UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2001
EXFO ELECTRO-OPTICAL ENGINEERING INC.
(Translation of registrant's name into English)
465 GODIN AVENUE, VANIER, QUEBEC, CANADA G1M 3G7 (Address of
principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X___
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-______.
-1-
On March 19, 2001, EXFO Electro-Optical Engineering Inc., a Canadian
corporation, reported its results of operations for the fiscal quarter ended
February 28, 2001. This report on Form 6-K sets forth the news release relating
to EXFO's announcement and certain information relating to EXFO's financial
condition and results of operations for the second fiscal quarter of the 2001
fiscal year.
-2-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
AS AT AS AT
AUGUST 31, FEBRUARY 28,
2000 2001
------------ ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 729 $ 1,934
Short-term investments 162,659 107,118
Accounts receivable
Trade 18,272 26,931
Other 2,790 4,345
Income taxes receivable 284 -
Inventories 18,868 37,444
Prepaid expenses 1,023 1,623
Future income taxes 995 825
-------- --------
205,620 180,220
CAPITAL ASSETS 8,694 16,934
INTANGIBLE ASSETS 68 25,482
FUTURE INCOME TAXES 3,089 2,328
GOODWILL 2,252 164,125
-------- --------
$219,723 $389,089
======== ========
LIABILITIES
CURRENT LIABILITIES
Bank advances $ 10 $ 1,811
Accounts payable and accrued liabilities 10,353 18,055
Income taxes payable - 3,540
Mandatorily redeemable preferred shares 543 -
Deferred revenue 395 664
Current portion of long-term debt 152 67
-------- --------
11,453 24,137
DEFERRED REVENUE 151 36
DEFERRED GRANTS 1,109 1,005
LONG-TERM DEBT 16 760
FUTURE INCOME TAXES - 8,392
-------- --------
12,729 34,330
-------- --------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 198,459 345,223
CONTRIBUTED SURPLUS - 1,350
CUMULATIVE TRANSLATION ADJUSTMENT 1,555 (6,323)
RETAINED EARNINGS 6,980 14,509
-------- --------
206,994 354,759
-------- --------
$219,723 $389,089
-------- --------
-3-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of U.S. dollars, except share and per share data)
THREE MONTHS ENDED SIX MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 29, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
2000 2000 2001 2001
------------------ ---------------- ----------------- ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
SALES $17,423 $29,111 $36,293 $64,812
COST OF SALES 5,876 9,609 12,787 23,095
------- ------- ------- -------
GROSS MARGIN 11,547 19,502 23,506 41,717
------- ------- ------- -------
OPERATING EXPENSES
Selling and administrative 5,819 9,938 10,915 19,835
Net research and development 1,759 3,221 3,315 5,287
Amortization of capital assets 318 590 716 1,230
Amortization of intangible assets 11 21 1,648 1,662
------- ------- ------- -------
TOTAL OPERATING EXPENSES 7,907 13,770 16,594 28,014
------- ------- ------- -------
EARNINGS FROM OPERATIONS 3,640 5,732 6,912 13,703
Interest income, net (3) (25) (1,777) (4,408)
Foreign exchange loss (gain) (120) 116 (811) (3,170)
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES AND
AMORTIZATION OF GOODWILL 3,763 5,641 9,500 21,281
------- ------- ------- -------
INCOME TAXES
Current 1,291 1,863 4,070 7,590
Future 18 24 (971) (339)
------- ------- ------- -------
1,309 1,887 3,099 7,251
------- ------- ------- -------
EARNINGS BEFORE AMORTIZATION OF GOODWILL 2,454 3,754 6,401 14,030
AMORTIZATION OF GOODWILL 42 42 6,377 6,501
------- ------- ------- -------
NET EARNINGS FOR THE PERIOD $ 2,412 $ 3,712 $ 24 $ 7,529
======= ======= ======= =======
BASIC AND DILUTED EARNINGS PER SHARE
Earnings before amortization
of goodwill $ 0.06 $ 0.10 $ 0.12 $ 0.28
Net earnings $ 0.06 $ 0.10 $ - $ 0.15
BASIC WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (000'S) 38,627 38,425 51,804 49,267
-4-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
INTERIM CONSOLIDATED STATEMENTS OF
RETAINED EARNINGS AND CONTRIBUTED SURPLUS
(in thousands of U.S. dollars)
RETAINED EARNINGS
SIX MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 29, FEBRUARY 28,
2000 2001
--------------- ----------------
(UNAUDITED) (UNAUDITED)
BALANCE - BEGINNING OF PERIOD $14,592 $ 6,980
ADD
Net earnings for the period 3,712 7,529
------- -------
BALANCE - END OF PERIOD $18,304 $14,509
======= =======
CONTRIBUTED SURPLUS
SIX MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 29, FEBRUARY 28,
2000 2001
--------------- ----------------
(UNAUDITED) (UNAUDITED)
BALANCE - BEGINNING OF PERIOD $ - $ -
ADD
Premium on resale of share capital - 1,350
------- -------
BALANCE - END OF PERIOD $ - $ 1,350
======= =======
-5-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
THREE MONTHS ENDED SIX MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 29, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
2000 2000 2001 2001
------------------ ---------------- ----------------- ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings for the period $ 2,412 $ 3,712 $ 24 $ 7,529
------- ------- --------- ---------
Add (deduct) items not affecting cash and
cash equivalents
Amortization of discount on short-term
investments - - (1,867) (4,474)
Amortization of capital assets 318 590 716 1,230
Amortization of intangible assets 11 21 1,648 1,662
Foreign exchange gains on short-term
investments - - (878) (3,188)
Future income taxes 18 24 (971) (339)
Amortization of goodwill 42 42 6,377 6,501
Change in non-cash operating working capital
items
Accounts receivable (3,603) (5,025) (1,039) (7,297)
Income taxes receivable 20 (538) - 276
Inventories (1,475) (3,243) (9,307) (16,300)
Prepaid expenses 225 47 (627) (605)
Accounts payable and accrued
liabilities 1,922 1,907 (2,029) 4,371
Income taxes payable - - 2,571 4,107
Deferred revenue 37 75 144 176
Deferred grants 281 255 (71) (61)
------- ------- -------- --------
208 (2,133) (5,309) (6,412)
------- ------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank advances 1,672 4,552 654 812
Repayment of mandatorily redeemable
preferred shares - - - (354)
Repayment of long-term debt (16) (16) (874) (1,004)
Issuance of share capital - 17 - -
Resale of share capital - - 364 1,380
Redemption of share capital - - (11) (30)
Share issue expenses - - (26) (49)
Dividends paid (51) (51) - -
------- ------- -------- --------
1,605 4,502 107 755
------- ------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to short-term investments - - (194,325) (210,790)
Proceeds from disposal of short-term
investments 1,400 1,400 250,161 268,493
Additions to capital and intangible assets (887) (1,587) (5,857) (8,038)
Business combinations, net of cash and cash
equivalents acquired (2,108) (2,108) (42,349) (42,349)
------- ------- -------- --------
(1,595) (2,295) 7,630 7,316
------- ------- -------- --------
CHANGE IN CASH AND CASH EQUIVALENTS 218 74 2,428 1,659
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS 36 42 (778) (454)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 285 423 284 729
------- ------- -------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 539 $ 539 $ 1,934 $1,934
======= ======= ======== ========
SUPPLEMENTARY INFORMATION
Interest paid $ 73 $ 136 $ 125 $ 157
Interest received $ (92) $ (92) $ (4,057) $ (4,723)
Income taxes paid $ 539 $ 3,098 $ 1,165 $ 2,110
-6-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
1 INTERIM FINANCIAL INFORMATION
The financial information as at February 28, 2001 and for the periods
ended February 29, 2000 and February 28, 2001 is unaudited; however, in
the opinion of management, all adjustments necessary to present fairly the
results of these periods have been included. The adjustments made were of
a normal recurring nature. Interim results may not necessarily be
indicative of results anticipated for the year.
These interim consolidated financial statements are prepared in accordance
with generally accepted accounting principles in Canada and use the same
accounting policies and methods used in the preparation of the company's
most recent annual consolidated financial statements. All disclosures
required for annual financial statements have not been included in these
financial statements. These interim consolidated financial statements
should be read in conjunction with the company's most recent annual
consolidated financial statements.
2 NEW ACCOUNTING STANDARDS
On September 1, 2000, the company retroactively adopted the new standard
of the Canadian Institute of Chartered Accountants (CICA) regarding
accounting for employee future benefits (CICA 3461, Employee future
benefits). The adoption of this new standard did not result in any changes
to prior year earnings, shareholders' equity or cash flows.
During the period, the company retroactively adopted the recently revised
recommendations of the CICA regarding earnings per share (CICA 3500,
Earnings per share). The principles for calculating basic earnings per
share are consistent with previous practice, however, diluted earnings per
share are now calculated using the treasury stock method which differs
from the imputed interest method previously used. The adoption of these
revised recommendations did not result in any material change to
previously reported basic and diluted earnings per share.
In 2000, a new accounting standard for the preparation of interim
financial statements (CICA 1751, Interim Financial Statements) was issued
which sets out minimum presentation and disclosure requirements as well as
guidance on recognition and measurement of items for interim periods. The
recognition and measurement guidance requires that items be recognized and
measured on the same basis as used for annual financial statements. The
new standard is effective for fiscal years beginning on or after January
1, 2001. The company believes that these interim financial statements
comply in all material respects with the recommendations in the new
standard.
3 BUSINESS COMBINATION
On December 20, 2000, the company acquired a 100% interest in Burleigh
Instruments, Inc. ("Burleigh"), a manufacturer of precision scientific
instruments used in basic and applied research, engineering and production
test applications in a variety of fields, in exchange for a total
consideration valued at US$189,270,000 including acquisition-related costs
of US$2,461,000.
The consideration paid consisted of US$42,461,000 in cash and the issuance
of 6,488,816 subordinate voting shares for an amount of US$146,809,000.
-7-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
This acquisition has been accounted for using the purchase method and
consequently, the net earnings of Burleigh have been included in the
consolidated statement of earnings of the company from the date of
acquisition, being December 20, 2000.
The purchase price, including acquisition-related costs, has been
allocated based on the estimated fair value of net assets at the
acquisition date as follows:
(UNAUDITED)
Assets acquired
Current assets $ 7,092
Capital assets 4,457
In process research and development 1,800
Core technology 24,000
Work force 1,250
Liabilities assumed (9,068)
Future income taxes (8,927)
--------
Net identifiable assets acquired 20,604
Goodwill 168,666
--------
Purchase price 189,270
Less: subordinate voting shares issued 146,809
--------
Cash paid $ 42,461
========
The fair value allocated to intangible assets acquired from Burleigh was
based upon independent valuation performed in conjunction with this
acquisition.
The existing technology that has reached technological feasibility was
classified as core technology.
In process research and development represents the existing technology
that has not reached technological feasibility and has no future
alternative use.
The fair value of subordinate voting shares issued was determined based on
the market price of the shares over a reasonable period of time before and
after the date of acquisition.
-8-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
4 INVENTORIES
AS AT AS AT
AUGUST 31, FEBRUARY 28,
2000 2001
----------- ------------
(UNAUDITED)
Raw materials $12,057 $24,474
Work in progress 2,910 6,959
Finished goods 3,901 6,011
------- -------
$18,868 $37,444
======= =======
5 INTANGIBLE ASSETS AND GOODWILL
The net book value of intangible assets and goodwill is as follows:
AS AT
AUGUST 31,
AS AT FEBRUARY 28, 2001 2000
------------------------------------------------------------------------- -----------------
AMORTIZATION ACCUMULATED
PERIOD COST AMORTIZATION NET NET
----------------- ----------------- ----------------- ----------------- -----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
In process research
and development Eight months $ 1,800 $ 486 $ 1,314 $ -
Core technology Five years 24,000 899 23,101 -
Workforce One year 1,250 234 1,016 -
Other assets Four years 239 188 51 68
-------- -------- -------- --------
$ 27,289 $ 1,807 $ 25,482 $ 68
======== ======== ======== ========
Goodwill Five years $171,122 $ 6,997 $164,125 $ 2,252
======== ======== ======== ========
Intangible assets and goodwill are amortized on a straight-line basis over
their estimated useful lives.
-9-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
6 ACCOUNTS PAYABLE
AS AT AS AT
AUGUST 31, FEBRUARY 28,
2000 2001
----------- -----------
(UNAUDITED)
Trade $ 6,473 $12,231
Salaries and social benefits 1,698 3,425
Outstanding cheques in excess of bank balances 374 278
Commissions 966 739
Other 842 1,382
------- -------
$10,353 $18,055
======= =======
7 RESTRICTED STOCK AWARD PLAN
During the period, the company established a restricted stock award plan
for employees of Burleigh. A total of 360,000 subordinate voting shares
has been granted under that plan with an exercise price of nil. Shares
granted under the plan vest over a four-year period, with 25% vesting on
an annual basis commencing on the first anniversary of the date of grant.
No compensation cost has been recognized for this stock-based compensation
plan.
8 NET RESEARCH AND DEVELOPMENT EXPENSES
THREE MONTHS SIX MONTHS ENDED THREE MONTHS SIX MONTHS ENDED
ENDED FEBRUARY 29, FEBRUARY 29, ENDED FEBRUARY 28, FEBRUARY 28,
2000 2000 2001 2001
------------------ ---------------- ------------------ ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Gross research and development
expenses $2,514 $4,696 $4,508 $7,356
Research and development tax credits (695) (1,216) (867) (1,567)
Government grants (60) (259) (326) (502)
------ ------ ------ ------
$1,759 $3,221 $3,315 $5,287
====== ====== ====== ======
-10-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
9 DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP
These interim consolidated financial statements are prepared in accordance
with Canadian GAAP which differ in certain respects from U.S. GAAP. Note
20 to the company's most recent annual consolidated financial statements
describes the material differences between Canadian and U.S. GAAP. This
note describes additional changes occurring since the most recent annual
financial statements and provides a quantitative analysis of the material
differences. All disclosures required in annual financial statements under
U.S. GAAP have not been provided in these interim consolidated financial
statements.
ACCOUNTING FOR STOCK-BASED COMPENSATION
Under U.S. GAAP, compensation costs related to the restricted stock award
plan are measured as the difference between the fair value of the awarded
stock and the exercise price which is nil. Compensation costs are
amortized to expense over the estimated vesting period of four years. As
at February 28, 2001, the balance of deferred stock-based compensation
costs related to this plan amounted to US$7,806,000.
Under Canadian GAAP, no compensation cost has been recognized for this
stock-based compensation plan.
BUSINESS COMBINATION
Under U.S. GAAP, the value of shares issued upon a business combination
should be determined based on the market price of the shares over a
reasonable period of time before and after the companies have reached an
agreement on the purchase price, the significant terms of the agreement
are known and the proposed transaction is announced.
Consequently, the measurement date of the acquisition of Burleigh occurred
on December 14, 2000, the date on which all significant terms of the
agreement were known. The average market price of the shares a few days
before and after that date was US$31.09. Considering the number of shares
issued, the total consideration of this acquisition for U.S. GAAP purposes
amounts to US$244,198,000 and the value allocated to goodwill amounts to
US$223,000,000.
Furthermore, under U.S. GAAP, in process research and development acquired
in a business combination is written off at the time of acquisition and no
future income taxes are recognized on this asset in the purchase price
allocation process.
Under Canadian GAAP, in process research and development acquired in a
business combination is capitalized and amortized over its estimated
useful life. Future income taxes are recognized on the acquisition date on
that asset in the purchase price allocation process.
Finally, under U.S. GAAP, pro forma information must be disclosed as
though the business combination had occurred at the beginning of the
reported periods.
-11-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
FORWARD EXCHANGE CONTRACTS
Under Canadian GAAP, unrealized exchange gains and losses on short-term
investments are included in net earnings, whereas under U.S. GAAP,
unrealized exchange gains and losses on short-term investments classified
as available-for-sale securities are included in other comprehensive
income until the investments are realized.
On September 1, 2000, the company adopted Statement of Financial
Accounting Standard No. 133, Accounting for Derivative Instruments and
Hedging Activities and its amendments (SFAS 138), which requires all
derivatives to be carried on the balance sheet at fair value. The forward
exchange contracts used by the company have not qualified for hedging
accounting treatment during the periods ended February 28, 2001,
accordingly changes in the fair value of the derivatives have been charged
to earnings during the periods. Under Canadian GAAP, certain forward
exchange contracts have been designated as hedges of anticipated sales and
the related accounts receivable and unrealized gains and losses are not
reflected in the financial statements until the sale occurs. For all other
forward exchange contracts, the unrealized gains and losses are charged to
earnings under Canadian GAAP with an offsetting asset or liability for the
unrealized amount. Under Canadian GAAP, the unrealized gains and losses
are computed using the period-end spot rate as opposed to the period-end
forward rate.
SHARE CAPITAL
Under Canadian GAAP, restricted shares reacquired from employees under the
stock purchase plan are treated as arm's length repurchases of shares
whereas under U.S. GAAP, the reacquisition of shares would be accounted
for as a forfeiture by the employee, resulting in any difference between
the amount originally credited to share capital and the remaining deferred
compensation cost being credited to compensation expense in the current
period. The subsequent resale of the shares would be treated as an
issuance of shares for the proceeds received.
-12-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
RECONCILIATION OF NET EARNINGS TO CONFORM WITH U.S. GAAP
THREE MONTHS SIX MONTHS THREE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
2000 2000 2001 2001
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Net earnings for the period in
accordance with Canadian GAAP $2,412 $3,712 $ 24 $ 7,529
Non-cash stock-based compensation
costs related to stock option plan - - (641) (174)
Non-cash stock-based compensation
costs related to stock purchase plan (146) (293) (113) (234)
Non-cash stock-based compensation costs
related to restricted stock award plan - - (339) (339)
Unrealized gains on forward exchange contracts 158 158 1,002 103
Future income taxes on forward
exchange contracts (51) (51) (439) (34)
Unrealized foreign exchange gains on
available-for-sale securities - - 4,300 -
Future income taxes on
available-for-sale securities - - (1,935) -
Unamortized acquired in process
research and development - - (1,309) (1,309)
Future income taxes on acquired in
process research and development - - 162 162
Amortization of goodwill - - (2,034) (2,034)
------ ------ ------- -------
Net earnings (loss) available to common
shareholders for the period in
accordance with U.S. GAAP 2,373 3,526 (1,322) 3,670
Other comprehensive income (loss)
Foreign currency translation adjustments 372 640 664 (7,878)
Unrealized holding gains (losses)
on available-for-sale securities,
net of related future income taxes - (36) 419 382
Unrealized foreign exchange gains on
available-for-sale securities, net
of related future income taxes - - (2,365) -
------ ------ ------- -------
Comprehensive income (loss) $2,745 $4,130 $(2,604) $(3,826)
======= ======= ======= =======
Basic and diluted net earnings (loss)
per share in accordance with U.S. GAAP $ 0.06 $ 0.09 $ (0.03) $ 0.07
======= ======= ======= =======
-13-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
The diluted weighted average number of common shares outstanding
calculated according to U.S. GAAP is as follows:
THREE MONTHS SIX MONTHS THREE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
2000 2000 2001 2001
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Weighted average number of common
shares outstanding - Basic (000's) 38,627 38,425 51,804 49,267
------ ------ ------ ------
Conversion of preferred shares
Series I 18 4 - -
Exercise of stock options - - 153 121
Exercise of restricted stock awards - - 86 43
------ ------ ------ ------
Weighted average number of common
shares outstanding - Diluted (000's) 38,645 38,429 52,043 49,431
====== ====== ====== ======
BALANCE SHEETS
AS AT FEBRUARY 29, 2000 AS AT FEBRUARY 28, 2001
---------------------------------------- ----------------------------------------
AS REPORTED U.S. GAAP AS REPORTED U.S. GAAP
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Available-for-sale securities $ - $ - $107,118 $107,746
======= ======= ======== ========
Accounts receivable $15,934 $16,092 $ 31,276 $ 31,379
======= ======= ======== ========
Short-term future income tax assets $ 185 $ 134 $ 825 $ 582
======= ======= ======== ========
Intangible assets $ 51 $ 51 $ 25,482 $ 24,173
======= ======= ======== ========
Goodwill $ 2,511 $ 2,511 $164,125 $216,081
======= ======= ======== ========
Long-term future income tax liabilities $ 96 $ 96 $ 8,392 $ 8,230
======= ======= ======== ========
Shareholders' equity
Share capital $ 104 $ 407 $345,223 $401,789
Contributed surplus - - 1,350 1,350
Cumulative translation adjustment 640 - (6,323) -
Deferred stock-based compensation costs - - - (1,455)
Other capital - - - 1,638
Retained earnings 18,304 19,124 14,509 9,654
Accumulated other comprehensive loss - (376) - (6,920)
------- ------- -------- --------
$19,048 $19,155 $354,759 $406,056
======= ======= ======== ========
-14-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
STATEMENTS OF CASH FLOWS
For the three months and the six months ended February 29, 2000 and
February 28, 2001, there are no material differences between the
statements of cash flows under Canadian GAAP as compared to U.S. GAAP.
PRO FORMA INFORMATION
The following unaudited pro forma information regarding the acquisition of
Burleigh has been prepared by the company's management based upon the
unaudited consolidated financial statements of the company for the six
months ended February 29, 2000 and February 28, 2001 and the unaudited
financial statements of Burleigh.
This pro forma information includes adjustments related to the
amortization of intangible assets and goodwill, the income tax effects of
the acquisition and the stock-based compensation costs related to the
restricted stock award plan. Consequently, such information is not
necessarily indicative of the actual results which would have been
achieved, nor is it necessarily indicative of future consolidated results
of the company.
The following unaudited pro forma information for the six months ended
February 29, 2000 has been prepared as if the acquisition had occurred on
September 1, 1999. The unaudited pro forma information for the six months
ended February 28, 2001 has been prepared as if the acquisition had
occurred on September 1, 2000.
SIX MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 29, FEBRUARY 28,
2000 2001
---------------- ----------------
(UNAUDITED) (UNAUDITED)
Sales $ 37,699 $ 72,109
Net loss $(26,147) $(12,326)
Basic and diluted net loss per share $ (0.68) $ (0.25)
10 SUBSEQUENT EVENT
On March 15, 2001, the company acquired a 100% interest in EFOS Inc.
("EFOS"), a leader in precision light-based adhesive spot curing
technologies as well as curing process control for the global optical
component manufacturing market. The consideration paid consisted of the
issuance of 3,700,000 subordinate voting shares for an amount of
US$84,952,000. This acquisition will be accounted for using the purchase
method. As part of this transaction, the company also acquired a patent
from EFOS for a cash consideration of US$25,000,000.
-15-
EXFO ELECTRO-OPTICAL ENGINEERING INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in thousands of U.S. dollars, except share
and per share data and as otherwise noted)
Under U.S. GAAP, the value of shares issued upon a business combination
should be determined based on the market price of the shares over a
reasonable period of time before and after the companies have reached an
agreement on the purchase price, the significant terms of the agreement
are known and the proposed transaction is announced.
In view of this standard, the measurement date occurred on March 6, 2001,
the date on which all significant terms of the agreement were known. The
average market price of the shares a few days before and after that date
was US$25.70. Considering the number of shares to be issued, the total
consideration for U.S. GAAP purposes amounts to US$95,086,000.
-16-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion may contain statements that constitute forward-looking
statements within the meaning of the U.S. Private Securities Litigation
Reform Act of 1995. Forward-looking statements are statements other than
historical information or statements of current condition. These
statements may appear in a number of places in this discussion and include
statements concerning our intent, belief or current expectations regarding
future events. Forward-looking statements are not guarantees of future
performance and involve risks and uncertainties. Actual results may differ
materially from those in the forward-looking statements as a result of
various factors, which are beyond the control of EXFO, including retention
of qualified personnel, revenue synergies, demand for testing and
measurement instruments and precision positioning instruments. Although we
believe that the expectations, reflected in the forward-looking
statements, are reasonable based on information currently available to us,
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. In any event, these statements speak only as
of the date of this discussion. We undertake no obligation to revise or
update any of them to reflect events or circumstances after the date of
this discussion, or to reflect new information or the occurrence of
unanticipated events. Readers are referred to our Registration Statement
on Form F-1 and our other filings with the U.S. Securities and Exchange
Commission and the Canadian securities commissions for a discussion of the
other factors that may affect our future performance and other important
risk factors concerning us and our operations.
RECENT EVENTS
On March 15, 2001, EXFO acquired EFOS Inc. by issuing 3.7 million
subordinate voting shares and paying US$25 million in cash. The total
consideration paid is US$110 million. EFOS, a privately held company in
Toronto, Ont., is widely recognized as a leader in precision light-based
adhesive spot curing technologies as well as curing process control for
the global optical component manufacturing market. EFOS' products deliver
precise doses of the appropriate spectral light onto photosensitive and
heat-cured adhesives to significantly reduce bonding time and increase
repeatability in optical component manufacturing.
RESULTS OF OPERATIONS
The following discussion and analysis of our results of operations and
liquidity and capital resources should be read in conjunction with our
interim consolidated financial statements and the related notes thereto.
All figures are expressed in United States dollars unless otherwise noted.
The interim consolidated financial statements have been prepared in
accordance with Canadian GAAP, Generally Accepted Accounting Principles
("GAAP"), in Canada, which conform in all material respects with U.S.
GAAP, except as disclosed in note 9 of the interim consolidated financial
statements.
-17-
The following tables summarize the consolidated statements of earnings in
dollar amounts and as a percentage of sales to facilitate the discussion
that follows.
(in thousands of US dollars)
$ $
Three months ended Six months ended
----------------------------- -----------------------------
February 29, February 28, February 29, February 28,
2000 2001 2000 2001
------------ ------------- ------------- -------------
Sales $ 17,423 $ 36,293 $ 29,111 $ 64,812
Cost of sales 5,876 12,787 9,609 23,095
------------ ------------ ------------ ------------
Gross margin 11,547 23,506 19,502 41,717
Operating expenses
Selling and administrative 5,819 10,915 9,938 19,835
Net research and development 1,759 3,315 3,221 5,287
Amortization of capital assets 318 716 590 1,230
Amortization of intangible assets 11 1,648 21 1,662
------------ ------------ ------------ ------------
Total operating expenses 7,907 16,594 13,770 28,014
Earnings from operations 3,640 6,912 5,732 13,703
Interest income, net (3) (1,777) (25) (4,408)
Foreign exchange loss (gain) (120) (811) 116 (3,170)
------------ ------------ ------------ ------------
Earnings before income taxes and
amortization of goodwill 3,763 9,500 5,641 21,281
Income taxes 1,309 3,099 1,887 7,251
------------ ------------ ------------ ------------
Earnings before amortization of goodwill 2,454 6,401 3,754 14,030
Amortization of goodwill 42 6,377 42 6,501
------------ ------------ ------------ ------------
Net earnings for the period $ 2,412 $ 24 $ 3,712 $ 7,529
============ ============ ============ ============
Research and development data
Gross research and development $ 2,514 $ 4,508 $ 4,696 $ 7,356
Net research and development $ 1,759 $ 3,315 $ 3,221 $ 5,287
-18-
(in percentage)
% %
Three months ended Six months ended
----------------------------- -----------------------------
February 29, February 28, February 29, February 28,
2000 2001 2000 2001
------------ ------------- ------------- -------------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 33.7 35.2 33.0 35.6
------------ ------------- ------------- -------------
Gross margin 66.3 64.8 67.0 64.4
Operating expenses
Selling and administrative 33.4 30.1 34.1 30.6
Net research and development 10.1 9.1 11.1 8.2
Amortization of capital assets 1.8 2.0 2.0 1.9
Amortization of intangible assets 0.1 4.5 0.1 2.6
----------- ------------- ------------- -------------
Total operating expenses 45.4 45.7 47.3 43.3
Earnings from operations 20.9 19.1 19.7 21.1
Interest income, net 0.0 (4.9) (0.1) (6.8)
Foreign exchange loss (gain) (0.7) (2.2) 0.4 (4.9)
----------- ------------- ------------- -------------
Earnings before income taxes and
amortization of goodwill 21.6 26.2 19.4 32.8
Income taxes 7.5 8.5 6.5 11.2
----------- ------------- ------------- -------------
Earnings before amortization of goodwill 14.1 17.7 12.9 21.6
Amortization of goodwill 0.2 17.6 0.1 10.0
----------- ------------- ------------- -------------
Net earnings for the period 13.9% 0.1% 12.8% 11.6%
=========== ============= ============ ============
Research and development data
Gross research and development 14.4% 12.4% 16.1% 11.3%
Net research and development 10.1% 9.1% 11.1% 8.2%
SALES
For the quarter ended February 28, 2001, sales increased 108% to $36.3
million from $17.4 million for the same period last year. The growth is
due to the increased demand for our Industrial and Scientific products and
our Portable and Monitoring products, which include the successful launch
of new products in fiscal 2000 and the partial quarter effect of the
Burleigh acquisition. During the quarter ended February 28, 2001, the
Company's three largest customers accounted for approximately 13% of net
sales with no single customer exceeding approximately 5.9% of sales.
For the six-month period ended February 28, 2001, sales increased 123% to
$64.8 million from $29.1 million for the same period last year. The growth
is due to the increased demand for our Industrial and Scientific products
and our Portable and Monitoring products, which include the successful
launch of new products in fiscal 2000 and the partial quarter effect of
the Burleigh acquisition. During the six-month period ended February 28,
2001, the three largest customers accounted for approximately 16% of net
sales with no single customer exceeding 6.5% of sales.
-19-
GROSS MARGIN
For the quarter ended February 28, 2001, gross margin amounted to 64.8% of
sales compared to 66.3% of sales for the quarter ended February 29, 2000.
The percentage decline in gross margin is primarily due to investments in
manufacturing operations, namely the ramp up of production to meet
customer demand and the hiring and training of additional employees in
production.
For the six-month period ended February 28, 2001, gross margin amounted to
64.4% of sales compared to 67.0% of sales for the six-month period ended
February 29, 2000. The percentage decline in gross margin is primarily due
to investments in manufacturing operations, namely the ramp up of
production to meet customer demand and the hiring and training of
additional employees in production.
SELLING AND ADMINISTRATION
Selling and administrative expenses for the quarter ended February 28,
2001 were $10.9 million, or 30.1% of sales, compared to $5.8 million, or
33.4% of sales, for the quarter ended February 29, 2000. The dollar
increase for the quarter is directly related to higher commissions
resulting from increased sales activity. The percentage decrease is mainly
due to the fact that sales are increasing at a faster rate than selling
and administrative expenses.
Selling and administrative expenses for the six-month period ended
February 28, 2001 were $19.8 million, or 30.6% of sales, compared to $9.9
million, or 34.1% of sales, for the six-month period ended February 29,
2000. The dollar increase for the quarter is directly related to higher
commissions resulting from increased sales activity, increased promotional
and product marketing expenses as well as expenses related to running a
public company. The percentage decrease is mainly due to the fact that
sales are increasing at a faster rate than selling and administrative
expenses.
RESEARCH AND DEVELOPMENT
Gross research and development expenses were $4.5 million, or 12.4% of
sales, for the quarter ended February 28, 2001 compared to $2.5 million,
or 14.4% of sales, in the same period last year. The dollar increase for
the quarter is primarily due to development efforts centered on our new
products within the Industrial and Scientific product lines and salary
increases resulting from the hiring of additional personnel.
Tax credits and grants from the federal and provincial governments for R&D
activities were $1.2 million for the quarter ended February 28, 2001
compared to $0.8 million for the quarter ended February 29, 2000. This
increase in tax credits and grants is directly related to the hiring of
additional research and development personnel.
Gross research and development expenses were $7.4 million, or 11.3% of
sales, for the six-month period ended February 28, 2001 compared to $4.7
million, or 16.1% of sales, in the same period last year. The dollar
increase for the quarter is primarily due to development efforts centered
on our
-20-
new products within the Industrial and Scientific product lines. In
addition, we added 116 employees to our R&D Department, which reflects our
continued focus on R&D.
Tax credits and grants from the federal and provincial governments for R&D
activities were $2.1 million for the six-month period ended February 28,
2001 compared to $1.5 million for the six-month period ended February 29,
2000. This increase in tax credits and grants is directly related to the
hiring of additional research and development personnel.
AMORTIZATION INTANGIBLE ASSETS
In conjunction with the acquisition of Burleigh Instruments Inc., the
Company recorded a total of $27.1 million in intangible assets, which are
to be amortized over the next 8 months to 5 years. An amount of $1.6
million, recorded during the quarter, represents 2 months and 11 days of
amortization.
NET INTEREST INCOME
Net interest income amounted to $1.8 million and nil for the quarters
ended February 28, 2001 and February 29, 2000, respectively.
Net interest income amounted to $4.4 million and nil for the six-month
periods ended February 28, 2001 and February 29, 2000, respectively.
The increase results from the interest income derived from investment of
the remaining net proceeds of the Initial Public Offering on June 29,
2000.
FOREIGN EXCHANGE GAIN
A foreign exchange gain of $0.8 million for the quarter ended February 28,
2001 is the result of the currency conversions in current operations.
A foreign exchange gain of $3.2 million for the six-month period ended
February 28, 2001 is mainly due to the disposal of short-term investments
in U.S. dollars between August 31, 2000 and the date of disposal. The
exchange rate on August 31, 2000 was 1.4722 and the average exchange rate
on our forward exchange contracts was 1.4967.
INCOME TAX
The Company's effective income tax rates were 32.6% and 34.8% for the
quarters ended February 28, 2001 and February 29, 2000, respectively. The
lower rate in 2001 compared to 2000 was the result of the non-taxable
items in 2001.
The Company's effective income tax rates were 34.1% and 33.5% for the
six-month periods ended February 28, 2001 and February 29, 2000,
respectively. The higher rate in 2001 compared to 2000 was the result of
the higher effective income tax rate on interest provided by short-term
investments.
-21-
AMORTIZATION OF GOODWILL
In conjunction with the acquisition of Burleigh Instruments Inc., the
Company recorded a total of $168.7 million in goodwill, which is to be
amortized over the next 5 years. The amount of $6.4 million recorded
during the quarter is mainly due to the 2 months and 11 days of
amortization of goodwill related to the acquisition of Burleigh
Instruments Inc.
LIQUIDITY AND CAPITAL RESOURCES
Prior to our Initial Public Offering, we had financed operations and met
our capital expenditures requirements mainly through cash flows from our
operations, research and development tax credits and government grants. On
June 29, 2000, we closed our Initial Public Offering of 8,050,000
subordinate voting shares at a price of US$26.00 per share in the United
States and at C$38.55 per share in Canada. Total proceeds to EXFO,
including the over-allotment option exercised by the underwriters, were
approximately US$209 million.
Cash flows used in operating activities were $5.3 million for the
three-month period ended February 28, 2001 compared to cash flows provided
of $0.2 million for the same period last year. Cash flows used in
operating activities for the three-month period ended February 28, 2001
were mainly due to an increase in accounts receivable of $1.0 million,
which is related to a higher volume of sales, an increase in inventories
of $9.3 million, which is required to ensure minimal manufacturing and
delivery lead time, and a decrease in accounts payable and liabilities of
$2.0 million, which is due to the timing of payments. An increase of $2.6
million in income taxes payable related to the Company's growth provided
cash flows for operating activities.
Cash flows used in operating activities were $6.4 million for the
six-month period ended February 28, 2001 and $2.1 million for the same
period last year. Cash flows used in operating activities for the
six-month period ended February 28, 2001 were mainly due to an increase in
accounts receivable of $7.3 million, which is related to a higher volume
of sales, and an increase in inventories of $16.3 million, which is
required to ensure minimal manufacturing and delivery lead time. Cash
flows provided in operating activities were due to the increase in
accounts payable and accrued liabilities totaling $4.4 million and in
income taxes payable totaling $4.1 million, which are primarily related to
the Company's growth.
For the period ended February 28, 2001, we had cash and cash equivalents
of $1.9 million, short-term investments of $107.1 million and working
capital of $156.1 million.
Cash flows provided by financing activities amounted to $0.1 million for
the three-month period ended February 28, 2001, and $1.6 million for the
same period last year. Cash flows provided by financing activities in the
three-month period ended February 28, 2001 were primarily due to the use
of bank advances of $0.7 million and the net proceeds of $0.4 million from
the redemption and the resale of restricted employee shares. Furthermore,
cash flows were used for the repayment of long-term debt in the amount of
$0.9 million. For the period ended February 29, 2000, cash flows provided
by financing activities were mainly due to the use of bank advances.
Cash flows provided by financing activities amounted to $0.8 million for
the six-month period ended February 28, 2001 and $4.5 million for the same
period last year. Cash flows provided by financing activities in the
six-month period ended February 28, 2001 were primarily due to net
proceeds of $1.4 million from the redemption and the resale of restricted
employee shares and the
-22-
use of bank advances in the amount of $0.8 million. Furthermore, cash
flows were used for the repayment of long-term debt and mandatorily
redeemable preferred shares for a total amount of $1.4 million. For the
period ended February 29, 2000, cash flows provided by financing
activities were mainly due to the use of bank advances.
Cash flows provided for investing activities for the three-month period
ended February 28, 2001 amounted to $7.6 million compared to cash flows
used of $1.6 million for the same period last year. During the quarter
ended February 28, 2001, cash flows were used for the acquisition of
Burleigh in the amount of $42.3 million and for the acquisition of capital
and intangible assets in the amount of $5.9 million. Finally, net cash
flows of $55.8 million were provided by sales of short-term investments
and reinvestments therein.
Cash flows provided for investing activities for the six-month period
ended February 28, 2001 amounted to $7.3 million compared to cash flows
used of $2.3 million for the same period last year. During the six-month
period ended February 28, 2001, cash flows were used for the acquisition
of Burleigh in the amount of $42.3 million and for the acquisition of
capital and intangible assets in the amount of $8.0 million. Finally, net
cash flows of $57.7 million were provided by sales of short-term
investments and reinvestments therein.
We believe that our existing cash balances and short-term investments,
together with cash flows from operations and available lines of credit,
will be sufficient to meet our liquidity and capital spending requirements
through the end of fiscal 2001. However, possible investments in, or
acquisitions of complementary businesses, products or technologies may
require additional financing prior to such time. There can be no assurance
that additional debt or equity financing will be available when required
or, if available, can be secured on terms satisfactory to us.
-23-
EXFO REPORTS RECORD FINANCIAL RESULTS FOR
FOURTH CONSECUTIVE QUARTER
o SALES UP 108% TO US$36.3 MILLION
o NET EARNINGS* UP 205% TO US$7.5 MILLION
o SALES OUTLOOK RAISED TO BETWEEN US$150 MILLION AND US$165 MILLION
o EPS* OUTLOOK RAISED TO BETWEEN US$0.40 AND US$0.50
ANAHEIM, CA, March 19, 2001--EXFO Electro-Optical Engineering Inc. (NASDAQ:
EXFO, TSE: EXF) announced today record sales and operating results for the
second quarter of fiscal 2001.
It marked the fourth consecutive quarter that EXFO has reported record financial
results since becoming a public company.
Sales increased 108% to US$36.3 million in the second quarter from US$17.4
million for the same period in fiscal 2000, and 27% sequentially from US$28.5
million in the first quarter of 2001.
Net earnings, excluding amortization of intangible assets and goodwill related
to acquisitions, increased 205% to US$7.5 million, or $0.14 per share, for the
second quarter from US$2.5 million, or $0.06 per share, for the same period in
fiscal 2000. Compared to the first quarter of fiscal 2001, net earnings* in the
second quarter dropped 2% from US$7.6 million, or $0.16 per share.
It should be noted that net earnings in the first quarter of 2001 included an
after-tax gain in foreign exchange of $0.03 per share and an after-tax gain in
interest income of $0.04 per share. In the second quarter, net earnings included
an after-tax gain in foreign exchange of $0.01 per share and an after-tax gain
in interest income of $0.02 per share. As a result, EXFO increased its net
earnings per share* from operations $0.02 from the first to second quarter of
fiscal 2001.
-24-
Including amortization of intangible assets and goodwill, EXFO's net earnings in
the second quarter are at US$24,000, or US$0.00 per share, compared to US$2.4
million, or US$0.06 per share, for the same period in fiscal 2000 and US$7.5
million, or US$0.16 per share, in the first quarter of 2001. The non-cash
charges related to acquisitions include US$1.6 million in amortization of
intangible assets and US$6.4 million in amortization of goodwill in the second
quarter of 2001.
"We're very proud of the fact that we have been able to sustain record growth
since becoming a public company four quarters ago," said Germain Lamonde,
Chairman, President and CEO of EXFO. "We have been able to maintain this upward
trend because we're strategically positioned in high-growth markets in the
fiber-optic industry such as DWDM and High-Bandwidth Solutions as well as
Optical Component Manufacturing and Testing.
"We also supply all stripes of customers in the fiber-optic industry including
network service providers, system and component manufacturers as well as
research labs with in excess of 80 product lines, several of which have not yet
reached full maturity.
"In addition, we have a diversified global customer base with more than 2000
customers in 70 countries around the world. Our biggest customer accounted for
approximately 5.9% of our sales in the second quarter."
The financial results of Burleigh Instruments, Inc., a leading supplier of DWDM
wavelength measurement instruments and precision positioning equipment in
Fishers, NY, are reflected in EXFO's financial statements during this quarter
since the acquisition closed on December 20, 2000.
Subsequent to the second quarter, EXFO's affiliate, Burleigh Automation, Inc.,
closed an agreement to purchase substantially all of the assets of Vanguard
Technical Solutions, Inc., an automation equipment manufacturer in Tucson, AZ.
In another transaction subsequent to the second quarter, EXFO closed a deal to
acquire Toronto-based EFOS Inc., a leader in precision light-based adhesive spot
curing for the global optical component manufacturing market. EFOS' financial
results will be consolidated in the third quarter.
-25-
"This string of transactions is part of our acquisition strategy to strengthen
our position in the optical component manufacturing market," Mr. Lamonde added.
"Manufacturers are faced with a pressing need to increase yields and volume
while reducing costs in order to meet the fiber-optic industry's growing demand
for bandwidth.
"Combining Burleigh Automation's expertise in automated manufacturing and system
integration with Burleigh Instruments' nano-positioning and fiber alignment
systems, EFOS' advanced light-based curing solutions and EXFO's automated test
systems will allow us to offer a whole line of automated solutions for the most
critical steps in the optical component manufacturing process."
Based upon financial results in the first half of 2001 and synergies from
acquisitions, EXFO has decided to raise guidance for a second consecutive
quarter. The sales outlook for fiscal 2001 has been raised to between US$150
million and US$165 million, while the outlook for earnings per share* has been
increased to between US$0.40 and US$0.50.
Selling and administrative expenses amounted to US$10.9 million, or 30.1% of
sales, for the second quarter compared to US$5.8 million, or 33.4% of sales, for
the same period in fiscal 2000 and US$8.9 million, or 31.3% of sales, for the
first quarter of fiscal 2001.
Gross research and development expenses were US$4.5 million, or 12.4% of sales,
in the second quarter compared to US$2.5 million, or 14.4% of sales, for the
same period in fiscal 2000 and US$2.8 million, or 10.0% of sales, for the first
quarter of 2001.
To listen to the second-quarter conference call and participate in the question
period via telephone, dial 1 (888) 433-1680 or (416) 620-2400. Germain Lamonde
and Pierre Plamondon, EXFO's Vice-President of Finance and Chief Financial
Officer, will participate in the call. A replay of the conference call can be
accessed after 7 p.m. (Eastern time) today until midnight (Eastern time) on
March 26, 2001. The replay number is 1 (800) 558-5253 and the password is
18137616. A Web cast of the conference call will be available to all interested
parties on EXFO's Web site at WWW.EXFO.COM, under the Investors section.
*EXCLUDING AMORTIZATION OF INTANGIBLE ASSETS AND GOODWILL RELATED TO
ACQUISITIONS
-26-
ABOUT EXFO
EXFO, which derives its name from EXPERTISE IN FIBER OPTICS, is a leading
designer and manufacturer of fiber-optic test, measurement and monitoring
instruments for the telecommunications industry. It markets products under two
brand names: EXFO and Burleigh Instruments.
EXFO and its subsidiaries develop products mainly for two markets. The Portable
and Monitoring Division provides solutions primarily to telecommunications
carriers, cable television companies, public utilities, private network
operators as well as third-party installers and equipment rental companies. The
Industrial and Scientific Division as well as Burleigh Instruments design an
extensive line of high-performance instruments and automated test systems for
manufacturers of optical components, value-added optical modules and optical
networking systems as well as for research and development markets.
This news release may contain statements that constitute forward-looking
statements within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995. Forward-looking statements are statements other than historical
information or statements of current condition. These statements may appear in a
number of places in this news release and include statements concerning our
intent, belief, or current expectations regarding future events. Forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and actual results may differ materially from those in the
forward-looking statements as a result of various factors which are beyond the
control of EXFO, including retention of qualified personnel, revenue synergies,
demand for testing and measurement instruments and precision positioning
instruments. Although we believe that the expectations reflected in the
forward-looking statements are reasonable based on information currently
available to us, we cannot assure you that the expectations will prove to have
been correct.
-27-
Accordingly, you should not place undue reliance on these forward-looking
statements. In any event, these statements speak only as of the date of this
news release. We undertake no obligation to revise or update any of them to
reflect events or circumstances after the date of this news release, or to
reflect new information or the occurrence of unanticipated events. Readers are
referred to our Annual Report on Form 20-F and our other filings with the U.S.
Securities and Exchange Commission and the Canadian securities commissions for a
discussion of the other factors that may affect our future performance and other
important risk factors concerning us and our operations.
FOR MORE INFORMATION:
Mike Lamanna Maryse Imbeault
Manager, Investor Relations Director, Communications
(418) 683-0211 (418) 683-0211
MICHAEL.LAMANNA@EXFO.COM MARYSE.IMBEAULT@EXFO.COM
-28-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXFO ELECTRO-OPTICAL ENGINEERING INC.
By: /S/ KIMBERLEY OKELL
Name: Kimberley Okell
Title: Legal Counsel and Corporate Secretary
Date: March 22, 2001
-29-