Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

October 19, 2009 17:01 ET

Aastra Reports Improved Earnings and Declares Dividend

TORONTO, ONTARIO--(Marketwire - Oct. 19, 2009) - Aastra Technologies Limited - (TSX:AAH) is pleased to report its unaudited financial results for the third quarter ended September 30, 2009 and, in connection with these improved results, the Board of Directors has declared a quarterly cash dividend of $0.15 per share on its common shares payable on November 24, 2009, to shareholders of record at the close of business on November 3, 2009.

"Given our confidence in our financial strength, we are pleased to be able to return profits to our shareholders in the form of a quarterly dividend while satisfying our capital requirements and continuing with our long-term business strategy", said Francis N. Shen, Chairman and Co-CEO of Aastra.

Sales for the three months ended September 30, 2009 were $198.7 million compared to $224.5 million for the same quarter in 2008, a decrease of 11.5%. On a sequential basis, sales increased by 0.8% from sales of $197.2 million in the second quarter of this year, despite the fact that the third quarter is generally seasonally weaker in several of our major markets across Europe.

Gross margin was 44.7% of sales in the quarter compared to 45.1% of sales in the same period in 2008 and 45.6% of sales in the second quarter of 2009. Research and development expenses in the third quarter were $18.8 million or 9.5% of sales, compared to $29.7 million or 13.2% of sales in the same quarter of 2008.

Selling, general and administrative expenses were $49.6 million or 25.0% of sales in the third quarter compared to $58.8 million or 26.2% of sales in the third quarter of 2008. SG&A expenses decreased over the same period last year as well as on a sequential basis as the Company continued to focus on aggressively managing its cost structure in lieu of weaker end customer demand.

Amortization expense recorded in operating expenses was $6.2 million in the third quarter compared to $7.4 million in the same period last year. The Company recorded interest expense of $0.2 million in the third quarter this year compared to $0.9 million in the third quarter of 2008 as a result of both lower interest rates and a lower long-term debt balance. Losses from foreign exchange were $2.0 million in the third quarter of 2009 compared to losses of $1.3 million in the third quarter of 2008.

Investment income totalled $0.8 million in third quarter compared to $0.5 million in the same quarter of 2008. While the investment income earned on excess cash in the quarter has decreased sharply compared to last year, the Company earned a higher amount of financing income on its leasing business. Income tax expense was $2.8 million or 22.7% of pre-tax income compared to $0.7 million or 21.7% of pre-tax income in the same period last year.

As a result, net income for the third quarter was $9.6 million or $0.71 diluted earnings per share compared to $2.6 million or $0.17 diluted earnings per share in the same period last year and $5.5 million or $0.40 diluted earnings per share in the second quarter of 2009.

Cash and short-term investments increased to $105.6 million at the end of September 2009 compared to $80.6 million as at June 30, 2009 and $98.2 million at the end of December 2008. During the third quarter of 2009, the Company generated $37.8 million in cash flow from operations, bringing the total increase in cash flow from operations to $59.5 million for the nine months ended September 30, 2009.

The dividend declared today has been designated as an "eligible" dividend for the purposes of the Income Tax Act (Canada) and similar provincial legislation. Shareholders of Aastra are entitled to receive dividends only if and when such dividends have been declared and there is no entitlement to any dividends prior to any declaration thereof by Aastra's Board of Directors.

About Aastra Technologies Limited

Aastra Technologies Limited (TSX:AAH) is a global company at the forefront of the Enterprise Communication market. Headquartered in Concord, Ontario, Canada, Aastra develops and delivers innovative and integrated solutions that address the communication needs of businesses small and large around the world. Aastra enables Enterprises to communicate and collaborate more efficiently and effectively by offering customers a full range of open standard IP-based and traditional communications networking products, including terminals, systems, and applications. For additional information on Aastra, visit our website at http://www.aastra.com.

Certain statements made herein may be forward-looking statements within the meaning of applicable Canadian securities legislation. These forward-looking statements include, among others, statements with respect to our Board of Directors declaring any future quarterly dividends and, if so declared, the amount of such dividends. By their very nature, forward-looking statements involve numerous factors and assumptions, and are subject to inherent risks and uncertainties, both general and specific, which give rise to the possibility that such forward-looking statements will not be achieved.

Shareholders are entitled to receive dividends only if and when such dividends have been declared and there is no entitlement to any dividends prior to any declaration thereof by our Board of Directors. The material factors that will be considered by our Board of Directors in determining whether it is appropriate to declare any future dividends, and the amount of any such dividends, include: our earnings, cash flow, quarterly fluctuations in financial results and financing requirements to fund acquisitions or other business opportunities. Please refer to our filings on the website maintained by the Canadian Securities Administrators at www.sedar.com, including our Annual Information Form and our annual Management Discussion and Analysis ("MD&A") for fiscal 2008 as well as our MD&A for our third quarter of 2009, for other material factors that may be considered by our Board of Directors in determining whether to declare any future dividends and the amount of any such dividends.

We caution readers not to place undue reliance on these forward-looking statements as our actual results may differ materially from our expectations if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. Therefore, we cannot provide any assurance that forward-looking statements will materialize. Unless otherwise required pursuant to applicable Canadian securities legislation, we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.



AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Stated in thousands of Canadian dollars, except per share amounts

YEAR-TO-DATE 3rd QUARTER
Nine months Three months
ended September 30th ended September 30th

2009 2008 2009 2008
--------------------------------------------------------------------------
Sales $ 615,093 $ 570,292 $ 198,666 $ 224,464
Cost of goods sold 331,199 319,396 109,853 123,237
--------------------------------------------------------------------------
283,894 250,896 88,813 101,227
Expenses (income):
Selling, general and
administrative 165,828 150,184 49,568 58,821
Research and development 62,580 70,253 18,845 29,739
Depreciation and
amortization 17,672 16,828 6,167 7,351
Interest expense 1,109 1,502 176 898
Foreign exchange loss 1,397 1,001 1,959 1,293
Investment income (2,157) (2,605) (778) (540)
Other charges 399 1,135 399 350
--------------------------------------------------------------------------
Earnings before income taxes 37,066 12,598 12,477 3,315
Income taxes 7,766 2,622 2,829 720
--------------------------------------------------------------------------
Net earnings for the period $ 29,300 $ 9,976 $ 9,648 $ 2,595
--------------------------------------------------------------------------
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Earnings per share:
Basic $ 2.09 $ 0.63 $ 0.71 $ 0.17
Diluted $ 2.09 $ 0.63 $ 0.71 $ 0.17
--------------------------------------------------------------------------
--------------------------------------------------------------------------

(i) Actual common shares outstanding as at September 30, 2009 - 13,674,710
(2008 - 15,540,573)
(ii) Weighted average common shares outstanding for the nine months and
three months ended September 30, 2009 - 14,007,901 and 13,674,710
(2008 - 15,778,848 and 15,540,062)

The interim consolidated financial statements for the nine months and three
months ended September 30, 2009 have not been reviewed by an auditor.



AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Stated in thousands of Canadian dollars

YEAR-TO-DATE 3rd QUARTER
Nine months Three months
ended September 30th ended September 30th

2009 2008 2009 2008
---------------------------------------------------------------------------
Cash and cash equivalents
provided by (used in):
Operations:
Net earnings for the period $ 29,300 $ 9,976 $ 9,648 $ 2,595
Depreciation of property
and equipment 10,293 8,775 3,537 2,976
Amortization of intangible
assets 11,042 11,230 3,686 5,461
Future income taxes (1,766) (5,035) (1,617) (2,615)
Stock-based compensation
expense 1,792 1,852 558 640
Loss on sale of property
and equipment 359 283 149 41
Other charges 399 1,135 399 350
Change in non-cash pension
liabilities 573 1,472 328 131
Change in non-cash
operating working capital 7,471 (20,680) 21,146 (2,669)
---------------------------------------------------------------------------
59,463 9,008 37,834 6,910
---------------------------------------------------------------------------
Financing:
Issuance of common shares
on exercise of options 3,395 193 - 16
Repurchase of shares (17,722) (12,746) - -
Receipt of acquired lease
receivables 2,863 5,679 976 2,211
Payment of loan to Seller (2,863) (5,679) (976) (2,211)
Increase in loans payable - 58,940 - -
Payment of loans payable (22,742) (216) (7,764) (73)
Decrease in bank
indebtedness - (16) - -
---------------------------------------------------------------------------
(37,069) 46,155 (7,764) (57)
---------------------------------------------------------------------------
Investments:
Maturity of short-term
investments - 21,919 - 2,062
Purchase of short-term
investments (3,038) (20,631) - (18,631)
Interest received from
long-term investment 417 - - -
Proceeds on disposal of
property and equipment 41 16 14 8
Purchase of property and
equipment (8,963) (12,289) (2,605) (6,415)
Business acquisitions, net
of cash acquired - (97,479) - -
---------------------------------------------------------------------------
(11,543) (108,464) (2,591) (22,976)
---------------------------------------------------------------------------
Foreign exchange on cash held
in foreign currency (6,580) 3,656 (2,514) (1,079)
---------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 4,271 (49,645) 24,965 (17,202)
Cash and cash equivalents,
beginning of period 97,637 112,802 76,943 80,359
---------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 101,908 $ 63,157 $ 101,908 $ 63,157
---------------------------------------------------------------------------
---------------------------------------------------------------------------

The interim consolidated financial statements for the nine months and three
months ended September 30, 2009 have not been reviewed by an auditor.



AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Stated in thousands of Canadian dollars

SEPTEMBER DECEMBER SEPTEMBER
30th 2009 31st 2008 30th 2008
----------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 101,908 $ 97,637 $ 63,157
Short-term investments 3,695 519 19,195
Accounts receivable 163,815 234,021 195,587
Income taxes receivable 7,080 8,201 -
Inventories 96,495 108,000 106,465
Net investment in leases 5,924 7,389 3,694
Acquired lease receivables 1,998 3,729 3,848
Prepaid expenses and other assets 7,392 8,751 9,625
Future income tax assets 5,190 9,615 8,999
---------------------------------------------------------------------------
393,497 477,862 410,570

Long-term investment 4,600 5,416 5,861
Future income tax assets 4,822 4,430 996
Net investment in leases 34,733 19,456 12,774
Acquired lease receivables 2,037 3,718 4,046
Property and equipment 43,821 48,859 42,168
Goodwill 49,333 50,269 12,089
Intangible assets 57,034 70,239 109,662
Other assets 677 441 448
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$ 590,554 $ 680,690 $ 598,614
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Indebtedness $ - $ 337 $ -
Accounts payable and accrued
liabilities 163,947 218,933 195,574
Income taxes payable 29,749 28,509 25,889
Deferred revenue 21,335 22,898 15,562
Current portion of contingent
consideration payable - - 1,895
Current portion of loans payable 17,665 27,276 26,929
Future income tax liabilities 1,255 1,121 735
---------------------------------------------------------------------------
233,951 299,074 266,584

Pensions 25,923 27,556 21,882
Loans payable 17,838 35,537 35,266
Future income tax liabilities 18,544 21,645 3,410
Other long-term liabilities 2,732 3,071 2,105
---------------------------------------------------------------------------
298,988 386,883 329,247
---------------------------------------------------------------------------

Shareholders' equity:
Share capital 85,613 90,951 95,639
Contributed surplus 8,276 6,484 5,881
Accumulated other comprehensive
income 582 19,588 (10,485)
Retained earnings 197,095 176,784 178,332
---------------------------------------------------------------------------
291,566 293,807 269,367
---------------------------------------------------------------------------
$ 590,554 $ 680,690 $ 598,614
---------------------------------------------------------------------------
---------------------------------------------------------------------------

The interim consolidated financial statements for the nine months and three
months ended September 30, 2009 have not been reviewed by an auditor.



AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(UNAUDITED)
Stated in thousands of Canadian dollars, except share amounts

----------------------------------------------------------------------------
Accumulated
Other Compre-
Contri- Comprehen- hensive
Common Share buted sive Income Retained Income
Shares Capital Surplus (Loss) Earnings Total (Loss)
----------------------------------------------------------------------------

Balance,
December
31,
2008 14,765,573 $ 90,951 $ 6,484 $ 19,588 $ 176,784 $ 293,807 $ -

Shares
issued
on
exercise
of
options 326,875 3,395 - - - 3,395 -

Stock-
based
compen-
sation - - 1,234 - - 1,234 -

Shares
repur-
chased
for
cancell-
ation (1,417,738) (8,733) - - (8,989) (17,722) -

Trans-
lation
of
self-
sustaining
operations - - - (11,230) - (11,230) (11,230)

Net
earnings - - - - 19,652 19,652 19,652
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Balance,
June
30,
2009 13,674,710 $ 85,613 $7,718 $ 8,358 $187,447 $289,136 $ 8,422

Stock-
based
compen-
sation - - 558 - - 558 -

Trans-
lation
of
self-
sustaining
operations - - - (7,776) - (7,776) (7,776)

Net
earnings - - - - 9,648 9,648 9,648
----------------------------------------------------------------------------

Balance,
September
30,
2009 13,674,710 $ 85,613 $ 8,276 $ 582 $ 197,095 $ 291,566 $ 10,294

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
Other Compre-
Contri- Comprehen- hensive
Common Share buted sive Income Retained Income
Shares Capital Surplus (Loss) Earnings Total (Loss)
----------------------------------------------------------------------------

Balance,
December
31,
2007 16,015,323 $ 98,442 $ 4,029 $(15,530) $ 178,106 $ 265,047 $ -

Shares
issued
on
exercise
of
options 11,250 177 - - - 177 -

Stock-
based
compen-
sation - - 1,212 - - 1,212 -

Shares
repur-
chased
for
cancell-
ation (487,000) (2,996) - - (9,750) (12,746) -

Trans-
lation
of
self-
sustaining
operations - - - 17,387 - 17,387 17,387

Net
earnings - - - - 7,381 7,381 7,381
----------------------------------------------------------------------------

Balance,
June
30,
2008 15,539,573 $95,623 $ 5,241 $ 1,857 $ 175,737 $ 278,458 $ 24,768

Shares
issued
on
exercise
of
options 1,000 16 - - - 16 -

Stock-
based
compen-
sation - - 640 - - 640 -

Trans-
lation
of
self-
sustaining
operations - - - (12,342) - (12,342) (12,342)

Net
earnings - - - - 2,595 2,595 2,595
----------------------------------------------------------------------------

Balance,
September
30,
2008 15,540,573 $95,639 $ 5,881 $(10,485) $ 178,332 $ 269,367 $ 15,021
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The interim consolidated financial statements for the nine months and three
months ended September 30, 2009 have not been reviewed by an auditor.


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