Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

February 24, 2009 16:01 ET

Aastra Reports Record Revenues

TORONTO, ONTARIO--(Marketwire - Feb. 24, 2009) - Aastra Technologies Limited (TSX:AAH) is pleased to report it generated record revenues in the fourth quarter and for the year ended December 31, 2008 as part of announcing its unaudited financial results for these periods.

Although net earnings in the fourth quarter were impacted by a non-cash asset impairment of certain long-lived assets and goodwill aggregating to $14.1 million and restructuring costs aggregating to $11.3 million, Aastra is pleased to report its 43rd consecutive quarter of profitability this quarter. Excluding these charges, Aastra's fourth quarter operating results reflect a marked improvement from previous quarters in 2008 as Aastra prepares to face the difficult economic environment ahead in 2009.

Net revenue for the three months ended December 31, 2008 was a record $261.8 million compared to $155.2 million for the same quarter in 2007. The Company experienced a significant increase in revenue in all regions as a result of the Ericsson acquisition which closed on April 30, 2008. Excluding the impact of this acquisition, net revenue would have increased 13.2% to $175.8 million for the fourth quarter. Net sales from the former Ericsson product lines were $86.0 million, an increase of 16.2% from sales of $74.0 million in the third quarter of 2008.

Sales for the year ended December 31, 2008 were $832.1 million compared to $606.6 million for 2007, also a record for the Company. Excluding the revenue from the product lines acquired from Ericsson, sales would have increased by 1.7% from 2007 to $617.0 million in 2008.

Gross margin increased to 47.0% of sales in the fourth quarter of 2008 compared to 42.8% of sales in the same period in 2007. Gross margin for the year ended December 31, 2008 was 44.9% compared to 42.5% for the year in 2007. This significant increase in gross margin in the quarter and year over the same periods in 2007 is a result of the positive effect of several factors including lower overhead ratios and a favourable mix of product and service revenues.

Research and development expenses in the fourth quarter of 2008 were $27.7 million or 10.6% of sales, compared to $12.9 million or 8.4% of sales in the same quarter of 2007. Research and development expenses for the year ended December 31, 2008 increased to $98.0 million or 11.8% of sales from $54.6 million or 9.0% of sales in 2007. R&D cost reductions were obtained throughout the second half of the year in several product lines, including the former Ericsson products.

Selling, general and administrative expenses were $67.9 million or 25.9% of sales in the fourth quarter of 2008 compared to $35.0 million or 22.5% of sales in the fourth quarter of 2007. Selling, general and administrative expenses for the year ended December 31, 2008 were $218.1 million or 26.2% of sales compared to $145.1 million or 23.9% of sales for the year in 2007.

Included in the operating results this quarter were severance charges totaling $11.3 million from the restructuring efforts undertaken in the fourth quarter of 2008.

Amortization expense recorded in operating expenses was $9.6 million in the fourth quarter of 2008 compared to $3.1 million in the fourth quarter of 2007. For the year, amortization expenses recorded in operating expenses were $26.4 million compared to $13.4 million for the year in 2007 as a result of the Ericsson acquisition completed earlier in the year. In addition, in the fourth quarter the Company recorded a non-cash charge on the impairment of certain long-lived assets and goodwill of $14.1 million.

As a result, net earnings for the three months ended December 31, 2008 were $1.5 million or $0.10 diluted earnings per share compared to $12.3 million or $0.75 diluted earnings per share in the same period in 2007. Net earnings for the year ended December 31, 2008 were $11.5 million or $0.74 diluted earnings per share compared to $35.8 million or $2.17 diluted earnings per share in 2007.

Cash and short-term investments totaled $98.2 million at the end of 2008 compared to a balance of $133.2 million at the end of 2007. During the fourth quarter of 2008, the Company generated $17.8 million in cash flow from operations, net of working capital increases. In addition, the Company repurchased 775,000 of its own common shares for $7.8 million during the fourth quarter. As announced last month, subsequent to the end of 2008, the Company completed its substantial issuer bid in which it repurchased an additional 1,417,738 of its common shares for a total purchase amount of $17.7 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, 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 2007 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 amounts

YEAR-TO-DATE 4th QUARTER
Twelve months Three months
ended December 31st ended December 31st
2008 2007 2008 2007
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Sales $ 832,070 $ 606,589 $ 261,778 $ 155,208
Cost of goods sold 458,149 349,051 138,753 88,786
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373,921 257,538 123,025 66,422

Expenses (income):
Selling, general and
administrative 218,064 145,094 67,880 34,976
Research and
development 97,984 54,629 27,731 12,962
Depreciation and
amortization 26,434 13,422 9,606 3,144
Interest expense 2,405 135 903 17
Foreign exchange loss 3,113 400 2,112 644
Investment income (3,645) (3,535) (1,040) (1,045)
Other income (389) (170) (1,524) (170)
Impairment of goodwill
and long-lived assets 14,123 - 14,123 -
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Earnings from continuing
operations before
income taxes 15,832 47,563 3,234 15,894
Income taxes 4,355 11,655 1,733 3,635
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Net earnings from
continuing operations 11,477 35,908 1,501 12,259
Net loss from
discontinued
operations - (141) - -
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Net earnings for the
period $ 11,477 $ 35,767 $ 1,501 $ 12,259
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Earnings per share from
continuing operations:
Basic $ 0.74 $ 2.24 $ 0.10 $ 0.77
Diluted $ 0.74 $ 2.18 $ 0.10 $ 0.75
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Earnings per share:
Basic $ 0.74 $ 2.23 $ 0.10 $ 0.77
Diluted $ 0.74 $ 2.17 $ 0.10 $ 0.75
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(i) Actual common shares outstanding as at December 31, 2008 - 14,765,573
(2007 - 16,015,323)

(ii) Weighted average common shares outstanding for the twelve months and
three months ended December 31, 2008 - 15,427,900 and 15,161,497
(2007 - 16,012,866 and 16,013,790)

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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2008 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
2008 2007 2008 2007
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Cash and cash
equivalents provided
by (used in):
Operations:
Net earnings for the
period $ 11,477 $ 35,767 $ 1,501 $ 12,259
Net loss from
discontinued operations - 141 - -
Depreciation of property
and equipment 12,632 10,803 3,857 2,692
Amortization of
intangible assets 18,209 6,404 6,979 1,454
Future income taxes (6,534) 2,818 (1,499) 2,710
Stock-based compensation
expense 2,536 1,882 684 382
Loss on short-term
investments - 955 - (89)
Loss on sale of property
and equipment 432 554 149 317
Other income (389) (170) (1,524) (170)
Impairment of goodwill
and long-lived assets 14,123 - 14,123 -
Change in pension
liabilities 3,827 849 2,355 232
Change in non-cash
operating working capital (29,465) (12,274) (8,784) 1,434
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26,848 47,729 17,841 21,221
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Discontinued operations - (141) - -
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Financing:
Issuance of common
shares on exercise
of options 193 1,259 - 39
Repurchase of shares (20,564) (2,328) (7,818) -
Receipt of acquired
lease receivables 7,159 10,775 1,480 3,156
Payment of loan to
Seller (7,159) (10,995) (1,480) (3,376)
Increase (decrease) in
loans payable 57,876 454 (849) (73)
(Decrease) increase in
bank indebtedness (16) (2,261) - 40
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37,489 (3,096) (8,667) (214)
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Investments:
Maturity of short-term
investments 40,624 85,105 18,705 7,395
Purchase of short-term
investments (20,631) (48,498) - -
Purchase of long-term
investment - (8,514) - -
Proceeds on disposal of
property and equipment 5 222 (11) 50
Purchase of property and
equipment (18,785) (13,086) (6,496) (4,855)
Business acquisitions,
net of cash acquired (90,255) (527) 7,224 -
Change in non-cash
investing working capital (2,663) - (2,663) -
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(91,705) 14,702 16,759 2,590
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Foreign exchange on cash
held in foreign currency 12,203 (4,105) 8,547 (108)
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Increase (decrease) in
cash and cash equivalents (15,165) 55,089 34,480 23,489
Cash and cash
equivalents, beginning
of period 112,802 57,713 63,157 89,313
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Cash and cash
equivalents, end
of period $ 97,637 $ 112,802 $ 97,637 $ 112,802
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2008 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 2008 DECEMBER 31st 2007
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Assets
Current assets:
Cash and cash equivalents $ 97,637 $ 112,802
Short-term investments 519 20,365
Accounts receivable 234,021 123,010
Income taxes receivable 8,201 215
Inventories 108,000 77,745
Net investment in leases 7,389 1,731
Acquired lease receivables 3,729 5,931
Prepaid expenses and other assets 8,751 4,201
Future income tax assets 9,615 8,935
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477,862 354,935
Long-term investment 5,416 6,996
Future income tax assets 4,430 2,853
Net investment in leases 19,456 3,532
Acquired lease receivables 3,718 6,992
Property and equipment 48,859 35,703
Goodwill 50,269 10,802
Intangible assets 70,239 24,221
Other assets 441 651
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$ 680,690 $ 446,685
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Liabilities and Shareholders'
Equity
Current liabilities:
Indebtedness $ 337 $ 14
Accounts payable and accrued
liabilities 218,933 98,384
Income taxes payable 28,509 25,048
Deferred revenue 22,898 11,900
Contingent consideration payable - 1,744
Current portion of loans payable 27,276 5,986
Future income tax liabilities 1,121 1,015
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299,074 144,091

Pensions 27,556 19,784
Loans payable 35,537 7,905
Future income tax liabilities 21,645 7,633
Other long-term liabilities 3,071 2,225
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386,883 181,638
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Shareholders' equity:
Share capital 90,951 98,442
Contributed surplus 6,484 4,029
Accumulated other comprehensive
income (loss) 19,588 (15,530)
Retained earnings 176,784 178,106
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293,807 265,047
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$ 680,690 $ 446,685
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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2008 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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Common Share Contributed
Shares Capital Surplus
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Balance, December 31, 2007 16,015,323 $ 98,442 $ 4,029
Shares issued on exercise of options 12,250 193 -
Stock-based compensation - - 1,852
Shares repurchased for cancellation (487,000) (2,996) -
Translation of self-sustaining
operations - - -
Net earnings - - -
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Balance, September 30, 2008 15,540,573 $ 95,639 $ 5,881
Stock-based compensation - - 684
Shares repurchased for cancellation (775,000) (4,769) -
Transfer from contributed surplus to
share capital - 81 (81)
Translation of self-sustaining
operations - - -
Net earnings - - -
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Balance, December 31, 2008 14,765,573 $ 90,951 $ 6,484
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Accumulated
Other
Comprehensive Retained Comprehensive
Income (Loss) Earnings Total Income (Loss)
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Balance, December
31, 2007 (15,530) $ 178,106 $ 265,047 $ -
Shares issued on
exercise
of options - - 193 -
Stock-based
compensation - - 1,852 -
Shares repurchased
for cancellation - (9,750) (12,746) -
Translation of
self-sustaining
operations 5,045 - 5,045 5,045
Net earnings - 9,976 9,976 9,976
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Balance, September
30, 2008 (10,485) $ 178,332 $ 269,367 $ 15,021
Stock-based
compensation - - 684 -
Shares repurchased
for cancellation - (3,049) (7,818) -
Transfer from
contributed
surplus to
share capital - - - -
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 19,588 $ 176,784 $ 293,807 $ 46,595
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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
Change in accounting policy related
to financial instruments, net of
income taxes of $65 - - -
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Adjusted balance, December 31, 2006 16,009,573 97,513 2,244
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
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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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 $ -
Change in accounting
policy related to
financial
instruments, net
of income
taxes of $65 - 115 115 -
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Adjusted balance,
December 31, 2006 (1,549) 144,240 242,448 -
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
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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The interim consolidated financial statements for the twelve months and
three months ended December 31, 2008 have not been reviewed by an auditor.

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