TORONTO, ONTARIO (May 11, 2005) -- Aastra Technologies Limited - (TSX: “AAH”) today announced its unaudited financial results for the first quarter ended March 31, 2005. Net earnings for the three months ended March 31, 2005 were $6.5 million or $0.37 diluted earnings per share compared to $4.6 million or $0.27 diluted earnings per share in the same period last year. The first quarter results for this year include the results of operations for one month from the EADS Enterprise Telephony acquisition that was completed on February 28 th . Excluding the impact of this acquisition, net earnings would have been $8.5 million or $0.48 diluted earnings per share, an increase of 85% for the comparable period last year.
Net sales for the three months ended March 31, 2005 were $80.9 million compared to net sales of $64.0 million for the same period last year, an increase of approximately 26%. Net sales from the recently acquired EADS Enterprise Telephony group were approximately $17 million for the month of March. Excluding the impact of this acquisition, net sales would have been approximately $64 million, consistent with the same period last year.
Net sales in the Enterprise Communications segment, including sales from the EADS acquisition, were $76 million in the first quarter compared to $55 million for the three months ended March 31, 2004. Excluding the acquisition, net sales in this segment increased by over 7% to $59 million when to the same period last year. Net sales from the Network Access segment were only $5 million in the first quarter compared to $9 million in the same period last year. Sales in this segment were primarily related to sales of the digital video products while revenue from the CVX product line continued to decline as expected.
Gross profit margin was 48% of sales for the three months ended March 31, 2005 consistent with the gross margin levels experienced in the same quarter last year. Continued improvements in the gross margin on our existing product lines was offset by the lower gross margins experienced on the new product lines acquired from EADS.
Research and development expenses in the fourth quarter of 2004 were $7.9 million or 10% of sales, compared to $6.4 million or 10% of sales in the comparable quarter of 2004. Excluding the impact of the EADS acquisition, research and development expenses would have declined by 10% or $5.8 million.
Selling, general and administrative expenses were $20.6 million or 25% of sales in the quarter compared to $17.2 million or 27% of sales in the first quarter of 2004. Excluding the impact of the EADS acquisition, selling, general and administrative expenses would have declined by over 10% when compared to the last period last year.
Earnings before income taxes, amortization and interest for the quarter were $11.6 million or 14% of sales compared to $9.1 million or 14% of sales in the same period of 2004. Amortization of capital and intangible assets, excluding tooling, was $3.3 million for the first quarter compared to $2.9 million in the same period last year. Amortization of capital and intangible assets arising from the EADS acquisition was $0.8 million during the first quarter.
Despite a significant decrease in the level of cash and short term investments upon the completion of the EADS acquisition in February, the Company recorded investment income of $0.4 million in the first quarter compared to $0.5 million for the first quarter last year as a result of higher average rates of return on its excess cash this quarter.
Income tax expense was $1.4 million in the first quarter or 17% of pre-tax profits compared to $0.5 million or 10% of pre-tax profits in the first quarter last year. While income tax rates have continued to be impacted by profits in lower tax jurisdictions, there was a continued shift towards more of the Company's taxable income coming from Europe during the first quarter.
As a result of the payment of approximately $88 million, net of acquired cash, on the EADS acquisition, Aastra experienced a decrease in cash and short-term investments to approximately $44 million at the end of the first quarter from a balance of approximately $129 million at the end of December 2004. During the first quarter, the Company generated approximately $10 million of positive cash flow from operations, excluding the addition of approximately $6 million of working capital primarily related to the acquisition. 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 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/.
Certain information discussed in this press release is forward-looking and is subject to important risks and uncertainties. Forward-looking statements include statements of plans, objectives, strategies and expectations. The words “anticipate”, “believe”, “estimate”, and “expect” and similar expressions are intended to identify forward looking statements. The results or events predicted in these statements may differ materially from actual results or events. Please refer to reports filed by Aastra with securities regulatory authorities in Canada for an identification of factors which could cause results or events to differ from current expectations. Aastra disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For further information contact:
Allan Brett, CFO
905-760-4160
abrett@aastra.com
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