Aastra Reports First Quarter Financial Results

TORONTO, ONTARIO--(Marketwire - April 27, 2011) - Aastra Technologies Limited - (TSX:AAH) today reported its unaudited financial results for the first quarter ended March 31, 2011. Note that certain 2010 numbers have been restated to comply with the new IFRS accounting rules for Canadian companies adopted by Aastra this quarter.

Sales for the three months ended March 31, 2011 were $162.7 million compared to $171.1 million for the same quarter in 2010, a decrease of approximately 4.9%. The Company continued to experience a drop in revenue from the strength in the Canadian dollar when compared to the Euro and U.S. dollar. Excluding the impact of foreign exchange, sales dropped approximately 1.8% from the same period last year.

Gross margin decreased to 42.5% of sales in the first quarter of 2011 compared to 43.9% of sales in the same period in 2010. The decrease in gross margin was a result of the combined effect of higher inventory provisions and lower material margins in the first quarter this year compared to last year.

Research and development expenses in the first quarter of 2011 were $17.4 million or 10.7% of sales, compared to $18.5 million or 10.8% of sales in the same quarter of 2010. The decrease was primarily due to continued efficiencies in our cost structure.

Selling, general and administrative ("SG&A") expenses were $44.7 million or 27.5% of sales in the first quarter of 2011 compared to $45.6 million or 26.6% of sales in the first quarter of 2010. SG&A expenses decreased as a result of the impact of foreign exchange.

Foreign exchange losses of $1.9 million were recognized in the first quarter of 2011 mainly as a result of a continued weakness in the Euro and U.S. dollar. Amortization expense recorded in operating expenses decreased to $5.5 million in the first quarter of 2011 compared to $5.8 million in the first quarter of 2010.

The Company recorded finance expense of $0.2 million and finance income of $0.8 million in the first quarter of each 2011 and 2010. In addition, the Company recorded a gain of $2.7 million on the sale of a non-core product line during the first quarter of 2010.

As a result of the above, profit decreased in the first quarter in 2011 to $0.2 million or $0.01 diluted earnings per share compared to $4.1 million or $0.29 diluted earnings per share in the same period in 2010.

Cash and short-term investments totaled $83.3 million at the end of March 2011 compared to $94.9 million at December 31, 2010. During the first quarter of 2011, the Company used $9.5 million of cash flow in operations. Accounts payable decreased $12.8 million as annual compensation plans were paid out during the quarter and inventory increased by $6.5 million as previous purchase commitments were taken in during the quarter. In addition, the Company used $2.8 million to pay dividends to shareholders.

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, 2011 to all shareholders of record on May 3, 2011. 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.