EXFO Inc. — Interim / Quarterly Report 2020

Oct 7, 2020

EXFO Inc.

Condensed Unaudited Interim Consolidated Balance Sheets

(in thousands of US dollars)

Assets Current assets Cash Short-term investments Accounts receivable Trade Other Income taxes and tax credits recoverable Inventories Prepaid expenses Other assets Tax credits recoverable Property, plant and equipment Lease right-of-use assets Intangible assets Goodwill Deferred income tax assets Other assets Liabilities Current liabilities Bank loan Accounts payable and accrued liabilities Provisions Income taxes payable Deferred revenue Other liabilities Current portion of lease liabilities Current portion of long-term debt Provisions Deferred revenue Lease liabilities Long-term debt Deferred income tax liabilities Other liabilities Shareholders’ equity Share capital Contributed surplus Retained earnings Accumulated other comprehensive loss	As at August 31,	As at August 31,
	2020 $ 32,818 919 56,291 4,055 4,203 38,865 5,631 5,493 148,275 48,812 39,722 10,758 17,616 40,290 3,633 1,548 $ 310,654 $ 32,737 41,348 3,792 43 25,785 4,032 3,249 2,076 113,062 2,782 8,858 7,334 2,144 3,760 151 138,091 94,024 19,680 102,633 (43,774) 172,563 $ 310,654	2019
		$ 16,518 2,918 51,517 3,396 3,159 38,017 6,510 3,083
		125,118 46,704 39,364 ‒ 21,654 38,648 4,821 1,293
		$ 277,602
		$ 5,000 50,790 1,065 704 24,422 1,606 ‒ 2,449
		86,036 2,737 9,056 ‒ 3,293 3,598 318
		105,038
		92,706 19,196 112,173 (51,511)
		172,564
		$ 277,602

EXFO Inc.

Condensed Unaudited Interim Consolidated Statements of Earnings

(in thousands of US dollars, except share and per share data)

Sales Cost of sales (1,2) Selling and administrative (2) Net research and development (2) Depreciation of property, plant and equipment Depreciation of lease right-of-use assets Amortization of intangible assets Interest and other (income) expense Foreign exchange (gain) loss Earnings (loss) before income taxes Income taxes Net loss for the period Basic and diluted net loss per share Basic and diluted weighted average number of shares outstanding (000’s) (1) The cost of sales is exclusive of depreciation (2) Restructuring charges included in: Cost of sales Selling and administrative Net research and development Income taxes	Three months ended August 31, 2020 Twelve months ended August 31, 2020 $ 70,572 $ 265,583 32,573 114,558 24,588 92,293 12,004 45,487 1,405 5,563 800 3,349 1,442 6,467 (19) 956 (221) 428 (2,000) (3,518) 1,633 6,022 $ (3,633) $ (9,540) $ (0.07) $ (0.17) 55,698 55,604 and amortization, shown separately. $ 898 $ 898 1,882 1,882 106 106 (533) (533) $ 2,353 $ 2,353	Three months ended August 31, 2019 $ 70,175 30,260 23,036 11,143 1,282 ‒ 1,870 1,157 894 533 760 $ (227) $ (0.00) 55,379 $ ‒ ‒ ‒ ‒ $ ‒	Twelve months ended August 31, 2019
			$ 286,890
			118,677 98,646 50,553 5,469 ‒ 9,012 718 949
			2,866 5,346
			$ (2,480)
			$ (0.04) 55,325 $ 304 495 2,506 (63)
			$ 3,242

EXFO Inc.

Condensed Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)

(in thousands of US dollars)

Net loss for the period Other comprehensive income (loss), net of income taxes Items that may be reclassified subsequently to net earnings Foreign currency translation adjustment Unrealized gains/losses on forward exchange contracts Reclassification of realized gains/losses on forward exchange contracts in net earnings Deferred income tax effect of gains/losses on forward exchange contracts Other comprehensive income (loss) Comprehensive income (loss) for the period	Three months ended August 31, 2020 $ (3,633) 10,069 3,026 493 (900) 12,688 $ 9,055	Twelve months ended August 31, 2020 $ (9,540) 5,994 1,221 1,100 (578) 7,737 $ (1,803)	Three months ended August 31, 2019 $ (227) 1,983 442 534 (289) 2,670 $ 2,443	Twelve months ended August 31, 2019
				$ (2,480) (4,177) (795) 744 67
				(4,161)
				$ (6,641)

EXFO Inc.

Condensed Unaudited Interim Consolidated Statements of Changes in Shareholders’ Equity

(in thousands of US dollars)

Balance as at August 31, 2018 Adoption of IFRS 9 Adjusted balance as at September 1, 2018 Reclassification of stock-based compensation costs Redemption of share capital Stock-based compensation costs Net loss for the year Other comprehensive income (loss) Foreign currency translation adjustment Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $67 Total comprehensive loss for the year Balance as at August 31, 2019		Year ended August 31, 2019	Year ended August 31, 2019	Year ended August 31, 2019
	Share capital $ 91,937 – 91,937 1,106 (337) – – – – $ 92,706	Contributed surplus $ 18,428 – 18,428 (1,106) 25 1,849 – – – $ 19,196	Retained earnings $ 114,906 (253) 114,653 – – – (2,480) – – $ 112,173	Accumulated other comprehensive loss $ (47,350) – (47,350) – – – – (4,177) 16 $ (51,511)	Total shareholders’ equity
					$ 177,921 (253)
					177,668 – (312) 1,849 (2,480) (4,177) 16
					(6,641)
					$ 172,564

Balance as at September 1, 2019 Reclassification of stock-based compensation costs Redemption of share capital Stock-based compensation costs Net loss for the year Other comprehensive income Foreign currency translation adjustment Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $578 Total comprehensive loss for the year Balance as at August 31, 2020		Year ended August 31, 2020	Year ended August 31, 2020	Year ended August 31, 2020
	Share capital $ 92,706 1,530 (212) – – – – $ 94,024	Contributed surplus $ 19,196 (1,530) (13) 2,027 – – – $ 19,680	Retained earnings $ 112,173 – – – (9,540) – – $ 102,633	Accumulated other comprehensive loss $ (51,511) – – – – 5,994 1,743 $ (43,774)	Total shareholders’ equity
					$ 172,564 – (225) 2,027 (9,540) 5,994 1,743
					(1,803)
					$ 172,563

EXFO Inc.

Condensed Unaudited Interim Consolidated Statements of Cash Flows

(in thousands of US dollars)

Cash flows from operating activities Net loss for the period Add (deduct) items not affecting cash Stock-based compensation costs Depreciation and amortization Gain on disposal of capital assets Write-off of capital assets Deferred revenue Deferred income taxes Changes in foreign exchange gain/loss Changes in non-cash operating items Accounts receivable Income taxes and tax credits Inventories Prepaid expenses Other assets Accounts payable, accrued liabilities and provisions Other liabilities Cash flows from investing activities Additions to short-term investments Proceeds from disposal and maturity of short- term investments Purchases of capital assets Proceeds from disposal of capital assets Cash flows from financing activities Bank loan Other liabilities Repayment of lease liabilities Repayment of long-term debt Redemption of share capital Effect of foreign exchange rate changes on cash Change in cash Cash – Beginning of the period Cash – End of the period	Three months ended August 31, 2020 $ (3,633) 575 3,647 (340) 7 3,545 818 (314) 4,305 5,251 (253) 6,188 247 (1,251) (362) (47) 14,078 (500) 3,052 (1,580) 230 1,202 (1,772) 2,355 (800) (240) – (457) 925 15,748 17,070 $ 32,818	Twelve months ended August 31, 2020 $ (9,540) 2,021 15,379 (340) 223 401 657 1,436 10,237 (1,623) (2,871) (45) 462 (1,963) (6,382) 48 (2,137) (2,574) 4,316 (7,646) 230 (5,674) 26,532 2,355 (3,334) (1,847) (225) 23,481 630 16,300 16,518 $ 32,818	Three months ended August 31, 2019 $ (227) 477 3,152 – 1,125 (1,142) 192 264 3,841 2,252 (93) 534 (927) (456) 1,171 (79) 6,243 (1,301) – (1,180) – (2,481) (143) – – (652) (207) (1,002) 135 2,895 13,623 $ 16,518	Twelve months ended August 31, 2019
				$ (2,480) 1,831 14,481 (1,732) 1,386 10,477 (2,103) (46)
				21,814 (4,786) 1,536 (134) (1,307) (1,459) 3,184 (1,606)
				17,242
				(1,879) 1,168 (7,498) 3,318
				(4,891)
				(5,195) – – (2,817) (312)
				(8,324)
				(267)
				3,760 12,758
				$ 16,518