Mitel Reports Second Quarter 2014 Financial Results

Mitel Reports Second Quarter 2014 Financial Results

   53,000 recurring cloud seats added in the quarter, up 98% year-over-year

  Strong cash generation enables another voluntary prepayment of $25 million
                           against credit facility

OTTAWA, Aug. 7, 2014 (GLOBE NEWSWIRE) -- Mitel® (Nasdaq:MITL) (TSX:MNW), a
global leader in business communications, today announced financial results
for the second quarter ended June 30, 2014.

                   As Reported       Pro-forma
                   Q2 '14      Q2'13  Q2'13*
Revenue             $288.7      $146.6 $293.0
Net Income (Loss)   $0.8        $2.7   -$1.6
Non-GAAP Net Income $22.2       $9.9   $18.9
Adjusted EBITDA     $38.8       $21.4  $35.2

All results are reported in millions of US dollars

See tables for reconciliation of non-GAAP measures to GAAP measures

*consists of the combined results of Mitel and Aastra from April 1, 2013
through June 30, 2013

"Mitel emerged from the second quarter with record reported quarterly revenue
and global market momentum that enabled us to beat consensus and deliver
consistently strong financial results through the first half of the year,"
said Richard McBee, Chief Executive Officer, Mitel. "The expanded global Mitel
team demonstrated an outstanding ability to address immediate customer needs,
and, at the same time, maintain tight focus on the execution of our long-term
strategy to invest in the cloud, expand our contact center business, and
leverage our installed base of 60 million end-customers worldwide."

In the second quarter Mitel continued to see strong cloud growth, installing
128,000 new cloud seats during the quarter including an impressive 53,000
recurring cloud seats, taking Mitel's total installed cloud base to 754,000,
up 75% year-over-year. The table below highlights Mitel's cloud operational
metrics, as of June 30, 2014.

Cloud Operational Metrics*

                                 Q2 '13   Q3'13    Q4'13    Q1 '14   Q2 '14
Total Cloud Seats                 431,886 497,489 566,562 625,699 754,045
Recurring Cloud Seats             98,727  115,870 121,314 142,600 195,673
Retail Cloud Monthly Average      $48    $46    $48    $48    $47
Revenue Per User (ARPU)
Retail Cloud Average # of Seats   32      33      31      32      34
per Customer
Retail Cloud Monthly Customer     0.7%     0.7%     0.5%     0.6%     0.6%
Churn

*Information reflects results on a pro-forma basis, as if the Aastra
acquisition had been completed on January 1, 2013.

"Our strategic progress is being recognized and rewarded by customers and the
industry. In a highly competitive environment we announced global market share
gains including #1 market share positions in Western Europe and EMEA overall.
We were also acknowledged by leading industry research firm Gartner as a
Leader in Unified Communications and a Challenger in Contact Center in their
2014 Magic Quadrant reports. We have entered the second half of the year with
strong momentum," said Mr. McBee.

Financial Highlights

Mitel completed the acquisition of Aastra Technologies Limited on January 31,
2014. "As reported" results are referred to below and in the tables attached
to this press release. Comparative pro-forma results reflect results of the
company as if it had been fully combined with Aastra Technologies for the
period April 1, 2013 through June 30, 2013.

AS REPORTED:

  oTotal revenue increased 97% to $288.7 million from second quarter 2013,
    primarily as a result of the Aastra acquisition.
  oGross margins were 52.6%, down from 55.0% in the prior year, reflecting
    the acquisition of Aastra, which was a lower gross margin business.
  oNet income was $0.8 million compared to net income of $2.7 million in the
    prior year, driven principally by the integration costs related to the
    acquisition of Aastra.
  oAdjusted EBITDA was $38.8 million compared to $21.4 million in the year
    ago period, due to a combination of EBITDA growth from the legacy Mitel
    business and EBITDA resulting from the acquisition of Aastra.
  oNon-GAAP net income for the second quarter of 2014 was $22.2 million, or
    $0.21 per diluted share, compared to $9.9 million, or $0.18 per diluted
    share in the second quarter of 2013. The number of non-GAAP
    weighted-average common shares outstanding was 103.7 million and 56.3
    million, respectively.
  oOperating cash flow for the quarter ended June 2014 was $25.8 million
    compared to $25.3 million in the quarter ended June 2013.
  oCash and cash equivalents as of June 30, 2014 were $134.2 million.

PRO-FORMA*:

  oTotal revenue decreased 1.5% from $293.0 million in second quarter 2013,
    driven principally by customers moving from premise to recurring
    cloud-based solutions.
  oGross margins improved to 52.6% compared to 48.6% in the prior year, as a
    result of the prairieFyre acquisition and other cost reductions.
  oNet income improved to $0.8 million compared to a net loss of $1.6 million
    in the prior year, driven principally by margin improvements.
  oAdjusted EBITDA increased to $38.8 million compared to $35.2 million in
    the year ago period, reflecting improved operating performance.
  oNon-GAAP net income improved to $22.2 million, or $0.21 per share,
    compared to $18.9 million, or $0.19 per diluted share in the second
    quarter of 2013. The number of non-GAAP weighted-average common shares
    outstanding for the second quarter of 2013 was 100.5 million.

*Information reflects results on a pro-forma basis, as if the Aastra
acquisition had been completed on January 1, 2013.

"The global Mitel team executed well during the quarter while meeting our
aggressive integration timelines and synergy targets. Given our favorable
financial results reported, and in light of the strength of our cash position,
we are announcing that today we will be making another voluntary pre-payment
of $25 million on our term loan credit facility," said Steve Spooner, Chief
Financial Officer, Mitel. He added, "We were especially pleased to note that
Standard & Poor's has recognized Mitel's performance and strategy. Shortly
before the close of the June quarter, they raised our long-term corporate
credit rating to B+ from B on the strength of early integration success. These
views are based on the expectation that Mitel will continue improving our
financial performance and further enhance our global market position."

Business Highlights

  oRecognized by Gartner as a Leader in the 2014 Magic Quadrant for Unified
    Communications, the second significant advancement in consecutive months
    by the prestigious research firm following Mitel's move into the
    Challengers Quadrant for Contact Center Infrastructure.

  oIntroduction of a new Partner program in North America with a redesigned
    reward system that recognizes both revenue success and IT and technical
    skill credentials, including technical and sales certifications,
    operational efficiency and installation expertise as well as specialized
    expertise in contact center, cloud and hospitality solutions.

  oIn conjunction with Mitel emerging as the #1 market share leader in both
    Western Europe and Europe Middle East and Africa (EMEA) overall, and to
    further strengthen and expand our market position in the region we
    completed the consolidation of Mitel's European sales organization into a
    single structure under the leadership of Graham Bevington, Executive Vice
    President for EMEA.

Business Outlook

Mitel has set the following financial performance guidance for the third
quarter of 2014 ending September 30, 2014.

  oGAAP revenue is expected to be in the range of $261 million to $276
    million, reflecting typical third quarter seasonality.
  oGAAP gross margin percentage is expected to be in the range of 51.5% to
    53.0%.
  oAdjusted EBITDA margins to be in the range 10.5% to 12.0%; and
  oNon-GAAP earnings per share to be in the range of $0.14 to $0.16

Conference Call Information

Mitel will host an investor conference call and live webcast today at 8:30
a.m. ET (5:30 a.m. PT) to discuss its financial results for the second quarter
ended June 30, 2014. To access the conference call, dial 888-734-0328. Callers
outside the U.S. and Canada should dial 678-894-3054. A replay of the
conference call will be available through Friday, August 15, 2014. To access
the replay, all callers should please dial 404-537-3406 and enter pass code
72200477. 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 net 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 press release 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. There is no
guarantee that the expected events or expected results will actually occur.
Such statements reflect the current views of management of Mitel and are
subject to a number of risks and uncertainties. These statements are based on
many assumptions and factors, including general economic and market
conditions, industry conditions, operational and other factors. Any changes in
these assumptions or other factors could cause actual results to differ
materially from current expectations. All forward-looking statements
attributable to Mitel, or persons acting on its behalf, and are expressly
qualified in their entirety by the cautionary statements set forth in this
paragraph. Undue reliance should not be placed on such statements. In
addition, material risks that could cause results of operations to differ
include the Mitel's ability to achieve or sustain profitability in the future
since its acquisition of Aastra; fluctuations in the quarterly and annual
revenues and operating results; fluctuations in foreign exchange rates;
current and ongoing global economic instability, political unrest and related
sanctions, particularly in connection with the Ukraine and the Middle East;
intense competition; reliance on channel partners for a significant component
of sales; dependence upon a small number of outside contract manufacturers to
manufacture products; the ability to successfully integrate the acquisition of
Aastra and realize certain synergies; and, our ability to implement and
achieve our business strategies successfully. Additional risks are described
under the heading "Risk Factors" in Mitel's Transition Report on Form 10-K for
the eight month period ended December 31, 2013, filed with the Securities and
Exchange Commission on March 31, 2014. Forward-looking statements speak only
as of the date they are made. Except as required by law, we do not have any
intention or obligation to update or to publicly announce the results of any
revisions to any of the forward-looking statements to reflect actual results,
future events or developments, changes in assumptions or changes in other
factors affecting the forward-looking statements.

About Mitel

Mitel® (Nasdaq:MITL) (TSX:MNW) is a global leader in business communications
that easily connect employees, partners and customers -- anywhere, anytime and
over any device, for the smallest business to the largest enterprise. Mitel
offers customers maximum choice with one of the industry's broadest portfolios
and the best path to the cloud. With more than $1 billion in combined annual
revenue, 60 million end-user customers worldwide, and #1 market share in
Western Europe and EMEA, Mitel is a clear market leader in business
communications. For more information, go to www.mitel.com.

MITL-F

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

All other trademarks are the property of their respective owners.

                                                             
MITEL NETWORKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions of US dollars)
(unaudited)
                                                   June 30,   December 31,
                                                   2014       2013
                                                             
ASSETS                                                        
Current assets:                                               
Cash and cash equivalents                           $134.2   $40.2
Accounts receivable                                 230.1     104.3
Sales-type lease receivables                        21.9      13.9
Inventories                                         89.3      36.9
Deferred tax asset                                  27.9      17.3
Other current assets                                53.7      26.5
                                                             
                                                   557.1     239.1
Non-current portion of sales-type lease receivables 23.1      12.1
Deferred tax asset                                  118.8     127.5
Property and equipment                              52.4      28.5
Identifiable intangible assets                      204.0     50.7
Goodwill                                            333.4     147.3
Other non-current assets                            19.1      15.3
                                                             
                                                   $1,307.9 $620.5
                                                             
LIABILITIES AND SHAREHOLDERS' EQUITY                          
Current liabilities:                                          
Accounts payable and accrued liabilities            $212.1   $82.8
Current portion of deferred revenue                 75.8      39.4
Current portion of long-term debt                   6.0       5.3
                                                             
                                                   293.9     127.5
Long-term debt                                      336.0     264.2
Lease recourse liability                            2.5       3.5
Long-term portion of deferred revenue               34.7      16.6
Deferred tax liability                              23.5      14.4
Pension liability                                   102.4     57.3
Other non-current liabilities                       28.6      18.6
                                                             
                                                   821.6     502.1
                                                             
Shareholders' equity                                486.3     118.4
                                                             
                                                   $1,307.9 $620.5
                                                             

                                                                 
MITEL NETWORKS CORPORATION
STATEMENT OF OPERATIONS
(in millions of US dollars)
(unaudited)
                                                                 
                                                Proforma  US GAAP As Proforma
                                  US GAAP As    Quarter   Reported   Quarter
                                 Reported      Ended     Quarter    Ended
                                  Quarter Ended June 30,  Ended      June 30,
                                  June 30, 2014 2014      June 30,   2013
                                                          2013
                                                                 
Revenues                          $288.7      $288.7  $146.6   $293.0
Cost of revenues                  136.9        136.9    66.0      150.5
Gross margin                      151.8        151.8    80.6      142.5
Expenses:                                                         
Selling, general and              91.8         91.8     50.7      86.8
administrative
Research and development          31.9         31.9     13.5      31.6
Special charges and restructuring 10.9         10.9     2.6       7.5
costs
Amortization of
acquisition-related intangible    14.0         14.0     5.6       13.0
assets
                                 148.6        148.6    72.4      138.9
Operating income                  3.2          3.2      8.2       3.6
Interest expense                  (5.5)        (5.5)    (6.3)     (6.4)
Debt retirement costs             (0.8)        (0.8)    --       --
Other income (loss)               1.7          1.7      (0.3)     (1.2)
Income (loss) from operations,    (1.4)        (1.4)    1.6       (4.0)
before income taxes
Current income tax recovery       (0.6)        (0.6)    3.3       2.6
(expense)
Deferred income tax recovery      2.8          2.8      (2.2)     (0.2)
(expense)
Net income (loss)                 $0.8        $0.8    $2.7     $(1.6)
                                                                 
Non-GAAP measures:                                                
Adjusted EBITDA                   38.8         38.8     21.4      35.2
Non-GAAP net income               22.2         22.2     9.9       18.9
                                                                 

                                                                
MITEL NETWORKS CORPORATION
STATEMENT OF OPERATIONS
(in millions of US dollars)
(unaudited)
                                                                
                                US GAAP As    Proforma   US GAAP As Proforma
                                Reported      Six Months Reported   Six Months
                               Six Months    Ended      Six Months Ended
                                Ended         June 30,   Ended      June 30,
                                June 30, 2014 2014       June 30,   2013
                                                         2013
                                                                
Revenues                        $530.2      $566.1   $289.7   $566.5
Cost of revenues                249.0        270.3     128.3     289.5
Gross margin                    281.2        295.8     161.4     277.0
Expenses:                                                        
Selling, general and            168.7        182.4     99.6      172.7
administrative
Research and development        58.2         63.8      27.3      64.2
Special charges and             24.1         39.1      4.1       9.9
restructuring costs
Amortization of
acquisition-related intangible  25.3         27.8      11.2      26.0
assets
                               276.3        313.1     142.2     272.8
Operating income (loss) from    4.9          (17.3)    19.2      4.2
continuing operations
Interest expense                (11.4)       (11.5)    (11.7)    (11.9)
Debt retirement costs           (15.5)       (15.5)    (2.6)     (2.6)
Fair value adjustment on        --          --       --       0.4
derivative instruments
Other income (loss)             1.8          0.8       (0.2)     --
Income (loss) from operations,  (20.2)       (43.5)    4.7       (9.9)
before income taxes
Current income tax recovery     (0.3)        5.2       3.9       2.5
(expense)
Deferred income tax recovery    7.7          8.3       (4.6)     --
(expense)
Net income (loss) from          (12.8)       (30.0)    4.0       (7.4)
continuing operations
Net loss from discontinued      --          --       (3.0)     (3.0)
operations
Net income (loss) from          $(12.8)     $(30.0)  $1.0     $(10.4)
continuing operations
                                                                
Non-GAAP measures:                                               
Adjusted EBITDA                 74.4         71.6      44.4      62.9
Non-GAAP net income             42.0         39.1      22.0      32.9
                                                                

                                                             
MITEL NETWORKS CORPORATION
Cash flow information
(in millions of US dollars)
(unaudited)
                                                             
                                      As Reported  As Reported   As Reported
                        As Reported   Quarter      Six Months    Six Months
                       Quarter Ended Ended        Ended         Ended
                        June 30, 2014 June 30,     June 30, 2014 June 30, 2013
                                      2013
                                                             
Cash provided by (used                                        
in):
Net cash provided by    $25.8       $25.3      $52.6       $35.0
operating activities
Net cash used in        (4.3)        (25.5)      (13.7)       (27.1)
investing activities
Net cash provided by
(used in) financing     (23.9)       (1.5)       53.5         (38.7)
activities
Effect of exchange rate
changes on cash         0.6          (0.1)       1.6          (1.8)
balances
Net increase (decrease)
in cash and cash        (1.8)        (1.8)       94.0         (32.6)
equivalents
                                                             
Cash and cash
equivalents, beginning  136.0        39.4        40.2         70.2
of period
                                                             
Cash and cash
equivalents, end of     $134.2      $37.6      $134.2      $37.6
period
                                                             
                                                             
Additional information
on capital                                                    
expenditures:
Capital expenditures    4.3          2.4         7.5          4.0
acquired with cash
Capital expenditures
financed through        1.5          0.9         2.7          2.2
capital leases
                                                             
Total capital           $5.8        $3.3       $10.2       $6.2
expenditures
                                                             


MITEL NETWORKS CORPORATION
Segmented Information
(in millions of US dollars)
(unaudited)
                                                            
                  U.S. GAAP, As Reported      Proforma
                   Quarter Ended June 30, 2014 Quarter Ended June 30, 2014
Revenues           Premise   Cloud    Total   Premise   Cloud    Total
                   segment  segment          segment  segment
Product            $194.7  $6.2   $200.9 $194.7  $6.2   $200.9
Services           66.5     0.4     66.9    66.5     0.4     66.9
Cloud recurring    --      20.9    20.9    --      20.9    20.9
Total revenues     $261.2  $27.5  $288.7 $261.2  $27.5  $288.7
                                                            
Gross margin                                                 
Product            $112.0  $3.7   $115.7 $112.0  $3.7   $115.7
Services           25.8     0.2     26.0    25.8     0.2     26.0
Cloud recurring    --      10.1    10.1    --      10.1    10.1
Total gross margin $137.8  $14.0  $151.8 $137.8  $14.0  $151.8
                                                            
                  U.S. GAAP, As Reported      Proforma
                   Quarter Ended June 30, 2013 Quarter Ended June 30, 2013
Revenues           Premise   Cloud    Total   Premise   Cloud    Total
                   segment  segment          segment  segment
Product            $90.0   $3.1   $93.1  $201.0  $6.1   $207.1
Services           40.0     --     40.0    69.7     0.6     70.3
Cloud recurring    --      13.5    13.5    --      15.6    15.6
Total revenues     $130.0  $16.6  $146.6 $270.7  $22.3  $293.0
                                                            
Gross margin                                                 
Product            $58.5   $1.8   $60.3  $108.7  $3.6   $112.3
Services           14.2     --     14.2    22.8     0.3     23.1
Cloud recurring    --      6.1     6.1     --      7.1     7.1
Total gross margin $72.7   $7.9   $80.6  $131.5  $11.0  $142.5
                                                            

                                                               
MITEL NETWORKS CORPORATION
Segmented Information
(in millions of US dollars)
(unaudited)
                                                               
                U.S. GAAP, As Reported         Proforma
                 Six Months Ended June 30, 2014 Six Months Ended June 30, 2014
Revenues         Premise    Cloud     Total    Premise    Cloud     Total
                 segment   segment            segment   segment
Product          $354.5   $12.9   $367.4  $381.1   $13.6   $394.7
Services         122.4     0.4      122.8    130.0     0.6      130.6
Cloud recurring  --       40.0     40.0     --       40.8     40.8
Total revenues   $476.9   $53.3   $530.2  $511.1   $55.0   $566.1
                                                               
Gross margin                                                    
Product          $207.3   $6.9    $214.2  $219.3   $7.2    $226.5
Services         47.4      0.2      47.6     49.4      0.2      49.6
Cloud recurring  --       19.4     19.4     --       19.7     19.7
Total gross      $254.7   $26.5   $281.2  $268.7   $27.1   $295.8
margin
                                                               
                U.S. GAAP, As Reported         Proforma
                 Six Months Ended June 30, 2013 Six Months Ended June 30, 2013
Revenues         Premise    Cloud     Total    Premise    Cloud     Total
                 segment   segment            segment   segment
Product          $177.1   $4.3    $181.4  $388.9   $8.5    $397.4
Services         82.7      --      82.7     138.4     1.0      139.4
Cloud recurring  --       25.6     25.6     --       29.7     29.7
Total revenues   $259.8   $29.9   $289.7  $527.3   $39.2   $566.5
                                                               
Gross margin                                                    
Product          $116.5   $2.6    $119.1  $211.2   $5.1    $216.3
Services         30.6      --      30.6     46.3      0.6      46.9
Cloud recurring  --       11.7     11.7     --       13.8     13.8
Total gross      $147.1   $14.3   $161.4  $257.5   $19.5   $277.0
margin
                                                               

                                                                 
MITEL NETWORKS CORPORATION
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in millions of US dollars)
(unaudited)
                                                                 
                                                                     Proforma
                           As Reported   Proforma      As Reported   Quarter
                          Quarter Ended Quarter Ended Quarter Ended Ended
                           June 30, 2014 June 30, 2014 June 30, 2013 June 30,
                                                                     2013
                                                                 
Net income (loss)          $0.8        $0.8        $2.7        $(1.6)
Adjustments:                                                      
Interest expense           5.5          5.5          6.3          6.4
Income tax expense         (2.2)        (2.2)        (1.1)        (2.4)
(recovery)
Amortization and           19.6         19.6         9.0          18.9
depreciation
Foreign exchange loss      (1.3)        (1.3)        0.5          1.6
(gain)
Special charges and        10.9         10.9         2.6          7.5
restructuring costs
Stock-based compensation   1.7          1.7          1.0          1.1
Debt retirement costs      0.8          0.8          --          --
Acquisition accounting for 3.0          3.0          --          3.0
deferred revenue
Other                      --          --          0.4          0.7
                                                                 
Adjusted EBITDA            $38.8       $38.8       $21.4       $35.2
                                                                 

                                                             
MITEL NETWORKS CORPORATION
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(in millions of US dollars)
(unaudited)
                                                             
                        As Reported   Proforma      As Reported  Proforma
                        Six Months    Six Months    Six Months   Six Months
                       Ended         Ended         Ended        Ended
                        June 30, 2014 June 30, 2014 June 30,     June 30, 2013
                                                    2013

Net income (loss)       $(12.8)     $(30.0)     $1.0       $(10.4)
Net loss from           --          --          3.0         3.0
discontinued operations
Net income (loss) from  (12.8)       (30.0)       4.0         (7.4)
continuing operations
Adjustments:                                                  
Interest expense        11.4         11.5         11.7        11.9
Income tax expense      (7.4)        (13.5)       0.7         (2.5)
(recovery)
Amortization and        35.8         39.1         17.9        37.4
depreciation
Foreign exchange loss   (1.0)        --          1.0         1.3
(gain)
Special charges and     24.1         39.1         4.1         9.9
restructuring costs
Stock-based             3.0          3.0          2.1         2.4
compensation
Debt retirement costs   15.5         15.5         2.6         2.6
Acquisition accounting  5.8          6.9          --         6.9
for deferred revenue
Other                   --          --          0.4         0.5
                                                             
Adjusted EBITDA from    74.4         71.6         44.5        63.0
continuing operations
                                                             
Adjusted EBITDA from
discontinued            --          --          (0.1)       (0.1)
operations^(1)
                                                             
Adjusted EBITDA         $74.4       $71.6       $44.4      $62.9
                                                             
(1)The reconciliation of net loss from discontinued operations to Adjusted
EBITDA from discontinued operations for the six months ended June 30, 2013
consists of special charges and restructuring costs of $1.6 million, non-cash
impairment of goodwill of $1.9 million and an income tax recovery of $0.6
million.
                                                             

                                                                
MITEL NETWORKS CORPORATION
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
(in millions of US dollars, except per share amounts)
(unaudited)
                                                                
                                            Proforma   As Reported  Proforma
                              As Reported   Quarter    Quarter      Quarter
                             Quarter Ended Ended      Ended        Ended
                              June 30, 2014 June 30,   June 30,     June 30,
                                            2014       2013         2013
                                                                
Net income (loss)             $0.8        $0.8     $2.7       $(1.6)
Income tax expense (recovery) (2.2)        (2.2)     (1.1)       (2.4)
Net income (loss), before     (1.4)        (1.4)     1.6         (4.0)
income taxes
                                                                
Adjustments:                                                     
Foreign exchange loss (gain)  (1.3)        (1.3)     0.5         1.6
Special charges and           10.9         10.9      2.6         7.5
restructuring costs
Stock-based compensation      1.7          1.7       1.0         1.1
Amortization of
acquisition-related           14.0         14.0      5.6         13.0
intangibles assets
Debt retirement costs         0.8          0.8       --         --
Acquisition accounting for    3.0          3.0       --         3.0
deferred revenue
Other                         --          --       0.4         0.7
Non-GAAP net income, before   27.7         27.7      11.7        22.9
income taxes
Non-GAAP tax expense^(1)      (5.5)        (5.5)     (1.8)       (4.0)
Non-GAAP net income           $22.2       $22.2    $9.9       $18.9
                             .             .          .            
Non-GAAP net income per                                          
share, diluted:
Non-GAAP net income per       $0.21       $0.21    $0.18      $0.19
common share
Non-GAAP weighted-average
number of common shares       103.7        103.7     56.3        100.5
outstanding (in millions):
                                                                
(1) Non-GAAP tax expense for 2013 is based on an estimated effective tax rate
of 15% for Mitel and 20% for Aastra.Non-GAAP tax expense for 2014 is based on
an effective tax rate of 20%.
                                                                

                                                                
MITEL NETWORKS CORPORATION
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
(in millions of US dollars, except per share amounts)
(unaudited)
                                                                
                            As Reported    Proforma    As Reported  Proforma
                            Six Months     Six Months  Six Months   Six Months
                           Ended          Ended       Ended        Ended
                            June 30, 2014  June 30,    June 30,     June 30,
                                           2014        2013         2013
                                                                
Net income (loss) from      $(12.8)      $(30.0)   $4.0       $(7.4)
continuing operations
Income tax expense          (7.4)         (13.5)     0.7         (2.5)
(recovery)
Net income (loss) from
continuing operations,      (20.2)        (43.5)     4.7         (9.9)
before income taxes
                                                                
Adjustments:                                                     
Foreign exchange loss       (1.0)         --        1.0         1.3
(gain)
Special charges and         24.1          39.1       4.1         9.9
restructuring costs
Stock-based compensation    3.0           3.0        2.1         2.4
Amortization of
acquisition-related         25.3          27.8       11.2        26.0
intangibles assets
Debt retirement costs       15.5          15.5       2.6         2.6
Acquisition accounting for  5.8           6.9        --         6.9
deferred revenue
Other                       --           --        0.4         0.5
Non-GAAP net income from
continuing operations,      52.5          48.8       26.1        39.7
before income taxes
Non-GAAP tax expense^(1)    (10.5)        (9.7)      (4.0)       (6.7)
Non-GAAP net income from    42.0          39.1       22.1        33.0
continuing operations
Non-GAAP net loss from      --           --        (0.1)       (0.1)
discontinued operations
Non-GAAP net income         $42.0        $39.1     $22.0      $32.9
                                                                
Non-GAAP net income per                                          
share, diluted:
Non-GAAP net income per
common share from           $0.44        $0.38     $0.39      $0.33
continuing operations
Non-GAAP net loss per
common share from           $--         $--      $--       $--
discontinued operations
Non-GAAP net income per     $0.44        $0.38     $0.39      $0.33
common share
Non-GAAP weighted-average
number of common shares     96.1          103.5      56.3        100.5
outstanding (in millions):
                                                                
(1) Non-GAAP tax expense for 2013 is based on an estimated effective tax rate
of 15% for Mitel and 20% for Aastra.Non-GAAP tax expense for 2014 is based on
an effective tax rate of 20%.
                                                                

                                                               
STATEMENT OF OPERATIONS
QUARTER ENDED JUNE 30, 2013
(in millions of US dollars)
(unaudited)
                                                               
                     Mitel,                                         Proforma
                    as           Aastra and Purchase price        results
                     reported^(1) Telepo^(2) adjustments^(3)        of
                                                                    operations
                                                               
Revenues             $146.6     $149.4   $(3.0)        ^(4) $293.0
Cost of revenues     66.0        84.5      --                  150.5
Gross margin         80.6        64.9      (3.0)                142.5
Expenses:                                                       
Selling, general and 50.7        36.1      --                  86.8
administrative
Research and         13.5        18.1      --                  31.6
development
Special charges and  2.6         4.9       --                  7.5
restructuring costs
Amortization of
acquisition-related  5.6         2.2       5.2            ^(5) 13.0
intangible assets
                    72.4        61.3      5.2                  138.9
Operating income     8.2         3.6       (8.2)                3.6
(loss)
Interest expense     (6.3)       (0.1)     --                  (6.4)
Other expense        (0.3)       (0.9)     --                  (1.2)
Income (loss) before 1.6         2.6       (8.2)                (4.0)
income taxes
Current income tax   3.3         (0.7)     --                  2.6
recovery (expense)
Deferred income tax  (2.2)       0.4       1.6            ^(6) (0.2)
recovery (expense)
Net income (loss)    $2.7       $2.3     $(6.6)              $(1.6)
                                                               
(1) Consists of the results of operations of Mitel.
(2) Consists of the results of operations of Aastra and Telepo.
(3) Consists of purchase price allocation adjustments relating to Aastra and
Telepo results for the quarter included in the pro-forma period.
(4) Relates to the reduction in revenues as a result of the valuation of
deferred revenue being below the historical book value.
(5) Relates to the amortization of intangibles acquired in the acquisition of
Aastra.
(6) Relates to the tax effect on the above adjustments using an effective tax
rate of 20%.
                                                               

                                                               
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2014
(in millions of US dollars)
(unaudited)
                                                               
                     Mitel,                                         Proforma
                    as           Aastra and Purchase price        results
                     reported^(1) Telepo^(2) adjustments^(3)        of
                                                                    operations
                                                               
Revenues             $530.2     $37.0    $(1.1)        ^(4) $566.1
Cost of revenues     249.0       21.3      --                  270.3
Gross margin         281.2       15.7      (1.1)                295.8
Expenses:                                                       
Selling, general and 168.7       13.7      --                  182.4
administrative
Research and         58.2        5.6       --                  63.8
development
Special charges and  24.1        15.0      --                  39.1
restructuring costs
Amortization of
acquisition-related  25.3        0.7       1.8            ^(5) 27.8
intangible assets
                    276.3       35.0      1.8                  313.1
Operating income     4.9         (19.3)    (2.9)                (17.3)
(loss)
Interest expense     (11.4)      (0.1)     --                  (11.5)
Debt retirement      (15.5)      --       --                  (15.5)
costs
Other income (loss)  1.8         (1.0)     --                  0.8
Loss before income   (20.2)      (20.4)    (2.9)                (43.5)
taxes
Current income tax   (0.3)       5.5       --                  5.2
recovery (expense)
Deferred income tax  7.7         --       0.6            ^(6) 8.3
recovery (expense)
Net loss             $(12.8)    $(14.9)  $(2.3)              $(30.0)
                                                               
(1) Consists of the results of operations of Mitel, which include the results
of Aastra and Telepo from the acquisition date of January 31, 2014
(2) Consists of the results of operations of Aastra and Telepo for the month
of January 2014.
(3) Consists of purchase price allocation adjustments relating to Aastra and
Telepo results for the month of January included in the pro-forma period.
(4) Relates to the reduction in revenues as a result of the valuation of
deferred revenue being below the historical book value.
(5) Relates to the amortization of intangibles acquired in the acquisition of
Aastra.
(6) Relates to the tax effect on the above adjustments using an effective tax
rate of 20%.
                                                               

                                                               
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2013
(in millions of US dollars)
(unaudited)
                                                               
                     Mitel,                                         Proforma
                    as           Aastra and Purchase price        results
                     reported^(1) Telepo^(2) adjustments^(3)        of
                                                                    operations
                                                               
Revenues             $289.7     $283.7   $(6.9)        ^(4) $566.5
Cost of revenues     128.3       161.2     --                  289.5
Gross margin         161.4       122.5     (6.9)                277.0
Expenses:                                                       
Selling, general and 99.6        73.1      --                  172.7
administrative
Research and         27.3        36.9      --                  64.2
development
Special charges and  4.1         5.8       --                  9.9
restructuring costs
Amortization of
acquisition-related  11.2        4.5       10.3           ^(5) 26.0
intangible assets
                    142.2       120.3     10.3                 272.8
Operating income
(loss) from          19.2        2.2       (17.2)               4.2
continuing
operations
Interest expense     (11.7)      (0.2)     --                  (11.9)
Debt retirement      (2.6)       --       --                  (2.6)
costs
Fair value
adjustment on        --         0.4       --                  0.4
derivative
instruments
Other income         (0.2)       0.2       --                  --
(expense)
Income from
continuing           4.7         2.6       (17.2)               (9.9)
operations, before
income taxes
Current income tax   3.9         (1.4)     --                  2.5
recovery (expense)
Deferred income tax  (4.6)       1.2       3.4            ^(6) --
recovery (expense)
Net income (loss)
from continuing      4.0         2.4       (13.8)               (7.4)
operations
Net loss from
discontinued         (3.0)       --       --                  (3.0)
operations
Net income (loss)    $1.0       $2.4     $(13.8)             $(10.4)
                                                               
(1) Consists of the results of operations of Mitel.
(2) Consists of the results of operations of Aastra and Telepo.
(3) Consists of purchase price allocation adjustments relating to Aastra and
Telepo results for the quarter included in the pro-forma period.
(4) Relates to the reduction in revenues as a result of the valuation of
deferred revenue being below the historical book value.
(5) Relates to the amortization of intangibles acquired in the acquisition of
Aastra.
(6) Relates to the tax effect on the above adjustments using an effective tax
rate of 20%.
                                                               

CONTACT: Amy MacLeod (media)
         613-592-2122 x71245
         amy_macleod@mitel.com
         Cynthia Navarro (industry analysts)
         469-574-8113
         cynthia_navarro@mitel.com
         Michael McCarthy (investor relations)
         469-574-8134
         michael_mccarthy@mitel.com

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