Aastra Reports Second Quarter Financial Results

Tue Jul 17, 2012 5:01pm EDT

* Reuters is not responsible for the content in this press release.

  TORONTO, ONTARIO, Jul 17 (MARKET WIRE) --
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.


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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 
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Profit for the period        $    3,887  $    6,271  $    1,924  $    6,087 
----------------------------------------------------------------------------
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Earnings per share:                                                         
 Basic                       $     0.29  $     0.45  $     0.15  $     0.43 
 Diluted                     $     0.29  $     0.44  $     0.15  $     0.43 
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(i) Actual common shares outstanding as at June 30, 2012 - 11,816,572 (2011 
 - 14,074,385)                                                              
                                                                            
(ii) 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)                                                            
                                                                            
(iii) 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)                                         
                                                                            
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    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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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)
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                                 21,382       2,595      (7,327)     12,084 
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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)          -           -           - 
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                                 (7,668)     (1,196)     (4,892)     (1,311)
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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)
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                                (56,524)    (20,802)    (53,685)    (18,003)
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Foreign exchange on cash                                                    
 held in foreign currency          (577)      2,029      (1,651)      1,462 
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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 
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Cash and cash equivalents,                                                  
 end of period               $   86,546  $   73,330  $   86,546  $   73,330 
----------------------------------------------------------------------------
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    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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AASTRA TECHNOLOGIES LIMITED                                                 
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)                   
Stated in thousands of Canadian dollars                                     
                                                                            
                                   JUNE 30th   DECEMBER 31st       JUNE 30th
                                        2012            2011            2011
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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
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                                     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
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                              $      496,564  $      567,525  $      557,474
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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
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                                     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
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                                     228,957         245,302         227,922
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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
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                                     267,607         322,223         329,552
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                              $      496,564  $      567,525  $      557,474
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    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.


Contacts:
Aastra Technologies Limited
Investor Relations
(905) 760-4200
investors@aastra.com

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