Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

October 18, 2012 17:01 ET

Aastra Reports Third Quarter Financial Results

TORONTO, ONTARIO--(Marketwire - Oct. 18, 2012) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the third quarter ended September 30, 2012.

Revenue for the three months ended September 30, 2012 was $137.1 million compared to $156.6 million for the same quarter in 2011, a decrease of approximately 12.5% in our seasonally weakest quarter of the year. Excluding the impact of foreign exchange, revenue dropped by approximately 4.9% from the same period last year. Revenue for the year to date in 2012 was $431.4 million compared to $493.3 million for the first nine months of 2011, a decrease of 12.5%. Again, excluding the impact of foreign exchange, revenue declined approximately 8.1% for the first nine months of 2012 compared to the same period in 2011. Revenue decreases continue to be experienced across most geographic regions including Western Europe where the majority of the Company's revenue is generated.

Gross margin increased to 42.2% of revenue in the third quarter of 2012 compared to 41.7% of revenue in the same period in 2011. Research and development expenses in the third quarter of 2012 were $13.5 million or 9.9% of revenue, compared to $15.2 million or 9.7% of revenue in the same quarter of 2011. Selling, general and administrative expenses were $39.8 million or 29.0% of revenue in the third quarter this year compared to $43.4 million or 27.7% of revenue in the third quarter of 2011. Operating expenses decreased compared to last year primarily as a result of the impact in foreign exchange rates on our European expenditures. In addition, labor costs have decreased slightly when compared to the same period last year.

Foreign exchange losses of $0.7 million were recognized in the third quarter of 2012, mainly as a result of weakness in the US dollar during the quarter, compared to a foreign exchange loss of $0.6 million in the same period last year. Depreciation and amortization expense recorded in operating expenses decreased to $3.6 million in the quarter compared to $5.0 million in the third quarter of 2011 as certain intangible assets acquired in previous years have become fully amortized.

The Company recorded net finance income of $0.9 million in the third quarter of 2012 compared to $0.8 million in the same period in 2011. Income tax expense was approximately $0.2 million or 14.8% of pre-tax profit compared to $0.3 million or 13.6% of pre-tax profit in the third quarter last year.

As a result of the above, profit decreased in the third quarter this year to $1.0 million or $0.08 diluted earnings per share compared to $1.7 million or $0.12 diluted earnings per share in the same period in 2011. Profit for the nine months ended September 30, 2012 was $4.9 million or $0.38 diluted earnings per share compared to $8.0 million or $0.56 diluted earnings per share in the first nine months of 2011. Despite an ongoing difficult period in our business, this represents the Company's 58th consecutive quarter of profitability.

Cash and short-term investments totaled $98.9 million at the end of September 2012 compared to $95.5 million at the end of June 2012. During the third quarter, the Company generated $12.0 million of cash flow from operations. Accounts receivables decreased by $16.0 million as a result of lower sales while finance lease receivables decreased by $3.1 million this quarter. These were partially offset by an increase of $8.6 million in inventory during the third quarter. In addition, the Company used $4.7 million to repurchase its own common shares and paid $2.4 million in dividends to its shareholders during the third quarter.

Finally, 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 November 22, 2012 to all shareholders of record on November 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
Nine months
ended September 30th
3rd QUARTER
Three months
ended September 30th
2012 2011 2012 2011
Revenue $ 431,404 $ 493,313 $ 137,063 $ 156,557
Cost of sales 244,632 286,451 79,220 91,227
186,772 206,862 57,843 65,330
Expenses:
Selling, general and administrative 127,145 134,107 39,815 43,437
Research and development 43,382 48,365 13,503 15,196
Depreciation and amortization 11,529 15,434 3,604 4,957
Foreign exchange loss 2,114 2,180 702 557
Results from operating activities 2,602 6,776 219 1,183
Finance income (3,360 ) (2,853 ) (966 ) (812 )
Finance expense 140 290 36 43
Profit before income taxes 5,822 9,339 1,149 1,952
Income taxes 956 1,382 170 266
Profit for the period $ 4,866 $ 7,957 $ 979 $ 1,686
Earnings per share:
Basic $ 0.38 $ 0.57 $ 0.08 $ 0.12
Diluted $ 0.38 $ 0.56 $ 0.08 $ 0.12
* Actual common shares outstanding as at September 30, 2012 - 11,529,114 (2011 - 14,074,385)
** Weighted average common shares outstanding for the nine months and three months ended September 30, 2012 - 12,868,308 and 11,672,843 (2011 - 14,071,088 and 14,074,385)
*** Weighted average fully diluted common shares outstanding for the nine months and three months ended September 30, 2012 - 12,957,005 and 11,735,437 (2011 - 14,178,710 and 14,146,079)
The interim consolidated financial statements for the nine months and three months ended September 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
Nine months
ended September 30th
3rd QUARTER
Three months
ended September 30th
2012 2011 2012 2011
Cash and cash equivalents provided by (used in):
Operating activities:
Profit for the period $ 4,866 $ 7,957 $ 979 $ 1,686
Depreciation of property, plant and equipment 7,265 8,598 2,333 2,885
Amortization of intangible assets 6,777 10,260 2,050 3,203
Share-based compensation expense 878 1,109 251 286
Loss on sale of property, plant and equipment 618 490 168 57
Finance income (3,360 ) (2,853 ) (966 ) (812 )
Finance expense 140 290 36 43
Income tax expense 956 1,382 170 266
Change in non-cash pension liabilities (138 ) 731 (16 ) 309
Change in non-cash operating working capital 17,247 23,088 8,237 34,708
Income taxes (paid) received (1,852 ) (5,016 ) (1,227 ) 810
33,397 46,036 12,015 43,441
Investing activities:
Maturity of short-term investments 4,201 - - -
Purchase of short-term investments (8,913 ) - - -
Interest received 2,364 2,459 636 870
Proceeds from disposal of property, plant and equipment 58 8 - -
Purchase of property, plant and equipment (2,585 ) (3,902 ) (925 ) (1,430 )
Purchase of intangible assets (521 ) (440 ) (114 ) (119 )
Business acquisition, net of cash acquired (2,675 ) - - -
(8,071 ) (1,875 ) (403 ) (679 )
Financing activities:
Dividends paid to shareholders (7,544 ) (8,444 ) (2,364 ) (2,815 )
Proceeds from exercise of share options 215 251 - -
Repurchase of shares, including transaction costs (56,103 ) - (4,671 ) -
Receipt of acquired lease receivables 316 578 75 178
Payment of acquired loan payable (316 ) (578 ) (75 ) (178 )
Increase in loans payable - 300 - -
Repayment of loans payable (49 ) (15,855 ) - (364 )
Finance costs paid (103 ) (277 ) (25 ) (44 )
(63,584 ) (24,025 ) (7,060 ) (3,223 )
Foreign exchange on cash held in foreign currency (1,734 ) 3,430 (1,157 ) 1,401
Increase (decrease) in cash and cash equivalents (39,992 ) 23,566 3,395 40,940
Cash and cash equivalents, beginning of period 129,933 90,704 86,546 73,330
Cash and cash equivalents, end of period $ 89,941 $ 114,270 $ 89,941 $ 114,270
The interim consolidated financial statements for the nine months and three months ended September 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
SEPTEMBER 30th 2012 DECEMBER 31st 2011 SEPTEMBER 30th 2011
ASSETS
Current assets:
Cash and cash equivalents $ 89,941 $ 129,933 $ 114,270
Short-term investments 8,913 4,202 4,194
Trade and other receivables 130,503 167,142 149,996
Current tax assets 9,949 7,348 5,000
Inventories 90,386 80,963 101,276
Finance lease receivables 16,581 21,336 20,613
Acquired lease receivables 202 462 443
Prepaid expenses and other assets 7,569 7,234 9,297
354,044 418,620 405,089
Long-term investment 6,462 5,406 5,641
Deferred tax assets 15,173 15,810 15,518
Finance lease receivables 17,876 23,469 26,117
Acquired lease receivables 61 138 355
Property, plant and equipment 25,213 30,953 33,848
Goodwill 46,761 46,323 47,786
Intangible assets 22,419 26,290 29,922
Other assets 465 516 638
$ 488,474 $ 567,525 $ 564,914
LIABILITIES AND EQUITY
Current liabilities:
Trade and other payables $ 104,465 $ 116,165 $ 117,890
Current tax liabilities 31,717 30,394 26,152
Deferred income 34,104 36,222 35,875
Current portion of loans payable 202 512 536
Current portion of provisions 13,182 12,494 14,534
183,670 195,787 194,987
Pensions 35,990 37,566 26,325
Loans payable 61 138 355
Provisions 2,785 2,965 3,160
Deferred tax liabilities 6,343 7,851 9,234
Other liabilities 631 995 1,089
229,480 245,302 235,150
Equity:
Share capital 77,798 94,917 94,904
Contributed surplus 11,125 10,247 10,001
Translation reserves (11,700 ) (6,159 ) 3,805
Retained earnings 181,771 223,218 221,054
258,994 322,223 329,764
$ 488,474 $ 567,525 $ 564,914
The interim consolidated financial statements for the nine months and three months ended September 30, 2012 and 2011 have not been reviewed by an auditor.

Contact Information