Aastra Reports Fourth Quarter Financial Results.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Aastra Technologies Aastra Technologies Limited (TSX: AAH) headquartered in Concord, Ontario, Canada, makes products and systems for accessing communication networks including the Internet. Limited - (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :AAH aah interj. Used to express pleasure, satisfaction, surprise, or great joy. intr.v. aahed, aah·ing, aahs To exclaim in pleasure, satisfaction, surprise, or great joy: ) today announced its unaudited financial results for the fourth quarter and year ended December December: see month. 31, 2005. During the fourth quarter of 2005 Aastra continued to implement its restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plans and work actively on integrating both the EADS EADS European Aeronautic Defence and Space Company N.V. EADS Expeditionary Air Defense System (USMC) EADS Extended Air Defense Systems EADS Environmental Assessment Data System EADS Echelons Above Division Study Enterprise Telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. business acquired on February February: see month. 28, 2005 as well as the DeTeWe Telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. Systems business acquired on July July: see month. 31, 2005. Net earnings for the three months ended December 31, 2005 were $9.2 million or $0.51 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of compared to $10.2 million or $0.58 diluted earnings per share in the same period in 2004. The fourth quarter results for 2005 include three months of operations from both the EADS Enterprise Telephony business as well as the DeTeWe Telecommunication Systems business. Net income for the year ended December 31, 2005 was $26.3 million or $1.46 diluted earnings per share compared to $24.2 million or $1.38 diluted earnings per share in 2004. Excluding acquisitions, net income for 2005 would have been approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $33.2 million or $1.84 diluted earnings per share, an increase of 37% when compared to 2004 actual results. In addition, these fourth quarter and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005 financial results include a significant negative impact from the rapid increase in the value of the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents during 2005. During 2005, the Canadian dollar appreciated significantly against both the Euro and Swiss Franc Noun 1. Swiss franc - the basic unit of money in Switzerland franc - the basic monetary unit in many countries; equal to 100 centimes centime - a fractional monetary unit of several countries: France and Algeria and Belgium and Burkina Faso and Burundi and while it also continued to strengthen against the U.S. dollar. Sales for the three months ended December 31, 2005 were $171.9 million compared to sales of $66.7 million for the same period in 2004, an increase of approximately 158%. Excluding the impact of the EADS and DeTeWe acquisitions as well as changes in foreign exchange, sales in the fourth quarter of 2005 would have increased by more than 11% over the fourth quarter of 2004. Sales for the year ended December 31, 2005 were $522.6 million compared to $256.1 million for the same period in 2004, an increase of approximately 104%. Again, excluding the impact of acquisitions as well as changes in foreign exchange, sales would have increased by 7% in 2005 from the year ended December 31, 2004. Including sales from the U.S. operations acquired in the EADS acquisition, sales in the Enterprise Communications - North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. segment were $27.3 million in the fourth quarter compared to $15.9 million in the same period in 2004. Including sales from the EADS and DeTeWe acquisitions, sales in the Enterprise Communications - Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). segment were $133.3 million in the fourth quarter compared to $42.3
million for the three months ended December 31, 2004. Sales from the
Network Access segment, primarily sales of digital video equipment,
were $11.3 million in the fourth quarter compared to $8.5 million in
the same period last year.Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. was 40% of sales for the three months ended December 31, 2005 compared to 51% of sales in the same quarter last year. While the gross margin on our existing product lines continued to be consistent to last year, this decrease is a result of lower gross margins experienced on the newly acquired product lines as expected. Research and Development expenses in the fourth quarter of 2005 were $16.2 million or 9.5% of sales, compared to $4.9 million or 7.4% of sales in the comparable quarter of 2004. Selling, general and administrative expenses were $33.1 million or 19.2% of sales in the quarter compared to $16.8 million or 25.2% of sales in the fourth quarter of 2004. In both cases, the increase over the fourth quarter of 2004 is a result of the increased operating costs operating costs npl → gastos mpl operacionales added as a result of the EADS and DeTeWe acquisitions. Primarily as a result of bringing certain foreign cash balances back to Canadian dollars from its European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations, Aastra recorded a foreign currency loss of $2.8 million during the fourth quarter compared to a foreign exchange gain of $1.4 million in the fourth quarter of 2004. In addition, as a result of the significant appreciation of the Canadian dollar against both the Euro and the Swiss franc throughout 2005, the Company has recorded a decrease of $25.5 million in its cumulative translation adjustment account in the equity section of its balance sheet. This implies (logic) implies - (=> or a thin right arrow) A binary Boolean function and logical connective. A => B is true unless A is true and B is false. The truth table is A B | A => B ----+------- F F | T F T | T T F | F T T | T It is surprising at first that A => that, in absence of a decline in the value of the Canadian dollar, the Company would incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional foreign exchange losses as and when it repatriates additional excess cash from its many foreign subsidiaries. As a result of the lower average cash balances, investment income declined to $0.3 million in the fourth quarter of 2005 compared to $0.6 million in the fourth quarter of 2004. Income tax expense was $2.7 million in the fourth quarter or 22.6% of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profits compared to $1.7 million or 14.5% of pre-tax profits in the fourth quarter of 2004. While income tax rates have continued to be impacted by profits in lower tax jurisdictions, there was a continued shift towards more of the Company's taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. coming from higher tax jurisdictions in Europe. Cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaled approximately $102 million at the end of 2005 compared to a balance of approximately $129 million at the end of December 2004. During 2005, the Company spent $97.6 million on the EADS and DeTeWe business acquisitions while also investing $11.4 million on new capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) . However, during 2005 Aastra also generated $80.0 million in cash flow from its operations. About Aastra Technologies Limited Aastra Technologies Limited (TSX:AAH), headquartered in Concord, Ontario
This press release contains forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information or forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of applicable securities legislation ("forward-looking statements"). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, potentials, future events or performance (often, but not always, using words or phrases such as "believes", "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", or "intends" or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken or achieved) are not statements of historical fact, but are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Aastra, or developments in Aastra's business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Forward-looking statements may include, but are not limited to: expectations regarding the Aastra's restructuring and integration plans for the EADS Enterprise Telephony business acquired on February 28, 2005 as well as the DeTeWe Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Systems business acquired on July 31, 2005. As described in detail under the heading "Risk Factors" in Aastra's annual information form filed on www.sedar.com, the material factors that could cause our actual results to differ materially from the forward-looking statements in this press release include: integration of Aastra's recent acquisitions of EADS' enterprise telephony business and DeTeWe's telephony business; continued demand for Aastra's recently-acquired products; Aastra's reliance on third party manufacturers and component suppliers (in general and related to the recently-acquired businesses); dependence on key personnel; risks related to expansion of Aastra's business operations-domestically and internationally; exchange rate fluctuations; risks related to future acquisitions; requirements for additional financing of Aastra's business; longer credit terms Credit Terms The conditions under which credit will be extended to a customer. The components of credit terms are: cash discount, credit period, net period. extended to Aastra's customers; continued implementation of an enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. system; potential fluctuations in quarterly financial results; possible volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the to Aastra's share price; limited range of products that Aastra sells; risks associated with product returns and product defects; Aastra's ability to protect its intellectual property; Aastra's potential vulnerability to computer and information systems security breaches; competition from third parties; consolidation and reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. in the telecommunications industry; rapid technological change; risk of third party claims for infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. of intellectual property rights by others; and risks related to technical standards and the certification our products. The material factors and assumptions that were applied in making the forward-looking statements in this press include: that Aastra will be able to continue with its restructuring and integration plans for the EADS Enterprise Telephony business and the DeTeWe Telecommunications Systems business; that the DeTeWe's workers' council A workers' council is a deliberative assembly, composed of working class or proletarian members, intended to facilitate workers' self-management or workers' control. Unlike a trade union, in a workers' council the workers are assumed to be in actual control of the workplace, rather will not prevent Aastra from implementing its restructuring plans without any material amendments; and that, after the implementation of the restructuring and integration plans, no further changes will be required in order to return the EADS Enterprise Telephony business and the DeTeWe Telecommunications, respectively, to profitability based upon expected revenues for each. It is important to note that: unless otherwise indicated, forward-looking statements in this press release describe Aastra's expectations as of the date of this press release; Aastra cautions readers not to place undue reliance on the forward-looking statements in this press release as actual results may differ materially from expectations if known and unknown risks or uncertainties affect Aastra's business, or if estimates or assumptions prove inaccurate. Therefore, Aastra cannot provide any assurance that forward-looking statements will materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. and Aastra assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events o other reason.
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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Stated in thousands of Canadian dollars except per share data
Year 4TH QUARTER
ended December 31st Three months
ended December 31st
2005 2004 2005 2004
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Sales $ 522,561 $ 256,119 $ 171,887 $ 66,717
Cost of goods sold 298,734 130,894 103,471 32,422
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$ 223,827 $ 125,225 $ 68,416 $ 34,295
Selling, general
and administrative 119,390 66,526 33,062 16,823
Research and development 50,931 23,599 16,247 4,945
Amortization 17,496 11,320 4,751 2,698
Foreign exchange
loss (gain) 4,278 (1,229) 2,768 (1,431)
Investment income (1,145) (2,364) (277) (616)
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Earnings before
income taxes $ 32,877 $ 27,373 $ 11,865 $ 11,876
Income taxes 6,562 3,175 2,682 1,724
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Net earnings for
the period $ 26,315 $ 24,198 $ 9,183 $ 10,152
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Basic earnings per
share for the period
(note 4) $ 1.52 $ 1.42 $ 0.53 $ 0.59
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Diluted earnings per
share for the period
(note 4) $ 1.46 $ 1.38 $ 0.51 $ 0.58
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- Actual common shares outstanding as at December 31,
2005 - 17,473,784 (2004 - 17,206,634)
- Weighted average common shares outstanding for the year and
three months ended December 31, 2005- 17,330,423 and 17,447,870
(2004 - 17,093,740 and 17,155,317)
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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Stated in thousands of Canadian dollars
Year 4TH QUARTER
ended December 31st Three months
ended December 31st
2005 2004 2005 2004
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Cash and cash
equivalents provided
by (used for) operations:
Net earnings for the
period $ 26,315 $ 24,198 $ 9,183 $ 10,152
Amortization of
capital assets 13,582 9,856 2,939 1,758
Amortization of
intangible assets 7,335 6,206 1,998 1,326
Future income taxes 1,762 1,611 1,152 2,943
Stock-based
compensation expense 777 248 241 62
Loss on sale of short
term investments 739 - (461) -
Loss (gain) on sale
of capital assets 1,112 (86) 723 (23)
Pension asset amortization 98 93 30 16
Net change in non-cash
operating working capital 25,473 12,351 1,913 (6,210)
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77,193 54,477 17,718 10,024
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Cash and cash equivalents
provided by (used in)
financing activities:
Bank indebtedness 4,928 (6,610) 4,875 (16)
Issuance of common shares 2,962 1,708 611 970
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7,890 (4,902) 5,486 954
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Cash and cash equivalents
provided by (used for)
investing activities:
Short-term investments 13,468 (8,541) (28,340) (3,511)
Net purchase of
capital assets (11,399) (2,242) (6,554) (830)
Business acquisitions
(note 2) (97,601) - 1,652 -
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(95,532) (10,783) (33,242) (4,341)
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Foreign exchange loss on
cash held in foreign
currency (3,092) (490) 1,219 (48)
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Increase (decrease) in
cash and cash equivalents (13,541) 38,302 (8,819) 6,589
Cash and cash equivalents,
beginning of period 64,181 25,879 59,459 57,592
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Cash and cash
equivalents, end of
period $ 50,640 $ 64,181 $ 50,640 $ 64,181
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The interim Consolidated Financial Statements for the year and the
three months ended December 31, 2005 have not been reviewed by an
auditor.
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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Stated in thousands of Canadian dollars
DECEMBER 31st 2005 DECEMBER 31st 2004
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Assets
Current assets:
Cash and cash equivalents $ 54,140 $ 64,181
Short-term investments 47,885 64,853
Accounts receivable 144,480 50,149
Income taxes receivable 801 2,039
Net investment in leases 20,029 756
Inventories 59,941 47,229
Prepaid expenses and other assets 9,519 2,193
Future income taxes 4,422 1,326
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$ 341,217 $ 232,726
Future income taxes 7,729 9,690
Net investment in leases 26,861 1,793
Capital assets, net 39,378 16,974
Accrued pension asset 725 1,046
Goodwill 17,512 6,353
Intangible assets 32,406 13,875
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$ 465,828 $ 282,457
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Liabilities and Shareholders' Equity
Current liabilities:
Indebtedness 5,640 -
Accounts payable and
accrued liabilities 121,434 44,095
Short term loan payable 17,959 -
Restructuring accrual 16,609 -
Income taxes payable 11,823 8,972
Deferred revenue 13,960 2,339
Future income taxes 262 -
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$ 187,687 $ 55,406
Contingent consideration payable 5,313 6,300
Pension liability 16,506 707
Future income taxes 4,829 -
Loan payable 24,067 -
Other long term accruals 622 99
Restructuring accrual 2,527 -
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$ 241,551 $ 62,512
Shareholders' equity:
Share capital 105,370 102,407
Contributed surplus 1,110 333
Cumulative translation adjustments (25,512) 211
Retained earnings 143,309 116,994
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224,277 219,945
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$ 465,828 $ 282,457
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The interim Consolidated Financial Statements for the year and the
three months ended December 31, 2005 have not been reviewed by an
auditor.
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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
Stated in thousands of Canadian dollars
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Cumula-
tive
Trans-
Contri- lation
Common Share buted Adjust- Retained
Shares Capital Surplus ment Earnings Total
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Balance,
December
31,
2004 17,206,634 $ 102,407 $ 333 $ 211 $ 116,994 $ 219,945
Shares
issued
on exercise
of
options 216,425 2,351 - - - 2,351
Stock option
compensation - - 536 - - 536
Translation of
self sustaining
operations - - - (21,177) - (21,177)
Net income - - - - 17,132 17,132
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Balance,
September
30,
2005 17,423,059 104,758 869 (20,966) 134,126 218,787
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Shares
issued
on exercise
of
options 50,725 612 - - - 612
Stock option
compensation - - 241 - - 241
Translation of
self sustaining
operations - - - (4,546) - (4,546)
Net income - - - - 9,183 9,183
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Balance,
December
31,
2005 17,473,784 $ 105,370 $ 1,110 $ (25,512) $ 143,309 $ 224,277
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Cumula-
tive
Trans-
Contri- lation
Common Share buted Adjust- Retained
Shares Capital Surplus ment Earnings Total
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Balance,
December
31,
2003 17,032,109 $ 100,699 $ 85 $ 1,101 $ 92,796 $ 194,681
Shares
issued
on
exercise
of
options 74,075 738 - - - 738
Stock option
compensation - - 124 - - 124
Translation
of
self
sustaining
operations - - - (909) - (909)
Net income - - - - 14,046 14,046
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Balance,
September
30,
2004 17,106,184 101,437 209 192 106,842 208,680
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Shares
issued
on
exercise
of
options 100,450 970 - - - 970
Stock
option
compensation - - 124 - - 124
Translation
of
self
sustaining
operations - - - 19 - 19
Net income - - - - 10,152 10,152
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Balance,
December
31,
2004 17,206,634 $ 102,407 $ 333 $ 211 $ 116,994 $ 219,945
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The interim Consolidated Financial Statements for the year and three
months ended December 31, 2005 have not been reviewed by an auditor.
Aastra Technologies Limited (TSX:AAH) |
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