- Amended Management's Annual Report on internal control
over financial reporting and Sarbanes-Oxley
certifications from CEO and CFO
- No material impact on previous three years' consolidated
financial statements
QUEBEC CITY, Jan. 9, 2017 /CNW Telbec/ - EXFO Inc. (NASDAQ:
EXFO) (TSX: EXF) announced today it has filed an amended Annual
Report on Form-20-F/A for fiscal 2016 with the U.S. Securities and
Exchange Commission (SEC) and Canadian securities commissions.
Subsequent to the original filing of its Annual Report on Form
20-F for fiscal 2016 on November 28,
2016, EXFO management identified a material weakness in the
company's internal control over financial reporting, resulting in
the improper aging of its trade accounts receivable ledger which
led to an incorrect assessment of bad debt expense against a single
trade account receivable. Specifically, the company did not
maintain sufficient controls over the trade accounts receivable
ledger, which included failure to maintain appropriate segregation
of duties as well as lack of supervisory review and monitoring of
journal entries recorded to the trade accounts receivable
ledger.
EXFO management determined that the identified control
deficiencies could have resulted in a material misstatement of the
aforementioned account balances or disclosures that would not have
been prevented or detected, and therefore these control
deficiencies represent a material weakness in internal control over
financial reporting. Considering the identified material weakness,
the company's Chief Executive Officer and the Chief Financial
Officer have concluded that internal controls over financial
reporting were not effective as of August
31, 2016.
Although EXFO management determined that the errors were not
material to the previously issued consolidated financial statements
and disclosures in its Annual Report on Form 20-F for the year
ended August 31, 2016, management
revised its previously issued consolidated financial statements to
reflect the correction of the bad debt expenses in the proper
periods. The revisions do not constitute a restatement of prior
years' financial statements.
The impact of the revision on EXFO's consolidated financial
statements as at and for the year ended August 31, 2016 are non-cash and therefore do not
affect the company's statements of cash flows for any of the prior
periods and do not affect the company's consolidated statements of
earnings for the year ended August 31,
2016. The impact on net earnings amount to a reduction of
US$441,000 and US$527,000 for the fiscal years ended
August 31, 2015 and 2014,
respectively.
The quantitative impact of the revision is shown in Exhibit 1 at
the end of this news release. For more detailed information, refer
to EXFO's amended Annual Report on Form 20-F/A and Note 1 to the
company's revised consolidated financial statements.
In summary, EXFO has filed an amended Annual Report on Form
20-F/A for the fiscal year ended August 31,
2016 with the SEC and Canadian securities commissions, along
with revised consolidated financial statements and management's
discussion and analysis (MD&A) for the year ended August 31, 2016, as well as amended Management's
Annual Report on internal control over financial reporting and
certifications from the CEO and CFO, as required by Sections 302
and 906 of the Sarbanes-Oxley Act of 2002. These documents can be
found on SEDAR (www.sedar.com) and EDGAR (www.sec.gov/edgar.shtml)
under EXFO's profile and at www.EXFO.com.
About EXFO
EXFO is the trusted partner to
communications service providers (CSPs) globally with leadership in
test automation and 3D analytics solutions to ensure the smooth
deployment, maintenance and management of next-generation,
physical, virtual, fixed and mobile networks. The company has also
forged strong relationships with network equipment manufacturers
(NEMs) to develop deep expertise that migrates from the lab to the
field and beyond. EXFO's key differentiation comes from combining
intelligent, automated and cloud-based test and monitoring
solutions with real-time analytics to deliver unmatched end-to-end
visibility and assurance—from a network, services and end-user
level. EXFO is no. 1 in portable optical testing and boasts the
largest active service assurance deployment worldwide. For more
information, visit www.EXFO.com and follow us on the EXFO Blog.
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, expect, believe, plan, anticipate, intend, could,
estimate, continue, or similar expressions or the negative of such
expressions are intended to identify forward-looking statements. In
addition, any statement that refers 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, but not limited to,
macroeconomic uncertainty as well as capital spending and network
deployment levels in the telecommunications industry (including our
ability to quickly adapt cost structures with anticipated levels of
business and our ability to manage inventory levels with market
demand); future economic, competitive, financial and market
conditions; consolidation in the global telecommunications test and
service assurance industry and increased competition among vendors;
capacity to adapt our future product offering to future
technological changes; limited visibility with regards to timing
and nature of customer orders; longer sales cycles for complex
systems involving customers' acceptances delaying revenue
recognition; fluctuating exchange rates; concentration of sales;
timely release and market acceptance of our new products and other
upcoming products; our ability to successfully expand international
operations; our ability to successfully integrate businesses that
we acquire; and the retention of key technical and management
personnel. 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 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.
Exhibit 1 (in thousands of US dollars)
|
|
As at August 31,
2016
|
|
|
|
As
reported
|
|
Adjustment
|
|
|
Revised
|
Revision to
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable -
Trade
|
|
$
|
45,076
|
$
|
|
(2,083)
|
|
$
|
42,993
|
Deferred income tax
assets
|
|
$
|
7,681
|
$
|
|
559
|
|
$
|
8,240
|
Retained
earnings
|
|
$
|
127,833
|
$
|
|
(1,524)
|
|
$
|
126,309
|
Total
assets
|
|
$
|
239,317
|
$
|
|
(1,524)
|
|
$
|
237,793
|
Shareholders'
equity
|
|
$
|
182,925
|
$
|
|
(1,524)
|
|
$
|
181,401
|
|
|
|
|
|
|
|
|
|
|
|
|
As at and for the
year ended August 31, 2015
|
|
|
|
As
reported
|
|
|
Adjustment
|
|
|
Revised
|
Revision to
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable -
Trade
|
|
$
|
48,068
|
|
$
|
(2,083)
|
|
$
|
45,985
|
Deferred income tax
assets
|
|
$
|
8,900
|
|
$
|
559
|
|
$
|
9,459
|
Retained
earnings
|
|
$
|
118,933
|
|
$
|
(1,524)
|
|
$
|
117,409
|
Total
assets
|
|
$
|
219,002
|
|
$
|
(1,524)
|
|
$
|
217,478
|
Shareholders'
equity
|
|
$
|
170,751
|
|
$
|
(1,524)
|
|
$
|
169,227
|
|
|
|
|
|
|
|
|
|
|
Revision to
Consolidated Statement of
Earnings and Consolidated Statement of
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unusual charge
(1)
|
|
$
|
‒
|
|
$
|
603
|
|
$
|
603
|
Earnings before
income taxes
|
|
$
|
10,496
|
|
$
|
(603)
|
|
$
|
9,893
|
Deferred income tax
expense
|
|
$
|
565
|
|
$
|
(162)
|
|
$
|
403
|
Net earnings for the
year
|
|
$
|
5,298
|
|
$
|
(441)
|
|
$
|
4,857
|
Basic net earnings
per share for the year
|
|
$
|
0.09
|
|
$
|
‒
|
|
$
|
0.09
|
Diluted net earnings
per share for the year
|
|
$
|
0.09
|
|
$
|
(0.01)
|
|
$
|
0.08
|
Comprehensive loss
for the year
|
|
$
|
(36,448)
|
|
$
|
(441)
|
|
$
|
(36,889)
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjustment to
recognize bad debt expense in connection with a past due trade
receivable balance, for which, upon correction of the aging,
management would have provided an allowance in accordance with the
company's credit provision policies.
|
|
|
As at and for the
year ended August 31, 2014
|
|
|
|
As
reported
|
|
|
Adjustment
|
|
|
Revised
|
Revision to
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
earnings
|
|
$
|
13,635
|
|
$
|
(1,083)
|
|
$
|
112,552
|
|
|
|
|
|
|
|
|
|
|
Revision to
Consolidated Statement of
Earnings and Consolidated Statement of
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unusual charge
(2)
|
|
$
|
‒
|
|
$
|
720
|
|
$
|
720
|
Earnings before
income taxes
|
|
$
|
5,262
|
|
$
|
(720)
|
|
$
|
4,542
|
Deferred income tax
expense
|
|
$
|
891
|
|
$
|
(193)
|
|
$
|
698
|
Net earnings for the
year
|
|
$
|
783
|
|
$
|
(527)
|
|
$
|
256
|
Basic and diluted net
earnings per share for the year
|
|
$
|
0.01
|
|
$
|
(0.01)
|
|
$
|
0.00
|
Comprehensive loss
for the year
|
|
$
|
(6,053)
|
|
$
|
(527)
|
|
$
|
(6,580)
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Adjustment to
recognize bad debt expense in connection with a past due trade
receivable balance, for which, upon correction of the aging,
management would have provided an allowance in accordance with the
company's credit provision policies.
|
|
|
As at August 31,
2013
|
|
|
|
As
reported
|
|
|
Adjustment
|
|
|
Revised
|
Revision to
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
(3)
|
|
$
|
112,852
|
|
$
|
(556)
|
|
$
|
112,296
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Adjustment to opening
retained earnings as at September 1, 2013 in connection with a past
due trade receivable balance, for which, upon correction of the
aging, management would have provided an allowance in accordance
with the company's credit provision policies.
|
EXFO-F
SOURCE EXFO inc.