Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

February 15, 2011 17:01 ET

Aastra Reports Strong Fourth Quarter Results

TORONTO, ONTARIO--(Marketwire - Feb. 15, 2011) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the three months and year ended December 31, 2010. The Company is pleased to report a significant rebound in net earnings as a result of strong revenues recorded in the fourth quarter ended December 31, 2010. 

Sales for the three months ended December 31, 2010 were $216.0 million compared to $217.8 million for the same quarter in 2009, a decrease of 0.8%. Excluding the impact of changes in foreign exchange from the strengthening of the Canadian dollar, sales increased by 8.7% over the same period last year. In addition, sales for the fourth quarter in 2010 increased sequentially from sales of the third quarter of 2010 by 31.6% as a result of significant increases in many of our key markets.

Sales for the year ended December 31, 2010 were $720.9 million compared to $832.9 million for 2009. Excluding the impact of foreign exchange, sales declined by 3.0% in the twelve months ended December 31, 2010 compared to the same period of 2009.

Gross margin decreased slightly to 44.5% of sales in the fourth quarter of 2010 compared to 45.0% of sales in the same period in 2009. Gross margin for the year ended December 31, 2010 decreased slightly to 43.6% compared to 45.9% for the year in 2009. Gross margins for 2010 were negatively impacted by the impact of foreign exchange on the purchase of our inventory as well as an unfavorable product mix.

Research and development ("R&D") expenses in the fourth quarter of 2010 were $18.2 million or 8.4% of sales, compared to $19.2 million or 8.8% of sales in the final quarter of 2009. R&D expenses for the year ended December 31, 2010 decreased to $69.4 million or 9.6% of sales from $81.8 million or 9.8% of sales in 2009.

Selling, general and administrative ("SG&A") expenses were $52.9 million or 24.5% of sales in the fourth quarter of 2010 compared to $51.6 million or 23.7% of sales in the fourth quarter of 2009. SG&A expenses for the year ended December 31, 2010 decreased to $189.4 million or 26.3% of sales compared to $217.4 million or 26.1% of sales for the year in 2009.

Losses from the impact of foreign exchange were $2.6 million in the fourth quarter of 2010, comparable to foreign exchange losses of $2.2 million incurred in the same period of 2009. Foreign exchange losses were $10.0 million for the year in 2010 compared to $3.6 million for 2009 as a result of the general strengthening of the Canadian dollar and Swiss franc compared to the Euro and the U.S. dollar over these periods. 

The Company earned interest income of $0.7 million in both fourth quarters of 2010 and 2009 while for the year, investment income was $2.6 million in 2010 compared to $2.8 million in 2009. Other income of $0.7 million was earned in the fourth quarter of 2010 as a result of an increase in the valuation of a long-term investment. Other income for the year ended December 31, 2010 includes a gain of $2.7 million realized on the sale of a product line earlier in the year.

As a result of the above, net earnings of the Company for the three months ended December 31, 2010 were $14.4 million or $1.02 diluted earnings per share compared to $15.3 million or $1.09 diluted earnings per share in the same period in 2009. Net earnings for the year ended December 31, 2010 were $24.0 million or $1.69 diluted earnings per share compared to $44.6 million or $3.20 diluted earnings per share in 2009.

Cash and short-term investments totaled $94.9 million at the end of 2010 compared to a balance of $116.9 million at the end of 2009. During the fourth quarter of 2010, the Company generated $16.7 million of cash flow from operations, net of working capital increases. For the year, the Company generated $8.4 million of cash flow from operations, net of significant increases in working capital, primarily inventory and accounts receivable during the year. In addition, the Company repaid $14.9 million of long term debt during 2010 and invested in $12.6 million in property, plant and equipment and intangible assets during 2010.

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 March 24, 2011 to all shareholders of record on March 3, 2011. 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 EARNINGS (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
 
  2010   2009   2010   2009  
Sales $ 720,860   $ 832,897   $ 215,960   $ 217,804  
Cost of goods sold   406,404     451,012     119,828     119,813  
    314,456     381,885     96,132     97,991  
Expenses (income):                        
  Selling, general and administrative   189,405     217,425     52,913     51,597  
  Research and development   69,390     81,817     18,197     19,237  
  Depreciation and amortization   20,979     22,961     5,273     5,289  
  Interest expense   380     1,226     98     117  
  Foreign exchange loss   10,045     3,597     2,640     2,200  
  Investment income   (2,647 )   (2,836 )   (744 )   (679 )
  Other (income) charges   (3,416 )   399     (734 )   -  
Earnings before income taxes   30,320     57,296     18,489     20,230  
Income taxes   6,364     12,685     4,116     4,919  
Net earnings for the period $ 23,956   $ 44,611   $ 14,373   $ 15,311  
Earnings per share:                      
  Basic $ 1.71   $ 3.26   $ 1.02   $ 1.11  
  Diluted $ 1.69   $ 3.20   $ 1.02   $ 1.09  
   
* Actual common shares outstanding as at December 31, 2010 – 14,054,385 (2009 – 13,852,335)  
   
** Weighted average common shares outstanding for the twelve months and three months ended December 31, 2010 – 13,994,884 and 14,044,168 (2009 – 13,705,274 and 13,761,592)  
   
*** Weighted average fully diluted common shares outstanding for the twelve months and three months ended December 31, 2010 – 14,140,652 and 14,153,524 (2009 – 13,920,085 and 14,015,679)  
   
 
The interim consolidated financial statements for the twelve months and three months ended December 31, 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
Twelve months
ended December 31st
  4th QUARTER
Three months
ended December 31st
 
  2010   2009   2010   2009  
Cash and cash equivalents provided by (used in):                        
Operations:                        
  Net earnings for the period $ 23,956   $ 44,611   $ 14,373   $ 15,311  
  Depreciation of property, plant and equipment   11,672     11,959     3,106     2,878  
  Amortization of intangible assets   13,598     15,982     3,364     3,728  
  Future income taxes   (4,279 )   (1,942 )   (1,857 )   (176 )
  Stock-based compensation expense   2,479     2,350     761     558  
  Loss on sale of property, plant and equipment   726     492     279     133  
  Other (income) charges   (3,416 )   399     (734 )   -  
  Change in non-cash pension liabilities   325     1,309     399     736  
  Change in non-cash operating working capital   (36,687 )   (7,037 )   (3,001 )   (11,845 )
    8,374     68,123     16,690     11,323  
Financing:                        
  Dividends to shareholders   (11,197 )   (2,062 )   (2,810 )   (2,062 )
  Issuance of common shares on exercise of options   3,273     6,901     210     3,506  
  Repurchase of shares   -     (17,722 )   -     -  
  Receipt of acquired lease receivables   1,505     3,606     349     743  
  Payment of loan to Seller   (1,505 )   (3,606 )   (349 )   (743 )
  Payment of loans payable   (14,948 )   (22,821 )   (74 )   (79 )
    (22,872 )   (35,704 )   (2,674 )   1,365  
Investing:                        
  Maturity of short-term investments   3,199     -     131     -  
  Purchase of short-term investments   (4,044 )   (3,038 )   (4,044 )   -  
  Interest received from long-term investment   18     493     6     76  
  Proceeds on disposal of property, plant and equipment   43     28     34     (13 )
  Purchase of property, plant and equipment   (11,193 )   (11,914 )   (3,160 )   (4,059 )
  Purchase of intangible assets   (1,413 )   (1,740 )   (356 )   (632 )
  Business acquisition, net of cash acquired   -     2,663     -     -  
  Disposition, net of cash   3,649     -     -     -  
    (9,741 )   (13,508 )   (7,389 )   (4,628 )
Foreign exchange on cash held in foreign currency   1,347     (2,952 )   2,105     3,628  
Increase (decrease) in cash and cash equivalents   (22,892 )   15,959     8,732     11,688  
Cash and cash equivalents, beginning of period   113,596     97,637     81,972     101,908  
Cash and cash equivalents, end of period $ 90,704   $ 113,596   $ 90,704   $ 113,596  
 
The interim consolidated financial statements for the twelve months and three months ended December 31, 2010 have not been reviewed by an auditor.
 
AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Stated in thousands of Canadian dollars
 
   
  DECEMBER 31st
2010
  DECEMBER 31st
2009
 
ASSETS            
Current assets:            
  Cash and cash equivalents $ 90,704   $ 113,596  
  Short-term investments   4,153     3,309  
  Accounts receivable   183,977     175,331  
  Income taxes receivable   5,225     5,986  
  Inventories   115,374     81,398  
  Net investment in leases   17,426     11,831  
  Acquired lease receivables   714     1,544  
  Prepaid expenses and other assets   7,279     7,088  
  Future income tax assets   6,732     6,395  
    431,584     406,478  
             
Long-term investment   5,251     4,525  
Future income tax assets   4,487     3,901  
Net investment in leases   24,324     28,597  
Acquired lease receivables   607     1,597  
Property, plant and equipment   37,534     41,920  
Goodwill   46,321     46,391  
Intangible assets   36,391     51,460  
Other assets   625     611  
  $ 587,124   $ 585,480  
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
  Accounts payable and accrued liabilities $ 166,642   $ 148,076  
  Income taxes payable   29,467     33,294  
  Deferred revenue   25,437     23,686  
  Current portion of loans payable   15,740     16,490  
  Future income tax liabilities   480     961  
    237,766     222,507  
             
Pensions   21,270     25,488  
Loans payable   658     16,561  
Future income tax liabilities   11,336     14,281  
Other long-term liabilities   2,604     3,802  
    273,634     282,639  

Shareholders' equity:
           
  Share capital   94,653     90,488  
  Contributed surplus   9,052     7,465  
  Accumulated other comprehensive (loss) income   (13,318 )   (5,456 )
  Retained earnings   223,103     210,344  
    313,490     302,841  
  $ 587,124   $ 585,480  
 
The interim consolidated financial statements for the twelve months and three months ended December 31, 2010 have not been reviewed by an auditor.
 
 
AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (UNAUDITED)
Stated in thousands of Canadian dollars, except share amounts
 
   
    Common Shares    Share Capital    Contributed Surplus    Accumulated Other Comprehensive Income (Loss)    Retained Earnings    Total    Comprehensive Income (Loss)  
Balance, December 31, 2009   13,852,335   $ 90,488   $ 7,465   $ (5,456 ) $ 210,344   $ 302,841   $ -  
Dividends   -     -     -     -     (8,387 )   (8,387 )   -  
Shares issued on exercise of options   182,050     3,063     -     -     -     3,063     -  
Stock-based compensation   -     -     1,718     -     -     1,718     -  
Translation of self-sustaining operations   -     -     -     (813 )   -     (813 )   (813 )
Net earnings   -     -     -     -     9,583     9,583     9,583  
Balance, September 30, 2010   14,034,385   $ 93,551   $ 9,183   $ (6,269 ) $ 211,540   $ 308,005   $ 8,770  
Dividends   -     -     -     -     (2,810 )   (2,810 )   -  
Shares issued on exercise of options   20,000     210     -     -     -     210     -  
Stock-based compensation   -     -     761     -     -     761     -  
Transfer from contributed surplus to share capital   -     892     (892 )   -     -     -     -  
Translation of self-sustaining operations   -     -     -     (7,049 )   -     (7,049 )   (7,049 )
Net earnings   -     -     -     -     14,373     14,373     14,373  
Balance, December 31, 2010   14,054,385   $ 94,653   $ 9,052   $ (13,318 ) $ 223,103   $ 313,490   $ 16,094  
    Common Shares     Share Capital     Contributed Surplus     Accumulated Other Comprehensive Income (Loss )   Retained Earnings     Total     Comprehensive Income (Loss )
Balance, December 31, 2008   14,765,573   $ 90,951   $ 6,484   $ 19,588   $ 176,784   $ 293,807   $ -  
Shares issued on exercise of options   326,875     3,395     -     -     -     3,395     -  
Stock-based compensation   -     -     1,792     -     -     1,792     -  
Shares repurchased for cancellation   (1,417,738 )   (8,733 )   -     -     (8,989 )   (17,722 )   -  
Translation of self-sustaining operations   -     -     -     (19,006 )   -     (19,006 )   (19,006 )
Net earnings   -     -     -     -     29,300     29,300     29,300  
Balance, September 30, 2009   13,674,710   $ 85,613   $ 8,276   $ 582   $ 197,095   $ 291,566   $ 10,294  
Dividends   -     -     -     -     (2,062 )   (2,062 )   -  
Shares issued on exercise of options   177,625     3,506     -     -     -     3,506     -  
Stock-based compensation   -     -     558     -     -     558     -  
Transfer from contributed surplus to share capital   -     1,369     (1,369 )   -     -     -     -  
Translation of self-sustaining operations   -     -     -     (6,038 )   -     (6,038 )   (6,038 )
Net earnings   -     -     -     -     15,311     15,311     15,311  
Balance, December 31, 2009   13,852,335   $ 90,488   $ 7,465   $ (5,456 ) $ 210,344   $ 302,841   $ 19,567  
 
The interim consolidated financial statements for the twelve months and three months ended December 31, 2010 have not been reviewed by an auditor.

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