Aastra Technologies Limited

TSX : AAH


Aastra Technologies Limited

February 21, 2013 17:01 ET

Aastra Reports Fourth Quarter Financial Results

TORONTO, ONTARIO--(Marketwire - Feb. 21, 2013) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the fourth quarter ended December 31, 2012.

Revenue for the three months ended December 31, 2012 was $175.2 million compared to $199.7 million for the same quarter in 2011, a decrease of approximately 12.3%. Excluding the impact of foreign exchange, revenue dropped by approximately 7.1% from the same period last year.

Revenue for the year ended December 31, 2012 was $606.6 million compared to $693.0 million for 2011. Excluding the impact of foreign exchange, revenue declined by 7.8% in the twelve months ended December 31, 2012 compared to the same period of 2011.

Gross margin increased to 43.8% of revenue in the fourth quarter of 2012 compared to 43.2% of revenue in the same period in 2011. Gross margin for the year ended December 31, 2012 increased to 43.4% compared to 42.3% for the year in 2011.

Research and development ("R&D") expenses in the fourth quarter of 2012 were $13.4 million or 7.7% of revenue, compared to $14.8 million or 7.4% of revenue in the final quarter of 2011. R&D expenses for the year ended December 31, 2012 decreased to $56.8 million or 9.4% of revenue from $63.2 million or 9.1% of revenue.

Selling, general and administrative ("SG&A") expenses were $44.6 million or 25.5% of revenue in the fourth quarter this year compared to $44.4 million or 22.2% of revenue in the fourth quarter of 2011. SG&A expenses for the year ended December 31, 2012 decreased to $171.7 million or 28.3% of revenue compared to $178.5 million or 25.8% of revenue for the year in 2011.

Foreign exchange losses of $1.1 million were recognized in the fourth quarter of 2012, compared to a foreign exchange loss of $1.3 million in the same period last year. Foreign exchange losses were $3.2 million for the year in 2012 compared to $3.5 million for 2011.

Depreciation and amortization expense recorded in operating expenses decreased to $3.9 million in the quarter compared to $4.9 million in the fourth quarter of 2011 as certain intangible assets acquired in previous years were fully amortized at the end of 2011.

The Company recorded net finance income of $1.4 million in the fourth quarter of 2012 compared to $0.7 million in the same period in 2011. Net finance income for the year in 2012 was $4.7 million compared to $3.3 million for the year in 2011. In 2012, the Company recorded a fair value adjustment gain of $1.8 million on a long-term investment compared to a gain of $0.2 million in 2011.

Despite continued profits before income tax, the Company recorded an income tax recovery of $12.9 million in the fourth quarter of 2012 related to a reduction in current income tax liabilities of $17.1 million as a result of tax years becoming statute barred or settlements being made in certain jurisdictions. Comparatively, income tax expense of $3.4 million or 15.8% of pre-tax profit was recognized in the fourth quarter of 2011. Income tax recovery was $11.9 million for the year in 2012 compared to income tax expense of $4.8 million or 15.5% of pre-tax profit for the year in 2011.

As a result of the above, profit increased in the fourth quarter of 2012 to $28.0 million or $2.42 diluted earnings per share compared to $18.2 million or $1.30 diluted earnings per share in the same period in 2011. Profit for the year ended December 31, 2012 was $32.8 million or $2.60 diluted earnings per share compared to $26.2 million or $1.85 diluted earnings per share in 2011. Despite an ongoing difficult period in our business, this represents the Company's 59th consecutive quarter of profitability.

Cash and short-term investments totaled $107.4 million at the end of 2012 compared to $134.1 million at the end of 2011. During the fourth quarter of 2012, the Company generated $10.6 million of cash flow from operations. For the year, the Company generated $44.0 million of cash flow from operations as a result of continued profitability. In addition, the Company used $56.1 million to repurchase its own common shares, paid $9.9 million in dividends to its common shareholders and invested $6.5 million in property, plant and equipment and intangible assets during 2012.

Finally, the Company is pleased to announce that it will pay a dividend to its shareholders of $0.20 per share for this quarter, payable on March 20, 2013 to all shareholders of record on March 6, 2013. 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.

AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF PROFIT (UNAUDITED)
Stated in thousands of Canadian dollars, except per share amounts
YEAR-TO-DATE
Twelve months
ended December 31st
4th QUARTER
Three months
ended December 31st
2012 2011 2012 2011
Revenue $ 606,615 $ 692,994 $ 175,211 $ 199,681
Cost of sales 343,173 399,786 98,541 113,335
263,442 293,208 76,670 86,346
Expenses:
Selling, general and administrative 171,745 178,476 44,600 44,369
Research and development 56,813 63,160 13,431 14,795
Depreciation and amortization 15,432 20,328 3,903 4,894
Foreign exchange loss 3,170 3,521 1,056 1,341
Results from operating activities 16,282 27,723 13,680 20,947
Finance income (4,882 ) (3,600 ) (1,522 ) (747 )
Finance expense 218 344 78 54
Profit before income taxes 20,946 30,979 15,124 21,640
Income tax (recovery) expense (11,900 ) 4,807 (12,856 ) 3,425
Profit for the period $ 32,846 $ 26,172 $ 27,980 $ 18,215
Earnings per share:
Basic $ 2.62 $ 1.86 $ 2.43 $ 1.30
Diluted $ 2.60 $ 1.85 $ 2.42 $ 1.30
* Actual common shares outstanding as at December 31, 2012 - 11,529,114 (2011 - 14,031,485)
** Weighted average common shares outstanding for the twelve months and three months ended December 31, 2012 - 12,530,758 and 11,529,114 (2011 - 14,061,422 and 14,032,739)
*** Weighted average fully diluted common shares outstanding for the twelve months and three months ended December 31, 2012 - 12,616,229 and 11,583,190 (2011 - 14,155,347 and 14,032,739)
The interim consolidated financial statements for the twelve months and three months ended December 31, 2012 and 2011 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
Twelve months
ended December 31st
4th QUARTER
Three months
ended December 31st
2012 2011 2012 2011
Cash and cash equivalents provided by (used in):
Operating activities:
Profit for the period $ 32,846 $ 26,172 $ 27,980 $ 18,215
Depreciation of property, plant and equipment 9,511 11,402 2,246 2,804
Amortization of intangible assets 9,207 13,400 2,430 3,140
Share-based compensation expense 976 1,394 98 285
Loss on sale of property, plant and equipment 845 1,130 227 640
Finance income (4,882 ) (3,600 ) (1,522 ) (747 )
Finance expense 218 344 78 54
Income tax (recovery) expense (11,900 ) 4,807 (12,856 ) 3,425
Change in non-cash pension liabilities (114 ) (766 ) 24 (1,497 )
Change in non-cash operating working capital 10,812 22,569 (6,435 ) (519 )
Income taxes paid (3,481 ) (6,471 ) (1,629 ) (1,455 )
44,038 70,381 10,641 24,345
Investing activities:
Maturity of short-term investments 18,615 4,092 14,414 4,092
Purchase of short-term investments (19,922 ) (4,092 ) (11,009 ) (4,092 )
Interest received 3,113 3,523 749 1,064
Proceeds from disposal of property, plant and equipment 58 11 - 3
Purchase of property, plant and equipment (5,803 ) (5,102 ) (3,218 ) (1,200 )
Purchase of intangible assets (742 ) (821 ) (221 ) (381 )
Business acquisition, net of cash acquired (2,675 ) - - -
(7,356 ) (2,389 ) 715 (514 )
Financing activities:
Dividends paid to shareholders (9,850 ) (11,258 ) (2,306 ) (2,814 )
Proceeds from exercise of share options 215 851 - 600
Repurchase of shares, including transaction costs (56,103 ) (1,359 ) - (1,359 )
Receipt of acquired lease receivables 378 740 62 162
Payment of acquired loan payable (378 ) (740 ) (62 ) (162 )
Increase in loans payable - 300 - -
Repayment of loans payable (49 ) (15,894 ) - (39 )
Finance costs paid (137 ) (314 ) (34 ) (37 )
(65,924 ) (27,674 ) (2,340 ) (3,649 )
Foreign exchange on cash held in foreign currency 274 (1,089 ) 2,008 (4,519 )
Increase (decrease) in cash and cash equivalents (28,968 ) 39,229 11,024 15,663
Cash and cash equivalents, beginning of period 129,933 90,704 89,941 114,270
Cash and cash equivalents, end of period $ 100,965 $ 129,933 $ 100,965 $ 129,933
The interim consolidated financial statements for the twelve months and three months ended December 31, 2012 and 2011 have not been reviewed by an auditor.
AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
Stated in thousands of Canadian dollars
DECEMBER 31st 2012 DECEMBER 31st 2011
ASSETS
Current assets:
Cash and cash equivalents $ 100,965 $ 129,933
Short-term investments 6,433 4,202
Trade and other receivables 159,260 167,142
Current tax assets 7,296 7,348
Inventories 91,804 80,963
Finance lease receivables 14,052 21,336
Acquired lease receivables 123 462
Prepaid expenses and other assets 7,106 7,234
387,039 418,620
Long-term investment 6,278 5,406
Deferred tax assets 16,297 15,810
Finance lease receivables 19,375 23,469
Acquired lease receivables 88 138
Property, plant and equipment 26,754 30,953
Goodwill 48,294 46,323
Intangible assets 20,620 26,290
Other assets 92 516
$ 524,837 $ 567,525
LIABILITIES AND EQUITY
Current liabilities:
Trade and other payables $ 121,121 $ 116,165
Current tax liabilities 11,478 30,394
Deferred income 35,209 36,222
Current portion of loans payable 123 512
Current portion of provisions 14,330 12,494
182,261 195,787
Pensions 37,731 37,566
Loans payable 88 138
Provisions 2,844 2,965
Deferred tax liabilities 8,875 7,851
Other liabilities 894 995
232,693 245,302
Equity:
Share capital 77,859 94,917
Contributed surplus 11,162 10,247
Translation reserves (4,726 ) (6,159 )
Retained earnings 207,849 223,218
292,144 322,223
$ 524,837 $ 567,525
The interim consolidated financial statements for the twelve months and three months ended December 31, 2012 and 2011 have not been reviewed by an auditor.

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