Mitel Reports Fourth Quarter and Fiscal Year 2010 Financial Results

June 30, 2010

Mitel® (Nasdaq:MITL), a leading provider of unified communications software solutions, today announced its financial results for the fourth quarter and fiscal year ended April 30, 2010. All financial results are in US dollars.

Financial Highlights

  --  Revenue for the fourth quarter was $163.9 million, compared to $162.2       million in the third quarter.   --  Non-GAAP net income for the fourth quarter was $17.4 million, compared       to $14.3 million for the third quarter.   --  Successful completion of our initial public offering on April 27, 2010       with approximately $147 million in gross proceeds.   --  Cash and cash equivalents as of April 30, 2010 were $76.6 million, up       170 percent compared to a year ago.   --  Operating cash flows for fiscal 2010 were $34.4 million, an increase of       290 percent from fiscal 2009.   

Revenue for the fourth quarter was $163.9 million, compared to non-GAAP revenue of $166.7 million for the fourth quarter of 2009. For the fiscal year 2010, revenue was $647.9 million, compared to non-GAAP revenue of $730.4 million for fiscal year 2009. For comparison purposes, non-GAAP revenue for the fourth quarter and fiscal year 2009 excludes the impact of a one-time $4.7 million licensing revenue benefit Mitel received in the fourth quarter of fiscal 2009.

Net income for the fourth quarter of fiscal 2010 was $22.0 million, or a loss per share of $5.43. This compares to a net loss of $252.0 million, or a loss of $18.37 per share, in the same period last year. For fiscal 2010, net income was $37.2 million, or a loss per share of $7.30. This compares to a net loss of $193.5 million, or $16.38 per share, for fiscal 2009. Non-GAAP net income for the fourth quarter of fiscal 2010 was $17.4 million, or $0.31 per share. This compares to non-GAAP net income of $21.3 million, or $0.38 per share in the fourth quarter of fiscal 2009. For fiscal 2010, non-GAAP net income was $49.1 million, or $0.87 per share. This compares to non-GAAP net income of $25.3 million, or $0.45 per share for the prior fiscal year. Please refer to the GAAP to non-GAAP reconciliation tables in this release.

Adjusted EBITDA (as defined below) for the fourth quarter of fiscal 2010 was $25.3 million and for fiscal 2010 was $89.8 million. Adjusted EBITDA for the fourth quarter of fiscal 2009 was $29.5 million and for fiscal 2009 was $78.7 million. Excluding the impact of the $4.7 million licensing revenue in the fourth quarter of 2009, adjusted EBITDA for the fourth quarter of fiscal 2009 was $24.8 million and for fiscal 2009 was $74.0 million. After reflecting this adjustment, adjusted EBITDA in the fourth quarter and fiscal 2010 grew 2.0% and 21.4% year over year, respectively.

"Mitel's continued investments in our IP-based communications solutions and channel and partner development have allowed us to grow market share worldwide," said Don Smith, chief executive officer, Mitel. "Mitel remains at the forefront of delivering products that save our customers money and support their rapidly evolving IT strategies. In fiscal 2010, partnerships with VMware and Research In Motion have allowed us to develop solutions aimed at two growing trends - the move toward "virtualized" call control and an increasingly mobile workforce."

"Our recently completed initial public offering improved our financial flexibility and strengthened the Mitel brand name," stated Steve Spooner, chief financial officer, Mitel. "The continued adoption of our UCC applications drove gross margin improvements throughout fiscal 2010. We remain focused on improving our operational efficiency and we achieved non-GAAP operating margins of 13.2 percent and adjusted EBITDA margins of 15.4 percent in the fourth quarter."

Business Highlights

  --  New customer highlights: Stone & Youngberg, Ashford Borough Council,       Spalding University, Ideal Integration, ALM Holdings, Bouygues       Construction, and BCIT, LLC.   --  Honored with the Frost & Sullivan 2010 Global New Product Innovation       Award for Virtual Mitel Communications Director.   --  Joined BlackBerry(R) Alliance Program and announced plans to deliver       Mitel Mobility for BlackBerry Mobile Voice System 5.   --  Received the Global Technology Innovator Award at VMware Partner       Exchange.   --  Announced Virtual Mitel Communications Director (Virtual MCD), part of       the new Mitel Virtual Solutions software portfolio, the first real-time       voice application designed for the VMware vSphere(TM) 4 platform.   --  Introduced Mitel Multi-Instance Communications Director (MICD) offering       both enterprises and service providers a software-based communication       services platform for delivery of private or public cloud-based       communications services.   --  Launched Mitel Mobile, a wireless voice and data service designed for       corporate customers in the U.S. The service is fully integrated with       Mitel's leading unified communications and collaboration (UCC)       applications and offers business customers the ability to work with a       single vendor for all of their customer premise, wireline, wireless,       voice, and data communications needs.   

Business Outlook

The following is the company's outlook for the first quarter of fiscal 2011 ending July 31, 2010:

  --  Revenue is expected to be in the range of $163 to $167 million.   --  Gross margin is expected to be in the range of 48 to 49 percent.   --  Non-GAAP operating expenses as a percent of revenue are expected to be       in the range of 37 to 38 percent. This excludes amortization of $5.7       million for acquisition related intangible assets and stock-based       compensation expense of $1.2 million.   --  Diluted shares outstanding are expected to be approximately 57 million.   

Conference Call Information

Mitel will host an investor conference call and live webcast today at 5:00 p.m. EDT (2:00 p.m. PDT) to discuss its financial results for the fourth quarter and fiscal year ended April 30, 2010. To access the conference call, dial 888-857-6930 and enter pass code 9175482. Callers outside the U.S. and Canada should dial 719-325-2100 and enter pass code 9175482. A replay of the conference call will be available through Monday, July 5, 2010. To access the replay, please dial 888-203-1112 and enter pass code 9175482. Callers outside the U.S. and Canada should dial 647-436-0148 and enter pass code 9175482. 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.

Adjusted EBITDA

Adjusted EBITDA is defined as consolidated net income (loss) before (1) interest expense, (2) income tax (recovery) expense, (3) amortization and depreciation, (4) foreign exchange (gain) or loss, (5) fair value adjustment on derivative instruments, (6) debt and warrant retirement costs, including write-off of related deferred financing costs, (7) impairment of goodwill, (8) special charges, integration and merger related costs, (9) gain on litigation settlement, and (10) stock-based compensation. For a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable U.S. GAAP measure, see attached "Reconciliation of Net Income to Adjusted EBITDA".

Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to net income, income from operations or any other measure of financial performance calculated and presented in accordance with U.S. GAAP. We prepare Adjusted EBITDA to eliminate the impact of items that we do not consider indicative of our core operating performance. We encourage you to evaluate these adjustments and the reasons we consider them appropriate, as well as the material limitations of non-GAAP measures and the manner in which we compensate for those limitations. See "Selected Consolidated Financial Data" in Mitel's prospectus dated April 21, 2010, which has been filed with the U.S. Securities and Exchange Commission and Canadian securities authorities.

Non-GAAP Financial Measurements

To supplement our consolidated financial statements presented on a GAAP basis, Mitel uses non-GAAP measures of operating results, net income and income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period and comparative prior period GAAP results are made with the intent of providing both management and investors a more complete understanding of Mitel's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or diluted net income per share prepared in accordance with generally accepted accounting principles in the United States.

Forward-Looking Statements

Some of the statements in this press release are forward-looking statements within the meaning of applicable U.S. and Canadian securities laws that reflect Mitel's current views with respect to future events and its financial results, performance, financial position or achievements. Statements that include the words "may," "will," "should," "could," "estimate," "continue," "expect," "intend," "plan," "predict," "potential," "believe," "project," "anticipate" and similar statements of a forward-looking nature, or the negatives of those statements, identify forward-looking statements. In particular, this press release may contain forward looking statements pertaining to, among other matters: general global economic conditions; our business strategy, plans and objectives for future operations, industry, future economic performance, profitability and financial condition; the costs of operating as a public company; and our research and development expenditures. These forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. In making these statements we have made assumptions regarding, among other things: stable foreign exchange rates for the U.S. dollar to both the U.K. pound sterling and the euro; no unforeseen changes occurring in the competitive landscape that would affect our industry; a stable or recovering economic environment; no significant event occurring outside the ordinary course of our business; and stable interest rates. Actual events or Mitel's results, performance, financial position or achievements could differ materially from those contemplated, expressed or implied by such forward-looking statements as a result of various risks and uncertainties, including the risks factors described under the heading "Risk Factors" in Mitel's prospectus, dated April 21, 2010, which has been filed with the U.S. Securities and Exchange Commission and Canadian securities authorities. Except as required by law, Mitel is under no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

About Mitel

A global market leader in business communications powering more than two billion business connections, Mitel helps businesses and service providers connect, collaborate and provide innovative services to their customers. Our innovation and communications experts serve business users in more than 100 countries. For more information, go to www.mitel.com and follow us on LinkedIn and Twitter @Mitel.

Contact Information

Mitel Public Relations

Email: [email protected]

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