07/20/2010

Aastra Reports Second Quarter 2010 Financial Results

TORONTO, ONTARIO (Marketwire - July 20, 2010) -- Aastra Technologies Limited - (TSX: “AAH”) today reported its unaudited financial results for the second quarter ended June 30, 2010.

Sales for the three months ended June 30, 2010 were $171.2 million compared to $197.2 million for the same quarter in 2009, a decline of approximately 13%. As a result of the continued strength of the Canadian dollar against most other currencies, the Company experienced a significant sales drop of $29.0 million directly from changes in foreign exchange when compared to the second quarter of 2009. Excluding the impact of foreign exchange, sales would have increased approximately $3 million or 1.6% in the second quarter from the same period last year. In addition, as a result of higher sales in Germany and several other regions, sales would have increased approximately $12 million or 7.0% when compared to the first quarter of this year if changes in the foreign exchange were excluded.

Gross margin was 44.1% of sales in the second quarter of 2010 compared to 45.6% of sales in the same period in 2009. While the weaker Euro is still having a negative impact compared to last year, gross margin for the quarter was relatively stable to gross margin of 44.2% of sales realized in the first quarter of this year.

Research and development expenses in the second quarter of 2010 were $16.6 million or 9.7% of sales, compared to $21.8 million or 11.1% of sales in the same quarter of 2009. The decrease was primarily related to the impact of foreign exchange rates on European development costs, while the decrease as a percentage of revenue is the result of a continued streamlining of development costs across all major product lines.

Selling, general and administrative (“SG&A”) expenses were $46.1 million or 26.9% of sales in the first quarter of 2010 compared to $56.0 million or 28.4% of sales in the second quarter of 2009. SG&A expenses decreased as a result of the impact of foreign exchange rates on European SG&A costs as well as general reduction in over-all expenses.

Foreign exchange losses of $1.6 million were recognized in the second quarter of 2010, primarily in our European operations, where a continued weakening of the Euro to the Swiss Franc and the Canadian dollar occurred during the quarter. Amortization expense recorded in operating expenses decreased to $5.1 million in the second quarter of 2010 compared to $5.6 million in the second quarter of 2009 as a result of foreign exchange rates as well as the fact that certain intangible assets have become fully amortized during the past year.

The Company recorded interest expense of $0.1 million in the second quarter of 2010 compared to $0.2 million in the second quarter last year as both the outstanding principal balance and variable interest rates on the company’s term loan are lower. Investment income totaled $0.6 million in the second quarter, down slightly from $0.7 million in the same quarter of 2009. Income tax expense was recognized at $1.4 million or 20.4% of pre-tax earnings in the quarter compared to $1.2 million or 18.2% of pre-tax earnings in the first quarter last year.

As a result of the above, net earnings were $5.3 million or $0.37 diluted earnings per share in the second quarter in 2010 compared to $5.5 million or $0.40 diluted earnings per share in the same period in 2009.

Cash and short-term investments totaled $104.4 million at the end of June 2010 compared to $116.9 million at December 31, 2009 and $118.8 million at the end of the first quarter this year. During the second quarter of 2010, the Company used $7.1 million of cash in operating activities as, despite continued cash flow from earnings, there was a reduction of $18.6 million in the quarter from an increase in non-cash working capital. The working capital increase was mainly driven by an increase of $6.6 million in inventory and a decrease in accounts payable by $10.8 million during the quarter. In addition, the Company used $2.8 million to pay dividends to shareholders while an additional $2.8 million was invested in capital asset during the second quarter.

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 24, 2010 to all shareholders of record on August 3, 2010. 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.

For further information contact:
Kathy Ristic, V.P. Finance,
(905) 760-4200
investors@aastra.com