Aastra Technologies Limited
TSX : AAH

Aastra Technologies Limited

April 24, 2007 16:24 ET

Aastra Reports First Quarter Financial Results

TORONTO, ONTARIO--(CCNMatthews - April 24, 2007) - Aastra Technologies Limited (TSX:AAH) today announced its unaudited financial results for the first quarter ended March 31, 2007. Sales for the three months ended March 31, 2007 were $153.3 million compared to sales of $145.7 million for the same period of 2006, an increase of 5.2%. Sales in the European Enterprise Communication segment increased 6.9% from $120.4 million in the three months ended March 31, 2006 to $128.7 million in the same period of 2007. Sales in this segment were positively impacted by the decline in the Canadian Dollar to the Euro and Swiss Franc compared with the first quarter last year. Sales in the North American Enterprise Communication segment were $24.6 million in the three months ended March 31, 2007 from $25.3 million in the same period of 2006 primarily as a result of weakness in U.S. sales during the first quarter.

Gross margin was 42% of sales for the three months ended March 31, 2007, consistent with the same period last year. Research and development expenses in the first quarter of 2006 were $14.4 million or 9.4% of sales, compared to $14.9 million or 10.2% of sales in the same quarter of 2006. The reduction in research and development expenses reflects the impact of restructuring efforts taken in Europe subsequent to the first quarter of 2006. Selling, general and administrative ("SG&A") expenses were $37.5 million or 24.5% of sales in the quarter compared to $33.4 million or 22.9% of sales in the first quarter of 2006. The increase in SG&A expenses was driven by higher sales and marketing expenses as well as the impact of foreign exchange.

Gains from foreign exchange were $1.2 million in the first quarter of 2007 compared with only $0.2 million in the same period last year as the Canadian Dollar weakened against the Euro, the Swiss Franc and the U.S. Dollar. The Company recorded investment income of $1.1 million in the first quarter of 2007 compared to $0.6 million for the first quarter of 2006 mainly as a result of comparatively higher average cash balances. Income tax expense was $2.7 million in the first quarter or 24.5% of pre-tax profits compared to $1.9 million or 19.8% of pre-tax profits in the first quarter of 2006. In addition, the Company recorded a loss of $0.1 million net of tax, in the first quarter of 2007 as a result of a post closing adjustment related to the May 2006 sale of the Digital Video business.

As a result, net earnings for the three months ended March 31, 2007 were $8.2 million or $0.50 diluted earnings per share compared to $7.6 million or $0.42 diluted earnings per share in the same period last year.

On March 31, 2007, Aastra's balance of cash and short-term investments was $122.8 million compared to $115.7 million on December 31, 2006. Cash flow from operations for the three months ended March 31, 2007 was $10.5 million compared to $7.6 million for the same period of 2006. In addition, the Company used $1.6 million to repurchase 50,000 common shares during the first quarter of 2007 under its on-going Normal Course Issuer Bid.

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 networking products, including terminals, systems, and applications. For additional information on Aastra, visit our website at http://www.aastra.com.

From time to time, we make written or oral forward-looking statements within the meaning of applicable Canadian securities legislation. We may make such statements in this press release, in other filings with Canadian regulators in reports to shareholders or in other communications. These forward-looking statements include, among others, statements with respect to our medium-term and 2007 objectives, and strategies to achieve our objectives, as well as statements with respect to our beliefs, outlooks, plans, objectives, expectations, anticipations, estimates and intentions. The words "may," "could," "should," "would," "suspect," "outlook," "believe," "plan," "anticipate," "estimate," "expect," "intend," "forecast," "objective" and words and expressions of similar import are intended to identify forward-looking statements. 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 predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements.

As described in detail under the heading "Risk Factors" in our 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 our recent acquisitions and continued demand for our products; exchange rate fluctuation of the Canadian Dollar against other currencies, particularly with respect to the Swiss Franc, Euro and US Dollar; product concentration and limited range of products; geographic market concentration in Europe; reliance on third party manufacturers and component suppliers; longer credit terms to customers; continued implementation of our enterprise resource planning system; potential fluctuations in quarterly financial results, particularly as a result of seasonality and geographic market concentration; risks associated with product returns and defects; intellectual proprietary protection; security; competition and rapid technological change in our market; and the risk of third party claims for infringement.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about these factors that may affect future results can be found under the "Risk Factors" section and in our 2006 Annual Information Form. We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf.



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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS(UNAUDITED)
Stated in thousands of Canadian dollars except per share data

1st QUARTER
Three months
ended March 31st

2007 2006
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Sales $ 153,251 $ 145,673

Cost of goods sold 88,983 84,291
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64,268 61,382

Expenses (income):

Selling, general and administrative 37,535 33,408

Research and development 14,373 14,918

Amortization 3,622 4,435

Foreign exchange gain (1,168) (231)

Investment income (1,092) (554)
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Earnings from continuing operations before
income taxes 10,998 9,406

Income taxes 2,698 1,863
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Net earnings from continuing operations 8,300 7,543

(Loss) earnings from discontinued operations,
net of income taxes (141) 84
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Net earnings for the period $ 8,159 $ 7,627
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Earnings per share from continuing operations:

Basic $ 0.52 $ 0.44

Diluted $ 0.51 $ 0.42
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Earnings per share:

Basic $ 0.51 $ 0.44

Diluted $ 0.50 $ 0.42
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(i) Actual common shares outstanding as at March 31, 2007 - 16,000,073
(2006 - 17,586,209)

(ii) Weighted average common shares outstanding for the three months ended
March 31, 2007 - 16,030,273 (2006 - 17,531,246)

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The interim consolidated financial statements for the three months ended
March 31, 2007 have not been reviewed by an auditor.


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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)
Stated in thousands of Canadian dollars

1st QUARTER
Three months
ended March 31st
2007 2006
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Cash and cash equivalents provided by (used in):

Operations:

Net earnings for the period $ 8,159 $ 7,627

Net loss (earnings) from discontinued operations 141 (84)

Amortization of capital assets 2,876 3,780

Amortization of intangible assets 1,665 2,104

Future income taxes (1,215) 2,261

Stock-based compensation expense 471 277

Loss on short-term investments 118 250

Loss (gain) on sale of capital assets 42 (33)

Other - 193

Change in non-cash operating working capital (1,797) (8,736)
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10,460 7,639
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Discontinued operations: (141) 243
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Financing:

Increase (decrease) in pension liabilities (303) 236

Issuance of common shares on exercise of options 634 1,152

Repurchase of shares (1,610) -

Receipt of acquired lease receivables 2,794 9,559

Payment of loan payable to Seller (2,794) (9,742)

Bank indebtedness (50) (2,734)
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(1,329) (1,529)
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Investments:

Maturity of short-term investments 17,424 29,381

Purchase of short-term investments (3,000) -

Proceeds on disposal of capital assets 36 195

Purchase of capital assets (2,064) (3,570)
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12,396 26,006
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Foreign exchange on cash held in foreign currency 16 (382)
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Increase in cash and cash equivalents 21,402 31,977

Cash and cash equivalents, beginning of period 57,713 54,140
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Cash and cash equivalents, end of period $ 79,115 $ 86,117
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The interim consolidated financial statements for the three months ended
March 31, 2007 have not been reviewed by an auditor.


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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Stated in thousands of Canadian dollars

MARCH DECEMBER MARCH
31st 2007 31st 2006 31st 2006
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Assets
Current assets:
Cash and cash equivalents $ 79,115 $ 57,713 $ 86,117
Short-term investments 43,668 58,030 18,254
Accounts receivable 144,956 145,350 147,055
Income taxes receivable - - 404
Inventories 80,198 73,484 63,695
Net investment in leases 1,477 1,665 1,617
Acquired lease receivables 9,079 9,998 11,016
Prepaid expenses and other assets 6,307 4,401 8,054
Future income tax assets 11,406 11,671 7,274
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376,206 362,312 343,486

Future income tax assets 4,909 3,879 6,091
Net investment in leases 3,237 3,017 2,464
Acquired lease receivables 13,234 15,053 23,201
Capital assets 36,182 37,182 38,847
Goodwill 11,561 11,547 18,723
Intangible assets 30,114 31,742 30,448
Other assets 797 815 694
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$ 476,240 $ 465,547 $ 463,954
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Liabilities and Shareholders' Equity
Current liabilities:
Indebtedness $ 2,543 $ 2,586 $ 3,005
Accounts payable and accrued
liabilities 120,716 118,002 110,980
Restructuring accruals 2,160 3,668 16,129
Income taxes payable 23,640 20,999 10,852
Deferred revenue 17,139 14,546 18,679
Loan payable 9,079 9,998 10,829
Future income tax liabilities 2,270 364 269
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177,547 170,163 170,743

Contingent consideration payable 3,803 3,822 5,376
Pensions 20,287 20,195 17,188
Loan payable 13,234 15,053 23,201
Future income tax liabilities 8,085 10,380 8,659
Other long-term liabilities 3,330 2,672 804
Restructuring accruals 574 929 2,489
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226,860 223,214 228,460

Shareholders' equity:
Share capital 97,842 97,513 106,522
Contributed surplus 2,715 2,244 1,387
Accumulated other comprehensive
income (2,271) (1,549) (23,351)
Retained earnings 151,094 144,125 150,936
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249,380 242,333 235,494
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$ 476,240 $ 465,547 $ 463,954
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The interim consolidated financial statements for the three months
ended March 31, 2007 have not been reviewed by an auditor.



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AASTRA TECHNOLOGIES LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(UNAUDITED)
Stated in thousands of Canadian dollars
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Accumulated
Other
Common Share Contributed Comprehensive
Shares Capital Surplus Income (Loss)
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Balance, December 31,
2006 16,009,573 $ 97,513 $ 2,244 $ (1,549)
Cumulative impact of
adjusting fair
value of short-term
investments, net of
income taxes of $65 - - - -

Shares issued on
exercise of options 40,500 634 - -

Stock-based compensation - - 471 -

Shares repurchased for
cancellation (50,000) (305) - -

Translation of self-
sustaining operations - - - (722)

Net earnings - - - -
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Balance, March 31,
2007 16,000,073 $ 97,842 $ 2,715 $ (2,271)
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Retained Comprehensive
Earnings Total Income (Loss)
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Balance, December 31, 2006 $ 144,125 $ 242,333 $ -

Cumulative impact of adjusting
fair value of short-term
investments, net of income
taxes of $65 115 115 -

Shares issued on exercise of options - 634 -

Stock-based compensation - 471 -

Shares repurchased for cancellation
(1,305) (1,610) -

Translation of self-sustaining
operations - (722) (722)

Net earnings 8,159 8,159 8,159
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Balance, March 31, 2007 $ 151,094 $ 249,380 $ 7,437
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Accumulated
Other
Common Share Contributed Comprehensive
Shares Capital Surplus Income (Loss)
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Balance, December 31,
2005 17,473,784 $ 105,370 $ 1,110 $ (25,512)

Shares issued on
exercise of options 112,425 1,152 - -

Stock-based compensation - - 277 -

Translation of self-
sustaining operations - - - 2,161

Net earnings - - - -
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Balance, March 31,
2006 17,586,209 $ 106,522 $ 1,387 $ (23,351)
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Retained Comprehensive
Earnings Total Income (Loss)
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Balance, December 31, 2005 $ 143,309 $ 224,277 $ -

Shares issued on exercise of
options - 1,152 -

Stock-based compensation - 277 -

Translation of self-sustaining
operations - 2,161 2,161

Net earnings 7,627 7,627 7,627
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Balance, March 31, 2006 $ 150,936 $ 235,494 $ 9,788
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The interim consolidated financial statements for the three months
ended March 31, 2007 have not been reviewed by an auditor.

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