Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

October 17, 2013 17:01 ET

Aastra Reports Third Quarter Financial Results

TORONTO, ONTARIO--(Marketwired - Oct. 17, 2013) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the third quarter ended September 30, 2013.

Revenue for the three months ended September 30, 2013 was $139.6 million compared to $137.1 million for the same quarter in 2012, an increase of approximately 1.9%. Stronger revenue from the U.S. and Latin America, as well as strength from foreign exchange rates, helped offset weaker revenues from Europe when compared to the same quarter in 2012. Revenue for the nine months ended September 30, 2013 was $424.0 million compared to $431.4 million in the same period last year, a decrease of 1.7%.

Gross margin in the third quarter increased slightly to 43.2% of revenue compared to 42.1% of revenue in the same period in 2012 due mainly to a change in product mix this quarter, offset partially by higher inventory provisions recorded during the third quarter this year.

Selling, general and administrative ("SG&A") expenses were $38.9 million or 27.8% of revenue in the third quarter of 2013 compared to $39.9 million or 29.1% of revenue in the third quarter of 2012. SG&A expenses include restructuring expenses of $0.5 million in the third quarter of 2013, compared to $0.2 million in the same quarter of 2012.

Research and development ("R&D") expenses in the third quarter of 2013 were $12.4 million or 8.9% of revenue, compared to $13.6 million or 9.9% of revenue in the same quarter of 2012. R&D expenses include restructuring expenses of $0.2 million (2012 - $0.1 million). Operating expenses were lower in the third quarter as a result of continued cost control and efficiencies, including the impact of our restructuring efforts implemented earlier this year.

Foreign exchange losses of $0.5 million were recognized in the third quarter of 2013, compared to $0.7 million in the same period last year. Amortization expense recorded in operating expenses was $3.8 million in the third quarter of 2013 compared to $3.6 million in the third quarter of 2012.

The Company recorded net finance income of $2.0 million in the third quarter of 2013 compared to $0.9 million in the same period in 2012. Income tax expense of $1.3 million or 18.7% of pre-tax profit compared to $0.1 million or 16.2% of pre-tax profit in the third quarter last year.

As a result of the above, profit increased sharply in the third quarter this year to $5.5 million or $0.47 diluted earnings per share compared to $0.7 million or $0.06 diluted earnings per share in the same period in 2012. Profit for the nine months ended September 30, 2013 is also up significantly to $8.0 million or $0.68 diluted earnings per share compared to $4.1 million or $0.31 diluted earnings per share in the same period of 2012.

Included in the income statement this quarter was $0.8 million of restructuring expenses compared to $0.3 million for the same period last year. For the year-to-date, restructuring expenses of $6.7 million have been recorded in 2013 compared to only $1.1 million for the same period in 2012.

Cash and short-term investments totaled $89.3 million at the end of September 2013 compared to $107.4 million at December 31, 2012. During the third quarter of 2013, the Company generated $30.1 million of cash flow in operations. Accounts receivables decreased by $20.7 million from $138.7 million at June 30, 2013 mainly as a result of stronger collections experienced during the third quarter this year. In addition, inventory decreased by $2.8 million and finance lease receivables decreased by $1.8 million. The Company also sold long-term investments totaling $6.6 million during the third quarter. Finally, the Company returned $84.9 million as a special dividend to shareholders during the third quarter.

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 14, 2013 to all shareholders of record on October 31, 2013. 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 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
2013 20121 2013 20121
Revenue $ 423,966 $ 431,404 $ 139,641 $ 137,063
Cost of sales 240,192 244,887 79,271 79,301
183,774 186,517 60,370 57,762
Expenses:
Selling, general and administrative 121,256 127,530 38,850 39,937
Research and development 44,303 43,654 12,431 13,595
Depreciation and amortization 11,270 11,529 3,777 3,604
Foreign exchange loss 865 2,114 519 702
Results from operating activities 6,080 1,690 4,793 (76 )
Finance income (3,797 ) (3,360 ) (2,014 ) (966 )
Finance expense 204 140 52 36
Profit before income taxes 9,673 4,910 6,755 854
Income taxes 1,666 856 1,265 138
Profit for the period $ 8,007 $ 4,054 $ 5,490 $ 716
Earnings per share:
Basic $ 0.69 $ 0.32 $ 0.47 $ 0.06
Diluted $ 0.68 $ 0.31 $ 0.47 $ 0.06
* Actual common shares outstanding as at September 30, 2013 - 11,797,114 (2012 - 11,529,114)
** Weighted average common shares outstanding for the nine months and three months ended September 30, 2013 - 11,592,200 and 11,678,114 (2012 - 12,868,308 and 11,672,843)
*** Weighted average fully diluted common shares outstanding for the nine months and three months ended September 30, 2013 - 11,713,531 and 11,793,841 (2012 - 12,957,005 and 11,735,437)

The interim consolidated financial statements for the nine months and three months ended September 30, 2013 and 2012 have not been reviewed by an auditor.

1Restated to reflect changes resulting from the retrospective application of the amendments to accounting standard IAS 19 (Revised), Employee Benefits.

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
2013 20121 2013 20121
Cash and cash equivalents provided by (used in):
Operating activities:
Profit for the period $ 8,007 $ 4,054 $ 5,490 $ 716
Depreciation of property, plant and equipment 6,787 7,265 2,269 2,333
Amortization of intangible assets 6,853 6,777 2,306 2,050
Share-based compensation expense 512 878 205 251
Loss on sale of property, plant and equipment 497 618 43 168
Finance income (3,797 ) (3,360 ) (2,014 ) (966 )
Finance expense 204 140 52 36
Income tax expense 1,666 856 1,265 138
Change in non-cash pension liabilities 264 774 173 279
Change in non-cash operating working capital 40,354 17,247 20,045 8,237
Income taxes (paid) received (4,019 ) (1,852 ) 271 (1,227 )
57,328 33,397 30,105 12,015
Investing activities:
Maturity of short-term investments 6,433 4,201 - -
Purchase of short-term investments - (8,913 ) - -
Interest received 2,181 2,364 974 636
Proceeds from disposal of property, plant and equipment 28 58 8 -
Purchase of property, plant and equipment (4,103 ) (2,585 ) (1,206 ) (925 )
Purchase of intangible assets (649 ) (521 ) (183 ) (114 )
Business acquisition, net of cash acquired 161 (2,675 ) - -
Proceeds from disposal of long-term investment 6,595 - 6,595 -
Disposition 1,387 - 1,387 -
12,033 (8,071 ) 7,575 (403 )
Financing activities:
Dividends paid to shareholders (89,487 ) (7,544 ) (84,867 ) (2,364 )
Proceeds from exercise of share options 3,414 215 3,011 -
Repurchase of shares, including transaction costs - (56,103 ) - (4,671 )
Receipt of acquired lease receivables 93 316 30 75
Payment of acquired loan payable (93 ) (316 ) (30 ) (75 )
Increase in loans payable 1,001 - - -
Repayment of loans payable (82 ) (49 ) (82 ) -
Increase (decrease) in bank indebtedness 2,089 - (45 ) -
Finance costs paid (132 ) (103 ) (26 ) (25 )
(83,197 ) (63,584 ) (82,009 ) (7,060 )
Foreign exchange on cash held in foreign currency 2,150 (1,734 ) 1,107 (1,157 )
Increase (decrease) in cash and cash equivalents (11,686 ) (39,992 ) (43,222 ) 3,395
Cash and cash equivalents, beginning of period 100,965 129,933 132,501 86,546
Cash and cash equivalents, end of period $ 89,279 $ 89,941 $ 89,279 $ 89,941

The interim consolidated financial statements for the nine months and three months ended September 30, 2013 and 2012 have not been reviewed by an auditor.

1Restated to reflect changes resulting from the retrospective application of the amendments to accounting standard IAS 19 (Revised), Employee Benefits.

AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
Stated in thousands of Canadian dollars
SEPTEMBER 30th
2013
DECEMBER 31st
20121
JANUARY 1st
20121
ASSETS
Current assets:
Cash and cash equivalents $ 89,279 $ 100,965 $ 129,933
Short-term investments - 6,433 4,202
Trade and other receivables 118,010 159,260 167,142
Current tax assets 7,274 7,296 7,348
Inventories 85,322 91,804 80,963
Finance lease receivables 11,543 14,052 21,336
Acquired lease receivables 102 123 462
Prepaid expenses and other assets 7,747 7,106 7,234
319,277 387,039 418,620
Long-term investment - 6,278 5,406
Deferred tax assets 17,330 15,428 14,898
Finance lease receivables 16,128 19,375 23,469
Acquired lease receivables 26 88 138
Property, plant and equipment 24,882 26,754 30,953
Goodwill 50,735 48,294 46,323
Intangible assets 15,350 20,620 26,290
Other assets 11 92 516
$ 443,739 $ 523,968 $ 566,613
LIABILITIES AND EQUITY
Current liabilities:
Indebtedness $ 2,158 $ - $ -
Trade and other payables 94,472 121,121 116,165
Current tax liabilities 9,329 11,478 30,394
Deferred income 41,548 35,209 36,222
Current portion of loans payable 445 123 512
Current portion of provisions 17,983 14,330 12,494
165,935 182,261 195,787
Pensions 36,158 33,959 33,427
Loans payable 642 88 138
Provisions 3,279 2,844 2,965
Deferred tax liabilities 7,812 8,875 7,851
Other liabilities 1,729 894 995
215,555 228,921 241,163
Equity:
Share capital 81,273 77,859 94,917
Contributed surplus 11,674 11,162 10,247
Translation reserves 5,885 (4,806 ) (6,234 )
Retained earnings 129,352 210,832 226,520
228,184 295,047 325,450
$ 443,739 $ 523,968 $ 566,613

The interim consolidated financial statements for the nine months and three months ended September 30, 2013 and 2012 have not been reviewed by an auditor.

1Restated to reflect changes resulting from the retrospective application of the amendments to accounting standard IAS 19 (Revised), Employee Benefits.

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