TORONTO, ONTARIO (March 11, 2004) -- Aastra Technologies Limited - (TSX: “AAH”) today announced its financial results for the fourth quarter and year ended December 31, 2003. Net earnings for the three months ended December 31, 2003 were $7.1 million or $0.41 diluted earnings per share compared to $10.6 million or $0.67 diluted earnings per share in the same period last year. The fourth quarter earnings for last year included certain one-time benefits. Excluding these benefits, net income would have been approximately $0.40 diluted earnings per share for the fourth quarter of last year. These fourth quarter 2003 financial results represent the Company’s 23rd consecutive quarter of profitability. Net earnings for the year ended December 31, 2003 were $21.0 million or $1.20 diluted earnings per share compared to $29.2 million or $1.87 diluted earnings per share for 2002.
Net sales for the three months ended December 31, 2003 were $73.5 million compared to net sales of $56.3 million for the same period last year, an increase of 30%. Net sales from the Communication Access Terminals segment were $61.5 million in the fourth quarter compared to $38 million for the three months ended December 31, 2002. Sales in this segment included approximately $40 million in sales of PBX communication systems from the recently acquired European PBX product line. Net sales from the Network Communication Products segment were $12 million in the fourth quarter compared to $18 million in the same period last year. Net sales for the year ended December 31, 2003 were $191.7 million compared to net sales of $212.7 million for the year ended December 31, 2002.
Gross profit margin was 44.2% of sales for the three months ended December 31, 2003 compared to gross margin of 44.9% of sales for the same period last year. Research and development expenses in the fourth quarter of 2003 were $7.0 million or 9% of sales, compared to $4.8 million or 9% of sales in the comparable quarter of 2002. Research and development expenses increased as a result of the PBX acquisition. This increase was partially offset by reductions that the Company has made early in 2003 in its Network Access development programs. Selling, general and administrative expenses were $16.3 million or 22% of sales in the fourth quarter of 2003 compared to $5.8 million or 10% in the fourth quarter of 2002. This significant increase in operating costs is again the result of the sales and administration infrastructure across Europe acquired with the PBX product line.
Earnings before income taxes, amortization and interest for the fourth quarter ended December 31, 2003 were $10.0 million compared to $14.7 million in 2002 for the same quarter. Amortization of capital and intangible assets was $3.2 million for the fourth quarter of 2003 compared to $3.2 million in the same period last year. Amortization expense increased by $0.6 million as a result of the PBX acquisition and an additional $0.3 million as the Company made the decision to amortize certain long life intangible assets that were previously treated as indefinite life assets. Amortization expense for the fourth quarter last year included a charge for a write-down of certain excess equipment. Investment income was $1.1 million during the fourth quarter compared to $1.8 million in 2002 as the balance last year included a capital gain of approximately $1.3 million realized on the sale of an equity investment.
Gains from foreign exchange were $0.8 million in the fourth quarter compared to no gain in the fourth quarter last year. As a result of the efforts the Company made during the year to reduce its exposure to foreign currencies, the impact of continued strengthening of the Canadian to the U.S. dollar did not have a negative impact of the Company in the fourth quarter. However, the Company did experience a foreign exchange gain in the fourth quarter relating to certain advances relating to the PBX acquisition. In addition, an additional foreign exchange benefit of $1.2 million has been shown in the equity section of our balance sheet, as Cumulative Translation Adjustment, relating to the long-term investment in the PBX business.
Finally, income tax expense decreased to $0.8 million or 10% of pre-tax income compared to $2.7 million or 20% of pre-tax income in the fourth quarter of 2002. Income tax rates have continued to be impacted by a significant shift in taxable income to lower tax jurisdictions.
The fourth quarter represents the Company’s first quarter with the full three month operating results of the European PBX business that the Company acquired from Ascom Holdings AG on August 31, 2003. As a result of revenue seasonality, the European PBX business operated marginally above break-even for the quarter. However, we currently believe these results will not be sustainable until we complete our restructuring efforts later this year. Once completed, we believe that our European PBX business will be well positioned within the highly competitive PBX market.
As a result of its continued profitability Aastra experienced an increase in cash, cash equivalents and short-term investments to approximately $82 million at the end of 2003. In addition to focusing on development of internal growth through the introduction of new products, the Company will also continue to focus on identifying acquisition opportunities.
About Aastra Technologies Limited
Aastra Technologies Limited (TSX: “AAH”), headquartered in Concord, Ontario, Canada, develops and markets products and systems for accessing communication networks. Aastra’s products include a full range of residential and business telephone terminals, Enterprise Private Branch Exchanges (PBX), network access servers and high quality digital video gateways. Aastra serves the majority of telephone companies and certain cable operators and broadcasters in North America and Europe, with a growing presence in South America and Asia. For more information on Aastra, visit our Web site at http://www.aastra.com.
For further information contact:
Allan Brett, CFO
905-760-4160
abrett@aastra.com
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Press Contact
Aastra Technologies Ltd.
155 Snow Blvd.
Concord, Ontario
Canada
L4K 4N9
press@aastra.com
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