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Mitel Corporation. (55PT)

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Thursday 29 July, 1999

Mitel Corporation.

1st Quarter Results

MITEL CORPORATION
29 July 1999



Mitel Reports First Quarter Results: Mitel reports sales and adjusted net income
 on target

KANATA, ONTARIO--Mitel Corporation today announced its Fiscal 2000 first quarter
 results for the period ended June 25, 1999.  Revenue from continuing operations
 increased by 7 percent to $311.2 million from $289.6 million in the first 
 quarter of Fiscal 1999.  Adjusted Net Income(1) for the quarter was $12.5 
 million, or $0.10 per share, compared to $17.1 million, or $0.15 per share, 
 in Fiscal 1999. The reduction in Adjusted Net Income from a year ago was 
 mainly attributable to lower sales and an unfavourable product mix in Mitel 
 Semiconductor and to increased R&D and selling and administrative expenses.

'The Company's first quarter performance represented the expected slow start to 
our projected Fiscal 2000 profitability target, particularly in our 
Semiconductor group,' said Kirk K. Mandy, Mitel's President and Chief Executive 
Officer.  'Our Semiconductor order inputs, however, improved significantly in 
the quarter, providing sales growth momentum for the coming months', Mandy said.

'With respect to our Systems group, we increased our investments in new products
 and channels, principally in the areas of advanced messaging and ISDN PBX,' 
 Mandy said.

Order backlog at June 25, 1999 was $240 million, up $60 million from the end of 
the previous quarter.

Cash flow from operations before working capital changes amounted to $37.3 
million compared with $40.4 million in the previous year.  Cash and short-term 
investments totaled $138.4 million at June 25, 1999, up from $125.3 million at 
the end of Fiscal 1999.

Consistent with the previously announced policy of amortizing acquired
intangibles over a shorter period, Mitel recorded a net loss of $4.6 million in
the first quarter of Fiscal 2000, or $0.05 per share, after deduction of
amortization of  intangibles totaling $17.1 million.  This compares to income of
$14.5 million, o r $0.13 per share, in the first quarter of Fiscal 1999.

Review of Operations

Mitel Communications Systems

Mitel Communications Systems revenues were $186.0 million, up 19 percent from
$1 55.9 million last year.  The increase reflected continued strength in sales
of enterprise communications systems, voice messaging applications and network
access solutions.  Despite the higher sales, Systems' operating income declined
to $1 3.2 million from $14.4 million last year, chiefly as a result of increased
research and development expenses and higher selling and administrative
expenses related principally to the advanced messaging and ISDN PBX operations
which were acquired mid-way through the first quarter of Fiscal 1999.

Mitel Semiconductor

Mitel Semiconductor sales amounted to $125.2 million, down from $133.7 million
in the preceding year mainly as a result of lower sales to the Asia-Pacific
region.  Semiconductor's operating income decreased from $12.8 million last
year to  $5.1 million as a result of reduced sales and an unfavorable product
mix.  Mitel Semiconductor's order backlog, however, increased from $144 million
at the end of Fiscal 1999 to $177 million at June 25, 1999.

Margins and Expenses

As a percentage of revenue, gross margin for the quarter improved from 45
percent to 46 percent, reflecting higher shipments and an enhanced product mix
in Systems.

Selling and administrative expenses represented 27 percent of sales as against
23 percent last year.  The increase resulted from the higher investments to
market new advanced messaging applications as well as develop new channels in
Europe for the ISDN PBX products.

Research and development expenses increased from $35.4 million, or 12 percent
of sales, to $38.8 million, and also 12 percent of sales, due to continued
investments in high-growth communications market segments partially offset by
lower investment tax credits which were deducted from these expenses.

Amortization of intangibles amounted to $17.1 million compared with $1.4
million last year.  The higher amortization was due to recent revisions to the
amortization periods of acquired intangibles.

Mitel's effective income tax rate on adjusted pre-tax income was 17 percent as
against 23 percent last year as a result of lower taxable income in the United
Kingdom.

Headquartered near the capital city of Ottawa in Canada, Mitel (NYSE: MLT; TSE:
MLT) is a global designer, manufacturer and marketer of networked systems and
specialty semiconductors for the communications industry.  Mitel Communications
Systems provides enterprises with voice and data communications systems;
complete private networks including remote teleworking solutions; unified
messaging and call-center applications; CTI systems and applications; and it
supplies competitive carriers with public network access products.  Mitel
Semiconductor specializes in connectivity solutions for the communications and
medical industries with a product range which includes components for both wired
and wireless networks; microelectronics for enabling the convergence of voice
and data; optoelectronic devices for high-speed Internet systems; and
applications-specific integrated circuits (ASICs) for medical applications such
as pacemakers and hearing aids.  Mitel had Fiscal 1999 revenues of $1.3
billion and has approximately 6,100 employees worldwide.

(1) As a supplementary measure to assess financial performance, management 
utilizes Adjusted Net Income and Adjusted Net Income per common share which
exclude the impact of amortization of acquired intangibles, special charges,
non-cash debt issue and other costs expensed on an early partial debt
repayment, and discontinued operations.

Certain statements in this press release constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors which may cause the actual results, performance or
achievements of the Company, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements.  Such risks, uncertainties and assumptions include, among others,
the risks discussed in documents filed by the Company with the Securities and
Exchange Commission.  In vestors are encouraged to consider the risks detailed
in those filings.

Mitel Corporation
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(Unaudited)

                                      June 25,    March 26,
                                      1999        1999
                                      ----------------------
ASSETS
Current assets:
  Cash and cash equivalents           $   90.2    $  125.3
  Short-term investments                  48.2           -
  Accounts receivable                    280.6       326.3
  Inventories                            190.4       198.1
  Prepaid expenses and other              23.4        27.4
                                      ---------------------
                                         632.8       677.1

Long-term receivables                     38.7        35.4
Fixed assets                             482.4       507.7
Acquired intangible assets                40.0        56.7
Patents, trademarks and other             10.7        23.4
                                      ---------------------
                                      $1,204.6    $1,300.3
                                      ---------------------
                                      ---------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued
   liabilities                        $  223.1    $  254.1
  Income and other taxes payable          12.2        11.8
  Deferred revenue                        31.6        36.6
  Current portion of long-term debt       37.7        37.6
                                      ---------------------
                                         304.6       340.1
Long-term debt                           261.4       276.5
Pension liability                         13.0        13.2
Deferred income taxes                     17.6        23.2
                                      ---------------------
                                         596.6       653.0
                                      ---------------------
Shareholders' equity:
  Capital stock 
    Preferred shares                      37.2        37.2
    Common shares                        328.4       331.2
  Contributed surplus                     29.4        32.3
  Retained earnings                      212.3       218.4
  Translation account                      0.7        28.2
                                      ---------------------
                                         608.0       647.3
                                      ---------------------
                                      $1,204.6   $ 1,300.3
                                      ---------------------
                                      ---------------------


Mitel Corporation
CONSOLIDATED STATEMENTS OF INCOME
(in millions of Canadian dollars, except per share amounts)
(Unaudited)

                                      Three Months Ended
                                      June 25,    June 26,
                                      1999        1998
                                      ---------------------
Revenue                               $  311.2    $  289.6
                                      ---------------------
Cost of sales:
  Cost of sales other than
    amortization                         151.2       143.2
  Amortization of manufacturing
    assets                                17.5        16.6
                                      ---------------------
                                         168.7       159.8
                                      ---------------------
Gross margin                             142.5       129.8
                                      ---------------------
Expenses:
  Selling and administrative              85.4        67.2
  Research and development (net)          38.8        35.4
  Amortization of acquired intangibles    17.1         1.4
                                      ---------------------
                                         141.3       104.0
                                      ---------------------
Operating income from continuing
  operations                               1.2        25.8
Interest income                            1.9         1.6
Interest expense                          (5.2)       (6.6)
                                      ---------------------
Income (loss) from continuing
  operations before income taxes          (2.1)       20.8
Income tax expense                        (2.5)       (5.1)
                                      ---------------------
Net income (loss) from continuing
  operations for the period               (4.6)       15.7
Loss from discontinued operations
  for the period                             -        (1.1)
                                      ---------------------
Net income (loss) for the period      $   (4.6)   $   14.6
                                      ---------------------
                                      ---------------------
Net income (loss) attributable to
  common shareholders after
  preferred share dividends           $   (5.4)   $   13.8
                                      ---------------------
                                      ---------------------
Net income per common share:
  Net income (loss) per common share
    from continuing operations:
      Basic                           $  (0.05)   $   0.14
                                      ---------------------
                                      ---------------------
  Net income (loss) per common share:
      Basic                           $  (0.05)   $   0.13
                                      ---------------------
                                      ---------------------
Weighted average number of common
  shares outstanding (millions):
      Basic                              116.5       108.5
                                      ---------------------
                                      ---------------------


Mitel Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars)
(Unaudited)

                                      Three Months Ended
                                      June 25,    June 26,
                                      1999        1998
                                      ---------------------
CASH PROVIDED BY (USED IN)

Operating activities:
  Net income (loss) for the period    $   (4.6)   $   14.6
  Amortization of capital and other
    assets                                43.4        29.4
  Investment tax credits                   1.4        (3.5)
  Gain on sale of capital assets          (0.1)       (0.4)
  Deferred income taxes                   (3.1)          -
  Change in pension liability              0.3         0.3
  Decrease (increase) in working
    capital                               20.2       (69.4)
                                      ---------------------
    Total                                 57.5       (29.0)
                                      ---------------------

Investing activities:
  Change in short-term investments       (48.2)       34.5
  Additions to capital and other
    assets                               (13.6)       (9.7)
  Proceeds from disposal of capital
      assets                               0.1         0.8
  Acquisitions                               -       (46.6)
  Net change in non-cash balances
    related to investing activities       (9.4)       (5.0)
                                      ---------------------
    Total                                (71.1)      (26.0)
                                      ---------------------

Financing activities:
  Repayment of long-term debt             (2.7)          -
  Repayment of capital lease
    liabilities                           (9.9)       (1.3)
  Debt issue costs                           -        (1.9)
  Dividends on preferred shares           (0.8)       (0.8)
  Issue of common shares                   0.1         0.6
  Repurchase of common shares             (6.4)          -
                                      ---------------------
    Total                                (19.7)       (3.4)
                                      ---------------------
Effect of currency translation on cash    (1.8)        2.0
                                      ---------------------
Decrease in cash and cash equivalents    (35.1)      (56.4)
Cash and cash equivalents, beginning
  of period                              125.3       117.2
                                      ---------------------
Cash and cash equivalents, end of
  period                              $   90.2    $   60.8
                                      ---------------------
                                      ---------------------


Mitel Corporation
SUPPLEMENTARY SCHEDULES
(in millions of Canadian dollars, except per share amounts)
(Unaudited)

Adjusted Net Income

As a supplementary measure to assess financial performance,
management utilizes Adjusted Net Income and Adjusted Net
Income per common share which exclude the impact of
amortization of acquired intangibles, special charges (net),
non-cash debt issue and other costs expensed on an early
partial debt repayment and discontinued operations.  The
Adjusted Net Income and Adjusted Net Income per common share
were as follows:

                                      Three Months Ended
                                      June 25,    June 26,
                                      1999        1998
                                      ---------------------
Net income (loss) as reported         $   (4.6)   $   14.6
Adjusted Net Income, as adjusted for:
  Amortization of acquired intangibles    17.1         1.4
  Loss from discontinued operations          -         1.1
                                      ---------------------
Adjusted Net Income                   $   12.5    $   17.1
                                      ---------------------
                                      ---------------------
Adjusted Net Income per common
  share - basic                       $   0.10    $   0.15
                                      ---------------------
                                      ---------------------

Geographic Information

Revenue, based on the geographic location of Mitel'
 customers, was distributed as follows:

                  Three    Percentage   Three    Percentage
                  months   of total     months   of total
                  Ended                 Ended
                  June 25,              June 26,
                  1999                  1998
                  -------- -----------  -------- -----------
United States     $ 138.7  45 percent   $ 138.7  48 percent
Europe              105.8  34              84.7  29
Other Regions        50.2  16              50.7  18
Canada               16.5   5              15.5   5
                  -------- -----------  -------- -----------
                  $ 311.2  100 percent  $ 289.6  100 percent
                  -------- -----------  -------- -----------
                  -------- -----------  -------- -----------


Mitel Corporation
SUPPLEMENTARY SCHEDULES
(in millions of Canadian dollars)
(Unaudited)

Information On Business Segments

Three Months Ended June 25, 1999
               Systems  Semiconductor  Unallocated  Total
                                       cost
               -------  -------------  -----------  --------
Total external
 sales revenue $ 186.0        $ 125.2         $  -  $  311.2
Amortization
 of buildings
 and equipment     4.5           20.1            -      24.6
Amortization of
 acquired
 intangibles         -              -         17.1      17.1
Segment's
 operating
 income from
 continuing
 operations       13.2            5.1        (17.1)      1.2


Three Months Ended June 26, 1998
               Systems  Semiconductor  Unallocated  Total
                                       cost
               -------  -------------  -----------  --------
Total external
 sales revenue $ 155.9        $ 133.7         $  -   $ 289.6
Amortization
 of buildings
 and equipment     4.8           21.8            -      26.6
Amortization of
 acquired
 intangibles         -              -          1.4       1.4
Segment's
 operating
 income from
 continuing
 operations       14.4           12.8         (1.4)     25.8

Fiscal 1999 Information
                 First    Second   Third    Fourth   Full
                 Quarter  Quarter  Quarter  Quarter  Year
                 -------  -------  -------  -------  -------
Systems
-------
Total external
 sales revenue   $ 155.9  $ 201.9  $ 195.6  $ 199.3  $ 752.7
Amortization of
 buildings and
 equipment           4.8      5.1      5.5      5.5     20.9
Segment's
 operating income
 from continuing
 operations         14.4     18.6     15.4     12.8     61.2

Semiconductor
-------------
Total external
 sales revenue   $ 133.7  $ 145.7  $ 148.5  $ 129.8  $ 557.7
Amortization of
 buildings and
 equipment          21.8     21.9     22.1     19.1     84.9
Segment's
 operating income
 from continuing
 operations         12.8     18.7     13.8      8.8     54.1

Mitel Corporation
-----------------
Total external
 sales revenue   $ 289.6  $ 347.6  $ 344.1  $ 329.1 $1,310.4
Amortization of
 buildings and
 equipment          26.6     27.0     27.6     24.6    105.8
Segments'
 operating income
 from continuing
 operations      $  27.2  $  37.3  $  29.2  $  21.6  $ 115.3
Unallocated costs:
  Amortization
   of acquired
   intangibles      (1.4)    (2.2)    (2.2)   (16.6)  (22.4)
  Special charges
   (net)               -        -        -    (10.1)  (10.1)
                 -------  -------  -------  -------  -------
Consolidated
 operating income
 (loss) from
 continuing
 operations      $  25.8  $  35.1  $  27.0  $  (5.1) $ 82.8
                 -------  -------  -------  -------  -------
                 -------  -------  -------  -------  -------


FOR FURTHER INFORMATION PLEASE CONTACT:

Mitel Corporation
Connie Cochran
Investor Relations
(613) 592-2122
(613) 592-4170
Email:  Connie_Cochran@mitel.com
Internet: www.mitel.com

OR

Mitel Corporation
Jacques Guerette
Corporate Communications
(613) 592-2122
(613) 592-4170
Email:  Jacques_Guerette@mitel.com