TORONTO, ONTARIO (April 25, 2006) -- Aastra Technologies Limited - (TSX: “AAH”) today announced its unaudited financial results for the first quarter ended March 31, 2006. Sales for the three months ended March 31, 2006 were $150.9 million compared to net sales of $80.9 million for the same period last year, an increase of approximately 86%. The results for the first quarter this year include three months of operations from the Matra and Intecom Enterprise Telephony groups acquired from EADS in February 2005 as well as the DeTeWe Telecommunications Systems business acquired from Röchling in July 2005. In comparison, the results for the first quarter last year include only one month of operations from the Matra and Intecom groups acquired from EADS.
Gross margin was 42% of sales for the three months ended March 31, 2006, a decrease from a gross margin of 48% in the first quarter last year. While the gross margin on our existing product lines decreased slightly compared to last year, this decline was primarily due to lower gross margins experienced on the product lines acquired from EADS and Röchling.
Research and development expenses in the first quarter of 2006 were $15.9 million or 10.5% of sales, compared to $7.9 million or 9.7% of sales in the same quarter of 2005. Selling, general and administrative expenses were $34.4 million or 22.8% of sales in the quarter compared to $20.6 million or 25.5% of sales in the first quarter of 2005.
Earnings before income taxes, amortization and investment income for the quarter were $15.7 million or 10.4% of sales compared to $11.6 million or 14.3% of sales in the same period of 2004. Amortization of capital and intangible assets, excluding tooling, was $4.6 million for the first quarter compared to $3.3 million in the same period last year.
The Company recorded investment income of $0.6 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 $1.9 million in the first quarter or 20.1% of pre-tax profits compared to $1.4 million or 17.1% of pre-tax profits in the first quarter last year.
As a result, net earnings for the three months ended March 31, 2006 were $7.6 million or $0.42 diluted earnings per share compared to $6.5 million or $0.37 diluted earnings per share in the same period last year. The Company is pleased to announce that during the first quarter it completed its labour restructuring in France. In addition, the Company recently agreed to terms with its workers’ council in Germany and expects that its restructuring efforts in the DeTeWe business will be completed later this year.
While we are pleased with the significant efforts that have been made in restructuring the Matra and DeTeWe groups, these businesses did not produce meaningful financial returns in the first quarter. As a result, excluding the impact of these acquired businesses, net earnings would have been approximately $8.3 million or $0.46 diluted earnings per share in the first quarter of 2006.
At the end of the first quarter, Aastra had cash, cash equivalent and short-term investment balances of $104 million compared to $102 million at the end of December last year. Cash flow from operations was $7.7 million in the first quarter compared to $4.1 million in the first quarter of 2005. While cash flow from operations continued to be very strong, consistent with last year, accounts payable and accrued liabilities decreased sharply in the first quarter as a result of a normal quarterly decrease in payroll related liabilities.
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. For more information on Aastra, visit our Web site at http://www.aastra.com .
This press release contains forward-looking information or forward-looking statements within the meaning of applicable securities legislation (“forward-looking statements”). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, potentials, future events or performance (often, but not always, using words or phrases such as “believes”, “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, or “intends” or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken or achieved) are not statements of historical fact, but are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Aastra, or developments in Aastra’s business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements may include, but are not limited to: expectations regarding the Aastra’s restructuring and integration plans for the EADS Enterprise Telephony business acquired on February 28, 2005 as well as the DeTeWe Telecommunications Systems business acquired on July 31, 2005. As described in detail under the heading “Risk Factors” in Aastra’s annual information form filed on www.sedar.com , the material factors that could cause our actual results to differ materially from the forward-looking statements in this press release include: integration of Aastra’s recent acquisitions of EADS’ enterprise telephony business and DeTeWe’s telephony business; continued demand for Aastra’s recently-acquired products; Aastra’s reliance on third party manufacturers and component suppliers (in general and related to the recently-acquired businesses); dependence on key personnel; risks related to expansion of Aastra’s business operations-domestically and internationally; exchange rate fluctuations; risks related to future acquisitions; requirements for additional financing of Aastra’s business; longer credit terms extended to Aastra’s customers; continued implementation of an enterprise resource planning system; potential fluctuations in quarterly financial results; possible volatility to Aastra’s share price; limited range of products that Aastra sells; risks associated with product returns and product defects; Aastra’s ability to protect its intellectual property; Aastra’s potential vulnerability to computer and information systems security breaches; competition from third parties; consolidation and reorganization in the telecommunications industry; rapid technological change; risk of third party claims for infringement of intellectual property rights by others; and risks related to technical standards and the certification our products. The material factors and assumptions that were applied in making the forward-looking statements in this press include: that Aastra will be able to continue with its restructuring and integration plans for the EADS Enterprise Telephony business and the DeTeWe Telecommunications Systems business; that the DeTeWe’s workers’ council will not prevent Aastra from implementing its restructuring plans without any material amendments; and that, after the implementation of the restructuring and integration plans, no further changes will be required in order to return the EADS Enterprise Telephony business and the DeTeWe Telecommunications, respectively, to profitability based upon expected revenues for each.
It is important to note that: unless otherwise indicated, forward-looking statements in this press release describe Aastra’s expectations as of the date of this press release; Aastra cautions readers not to place undue reliance on the forward-looking statements in this press release as actual results may differ materially from expectations if known and unknown risks or uncertainties affect Aastra’s business, or if estimates or assumptions prove inaccurate. Therefore, Aastra cannot provide any assurance that forward-looking statements will materialize and Aastra assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or other reason.
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:
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Contact Investor Relations:
investors@aastra.com
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