Aastra Technologies - (TSX: “AAH”) today reported its unaudited financial results for the three months and year ended 31 December 2009.
The company is pleased to report a significant improvement in net earnings in the fourth quarter resulting in a record net income for the year ended 31 December 2009. In addition, the company is also pleased to announce an increase to its quarterly dividend to $0.20 per share for this quarter, payable on 24 March 2010 to all shareholders of record on 3 March 2010.
Net revenue for the three months ended 31 December 2009 was $217.8 million compared to $261.8 million for the same quarter in 2008, a decrease of 16.8% from the previous year. While sales were down from the record level experienced in the fourth quarter last year, sales for the quarter were up 9.6% sequentially from sales of $198.7 million in the third quarter of 2009.
Sales for the year ended 31 December 2009 were up slightly at $832.9 million compared to $832.1 million for 2008. The results for 2008 include only eight months of sales of the former Ericsson Enterprise product lines acquired on 30 April 2008. Excluding the impact of the Ericsson Enterprise acquisition, sales would have decreased by approximately 8% from 2008 as a result of the weaker global economy in 2009, and its impact on the IT spending by our enterprise end customers across many of our markets.
Gross margin decreased slightly to 45% of sales in the fourth quarter of 2009 compared to 47% of sales in the same period in 2008. Gross margin for the year ended 31 December 2009 was 45.9% compared to 44.9% for the year in 2008.
Research and development expenses in the fourth quarter of 2009 were $19.2 million or 8.8% of sales, compared to $27.7 million or 10.6% of sales in the final quarter of 2008. Research and development expenses for the year ended 31 December 2009 decreased to $81.8 million or 9.8% of sales from $98 million or 11.8% of sales in 2008. The company actively worked in 2009 to create efficiencies across its research and development centres.
Selling, general and administrative expenses were $51.6 million or 23.7% of sales in the fourth quarter of 2009 compared to $67.9 million or 25.9% of sales in the fourth quarter of 2008. Selling, general and administrative expenses for the year ended 31 December 2009 were down slightly to $217.4 million or 26.1% of sales compared to $218.1 million or 26.2% of sales for the year in 2008.
Amortisation expense recorded in operating expenses was $5.3 million in the fourth quarter of 2009 compared to $9.6 million in the fourth quarter of 2008. For the year, amortisation expenses recorded in operating expenses were $23 million compared to $26.4 million for the year in 2008. Amortisation expenses decreased as certain intangible assets became fully amortised at the end of 2008. In the fourth quarter of 2008, the company recorded a non-cash charge on the impairment of certain long-lived assets and goodwill of $14.1 million, which had a significant negative impact on earnings in that quarter.
Losses from the impact of foreign exchange were $2.2 million in the fourth quarter of 2009, comparable to foreign exchange losses of $2.1 million incurred in the same period of 2008. Foreign exchange losses were $3.6 million for the year in 2009 compared to $3.1 million for 2008 as a result of the general strengthening of the Canadian dollar over these periods.
Interest income was down to $0.7 million in the fourth quarter of 2009 from $1 million in the final quarter of 2008. For the year, investment income was $2.8 million compared to $3.6 million in 2008. The decrease in both periods is primarily the result of lower average rates of return in 2009 when compared to 2008. Interest expense decreased to $1.2 million for the year in 2009 compared to $2.4 million in 2008 as a result of a decrease in the loan balance outstanding as well as lower rates of interest on the balance outstanding.
As a result of the above, net earnings for the three months ended 31 December 2009 improved sharply to $15.3 million or $1.09 diluted earnings per share compared to $1.5 million or $0.10 diluted earnings per share in the same period in 2008. Net earnings for the year ended 31 December 2009 were $44.6 million or $3.20 diluted earnings per share compared to $11.5 million or $0.73 diluted earnings per share in 2008. Despite the depressed levels of sales due to the weak economic conditions, the company was pleased with its ability to manage its cost base and generate strong profitability resulting in record net earnings for 2009.
Cash and short-term investments totalled $116.9 million at the end of 2009 compared to a balance of $98.2 million at the end of 2008. During the fourth quarter of 2009, the company generated $11.3 million in cash flow from operations, net of working capital increases. For the year, the company generated $68.1 million from operations, net of working capital increases. In addition, the company repurchased $17.7 million of its own shares and repaid $22.8 million of long-term debt during 2009.
As announced previously, the company has entered into an agreement with KEYMILE to sell its optical transmission and multiplexer product line, which is non-core to the company's enterprise communication business and accounted for less than 2% of the company's consolidated revenue for 2009. The sale is subject to customary closing conditions and is expected to close by the end of March 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.
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