Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

February 20, 2008 17:38 ET

Aastra Reports Fourth Quarter Financial Results

TORONTO, ONTARIO--(Marketwire - Feb. 20, 2008) - Aastra Technologies Limited - (TSX:AAH) today announced its unaudited financial results for the fourth quarter and year ended December 31, 2007. Net earnings for the three months ended December 31, 2007 were $12.3 million or $0.75 diluted earnings per share compared to $12.5 million or $0.74 diluted earnings per share in the same period in 2006.

Net earnings for the year ended December 31, 2007 were $35.8 million or $2.17 diluted earnings per share compared to $42.0 million or $2.38 diluted earnings per share in 2006.

Sales for the three months ended December 31, 2007 were $155.2 million compared to $160.8 million for the same quarter in 2006, a decrease of 3.5%. Sales in European Enterprise Communication increased from $134.6 million in the fourth quarter of 2006 to $135.0 in the same quarter of 2007, an increase of 0.3%. Excluding the impact of foreign exchange, the increase in sales of European Enterprise Communication would have been 3.6%.

Sales in North American Enterprise Communication decreased by $6.0 million from $26.2 million in the fourth quarter of 2006 to $20.2 million in the same quarter of 2007, a decrease of 23.0%. Excluding the impact of foreign exchange, the decrease in sales of North American Enterprise Communication would have been 13.8%.

Sales for the year ended December 31, 2007 were $606.6 million compared to $600.5 million for 2006, an increase of approximately 1.0%. Excluding the impact of foreign exchange, sales would have decreased by 0.6% from 2006. While sales increased by 3.4% in European Enterprise Communication from $497.8 million in 2006 to $514.8 million in 2007, this was offset by a sales decline in North American Enterprise Communication from $102.7 million in 2006 to $91.8 million.

Gross margin was 42.8% of sales in the fourth quarter of 2007 compared to 42.5% of sales in the same period in 2006. Gross margin for the year ended December 31, 2007 was 42.5% compared to 41.9% in 2006. The modest gross margin improvements in the quarter and year over year represent the decrease in cost of product through consolidation of our vendors.

Research and development expenses in the fourth quarter of 2007 were $13.0 million or 8.4% of sales, compared to $16.0 million or 9.9% of sales in the same quarter of 2006. Research and development expenses for the year ended December 31, 2007 decreased to $54.6 million or 9.0% of sales from $59.6 million or 9.9% of sales in 2006. Cost reductions were obtained through the realignment of our research and development groups in various countries in Europe and North America into centers of excellence.

Selling, general and administrative expenses were $35.0 million or 22.5% of sales in the fourth quarter of 2007 compared to $38.0 million or 23.6% of sales in the fourth quarter of 2006. Selling, general and administrative expenses for the year ended December 31, 2007 were stable at $145.2 million or 23.9% of sales compared to $144.3 million or 24.0% of sales in 2006.

Cash and short-term investments totaled $133.2 million at the end of 2007 compared to a balance of $115.7 million at the end of 2006. During 2007, the Company continued to generate strong cash flow from operations of approximately $46.8 million.

In July 2007, Aastra purchased an asset-backed commercial paper from the issuer Structured Investment Trust III (the "SIT ABCP"). This asset is part of the restructuring currently being coordinated by the Pan-Canadian Investors Committee ("Investors Committee"). As this investment is no longer being actively traded on quoted stock markets, the Company performed a detailed valuation to determine the fair value of the SIT ABCP at December 31, 2007 using information gained from the press releases of the Investors Committee. The Company recorded a fair value adjustment loss on this investment of $1.6 million during the fourth quarter of 2007. The SIT ABCP has been classified as a long-term investment and has not been included in cash and short-term investments as at December 31, 2007.

As previously announced on February 18, 2008, the Company entered into an agreement with Telefonaktiebolaget LM Ericsson ("Ericsson") to acquire Ericsson's Enterprise Communication Business for consideration of $103.0 million (Swedish krone 650 million) for intangible assets. The Company expects that this business will require an additional $57 million of working capital for a total investment of $160 million. The acquisition is scheduled to close in April 2007 and the Company expects to finance the acquisition through existing excess cash, short-term investments, and credit facilities.

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 medium-term and 2007 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: exchange rate fluctuation of the Canadian dollar against other currencies, particularly with respect to the Swiss franc, 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 2006 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.



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



4th QUARTER
Twelve months Three months
ended December 31st ended December 31st
2007 2006 2007 2006
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Sales $ 606,589 $ 600,536 $ 155,208 $ 160,786

Cost of goods sold 349,051 348,906 88,786 92,493
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257,538 251,630 66,422 68,293

Expenses (income):
Selling, general and
administrative 145,229 144,334 34,993 37,997
Research and development 54,629 59,631 12,962 15,995
Amortization 13,422 16,834 3,144 4,547
Foreign exchange loss (gain) 400 (2,909) 644 (1,874)
Investment income (3,535) (4,361) (1,045) (1,473)
Fair value adjustment of
long-term investment 1,619 - 1,619 -
Other charges (recovery) (1,789) 11,356 (1,789) (1,504)
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Earnings from continuing
operations before income
taxes 47,563 26,745 15,894 14,605
Income taxes 11,655 3,168 3,635 3,046
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Net earnings from
continuing operations 35,908 23,577 12,259 11,559
Net (loss) earnings from
discontinued operations (141) 18,402 - 975
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Net earnings for the
period $ 35,767 $ 41,979 $ 12,259 $ 12,534
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Earnings per share from
continuing operations:
Basic $ 2.24 $ 1.37 $ 0.77 $ 0.70
Diluted $ 2.18 $ 1.34 $ 0.75 $ 0.68
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Earnings per share:
Basic $ 2.23 $ 2.44 $ 0.77 $ 0.76
Diluted $ 2.17 $ 2.38 $ 0.75 $ 0.74
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(i) Actual common shares outstanding as at December 31, 2007 - 16,015,323
(2006 - 16,009,573)
(ii) Weighted average common shares outstanding for the twelve months and
three months ended December 31, 2007 - 16,012,866 and 16,013,790
(2006 - 17,222,380 and 16,479,898)
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2007 and 2006 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

4th QUARTER
Twelve months Three months
ended December 31st ended December 31st
2007 2006 2007 2006
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Cash and cash equivalents
provided by (used in):
Operations:
Net earnings for the
period $ 35,767 $ 41,979 $ 12,259 $ 12,534
Net loss (earnings) from
discontinued operations 141 (18,402) - (975)
Amortization of capital
assets 11,207 12,839 3,096 2,551
Amortization of
intangible assets 6,404 8,695 1,454 2,851
Future income taxes 2,818 995 2,710 (3,643)
Stock-based compensation
expense 1,882 1,212 382 332
Loss on short-term
investments 955 482 (89) 103
Loss on sale of capital
assets 554 1,107 317 1,004
Fair value adjustment of
long-term investment 1,619 - 1,619 -
Other charges (recovery) (1,789) 11,356 (1,789) (1,504)
Other - 693 - 110
Change in non-cash
operating working capital (12,746) (8,379) 307 (6,576)
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46,812 52,577 20,266 6,787
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Discontinued operations (141) 20,431 - (14)
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Financing:
Increase in pension
liabilities 849 1,989 232 2,093
Issuance of common
shares on exercise
of options 1,259 2,133 39 522
Repurchase of shares (2,328) (51,231) - (31,502)
Receipt of acquired
lease receivables 10,775 21,710 3,156 4,604
Payment of loan
payable to Seller (10,995) (21,710) (3,376) (5,349)
Bank indebtedness (2,179) (2,595) 250 988
Increase (decrease) in
long-term credit
facilities 440 (787) 440 (787)
Change in non-cash
financing working capital - - - (2,137)
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(2,179) (50,491) 741 (31,568)
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Investments:
Maturity of short-term
investments 85,105 82,773 7,395 24,848
Purchase of short-term
investments (48,498) (93,400) - (213)
Purchase of long-term
investment (8,514) - - -
Proceeds on disposal of
capital assets 222 378 50 -
Purchase of capital
assets (13,086) (11,527) (4,855) (5,534)
Business acquisitions,
net of cash acquired (527) (14) - (14)
Business disposition - (466) - (466)
Change in non-cash
investing working capital - - - (466)
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14,702 (22,256) 2,590 18,155
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Foreign exchange on cash
held in foreign currency (4,105) 3,312 (108) 3,157
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Increase (decrease) in
cash and cash equivalents 55,089 3,573 23,489 (3,483)
Cash and cash equivalents,
beginning of period 57,713 54,140 89,313 61,196
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Cash and cash equivalents,
end of period $ 112,802 $ 57,713 $ 112,802 $ 57,113
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2007 and 2006 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 2007 DECEMBER 31st 2006
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Assets
Current assets:
Cash and cash equivalents $ 112,802 $ 57,713
Short-term investments 20,365 58,030
Accounts receivable 123,010 145,350
Inventories 77,745 73,484
Net investment in leases 1,731 1,665
Acquired lease receivables 5,931 9,998
Prepaid expenses and other assets 4,201 4,401
Future income tax assets 8,935 11,671
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354,720 362,312

Long-term investment 6,996 -
Future income tax assets 2,853 3,879
Net investment in leases 3,532 3,017
Acquired lease receivables 6,992 15,053
Capital assets 35,703 37,182
Goodwill 10,802 11,547
Intangible assets 24,221 31,742
Other assets 651 815
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$ 446,470 $ 465,547
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Liabilities and Shareholders' Equity
Current liabilities:
Indebtedness $ 286 $ 2,586
Accounts payable and accrued
liabilities 98,085 118,002
Restructuring accruals 751 3,668
Income taxes payable 24,833 20,999
Deferred revenue 11,900 14,546
Loan payable 5,714 9,998
Future income tax liabilities 1,015 364
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142,584 170,163

Contingent consideration payable 1,744 3,822
Pensions 19,784 20,195
Loan payable 6,992 15,053
Future income tax liabilities 7,633 10,380
Other long-term liabilities 2,686 2,672
Restructuring accruals - 929
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181,423 223,214

Shareholders' equity:
Share capital 98,442 97,513
Contributed surplus 4,029 2,244
Accumulated other comprehensive
loss (15,530) (1,549)
Retained earnings 178,106 144,125
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265,047 242,333
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$ 446,470 $ 465,547
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2007 and 2006 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
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Common Share Contributed
Shares Capital Surplus
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Balance, December 31, 2006 16,009,573 $ 97,513 $ 2,244
Cumulative impact of adjusting fair
value of short-term investments on
adoption of new standard, net of
income taxes of $65 - - -
Shares issued on exercise of options 72,750 1,220 -
Stock-based compensation - - 1,500
Shares repurchased for cancellation (70,000) (427) -
Translation of self-sustaining
operations - - -
Net earnings - - -

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Balance, September 30, 2007 16,012,323 98,306 3,744
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Shares issued on exercise of options 3,000 39 -
Stock-based compensation - - 382
Transfer from contributed surplus to
share capital - 97 (97)
Translation of self-sustaining
operations - - -
Net earnings - - -
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Balance, December 31, 2007 16,015,323 $ 98,442 $ 4,029
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Common Share Contributed
Shares Capital Surplus
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Balance, December 31, 2005 17,473,784 $ 105,370 $ 1,110
Shares issued on exercise of options 156,425 1,611 -
Stock-based compensation - - 880
Shares repurchased for cancellation (700,000) (4,246) -
Transfer from contributed surplus to
share capital - 51 (51)
Translation of self-sustaining
operations - - -
Net earnings - - -
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Balance, September 30, 2006 16,930,209 102,786 1,939
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Shares issued on exercise of options 38,375 522 -
Stock-based compensation - - 332
Shares repurchased for cancellation (959,011) (5,822) -
Transfer from contributed surplus to
share capital - 27 (27)
Translation of self-sustaining
operations - - -
Net earnings - - -
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Balance, December 31, 2006 16,009,573 $ 97,513 $ 2,244
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Accumulated
Other
Comprehensive Retained Comprehensive
Income (Loss) Earnings Total Income (Loss)
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Balance, December
31, 2006 $ (1,549) $ 144,125 $ 242,333 $ -
Cumulative impact
of adjusting
fair value of
short-term
investments on
adoption of new
standard, net of
income taxes of $65 - 115 115 -
Shares issued on
exercise of options - - 1,220 -
Stock-based
compensation - - 1,500 -
Shares
repurchased
for cancellation - (1,901) (2,328) -
Translation of
self-sustaining
operations (16,355) - (16,355) (16,355)
Net earnings - 23,508 23,508 23,508
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Balance, September
30, 2007 (17,904) 165,847 249,993 7,153
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Shares issued on
exercise of options - - 39 -
Stock-based
compensation - - 382 -
Transfer from
contributed
surplus to
share capital - - - -
Translation of
self-sustaining
operations 2,374 - 2,374 2,374
Net earnings - 12,259 12,259 12,259
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Balance, December
31, 2007 $ (15,530) $ 178,106 $ 265,047 $ 21,786
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Accumulated
Other
Comprehensive Retained Comprehensive
Income (Loss) Earnings Total Income (Loss)
Balance, December
31, 2005 $ (25,512) $ 143,309 $ 224,277 $ -
Shares issued on
exercise
of options - - 1,611 -
Stock-based
compensation - - 880 -
Shares
repurchased
for cancellation - (15,483) (19,729) -
Transfer from
contributed
surplus to
share capital - - - -
Translation of
self-sustaining
operations 11,992 - 11,992 11,992
Net earnings - 29,445 29,445 29,445
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Balance, September
30, 2006 (13,520) 157,271 248,476 41,437
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Shares issued on
exercise of options - - 522 -
Stock-based
compensation - - 332 -
Shares
repurchased
for cancellation - (25,680) (31,502) -
Transfer from
contributed
surplus to
share capital - - - -
Translation of
self-sustaining
operations 11,971 - 11,971 11,971
Net earnings - 12,534 12,534 12,534
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Balance, December
31, 2006 $ (1,549) $ 144,125 $ 242,333 $ 65,942
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2007 and 2006 have not been reviewed by an
auditor.

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