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 October, 2003
EXFO ELECTRO-OPTICAL ENGINEERING INC.
(Translation of registrant's name into English)
400 GODIN AVENUE, VANIER, QUEBEC, CANADA G1M 2K2
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1). [_]
Note: Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): [_]
Note: Regulation S-T Rule 101(b)(7) only permits the submission in
paper of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the laws of
the jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
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-___________.
On September 30, 2003, EXFO Electro-Optical Engineering Inc., a Canadian
corporation, reported its results of operations for the fourth fiscal quarter
and year-end for the fiscal year ended August 31, 2003. 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 fourth fiscal quarter of the 2003 fiscal year. This press release and
information relating to EXFO's financial condition and results of operations for
the fourth fiscal quarter of the 2003 fiscal year are hereby incorporated as a
document by reference to Form F-3 (Registration Statement under the Securities
Act of 1933) declared effective as of July 30, 2001 and to Form F-3
(Registration Statement under the Securities Act of 1933) declared effective as
of March 11, 2002 and to amend certain material information as set forth in
these two Form F-3 documents.
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/ Germain Lamonde
-----------------------------------
Name: Germain Lamonde
Title: President and Chief
Executive Officer
Date: October 6, 2003
[GRAPHIC OMITTED -- COMPANY LOGO]
EXFO
PRESS RELEASE
================================================================================
1 800 663-3936 info@exfo.com - www.exfo.com Fiber-optic test,
Tel: (418) 683-0211 measurement and
Fax: (418) 683-2170 monitoring equipment
EXFO REPORTS FOURTH-QUARTER AND YEAR-END RESULTS FOR FISCAL 2003
o BUSINESS STRUCTURE REORGANIZED UNDER TWO NEW MARKET SEGMENTS
o SALES DOWN 5% QUARTER-OVER-QUARTER AND 9% YEAR-OVER-YEAR
o PORTABLE AND MONITORING DIVISION SALES UP 3% YEAR-OVER-YEAR
QUEBEC CITY, CANADA, September 30, 2003--EXFO Electro-Optical Engineering Inc.
(NASDAQ: EXFO, TSX: EXF) announced today fourth-quarter and year-end results for
fiscal 2003.
Sales decreased 5% to US$14.3 million in the fourth quarter ended August 31,
2003 from $15.1 million in the previous quarter and 17% from US$17.2 million in
the fourth quarter of 2002. Overall for fiscal 2003, sales fell 9% to US$61.9
million from US$68.3 million in 2002.
EXFO's pro forma net loss* in the fourth quarter of fiscal 2003 amounted to
US$2.7 million, or US$0.04 per share, compared to a pro forma net loss of US$4.1
million, or US$0.06 per share, in the third quarter of 2003 and a pro forma net
loss of US$1.2 million, or US$0.02 per share, in the fourth quarter of 2002. Net
loss in the fourth quarter of fiscal 2003 totaled US$10.1 million, or US$0.16
per share, compared to a net loss of US$38.4 million, or US$0.61 per share, in
the previous quarter and a net loss of US$3.0 million, or US$0.05 per share, in
the fourth quarter of 2002.
Pro forma net loss for fiscal 2003 amounted to US$11.5 million, or US$0.18 per
share, compared to a pro forma net loss of US$11.2 million, or US$0.19 per
share, for 2002. Net loss for fiscal 2003 was US$55.0 million, or US$0.87 per
share, compared to a net loss of US$308.5 million, or US$5.09 per share, for
fiscal 2002.
Gross margin increased to 45.8% of sales in the fourth quarter of fiscal 2003,
excluding inventory write-offs of US$2.5 million and a non-recurring gain of
US$473,000. Including inventory write-offs and the non-recurring gain, gross
margin was 31.8% in the fourth quarter. In comparison, gross margin represented
41.7% of sales in the third quarter of 2003, excluding inventory write-offs, or
34.7% including inventory write-offs. In the fourth quarter of 2002, gross
margin was 49.2%.
Overall for fiscal 2003, gross margin declined to 47.4% of sales, excluding
inventory write-offs of US$4.1 million and the non-recurring gain. Including
inventory write-offs and the non-recurring gain, gross margin was 41.6% in 2003.
In comparison, gross margin was 50.4% in 2002, excluding inventory write-offs,
or 23.4% including inventory write-offs. In the fourth quarter of 2003, a new
presentation was adopted with certain expenses reclassified from selling and
administrative expenses to cost of sales. Consequently, comparative figures have
been reclassified.
[GRAPHIC OMITTED -- COMPANY LOGO]
EXFO
================================================================================
1 800 663-3936 info@exfo.com - www.exfo.com Fiber-optic test,
Tel: (418) 683-0211 measurement and
Fax: (418) 683-2170 monitoring equipment
"The past two years have been a period of transition for EXFO as we adapted to
the new telecom environment," said Germain Lamonde, Chairman, President and CEO
of EXFO. "We improved our long-term strategic position by refocusing our
business towards network service providers and system manufacturers--the first
two segments in the communications supply chain. The end result is that sales of
our Portable and Monitoring product lines, which progressed from almost
one-third of our revenues in fiscal 2001 to two-thirds in 2003, increased 3%
year-over-year despite depressed spending levels. Protocol testing is a key
element of our strategy for these sectors. I am pleased with our protocol
results in the last three quarters and we will maintain our strong R&D program."
At the beginning of the fourth quarter, EXFO announced a restructuring plan
providing approximately US$10 million in annualized pre-tax savings. The company
reduced its workforce by 30%, exited the optical component manufacturing
automation business and streamlined manufacturing operations. Cost-reduction
initiatives incurred charges of approximately US$4.1 million in fiscal 2003,
including US$3.8 million in the fourth quarter.
To begin fiscal 2004, EXFO has reorganized its business under two new market
segments. The new Telecom Division consists of former Portable and Monitoring
and telecom-related Industrial and Scientific product lines. The new Photonics &
Life Sciences Division includes previous non-telecom Industrial and Scientific
product lines.
BUSINESS HIGHLIGHTS
EXFO introduced approximately 15 new products in fiscal 2003. Key product
launches for the network service provider market included a next-generation
Polarization Mode Dispersion (PMD) Analyzer that sweeps through amplifiers to
characterize entire optical networks at once; a Fibre Channel test module for
emerging storage area networks (SANs); and an Integrated Applications Suite that
automates the operation of test modules within the FTB-400 platform. For the
system vendor market, EXFO released a 2.5+ Gigabit Multi-Rate Transceiver that
optimizes the design and manufacturing of next-generation SONET/SDH, IP-based
networks.
OPERATING EXPENSES
Selling and administrative expenses amounted to US$6.0 million (including a
non-recurring gain of US$239,000), or 42.1% of sales, in the fourth quarter of
fiscal 2003 compared to US$7.1 million, or 46.7% of sales, in the third quarter
of 2003 and US$6.7 million, or 38.7% of sales, in the fourth quarter of 2002. In
fiscal 2003, selling and administrative expenses totaled US$27.0 million, or
43.6% of sales, compared to US$33.9 million, or 49.6% of sales, in 2002.
Gross research and development expenses amounted to US$3.9 million, or 27.0% of
sales, in the fourth quarter of fiscal 2003 compared to US$4.6 million, or 30.7%
of sales, in the previous quarter and US$3.2 million, or 18.8% of sales, in the
fourth quarter of 2002. In fiscal 2003, gross research and development expenses
reached US$17.1 million, or 27.7% of sales, compared to US$17.0 million, or
24.9% of sales, in 2002.
[GRAPHIC OMITTED -- COMPANY LOGO]
EXFO
================================================================================
1 800 663-3936 info@exfo.com - www.exfo.com Fiber-optic test,
Tel: (418) 683-0211 measurement and
Fax: (418) 683-2170 monitoring equipment
BUSINESS OUTLOOK
EXFO forecasted sales between US$13.0 million and US$16.0 million and a GAAP net
loss between US$0.10 and US$0.07 per share for the first quarter of fiscal 2004.
GAAP net loss includes a loss representing amortization of intangible assets and
income tax recovery that is expected to amount to US$0.01 per share in the first
quarter of 2004.
* PRO FORMA NET LOSS REPRESENTS NET LOSS EXCLUDING AMORTIZATION AND WRITE-DOWN
OF GOODWILL, NON-RECURRING TAX RECOVERY, FUTURE INCOME TAX ASSETS VALUATION
ALLOWANCE AND THE AFTER-TAX EFFECT OF AMORTIZATION AND WRITE-DOWN OF
INTANGIBLE ASSETS, RESTRUCTURING AND OTHER CHARGES, INVENTORY AND TAX CREDIT
WRITE-OFFS AND NON-RECURRING GRANTS RECOVERY. ALL FIGURES ARE IN THOUSANDS OF
US DOLLARS EXCEPT PER SHARE DATA.
THREE MONTHS THREE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2003 AUGUST 31, 2002
--------------- --------------- --------------- ---------------
(unaudited)
Net loss in accordance with GAAP $ (10,119) $ (2,968) $ (54,950) $ (308,524)
Pro forma adjustments:
Amortization of goodwill -- 690 -- 38,021
Amortization of intangible assets 1,001 1,639 4,747 11,615
Write-down of goodwill -- -- 4,505 222,169
Write-down of intangible assets -- -- 2,922 23,657
Tax effect on amortization of
intangible assets (393) (544) (1,699) (4,007)
Tax effect on write-down of
intangible assets -- -- (1,046) (8,160)
Restructuring and other charges
and inventory and tax credit
write-offs 6,261 -- 10,549 21,343
Tax effect on restructuring and
other charges and inventory
and tax credit write-offs (2,461) -- (3,777) (7,362)
Non-recurring tax and grants
recovery (1,357) -- (1,357) --
Tax effect on non-recurring
grants recovery 280 -- 245 --
Future income tax valuation
allowance 4,125 -- 28,385 --
--------------- --------------- --------------- ---------------
Pro forma net loss $ (2,663) $ (1,183) $ (11,476) $ (11,248)
=============== =============== =============== ===============
Basic and diluted net loss per
share $ (0.16) $ (0.05) $ (0.87) $ (5.09)
Basic and diluted pro forma net
loss per share $ (0.04) $ (0.02) $ (0.18) $ (0.19)
EXFO PROVIDES PRO FORMA FINANCIAL INFORMATION TO HELP THE INVESTOR BETTER
UNDERSTAND ITS OPERATING RESULTS. THIS INFORMATION IS NOT IN ACCORDANCE WITH, OR
AN ALTERNATIVE FOR, GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND MAY NOT BE
COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES.
[GRAPHIC OMITTED -- COMPANY LOGO]
EXFO
================================================================================
1 800 663-3936 info@exfo.com - www.exfo.com Fiber-optic test,
Tel: (418) 683-0211 measurement and
Fax: (418) 683-2170 monitoring equipment
CONFERENCE CALL AND WEBCAST
EXFO will host a conference call today at 5 p.m. (EDT) to review its
fourth-quarter and year-end results for fiscal 2003. To listen to the conference
call and participate in the question period via telephone, dial 1-416-695-9713.
Germain Lamonde, Chairman, President and CEO, and Pierre Plamondon, CA,
Vice-President of Finance and Chief Financial Officer, will participate in the
call. An audio replay of the conference call will be available between 7 a.m.
and 11 p.m. until October 7, 2003. The replay number is 1-416-252-1143. The
audio Webcast of the conference call will also be available on EXFO's Website at
WWW.EXFO.COM/INVESTORS.
ABOUT EXFO
EXFO designs and manufacturers innovative test and measurement solutions for the
global communications industry. The Telecom Division, which represents the
company's main business activity, offers fully integrated and complete test
solutions to network service providers, system vendors and component
manufacturers in approximately 70 countries. One of EXFO's strongest competitive
advantages is its modular platform design, providing PC-based, Windows-centric
test solutions that maximize technology reuse across several market segments.
The Photonics and Life Sciences Division mainly leverages core telecom
technologies to offer value-added solutions in high-tech industrial
manufacturing and research sectors. For more information about EXFO, visit
WWW.EXFO.COM.
This news 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 that refer to expectations, projections or other
characterizations of future events and circumstances. 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 global geo-political, economic, competitive and market
uncertainty and our ability to execute successfully in these uncertain
conditions; capital spending levels in the telecommunications sector; market
acceptance of new products and upcoming new products; limited visibility of
customer orders and the timing thereof; the competitive landscape; and
successful integration of our acquired and to-be-acquired companies. 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 and shall not be revised
or updated to reflect events after the date of this document.
FOR MORE INFORMATION:
Vance Oliver
Investor Relations
(418) 683-0211
vance.oliver@exfo.com
EXFO ELECTRO-OPTICAL ENGINEERING INC.
INTERIM CONSOLIDATED BALANCE SHEET
(in thousands of US dollars)
AS AT AUGUST 31,
----------------------
2003 2002
--------- ---------
ASSETS
CURRENT ASSETS
Cash $ 5,366 $ 9,128
Short-term investments 52,010 40,553
Accounts receivable
Trade, less allowance for doubtful accounts of $568
($520 as at August 31, 2002) 9,639 9,881
Other 834 3,267
Income taxes and tax credits recoverable 6,003 13,473
Inventories 15,602 23,822
Prepaid expenses 2,041 1,280
Future income taxes -- 1,272
--------- ---------
91,495 102,676
INCOME TAXES AND TAX CREDITS RECOVERABLE 1,377 6,234
PROPERTY, PLANT AND EQUIPMENT 24,931 26,246
INTANGIBLE ASSETS 10,778 16,464
GOODWILL 17,673 17,576
FUTURE INCOME TAXES -- 8,730
--------- ---------
$ 146,254 $ 177,926
========= =========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 12,026 $ 10,699
Income taxes payable 2,200 --
Deferred revenue 500 503
Current portion of long-term debt 110 100
--------- ---------
14,836 11,302
DEFERRED GRANTS 1,139 654
LONG-TERM DEBT 453 564
--------- ---------
16,428 12,520
--------- ---------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 492,452 489,611
CONTRIBUTED SURPLUS 1,519 1,487
CUMULATIVE TRANSLATION ADJUSTMENT 7,643 (8,854)
DEFICIT (371,788) (316,838)
--------- ---------
129,826 165,406
--------- ---------
$ 146,254 $ 177,926
========= =========
EXFO ELECTRO-OPTICAL ENGINEERING INC.
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of US dollars, except share and per share data)
THREE MONTHS TWELVE MONTHS THREE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
AUGUST 31, 2003 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2002
---------------- --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
SALES $ 14,326 $ 61,930 $ 17,243 $ 68,330
COST OF SALES(1) (2) 9,767 36,197 8,757 52,366
---------------- --------------- --------------- ---------------
GROSS MARGIN 4,559 25,733 8,486 15,964
---------------- --------------- --------------- ---------------
OPERATING EXPENSES
Selling and administrative(2) 6,036 26,991 6,666 33,881
Net research and development 3,198 15,879 2,510 12,782
Amortization of property, plant and
equipment 1,551 6,139 1,553 5,932
Amortization of intangible assets 1,001 4,747 1,639 11,615
Write-down of intangible assets -- 2,922 -- 23,657
Restructuring and other charges 3,786 4,134 -- 2,880
---------------- --------------- --------------- ---------------
TOTAL OPERATING EXPENSES 15,572 60,812 12,368 90,747
---------------- --------------- --------------- ---------------
LOSS FROM OPERATIONS (11,013) (35,079) (3,882) (74,783)
Interest income, net 316 1,245 217 1,456
Foreign exchange gain (loss) (242) (1,552) 256 (458)
---------------- --------------- --------------- ---------------
LOSS BEFORE INCOME TAXES AND AMORTIZATION
AND WRITE-DOWN OF GOODWILL (10,939) (35,386) (3,409) (73,785)
---------------- --------------- --------------- ---------------
INCOME TAXES
Current (966) 4,921 (3,452) (12,054)
Future (3,979) (18,247) 2,321 (13,397)
Future income tax assets valuation
allowance 4,125 28,385 -- --
---------------- --------------- --------------- ---------------
(820) 15,059 (1,131) (25,451)
---------------- --------------- --------------- ---------------
LOSS BEFORE AMORTIZATION AND WRITE-DOWN
OF GOODWILL (10,119) (50,445) (2,278) (48,334)
AMORTIZATION OF GOODWILL -- -- 690 38,021
WRITE-DOWN OF GOODWILL -- 4,505 -- 222,169
---------------- --------------- --------------- ---------------
NET LOSS FOR THE PERIOD $ (10,119) $ (54,950) $ (2,968) $ (308,524)
================ =============== =============== ===============
BASIC AND DILUTED LOSS PER SHARE
Loss before amortization and write-down
of goodwill $ (0.16) $ (0.80) $ (0.04) $ (0.80)
Net loss $ (0.16) $ (0.87) $ (0.05) $ (5.09)
BASIC WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (000'S) 63,030 62,852 61,465 60,666
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (000'S) 63,555 63,317 61,465 60,966
(1) Including inventory write-offs of $2,475 and $4,121 for the three months
and the twelve months ended August 31, 2003, and of nil and $18,463 for the
three months and the twelve months ended August 31, 2002, respectively.
(2) Certain comparative figures have been reclassified to conform with the
current year's presentation.
EXFO ELECTRO-OPTICAL ENGINEERING INC.
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of US dollars)
THREE MONTHS TWELVE MONTHS THREE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
AUGUST 31, 2003 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2002
---------------- --------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (10,119) $ (54,950) $ (2,968) $ (308,524)
Add (deduct) items not affecting cash
Discount on short-term investments (280) (54) (256) 271
Inventory and tax credit write-offs 2,475 6,418 -- 1,846
Amortization 2,552 10,886 3,882 55,568
Foreign exchange gain on disposal of
short-term investments -- (42) -- (74)
Restructuring and other charges 512 512 -- 741
Future income taxes (3,979) (18,247) (2,321) (13,397)
Future income tax assets valuation
allowance 4,125 28,385 -- --
Write-down of goodwill and intangible
assets -- 7,427 -- 245,826
Change in non-cash operating items
Accounts receivable 1,180 3,957 24 15,406
Income taxes and tax credits (1,806) 13,886 (3,021) (19,736)
Inventories 2,403 7,925 2,680 4,332
Prepaid expenses (434) (569) 136 356
Accounts payable and accrued
liabilities 126 (349) (2,693) (7,470)
Deferred revenue 223 (24) 198 (106)
Deferred grants (720) 420 (1) (335)
---------------- --------------- --------------- ---------------
(3,742) 5,581 302 (8,679)
---------------- --------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt (25) (133) (24) (106)
Issuance of share capital 24 45 -- --
Redemption of share capital (9) (16) (4) (6)
Resale of share capital 30 48 8 36
Share issue expenses -- -- -- (14)
---------------- --------------- --------------- ---------------
20 (56) (20) (90)
---------------- --------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to short-term investments (54,212) (401,105) (14,473) (506,228)
Proceeds from disposal of short-term
investments 57,788 395,699 17,075 531,733
Additions to property, plant and equipment
and intangible assets (402) (2,652) (576) (5,245)
Business combinations -- (1,867) -- (9,756)
---------------- --------------- --------------- ---------------
3,174 (9,925) 2,026 10,504
---------------- --------------- --------------- ---------------
CHANGE IN CASH (548) (4,400) 2,308 1,735
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON
CASH (122) 638 (307) (336)
CASH - BEGINNING OF PERIOD 6,036 9,128 7,127 7,729
---------------- --------------- --------------- ---------------
CASH - END OF PERIOD $ 5,366 $ 5,366 $ 9,128 $ 9,128
================ =============== =============== ===============