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Press release from Marketwire

Aastra Reports Third Quarter Financial Results

Thursday, October 18, 2012

Aastra Reports Third Quarter Financial Results17:01 EDT Thursday, October 18, 2012TORONTO, 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 LIMITEDCONSOLIDATED STATEMENTS OF PROFIT (UNAUDITED)Stated in thousands of Canadian dollars, except per share amountsYEAR-TO-DATE Nine months ended September 30th3rd QUARTER Three months ended September 30th2012201120122011Revenue$431,404$493,313$137,063$156,557Cost of sales244,632286,45179,22091,227186,772206,86257,84365,330Expenses:Selling, general and administrative127,145134,10739,81543,437Research and development43,38248,36513,50315,196Depreciation and amortization11,52915,4343,6044,957Foreign exchange loss2,1142,180702557Results from operating activities2,6026,7762191,183Finance income(3,360)(2,853)(966)(812)Finance expense1402903643Profit before income taxes5,8229,3391,1491,952Income taxes9561,382170266Profit for the period$4,866$7,957$979$1,686Earnings per share:Basic$0.38$0.57$0.08$0.12Diluted$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 LIMITEDCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)Stated in thousands of Canadian dollarsYEAR-TO-DATE Nine months ended September 30th3rd QUARTER Three months ended September 30th2012201120122011Cash and cash equivalents provided by (used in):Operating activities:Profit for the period$4,866$7,957$979$1,686Depreciation of property, plant and equipment7,2658,5982,3332,885Amortization of intangible assets6,77710,2602,0503,203Share-based compensation expense8781,109251286Loss on sale of property, plant and equipment61849016857Finance income(3,360)(2,853)(966)(812)Finance expense1402903643Income tax expense9561,382170266Change in non-cash pension liabilities(138)731(16)309Change in non-cash operating working capital17,24723,0888,23734,708Income taxes (paid) received(1,852)(5,016)(1,227)81033,39746,03612,01543,441Investing activities:Maturity of short-term investments4,201---Purchase of short-term investments(8,913)---Interest received2,3642,459636870Proceeds from disposal of property, plant and equipment588--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 options215251--Repurchase of shares, including transaction costs(56,103)-(4,671)-Receipt of acquired lease receivables31657875178Payment 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)1,401Increase (decrease) in cash and cash equivalents(39,992)23,5663,39540,940Cash and cash equivalents, beginning of period129,93390,70486,54673,330Cash and cash equivalents, end of period$89,941$114,270$89,941$114,270The 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 LIMITEDCONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)Stated in thousands of Canadian dollarsSEPTEMBER 30th 2012DECEMBER 31st 2011SEPTEMBER 30th 2011ASSETSCurrent assets:Cash and cash equivalents$89,941$129,933$114,270Short-term investments8,9134,2024,194Trade and other receivables130,503167,142149,996Current tax assets9,9497,3485,000Inventories90,38680,963101,276Finance lease receivables16,58121,33620,613Acquired lease receivables202462443Prepaid expenses and other assets7,5697,2349,297354,044418,620405,089Long-term investment6,4625,4065,641Deferred tax assets15,17315,81015,518Finance lease receivables17,87623,46926,117Acquired lease receivables61138355Property, plant and equipment25,21330,95333,848Goodwill46,76146,32347,786Intangible assets22,41926,29029,922Other assets465516638$488,474$567,525$564,914LIABILITIES AND EQUITYCurrent liabilities:Trade and other payables$104,465$116,165$117,890Current tax liabilities31,71730,39426,152Deferred income34,10436,22235,875Current portion of loans payable202512536Current portion of provisions13,18212,49414,534183,670195,787194,987Pensions35,99037,56626,325Loans payable61138355Provisions2,7852,9653,160Deferred tax liabilities6,3437,8519,234Other liabilities6319951,089229,480245,302235,150Equity:Share capital77,79894,91794,904Contributed surplus11,12510,24710,001Translation reserves(11,700)(6,159)3,805Retained earnings181,771223,218221,054258,994322,223329,764$488,474$567,525$564,914The interim consolidated financial statements for the nine months and three months ended September 30, 2012 and 2011 have not been reviewed by an auditor.FOR FURTHER INFORMATION PLEASE CONTACT: Investor RelationsAastra Technologies Limited(905) 760-4200investors@aastra.com