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Mitel Corporation. (55PT)

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Friday 21 January, 2000

Mitel Corporation.

3rd Quarter & 9 Mths Results

Mitel Corporation
21 January 2000


Mitel Corporation Announces Record Third Quarter Results:

* Positive Developments in Growth and Profitability 
* Mitel Sells Its Lincoln Power Business

OTTAWA, ONTARIO--Mitel Corporation (TSE:MLT, NYSE:MLT) today
announced record third quarter revenues and adjusted net income
for the Fiscal 2000 period ended December 24, 1999.

'Today's results underscore the efforts we are taking to
re-position Mitel for growth and profitability,' said Kirk K.
Mandy, President and Chief Executive Officer, Mitel.  'I am
pleased that our businesses met or exceeded our expectations and
that we achieved new milestones in some of our performance
indicators.'

Revenue from continuing operations for the quarter reached a
record of $363.8 million, up 6% from $344.1 million in the third
quarter of Fiscal 1999.  For the first nine months of Fiscal 2000,
revenue from continuing operations reached $1.024 billion, up 4%
from $981.3 million in Fiscal 1999.

Adjusted Net Income (*) for the quarter reached a record $36.5
million, or $0.31 per share, compared to $22.0 million, or $0.18
per share, in Fiscal 1999, and $0.23 per share in the second
quarter of this Fiscal year.  The improvement from a year ago is
due mainly to higher semiconductor shipments and to enhanced
margins in both the Systems and Semiconductor business segments.
Adjusted Net Income for the first nine months of the year was
$76.7 million, or $0.65 per share, compared to $64.8 million, or
$0.55 per share, for the same period in Fiscal 1999.

Order backlog remained strong at $277 million, up $12 million from
the previous quarter and up $97 million from the end of Fiscal
1999.

On January 19, 2000, Mitel completed the sale of the company's
Lincoln Automotive and Power business unit located in the UK.  The
sale concludes a formal plan announced on April 22nd, 1999 to
dispose of this unit as part of Mitel's efforts to focus on its
core communications business.  The unit was sold to Dynex Power
Inc. for approximately $12 million.  As a result of the sale,
Mitel recorded as a loss from discontinued operations in the third
quarter additional after-tax provisions of $8.0 million.
Operations from the Lincoln unit have been excluded from Mitel's
results from continuing operations since March 1999.

Mitel recorded net income of $16.6 million in the third quarter,
or $0.14 per share, after deduction of amortization of intangibles
totaling $11.9 million and the after-tax discontinued operations
charge of $8.0 million related to the sale of Lincoln.  This
compares to net income of $17.8 million, or $0.15 per share, in
the third quarter of Fiscal 1999.

For the year to date, net income was $24.5 million, or $0.19 per
share, after deducting the amortization of intangibles amounting
to $44.2 million and after-tax provisions for discontinued
operations of $8.0 million.  This compares to net income of $45.2
million, or $0.38 per share in the first nine months of Fiscal
1999.  The Fiscal 1999 figures reflect the amortization of
intangibles of $2.2 million and $5.8 million for the respective
quarter and year to date periods. Amortization periods were
revised in the fourth quarter of Fiscal 1999.

Cash flow from operations before working capital changes amounted
to $149.1 million in the first nine months compared with $147.3
million in the previous year.  Since June 1999, the company has
spent $36 million to repurchase and cancel 3,383,800 common shares
under a previously announced normal course issuer bid program.
Cash and short-term investments totaled $164 million, up from $140
million at the end of the second quarter.

Review of Third Quarter Operations

Mitel Communications Systems revenues reached $200.4 million, up
2% from $195.6 million last year but lower, as expected, from the
$209.4 million posted last quarter.  Sales of enterprise
communications systems remained strong, particularly in North
America.  Operating income improved to $24.5 million from $15.4
million last year, chiefly as a result of improved voice systems
margins and sales channel efficiencies.

'Our Systems business continues to be a solid performer that is
making clear gains in market share and margins,' said Mandy.
'Customers recognize the value of our selling proposition, in
particular our commitment to investment protection as they move
into the Internet space.'

Mitel Semiconductor sales for the quarter increased by 10% to
$163.4 million from $148.5 million in the preceding year, mainly
due to a strong recovery in the Asia Pacific region, and were up
17% from $139.4 million in the second quarter of this Fiscal year.
Operating income increased substantially from $13.8 million last
year to $27.9 million as a result of higher sales and improved
manufacturing utilization.

Semiconductor order backlog improved substantially to $237
million, up by $28 million from the previous quarter and up by $93
million since the end of Fiscal 1999.

'Semiconductor's results exceeded our expectations and I am
particularly pleased to note our substantial gain in backlog which
reflects the health of this business,' said Mandy.  'The
improvement in Semiconductor reflects the general rebound of this
industry as well as the efforts we are undertaking to boost
performance.'

Margins and Expenses

Gross margin for the quarter improved from 47% to 50% of revenue,
reflecting higher shipments of semiconductors and cost
efficiencies in each of the Systems and Semiconductor businesses.

Selling and administrative expenses were 25% of sales,
representing the same level as the second quarter of this Fiscal
year and two percentage points lower than last year.

Research and development expenses reflect Mitel's continuing
commitment to technological innovation and remained at 10% of
sales, totaling $37.5 million for the quarter.

Mitel's effective income tax rate on adjusted pre-tax income was
26% as against 12% last year as a result of this year's higher
taxable income in Canada and of the favorable impact of certain
Fiscal 1999 permanent differences in the European operation.  The
year to date effective income tax rate on adjusted pre-tax income
was 26% and in line with expectations, as compared to 19% in
Fiscal 1999.

About Mitel

Mitel is a growing global provider of converging voice and data
systems and applications, and specialty semiconductors for the
communications industry.  The company has annual revenues of more
than $1.3 billion and employs some 6,000 people worldwide.

(*) 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.  Investors are encouraged to consider the risks
detailed in those filings.

Editor: An analyst call to discuss 3Q00 earnings will be held from
8:30-9:30am ET.  Media can listen to this call by dialing
1-800-273-9672 (a 48-hour replay number is also available. Dial
416-695-5800, passcode 369029). The analyst call will also be
webcast via two sites: www.Q1234.com and www.vcall.com.  In both
cases, audio is 'listen only' and a copy of Mitel's 3Q00 news
release can be downloaded.


Mitel Corporation
(incorporated under the laws of Canada)
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(Unaudited)

                                                Dec. 24,   March 26,
                                                  1999       1999
                                               --------------------
ASSETS
Current assets:
  Cash and cash equivalents                     $   153.6  $   125.3
  Short-term investments                             10.2          -
  Accounts receivable                               315.3      326.3
  Inventories                                       191.3      198.1
  Prepaid expenses and other                         26.6       27.4
                                                --------------------
                                                    697.0      677.1

Long-term receivables                                25.8       35.4
Fixed assets                                        481.5      507.7
Acquired intangible assets                           13.7       56.7
Patents, trademarks and other                         9.9       23.4
                                                --------------------
                                                $ 1,227.9  $ 1,300.3
                                                --------------------
                                                --------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities      $   233.9  $   254.1
  Income and other taxes payable                     20.8       11.8
  Deferred revenue                                   36.2       36.6
  Current portion of long-term debt                  41.0       37.6
                                                --------------------
                                                    331.9      340.1
Long-term debt                                      254.1      276.5
Pension liability                                    13.5       13.2
Deferred income taxes                                13.1       23.2
                                                --------------------
                                                    612.6      653.0
                                                --------------------
Shareholders' equity:
  Capital stock
     Preferred shares                                37.0       37.2
     Common shares                                  322.7      331.2
  Contributed surplus                                 9.3       32.3
  Retained earnings                                 236.7      218.4
  Translation account                                 9.6       28.2
                                                --------------------
                                                    615.3      647.3
                                                --------------------
                                                $ 1,227.9  $ 1,300.3
                                                --------------------
                                                --------------------

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

                             Three Months Ended   Nine Months Ended
                             Dec. 24,  Dec. 25,   Dec. 24,  Dec. 25,
                               1999      1998       1999      1998
                             ---------------------------------------
Revenue                      $  363.8  $  344.1  $ 1,023.7  $  981.3
                             ---------------------------------------

Cost of sales:
 Cost of sales other than
  amortization                  166.6     164.3      484.5     479.3
 Amortization of manufacturing
  assets                         16.2      18.0       51.1      51.7
                             ---------------------------------------
                                182.8     182.3      535.6     531.0
                             ---------------------------------------
Gross margin                    181.0     161.8      488.1     450.3
                             ---------------------------------------


Expenses:
 Selling and administrative      91.1      92.7      264.5     245.9
 Research and development (net)  37.5      39.9      110.0     110.7
 Amortization of acquired
  intangibles                    11.9       2.2       44.2       5.8
                             ---------------------------------------
                                140.5     134.8      418.7     362.4
Operating income from
 Continuing operations           40.5      27.0       69.4      87.9
Interest income                   1.8       1.6        5.4       4.3
Interest expense                 (4.9)     (5.8)     (15.3)    (18.2)
Debt issue and other costs          -         -          -      (7.2)
                             ---------------------------------------
Income from continuing
 operations before income
 taxes                           37.4      22.8       59.5      66.8
Income tax expense              (12.8)     (3.0)     (27.0)    (15.0)
                             ---------------------------------------
Net income from continuing
 operations for the period       24.6      19.8       32.5      51.8
Loss from discontinued
 operations for the period       (8.0)     (2.0)      (8.0)     (6.6)
                             ---------------------------------------
Net income for the period    $   16.6  $   17.8  $    24.5  $   45.2
                             ---------------------------------------
                             ---------------------------------------

Net income attributable to
 common shareholders after
 preferred share dividends   $   15.8  $   17.0  $    22.1   $  42.8
                             ---------------------------------------
                             ---------------------------------------

Net income per common share:
 Net income per common share
 from continuing operations:
      Basic                  $   0.21  $   0.16  $    0.26   $  0.44
                             ---------------------------------------
                             ---------------------------------------
      Fully diluted          $   0.20  $   0.16  $    0.26   $  0.43
                             ---------------------------------------
                             ---------------------------------------
 Net income per common share:
      Basic                  $   0.14  $   0.15  $    0.19  $   0.38
                             ---------------------------------------
                             ---------------------------------------
      Fully diluted          $   0.14  $   0.14  $    0.19  $   0.37
                             ---------------------------------------
                             ---------------------------------------

Weighted average number of
 common shares outstanding
 (millions):

      Basic                     113.7     116.7      115.1     113.5
                             ---------------------------------------
                             ---------------------------------------
      Fully diluted             119.9     122.4      119.2     116.2
                             ---------------------------------------
                             ---------------------------------------


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

                                                 Nine Months Ended
                                                Dec. 24,    Dec. 25,
                                                  1999        1999
                                                --------------------

CASH PROVIDED BY (USED IN)
Operating activities:
  Net income for the period                     $   24.5    $   45.2
  Amortization of capital and other assets         121.4        95.2
  Debt issue and other costs expensed                  -         8.8
  Investment tax credits                             5.9        (7.0)
  Gain on sale of capital assets                    (0.1)       (0.4)
  Deferred income taxes                             (3.5)        4.6
  Change in pension liability                        0.9         0.9
  Decrease (increase) in working capital            11.8      (136.9)
                                                --------------------
    Total                                          160.9        10.4
                                                --------------------

Investing activities:
  Change in short-term investments                 (10.2)       34.5
  Additions to capital and other assets            (46.2)      (52.0)
  Proceeds from disposal of capital assets           0.8         2.1
  Acquisitions                                         -       (46.6)
  Net change in non-cash balances related to
   investing activities                             (6.9)       (3.0)
                                                --------------------
     Total                                         (62.5)      (65.0)
                                                --------------------

Financing activities:
  Repayment of long-term debt                       (7.9)     (116.5)
  Repayment of capital lease liabilities           (22.6)      (19.0)
  Debt issue costs                                     -        (2.0)
  Dividends on preferred shares                     (2.4)       (2.4)
  Issue of common shares                             1.1       166.2
  Repurchase of common shares                      (36.4)          -
  Net change in non-cash balances related
   to financing activities                          (0.2)        0.8
                                                --------------------
     Total                                         (68.4)       27.1
                                                --------------------

Effect of currency translation on cash              (1.7)        5.3
                                                --------------------
Increase (decrease) in cash and cash equivalents    28.3       (22.2)

Cash and cash equivalents, beginning of period     125.3       117.2
                                                --------------------
Cash and cash equivalents, end of period        $  153.6    $   95.0
                                                --------------------
                                                --------------------


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 are as follows:

                             Three Months Ended   Nine Months Ended
                             Dec. 24,  Dec. 25,   Dec. 24,  Dec. 25,
                               1999      1998       1999      1998
                             ---------------------------------------

Net income for the period
 as reported                 $   16.6  $   17.8   $   24.5  $   45.2

Adjusted net income, as
 adjusted for:
  Amortization of acquired
   intangibles                   11.9       2.2       44.2       5.8
  Loss from discontinued
   operations                     8.0       2.0        8.0       6.6
  Debt issue and other costs        -         -          -       7.2
                             ---------------------------------------

Adjusted Net Income for
 the period                  $   36.5  $   22.0   $   76.7  $   64.8
                             ---------------------------------------
                             ---------------------------------------

Adjusted Net Income per
 common share - basic        $   0.31  $   0.18   $   0.65  $   0.55
                             ---------------------------------------
                             ---------------------------------------

Geographic Information

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

                       Three Months             Three Months
                          Ended        % of       Ended         % of
                      Dec. 24, 1999   Total    Dec. 25, 1998   Total
                      -------------   -----    -------------   -----
United States         $       181.3    50  %   $       150.1    44 %
Europe                        104.2    29              123.1    36
Other Regions                  58.7    16               52.6    15
Canada                         19.6     5               18.3     5
                      -------------   -----    -------------   -----
Total                 $       363.8   100 %    $       344.1   100 %
                      -------------   -----    -------------   -----
                      -------------   -----    -------------   -----


                       Nine Months              Nine Months
                          Ended        % of        Ended        % of

                      Dec. 24, 1999   Total    Dec. 25, 1998   Total
                      -------------   -----    -------------   -----
United States         $       483.4    47  %    $      451.6    46 %
Europe                        319.5    31              312.5    32
Other Regions                 164.9    16              165.5    17
Canada                         55.9     6               51.7     5
                      -------------   -----    -------------   -----
Total                 $     1,023.7   100 %    $       981.3   100 %
                      -------------   -----    -------------   -----
                      -------------   -----    -------------   -----


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

Information on Business Segments

Three Months Ended December 24,1999
                      Systems   Semiconductor  Unallocated  Total
                                                 Costs
                      ----------------------------------------------
Total external sales  $  200.4  $  163.4       $    -       $  363.8
 revenue
Amortization of
 Buildings and
 equipment                 4.3      19.2            -           23.5
Amortization of
 Acquired intangibles        -         -         11.9           11.9
Segment's operating
 income from
 continuing operations    24.5      27.9        (11.9)          40.5


Three Months Ended December 25, 1998
                      Systems   Semiconductor  Unallocated  Total
                                                 Costs
                      ----------------------------------------------
Total external sales
 revenue              $  195.6  $  148.5       $    -       $  344.1
Amortization of
 buildings and
 equipment                 5.5      22.1            -           27.6
Amortization of
 acquired intangibles        -         -          2.2            2.2
Segment's operating
 income from continuing
 operations               15.4      13.8         (2.2)          27.0


Nine Months Ended December 24, 1999
                      Systems   Semiconductor  Unallocated  Total
                                                 Costs
                      ----------------------------------------------
Total external sales
 revenue              $  595.8  $  427.9       $   -        $1,023.7
Amortization of
 buildings and
 equipment                13.2      59.7           -            72.9
Amortization of
 acquired intangibles        -         -        44.2            44.2
Segment's operating
 income from continuing
 operations               63.9      49.7       (44.2)           69.4


Nine Months Ended December 25, 1998
                      Systems   Semiconductor  Unallocated  Total
                                                 Costs
                      ----------------------------------------------

Total external sales
 revenue              $  553.4  $  427.9       $    -       $  981.3
Amortization of
 buildings and
 equipment                15.4      65.8            -           81.2
Amortization of
 acquired intangibles        -         -          5.8            5.8
Segment's operating
 income from continuing
 operations               48.4      45.3         (5.8)          87.9


FOR FURTHER INFORMATION PLEASE CONTACT:

Mitel Corporation
Jacques Guerette
Corporate Communications
(613) 592-2122
E-mail: jacques_guerette@mitel.com
Web Site: www.mitel.com
or
Mitel Corporation
Mike McGinn
Investor Relations
(613) 592-2122
E-mail: mike_mcginn@mitel.com