Mitel Networks Corporation (NASDAQ:MITL)

Second Quarter 2012 Results

• Revenue for the second quarter of fiscal 2012 was $168.8 million, compared to $161.1 million for the second quarter of fiscal 2011.
• Adjusted EBITDA (as defined below) for the second quarter of fiscal 2012 was $22.2 million, up 22% from the prior year quarter.
• Non-GAAP net income for the second quarter of fiscal 2012 was $13.3 million, or $0.24 per share, compared to non-GAAP net income of $9.1 million, or $0.16 per share, in the same period last year. Non-GAAP net income per share was up 50% from the prior year quarter.
• Net loss for the second quarter of fiscal 2012 was $1.2 million, or $0.02 per share, compared to net income of $80.9 million, or $1.45 per share, diluted, in the same period last year.
• Cash and cash equivalents as of October 31, 2011 were $68.9 million.
• Operating cash flows for the second quarter of fiscal 2012 were $3.8 million.

The net loss for the second quarter of fiscal 2012 was largely driven by special charges and the acceleration of planned restructuring costs of $8.4 million reflecting previously announced actions taken to drive improved operating performance. The net income for the second quarter of fiscal 2011 was due to a tax recovery resulting from the relief of a valuation allowance.

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.

"Solid execution across the entire company and continued technology leadership allowed us to achieve results greater than our previous guidance across all metrics," said Richard McBee, chief executive officer, Mitel. "We continue to see the benefits of our previously announced strategic initiatives to simplify our business and streamline our organization. In addition, we are seeing solid demand for our Mitel 5000 platform and our virtualized UC Advanced client software."

Business Outlook

Mitel has set the following financial performance guidance for the third quarter of fiscal year 2012 ending January 31, 2012:

• Revenue is expected to be in the range of $164 to $170 million, which represents a year-over-year growth range of 1% to 5%.
• Gross margin percentage is expected to be in the range of 49.4 to 49.9 percent.
• Non-GAAP operating expenses as a percentage of revenue are expected to be in the range of 38.5 to 39.5 percent. Non-GAAP operating expenses means SG&A and R&D expenses excluding estimated amortization of $5.6 million for acquisition-related intangible assets and estimated stock-based compensation expense of $1.2 million.