Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

July 27, 2009 16:31 ET

Aastra Reports Continued Profitability

TORONTO, ONTARIO--(Marketwire - July 27, 2009) - Aastra Technologies Limited - (TSX:AAH) is pleased to report its unaudited financial results for the second quarter ended June 30, 2009.

Sales for the three months ended June 30, 2009 were $197.2 million compared to $205.8 million for the same quarter in 2008, a decrease of 4.2%. The Company's sales results for the second quarter of last year include two months of revenue from the acquisition of the Ericsson Enterprise Communications Business which closed on April 30, 2008. On a sequential basis, sales decreased by 10.1% from sales of $219.3 million in the first quarter of this year as a result of the weak economic conditions experienced in several markets.

Gross margin was 45.6% of sales in the quarter compared to 42.5% of sales in the same period in 2008 and 48.0% of sales in the first quarter of 2009. Research and development expenses in the second quarter were $21.8 million or 11.1% of sales, compared to $26.8 million or 13.0% of sales in the same quarter of 2008.

Selling, general and administrative expenses were $56.0 million or 28.4% of sales in the second quarter compared to $53.2 million or 25.8% of sales in the second quarter of 2008. As a percentage of sales, SG&A expenses increased over the same period last year as operating costs could not be reduced as quickly as the decline in sales that was experienced during the quarter.

Amortization expense recorded in operating expenses was $5.6 million in the second quarter compared to $6.2 million in the same period last year. The Company recorded interest expense of $0.2 million in the second quarter this year compared to $0.6 million in the second quarter of 2008 as a result of both lower interest rates and a lower long-term debt balance. Losses from foreign exchange were $0.3 million in the second quarter of 2009 compared to a foreign exchange gain of $1.2 million in the second quarter of 2008, due to the strengthening of the Canadian dollar compared to the Euro and U.S. dollar during the second quarter this year.

Investment income totaled $0.7 million in second quarter compared to $0.8 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 $1.2 million or 18.2% of pre-tax income compared to $0.4 million or 15.5% of pre-tax income in the same period last year.

As a result, net income for the second quarter was $5.5 million or $0.40 diluted earnings per share compared to $2.1 million or $0.13 diluted earnings per share in the same period last year.

Cash and short-term investments totaled $80.6 million at the end of June 2009 compared to $66.9 million as at March 31, 2009 and $98.2 million at the end of December 2008. During the second quarter of 2009, the Company generated $15.1 million in cash flow from operations, inclusive of an increase in its net investment in leases of approximately $6 million.

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.

From time to time, we make written or oral forward-looking statements within the meaning of applicable Canadian securities legislation. We may make such statements in this press release, in other filings with Canadian regulators in reports to shareholders or in other communications. These forward-looking statements include, among others, statements with respect to our objectives, and strategies to achieve our objectives, as well as statements with respect to our beliefs, outlooks, plans, objectives, expectations, anticipations, estimates and intentions. The words "may," "could," "should," "would," "suspect," "outlook," "believe," "plan," "anticipate," "estimate," "expect," "intend," "forecast," "objective" and words and expressions of similar import are intended to identify forward-looking statements. 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 predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements.

As described in detail under the heading "Risk Factors" in our Annual Information Form filed on www.sedar.com, the material factors that could cause our actual results to differ materially from the forward-looking statements in this press release include: the global economical and financial crisis impacting businesses worldwide, exchange rate fluctuation of the Canadian dollar against other currencies, particularly with respect to the Swiss franc, Swedish krona, Euro and US dollar; product concentration and limited range of products; continued demand for our products; geographic market concentration in Europe; reliance on third party manufacturers and component suppliers; longer credit terms to customers; continued implementation of our enterprise resource planning system; potential fluctuations in quarterly financial results, particularly as a result of seasonality and geographic market concentration; risks associated with product returns and defects; consolidation, reorganization and rapid technological change in our market; competition and the risk of third party claims for infringement; and other risk factors that our business faces.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about these factors that may affect future results can be found under the "Risk Factors" section and in our 2008 Annual Information Form. We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf.



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

YEAR-TO-DATE 2nd QUARTER
Six months Three months
ended June 30th ended June 30th

2009 2008 2009 2008
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Sales $ 416,427 $ 345,828 $ 197,151 $ 205,793

Cost of goods sold 221,346 196,159 107,222 118,252
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195,081 149,669 89,929 87,541

Expenses (income):

Selling, general and
administrative 116,260 91,363 55,987 53,176

Research and development 43,735 40,514 21,826 26,840

Depreciation and amortization 11,505 9,477 5,607 6,150

Interest expense 933 604 197 587

Foreign exchange (gain) loss (562) (292) 270 (1,241)

Investment income (1,379) (2,065) (708) (766)

Other charges - 785 - 280
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Earnings before income taxes 24,589 9,283 6,750 2,515

Income taxes 4,937 1,902 1,231 390
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Net earnings for the period $ 19,652 $ 7,381 $ 5,519 $ 2,125
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Earnings per share:

Basic $ 1.44 $ 0.46 $ 0.41 $ 0.13

Diluted $ 1.44 $ 0.46 $ 0.40 $ 0.13
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(i) Actual common shares outstanding as at June 30, 2009 - 13,674,710
(2008 - 15,539,573)

(ii) Weighted average common shares outstanding for the six months and
three months ended June 30, 2009 - 13,691,626 and 13,552,444 (2008 -
15,900,220 and 15,783,222)

The interim consolidated financial statements for the six months and three
months ended June 30, 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 2nd QUARTER
Six months Three months
ended June 30th ended June 30th

2009 2008 2009 2008
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Cash and cash equivalents
provided by (used in):

Operations:

Net earnings for the period $ 19,652 $ 7,381 $ 5,519 $ 2,125

Depreciation of property and
equipment 6,756 5,799 3,442 3,077

Amortization of intangible
assets 7,356 5,769 3,655 4,171

Future income taxes (149) (2,420) 1,762 (2,344)

Stock-based compensation expense 1,234 1,212 590 638

Loss on short-term investments - - - (13)

Loss on sale of property and
equipment 210 242 42 102

Other charges - 785 - 280

Change in non-cash pension
liabilities 245 1,341 73 1,157

Change in non-cash operating
working capital (13,675) (18,012) (3) (22,833)
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21,629 2,097 15,080 (13,640)
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Financing:

Issuance of common shares on
exercise of options 3,395 177 2,588 65

Repurchase of shares (17,722) (12,746) - (12,746)

Receipt of acquired lease
receivables 1,887 3,468 900 1,692

Payment of loan to Seller (1,887) (3,468) (900) (1,692)

Increase in loans payable - 58,940 - 58,940

Payment of loans payable (14,978) (142) (79) (73)

Decrease in bank indebtedness - (16) - -
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(29,305) 46,213 2,509 46,186
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Investments:

Maturity of short-term
investments - 19,857 - 3,425

Purchase of short-term
investments (3,038) (2,000) - -

Interest received from
long-term investment 417 - 122 -

Proceeds on disposal of property
and equipment 27 8 25 2

Purchase of property and
equipment (6,358) (5,874) (3,157) (3,302)

Business acquisitions, net of
cash acquired - (97,479) - (97,479)
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(8,952) (85,488) (3,010) (97,354)
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Foreign exchange on cash held
in foreign currency (4,066) 4,735 (968) (2,695)
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Increase (decrease) in cash and
cash equivalents (20,694) (32,443) 13,611 (67,503)

Cash and cash equivalents,
beginning of period 97,637 112,802 63,332 147,862
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Cash and cash equivalents, end
of period $ 76,943 $ 80,359 $ 76,943 $ 80,359
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The interim consolidated financial statements for the six months and three
months ended June 30, 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

JUNE 30th DECEMBER 31st JUNE 30th
2009 2008 2008
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ASSETS
Current assets:
Cash and cash equivalents $ 76,943 $ 97,637 $ 80,359
Short-term investments 3,639 519 2,590
Accounts receivable 190,687 234,021 203,418
Income taxes receivable 8,847 8,201 -
Inventories 102,173 108,000 116,614
Net investment in leases 7,551 7,389 2,696
Acquired lease receivables 2,562 3,729 5,073
Prepaid expenses and other assets 8,448 8,751 8,465
Future income tax assets 6,264 9,615 8,780
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407,114 477,862 427,995

Long-term investment 4,999 5,416 6,211
Future income tax assets 4,709 4,430 1,263
Net investment in leases 32,330 19,456 8,234
Acquired lease receivables 2,642 3,718 5,686
Property and equipment 46,715 48,859 41,218
Goodwill 48,498 50,269 12,481
Intangible assets 60,260 70,239 123,177
Other assets 709 441 475
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$ 607,976 $ 680,690 $ 626,740
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Indebtedness $ - $ 337 $ -
Accounts payable and accrued
liabilities 175,884 218,933 206,697
Income taxes payable 27,532 28,509 25,938
Deferred revenue 23,584 22,898 12,528
Current portion of contingent
consideration payable - - 1,997
Current portion of loans payable 17,831 27,276 22,056
Future income tax liabilities 274 1,121 665
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245,105 299,074 269,881

Pensions 26,595 27,556 23,392
Loans payable 25,722 35,537 48,816
Future income tax liabilities 18,551 21,645 3,911
Other long-term liabilities 2,867 3,071 2,282
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318,840 386,883 348,282
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Shareholders' equity:
Share capital 85,613 90,951 95,623
Contributed surplus 7,718 6,484 5,241
Accumulated other comprehensive
income 8,358 19,588 1,857
Retained earnings 187,447 176,784 175,737
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289,136 293,807 278,458
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$ 607,976 $ 680,690 $ 626,740
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The interim consolidated financial statements for the six months and three
months ended June 30, 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
Common Share Contributed Comprehensive
Shares Capital Surplus Income (Loss)
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Balance, December 31,
2008 14,765,573 $ 90,951 $ 6,484 $ 19,588
Shares issued on
exercise of options 85,000 807 - -
Stock-based compensation - - 644 -
Shares repurchased for
cancellation (1,417,738) (8,733) - -
Translation of
self-sustaining
operations - - - (3,787)
Net earnings - - - -
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Balance, March 31, 2009 13,432,835 $ 83,025 $ 7,128 $ 15,801
Shares issued on
exercise of options 241,875 2,588 - -
Stock-based compensation - - 590 -
Translation of
self-sustaining
operations - - - (7,443)
Net earnings - - - -
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Balance, June 30, 2009 13,674,710 $ 85,613 $ 7,718 $ 8,358
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Accumulated
Other
Common Share Contributed Comprehensive
Shares Capital Surplus Income (Loss)
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Balance, December 31,
2007 16,015,323 $ 98,442 $ 4,029 $ (15,530)
Shares issued on
exercise of options 6,250 112 - -
Stock-based compensation - - 574 -
Translation of
self-sustaining
operations - - - 21,317
Net earnings - - - -
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Balance, March 31, 2008 16,021,573 $ 98,554 $ 4,603 $ 5,787
Shares issued on
exercise of options 5,000 65 - -
Stock-based compensation - - 638 -
Shares repurchased for
cancellation (487,000) (2,996) - -
Translation of
self-sustaining
operations - - - (3,930)
Net earnings - - - -
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Balance, June 30, 2008 15,539,573 $ 95,623 $ 5,241 $ 1,857
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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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Retained Comprehensive
Earnings Total Income (Loss)
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Balance, December 31,
2008 $ 176,784 $ 293,807 $ -
Shares issued on
exercise of options - 807 -
Stock-based compensation - 644 -
Shares repurchased for
cancellation (8,989) (17,722) -
Translation of
self-sustaining
operations - (3,787) (3,787)
Net earnings 14,133 14,133 14,133
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Balance, March 31, 2009 $ 181,928 $ 287,882 $ 10,346
Shares issued on
exercise of options - 2,588 -
Stock-based compensation - 590 -
Translation of
self-sustaining
operations - (7,443) (7,443)
Net earnings 5,519 5,519 5,519
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Balance, June 30, 2009 $ 187,447 $ 289,136 $ 8,422
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Retained Comprehensive
Earnings Total Income (Loss)
------------------------------------------------------------
Balance, December 31,
2007 $ 178,106 $ 265,047 $ -
Shares issued on
exercise of options - 112 -
Stock-based compensation - 574 -
Translation of
self-sustaining
operations - 21,317 21,317
Net earnings 5,256 5,256 5,256
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Balance, March 31, 2008 $ 183,362 $ 292,306 $ 26,573
Shares issued on
exercise of options - 65 -
Stock-based compensation - 638 -
Shares repurchased for
cancellation (9,750) (12,746) -
Translation of
self-sustaining
operations - (3,930) (3,930)
Net earnings 2,125 2,125 2,125
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Balance, June 30, 2008 $ 175,737 $ 278,458 $ 24,768
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The interim consolidated financial statements for the six months
and three months ended June 30, 2009 have not been reviewed by an
auditor.

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