Aastra Reports First Quarter 2010 Financial Results

TORONTO, ONTARIO (Marketwire - April 20, 2010) -- Aastra Technologies Limited - (TSX: “AAH”) today reported its unaudited financial results for the first quarter ended March 31, 2010.

Sales for the three months ended March 31, 2010 were $171.9 million compared to $219.3 million for the same quarter in 2009. The Company experienced a significant drop of $18.4 million or 8.4% of sales directly as a result of the strength in the Canadian dollar when compared to the Euro and U.S. dollar. Excluding the impact of foreign exchange, sales dropped 13.2% from the same period last year as a result of lower sales volumes. There was a general decrease in revenue experienced in most regions.

Gross margin decreased to 44.2% of sales in the first quarter of 2010 compared to 48.0% of sales in the same period in 2009 and 45.0% of sales in the fourth quarter of 2009. Material margins remained relatively flat against the first quarter of 2009 and the fourth quarter of 2009. Fixed costs in cost of sales, including certain restructuring charges recognized in the first quarter of 2010, caused the decrease in gross margin relative to these earlier periods.

Research and development expenses in the first quarter of 2010 were $18.5 million or 10.8% of sales, compared to $21.9 million or 10.0% of sales in the same quarter of 2009. The decrease was primarily related to the impact of foreign exchange rates on European development costs, while the increase as a percentage of revenue is based on solely on the lower sales volume.

Selling, general and administrative (“SG&A”) expenses were $46.4 million or 27.0% of sales in the first quarter of 2010 compared to $60.3 million or 27.5% of sales in the first quarter of 2009. SG&A expenses decreased as a result of the impact of foreign exchange as well from further cost saving measures and lower provisions for bad debts when compared to the level recorded in the first quarter of last year.

Foreign exchange losses of $4.1 million were recognized in the first quarter of 2010, primarily in our European operations, where a significant weakening of the Euro to the Canadian dollar occurred during the period. Amortization expense recorded in operating expenses decreased to $5.5 million in the first quarter of 2010 compared to $5.9 million in the first quarter of 2009.

The Company recorded interest expense of $0.1 million in the first quarter of 2010 compared to $0.7 million in the first quarter last year as both the outstanding principal balance and variable interest rates on the company’s term loan were lower. Investment income totaled $0.7 million in the first quarter, consistent with the same quarter of 2009. In addition, the Company recorded a gain of $2.7 million on the previously announced sale of its optical transmission and multiplexer product line during the first quarter of 2010. Income tax expense was recognized at $0.8 million or 17.0% of pre-tax earnings in the quarter compared to $3.7 million or 20.7% of pre-tax earnings in the first quarter last year.

As a result of the above, net earnings decreased sharply in the first quarter in 2010 to $3.9 million or $0.28 diluted earnings per share compared to $14.1 million or $1.02 diluted earnings per share in the same period in 2009.

Cash and short-term investments totaled $118.8 million at the end of March 2010 compared to $116.9 million at December 31, 2009. During the first quarter of 2010, the Company generated $7.7 million in cash flow from operations and $3.6 million from the sale of the non-core product line. In addition, the Company used $2.8 million to pay dividends to shareholders while $7.1 million was used to repay a portion of its loan balance outstanding.

The Company is also pleased to announce that it will pay a dividend to its shareholders of $0.20 per share for this quarter, payable on May 24, 2010 to all shareholders of record on May 3, 2010. The dividend declared today has been designated as an “eligible” dividend for the purposes of the Income Tax Act (Canada) and similar provincial legislation. Shareholders of Aastra are entitled to receive dividends only if and when such dividends have been declared and there is no entitlement to any dividends prior to any declaration thereof by Aastra’s Board of Directors.

About Aastra Technologies Limited

Aastra Technologies Limited (TSX:AAH) is a global company at the forefront of the Enterprise Communication market. Headquartered in Concord, Ontario, Canada, Aastra develops and delivers innovative and integrated solutions that address the communication needs of businesses small and large around the world. Aastra enables Enterprises to communicate and collaborate more efficiently and effectively by offering customers a full range of open standard IP-based and traditional communications solutions, including terminals, systems, and applications. For additional information on Aastra, visit our website at http://www.aastra.com/ .

Certain statements made herein may be forward-looking statements within the meaning of applicable Canadian securities legislation. These forward-looking statements include, among others, statements with respect to our Board of Directors declaring any future quarterly dividends and, if so declared, the amount of such dividends. By their very nature, forward-looking statements involve numerous factors and assumptions, and are subject to inherent risks and uncertainties, both general and specific, which give rise to the possibility that such forward-looking statements will not be achieved.

Shareholders are entitled to receive dividends only if and when such dividends have been declared and there is no entitlement to any dividends prior to any declaration thereof by our Board of Directors. The material factors that will be considered by our Board of Directors in determining whether it is appropriate to declare any future dividends, and the amount of any such dividends, include: our earnings, cash flow, quarterly fluctuations in financial results and financing requirements to fund acquisitions or other business opportunities. Please refer to our filings on the website maintained by the Canadian Securities Administrators at www.sedar.com, including our Annual Information Form and our annual and quarterly Management Discussion and Analyses for other material factors that may be considered by our Board of Directors in determining whether to declare any future dividends and the amount of any such dividends.

We caution readers not to place undue reliance on these forward-looking statements as our actual results may differ materially from our expectations if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. Therefore, we cannot provide any assurance that forward-looking statements will materialize. Unless otherwise required pursuant to applicable Canadian securities legislation, we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.

For further information contact:
Kathy Ristic, V.P. Finance,
(905) 760-4200
investors@aastra.com