Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

February 16, 2010 17:01 ET

Aastra Reports Record Annual Net Income

TORONTO, ONTARIO--(Marketwire - Feb. 16, 2010) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the three months and year ended December 31, 2009. The Company is pleased to report a significant improvement in net earnings in the fourth quarter resulting in a record net income for the year ended December 31, 2009. In addition, the Company is also pleased to announce an increase to its quarterly dividend to $0.20 per share for this quarter, payable on March 24, 2010 to all shareholders of record on March 3, 2010.

Net revenue for the three months ended December 31, 2009 was $217.8 million compared to $261.8 million for the same quarter in 2008, a decrease of 16.8% from the previous year. While sales were down from the record level experienced in the fourth quarter last year, sales for the quarter were up 9.6% sequentially from sales of $198.7 million in the third quarter of 2009.

Sales for the year ended December 31, 2009 were up slightly at $832.9 million compared to $832.1 million for 2008. The results for 2008 include only 8 months of sales of the former Ericsson Enterprise product lines acquired on April 30, 2008. Excluding the impact of the Ericsson Enterprise acquisition, sales would have decreased by approximately 8% from 2008 as a result of the weaker global economy in 2009 and its impact on the IT spending by our enterprise end customers across many of our markets.

Gross margin decreased slightly to 45.0% of sales in the fourth quarter of 2009 compared to 47.0% of sales in the same period in 2008. Gross margin for the year ended December 31, 2009 was 45.9% compared to 44.9% for the year in 2008.

Research and development expenses in the fourth quarter of 2009 were $19.2 million or 8.8% of sales, compared to $27.7 million or 10.6% of sales in the final quarter of 2008. Research and development expenses for the year ended December 31, 2009 decreased to $81.8 million or 9.8% of sales from $98.0 million or 11.8% of sales in 2008. The Company actively worked in 2009 to create efficiencies across its research and development centers.

Selling, general and administrative expenses were $51.6 million or 23.7% of sales in the fourth quarter of 2009 compared to $67.9 million or 25.9% of sales in the fourth quarter of 2008. Selling, general and administrative expenses for the year ended December 31, 2009 were down slightly to $217.4 million or 26.1% of sales compared to $218.1 million or 26.2% of sales for the year in 2008.

Amortization expense recorded in operating expenses was $5.3 million in the fourth quarter of 2009 compared to $9.6 million in the fourth quarter of 2008. For the year, amortization expenses recorded in operating expenses were $23.0 million compared to $26.4 million for the year in 2008. Amortization expenses decreased as certain intangible assets became fully amortized at the end of 2008. In the fourth quarter of 2008 the Company recorded a non-cash charge on the impairment of certain long-lived assets and goodwill of $14.1 million which had a significant negative impact on earnings in that quarter.

Losses from the impact of foreign exchange were $2.2 million in the fourth quarter of 2009, comparable to foreign exchange losses of $2.1 million incurred in the same period of 2008. Foreign exchange losses were $3.6 million for the year in 2009 compared to $3.1 million for 2008 as a result of the general strengthening of the Canadian dollar over these periods.

Interest income was down to $0.7 million in the fourth quarter of 2009 from $1.0 million in the final quarter of 2008. For the year, investment income was $2.8 million compared to $3.6 million in 2008. The decrease in both periods is primarily the result of lower average rates of return in 2009 when compared to 2008. Interest expense decreased to $1.2 million for the year in 2009 compared to $2.4 million in 2008 as a result of a decrease in the loan balance outstanding as well as lower rates of interest on the balance outstanding.

As a result of the above, net earnings for the three months ended December 31, 2009 improved sharply to $15.3 million or $1.09 diluted earnings per share compared to $1.5 million or $0.10 diluted earnings per share in the same period in 2008. Net earnings for the year ended December 31, 2009 were $44.6 million or $3.20 diluted earnings per share compared to $11.5 million or $0.73 diluted earnings per share in 2008. Despite the depressed levels of sales due to the weak economic conditions, the Company was pleased with its ability to manage its cost base and generate strong profitability resulting in a record net earnings for 2009.

Cash and short-term investments totaled $116.9 million at the end of 2009 compared to a balance of $98.2 million at the end of 2008. During the fourth quarter of 2009, the Company generated $11.3 million in cash flow from operations, net of working capital increases. For the year, the Company generated $68.1 million from operations, net of working capital increases. In addition, the Company repurchased $17.7 million of its own shares and repaid $22.8 million of long term debt during 2009.

As announced previously, the Company has entered into an agreement with KEYMILE GmbH to sell its optical transmission and multiplexer product line, which is non-core to the Company's Enterprise Communication business and accounted for less than 2% of the Company's consolidated revenue for 2009. The sale is subject to customary closing conditions and is expected to close by the end of March 2010.

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 solutions, 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 and quarterly Management Discussion and Analyses 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.



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

YEAR-TO-DATE 4th QUARTER
Twelve months Three months
ended December 31st ended December 31st
2009 2008 2009 2008
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Sales $ 832,897 $ 832,070 $ 217,804 $ 261,778
Cost of goods sold 451,012 458,149 119,813 138,753
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381,885 373,921 97,991 123,025
Expenses (income):
Selling, general and
administrative 217,425 218,064 51,597 67,880
Research and development 81,817 97,984 19,237 27,731
Depreciation and
amortization 22,961 26,434 5,289 9,606
Interest expense 1,226 2,405 117 903
Foreign exchange loss 3,597 3,113 2,200 2,112
Investment income (2,836) (3,645) (679) (1,040)
Impairment of goodwill - 9,022 - 9,022
Other charges 399 4,712 - 3,577
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Earnings before income taxes 57,296 15,832 20,230 3,234
Income taxes 12,685 4,355 4,919 1,733
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Net earnings for the period $ 44,611 $ 11,477 $ 15,311 $ 1,501
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Earnings per share:
Basic $ 3.26 $ 0.74 $ 1.11 $ 0.10
Diluted $ 3.20 $ 0.73 $ 1.09 $ 0.10
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(i) Actual common shares outstanding as at December 31, 2009 - 13,852,335
(2008 - 14,765,573)

(ii) Weighted average common shares outstanding for the twelve months and
three months ended December 31, 2009 - 13,705,274 and 13,920,085
(2008 - 15,427,900 and 15,161,497)
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2009 have not been reviewed by an auditor.


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

YEAR-TO-DATE 4th QUARTER
Twelve months Three months
ended December 31st ended December 31st
2009 2008 2009 2008
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Cash and cash equivalents
provided by (used in):
Operations:
Net earnings for
the period $ 44,611 $ 11,477 $ 15,311 $ 1,501
Depreciation of property
and equipment 11,959 11,266 2,878 3,392
Amortization of intangible
assets 15,982 19,575 3,728 7,444
Future income taxes (1,942) (5,380) (176) (345)
Stock-based compensation
expense 2,350 2,536 557 684
Loss on short-term
investments - (147) - (147)
Loss on sale of property
and equipment 492 432 133 149
Impairment of goodwill - 9,022 - 9,022
Other charges 399 4,712 - 3,577
Change in non-cash pension
liabilities 1,309 1,119 736 (353)
Change in non-cash
operating working capital (7,037) (27,764) (11,844) (7,084)
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68,123 26,848 11,323 17,840
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Financing:
Dividends to shareholders (2,062) - (2,062) -
Issuance of common shares
on exercise of options 6,901 193 3,506 -
Repurchase of shares (17,722) (20,564) - (7,818)
Receipt of acquired lease
receivables 3,606 7,159 743 1,480
Payment of loan to Seller (3,606) (7,159) (743) (1,480)
Increase in loans payable - 58,170 - -
Payment of loans payable (22,821) (294) (79) (78)
Decrease in bank
indebtedness - (16) - -
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(35,704) 37,489 1,365 (7,896)
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Investments:
Maturity of short-term
investments - 40,624 - 18,705
Purchase of short-term
investments (3,038) (20,631) - -
Interest received from
long-term investment 493 - 76 -
Proceeds on disposal of
property and equipment 28 5 (13) (11)
Purchase of property and
equipment (11,914) (17,679) (4,059) (6,226)
Purchase of intangible
assets (1,740) (1,106) (632) (270)
Business acquisitions, net
of cash acquired 2,663 (92,918) - 4,561
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(13,508) (91,705) (4,628) 16,759
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Foreign exchange on cash
held in foreign currency (2,952) 12,203 3,628 7,777
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Increase (decrease) in cash
and cash equivalents 15,959 (15,165) 11,688 34,480
Cash and cash equivalents,
beginning of period 97,637 112,802 101,908 63,157
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Cash and cash equivalents,
end of period $ 113,596 $ 97,637 $ 113,596 $ 97,637
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2009 have not been reviewed by an auditor.


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

DECEMBER 31st 2009 DECEMBER 31st 2008
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ASSETS
Current assets:

Cash and cash equivalents $ 113,596 $ 97,637
Short-term investments 3,309 519
Accounts receivable 175,331 234,021
Income taxes receivable 5,986 8,201
Inventories 81,398 108,000
Net investment in leases 11,831 7,389
Acquired lease receivables 1,544 3,729
Prepaid expenses and other assets 7,088 8,751
Future income tax assets 6,395 9,615
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406,478 477,862

Long-term investment 4,525 5,416
Future income tax assets 3,901 4,430
Net investment in leases 28,597 19,456
Acquired lease receivables 1,597 3,718
Property and equipment 41,920 47,592
Goodwill 46,391 50,269
Intangible assets 51,460 71,506
Other assets 611 441
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$ 585,480 $ 680,690
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

Indebtedness $ - $ 337
Accounts payable and accrued
liabilities 148,076 218,933
Income taxes payable 33,294 28,509
Deferred revenue 23,686 22,898
Current portion of loans payable 16,490 27,276
Future income tax liabilities 961 1,121
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222,507 299,074

Pensions 25,488 27,556
Loans payable 16,561 35,537
Future income tax liabilities 14,281 21,645
Other long-term liabilities 3,802 3,071
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282,639 386,883
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Shareholders' equity:
Share capital 90,488 90,951
Contributed surplus 7,465 6,484
Accumulated other comprehensive
income (5,456) 19,588
Retained earnings 210,344 176,784
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302,841 293,807
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$ 585,480 $ 680,690
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2009 have not been reviewed by an auditor.


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

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Accumulated
Other Compre-
Contri- Comprehen- hensive
Common Share buted sive Income Retained Income
Shares Capital Surplus (Loss) Earnings Total (Loss)
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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 - - 1,792 - - 1,792 -
Shares
repurchased
for
cancella-
tion (1,417,738) (8,733) - - (8,989) (17,722) -
Translation
of self-
sustaining - - - (19,006) - (19,006)(19,006)
operations
Net earnings - - - - 29,300 29,300 29,300
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Balance,
September
30,
2009 13,674,710 $ 85,613 $ 8,276 $ 582 $ 197,095 $ 291,566 $ 10,294
Dividends - - - - (2,062) (2,062) -
Shares
issued
on
exercise
of
options 177,625 3,506 - - - 3,506 -
Stock-
based
compen-
sation - - 558 - - 558 -
Transfer
from
contri-
buted
surplus
to
share
capital - 1,369 (1,369) - - - -
Translation
of self-
sustaining
operations - - - (6,038) - (6,038) (6,038)
Net earnings - - - - 15,311 15,311 15,311
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Balance,
December
31,
2009 13,852,335 $ 90,488 $ 7,465 $ (5,456) $ 210,344 $ 302,841 $ 19,567
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Accumulated
Other Compre-
Contri- Comprehen- hensive
Common Share buted sive Income Retained Income
Shares Capital Surplus (Loss) Earnings Total (Loss)
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Balance,
December
31,
2007 16,015,323 $ 98,442 $ 4,029 $(15,530) $ 178,106 $ 265,047 $ -
Shares
issued
on
exercise
of
options 12,250 193 - - - 193 -
Stock-
based
compen-
sation - - 1,852 - - 1,852 -
Shares
repurchased
for
cancella-
tion (487,000) (2,996) - - (9,750) (12,746) -
Translation
of self-
sustaining - - - 5,045 - 5,045 5,045
operations
Net earnings - - - - 9,976 9,976 9,976
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Balance,
September
30,
2008 15,540,573 $ 95,639 $ 5,881 $(10,485) $ 178,332 $ 269,367 $15,021
Stock-
based
compen-
sation - - 684 - - 684 -
Shares
repurchased
for
cancell
-ation (775,000) (4,769) - - (3,049) (7,818) -
Transfer
from
contri-
buted
surplus
to
share
capital 81 (81) - - - -
Translation
of self-
sustaining
operations - - - 30,073 - 30,073 30,073
Net earnings - - - - 1,501 1,501 1,501
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Balance,
December
31,
2008 14,765,573 $ 90,951 $ 6,484 $ 19,588 $ 176,784 $ 293,807 $46,595
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2009 have not been reviewed by an auditor.

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