Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

July 17, 2012 17:01 ET

Aastra Reports Second Quarter Financial Results

TORONTO, ONTARIO--(Marketwire - July 17, 2012) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the second quarter ended June 30, 2012.

Revenue for the three months ended June 30, 2012 was $147.1 million compared to $174.1 million for the same quarter in 2011, a decrease of approximately 15.5%. Excluding the impact of foreign exchange, revenue dropped approximately 10.9% from the same period last year. Revenue decreases were experienced across most geographical markets including Western Europe where the majority of the Company's revenue is generated. Revenue for the six months ended June 30, 2012 was $294.3 million compared to $336.8 million in the same period last year, a decrease of 12.6%. Again, excluding foreign exchange, revenue decreased by 9.6% over the same period last year. The impact of the economic weakness in Europe has clearly had a significant negative impact on our revenue in the first half of 2012.

Gross margin increased to 44.2% of revenue in the second quarter of 2012 compared to 41.6% of revenue in the same period in 2011 partly due to reduced price discounting. In addition, the Company continues to experience an increase in revenue from software applications and service as a percentage of total revenue and this had a positive impact on gross margins realized during the second quarter of 2012.

Research and development expenses in the second quarter of 2012 were $15.0 million or 10.2% of revenue, compared to $15.8 million or 9.1% of revenue in the same quarter of 2011. Selling, general and administrative ("SG&A") expenses were $44.4 million or 30.2% of revenue in the second quarter of 2012 compared to $45.9 million or 26.4% of revenue in the second quarter of 2011. Operating expenses decreased slightly compared to last year as a result of the impact in foreign exchange rates on our European expenditures. This decrease was partially offset by an increase in bad debt expense and higher restructuring costs incurred in the second quarter this year.

Foreign exchange losses of $0.7 million were recognized in the second quarter of 2012, mainly as a result of a continued weakness in the Euro, compared to a foreign exchange gain of $0.3 million in the same period last year. Amortization expense recorded in operating expenses decreased to $3.6 million in the second quarter of 2012 compared to $5.0 million in the second quarter of 2011 as certain intangible assets acquired in previous years have become fully amortized.

The Company recorded net finance income of $1.0 million in the second quarter of 2012 compared to $1.1 million in the same period in 2011. Income tax expense was $0.4 million or 16.8% of pre-tax profit compared to $1.1 million or 15.0% of pre-tax profit in the second quarter last year.

As a result of the above, profit decreased in the second quarter this year to $1.9 million or $0.15 diluted earnings per share compared to $6.1 million or $0.43 diluted earnings per share in the same period in 2011. Profit for the six months ended June 30, 2012 was $3.9 million or $0.29 diluted earnings per share compared to $6.3 million or $0.44 diluted earnings per share in the first half of 2011. Despite a challenging climate in our largest geographic segment, this represents the Company's 57th consecutive quarter of profitability.

Cash and short-term investments totaled $95.5 million at the end of June 2012 compared to $134.1 million at December 31, 2011 and $158.2 million at the end of March 2012. During the second quarter, the Company used $7.3 million of cash flow in operations. Accounts payable decreased by $10.1 million as a result of lower labour liabilities and supplier payables; while partially offsetting this accounts receivable decreased by $2.6 million. Both balances were also impacted by lower exchange rates on Euro denominated receivables and payables at the end of the second quarter. In addition, inventory increased by an additional $4.3 million while finance lease receivables decreased by $4.6 million.

During the second quarter, the Company used $51.4 million to repurchase approximately 2.2 million of its common shares through its substantial issuer bid and Normal Course Issuer Bid while also paying $2.4 million in dividends to shareholders.

Finally, the Company is also pleased to announce that it will pay a dividend to its shareholders of $0.20 per share for this quarter, payable on August 22, 2012 to all shareholders of record on August 1, 2012. 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 2nd QUARTER
Six months Three months
ended June 30th ended June 30th
2012 2011 2012 2011
Revenue $ 294,341 $ 336,756 $ 147,071 $ 174,050
Cost of sales 165,412 195,224 82,083 101,618
128,929 141,532 64,988 72,432
Expenses:
Selling, general and administrative 87,330 90,670 44,402 45,942
Research and development 29,879 33,169 14,995 15,770
Depreciation and amortization 7,925 10,477 3,642 4,969
Foreign exchange loss (gain) 1,412 1,623 680 (259 )
Results from operating activities 2,383 5,593 1,269 6,010
Finance income (2,394 ) (2,041 ) (1,101 ) (1,223 )
Finance expense 104 247 58 75
Profit before income taxes 4,673 7,387 2,312 7,158
Income taxes 786 1,116 388 1,071
Profit for the period $ 3,887 $ 6,271 $ 1,924 $ 6,087
Earnings per share:
Basic $ 0.29 $ 0.45 $ 0.15 $ 0.43
Diluted $ 0.29 $ 0.44 $ 0.15 $ 0.43
* Actual common shares outstanding as at June 30, 2012 - 11,816,572 (2011 - 14,074,385)
** Weighted average common shares outstanding for the six months and three months ended June 30, 2012 - 13,475,947 and 12,925,278 (2011 - 14,069,413 and 14,074,385)
*** Weighted average fully diluted common shares outstanding for the six months and three months ended June 30, 2012 - 13,571,836 and 13,019,945 (2011 - 14,164,189 and 14,188,694)

The interim consolidated financial statements for the six months and three months ended June 30, 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 2nd QUARTER
Six months Three months
ended June 30th ended June 30th
2012 2011 2012 2011
Cash and cash equivalents provided by (used in):
Operating activities:
Profit for the period $ 3,887 $ 6,271 $ 1,924 $ 6,087
Depreciation of property, plant and equipment 4,932 5,713 2,455 2,840
Amortization of intangible assets 4,727 7,057 2,034 3,418
Share-based compensation expense 627 823 289 366
Loss on sale of property, plant and equipment 450 433 185 433
Finance income (2,394 ) (2,041 ) (1,101 ) (1,223 )
Finance expense 104 247 58 75
Income tax expense 786 1,116 388 1,071
Change in non-cash pension liabilities (122 ) 422 (92 ) (207 )
Change in non-cash operating working capital 9,010 (11,620 ) (13,079 ) 759
Income taxes paid (625 ) (5,826 ) (388 ) (1,535 )
21,382 2,595 (7,327 ) 12,084
Investing activities:
Maturity of short-term investments 4,201 - 4,201 -
Purchase of short-term investments (8,913 ) - (8,913 ) -
Interest received 1,728 1,589 872 871
Proceeds from disposal of property, plant and equipment 58 8 51 8
Purchase of property, plant and equipment (1,660 ) (2,472 ) (835 ) (1,889 )
Purchase of intangible assets (407 ) (321 ) (268 ) (301 )
Business acquisition, net of cash acquired (2,675 ) - - -
(7,668 ) (1,196 ) (4,892 ) (1,311 )
Financing activities:
Dividends paid to shareholders (5,180 ) (5,629 ) (2,374 ) (2,815 )
Proceeds from exercise of share options 215 251 177 -
Repurchase of shares, including transaction costs (51,432 ) - (51,432 ) -
Receipt of acquired lease receivables 241 400 121 213
Payment of acquired loan payable (241 ) (400 ) (121 ) (213 )
Increase in loans payable - 300 - 300
Repayment of loans payable (49 ) (15,491 ) (12 ) (15,417 )
Finance costs paid (78 ) (233 ) (44 ) (71 )
(56,524 ) (20,802 ) (53,685 ) (18,003 )
Foreign exchange on cash held in foreign currency (577 ) 2,029 (1,651 ) 1,462
Increase (decrease) in cash and cash equivalents (43,387 ) (17,374 ) (67,555 ) (5,768 )
Cash and cash equivalents, beginning of period 129,933 90,704 154,101 79,098
Cash and cash equivalents, end of period $ 86,546 $ 73,330 $ 86,546 $ 73,330

The interim consolidated financial statements for the six months and three months ended June 30, 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
JUNE 30th
2012
DECEMBER 31st
2011
JUNE 30th
2011
ASSETS
Current assets:
Cash and cash equivalents $ 86,546 $ 129,933 $ 73,330
Short-term investments 8,913 4,202 4,175
Trade and other receivables 146,507 167,142 163,769
Current tax assets 7,323 7,348 5,062
Inventories 81,749 80,963 114,938
Finance lease receivables 18,892 21,336 21,073
Acquired lease receivables 261 462 548
Prepaid expenses and other assets 8,107 7,234 9,227
358,298 418,620 392,122
Long-term investment 6,166 5,406 5,641
Deferred tax assets 15,717 15,810 14,662
Finance lease receivables 18,659 23,469 27,357
Acquired lease receivables 87 138 433
Property, plant and equipment 26,941 30,953 35,477
Goodwill 46,114 46,323 47,999
Intangible assets 24,101 26,290 33,161
Other assets 481 516 622
$ 496,564 $ 567,525 $ 557,474
LIABILITIES AND EQUITY
Current liabilities:
Trade and other payables $ 103,512 $ 116,165 $ 112,106
Current tax liabilities 30,442 30,394 24,735
Deferred income 34,176 36,222 34,662
Current portion of loans payable 261 512 841
Current portion of provisions 13,304 12,494 14,800
181,695 195,787 187,144
Pensions 36,844 37,566 26,062
Loans payable 87 138 607
Provisions 2,828 2,965 3,207
Deferred tax liabilities 6,762 7,851 9,773
Other liabilities 741 995 1,129
228,957 245,302 227,922
Equity:
Share capital 79,738 94,917 94,904
Contributed surplus 10,874 10,247 9,715
Translation reserves (8,892 ) (6,159 ) 2,750
Retained earnings 185,887 223,218 222,183
267,607 322,223 329,552
$ 496,564 $ 567,525 $ 557,474

The interim consolidated financial statements for the six months and three months ended June 30, 2012 and 2011 have not been reviewed by an auditor.

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