Aastra Reports Strong Earnings in 2nd Quarter.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 second quarter ended June June: see month. 30, 2004. Net earnings for the three months ended June 30, 2004 were $5.8 million or $0.33 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 $2.9 million or $0.17 diluted earnings per share for the same period last year. Net earnings for the six months ended June 30, 2004 were $10.4 million or $0.59 diluted earnings per share compared to $8.9 million or $0.52 diluted earnings per share for the same period in 2003. These second quarter 2004 financial results represent the Company's 25th 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 June 30, 2004 were $64.9 million compared to net sales of $33.1 million for the same period last year, an increase of 96%. 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 $56 million in the second quarter of 2004 compared to $21 million for the three months ended June 30, 2003. Net sales of the Network Access Products segment were $9 million in the second quarter of 2004, compared to $12 million in the second quarter last year as a result of weaker sales and service revenue in the Remote Access Server product line. Gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased to 49% of sales for the second 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. In addition, the Company has continued its efforts to re-engineer certain products in order to reduce costs while enhancing the features of its products. Research and development expenses in the second quarter of 2004 were $6.1 million or 9% of sales compared to $4.3 million or 13% of sales in the second quarter of 2003. Selling, general and administration expenses were $16.8 million or 26% of sales in quarter compared to $4.4 million or 13% of sales in the second quarter of 2003. 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. is a result of the addition of the PBX product line acquired in September September: see month. 2003. 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 second quarter of 2004 compared to $2.1 million in the second quarter last year. Amortization increased by $0.5 million as a result of the PBX product line and $0.3 million 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 were previously 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. Investment income was consistent with the second quarter of 2003 at $0.5 million in the second quarter of 2004. In the second quarter the Company experienced a foreign exchange loss of $0.3 million compared to a foreign exchange loss of $0.8 million in the second quarter last year. Finally, income tax expense decreased to $0.6 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 second quarter of 2004 compared to $0.7 million or 19% of pre-tax income in the second quarter of 2003 as a result of a shift in taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. to lower-tax jurisdictions. As a result of its continued profitability and an increased 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 to a record balance of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $104 million at the end of June 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
 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). , with a presence in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. 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 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 2nd QUARTER
Six-month period Three-month period
Ended June 30th Ended June 30th
2004 2003 2004 2003
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Sales $128,865 $ 73,125 $ 64,901 $ 33,071
Cost of goods sold 66,014 40,449 33,035 18,269
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$ 62,851 $ 32,676 $ 31,866 $ 14,802
Selling, general and
administrative 33,990 9,089 16,769 4,432
Research and development 12,493 8,652 6,065 4,327
Amortization 5,760 4,080 2,865 2,128
Foreign exchange loss 129 1,695 323 795
Investment Income (1,013) (1,782) (494) (442)
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Earnings before income
taxes $ 11,492 $ 10,942 $ 6,338 $ 3,562
Income taxes 1,099 2,035 550 677
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Net earnings for
the period $ 10,393 $ 8,907 $ 5,788 $ 2,885
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Basic earnings per share
for the period $ 0.61 $ 0.53 $ 0.34 $ 0.17
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Diluted earnings per share
for the period $ 0.59 $ 0.52 $ 0.33 $ 0.17
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(x) Actual common shares outstanding as at
June 30, 2004 - 17,086,684 (2003 - 16,931,484)
(xx) Weighted average common shares outstanding as at
June 30, 2004 -17,061,180 (2003 - 16,912,315)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Stated in thousands of Canadian dollars
YEAR-TO-DATE 2nd QUARTER
Six-month period Three-month period
Ended June 30th Ended June 30th
2004 2003 2004 2003
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Cash provided by (used
for) operations:
Net earnings for the
period $ 10,393 $ 8,907 $ 5,788 $ 2,885
Amortization of capital
assets 3,899 3,342 1,909 1,719
Amortization of operating
leased assets 1,558 - 720 -
Amortization of intangible
assets 2,829 1,613 1,216 848
Stock compensation expense 124 - 62 -
Change in non cash
operating working capital 9,357 (4,152) 7,408 (1,741)
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28,160 9,710 17,103 3,711
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Cash provided by (used in)
financing activities:
Issuance of common shares 555 499 228 168
Bank indebtedness (5,827) - (6,879) -
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(5,272) 499 (6,651) 168
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Cash provided by (used for)
investing activities:
Short-term investments 28,973 (11,122) (12,660) 11,116
Net purchase of
capital assets (772) (1,083) (320) (826)
Investment in operating
leases (243) - (243) -
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27,958 (12,205) (13,223) 10,290
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Foreign exchange on cash
held in foreign currency 299 (1,434) 292 (533)
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Increase (decrease) in cash
and cash equivalents 51,145 (3,430) (2,479) 13,636
Cash and cash equivalents,
beginning of period 25,879 78,187 79,503 61,121
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Cash and cash equivalents,
end of period $ 77,024 $ 74,757 $ 77,024 $ 74,757
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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Stated in thousands of Canadian dollars
AS AT AS AT
JUNE 30TH DECEMBER 31ST
2004 2003
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Assets
Current assets:
Cash and cash equivalents $ 77,024 $ 25,879
Short-term investments 27,339 56,312
Accounts receivable 50,573 69,084
Net investment in leases 628 336
Inventories 55,808 52,783
Deposits and prepaid expenses 2,390 1,785
Future income taxes 4,313 4,801
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$218,075 $210,980
Future income taxes 5,413 5,652
Net investment in leases 1,864 740
Capital assets, net 20,146 24,588
Accrued pension asset 1,116 1,139
Goodwill 6,353 6,353
Intangible assets 20,588 23,417
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$273,555 $272,869
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Liabilities and Shareholders' Equity
Current liabilities:
Indebtedness 783 6,610
Accounts payable and
accrued liabilities 50,302 55,194
Income taxes payable 4,658 4,944
Deferred revenue 4,951 4,039
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$ 60,694 $ 70,787
Contingent consideration payable 6,420 6,240
Future income taxes 1,265 1,161
Shareholders' equity:
Share capital 101,254 100,699
Contributed surplus 209 86
Cumulative foreign currency
translation adjustment 524 1,100
Retained earnings 103,189 92,796
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205,176 194,681
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$273,555 $272,869
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED)
2ND QUARTER
Six-month period
ended June 30th
2004 2003
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Retained earnings, beginning of period $ 92,796 $ 71,840
Net earnings 10,393 8,907
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Retained earnings, end of period $103,189 $ 80,747
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