Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

July 20, 2011 17:01 ET

Aastra Reports Second Quarter Financial Results

TORONTO, ONTARIO--(Marketwire - July 20, 2011) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the second quarter ended June 30, 2011. Note that certain 2010 numbers have been restated to comply with the new IFRS accounting rules for Canadian companies adopted by Aastra on January 1, 2011.

Sales for the three months ended June 30, 2011 were $174.1 million compared to $170.3 million for the same quarter in 2010, an increase of approximately 2.2%, primarily as a result of foreign exchange rates.

Gross margin decreased to 41.6% of sales in the second quarter of 2011 compared to 43.8% of sales in the same period in 2010. The decrease in gross margin was a result of several factors including negative foreign exchange impacts, higher inventory provisions and continued pricing pressure across several geographic markets.

Research and development ("R&D") expenses in the second quarter of 2011 were $15.8 million or 9.1% of sales, compared to $16.6 million or 9.7% of sales in the same quarter of 2010. Excluding the impact of foreign exchange, R&D expenses decreased approximately 13.8%. The decrease was primarily due to continued efficiencies in our cost structure.

Selling, general and administrative ("SG&A") expenses were $45.9 million or 26.4% of sales in the second quarter of 2011 compared to $45.1 million or 26.5% of sales in the second quarter of 2010. Excluding the impact of foreign exchange, SG&A expenses decreased approximately 4.8% from the same period last year, as a result of restructuring that took place in previous quarters.

Foreign exchange gain of $0.3 million was recognized in the second quarter of 2011 due to the strengthening of the Euro and Swiss franc against the Canadian dollar. This is compared to a foreign exchange loss of $1.6 million in quarter two of 2010. Amortization expense recorded in operating expenses decreased to $5.0 million in the second quarter of 2011 compared to $5.3 million in the second quarter of 2010.

The Company recorded finance expense of $0.1 million in the second quarter of 2011 compared to $0.2 million in the second quarter of 2010. The Company repaid the balance of the term loan in the amount of $15.3 million or 100.0 million Swedish kronor in the second quarter of 2011.

Finance income of $1.2 million was recorded in the second quarter of 2011 compared to $0.6 million in the same quarter in 2010. The Company recorded a fair value adjustment gain of $0.4 million on the long term investment in the second quarter of 2011. No fair value adjustment was recognized in the second quarter of 2010.

As a result of the above, profit increased in the second quarter of 2011 to $6.1 million or $0.43 diluted earnings per share compared to $5.1 million or $0.36 diluted earnings per share in the same period in 2010.

Cash and short-term investments totaled $77.5 million at the end of June 2011 compared to $94.9 million at December 31, 2010. During the second quarter of 2011, the Company generated $12.1 million of cash flow from operations. Accounts receivable decreased by $20.2 million since December 31, 2010 and $7.9 million since March 31, 2011 to $163.8 million. Inventory decreased by $0.4 million since December 31, 2010 and $7.0 million since March 31, 2011 to $114.9 million. In addition, the Company used $2.8 million to pay dividends to shareholders.

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 August 24, 2011 to all shareholders of record on August 3, 2011. 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
Six months
ended June 30th
2nd QUARTER
Three months
ended June 30th
2011 2010 2011 2010
Revenue $ 336,756 $ 341,380 $ 174,050 $ 170,315
Cost of sales 195,224 191,611 101,618 95,716
141,532 149,769 72,432 74,599
Expenses (income):
Selling, general and administrative 90,670 90,684 45,942 45,108
Research and development 33,169 35,077 15,770 16,575
Depreciation and amortization 10,477 11,042 4,969 5,277
Foreign exchange loss (gain) 1,623 5,631 (259 ) 1,554
Other income - (2,682 ) - -
Results from operating activities 5,593 10,017 6,010 6,085
Finance income (2,041 ) (1,442 ) (1,223 ) (646 )
Finance expense 247 346 75 185
Profit before income taxes 7,387 11,113 7,158 6,546
Income taxes 1,116 1,850 1,071 1,399
Profit for the period $ 6,271 $ 9,263 $ 6,087 $ 5,147
Earnings per share:
Basic $ 0.45 $ 0.66 $ 0.43 $ 0.37
Diluted $ 0.44 $ 0.65 $ 0.43 $ 0.36
* Actual common shares outstanding as at June 30, 2011 – 14,074,385 (2010 – 14,034,385)
** Weighted average common shares outstanding for the six months and three months ended June 30, 2011 – 14,069,413 and 14,074,385 (2010 – 13,950,738 and 13,995,209)
*** Weighted average fully diluted common shares outstanding for the six months and three months ended June 30, 2011 – 14,164,189 and 14,188,694 (2010 – 14,157,139 and 14,172,828)

The interim consolidated financial statements for the six months and three months ended June 30, 2011 and 2010 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
Six months
ended June 30th
2nd QUARTER
Three months
ended June 30th
2011 2010 2011 2010
Cash and cash equivalents provided by (used in):
Operating activities:
Profit for the period $ 6,271 $ 9,263 $ 6,087 $ 5,147
Depreciation of property, plant and equipment 5,713 5,681 2,840 2,624
Amortization of intangible assets 7,057 7,355 3,418 3,510
Share-based compensation expense 861 719 385 349
Loss on sale of property, plant and equipment 433 318 433 187
Other income - (2,682 ) - -
Finance income (2,041 ) (1,442 ) (1,223 ) (646 )
Finance expenses 247 346 75 185
Income tax expense 1,116 1,850 1,071 1,399
Change in non-cash pension liabilities 422 626 (207 ) 385
Change in non-cash operating working capital (11,658 ) (15,978 ) 740 (17,019 )
Income taxes paid (5,826 ) (6,266 ) (1,535 ) (3,691 )
2,595 (210 ) 12,084 (7,570 )
Investing activities:
Maturity of short-term investments - 3,063 - -
Interest received 1,589 1,279 871 620
Proceeds on disposal of property, plant and equipment 8 - 8 -
Purchase of property, plant and equipment (2,472 ) (5,663 ) (1,889 ) (2,772 )
Purchase of intangible assets (321 ) (536 ) (301 ) (316 )
Disposition, net of cash - 3,649 - -
Changes in non-cash investing working capital - - - (201 )
(1,196 ) 1,792 (1,311 ) (2,669 )
Financing activities:
Dividends paid to shareholders (5,629 ) (5,580 ) (2,815 ) (2,793 )
Proceeds from exercise of share options 251 3,063 - 847
Receipt of acquired lease receivables 400 864 213 434
Payment of acquired loan payable (400 ) (864 ) (213 ) (434 )
Increase in loans payable 300 - 300 -
Repayment of loans payable (15,491 ) (7,193 ) (15,417 ) (69 )
Finance costs paid (233 ) (363 ) (71 ) (189 )
(20,802 ) (10,073 ) (18,003 ) (2,204 )
Foreign exchange on cash held in foreign currency 2,029 (992 ) 1,462 (1,987 )
Increase (decrease) in cash and cash equivalents (17,374 ) (9,483 ) (5,768 ) (14,430 )
Cash and cash equivalents, beginning of period 90,704 113,596 79,098 118,543
Cash and cash equivalents, end of period $ 73,330 $ 104,113 $ 73,330 $ 104,113

The interim consolidated financial statements for the six months and three months ended June 30, 2011 and 2010 have not been reviewed by an auditor.

AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
Stated in thousands of Canadian dollars
JUNE 30th 2011 DECEMBER 31st 2010 JANUARY 1st 2010
ASSETS
Current assets:
Cash and cash equivalents $ 73,330 $ 90,704 $ 113,596
Short-term investments 4,175 4,153 3,309
Trade and other receivables 163,769 183,977 175,082
Current tax assets 5,062 5,225 5,986
Inventories 114,938 115,374 81,398
Finance lease receivables 21,073 17,426 11,831
Acquired lease receivables 548 714 1,544
Prepaid expenses and other assets 9,227 7,279 7,088
392,122 424,852 399,834
Long-term investment 5,641 5,251 4,525
Deferred tax assets 14,662 14,015 13,230
Finance lease receivables 27,357 24,324 28,597
Acquired lease receivables 433 607 1,597
Property, plant and equipment 35,477 37,510 41,918
Goodwill 47,999 46,321 46,391
Intangible assets 33,161 38,489 53,965
Other assets 622 625 611
$ 557,474 $ 591,994 $ 590,668
LIABILITIES AND EQUITY
Current liabilities:
Trade and other payables $ 112,106 $ 143,043 $ 122,745
Current tax liabilities 24,735 29,467 33,294
Deferred income 34,662 33,524 31,741
Current portion of loans payable 841 15,740 16,490
Current portion of provisions 14,800 14,065 16,447
187,144 235,839 220,717
Pensions 26,062 24,305 31,332
Loans payable 607 658 16,561
Provisions 3,207 2,970 3,512
Deferred tax liabilities 9,773 10,493 13,735
Other liabilities 1,129 1,154 1,481
227,922 275,419 287,338

Equity:
Share capital 94,904 94,653 90,488
Contributed surplus 9,715 8,892 8,030
Translation reserves 2,750 (8,511 ) -
Retained earnings 222,183 221,541 204,812
329,552 316,575 303,330
$ 557,474 $ 591,994 $ 590,668

The interim consolidated financial statements for the six months and three months ended June 30, 2011 and 2010 have not been reviewed by an auditor.

Contact Information