 | (1,730 | ) | – | 218,689 | |||||||||||||||||
$ | 273,502 | $ | 930 | $ | – | $ | 274,432 |
Notes
|
Canadian GAAP
|
Adjustments
|
Reclassification
|
IFRS
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Current assets
|
||||||||||||||||||||
Cash
|
$ | 22,771 | $ | – | $ | – | $ | 22,771 | ||||||||||||
Short-term investments
|
47,091 | – | – | 47,091 | ||||||||||||||||
Accounts receivable
|
||||||||||||||||||||
Trade
|
45,151 | – | – | 45,151 | ||||||||||||||||
Other
|
6,329 | – | – | 6,329 | ||||||||||||||||
Income taxes and tax credits recoverable
|
5,414 | – | – | 5,414 | ||||||||||||||||
Inventories
|
52,754 | – | – | 52,754 | ||||||||||||||||
Prepaid expenses
|
3,237 | – | – | 3,237 | ||||||||||||||||
Deferred income taxes
|
a) | 6,130 | – | (6,130 | ) | – | ||||||||||||||
188,877 | – | (6,130 | ) | 182,747 | ||||||||||||||||
Tax credits recoverable
|
36,627 | – | – | 36,627 | ||||||||||||||||
Forward exchange contracts
|
149 | – | – | 149 | ||||||||||||||||
Property, plant and equipment
|
d) | 30,566 | 1,510 | – | 32,076 | |||||||||||||||
Intangible assets
|
22,901 | – | – | 22,901 | ||||||||||||||||
Goodwill
|
30,942 | – | – | 30,942 | ||||||||||||||||
Deferred income taxes
|
a), c) | 11,024 | (241 | ) | 6,130 | 16,913 | ||||||||||||||
$ | 321,086 | $ | 1,269 | $ | – | $ | 322,355 | |||||||||||||
Liabilities
|
||||||||||||||||||||
Current liabilities
|
||||||||||||||||||||
Bank loan
|
$ | 784 | $ | – | $ | – | $ | 784 | ||||||||||||
Accounts payable and accrued liabilities
|
e) | 32,137 | – | (1,817 | ) | 30,320 | ||||||||||||||
Provisions
|
e) | – | – | 1,817 | 1,817 | |||||||||||||||
Income taxes payable
|
876 | – | – | 876 | ||||||||||||||||
Contingent liability
|
b) | – | 338 | – | 338 | |||||||||||||||
Current portion of long-term debt
|
645 | – | – | 645 | ||||||||||||||||
Deferred revenue
|
10,590 | – | – | 10,590 | ||||||||||||||||
45,032 | 338 | – | 45,370 | |||||||||||||||||
Deferred revenue
|
5,704 | – | – | 5,704 | ||||||||||||||||
Long-term debt
|
968 | – | – | 968 | ||||||||||||||||
Other liabilities
|
723 | – | – | 723 | ||||||||||||||||
Deferred income taxes
|
c) | 4,913 | 166 | – | 5,079 | |||||||||||||||
57,340 | 504 | – | 57,844 | |||||||||||||||||
Shareholders’ equity
|
||||||||||||||||||||
Share capital
|
110,341 | – | – | 110,341 | ||||||||||||||||
Contributed surplus
|
18,017 | – | – | 18,017 | ||||||||||||||||
Retained earnings
|
b), c), d) | 69,877 | 1,041 | 44,186 | 115,104 | |||||||||||||||
Accumulated other comprehensive income
|
b), c), d) | 65,511 | (276 | ) | (44,186 | ) | 21,049 | |||||||||||||
263,746 | 765 | – | 264,511 | |||||||||||||||||
$ | 321,086 | $ | 1,269 | $ | – | $ | 322,355 |
Notes
|
Share capital
|
Contributed Surplus
|
Retained
earnings
|
Accumulated other comprehensive income
|
Total
Shareholders’ equity
|
|||||||||||||||||||
Canadian GAAP
|
$ | 106,126 | $ | 18,563 | $ | 50,528 | $ | 45,202 | $ | 220,419 | ||||||||||||||
Foreign currency translation adjustment
|
d) | – | – | 44,186 | (44,186 | ) | – | |||||||||||||||||
Adjustment to property, plant and equipment, net of deferred income taxes
|
c) | – | – | 930 | – | 930 | ||||||||||||||||||
Adjustment to the fair value of the cash contingent consideration
|
b) | – | – | (2,660 | ) | – | (2,660 | ) | ||||||||||||||||
IFRS
|
$ | 106,126 | $ | 18,563 | $ | 92,984 | $ | 1,016 | $ | 218,689 |
Notes
|
Share capital
|
Contributed Surplus
|
Retained
earnings
|
Accumulated other comprehensive income
|
Total shareholders’ equity
|
|||||||||||||||||||
Canadian GAAP
|
$ | 110,341 | $ | 18,017 | $ | 69,877 | $ | 65,511 | $ | 263,746 | ||||||||||||||
Foreign currency translation adjustment
|
d) | – | 44,186 | (44,186 | ) | – | ||||||||||||||||||
Adjustment to property, plant and equipment, net of deferred income taxes
|
c) | – | – | 1,016 | 87 | 1,103 | ||||||||||||||||||
Adjustment to the fair value of the cash contingent consideration
|
b) | – | – | 25 | (363 | ) | (338 | ) | ||||||||||||||||
IFRS
|
$ | 110,341 | $ | 18,017 | $ | 115,104 | $ | 21,049 | $ | 264,511 |
Notes
|
Canadian GAAP
|
Adjustments
|
IFRS
|
|||||||||||||
Sales
|
$ | 269,743 | $ | – | $ | 269,743 | ||||||||||
Cost of sales
|
100,296 | – | 100,296 | |||||||||||||
Selling and administrative
|
87,062 | – | 87,062 | |||||||||||||
Net research and development
|
47,927 | – | 47,927 | |||||||||||||
Depreciation of property, plant and equipment
|
c) | 6,772 | (117 | ) | 6,655 | |||||||||||
Amortization of intangible assets
|
9,183 | – | 9,183 | |||||||||||||
Changes in fair value of cash contingent consideration
|
b) | – | (2,685 | ) | (2,685 | ) | ||||||||||
Earnings from operations
|
18,503 | 2,802 | 21,305 | |||||||||||||
Interest and other income
|
511 | – | 511 | |||||||||||||
Foreign exchange loss
|
(3,808 | ) | – | (3,808 | ) | |||||||||||
Earnings before income taxes
|
15,206 | 2,802 | 18,008 | |||||||||||||
Income taxes
|
c) | 8,783 | 31 | 8,814 | ||||||||||||
Net earnings from continuing operations
|
6,423 | 2,771 | 9,194 | |||||||||||||
Net earnings from discontinued operations
|
12,926 | – | 12,926 | |||||||||||||
Net earnings for the year
|
$ | 19,349 | $ | 2,771 | $ | 22,120 |
Notes
|
Canadian GAAP
|
Adjustments
|
IFRS
|
|||||||||||||
Net earnings for the year
|
$ | 19,349 | $ | 2,771 | $ | 22,120 | ||||||||||
Other comprehensive income
|
||||||||||||||||
Foreign currency translation adjustment
|
b), c) | 19,399 | (276 | ) | 19,123 | |||||||||||
Reclassification of unrealized losses on short-term investments in net earnings
|
2 | – | 2 | |||||||||||||
Unrealized gains on forward exchange contracts
|
3,413 | – | 3,413 | |||||||||||||
Reclassification of realized gains on forward exchange contracts in net earnings
|
(2,191 | ) | – | (2,191 | ) | |||||||||||
Deferred income tax effect of the components of other comprehensive income
|
(314 | ) | – | (314 | ) | |||||||||||
Other comprehensive income
|
20,309 | (276 | ) | 20,033 | ||||||||||||
Comprehensive income for the year
|
$ | 39,658 | $ | 2,495 | $ | 42,153 |
a)
|
Deferred income taxes
|
b)
|
Business combinations
|
·
|
As at September 1, 2010, the fair value of the cash contingent consideration was estimated at €2,099,000 ($2,660,000) based on information available at that time and recorded in long-term liabilities, with a corresponding decrease of the opening balance of retained earnings (shareholders’ equity).
|
·
|
As at August 31, 2011, the fair value of the cash contingent consideration was reassessed to €235,000 ($338,000), based on revised sales forecasts and presented in current liabilities due to its short-term maturity. The change in the fair value in the amount of $2,685,000, which includes the effect of a foreign currency translation loss of $363,000 (shareholders’ equity), was recorded in the statement of earnings for the year ended August 31, 2011.
|
c)
|
Property, plant and equipment
|
·
|
As at September 1, 2010, this resulted in an increase of the carrying value of property, plant and equipment of $1,275,000 and a decrease of deferred income tax assets of $345,000, for a net increase of the opening balance of retained earnings (shareholders’ equity) of $930,000.
|
·
|
As at August 31, 2011, this resulted in an increase in the carrying value of property, plant and equipment of $1,510,000, a decrease of deferred tax assets of $241,000 and an increase of deferred tax liabilities of $166,000. For the year ended August, 31, 2011, this resulted in a decrease of depreciation of property, plant and equipment of $117,000 and a deferred income tax expense of $31,000. It also resulted in a foreign currency translation gain of $87,000 recorded in accumulated other comprehensive income in the shareholders’ equity.
|
d)
|
Foreign currency translation adjustment
|
e)
|
Provisions reclassification
|
Year ended
August 31, 2011
(30 days)
|
||||
Sales
|
$ | 1,991 | ||
Cost of goods sold and operating expenses
|
$ | 1,997 | ||
Loss from operations
|
$ | (6 | ) | |
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 |
Assets
|
||||
Current assets
|
||||
Cash
|
$ | 669 | ||
Accounts receivable
|
84 | |||
Income taxes and tax credits recoverable
|
188 | |||
Inventories
|
2,670 | |||
Prepaid expenses
|
158 | |||
Current assets held for sale
|
3,769 | |||
Tax credits recoverable
|
2,142 | |||
Property, plant and equipment
|
349 | |||
Intangible assets
|
48 | |||
Goodwill
|
4,769 | |||
Deferred income taxes
|
222 | |||
Long-term assets held for sale
|
7,530 | |||
$ | 11,299 | |||
Liabilities
|
||||
Current liabilities related to assets held for sale
|
$ | 2,531 | ||
Long-term liabilities related to assets held for sale
|
537 | |||
$ | 3,068 |
Balance as at
August 31, 2011
|
Additions
|
Payments
|
Balance as at
August 31, 2012
|
|||||||||||||
Severance expenses
|
$ | − | $ | 2,329 | $ | (2,279 | ) | $ | 50 |
·
|
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.
|
As at August 31, 2012
|
||||||||||||||||||||
Loans and
receivable
|
Derivatives
used for
hedging
|
Available
for sale
|
Other
financial
liabilities
|
Total
|
||||||||||||||||
Cash
|
$ | 58,868 | $ | – | $ | – | $ | – | $ | 58,868 | ||||||||||
Short-term investments
|
$ | – | $ | – | $ | 8,236 | $ | – | $ | 8,236 | ||||||||||
Accounts receivable
|
$ | 41,128 | $ | – | $ | – | $ | – | $ | 41,128 | ||||||||||
Forward exchange contracts
|
$ | – | $ | 798 | $ | – | $ | – | $ | 798 | ||||||||||
Accounts payable and accrued liabilities
|
$ | – | $ | – | $ | – | $ | 32,392 | $ | 32,392 | ||||||||||
Long-term debt
|
$ | – | $ | – | $ | – | $ | 847 | $ | 847 | ||||||||||
Other liabilities
|
$ | – | $ | – | $ | – | $ | 163 | $ | 163 |
As at August 31, 2011
|
||||||||||||||||||||||||
Loans and receivable
|
Derivatives used for hedging
|
Available
for sale
|
Other financial liabilities
|
Financial liabilities at fair value through profit and loss
|
Total
|
|||||||||||||||||||
Cash
|
$ | 22,771 | $ | – | $ | – | $ | – | $ | – | $ | 22,771 | ||||||||||||
Short-term investments
|
$ | – | $ | – | $ | 47,091 | $ | – | $ | – | $ | 47,091 | ||||||||||||
Accounts receivable
|
$ | 49,779 | $ | – | $ | – | $ | – | $ | – | $ | 49,779 | ||||||||||||
Forward exchange contracts
|
$ | – | $ | 1,850 | $ | – | $ | – | $ | – | $ | 1,850 | ||||||||||||
Bank loan
|
$ | – | $ | – | $ | – | $ | 784 | $ | – | $ | 784 | ||||||||||||
Accounts payable and accrued liabilities
|
$ | – | $ | – | $ | – | $ | 30,320 | $ | – | $ | 30,320 | ||||||||||||
Contingent liability
|
$ | – | $ | – | $ | – | $ | – | $ | 338 | $ | 338 | ||||||||||||
Long-term debt
|
$ | – | $ | – | $ | – | $ | 1,613 | $ | – | $ | 1,613 | ||||||||||||
Other liabilities
|
$ | – | $ | – | $ | – | $ | 201 | $ | – | $ | 201 |
As at September 1, 2010
|
||||||||||||||||||||||||
Loans and receivable
|
Derivatives used for hedging
|
Available
for sale
|
Other financial liabilities
|
Financial liabilities at fair value through profit and loss
|
Total
|
|||||||||||||||||||
Cash
|
$ | 21,440 | $ | – | $ | – | $ | – | $ | – | $ | 21,440 | ||||||||||||
Short-term investments
|
$ | – | $ | – | $ | 10,379 | $ | – | $ | – | $ | 10,379 | ||||||||||||
Accounts receivable
|
$ | 54,653 | $ | – | $ | – | $ | – | $ | – | $ | 54,653 | ||||||||||||
Forward exchange contracts
|
$ | – | $ | 522 | $ | – | $ | – | $ | – | $ | 522 | ||||||||||||
Accounts payable and accrued liabilities
|
$ | – | $ | – | $ | – | $ | 29,711 | $ | – | $ | 29,711 | ||||||||||||
Contingent liability
|
$ | – | $ | – | $ | – | $ | – | $ | 2,660 | $ | 2,660 | ||||||||||||
Long-term debt
|
$ | – | $ | – | $ | – | $ | 1,987 | $ | – | $ | 1,987 | ||||||||||||
Other liabilities
|
$ | – | $ | – | $ | – | $ | 295 | $ | – | $ | 295 |
Expiry dates
|
Contractual
amounts
|
Weighted average contractual
forward rates
|
||||||
As at September 1, 2010
|
||||||||
September 2010 to August 2011
|
$ | 29,500 | 1.0897 | |||||
September 2011 to August 2012
|
20,400 | 1.0802 | ||||||
September 2012 to January 2013
|
1,500 | 1.0722 | ||||||
Total
|
$ | 51,400 | 1.0854 | |||||
As at August 31, 2011
|
||||||||
September 2011 to August 2012
|
$ | 27,500 | 1.0555 | |||||
September 2012 to July 2013
|
11,400 | 1.0063 | ||||||
Total
|
$ | 38,900 | 1.0411 | |||||
As at August 31, 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, 2012
|
As at August 31, 2011
|
As at September 1, 2010
|
||||||||||||||||||||||
Carrying/
nominal
amount
(in thousands
of US dollars)
|
Carrying/
nominal
amount
(in thousands
of euros)
|
Carrying/
nominal
amount
(in thousands
of US dollars)
|
Carrying/
nominal
amount
(in thousands
of euros)
|
Carrying/
nominal
amount
(in thousands
of US dollars)
|
Carrying/
nominal
amount
(in thousands
of euros)
|
|||||||||||||||||||
Financial assets
|
||||||||||||||||||||||||
Cash
|
$ | 9,781 | € | 1,555 | $ | 10,553 | € | 1,502 | $ | 6,947 | € | 1,287 | ||||||||||||
Accounts receivable
|
27,996 | 4,313 | 25,040 | 4,332 | 30,218 | 3,860 | ||||||||||||||||||
37,777 | 5,868 | 35,593 | 5,834 | 37,165 | 5,147 | |||||||||||||||||||
Financial liabilities
|
||||||||||||||||||||||||
Accounts payable and accrued liabilities
|
10,564 | 71 | 8,706 | 37 | 8,932 | 438 | ||||||||||||||||||
Forward exchange contracts (nominal value)
|
4,400 | – | 5,400 | – | 5,900 | – | ||||||||||||||||||
14,964 | 71 | 14,106 | 37 | 14,832 | 438 | |||||||||||||||||||
Net exposure
|
$ | 22,813 | € | 5,797 | $ | 21,487 | € | 5,797 | $ | 22,333 | € | 4,709 |
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would decrease (increase) net earnings by $1,943,000, or $0.03 per diluted share, and $2,053,000, or $0.03 per diluted share, as at August 31, 2011 and 2012 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 $831,000, or $0.01 per diluted share, and $709,000, or $0.01 per diluted share, as at August 31, 2011 and 2012 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 $2,404,000 and $1,575,000 as at August 31, 2011 and 2012 respectively.
|
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Commercial paper denominated in Canadian dollars, bearing interest at annual rates of 1.0% to 1.3% in fiscal 2011 and 0.6% to 0.9% in fiscal 2010, maturing between September and November 2011 in fiscal 2011, and in September and October 2010 in 2010
|
$ | – | $ | 31,765 | $ | 6,383 | ||||||
Bankers acceptance denominated in Canadian dollars, bearing interest at annual rates of 1.1% in fiscal 2012, 1.0% and 1.2% in fiscal 2011 and 0.8% in fiscal 2010, maturing in September 2012 in fiscal 2012, in September and November 2011 in 2011, and in September 2010 in 2010
|
8,236 | 15,326 | 3,996 | |||||||||
$ | 8,236 | $ | 47,091 | $ | 10,379 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Current
|
$ | 31,856 | $ | 33,149 | $ | 38,663 | ||||||
Past due, 0 to 30 days
|
3,770 | 7,299 | 6,787 | |||||||||
Past due, 31 to 60 days
|
1,048 | 2,590 | 1,991 | |||||||||
Past due, more than 60 days, less allowance for doubtful accounts of $1,243, $1,245 and $583 as at September 1, 2010 and August 31, 2011 and 2012 respectively
|
969 | 2,113 | 2,749 | |||||||||
$ | 37,643 | $ | 45,151 | $ | 50,190 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Balance – Beginning of year
|
$ | 1,245 | $ | 1,243 | ||||
Addition charged to earnings
|
267 | 148 | ||||||
Write-off of uncollectible accounts
|
(873 | ) | (111 | ) | ||||
Recovery of uncollectible accounts
|
(56 | ) | (35 | ) | ||||
Balance – End of year
|
$ | 583 | $ | 1,245 |
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 |
As at August 31, 2011
|
||||||||||||
0-12
months
|
13-24
months
|
25-36
months
|
||||||||||
Bank loan
|
$ | 784 | $ | – | $ | – | ||||||
Accounts payable and accrued liabilities
|
30,320 | – | – | |||||||||
Contingent liability
|
338 | – | – | |||||||||
Long-term debt
|
645 | 645 | 323 | |||||||||
Other liabilities
|
– | 201 | – | |||||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
27,500 | 11,400 | – | |||||||||
Inflow
|
(29,668 | ) | (11,725 | ) | – | |||||||
Total
|
$ | 29,919 | $ | 521 | $ | 323 |
As at September 1, 2010
|
||||||||||||||||
0-12
months
|
13-24
months
|
25-36
months
|
Over 36
months
|
|||||||||||||
Accounts payable and accrued liabilities
|
$ | 29,711 | $ | – | $ | – | $ | – | ||||||||
Long-term debt
|
568 | 568 | 568 | 283 | ||||||||||||
Contingent liability
|
– | 2,660 | – | – | ||||||||||||
Other liabilities
|
– | 295 | – | – | ||||||||||||
Forward exchange contracts
|
||||||||||||||||
Outflow
|
29,500 | 20,400 | 1,500 | – | ||||||||||||
Inflow
|
(30,141 | ) | (20,662 | ) | (1,508 | ) | – | |||||||||
Total
|
$ | 29,638 | $ | 3,261 | $ | 560 | $ | 283 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Raw materials
|
$ | 19,786 | $ | 30,280 | $ | 21,505 | ||||||
Work in progress
|
1,511 | 2,206 | 1,975 | |||||||||
Finished goods
|
19,915 | 20,268 | 16,848 | |||||||||
$ | 41,212 | $ | 52,754 | $ | 40,328 |
Land and land improvements
|
Buildings
|
Equipment
|
Leasehold improvements
|
Asset under construction
|
Total
|
|||||||||||||||||||
Cost as at September 1, 2010
|
$ | 2,287 | $ | 15,670 | $ | 39,734 | $ | 2,976 | $ |
‒
|
$ | 60,667 | ||||||||||||
Additions
|
2,171 | 1,621 | 5,551 | 133 | 2,888 | 12,364 | ||||||||||||||||||
Disposals
|
‒
|
‒
|
(3,193 | ) | (73 | ) |
‒
|
(3,266 | ) | |||||||||||||||
Foreign currency translation adjustment
|
247 | 1,682 | 1,942 | 219 | 54 | 4,144 | ||||||||||||||||||
Cost as at August 31, 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 | ||||||||||||
Accumulated depreciation as at September 1, 2010
|
$ | 1,200 | $ | 4,987 | $ | 28,282 | $ | 1,468 | $ |
‒
|
$ | 35,937 | ||||||||||||
Depreciation for the year
|
10 | 302 | 5,821 | 522 |
‒
|
6,655 | ||||||||||||||||||
Disposals
|
‒
|
‒
|
(2,824 | ) | (73 | ) |
‒
|
(2,897 | ) | |||||||||||||||
Foreign currency translation adjustment
|
107 | 696 | 1,191 | 144 |
‒
|
2,138 | ||||||||||||||||||
Accumulated depreciation as at August 31, 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 | ||||||||||||
Net carrying value as at:
|
||||||||||||||||||||||||
September 1 , 2010
|
$ | 1,087 | $ | 10,683 | $ | 11,452 | $ | 1,508 | $ |
‒
|
$ | 24,730 | ||||||||||||
August 31, 2011
|
$ | 3,388 | $ | 12,988 | $ | 11,564 | $ | 1,194 | $ | 2,942 | $ | 32,076 | ||||||||||||
August 31, 2012
|
$ | 4,268 | $ | 32,113 | $ | 11,791 | $ | 1,676 | $ |
‒
|
$ | 49,848 |
Core technology
|
Customer relationships
|
Brand name
|
Software
|
Total
|
||||||||||||||||
Cost as at September 1, 2010
|
$ | 34,858 | $ | 6,615 | $ | 659 | $ | 11,557 | $ | 53,689 | ||||||||||
Additions
|
321 |
‒
|
‒
|
1,442 | 1,763 | |||||||||||||||
Disposals
|
(10,187 | ) |
‒
|
‒
|
(421 | ) | (10,608 | ) | ||||||||||||
Foreign currency translation adjustment
|
2,223 | 904 | 90 | 1,144 | 4,361 | |||||||||||||||
Cost as at August 31, 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 | ||||||||||
Accumulated amortization as at September 1, 2010
|
$ | 17,496 | $ | 622 | $ | 62 | $ | 7,562 | $ | 25,742 | ||||||||||
Amortization for the year
|
5,910 | 1,448 | 144 | 1,681 | 9,183 | |||||||||||||||
Disposals
|
(10,187 | ) |
‒
|
‒
|
(410 | ) | (10,597 | ) | ||||||||||||
Foreign currency translation adjustment
|
1,236 | 141 | 14 | 585 | 1,976 | |||||||||||||||
Accumulated amortization as at August 31, 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 | ||||||||||
Net carrying value as at:
|
||||||||||||||||||||
September 1, 2010
|
$ | 17,362 | $ | 5,993 | $ | 597 | $ | 3,995 | $ | 27,947 | ||||||||||
August 31, 2011
|
$ | 12,760 | $ | 5,308 | $ | 529 | $ | 4,304 | $ | 22,901 | ||||||||||
August 31, 2012
|
$ | 6,955 | $ | 3,330 | $ | 332 | $ | 3,515 | $ | 14,132 | ||||||||||
Remaining amortization period as at August 31, 2012
|
2 years
|
3 years
|
3 years
|
4 years
|
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Balance – Beginning of year
|
$ | 30,942 | $ | 29,355 | ||||
Foreign currency translation adjustment
|
(1,782 | ) | 1,587 | |||||
Balance – End of year
|
$ | 29,160 | $ | 30,942 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
NetHawk CGU
|
$ | 11,520 | $ | 13,160 | $ | 11,573 | ||||||
Brix CGU
|
17,640 | 17,782 | 17,782 | |||||||||
Total
|
$ | 29,160 | $ | 30,942 | $ | 29,355 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Trade
|
$ | 16,998 | $ | 15,717 | $ | 14,244 | ||||||
Salaries and social benefits
|
13,084 | 12,649 | 12,400 | |||||||||
Forward exchange contracts (note 7)
|
– | – | 232 | |||||||||
Other
|
2,310 | 1,954 | 3,067 | |||||||||
$ | 32,392 | $ | 30,320 | $ | 29,943 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Warranty
|
$ | 675 | $ | 1,402 | $ | 579 | ||||||
Other
|
277 | 415 | 348 | |||||||||
$ | 952 | $ | 1,817 | $ | 927 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Balance – Beginning of year
|
$ | 1,402 | $ | 579 | ||||
Provision
|
861 | 1,608 | ||||||
Settlements
|
(1,588 | ) | (785 | ) | ||||
Balance – End of year
|
$ | 675 | $ | 1,402 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Loan collateralized by assets of NetHawk Oyj denominated in euros (€672), bearing interest at 2.95%, repayable in semi-annual installments of $282 (€224), maturing in December 2013
|
$ | 847 | $ | 1,613 | $ | 1,987 | ||||||
Less: current portion
|
565 | 645 | 568 | |||||||||
$ | 282 | $ | 968 | $ | 1,419 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
No later than 1 year
|
$ | 3,628 | $ | 4,659 | $ | 4,716 | ||||||
Later than 1 year and no later than 5 years
|
4,711 | 5,618 | 6,601 | |||||||||
Later than 5 years
|
676 | 525 | 1,181 | |||||||||
$ | 9,015 | $ | 10,802 | $ | 12,498 |
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 18)
|
– | – | 306,825 | 1,452 | 1,452 | |||||||||||||||
Redemption of restricted share units (note 18)
|
– | – | 340,974 | – | – | |||||||||||||||
Redemption of deferred shares units (note 18)
|
– | – | 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 18)
|
– | – | 109,700 | 310 | 310 | |||||||||||||||
Redemption of restricted share units (note 18)
|
– | – | 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 |
|
a)
|
On November 5, 2010, the company announced that its Board of Directors had authorized the renewal of its share repurchase program, by way of a normal course issuer bid on the open market, of up to 10% of its public float (as defined by the Toronto Stock Exchange), or 2,012,562 subordinate voting shares, at the prevailing market price. The period of the normal course issuer bid started on November 10, 2010, and ended on November 9, 2011. All shares repurchased under the bid were cancelled.
|
|
b)
|
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 will end on November 9, 2012. All shares repurchased under the bid will be cancelled.
|
|
c)
|
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 company expects to use cash, short-term investments or future cash flow from operations to fund the repurchase of shares. The normal course issuer bid will start on November 12, 2012, and will end on November 11, 2013, or on an earlier date if the company repurchases the maximum number of shares permitted under the bid. The program does not require that the company repurchases any specific number of shares, and it may be modified, suspended or terminated at any time and without prior notice. All shares repurchased under the bid will be cancelled.
|
Foreign currency translation adjustment
|
Cash-flow hedge
|
Available-
for-sale
financial instruments
|
Accumulate other comprehensive income
|
|||||||||||||
Balance as at September 1, 2010
|
$ | – | $ | 1,018 | $ | (2 | ) | $ | 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 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Stock-based compensation costs arising from equity-settled awards
|
$ | 1,831 | $ | 2,217 | ||||
Stock-based compensation costs arising from cash-settled awards
|
31 | 39 | ||||||
$ | 1,862 | $ | 2,256 |
Years ended August 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
|||||||||||||
(CA$)
|
(CA$)
|
|||||||||||||||
Outstanding – Beginning of year
|
641,357 | $ | 9 | 1,348,787 | $ | 19 | ||||||||||
Exercised
|
(109,700 | ) | 3 | (306,825 | ) | 5 | ||||||||||
Forfeited
|
(1,500 | ) | 5 | (43,541 | ) | 14 | ||||||||||
Expired
|
(285,803 | ) | 15 | (357,064 | ) | 48 | ||||||||||
Outstanding – End of year
|
244,354 | $ | 5 | 641,357 | $ | 9 | ||||||||||
Exercisable – End of year
|
244,354 | $ | 5 | 641,357 | $ | 9 |
Stock options outstanding and exercisable
|
||||||||||||||||||
Exercise price
|
Number
|
Weighted
average
exercise
price
|
Intrinsic
value
|
Weighted
average
remaining
contractual life
|
||||||||||||||
(CA$)
|
(CA$)
|
(CA$)
|
||||||||||||||||
$2.50 | 23,275 | $ | 2.50 | $ | 55 | – | ||||||||||||
$4.64 to 6.28 | 221,079 | 5.54 | – |
2 years
|
||||||||||||||
244,354 | $ | 5.25 | $ | 55 |
2 years
|
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Outstanding – Beginning of year
|
1,551,658 | 1,603,048 | ||||||
Granted
|
334,878 | 350,382 | ||||||
Redeemed
|
(418,086 | ) | (340,974 | ) | ||||
Forfeited
|
(130,720 | ) | (60,798 | ) | ||||
Outstanding – End of year
|
1,337,730 | 1,551,658 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Outstanding – Beginning of year
|
110,298 | 135,003 | ||||||
Granted
|
22,792 | 12,786 | ||||||
Redeemed
|
– | (37,491 | ) | |||||
Outstanding – End of year
|
133,090 | 110,298 |
Years ended August 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
Number
|
Weighted
average
exercise
price
|
Number
|
Weighted
average
exercise
price
|
|||||||||||||
Outstanding – Beginning of year
|
29,124 | $ | 3 | 44,374 | $ | 8 | ||||||||||
Granted
|
4,000 | – | 4,500 | – | ||||||||||||
Forfeited
|
– | – | (14,750 | ) | 5 | |||||||||||
Expired
|
– | – | (5,000 | ) | 34 | |||||||||||
Outstanding – End of year
|
33,124 | $ | 3 | 29,124 | $ | 3 | ||||||||||
Exercisable – End of year
|
15,787 | $ | 4 | 10,075 | $ | 5 |
Stock appreciation
rights outstanding
|
Stock appreciation
rights exercisable
|
||||||||||
Exercise price
|
Number
|
Weighted average
remaining contractual
life
|
Number
|
||||||||
$ – | 8,500 |
9 years
|
– | ||||||||
$2.36 | 9,674 |
6 years
|
4,837 | ||||||||
$3.74 to $4.65 | 10,500 |
4 years
|
6,500 | ||||||||
$6.28 to $6.50 | 4,450 |
4 years
|
4,450 | ||||||||
33,124 |
6 years
|
15,787 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Salaries and short-term employee benefits
|
$ | 3,398 | $ | 3,643 | ||||
Restructuring charges
|
177 | – | ||||||
Stock-based compensation costs
|
793 | 853 | ||||||
$ | 4,368 | $ | 4,496 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Gross research and development expenses
|
$ | 59,282 | $ | 57,226 | ||||
Research and development tax credits and grants
|
(9,428 | ) | (9,299 | ) | ||||
$ | 49,854 | $ | 47,927 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Cost of sales
|
||||||||
Depreciation of property, plant and equipment
|
$ | 2,009 | $ | 1,975 | ||||
Amortization of intangible assets
|
5,076 | 6,093 | ||||||
7,085 | 8,068 | |||||||
Selling and administrative expenses
|
||||||||
Depreciation of property, plant and equipment
|
1,037 | 1,341 | ||||||
Amortization of intangible assets
|
1,806 | 2,092 | ||||||
2,843 | 3,433 | |||||||
Net research and development expenses
|
||||||||
Depreciation of property, plant and equipment
|
3,123 | 3,339 | ||||||
Amortization of intangible assets
|
937 | 998 | ||||||
4,060 | 4,337 | |||||||
$ | 13,988 | $ | 15,838 | |||||
Depreciation of property, plant and equipment
|
$ | 6,169 | $ | 6,655 | ||||
Amortization of intangible assets
|
7,819 | 9,183 | ||||||
$ | 13,988 | $ | 15,838 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Salaries and benefits
|
$ | 127,007 | $ | 122,828 | ||||
Restructuring charges
|
2,329 | – | ||||||
Stock-based compensation costs
|
1,862 | 2,256 | ||||||
$ | 131,198 | $ | 125,084 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Cost of sales
|
$ | 264 | $ | – | ||||
Selling and administrative expenses
|
1,181 | – | ||||||
Net research and development costs
|
884 | – | ||||||
$ | 2,329 | $ | – |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Cost of sales
|
$ | 248 | $ | 224 | ||||
Selling and administrative expenses
|
1,145 | 1,281 | ||||||
Net research and development expenses
|
469 | 487 | ||||||
Net earnings from discontinued operations
|
– | 264 | ||||||
$ | 1,862 | $ | 2,256 |
·
|
Deferred profit-sharing plan
|
·
|
401K plan
|
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Income tax provision at combined Canadian federal and provincial statutory tax rate (27% in 2012 and 29% in 2011)
|
$ | (6 | ) | $ | 5,222 | |||
Increase (decrease) due to:
|
||||||||
Foreign income taxed at different rates
|
285 | (402 | ) | |||||
Non-taxable (income)/loss
|
535 | (4,102 | ) | |||||
Non-deductible expenses
|
1,028 | 916 | ||||||
Foreign exchange effect of translation of foreign operations
|
(2,205 | ) | 2,541 | |||||
Recognition of previously unrecognized deferred income tax assets
|
(557 | ) |
‒
|
|||||
Utilization of previously unrecognized deferred income tax assets
|
(14 | ) | (61 | ) | ||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
4,523 | 5,111 | ||||||
Other
|
(18 | ) | (411 | ) | ||||
$ | 3,571 | $ | 8,814 |
The income tax provision consists of the following:
|
||||||||
Current
|
||||||||
Current income taxes
|
$ | 1,535 | $ | 1,986 | ||||
Benefit arising from previously unrecognized tax losses, tax credits and temporary differences
|
(14 | ) | (61 | ) | ||||
1,521 | 1,925 | |||||||
Deferred
|
||||||||
Deferred income taxes relating to the origination and reversal of temporary differences
|
(1,840 | ) | 1,778 | |||||
Benefit arising from previously unrecognized tax losses and temporary differences
|
(557 | ) | – | |||||
(2,397 | ) | 1,778 | ||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
4,447 | 5,111 | ||||||
2,050 | 6,889 | |||||||
$ | 3,571 | $ | 8,814 |
Current
|
$ | – | $ | 27 | ||||
Deferred
|
– | 174 | ||||||
$ | – | $ | 201 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Deferred tax assets
|
||||||||||||
Deferred tax assets to be recovered within 12 months
|
$ | 2,121 | $ | 4,559 | $ | 4,408 | ||||||
Deferred tax assets to be recovered after 12 months
|
9,959 | 12,354 | 14,322 | |||||||||
12,080 | 16,913 | $ | 18,730 |
Deferred tax liabilities
|
||||||||||||
Deferred tax liabilities payable within 12 months
|
108 | 8 | – | |||||||||
Deferred tax liabilities payable after 12 months
|
1,997 | 5,071 | – | |||||||||
2,105 | 5,079 | – | ||||||||||
Deferred tax assets net
|
$ | 9,975 | $ | 11,834 | $ | 18,730 |
Balance as at September 1, 2010
|
Credited (charged) to statement of earnings
|
Charged to shareholders’ equity
|
Foreign currency translation adjustment
|
Balance as at August 31, 2011
|
||||||||||||||||
Deferred tax assets
|
||||||||||||||||||||
Long-lived assets
|
$ | 5,013 | $ | (705 | ) | $ | – | $ | 336 | $ | 4,644 | |||||||||
Provisions and accruals
|
3,324 | (319 | ) | (314 | ) | 234 | 2,925 | |||||||||||||
Deferred revenue
|
1,983 | (115 | ) | – | 115 | 1,983 | ||||||||||||||
Research and development expenses
|
6,662 | (4,602 | ) | – | 538 | 2,598 | ||||||||||||||
Losses carried forward
|
10,172 | (558 | ) | – | – | 9,614 | ||||||||||||||
Deferred tax liabilities
|
||||||||||||||||||||
Long-lived assets
|
(631 | ) | 421 | – | (22 | ) | (232 | ) | ||||||||||||
Research and development tax credits
|
(7,793 | ) | (1,185 | ) | – | (720 | ) | (9,698 | ) | |||||||||||
Total
|
$ | 18,730 | $ | (7,063 | ) | $ | (314 | ) | $ | 481 | $ | 11,834 | ||||||||
Classified as follows:
|
||||||||||||||||||||
Deferred tax assets
|
$ | 18,730 | $ | 16,913 | ||||||||||||||||
Deferred tax liabilities
|
– | (5,079 | ) | |||||||||||||||||
$ | 18,730 | $ | 11,834 |
Balance as at August 31, 2011
|
Credited (charged) to the statement of earnings
|
Credited (charged) to shareholders’ equity
|
Foreign currency translation adjustment
|
Balance as at August 31, 2012
|
||||||||||||||||
Deferred 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 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 tax assets
|
$ | 16,913 | $ | 12,080 | ||||||||||||||||
Deferred tax liabilities
|
(5,079 | ) | (2,105 | ) | ||||||||||||||||
$ | 11,834 | $ | 9,975 |
As at
August 31, 2012
|
As at
August 31, 2011
|
As at
September 1, 2010
|
||||||||||
Temporary deductible differences
|
$ | 270 | $ | 615 | $ | 332 | ||||||
Losses carried forward
|
33,135 | 30,984 | 17,653 | |||||||||
Research and development expenses
|
2,347 | 2,917 | 3,292 | |||||||||
$ | 35,752 | $ | 34,516 | $ | 21,277 |
Canada
|
||||||||||
Year of expiry
|
Federal
|
Provincial
|
Finland
|
United States
|
Other
|
|||||
2013
|
$ ‒
|
$ ‒
|
$ 1,203
|
$ 1,726
|
$ ‒
|
|||||
2014
|
‒
|
‒
|
4,339
|
1,404
|
‒
|
|||||
2015
|
1,182
|
1,182
|
2,877
|
997
|
‒
|
|||||
2016
|
‒
|
‒
|
‒
|
553
|
‒
|
|||||
2017
|
‒
|
‒
|
4
|
‒
|
‒
|
|||||
2018
|
‒
|
‒
|
366
|
‒
|
‒
|
|||||
2020
|
‒
|
‒
|
8,368
|
2,145
|
‒
|
|||||
2021
|
‒
|
‒
|
7,250
|
10,202
|
‒
|
|||||
2022
|
‒
|
‒
|
12,699
|
7,435
|
‒
|
|||||
2023
|
‒
|
‒
|
‒
|
1,972
|
‒
|
|||||
2024
|
‒
|
‒
|
‒
|
1,351
|
‒
|
|||||
2025
|
‒
|
‒
|
‒
|
1,351
|
‒
|
|||||
2026
|
1,090
|
1,090
|
‒
|
1,351
|
‒
|
|||||
2027
|
1,383
|
1,383
|
‒
|
1,351
|
‒
|
|||||
2028
|
‒
|
‒
|
‒
|
2,447
|
‒
|
|||||
2030
|
12
|
12
|
‒
|
2,713
|
‒
|
|||||
2031
|
38
|
38
|
‒
|
109
|
‒
|
|||||
Indefinite
|
‒
|
‒
|
‒
|
‒
|
2,109
|
|||||
$ 3,705
|
$ 3,705
|
$ 37,106
|
$ 37,107
|
$ 2,109
|
(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.
|
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
Basic weighted average number of shares outstanding (000’s)
|
60,453 | 60,000 | ||||||
Plus dilutive effect of:
|
||||||||
Stock options (000’s)
|
149 | 266 | ||||||
Restricted share units (000’s)
|
910 | 1,106 | ||||||
Deferred share units (000’s)
|
118 | 116 | ||||||
Diluted weighted average number of shares outstanding (000’s)
|
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)
|
54 | 381 |
Years ended August 31,
|
||||||||
2012
|
2011
|
|||||||
United States
|
$ | 83,401 | $ | 89,240 | ||||
Canada
|
29,944 | 30,986 | ||||||
Other
|
17,838 | 17,303 | ||||||
Americas
|
131,183 | 137,529 | ||||||
United Kingdom
|
9,862 | 15,617 | ||||||
Other
|
61,449 | 69,698 | ||||||
Europe, Middle-East and Africa
|
71,311 | 85,315 | ||||||
China
|
18,365 | 25,799 | ||||||
Other
|
29,107 | 21,100 | ||||||
Asia-Pacific
|
47,472 | 46,899 | ||||||
$ | 249,966 | $ | 269,743 |
As at August 31, 2012
|
As at August 31, 2011
|
As at September 1, 2010
|
||||||||||||||||||||||||||||||||||
Property, plant and equipment
|
Intangible assets
|
Goodwill
|
Property, plant and equipment
|
Intangible assets
|
Goodwill
|
Property, plant and equipment
|
Intangible assets
|
Goodwill
|
||||||||||||||||||||||||||||
Canada
|
$ | 38,436 | $ | 2,858 | $ | − | $ | 21,206 | $ | 3,164 | $ | − | $ | 15,028 | $ | 3,316 | $ | − | ||||||||||||||||||
United States
|
1,335 | 2,067 | 17,640 | 1,402 | 4,834 | 17,782 | 1,829 | 7,828 | 17,782 | |||||||||||||||||||||||||||
Finland
|
849 | 8,265 | 11,520 | 1,544 | 13,324 | 13,160 | 1,606 | 14,906 | 11,573 | |||||||||||||||||||||||||||
India
|
5,866 | 16 | – | 4,709 | 43 | – | 3,134 | 43 | – | |||||||||||||||||||||||||||
China
|
2,094 | 43 | − | 2,696 | 27 | − | 2,665 | 33 | − | |||||||||||||||||||||||||||
Other
|
1,268 | 883 | − | 519 | 1,509 | − | 468 | 1,821 | − | |||||||||||||||||||||||||||
$ | 49,848 | $ | 14,132 | $ | 29,160 | $ | 32,076 | $ | 22,901 | $ | 30,942 | $ | 24,730 | $ | 27,947 | $ | 29,355 |
●
|
Increasing our wireless presence;
|
●
|
Enable network operators to reduce their operating expenses;
|
●
|
Expanding our share of wallet with Tier-1 network operators; and
|
●
|
Accelerating profitability through execution.
|
o
|
Increase sales by a CAGR* of at least 25%
|
o
|
Raise gross margin to 65%
|
o
|
Increase adjusted EBITDA** in dollars by a CAGR of at least 30%
|
*
|
Compound annual growth rate
|
**
|
EBITDA is defined as net earnings (loss) before interest, income taxes, depreciation of property, plant and equipment, amortization of intangible assets and impairment of goodwill. Adjusted EBITDA represents EBITDA excluding changes in the fair value of the cash contingent consideration and the gain from the disposal of discontinued operations.
|
Corporate Performance Objectives (Fiscal 2010-2012)
|
||||
Results After
|
||||
Objectives
|
Metrics
|
1 Year
|
2 Years
|
3 Years
|
Increase sales by a CAGR of at least:
|
25%
|
32.0%
|
25.4%
|
13.1%
|
Raise gross margin from 61.3% to:
|
65%
|
62.4%
|
62.7%
|
63.3%
|
Increase adjusted EBITDA** in dollars by a CAGR of at least:
|
30%
|
88.8%
|
45.4%
|
-2.2%
|
Consolidated statements of earnings data:
|
2012
|
2011
|
2012
|
2011
|
||||||||||||
Sales
|
$ | 249,966 | $ | 269,743 | 100.0 | % | 100.0 | % | ||||||||
Cost of sales
(1)
|
91,792 | 100,296 | 36.7 | 37.2 | ||||||||||||
Selling and administrative
|
94,139 | 87,062 | 37.7 | 32.3 | ||||||||||||
Net research and development
|
49,854 | 47,927 | 19.9 | 17.7 | ||||||||||||
Depreciation of property, plant and equipment
|
6,169 | 6,655 | 2.5 | 2.5 | ||||||||||||
Amortization of intangible assets
|
7,819 | 9,183 | 3.1 | 3.4 | ||||||||||||
Changes in the fair value of cash contingent consideration
|
(311 | ) | (2,685 | ) | (0.1 | ) | (1.0 | ) | ||||||||
Earnings from operations
|
504 | 21,305 | 0.2 | 7.9 | ||||||||||||
Interest and other income
|
131 | 511 | 0.1 | 0.2 | ||||||||||||
Foreign exchange loss
|
(657 | ) | (3,808 | ) | (0.3 | ) | (1.4 | ) | ||||||||
Earnings (loss) before income taxes
|
(22 | ) | 18,008 | – | 6.7 | |||||||||||
Income taxes
|
3,571 | 8,814 | 1.4 | 3.3 | ||||||||||||
Net earnings (loss) from continuing operations
|
(3,593 | ) | 9,194 | (1.4 | )% | 3.4 | % | |||||||||
Net earnings from discontinued operations
|
– | 12,926 | ||||||||||||||
Net earnings (loss) for the year
|
$ | (3,593 | ) | $ | 22,120 | |||||||||||
Basic and diluted net earnings (loss) from continuing operations per share
|
$ | (0.06 | ) | $ | 0.15 | |||||||||||
Basic net earnings (loss) per share
|
$ | (0.06 | ) | $ | 0.37 | |||||||||||
Diluted net earnings (loss) per share
|
$ | (0.06 | ) | $ | 0.36 | |||||||||||
Other selected information:
|
||||||||||||||||
Gross margin
(2)
|
$ | 158,174 | $ | 169,447 | 63.3 | % | 62.8 | % | ||||||||
Research and development data:
|
||||||||||||||||
Gross research and development
|
$ | 59,282 | $ | 57,226 | 23.7 | % | 21.2 | % | ||||||||
Net research and development
|
$ | 49,854 | $ | 47,927 | 19.9 | % | 17.7 | % | ||||||||
Restructuring changes included in:
|
||||||||||||||||
Cost of sales
|
$ | 264 | $ | – | 0.1 | % | – | % | ||||||||
Selling and administrative expenses
|
$ | 1,181 | $ | – | 0.5 | % | – | % | ||||||||
Net research and development expenses
|
$ | 884 | $ | – | 0.4 | % | – | % | ||||||||
Adjusted EBITDA
(2)
|
$ | 13,524 | $ | 30,583 | 5.4 | % | 11.3 | % | ||||||||
Consolidated balance sheets data:
|
||||||||||||||||
Total assets
|
$ | 306,683 | $ | 322,355 |
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(2)
|
Refer to page 72 for non-IFRS measures.
|
Years ended
|
||||||||||||
August 31, 2012
|
August 31, 2011
|
Change in %
|
||||||||||
Physical-layer solutions
|
$ | 135,141 | $ | 158,002 | (14.5 | ) % | ||||||
Protocol-layer solutions
|
113,700 | 108,946 | 4.4 | |||||||||
Foreign exchange gains on forward exchange contracts
|
1,125 | 2,795 | (59.7 | ) | ||||||||
Total sales
|
$ | 249,966 | $ | 269,743 | (7.3 | ) % |
Expiry dates
|
Contractual
amounts
|
Weighted average contractual
forward rates
|
||||||
September 2012 to August 2013
|
$ | 23,000,000 | 1.0228 | |||||
September 2013 to August 2014
|
3,600,000 | 1.0439 | ||||||
Total
|
$ | 26,600,000 | 1.0256 |
(a)
|
Inventories
|
(b)
|
Income taxes
|
(c)
|
Impairment of non-financial assets
|
i)
|
Growth rates
|
ii)
|
Discount rate
|
NetHawk CGU
|
$ | 11,520,000 | ||
Brix CGU
|
17,640,000 | |||
Total
|
$ | 29,160,000 |
*
|
Gross margin represents sales less cost of sales, excluding depreciation and amortization.
|
**
|
EBITDA is defined as net earnings (loss) before interest, income taxes, depreciation of property, plant and equipment and amortization of intangible assets. Adjusted EBITDA represents EBITDA excluding changes in the fair value of the cash contingent consideration and the gain from the disposal of discontinued operations.
|
Year ended
August 31, 2012
|
Year ended
August 31, 2011
|
|||||||
IFRS net earnings (loss) for the year
|
$ | (3,593 | ) | $ | 22,120 | |||
Add (deduct):
|
||||||||
Depreciation of property, plant and equipment
|
||||||||
Continuing operations
|
6,169 | 6,655 | ||||||
Discontinued operations
|
– | 14 | ||||||
Amortization of intangible assets
|
||||||||
Continuing operations
|
7,819 | 9,183 | ||||||
Discontinued operations
|
– | 4 | ||||||
Interest and other income (continuing operations)
|
(131 | ) | (511 | ) | ||||
Income taxes
|
||||||||
Continuing operations
|
3,571 | 8,814 | ||||||
Discontinued operations
|
– | 201 | ||||||
EBITDA for the year
|
13,835 | 46,480 | ||||||
Changes in fair value of cash contingent consideration
|
(311 | ) | (2,685 | ) | ||||
Gain on disposal of discontinued operations
|
– | (13,212 | ) | |||||
Adjusted EBITDA for the year
|
$ | 13,524 | $ | 30,583 | ||||
EBITDA in percentage of total sales
|
5.5 | % | 17.1 | % | ||||
Adjusted EBITDA in percentage of total sales
|
5.4 | % | 11.3 | % |
Year ended
August 31, 2012
|
Year ended
August 31, 2011
|
|||||||
Sales from continued operations
|
$ | 249,966 | $ | 269,743 | ||||
Sales from discontinued operations
|
– | 1,991 | ||||||
Total sales
|
$ | 249,966 | $ | 271,734 |
1
st
quarter
(2)
|
2
nd
quarter
(2)
|
3
rd
quarter
(2)
|
4
th
quarter
|
Year ended
August 31,
|
||||||||||||||||
2012
|
||||||||||||||||||||
Sales
|
$ | 66,388 | $ | 66,917 | $ | 59,505 | $ | 57,156 | $ | 249,966 | ||||||||||
Cost of sales
(1)
|
$ | 23,370 | $ | 23,616 | $ | 23,549 | $ | 21,257 | $ | 91,972 | ||||||||||
Earnings (loss) from operations
|
$ | 2,428 | $ | 4,109 | $ | (4,355 | ) | $ | (1,678 | ) | $ | 504 | ||||||||
Net earnings (loss)
|
$ | 2,887 | $ | 954 | $ | (3,720 | ) | $ | (3,714 | ) | $ | (3,593 | ) | |||||||
Basic and diluted net earnings (loss) per share
(3)
|
$ | 0.05 | $ | 0.02 | $ | (0.06 | ) | $ | (0.06 | ) | $ | (0.06 | ) |
1
st
quarter
(2)
|
2
nd
quarter
(2)
|
3
rd
quarter
(2)
|
4
th
quarter
|
Year ended
August 31,
|
||||||||||||||||
2011
|
||||||||||||||||||||
Sales
|
$ | 65,653 | $ | 72,046 | $ | 67,630 | $ | 64,414 | $ | 269,743 | ||||||||||
Cost of sales
(1)
|
$ | 24,785 | $ | 27,821 | $ | 24,243 | $ | 23,447 | $ | 100,296 | ||||||||||
Earnings from operations
|
$ | 5,156 | $ | 6,782 | $ | 3,489 | $ | 5,878 | $ | 21,305 | ||||||||||
Net earnings from continuing operations
|
$ | 1,166 | $ | 1,674 | $ | 1,757 | $ | 4,597 | $ | 9,194 | ||||||||||
Net earnings
|
$ | 14,092 | $ | 1,674 | $ | 1,757 | $ | 4,597 | $ | 22,120 | ||||||||||
Basic net earnings from continuing operations per share
(3)
|
$ | 0.02 | $ | 0.03 | $ | 0.03 | $ | 0.08 | $ | 0.15 | ||||||||||
Diluted net earnings from continuing operations per share
|
$ | 0.02 | $ | 0.03 | $ | 0.03 | $ | 0.07 | $ | 0.15 | ||||||||||
Basic net earnings per share
(3)
|
$ | 0.24 | $ | 0.03 | $ | 0.03 | $ | 0.08 | $ | 0.37 | ||||||||||
Diluted net earnings per share
|
$ | 0.23 | $ | 0.03 | $ | 0.03 | $ | 0.07 | $ | 0.36 |
(1)
|
The cost of sales is exclusive of depreciation and amortization.
|
(2)
|
IFRS net earnings (loss) for these periods, previously disclosed, have been adjusted to reflect the final choice of first-year adoption of IFRS of the accounting policy for measuring long-term, non-refundable research and development tax credits in the fourth quarter of fiscal 2012. Please refer to note 3 to our fiscal 2012 consolidated financial statements for details about this change of accounting policy.
|
(3)
|
Per share data is calculated independently for each quarter presented. Therefore, the sum of this quarterly information does not equal the corresponding annual information.
|
1.
|
to receive the consolidated financial statements of the Corporation for the financial year ended August 31, 2012, and the Auditor’s report thereon;
|
2.
|
to elect Directors of the Corporation;
|
3.
|
to appoint PricewaterhouseCoopers LLP as auditors and to authorize the Audit Committee to fix their remuneration;
|
4.
|
to transact such further or other business as may properly come before the Meeting or any adjournment or adjournments thereof.
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
/s/ Benoit Ringuette | |
Benoit Ringuette | |
Secretary |
q
|
(A)
|
Mr. Germain Lamonde of St-Augustin-de-Desmaures, Quebec, or failing him, Mr. Pierre Plamondon of Quebec, Quebec;
|
q
|
(B)
|
________________________________________ of ___________________________________________;
|
To elect:
|
(MARK WITH AN X)
|
|
Pierre-Paul Allard whose city of residence is indicated in the Management Proxy Circular, as Director of the Corporation.
|
FOR
ABSTENTION
|
q
q
|
Darryl Edwards whose city of residence is indicated in the Management Proxy Circular, as Director of the Corporation.
|
FOR
ABSTENTION
|
q
q
|
Germain Lamonde whose city of residence is indicated in the Management Proxy Circular, as Director of the Corporation.
|
FOR
ABSTENTION
|
q
q
|
Guy Marier whose city of residence is indicated in the Management Proxy Circular, as Director of the Corporation.
|
FOR
ABSTENTION
|
q
q
|
To appoint PricewaterhouseCoopers LLP as auditors and to authorize the Audit Committee to fix their remuneration.
|
FOR
ABSTENTION
|
q
q
|
* A shareholder is entitled to appoint, to attend and act for and on behalf of such shareholder at the Meeting, a person other than the person mentioned in (A) herein above and may do so by checking (B) hereinabove and adding the name of such other person in the space reserved for such purpose.
|
DATED this day of
_____________________________________________
SIGNATURE OF SHAREHOLDER
[ ]
name of shareholder
[ ]
|
Name of Shareholder
|
Number of
Subordinate
Voting Shares
|
Percentage of Voting
Rights Attached to
All Subordinate
Voting Shares
|
Number of
Multiple Voting
Shares
(1)
|
Percentage of Voting
Rights Attached to
All Multiple Voting
Shares
|
Percentage of Voting
Rights Attached to All
Subordinate and
Multiple Voting Shares
|
Germain Lamonde
|
4,171,069
(2)
|
14.47%
|
31,643,000
(3)
|
100%
|
92.86%
|
EdgePoint Investment Group, Inc.
|
4,032,700
|
13.99%
|
–
|
–
|
1.17%
|
(1)
|
The holder of Multiple Voting Shares is entitled to 10 votes for each share.
|
(2)
|
Mr. Lamonde exercises control over 4,000,000 Subordinate Voting Shares through G. Lamonde Investissements Financiers inc., a company controlled by Mr. Lamonde.
|
(3)
|
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.
|
GERMAIN LAMONDE
|
||
|
St-Augustin-de-Desmaures, Quebec, Canada
Director since
September 1985
Not Independent (Management)
Principal Occupation: Chairman of the Board of Directors, President and Chief Executive Officer of the Corporation
|
Germain Lamonde
, a company founder, has been President and Chief Executive Officer of EXFO since its inception in 1985. He has also been Chairman of the Board since EXFO went public in 2000. Responsible for the overall management and strategic direction of EXFO, Mr. Lamonde has grown the company from the ground up into a global leader in the test and measurement and systems and service assurance industry. Mr. Lamonde has served on the board of directors of several organizations such as the Canadian Institute for Photonic Innovations, the POLE QCA Economic Development Corporation, the National Optics Institute of Canada (INO) and Laval University, to name a few. Germain Lamonde holds a bachelor's degree in physics engineering from the University of Montreal's School of Engineering (
École Polytechnique
), a master's degree in optics from
Université Laval
in Quebec City, and is also a graduate of the Ivey Executive Management Program offered by the University of Western Ontario.
|
Board/Committee Membership
|
Attendance
(1)
|
Principal Board Memberships
|
|
Chairman of the Board of Directors
|
8/8
|
100%
|
–
|
Securities Held
|
As at
|
Subordinate
Voting Shares(#)
|
Multiple Voting
Shares(#)
|
RSUs(#)
|
Total Shares
(2)
and RSUs(#)
|
Total Market Value
(3)
of Shares
(2)
and RSUs (US$)
|
||
August 31, 2012
|
4,140,588
(4)
|
31,643,000
(5)
|
228,920
|
36,012,508
|
173,580,289
|
Options Held as at August 31, 2012
|
|||||||
Date Granted
|
Number(#)
|
Exercise Price (US$)
(6)
|
Total Unexercised(#)
|
Value of Options
Unexercised (US$)
(7)
|
|||
February 1, 2005
December 6, 2005
|
17,942
11,218
|
4.51
4.76
|
17,942
11,218
|
‒
‒
|
|||
Total
|
29,160
|
‒
|
(1)
|
From September 1, 2011 until November 1, 2012, Mr. Lamonde attended 7 meetings in person and 1 meeting by telephone.
|
(2)
|
Includes both Subordinate Voting Shares and Multiple Voting Shares.
|
(3)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2012, which was US$4.82 (CA$4.75). 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, 2012 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, 2012. “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, 2012, which was US$4.82 (CA$4.75). 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, 2012 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 TSX in Canadian dollars.
|
PIERRE-PAUL ALLARD
|
|
Pleasanton, California,
USA
Director since
September 2008
Independent
Principal Occupation: Senior Vice-President, Corporate Strategy and Development at Avaya Inc.
(1)
|
Pierre-Paul Allard
was appointed a member of our Board of Directors in September 2008 and has been a board member of many other technology companies in Canada and in the US. Mr. Allard is Senior Vice-President, Corporate Strategy and Development at Avaya Inc., a global provider of business collaboration and communications solutions. Mr. Allard is responsible for all go-to-market strategy at Avaya, as well as leading Avaya's mergers and acquisitions (M&A), marketing, analyst relations and strategic alliance initiatives on a global basis. Prior to joining Avaya in May 2012, Mr. Allard worked for 19 years at Cisco Systems, Inc., where he most recently held the position of Vice-President, Sales and Operations, Global Enterprise. Previously, Mr. Allard was President of Cisco Systems Canada, and before that he held various management roles at IBM Canada for 12 years. In 2002, Mr. Allard co-chaired the Canadian e-Business Initiative, a private-public partnership aiming to measure the role e-Business plays in increasing productivity levels, job creation and competitive position. In 1998, he was the laureate of the Arista-Sunlife Award, for Top Young Entrepreneur in Large Enterprise, by the Montreal Chamber of Commerce. In 2003, he received the Queen’s Golden Jubilee Medal, which highlights significant contributions to Canada. In the same year, he was also awarded the prestigious Trudeau Medal from the University of Ottawa, Tefler School of Management. Pierre-Paul Allard holds a bachelor’s and masters’ degree in Business Administration from the University of Ottawa, in Canada.
|
Board/Committee Membership
|
Attendance
(2)
|
Principal Board Memberships
|
|||||
Board of Directors
Audit Committee
Human Resources Committee
Independent Board of Directors
|
7/8
3/5
4/5
5/7
|
88%
60%
80%
71%
|
–
|
||||
Securities Held
|
|||||||
As at
|
Subordinate
Voting Shares(#)
|
DSUs(#)
|
Total Shares
and DSUs(#)
|
Total Market Value
(3)
of Shares
(4)
and DSUs (US$)
|
|||
August 31, 2012
|
8,000
|
20,538
|
28,538
|
137,553
|
|||
Options Held as at August 31, 2012
|
|||||||
Date Granted
|
Number(#)
|
Exercise Price (US$)
|
Total Unexercised(#)
|
Value of Options Unexercised (US$)
|
|||
–
|
–
|
–
|
–
|
–
|
(1)
|
Avaya Inc. is a global provider of business collaboration and communications solutions.
|
(2)
|
From September 1, 2011 until November 1, 2012, Mr. Allard attended 5 meetings in person and 2 meetings by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2012, which was US$4.82 (CA$4.75). 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, 2012 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.
|
DARRYL EDWARDS
|
|
Weston Under Wetherley
Warwickshire
United Kingdom
Director since
September 2011
Independent
Principal Occupation:
President and CEO, ECI Telecom
|
Darryl Edwards
was appointed a member of our Board of Directors in September 2011. Mr. Edwards is the President and CEO of ECI Telecom, a leading provider of Access and Transport solution. Prior to leading ECI, Mr. Edwards was the Chairman of the Board for MACH, a leading provider of hub-based mobile communication solutions. He brings to EXFO more than 30 years of telecommunications experience gained from a number of senior executive leadership positions; most recently he was the Chief Executive Officer of AIRCOM International, successfully leading the company through to business sale. Mr. Edwards was previously at Nortel Networks for 17 years, where he held various executive officer positions, including President of EMEA and President of Global Sales (Carrier Networks). He also was the Chief Executive Officer for two of Nortel's key joint ventures, first in the Middle East and later in Germany. Prior to his time at Nortel, Mr. Edwards spent 13 years at GEC-Plessey Telecommunications where he worked in engineering, quality assurance and international sales. He was also an advisor to private equity firm Warburg Pincus, the majority shareholder in MACH, on telecommunications-related topics. Mr. Edwards has held a number of chairs, including Chairman of the Board of Nortel's interests in Turkey, Nortel Netas, which was listed on the Istanbul Stock Exchange. He also was a member of the Advisory Counsel to the Turkish government between 2004 and 2008, and previously served on the UK Government Broadband Stakeholders Group and the Information Age Partnership. Darryl Edwards holds a Higher National Certificate (Physics) from Birmingham Polytechnic in the UK.
|
Board/Committee Membership
|
Attendance
(2)
|
Principal Board Memberships
|
|||||
Board of Directors
Audit Committee
Human Resources Committee
Independent Board of Directors
|
8/8
4/5
5/5
6/7
|
100%
80%
100%
86%
|
WP Roaming Holdings S.A.
|
||||
Securities Held
|
|||||||
As at
|
Subordinate
Voting Shares(#)
|
DSUs(#)
|
Total Shares
and DSUs(#)
|
Total Market Value
(3)
of Shares
(4)
and DSUs (US$)
|
|||
August 31, 2012
|
–
|
4,244
|
4,244
|
20,456
|
|||
Options Held as at August 31, 2012
|
|||||||
Date Granted
|
Number(#)
|
Exercise Price (US$)
|
Total Unexercised(#)
|
Value of Options Unexercised (US$)
|
|||
–
|
–
|
–
|
–
|
–
|
(1)
|
From September 1, 2011 until November 1, 2012, Mr. Edwards attended 6 meetings in person and 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, 2012, which was US$4.82 (CA$4.75). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2012 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(3)
|
Refers to Subordinate Voting Shares.
|
GUY MARIER
|
|
Lakefield Gore, Quebec,
Canada
Director since January 2004
Lead Director from January 2007 until January 2011
Independent
Principal Occupation: Executive Consultant
|
Guy Marier
has served as our Director since January 2004. President of Bell Québec between 1999 and 2003, Mr. Marier completed his successful 33-year career at Bell
(1)
as Executive Vice-President of the Project Management Office, before retiring at the end of 2003. From 1988 to 1990, Mr. Marier headed Bell Canada International’s investments and projects in Saudi Arabia and, for the three following years, served as President of Télébec, limited partnership, a member of the Bell group of companies. He then returned to the parent company to hold various senior management positions. Guy Marier holds a Bachelor of Arts from the University of Montreal and a Bachelor of Business Administration from the
Université du Québec à Montréal.
|
Board/Committee Membership
|
Attendance
(2)
|
Principal Board Memberships
|
|||||
Board of Directors
Audit Committee
Human Resources Committee
Independent Board of Directors
|
8/8
5/5
5/5
7/7
|
100%
100%
100%
100%
|
–
|
||||
Securities Held
|
|||||||
As at
|
Subordinate
Voting Shares(#)
|
DSUs(#)
|
Total Shares
and DSUs(#)
|
Total Market Value
(3)
of Shares
(4)
and DSUs (US$)
|
|||
August 31, 2012
|
1,000
|
36,186
|
37,186
|
179,237
|
|||
Options Held as at August 31, 2012
|
|||||||
Date Granted
|
Number(#)
|
Exercise Price (US$)
|
Total Unexercised(#)
|
Value of Options Unexercised (US$)
|
|||
March 24, 2004
|
12,500
|
4.65
|
12,500
|
–
|
(1)
|
Bell is Canada's largest communications company, providing consumers with solutions to all their communications needs, including telephone services, wireless communications, high-speed Internet, digital television and voice over IP. Bell also offers integrated information and communications technology services to businesses and governments.
|
(2)
|
From September 1, 2011 until November 1, 2012, Mr. Marier attended 7 meetings in person and 1 meeting by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2012, which was US$4.82 (CA$4.75). 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, 2012 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, 2012. “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, 2012, which was US$4.82 (CA$4.75). 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, 2012 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 TSX in Canadian dollars.
|
(a)
|
is, as at the date hereof, or has been, within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company that (i) was subject to an order that was issued while such individual was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after such individual ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;
|
(b)
|
is, as at the date hereof, or has been within 10 years before the date hereof, a director or executive officer of any company that, while such individual was acting in that capacity, or within a year of that individual ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;
|
(c)
|
has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets; or
|
(d)
|
has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for such individual.
|
|
●
|
Mr. Guy Marier (Chairman)
|
|
●
|
Mr. Pierre-Paul Allard
|
|
●
|
Mr. Darryl Edwards
|
|
●
|
Mr. Pierre Marcouiller
|
|
●
|
Ms. Susan Spradley
|
|
●
|
Mr. David A. Thompson (until January 12, 2012);
|
Meeting
|
Main activities of the Human Resources Committee
|
|
October 11, 2011
|
●
|
Review and approval of the Short-Term Incentive Plan for the financial year started September 1, 2011;
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2011;
|
|
●
|
Review and approval of the compensation plans of executive officers for the financial year started September 1, 2011 being the Base Salary, the Short-Term Incentive Plan and the stock-based compensation delivered through the Long-Term Incentive Plan;
|
|
●
|
Review and approval of the stock-based compensation plan for the sales force delivered through the Long-Term Incentive Plan for the financial year started September 1, 2011;
|
|
●
|
Review and approval of the quantum for the stock-based compensation plan for the performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2011;
|
|
●
|
Review and approval of the executive compensation section of the management proxy circular for the financial year ended August 31, 2011 during a Board of Directors meeting;
|
|
●
|
Review of the succession planning program;
|
|
●
|
Review of the Mobilization / Motivation Plan;
|
|
●
|
Review of a coaching program for the CEO;
|
|
●
|
Review and approval of the CEO objectives;
|
|
●
|
Review of the 2012 executive compensation disclosure obligations;
|
|
●
|
Review of the Management Improvement Performance Program.
|
|
January 11, 2012
|
●
|
Review of the quarterly payments under the Short-Term Incentive Plan
for the financial year started September 1, 2011 and being part of the Short-Term Incentive Plan;
|
●
|
Review and approval of the stock-based compensation plan for the performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2011;
|
|
●
|
Review and approval of the CEO objectives and compensation plan;
|
|
●
|
Review of the Mobilization / Motivation Plan;
|
|
●
|
Review of the Management Improvement Performance Program;
|
|
●
|
Review of the sales forces commissions plans;
|
|
●
|
Review of the succession planning program.
|
|
March 27, 2012
|
●
|
Review of the quarterly payments under the Short-Term Incentive Plan
for the financial year started September 1, 2011 and being part of the Short-Term Incentive Plan;
|
●
|
Review and approval of the stock-based compensation delivered through the Long-Term Incentive Plan;
|
|
●
|
Review of the sales compensation plans;
|
|
●
|
Review of the employee mobilization survey;
|
|
●
|
Review of the succession planning program.
|
|
June 28, 2012
|
●
|
Review of the quarterly payments under the Short-Term Incentive Plan for the financial year started September 1, 2011 and being part of the Short-Term Incentive Plan;
|
●
|
Confirmation of the members’ biographies;
|
|
●
|
Introduction to the Risk Assessment of Executive Compensation;
|
|
●
|
Status update on the employee mobilization survey;
|
|
●
|
Review of the Structure Realignment;
|
|
●
|
Review of the Restructuring Activities;
|
|
●
|
Review of the Management Framework Renewal;
|
|
●
|
Review of the sales forces commissions plans;
|
|
●
|
Determination by the Members of their respective DSU percentage of their Annual Retainer.
|
|
October 9, 2012
|
●
|
Review and approval of the Short-Term Incentive Plan for the financial year started September 1, 2012;
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2012;
|
|
●
|
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;
|
|
●
|
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.
|
Type of Fee
|
Financial 2011 Fees
|
Percentage of
Financial 2011 Fees
|
Financial 2012 Fees
|
Percentage of
Financial 2012 Fees
|
||||
Executive Compensation Related Fees
|
CA$7,035
|
43%
|
CA$1,780
|
3%
|
||||
All Other Fees
|
CA$9,245
|
57%
|
CA$57,314
|
97%
|
||||
Total
|
CA$16,280
|
100%
|
CA$59,094
|
100%
|
(1)
|
2009 Mercer Benchmark Database, which contains compensation data for selected Canadian companies with median annual revenues of CA$325 million. The following is a list of the main companies, with a particular emphasis on the high-technology/telecommunications and manufacturing-durable goods industries, servicing industries, revenue categories and geography, used for the purposes of setting 2010 compensation: Arcan Resources Ltd.; Linamar Corporation; Arsenal Energy Inc.; Livingston International; Baytex Energy Trust; Logistec Corporation; Canadian Hydro Developers Inc.; MacDonald, Dettwiler and Associates Corporation – Quebec; Canadian Pacific; Pason Systems Inc.; CE Franklin Ltd.; Precision Drilling Trust; Centerra Gold Inc.; RDM Corporation; Compton Petroleum Corporation; SNC-Lavalin; Computer Modelling Group Ltd.; Softchoice Corp.; Crew Energy Inc.; Stantec Inc.; Enerflex Systems Ltd.; Teck Resources Limited; Labopharm Inc.; TeraGo Networks Inc.; 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, CFO
|
37.5%
|
|
Stephen Bull, Vice-President, Research and Development
|
35.0%
|
|
Sylvain Rouleau, Vice-President, Human Capital
|
25.0%
|
(1)
|
Dana Yearian, Vice-President, Sales Americas
|
88.7%
|
(1)
|
Representing the percentage of the base salary actually received for the financial year ended August 31, 2012.
|
·
|
Short-Term Incentive Plan
|
Base Salary
|
X
|
Annual Incentive Target (%)
|
X
|
Business Performance Measures (%)
|
X
|
Individual Performance Measures (%)
|
Business Performance Measure
|
Weight
(3)
|
Annual Target
(4)
|
Result (%)
(3) (4)
|
Sales
(1)
|
35%
|
330.8 million
|
18.4%
|
EBITDA
(1)
|
25%
|
42.8 million
|
5.3%
|
Gross margin
(2)
|
15%
|
63.70 %
|
13.8%
|
Quality
(2)
|
15%
|
0.40%
|
17.2%
|
On-time delivery
(2)
|
10%
|
95%
|
11.1%
|
Total 100%
|
65.8%
|
(1)
|
For sales and EBITDA metrics, results will range from nil to 150% of the weight upon attainment of a minimum of 50% of the annual target and a maximum of 150% of the annual target.
|
(2)
|
For gross margin, quality and on-time delivery metrics, result will range from nil to 100% of the weight upon attainment of a minimum threshold of 57.7%, 0.7% and 87%, respectively, up to the annual target and from 100% to 150% from the annual target to the maximum threshold of 66.7%, 0.20% and 98%, respectively.
|
(3)
|
Calculated on a quarterly basis for each of the first three quarters (20% per quarter) and on annual basis at year-end (40%).
|
(4)
|
Quarterly targets and results are used for the quarterly calculations of the first three quarters mentioned above.
|
Germain Lamonde, CEO
|
||
Elements of Individual Performance Measures
|
Weight
(from 0% to 125%)
|
Result
(%)
|
Financial
|
||
Corporate revenues
|
From 0% to 30%
|
14.84
|
Corporate EBITDA
|
From 0% to 20%
|
0.00
|
Corporate gross margin
|
From 0% to 20%
|
17.38
|
Strategic
|
||
Corporate Structure
|
From 0% to 20%
|
15.00
|
Establishment and implementation of a three year Strategic Plan
|
From 0% to 15%
|
13.00
|
Increase market presence with wireless customers
|
From 0% to 10%
|
10.00
|
Establishment and implementation of development plans for key executives
|
From 0% to 10%
|
6.00
|
Total
|
76.22
|
Pierre Plamondon, CFO
|
|||
Elements of Individual Performance Measures
|
Weight
(from 0% to 125%)
|
Result
(%)
|
|
Profitability and cash management
|
Weight
|
From 0% to 30%
|
21.10
|
Adjusted EBITDA
|
30%
|
||
Controls on operating expenses
|
20%
|
||
Maximizing cash flows from operations
|
30%
|
||
Controls on the Corporation’s corporate G&A expenses
|
20%
|
||
Information Technology and Information Management
|
Weight
|
From 0% to 27.5%
|
24.00
|
Delivering management information for the Corporation’s business.
|
35%
|
||
Delivering Contribution Margin information
|
25%
|
||
Improving information technology security risk management
|
25%
|
||
Assuring efficient transition to IFRS
|
15%
|
||
Financial Integrity & Risk Management
|
Weight
|
From 0% to 25%
|
25.00
|
Maintaining the highest standard of integrity and compliance in the Corporation’s financial reporting
|
40%
|
||
Reporting and addressing pro-actively risks and issues of any sorts that might adversely affect the Corporation
|
35%
|
||
Attaining SOX-404 certification
|
25%
|
||
Strategic Contribution
|
Weight
|
From 0% to 22.5%
|
18.60
|
Delivering the Strategies and Objectives under the NEO’s responsibility as set forth in the Corporation’s strategic plan
|
50%
|
||
Contributing to the Corporation’s annual review of the strategic plan
|
50%
|
||
Contribution to Mergers & Acquisitions Activities
|
Weight
|
From 0% to 20%
|
17.00
|
Strategic contribution to the Mergers & Acquisitions process
|
50%
|
||
Establishment and implementation of adequate and efficient tools, systems and controls in all acquired targets
|
50%
|
||
Total
|
105.70
|
Stephen Bull, Vice-President Research and Development
|
|||
Elements of Individual Performance Measures
|
Weight
(from 0% to 125%)
|
Result
(%)
|
|
R&D throughput and Return on Investment (“ROI”)
|
Weight
|
From 0% to 35%
|
19.95
|
Maximizing R&D throughput
|
30%
|
||
Contributing to improving ROI, reducing cost of goods (“COG”) and Cost Reduction Activities
|
20%
|
||
Improving team contribution and motivation
|
20%
|
||
Implementing a corporate program management
|
20%
|
||
R&D voluntary employee turnover rate in India
|
10%
|
||
Contribution to profitability
|
Weight
|
From 0% to 30%
|
26.19
|
Corporate gross margin
|
60%
|
||
Establishment and implementation of a three years Cost Reduction Plan within the Corporation’s strategic plan
|
40%
|
Stephen Bull, Vice-President Research and Development
|
|||
Elements of Individual Performance Measures
|
Weight
(from 0% to 125%)
|
Result
(%)
|
|
Strategic Contribution
|
Weight
|
From 0% to 30%
|
23.10
|
Delivering the Strategies and Objectives under the NEO’s responsibility as set forth in the Corporation’s strategic plan
|
50%
|
||
Contributing to continuous improvement on security of strategic confidential information and intellectual property within the Corporation
|
30%
|
||
Increase the competitiveness of the R&D team
|
20%
|
||
Improving Customer Satisfaction
|
Weight
|
From 0% to 30%
|
14.85
|
Achieving the corporate quality indicator
|
30%
|
||
Improve customer feedbacks closing time
|
25%
|
||
Improve software quality for all products and solutions
|
25%
|
||
Respecting projects & programs schedules
|
20%
|
||
Total
|
84.09
|
Base Salary
|
X
|
Annual Incentive Target (%)
|
X
|
Business Performance Measures (%)
|
·
|
The Sales Incentive Plan
|
Business Performance Measure
|
Revenue Target (US$)
|
Result (US$)
|
|
Bookings Commissions
(1)
|
80,000
|
72,159
|
|
Contribution Margin Commissions
(2)
|
80,000
|
59,194
|
|
Personal objective (Quarterly Bonus on Sales)
(3)
|
Q1 2,500
Q2 2,500
Q3 2,500
Q4 2,500
|
5,824
|
|
Products Lines Sales Bonus
(4)
|
10,000
|
5,293
|
|
Tier 1 Operators accelerator commissions
(5)
|
10,000
|
7,381
|
|
TOTAL
|
149,851
|
(1)
|
The compensation rate for the attainment of revenue targets for the territory of the Americas is equal to the Revenue 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.
|
(2)
|
The commission rate for the attainment of the contribution margin targets for the territory of the Americas is equal to the revenue 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.
|
(3)
|
The compensation for personal objectives is based on the quarterly achievement of the sales bookings within the territory of the Americas. 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.
|
(4)
|
The compensation for products lines sales objectives is based on the achievement within such products lines of annual sales bookings for the territory of the Americas. A commission rate is applied for each products line from 50% to 100% of the attainment of such products lines objectives. An accelerator for each products line is applied after attaining 100% of the products lines objectives.
|
(5)
|
Annually the Corporation determines a list of Tier 1 Operators for the territory of the Americas for which the NEO will be specifically commissioned. A commission rate is applied from 0% to 100% of the attainment of the objective. An accelerator is applied after attaining 100% of the objective.
|
·
|
Long-Term Incentive
Plan
|
Name & Position
|
Grant Levels
(1)
(% of base salary)
|
|
Germain Lamonde, CEO
|
70%
|
|
Pierre Plamondon, CFO
|
40%
|
|
Stephen Bull, Vice-President, Research and Development
|
40%
|
|
Sylvain Rouleau, Vice-President, Human Capital
|
30%
|
(2)
|
Dana Yearian, Vice-President, Sales Americas
|
40%
|
(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.
|
(2)
|
Representing the percentage of the base salary actually received for the financial year ended August 31, 2012.
|
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 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.
|
|
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 3 years of the grant date if performance is achieved (long-term growth of revenue and profitability). Otherwise 100% vested after 5 years of the grant date.
|
Financial
year ended
|
Grant Date
|
RSU
granted
(#)
|
Fair Value
at the Time
of Grant
(US$/RSU)
|
Vesting schedule
|
August 31, 2008
|
October 23, 2007
|
29,000
|
6.28
|
50% on each of the third and fourth anniversary dates of the grant.
|
January 15, 2008
|
76,200
|
4.16
|
||
April 8, 2008
|
21,600
|
6.09
|
||
April 22, 2008
|
185,570
|
5.82
|
||
July 7, 2008
|
71,310
|
4.39
|
||
October 23, 2007
|
86,167
|
6.28
|
100% on the fifth anniversary date of the grant subject to early vesting of up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation, are fully attained.
|
·
|
Restricted Share Unit Grants in Last Financial Year
|
Name
|
RSUs
granted (#)
|
Percentage of Total RSUs Granted to Employees in
Financial Year (%)
(1)
|
Fair Value at
the Time of
Grant
(US$/RSU)
(2)
|
Grant Date
|
Vesting schedule
(3)
|
Germain Lamonde
|
53,261
|
15.90%
|
5.43
|
October 18, 2011
|
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)
|
Pierre Plamondon
|
17,325
|
5.17%
|
5.43
|
October 18, 2011
|
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
|
15,490
|
4.63%
|
5.43
|
October 18, 2011
|
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)
|
Sylvain Rouleau
|
7,576
|
2.26%
|
6.55
|
January 23, 2012
|
50% after 3 and 4 years of the grant date.
|
6,330
|
1.89%
|
6.55
|
January 23, 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
|
15,322
|
4.58%
|
5.43
|
October 18, 2011
|
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, 2012 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 (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, 2014, 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, 2014. 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, 2015.
|
Number of
RSUs (#)
|
% of Issued and
Outstanding RSUs
|
Weighted Average Fair Value at the Time of Grant ($US/RSU)
|
||||
President and CEO (one individual)
|
228,920
|
17.11
|
%
|
4.54
|
||
Board of Directors (five individuals)
(1)
|
–
|
–
|
–
|
|||
Management and Corporate Officers (ten individuals)
|
532,473
|
39.80
|
%
|
4.29
|
(1)
|
Six individuals from September 1, 2011 until January 12, 2012.
|
Number of
Options (#)
|
% of Issued and
Outstanding Options
|
Weighted Average Exercise
Price ($US/Security)
|
|
President and CEO (one individual)
|
29,160
|
11.93%
|
4.61
|
Board of Directors (one individual)
|
12,500
|
5.12%
|
4.65
|
Management and Corporate Officers (two individuals)
|
14,494
|
5.93%
|
4.98
|
·
|
Deferred Share Unit Plan
|
·
|
Deferred Share Unit Grants in Last Financial Year
|
DSUs #
|
Weighted Average Fair Value
at the Time of Grant (US$/DSU)
|
Total of the Fair Value
at the Time of Grant (US$)
|
Vesting
|
22,792
|
5.86
|
133,561
|
At the time director ceases to be a member of the Board of Directors of the Corporation
|
Number of
DSUs (#)
|
% of Issued and
Outstanding DSUs
|
Total of the Fair Value
at
the Time of Grant (US$)
|
Weighted Average Fair Value
at the Time of Grant (US$/DSU)
|
|
Board of Directors (five individuals)
|
133,090
|
100%
|
678,956
|
5.10
|
·
|
Number of Subordinate Voting Shares Reserved for Future Issuance
|
·
|
Stock Appreciation Rights Plan
|
Number of SARs exercised
|
Aggregate Value Realized (US$)
(1)
|
‒
|
‒
|
(1)
|
The aggregate value realized is equivalent to the market value of the securities underlying the SARs at exercise. This value, as the case may be, has been converted from Canadian dollars to U.S. dollars based on the noon buying rate of the Bank of Canada on the day of exercise.
|
Long-Term Incentive Plan (LTIP) - RSUs
|
|||
Date of Grant
|
Vesting Date
|
% of early vesting achievement
(1)
|
|
October 22, 2008
|
October 22, 2012
|
8%
|
|
October 22, 2008
|
October 22, 2012
|
0%
|
|
October 20, 2009
|
October 22, 2012
|
39%
|
(1)
|
The vesting schedules are provided in the table under the heading “Long-Term Incentive Plan”.
|
Compensation Elements
|
2012
|
2011
|
2010
|
3-Year Total
|
||||
Cash
|
||||||||
Base Salary
|
CA$441,000
|
CA$420,000
|
CA$400,000
|
CA$1,261,000
|
||||
Short-term incentive
|
CA$143,784
|
CA$216,626
|
CA$257,127
|
CA$617,537
|
||||
Equity
|
||||||||
Long-term incentive
|
CA$294,001
|
(1)
|
CA$280,003
|
(1)
|
CA$259,698
|
(1)
|
CA$833,702
|
(1)
|
Total Direct Compensation
|
CA$878,785
|
CA$916,629
|
CA$916,825
|
CA$2,712,239
|
||||
Pension Value
|
–
|
–
|
–
|
–
|
||||
All Other Compensation
|
–
|
–
|
–
|
–
|
||||
Total Compensation
|
CA$878,785
|
CA$916,629
|
CA$916,825
|
CA$2,712,239
|
||||
Annual Average
|
–
|
–
|
–
|
CA$940,080
|
||||
Total Market Capitalization Growth (CA$ millions)
|
(105.6)
|
(2)
|
40.8
|
(2)
|
156.2
|
(2)
|
91.4
|
(2)
|
Total Cost as a % of Market Capitalization Growth
|
(0.8)%
|
2.2%
|
0.6%
|
3.0%
|
(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 & Analysis – Long-Term Incentive Plan”.
|
(2)
|
Includes the redemption of 3,600, nil and 438,894 Subordinate Voting Shares respectively in fiscal 2010, 2011 and 2012 under the normal course issuer bid and substantial issuer bid of the Corporation during these years.
|
Name and
Principal Position
|
Financial
Year
|
Salary
(1) (2)
($)
|
Share-Based
Awards
(2)
(3)
($)
|
Option-based
Awards
($)
|
Non-equity incentive
plan compensation ($)
|
Pension
value ($)
|
All other
compensation
($)
(2) (5)
|
Total
Compensation
($)
|
|
Annual
Incentive
plans
(2) (4)
|
Long-term
Incentive
plans
|
||||||||
Germain Lamonde,
President and Chief
Executive Officer
|
2012
|
436,893
(US)
441,000
(CA)
|
291,263
(US)
294,001
(CA)
|
–
|
142,446
(US)
143,784
(CA)
|
–
|
–
|
–
|
870,602
(US)
878,785
(CA)
|
2011
|
424,500
(US)
420,000
(CA)
|
283,003
(US)
280,003
(CA)
|
–
|
218,947
(US)
216,626
(CA)
|
–
|
–
|
–
|
926,450
(US)
916,629
(CA)
|
|
2010
|
382,922
(US)
400,000
(CA)
|
248,610
(US)
259,698
(CA)
|
–
|
246,149
(US)
257,127
(CA)
|
–
|
–
|
–
|
877,681
(US)
916,825
(CA)
|
|
Pierre Plamondon,
Vice-President,
Finance and
Chief Financial
Officer
|
2012
|
245,149
(US)
247,453
(CA)
|
94,743
(US)
95,634
(CA)
|
–
|
63,948
(US)
64,549
(CA)
|
–
|
–
|
9,431
(US)
9,519
(CA)
|
413,271
(US)
417,155
(CA)
|
2011
|
241,646
(US)
239,085
(CA)
|
137,305
(US)
135,850
(CA)
|
–
|
76,569
(US)
75,757
(CA)
|
–
|
–
|
8,747
(US)
8,654
(CA)
|
464,267
(US)
459,346
(CA)
|
|
2010
|
221,137
(US)
231,000
(CA)
|
63,182
(US)
66,000
(CA)
|
–
|
92,060
(US)
96,166
(CA)
|
–
|
–
|
5,777
(US)
6,035
(CA)
|
382,156
(US)
399,202
(CA)
|
|
Stephen Bull,
Vice-President,
Research and
Development
|
2012
|
218,129
(US)
220,180
(CA)
|
84,709
(US)
85,505
(CA)
|
–
|
42,249
(US)
42,646
(CA)
|
–
|
–
|
7,982
(US)
8,057
(CA)
|
353,069
(US)
356,388
(CA)
|
2011
|
216,057
(US)
213,767
(CA)
|
90,323
(US)
93,020
(CA)
|
–
|
65,266
(US)
64,574
(CA)
|
–
|
–
|
12,819
(US)
12,683
(CA)
|
384,465
(US)
384,044
(CA)
|
|
2010
|
186,037
(US)
194,334
(CA)
|
52,900
(US)
55,260
(CA)
|
–
|
66,741
(US)
69,718
(CA)
|
–
|
–
|
4,741
(US)
4,952
(CA)
|
310,419
(US)
324,264
(CA)
|
|
Sylvain Rouleau,
Vice-President,
Human Capital
|
2012
|
135,838
(US) (6)
137,115
(CA)
|
90,925
(US)
91,780
(CA)
|
–
|
22,894
(US)
23,109
(CA)
|
–
|
–
|
4,338
(US)
4,379
(CA)
|
253,995
(US)
256,383
(CA)
|
Dana Yearian,
Vice-President,
Sales — Americas
|
2012
|
214,240
(US)
216,254
(CA)
|
83,198
(US)
83,980
(CA)
|
–
|
149,851
(US)
151,260
(CA)
|
–
|
–
|
7,293
(US)
7,361
(CA)
|
454,582
(US)
458,855
(CA)
|
2011
|
208,000
(US)
205,795
(CA)
|
123,410
(US)
122,102
(CA)
|
–
|
217,246
(US)
214,944
(CA)
|
–
|
–
|
7,350
(US)
7,272
(CA)
|
556,006
(US)
550,113
(CA)
|
|
2010
|
200,000
(US)
208,920
(CA)
|
57,001
(US)
59,544
(CA)
|
–
|
170,297
(US)
177,892
(CA)
|
–
|
–
|
8,502
(US)
8,881
(CA)
|
435,801
(US)
455,237
(CA)
|
(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$1.0094 = US$1.00 for the financial year ended August 31, 2012, CA$0.9894 = US$1.00 for the financial year ended August 31, 2011 and CA$1.0446 = US$1.00 for the financial year ended August 31, 2010.
|
(3)
|
Indicates the dollar amount based on the grant date fair value of the RSUs awarded under the LTIP for the financial year. The grant date fair value is equal to the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Bank of Canada on the grant date to convert the NASDAQ National Market closing price to Canadian dollars. Grants of RSUs to NEOs are detailed under section “Compensation Discussion & Analysis – Long-Term Incentive Plan”.
|
(4)
|
Indicates the total bonus earned during the financial year whether paid during the financial year or payable on a later date:
|
Name
|
Paid during the
financial year ended
August 31, 2012
(i)
($)
|
Paid in the first quarter
of the financial year
ending on August 31, 2013
(i)
($)
|
Total bonus earned during
the financial year
ended August 31, 2012
(i)
($)
|
||||
Germain Lamonde
|
112,297
113,352
|
(US)
(CA)
|
30,149
30,432
|
(US)
(CA)
|
142,446
143,784
|
(US)
(CA)
|
|
Pierre Plamondon
|
36,353
36,694
|
(US)
(CA)
|
27,595
27,855
|
(US)
(CA)
|
63,948
64,549
|
(US)
(CA)
|
|
Stephen Bull
|
30,190
30,474
|
(US)
(CA)
|
12,059
12,172
|
(US)
(CA)
|
42,249
42,646
|
(US)
(CA)
|
|
Sylvain Rouleau
|
8,777
8,860
|
(US)
(CA)
|
14,117
14,249
|
(US)
(CA)
|
22,894
23,109
|
(US)
(CA)
|
|
Dana Yearian
|
123,923
125,088
|
(US)
(CA)
|
25,928
26,172
|
(US)
(CA)
|
149,851
151,260
|
(US)
(CA)
|
(i)
|
Refer to note 2 above.
|
(5)
|
Indicates the amount contributed by the Corporation during the financial year to the Deferred Profit-Sharing Plan as detailed under section “Compensation Discussion & Analysis – Deferred Profit-Sharing Plan”, 401K Plan as detailed under section “Compensation Discussion & Analysis – 401K Plan”, as applicable, for the benefit of the NEOs. Mr. Lamonde is not eligible to participate in the Deferred Profit Sharing Plan.
|
(6)
|
This amount represents the salary paid to Mr. Sylvain Rouleau from January 23, 2012 until August 31, 2012 which is based on an annual salary amounted to US$227,858 (CA$230,000) for the financial year ended August 31, 2012.
|
Name
|
Outstanding Option-based Awards (Options)
|
Outstanding Share-based Awards (RSUs)
|
|||||
Number of securities
underlying
unexercised options
(#)
|
Option
Exercise
Price
(1)
|
Option
expiration
date
|
Value
(2)
of
unexercised
in-the-money
options
(3)
|
Number of
shares
or units of
shares
that have not
vested (#)
|
Market or
payout
value of share-based
awards that
have not vested
(US$)
(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
|
–
–
|
228,920
|
1,103,394
|
–
|
11,218
|
4.76
(US)
5.50
(CA)
|
Dec. 6, 2015
|
–
–
|
||||
Pierre Plamondon
|
5,383
|
5.13
(US)
6.28
(CA)
|
Oct. 26, 2014
|
–
–
|
96,854
|
466,836
|
–
|
3,653
|
4.76
(US)
5.50
(CA)
|
Dec. 6, 2015
|
–
–
|
||||
Stephen Bull
|
–
|
–
|
–
|
–
|
75,101
|
361,987
|
–
|
Sylvain Rouleau
|
–
|
–
|
–
|
–
|
13,906
|
67,027
|
–
|
Dana Yearian
|
–
|
–
|
–
|
–
|
97,002
|
467,550
|
–
|
(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, 2012. “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, 2012, which was US$4.82 (CA$4.75). 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, 2012 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 TSX 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, 2012, which was US$4.82 (CA$4.75). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2012 using the noon buying rate of the Bank of Canada to convert the NASDAQ National Market closing price to Canadian dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
Name
|
Exercised Option-based Awards (Options)
|
||||||
Number of securities underlying exercised options (#)
|
Option Exercise Price (US$)
|
Option grant date
|
Gains realized (US$)
|
||||
Germain Lamonde
|
50,000
|
1.58
|
(1)
|
September 25, 2002
|
118,376
|
(2)
|
|
Pierre Plamondon
|
–
|
–
|
–
|
– | |||
Stephen Bull
|
–
|
–
|
–
|
– | |||
Sylvain Rouleau
|
–
|
–
|
–
|
– | |||
Dana Yearian
|
–
|
–
|
–
|
– |
(1)
|
These options were granted in Canadian dollars. The exercise price was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on the business day preceding the grant date using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars on the grant date.
|
(2)
|
The gain realized is the difference between the market value of the underlying Subordinate Voting Shares at the time of the exercise and the exercise or base price of the option. The market value of the Subordinate Voting Shares at the time of exercise was converted from Canadian dollars to United States dollars based upon the noon buying rate of the Bank of Canada on the exercise date.
|
Name
|
Share-based awards – value
vested during the year (US$)
(1)
|
Non-equity incentive plan compensation –
Value earned during the year (US$)
(2)
|
||
Germain Lamonde
|
262,593
|
142,446
|
||
Pierre Plamondon
|
92,083
|
63,948
|
||
Stephen Bull
|
83,290
|
42,249
|
||
Sylvain Rouleau
|
‒
|
22,894
|
||
Dana Yearian
|
78,445
|
149,851
|
(1)
|
The aggregate dollar value realized is equivalent to the market value of the Subordinate Voting Shares underlying the RSUs at vesting. This value, as the case may be, has been converted from Canadian dollars to US dollars based upon the noon buying rate of the Bank of Canada on the day of vesting.
|
(2)
|
Includes total non-equity incentive plan compensation earned by each NEO in respect to the financial year ended on August 31, 2012 (as indicated under the “Summary Compensation Table”).
|
Named Executive Officer
|
Termination Payment Event
|
|||||
Without Cause ($)
(1) (2)
|
Change of Control ($)
(2) (3) (4)
|
Voluntary ($)
|
||||
Germain Lamonde
|
2,415,074
2,402,622
|
(US) (5)
(CA)
|
2,415,074
2,402,622
|
(US)
(CA)
|
1,103,394
1,087,370
|
(US) (6)
(CA)
|
Pierre Plamondon
|
508,181
506,665
|
(US)
(CA)
|
949,412
944,872
|
(US)
(CA)
|
–
|
|
Stephen Bull
|
415,302
414,488
|
(US)
(CA)
|
787,080
783,861
|
(US)
(CA)
|
–
|
|
Sylvain Rouleau
|
124,061
124,985
|
(US)
(CA)
|
180,956
181,054
|
(US)
(CA)
|
–
|
|
Dana Yearian
|
481,591
479,722
|
(US)
(CA)
|
1,114,779
1,107,557
|
(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, 2012 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 Circular. 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$1.0094 = US$1.00 for the financial year ended August 31, 2012.
|
(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, 2012 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 Circular, 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, 2012 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 Circular; 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, 2012 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$49,534
|
(3)
|
Annual Retainer for Lead Director
|
CA$5,000
|
US$4,953
|
(3)
|
|
Annual Retainer for Committee Chairman
|
CA$5,000
|
US$4,953
|
(3)
|
|
Annual Retainer for Committee Members
|
CA$3,000
|
US$2,972
|
(3)
|
|
Fees for all Meetings Attended per day in Person
|
CA$1,000
|
US$991
|
(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, Ms. Susan Spradley and Mr. David A. Thompson is US$50,000 (CA$50,470).
|
(3)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.0094 = US$1.00 for the financial year ended August 31, 2012.
|
Name
|
Fees earned
(1)
($)
|
Share-based
Awards
($)
|
Option-
based
awards
($)
|
Non-equity
incentive plan
compensation ($)
|
Pension
Value
($)
|
All other
Compensation
($)
|
Total
($)
|
||
Pierre-Paul Allard
|
60,898
61,470
|
(US)
(CA)
|
–
|
–
|
–
|
–
|
–
|
60,898
61,470
|
(US)
(CA)
|
Darryl Edwards
|
61,918
62,500
|
(US)
(CA)
|
–
|
–
|
–
|
–
|
–
|
61,918
62,500
|
(US)
(CA)
|
Pierre Marcouiller
|
65,385
66,000
|
(US)
(CA)
|
–
|
–
|
–
|
–
|
–
|
65,385
66,000
|
(US)
(CA)
|
Guy Marier
|
65,881
66,500
|
(US)
(CA)
|
–
|
–
|
–
|
–
|
–
|
65,881
66,500
|
(US)
(CA)
|
Susan Spradley
|
60,898
61,470
|
(US)
(CA)
|
–
|
–
|
–
|
–
|
–
|
60,898
61,470
|
(US)
(CA)
|
David A. Thompson
(2)
|
23,909
24,134
|
(US)
(CA)
|
–
|
–
|
–
|
–
|
–
|
23,909
24,134
|
(US)
(CA)
|
(1)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.0094 = US$1.00 for the financial year ended August 31, 2012 except for compensation amounts paid to Mr. Pierre-Paul Allard, Ms. Susan Spradley and Mr. David A. Thompson which are paid in US dollars for the portion of their annual retainer for Directors. The fees are always payable in cash, but executives are provided the opportunity to elect to exchange all or a portion of their Annual Retainer for Directors into DSUs. The following table identifies the portion of the fees earned by the directors that were paid in DSUs and the portion that were paid in cash.
|
Fees earned | |||||||
Name |
DSUs ($)
(i)
|
Cash
($)
|
Total ($)
|
||||
Pierre-Paul Allard
(ii)
|
25,000
25,235
|
(US)
(CA)
|
35,898
36,235
|
(US)
(CA)
|
60,898
61,470
|
(US)
(CA)
|
|
Darryl Edwards
(ii)
|
24,767
25,000
|
(US)
(CA)
|
37,151
37,500
|
(US)
(CA)
|
61,918
62,500
|
(US)
(CA)
|
Fees earned | |||||||
Name |
DSUs ($)
(i)
|
Cash
($)
|
Total ($)
|
||||
Pierre Marcouiller
(ii)
|
24,767
25,000
|
(US)
(CA)
|
40,618
41,000
|
(US)
(CA)
|
65,385
66,000
|
(US)
(CA)
|
|
Guy Marier
(ii)
|
24,767
25,000
|
(US)
(CA)
|
41,114
41,500
|
(US)
(CA)
|
65,881
66,500
|
(US)
(CA)
|
|
Susan Spradley
(ii)
|
25,000
25,235
|
(US)
(CA)
|
35,898
36,235
|
(US)
(CA)
|
60,898
61,470
|
(US)
(CA)
|
|
David A. Thompson
(ii)
|
9,135
9,221
|
(US)
(CA)
|
14,774
14,913
|
(US)
(CA)
|
23,909
24,134
|
(US)
(CA)
|
(i)
|
The estimated value at the time of grant of a DSU is determined based on the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Federal Reserve Bank of New York (for grants of DSUs prior to January 1, 2009) or the Bank of Canada (for grants of DSUs on or after January 1, 2009) on the grant date to convert the NASDAQ National Market closing price to Canadian dollars, as required. The value at vesting of a DSU is equivalent to the market value of a Subordinate Voting Share when a DSU is converted to such Subordinate Voting Share.
|
(ii)
|
Elected to receive 50% of his or her Annual Retainer for Directors in form of DSUs.
|
(2)
|
Mr. Thompson ceased to be a member of the Board of Directors as at January 12, 2012.
|
Name
|
Outstanding Option-based Awards (Options)
|
Outstanding Share-based Awards (DSUs)
|
|||||
Number of securities
underlying
unexercised options
(#)
|
Option
Exercise
Price
(US$)
(1)
|
Option
expiration
date
|
Value
(2)
of
unexercised
in-the-money
options
(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
|
–
|
–
|
–
|
–
|
20,538
|
98,993
|
–
|
Darryl Edwards
|
–
|
–
|
–
|
–
|
4,244
|
20,456
|
–
|
Pierre Marcouiller
|
–
|
–
|
–
|
–
|
36,186
|
174,417
|
–
|
Guy Marier
|
12,500
|
4.65
(US)
6,22
(CA)
|
Mar. 24, 2014
|
–
–
|
36,186
|
174,417
|
–
|
Susan Spradley
|
–
|
–
|
–
|
–
|
4,268
|
20,572
|
–
|
David A. Thompson
(5)
|
–
|
–
|
–
|
–
|
31,668
|
152,640
|
–
|
(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, 2012. “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, 2012 which was US$4.82 (CA$4.75). 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, 2012 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 TSX 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, 2012, which was US$4.82 (CA$4.75). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2012 using the noon buying rate of the Bank of Canada to convert the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(5)
|
Mr. Thompson ceased to be a member of the Board of Directors as at January 12, 2012.
|
Name
|
Exercised Option-based Awards (Options)
|
||||||
Number of securities underlying exercised options (#)
|
Option Exercise Price
(US$)
|
Option
grant date
|
Gains realized (US$)
|
||||
Pierre-Paul Allard
|
–
|
–
|
–
|
–
|
|||
Darryl Edwards
|
–
|
–
|
–
|
–
|
|||
Pierre Marcouiller
|
–
|
–
|
–
|
–
|
|||
Guy Marier
|
–
|
–
|
–
|
–
|
|||
Susan Spradley
|
–
|
–
|
–
|
–
|
|||
David A. Thompson
(1)
|
12,500
|
3.51
|
Oct. 27, 2003
|
36,039
|
(2)
|
(1)
|
Mr. Thompson ceased to be a member of the Board of Directors as at January 12, 2012.
|
(2)
|
The gain realized is the difference between the market value of the underlying Subordinate Voting Shares at the time of the exercise and the exercise or base price of the option.
|
Plan category
|
Number of securities to be issued
upon exercise of outstanding
options, RSUs and DSUs (#)
(a)
|
Weighted-average exercise price
of outstanding options, RSUs and
DSUs (US$)
(b)
|
Number of securities remaining
available for future issuance under
equity compensation plans (excluding
securities reflected in column (a)) (#)
(c)
|
|
LTIP – RSUs
|
1,337,730
|
n/a
(1)
|
2,290,523
|
|
LTIP – Options
|
244,354
|
4.02
|
||
DSUP – DSUs
|
133,090
|
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,
|
||||||||||||||||||||||||
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
|||||||||||||||||||
EXFO Subordinate Voting Share
|
100 | 62 | 45 | 81 | 90 | 65 | ||||||||||||||||||
S&P/TSX Stock Index
|
100 | 100 | 79 | 87 | 93 | 87 | ||||||||||||||||||
Sum of NEO’s total compensation (in millions of CA$)
|
$2.0 | $2.1 | $2.3 | $2.5 | $2.7 | $2.5 |
·
|
Our share performance improved from the fiscal year ended August 31, 2009 to the fiscal year ended August 31, 2011 and decreased from the fiscal year ended August 31, 2011 to the fiscal year ended August 31, 2012; this performance is aligned with the respective increase and decrease of the 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 fiscal years ended August 31, 2007, 2008 and 2009 due to a significant downturn in the economy; this performance is similar to other technology sector companies. It should be noted that the Corporation delivered an EBITDA* margin of 14.8%, 11.2 % and 8.4 %, respectively, for fiscal 2007, 2008 and 2009, since the Corporation was expanding our activities, developing new market territories and acquiring new businesses. This expansion significantly increased the complexity of our operations and organization. EBITDA margin is a non-IFRS financial measure. For a discussion of this measure and reconciliation to the most comparable IRFS measure, see Item 5 of this Annual Report under “Non-IFRS Financial Measures”.
|
·
|
The increase in the total compensation received by the NEOs in the fiscal years ended August 31, 2008, 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’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 named executive officers 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.
|
*
|
EBITDA is defined as net earnings (loss) before interest, income taxes, amortization of property, plant and equipment, amortization of intangible assets, impairment of goodwill and extraordinary gain.
|
(a)
|
one copy of the Annual Report on Form 20-F of the Corporation filed with the Securities and Exchange Commission (the “SEC”) in the United States pursuant to the
Securities Exchange Act of 1934,
and with securities commissions or similar authorities;
|
(b)
|
one copy of the comparative consolidated financial statements and the management’s discussion and analysis of financial condition and results of operations of the Corporation for its most recently completed financial year and the Auditors report thereon, included in the Annual Report on Form 20-F of the Corporation and one copy of any interim consolidated financial statements of the Corporation subsequent to the consolidated financial statements for its most recently completed financial year;
|
(c)
|
one copy of this Management Proxy Circular.
|
CSA Guidelines
|
EXFO’s Corporate Governance Practices
|
||||||||
1.
|
Board of Directors
|
||||||||
(a)
|
Disclose the identity of directors who are independent.
|
The following directors are independent:
Mr. Pierre-Paul Allard
Mr. Darryl Edwards
Mr. Pierre Marcouiller
Mr. Guy Marier
Ms. Susan Spradley
Dr. David A. Thompson (director until January 12, 2012)
|
|||||||
(b)
|
Disclose the identity of directors who are not independent, and describe the basis for that determination.
|
Mr. Germain Lamonde – non-independent – is President and Chief Executive Officer of the Corporation and the majority shareholder of the Corporation as he has the ability to exercise a majority of the votes for the election of the Board of Directors.
|
|||||||
(c)
|
Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors does to facilitate its exercise of independent judgment in carrying out its responsibilities.
|
The majority of directors are independent.
From September 1, 2011 to October 1, 2011, 5 out of 6.
From October 1, 2011 until January 12, 2012, 6 out of 7.
From January 12, 2012, until November 1, 2012, 5 out of 6.
|
|||||||
(d)
|
If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.
|
Pierre Marcouiller is a Director of Canam Group Inc., a publicly listed corporation from Saint-Georges de Beauce, Quebec, Canada.
|
|||||||
(e)
|
Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held since the beginning of the issuer’s most recently completed financial year. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.
|
The independent Directors hold as many meetings as needed annually and any Director may request a meeting at any time. From September 1, 2011 and to November 1, 2012, seven (7) meetings of independent Directors without management occurred.
In June 2011, an Independent Members Committee Charter was adopted.
|
(f)
|
Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors.
|
The Chair of the Board of Directors (being the majority shareholder) is not an independent director. Since 2002, the Corporation has named an independent director to act as “Lead Director”. Mr. Pierre Marcouiller has been acting as the independent “Lead Director” of the Corporation since January 2011.
The Lead Director is an outside and unrelated director appointed by the Board of Directors to ensure that the Board of Directors can perform its duties in an effective and efficient manner independent of management. The appointment of a Lead Director is part of the Corporation’s ongoing commitment to good corporate governance. The Lead Director will namely:
|
|||||||
●
|
provide independent leadership to the Board of Directors;
|
||||||||
●
|
select topics to be included in the Board of Directors meetings;
|
||||||||
●
|
facilitate the functioning of the Board of Directors independently of the Corporation’s management;
|
||||||||
●
|
maintain and enhance the quality of the Corporation’s corporate governance practices;
|
||||||||
●
|
in the absence of the Executive Chair, act as chair of meetings of the Board of Directors;
|
||||||||
●
|
recommend, where necessary, the holding of special meetings of the Board of Directors;
|
||||||||
●
|
serve as Board of Directors ombudsman, so as to ensure that questions or comments of individual directors are heard and addressed;
|
||||||||
●
|
manage and investigate any report received through the Corporation website pursuant to the Corporation’s Statement on reporting Ethical Violations and Ethics and Business Conduct Policy; and
|
||||||||
●
|
work with the Board of Directors to facilitate the process for developing, monitoring and evaluating specific annual objectives for the Board of Directors each year.
|
||||||||
(g)
|
Disclose the attendance record of each director for all board meetings held since the beginning of the issuer’s most recently completed financial year.
|
The table below indicates the directors’ record of attendance at meetings of the Board of Directors and its committees during the financial year ended August 31, 2012:
|
|||||||
Director
|
Board
meetings
attended
|
Audit Committee meetings attended
|
Human Resources Committee meetings attended
|
Independent Directors meetings attended
|
Total Board and Committee meetings attendance rate
|
||||
Lamonde, Germain
|
6 of 6
|
n/a
|
n/a
|
n/a
|
100%
|
||||
Allard, Pierre-Paul
|
6 of 6
|
3 of 4
|
4 of 4
|
4 of 5
|
90%
|
||||
Edwards, Darryl
|
6 of 6
|
4 of 4
|
4 of 4
|
5 of 5
|
100%
|
||||
Marcouiller, Pierre
|
4 of 6
|
3 of 4
|
3 of 4
|
4 of 5
|
84%
|
||||
Marier, Guy
|
6 of 6
|
4 of 4
|
4 of 4
|
5 of 5
|
100%
|
||||
Spradley, Susan
|
5 of 5
|
4 of 4
|
4 of 4
|
5 of 5
|
100%
|
||||
Thompson, David
|
4 of 4
|
2 of 2
|
2 of 2
|
3 of 3
|
100%
|
||||
Attendance Rate:
|
95%
|
91%
|
95%
|
91%
|
93%
|
2.
|
Board Mandate
– Disclose the text of the board’s written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities.
|
||||
(a)
|
Assuring the integrity of the executive officers and creating a culture of integrity throughout the organization.
|
The Board of Directors is committed to maintaining the highest standards of integrity throughout the organization. Accordingly, the Board of Directors adopted an Ethics and Business Conduct Policy and a Statement on Reporting Ethical Violations (“Whistleblower Policy”) which are available on the Corporation’s website (www.EXFO.com) to all employees and initially distributed to every new employees of the Corporation.
|
|||
(b)
|
Adoption of a strategic planning process.
|
The Board of Directors provides guidance for the development of the strategic planning process and approves the process and the plan developed by management annually. In addition, the Board of Directors carefully reviews the strategic plan and deals with strategic planning matters that arise during the year.
|
|||
(c)
|
Identification of principal risks and implementing of risk management systems.
|
The Board of Directors works with management to identify the Corporation’s principal risks and manages these risks through regular appraisal of management’s practices on an ongoing basis.
|
|||
(d)
|
Succession planning including appointing, training and monitoring senior management.
|
The Human Resources Committee is responsible for the elaboration and implementation of a succession planning process and its updates as required. The Human Resources Committee is responsible to monitor and review the performance of the Chief Executive Officer and that of all other senior officers.
|
|||
(e)
|
Communications policy.
|
The Chief Financial Officer of the Corporation is responsible for communications between Management and the Corporation’s current and potential shareholders and financial analysts. The Board of Directors adopted and implemented Disclosure Guidelines to ensure consistency in the manner that communications with shareholders and the public are managed. The Audit Committee reviews press releases containing the quarterly results of the Corporation prior to release. In addition, all material press releases of the Corporation are reviewed by the President and Chief Executive Officer, Chief Financial Officer, Investor Relations Manager, Director of Financial Reporting and Accounting and General Counsel. The Disclosure Guidelines have been established in accordance with the relevant disclosure requirements under applicable Canadian and United States securities laws.
|
|||
(f)
|
Integrity of internal control and management information systems.
|
The Audit Committee has the responsibility to review the Corporation’s systems of internal controls regarding finance, accounting, legal compliance and ethical behavior. The Audit Committee meets with the Corporation’s external auditors on a quarterly basis. Accordingly, the Corporation fully complies with Sarbanes-Oxley Act requirements within the required period of time.
|
(g)
|
Approach to corporate governance including developing a set of corporate governance principles and guidelines that are specifically applicable to the issuer
|
The Board of Directors assumes direct responsibility for the monitoring of the Board of Directors’s corporate governance practices, the functioning of the Board of Directors and the powers, mandates and performance of the committees. These responsibilities were previously assumed by the Human Resources Committee. Accordingly, the Board of Directors updated and adopted in March 2005 the following policies to fully comply with these responsibilities, which are updated on a regular basis:
|
||
●
|
Audit Committee Charter*;
|
|||
●
|
Board of Directors Corporate Governance Guidelines*;
|
|||
●
|
Code of Ethics for our Principal Executive Officer and Senior Financial Officers*;
|
|||
●
|
Disclosure Guidelines;
|
|||
●
|
Ethics and Business Conduct Policy*;
|
|||
●
|
Human Resources Committee Charter ;
|
|||
●
|
Securities Trading Policy; and
|
|||
●
|
Statement on Reporting Ethical Violations (Whistle Blower)*.
|
|||
The Board of Directors also adopted in October 2006 the Policy Regarding Hiring Employees and Former Employees of Independent Auditors which is also available on the Corporation’s website (
www.EXFO.com
)
. The Board of Directors also adopted in April 2007 the Best Practice regarding the Granting Date of Stock Incentive Compensation and adopted in October 2008 the Guidelines regarding the filing and disclosure of material contracts. The Board of Directors also adopted in October 2011 a majority voting policy for the election of Directors which is also available on the Corporation’s website (
www.EXFO.com
).
* available on the Corporation’s website (
www.EXFO.com
).
|
||||
(h)
|
Expectations and responsibilities of Directors, including basic duties and responsibilities with respect to attendance at board meetings and advance review of meeting materials
|
The Board of Directors is also responsible for the establishment and functioning of all Board of Directors committees, their compensation and their good standing. At regularly scheduled meetings of the Board of Directors, the Directors receive, consider and discuss committee reports. The Directors also receive in advance of any meeting, all documentation required for the upcoming meetings and they are expected to review and consult this documentation.
|
||
3.
|
Position Descriptions
|
|||
(a)
|
Disclose whether or not the board has developed written position descriptions for the chair of the board and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefly describe how the board delineates the role and responsibilities of each such position.
|
There is no specific mandate for the Board of Directors, however the Board of Directors is, by law, responsible for managing the business and affairs of the Corporation. Any responsibility which is not delegated to senior management or to a committee of the Board of Directors remains the responsibility of the Board of Directors. Accordingly, the chair of the Board of Directors, of the Audit Committee and of the Human Resources Committee will namely:
|
||
●
|
provide leadership to the Board of Directors or Committee;
|
|||
●
|
ensure that the Board of Directors or Committee can perform its duties in an effective and efficient manner;
|
|||
●
|
facilitate the functionary of the Board of Directors or Committee; and
|
|||
●
|
promote best practices and high standards of corporate governance.
|
(b)
|
Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO.
|
No written position description has been developed for the CEO. The President and Chief Executive Officer, along with the rest of management placed under his supervision, is responsible for meeting the corporate objectives as determined by the strategic objectives and budget as they are adopted each year by the Board of Directors.
|
|||
4.
|
Orientation and Continuing Education
|
||||
(a)
|
Briefly describe what measures the board takes to orient new directors regarding
|
||||
i.
|
the role of the board, its committees and its directors, and
|
The Human Resources Committee Charter foresees that the Human Resource Committee maintains an orientation program for New Directors.
|
|||
ii.
|
the nature and operation of the issuer’s business.
|
Presentations and reports relating to the Corporation’s business and affairs are provided to new Directors. In addition, new Board of Directors members meet with senior management of the Corporation to review the business and affairs of the Corporation.
|
|||
(b)
|
Briefly describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.
|
The Human Resources Committee Charter foresees that the Human Resources Committee maintains a continuing education program for Directors. In March 2010, the independent directors of the Corporation attended a training session that concerned director liability and governance. The training session addressed the legal duties of directors and governance as a way to discharge director’s duties. In October 2010, the independent directors of the Corporation attended a training session that concerned independence practices, governance best practices and upcoming topics in governance best practices. In June 2011, the independent directors of the Corporation attended a training session that concerned executive compensation and related governance developments.
In January 2012, the independent directors of the Corporation attended a presentation on the Corporation given by an executive and a product and marketing presentation. In March 2012, the independent directors of the Corporation attended a presentation on the investors’ perception of the Corporation given by a market specialist and a presentation on the Corporation from an executive. In June 2012, the independent directors of the Corporation attended a presentation on the competitive view of the Corporation’s main competitor given by a sales executive of the Corporation and a presentation on market analysis given by an executive of a significant customer.
|
5.
|
Ethical Business Conduct
|
||||
(a)
|
Disclose whether or not the board has adopted a written code for the directors, officers and employees. If the board has adopted a written code:
|
The Corporation is committed to maintaining the highest standard of business conduct and ethics. Accordingly, the Board of Directors updated and established (i) a Board of Directors Corporate Governance Guidelines (ii) a Code of Ethics for our Principal Executive Officer and senior Financial Officers (iii) Ethics and Business Conduct Policy and (iv) a Statement on Reporting Ethical Violations “Whistleblower Policy” which are available on the Corporation’s website (
www.EXFO.com
)
.
|
|||
i.
|
disclose how a person or company may obtain a copy of the code;
|
||||
ii.
|
describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board satisfies itself regarding compliance with its code; and
|
The Board of Directors will determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of a violation of the Code of Ethics for our Principal Executive Officer and senior Financial Officers. Someone that does not comply with this Code of Ethics will be subject to disciplinary measures, up to and including discharge from the Corporation. Furthermore, a compliance affirmation must be filled in a written form agreeing to abide by the policies of the Code of Ethics.
|
|||
iii.
|
provide a cross-reference to any material change report filed since the beginning of the issuer’s most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.
|
No material change report has been required or filed during our financial year ended August 31, 2012 with respect to any conduct constituting a departure from our Code of Ethics.
|
|||
(b)
|
Describe any steps the board takes to ensure directors exercise independent judgement in considering transactions and agreements in respect of which a director or executive officer has a material interest.
|
Activities that could give rise to conflicts of interest are prohibited. Board of Directors members should contact the Lead Director or in-house legal counsel regarding any issues relating to possible conflict of interest. If such event occurs, the implicated Board of Directors member will not participate in the meeting and discussion with respect to such possible conflict of interest and will not be entitled to vote on such matter. Senior executives should also contact the in-house legal counsel regarding any issues relating to possible conflict of interest.
|
|||
(c)
|
Describe any other steps the board takes to encourage and promote a culture of ethical business conduct.
|
The Corporation has instituted and follows a “Whistleblower Policy” where each member of the Board of Directors as well as any senior officer, every employee of the Corporation and any person is invited and encouraged to report anything appearing or suspected of being non-ethical to our Lead Director, in confidence. The Lead Director has the power to hire professional assistance to conduct an internal investigation should he so fell required.
|
|||
6.
|
Nomination of Directors
|
||||
(a)
|
Describe the process by which the board identifies new candidates for board nomination.
|
The Board of Directors adopted and implemented a Human Resources Committee Charter which integrates the Compensation Committee Charter and the Nominating and Governance Committee Charter. The Human Resources Committee is responsible for nomination, assessment and compensation of directors and Officers.
|
(b)
|
Disclose whether or not the board has a nominating committee composed entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process.
|
The Human Resources Committee consists of five members all of who are independent Directors. The Chairman of the Human Resources Committee is Mr. Guy Marier.
The Human Resources Committee Charter foresees:
|
||||||||||
●
|
recommending a process for assessing the performance of the Board of Directors as a whole, the Chair of the Board of Directors and the Committee chairs and the contribution of individual directors, and seeing to its implementation;
|
|||||||||||
(c)
|
If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.
|
●
|
recommending the competencies, skills and personal qualities required on the Board of Directors in order to create added value, taking into account the opportunities and risks faced by the Corporation and subsequently identifying and recommending to the Board of Directors
|
7.
|
Compensation
|
|||||||||||
(a)
|
Describe the process by which the board determines the compensation for the issuer’s directors and officers.
|
The Human Resources Committee reviews periodically compensation policies in light of market conditions, industry practice and level of responsibilities. Only independent Directors are compensated for acting as a Director of the Corporation.
|
||||||||||
(b)
|
Disclose whether or not the board has a compensation committee composed entirely of independent directors. If the board does not have a compensation committee composed entirely of independent directors, describe what steps the board takes to ensure an objective process for determining such compensation.
|
The Human Resources Committee consists of five members all of who are independent Directors. The Chairman of the Human Resources Committee is Mr. Guy Marier.
|
||||||||||
(c)
|
If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.
|
The Human Resources Committee Charter foresees:
|
||||||||||
●
|
The Committee to review and approve on an annual basis with respect to the annual compensation of all senior officers; which namely includes the assessment of risks associated with the compensation of such senior officers;
|
|||||||||||
●
|
The Committee to review and approve, on behalf of the Board of Directors or in collaboration with the Board of Directors as applicable, on the basis of the attribution authorized by the Board of Directors, to whom options to purchase shares of the Corporation, RSUs or DSUs shall be offered as the case may be and if so, the terms of such options, RSUs or DSUs in accordance with the terms of the Corporation’s LTIP or the Deferred Share Unit Plan provided that no options, RSUs or DSUs shall be granted to members of this committee without the approval of the Board of Directors;
|
|||||||||||
●
|
The Committee to recommend to the Board of Directors from time to time the remuneration to be paid by the Corporation to Directors;
|
|||||||||||
●
|
The Committee to make recommendations to the Board of Directors with respect to the Corporation’s incentive compensation plans and equity-based plans.
|
8.
|
Other Board Committees
– If the board has standing committees other than the audit, compensation and nominating committees identify the committees and describe their function.
|
The Board of Directors has no other standing committee.
|
|||
9.
|
Assessments
– Disclose whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfies itself that the board, its committees, and its individual directors are performing effectively.
|
The Board of Directors assumes direct responsibility for the monitoring of the Board of Directors’ corporate governance practices, the functioning of the Board of Directors and the powers, mandates and performance of the Human Resources Committee. The Human Resources Committee, composed solely of independent Directors, initiates a self-evaluation of the Board of Directors’ performance on an annual basis. Questionnaires are distributed to each independent director for the purpose of evaluation the Board of Directors’ responsibilities and functions and the performance of the Board of Directors’ Committees. The results of the questionnaires are compiled on a confidential basis to encourage full and frank commentary and are discussed at the next regular meeting of the Human Resources Committee or Independent Board of Directors members meeting.
|