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Mitel Reports Third Quarter Fiscal 2013 Financial Results

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MITL-F
MITEL NETWORKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions of US dollars)
(unaudited)
  January 31, 2013 April 30, 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 January 31, 2013 Quarter Ended January 31, 2012 Nine Months Ended January 31, 2013 Nine Months Ended January 31, 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 administrative  52.8  55.9  165.1  167.3
Research and development  13.8  14.3  42.2  43.8
Special charges and restructuring costs  7.3  2.8  18.6  16.0
Loss on litigation settlement  0.4  --   1.5  1.0
   74.3  73.0  227.4  228.1
Operating income from continuing operations  4.5  8.8  8.5  13.6
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, before income taxes  0.2  3.7  (4.5)  (1.5)
Current income tax recovery (expense)  (5.3)  --   (11.5)  (0.9)
Deferred income tax recovery (expense)  10.2  0.7  17.6  1.8
Net income (loss) from continuing operations  5.1  4.4  1.6  (0.6)
Net income (loss) from discontinued operations  (3.0)  0.2  (3.5)  1.2
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 - Basic  $ 0.04  $ 0.09  $ (0.04)  $ 0.01
         
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 - Diluted  $ 0.04  $ 0.08  $ (0.03)  $ 0.01
         
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 January 31, 2013 Quarter Ended January 31, 2012 Nine Months Ended January 31, 2013 Nine Months Ended January 31, 2012
 
Cash provided by (used in):        
Net cash provided by operating activities  $ 17.3  $ 15.4  $ 37.4  $ 31.6
Net cash used in investing activities  (2.6)  (5.4)  (10.5)  (11.9)
Net cash used in financing activities  (1.0)  (1.4)  (4.3)  (15.3)
Effect of exchange rate changes on cash balances  (0.5)  (0.6)  (0.7)  (1.4)
         
Net increase in cash and cash equivalents  13.2  8.0  21.9  3.0
         
Cash and cash equivalents, beginning of period  87.4  68.9  78.7  73.9
         
Cash and cash equivalents, end of period  $ 100.6  $ 76.9  $ 100.6  $ 76.9
         
         
Additional information on capital expenditures:        
Capital expenditures acquired with cash  2.6  5.4  10.8  11.9
Capital expenditures financed through capital leases  2.0  0.5  7.4  1.2
         
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 Ended January 31, 2013 Quarter Ended January 31, 2012 Nine Months Ended January 31, 2013 Nine Months Ended January 31, 2012
 
         
         
Net income (loss) from continuing operations  $ 5.1  $ 4.4  $ 1.6  $ (0.6)
Income tax recovery  (4.9)  (0.7)  (6.1)  (0.9)
Net income (loss) from continuing operations, before income taxes  0.2  3.7  (4.5)  (1.5)
         
Adjustments:        
Foreign exchange loss  --   0.5  0.1  1.5
Special charges and restructuring costs  7.3  2.8  18.6  16.0
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 intangibles assets  5.6  5.6  16.8  16.8
Non-GAAP net income from continuing operations, before income taxes  14.6  13.7  35.8  37.6
Non-GAAP tax expense (1)  (1.8)  (1.7)  (4.3)  (4.5)
Non-GAAP net income from continuing operations  12.8  12.0  31.5  33.1
Non-GAAP net income (loss) from discontinued operations  (0.2)  0.4  (1.0)  1.8
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 operations  $ 0.23  $ 0.21  $ 0.56  $ 0.59
Non-GAAP net income (loss) per common share from discontinued operations  $ --   $ 0.01  $ (0.02)  $ 0.03
Non-GAAP net income per common share  $ 0.23  $ 0.22  $ 0.54  $ 0.62
Weighted-average number of common shares outstanding (in millions):   56.2  56.1  56.2  56.0
         
(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 Ended January 31, 2013 Quarter Ended January 31, 2012 Nine Months Ended January 31, 2013 Nine Months Ended January 31, 2012
 
         
         
Net income (loss)  $ 2.1  $ 4.6  $ (1.9)  $ 0.6
Net loss (income) from discontinued operations  3.0  (0.2)  3.5  (1.2)
Net income (loss) from continuing operations  5.1  4.4  1.6  (0.6)
Adjustments:        
Interest expense  4.6  4.7  13.9  14.1
Income tax recovery  (4.9)  (0.7)  (6.1)  (0.9)
Amortization and depreciation  9.0  8.2  26.6  24.7
Foreign exchange loss  --   0.5  0.1  1.5
Special charges and restructuring costs  7.3  2.8  18.6  16.0
Stock-based compensation  1.1  1.1  3.3  3.8
Loss on litigation settlement  0.4  --   1.5  1.0
         
Adjusted EBITDA from continuing operations  22.6  21.0  59.5  59.6
         
Adjusted EBITDA from discontinued operations (1)  (0.2)  0.4  (1.1)  2.0
         
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 operations to 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 Ended January 31, 2013 Quarter Ended January 31, 2012 Nine Months Ended January 31, 2013 Nine Months Ended January 31, 2012
 
Revenues        
Mitel Communications Solutions  $ 117.9  $ 127.2  $ 354.4  $ 381.0
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 Solutions  $ 26.8  $ 28.8  $ 77.1  $ 80.0
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

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