Although net earnings in the fourth quarter were impacted by a non-cash asset impairment of certain long-lived assets and goodwill aggregating to $14.1 million and restructuring costs aggregating to $11.3 million, Aastra is pleased to report its 43rd consecutive quarter of profitability this quarter. Excluding these charges, Aastra's fourth quarter operating results reflect a marked improvement from previous quarters in 2008 as Aastra prepares to face the difficult economic environment ahead in 2009.
Net revenue for the three months ended December 31, 2008 was a record $261.8 million compared to $155.2 million for the same quarter in 2007. The Company experienced a significant increase in revenue in all regions as a result of the Ericsson acquisition which closed on April 30, 2008. Excluding the impact of this acquisition, net revenue would have increased 13.2% to $175.8 million for the fourth quarter. Net sales from the former Ericsson product lines were $86.0 million, an increase of 16.2% from sales of $74.0 million in the third quarter of 2008. Sales for the year ended December 31, 2008 were $832.1 million compared to $606.6 million for 2007, also a record for the Company. Excluding the revenue from the product lines acquired from Ericsson, sales would have increased by 1.7% from 2007 to $617.0 million in 2008.
Gross margin increased to 47.0% of sales in the fourth quarter of 2008 compared to 42.8% of sales in the same period in 2007. Gross margin for the year ended December 31, 2008 was 44.9% compared to 42.5% for the year in 2007. This significant increase in gross margin in the quarter and year over the same periods in 2007 is a result of the positive effect of several factors including lower overhead ratios and a favourable mix of product and service revenues.
Research and development expenses in the fourth quarter of 2008 were $27.7 million or 10.6% of sales, compared to $12.9 million or 8.4% of sales in the same quarter of 2007. Research and development expenses for the year ended December 31, 2008 increased to $98.0 million or 11.8% of sales from $54.6 million or 9.0% of sales in 2007. R&D cost reductions were obtained throughout the second half of the year in several product lines, including the former Ericsson products.
Selling, general and administrative expenses were $67.9 million or 25.9% of sales in the fourth quarter of 2008 compared to $35.0 million or 22.5% of sales in the fourth quarter of 2007. Selling, general and administrative expenses for the year ended December 31, 2008 were $218.1 million or 26.2% of sales compared to $145.1 million or 23.9% of sales for the year in 2007.
Included in the operating results this quarter were severance charges totaling $11.3 million from the restructuring efforts undertaken in the fourth quarter of 2008.
Amortization expense recorded in operating expenses was $9.6 million in the fourth quarter of 2008 compared to $3.1 million in the fourth quarter of 2007. For the year, amortization expenses recorded in operating expenses were $26.4 million compared to $13.4 million for the year in 2007 as a result of the Ericsson acquisition completed earlier in the year. In addition, in the fourth quarter the Company recorded a non-cash charge on the impairment of certain long-lived assets and goodwill of $14.1 million.
As a result, net earnings for the three months ended December 31, 2008 were $1.5 million or $0.10 diluted earnings per share compared to $12.3 million or $0.75 diluted earnings per share in the same period in 2007. Net earnings for the year ended December 31, 2008 were $11.5 million or $0.74 diluted earnings per share compared to $35.8 million or $2.17 diluted earnings per share in 2007.
Cash and short-term investments totaled $98.2 million at the end of 2008 compared to a balance of $133.2 million at the end of 2007. During the fourth quarter of 2008, the Company generated $17.8 million in cash flow from operations, net of working capital increases. In addition, the Company repurchased 775,000 of its own common shares for $7.8 million during the fourth quarter. As announced last month, subsequent to the end of 2008, the Company completed its substantial issuer bid in which it repurchased an additional 1,417,738 of its common shares for a total purchase amount of $17.7 million.
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 networking products, including terminals, systems, and applications. For additional information on Aastra, visit our website at http://www.aastra.com.