EXFO INC. 
By - Record-high bookings of
- Sales increase 13.1% year-over-year to
- Gross margin reaches 62.3%, highest level since second quarter of 2001
- GAAP net earnings amount to
QUEBEC CITY,
Sales increased 13.1% to
Gross margin reached 62.3% of sales in the first quarter of fiscal 2009, its highest level since the second quarter of 2001, compared to 55.7% in the first quarter of 2008 and 59.9% in the fourth quarter of 2008.
GAAP net earnings in the first quarter of fiscal 2009 increased to
"I am quite pleased with our record-high bookings of
"A number of wireline and wireless network operators will likely reduce their capital expenditures in 2009, given the challenging macro-economic conditions," Mr. Lamonde added. "But we expect many will continue to strategically invest in next-generation IP convergence and broadband deployments in order to add higher-margin revenues, differentiated services and to reduce their operating expenses. EXFO is well positioned to take advantage of these growth segments. We're also counting on important new products and increased focus to attain our long-term performance metrics. To remain prudent, however, we have implemented a series of measures to control expenses, deferred or cancelled hirings, and fine-tuned our strategies. Finally, our balance sheet remains strong, even after our successful
Unaudited Selected Financial Information
(In thousands of US dollars)
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Segmented results: Q1 2009 Q1 2008 Q4 2008
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Sales:
Telecom Division $ 41,159 $ 35,365 $ 45,338
Life Sciences and Industrial
Division 5,204 5,620 5,605
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Total $ 46,363 $ 40,985 $ 50,943
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Earnings from operations:
Telecom Division $ 1,355 $ 21 $ 2,867
Life Sciences and Industrial
Division 738 281 721
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Total $ 2,093 $ 302 $ 3,588
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Other selected information:
GAAP net earnings (loss) $ 5,287 $ (93) $ 3,314
After-tax amortization of
intangible assets $ 1,098 $ 499 $ 1,177
Stock-based compensation costs $ 322 $ 301 $ 368
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Operating Expenses
Selling and administrative expenses amounted to
Gross research and development expenses totaled
Net R&D expenses totaled
First-Quarter Business Highlights
Market expansion - EXFO delivered sales growth of 13.1% year-over-year, including a combined
Profitability and Gross Margin - EXFO reported GAAP net earnings of
EXFO launched five new products in the first quarter including amongst others a new software release for the Transport Blazer product line that delivers unprecedented insight into 40 Gbit/s network behavior; new software releases for the IMS InterWatch platform and Packet Blazer product line to support the migration of voice and video applications to the IPv6 (Internet Protocol, version 6) addressing scheme; and expanded Ethernet test capabilities on the Power Blazer product line through multi-stream, quality of service (QoS) support. Products on the market two years or less generated 33.1% of total sales.
Business Outlook
EXFO forecasted sales between
This guidance was established by management based on existing backlog as of the date of this press release, seasonality, expected bookings for the remaining of the quarter, as well as stability in exchange rates compared to the previous quarter.
Conference Call and Webcast
EXFO will host a conference call today at
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, and we intend that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are statements other than historical information or statements of current condition. Words such as may, will, expect, believe, anticipate, intend, could, estimate, continue, or the negative or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events and circumstances are considered forward-looking statements. They are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in forward-looking statements due to various factors including consolidation in the global telecommunications test, measurement and monitoring industry; capital spending levels in the telecommunications, life sciences and high-precision assembly sectors; concentration of sales; fluctuating exchange rates and our ability to execute in these uncertain conditions; the effects of the additional actions we have taken in response to such economic uncertainty (including our ability to quickly adapt cost structures with anticipated levels of business, ability to manage inventory levels with market demand); market acceptance of our new products and other upcoming products; limited visibility with regards to customer orders and the timing of such orders; our ability to successfully integrate our acquired and to-be-acquired businesses; our ability to successfully expand international operations; the retention of key technical and management personnel; and future economic, competitive, financial and market conditions, including any slowdown or recession in the global economy. Assumptions relating to the foregoing involve judgments and risks, all of which are difficult or impossible to predict and many of which are beyond our control. Other risk factors that may affect our future performance and operations are detailed in our Annual Report, on Form 20-F, and our other filings with the U.S. Securities and Exchange Commission and the Canadian securities commissions. We believe that the expectations reflected in the forward-looking statements are reasonable based on information currently available to us, but we cannot assure you that the expectations will prove to have been correct. Accordingly, you should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this document. Unless required by law or applicable regulations, we undertake no obligation to revise or update any of them to reflect events or circumstances that occur after the date of this document.
About EXFO
EXFO is a leading provider of test and service assurance solutions for network service providers and equipment manufacturers in the global telecommunications industry. The Telecom Division offers a wide range of innovative solutions extending across the full technology lifecycle ? from design to technology deployment and onto service assurance ? and covering all layers on a network infrastructure to enable triple-play services and next-generation, converged IP networking. The Life Sciences and Industrial Division offers solutions in medical device and opto-electronics assembly, fluorescence microscopy and other life science sectors. For more information, visit www.EXFO.com.
EXFO Electro-Optical Engineering Inc.
Interim Consolidated Balance Sheet
(in thousands of US dollars)
As at As at
November 30, August 31,
2008 2008
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(unaudited)
Assets
Current assets
Cash $ 5,441 $ 5,914
Short-term investments 65,915 81,626
Accounts receivable
Trade 33,018 31,473
Other 4,859 4,753
Income taxes and tax credits recoverable 3,541 4,836
Inventories 30,125 34,880
Prepaid expenses 1,993 1,774
Future income taxes 8,895 9,140
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153,787 174,396
Tax credits recoverable 19,264 20,657
Property, plant and equipment 17,475 19,875
Intangible assets 16,121 19,945
Goodwill 36,634 42,653
Future income taxes 14,297 15,540
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$ 257,578 $ 293,066
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Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 24,440 $ 24,713
Deferred revenue 4,560 5,079
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29,000 29,792
Deferred revenue 3,388 3,759
Forward exchange contracts 2,275 -
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34,663 33,551
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Shareholders' equity
Share capital 141,991 142,786
Contributed surplus 5,921 5,226
Retained earnings 65,781 60,494
Accumulated other comprehensive income 9,222 51,009
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222,915 259,515
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$ 257,578 $ 293,066
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EXFO Electro-Optical Engineering Inc.
Interim Unaudited Consolidated Statements of Earnings
(in thousands of US dollars, except share and per share data)
Three months ended
November 30,
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2008 2007
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Sales $ 46,363 $ 40,985
Cost of sales (1), (2) 17,480 18,144
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Gross margin 28,883 22,841
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Operating expenses
Selling and administrative(1) 17,091 14,817
Net research and development(1) 7,221 6,012
Amortization of property, plant and equipment 1,159 976
Amortization of intangible assets 1,319 734
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Total operating expenses 26,790 22,539
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Earnings from operations 2,093 302
Interest income 466 1,483
Foreign exchange gain (loss) 4,568 (616)
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Earnings before income taxes 7,127 1,169
Income taxes
Current (61) 1,181
Future 1,901 81
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1,840 1,262
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Net earnings (loss) for the period $ 5,287 $ (93)
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Basic and diluted net earnings (loss) per share $ 0.08 $ (0.00)
Basic weighted average number of shares
outstanding (000's) 67,340 69,000
Diluted weighted average number of shares
outstanding (000's) 67,717 69,672
(1) Stock-based compensation costs included in:
Cost of sales $ 29 $ 37
Selling and administrative 201 197
Net research and development 92 67
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$ 322 $ 301
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(2) The cost of sales is exclusive of
amortization, shown separately.
EXFO Electro-Optical Engineering Inc.
Interim Unaudited Consolidated Statements of Comprehensive Income (Loss)
and Accumulated Other Comprehensive Income
(in thousands of US dollars)
Comprehensive income (loss)
Three months ended
November 30,
-------------------------
2008 2007
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Net earnings (loss) for the period $ 5,287 $ (93)
Foreign currency translation adjustment (36,933) 13,906
Changes in unrealized losses on short-term
investments 22 39
Unrealized gains (losses) on forward exchange
contracts (6,929) 1,948
Reclassification of realized gains on forward
exchange contracts in net earnings (loss) (137) (759)
Future income tax effect of the above items 2,190 (380)
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Comprehensive income (loss) $ (36,500) $ 14,661
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Accumulated other comprehensive income
Three months ended
November 30,
-------------------------
2008 2007
------------ ------------
Foreign currency translation adjustment
Cumulative effect of prior periods $ 51,129 $ 53,418
Current period (36,933) 13,906
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14,196 67,324
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Unrealized gains (losses) on forward
exchange contracts
Cumulative effect of prior periods (96) 1,948
Current period, net of realized gains and
future income taxes (4,876) 809
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(4,972) 2,757
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Unrealized losses on short-term investments
Cumulative effect of prior periods (24) (55)
Current period, net of future income taxes 22 39
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(2) (16)
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Accumulated other comprehensive income $ 9,222 $ 70,065
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EXFO Electro-Optical Engineering Inc.
Interim Unaudited Consolidated Statements of Retained Earnings
and Contributed Surplus
(in thousands of US dollars)
Retained earnings
Three months ended
November 30,
-------------------------
2008 2007
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Balance - Beginning of the period $ 60,494 $ 42,330
Add (deduct)
Net earnings (loss) for the period 5,287 (93)
Premium on redemption of share capital - (39)
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Balance - End of the period $ 65,781 $ 42,198
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Contributed surplus
Three months ended
November 30,
-------------------------
2008 2007
------------ ------------
Balance - Beginning of the period $ 5,226 $ 4,453
Add (deduct)
Stock-based compensation costs 321 316
Reclassification of stock-based compensation
costs to share capital upon exercise of
stock awards - (2)
Discount on redemption of share capital 374 -
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Balance - End of the period $ 5,921 $ 4,767
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EXFO Electro-Optical Engineering Inc.
Interim Unaudited Consolidated Statements of Cash Flows
(in thousands of US dollars)
Three months ended
November 30,
-------------------------
2008 2007
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Cash flows from operating activities
Net earnings (loss) for the period $ 5,287 $ (93)
Add items not affecting cash
Change in discount on short-term investments 456 902
Stock-based compensation costs 322 301
Amortization 2,478 1,710
Deferred revenue 353 351
Future income taxes 1,901 81
Change in unrealized foreign exchange gain (3,456) -
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7,341 3,252
Change in non-cash operating items
Accounts receivable (7,325) 1,166
Income taxes and tax credits (696) (458)
Inventories (367) (87)
Prepaid expenses (542) (612)
Accounts payable and accrued liabilities (1,087) (5,694)
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(2,676) (2,433)
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Cash flows from investing activities
Additions to short-term investments (122,100) (211,453)
Proceeds from disposal and maturity of
short-term investments 126,605 214,571
Additions to capital assets (1,514) (1,573)
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2,991 1,545
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Cash flows from financing activities
Change in bank loan - 699
Exercise of stock options 26 -
Redemption of share capital (447) (174)
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(421) 525
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Effect of foreign exchange rate changes on cash (367) 343
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Change in cash (473) (20)
Cash - Beginning of the period 5,914 5,541
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Cash - End of the period $ 5,441 $ 5,521
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SOURCE EXFO Electro-Optical Engineering Inc.
