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Aastra Reports Improved Earnings and Declares Dividend
"Given our confidence in our financial strength, we are pleased to be able to return profits to our shareholders in the form of a quarterly dividend while satisfying our capital requirements and continuing with our long-term business strategy", said Francis N. Shen, Chairman and Co-CEO of Aastra.
Sales for the three months ended September 30, 2009 were $198.7 million compared to $224.5 million for the same quarter in 2008, a decrease of 11.5%. On a sequential basis, sales increased by 0.8% from sales of $197.2 million in the second quarter of this year, despite the fact that the third quarter is generally seasonally weaker in several of our major markets across Europe.
Gross margin was 44.7% of sales in the quarter compared to 45.1% of sales in the same period in 2008 and 45.6% of sales in the second quarter of 2009. Research and development expenses in the third quarter were $18.8 million or 9.5% of sales, compared to $29.7 million or 13.2% of sales in the same quarter of 2008.
Selling, general and administrative expenses were $49.6 million or 25.0% of sales in the third quarter compared to $58.8 million or 26.2% of sales in the third quarter of 2008. SG&A expenses decreased over the same period last year as well as on a sequential basis as the Company continued to focus on aggressively managing its cost structure in lieu of weaker end customer demand.
Amortization expense recorded in operating expenses was $6.2 million in the third quarter compared to $7.4 million in the same period last year. The Company recorded interest expense of $0.2 million in the third quarter this year compared to $0.9 million in the third quarter of 2008 as a result of both lower interest rates and a lower long-term debt balance. Losses from foreign exchange were $2.0 million in the third quarter of 2009 compared to losses of $1.3 million in the third quarter of 2008.
Investment income totalled $0.8 million in third quarter compared to $0.5 million in the same quarter of 2008. While the investment income earned on excess cash in the quarter has decreased sharply compared to last year, the Company earned a higher amount of financing income on its leasing business. Income tax expense was $2.8 million or 22.7% of pre-tax income compared to $0.7 million or 21.7% of pre-tax income in the same period last year.
As a result, net income for the third quarter was $9.6 million or $0.71 diluted earnings per share compared to $2.6 million or $0.17 diluted earnings per share in the same period last year and $5.5 million or $0.40 diluted earnings per share in the second quarter of 2009.
Cash and short-term investments increased to $105.6 million at the end of September 2009 compared to $80.6 million as at June 30, 2009 and $98.2 million at the end of December 2008. During the third quarter of 2009, the Company generated $37.8 million in cash flow from operations, bringing the total increase in cash flow from operations to $59.5 million for the nine months ended September 30, 2009.
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.
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 Management Discussion and Analysis ("MD&A") for fiscal 2008 as well as our MD&A for our third quarter of 2009, 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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