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Share Name | Share Symbol | Market | Type |
---|---|---|---|
EXFO Inc | NASDAQ:EXFO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.245 | 6.24 | 6.26 | 0 | 01:00:00 |
Form 20-F
☒
|
Form 40-F
☐
|
Yes
☐
|
No
☒
|
EXFO INC.
|
|
By:
/s/ Germain Lamonde
Name:
Germain Lamonde
Title:
President and Chief Executive Officer
|
|
Re: |
Filing of Amended Annual Report for Fiscal 2016
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash
|
$
|
43,208
|
$
|
25,864
|
||||
Short-term investments (note 5)
|
4,087
|
1,487
|
||||||
Accounts receivable (note 5)
|
||||||||
Trade
|
42,993
|
45,985
|
||||||
Other
|
2,474
|
2,384
|
||||||
Income taxes and tax credits recoverable (note 18)
|
4,208
|
3,855
|
||||||
Inventories (note 6)
|
33,004
|
27,951
|
||||||
Prepaid expenses
|
3,099
|
2,801
|
||||||
133,073
|
110,327
|
|||||||
Tax credits recoverable
(note 18)
|
34,594
|
35,625
|
||||||
Property, plant and equipment
(notes 7 and 20)
|
35,978
|
35,695
|
||||||
Intangible assets
(notes 8 and 20)
|
3,391
|
4,096
|
||||||
Goodwill
(notes 8 and 20)
|
21,928
|
21,860
|
||||||
Deferred income tax assets
(note 18)
|
8,240
|
9,459
|
||||||
Other assets
|
589
|
416
|
||||||
$
|
237,793
|
$
|
217,478
|
|||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities (note 10)
|
$
|
37,174
|
$
|
34,126
|
||||
Provisions
|
299
|
427
|
||||||
Income taxes payable
|
971
|
779
|
||||||
Deferred revenue
|
9,486
|
7,647
|
||||||
47,930
|
42,979
|
|||||||
Deferred revenue
|
5,530
|
2,957
|
||||||
Deferred income tax liabilities
(note 18)
|
2,857
|
1,524
|
||||||
Other liabilities
|
75
|
791
|
||||||
56,392
|
48,251
|
|||||||
Commitments
(note 11)
|
||||||||
Shareholders' equity
|
||||||||
Share capital (note 12)
|
85,516
|
86,045
|
||||||
Contributed surplus
|
18,150
|
17,778
|
||||||
Retained earnings
|
126,309
|
117,409
|
||||||
Accumulated other comprehensive loss (note 13)
|
(48,574
|
)
|
(52,005
|
)
|
||||
181,401
|
169,227
|
|||||||
$
|
237,793
|
$
|
217,478
|
On behalf of the Board
|
|
/s/ Germain Lamonde
|
/s/ Claude Séguin
|
Germain Lamonde
|
Claude Séguin
|
Chairman, President and CEO
|
Chairman, Audit Committee
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Sales (note
20
)
|
$
|
232,583
|
$
|
222,089
|
$
|
230,806
|
||||||
Cost of sales
(1)
(note
16
)
|
87,066
|
85,039
|
86,836
|
|||||||||
Selling and administrative
(2)
(note 16)
|
82,169
|
82,200
|
86,429
|
|||||||||
Net research and development
(note 16)
|
42,687
|
44,003
|
44,846
|
|||||||||
Depreciation of property, plant and equipment (note 16)
|
3,814
|
4,835
|
4,995
|
|||||||||
Amortization of intangible assets (note 16)
|
1,172
|
2,883
|
4,398
|
|||||||||
Interest and other income
|
(828
|
)
|
(155
|
)
|
(326
|
)
|
||||||
Foreign exchange gain
|
(161
|
)
|
(7,212
|
)
|
(1,634
|
)
|
||||||
Unusual charge (note 1)
|
–
|
603
|
720
|
|||||||||
Earnings before income taxes
|
16,664
|
9,893
|
4,542
|
|||||||||
Income taxes (note
18
)
|
7,764
|
5,036
|
4,286
|
|||||||||
Net earnings for the year
|
$
|
8,900
|
$
|
4,857
|
$
|
256
|
||||||
Basic net earnings per share
|
$
|
0.17
|
$
|
0.09
|
$
|
0.00
|
||||||
Diluted net earnings per share
|
$
|
0.16
|
$
|
0.08
|
$
|
0.00
|
||||||
Basic weighted average number of shares outstanding (000's)
|
53,863
|
56,804
|
60,329
|
|||||||||
Diluted weighted average number of shares outstanding (000's) (note
19
)
|
54,669
|
57,457
|
61,015
|
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(2)
|
Selling and administrative is exclusive of unusual charge, which represents bad debt expenses.
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Net earnings for the year
|
$
|
8,900
|
$
|
4,857
|
$
|
256
|
||||||
Other comprehensive income (loss), net of income taxes
|
||||||||||||
Items that will not be reclassified subsequently to net earnings
|
||||||||||||
Foreign currency translation adjustment
|
707
|
(39,175
|
)
|
(7,086
|
)
|
|||||||
Items that may be reclassified subsequently to net earnings
|
||||||||||||
Unrealized gains/losses on forward exchange contracts
|
862
|
(5,583
|
)
|
(618
|
)
|
|||||||
Reclassification of realized gains/losses on forward exchange contracts in net earnings
|
2,797
|
2,107
|
959
|
|||||||||
Deferred income tax effect of gains/losses on forward exchange contracts
|
(935
|
)
|
905
|
(91
|
)
|
|||||||
Other comprehensive income (loss)
|
3,431
|
(41,746
|
)
|
(6,836
|
)
|
|||||||
Comprehensive income (loss) for the year
|
$
|
12,331
|
$
|
(36,889
|
)
|
$
|
(6,580
|
)
|
Year ended August 31, 2014
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2013
|
$
|
109,837
|
$
|
17,186
|
$
|
112,296
|
$
|
(3,423
|
)
|
$
|
235,896
|
|||||||||
Exercise of stock options (note 12)
|
225
|
–
|
–
|
–
|
225
|
|||||||||||||||
Redemption of share capital (note 12)
|
(831
|
)
|
(106
|
)
|
–
|
–
|
(937
|
)
|
||||||||||||
Reclassification of stock-based compensation costs (note 12)
|
2,260
|
(2,260
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
1,683
|
–
|
–
|
1,683
|
|||||||||||||||
Net earnings for the year
|
–
|
–
|
256
|
–
|
256
|
|||||||||||||||
Other comprehensive income (loss)
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
(7,086
|
)
|
(7,086
|
)
|
|||||||||||||
Changes in unrealized losses on forward exchange contracts, net of deferred income taxes of $91
|
–
|
–
|
–
|
250
|
250
|
|||||||||||||||
Total comprehensive loss for the year
|
(6,580
|
)
|
||||||||||||||||||
Balance as at August 31, 2014
|
$
|
111,491
|
$
|
16,503
|
$
|
112,552
|
$
|
(10,259
|
)
|
$
|
230,287
|
Year ended August 31, 2015
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2014
|
$
|
111,491
|
$
|
16,503
|
$
|
112,552
|
$
|
(10,259
|
)
|
$
|
230,287
|
|||||||||
Redemption of share capital (note 12)
|
(26,827
|
)
|
1,333
|
–
|
–
|
(25,494
|
)
|
|||||||||||||
Reclassification of stock-based compensation costs (note 12)
|
1,381
|
(1,381
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
1,323
|
–
|
–
|
1,323
|
|||||||||||||||
Net earnings for the year
|
–
|
–
|
4,857
|
–
|
4,857
|
|||||||||||||||
Other comprehensive loss
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
(39,175
|
)
|
(39,175
|
)
|
|||||||||||||
Changes in unrealized losses on forward exchange contracts, net of deferred income taxes of $905
|
–
|
–
|
–
|
(2,571
|
)
|
(2,571
|
)
|
|||||||||||||
Total comprehensive loss for the year
|
(36,889
|
)
|
||||||||||||||||||
Balance as at August 31, 2015
|
$
|
86,045
|
$
|
17,778
|
$
|
117,409
|
$
|
(52,005
|
)
|
$
|
169,227
|
Year ended August 31, 2016
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2015
|
$
|
86,045
|
$
|
17,778
|
$
|
117,409
|
$
|
(52,005
|
)
|
$
|
169,227
|
|||||||||
Redemption of share capital (note 12)
|
(1,768
|
)
|
217
|
–
|
–
|
(1,551
|
)
|
|||||||||||||
Reclassification of stock-based compensation costs (note 12)
|
1,239
|
(1,239
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
1,394
|
–
|
–
|
1,394
|
|||||||||||||||
Net earnings for the year
|
–
|
–
|
8,900
|
–
|
8,900
|
|||||||||||||||
Other comprehensive income (loss)
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
707
|
707
|
|||||||||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $935
|
–
|
–
|
–
|
2,724
|
2,724
|
|||||||||||||||
Total comprehensive income for the year
|
12,331
|
|||||||||||||||||||
Balance as at August 31, 2016
|
$
|
85,516
|
$
|
18,150
|
$
|
126,309
|
$
|
(48,574
|
)
|
$
|
181,401
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Net earnings for the year
|
$
|
8,900
|
$
|
4,857
|
$
|
256
|
||||||
Add (deduct) items not affecting cash
|
||||||||||||
Stock-based compensation costs
|
1,378
|
1,295
|
1,696
|
|||||||||
Depreciation and amortization
|
4,986
|
7,718
|
9,393
|
|||||||||
Unusual charge
|
–
|
603
|
720
|
|||||||||
Deferred revenue
|
4,238
|
396
|
(804
|
)
|
||||||||
Deferred income taxes
|
1,578
|
403
|
698
|
|||||||||
Changes in foreign exchange gain/loss
|
(332
|
)
|
(3,842
|
)
|
(491
|
)
|
||||||
20,748
|
11,430
|
11,468
|
||||||||||
Changes in non-cash operating items
|
||||||||||||
Accounts receivable
|
2,682
|
(10,828
|
)
|
3,578
|
||||||||
Income taxes and tax credits
|
939
|
(2,062
|
)
|
1,447
|
||||||||
Inventories
|
(4,713
|
)
|
820
|
(734
|
)
|
|||||||
Prepaid expenses
|
(280
|
)
|
(982
|
)
|
210
|
|||||||
Other assets
|
170
|
61
|
92
|
|||||||||
Accounts payable and accrued liabilities and provisions
|
4,882
|
8,132
|
3,832
|
|||||||||
Other liabilities
|
(65
|
)
|
(87
|
)
|
(107
|
)
|
||||||
24,363
|
6,484
|
19,786
|
||||||||||
Cash flows from investing activities
|
||||||||||||
Additions to short-term investments
|
(3,546
|
)
|
(20,067
|
)
|
(34,222
|
)
|
||||||
Proceeds from disposal and maturity of short-term investments
|
873
|
23,685
|
33,208
|
|||||||||
Purchases of capital assets (notes 7 and 8)
|
(4,356
|
)
|
(5,933
|
)
|
(7,931
|
)
|
||||||
(7,029
|
)
|
(2,315
|
)
|
(8,945
|
)
|
|||||||
Cash flows from financing activities
|
||||||||||||
Repayment of long-term debt
|
‒
|
‒
|
(307
|
)
|
||||||||
Exercise of stock options (note 12)
|
‒
|
‒
|
225
|
|||||||||
Redemption of share capital (note 12)
|
(1,551
|
)
|
(25,494
|
)
|
(937
|
)
|
||||||
(1,551
|
)
|
(25,494
|
)
|
(1,019
|
)
|
|||||||
Effect of foreign exchange rate changes on cash
|
1,561
|
(6,932
|
)
|
(1,087
|
)
|
|||||||
Change in cash
|
17,344
|
(28,257
|
)
|
8,735
|
||||||||
Cash – Beginning of year
|
25,864
|
54,121
|
45,386
|
|||||||||
Cash – End of year
|
$
|
43,208
|
$
|
25,864
|
$
|
54,121
|
||||||
Supplementary information
|
||||||||||||
Income taxes paid
|
$
|
2,015
|
$
|
1,491
|
$
|
1,272
|
1
|
Nature of Activities and Incorporation
|
As at August 31, 2016
|
||||||||||||
As reported
|
Adjustment
|
Revised
|
||||||||||
Revision to Consolidated Balance Sheet
|
||||||||||||
Accounts receivable - Trade
|
$
|
45,076
|
$
|
(2,083
|
)
|
$
|
42,993
|
|||||
Deferred income tax assets
|
$
|
7,681
|
$
|
559
|
$
|
8,240
|
||||||
Retained earnings
|
$
|
127,833
|
$
|
(1,524
|
)
|
$
|
126,309
|
|||||
Total assets
|
$
|
239,317
|
$
|
(1,524
|
)
|
$
|
237,793
|
|||||
Shareholders' equity
|
$
|
182,925
|
$
|
(1,524
|
)
|
$
|
181,401
|
|||||
As at and for the year ended August 31, 2015
|
||||||||||||
As reported
|
Adjustment
|
Revised
|
||||||||||
Revision to Consolidated Balance Sheet
|
||||||||||||
Accounts receivable - Trade
|
$
|
48,068
|
$
|
(2,083
|
)
|
$
|
45,985
|
|||||
Deferred income tax assets
|
$
|
8,900
|
$
|
559
|
$
|
9,459
|
||||||
Retained earnings
|
$
|
118,933
|
$
|
(1,524
|
)
|
$
|
117,409
|
|||||
Total assets
|
$
|
219,002
|
$
|
(1,524
|
)
|
$
|
217,478
|
|||||
Shareholders' equity
|
$
|
170,751
|
$
|
(1,524
|
)
|
$
|
169,227
|
|||||
Revision to Consolidated Statement of Earnings and Consolidated Statement of Comprehensive Income (Loss)
|
||||||||||||
Unusual charge (1)
|
$
|
–
|
$
|
603
|
$
|
603
|
||||||
Earnings before income taxes
|
$
|
10,496
|
$
|
(603
|
)
|
$
|
9,893
|
|||||
Deferred income tax expense
|
$
|
565
|
$
|
(162
|
)
|
$
|
403
|
|||||
Net earnings for the year
|
$
|
5,298
|
$
|
(441
|
)
|
$
|
4,857
|
|||||
Basic net earnings per share for the year
|
$
|
0.09
|
$
|
–
|
$
|
0.09
|
||||||
Diluted net earnings per share for the year
|
$
|
0.09
|
$
|
(0.01
|
)
|
$
|
0.08
|
|||||
Comprehensive loss for the year
|
$
|
(36,448
|
)
|
$
|
(441
|
)
|
$
|
(36,889
|
)
|
(1)
|
Adjustment to recognize bad debt expense in connection with a past due trade receivable balance, for which, upon correction of the aging, management would have provided an allowance in accordance with the company's credit provision policies.
|
As at and for the year ended August 31, 2014
|
||||||||||||
As reported
|
Adjustment
|
Revised
|
||||||||||
Revision to Consolidated Balance Sheet
|
||||||||||||
Retained earnings
|
$
|
113,635
|
$
|
(1,083
|
)
|
$
|
112,552
|
|||||
Revision to Consolidated Statement of Earnings and Consolidated Statement of Comprehensive Income (Loss)
|
||||||||||||
Unusual charge (2)
|
$
|
–
|
$
|
720
|
$
|
720
|
||||||
Earnings before income taxes
|
$
|
5,262
|
$
|
(720
|
)
|
$
|
4,542
|
|||||
Deferred income tax expense
|
$
|
891
|
$
|
(193
|
)
|
$
|
698
|
|||||
Net earnings for the year
|
$
|
783
|
$
|
(527
|
)
|
$
|
256
|
|||||
Basic and diluted net earnings per share for the year
|
$
|
0.01
|
$
|
(0.01
|
)
|
$
|
0.00
|
|||||
Comprehensive loss for the year
|
$
|
(6,053
|
)
|
$
|
(527
|
)
|
$
|
(6,580
|
)
|
(2)
|
Adjustment to recognize bad debt expense in connection with a past due trade receivable balance, for which, upon correction of the aging, management would have provided an allowance in accordance with the company's credit provision policies.
|
As at August 31, 2013
|
||||||||||||
As reported
|
Adjustment
|
Revised
|
||||||||||
Revision to Consolidated Balance Sheet
|
||||||||||||
Retained earnings (3)
|
$
|
112,852
|
$
|
(556
|
)
|
$
|
112,296
|
(3)
|
Adjustment to opening retained earnings as at September 1, 2013 in connection with a past due trade receivable balance, for which, upon correction of the aging, management would have provided an allowance in accordance with the company's credit provision policies.
|
2
|
Basis of Presentation
|
Cash
|
Loans and receivables
|
Short-term investments
|
Available for sale
|
Accounts receivable
|
Loans and receivables
|
Other assets
|
Loans and receivables
|
Accounts payable and accrued liabilities
|
Other financial liabilities
|
Level 1: |
Quoted prices (unadjusted) in active market for identical assets or liabilities;
|
Level 2: |
Inputs other than quoted prices included within Level 1 that are observable for the asset and liability, either directly or indirectly;
|
Level 3: |
Unobservable inputs for the asset or liability.
|
Term
|
|
Land improvements
|
15 years
|
Buildings
|
20 to 60 years
|
Equipment
|
3 to 15 years
|
Leasehold improvements
|
The lesser of useful life and remaining lease term
|
(a)
|
Determination of functional currency
|
(b)
|
Determination of cash generating units and allocation of goodwill
|
(a)
|
Inventories
|
(b)
|
Income taxes
|
(c)
|
Tax credits recoverable
|
(d)
|
Impairment of non-financial assets
|
3
|
Restructuring Charges
|
4
|
Capital Disclosures
|
·
|
To maintain a flexible capital structure that optimizes the cost of capital at acceptable risk;
|
·
|
To sustain future development of the company, including research and development activities, market development and potential acquisitions of complementary businesses or products; and
|
·
|
To provide the company's shareholders with an appropriate return on their investment.
|
5
|
Financial Instruments
|
As at August 31, 2016
|
||||||||||||||||||||
Loans and
receivable |
Available
for sale |
Other
financial liabilities |
Derivatives
used for hedging |
Total
|
||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash
|
$
|
43,208
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
43,208
|
||||||||||
Short-term investments
|
$
|
–
|
$
|
4,087
|
$
|
–
|
$
|
–
|
$
|
4,087
|
||||||||||
Accounts receivable
|
$
|
45,467
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
45,467
|
||||||||||
Other assets
|
$
|
35
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
35
|
||||||||||
Forward exchange contracts
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
980
|
$
|
980
|
||||||||||
Financial liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
–
|
$
|
–
|
$
|
36,099
|
$
|
–
|
$
|
36,099
|
||||||||||
Forward exchange contracts
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
1,120
|
$
|
1,120
|
As at August 31, 2015
|
||||||||||||||||||||
Loans and
receivable |
Available
for sale |
Other
financial liabilities |
Derivatives
used for hedging |
Total
|
||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash
|
$
|
25,864
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
25,864
|
||||||||||
Short-term investments
|
$
|
–
|
$
|
1,487
|
$
|
–
|
$
|
–
|
$
|
1,487
|
||||||||||
Accounts receivable
|
$
|
48,369
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
48,369
|
||||||||||
Other assets
|
$
|
103
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
103
|
||||||||||
Financial liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
–
|
$
|
–
|
$
|
29,029
|
$
|
–
|
$
|
29,029
|
||||||||||
Forward exchange contracts
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
4,154
|
$
|
4,154
|
As at August 31, 2016
|
As at August 31, 2015
|
|||||||||||||||
Level 1
|
Level 2
|
Level 1
|
Level 2
|
|||||||||||||
Financial assets
|
||||||||||||||||
Short-term investments
|
$
|
4,087
|
$
|
–
|
$
|
1,487
|
$
|
–
|
||||||||
Forward exchange contracts
|
$
|
–
|
$
|
980
|
$
|
–
|
$
|
–
|
||||||||
Financial liabilities
|
||||||||||||||||
Forward exchange contracts
|
$
|
–
|
$
|
1,120
|
$
|
–
|
$
|
4,154
|
Expiry dates
|
Contractual
amounts |
Weighted average
contractual forward rates |
||||||
As at August 31, 2015
|
||||||||
September 2015 to August 2016
|
$
|
20,200
|
1.1180
|
|||||
September 2016 to August 2017
|
8,000
|
1.1530
|
||||||
September 2017 to December 2017
|
1,600
|
1.2135
|
||||||
Total
|
$
|
29,800
|
1.1326
|
|||||
As at August 31, 2016
|
||||||||
September 2016 to August 2017
|
$
|
22,200
|
1.2784
|
|||||
September 2017 to August 2018
|
9,900
|
1.3367
|
||||||
September 2018 to December 2018
|
1,900
|
1.3639
|
||||||
Total
|
$
|
34,000
|
1.3002
|
Expiry dates
|
Contractual
amounts |
Weighted average
contractual forward rates |
||||||
As at August 31, 2015
|
||||||||
September 2015 to July 2016
|
$
|
3,900
|
66.41
|
|||||
As at August 31, 2016
|
||||||||
September 2016 to August 2017
|
$
|
3,800
|
70.92
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Losses on forward exchange contracts
|
$
|
2,651
|
$
|
2,562
|
$
|
909
|
As at August 31,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
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
|
$
|
13,090
|
€
|
2,927
|
$
|
9,226
|
€
|
3,448
|
||||||||
Accounts receivable
|
30,141
|
5,963
|
37,019
|
4,488
|
||||||||||||
43,231
|
8,890
|
46,245
|
7,936
|
|||||||||||||
Financial liabilities
|
||||||||||||||||
Accounts payable and accrued liabilities
|
14,251
|
1,081
|
12,873
|
1,047
|
||||||||||||
Forward exchange contracts (nominal value)
|
4,000
|
–
|
3,800
|
–
|
||||||||||||
18,251
|
1,081
|
16,673
|
1,047
|
|||||||||||||
Net exposure
|
$
|
24,980
|
€
|
7,809
|
$
|
29,572
|
€
|
6,889
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would decrease (increase) net earnings by $2,677,000, or $0.05 per diluted share, and $2,342,000, or $0.04 per diluted share, as at August 31, 2015 and 2016 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 $834,000, or $0.01 per diluted share, and $830,000 or $0.02 per diluted share, as at August 31, 2015 and 2016 respectively.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would increase (decrease) other comprehensive income by $2,066,000 and $2,176,000 as at August 31, 2015 and 2016 respectively.
|
As at August 31
|
||||||||
2016
|
2015
|
|||||||
Term deposit denominated in Canadian dollars, bearing interest at an annual rate of 1.5%, maturing in May 2017
|
$
|
2,668
|
$
|
–
|
||||
Term deposits denominated in Indian rupees, bearing interest at annual rates of 6.0% to 7.3% in 2016 and 4.5% to 8.5% in 2015, maturing on different dates between November 2016 and October 2018 in 2016 and November 2015 and October 2018 in 2015
|
1,419
|
1,487
|
||||||
$
|
4,087
|
$
|
1,487
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
Current
|
$
|
38,411
|
$
|
36,723
|
||||
Past due, 0 to 30 days
|
1,286
|
5,164
|
||||||
Past due, 31 to 60 days
|
868
|
1,027
|
||||||
Past due, more than 60 days, net of allowance for doubtful accounts of $2,935 and $3,752 as at August 31, 2015 and 2016, respectively
|
2,428
|
3,071
|
||||||
$
|
42,993
|
$
|
45,985
|
Years ended August 31,
|
||||||||
2016
|
2015
|
|||||||
Balance – Beginning of year
|
$
|
2,935
|
$
|
1,876
|
||||
Addition charged to earnings
|
817
|
1,107
|
||||||
Write-off of uncollectible accounts
|
‒
|
(48
|
)
|
|||||
Balance – End of year
|
$
|
3,752
|
$
|
2,935
|
As at August 31, 2016
|
||||||||||||
0-12
months |
13-24
months |
25-36
months |
||||||||||
Accounts payable and accrued liabilities
|
$
|
36,099
|
$
|
‒
|
$
|
‒
|
||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
26,000
|
9,900
|
1,900
|
|||||||||
Inflow
|
(25,653
|
)
|
(10,089
|
)
|
(1,976
|
)
|
||||||
Total
|
$
|
36,446
|
$
|
(189
|
)
|
$
|
(76
|
)
|
As at August 31, 2015
|
||||||||||||
0-12
months |
13-24
months |
25-36
months |
||||||||||
Accounts payable and accrued liabilities
|
$
|
29,029
|
$
|
‒
|
$
|
‒
|
||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
24,100
|
8,000
|
1,600
|
|||||||||
Inflow
|
(21,082
|
)
|
(7,011
|
)
|
(1,476
|
)
|
||||||
Total
|
$
|
32,047
|
$
|
989
|
$
|
124
|
6
|
Inventories
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
Raw materials
|
$
|
18,692
|
$
|
15,972
|
||||
Work in progress
|
1,067
|
998
|
||||||
Finished goods
|
13,245
|
10,981
|
||||||
$
|
33,004
|
$
|
27,951
|
7
|
Property, Plant and Equipment
|
Land and land
improvements |
Buildings
|
Equipment
|
Leasehold
improvements |
Total
|
||||||||||||||||
Cost as at September 1, 2014
|
$
|
5,222
|
$
|
35,597
|
$
|
38,970
|
$
|
2,442
|
$
|
82,231
|
||||||||||
Additions
|
‒
|
153
|
3,638
|
1,443
|
5,234
|
|||||||||||||||
Disposals
|
‒
|
(12
|
)
|
(4,999
|
)
|
(753
|
)
|
(5,764
|
)
|
|||||||||||
Foreign currency translation adjustment
|
(913
|
)
|
(6,266
|
)
|
(6,400
|
)
|
(338
|
)
|
(13,917
|
)
|
||||||||||
Cost as at August 31, 2015
|
4,309
|
29,472
|
31,209
|
2,794
|
67,784
|
|||||||||||||||
Additions
|
‒
|
201
|
3,626
|
226
|
4,053
|
|||||||||||||||
Disposals
|
‒
|
(11
|
)
|
(4,280
|
)
|
(121
|
)
|
(4,412
|
)
|
|||||||||||
Foreign currency translation adjustment
|
13
|
93
|
162
|
19
|
287
|
|||||||||||||||
Cost as at August 31, 2016
|
$
|
4,322
|
$
|
29,755
|
$
|
30,717
|
$
|
2,918
|
$
|
67,712
|
||||||||||
Accumulated depreciation as at September 1, 2014
|
$
|
1,327
|
$
|
6,984
|
$
|
29,888
|
$
|
1,252
|
$
|
39,451
|
||||||||||
Depreciation for the year
|
51
|
485
|
3,919
|
380
|
4,835
|
|||||||||||||||
Disposals
|
‒
|
(12
|
)
|
(4,999
|
)
|
(753
|
)
|
(5,764
|
)
|
|||||||||||
Foreign currency translation adjustment
|
(236
|
)
|
(1,514
|
)
|
(4,595
|
)
|
(88
|
)
|
(6,433
|
)
|
||||||||||
Accumulated depreciation as at August 31, 2015
|
1,142
|
5,943
|
24,213
|
791
|
32,089
|
|||||||||||||||
Depreciation for the year
|
45
|
639
|
2,811
|
319
|
3,814
|
|||||||||||||||
Disposals
|
‒
|
(11
|
)
|
(4,258
|
)
|
(121
|
)
|
(4,390
|
)
|
|||||||||||
Foreign currency translation adjustment
|
5
|
31
|
136
|
49
|
221
|
|||||||||||||||
Accumulated depreciation as at August 31, 2016
|
$
|
1,192
|
$
|
6,602
|
$
|
22,902
|
$
|
1,038
|
$
|
31,734
|
||||||||||
Net carrying value as at:
|
||||||||||||||||||||
August 31, 2015
|
$
|
3,167
|
$
|
23,529
|
$
|
6,996
|
$
|
2,003
|
$
|
35,695
|
||||||||||
August 31, 2016
|
$
|
3,130
|
$
|
23,153
|
$
|
7,815
|
$
|
1,880
|
$
|
35,978
|
8
|
Intangible Assets and Goodwill
|
Core
technology |
Customer
relationships |
Brand name
|
Software
|
Total
|
||||||||||||||||
Cost as at September 1, 2014
|
$
|
12,686
|
$
|
5,979
|
$
|
596
|
$
|
12,925
|
$
|
32,186
|
||||||||||
Additions
|
153
|
‒
|
‒
|
567
|
720
|
|||||||||||||||
Disposals
|
(93
|
)
|
‒
|
‒
|
(652
|
)
|
(745
|
)
|
||||||||||||
Foreign currency translation adjustment
|
(2,225
|
)
|
(1,044
|
)
|
(104
|
)
|
(2,112
|
)
|
(5,485
|
)
|
||||||||||
Cost as at August 31, 2015
|
10,521
|
4,935
|
492
|
10,728
|
26,676
|
|||||||||||||||
Additions
|
147
|
‒
|
‒
|
313
|
460
|
|||||||||||||||
Disposals
|
(6,414
|
)
|
(4,935
|
)
|
(492
|
)
|
(310
|
)
|
(12,151
|
)
|
||||||||||
Foreign currency translation adjustment
|
48
|
‒
|
‒
|
112
|
160
|
|||||||||||||||
Cost as at August 31, 2016
|
$
|
4,302
|
$
|
‒
|
$
|
‒
|
$
|
10,843
|
$
|
15,145
|
||||||||||
Accumulated amortization as at September 1, 2014
|
$
|
8,062
|
$
|
5,346
|
$
|
534
|
$
|
10,951
|
$
|
24,893
|
||||||||||
Amortization for the year
|
808
|
569
|
57
|
1,449
|
2,883
|
|||||||||||||||
Disposals
|
(93
|
)
|
‒
|
‒
|
(652
|
)
|
(745
|
)
|
||||||||||||
Foreign currency translation adjustment
|
(865
|
)
|
(980
|
)
|
(99
|
)
|
(2,507
|
)
|
(4,451
|
)
|
||||||||||
Accumulated amortization as at August 31, 2015
|
7,912
|
4,935
|
492
|
9,241
|
22,580
|
|||||||||||||||
Amortization for the year
|
700
|
‒
|
‒
|
472
|
1,172
|
|||||||||||||||
Disposals
|
(6,414
|
)
|
(4,935
|
)
|
(492
|
)
|
(297
|
)
|
(12,138
|
)
|
||||||||||
Foreign currency translation adjustment
|
109
|
‒
|
‒
|
31
|
140
|
|||||||||||||||
Accumulated amortization as at August 31, 2016
|
$
|
2,307
|
$
|
‒
|
$
|
‒
|
$
|
9,447
|
$
|
11,754
|
||||||||||
Net carrying value as at:
|
||||||||||||||||||||
August 31, 2015
|
$
|
2,609
|
$
|
‒
|
$
|
‒
|
$
|
1,487
|
$
|
4,096
|
||||||||||
August 31, 2016
|
$
|
1,995
|
$
|
‒
|
$
|
‒
|
$
|
1,396
|
$
|
3,391
|
||||||||||
Remaining amortization period as at August 31, 2016
|
3 years
|
‒
|
‒
|
4 years
|
Years ended August 31,
|
||||||||
2016
|
2015
|
|||||||
Balance – Beginning of year
|
$
|
21,860
|
$
|
26,488
|
||||
Foreign currency translation adjustment
|
68
|
(4,628
|
)
|
|||||
Balance – End of year
|
$
|
21,928
|
$
|
21,860
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
EXFO CGU
|
$
|
8,663
|
$
|
8,636
|
||||
Brix CGU
|
13,265
|
13,224
|
||||||
Total
|
$
|
21,928
|
$
|
21,860
|
9
|
Credit Facilities
|
10
|
Accounts Payable and Accrued Liabilities
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
Trade
|
$
|
16,940
|
$
|
14,402
|
||||
Salaries and social benefits
|
16,188
|
11,088
|
||||||
Forward exchange contracts (note 5)
|
1,075
|
3,460
|
||||||
Restructuring charges (note 3)
|
‒
|
1,637
|
||||||
Other
|
2,971
|
3,539
|
||||||
$
|
37,174
|
$
|
34,126
|
11
|
Commitments
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
No later than 1 year
|
$
|
3,337
|
$
|
2,112
|
||||
Later than 1 year and no later than 5 years
|
3,876
|
3,620
|
||||||
Later than 5 years
|
1,037
|
1,766
|
||||||
$
|
8,250
|
$
|
7,498
|
12
|
Share Capital
|
Authorized – unlimited as to number, without par value
|
|
Subordinate voting and participating, bearing a non-cumulative dividend to be determined by the Board of Directors, ranking
pari passu
with multiple voting shares
|
|
Multiple voting and participating, entitling to 10 votes each, bearing a non-cumulative dividend to be determined by the Board of Directors, convertible at the holder's option into subordinate voting shares on a one-for-one basis, ranking
pari passu
with subordinate voting shares
|
Multiple Voting Shares
|
Subordinate Voting Shares
|
|||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Total
amount
|
||||||||||||||||
Balance as at September 1, 2013
|
31,643,000
|
$
|
1
|
28,401,790
|
$
|
109,836
|
$
|
109,837
|
||||||||||||
Exercise of stock options (note 14)
|
‒
|
–
|
52,800
|
225
|
225
|
|||||||||||||||
Redemption of restricted share units (note 14)
|
‒
|
–
|
425,620
|
–
|
–
|
|||||||||||||||
Redemption of deferred share units (note 14)
|
‒
|
–
|
38,010
|
–
|
–
|
|||||||||||||||
Redemption of share capital
|
‒
|
–
|
(214,470
|
)
|
(831
|
)
|
(831
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
‒
|
–
|
–
|
2,260
|
2,260
|
|||||||||||||||
Balance as at August 31, 2014
|
31,643,000
|
1
|
28,703,750
|
111,490
|
111,491
|
|||||||||||||||
Redemption of restricted share units (note 14)
|
‒
|
–
|
229,559
|
–
|
–
|
|||||||||||||||
Redemption of deferred share units (note 14)
|
‒
|
–
|
48,697
|
–
|
–
|
|||||||||||||||
Redemption of share capital
|
‒
|
–
|
(6,889,972
|
)
|
(26,827
|
)
|
(26,827
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
–
|
–
|
–
|
1,381
|
1,381
|
|||||||||||||||
Balance as at August 31, 2015
|
31,643,000
|
1
|
22,092,034
|
86,044
|
86,045
|
|||||||||||||||
Redemption of restricted share units (note 14)
|
–
|
–
|
277,805
|
–
|
–
|
|||||||||||||||
Redemption of deferred share units (note 14)
|
–
|
–
|
653
|
–
|
–
|
|||||||||||||||
Redemption of share capital
|
–
|
–
|
(452,550
|
)
|
(1,768
|
)
|
(1,768
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
–
|
–
|
–
|
1,239
|
1,239
|
|||||||||||||||
Balance as at August 31, 2016
|
31,643,000
|
$
|
1
|
21,917,942
|
$
|
85,515
|
$
|
85,516
|
a)
|
On January 8, 2014, 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 10% of its issued and outstanding subordinate voting shares, representing 2,043,101 subordinate voting shares at the prevailing market price. The normal course issuer bid started on January 13, 2014, and ended on January 12, 2015. All shares repurchased under the bid were cancelled.
|
b)
|
On January 7, 2015, the company announced that its Board of Directors had authorized a substantial issuer bid (the "Offer") to purchase for cancellation up to 7,142,857 subordinate voting shares for an aggregate purchase price not to exceed CA$30,000,000. On February 20, 2015, pursuant to the Offer, the company purchased for cancellation 6,521,739 subordinate voting shares for an aggregate purchase price of CA$30,000,000 (US$24,027,000), plus related fees of $223,000. The company used cash to fund the purchase of shares.
|
c)
|
On March 25, 2015, 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 10% of the issued and outstanding subordinate voting shares, representing 1,397,598 subordinate voting shares at the prevailing market price. The normal course issuer bid started on March 27, 2015, and ended on March 26, 2016. All shares repurchased under the bid were cancelled.
|
d)
|
On March 29, 2016, 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 6.6% of the issued and outstanding subordinate voting shares, representing 900,000 subordinate voting shares at the prevailing market price. The normal course issuer bid started on April 1, 2016, and will end on March 31, 2017, 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 are cancelled.
|
13
|
Accumulated Other Comprehensive Loss
|
Foreign
currency translation adjustment |
Cash-flow
hedge |
Accumulated
other comprehensive loss |
||||||||||
Balance as at September 1, 2013
|
$
|
(3,582
|
)
|
$
|
159
|
$
|
(3,423
|
)
|
||||
Foreign currency translation adjustment
|
(7,086
|
)
|
–
|
(7,086
|
)
|
|||||||
Changes in unrealized losses on forward exchange contracts, net of deferred income taxes
|
–
|
250
|
250
|
|||||||||
Balance as at August 31, 2014
|
(10,668
|
)
|
409
|
(10,259
|
)
|
|||||||
Foreign currency translation adjustment
|
(39,175
|
)
|
–
|
(39,175
|
)
|
|||||||
Changes in unrealized losses on forward exchange contracts, net of deferred income taxes
|
–
|
(2,571
|
)
|
(2,571
|
)
|
|||||||
Balance as at August 31, 2015
|
(49,843
|
)
|
(2,162
|
)
|
(52,005
|
)
|
||||||
Foreign currency translation adjustment
|
707
|
‒
|
707
|
|||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes
|
‒
|
2,724
|
2,724
|
|||||||||
Balance as at August 31, 2016
|
$
|
(49,136
|
)
|
$
|
562
|
$
|
(48,574
|
)
|
14
|
Stock-Based Compensation Plans
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Stock-based compensation costs arising from
equity-settled awards |
$
|
1,394
|
$
|
1,323
|
$
|
1,683
|
||||||
Stock-based compensation costs arising from
cash-settled awards |
(16
|
)
|
(28
|
)
|
13
|
|||||||
$
|
1,378
|
$
|
1,295
|
$
|
1,696
|
Years ended August 31,
|
||||||||||||||||||||||||
2016
|
2015
|
2014
|
||||||||||||||||||||||
Number
|
Weighted
average exercise price |
Number
|
Weighted
average exercise price |
Number
|
Weighted
average exercise price |
|||||||||||||||||||
(CA$)
|
(CA$)
|
(CA$)
|
||||||||||||||||||||||
Outstanding – Beginning of year
|
17,099
|
$
|
6
|
87,454
|
$
|
6
|
201,254
|
$
|
6
|
|||||||||||||||
Exercised
|
–
|
–
|
–
|
–
|
(52,800
|
)
|
5
|
|||||||||||||||||
Forfeited
|
–
|
–
|
(2,000
|
)
|
6
|
(4,500
|
)
|
6
|
||||||||||||||||
Expired
|
(17,099
|
)
|
6
|
(68,355
|
)
|
6
|
(56,500
|
)
|
6
|
|||||||||||||||
Outstanding – End of year
|
–
|
$
|
–
|
17,099
|
$
|
6
|
87,454
|
$
|
6
|
|||||||||||||||
Exercisable – End of year
|
–
|
$
|
–
|
17,099
|
$
|
6
|
87,454
|
$
|
6
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Outstanding – Beginning of year
|
1,299,958
|
1,225,135
|
1,333,092
|
|||||||||
Granted
|
572,008
|
409,521
|
336,685
|
|||||||||
Redeemed
|
(277,805
|
)
|
(229,559
|
)
|
(425,620
|
)
|
||||||
Forfeited
|
(42,606
|
)
|
(105,139
|
)
|
(19,022
|
)
|
||||||
Outstanding – End of year
|
1,551,555
|
1,299,958
|
1,225,135
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Outstanding – Beginning of year
|
114,810
|
117,701
|
119,908
|
|||||||||
Granted
|
44,970
|
45,806
|
35,803
|
|||||||||
Redeemed
|
(653
|
)
|
(48,697
|
)
|
(38,010
|
)
|
||||||
Outstanding – End of year
|
159,127
|
114,810
|
117,701
|
Years ended August 31,
|
||||||||||||||||||||||||
2016
|
2015
|
2014
|
||||||||||||||||||||||
Number
|
Weighted
average exercise price |
Number
|
Weighted
average exercise price |
Number
|
Weighted
average exercise price |
|||||||||||||||||||
Outstanding – Beginning of year
|
42,324
|
$
|
1
|
39,874
|
$
|
2
|
37,224
|
$
|
3
|
|||||||||||||||
Granted
|
7,800
|
–
|
6,150
|
–
|
7,150
|
–
|
||||||||||||||||||
Exercised
|
(12,927
|
)
|
5
|
(500
|
)
|
6
|
–
|
–
|
||||||||||||||||
Expired
|
(1,500
|
)
|
7
|
(2,000
|
)
|
5
|
(4,500
|
)
|
5
|
|||||||||||||||
Forfeited
|
(2,197
|
)
|
–
|
(1,200
|
)
|
6
|
–
|
–
|
||||||||||||||||
Outstanding – End of year
|
33,500
|
$
|
1
|
42,324
|
$
|
1
|
39,874
|
$
|
2
|
|||||||||||||||
Exercisable – End of year
|
14,000
|
$
|
3
|
22,924
|
$
|
3
|
22,374
|
$
|
3
|
Stock appreciation
rights outstanding |
Stock appreciation
rights exercisable |
|||||||||||
Exercise price
|
Number
|
Weighted average
remaining contractual life |
Number
|
|||||||||
$ –
|
|
19,500
|
8 years
|
–
|
||||||||
$2.36
|
|
8,250
|
2 years
|
8,250
|
||||||||
$3.74
|
|
4,000
|
3 years
|
4,000
|
||||||||
$6.28
|
|
1,750
|
1 year
|
1,750
|
||||||||
33,500
|
6 years
|
14,000
|
15
|
Related-Party Disclosures
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Salaries and short-term employee benefits
|
$
|
3,701
|
$
|
3,025
|
$
|
3,627
|
||||||
Stock-based compensation costs
|
826
|
617
|
906
|
|||||||||
$
|
4,527
|
$
|
3,642
|
$
|
4,533
|
|||||||
16
|
Statements of Earnings
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Gross research and development expenses
|
$
|
47,875
|
$
|
50,148
|
$
|
52,423
|
||||||
Research and development tax credits and grants
|
(5,188
|
)
|
(6,145
|
)
|
(7,577
|
)
|
||||||
Net research and development expenses for the year
|
$
|
42,687
|
$
|
44,003
|
$
|
44,846
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Cost of sales
|
||||||||||||
Depreciation of property, plant and equipment
|
$
|
1,290
|
$
|
1,519
|
$
|
1,522
|
||||||
Amortization of intangible assets
|
702
|
1,540
|
2,087
|
|||||||||
1,992
|
3,059
|
3,609
|
||||||||||
Selling and administrative expenses
|
||||||||||||
Depreciation of property, plant and equipment
|
501
|
524
|
951
|
|||||||||
Amortization of intangible assets
|
75
|
790
|
1,534
|
|||||||||
576
|
1,314
|
2,485
|
||||||||||
Net research and development expenses
|
||||||||||||
Depreciation of property, plant and equipment
|
2,023
|
2,792
|
2,522
|
|||||||||
Amortization of intangible assets
|
395
|
553
|
777
|
|||||||||
2,418
|
3,345
|
3,299
|
||||||||||
$
|
4,986
|
$
|
7,718
|
$
|
9,393
|
|||||||
Depreciation of property, plant and equipment
|
$
|
3,814
|
$
|
4,835
|
$
|
4,995
|
||||||
Amortization of intangible assets
|
1,172
|
2,883
|
4,398
|
|||||||||
Total depreciation and amortization expenses for the year
|
$
|
4,986
|
$
|
7,718
|
$
|
9,393
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Salaries and benefits
|
$
|
112,569
|
$
|
114,868
|
$
|
121,515
|
||||||
Restructuring charges
|
‒
|
1,637
|
‒
|
|||||||||
Stock-based compensation costs
|
1,378
|
1,295
|
1,696
|
|||||||||
Total employee compensation for the year
|
$
|
113,947
|
$
|
117,800
|
$
|
123,211
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Cost of sales
|
$
|
‒
|
$
|
290
|
$
|
‒
|
||||||
Selling and administrative expenses
|
‒
|
586
|
‒
|
|||||||||
Net research and development costs
|
‒
|
761
|
‒
|
|||||||||
Total restructuring charges for the year
|
$
|
‒
|
$
|
1,637
|
$
|
‒
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Cost of sales
|
$
|
107
|
$
|
159
|
$
|
191
|
||||||
Selling and administrative expenses
|
972
|
791
|
1,140
|
|||||||||
Net research and development expenses
|
299
|
345
|
365
|
|||||||||
Total stock-based compensation costs for the year
|
$
|
1,378
|
$
|
1,295
|
$
|
1,696
|
17
|
Other Disclosures
|
·
|
Canadian defined contribution pension plan
|
·
|
US defined contribution pension plan (401K plan)
|
18
|
Income Taxes
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Income tax provision at combined Canadian federal and provincial statutory tax rate (
27
%)
|
$
|
4,499
|
$
|
2,671
|
$
|
1,226
|
||||||
Increase (decrease) due to:
|
||||||||||||
Foreign income/loss taxed at different rates
|
(1,025
|
)
|
482
|
(20
|
)
|
|||||||
Non-taxable (income)/loss
|
5
|
2,540
|
(540
|
)
|
||||||||
Non-deductible expenses
|
411
|
664
|
1,011
|
|||||||||
Foreign exchange effect of translation of foreign subsidiaries in the functional currency
|
566
|
(3,641
|
)
|
(547
|
)
|
|||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
3,702
|
2,556
|
3,013
|
|||||||||
Other
|
(394
|
)
|
(236
|
)
|
143
|
|||||||
Income tax provision for the year
|
$
|
7,764
|
$
|
5,036
|
$
|
4,286
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
The income tax provision consists of the following:
|
||||||||||||
Current
|
||||||||||||
Current income taxes
|
$
|
6,186
|
$
|
4,633
|
$
|
3,588
|
||||||
Deferred
|
||||||||||||
Deferred income taxes relating to the origination and reversal of temporary differences
|
(2,124
|
)
|
(2,153
|
)
|
(2,315
|
)
|
||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
3,702
|
2,556
|
3,013
|
|||||||||
1,578
|
403
|
698
|
||||||||||
Income tax provision for the year
|
$
|
7,764
|
$
|
5,036
|
$
|
4,286
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
Deferred income tax assets
|
||||||||
Deferred income tax assets recoverable within 12 months
|
$
|
4,224
|
$
|
3,512
|
||||
Deferred income tax assets recoverable after 12 months
|
4,016
|
5,947
|
||||||
8,240
|
9,459
|
|||||||
Deferred income tax liabilities
|
||||||||
Deferred income tax liabilities payable within 12 months
|
645
|
398
|
||||||
Deferred income tax liabilities payable after 12 months
|
2,212
|
1,126
|
||||||
2,857
|
1,524
|
|||||||
Deferred income tax assets net
|
$
|
5,383
|
$
|
7,935
|
Balance as at
September 1, 2014 |
Credited
(charged) to the statement of earnings |
Credited
(charged) to shareholders' equity |
Foreign
currency translation adjustment |
Balance as at
August 31, 2015 |
||||||||||||||||
Deferred income tax assets
|
||||||||||||||||||||
Long-lived assets
|
$
|
2,837
|
$
|
468
|
$
|
‒
|
$
|
(456
|
)
|
$
|
2,849
|
|||||||||
Provisions and accruals
|
4,335
|
422
|
905
|
(638
|
)
|
5,024
|
||||||||||||||
Deferred revenue
|
1,638
|
(156
|
)
|
‒
|
(174
|
)
|
1,308
|
|||||||||||||
Research and development expenses
|
2,732
|
(17
|
)
|
‒
|
(475
|
)
|
2,240
|
|||||||||||||
Losses carried forward
|
7,406
|
(819
|
)
|
‒
|
(36
|
)
|
6,551
|
|||||||||||||
Deferred income tax liabilities
|
||||||||||||||||||||
Long-lived assets
|
(41
|
)
|
41
|
‒
|
‒
|
‒
|
||||||||||||||
Research and development tax credits
|
(11,781
|
)
|
(342
|
)
|
‒
|
2,086
|
(10,037
|
)
|
||||||||||||
Total
|
$
|
7,126
|
$
|
(403
|
)
|
$
|
905
|
$
|
307
|
$
|
7,935
|
|||||||||
Classified as follows:
|
||||||||||||||||||||
Deferred income tax assets
|
$
|
10,213
|
$
|
9,459
|
||||||||||||||||
Deferred income tax liabilities
|
(3,087
|
)
|
(1,524
|
)
|
||||||||||||||||
$
|
7,126
|
$
|
7,935
|
Balance as at
September 1, 2015 |
Credited
(charged) to the statement of earnings |
Credited
(charged) to shareholders' equity |
Foreign
currency translation adjustment |
Balance as at
August 31, 2016 |
||||||||||||||||
Deferred income tax assets
|
||||||||||||||||||||
Long-lived assets
|
$
|
2,849
|
$
|
(595
|
)
|
$
|
‒
|
$
|
1
|
$
|
2,255
|
|||||||||
Provisions and accruals
|
5,024
|
177
|
(935
|
)
|
(20
|
)
|
4,246
|
|||||||||||||
Deferred revenue
|
1,308
|
1,015
|
‒
|
7
|
2,330
|
|||||||||||||||
Research and development expenses
|
2,240
|
112
|
‒
|
9
|
2,361
|
|||||||||||||||
Losses carried forward
|
6,551
|
(1,951
|
)
|
‒
|
(2
|
)
|
4,598
|
|||||||||||||
Deferred income tax liabilities
|
||||||||||||||||||||
Research and development tax credits
|
(10,037
|
)
|
(336
|
)
|
‒
|
(34
|
)
|
(10,407
|
)
|
|||||||||||
Total
|
$
|
7,935
|
$
|
(1,578
|
)
|
$
|
(935
|
)
|
$
|
(39
|
)
|
$
|
5,383
|
|||||||
Classified as follows:
|
||||||||||||||||||||
Deferred income tax assets
|
$
|
9,459
|
$
|
8,240
|
||||||||||||||||
Deferred income tax liabilities
|
(1,524
|
)
|
(2,857
|
)
|
||||||||||||||||
$
|
7,935
|
$
|
5,383
|
As at August 31,
|
||||||||
2016
|
2015
|
|||||||
Temporary deductible differences
|
$
|
1,676
|
$
|
1,433
|
||||
Losses carried forward
|
38,287
|
34,693
|
||||||
Research and development expenses
|
‒
|
221
|
||||||
$
|
39,963
|
$
|
36,347
|
Year of expiry
|
Finland
|
United States
|
||||||
2017
|
$
|
3
|
$
|
‒
|
||||
2018
|
418
|
741
|
||||||
2019
|
‒
|
3,470
|
||||||
2020
|
7,387
|
7,991
|
||||||
2021
|
6,400
|
2,211
|
||||||
2022
|
11,097
|
7,435
|
||||||
2023
|
7,189
|
1,972
|
||||||
2024
|
5,550
|
1,351
|
||||||
2025
|
6,918
|
1,351
|
||||||
2026
|
237
|
1,351
|
||||||
2027
|
‒
|
1,351
|
||||||
2028
|
‒
|
2,447
|
||||||
2030
|
‒
|
2,713
|
||||||
2031
|
‒
|
109
|
||||||
2033
|
‒
|
4,681
|
||||||
2034
|
‒
|
4,851
|
||||||
2035
|
‒
|
2,616
|
||||||
2036
|
‒
|
8,528
|
||||||
$
|
45,199
|
$
|
55,169
|
(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.
|
19
|
Earnings per Share
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Basic weighted average number of shares outstanding (000's)
|
53,863
|
56,804
|
60,329
|
|||||||||
Plus dilutive effect of (000's):
|
||||||||||||
Restricted share units
|
675
|
549
|
574
|
|||||||||
Deferred share units
|
131
|
104
|
103
|
|||||||||
Stock options
|
‒
|
‒
|
9
|
|||||||||
Diluted weighted average number of shares outstanding (000's)
|
54,669
|
57,457
|
61,015
|
|||||||||
Stock awards excluded from the calculation of the diluted weighted average number of shares outstanding because their exercise price was greater than the average market price of the common shares (000's)
|
75
|
57
|
77
|
20
|
Segment Information
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Products
|
$
|
205,371
|
$
|
193,427
|
$
|
201,724
|
||||||
Services
|
27,212
|
28,662
|
29,082
|
|||||||||
$
|
232,583
|
$
|
222,089
|
$
|
230,806
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
United States
|
$
|
95,388
|
$
|
82,227
|
$
|
83,172
|
||||||
Canada
|
18,027
|
19,722
|
19,482
|
|||||||||
Other
|
14,129
|
17,547
|
19,195
|
|||||||||
Americas
|
127,544
|
119,496
|
121,849
|
|||||||||
United Kingdom
|
11,032
|
9,151
|
12,736
|
|||||||||
Other
|
46,140
|
48,123
|
51,243
|
|||||||||
Europe, Middle-East and Africa
|
57,172
|
57,274
|
63,979
|
|||||||||
China
|
25,281
|
21,526
|
22,468
|
|||||||||
Other
|
22,586
|
23,793
|
22,510
|
|||||||||
Asia-Pacific
|
47,867
|
45,319
|
44,978
|
|||||||||
$
|
232,583
|
$
|
222,089
|
$
|
230,806
|
As at August 31, 2016
|
As at August 31, 2015
|
|||||||||||||||||||||||
Property,
plant and equipment |
Intangible
assets |
Goodwill
|
Property,
plant and equipment |
Intangible
assets |
Goodwill
|
|||||||||||||||||||
Canada
|
$
|
27,048
|
$
|
1,330
|
$
|
–
|
$
|
27,174
|
$
|
1,310
|
$
|
–
|
||||||||||||
United States
|
1,174
|
1,637
|
13,265
|
948
|
1,255
|
13,224
|
||||||||||||||||||
Finland
|
572
|
354
|
8,663
|
295
|
1,433
|
8,636
|
||||||||||||||||||
India
|
3,602
|
37
|
–
|
4,011
|
65
|
–
|
||||||||||||||||||
China
|
2,657
|
33
|
–
|
2,500
|
30
|
–
|
||||||||||||||||||
Other
|
925
|
–
|
–
|
767
|
3
|
–
|
||||||||||||||||||
$
|
35,978
|
$
|
3,391
|
$
|
21,928
|
$
|
35,695
|
$
|
4,096
|
$
|
21,860
|
21
|
Subsequent Event
|
Consolidated statements of earnings data
(1)
:
|
2016
|
2015
|
2014
|
2016
|
2015
|
2014
|
||||||||||||||||||
Sales
|
$
|
232,583
|
$
|
222,089
|
$
|
230,806
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||||||
Cost of sales
(2)
|
87,066
|
85,039
|
86,836
|
37.4
|
38.3
|
37.6
|
||||||||||||||||||
Selling and administrative
(3)
|
82,169
|
82,200
|
86,429
|
35.3
|
37.0
|
37.4
|
||||||||||||||||||
Net research and development
|
42,687
|
44,003
|
44,846
|
18.4
|
19.8
|
19.4
|
||||||||||||||||||
Depreciation of property, plant and equipment
|
3,814
|
4,835
|
4,995
|
1.6
|
2.2
|
2.2
|
||||||||||||||||||
Amortization of intangible assets
|
1,172
|
2,883
|
4,398
|
0.5
|
1.3
|
1.9
|
||||||||||||||||||
Interest and other income
|
(828
|
)
|
(155
|
)
|
(326
|
)
|
(0.4
|
)
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||||
Foreign exchange gain
|
(161
|
)
|
(7,212
|
)
|
(1,634
|
)
|
–
|
(3.2
|
)
|
(0.7
|
)
|
|||||||||||||
Unusual charge
(3)
|
–
|
603
|
720
|
–
|
0.3
|
0.3
|
||||||||||||||||||
Earnings before income taxes
|
16,664
|
9,893
|
4,542
|
7.2
|
4.4
|
2.0
|
||||||||||||||||||
Income taxes
|
7,764
|
5,036
|
4,286
|
3.4
|
2.2
|
1.9
|
||||||||||||||||||
Net earnings for the year
|
$
|
8,900
|
$
|
4,857
|
$
|
256
|
3.8
|
%
|
2.2
|
%
|
0.1
|
%
|
||||||||||||
Basic net earnings per share
|
$
|
0.17
|
$
|
0.09
|
$
|
0.00
|
||||||||||||||||||
Diluted net earnings per share
|
$
|
0.16
|
$
|
0.08
|
$
|
0.00
|
||||||||||||||||||
Other selected information:
|
||||||||||||||||||||||||
Gross margin before depreciation and amortization
(4)
|
$
|
145,517
|
$
|
137,050
|
$
|
143,970
|
62.6
|
%
|
61.7
|
%
|
62.4
|
%
|
||||||||||||
Research and development data:
|
||||||||||||||||||||||||
Gross research and development
|
$
|
47,875
|
$
|
50,148
|
$
|
52,423
|
20.6
|
%
|
22.6
|
%
|
22.7
|
%
|
||||||||||||
Net research and development
|
$
|
42,687
|
$
|
44,003
|
$
|
44,846
|
18.4
|
%
|
19.8
|
%
|
19.4
|
%
|
||||||||||||
Restructuring charges included in:
|
||||||||||||||||||||||||
Cost of sales
|
$
|
–
|
$
|
290
|
$
|
–
|
–
|
%
|
0.1
|
%
|
–
|
%
|
||||||||||||
Selling and administrative expenses
|
$
|
–
|
$
|
586
|
$
|
–
|
–
|
%
|
0.3
|
%
|
–
|
%
|
||||||||||||
Net research and development expenses
|
$
|
–
|
$
|
761
|
$
|
–
|
–
|
%
|
0.3
|
%
|
–
|
%
|
||||||||||||
Adjusted EBITDA
(4)
|
$
|
22,039
|
$
|
13,779
|
$
|
14,391
|
9.5
|
%
|
6.2
|
%
|
6.2
|
%
|
||||||||||||
Consolidated balance sheets data
(1)
:
|
||||||||||||||||||||||||
Total assets
|
$
|
237,793
|
$
|
217,478
|
$
|
276,948
|
(1)
|
Consolidated statements of earnings and balance sheets data has been derived from our consolidated financial statements prepared according with IFRS, as issued by the IASB, except for non-IFRS measures
(4)
.
|
(2)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(3)
|
Selling and administrative is exclusive of unusual charge, shown separately, which represents bad debt expenses arising from the revision (see Note 1 to the consolidated financial statements included in this Annual Report on Form 20-F/A).
|
(4)
|
Refer to page 67 for non-IFRS measures.
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Physical-layer product line
|
$
|
151,910
|
$
|
144,060
|
$
|
132,097
|
||||||
Protocol-layer product line
|
83,324
|
80,591
|
99,618
|
|||||||||
235,234
|
224,651
|
231,715
|
||||||||||
Foreign exchange losses on forward exchange contracts
|
(2,651
|
)
|
(2,562
|
)
|
(909
|
)
|
||||||
Total sales
|
$
|
232,583
|
$
|
222,089
|
$
|
230,806
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Physical-layer product line
|
$
|
155,320
|
$
|
144,673
|
$
|
137,166
|
||||||
Protocol-layer product line
|
87,631
|
80,948
|
104,148
|
|||||||||
242,951
|
225,621
|
241,314
|
||||||||||
Foreign exchange losses on forward exchange contracts
|
(2,651
|
)
|
(2,562
|
)
|
(909
|
)
|
||||||
Total bookings
|
$
|
240,300
|
$
|
223,059
|
$
|
240,405
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Americas
|
55
|
%
|
54
|
%
|
53
|
%
|
||||||
EMEA
|
25
|
26
|
28
|
|||||||||
APAC
|
20
|
20
|
19
|
|||||||||
100
|
%
|
100
|
%
|
100
|
%
|
Expiry dates
|
Contractual
amounts
|
Weighted average
contractual
forward rates
|
||||||
September 2016 to August 2017
|
$
|
22,200,000
|
1.2784
|
|||||
September 2017 to August 2018
|
9,900,000
|
1.3367
|
||||||
September 2018 to December 2018
|
1,900,000
|
1.3639
|
||||||
Total
|
$
|
34,000,000
|
1.3002
|
Expiry dates
|
Contractual
amounts
|
Weighted average
contractual
forward rate
|
||||||
September 2016 to August 2017
|
$
|
3,800,000
|
70.92
|
(a)
|
Determination of functional currency
|
(b)
|
Determination of cash generating units and allocation of goodwill
|
(a)
|
Inventories
|
(b)
|
Income taxes
|
(c)
|
Tax credits recoverable
|
(d)
|
Impairment of non-financial assets
|
EXFO CGU
|
$
|
8,663,000
|
|||
Brix CGU
|
13,265,000
|
||||
Total
|
$
|
21,928,000
|
Years ended August 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
IFRS net earnings for the year
|
$
|
8,900
|
$
|
4,857
|
$
|
256
|
||||||
Add (deduct):
|
||||||||||||
Depreciation of property, plant and equipment
|
3,814
|
4,835
|
4,995
|
|||||||||
Amortization of intangible assets
|
1,172
|
2,883
|
4,398
|
|||||||||
Interest and other income
|
(828
|
)
|
(155
|
)
|
(326
|
)
|
||||||
Income taxes
|
7,764
|
5,036
|
4,286
|
|||||||||
Restructuring charges
|
–
|
1,637
|
–
|
|||||||||
Unusual charge
(1)
|
–
|
603
|
720
|
|||||||||
Stock-based compensation costs
|
1,378
|
1,295
|
1,696
|
|||||||||
Foreign exchange gain
|
(161
|
)
|
(7,212
|
)
|
(1,634
|
)
|
||||||
Adjusted EBITDA for the year
|
$
|
22,039
|
$
|
13,779
|
$
|
14,391
|
||||||
Adjusted EBITDA in percentage of total sales
|
9.5
|
%
|
6.2
|
%
|
6.2
|
%
|
(1)
|
We have amended the calculation of adjusted EBITDA to include an adjustment for the unusual charge associated with bad debt expense, as described in Note 1,
Revision to Consolidated Financial Statements
, to our consolidated financial statements on the basis that the charge is not considered typical for our historical or future operating performance.
|
1
st
quarter
|
2
nd
quarter
|
3
rd
quarter
|
4
th
quarter
|
Year ended
August 31, |
||||||||||||||||
2016
|
||||||||||||||||||||
Sales
|
$
|
55,232
|
$
|
53,597
|
$
|
60,896
|
$
|
62,858
|
$
|
232,583
|
||||||||||
Cost of sales
(2)
|
$
|
20,137
|
$
|
18,904
|
$
|
23,880
|
$
|
24,145
|
$
|
87,066
|
||||||||||
Net earnings
|
$
|
1,766
|
$
|
3,963
|
$
|
919
|
$
|
2,252
|
$
|
8,900
|
||||||||||
Basic net earnings per share
(3)
|
$
|
0.03
|
$
|
0.07
|
$
|
0.02
|
$
|
0.04
|
$
|
0.17
|
||||||||||
Diluted net earnings per share
|
$
|
0.03
|
$
|
0.07
|
$
|
0.02
|
$
|
0.04
|
$
|
0.16
|
1
st
quarter
|
2
nd
quarter
|
3
rd
quarter
|
4
th
quarter
|
Year ended
August 31, |
||||||||||||||||
2015
|
||||||||||||||||||||
Sales
|
$
|
56,724
|
$
|
50,990
|
$
|
57,781
|
$
|
56,594
|
$
|
222,089
|
||||||||||
Cost of sales
(2)
|
$
|
21,237
|
$
|
19,546
|
$
|
22,281
|
$
|
21,975
|
$
|
85,039
|
||||||||||
Net earnings
|
$
|
1,481
|
$
|
931
|
$
|
563
|
$
|
1,882
|
$
|
4,857
|
||||||||||
Basic net earnings per share
(3)
|
$
|
0.02
|
$
|
0.02
|
$
|
0.01
|
$
|
0.03
|
$
|
0.09
|
||||||||||
Diluted net earnings per share
|
$
|
0.02
|
$
|
0.02
|
$
|
0.01
|
$
|
0.03
|
$
|
0.08
|
(1)
|
Quarterly financial information has been derived from our unaudited interim condensed financial statements, which are prepared in accordance with the IFRS, as issued by the IASB applicable to the preparation of interim financial statements, including IAS 34, "
Interim Financial Reporting
". The presentation currency is the US dollars, which differs from the functional currency of the company (Canadian dollar).
|
(2)
|
The cost of sales is exclusive of depreciation and amortization.
|
(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, 2016, 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.
|
|
|
Under Canadian Securities Law, you are entitled to receive certain investor documents. If you wish to receive such material, please tick the applicable boxes below. You may also go to CST website
www.canstockta.com/financialstatements
and input code 1629a.
.
q
I would like to receive quarterly financial statements
q
I do not want to receive annual financial statements
q
I would like to receive future mailings by email at ______________________
I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting.
If no voting instructions are indicated above, this Proxy will be voted FOR a matter by Management's appointees or, if you appoint another proxyholder, as that other proxyholder sees fit. On any amendments or variations proposed or any new business properly submitted before the Meeting, I/We authorize you to vote as you see fit.
________________________________________________
__________________
Signature(s)
Date
Please sign exactly as your name(s) appear on this proxy. Please see reverse for instructions. All proxies must be received by January 19
th
, 2017 at 5:00 p.m. (Eastern time).
|
|||||
I/We, being holder(s)
of subordinate voting shares of EXFO Inc. (the "Company"), hereby appoint: Germain Lamonde, President and Chief Executive Officer, or, failing him, Pierre Plamondon, Vice-President, Finance and Chief Financial Officer OR
__________________________________________________________________________________________
Print the name of the person you are appointing if this person is someone other than the individuals listed above
as proxy of the undersigned, to attend, act and vote on behalf of the undersigned in accordance with the below direction (or if no directions have been given, as the proxy sees fit) on all the following matters and any other matter that may properly come before the Annual Meeting of Shareholders of
the Compan
y to be held at 9:00 a.m. (Toronto Time) on January 11, 2017, at the St. Andrew's Club & Conference Centre, 150 King Street West, 27
th
Floor, Caledonia Room, Toronto, Ontario, Canada (the "Meeting"), and at any and all adjournments or postponements thereof in the same manner, to the same extent and with the same powers as if the undersigned were personally present, with full power of substitution.
|
|||||||
Management recommends voting FOR Resolutions 1 and 2. Please use a dark black pencil or pen.
|
|||||||
1.
Election of Directors
|
FOR
|
WITHHOLD
|
|||||
1.
Pierre-Paul Allard
|
☐
|
☐
|
|||||
2.
François Côté
|
☐
|
☐
|
|||||
3.
Germain Lamonde
|
☐
|
☐
|
|||||
4.
Angela Logothetis
|
☐
|
☐
|
|||||
5.
Claude Séguin
|
☐
|
☐
|
|||||
6.
Randy E. Tornes
|
☐
|
☐
|
|||||
2.
Appointment of Auditors
|
FOR
|
WITHHOLD
|
|||||
Appointment of PricewaterhouseCoopers LLP
as Auditors
|
☐
|
☐
|
|||||
Control Number
|
|
How to Vote
|
||
Proxy Form – Annual Meeting of Shareholders of EXFO Inc. to be held on January 11, 2017 (the "Meeting")
Notes to Proxy
|
INTERNET
·
Go to
www.cstvotemyproxy.com
·
Cast your vote online
·
View Meeting documents
|
TELEPHONE
Use any touch-tone phone, call toll free in Canada and United States
1-888-489-7352
and follow the voice instructions
|
|
1.
This proxy must be signed by a holder or his or her attorney duly authorized in writing. If you are an individual, please sign exactly as your name appears on this proxy. If the holder is a corporation, a duly authorized officer or attorney of the corporation must sign this proxy, and if the corporation has a corporate seal, its corporate seal should be affixed.
|
To vote using your smartphone,
please scan this QR Code è |
|
|
2.
If the securities are registered in the name of an executor, administrator or trustee, please sign exactly as your name appears on this proxy. If the securities are registered in the name of a deceased or other holder, the proxy must be signed by the legal representative with his or her name printed below his or her signature, and evidence of authority to sign on behalf of the deceased or other holder must be attached to this proxy.
|
To vote by telephone or Internet you will need your control number. If you vote by Internet or telephone, do not return this proxy.
MAIL, FAX or EMAIL
|
||
3.
Some holders may own securities as both a registered and a beneficial holder; in which case you may receive more than one Circular and will need to vote separately as a registered and beneficial holder. Beneficial holders may be forwarded either a form of proxy already signed by the intermediary or a voting instruction form to allow them to direct the voting of securities they beneficially own. Beneficial holders should follow instructions for voting conveyed to them by their intermediaries.
|
·
Complete and return your signed proxy in the envelope provided or send to:
CST Trust Company
P.O. Box 721 Agincourt, ON M1S 0A1 |
||
4.
If a security is held by two or more individuals, any one of them present or represented by proxy at the Meeting may, in the absence of the other or others, vote at the Meeting. However, if one or more of them are present or represented by proxy, they must vote together the number of securities indicated on the proxy.
|
·
You may alternatively fax your proxy to 416-368-2502 or toll free in Canada and the United States to 1-866-781-3111 or scan and email
to
proxy@canstockta.com
|
||
All holders should refer to the Proxy Circular for further information regarding completion and use of this proxy and other information pertaining to the Meeting.
This proxy is solicited by and on behalf of Management of the Company.
|
An undated proxy is deemed to be dated on the day it was received by CST.
If you wish to receive investor documents electronically in future, please visit
www.canstockta.com/electronicdelivery
to enrol.
|
||
All proxies must be received by January 10, 2017 at 5:00 p.m. (Eastern time).
|
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
|
4,316,247
|
(2)
|
18.93%
|
31,643,000
|
(3)
|
100%
|
94.55%
|
|
EdgePoint Investment Group, Inc.
|
4,193,500
|
18.39%
|
–
|
–
|
1.24%
|
(1)
|
The holder of Multiple Voting Shares is entitled to ten (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.
|
Board/Committee Membership
|
Attendance
(1)
|
Board Memberships of Another Reporting Issuer
|
||||
Chairman of the Board of Directors
|
6/6
|
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, 2016
|
4,316,247
(4)
|
31,643,000
(5)
|
53,261
|
36,012,508
|
118,841,276
|
(1)
|
From September 1, 2015 until November 1, 2016, Mr. Lamonde attended five (5) board meetings in person and one (1) board 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, 2016, which was US$3.30 (CA$4.33). The market value of the Subordinate Voting Shares and Multiple Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2016 using the noon buying rate of the Bank of Canada to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of RSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Mr. Lamonde exercises control over 4,000,000 of Subordinate Voting Shares through G. Lamonde Investissements Financiers Inc., a company controlled by Mr. Lamonde.
|
(5)
|
Mr. Lamonde exercises control over this number of Multiple Voting Shares through G. Lamonde Investissements Financiers Inc., a company controlled by Mr. Lamonde and through Fiducie Germain Lamonde, a family trust for the benefit of Mr. Lamonde's family.
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value
(3)
of Shares (4) and DSUs (US$) |
August 31, 2016
|
8,000
|
48,883
|
56,883
|
187,714
|
(1)
|
Check Point Software Technologies Inc. is an international provider of software products for IT security, including network security, endpoint security, data security and security management
|
(2)
|
From September 1, 2015 until November 1, 2016, Mr. Allard attended four (4) board meetings in person and one (1) board 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, 2016, which was US$3.30 (CA$4.33). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2016 using the noon buying rate of the Bank of Canada to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value
(3)
of Shares (4) and DSUs (US$) |
August 31, 2016
|
3,000
|
10,809
|
13,809
|
45,570
|
(1)
|
From September 1, 2015 until November 1, 2016, Mr. Côté attended five (5) board meetings in person and no board meeting 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, 2016, which was US$3.30 (CA$4.33). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2016 using the noon buying rate of the Bank of Canada to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(3)
|
Refers to Subordinate Voting Shares.
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value
(3)
of Shares (4) and DSUs (US$) |
August 31, 2016
|
–
|
–
|
–
|
–
|
(1)
|
Amdocs is a market leader in software solutions and services for communications, media and entertainment service providers.
|
(2)
|
Ms. Logothetis, if elected, will join our Board of Directors on January 11, 2017. Hence, from September 1, 2015 until November 1, 2016, Ms. Logothetis did not attend any meetings.
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value
(3)
of Shares (4) and DSUs (US$) |
August 31, 2016
|
–
|
21,755
|
21,755
|
71,792
|
(1)
|
CGI Group Inc. is an information technology consulting, systems integration, outsourcing and solutions company.
|
(2)
|
From September 1, 2015 until November 1, 2016, Mr. Séguin attended five (5) board meetings in person and one (1) board 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, 2016, which was US$3.30 (CA$4.33). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2016 using the noon buying rate of the Bank of Canada to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value
(3)
of Shares (4) and DSUs (US$) |
August 31, 2016
|
–
|
49,463
|
49,463
|
163,228
|
(1)
|
Juniper Networks is a manufacturer of networking equipment.
|
(2)
|
From September 1, 2015 until November 1, 2016, Mr. Tornes attended four (4) board meetings in person and one (1) board 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, 2016, which was US$3.30 (CA$4.33). 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, 2016 using the noon buying rate of the Bank of Canada to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
a)
|
is, as at the date hereof, or has been, within ten (10) years before the date hereof, a director, chief executive officer or chief financial officer of any company that (i) was subject to an order that was issued while such individual was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after such individual ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;
|
b)
|
is, as at the date hereof, or has been within ten (10) years before the date hereof, a director or executive officer of any company that, while such individual was acting in that capacity, or within a year of that individual ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;
|
c)
|
has, within the ten (10) years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets; or
|
d)
|
has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for such individual.
|
·
|
Mr. François Côté (Chairman)
|
·
|
Mr. Pierre-Paul Allard
|
·
|
Mr. Darryl Edwards
|
·
|
Mr. Claude Séguin
|
·
|
Mr. Randy E. Tornes
|
Meeting
|
Main Activities of the Human Resources Committee
|
|
October 7, 2015
|
●
|
Review of the Business Performance Measures results for the financial year ended August 31, 2015;
|
●
|
Review of the Business Performance Measures for the financial year started September 1, 2015;
|
|
●
|
Review of the Short-Term Incentive Plan results for the financial year ended August 31, 2015;
|
|
●
|
Review of the Short-Term Incentive Plan for the financial year started September 1, 2015;
|
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2015;
|
|
●
|
Review of the compensation plans of executive officers for the financial year started September 1, 2015 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, 2015;
|
|
●
|
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, 2015;
|
|
●
|
Review and approval of the executive compensation section of the Management proxy circular for the financial year ended August 31, 2015;
|
|
●
|
Review and approval of the CEO objectives and compensation plan;
|
|
●
|
Review of the Risk Assessment of Executive Compensation disclosure obligations.
|
|
January 6, 2016
|
●
|
Review and approval of the Business Performance Measures for the financial year started September 1, 2015;
|
●
|
Review and approval of the Short-Term Incentive Plan of some executive officers for the financial year started September 1, 2015, including the CEO objectives;
|
|
●
|
Review of the Short-Term Incentive Plan results for the financial year ended August 31, 2015;
|
|
●
|
Review of the quarterly results under the Short-Term Incentive Plan for the financial year started September 1, 2015 and being part of the Short-Term Incentive Plan;
|
|
●
|
Review and approval of the stock-based compensation for performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2015;
|
|
●
|
Global Compensation Review;
|
|
●
|
Leadership program;
|
|
●
|
Talent Management.
|
|
March 29, 2016
|
●
|
Review of the quarterly results under the Short-Term Incentive Plan for the financial year started September 1, 2015 and being part of the Short-Term Incentive Plan;
|
●
|
Succession Planning;
|
|
●
|
Review and approval of the Short-Term Incentive Plan
of some executive officers for the financial year started September 1, 2015;
|
|
●
|
Review of the Key Human Capital Initiatives;
|
|
●
|
Executive Compensation Review;
|
|
●
|
Leadership program;
|
|
●
|
Review of the selection criteria for Board Members;
|
|
●
|
Review of the Talent Management.
|
|
June 29, 2016
|
●
|
Review of the quarterly results under the Short-Term Incentive Plan for the financial year started September 1, 2015 and being part of the Short-Term Incentive Plan;
|
●
|
Review and approval of the Short-Term Incentive Plan of the remaining executive officers for the financial year started September 1, 2015;
|
|
●
|
Update on the Global Compensation Review;
|
|
●
|
Update on the Management Structure Review;
|
|
●
|
Update on the Talent Management Review;
|
|
●
|
Review of the Key Human Capital Initiatives.
|
|
October 12, 2016
|
●
|
Review of the Business Performance Measures results for the financial year ended August 31, 2016;
|
●
|
Review of the Business Performance Measures for the financial year started September 1, 2016;
|
|
●
|
Review of the Short-Term Incentive Plan results for the financial year ended August 31, 2016;
|
|
●
|
Update on the Short-Term Incentive Plan for the financial year started September 1, 2016;
|
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2016;
|
|
●
|
Review of the compensation plans of executive officers for the financial year started September 1, 2016 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, 2016;
|
|
●
|
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, 2016;
|
|
●
|
Review and approval of the executive compensation section of the Management proxy circular for the financial year ended August 31, 2016;
|
|
●
|
Review and approval of the CEO objectives and compensation plan;
|
|
●
|
Review of the Risk Assessment of Executive Compensation disclosure obligations.
|
Type of Fee
|
Financial 2015 Fees
|
Percentage of
Financial 2015 Fees |
Financial 2016 Fees
|
Percentage of
Financial 2016 Fees |
||||
Executive Compensation - Related Fees
|
CA$0,00
|
0%
|
CA$28,734
|
28%
|
||||
All Other Fees
|
CA$115,333
|
100%
|
CA$175,202
|
72%
|
||||
Total
|
CA$115,333
|
100%
|
CA$203,936
|
100%
|
·
|
Canada executives
: For the executives based in Canada, the Corporation used the following comparator group: 5N Plus Inc., ACCEO Solutions, AgJunction Inc, Atos IT Services and Solutions, Inc., Avigilon Corporation, Callian Technologies Ltd., Ciena, COM DEV International Ltd., Constellation Software inc., Evertz Technologies Ltd., GTECH, Open Text Corporation, Redline Communications Group Inc., Sandvine Corporation, Sierra Wireless Inc., Smart Technologies Inc., Vecima Networks Inc., Vidéotron Ltée and Wi-Lan Inc.
|
·
|
United States executives
: For the executives based in the United States, the Corporation used the following comparator group: AMETEK, Avangate, BMC Software, CDK Global, Communications Systems, Crown Castle, Intelsat, Itron, Keysight Technologies, Laird Technologies, MTS Systems, Plexus, SAS Institute, SunGard Data Systems, Teradata, TomTom, Total System Services, Truphone, Verint Systems.
|
·
|
United Kingdom executives
: For the executives based in the United Kingdom, the Corporation used the following comparator group: BAE Systems Applied Intelligence, COLT Telecom, Flextronics, Fujitsu, Irdeto, McCain Foods, PepsiCo, Premier Food Group, QinetiQ, Qualcomm, Rentokil Initial, Talk Talk Group, Viacom.
|
·
|
Asia executives
: For the executives based in Asia, the Corporation used a broader comparator group, based on general industry data: A.Menarini Asia-Pacific, Abbott Laboratories, AbbVie, Accenture, ACE Asia Pacific Services, ACE Insurance, ACE Life Insurance Company Ltd, ACR Capital Holdings, AIA Company, Aimia, Alcatel-Lucent, Amazon.com, ANZ Banking Group, ASML, AstraZeneca, Avanade, Aviva Ltd, AXA Insurance Singapore, AXA Life Insurance Singapore, Bank of New York Mellon, Baxter, Beckman Coulter, Becton Dickinson, BHP Billiton, Bio-Rad Laboratories, Biosensors, BT Global Services, Cerebos Pacific Limited, Chubb Pacific Underwriting, Cigna, CommScope, DHL, DHL Express, DHL GBS, DHL Global Forwarding, DHL Mail, DHL Supply Chain, Discovery Communications, Experian, Federal Insurance Company, Fujitsu, GE Energy, GE Healthcare, General Electric, Great Eastern Life Insurance, Hap Seng Consolidated, HSBC Holdings, IHS Global, IMI, Ingenico, Intel, Intercontinental Hotels Group, International Flavors & Fragrances, ITT Corporation, Johnson & Johnson, Lexmark, Liberty Insurance, M1 Limited, Manulife, MasterCard, Merck KGaA, Microsoft, Molex, MSD International GMBH (Singapore Branch), National Australia Bank, NBC Universal, NCR, Overseas Assurance Corporation, Pfizer, Pramerica Financial Asia HQ, Proximus, Prudential Assurance Company, Prudential Services, QBE Insurance, Qualcomm, Reinsurance Group of America, RELX Group, Rio Tinto, Roche Pharmaceuticals, Sabre Holdings, Sealed Air, Smiths Group, Spirax Sarco, Standard Chartered Bank, StarHub, Starwood Hotels & Resorts, Straits Developments, Swiss Reinsurance International, Teva Pharmaceutical Industries, Thermo Fisher Scientific, Trayport, TUI, UBS, Unilever, United Overseas Bank, Verizon, Zurich Insurance Company, Zurich Life Insurance.
|
a)
|
Similar industry: Technology Hardware and Equipment, Telecommunications Equipment and Services or Software and Services; and
|
b)
|
Comparable in size: revenues under CA$1 billion. Only one publicly traded company had revenues above the equivalent of CA$1 billion. The compensation market comparison is done using the regression analysis which is a method to predict the "size-adjusted" competitive level of compensation to reflect the size of the Corporation in relation to that of the other companies of the reference group. This method mitigates the impact that larger companies may have on the competitive compensation levels for the Corporation.
|
·
|
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%
|
Philippe Morin, COO
|
50.0%
|
Pierre Plamondon, Vice-President, Finance and CFO
|
42.5%
|
Jon Bradley, Vice-President, Sales — EMEA
|
70.0%
|
Dana Yearian, Vice-President, Sales — Americas
|
89.0%
|
Base Salary
|
X
|
Annual Incentive Target (%)
|
X
|
Business Performance Measures (%)
|
X
|
Individual Performance Measures (%)
|
Business Performance Measures
(1)
|
Weight
|
Result in % of the Weight
|
Result of the Metrics
|
|||
Consolidated revenues
(2)
|
30%
|
17.85%
|
US$232.6 million
|
|||
Adjusted EBITDA
(3)
|
45%
|
30.52%
|
US$22.0 million
|
|||
Quality
(4)
|
15%
|
12.75%
|
95%
|
|||
Net Promoter Score
(5)
|
5%
|
5.88%
|
70%
|
|||
On-time delivery
(4)
|
5%
|
4.22%
|
96.5%
|
|||
Total
|
100%
|
71.22%
|
||||
(1)
|
The corporate Adjusted EBITDA result for the year must be positive (above 0) for the whole Business Performance Measure to trigger a payout. Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, restructuring charges, stock-based compensation costs and foreign exchange gain.
|
(2)
|
For consolidated revenues metric, results will be based on the achievement from 25% to 125%, calculated on a pro-rated basis, from the revenues attained in the previous financial year (US$222.1 million) up to the target defined at the beginning of the financial year (US$252.5 million).
|
(3)
|
For Adjusted EBITDA metric, results will be based on the achievement from 25% to 125%, calculated on a pro-rated basis, from the Adjusted EBITDA attained in the previous financial year (US$13.8 million) up to the target defined at the beginning of the financial year (US$33.1 million).
|
(4)
|
For quality and on-time delivery metrics, results will range from nil to 100% of the weight upon attainment of a minimum threshold of 50% and 91.7%, respectively, up to the annual target defined at the beginning of the financial year and from 100% to 150% of the weight from such annual target to the maximum threshold of 125% and 99.7%, respectively.
|
(5)
|
For Net Promoter Score metrics, results will range from nil to 100% of the weight upon attainment of a minimum threshold of 45% up to the annual target defined at the beginning of the financial year and from 100% to 150% of the weight from such annual target to the maximum threshold of 72%.
|
(1)
|
If the minimum level of the Corporate EBITDA, as determined at the beginning of the financial year, is not achieved, payment of any variable compensation to the CEO will be at the discretion of the Human Resources Committee.
|
(1)
|
The amount of bonus for the attainment of the quarterly contribution margin targets for the territory of the EMEA is based on the percentage of achievement from above 35% to 100% of the quarterly contribution margin targets defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the quarterly contribution margin targets above 100% is also payable.
|
(2)
|
The amount of bonus for the attainment of the billings targets for the territory of the EMEA is based on the percentage of achievement from above 50% to 100% of the quarterly billings targets defined at the beginning of the financial year. An additional amount of bonus based on the percentage of attainment from above 100% to 125% of the quarterly billings targets is also payable. Upon percentage of achievement above 125% of the quarterly billings targets, such corresponding exceeding portion of percentage achievement is added to the next quarter for the calculation of the amount of bonus and capped to 150% of achievement.
|
(3)
|
The amount of bonus for the attainment of the specific product lines bookings targets for the territory of the EMEA is based on the percentage of achievement from above 50% to 100% of the annual bookings targets of the specific product lines defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the specific product lines bookings targets for the territory of the EMEA above 100% is also payable.
|
(4)
|
The amount of bonus for the contribution margin growth targets for the territory of the EMEA in fiscal year 2017 is based on the percentage of such growth from above 5% to 15%.
|
(1)
|
The amount of bonus for the attainment of the quarterly contribution margin targets for the territory of the Americas is based on the percentage of achievement from above 35% to 100% of the quarterly contribution margin targets defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the quarterly contribution margin targets above 100% is also payable.
|
(2)
|
The amount of bonus for the attainment of the billings targets for the territory of the Americas is based on the percentage of achievement from above 50% to 100% of the quarterly billings targets defined at the beginning of the financial year. An additional amount of bonus based on the percentage of attainment from above 100% to 125% of the quarterly billings targets is also payable. Upon percentage of achievement above 125% of the quarterly billings targets, such corresponding exceeding portion of percentage achievement is added to the next quarter for the calculation of the amount of bonus and capped to 150% of achievement.
|
(3)
|
The amount of bonus for the attainment of the specific product lines bookings targets for the territory of the Americas is based on the percentage of achievement from above 50% to 100% of the annual bookings targets of the specific product lines defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the specific product lines bookings targets for the territory of the Americas above 100% is also payable.
|
(4)
|
The amount of bonus for the contribution margin growth targets for the territory of the Americas in fiscal year 2017 is based on the percentage of such growth from above 5% to 15%.
|
Name & Position
|
Grant Levels
(1)
(% of Previous Year Base Salary)
|
||
Philippe Morin, COO
|
50.0%
|
(2)
|
|
Pierre Plamondon, Vice-President, Finance and CFO
|
42.5%
|
||
Jon Bradley Vice-President, Sales ─ EMEA
|
42.5%
|
||
Dana Yearian, Vice-President, Sales ─ Americas
|
42.5%
|
||
(1)
|
Actual grant value may differ from the grant level guidelines as the stock price may vary between the time of the grant and its approval.
|
(2)
|
Current year base salary since he did not have a base salary for the previous year.
|
Financial
Year Ended |
Grant Date
|
RSUs
Granted (#) |
Fair Value
at the Time of Grant (US$/RSU) |
Vesting Schedule
|
|
August 31, 2016
|
October 15, 2015
|
36,900
|
3.23
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
November 9, 2015
|
109,890
|
3.43
|
|||
January 13, 2016
|
151,400
|
3.00
|
|||
July 7, 2016
|
2,500
|
3.30
|
|||
August 15, 2016
|
10,000
|
3.33
|
|||
October 15, 2015
|
206,373
|
3.23
|
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.
|
||
November 9, 2015
|
54,945
|
3.43
|
|||
Total
|
572,008
|
||||
August 31, 2015
|
October 16, 2014
|
29,150
|
3.71
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
January 14, 2015
|
163,400
|
3.55
|
|||
March 31, 2015
|
5,000
|
3.78
|
|||
July 2, 2015
|
12,299
|
3.27
|
|||
October 16, 2014
|
197,726
|
3.71
|
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.
|
||
July 2, 2015
|
1,946
|
3.27
|
|||
Total
|
409,521
|
||||
August 31, 2014
|
October 16, 2013
|
36,950
|
5.28
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
January 15, 2014
|
132,000
|
4.36
|
|||
July 3, 2014
|
29,502
|
4.77
|
|||
October 16, 2013
|
138,233
|
5.28
|
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.
|
||
Total
|
336,685
|
||||
August 31, 2013
|
October 16, 2012
|
30,006
|
5.06
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
January 16, 2013
|
145,750
|
5.61
|
|||
October 16, 2012
|
140,404
|
5.06
|
100% on the fifth anniversary date of the grant subject to early vesting of up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation, are fully attained.
|
||
Total
|
316,160
|
||||
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
|
|||
April 3, 2012
|
1,429
|
7.06
|
|||
Total
|
334,878
|
(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 either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required.
|
(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, 2016 vest on the fifth anniversary date of the grant but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives, as determined by the Board of Directors of the Corporation. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant. The early vesting shall be subject to the attainment of performance objectives. Such performance objectives are based on the attainment of a sales growth metric combined with profitability metric. The sales growth metric is determined by the Compound Annual Growth Rate of sales of the Corporation for the period described below (SALES CAGR). The profitability metric is determined as the Cumulative Corporation's IFRS net earnings before interest, income taxes, depreciation of property, plant and equipment, amortization of intangible assets, foreign exchange gain or loss, change in fair value of cash contingent consideration, and extraordinary gain or loss over the Cumulative Sales for the same period (LTIP EBITDA). Accordingly, the first early vesting performance objectives will be attained, calculated on a pro-rated basis as follows: i) 100% for a SALES CAGR of 20% or more and 0% for a SALES CAGR of 5% or less for the three-year period ending on August 31, 2018; 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, 2018. 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, 2019.
|
Number of
RSUs (#) |
% of Issued and
Outstanding RSUs |
Weighted Average Fair Value at
the Time of Grant ($US/RSU) |
||||
President and CEO (one (1) individual)
|
53,261
|
3.43%
|
5.43
|
|||
Board of Directors (five (5) individuals)
|
–
|
–
|
–
|
|||
Management and Corporate Officers (twelve (12) individuals)
|
893,467
|
57.59%
|
4.11
|
DSUs
Granted (#) |
Weighted Average Fair Value
at the Time of Grant (US$/DSU) |
Total of the Fair Value
at the Time of Grant (US$) |
Vesting
|
44,970
|
3.33
|
149,750
|
At the time director ceases to be a member of the Board of
Directors of the Corporation
|
Number of
DSUs (#) |
% of Issued and
Outstanding DSUs |
Total of the Fair Value at
the Time of Grant (US$) |
Weighted Average Fair Value
at the Time of Grant (US$/DSU) |
|
Board of Directors (five (5) individuals)
|
159,127
|
100%
|
636,508
|
4.00
|
Long-Term Incentive Plan (LTIP) - RSUs
|
|||
Date of Grant
|
Vesting Date
|
% of Early Vesting Achievement
(1)
|
|
October 16, 2012
|
October 17, 2016
|
0%
|
|
October 16, 2013
|
October 17, 2016
|
0%
|
|
(1)
|
The vesting schedules are provided in the table under the heading "Long-Term Incentive Plan".
|
|
|
(1)
|
In fiscal year 2015, the Corporation redeemed 6,521,739 subordinate voting shares under the Substantial Issuer Bid.
|
Name and
Principal Position |
Financial
Year |
Salary
(1) (2)
($) |
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 Plan |
|||||||||||||||
Germain Lamonde,
President and CEO |
2016
|
527,188
(US)
700,000 (CA) |
–
– |
(US)
(CA) |
–
|
249,371
331,115 |
(US)
(CA) |
–
|
–
|
–
|
776,559
1,031,115 |
(US)
(CA) |
||||
2015
|
508,833
(US)
615,332 (CA) |
–
– |
(US)
(CA) |
–
|
83,537
101,022 |
(US)
(CA) |
–
|
–
|
–
|
592,370
716,354 |
(US)
(CA) |
|||||
2014
|
517,313
(US)
557,767 (CA) |
–
– |
(US)
(CA) |
–
|
198,757
214,300 |
(US)
(CA) |
–
|
–
|
–
|
716,070
772,067 |
(US)
(CA) |
|||||
Philippe Morin,
COO |
2016
|
296,905
(US) (6)
394,231 (CA) |
564,844
749,999 |
(US)
(CA) |
–
|
107,388
142,589 |
(US)
(CA) |
–
|
–
|
6,879
9,135 |
(US)
(CA) |
976,016
1,295,954 |
(US)
(CA) |
|||
Pierre Plamondon,
Vice-President, Finance and CFO |
2016
|
221,502
(US)
294,110 (CA) |
91,220
121,122 |
(US)
(CA) |
–
|
82,291
109,266 |
(US)
(CA) |
–
|
–
|
9,064
12,035 |
(US)
(CA) |
404,077
536,533 |
(US)
(CA) |
|||
2015
|
235,665
(US)
284,990 (CA) |
95,847
115,907 |
(US)
(CA) |
–
|
31,095
37,603 |
(US)
(CA) |
–
|
–
|
12,212
14,768 |
(US)
(CA) |
374,819
453,268 |
(US)
(CA) |
||||
2014
|
252,938
(US)
272,718 (CA) |
100,465
108,321 |
(US)
(CA) |
–
|
69,448
74,879 |
(US)
(CA) |
–
|
–
|
11,667
12,579 |
(US)
(CA) |
434,518
468,497 |
(US)
(CA) |
||||
Jon Bradley,
Vice-President, Sales — EMEA |
2016
|
179,973
(US)
238,968 (CA) 124,739 (£) |
85,837
113,975 59,494 |
(US)
(CA) (£) |
–
|
123,019
163,344 85,264 |
(US)
(CA) (£) |
–
|
–
|
–
|
388,829
516,287 269,497 |
(US)
(CA) (£) |
||||
2015
|
193,664
(US)
234,198 (CA) 124,739 (£) |
83,579
101,072 53,833 |
(US)
(CA) (£) |
–
|
78,315
94,706 50,442 |
(US)
(CA) (£) |
–
|
–
|
–
|
355,558
429,976 229,014 |
(US)
(CA) (£) |
|||||
2014
|
200,594
(US)
216,280 (CA) 121,459 (£) |
71,402
76,986 45,740 |
(US)
(CA) (£) |
–
|
116,563
125,678 70,579 |
(US)
(CA) (£) |
–
|
–
|
–
|
388,559
418,944 237,778 |
(US)
(CA) (£) |
|||||
Dana Yearian,
Vice-President, Sales — Americas |
2016
|
233,465
(US)
309,995 (CA) |
97,087
128,913 |
(US)
(CA) |
–
|
181,465
240,949 |
(US)
(CA) |
–
|
–
|
7,049
9,360 |
(US)
(CA) |
519,066
689,217 |
(US)
(CA) |
|||
2015
|
228,439
(US)
276,251 (CA) |
95,369
115,330 |
(US)
(CA) |
–
|
156,372
189,100 |
(US)
(CA) |
–
|
–
|
7,049
8,525 |
(US)
(CA) |
487,229
589,206 |
(US)
(CA) |
||||
2014
|
224,400
(US)
241,948 (CA) |
93,329
100,627 |
(US)
(CA) |
–
|
140,579
151,573 |
(US)
(CA) |
–
|
–
|
7,049
7,601 |
(US)
(CA) |
465,357
501,749 |
(US)
(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$1.3278 = US$1.00 for the financial year ended August 31, 2016, CA$1.2093 = US$1.00 for the financial year ended August 31, 2015 and CA$1.0782 = US$1.00 for the financial year ended August 31, 2014. The compensation information for UK resident has been converted from British Pounds to US dollars based upon an average foreign exchange rate of £0.6931 = US$1.00 for the financial year ended August 31, 2016, £0.6441 = US$1.00 for the financial year ended August 31, 2015 and £0.6055 = US$1.00 for the financial year ended August 31, 2014 and the conversion from US dollars to Canadian dollars is made as described above.
|
(3)
|
Indicates the dollar amount based on the grant date fair value of the RSUs awarded under the LTIP for the financial year. The grant date fair value is equal to the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ National Market on the last trading day preceding the grant date, using the noon buying rate of the Bank of Canada on the grant date to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars. Grants of RSUs to NEOs are detailed under section "Compensation Discussion and Analysis – Long-Term Incentive Plan".
|
(4)
|
Indicates the total bonus earned during the financial year whether paid during the financial year or payable on a later date:
|
Name
|
Paid during the
Financial Year Ended August 31, 2016 (i) ($) |
Paid in the First Quarter
of the Financial Year Ending on August 31, 2017 (i) ($) |
Total Bonus Earned during
the Financial Year Ended August 31, 2016 (i) ($) |
|||||
Germain Lamonde
|
‒
‒ |
(US)
(CA) |
249,371
331,115 |
(US)
(CA) |
249,371
331,115 |
(US)
(CA) |
||
Philippe Morin
|
‒
‒ |
(US)
(CA) |
107,388
142,589 |
(US)
(CA) |
107,388
142,589 |
(US)
(CA) |
||
Pierre Plamondon
|
‒
‒ |
(US)
(CA) |
82,291
109,266 |
(US)
(CA) |
82,291
109,266 |
(US)
(CA) |
||
Jon Bradley
|
63,591
84,436 44,075 |
(US)
(CA) (£) |
59,428
78,908 41,189 |
(US)
(CA) (£) |
123,019
163,344 85,264 |
(US)
(CA) (£) |
||
Dana Yearian
|
98,141
130,312 |
(US)
(CA) |
83,324
110,637 |
(US)
(CA) |
181,465
240,949 |
(US)
(CA) |
||
(5)
|
Indicates the amount contributed by the Corporation during the financial year to the DPSP as detailed under section "Compensation Discussion and Analysis – Deferred Profit-Sharing Plan", the 401K plan as detailed under section "Compensation Discussion and Analysis – 401K plan", as applicable, for the benefit of the NEOs. Mr. Lamonde is not eligible to participate in the DPSP and Mr. Bradley did not participate.
|
(6)
|
This amount represents the salary paid to Mr. Philippe Morin from November 9, 2015 to August 31, 2016 which is based on an annual salary of US$376,563 (CA$500,000) for the financial year ended August 31, 2016.
|
Name
|
Outstanding Option-Based Awards (Options)
|
Outstanding Share-Based Awards (RSUs)
|
||||||||
Number of
Securities Underlying Unexercised Options (#) |
Option
Exercise Price |
Option
Expiration Date |
Value of
Unexercised "in-the-money" Options |
Number of
Shares or Units of Shares that Have Not Vested (#) |
Market or
Payout Value of Share-Based Awards that Have Not Vested (US$) (1) |
Market or
Payout Value of Vested Share- Based Awards Not Paid Out or Distributed (US$) |
||||
Germain Lamonde
|
–
|
–
|
–
|
–
|
53,261
|
175,761
|
–
|
|||
Philippe Morin
|
–
|
–
|
–
|
–
|
164,835
|
543,956
|
–
|
|||
Pierre Plamondon
|
–
|
–
|
–
|
–
|
113,679
|
375,141
|
–
|
|||
Jon Bradley
|
–
|
–
|
–
|
–
|
88,547
|
292,205
|
–
|
|||
Dana Yearian
|
–
|
–
|
–
|
–
|
106,756
|
352,295
|
–
|
|||
(1)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2016, which was US$3.30 (CA$4.33). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2016 using the noon buying rate of the Bank of Canada to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
Name
|
Share-Based Awards – Value
Vested during the Year (US$) (1) |
Non-Equity Incentive Plan Compensation –
Value Earned during the Year (US$) (2) |
|||
Germain Lamonde
|
132,457
|
249,371
|
|||
Philippe Morin
|
‒
|
107,388
|
|||
Pierre Plamondon
|
64,581
|
82,291
|
|||
Jon Bradley
|
51,214
|
123,019
|
|||
Dana Yearian
|
61,406
|
181,465
|
|||
(1)
|
The aggregate dollar value realized is equivalent to the market value of the Subordinate Voting Shares underlying the RSUs at vesting. This value, as the case may be, has been converted from Canadian dollars to US dollars based upon the noon buying rate of the Bank of Canada on the day of vesting.
|
(2)
|
Includes total non-equity incentive plan compensation earned by each NEO in respect to the financial year ended on August 31, 2016 (as indicated under the "Summary Compensation Table").
|
Named Executive Officer
|
Termination Payment Event
|
||||||
Without Cause ($)
(1) (2)
|
Change of Control ($)
(2) (3) (4)
|
Voluntary ($)
|
|||||
Germain Lamonde
|
1,748,061
2,292,850 |
(US) (5)
(CA) |
1,748,061
2,292,850 |
(US)
(CA) |
175,761
230,620 |
(US) (6)
(CA) |
|
Philippe Morin
|
496,315
651,026 |
(US)
(CA) |
925,170
1,213,736 |
(US)
(CA) |
–
|
||
Pierre Plamondon
|
419,202
549,926 |
(US)
(CA) |
836,459
1,097,294 |
(US)
(CA) |
–
|
||
Jon Bradley
|
306,092
401,544 233,035 |
(US)
(CA) (£) |
705,963
926,094 537,467 |
(US)
(CA) (£) |
–
|
||
Dana Yearian
|
411,503
539,821 |
(US)
(CA) |
974,690
1,278,586 |
(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, 2016 and includes, as the case may be for each NEO, the base salary that would have been received and total value of RSUs and options that would have vested (with the exception of Mr. Lamonde's evaluation which is described in note 6 below and includes: the base salary, STIP compensation, and total value of RSUs and options that would have vested). The amount for base salary compensation is calculated according to those amounts provided under the section entitled "Summary Compensation Table" included in this Annual Report. The amount for the total value attached to the vesting of RSUs and options determined pursuant to the LTIP as described in the section entitled "Long-Term Incentive Compensation – Long-Term Incentive Plan" for termination without cause.
|
(2)
|
The aggregate amount for Canadian residents has been converted from Canadian dollars to US dollars based upon a foreign exchange rate of CA$1.3116 = US$1.00 as of August 31, 2016. The aggregate amount for UK resident has been converted from British Pounds to US dollars based upon a foreign exchange rate of £0.7613 = US$1.00 as of August 31, 2016.
|
(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, 2016 and includes, as the case may be, namely, the base salary, STIP or SIP compensation and total value of RSUs and options that would have vested. The amount for base salary and STIP or SIP compensation are calculated according to those amounts provided under the section entitled "Summary Compensation Table" included in this Annual Report, the total value attached to the vesting of RSUs and options is calculated according to those amounts provided in the columns named "Value of unexercised "in-the-money" options" and "Market or payout value of share-based awards that have not vested" of the table included under the heading entitled "Outstanding share-based awards and option-based awards".
|
(5)
|
The aggregate amount disclosed includes an evaluation of the amount that Mr. Lamonde would have been entitled to should a termination of employment without cause have occurred on August 31, 2016 and includes: the base salary, STIP compensation, and total value of RSUs and options that would have vested. The amount for base salary and STIP compensation are calculated according to those amounts provided under the section entitled "Summary Compensation Table" included in this Annual Report; the total value attached to the vesting of RSUs and options are calculated according to those amounts provided in the columns named "Value of unexercised "in-the-money" options" and "Market or payout value of share-based awards that have not vested" of the table included under the heading entitled – "Outstanding share-based awards and option-based awards".
|
(6)
|
The aggregate amount disclosed includes an evaluation of the amount that Mr. Lamonde would have been entitled to should a voluntary termination of employment have occurred on August 31, 2016 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$57,000
|
(2)
|
US$42,928
|
(3)
|
|
Annual Retainer for Lead Director
|
CA$8,000
|
US$6,025
|
(3)
|
||
Annual Retainer for Audit Committee Chairman
|
CA$8,000
|
US$6,025
|
(3)
|
||
Annual Retainer for Audit Committee Members
|
CA$4,000
|
US$3,013
|
(3)
|
||
Annual Retainer for Human Resources Committee Chairman
|
CA$6,000
|
US$4,519
|
(3)
|
||
Annual Retainer for Human Resources Committee Members
|
CA$3,000
|
US$2,259
|
(3)
|
||
(1)
|
All the Directors elected to receive 50% of their Annual Retainer for Directors in form of DSUs except Mr. Randy E. Tornes who elected to receive 100% of his Annual Retainer in form of DSUs.
|
(2)
|
The Annual Retainer for Mr. Pierre-Paul Allard and Mr. Randy E. Tornes is US$57,000 (CA$75,685).
|
(3)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.3278 = US$1.00 for the financial year ended August 31, 2016.
|
Name
|
Fees
Earned (1) ($) |
Share-Based
Awards ($) |
Option-
Based Awards ($) |
Non-Equity
Incentive Plan Compensation ($) |
Pension
Value ($) |
All Other
Compensation ($) |
Total
($) |
|||
Pierre-Paul Allard
|
62,272
82,684 |
(US)
(CA) |
–
|
–
|
–
|
–
|
–
|
62,272
82,684 |
(US)
(CA) |
|
François Côté
|
54,366
72,187 |
(US)
(CA) |
–
|
–
|
–
|
–
|
–
|
54,366
72,187 |
(US)
(CA) |
|
Darryl Edwards
|
50,318
66,813 |
(US)
(CA) |
–
|
–
|
–
|
–
|
–
|
50,318
66,813 |
(US)
(CA) |
|
Claude Séguin
|
51,212
68,000 |
(US)
(CA) |
–
|
–
|
–
|
–
|
–
|
51,212
68,000 |
(US)
(CA) |
|
Randy E. Tornes
|
62,272
82,685 |
(US)
(CA) |
–
|
–
|
–
|
–
|
–
|
62,272
82,685 |
(US)
(CA) |
|
(1)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.3278 = US$1.00 for the financial year ended August 31, 2016 except for compensation amounts paid to Mr. Pierre-Paul Allard and Mr. Randy E. Tornes which were paid in US dollars for the portion of their annual retainer for Directors. The fees are always payable in cash, but executives are provided the opportunity to elect to exchange all or a portion of their Annual Retainer for Directors into DSUs. The following table identifies the portion of the fees earned by the directors that were paid in DSUs and the portion that were paid in cash.
|
Name
|
Fees Earned
|
|||||||
DSUs ($)
(i)
|
Cash ($)
|
Total ($)
|
||||||
Pierre-Paul Allard
(ii)
|
28,500
37,842 |
(US)
(CA) |
33,772
44,842 |
(US)
(CA) |
62,272
82,684 |
(US)
(CA) |
||
François Côté
(ii)
|
21,464
28,500 |
(US)
(CA) |
32,902
43,687 |
(US)
(CA) |
54,366
72,187 |
(US)
(CA) |
||
Darryl Edwards
(ii)
|
21,464
28,500 |
(US)
(CA) |
28,854
38,313 |
(US)
(CA) |
50,318
66,813 |
(US)
(CA) |
||
Claude Séguin
(ii)
|
21,464
28,500 |
(US)
(CA) |
29,748
39,500 |
(US)
(CA) |
51,212
68,000 |
(US)
(CA) |
||
Randy E. Tornes
(iii)
|
57,000
75,685 |
(US)
(CA) |
5,272
7,000 |
(US)
(CA) |
62,272
82,685 |
(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 Bank of Canada on the grant date to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars, as required. The value at vesting of a DSU is equivalent to the market value of a Subordinate Voting Share when a DSU is converted to such Subordinate Voting Share.
|
(ii)
|
Elected to receive 50% of his Annual Retainer for Directors in form of DSUs.
|
(iii)
|
Elected to receive 100% of his Annual Retainer for Directors in form of DSUs.
|
Name
|
Outstanding Share-Based Awards (DSUs)
|
|||||
Number of Shares or Units of
Shares that Have Not Vested (#) |
Market or Payout Value of
Share-Based Awards that Have Not Vested (US$) (1) |
Market or Payout Value of
Vested Share-Based Awards Not Paid Out or Distributed (US$) |
||||
Pierre-Paul Allard
|
48,883
|
161,314
|
‒
|
|||
François Côté
|
10,809
|
35,670
|
–
|
|||
Darryl Edwards
|
28,217
|
93,116
|
–
|
|||
Claude Séguin
|
21,755
|
71,792
|
–
|
|||
Randy E. Tornes
|
49,463
|
163,228
|
–
|
|||
(1)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2016, which was US$3.30 (CA$4.33). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ National Market on August 31, 2016 using the noon buying rate of the Bank of Canada to convert either the NASDAQ National Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
Name
|
Number of DSUs Converted
|
Aggregate Value Realized (US$)
(1)
|
|
Guy Marier
(2)
|
653
|
1,955
|
|
(1)
|
The aggregate value realized is equivalent to the market value of the securities underlying the DSUs at conversion.
|
(2)
|
Mr. Marier ceased to be a member of the Board of Directors as of January 7, 2015.
|
Plan Category
|
Number of Securities to Be
Issued upon Exercise of Outstanding Options, RSUs and DSUs (#) (a) |
Weighted-Average Exercise
Price of Outstanding Options, RSUs and DSUs (US$) (b) |
Number of Securities Remaining
Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#) (c) |
|||
LTIP – RSUs
|
1,551,555
|
n/a
(1)
|
867,716
|
|||
LTIP – Options
|
–
|
–
|
||||
Deferred Share Unit Plan – DSUs
|
159,127
|
n/a
(1)
|
||||
(1)
|
The value of RSUs and DSUs will be equal to the market value of the Subordinate Voting Shares of the Corporation on the date of vesting.
|
August 31,
|
||||||||||||||||||||||||
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
|||||||||||||||||||
EXFO Subordinate Voting Shares (CA$)
|
$
|
100
|
$
|
70
|
$
|
70
|
$
|
70
|
$
|
59
|
$
|
63
|
||||||||||||
S&P/TSX Composite Index (CA$)
|
$
|
100
|
$
|
94
|
$
|
100
|
$
|
123
|
$
|
109
|
$
|
115
|
||||||||||||
NEOs' total compensation (in millions of CA$)
|
$
|
2.7
|
$
|
2.5
|
$
|
2.3
|
$
|
2.6
|
$
|
2.6
|
$
|
4.1
|
·
|
The Corporation's share performance decreased from the financial year that began on September 1, 2011 to the financial year ended August 31, 2012. Total compensation received by the NEOs during this period was aligned with the decrease in the Corporation's share price.
|
·
|
Despite the relative stability of the Corporation's share price as at August 31, 2013 compared to the previous financial year, total compensation to the NEOs decreased. This decrease in NEOs compensation reflected financial results below expectations for financial 2013 and consequently was aligned with shareholders' interests.
|
·
|
The Corporation's share price remained relatively flat as at August 31, 2014 compared to the previous financial year, but total NEO compensation increased for that year. This rise in NEO compensation can be explained mainly by the progressive adjustment of the CEO's base salary, as he no longer received equity-based compensation, as well as adjustments to align executive compensation with the Target Compensation Positioning offered within a reference market of comparable companies similar in size to the Corporation. This was deemed necessary to maintain a competitive position within the marketplace and retain key executives.
|
·
|
The Corporation's share price decreased as at August 31, 2015 compared to the previous financial year, while total NEO compensation as expressed in Canadian dollars remained flat for the same period. It should be noted, however, three out of five NEOs were remunerated in currencies other than the Canadian dollar. On a constant currency basis, total NEO compensation would have decreased by about CA$100,000 year-over-year. As a result, total compensation received by the NEOs for this period was aligned with share price performance.
|
·
|
The Corporation's share performance increased from September 1, 2015 to August 31, 2016. Total compensation received by the NEOs during this period also increased but at a higher rate than the Corporation's share price. It should be noted that the Corporation hired an executive to the newly created position of Chief Operating Officer in the early part of the financial year, which also contributed to the increase in total compensation received by the NEOs during this period.
|
(a)
|
one (1) copy of the Annual Report on Form 20-F of the Corporation filed with the SEC in the United States pursuant to the
Securities Exchange Act of 1934,
and with securities commissions or similar authorities;
|
(b)
|
one (1) copy of the consolidated financial statements and the Auditors report thereon as well as the Management's discussion and analysis of financial condition and results of operations of the Corporation for its most recently completed financial year, included in the Annual Report on Form 20-F of the Corporation and one (1) 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 (1) copy of this Management Proxy Circular.
|
(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. Darryl Edwards has been acting as the independent "Lead Director" of the Corporation from January 2013 until January 2016 and Mr. François Côté has been acting as the independent "Lead Director" of the Corporation since January 2016.
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, Ethics and Business Conduct Policy and Agent Code of Conduct; 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, 2016: |
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
|
4 of 4
|
n/a
|
n/a
|
n/a
|
100%
|
||
Allard, Pierre-Paul
|
3 of 4
|
3 of 4
|
3 of 4
|
3 of 4
|
75%
|
||
Côté, François
|
4 of 4
|
4 of 4
|
4 of 4
|
4 of 4
|
100%
|
||
Edwards, Darryl
|
4 of 4
|
3 of 4
|
3 of 4
|
3 of 4
|
81%
|
||
Séguin, Claude
|
4 of 4
|
4 of 4
|
4 of 4
|
4 of 4
|
100%
|
||
Tornes, Randy E.
|
3 of 4
|
4 of 4
|
4 of 4
|
3 of 4
|
88%
|
||
Attendance Rate:
|
92%
|
90%
|
90%
|
85%
|
89%
|
||
(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 (5) members all of who are independent Directors. The Chairman of the Human Resources Committee was Mr. Guy Marier until January 7, 2015. Since then, Mr. François Côté is the Chairman of the Human Resources Committee.
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(c)
|
If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.
|
The Human Resources Committee Charter foresees that such committee shall:
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●
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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;
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●
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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;
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●
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recommend to the Board of Directors from time to time the remuneration to be paid by the Corporation to Directors;
|
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●
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make recommendations to the Board of Directors with respect to the Corporation's incentive compensation plans and equity-based plans.
|
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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.
|
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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.
|
||
10.
|
Director Term Limits and Other Mechanisms of Board Renewal
–
Disclose whether or not the issuer has adopted term limits for the directors on its board or other mechanisms of board renewal and, if so, include a description of those director term limits or other mechanisms of board renewal. If the issuer has not adopted director term limits or other mechanisms of board renewal, disclose why it has not done so.
|
The Corporation does not have a policy that limits the term of the directors on its board. The Board has determined that the term limit of the director's mandate or the mandatory retirement age is not essential in part, because Board renewal has not been a challenge for the Corporation in recent years. Specifically, the average tenure of the current independent directors is low, at approximately four (4) years and a half (fifty-four (54) months). Historically, the average tenure of the independent directors that served on the Board of Directors since 2000 is nine (9) years and four (4) months. In addition, the Corporation seeks to avoid losing the services of a qualified director with experience and in-depth knowledge of the Corporation through the imposition of an arbitrary term limit but is of the opinion however that a balance between long‐term directors and new directors who bring a different experience and new ideas is essential.
The Human Resources Committee initiates a self-evaluation of the Board of Director's performance on an annual basis. This evaluation is an alternative mechanism for renewing the terms of the Directors serving on its Board of Directors. The annual review process of the overall efficiency of the Board of Directors and Committees as a whole and of Committee members and Directors on an individual basis, remains the best way of ensuring that the skills required are well represented within the Board of Directors.
|
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11.
|
Policies Regarding the Representation of Women on the Board
|
|||
(a)
|
Disclose whether the issuer has adopted a written policy relating to the identification and nomination of women directors. If the issuer has not adopted such a policy, disclose why it has not done so.
|
The Corporation does not have any written policy regarding the identification and nomination of women directors as it did not deem it necessary and its focus is on the recruitment of candidates with the specific skills, personal qualities and experiences to add the highest value to the Board, rather than on the gender or other personal characteristics of particular candidates.
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