MITEL NETWORKS CORP

CIK:0001170534|SEC Filings

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues	$ 309.6	$ 241.5	$ 948.1	$ 703.2
Cost of revenues	128.5	110.4	393.4	327.8
Gross margin	181.1	131.1	554.7	375.4
Expenses:
Selling, general and administrative	103.0	81.5	330.1	246.8
Research and development	36.1	22.5	110.8	67.8
Restructuring, integration and acquisition-related costs (note 17)	12.5	35.7	34.5	56.4
Amortization of acquisition-related intangible assets	25.2	8.5	79.6	25.7
Operating Expenses, Total	176.8	148.2	555.0	396.7
Operating income (loss)	4.3	(17.1)	(0.3)	(21.3)
Interest expense	(8.8)	(3.3)	(27.5)	(9.0)
Debt retirement and other debt costs (note 11)			(0.9)	(18.0)
Gains on divestitures (note 4)			19.1
Other income (expense)		(1.7)	3.8	(3.0)
Loss from continuing operations, before income taxes	(4.5)	(22.1)	(5.8)	(51.3)
Current income tax recovery (expense)	2.4	1.9	(7.0)	(1.5)
Deferred income tax recovery (expense)	(4.6)	(6.6)	0.5	6.2
Net loss from continuing operations	(6.7)	(26.8)	(12.3)	(46.6)
Net loss from discontinued operations, net of tax (note 4)				(1.4)
Net loss	$ (6.7)	$ (26.8)	$ (12.3)	$ (48.0)
Net loss per common share - Basic and Diluted
Net loss from continuing operations	$ (0.05)	$ (0.23)	$ (0.10)	$ (0.39)
Net loss from discontinued operations				(0.01)
Net loss per share	$ (0.05)	$ (0.23)	$ (0.10)	$ (0.40)
Weighted-average number of common shares outstanding (note 16)
Basic and Diluted	122.9	118.9	121.8	120.9

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
CASH PROVIDED BY (USED IN) Operating activities:
Net loss	$ (6.7)	$ (26.8)	$ (12.3)	$ (48.0)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization and depreciation	32.5	13.2	101.1	39.1
Stock-based compensation	4.7	3.1	15.0	10.8
Deferred income tax expense (recovery)	4.6	6.6	(0.5)	(12.7)
Non-cash portion of debt retirement and other debt costs (note 11)			0.9	18.0
Gain on divestitures (note 4)			(19.1)	(7.9)
Accretion of interest		(0.3)	(0.5)	(0.7)
Non-cash movements in provisions	3.7	3.5	10.0	6.4
Change in non-cashoperating assets and liabilities (note 19)	15.6	29.3	20.4	25.3
Net cash provided by (used in) operating activities	54.4	28.6	115.0	30.3
Investing activities:
Additions to property, equipment and identifiable intangible assets	(2.3)	(4.9)	(10.8)	(13.4)
Acquisitions, net of cash acquired (note 3)		(400.6)		(400.6)
Proceeds from divestitures of business units, net of cash divested (note 4)			41.5	336.9
Net cash provided by (used in) investing activities	(2.3)	(405.5)	30.7	(77.1)
Financing activities:
Proceeds from issuance of long-term debt (note 11)		298.5		448.5
Repayment of long-term debt (note 11)		(1.9)	(48.0)	(595.4)
Borrowings under revolving credit facilities (note 11)	26.0	200.0	162.0	403.0
Repayments of revolving credit facilities (note 11)	(72.0)	(113.0)	(256.0)	(213.0)
Payment of debt issue costs and other debt costs (note 11)		(9.5)		(16.1)
Repayment of capital lease liabilities and other long-term debt	(0.9)	(1.3)	(2.9)	(5.0)
Proceeds from issuance of common shares from option exercises	0.6	8.1	3.1	10.2
Repurchase of common shares				(35.7)
Net cash provided by (used in) financing activities	(46.3)	380.9	(141.8)	(3.5)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	0.2	1.3	(2.4)	5.6
Net increase (decrease) in cash, cash equivalents and restricted cash	6.0	5.3	1.5	(44.7)
Cash, cash equivalents and restricted cash, beginning of period	40.4	51.7	44.9	101.7
Cash, cash equivalents and restricted cash, end of period	46.4	57.0	46.4	57.0
Less: restricted cash, end of period	(1.4)	(1.6)	(1.4)	(1.6)
Cash and cash equivalents, end of period	$ 45.0	$ 55.4	$ 45.0	$ 55.4

CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions

Sep. 30, 2018

Dec. 31, 2017

Current assets:

Cash and cash equivalents

$ 45.0

$ 40.9

Accounts receivable (net of allowance for doubtful accounts of $13.9 and $15.8, respectively)

180.2

219.2

Sales-type lease receivables (net) (note 5)

3.4

Inventories (net) (note 6)

66.1

79.6

Other current assets (note 7)

80.3

74.8

Assets of component held for sale, current (note 4)

33.3

Assets, Current, Total

371.6

451.2

Non-current portion of sales-type lease receivables (net) (note 5)

4.0

Deferred tax asset

113.4

124.4

Property and equipment (net)

46.7

52.7

Identifiable intangible assets (net) (note 8)

341.7

420.8

Goodwill

528.7

528.9

Other non-current assets

52.6

35.8

Assets of component held for sale, non-current (note 4)

12.7

Assets, Total

1,454.7

1,630.5

Current liabilities:

Accounts payable and accrued liabilities (note 9)

251.9

245.8

Current portion of deferred revenue

134.3

160.6

Current portion of long-term debt (note 11)

9.9

17.1

Liabilities of component held for sale, current (note 4)

15.2

Liabilities, Current, Total

396.1

438.7

Long-term debt (note 11)

476.6

612.0

Long-term portion of deferred revenue

57.2

64.1

Deferred tax liability

9.0

13.9

Pension liability (note 12)

83.6

111.1

Other non-current liabilities

30.6

36.0

Liabilities of component held for sale, non-current (note 4)

9.0

Liabilities, Total

1,053.1

1,284.8

Commitments, guarantees and contingencies (note 13)

Shareholders' equity:

Common shares, without par value and additional paid-in capital - unlimited shares authorized; issued and outstanding: 123.1 and 120.1, respectively (note 14)

1,502.7

1,466.0

Warrants (note 15)

^[1]

20.5

39.1

Accumulated deficit

(972.8)

(990.6)

Accumulated other comprehensive loss

(148.8)

(168.8)

Stockholders' Equity Attributable to Parent, Total

401.6

345.7

Liabilities and Equity, Total

$ 1,454.7

$ 1,630.5

[1]

At September 30, 2018, there were 1.3 million warrants outstanding that were issued in connection with government funding (December 31, 2017-2.5 million). The warrants have an exercise price of nil, are exercisable at any time at the option of the holder and have no expiry date. In April 2018, 1.2 million warrants were exercised for proceeds of nil. As a result, in the second quarter of 2018, a pro-rata share of the carrying value of the warrants was reclassified to common share capital.