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TORONTO, ONTARIO (April 27, 2004) -- Aastra Technologies Limited - (TSX: “AAH”) today announced its financial results for the first quarter ended March 31, 2004. Net earnings for the three months ended March 31, 2004 were $4.6 million or $0.26 diluted earnings per share compared to $6.0 million or $0.35 diluted earnings per share in the same period last year. These first quarter 2004 financial results represent the Company’s 24th consecutive quarter of profitability.
Net sales for the three months ended March 31, 2004 were $64 million compared to net sales of $40 million for the same period last year, an increase of 60%. Net sales of Communication Access Terminals, including sales of PBX communication systems, were $55 million in the first quarter of 2004 compared to $26 million for the three months ended March 31, 2003. Net sales of the Network Access Products segment were $9 million in the first quarter of 2004, compared to $14 million in the first quarter last year as a result of weaker sales in the Remote Access Server product line.
Gross profit margins increased to 48% of sales for the first quarter of 2004 compared to gross margins of 45% of sales for the same period last year. Gross margins increased mainly as a result of higher margins in the PBX product line. Research and development expenses in the first quarter of 2004 were $6.4 million or 10% of sales compared to $4.3 million or 11% of sales in the first quarter of 2003. Selling, general and administration expenses were $17.2 million or 27% of sales in quarter compared to $4.7 million or 12% of sales in the first quarter of 2003. These increases in operating expenses relate primarily to the addition of the PBX product line acquired in September 2003.
Earnings before income taxes, amortization and interest for the quarter ended March 31, 2004 were $7.5 million compared to $8.0 million last year for the same quarter. Amortization of capital and intangible assets was $2.9 million for the first quarter of 2004 compared to $2.0 million in the first quarter last year. Amortization increased by $0.6 million as a result of the PBX product line and $0.3 million as the Company made the decision to amortize certain long life intangible assets that were previously treated as indefinite life assets. Investment income decreased to $0.5 million in the first quarter of 2004 from $1.3 million in 2003 as the balance last year includes a one-time capital gain of approximately $0.8 million realized on the sale of an equity investment. Finally income tax expense decreased to $0.5 million or 11% of pre-tax income for the first quarter of 2004 compared to $1.4 million or 18% of pre-tax income in the first quarter of 2003 as a result of a shift in taxable income to lower-tax jurisdictions.
During the first quarter the Company initiated certain restructuring efforts in its European PBX group, which includes the scheduled termination of approximately 50 employees, in an effort to improve its financial performance. In addition to the restructuring provision included in our purchase price equation of this group, the first quarter financial results include an additional charge of approximately $0.5 million related to these restructuring activities. The full benefit of these restructuring efforts will not be realized until late in the third quarter of this year. While the Company is pleased with the progress we have made to date in reshaping the PBX group in order to sustain its long-term profitability, we remain focused on completing the transformation to a unified pan-European group with a clear vision to deliver the most effective communications solutions to our customers.
As a result of its continued profitability Aastra experienced an increase in its cash, cash equivalents and short-term investments to approximately $95 million at the end of March 2004. In addition to focusing on 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 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.
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
Media Contact:
press@aastra.com
Contact Investor Relations:
investors@aastra.com
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