Mitel Reports Third Quarter Fiscal 2013 Financial Results

Mitel Reports Third Quarter Fiscal 2013 Financial Results

Completes Refinancing of Credit Facilities

OTTAWA, Feb. 28, 2013 (GLOBE NEWSWIRE) -- Mitel® (Nasdaq:MITL) (TSX:MNW), a
leading provider of cloud and premises-based unified communications and
collaboration (UCC) solutions, today announced financial results for the third
quarter of fiscal 2013 ended January 31, 2013. All financial results are in
U.S. dollars.

"We delivered solid revenue and gross margin, each in line with guidance, and
non-GAAP operating expenses favorable to guidance in the third quarter," said
Richard McBee, Chief Executive Officer, Mitel. "Also, as previously announced,
we entered into new credit facilities, strengthening our financial position
and, in the third quarter, signed a letter of intent with a prospective buyer
to complete the divestiture of our DataNet/CommSource business unit. We
anticipate completing the transaction on March 1, 2013."

Fiscal Third Quarter 2013 Financial Highlights

  oAdjusted EBITDA from continuing operations for the third quarter of fiscal
    2013 was $22.6 million or 15.9%, up from $21.0 million or 14.0% from the
    prior year quarter.
  oNon-GAAP net income from continuing operations for the third quarter of
    fiscal 2013 was $12.8 million, or $0.23 per share, up from $12.0 million,
    or $0.21 per share, in the same period last year.
  oNet income from continuing operations for the third quarter of fiscal 2013
    was $5.1 million, or $0.09 per share, diluted, compared to net income from
    continuing operations of $4.4 million, or $0.08 per share, diluted, in the
    same period last year.
  oRevenue from continuing operations for the third quarter of fiscal 2013
    was $142.0 million, compared to $150.5 million for the third quarter of
    fiscal 2012.
  oGross margin from continuing operations was 55.5%, up from 54.4% in the
    third quarter of fiscal 2012.
  oCash and cash equivalents as of January 31, 2013 were $100.6 million.
  oOperating cash flows for the third quarter of fiscal 2013 were $17.3
    million.
  oSpecial charges and restructuring costs of $7.3 million were recorded in
    the third quarter of fiscal 2013.

As in prior periods, due to the previously announced intention to sell or
dispose of DataNet/CommSource, the results of the business unit are presented
as discontinued operations, and prior period amounts have been adjusted
accordingly.

Please refer to the GAAP to non-GAAP reconciliation tables in this release and
a discussion of the use of non-GAAP measures under the heading, "Non-GAAP
Financial Measurements" below.

Business Unit Results

  *Mitel Communications Solutions revenues for the third quarter of fiscal
    2013 were $117.9 million, compared to $127.2 million for the third quarter
    of fiscal 2012. Operating margin was consistent with the prior year's
    quarter.
  *Mitel NetSolutions revenues for the third quarter of fiscal 2013 grew 4%
    to $21.0 million from the same quarter of 2012. Operating margin was
    consistent with the prior year's quarter.

"In the fiscal third quarter, we saw continued strength in our gross margin,
Adjusted EBITDA and cash flow generation," said Steve Spooner, Chief Financial
Officer, Mitel. "Mitel's solid operating performance was a key factor in our
ability to refinance our credit facilities on favorable terms, providing
significant operational flexibility in the years ahead. Our forecast reflects
our continued focus to execute on our strategy while remaining cautious in a
challenging macroeconomic environment."

Business Highlights

  *Continued growth of Mitel's cloud customer base with more than 30,000 new
    cloud users added in the third quarter, bringing the total installed base
    to more than 228,000 cloud users.
  *Recognized by Frost & Sullivan with the 2013 North America Award for
    Product Leadership for pioneering product developments in real-time
    communications software virtualization, which is a capability critical to
    enabling customers to migrate their business communications to the cloud.
  *Introduction of Mitel Communications Director 6.0 with enhancements to the
    user experience, improvements for cloud environments, new features for
    financial services and education markets, and simplified installation.

Business Outlook

Mitel has set the following financial performance guidance for the fourth
quarter of fiscal year 2013 ending April 30, 2013.

  *Revenue from continuing operations is expected to be in the range of $143
    to $148 million.
  *Gross margin percentage from continuing operations is expected to be in
    the range of 55.0 to 56.0 percent.
  *Non-GAAP operating expenses as a percentage of revenue from continuing
    operations are expected to be in the range of 41.5 to 42.5 percent.
    Non-GAAP operating expenses include SG&A and R&D expenses but exclude
    estimated amortization of $5.5 million for acquisition-related intangible
    assets and estimated stock-based compensation expense of $1.1 million.

Conference Call Information

Mitel will host an investor conference call and live webcast today at 5:00
p.m. EST (2:00 p.m. PST) to discuss its financial results for the third
quarter ended January 31, 2013. To access the conference call, dial
866-321-8231. Callers outside the U.S. and Canada should dial 416-642-5213. A
replay of the conference call will be available through Tuesday, March 5,
2013. To access the replay, please dial 888-203-1112 and enter pass code
6324700. Callers outside the U.S. and Canada should dial 647-436-0148 and
enter pass code 6324700. The live webcast will be accessible on Mitel's
investor relations website at http://investor.mitel.com/ and will be archived
and available on this site for at least three months.

Non-GAAP Financial Measurements

This press release includes references to non-GAAP financial measures
including adjusted EBITDA, non-GAAP income and non-GAAP operating expenses.
Non-GAAP financial measures do not have any standardized meaning and are
therefore unlikely to be comparable to similar measures presented by other
companies.We use these non-GAAP financial measures to assist management and
investors in understanding our past financial performance and prospects for
the future, including changes in our operating results, trends and marketplace
performance, exclusive of unusual events or factors which do not directly
affect what we consider to be our core operating performance.Non-GAAP
measures are among the primary indicators management uses as a basis for our
planning and forecasting of future periods.Investors are cautioned that
non-GAAP financial measures should not be relied upon as a substitute for
financial measures prepared in accordance with generally accepted accounting
principles.Please see the reconciliation of non-GAAP financial measures to
the most directly comparable U.S. GAAP measure attached to this release.

Forward Looking Statements

Some of the statements in this presentation are forward-looking statements (or
forward-looking information) within the meaning of applicable U.S. and
Canadian securities laws.These include statements using the words target,
outlook, may, will, should, could, estimate, continue, expect, intend, plan,
predict, potential, project and anticipate, and similar statements which do
not describe the present or provide information about the past.Actual results
may differ materially from those presented in forward-looking
statements.Material risks that could cause actual results to differ
include:our ability to achieve or sustain profitability in the future;
fluctuations in our quarterly and annual revenues and operating results;
fluctuations in foreign exchange rates; current and ongoing global economic
instability; intense competition; our reliance on channel partners for a
significant component of our sales; our dependence upon a small number of
outside contract manufacturers to manufacture our products; our ability to
successfully implement our restructuring plans;and, our ability to implement
and achieve our business strategies successfully.Additional risks are
described under the heading "Risk Factors" in Mitel's Annual Report on Form
10-K.We have made assumptions regarding, among other things:no unforeseen
changes occurring in the competitive landscape that would affect our industry
generally or Mitel in particular; a stable or recovering economic environment;
no significant event occurring outside the ordinary course of our business;
our ability to successfully implement our restructuring plans; and stable
foreign exchange and interest rates.Forward-looking information is intended
to help you understand management's current views of our future prospects, and
it may not be appropriate for other purposes.Except as required by law, Mitel
will not necessarily update forward-looking statements.

About Mitel

Mitel® (Nasdaq:MITL) (TSX:MNW) is a global provider of unified communications
and collaboration (UCC) software, solutions and services that enable
organizations to conduct business anywhere, over any medium with the device of
their choice. Through a single cloud-ready software stream, Mitel's Freedom
architecture provides customers in over 100 countries the flexibility and
simplicity needed to support today's dynamic work environment. For more
information visit www.mitel.com.

The Mitel Networks Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=8599

Mitel and the Mitel logo are registered trademarks of Mitel Networks
Corporation.

All other trademarks are the property of their respective owners.

MITL-F

MITEL NETWORKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions of US dollars)
(unaudited)
                                                   January 31, April 30,
                                                    2013        2012
                                                              
ASSETS                                                         
Current assets:                                                
Cash and cash equivalents                          $100.6    $78.7
Accounts receivable                                 115.1      129.0
Sales-type lease receivables                        13.8       16.9
Inventories                                         33.4       28.3
Deferred tax asset                                 19.9       12.9
Other current assets                               32.3       33.8
Assets of component held for sale, current          2.4        3.4
                                                              
                                                   317.5      303.0
Non-current portion of sales-type lease receivables 19.6       23.6
Deferred tax asset                                 119.1      117.4
Property and equipment                              30.9       21.5
Identifiable intangible assets                      61.6       78.5
Goodwill                                            132.6      132.6
Other non-current assets                            7.8        8.7
Assets of component held for sale, non-current      --        1.9
                                                              
                                                   $689.1    $687.2
                                                              
LIABILITIES AND SHAREHOLDERS' EQUITY                           
Current liabilities:                                           
Accounts payable and accrued liabilities           $112.9    $104.3
Current portion of deferred revenue                31.0       33.3
Current portion of long-term debt                  8.5        4.6
                                                              
                                                   152.4      142.2
Long-term debt                                     306.2      307.2
Lease recourse liability                            4.4        5.7
Long-term portion of deferred revenue               13.7       12.1
Deferred tax liability                             26.9       35.9
Pension liability                                  87.1       75.2
Other non-current liabilities                       19.5       19.1
                                                              
                                                   610.2      597.4
                                                              
Shareholders' equity                                78.9       89.8
                                                              
                                                   $689.1    $687.2


MITEL NETWORKS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions of US dollars, except per share amounts)
(unaudited)

                             Quarter Ended Quarter     Nine Months Nine Months
                            January 31,   Ended       Ended       Ended
                             2013          January 31, January 31, January 31,
                                           2012        2013        2012

                                                               
Revenues                     $142.0      $150.5    $426.0    $454.2
Cost of revenues             63.2         68.7       190.1      212.5
Gross margin                 78.8         81.8       235.9      241.7
Expenses:                                                       
Selling, general and         52.8         55.9       165.1      167.3
administrative
Research and development     13.8         14.3       42.2       43.8
Special charges and          7.3          2.8        18.6       16.0
restructuring costs
Loss on litigation           0.4          --        1.5        1.0
settlement
                            74.3         73.0       227.4      228.1
Operating income from        4.5          8.8        8.5        13.6
continuing operations
Interest expense             (4.6)        (4.7)      (13.9)     (14.1)
Other income (expense), net  0.3          (0.4)      0.9        (1.0)
Net income (loss) from
continuing operations,       0.2          3.7        (4.5)      (1.5)
before income taxes
Current income tax recovery  (5.3)        --        (11.5)     (0.9)
(expense)
Deferred income tax recovery 10.2         0.7        17.6       1.8
(expense)
Net income (loss) from       5.1          4.4        1.6        (0.6)
continuing operations
Net income (loss) from       (3.0)        0.2        (3.5)      1.2
discontinued operations
Net income (loss)            $2.1        $4.6      $(1.9)    $0.6
                                                               
Net income (loss) per common                                    
share - Basic
From continuing operations   $0.09       $0.09     $0.03     $(0.01)
From discontinued operations $(0.05)     $--      $(0.07)   $0.02
Net loss per common share -  $0.04       $0.09     $(0.04)   $0.01
Basic
                                                               
Net income (loss) per common                                    
share - Diluted
From continuing operations   $0.09       $0.08     $0.03     $(0.01)
From discontinued operations $(0.05)     $--      $(0.06)   $0.02
Net loss per common share -  $0.04       $0.08     $(0.03)   $0.01
Diluted
                                                               
Weighted-average number of
common shares outstanding                                       
(in millions):
Basic                        53.7         53.6       53.7       53.5
Diluted                      56.2         56.1       56.2       53.5


MITEL NETWORKS CORPORATION
Cash flow information
(in millions of US dollars)
(unaudited)
                                                               
                            Quarter Ended  Quarter     Nine Months Nine Months
                           January 31,    Ended       Ended       Ended
                            2013           January 31, January 31, January 31,
                                           2012        2013        2012

Cash provided by (used in):                                     
Net cash provided by        $17.3        $15.4     $37.4     $31.6
operating activities
Net cash used in investing  (2.6)         (5.4)      (10.5)     (11.9)
activities
Net cash used in financing  (1.0)         (1.4)      (4.3)      (15.3)
activities
Effect of exchange rate     (0.5)         (0.6)      (0.7)      (1.4)
changes on cash balances
                                                               
Net increase in cash and    13.2          8.0        21.9       3.0
cash equivalents
                                                               
Cash and cash equivalents,  87.4          68.9       78.7       73.9
beginning of period
                                                               
Cash and cash equivalents,  $100.6       $76.9     $100.6    $76.9
end of period
                                                               
                                                               
Additional information on                                       
capital expenditures:
Capital expenditures        2.6           5.4        10.8       11.9
acquired with cash
Capital expenditures
financed through capital    2.0           0.5        7.4        1.2
leases
                                                               
Total capital expenditures  $4.6         $5.9      $18.2     $13.1


MITEL NETWORKS CORPORATION
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
(in millions of US dollars, except per share amounts)
(unaudited)
                                                               
                               Quarter     Quarter     Nine Months Nine Months
                              Ended       Ended       Ended       Ended
                               January 31, January 31, January 31, January 31,
                               2013        2012        2013        2012

                                                               
                                                               
Net income (loss) from         $5.1      $4.4      $1.6      $(0.6)
continuing operations
Income tax recovery            (4.9)      (0.7)      (6.1)      (0.9)
Net income (loss) from
continuing operations, before  0.2        3.7        (4.5)      (1.5)
income taxes
                                                               
Adjustments:                                                    
Foreign exchange loss          --        0.5        0.1        1.5
Special charges and            7.3        2.8        18.6       16.0
restructuring costs
Stock-based compensation       1.1        1.1        3.3        3.8
Loss on litigation settlement  0.4        --        1.5        1.0
Amortization of
acquisition-related            5.6        5.6        16.8       16.8
intangibles assets
Non-GAAP net income from
continuing operations, before  14.6       13.7       35.8       37.6
income taxes
Non-GAAP tax expense^(1)       (1.8)      (1.7)      (4.3)      (4.5)
Non-GAAP net income from       12.8       12.0       31.5       33.1
continuing operations
Non-GAAP net income (loss)     (0.2)      0.4        (1.0)      1.8
from discontinued operations
Non-GAAP net income            $12.6     $12.4     $30.5     $34.9
                                                               
Non-GAAP net income (loss) per                                  
share, diluted:
Non-GAAP net income per common
share from continuing          $0.23     $0.21     $0.56     $0.59
operations
Non-GAAP net income (loss) per
common share from discontinued $--      $0.01     $(0.02)   $0.03
operations
Non-GAAP net income per common $0.23     $0.22     $0.54     $0.62
share
Weighted-average number of
common shares outstanding (in  56.2       56.1       56.2       56.0
millions):
                                                               
(1) Non-GAAP tax expense is based on an                          
estimated effective tax rate of 12.0%.


MITEL NETWORKS CORPORATION
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in millions of US dollars)
(unaudited)
                                                       
                       Quarter     Quarter     Nine Months Nine Months
                      Ended       Ended       Ended       Ended
                       January 31, January 31, January 31, January 31,
                       2013        2012        2013        2012

                                                       
                                                       
Net income (loss)      $2.1      $4.6      $(1.9)    $0.6
Net loss (income) from
discontinued           3.0        (0.2)      3.5        (1.2)
operations
Net income (loss) from 5.1        4.4        1.6        (0.6)
continuing operations
Adjustments:                                            
Interest expense       4.6        4.7        13.9       14.1
Income tax recovery    (4.9)      (0.7)      (6.1)      (0.9)
Amortization and       9.0        8.2        26.6       24.7
depreciation
Foreign exchange loss  --        0.5        0.1        1.5
Special charges and    7.3        2.8        18.6       16.0
restructuring costs
Stock-based            1.1        1.1        3.3        3.8
compensation
Loss on litigation     0.4        --        1.5        1.0
settlement
                                                       
Adjusted EBITDA from   22.6       21.0       59.5       59.6
continuing operations
                                                       
Adjusted EBITDA from
discontinued           (0.2)      0.4        (1.1)      2.0
operations^(1)
                                                       
Adjusted EBITDA        $22.4     $21.4     $58.4     $61.6
                                                       
(1)The reconciliation of net income from discontinued operations to
Adjusted EBITDA from discontinued operations for the three and nine
months ended January 31, 2012 consists of income tax expense of $0.2
and $0.8, respectively. The reconciliation of net income from
discontinued operationsto Adjusted EBITDA from discontinued
operations for the three months ended January 31, 2013 consists of
special charges and restructuring costs of$1.6, non-cash impairment      
of goodwill of $1.9 and income tax recovery of ($0.7). The
reconciliation of net income from discontinued operations to Adjusted
EBITDA from discontinued operations for the nine months ended January
31, 2013 consists of special charges and restructuring costs of$1.6,
non-cash impairment of goodwill of $1.9 and income tax recovery of
($1.1).


MITEL NETWORKS CORPORATION
Segmented Information
(in millions of US dollars)
(unaudited)
                                                       
                       Quarter     Quarter     Nine Months Nine Months
                      Ended       Ended       Ended       Ended
                       January 31, January 31, January 31, January 31,
                       2013        2012        2013        2012

Revenues                                                
Mitel Communications   $117.9    $127.2    $354.4    $381.0
Solutions
NetSolutions           21.0       20.2       62.6       60.6
Other^(1)              3.1        3.1        9.0        12.6
Total revenues         $142.0    $150.5    $426.0    $454.2
                                                       
Segment income                                          
Mitel Communications   $26.8     $28.8     $77.1     $80.0
Solutions
NetSolutions           4.6        4.6        14.1       13.9
Other^(1)              0.6        --        1.6        2.4
Total segment income   $32.0     $33.4     $92.8     $96.3
                                                       
(1) The operations of the DataNet and CommSource are recorded as
discontinued operations and therefore are excluded from the periods       
presented.

CONTACT: Amy MacLeod (media), 613-592-2122 x71245, amy_macleod@mitel.com

         Malcolm Brown (industry analysts), 613-592-2122 x71246,
         malcolm_brown@mitel.com

         Cynthia Hiponia and Alice Kousoum (investor relations),
         613-592-2122 x71997, investorrelations@mitel.com

company logo
 
Press spacebar to pause and continue. Press esc to stop.