Enablence Reports Q3

OTTAWA -- Enablence Technologies Inc. ("Enablence" or the "Company") (TSX VENTURE:ENA - News), a leading supplier of broadband optical equipment and components, including fiber-to-the-home (FTTH) equipment for triple-play residential and business services, announced today financial results for its fiscal third quarter ending January 31, 2009.

Revenues for the third quarter were $14.8 million, up 68% or $6.0 million from the $8.8 million generated during the second quarter of fiscal 2009 and a $14.5 million increase from $261,000 during the third quarter of fiscal year 2008. The revenue growth in this quarter resulted mainly from the acquisition of Pannaway Technologies Inc. ("Pannaway"), whose financial results were included in Enablence's consolidated results since the acquisition date of November 19, 2008. During the third quarter the Company recorded a net loss of $49.5 million ($0.24 per share). This loss included non-cash write-downs of $47.7 million of the Company's intangible assets and goodwill, arising from the Company's acquisitions in 2007 and 2008, offset by a $7.4 million non-cash income tax recovery. The net loss for the third quarter of fiscal year 2008 was $2.6 million ($0.02 per share), of which $1.1 million comprised non-cash charges. The Company's cash position was $18.7 million on January 31, 2009, compared to $32.2 million on October 31, 2008, reflecting the cash used for one-time re-structuring costs following the Pannaway acquisition, the funding of Pannaway's working capital requirements and general company operations during the third quarter.

"The acquisition of Pannaway was a key milestone for Enablence as it helped expand our customer base by adding nearly 300 rural telco customers in North America. Pannaway also broadened our product portfolio to provide a migration path from DSL and POTS to Active Optical Networks and Passive Optical Networks, positioning us strongly in the important rural markets of the U.S." said Arvind Chhatbar, Chief Executive Officer. "This acquisition, combined with our ongoing initiatives, also contributed to the improvement in gross margins by about 12% from the previous quarter and augmented the size of the domestic sales team responsible for selling a wider array of products." said Mr. Chhatbar.

"As we vertically integrate and consolidate operations in pursuit of a competitive edge, Enablence, like so many other companies, is not immune to the consequences of the unprecedented economic turmoil in the U.S. and around the world. We evaluated the carrying values of our intangible assets and goodwill, and determined that their value has been impaired due to the recessionary economic conditions and that a fairer value has to be associated with these assets to reflect the present operating reality. As a result, impairment associated write-downs added $0.20 per share to the loss for the quarter." said Mr. Chhatbar.

"On the whole, we are pleased with the overall increase in revenues and gross margins in a tough environment" says Mr. Chhatbar. "The addition of Pannaway and its immediate integration into our existing operations will result in an annual savings of more than $11 million. When coupled with the added benefits from vertical integration we anticipate further improvements in our gross margins in the coming quarters with the ultimate goal of achieving profitability for both of our Divisions by end of the next fiscal year." said Mr. Chhatbar. "As we work towards those goals, we recognize that the unstable economic environment makes any projections difficult, but we are closely monitoring all aspects of our operations and intend to implement whatever actions are necessary to ride out the economic storm" added Mr. Chhatbar.

Enablence Technologies Inc. (Toronto: ENA)