EXFO Reports Record Sales for Fiscal 2008



    
    - Annual sales increase 20.2% to a record-high of US$183.8 million,
    - Telecom Division sales grow 24.0% year over year, led by 97.4% growth
      for protocol test business
    - Navtel Communications and Brix Networks acquisitions strengthen
      next-generation, IP testing and service assurance offering
    - Gross margin improves for a sixth consecutive year to reach 58.9%
    - Sales from new products amount to 34.6% of total revenue
    

    QUEBEC CITY, Oct. 15 /CNW Telbec/ - EXFO Electro-Optical Engineering Inc.
(NASDAQ:   EXFO, TSX: EXF) reported today record sales for the fiscal year ended
August 31, 2008.
    Annual sales increased 20.2% to a record-high of US$183.8 million in
fiscal 2008 from US$152.9 million in 2007. In the fourth quarter of 2008,
sales reached US$50.9 million compared to US$48.6 million in the previous
quarter and US$43.0 million in the fourth quarter of 2007. Overall for fiscal
2008, net accepted orders increased 17.8% to a record-high of US$184.6 million
for a book-to-bill ratio of 1.00. In the fourth quarter of 2008, net bookings
totaled US$45.7 million compared to US$50.7 million in the third quarter of
2008 and US$39.5 million in the fourth quarter of 2007.
    Gross margin improved to 58.9% of sales in fiscal 2008 from 57.4% in
2007. In the fourth quarter of 2008, gross margin amounted to 59.9% compared
to 60.9% in the previous quarter and 57.9% in the fourth quarter of 2007.
Fiscal 2008 marked the sixth consecutive year that the company raised its
gross margin.
    In fiscal 2008, GAAP net earnings reached US$18.4 million, or US$0.27 per
diluted share, including US$5.3 million for the recognition of previously
unrecognized future income tax assets, an extraordinary gain of US$3.0 million
related to the negative goodwill on the acquisition of Navtel Communications,
and a net recovery of income tax of US$1.2 million to account for new
corporate tax rates in Canada and a related review of the company's tax
strategy. These items were partially offset by US$3.0 million in after-tax
amortization of intangible assets and US$1.3 million in stock-based
compensation costs.
    In 2007, GAAP net earnings totaled US$42.3 million, or US$0.61 per
diluted share, including US$27.8 million in recognition of previously
unrecognized future income tax assets and tax credits and US$1.1 million for a
government grant recovery. These items were partially offset by US$2.9 million
in after-tax amortization of intangible assets and US$1.0 million in
stock-based compensation costs.
    In the fourth quarter of 2008, GAAP net earnings amounted to
US$3.3 million, or US$0.04 per diluted share, including US$1.2 million in
after-tax amortization of intangible assets and US$0.4 million in stock-based
compensation costs.
    In the third quarter of 2008, GAAP net earnings reached US$11.2 million,
or US$0.16 per diluted share, including US$5.3 million for the recognition of
previously unrecognized future income tax assets and an extraordinary gain of
US$3.0 million related to the negative goodwill on the acquisition of Navtel
Communications. These items were partially offset by US$0.8 million in
after-tax amortization of intangible assets and US$0.3 million in stock-based
compensation costs.
    In the fourth quarter of 2007, GAAP net earnings totaled US$33.5 million,
or US$0.48 per diluted share, including US$27.8 million in recognition of
previously unrecognized future income taxes and tax credits and US$1.1 million
from a government grant recovery. These items were partially offset by
US$0.7 million in after-tax amortization of intangible assets and
US$0.3 million in stock-based compensation costs.
    "Fiscal 2008 has been a year of transformation at EXFO as we positioned
ourselves as a leader in next-generation, IP testing and service assurance
through exceptional growth of our protocol test business as well as the
acquisitions of Navtel Communications and Brix Networks," said Germain
Lamonde, EXFO's Chairman, President and CEO. "We also expanded our global
presence with increased sales and marketing initiatives in targeted countries,
a new manufacturing facility in China, and enhanced capabilities at our R&D
software center in India. These latest investments should accelerate earnings
growth in 2009 and beyond.
    "We balanced these longer-term initiatives with significant progress on a
short-term basis, namely annual sales growth of 20.2% - or more than twice the
industry average. I'm especially proud of our higher-margin protocol test
business, which posted a sales CAGR of 74.4% during the last three years on
the strength of our focus on converged, IP networks. Not coincidentally, our
gross margin improved for a sixth consecutive year and I'm optimistic that it
will continue its upward trajectory in upcoming years.
    "Our EBITDA, however, didn't grow faster than sales for the first time in
five years, as we accepted short-term losses for long-term benefits with the
Brix acquisition. Looking ahead, I'm confident that we'll return to our
customary sales/EBITDA growth model, despite a visibly challenging
macro-economic environment."

    
    Selected Financial Information
    (In thousands of US dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Segmented
     results:        Q4 2008     Q3 2008     Q4 2007     FY 2008     FY 2007
                 ------------ ----------- ----------- ----------- -----------
                  (unaudited) (unaudited) (unaudited) (unaudited)
      Sales:
      Telecom
       Division  $    45,338  $   42,843  $   37,199  $  160,981  $  129,839
      Life
       Sciences &
       Industrial
       Division        5,605       5,738       5,776      22,809      23,095
                 ------------ ----------- ----------- ----------- -----------
      Total      $    50,943  $   48,581  $   42,975  $  183,790  $  152,934
                 ------------ ----------- ----------- ----------- -----------
                 ------------ ----------- ----------- ----------- -----------

      Earnings from
       operations:
      Telecom
       Division  $     2,867  $    3,819  $    8,108  $    9,524  $   13,132
      Life
       Sciences &
       Industrial
       Division          721         639         994       2,459       3,650
                 ------------ ----------- ----------- ----------- -----------
      Total      $     3,588  $    4,458  $    9,102  $   11,983  $   16,782
                 ------------ ----------- ----------- ----------- -----------
                 ------------ ----------- ----------- ----------- -----------

    Other selected
     information:
      GAAP net
       earnings  $     3,314  $   11,179  $   33,484  $   18,424  $   42,275
      After-tax
       amorti-
       zation of
       intangible
       assets    $     1,177  $      791  $      699  $    2,956  $    2,864
      Stock-based
       compen-
       sation
       costs     $       368  $      334  $      277  $    1,272  $      981
      Recognition
       of
       previously
       unrecog-
       nized
       future
       income
       taxes     $         -  $   (5,324) $  (24,566) $   (5,324) $  (24,566)
      Recognition
       of
       previously
       unrecog-
       nized
       R&D tax
       credits   $         -  $        -  $   (3,162) $        -  $   (3,162)
      Extraor-
       dinary
       gain
       (negative
       goodwill) $         -  $   (3,036) $        -  $   (3,036) $        -
      Government
       grant     $         -  $        -  $   (1,079) $        -  $   (1,079)
      Net reco-
       very of
       income
       tax       $         -  $        -  $        -  $   (1,191) $        -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Operating Expenses

    Selling and administrative expenses amounted to US$61.2 million, or 33.3%
of sales, in fiscal 2008 compared to US$49.6 million, or 32.4% of sales, in
2007. In the fourth quarter of 2008, selling and administrative expenses
totaled US$17.0 million, or 33.4% of sales, compared to US$15.7 million, or
32.2% of sales, in the third quarter of 2008 and US$13.0 million, or 30.3% of
sales, in the fourth quarter of 2007.
    Gross research and development (R&D) expenses reached US$32.5 million, or
17.7% of sales, in fiscal 2008 compared to US$25.2 million, or 16.5% of sales,
in 2007. In the fourth quarter of 2008, gross R&D expenses attained
US$8.6 million, or 16.8% of sales, compared to US$8.8 million, or 18.2% of
sales, in the previous quarter and US$7.1 million, or 16.6% of sales, in the
fourth quarter of 2007.
    Net R&D expenses totaled US$26.9 million, or 14.6% of sales in fiscal
2008, compared to US$16.7 million (including US$3.2 million for the
recognition of previously unrecognized R&D tax credits), or 10.9% of sales, in
2007. In the fourth quarter of 2008, net R&D expenses amounted to
US$7.3 million, or 14.3% of sales, compared to US$7.4 million, or 15.2% of
sales, in the third quarter of 2008 and US$2.3 million (including
US$3.2 million for the recognition of previously unrecognized R&D tax
credits), or 5.4% of sales, in the fourth quarter of 2007.

    Fiscal 2008 and Fourth-Quarter Business Highlights

      - Market expansion - EXFO increased its annual sales 20.2% to
        US$183.8 million, while the company's stated goal was 20% for the
        fiscal year. Telecom Division sales improved 24.0% year over year,
        led by 97.4% growth in the protocol test business (including a
        US$5.4 million revenue contribution from Brix and Navtel) and 12.7%
        increase in the optical test business. In terms of geographic
        diversification, the Americas accounted for 55.8% of sales in 2008,
        Europe, Middle East and Africa (EMEA) 28.4%, and Asia-Pacific 15.8%.
        The Americas, EMEA and Asia-Pacific regions posted annual growth
        rates of 12.8%, 26.3% and 40.1% respectively. EXFO's sales to its
        largest customer dropped to 7.4% of total revenue in 2008, despite
        increasing market share at this account. Excluding sales to this
        customer, Telecom Division sales would have increased 37.3% year over
        year, while sales to the United States would have increased 28.7%
        year over year.
      - Profitability - GAAP earnings from operations amounted to 6.5% of
        sales in 2008, including 7.0% in the fourth quarter, while the
        company's goal was 8% for the fiscal year. The shortfall is mainly
        due to the short-term negative impact of the Brix Networks
        acquisition. EXFO also generated US$13.8 million in cash flows from
        operating activities in 2008, bringing its cash and short-term
        investments to US$87.5 million.
      - Innovation - EXFO launched 27 new products in fiscal 2008, including
        seven in the fourth quarter, compared to 20 in 2007. Key product
        releases in the fourth quarter of 2008 included amongst others a
        triple-play test set for ADSL2+/VDSL2 network deployments and a new
        Gigabit Ethernet software option for the Packet Blazer test modules
        that enables Internet Protocol/Multi-Protocol Label Switching
        (IP/MPLS) testing. Following the year-end, the company introduced an
        enhanced version of Navtel's InterWatch platform that simulates up to
        256,000 unique IPv6 subscriber addresses per chassis, and new
        software features on the Transport Blazer test modules for
        characterizing 40G/43G SONET/SDH networks. Products on the market
        two years or less accounted for 34.6% of sales in fiscal 2008,
        including 29.0% in the fourth quarter, while the company's published
        goal was 30% for the fiscal year.

    Business Outlook

    EXFO forecasts sales between US$45.0 million and US$50.0 million and GAAP
net earnings (net loss) between a net loss of US$0.03 per diluted share and
net earnings of US$0.01 per diluted share for the first quarter of fiscal
2009. The GAAP net earnings/loss outlook includes US$0.02 per diluted share in
after-tax amortization of intangible assets and stock-based compensation
costs.

    Corporate Performance Results for Fiscal 2008

    EXFO reported the following corporate performance results for fiscal
    2008:

    -------------------------------------------------------------------------
                                                                 2008
                             Objective                 ----------------------
                                                          Metric      Result
    -------------------------------------------------------------------------
    Increase sales (% of year-over-year growth)               20%       20.2%
    -------------------------------------------------------------------------
    Maximize profitability (operating margin in %)             8%        6.5%
    -------------------------------------------------------------------------
    Focus on innovation (sales % from products
     (less than)2 years on market)                            30%       34.6%
    -------------------------------------------------------------------------

    Long-Term Corporate Performance Objectives (Three-Year Plan)

    EXFO disclosed the following three corporate performance objectives and
related metrics for its three-year strategic plan ending at the close of
fiscal 2011. These long-term objectives are meant to replace the performance
goals that the company provided on an annual basis. These new objectives
reflect the clear direction management is taking towards long-term value
creation.

    -------------------------------------------------------------------------
                             Objective                     Three-Year Metric
    -------------------------------------------------------------------------
    Grow sales approximately 2 times faster than the
     industry rate                                            20% CAGR
    -------------------------------------------------------------------------
    Increase EBITDA(*) faster than sales             (greater than)20% CAGR
    -------------------------------------------------------------------------
    Raise gross margin to a sustainable level
     above 60% of sales                                          62%
    -------------------------------------------------------------------------

    (*)EBITDA is defined as net earnings before interest, income taxes,
    amortization of property, plant and equipment, amortization of intangible
    assets, and extraordinary gain.

    Conference Call and Webcast

    EXFO will host a conference call today at 5 p.m. (Eastern time) to review
its fourth-quarter and year-end financial results for fiscal 2008. To listen
to the conference call and participate in the question period via telephone,
dial 1-416-620-5690. 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 will be available one hour after the
end of the conference call until 7 p.m. on October 22, 2008. The replay number
is 1-402-977-9141 and the reservation number is 21393109. The live audio
Webcast and replay of the conference call will also be available on EXFO's
Website at www.EXFO.com/investors.

    About EXFO

    EXFO is a leading provider of test and monitoring solutions for network
service providers and equipment manufacturers in the global telecommunications
industry. The Telecom Division offers a wide range of innovative solutions
extending across the full technology lifecycle - from design to technology
deployment and onto service assurance - and covering all layers on a network
infrastructure to enable triple-play services and next-generation, converged
IP networking. The Life Sciences and Industrial Division offers solutions in
medical device and opto-electronics assembly, fluorescence microscopy and
other life science sectors. For more information, visit www.EXFO.com.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995, and we intend
that such forward-looking statements be subject to the safe harbors created
thereby. Forward-looking statements are statements other than historical
information or statements of current condition. Words such as may, will,
expect, believe, anticipate, intend, could, estimate, continue, or the
negative or comparable terminology are intended to identify forward-looking
statements. In addition, any statements that refer to expectations,
projections or other characterizations of future events and circumstances are
considered forward-looking statements. They are not guarantees of future
performance and involve risks and uncertainties.
    Actual results may differ materially from those in forward-looking
statements due to various factors including consolidation in the global
telecommunications test, measurement and monitoring industry; capital spending
levels in the telecommunications, life sciences and high-precision assembly
sectors; concentration of sales; fluctuating exchange rates and our ability to
execute in these uncertain conditions; the effects of the additional actions
we have taken in response to such economic uncertainty (including our ability
to quickly adapt cost structures with anticipated levels of business, ability
to manage inventory levels with market demand); market acceptance of our new
products and other upcoming products; limited visibility with regards to
customer orders and the timing of such orders; our ability to successfully
integrate our acquired and to-be-acquired businesses; our ability to
successfully expand international operations; the retention of key technical
and management personnel; and future economic, competitive, financial and
market conditions, including any slowdown or recession in the global economy.
Assumptions relating to the foregoing involve judgments and risks, all of
which are difficult or impossible to predict and many of which are beyond our
control. Other risk factors that may affect our future performance and
operations are detailed in our Annual Report, on Form 20-F, and our other
filings with the U.S. Securities and Exchange Commission and the Canadian
securities commissions. We believe that the expectations reflected in the
forward-looking statements are reasonable based on information currently
available to us, but we cannot assure you that the expectations will prove to
have been correct. Accordingly, you should not place undue reliance on these
forward-looking statements. These statements speak only as of the date of this
document. Unless required by law or applicable regulations, we undertake no
obligation to revise or update any of them to reflect events or circumstances
that occur after the date of this document.


                    EXFO Electro-Optical Engineering Inc.
                     Interim Consolidated Balance Sheet

                         (in thousands of US dollars)

                                                          As at August 31,
                                                      -----------------------
                                                            2008        2007
                                                      ----------- -----------

    Assets                                            (unaudited)

    Current assets
    Cash                                              $    5,914  $    5,541
    Short-term investments                                81,626     124,217
    Accounts receivable
      Trade, less allowance for doubtful accounts
       of $305 ($206 as at August 31, 2007)               31,473      26,699
      Other                                                4,753       2,479
    Income taxes and tax credits recoverable               4,836       6,310
    Inventories                                           34,880      31,513
    Prepaid expenses                                       1,774       1,391
    Future income taxes                                    9,140       7,609
                                                      ----------- -----------

                                                         174,396     205,759

    Tax credits recoverable                               20,657           -

    Property, plant and equipment                         19,875      18,117

    Intangible assets                                     19,945       9,628

    Goodwill                                              42,653      28,437

    Future income taxes                                   15,540      17,197
                                                      ----------- -----------

                                                      $  293,066  $  279,138
                                                      ----------- -----------
                                                      ----------- -----------
    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities          $   24,713  $   22,721
    Deferred revenue                                       5,079       2,598
                                                      ----------- -----------

                                                          29,792      25,319

    Deferred revenue                                       3,759       3,414

    Future income taxes                                        -         240
                                                      ----------- -----------

                                                          33,551      28,973
                                                      ----------- -----------

    Shareholders' equity

    Share capital                                        142,786     150,019
    Contributed surplus                                    5,226       4,453
    Retained earnings                                     60,494      42,275
    Accumulated other comprehensive income                51,009      53,418
                                                      ----------- -----------

                                                         259,515     250,165
                                                      ----------- -----------

                                                      $  293,066  $  279,138
                                                      ----------- -----------
                                                      ----------- -----------



                    EXFO Electro-Optical Engineering Inc.
            Interim Unaudited Consolidated Statements of Earnings

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

                                   Three      Twelve       Three      Twelve
                                  months      months      months      months
                                   ended       ended       ended       ended
                               August 31,  August 31,  August 31,  August 31,
                                    2008        2008        2007        2007
                              ----------- ----------- ----------- -----------
    Sales                     $   50,943  $  183,790  $   42,975  $  152,934

    Cost of sales (1,2)           20,416      75,624      18,109      65,136
                              ----------- ----------- ----------- -----------

    Gross margin                  30,527     108,166      24,866      87,798
                              ----------- ----------- ----------- -----------

    Operating expenses
    Selling and
     administrative (1)           16,993      61,153      13,035      49,580
    Net research and
     development (1, 3)            7,297      26,867       2,308      16,668
    Amortization of property,
     plant and equipment           1,247       4,292         801       2,983
    Amortization of
     intangible assets             1,402       3,871         699       2,864
    Government grants                  -           -      (1,079)     (1,079)
                              ----------- ----------- ----------- -----------

    Total operating expenses      26,939      96,183      15,764      71,016
                              ----------- ----------- ----------- -----------

    Earnings from operations       3,588      11,983       9,102      16,782

    Interest income                  576       4,639       1,204       4,717
    Foreign exchange gain
     (loss)                        1,349         442        (156)        (49)
                              ----------- ----------- ----------- -----------

    Earnings before income
     taxes and extraordinary
     gain                          5,513      17,064      10,150      21,450

    Income taxes
    Current                          (14)     (7,094)      1,232       3,741
    Future                         2,213      14,094           -           -
    Recognition of previously
     unrecognized future
     income tax assets                 -      (5,324)    (24,566)    (24,566)
                              ----------- ----------- ----------- -----------

                                   2,199       1,676     (23,334)    (20,825)
                              ----------- ----------- ----------- -----------

    Earnings before
     extraordinary gain            3,314      15,388      33,484      42,275

    Extraordinary gain                 -       3,036           -           -
                              ----------- ----------- ----------- -----------

    Net earnings for the
     period                   $    3,314  $   18,424  $   33,484  $   42,275
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Basic earnings before
     extraordinary gain per
     share                    $     0.05  $     0.22  $     0.49  $     0.61
    Diluted earnings before
     extraordinary gain per
     share                    $     0.05  $     0.22  $     0.48  $     0.61
    Basic net earnings per
     share                    $     0.05  $     0.27  $     0.49  $     0.61
    Diluted net earnings per
     share                    $     0.05  $     0.27  $     0.48  $     0.61

    Basic weighted average
     number of shares
     outstanding (000's)          68,082      68,767      68,969      68,875

    Diluted weighted average
     number of shares
     outstanding (000's)          68,550      69,318      69,486      69,555

    (1) Stock-based
         compensation costs
         included in:
        Cost of sales         $       36  $      148  $       25  $      118
        Selling and
         administrative              232         830         191         633
        Net research and
         development                 100         294          61         230
                              ----------- ----------- ----------- -----------

                              $      368  $    1,272  $      277  $      981
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    (2) The cost of sales is exclusive of amortization, shown separately.
    (3) Net research and development expenses for the periods ended
        August 31, 2007 include recognition of unrecognized research and
        development tax credits of $3,162.



                    EXFO Electro-Optical Engineering Inc.
    Interim Unaudited Consolidated Statements of Comprehensive Income (Loss)
                 And Accumulated Other Comprehensive Income

                         (in thousands of US dollars)

    Comprehensive income (loss)
                                   Three      Twelve       Three      Twelve
                                  months      months      months      months
                                   ended       ended       ended       ended
                               August 31,  August 31,  August 31,  August 31,
                                    2008        2008        2007        2007
                              ----------- ----------- ----------- -----------
    Net earnings for the
     period                   $    3,314  $   18,424  $   33,484  $   42,275
    Foreign currency
     translation adjustment      (18,511)     (2,289)      2,574       9,881
    Changes in unrealized
     gains (losses) on
     short-term investments           (9)         31           -           -
    Unrealized gains on
     forward exchange
     contracts                    (1,882)        962           -           -
    Reclassification of
     realized gains on
     forward exchange
     contracts in net
     earnings                       (770)     (3,915)          -           -
    Future income taxes effect
     of the above items              822         909           -           -
                              ----------- ----------- ----------- -----------

    Comprehensive income
     (loss)                   $  (17,036) $   14,122  $   36,058  $   52,156
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Accumulated other comprehensive income

                                                       Years ended August 31,
                                                      -----------------------
                                                            2008        2007
                                                      ----------- -----------
    Foreign currency translation adjustment
    Cumulative effect of prior years                  $   53,418  $   43,537
    Current year                                          (2,289)      9,881
                                                      ----------- -----------

                                                          51,129      53,418
                                                      ----------- -----------
    Unrealized gains (losses) on forward exchange
     contracts
    Adjustment related to the implementation of
     new accounting standards                              1,948           -
    Current year, net of realized gains and future
     income taxes                                         (2,044)          -
                                                      ----------- -----------

                                                             (96)          -
                                                      ----------- -----------

    Unrealized gains (losses) on short-term investments
    Adjustment related to the implementation of new
     accounting standards                                    (55)          -
    Current year, net of future income taxes                  31           -
                                                      ----------- -----------

                                                             (24)          -
                                                      ----------- -----------

    Accumulated other comprehensive income            $   51,009  $   53,418
                                                      ----------- -----------
                                                      ----------- -----------



                    EXFO Electro-Optical Engineering Inc.
       Interim Unaudited Consolidated Statements of Retained Earnings
                           and Contributed Surplus

                         (in thousands of US dollars)

    Retained earnings

                                                       Years ended August 31,
                                                      -----------------------
                                                            2008        2007
                                                      ----------- -----------

    Balance - Beginning of year                       $   42,275  $        -

    Add (deduct)
    Adjustment related to the implementation of new
     accounting standards                                     55           -
    Net earnings for the year                             18,424      42,275
    Premium on redemption of share capital                  (260)          -
                                                      ----------- -----------

    Balance - End of year                             $   60,494  $   42,275
                                                      ----------- -----------
                                                      ----------- -----------

    Contributed surplus

                                                       Years ended August 31,
                                                      -----------------------
                                                            2008        2007
                                                      ----------- -----------

    Balance - Beginning of year                       $    4,453  $    3,776

    Add (deduct)
    Stock-based compensation costs                         1,287         973
    Reclassification of stock-based compensation
     costs to share capital upon exercise of
     stock awards                                           (514)       (296)
                                                      ----------- -----------

    Balance - End of year                             $    5,226  $    4,453
                                                      ----------- -----------
                                                      ----------- -----------



                    EXFO Electro-Optical Engineering Inc.
           Interim Unaudited Consolidated Statements of Cash Flows

                         (in thousands of US dollars)

                                   Three      Twelve       Three      Twelve
                                  months      months      months      months
                                   ended       ended       ended       ended
                               August 31,  August 31,  August 31,  August 31,
                                    2008        2008        2007        2007
                              ----------- ----------- ----------- -----------

    Cash flows from operating
     activities
    Net earnings for the
     period                   $    3,314  $   18,424  $   33,484  $   42,275
    Add (deduct) items not
     affecting cash
      Change in discount on
       short-term investments       (486)      1,035      (1,062)       (404)
      Stock-based compensation
       costs                         368       1,272         277         981
      Amortization                 2,649       8,163       1,500       5,847
      Gain on disposal of
       capital assets                  -           -         (17)       (117)
      Deferred revenue               482          47         135       1,299
      Government grants                -           -        (730)       (752)
      Future income taxes          2,213       8,770     (24,566)    (24,566)
      Extraordinary gain               -      (3,036)          -           -
                              ----------- ----------- ----------- -----------

                                   8,540      34,675       9,021      24,563

    Change in non-cash
     operating items
      Accounts receivable         (4,193)     (4,338)        792      (5,468)
      Income taxes and tax
       credits                    (1,396)    (12,833)     (2,006)     (3,403)
      Inventories                    712      (2,166)     (2,824)     (5,456)
      Prepaid expenses               379        (127)        174          85
      Accounts payable and
       accrued liabilities         1,659      (1,416)      1,564       4,105
                              ----------- ----------- ----------- -----------

                                   5,701      13,795       6,721      14,426
                              ----------- ----------- ----------- -----------
    Cash flows from investing
     activities
    Additions to short-term
     investments                 (72,800)   (717,020)    (80,267)   (807,056)
    Proceeds from disposal
     and maturity of
     short-term investments       73,939     760,310      75,073     793,435
    Additions to capital
     assets                       (1,452)     (6,508)     (2,011)     (5,547)
    Net proceeds from disposal
     of capital assets                 -           -         301       3,092
    Business combinations,
     net cash acquired               (78)    (41,016)          -           -
                              ----------- ----------- ----------- -----------

                                    (391)     (4,234)     (6,904)    (16,076)
                              ----------- ----------- ----------- -----------
    Cash flows from
     financing activities
    Change in bank loan           (1,485)          -           -           -
    Repayment of long-term debt        -           -        (394)       (472)
    Redemption of share capital   (4,675)     (8,068)          -           -
    Exercise of stock options          -          61         229         802
                              ----------- ----------- ----------- -----------

                                  (6,160)     (8,007)       (165)        330
                              ----------- ----------- ----------- -----------

    Effect of foreign exchange
     rate changes on cash         (1,818)     (1,181)       (119)          8
                              ----------- ----------- ----------- -----------

    Change in cash                (2,668)        373        (467)     (1,312)

    Cash - Beginning of period     8,582       5,541       6,008       6,853
                              ----------- ----------- ----------- -----------

    Cash - End of period      $    5,914  $    5,914  $    5,541  $    5,541
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    




For further information:

For further information: Vance Oliver, Manager, Investor Relations,
(418) 683-0913, Ext. 3733, vance.oliver@exfo.com

Organization Profile

EXFO Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890