TORONTO, ONTARIO (October 25, 2004) -- Aastra Technologies Limited - (TSX: “AAH”) today announced its financial results for the third quarter ended September 30, 2004. Net earnings for the three months ended September 30, 2004 were $3.7 million or $0.21 diluted earnings per share compared to $4.9 million or $0.28 diluted earnings per share for the same period last year. Net earnings for the nine months ended September 30, 2004 were $14.0 million or $0.80 diluted earnings per share compared to $13.8 million or $0.80 diluted earnings per share for the same period in 2003. These third quarter 2004 financial results represent the Company’s 26th consecutive quarter of profitability.
Net sales for the three months ended September 30, 2004 were $60.5 million compared to net sales of $45.1 million for the same period last year, an increase of 34%. Net sales for the nine months ended September 30, 2004 increased 60% to $189.4 million compared to $118.2 million for the same period in 2003. While higher than the same period last year, sales in the third quarter decreased compared to the second quarter of this year, in line with management’s expectations, as a result of seasonally weaker sales from Europe during the summer months.
Net sales of Communication Access Terminals, including PBX communication systems, were $51.7 million in the third quarter of 2004 compared to $35.6 million for the three months ended September 30, 2003. Sales in the quarter included a full quarter of PBX sales in Europe compared to the inclusion of only September 2003 sales in the third quarter last year.
Net sales of the Network Access Products segment were $8.9 million in the third quarter of 2004, compared to $9.5 million in the third quarter last year. Weaker sales and service revenue in the Remote Access Server product line were offset by an increase in sales of digital video products.
Gross margin was 46% of sales for the third quarter of 2004, consistent with a gross margin of 46% of sales for the same period last year, yet down slightly when compared to gross margins of 49% in the second quarter of this year. While gross margin in the network access segment continues to be approximately 50%, gross margin in the access terminals segment declined to 45% from 49% as a result of limited pricing pressure and seasonal volume decreases from Europe.
Research and development expenses in the third quarter of 2004 were $6.2 million or 10% of sales compared to $5.0 million or 11% of sales in the third quarter of 2003. Selling, general and administration expenses were $15.7 million or 26% of sales in the quarter compared to $8.8 million or 20% of sales in the third quarter of 2003. While the increase in operating expenses are the result of the addition of the PBX product line acquired in September 2003, operating expenses continued to decrease in the quarter when to compared to the first half of 2004 as a result of restructuring efforts in the European group. These savings were offset partially by higher corporate costs and an increase in certain product development activities in North America.
Amortization of capital and intangible assets was $2.9 million for the third quarter of 2004 compared to $2.3 million in the third quarter last year. Amortization increased by $0.3 million from the same period in 2003 as the Company made the decision to amortize certain long life intangible assets that in the same period last year were treated as indefinite life assets. For the quarter, investment income was $0.7 million, consistent with the third quarter of 2003 as higher average cash balances were offset by lower rates of return. The Company experienced a foreign exchange loss of $0.1 million in the third quarter consistent with the same period last year. Finally, income tax expense was consistent at $0.4 million or 9% of pre-tax income for the third quarter of 2004 compared to $0.5 million or 9% of pre-tax income in the third quarter of 2003.
As a result of its continued profitability and focus on working capital management, Aastra experienced an increase in its cash, cash equivalents and short-term investments of $14 million for the third quarter to a record balance of approximately $118.9 million at the end of September 2004. In addition to focusing on the development of internal growth through the research and 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 broadcasters in North America and Europe, with a 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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Press Contact
Aastra Technologies Ltd.
155 Snow Blvd.
Concord, Ontario
Canada
L4K 4N9
press@aastra.com
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Contact Investor Relations:
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