Aastra Reports Continued Profitability.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Aastra Technologies Aastra Technologies Limited (TSX: AAH) headquartered in Concord, Ontario, Canada, makes products and systems for accessing communication networks including the Internet. Limited (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : AAH aah interj. Used to express pleasure, satisfaction, surprise, or great joy. intr.v. aahed, aah·ing, aahs To exclaim in pleasure, satisfaction, surprise, or great joy: ) today announced its financial results for the third quarter ended September September: see month. 30, 2004. Net earnings for the three months ended September 30, 2004 were $3.7 million or $0.21 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of 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 Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight 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 Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). during the summer months.
Net sales of Communication Access Terminals, including PBX (Private Branch eXchange) An inhouse telephone switching system that interconnects telephone extensions to each other as well as to the outside telephone network (PSTN). 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 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 Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 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 restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). efforts in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. group. These savings were offset partially by higher corporate costs and an increase in certain product development activities in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Amortization of capital and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible 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 amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. certain long life intangible assets that in the same period last year were treated as indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those 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 pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta 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 Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. 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
Certain information discussed in this press release is forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and is subject to important risks and uncertainties. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities 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.
AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Stated in thousands of Canadian dollars except per share data
YEAR-TO-DATE 3rd QUARTER
Nine months Three months
ended ended
September 30th September 30th
2004 2003 2004 2003
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Sales $189,402 $118,196 $60,537 $45,071
Cost of goods sold 98,472 64,652 32,458 24,203
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$90,930 $53,544 $28,079 $20,868
Selling, general and administrative 49,703 17,937 15,713 8,848
Research and development 18,654 13,620 6,161 4,968
Amortization 8,622 6,362 2,862 2,282
Foreign exchange loss 202 1,750 73 55
Investment Income (1,748) (2,479) (735) (698)
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Earnings before income taxes $15,497 $16,354 $4,005 $5,413
Income taxes 1,451 2,521 352 486
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Net earnings for the period $14,046 $13,833 $3,653 $4,927
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Basic earnings per share for the
period (note 4) $0.82 $0.82 $0.21 $0.29
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Diluted earnings per share for the
period (note 4) $0.80 $0.80 $0.21 $0.28
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(i) Actual common shares outstanding as at September 30, 2004 - 17,106,184 (2003 - 16,958,984) (ii) Weighted average common shares outstanding for the nine months and three months ended September 30, 2004 -17,072,989 and 17,096,222 (2003 - 16,794,080 and 16,944,935)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Stated in thousands of Canadian dollars
YEAR-TO-DATE 3rd QUARTER
Nine months Three months
ended ended
September 30th September 30th
2004 2003 2004 2003
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Cash and cash equivalents provided
by (used for) operations:
Net earnings for the period $14,046 $13,833 $3,653 $4,927
Amortization of capital assets 5,848 5,024 1,949 1,681
Amortization of operating leased
assets 2,250 - 692 -
Amortization of intangible assets 4,880 2,419 2,051 806
Stock compensation expense 186 - 62 -
Net change in non-cash operating
working capital 17,243 (4,535) 7,886 (382)
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44,453 16,741 16,293 7,032
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Cash and cash equivalents provided
by (used in) financing activities:
Issuance of common shares 738 783 183 284
Bank indebtedness (6,594) - (767) -
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(5,856) 783 (584) 284
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Cash and cash equivalents provided
by (used for) investing
activities:
Short-term investments (5,030) (15,661) (34,003) (4,539)
Net purchase of capital assets (801) (956) (29) 127
Business acquisition - (34,335) - (34,335)
Investment in operating leases (611) - (368) -
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(6,442) (50,952) (34,400) (38,747)
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Foreign exchange on cash held in
foreign currency (442) (1,488) (741) (55)
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Increase (decrease) in cash and
cash equivalents 31,713 (34,916) (19,432) (31,486)
Cash and cash equivalents,
beginning of period 25,879 78,187 77,024 74,757
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Cash and cash equivalents,
end of period $57,592 $43,271 $57,592 $43,271
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(iii) Cash and cash equivalents includes bank indebtedness
AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Stated in thousands of Canadian dollars
SEPTEMBER DECEMBER SEPTEMBER
30TH 31ST 30TH
2004 2003 2003
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Assets
Current assets:
Cash and cash equivalents $57,592 $25,879 $43,271
Short-term investments 61,342 56,312 27,790
Accounts receivable 45,072 69,084 58,933
Net investment in leases 398 336 1,076
Inventories 55,369 52,783 60,533
Deposits and prepaid expenses 1,949 1,785 1,628
Future income taxes 4,063 4,801 3,372
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$225,785 $210,980 $196,603
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Future income taxes 5,058 5,652 1,438
Net investment in leases 1,590 740 -
Capital assets, net 17,846 24,588 29,224
Accrued pension asset 1,029 1,139 -
Goodwill 6,353 6,353 6,353
Intangible assets 18,537 23,417 24,918
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$276,198 $272,869 $258,536
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Liabilities and Shareholders' Equity
Current liabilities:
Indebtedness 16 6,610 10,687
Accounts payable and accrued liabilities 50,297 55,194 51,666
Income taxes payable 5,147 4,944 4,120
Deferred revenue 4,837 4,039 6,364
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$60,297 $70,787 $72,837
Contingent consideration payable 6,060 6,240 -
Future income taxes 1,161 1,161 -
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67,518 78,188 72,837
Shareholders' equity:
Share capital 101,437 100,699 100,026
Contributed surplus 209 86 -
Cumulative foreign currency
translation adjustment 192 1,100 -
Retained earnings 106,842 92,796 85,673
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208,680 194,681 185,699
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$276,198 $272,869 $258,536
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED)
YEAR-TO-DATE 3rd QUARTER
Nine months Three months
ended ended
September 30th September 30th
2004 2003 2004 2003
---------------------------------------------------------------------
Retained earnings, beginning
of period $92,796 $71,840 $103,189 $80,746
Net earnings 14,046 13,833 3,653 4,927
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Retained earnings, end of period $106,842 $85,673 $106,842 $85,673
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