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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-K







|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the Fiscal Year Ended April 30, 2011

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission File Number: 001-34699





MITEL NETWORKS CORPORATION

(Exact name of Registrant as specified in its charter)







|                                                               |  |                                                          |  |                                     
|-------------------------------------------------------------- |  | -------------------------------------------------------- |  | ------------------------------------
|Canada                                                         |  | 3661                                                     |  | 98-0621254                          
|(State or other jurisdiction of
incorporation or organization) |  | (Primary Standard Industrial Classification Code Number) |  | (I.R.S. Employer Identification No.)

350 Legget Drive

Ottawa, Ontario

Canada K2K 2W7

(613) 592-2122

(Address, including zip code, and telephone number, including area code, of

Registrants principal executive offices)





Securities registered pursuant to Section 12(b) of the Act:



|                            |  |                                          
|--------------------------- |  | -----------------------------------------
|Title of each class         |  | Name of each exchange on which registered
|Common Shares, no par value |  | NASDAQ Global Market                     

Securities registered pursuant to Section 12(g) of the Act:

None.





Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.    Yes   ̈    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.  x

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated Filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes   ̈    No  x

As of June 15, 2011, there were 53,183,509 common shares outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE

None.









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EXPLANATORY NOTE

Mitel Networks Corporation (the Company) qualifies as a foreign private issuer for purposes of the U.S. Securities Exchange
Act of 1934, as amended (the Exchange Act). Instead of filing annual and periodic reports on forms available for foreign private issuers, the Company is filing this annual report on Form 10-K (this Report or Annual
Report) and has been filing and expects to continue to file quarterly reports on Form 10-Q and current reports on Form 8-K. However, as a Canadian foreign private issuer, the Company prepares and files its management information circulars and
related materials in accordance with Canadian corporate and securities law requirements. As the Companys management information circular is not prepared and filed pursuant to Regulation 14A, the Company may not incorporate by reference
information required by Part III of this Report from its management information circular, and accordingly has included that information in this Report on Form 10-K.

All dollar amounts quoted in this Report are provided in currency of the United States unless otherwise stated.



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MITEL NETWORKS CORPORATION

2011 FORM 10K ANNUAL REPORT

TABLE OF CONTENTS



|         |  |                                                                                                                   |  |  |     | 
|-------- |  | ----------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|PART I   |  |                                                                                                                   |  | 
|Item 1.  |  | Business                                                                                                          |  |  | 2   | 
|Item 1A. |  | Risk Factors                                                                                                      |  |  | 7   | 
|Item 1B. |  | Unresolved Staff Comments                                                                                         |  |  | 22  | 
|Item 2.  |  | Properties                                                                                                        |  |  | 23  | 
|Item 3.  |  | Legal Proceedings                                                                                                 |  |  | 23  | 
|         | 
|PART II  |  |                                                                                                                   |  | 
|         |  |                                                                                                                  
|Item 5.  |  | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
 Securities |  |  | 24  | 
|Item 6.  |  | Selected Financial Data                                                                                           |  |  | 26  | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                             |  |  | 29  | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                        |  |  | 53  | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                                       |  |  | 55  | 
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure                              |  |  | 96  | 
|Item 9A. |  | Controls and Procedures                                                                                           |  |  | 96  | 
|Item 9B. |  | Other Information                                                                                                 |  |  | 97  | 
|         | 
|PART III |  |                                                                                                                   |  | 
|         |  |                                                                                                                  
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                            |  |  | 98  | 
|Item 11. |  | Executive Compensation                                                                                            |  |  | 105 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters                    |  |  | 119 | 
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence                                         |  |  | 122 | 
|Item 14. |  | Principal Accounting Fees and Services                                                                            |  |  | 126 | 
|         | 
|PART IV  |  |                                                                                                                   |  | 
|         |  |                                                                                                                  
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                        |  |  | 127 | 
|         |  | Signatures                                                                                                        |  |  | 128 | 



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PART I



|Item 1. | Business
|------- | --------

The
Company

We are a leading provider of integrated communications solutions focused on the small-to-medium sized
enterprise, or SME, market. We also have a strong and growing presence in the large enterprise market with a portfolio of products which supports up to 65,000 users. Our Internet Protocol, or IP, based communications solutions consist of a
combination of IP telephony platforms, which we deliver as software, appliances and desktop devices, and a suite of unified communications and collaboration, or UCC, applications that integrate voice, video and data communications with business
applications. We refer to these IP telephony platforms and UCC applications as integrated communications solutions, because they meet our customers specific communications needs. We believe that our solutions, which can include associated
managed and network services, enable our customers to realize significant cost benefits and to conduct their business more effectively.

We have delivered innovative communications solutions to our customers for over 35 years, initially through Mitel Corporation, our predecessor business. Since the introduction of our IP-based systems in
1999, we have shipped more than 150,000 IP-based appliances to support the communications needs of over 7.2 million users. Our solutions are scalable, flexible and easy to deploy, manage and use. We have designed our software and
appliances to allow access to our solutions from mobile devices. Our solutions interoperate with various systems supplied by other vendors, which allows our customers to preserve their existing communications investments and gives them the
flexibility to choose the solutions that best meet their particular needs. We also offer our customers the flexibility of an end-to-end solution, in which our appliances and applications are integrated with our managed services (including a
combination of leasing, design and field services) and network services (including fixed and mobile voice and data connectivity, long distance and hosted applications).

For more than a decade, we have made a significant investment in developing our IP-based communications solutions and transitioning our distribution channels to take advantage of the industrys shift
from legacy systems to IP-based communications solutions, including UCC applications. Our research and development, or R&D, has produced a global portfolio of over 1,400 patents and pending applications, and provides us with the expertise to
anticipate market trends and meet the current and future needs of our customers. Today, we have a direct and indirect distribution channel, which as of June 15, 2011 addresses the needs of customers in over 100 countries through our 76 offices
and more than 1,600 channel partners worldwide.

Our segments for financial reporting purposes are: the United States; Europe,
Middle East & Africa; Canada and Caribbean & Latin America; and Asia Pacific. Financial information about these segments is set forth in Item 7 of this Report. In addition, reference should be made to the Consolidated
Financial Statements and Supplementary Data in Item 8 for further information regarding revenues, segment operating profit and loss, total assets attributable to our segments, and for financial information attributable to certain geographic
areas.

We completed our initial public offering (IPO) of our common shares on April 27, 2010. Our common
shares are listed on The Nasdaq Global Market under the symbol MITL.

Our Solutions

Our IP-based communications solutions include a combination of IP telephony platforms, which we deliver as software, appliances and
desktop devices, and a suite of UCC applications that integrate voice, video and data communications with business applications. These can be complemented with our network services and managed services.

We focus on ensuring that our products address a broad range of customer and geographic markets. Our solutions are scalable, flexible and
easy to deploy, manage and use. We believe that our solutions, including our managed and network services, enable our customers to realize significant cost benefits and to conduct their business more effectively.

IP Telephony Platforms

Software

Our IP telephony software provides the foundation of our
integrated communication solutions. In order to efficiently address specific markets, taking into account business size, operations, infrastructure, deployment and price, our IP telephony software may be deployed on virtualized data center
infrastructure, industry standard servers or on functionally optimized appliances.

Our Mitel Communications Director, or MCD,
is a software product suitable for small to large enterprises addressing both pure-IP telephony and hybrid IP telephony markets worldwide. This software performs a variety of functions, including multi-media call control and communications, which
allow business users to reach each other, share information and collaborate. MCD can be



2



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deployed in virtualized data center environments, on industry standard servers or on the Mitel 3300 ICP appliance. Our Multi-instance Communications Director, or MiCD, uses virtualization
techniques to run multiple MCDs on a single server. To address businesses that have multiple locations and geographically dispersed data centers, the MCD, and its MiCD and 3300 ICP variants, can be deployed across many different locations yet
integrated to create a seamless system. This platform forms the basis of our network services offering within a hosted environment.

Appliances

Our appliances are optimized yet expandable packages
combining the more popular software and hardware capabilities of their intended market. These appliances include:



| |  |  | Our Mitel 3300 ICP bundles MCD, certain mobility and UCC applications as well as legacy connectivity, and can be deployed, if required, as a simple IP
to legacy gateway and upgraded through licensing to a fully integrated communications appliance.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our Mitel 5000 CP is an integrated communications appliance addressing the unique feature requirements in North America and the United Kingdom for
small businesses with 20 to 250 users. The Mitel 5000 CP addresses both IP and traditional communications needs through an IP-centric hybrid architecture, which allows us to leverage existing customer infrastructure.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our Mitel 1000/3000 CS serves the two to 30 user segment of the small business market with our Mitel 1000 and 3000 integrated communications
appliances. These appliances provide complete communications capability and broadband and wireless connectivity in a single unit, utilizing a common hardware and software architecture.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Desktop Devices

Our desktop devices include a broad range of IP and digital phones, specialty desktop devices and peripherals, which are recognized in the industry for ease of use, feature set and style. Our IP phones
are designed to work across our IP telephony software and appliances, allowing businesses to retain their existing phones as their requirements evolve and providing our channels to market with the ability to minimize their fulfillment and training
requirements. These phones also support the SIP standard, allowing them to be used with telephony products supplied by other vendors. Our mid-market and premium IP phones have large, high quality graphical displays which enable easy access to a
variety of business applications and web content.

We also offer a variety of specialty desktop devices, including IP operator
consoles and conference units, and peripherals that augment our desktop devices. These peripherals include cordless handsets and headsets, receptionist key modules and other modules such as Wi-Fi and gigabit Ethernet connectivity, OraclesSun Ray thin client and local phone line integration that enable local enhanced 9-1-1 calling for remote workers. In addition, we partner with industry leading vendors to provide other specialized devices, such as Wi-Fi and wireless phones.

UCC Applications

We offer a broad range of UCC applications that can be deployed in a variety of ways. Our UCC suite of applications work across our MCD and Mitel 5000 platforms, and can also be deployed on industry
standard servers in data centers or on our own appliances such as the 3300 ICP. Our UCC applications include:



| |  |  | Unified Communicator Advancedsingle-user interface to access all unified communications capabilities, including desktop, web and mobile
phone, with features that include soft phone capabilities and presence.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mobilityextends business communications capabilities to mobile devices, improving the ability of employees to connect with the office and
be productive.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mitel TeleCollaboration Solutionhigh definition telepresence, integrated with collaboration and desktop sharing.
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Customer Interaction Solutionsmulti-media capable application for the operation and management of contact centers.
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | Unified Messagingunified multi-media messaging, including email, fax and voicemail, with integration into messaging products such as
Microsoft Exchange and IBM Lotus Notes.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Audio, Video & Web Conferencingcollaboration and conferencing tools for users including audio and video conferencing, webcasting
and document sharing.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Speech Auto Attendantautomated attendant allowing incoming callers to select departments and reach employees by speaking their names.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Teleworker Solutionsimple and secure Mitel and SIP telephone operation and communications for remote and home based users over the public
internet.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Business Dashboardeasy to use business analytics of communications system usage.
| | - |  | ---------------------------------------------------------------------------------

Network services

We offer connectivity and network services and hosted applications, which we refer to as network services that can be integrated with our products and delivered as part of our managed services. Our
network services are offered only in the United States and are branded as NetSolutions®. We are licensed
as a competitive local exchange carrier in 49 states in the U.S. and purchase network capacity wholesale from carriers, which we resell to our customers in various retail offerings. We do not operate our own network. Our network services enable us
to offer our product solutions from the public network or in combination with our enterprise based products.
NetSolutions® include the following types of services:



| |  |  | local access services;
| | - |  | ----------------------



| |  |  | long distance services;
| | - |  | -----------------------



| |  |  | mobile voice and data services;
| | - |  | -------------------------------



| |  |  | data services such as internet access and private networking services;
| | - |  | ----------------------------------------------------------------------



| |  |  | hosted offerings such as network monitoring and management, audio conferencing, web conferencing, hosted secure internet access and web hosting; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | hosted IP Telephony based on our MiCD software.
| | - |  | -----------------------------------------------

Managed services

We offer a comprehensive managed services portfolio to
our customers. These managed services provide our customers with flexibility in integrating our solutions with their particular financial and operational needs. Our managed services include:



| |  |  | lifecycle management, such as project management, installation, training, maintenance, professional services, consulting, business requirements review
and disaster recovery planning;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | support, including product warranty and core software upgrades;
| | - |  | ---------------------------------------------------------------



| |  |  | benefits such as a guaranteed renewal option, risk of loss coverage, fixed migration pricing, upgrade and expansion flexibility; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | financing of our solutions.
| | - |  | ---------------------------

We offer a comprehensive package of managed services in the United States branded as the TotalSolution® program. We also offer some combination of our managed services in certain other countries.

Partnerships

One important result of the evolution of integrated
communications solutions is the simplicity with which products and services, from a variety of sources, can be easily integrated to provide a better solution for customers. By partnering with others, we can concentrate on our core areas of expertise
while leveraging the capabilities of our partners for the benefit of our customers. We have four key types of partnerships: strategic alliances, operational partners, affiliates and solution alliances.



| |  |  | Our strategic alliances are generally with leaders in adjacent markets or complementary technologies which, when combined with our products and
services, create beneficial solutions for our customers. Our strategic partners include Oracle Corporation, Research in Motion Limited, and VMware, Inc.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our operational partners allow us to leverage their capabilities to optimize our operational expenses. These include external developers, contract
manufacturers, integrators, consultants and professional services.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our affiliate program with Wesley Clover International Corporation (Wesley Clover), a company controlled by Dr. Terence H. Matthews,
the chairman of our Board of Directors, allows us to benefit from early investment in complementary emerging technologies by Wesley Clover and its subsidiaries.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have a large number of solution alliance partners who offer complementary solutions and expertise in areas that are not core to our business, many
of which are integrated into our applications. We also provide access to market for our partners by allowing our channel partners to purchase these third party products through our Datanet division.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Customers

Since the introduction of our IP-based systems in 1999, we have shipped more than 150,000 IP-based appliances to support the communications needs of over 7.2 million users. Our largest customer
represented only 1.6% of our revenues in fiscal 2011. Our broad customer base reflects our historical strength in the SME market as well as continued penetration among large enterprises.



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We have also developed a comprehensive understanding of certain vertical markets such as
education, government, healthcare, hospitality and retail. Our solutions can be tailored to meet the business communications needs of these and other vertical markets.

Sales and Marketing

We have a direct and indirect distribution
channel, which addresses the needs of customers in over 100 countries through our 76 offices and more than 1,600 channel partners worldwide. We differentiate our solutions and enhance our channels to market through strategic relationships with
innovative strategic partners.

Our distribution network includes value-added resellers, service providers, high-touch sales
and direct channel. We complement and support our channel partners in selected markets using a sales model whereby our sales staff works either directly with a prospective customer or in coordination with a channel partner in defining the scope,
design and implementation of the solution.

Our channel partners are supported by teams of regional account managers, systems
engineers, technical account managers and support staff. To complement our channel partner network, we also provide support to independent consultants who assist companies with network design, implementation and vendor selection.

We believe our extensive channel partner network combined with our corporate and regional support allows us to scale our business for
volume and sell our solutions globally, resulting in an efficient cost of sale model. We recruit our channel partners with a focus on expanding our market coverage and supporting the skills needed to successfully sell, implement and support IP-based
communications solutions. Where we can benefit from operational savings, we perform our own product fulfillment and order logistics, rather than relying on a wholesale distribution network. By performing these functions ourselves, we support our
strategy of ensuring global continuity of supply by leveraging in-house logistics, distribution and inventory management with our contract manufacturers. We provide a secure, internet-based distribution and licensing capability for software
fulfillment and upgrades, which provides efficiency and reduced distribution costs.

Our marketing organization employs a
comprehensive strategy to enhance our brand and brand attributes, generate demand, attract and retain channel partners, differentiate our product offerings and develop solutions for specific industry markets. Brand development is conducted through
advertising, media articles, trade conferences, launch campaigns, analyst and public relations, social media and web content delivery. We view public relations as a key element of our marketing strategy to increase our brand awareness. Our channel
marketing programs are designed and administered to provide benefits and incentives to ensure competencies, customer satisfaction and quality in the delivery of our solutions to market. Sales promotions and campaigns are conducted for channel
partners and customers, to encourage the sale of specific products or in support of new product introductions. Our marketing organization conducts product launches and develops materials and programs for our portfolio of solutions. We also operate
demonstration and executive briefing centers equipped with our latest solutions. These centers are used by both our channel partners and our own staff to demonstrate our solutions to existing and prospective customers.

Manufacturing and Supply Chain Management

A significant amount of our portfolio consists of appliances and desktop devices. Our objective is to deliver high quality and differentiated products to our channel partners and customers while
optimizing our operational cost structure and ensuring continuity of supply. To enable this, we use a three-pronged strategy, which includes: leveraging our contract manufacturers and component suppliers; protecting supply continuity; and ensuring
manufacturing portability across manufacturers.



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We use high volume contract manufacturers and component suppliers. We require our component
suppliers to make information visible so that we can assess their performance for technical innovation, financial strength, quality, support and operational effectiveness. Our primary contract manufacturers are Flextronics International Ltd.
(Flextronics) and Sanmina-SCI Corporation (Sanmina). We have had a manufacturing relationship with Flextronics since 2006 and with Sanmina (through its acquisition of BreconRidge Manufacturing Solutions Corporation
(BreconRidge)) since 2001. We do not have any long term purchase commitments with either contract manufacturer.

In order to ensure our continuity of supply and reduce supply chain barriers, our products are designed for manufacturing portability.
Approximately 95% of our hardware revenue is portable between contract manufacturers, with a lead time of typically not more than 14 weeks. We also implement portable designs by limiting the use of custom and sole source components and adhering to
industry standard Design For Manufacture and Design For Test guidelines. We dual source the majority of our high volume products, including our core IP telephony platforms. Approximately 52% of our hardware is currently dual sourced, primarily
between Flextronics and Sanmina. However, approximately 5% of hardware, primarily legacy systems and devices, are sole sourced.

We manage our own product distribution facilities either directly or through the use of third party logistics management specialists,
and, in some regions, wholesale distributors, all of which are managed by our logistics team. This is implemented with geographically diverse points of distribution, with our principal facilities being in the United States, Canada and Europe.

Research and Development

Our history of success as an early adopter in software-based communications solutions has provided us with the foundation for continued innovation in IP-based communication solutions and UCC applications.
We have invested in our R&D practices to take advantage of new methodologies, in part enabled by the technology shift itself. Our R&D efforts are focused on initiatives which we believe are highly likely to provide compelling returns. We
achieve this goal through effective partnerships, lead customer engagement, operational measurement and organizational best practices.

At April 30, 2011, our R&D organization was comprised of 357 personnel. Our R&D personnel are primarily located in three locations: Ottawa, Canada; Chandler, Arizona; and Dublin, Ireland. Our
center in Ottawa, Canada is responsible for our MCD platform as well as our messaging, contact center and mobility centered applications. Our center in Chandler, Arizona, near Phoenix, is responsible for our products focused on the SME market and
our advanced collaboration applications. Our center in Dublin, Ireland is responsible for our small and very small business products. Please see Item 6, Selected Financial Data, of Part II in this Report for the amount spent
during each of the last three fiscal years on R&D activities determined in accordance with U.S. generally accepted accounting principles, or GAAP.

Intellectual Property

Our intellectual property assets include
patents, industrial designs, trademarks, proprietary software, copyrights, domain names, operating and instruction manuals, trade secrets and confidential business information. These assets are important to our competitiveness and we continue to
expand our intellectual property portfolio in order to protect our rights in new technologies and markets. We have a broad portfolio of over 1,400 patents and pending applications, covering over 500 inventions, in areas such as Voice-over IP, or
VoIP, collaboration and presence.

We leverage our intellectual property by asserting our rights in certain patented
technologies. Certain companies have licensed or offered to purchase patents within our portfolio. We believe that our patent portfolio helps us counter allegations of infringement on the patents held by our competitors.

Our solutions contain software applications and hardware components that are either developed and owned by us or licensed to us by third
parties. The majority of the software code embodied in each of our core call-processing software, IP-based teleworker software, wireless telephony software applications, integrated messaging and voicemail software and collaboration interfaces has
been developed internally and is owned by us.

In some cases, we have obtained non-exclusive licenses from third parties to
use, integrate and distribute with our products certain packaged software, as well as customized software. This third party software is either integrated into our own software applications or is sold as separate self-contained applications, such as
voicemail or unified messaging. The majority of the software that we license is packaged software that is made generally available and has not been customized for our specific purpose. If any of our third party licenses were to terminate, our
options would be to either license a functionally equivalent software application or develop the functionally equivalent software application ourselves.

We have also entered into a number of non-exclusive license agreements with third parties to use, integrate and distribute certain operating systems, digital signal processors and semiconductor components
as part of our communications platforms. If any of these third party licenses were to terminate, we would need to license functionally equivalent technology from another supplier.



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It is our general practice to include confidentiality and non-disclosure provisions in the
agreements entered into with our employees, consultants, manufacturers, end-users, channel partners and others to attempt to limit access to and distribution of our proprietary information. In addition, it is our practice to enter into agreements
with employees that include an assignment to us of all intellectual property developed in the course of their employment.

Employees

At April 30, 2011, we had 2,199 employees and at the end of fiscal 2010 and fiscal 2009 we had 2,367 and 2,452 employees, respectively. Our future success depends in large part on our ability to
attract, retain and motivate our highly skilled managerial, professional and technical resources. Our compensation programs include opportunities for regular annual salary reviews, bonuses and stock options. Many of our employees are also common
shareholders and over 79.5% of our employees hold options to acquire our common shares. We continue to actively recruit skilled employees and we believe that relations with our employees are generally positive.

Competition

Our competition is primarily from two groups of vendors: traditional IP communications vendors and software vendors who are adding communications and collaboration solutions to their offerings.

We compete against many traditional IP communications vendors, including in particular Avaya Inc. and Cisco Systems, Inc., as
well as Aastra Technologies Limited, Alcatel-Lucent S.A., NEC Corporation, Panasonic Corporation, ShoreTel, Inc., Siemens Enterprise Networks and Toshiba Corporation.

The second group of competitors consists of software vendors who, in recent years, have expanded their offerings to address the UCC market. These competitors include Microsoft Corporation and Google Inc.

Our industry is also experiencing significant vendor consolidation. In the recent past, Avaya Inc. acquired Nortel
Networks Enterprise Solutions business, Cisco Systems, Inc. acquired TANDBERG ASA and Hewlett-Packard Company acquired 3Com Corporation. We believe this consolidation continues to create an opportunity for vendors like us to capitalize on
disruption among the channel partners of these consolidated businesses as a result of channel overlap or incompatible channel compensation arrangements.

Availability of Information

We are currently a foreign private
issuer for the purposes of the Exchange Act. We have filed and expect to continue to file our annual reports on Form 10-K, our quarterly reports on Form 10-Q and current reports on Form 8-K instead of filing annual and current reports on forms
available for foreign private issuers. We prepare and file our management information circulars and related materials under Canadian corporate and securities law requirements, and as a foreign private issuer we are exempt from the requirements of
Regulation 14A under the Exchange Act.

We make available, through our internet website for investors
(http://investor.mitel.com), our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably practicable after electronically filing such material with the SEC and with Canadian securities regulators. The reference to our website address does not constitute incorporation by reference of the information contained on the website
and should not be considered part of this document.



|Item 1A. | Risk Factors
|-------- | ------------

Certain
information contained in this Report, including information regarding future financial results, performance and plans, expectations, and objectives of management, constitute forward-looking information within the meaning of Canadian securities laws
and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We refer to all of these as forward-looking statements. Statements that include the words may, will,
should, could, target, outlook, 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 Report contains forward-looking statements pertaining to,
among other matters: general global economic conditions; our business strategy; our plans and objectives for future operations; our industry; our future economic performance, profitability and financial condition; the costs of operating as a public
company; and our R&D expenditures. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties, assumptions and other factors that could cause actual events or results to differ from those expressed or implied
by the forward-looking statements, including, without limitation:



| |  |  | our ability to sustain profitability in the future;
| | - |  | ---------------------------------------------------



| |  |  | fluctuations in our quarterly and annual revenues and operating results;
| | - |  | ------------------------------------------------------------------------



| |  |  | the successful implementation of our newly announced strategic plan;
| | - |  | --------------------------------------------------------------------



| |  |  | our reliance on channel partners for a significant component of our sales;
| | - |  | --------------------------------------------------------------------------



| |  |  | global economic conditions;
| | - |  | ---------------------------



| |  |  | intense competition;
| | - |  | --------------------



| |  |  | our ability to keep pace with rapidly changing technological developments and evolving industry standards;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | failure of the market for UCC to evolve as we expect;
| | - |  | -----------------------------------------------------



| |  |  | risks related to the rate of adoption of IP telephony by our customers;
| | - |  | -----------------------------------------------------------------------



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| |  |  | our ability to protect our intellectual property and our possible infringement of the intellectual property rights of third parties;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to access additional sources of funds;
| | - |  | --------------------------------------------------



| |  |  | risks related to our level of indebtedness;
| | - |  | -------------------------------------------



| |  |  | fluctuations in our working capital requirements and cash flows;
| | - |  | ----------------------------------------------------------------



| |  |  | our dependence upon a small number of outside contract manufacturers to manufacture our products;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | our dependence on sole source and limited source suppliers for key components;
| | - |  | ------------------------------------------------------------------------------



| |  |  | possible delays in the delivery of, or lack of access to, software or other intellectual property licensed from our suppliers;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | uncertainties arising from our foreign operations;
| | - |  | --------------------------------------------------



| |  |  | fluctuations in foreign exchange rates;
| | - |  | ---------------------------------------



| |  |  | fluctuations in interest rates;
| | - |  | -------------------------------



| |  |  | our ability to realize our deferred tax assets;
| | - |  | -----------------------------------------------



| |  |  | challenges to our transfer pricing policies by tax authorities;
| | - |  | ---------------------------------------------------------------



| |  |  | our ability to sell leases derived from our managed services offering or a breach of our obligations in respect of such sales;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | risks related to the financial condition of our customers;
| | - |  | ----------------------------------------------------------



| |  |  | design defects, errors, failures or bugs in our solutions;
| | - |  | ------------------------------------------------------------



| |  |  | our ability to successfully integrate future strategic acquisitions;
| | - |  | --------------------------------------------------------------------



| |  |  | problems with the infrastructure of carriers;
| | - |  | ---------------------------------------------



| |  |  | our ability to successfully implement and achieve our business strategies; and
| | - |  | ------------------------------------------------------------------------------



| |  |  | reliance on key personnel.
| | - |  | --------------------------

These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. We operate in a very competitive and rapidly changing
environment. New risks emerge from time to time. In making these statements we have made assumptions regarding, among other things: stable foreign exchange rates; no unforeseen changes occurring in the competitive landscape that would affect our
industry; a stable economic environment; no significant event occurring outside the ordinary course of our business; stable interest rates; and certain other assumptions that are set out proximate to the applicable forward-looking statements
contained in this Report. While we believe our plans, intentions, expectations, assumptions and strategies reflected in these forward-looking statements are reasonable, we cannot assure you that these plans, intentions, expectations assumptions and
strategies will be achieved. Our actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this Report as a result of various factors, including
the risks and uncertainties discussed below.

All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary statements set forth in this Report. Except as required by law, we are under no obligation to update any forward-looking statement, whether as a result of new information, future
events or otherwise.



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Risks Relating to our Business

We may not be able to sustain profitability in the future.

In fiscal 2011 and fiscal 2010, we had net income of $88.1 and $37.2 million, respectively, but we incurred a net loss of $193.5 million in fiscal 2009. Although we recorded net income of
$12.6 million for fiscal 2008 we recorded a net loss in each other year since our incorporation in 2001. We have incurred restructuring charges in fiscal 2011 and prior periods and may incur additional restructuring charges in the future. Our
future success in sustaining our recent profitability and growing our revenues and market share for our solutions depends, among other things, upon our ability to develop and sell solutions that have a competitive advantage, to build our brand image
and reputation, to attract orders from new and existing customers and to reduce our costs as a proportion of our revenues by, among other things, increasing efficiency in design, component sourcing, manufacturing and assembly cost processes. We may
not be able to achieve such success or sustain our recent profitability.

Our quarterly and annual revenues and operating
results have historically fluctuated, and the results of one period may not provide a reliable indicator of our future performance.

Our quarterly and annual revenues and operating results have historically fluctuated and are not necessarily indicative of results to be expected in future periods. A number of factors may cause our
financial results to fluctuate significantly from period to period, including:



| |  |  | the fact that an individual order or contract can represent a substantial amount of revenues for that period;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | the size, timing and shipment of individual orders;
| | - |  | ---------------------------------------------------



| |  |  | changes in pricing or discount levels by us or our competitors;
| | - |  | ---------------------------------------------------------------



| |  |  | changes in foreign currency exchange rates;
| | - |  | -------------------------------------------



| |  |  | the mix of products sold by us;
| | - |  | -------------------------------



| |  |  | the timing of the announcement, introduction and delivery of new products or product enhancements by us or our competitors;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | the ability to execute on our strategy and operating plans;
| | - |  | -----------------------------------------------------------



| |  |  | general economic conditions;
| | - |  | ----------------------------



| |  |  | ability to realize our deferred tax assets; and
| | - |  | -----------------------------------------------



| |  |  | changes in tax laws, regulations or accounting rules.
| | - |  | -----------------------------------------------------

As a result of the above factors, a quarterly or yearly comparison of our results of operations is not necessarily meaningful. Prior results are not necessarily indicative of results to be expected in
future periods.

If changes to our business strategy are not successfully implemented and accepted by our customers, our
business could be negatively affected.

In May 2011, we announced the implementation of key changes to our business strategy involving,
among other things:



| |  |  | Simplifying our business model to more effectively and efficiently support the sales, licensing and marketing of our communications solutions to
customers;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reallocating our spending on R&D with greater emphasis on integrated communications solutions that support the needs of customers that have between
100 and 2,500 users;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reorganizing our U.S. sales organization by increasing investment in our indirect channel, and focusing our direct sales team on a select group of
customers; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continuing our investment, and increasing our market leadership, in voice virtualization.
| | - |  | -----------------------------------------------------------------------------------------

We expect to continue to shift resources to support these changes. If these changes to our business strategy are not aligned with the direction our
customers take as they invest in the evolution of their networks and telephony needs, our customers may not buy our solutions or continue to use our services. Any failure by us to successfully execute on one more changes to our business strategy
could adversely impact our business and results of operations.



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We rely on our channel partners for a significant component of our sales, and disruptions
to, or our failure to effectively develop and manage, our distribution channel and the processes and procedures that support it could adversely affect our ability to generate revenues.

Our future success is highly dependent upon establishing and maintaining successful relationships with a variety of channel partners. A
substantial portion of our revenues is derived through our channel partners, most of which also sell our competitors products. Our revenues depend in part on the performance of these channel partners. The loss of or reduction in sales to these
channel partners could materially reduce our revenues. Our competitors may in some cases be effective in causing our channel partners or potential channel partners to favor their products or prevent or reduce sales of our solutions. If we fail to
maintain relationships with these channel partners, fail to develop new relationships with channel partners in new markets or expand the number of channel partners in existing markets, or if we fail to manage, train or provide appropriate incentives
to existing channel partners or if these channel partners are not successful in their sales efforts, sales of our solutions may decrease and our operating results would suffer.

Many potential channel partners in the voice communications business have established relationships with our competitors and may not be
willing to invest the time and resources required to train their staff to effectively market our solutions and services. Potential channel partners engaged in the data and software applications communications businesses are less likely to have
established relationships with our competitors, but where they are unfamiliar with the voice communications business, they may require substantially more training and other resources to be qualified to sell our solutions. The majority of our channel
partners sell our solutions to the SME market. In the future, we hope to further penetrate the large enterprise market. However, our existing channel partners may not be effective in selling to large enterprises.

Global economic conditions in our key markets, particularly the United States and the United Kingdom, have adversely affected our
business over the past two years and could adversely affect our revenues and harm our business in the future.

In fiscal
2009 and fiscal 2010, our operating results were affected by the global economic downturn, which started in mid calendar year 2008. Many of our customers, particularly in the United States and the United Kingdom, responded to the financial and
credit crises and general macroeconomic uncertainty by suspending, delaying or reducing their capital expenditures which negatively impacted our revenues.

Despite some recent signs of economic recovery and stabilization of our revenues in fiscal 2011, global economic concerns such as the varying pace of the economic recovery and the recent sovereign debt
crisis in Europe continue to create uncertainty and unpredictability for us, particularly in the United States and the United Kingdom. Unfavorable global economic conditions may negatively impact technology spending on our products and services and
could materially adversely affect our business, operating results and financial condition.

We face intense competition
from many competitors and we may not be able to compete effectively against these competitors.

The market for our
solutions is highly competitive. We compete against many companies, including and in particular Avaya Inc. and Cisco Systems, Inc., as well as Aastra Technologies Limited, Alcatel-Lucent S.A., NEC Corporation, Panasonic Corporation, ShoreTel, Inc.,
Siemens Enterprise Networks and Toshiba Corporation. In addition, because the market for our solutions is subject to rapidly changing technologies, we may face competition in the future from companies that do not currently compete in our business
communications market, including companies that currently compete in other sectors of the information technology, communications or software industries, such as Microsoft Corporation and Google Inc., mobile communications companies or communications
companies that serve residential, rather than business, customers. Our industry has also experienced and may continue to experience consolidation that may adversely impact our competitive position. In recent years, Avaya Inc. acquired Nortel
Networks Enterprise Solutions business, Cisco Systems, Inc. acquired TANDBERG ASA and Hewlett-Packard Company acquired 3Com Corporation.

Several of our existing competitors have, and many of our future potential competitors may have, greater financial, personnel, research, project management and other resources, more well-established
brands or reputations and broader customer bases than we have. As a result, these competitors may be in a stronger position to respond more quickly to potential acquisitions and other market opportunities, new or emerging technologies and changes in
customer requirements. Some of these competitors may also have customer bases that are more diversified than ours and therefore may be less affected by an economic downturn in a particular region. Competitors with greater resources may also be able
to offer lower prices, additional products or services or other incentives that we do not offer or cannot match. In addition, existing customers of data communications companies that compete against us may be more inclined to purchase business
communications solutions from their current data communications vendor than from us. We cannot predict which competitors may enter our markets in the future, what form the competition may take or whether we will be able to respond effectively to the
entry of new competitors or the rapid evolution in technology and product development that has characterized our markets.



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Competition from existing and potential market entrants may take many forms. Our products
must interface with customer software, equipment and systems in their networks, each of which may have different specifications. To the extent our competitors supply network software, equipment or systems to our customers, it is possible these
competitors could design their technologies to be closed or proprietary systems that are incompatible with our products or work less effectively with our products than their own. As a result, customers would have an incentive to purchase products
that are compatible with the products and technologies of our competitors over our products. A lack of interoperability may result in significant redesign costs, and harm relations with our customers. If our products do not interoperate with our
customers networks, installations could be delayed or orders for our products could be cancelled, which would result in losses of revenues and customers that could significantly harm our business. In addition, our competitors may provide large
bundled offerings that incorporate applications and products similar to those that we offer. If our competitors offer deep discounts on certain products or services in an effort to recapture or gain market share, we may be required to lower our
prices or offer other favorable terms to compete effectively, which would reduce our margins and could adversely affect our operating results and financial condition.

Our solutions may fail to keep pace with rapidly changing technology and evolving industry standards.

The markets for our solutions are characterized by rapidly changing technology, evolving industry standards, frequent new product introductions, short product life cycles and changing business models.
Therefore, our operating results depend, among other things, on existing and new markets, our ability to develop and introduce new solutions and our ability to reduce the production costs of existing solutions. The process of anticipating trends and
evolving industry standards and developing new solutions is complex and uncertain, and if we fail to accurately predict and respond to our customers changing needs, and emerging technological trends, our business could be harmed. We commit
significant resources to developing new solutions before knowing whether our investments will result in solutions that the market will accept. The success of new solutions depends on several factors, including new application and product definition,
component costs, timely completion and introduction of these solutions, differentiation of new solutions from those of our competitors and market acceptance of these solutions. We may not be able to successfully identify new market opportunities for
our solutions, develop and bring new solutions to market in a timely manner, or achieve market acceptance of our solutions.

The evolving market for UCC is subject to market risks and uncertainties that could cause significant delays and expenses.

We have made a significant investment in developing our IP-based communications solutions and transitioning our
distribution channels to take advantage of the industrys shift from legacy systems to IP-based communications solutions, including UCC applications. The market for UCC applications is evolving rapidly and is characterized by an increasing
number of market entrants. As is typical of a rapidly evolving industry, the demand for and market acceptance of UCC applications is uncertain. If the market for UCC applications fails to develop, develops more slowly than we anticipate or develops
in a manner different than we expect, our solutions could fail to achieve market acceptance, which in turn could significantly harm our business.

Moreover, as UCC usage grows, the infrastructure used to support these services, whether public or private, may not be able to support the demands placed on them and their performance or reliability may
decline. Even if UCC becomes more widespread in the future, our solutions may not attain broad market acceptance. The adoption of UCC applications on both desktop computers and mobile devices at a rate faster than we currently anticipate may lead to
a decline in the utilization of distinct IP and digital devices and a reduction in our desktop device revenues. In addition, the evolution towards hosted IP telephony and UCC applications delivered as a service may occur faster and more extensively
than currently anticipated, which may adversely impact the sale of our non-hosted communications solutions.

We are
dependent on our customers decisions to deploy IP telephony solutions.

Our business remains dependant on customer
decisions to migrate their legacy telephony infrastructure to IP telephony and other advanced service delivery methods. While these investment decisions are often driven by macroeconomic factors, customers may also delay adoption of IP telephony due
to a range of other factors, including prioritization of other IT projects and weighing the costs and benefits of deploying new infrastructures and devices. IP telephony adoption among new and additional IP telephony customers may not grow at the
rates we currently anticipate.

Our business may be harmed if we infringe intellectual property rights of third parties.

There is considerable patent and other intellectual property development activity in our industry. Our success depends, in
part, upon our not infringing intellectual property rights owned by others. Our competitors, as well as a number of individuals, patent holding companies and consortiums, own, or claim to own, intellectual property relating to our industry. Our
solutions may infringe the patents or other intellectual property rights of third parties. We cannot determine with certainty whether any existing third party patent, or the issuance of new third party patents, would require us to alter our
solutions, obtain licenses, pay royalties or discontinue the sale of the affected applications and products. Our competitors may use their patent portfolios in an increasingly offensive manner in the future. We are currently and periodically
involved in patent infringement disputes with third parties, including claims that have



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been made against us for the payment of licensing fees. We have received notices in the past, and we may receive additional notices in the future, containing allegations that our solutions are
subject to patents or other proprietary rights of third parties, including competitors, patent holding companies and consortiums. Current or future negotiations with third parties to establish license or cross-license arrangements, or to renew
existing licenses, may not be successful and we may not be able to obtain or renew a license on satisfactory terms, or at all. If required licenses cannot be obtained, or if existing licenses are not renewed, litigation could have a material adverse
effect on our business.

Our success also depends upon our customers ability to use our products. Claims of patent
infringement have been asserted against some of our channel partners based on their use of our solutions. We generally agree to indemnify and defend our channel partners and direct customers to the extent a claim for infringement is brought against
our customers with respect to our solutions.

Aggressive patent litigation is common in our industry and can be disruptive.
Infringement claims (or claims for indemnification resulting from infringement claims) have been, are currently and may in the future be asserted or prosecuted against us, our channel partners or our customers by third parties. Some of these third
parties, including our competitors, patent holding companies and consortiums, have, or have access to, substantially greater resources than we do and may be better able to sustain the costs of complex patent litigation. Whether or not the claims
currently pending against us, our channel partners or our customers, or those that may be brought in the future, have merit, we may be subject to costly and time-consuming legal proceedings. Such claims could also harm our reputation and divert our
managements attention from operating our business. If these claims are successfully asserted against us, we could be required to pay substantial damages (including enhanced damages and attorneys fees if infringement is found to be
willful). We could also be forced to obtain a license, which may not be available on acceptable terms, if at all, forced to redesign our solutions to make them non-infringing, which redesign may not be possible or, if possible, costly and
time-consuming, or prevented from selling some or all of our solutions.

Our success is dependent on our intellectual
property. Our inability or failure to secure, protect and maintain our intellectual property could seriously harm our ability to compete and our financial success.

Our success depends on the intellectual property in the solutions that we develop and sell. We rely upon a combination of copyright, patent, trade secrets, trademarks, confidentiality procedures and
contractual provisions to protect our proprietary technology. Our present protective measures may not be enforceable or adequate to prevent misappropriation of our technology or independent third-party development of the same or similar technology.
Even if our patents are held valid and enforceable, others may be able to design around these patents or develop products competitive to our products but that are outside the scope of our patents.

Any of our patents may be challenged, invalidated, circumvented or rendered unenforceable. We may not be successful should one or more of
our patents be challenged for any reason. If our patent claims are rendered invalid or unenforceable, or narrowed in scope, the patent coverage afforded to our solutions could be impaired, which could significantly impede our ability to market our
products, negatively affect our competitive position and materially harm our business and operating results.



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Pending or future patent applications held by us may not result in an issued patent, or if
patents are issued to us, such patents may not provide meaningful protection against competitors or against competitive technologies. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by
consultants, vendors, former employees and current employees, despite the existence of nondisclosure and confidentiality agreements and other contractual restrictions. Furthermore, many foreign jurisdictions offer less protection of intellectual
property rights than the United States and Canada, and the protection provided to our proprietary technology by the laws of these and other foreign jurisdictions may not be sufficient to protect our technology. Preventing the unauthorized use of our
proprietary technology may be difficult, time consuming and costly, in part because it may be difficult to discover unauthorized use by third parties. Litigation may be necessary to enforce our intellectual property rights, to protect our trade
secrets, to determine the validity and scope of our proprietary rights, or to defend against claims of unenforceability or invalidity. Any litigation, whether successful or unsuccessful, could result in substantial costs and diversion of management
resources and could have a material adverse effect on our business, results of operations and financial condition regardless of its outcome.

Some of the software used with our products, as well as that of some of our customers, may be derived from so-called open source software that is made generally available to the public by its
authors and/or other third parties. Such open source software is often made available to us under licenses, such as the GNU General Public License, that impose certain obligations on us in the event we were to make derivative works of the open
source software. These obligations may require us to make source code for the derivative works available to the public, or license such derivative works under an open source license or another particular type of license, potentially granting third
parties certain rights to the software, rather than the forms of license customarily used to protect our intellectual property. Failure to comply with such obligations can result in the termination of our distribution of products that contain the
open source code or the public dissemination of any enhancements that we made to the open source code. We may also incur legal expenses in defending against claims that we did not abide by such open source licenses. In the event the copyright holder
of any open source software or another party in interest were to successfully establish in court that we had not complied with the terms of a license for a particular work, we could be subject to potential damages and could be required to release
the source code of that work to the public, grant third parties certain rights to the source code or stop distribution of that work. Any of these outcomes could disrupt our distribution and sale of related products and materially adversely affect
our business.

We rely on trade secrets and other forms of non-patent intellectual property protection. If we are unable to
protect our trade secrets, other companies may be able to compete more effectively against us.

We rely on trade secrets,
know-how and technology that are not protected by patents to maintain our competitive position. We try to protect this information by entering into confidentiality agreements with parties that have access to it, such as our partners, collaborators,
employees and consultants. Any of these parties may breach these agreements and we may not have adequate remedies



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for any specific breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our partners, collaborators, employees and
consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in the related or resulting know-how and inventions. If any of our trade secrets, know-how or other technologies not protected by a
patent were to be disclosed to, or independently developed by, a competitor, our business, financial condition and results of operations could be materially adversely affected.

We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of
their former employers.

Many of our employees may have been previously employed at other companies which provide
integrated communications solutions, including our competitors or potential competitors. We may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their
former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending such
claims, in addition to paying money claims, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to commercialize certain product candidates, which would
adversely affect our commercial development efforts, business, financial condition and results of operations.

Our business
requires a significant amount of cash, and we may require additional sources of funds if our sources of liquidity are unavailable or insufficient to fund our operations.

We may not generate sufficient cash from operations to meet anticipated working capital requirements, support additional capital expenditures or take advantage of acquisition opportunities. In order to
finance our business, we may need to utilize available borrowings under our revolving credit facility. Our ability to continually access this facility in the future is conditioned upon our compliance with current and potential future covenants
contained in the credit agreements governing our revolving credit facility and term loan facility. We may not be in compliance with such covenants in the future. We may need to secure additional sources of funding if our cash and borrowings under
our revolving credit facility are insufficient or unavailable to finance our operations. Such funding may not be available on terms satisfactory to us, or at all. In addition, any proceeds from the issuance of equity or debt may be required to be
used, in whole or in part, to make mandatory payments under our credit agreements. If we were to incur higher levels of debt, we would require a larger portion of our operating cash flow to be used to pay principal and interest on our indebtedness.
The increased use of cash to pay indebtedness could leave us with insufficient funds to finance our operating activities, such as R&D expenses and capital expenditures. In addition, any new debt instruments may contain covenants or other
restrictions that affect our business operations. If we were to raise additional funds by selling equity securities, the relative ownership of our existing investors could be diluted or the new investors could obtain terms more favorable than
previous investors.

We have a significant amount of debt, which contains customary default clauses, a breach of which may
result in acceleration of the repayment of some or all of this debt.

As of April 30, 2011, we had $188.6 million
outstanding under our first lien term loan and $129.8 million outstanding under our second lien term loan. The credit agreements relating to these loans and the revolving credit facility have customary default clauses. In the event we were to
default on these credit agreements, and were unable to cure or obtain a waiver of default, the repayment of our debt owing under these credit agreements may be accelerated. If acceleration were to occur, we would be required to secure alternative
sources of equity or debt financing to be able to repay the debt. Alternative financing may not be available on terms satisfactory to us, or at all. If acceptable alternative financing were unavailable, we would have to consider alternatives to fund
the repayment of the debt, including the sale of part or all of the business, which sale may occur at a distressed price.

Our working capital requirements and cash flows are subject to fluctuation which could have an adverse affect on us.

Our working capital requirements and cash flows have historically been, and are expected to continue to be, subject to quarterly and
yearly fluctuations, depending on a number of factors. If we are unable to manage fluctuations in cash flow, our business, operating results and financial condition may be materially adversely affected. For example, if we are unable to effectively
manage fluctuations in our cash flows, we may be unable to make required interest payments on our indebtedness. Factors which could result in cash flow fluctuations include:



| |  |  | the level of sales and the related margins on those sales;
| | - |  | ----------------------------------------------------------



| |  |  | the collection of receivables;
| | - |  | ------------------------------



| |  |  | the timing and volume of sales of leases to third party funding sources and the timing and volume of any repurchase obligations in respect of such
sales;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the timing and size of capital expenditures;
| | - |  | --------------------------------------------



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| |  |  | the timing and size of purchase of inventory and related components;
| | - |  | --------------------------------------------------------------------



| |  |  | the timing of payment on payables and accrued liabilities;
| | - |  | ----------------------------------------------------------



| |  |  | costs associated with potential restructuring actions; and
| | - |  | ----------------------------------------------------------



| |  |  | customer financing obligations.
| | - |  | -------------------------------

Because we depend upon a small number of outside contract manufacturers, our operations could be delayed or interrupted if we encounter problems with these contractors.

We do not have any internal manufacturing capabilities, and we rely primarily upon two contract manufacturers: Flextronics and Sanmina.
Our ability to ship products to our customers could be delayed or interrupted as a result of a variety of factors relating to our contract manufacturers, including:



| |  |  | failure to effectively manage our contract manufacturer relationships;
| | - |  | ----------------------------------------------------------------------



| |  |  | our contract manufacturers experiencing delays, disruptions or quality control problems in their manufacturing operations;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | lead-times for required materials and components varying significantly and being dependent on factors such as the specific supplier, contract terms and
the demand for each component at a given time;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | under-estimating our requirements, resulting in our contract manufacturers having inadequate materials and components required to produce our products,
or overestimating our requirements, resulting in charges assessed by the contract manufacturers or liabilities for excess inventory, each of which could negatively affect our gross margins; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the possible absence of adequate capacity and reduced control over component availability, quality assurances, delivery schedules, manufacturing yields
and costs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

We are also exposed to risks relating to the financial viability of our contract manufacturers
as a result of business and industry risks that affect those manufacturers. In order to finance their businesses during economic downturns or otherwise, Flextronics and Sanmina may need to secure additional sources of equity or debt financing. Such
funding may not be available on terms satisfactory to them, or at all, which could result in a material disruption to our production requirements.

If any of our contract manufacturers are unable or unwilling to continue manufacturing our products in required volumes and quality levels, we will have to identify, qualify, select and implement
acceptable alternative manufacturers, which would likely be time consuming and costly. In particular, each of Flextronics and Sanmina are sole manufacturing sources for certain of our products. A failure of either of these parties to satisfy our
manufacturing needs on a timely basis, as a result of the factors described above or otherwise, could result in a material disruption to our business until another manufacturer is identified and able to produce the same products, which could take a
substantial amount of time, during which our results of operations, financial condition and reputation among our customers and within our industry could be materially and adversely affected. In addition, alternate sources may not be available to us
or may not be in a position to satisfy our production requirements on a timely basis or at commercially reasonable prices and quality. Therefore, any significant interruption in manufacturing could result in us being unable to deliver the affected
products to meet our customer orders.

We depend on sole source and limited source suppliers for key components. If these
components are not available on a timely basis, or at all, we may not be able to meet scheduled product deliveries to our customers.

We depend on sole source and limited source suppliers for key components of our products. In addition, our contract manufacturers often acquire these components through purchase orders and may have no
long-term commitments regarding supply or pricing from their suppliers. Lead times for various components may lengthen, which may make certain components scarce. As component demand increases and lead-times become longer, our suppliers may increase
component costs. We also depend on anticipated product orders to determine our materials requirements. Lead times for limited source materials and components can be as long as six months, vary significantly and depend on factors such as the specific
supplier, contract terms and demand for a component at a given time. From time to time, shortages in allocations of components have resulted in delays in filling orders. Shortages and delays in obtaining components in the future could impede our
ability to meet customer orders. Any of these sole source or limited source suppliers could stop producing the components, cease operations entirely, or be acquired by, or enter into exclusive arrangements with, our competitors. As a result, these
sole source and limited source suppliers may stop selling their components to our contract manufacturers at commercially reasonable prices, or at all. Any such interruption, delay or inability to obtain these components from alternate sources at
acceptable prices and within a reasonable amount of time would adversely affect our ability to meet scheduled product deliveries to our customers and reduce margins realized by us.



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Delay in the delivery of, or lack of access to, software or other intellectual property
licensed from our suppliers could adversely affect our ability to develop and deliver our solutions on a timely and reliable basis.

Our business may be harmed by a delay in delivery of software applications from one or more of our suppliers. Many of our solutions are designed to include software or other intellectual property licensed
from third parties. It may be necessary in the future to seek or renew licenses relating to various components in our solutions. These licenses may not be available on acceptable terms, or at all. Moreover, the inclusion in our solutions of software
or other intellectual property licensed from third parties on a non-exclusive basis could limit our ability to protect our proprietary rights to our solutions. Non-exclusive licenses also allow our suppliers to develop relationships with, and supply
similar or the same software applications to, our competitors. Our software licenses could terminate in the event of a bankruptcy or insolvency of a software supplier or other third party licensor. Our software licenses could also terminate in the
event such software infringes third party intellectual property rights. We have not entered into source code escrow agreements with every software supplier or third party licensor, and we could lose the ability to use such licensed software or
implement it in our solutions in the event the licensor breaches its obligations to us. In the event that software suppliers or other third party licensors terminate their relationships with us, are unable to fill our orders on a timely basis or
their licenses are otherwise terminated, we may be unable to deliver the affected products to meet our customer orders.

Our operations in international markets involve inherent risks that we may not be able to control.

We do business in over 100 countries. Accordingly, our results could be materially and adversely affected by a variety of uncontrollable
and changing factors relating to international business operations, including:



| |  |  | macroeconomic conditions adversely affecting geographies where we do business;
| | - |  | ------------------------------------------------------------------------------



| |  |  | foreign currency exchange rates;
| | - |  | --------------------------------



| |  |  | political or social unrest or economic instability in a specific country or region;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | higher costs of doing business in foreign countries;
| | - |  | ----------------------------------------------------



| |  |  | infringement claims on foreign patents, copyrights or trademark rights;
| | - |  | -----------------------------------------------------------------------



| |  |  | difficulties in staffing and managing operations across disparate geographic areas;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | difficulties associated with enforcing agreements and intellectual property rights through foreign legal systems;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | trade protection measures and other regulatory requirements, which affect our ability to import or export our products from or to various countries;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | adverse tax consequences;
| | - |  | -------------------------



| |  |  | unexpected changes in legal and regulatory requirements;
| | - |  | --------------------------------------------------------



| |  |  | military conflict, terrorist activities, natural disasters and medical epidemics; and
| | - |  | -------------------------------------------------------------------------------------



| |  |  | our ability to recruit and retain channel partners in foreign jurisdictions.
| | - |  | ----------------------------------------------------------------------------

Our financial results may be affected by fluctuations in exchange rates, and our current currency hedging strategy may not be
sufficient to counter such fluctuations.

Our financial statements are presented in U.S. dollars, while a significant
portion of our business is conducted, and a substantial portion of our operating expenses are payable, in currencies other than the U.S. dollar. Due to the substantial volatility of currency exchange rates, exchange rate fluctuations may have an
adverse impact on our future revenues or expenses presented in our financial statements. We use financial instruments, principally forward exchange contracts, in our management of foreign currency exposure. These contracts primarily require us to
purchase and sell certain foreign currencies with or for U.S. dollars at contracted rates. We may be exposed to a credit loss in the event of non-performance by the counterparties of these contracts. In addition, these financial instruments may not
adequately manage our foreign currency exposure. Our results of operations could be adversely affected if we are unable to successfully manage currency fluctuations in the future.

Our financial results will be negatively impacted if we are unable to realize our deferred tax assets

As at our fiscal year end, April 30, 2011, our balance sheet contained a $71.2 million valuation allowance against deferred tax
assets. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Future losses or reduced estimates of future income may result in an increase to the partial valuation
allowance or even a full valuation allowance on our deferred tax assets in future periods, which will negatively impact our results. See Management Discussions & Analysis  Critical Accounting Policies  Deferred
Taxes.



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Transfer pricing rules may adversely affect our income tax expenses.

We conduct business operations in various jurisdictions and through legal entities in Canada, the United States, the United Kingdom and
elsewhere. We and certain of our subsidiaries provide solutions and services to, and may from time to time undertake certain significant transactions with, other subsidiaries in different jurisdictions. The tax laws of many of these jurisdictions
have detailed transfer pricing rules which require that all transactions with non-resident related parties be priced using arms length pricing principles. Contemporaneous documentation must exist to support this pricing. The taxation
authorities in the jurisdictions where we carry on business could challenge our transfer pricing policies. International transfer pricing is an area of taxation that depends heavily on the underlying facts and circumstances and generally involves a
significant degree of judgment. If any of these taxation authorities are successful in challenging our transfer pricing policies, our income tax expense may be adversely affected and we could also be subjected to interest and penalty charges. Any
increase in our income tax expense and related interest and penalties could have a significant impact on our future earnings and future cash flows.

Our operating results may be impacted by our ability to sell leases derived from our managed services offering, or a breach of our obligations in respect of such sales.

We offer customers the ability to bundle all their managed service communication expense into a single monthly payment lease, which we
then generally pool and sell to third party financial institutions. We derive revenues from the direct sale of pools of leases to third party financial institutions, many of whom have been impacted by challenging macroeconomic events. These leases
are recurring revenue streams for us and typically produce attractive gross margins. If we are unable to secure attractive funding rates or sell these leases, our operating results would suffer. The challenging macroeconomic conditions, coupled with
our level of indebtedness, have adversely impacted our ability to sell these leases in the past and may do so again in the future. Moreover, particularly in the current economic environment, the timing, volume and profitability of lease sales from
quarter to quarter could impact our operating results. We have historically sold these pools of leases at least once per quarter. Furthermore, when the initial term of the lease is concluded, our customers have the option to renew the lease at a
payment and term less than the original lease. We have typically held these customer lease renewals on our balance sheet, although we could also elect to sell these renewals to a third party financial institution.

In the event of defaults by lease customers under leases that have been sold, financial institutions that purchased the pool of such
leases may require us to repurchase the remaining unpaid portion of such sold leases, subject to certain annual limitations on recourse for credit losses. The size of credit losses may impact our ability to sell future pools of leases.

Under the terms of the program agreements governing the sale of these pools of leases, we are subject to ongoing obligations in
connection with the servicing of the underlying leases. If we are unable to perform these obligations or are otherwise in default under a program agreement, and are unable to cure or obtain a waiver of such default, we could be required by the
purchaser to repurchase the entire unpaid portion of the leases sold to such purchaser, which could have an adverse effect on our cash flows and financial condition.

Credit and commercial risks and exposures could increase if the financial condition of our customers declines.

We provide or commit to financing, where appropriate, for our customers. Our ability to arrange or provide financing for our customers depends on a number of factors, including our credit rating, our
level of available credit and our ability to sell off commitments on acceptable terms. Pursuant to certain of our customer contracts, we deliver solutions representing an important portion of the contract price before receiving any significant
payment from the customer. As a result of the financing that may be provided to customers and our commercial risk exposure under long-term contracts, our business could be adversely affected if the financial condition of our customers erodes. Upon
the financial failure of a customer, we may experience losses on credit extended and loans made to such customer, losses relating to our commercial risk exposure, and the loss of the customers ongoing business. If customers fail to meet their
obligations to us or the recurring revenue stream from customer financings is lost, we may experience reduced cash flows and losses in excess of reserves, which could materially adversely impact our results of operations and financial position.

Design defects, errors, failures or bugs, which may be difficult to detect, may occur in our solutions.

We sell highly complex solutions that incorporate both hardware and software. Our software may contain bugs
that can interfere with expected operations. Our pre-shipment testing and field trial programs may not be adequate to detect all defects in individual applications and products or systematic defects that could affect numerous shipments, which might
interfere with customer satisfaction, reduce sales opportunities or affect gross margins. In the past, we have had to replace certain components and provide remediation in response to the discovery of defects or bugs in solutions that we
had shipped. Any future remediation may have a material impact on our business. Our inability to cure an application or product defect could result in the failure of an application or product line, the temporary or permanent withdrawal from an
application, product or market, damage to our reputation, inventory costs, lawsuits by customers or customers or channel partners end users, or application or product reengineering expenses. The sale



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and support of solutions containing defects and errors may result in product liability claims and warranty claims. Our insurance may not cover or may be insufficient to cover claims that are
successfully asserted against us or our contract suppliers and manufacturers.

Our business may suffer if our strategic
alliances are not successful.

We have a number of strategic alliances, including Oracle Corporation, Research in Motion
Limited and VMware, Inc., and continue to pursue strategic alliances with other companies. The objectives and goals for a strategic alliance can include one or more of the following: technology exchange, product development, joint sales and
marketing, or new-market creation. If a strategic alliance fails to perform as expected or if the relationship is terminated, we could experience delays in product availability or impairment of our relationships with customers, and our ability to
develop new solutions in response to industry trends or changing technology may be impaired. In addition, we may face increased competition if a third party acquires one or more of our strategic alliances or if our competitors enter into additional
successful strategic relationships.

We may make strategic acquisitions in the future. We may not be successful in
operating or integrating these acquisitions.

As part of our business strategy, we may consider acquisitions of, or
significant investments in, other businesses that offer products, services and technologies complementary to ours. Any such acquisition or investment could materially adversely affect our operating results and the price of our common shares.
Acquisitions and other strategic investments involve significant risks and uncertainties, including:



| |  |  | unanticipated costs and liabilities;
| | - |  | ------------------------------------



| |  |  | difficulties in integrating new products, software, businesses, operations and technology infrastructure in an efficient and effective manner;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in maintaining customer relations;
| | - |  | -----------------------------------------------



| |  |  | the potential loss of key employees of the acquired businesses;
| | - |  | ---------------------------------------------------------------



| |  |  | the diversion of the attention of our senior management from the operation of our daily business;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | the potential adverse effect on our cash position as a result of all or a portion of an acquisition purchase price being paid in cash;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the potential significant increase of our interest expense, leverage and debt service requirements if we incur additional debt to pay for an
acquisition;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the potential issuance of securities that would dilute our shareholders percentage ownership;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | the potential to incur large and immediate write-offs and restructuring and other related expenses; and
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | the inability to maintain uniform standards, controls, policies and procedures.
| | - |  | -------------------------------------------------------------------------------

Our inability to successfully operate and integrate newly acquired businesses appropriately, effectively and in a timely manner could
have a material adverse effect on our ability to take advantage of future growth opportunities and other advances in technology, as well as on our revenues, gross margins and expenses.

Business interruptions could adversely affect our operations.

Our operations are vulnerable to interruption by fire, earthquake, hurricane or other natural disaster, power loss, computer viruses,
security breaches, telecommunications failure, quarantines, national catastrophe, terrorist activities, war and other events beyond our control. Our disaster recovery plans may not be sufficient to address these interruptions. The coverage or limits
of our business interruption insurance may not be sufficient to compensate for any losses or damages that may occur.

Problems with the infrastructure of carriers may impair the performance of our solutions and cause problems with the network services
we provide to our customers.

We purchase network capacity wholesale from carriers, which we resell to our customers in
various retail offerings. The infrastructures of these telecom carriers are vulnerable to interruption by fires, earthquakes, hurricanes and other similar natural disasters, as well as power loss, viruses, security breaches, acts of terrorism,
sabotage, intentional acts of vandalism and similar misconduct. The occurrence of such a natural disaster or misconduct, or outages affecting these carrier networks, could impair the performance of our solutions and lead to interruptions, delays or
cessation of network services to our customers. Any impairment of the performance of our solutions or problems in providing our network services to our customers, even if for a limited time, could have an adverse effect on our business, financial
condition and operating results.



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Governmental regulation could harm our operating results and future prospects.

Governments in a number of jurisdictions in which we conduct business have imposed export license requirements and
restrictions on the import or export of some technologies, including some of the technologies used in our solutions. Changes in these or other laws or regulations could adversely affect our revenues. A number of governments also have laws and
regulations that govern technical specifications for the provision of our solutions. Changes in these laws or regulations could adversely affect the sales of, decrease the demand for and increase the cost of, our solutions. For example, the Federal
Communications Commission may issue regulatory pronouncements from time to time that may mandate new standards for our equipment in the United States. These pronouncements could require costly changes to our hardware and software. Additionally,
certain government agencies currently require VoIP products to be certified through a lengthy testing process. Other government agencies may adopt similar lengthy certification procedures, which could delay the delivery of our products and adversely
affect our revenues.

We rely on carriers to provide local and long distance services, including voice and data circuits, and
will rely on carriers to provide mobile voice and data services to our customers and to provide us with billing information. These services are subject to extensive and uncertain governmental regulation on both the federal and local level. An
increase or change in government regulation could restrict our ability to provide these services to our customers, which may have a material adverse affect on our business.

Adverse resolution of litigation or governmental investigations may harm our operating results or financial condition.

We are a party to lawsuits in the normal course of our business. We may also be the subject of governmental investigations from time to time. Litigation and governmental investigations can be expensive,
lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings or governmental investigations are difficult to predict. An unfavorable resolution of lawsuits or governmental investigations could have a
material adverse effect on our business, operating results or financial condition. See Litigation in Item 3 of Part I in this Report.

We are exposed to risks inherent in our defined benefit pension plan.

We
currently maintain a defined benefit pension plan for a number of our past and present employees in the United Kingdom. The plan was closed to new employees in June 2001. The contributions to fund benefit obligations under this plan are based
on actuarial valuations, which themselves are based on assumptions and estimates about the long-term operation of the plan, including employee turnover and retirement rates, the performance of the financial markets and interest rates. If the actual
operation of the plan differs from these assumptions, additional contributions by us may be required. As of April 30, 2011, the projected benefit obligation of $194.5 million exceeded the fair value of the plan assets of $133.1 million,
resulting in a pension liability of $61.4 million. In October 2010, funding requirements under the plan were set for the three years commencing January 1, 2011 at 8.7% of current pensionable salaries for current members plus annual
payments totaling 2.5 million pounds sterling towards the reduction of the accumulated deficit (increasing by 3% per annum for calendar year 2012 and 2013). Our funding requirements for future years may increase from these current levels.
Changes to pension legislation in the United Kingdom may also adversely affect our funding requirements.



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Our future success depends on our existing key personnel.

Our success is dependent upon the services of key personnel throughout our organization, including the members of our senior management
and software and engineering staff, as well as the expertise of our directors. Competition for highly skilled directors, management, R&D and other employees is intense in our industry and we may not be able to attract and retain highly qualified
directors, management, and R&D personnel and other employees in the future. In order to improve productivity, a portion of our compensation to employees and directors is in the form of stock option grants, and as a consequence, a depression in
the value of our common shares could make it difficult for us to motivate and retain employees and recruit additional qualified directors and personnel. All of the foregoing may negatively impact our ability to retain or attract employees, which may
adversely impact our ability to implement a management succession plan as and if required and on a timely basis. We currently do not maintain corporate life insurance policies on the lives of our directors or any of our key employees.

The risks associated with Sarbanes-Oxley regulatory compliance may have a material adverse effect on us.

We are required to document and test our internal control over financial reporting pursuant to Section 404 of the United States
Sarbanes-Oxley Act of 2002, so that our management can certify as to the effectiveness of our internal controls and, commencing with our annual report for the fiscal year ended April 30, 2011, our independent registered chartered accountants
can render an opinion on the effectiveness of our internal controls over financial reporting. If our independent registered chartered accountants cannot render a favorable opinion or if material weaknesses in our internal control are identified, we
could be subject to regulatory scrutiny and a loss of public confidence.

Risks Related to our Common Shares

Our stock price in the past has been volatile, and may continue to be volatile or may decline regardless of our operating performance,
and investors may not be able to resell shares at or above the price at which they purchased the shares.

Our stock has
been publicly traded on The Nasdaq Global Market for approximately one year. At times the stock price has become extremely volatile. For example, on September 3, 2010, our stock price increased from $5.35 per share to $6.42 per share and on
August 10, 2010 our stock price decreased from $8.86 per share to $7.95 per share. The market price of our common shares may fluctuate significantly in response to numerous factors, many of which are beyond our control and which may be
accentuated due to the relatively low average daily trading volume in our common shares. The factors include:



| |  |  | fluctuations in the overall stock market;
| | - |  | -----------------------------------------



| |  |  | our quarterly operating results;
| | - |  | --------------------------------



| |  |  | sales of our common shares by principal security holders;
| | - |  | ---------------------------------------------------------



| |  |  | the exercise of options and subsequent sales of shares by option holders, including those held by our senior management and other employees;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | departures of key personnel;
| | - |  | ----------------------------



| |  |  | future announcements concerning our or our competitors businesses;
| | - |  | -------------------------------------------------------------------



| |  |  | the failure of securities analysts to cover our company and/or changes in financial forecasts and recommendations by securities analysts;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a rating downgrade or other negative action by a ratings organization;
| | - |  | ----------------------------------------------------------------------



| |  |  | actual or anticipated developments in our competitors businesses or the competitive landscape generally;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | litigation involving us, our industry or both;
| | - |  | ----------------------------------------------



| |  |  | general market, economic and political conditions;
| | - |  | --------------------------------------------------



| |  |  | regulatory developments; and
| | - |  | ----------------------------



| |  |  | natural disasters, terrorist attacks and acts of war.
| | - |  | -----------------------------------------------------

In addition, the stock markets, and in particular the Nasdaq Global Market, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity
securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have initiated securities class
action litigation following declines in stock prices of technology companies. Any future litigation may subject us to substantial costs, divert resources and the attention of management from our business, which could harm our business and operating
results.



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Each of the Francisco Partners Group and the Matthews Group is a significant
security-holder and each has the potential to exercise significant influence over matters requiring approval by our shareholders and, in the case of the Francisco Partners Group, over matters requiring approval by our board.

As of June 15, 2011, Francisco Partners Management, LLC and certain of its affiliates, or the Francisco Partners Group, and
Dr. Matthews and certain entities controlled by Dr. Matthews, or the Matthews Group, beneficially controlled approximately 42.1% and 23.2%, respectively, of the voting power of our share capital. Pursuant to a shareholders agreement,
or the Shareholders Agreement, between the Company, the Francisco Partners Group and the Matthews Group dated as of April 27, 2010, the Francisco Partners Group and the Matthews Group collectively have the right to nominate 50% of our
directors, provided certain criteria are met. The Shareholders Agreement also provides that we may not take certain significant actions without the approval of the Francisco Partners Group, so long as they own at least 15% of our outstanding
common shares. These actions include:



| |  |  | amendments to our articles or by-laws;
| | - |  | --------------------------------------



| |  |  | issuance of any securities that are senior to our common shares in respect of dividend, liquidation preference or other rights and privileges;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | issuance of equity securities or rights, options or warrants to purchase equity securities, with certain exceptions where we issue securities pursuant
to our 2006 Equity Incentive Plan, in connection with acquisitions that involve the issuance of less than $25 million of our securities, upon the conversion of our currently outstanding warrants, as consideration paid to consultants for services
provided to us, or in connection with technology licensing or other non-equity interim financing transactions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | declaring or paying any dividends or making any distribution or return of capital, whether in cash, in stock or in specie, on any equity securities;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | incurring, assuming or otherwise becoming liable for debt obligations, other than refinancing our debt obligations following the closing of this
offering and the application of the intended use of proceeds, incurring additional indebtedness in connection with our leasing program, or incurring up to $50 million in new indebtedness;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | mergers, acquisitions, sales of assets or material subsidiaries, or the entering into any joint venture, partnership or similar arrangement that have a
value of more than $25 million per such transaction;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any change in the number of directors that comprise our board of directors;
| | - |  | ---------------------------------------------------------------------------



| |  |  | an amalgamation, merger or other corporate reorganization by the Company with or into any other corporation (other than a short-form amalgamation with
a wholly-owned subsidiary), an agreement to sell or sale of all or substantially all of the assets of the Company or other transaction that has the effect of a change of control of the Company; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any liquidation, winding up, dissolution or bankruptcy or other distribution of the assets of the Company to its shareholders.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------

Such powers held by the Francisco Partners Group could have the effect of delaying, deterring or preventing
a change of control, business combination or other transaction that might otherwise be beneficial to our shareholders. Also, each of the Francisco Partners Group and the Matthews Group may have interests that differ from the interests of our other
shareholders.

The Francisco Partners Group and the Matthews Group and the persons whom they nominate to our board of
directors may have interests that conflict with our interests and the interests of our other shareholders.

The Francisco
Partners Group and the Matthews Group and the persons whom they nominate to our board of directors may have interests that conflict with, or are divergent from, our own interests and those of our other shareholders. Conflicts of interest between our
principal investors and us or our other shareholders may arise. Our articles of incorporation do not contain any provisions designed to facilitate resolution of actual or potential conflicts of interest, or to ensure that potential business
opportunities that may become available to our principal investors and us will be reserved for or made available to us. In addition, our significant concentration of share ownership may adversely affect the trading price of our common shares because
investors may perceive disadvantages in owning shares in companies with controlling shareholders.

Some of our directors
have interests that may be different than our interests.

We do business with certain companies that are related parties,
such as Wesley Clover International Corporation and its subsidiaries. Wesley Clover International Corporation is controlled by Dr. Matthews. Our directors owe fiduciary duties, including the duties of loyalty and confidentiality, to us. Our
directors that serve on the boards of companies that we do business with also owe similar fiduciary duties to such other companies. The duties owed to us could conflict with the duties such directors owe to these other companies.



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Ownership of our common shares by the Francisco Partners Group and the Matthews Group as
well as provisions contained in our articles of incorporation and in certain anti-trust and foreign investment legislation, may reduce the likelihood of a change of control occurring and, as a consequence, may deprive shareholders of the opportunity
to sell their common shares at a control premium.

The voting power of the Francisco Partners Group and the Matthews Group,
respectively, under certain circumstances could have the effect of delaying or preventing a change of control and may deprive our shareholders of the opportunity to sell their common shares at a control premium. In addition, provisions of our
articles of incorporation and Canadian and U.S. law may delay or impede a change of control transaction. Our articles of incorporation permit us to issue an unlimited number of common and preferred shares. Limitations on the ability to acquire and
hold our common shares may be imposed under the Hart-Scott-Rodino Act, the Competition Act (Canada) and other applicable antitrust legislation. Such legislation generally permits the relevant governmental authorities to review any
acquisition of control over or of significant interest in us, and grants the authority to challenge or prevent an acquisition on the basis that it would, or would be likely to, result in a substantial prevention or lessening of competition.

In addition, the Investment Canada Act subjects an acquisition of control of a Canadian
business (as those terms are defined therein) by a non-Canadian to government review if the book value of the Canadian business assets as calculated pursuant to the legislation exceeds a threshold amount. A reviewable acquisition may not
proceed unless the relevant minister is satisfied that the investment is likely to be of net benefit to Canada. Any of the foregoing could prevent or delay a change of control and may deprive our shareholders of the opportunity to sell their common
shares at a control premium.

You may be unable to bring actions or enforce judgments against us or certain of our
directors and officers under U.S. federal securities laws.

We are incorporated under the laws of Canada, and our principal
executive offices are located in Canada. A majority of our officers and certain of our directors named in this Report reside principally in Canada and a substantial portion of our assets and all or a substantial portion of the assets of these
persons are located outside the United States. Consequently, it may not be possible for you to effect service of process within the United States upon us or those persons. Furthermore, it may not be possible for you to enforce judgments obtained in
U.S. courts based upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States against us or those persons. There is doubt as to the enforceability in original actions in Canadian courts of liabilities
based upon the U.S. federal securities laws, and as to the enforceability in Canadian courts of judgments of U.S. courts obtained in actions based upon the civil liability provisions of the U.S. federal securities laws.



|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

None.



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|Item 2. | Properties
|------- | ----------

We do not own
any real property. The following table outlines significant properties that we currently lease:



|                         |  |                                     |  |                      |         |  |                         |  |                   | 
|------------------------ |  | ----------------------------------- |  | -------------------- | ------- |  | ----------------------- |  | ----------------- | 
|Location                 |  | Purpose                             |  | Area(In Square Feet) |         |  | ExpirationDate of Lease | 
|Ottawa, Canada           |  | Corporate Head Office/Sales/R&D     |  |                      | 226,096 |  |                         |  | February 15, 2016 | 
|Ottawa, Canada           |  | Warehouse                           |  |                      | 9,005   |  |                         |  | February 15, 2016 | 
|Caldicot, United Kingdom |  | U.K. and EMEA Regional Headquarters |  |                      | 26,101  |  |                         |  | March 9, 2021     | 
|Chandler, AZ             |  | Office/Sales/R&D                    |  |                      | 97,000  |  |                         |  | June 30, 2012     | 
|Tempe, AZ                |  | Warehouse/Office                    |  |                      | 68,000  |  |                         |  | June 30, 2012     | 
|Reno, NV                 |  | Office                              |  |                      | 74,000  |  |                         |  | November 14, 2018 | 

The Ottawa facilities are leased from Kanata Research Park Corporation, (KRPC), a company
controlled by Dr. Matthews, under terms and conditions reflecting what management believed were prevailing market conditions at the time the lease was entered into.

In addition to these significant properties, we also lease a number of regional sales offices throughout the world, including offices:



| |  |  | throughout the United States and Canada, including sales-service offices and distribution, demonstration and training centers across both countries;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in Ireland (Dublin) and throughout the United Kingdom, including England (London, Birmingham, Kettering and Northampton) and Scotland (Strathclyde and
Glasgow) ;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | throughout Europe, the Middle East and Africa (EMEA), including Belgium, France, Germany, the Netherlands, Saudi Arabia, Dubai and South
Africa;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in Asia-Pacific, including Hong Kong, Shanghai, Beijing (China), Singapore and Sydney (Australia); and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | in the Caribbean and Latin America, including in Mexico City (Mexico), Guaynabo (Puerto Rico) and Rio de Janeiro (Brazil).
| | - |  | --------------------------------------------------------------------------------------------------------------------------



|Item 3. | Legal Proceedings
|------- | -----------------

We are
a party to a small number of legal proceedings, claims or potential claims arising in the normal course of business. We believe any monetary liability or financial impact of such claims or potential claims to which we might be subject after final
adjudication would not be material to our consolidated financial position, results of operations or cash flows.



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PART II



|Item 5. | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ----------------------------------------------------------------------------------------------------------------

Our common shares are traded on The Nasdaq Global Market (trading symbol: MITL). The Company completed its IPO on April 27, 2010; as
a result, we have set forth quarterly information with respect to the high and low prices for our common shares for the most recent fiscal year and the first quarter of our current fiscal year (to June 30, 2011):



|                                 |  |      |       |  |     |  |      | 
|-------------------------------- |  | ---- | ----- |  | --- |  | ---- | 
|Year ended April 30, 2012        |  | High |       |  | Low | 
|First quarter,(to June 30, 2011) |  |      | 5.74  |  |     |  | 4.11 | 
|First quarter                    |  |      | 12.13 |  |     |  | 7.58 | 
|Second quarter                   |  |      | 9.43  |  |     |  | 5.11 | 
|Third quarter                    |  |      | 7.77  |  |     |  | 4.98 | 
|Fourth quarter                   |  |      | 5.94  |  |     |  | 4.01 | 

On June 30, 2011, the last reported sales price of our common shares on The Nasdaq Global Market was
$4.38 per share.

Shareholders

As of June 15, 2011, we had 1,281 shareholders of record (as registered shareholders), as determined by the Company based on information supplied by Mellon Investor Services LLC.

Because many of our common shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the
total number of beneficial shareholders represented by these record holders.

Dividend Policy

We have never declared or paid cash dividends on our common shares. We currently intend to retain any future earnings to fund the
development and growth of our business and we do not currently anticipate paying dividends on our common shares. Any determination to pay dividends to holders of our common shares in the future will be at the discretion of our board of directors and
will depend on many factors, including our financial condition, earnings, legal requirements and other factors as our board of directors deems relevant. In addition, our outstanding credit agreements limit our ability to pay dividends and we may in
the future become subject to debt instruments or other agreements that further limit our ability to pay dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth, as of the end of our last fiscal year, (a) the number of securities that could be issued upon
exercise of outstanding options and vesting of outstanding restricted stock units and restricted stock awards under our equity compensation plans, (b) the weighted average exercise price of outstanding options under such plans, and (c) the
number of securities remaining available for future issuance under such plans, excluding securities that could be issued upon exercise of outstanding options.



|                                                               |  |                                                                                              |           |  |                                                                               |   |      |                                                                                                                                           |  |  |           | 
|-------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------- | --------- |  | ----------------------------------------------------------------------------- | - | ---- | ----------------------------------------------------------------------------------------------------------------------------------------- |  |  | --------- | 
|Plan Category                                                  |  | Number of securities to beissued upon exercise ofoutstanding
options,warrants and rights (a) |           |  | Weighted-average exerciseprice of outstanding options,warrants and rights
(b) |   |      | Number of securitiesremaining available forfuture issuance underequity
compensationplans (excludingsecurities reflected incolumn (a)) (c) | 
|Equity compensation plans approved by security-holders (1)     |  |                                                                                              | 5,275,049 |  |                                                                               | $ | 5.77 |                                                                                                                                           |  |  | 1,590,689 | 
|Equity compensation plans not approved by security-holders (2) |  |                                                                                              | 515,175   |  |                                                                               |   | 5.16 |                                                                                                                                           |  |  |          | 
|                                                               |  |                                                                                              |           |  |                                                                               |   |      |                                                                                                                                           |  |  |           | 
|Total                                                          |  |                                                                                              | 5,790,224 |  |                                                                               | $ | 5.72 |                                                                                                                                           |  |  | 1,590,689 | 
|                                                               |  |                                                                                              |           |  |                                                                               |   |      |                                                                                                                                           |  |  |           | 



|(1) | As of April 30, 2011, 5,790,224 common shares were issuable upon exercise of stock options, including options to acquire 614,944 common shares
granted under the employee stock option plan adopted in March 2001 (the 2001 Stock Option Plan) and options to acquire 4,660,105 common shares granted under our second employee stock option plan adopted September 7,
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



24



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| | 2006 (the 2006 Equity Incentive Plan). An additional 1,590,689 common shares were reserved for issuance under our equity incentive plans. Effective September 7, 2006, shares subject to
outstanding awards under the 2001 Stock Option Plan which lapse, expire or are forfeited or terminated will no longer become available for grants under this plan. Instead, new stock options and other equity grants will be made under the 2006 Equity
Incentive Plan. The aggregate number of common shares that may be issued under the 2006 Equity Incentive Plan and all other security-based compensation arrangements is 5,600,000 common shares provided that an additional number of common shares of up
to three percent of the number of our common shares then outstanding may be added to such initial maximum each year for three years ending in fiscal 2014 at the discretion of the compensation committee. Effective March 5, 2011, our compensation
committee approved an increase in the number of common shares issuable by 1,588,298 common shares for a total of 7,188,298 common shares. Common shares subject to outstanding awards under our 2006 Equity Incentive Plan which lapse, expire or are
forfeited or terminated will, subject to plan limitations, again become available for grants under this plan.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Options to acquire 515,175 common shares granted as inducement options to Richard McBee as a component of his employment compensation. These options are outside of the
pool of stock options available for grant under the 2006 Equity Incentive Plan and all other security-based compensation arrangements of the Company, and were approved by our Board of Directors on January 19, 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



25



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##### Table of Contents

|Item 6. | Selected Financial Data
|------- | -----------------------

The following tables present our selected historical consolidated financial and other data and should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of Operations and our historical Consolidated Financial Statements and notes thereto included elsewhere in this Report. Our historical consolidated financial
information may not be indicative of our future performance. Our consolidated financial statements are reported in U.S. dollars and have been prepared in accordance with U.S. GAAP.



|                                                      |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|----------------------------------------------------- |  | ------------------------------------ | ----- | - | ---- | - | ------ | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------ | -
|                                                      |  | Fiscal Year Ended April 30,          |      
|                                                      |  | 2011                                 |       |   | 2010 |   |        | 2009 |  |   | 2008(1) |   |  | 2007 |       
|                                                      |  | (in millions, except per share data) |      
|Consolidated Statement of Operations Data             |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|Revenues                                              |  | $                                    | 649.7 |   |      | $ | 647.9  |      |  | $ | 735.1   |   |  | $    | 692.0  |   |  | $ | 384.9  |  
|Cost of revenues                                      |  |                                      | 338.2 |   |      |   | 334.0  |      |  |   | 390.6   |   |  |      | 367.9  |   |  |   | 225.1  |  
|                                                      |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|Gross margin                                          |  |                                      | 311.5 |   |      |   | 313.9  |      |  |   | 344.5   |   |  |      | 324.1  |   |  |   | 159.8  |  
|Selling, general and administrative                   |  |                                      | 221.5 |   |      |   | 211.3  |      |  |   | 248.5   |   |  |      | 246.6  |   |  |   | 123.5  |  
|Research and development                              |  |                                      | 54.1  |   |      |   | 51.7   |      |  |   | 60.1    |   |  |      | 62.6   |   |  |   | 41.7   |  
|Special charges and restructuring costs               |  |                                      | 15.5  |   |      |   | 5.2    |      |  |   | 23.3    |   |  |      | 16.0   |   |  |   | 9.3    |  
|Other operating charges (2)                           |  |                                      |      |   |      |   |       |      |  |   |        |   |  |      | 6.0    |   |  |   | 2.3    |  
|Loss (gain) on litigation settlement                  |  |                                      | 1.0   |   |      |   | (5.5   | )    |  |   |        |   |  |      |       |   |  |   | 16.3   |  
|Impairment of goodwill                                |  |                                      |      |   |      |   |       |      |  |   | 284.5   |   |  |      |       |   |  |   |       |  
|                                                      |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|Operating income (loss)                               |  |                                      | 19.4  |   |      |   | 51.2   |      |  |   | (271.9  | ) |  |      | (7.1   | ) |  |   | (33.3  | )
|Other income (expense), net (3)                       |  |                                      | 1.2   |   |      |   | 7.3    |      |  |   | 99.4    |   |  |      | 42.7   |   |  |   | 9.2    |  
|Interest expense                                      |  |                                      | (20.0 | ) |      |   | (29.8  | )    |  |   | (40.1   | ) |  |      | (34.7  | ) |  |   | (9.1   | )
|Income tax recovery (expense)                         |  |                                      | 87.5  |   |      |   | 8.5    |      |  |   | 19.1    |   |  |      | 11.7   |   |  |   | (1.8   | )
|                                                      |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|Net income (loss)                                     |  | $                                    | 88.1  |   |      | $ | 37.2   |      |  | $ | (193.5  | ) |  | $    | 12.6   |   |  | $ | (35.0  | )
|                                                      |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|Net income (loss) attributable to common shareholders |  | $                                    | 88.1  |   |      | $ | (107.3 | )    |  | $ | (234.5  | ) |  | $    | (83.5  | ) |  | $ | (42.3  | )
|Net income (loss) per common share:                   |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|basic                                                 |  | $                                    | 1.66  |   |      | $ | (7.30  | )    |  | $ | (16.38  | ) |  | $    | (6.73  | ) |  | $ | (5.41  | )
|diluted                                               |  | $                                    | 1.57  |   |      | $ | (7.30  | )    |  | $ | (16.38  | ) |  | $    | (6.73  | ) |  | $ | (5.41  | )
|Weighted average number of common shares outstanding: |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|basic                                                 |  |                                      | 52.9  |   |      |   | 14.7   |      |  |   | 14.3    |   |  |      | 12.4   |   |  |   | 7.8    |  
|diluted                                               |  |                                      | 56.0  |   |      |   | 14.7   |      |  |   | 14.3    |   |  |      | 12.4   |   |  |   | 7.8    |  
|Other Financial Data                                  |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|Adjusted EBITDA (6)                                   |  | $                                    | 76.1  |   |      | $ | 89.8   |      |  | $ | 78.7    |   |  | $    | 50.2   |   |  | $ | 5.0    |  
|                                                      | 
|                                                      |  | As of April 30,                      |      
|                                                      |  | 2011                                 |       |   | 2010 |   |        | 2009 |  |   | 2008    |   |  | 2007 |       
|                                                      |  | (in millions)                        |      
|Consolidated Balance Sheet Data                       |  |                                      |       |   |      |   |        |      |  |   |         |   |  |      |        |   |  |   |        |  
|Cash and cash equivalents                             |  | $                                    | 73.9  |   |      | $ | 76.6   |      |  | $ | 28.4    |   |  | $    | 19.5   |   |  | $ | 33.5   |  
|Working capital (4)                                   |  | $                                    | 128.1 |   |      | $ | 154.9  |      |  | $ | 49.5    |   |  | $    | 58.9   |   |  | $ | 26.6   |  
|Total assets                                          |  | $                                    | 672.2 |   |      | $ | 641.0  |      |  | $ | 623.1   |   |  | $    | 982.2  |   |  | $ | 202.2  |  
|Total debt, including capital leases                  |  | $                                    | 323.3 |   |      | $ | 349.8  |      |  | $ | 454.8   |   |  | $    | 435.6  |   |  | $ | 54.7   |  
|Redeemable shares (5)                                 |  | $                                    |      |   |      | $ |       |      |  | $ | 249.5   |   |  | $    | 208.5  |   |  | $ | 71.5   |  
|Common shares                                         |  | $                                    | 805.5 |   |      | $ | 802.8  |      |  | $ | 277.8   |   |  | $    | 277.1  |   |  | $ | 189.1  |  
|Warrants                                              |  | $                                    | 55.6  |   |      | $ | 55.6   |      |  | $ | 56.6    |   |  | $    | 56.7   |   |  | $ | 62.9   |  
|Total shareholders equity (deficiency)               |  | $                                    | 49.5  |   |      | $ | (54.9  | )    |  | $ | (430.1  | ) |  | $    | (244.7 | ) |  | $ | (202.6 | )



|(1) | As a result of the August 2007 acquisition of Inter-Tel (Delaware), Incorporated (Inter-Tel), our financial results for the fiscal year ended April 30,
2008 include eight and a half months of financial results from Inter-Tel.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Other operating charges for fiscal 2008 and fiscal 2007 include loss (gain) on sale of manufacturing operations and expenses for in-process research and development
acquired as part of the Inter-Tel acquisition.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(3) | Other (income) expense, net includes: fair value adjustment on derivative instruments; other income (expense), which is comprised of foreign exchange gains (losses),
net, amortization on gain on sale of assets and other expenses; and debt and warrant retirement costs, including the write-off of deferred financing charges.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Working capital is total current assets less total current liabilities.
|--- | -----------------------------------------------------------------------

|(5) | The redeemable common shares in this footnote do not reflect the common share reverse share split on April 16, 2010. For fiscal 2007, redeemable shares consisted
of 10.0 million redeemable common shares, 20.0 million Series A Preferred Shares, and 67.8 million Series B Preferred Shares. In fiscal 2008 and 2009, redeemable shares consisted of 0.3 million Class 1 Preferred Shares issued in
connection with the acquisition of Inter-Tel. The Class 1 Preferred Shares were converted into common shares in conjunction with the April 2010 IPO.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Adjusted EBITDA
|--- | ---------------

The following
table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable U.S. GAAP measure, for each of the periods indicated:



|                                                |  |                             |       |   |      |   |      |      |  |   |        |   |  |      |       |   |  |   |       |  
|----------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ---- | ---- |  | - | ------ | - |  | ---- | ----- | - |  | - | ----- | -
|                                                |  | Fiscal Year Ended April 30, |      
|                                                |  | 2011                        |       |   | 2010 |   |      | 2009 |  |   | 2008   |   |  | 2007 |      
|                                                |  | (in millions)               |      
|Net income (loss)                               |  | $                           | 88.1  |   |      | $ | 37.2 |      |  | $ | (193.5 | ) |  | $    | 12.6  |   |  | $ | (35.0 | )
|Adjustments:                                    |  |                             |       |   |      |   |      |      |  |   |        |   |  |      |       |   |  |   |       |  
|Amortization and depreciation                   |  |                             | 34.0  |   |      |   | 34.4 |      |  |   | 38.0   |   |  |      | 32.6  |   |  |   | 9.2   |  
|Stock-based compensation                        |  |                             | 4.7   |   |      |   | 3.3  |      |  |   | 2.4    |   |  |      | 1.7   |   |  |   | 0.3   |  
|Special charges and restructuring costs         |  |                             | 15.5  |   |      |   | 5.2  |      |  |   | 23.3   |   |  |      | 16.0  |   |  |   | 9.3   |  
|Loss (gain) on litigation settlement            |  |                             | 1.0   |   |      |   | (5.5 | )    |  |   |       |   |  |      |      |   |  |   | 16.3  |  
|Interest expense                                |  |                             | 20.0  |   |      |   | 29.8 |      |  |   | 40.1   |   |  |      | 34.7  |   |  |   | 9.1   |  
|Debt and warrant retirement costs               |  |                             | 0.6   |   |      |   | 1.0  |      |  |   |       |   |  |      | 20.8  |   |  |   |      |  
|Fair value adjustment on derivative instruments |  |                             | (1.0  | ) |      |   | (7.4 | )    |  |   | (100.2 | ) |  |      | (61.9 | ) |  |   | (8.6  | )
|Foreign exchange loss (gain)                    |  |                             | 0.7   |   |      |   | 0.3  |      |  |   | 3.2    |   |  |      | (0.6  | ) |  |   | 0.3   |  
|Income tax expense (recovery)                   |  |                             | (87.5 | ) |      |   | (8.5 | )    |  |   | (19.1  | ) |  |      | (11.7 | ) |  |   | 1.8   |  
|Impairment of goodwill                          |  |                             |      |   |      |   |     |      |  |   | 284.5  |   |  |      |      |   |  |   |      |  
|In-process research and development             |  |                             |      |   |      |   |     |      |  |   |       |   |  |      | 5.0   |   |  |   |      |  
|Initial public offering costs                   |  |                             |      |   |      |   |     |      |  |   |       |   |  |      |      |   |  |   | 3.3   |  
|Loss (gain) on sale of manufacturing operations |  |                             |      |   |      |   |     |      |  |   |       |   |  |      | 1.0   |   |  |   | (1.0  | )
|                                                |  |                             |       |   |      |   |      |      |  |   |        |   |  |      |       |   |  |   |       |  
|Adjusted EBITDA                                 |  | $                           | 76.1  |   |      | $ | 89.8 |      |  | $ | 78.7   |   |  | $    | 50.2  |   |  | $ | 5.0   |  
|                                                |  |                             |       |   |      |   |      |      |  |   |        |   |  |      |       |   |  |   |       |  

We define Adjusted EBITDA as net income (loss) adjusted for the items as noted in the above table.
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.

We use
Adjusted EBITDA:



| |  |  | as a measure of operating performance;
| | - |  | --------------------------------------



| |  |  | for planning purposes, including the preparation of our annual operating budget;
| | - |  | --------------------------------------------------------------------------------



| |  |  | to allocate resources to enhance the financial performance of our business; and
| | - |  | -------------------------------------------------------------------------------



| |  |  | in communications with our board of directors concerning our financial performance.
| | - |  | -----------------------------------------------------------------------------------

We believe that the use of Adjusted EBITDA provides consistency and comparability of, and facilitates, period to period comparisons, and
also facilitates comparisons with other companies in our industry, many of which use similar non-GAAP financial measures to supplement their U.S. GAAP results.

We believe Adjusted EBITDA may also be useful to investors in evaluating our operating performance because securities analysts use Adjusted EBITDA as a supplemental measure to evaluate the overall
operating performance of companies. Our investor



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and analyst presentations also include Adjusted EBITDA. However, we also caution you that other companies in our industry may calculate Adjusted EBITDA or similarly titled measures differently
than we do, which limits the usefulness of Adjusted EBITDA as a comparative measure.

Moreover, although Adjusted EBITDA is
frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA and similar non-GAAP measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for an
analysis of our results of operations as reported under U.S. GAAP.

Some of the limitations of Adjusted EBITDA are that it
does not reflect:



| |  |  | interest income or interest expense;
| | - |  | ------------------------------------



| |  |  | cash requirements for income taxes;
| | - |  | -----------------------------------



| |  |  | foreign exchange gains or losses;
| | - |  | ---------------------------------



| |  |  | significant cash payments made in connection with restructuring, litigation settlements and transaction expenses;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | employee stock-based compensation;
| | - |  | ----------------------------------



| |  |  | cash requirements for the replacement of assets that have been depreciated or amortized;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | acquired in-process research and development charges; and
| | - |  | ---------------------------------------------------------



| |  |  | losses or gains related to the sale of manufacturing operations and other assets.
| | - |  | ---------------------------------------------------------------------------------

We compensate for the inherent limitations associated with using Adjusted EBITDA through disclosure of such limitations, presentation of
our financial statements in accordance with U.S. GAAP and reconciliation of Adjusted EBITDA to the most directly comparable U.S. GAAP measure, net income (loss).



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|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the
April 30, 2011 Consolidated Financial Statements and accompanying Notes included elsewhere in this Report. All amounts are expressed in U.S. dollars unless otherwise noted. The following discussion includes forward-looking statements that are
not historical facts but reflect our current expectation regarding future results. Actual results may differ materially from the results discussed in the forward-looking statements because of a number of risks and uncertainties, including the
matters discussed below. Please refer to Risk Factors included elsewhere in this Report for a further description of risks and uncertainties affecting our business and financial results. Historical trends should not be taken as
indicative of future operations and financial results.

Overview

We are a leading provider of integrated communications solutions focused on the SME market. We also have a strong and growing presence in
the large enterprise market with a portfolio of products that support up to 65,000 users. Our IP-based communications solutions consist of a combination of IP telephony platforms, which we deliver as software, appliances and desktop devices, and a
suite of UCC applications that integrate voice, video and data communications with business applications. We believe that our solutions, including associated managed and network services, enable our customers to realize significant cost benefits and
to conduct their business more effectively.

We have delivered innovative communications solutions to our customers for over
35 years, initially through Mitel Corporation, our predecessor business. We have invested heavily in the research and development (R&D) of our IP-based communications solutions to take advantage of the telecommunications industry
shift from traditional PBX systems to IP-based communications solutions. We believe our early and sustained R&D investment in IP-based communications solutions have positioned us well to capitalize on the industry shift to IP-based
communications solutions. As a result of this strategic focus, for the last four years substantially all of our system shipments have been IP-based communication solutions.

Significant Events and Recent Developments

In fiscal 2008 (August 2007),
we completed the acquisition of Inter-Tel, which significantly enhanced our ability to target SME customers with our IP solutions by expanding our U.S. distribution and managed service capabilities. The total purchase price of $729.9 million
was funded with a combination of equity and debt financing plus cash held by Inter-Tel.

In April 2010, we completed an
initial public offering (IPO) on The Nasdaq Global Market. Under the IPO, we sold 10.5 million common shares at $14.00 per share. Our net proceeds from the IPO were $130.7 million after underwriting commissions of $10.3 million and
other associated costs of $6.3 million. The net proceeds of the IPO were used to repay $30.0 million outstanding under the revolving credit facility and $72.0 million to prepay amounts outstanding under our first lien term loan, with the remainder
to be used for general corporate purposes. In conjunction with the IPO, all of the 0.3 million Class 1 Preferred Shares were converted into common shares.

Until the end of the second quarter of fiscal 2011, the Company leased its Ottawa-based headquarter facilities from the Matthews Group under a 10-year lease which was to expire in February 2011. During
the third quarter of fiscal 2011, the Company negotiated a new lease with the Matthews Group under terms and conditions which management believes reflect current market rates. The new lease has a term of 5 years and 3 months, and can be renewed at
the option of the Company for an additional 5 years.

In March 2011, we made a prepayment of $25.0 million against our
outstanding first lien term loan. In connection with the prepayment, the maximum consolidated debt to EBITDA covenant under our first lien credit agreement was increased for the fourth quarter of fiscal 2011 and for subsequent quarters up to and
including the second quarter of fiscal 2014.

During fiscal 2011, we announced changes to our senior management team. In
January 2011, Richard McBee became our new Chief Executive Officer (CEO), following the retirement of Don Smith. Mr. Smith continues to serve as a director of Mitel. In addition, Mr. McBee has taken on the role of President
following the departure of Paul Butcher, our former President and Chief Operating Officer, in April 2011. The Chief Operating Officer title has been eliminated.

In May 2011, we announced certain organizational changes, creating an organization comprised of two geographical sales organizations and three key business units. We anticipate that these organizational
changes will result in a change in our segmented presentation, beginning in the first quarter of fiscal 2012.

Operating
Results

Our total revenues for the year ended April 30, 2011 were $649.7 million, as compared to $647.9 million for
the year ended April 30, 2010. The increase in revenues is due to an increase in sales from our network services segment. Our operating income



29



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decreased to $19.4 million in fiscal 2011 from $51.2 million in fiscal 2010. The decrease in operating income was largely due to an increase in special charges resulting from restructuring
activity during the year and an increase in sales, general and administrative (SG&A) expenses and R&D expenses as a result of the phase-out of the reduced work-week program, as described below.

In fiscal 2010 and 2009, our operating results were affected by the global economic recession, which started in mid-calendar year 2008
(our fiscal 2009). We responded to the negative effect of the recession by implementing cost reduction programs to re-align our operating model. These programs, which were implemented during the second half of fiscal 2009 and fiscal 2010, included
headcount reductions, reduced discretionary spending, closure of excess facilities across our geographic regions and renegotiation of key supplier contracts. In fiscal 2009, we implemented a temporary reduced work-week program, which remained in
effect throughout fiscal 2010. The reduced work-week program was phased out gradually in fiscal 2011. While our revenues declined as a result of the economic conditions, our cost reduction programs contributed positively to our operating
performance, resulting in a significant improvement in both operating income and Adjusted EBITDA in fiscal 2010 as compared to fiscal 2009.

We plan to continue to monitor our cost structure so that it remains appropriate for our revenue levels. Depending on the future macroeconomic climate and its impact on our revenues, we may implement
additional cost reduction programs in an effort to keep operating expenses in line with revenues. Conversely, if our revenues improve above current levels we may gradually increase our expenditures while ensuring that our operating expense to
revenue ratio remains within our target level. In either scenario, we plan to continue to invest in new product development and other significant R&D initiatives. However, there is no certainty that these investments will allow us to develop and
introduce new IP-based communications solutions in a timely manner to allow us to compete effectively against existing and new competitors and meet customer requirements.

Trends

Businesses are migrating from legacy telephony networks to
IP-based environments, which can address their voice, data, video and business applications requirements within a single converged network. The transition to IP-based communications solutions provides significant benefits to businesses, including
enhanced workforce productivity, reduced infrastructure costs, the creation of highly functional applications that can be distributed easily, and the use of open standards. We have invested heavily and continue to innovate in IP-based solutions and
therefore believe we are well positioned to benefit from this transition.

The evolution to converged IP-based networks has
given rise to two important trends: the transition from hardware-based to software-based communications solutions and the ability to deliver integrated UCC applications. The transition to software-based communications solutions provides operational
cost benefits and the ability to integrate communications with other business processes and applications. UCC allows business customers to move beyond basic fixed telephony and disparate communications tools toward integrated multi-media
communications and collaboration between users, wherever they may be located. UCC includes the integrated use of various media and messaging, such as voice, video and data. Our history of success as an early adopter in software-based communications
solutions has provided us with the foundation for continued innovation in IP-based communications and UCC. We believe our comprehensive, integrated IP-based communications offering provides our customers with significant flexibility, cost efficiency
and enhanced employee productivity as they transition to converged IP-based environments and UCC.

Corporate data centers have
experienced a significant increase in the use of virtualization technology as a strategy to reduce capital and operating expenses as well as providing improved business continuity solutions through new high availability architectures. Virtualization
technology is also serving as the base for both private and public cloud computing solutions enabling businesses to benefit from data center outsourcing and data center elasticity where data center resources may be acquired and dispensed with,
depending on a businesss needs. We believe that businesses can significantly benefit from the virtualization of all UCC and IP based communication solutions by allowing these products to integrate fully with the data center infrastructure and
related management processes and eliminating telecommunication specific infrastructure and processes. Our early investment in this technology across our product portfolio allows our customers to benefit using either our products on VMWare or with
our MiCD product.

SMEs are increasingly interested in outsourcing management of their communications requirements through
managed service offerings. Managed services may include equipment, installation, ongoing support, network services, or various professional services. Managed services offerings allow businesses to focus on their core expertise and, in some cases,
substitute what would otherwise be a large capital expenditure for a predictable operating expense. We believe that we are well positioned to benefit from this trend through the combination of our existing managed service program and our network
services offerings in the United States. We believe these solutions also provide an opportunity to achieve operational savings by giving us the flexibility to place equipment and services either on the customers premises or as a hosted
solution.



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Key Performance Indicators

Key performance indicators that we use to manage our business and evaluate our financial results and operating performance include:
revenues, gross margins, operating costs, operating income (loss), net income (loss), cash flows from operations and Adjusted EBITDA.

Revenue performance is evaluated from both a geographical perspective, in accordance with our reportable segments, and from a revenue source perspective, that is telecommunications and network services.
We evaluate revenue performance by comparing the results to management forecasts and prior period performance.

Gross margins,
operating costs, operating income (loss) and net income (loss) are each evaluated in a similar manner as our actual results are compared against both management forecasts and prior period performance.

Cash flow from operations is the key performance indicator with respect to cash flows. As part of monitoring cash flow from operations,
we also monitor our days sales outstanding, our inventory turns and our days expenses in payables outstanding.

Adjusted
EBITDA, a non-GAAP measure, is evaluated by comparing actual results to management forecasts and prior period performance. For a definition and explanation of Adjusted EBITDA, as well as a reconciliation of Adjusted EBITDA to net income (loss), see
Item 6, Selected Financial Data.

In addition to the above indicators, from time to time, we also
monitor performance in the following areas:



| |  |  | status of key customer contracts;
| | - |  | ---------------------------------



| |  |  | the achievement of expected milestones of our key R&D projects; and
| | - |  | -------------------------------------------------------------------



| |  |  | the achievement of our key strategic initiatives.
| | - |  | -------------------------------------------------

In an effort to ensure we are creating value for and maintaining strong relationships with our customers, we monitor the status of key customer contracts to monitor customer service levels. With respect
to our R&D projects, we measure content, quality and timeliness against project plans.

Sources of Revenues and
Expenses

The following describes our sources of revenues and expenses.

Revenues

We generate our revenues principally from the sale of integrated communications solutions to business customers, with these revenues being
classified as telecommunications revenues or network services revenues. Telecommunications revenues are comprised of revenues generated from the sales of platforms, including software, appliances and desktop devices, UCC applications and managed
services. Network services are comprised of local and long distance and network resale services.

Our distribution network
includes value-added resellers, service providers, high-touch sales and direct channel. We complement and support our channel partners in selected markets using a sales model whereby our sales staff works either directly with a prospective customer
or in coordination with a channel partner in defining the scope, design and implementation of the solution. Our direct and indirect distribution channel addresses the needs of customers in over 100 countries through our 76 offices and more than
1,600 channel partners worldwide.

Because we have multiple revenue streams, our revenue recognition policy varies depending
on the revenue stream and type of customer transaction.

Revenue for hardware is recognized when persuasive evidence of an
arrangement exists, delivery has occurred in accordance with the terms and conditions of the contract, title and risk of loss have been transferred to the customer, the fee is fixed or determinable, and collection is reasonably assured.

Software revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred in accordance with the terms and
conditions of the contract, the fee is fixed or determinable, and collection is reasonably assured. For software arrangements involving multiple elements, revenue is allocated to each element based on the relative fair value or the residual method,
as applicable, and using vendor specific objective evidence (VSOE) of fair value, which is based on prices charged when the element is sold separately. Revenue related to post-contract support (PCS), including technical
support and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term for contracts that are greater than one year. For contracts where the post-contract period is one year or less, the costs are deemed
insignificant and the unspecified software upgrades are expected to



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be and historically have been infrequent, revenue is recognized together with the initial licensing fee and the estimated costs are accrued.

We make sales to resellers and channel partners based on contracts that typically expire at the end of our fiscal year, with automatic
renewals for one year periods thereafter. For products sold through these distribution channels, revenues are recognized at the time the risk of loss is transferred to resellers and channel partners according to contractual terms and if all
contractual obligations have been satisfied. These arrangements usually involve multiple elements, including PCS and training. Costs related to insignificant technical support obligations, including second-line phone support for certain products,
are accrued. For other technical support and training obligations, revenues from product sales are allocated to each element based on VSOE of relative fair values, generally representing the prices charged when the element is sold separately, with
any discount allocated proportionately. Revenues attributable to undelivered elements are deferred and recognized upon performance or ratably over the contract period.

Our standard warranty period extends 15 months from the date of sale and extended warranty periods are offered on certain products. At the time product revenues are recognized, an accrual for estimated
warranty costs is recorded as a component of cost of revenues based on prior claims experience. Sales to our channel partners do not provide for return or price protection rights while sales to distributors provide for these rights. Product return
rights for distributors are typically limited to a percentage of sales over a maximum three month period. A reserve for estimated product returns and price protection rights based on past experience is recorded as a reduction of sales at the time
product revenues are recognized. For new resellers, we estimate the product return provision using past return experience with similar partners operating in the same regions. We offer various cooperative marketing programs to assist our channels to
market our products. Allowances for these programs are recorded as marketing expenses at the time of shipment based on contract terms and prior claims experience.

We also sell solutions, including installation and related maintenance and support services, directly to end-user customers. For solutions sold directly to end-user customers, revenues are recognized at
the time of delivery and at the time risk of loss is transferred, based on prior experience of successful compliance with customer specifications. Revenues from installation are recognized when services are rendered and when contractual obligations,
including customer acceptance, have been satisfied. Revenues are also derived from professional service contracts with terms that typically range from two to six weeks for standard solutions and for longer periods for customized solutions. Revenues
from customer support, professional services and maintenance contracts are recognized ratably over the contractual period, generally one year. Billings in advance of services are included in deferred revenues. Revenues from installation services
provided in advance of billing are included in unbilled accounts receivable.

Certain arrangements with end-user customers
provide customer support and maintenance services extending 12 months from the date of installation at no charge. Customer support and maintenance contracts are also sold separately. When customer support or maintenance services are provided at no
charge, these amounts are unbundled from the product and installation revenues at their fair market value based on the prices charged when the element is sold separately and recognized ratably over the contract period. Consulting and training
revenues are recognized upon performance.

We provide long term outsourcing services of communication systems. Under these
arrangements, systems management services (managed services) and communication equipment are provided to end-user customers typically over a five-year period. Revenues from managed services are recognized ratably over the contract
period. We retain title and risk of loss associated with the equipment utilized in the provision of the managed services. Accordingly, the equipment is capitalized as part of property and equipment and is amortized to cost of sales over the contract
period.

In a transaction containing a sales-type lease, hardware revenues are recognized at the present value of the payments
allocated to the hardware lease element at the time of system sale in accordance with the Leases Topic of the United States Financial Accounting Standards Board Accounting Standard Codification (FASB ASC). With respect to the software
lease elements included in the sales-type lease, which are comprised of software, including applications, upgrades, software support, and embedded software, prior to the Company establishing VSOE for these elements, revenues from the software
elements were deferred and recognized over the period of support in accordance with the Software Topic of the FASB ASC. Where the Company has now established VSOE for these elements, revenue is recognized upon delivery, based on their VSOE, in
accordance with the Software Topic of the FASB ASC. Revenues from sales-type leases are allocated between hardware and software elements based on managements best estimate of relative fair values. We regularly sell the net rental payments from
sales-type leases to financial institutions with the income streams discounted at prevailing rates at the time of sale. Gains or losses resulting from the sale of net rental payments from leases are recorded as net sales within telecommunications
revenues.

We also provide network services to our customers, which includes local and long-distance voice services, internet
access and data network offerings on our partners networks, which we bill on a monthly basis. Revenues from network services are recognized as the services are provided.



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Cost of Revenues

Cost of revenues is comprised of product costs and service costs. Product cost of revenues is primarily comprised of cost of goods
purchased from third party electronics manufacturing services and inventory provisions, engineering costs, warranty costs and other supply chain management costs. Product cost of revenues also includes a small component related to software comprised
of royalty payments and licensing fees to third parties. Service cost of sales is primarily comprised of costs associated with managed services, which include labor costs associated with maintenance and support, installation and other professional
services, and costs associated with network services, which includes the cost of acquisition of local and long-distance voice services, internet access and data network services from major carriers in the United States. Depreciation of property and
equipment relating to cost of revenues are also included in cost of revenues expense.

We use high-volume contract
manufacturers and component suppliers and we require them to give us full visibility of component supply, manufacturing process and portability. We measure and benchmark the performance of our component suppliers and manufacturers for technical
innovation, financial strength, quality, support and operational effectiveness.

Sales, General and Administrative Expenses

SG&A expenses consist primarily of costs relating to our sales and marketing activities, including salaries and
related expenses, advertising, trade shows and other promotional activities and materials, administrative and finance functions, legal and professional fees, insurance and other corporate and overhead expenses. Following the acquisition of Inter-Tel
in fiscal 2008, SG&A also includes significant amounts recorded for the amortization of purchased intangible assets.

Research and Development Expenses

R&D expenses consist primarily of salaries and related expenses for engineering personnel, materials and consumables and subcontract service costs. Depreciation and amortization of R&D assets are
included in R&D expenses.

Special Charges and Restructuring Costs

Special charges relate to restructuring activities, product line exits and other loss accruals undertaken to improve our operational
efficiency. Special charges consist primarily of workforce reduction costs, lease termination obligations and asset write-offs. We reassess the accruals at each reporting period to reflect changes in the timing or amount of estimated restructuring
and termination costs on which the original estimates were based. New restructuring accruals or reversals of previous accruals are recorded in the period of change.

Comparability of Periods

Our functional currency is the U.S. dollar
and our consolidated financial statements are prepared with U.S. dollar reporting currency using the current rate method. Assets and liabilities of non-U.S. operations are translated from foreign currencies into U.S. dollars at the exchange rates in
effect at the balance sheet date while revenue and expense items are translated at the monthly weighted-average exchange rates for the relevant period. The resulting unrealized gains and losses have been included as part of the cumulative foreign
currency translation adjustment which is reported as other comprehensive income. As a result, changes in foreign-exchange rates from period to period can have a significant impact on our results of operations and financial position, which also makes
the comparability of periods complex.



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Results of OperationsFiscal 2011 Compared to Fiscal 2010

The following table sets forth our comparative results of operations, both in dollars and as a percentage of total revenues, for fiscal
2011 and 2010:



|                                                                               |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |       |   |  |  |       |  
|------------------------------------------------------------------------------ |  | --------------------------------- | ----- | - | ----------- |  | ----- | ------- |  | - | ----------- | - |  | ------ | ----- | -- | - | - | ----- | - |  |  | ----- | -
|                                                                               |  | Fiscal Year Ended April 30,       |       |   | Change      | 
|                                                                               |  | 2011                              |       |   | 2010        |  |      
|                                                                               |  | Amounts                           |       |   | % ofRevenue |  |       | Amounts |  |   | % ofRevenue |   |  | Amount |       |    | % |  
|                                                                               |  | (in millions, except percentages) |      
|Revenues                                                                       |  | $                                 | 649.7 |   |             |  | 100.0 | %       |  | $ | 647.9       |   |  |        | 100.0 | %  |   | $ | 1.8   |   |  |  | 0.3   |  
|Cost of revenues                                                               |  |                                   | 338.2 |   |             |  | 52.1  | %       |  |   | 334.0       |   |  |        | 51.6  | %  |   |   | 4.2   |   |  |  | 1.3   |  
|                                                                               |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |       |   |  |  |       |  
|Gross margin                                                                   |  |                                   | 311.5 |   |             |  | 47.9  | %       |  |   | 313.9       |   |  |        | 48.4  | %  |   |   | (2.4  | ) |  |  | (0.8  | )
|Selling, general and administrative                                            |  |                                   | 221.5 |   |             |  | 34.1  | %       |  |   | 211.3       |   |  |        | 32.6  | %  |   |   | 10.2  |   |  |  | 4.8   |  
|Research and development                                                       |  |                                   | 54.1  |   |             |  | 8.3   | %       |  |   | 51.7        |   |  |        | 8.0   | %  |   |   | 2.4   |   |  |  | 4.6   |  
|Special charges and restructuring costs                                        |  |                                   | 15.5  |   |             |  | 2.4   | %       |  |   | 5.2         |   |  |        | 0.8   | %  |   |   | 10.3  |   |  |  | +     |  
|Loss (gain) on litigation settlement                                           |  |                                   | 1.0   |   |             |  | 0.2   | %       |  |   | (5.5        | ) |  |        | (0.8  | )% |   |   | 6.5   |   |  |  | +     |  
|                                                                               |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |       |   |  |  |       |  
|Operating income                                                               |  |                                   | 19.4  |   |             |  | 3.0   | %       |  |   | 51.2        |   |  |        | 7.9   | %  |   |   | (31.8 | ) |  |  | (62.1 | )
|Interest expense                                                               |  |                                   | (20.0 | ) |             |  | (3.1  | )%      |  |   | (29.8       | ) |  |        | (4.6  | )% |   |   | 9.8   |   |  |  | (32.9 | )
|Debt retirement costs, including write-off of related deferred financing costs |  |                                   | (0.6  | ) |             |  | (0.1  | )%      |  |   | (1.0        | ) |  |        | (0.2  | )% |   |   | 0.4   |   |  |  | +     |  
|Fair value adjustment on derivative instruments                                |  |                                   | 1.0   |   |             |  | 0.2   | %       |  |   | 7.4         |   |  |        | 1.1   | %  |   |   | (6.4  | ) |  |  | +     |  
|Other income                                                                   |  |                                   | 0.8   |   |             |  | 0.1   | %       |  |   | 0.9         |   |  |        | 0.1   | %  |   |   | (0.1  | ) |  |  | +     |  
|Income tax recovery                                                            |  |                                   | 87.5  |   |             |  | 13.5  | %       |  |   | 8.5         |   |  |        | 1.3   | %  |   |   | 79.0  |   |  |  | +     |  
|                                                                               |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |       |   |  |  |       |  
|Net income                                                                     |  | $                                 | 88.1  |   |             |  | 13.6  | %       |  | $ | 37.2        |   |  |        | 5.7   | %  |   | $ | 50.9  |   |  |  | +     |  
|                                                                               |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |       |   |  |  |       |  
|Adjusted EBITDA (a non-GAAP measure)                                           |  | $                                 | 76.1  |   |             |  | 11.7  | %       |  | $ | 89.8        |   |  |        | 13.9  | %  |   | $ | (13.7 | ) |  |  | (15.3 | )
|                                                                               |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |       |   |  |  |       |  



|+ | The comparison is not meaningful.
|- | ---------------------------------

Revenues

Our reportable segments are represented by the following four
geographic sales regions:



| |  |  | the United States;
| | - |  | ------------------



| |  |  | Europe, Middle East & Africa (collectively EMEA);
| | - |  | ---------------------------------------------------



| |  |  | Canada and Caribbean & Latin America (collectively Canada and CALA); and
| | - |  | --------------------------------------------------------------------------



| |  |  | Asia Pacific.
| | - |  | -------------

These reportable segments were determined in accordance with how our management views and evaluates our business. The following table sets forth total revenues by geographic regions both in dollars and as
a percentage of total revenues:



|                             |  |                                   |       |  |              |  |      |          |  |   |              |  |  |        |      |   |   |   |      |   |  |  |      |  
|---------------------------- |  | --------------------------------- | ----- |  | ------------ |  | ---- | -------- |  | - | ------------ |  |  | ------ | ---- | - | - | - | ---- | - |  |  | ---- | -
|                             |  | Fiscal Year Ended April 30,       |       |  | Change       | 
|                             |  | 2011                              |       |  | 2010         |  |     
|                             |  | Revenues                          |       |  | % ofRevenues |  |      | Revenues |  |   | % ofRevenues |  |  | Amount |      |   | % |  
|                             |  | (in millions, except percentages) |      
|Telecommunications revenues: |  |                                   |       |  |              |  |      |          |  |   |              |  |  |        |      |   |   |   |      |   |  |  |      |  
|United States                |  | $                                 | 353.9 |  |              |  | 54.5 | %        |  | $ | 355.6        |  |  |        | 54.8 | % |   | $ | (1.7 | ) |  |  | (0.5 | )
|EMEA                         |  |                                   | 153.0 |  |              |  | 23.6 | %        |  |   | 159.5        |  |  |        | 24.6 | % |   |   | (6.5 | ) |  |  | (4.1 | )
|Canada and CALA              |  |                                   | 45.0  |  |              |  | 6.9  | %        |  |   | 44.0         |  |  |        | 6.8  | % |   |   | 1.0  |   |  |  | 2.3  |  
|Asia Pacific                 |  |                                   | 18.9  |  |              |  | 2.9  | %        |  |   | 13.3         |  |  |        | 2.1  | % |   |   | 5.6  |   |  |  | 42.1 |  
|                             |  |                                   |       |  |              |  |      |          |  |   |              |  |  |        |      |   |   |   |      |   |  |  |      |  



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|                           |  |                                   |       |  |              |  |       |          |  |   |              |  |  |        |       |   |   |   |      |   |  |  |      |  
|-------------------------- |  | --------------------------------- | ----- |  | ------------ |  | ----- | -------- |  | - | ------------ |  |  | ------ | ----- | - | - | - | ---- | - |  |  | ---- | -
|                           |  | Fiscal Year Ended April 30,       |       |  | Change       | 
|                           |  | 2011                              |       |  | 2010         |  |      
|                           |  | Revenues                          |       |  | % ofRevenues |  |       | Revenues |  |   | % ofRevenues |  |  | Amount |       |   | % |  
|                           |  | (in millions, except percentages) |      
|Network services revenues: |  |                                   |       |  |              |  |       |          |  |   |              |  |  |        |       |   |   |   |      |   |  |  |      |  
|                           |  | $                                 | 570.8 |  |              |  | 87.9  | %        |  | $ | 572.4        |  |  |        | 88.3  | % |   | $ | (1.6 | ) |  |  | (0.3 | )
|United States              |  | $                                 | 78.9  |  |              |  | 12.1  | %        |  | $ | 75.5         |  |  |        | 11.7  | % |   | $ | 3.4  |   |  |  | 4.5  |  
|                           |  |                                   |       |  |              |  |       |          |  |   |              |  |  |        |       |   |   |   |      |   |  |  |      |  
|                           |  | $                                 | 649.7 |  |              |  | 100.0 | %        |  | $ | 647.9        |  |  |        | 100.0 | % |   | $ | 1.8  |   |  |  | 0.3  |  
|                           |  |                                   |       |  |              |  |       |          |  |   |              |  |  |        |       |   |   |   |      |   |  |  |      |  

Our telecommunications revenues in fiscal 2011 remained consistent with fiscal 2010 as decreased revenues
in the U.S. and EMEA were largely offset by increased revenue in the Asia Pacific region. Our network services revenues increased, however, due to an increased spend per customer compared to fiscal 2010.

Telecommunications revenues in the U.S. decreased by $1.7 million, or 0.5%, in fiscal 2011 compared to fiscal 2010. We believe that the
decrease in telecommunications revenues was primarily due to the lower sales from direct selling offices.

Revenues in EMEA
decreased by $6.5 million, or 4.1%, in fiscal 2011 compared to fiscal 2010, as a result of the global recession and the weakening of the British pound sterling against the U.S. dollar. As approximately 90% of this regions revenues are
generated in currencies other than the U.S. dollar, most significantly the British pound sterling and the Euro, our revenues, as reported in U.S. dollars, are impacted by significant changes in exchange rates. Revenues in the EMEA region decreased
2.4% due to a lower average exchange rate of the British pound sterling during fiscal 2011 versus fiscal 2010. Excluding the impact of foreign exchange, revenues in EMEA were down 1.7% principally as a result of lower volumes through our channel
partners in Europe.

Revenues in Canada and CALA increased by $1.0, or 2.3%, million in fiscal 2011 compared to fiscal
2010, driven primarily by the higher average exchange rate of the Canadian dollar during fiscal 2011 versus fiscal 2010.

Revenues in Asia Pacific increased by $5.6 million, or 42.1%, due to strong performance in the South Pacific as we continue our efforts
to grow the business in the region.

Networks services revenues in the U.S. increased by $3.4 million, or 4.5%, in fiscal 2011
compared to fiscal 2010. The increase in revenues from network services in fiscal 2011 was due to increased spending per customer compared to the prior period.

Gross Margin

The following table sets forth gross margin, both in dollars
and as a percentage of revenues, for the fiscal years indicated:



|                   |  |                                   |       |  |               |  |      |             |  |   |               |  |  |  |      |  
|------------------ |  | --------------------------------- | ----- |  | ------------- |  | ---- | ----------- |  | - | ------------- |  |  |  | ---- | -
|                   |  | Fiscal Year Ended April 30,       |      
|                   |  | 2011                              |       |  | 2010          | 
|                   |  | GrossMargin                       |       |  | GrossMargin % |  |      | GrossMargin |  |   | GrossMargin % | 
|                   |  | (in millions, except percentages) |      
|Telecommunications |  | $                                 | 276.0 |  |               |  | 48.4 | %           |  | $ | 281.3         |  |  |  | 49.1 | %
|Network services   |  |                                   | 35.5  |  |               |  | 45.0 | %           |  |   | 32.6          |  |  |  | 43.2 | %
|                   |  |                                   |       |  |               |  |      |             |  |   |               |  |  |  |      |  
|Total              |  | $                                 | 311.5 |  |               |  | 47.9 | %           |  | $ | 313.9         |  |  |  | 48.4 | %
|                   |  |                                   |       |  |               |  |      |             |  |   |               |  |  |  |      |  

Gross margin percentage declined by 0.5% to 47.9% in fiscal 2011 from 48.4% in fiscal 2010, driven by a
decrease from telecommunications.

Gross margin percentage on telecommunication revenues decreased in fiscal 2011 by 0.7% to
48.4% from 49.1% in fiscal 2010. This decrease was primarily the result of an unfavorable shift in revenue mix coupled with unfavorable changes in the foreign exchange rates. The declines in margin were partially offset by a reduction in costs due
to improved prices from our contract manufacturers.



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Network services typically generate lower gross margins as compared to sales of software and
systems. The gross margin percentage from our network services revenues improved to 45.0% in fiscal 2011 from 43.2% in fiscal 2010 predominantly as the result of lower rates negotiated with our local and long distance carriers at the beginning of
the third quarter of fiscal 2010.

We expect gross margins to improve slightly in the near term as a result of continuing
implementation of our cost reduction initiatives described above and trend to higher margin software products; however, margins could be higher or lower as a result of a number of factors including variations in revenue mix, competitive pricing
pressures, foreign currency movements in regions where revenues are denominated in currencies other than the U.S. dollar, utilization of our professional services personnel and efficiencies in installing our products, and global economic conditions,
among other factors.

Operating Expenses

Selling, General and Administrative

SG&A expenses increased to 34.1% of revenues in fiscal 2011 from 32.6% of revenues in fiscal 2010 an increase of $10.2 million in absolute dollars. Our SG&A expenses for fiscal 2011 included
certain non-cash charges, most significantly $22.3 million (2010$22.2 million) for the amortization of customer relationships and developed technology intangible assets related to the acquisition of Inter-Tel in fiscal 2008. In addition,
SG&A included $4.7 million (2010$3.3 million) of non-cash compensation expense associated with employee stock options.

The increase in SG&A expenses as a percent of revenues for fiscal 2011 compared to fiscal 2010 was primarily due to higher selling and marketing expenses, higher stock-based compensation and the
phase-out of the reduced work-week program, which began in July 2010.

We will continue to monitor our cost base closely in an
effort to keep our operating expenditures in line with revenue levels achieved in future quarters. SG&A expenses as a percentage of revenues is highly dependent on revenue levels and could vary significantly depending on actual revenues
achieved.

Research and Development

R&D expenses increased to 8.3% of total revenues in fiscal 2011 from 8.0% of total revenues in fiscal 2010, an increase of $2.4 million in absolute dollars. The increase in our investment level in
R&D in fiscal 2011 was due to the phase-out of the reduced work-week program in fiscal 2011.

We have historically
invested heavily in R&D, consistent with an aggressive R&D investment strategy that has positioned us with a broad range of feature-rich, scalable, standards-based and interoperable IP-based communication solutions. Our R&D expenses in
absolute dollars can fluctuate depending on the timing and number of development initiatives in any given quarter. R&D expenses as a percentage of revenues is highly dependent on revenue levels and could vary significantly depending on actual
revenues achieved.

Special Charges and Restructuring Costs

We recorded pre-tax special charges of $15.5 million in fiscal 2011 as a result of actions taken to lower our operating cost structure.
The components of the special charges consisted of $10.2 million of employee severance and benefits incurred in the termination of approximately 100 employees around the world and $5.3 million related to additional lease terminations and accreted
interest on lease terminations. We expect all of the workforce reduction liability to be settled within the next two years. The lease termination obligations incurred in the current and prior fiscal years will be reduced over the remaining term of
the leases, with $3.9 million of the outstanding $7.0 million balance to be paid in fiscal 2012.

We recorded pre-tax special
charges of $5.2 million in fiscal 2010 as a result of actions taken to lower our operating cost structure. The components of the special charges included $2.5 million of employee severance and benefits incurred in the termination of approximately 20
employees around the world, $1.4 million related to additional lease terminations and accreted interest on lease terminations, and $1.2 million in assets written off related to the termination of a product line. Substantially all of the workforce
reduction liability at April 30, 2010 was settled in fiscal 2011. Also included in special charges in fiscal 2010 was $0.1 million of costs related to integration activities following our acquisition of Inter-Tel.



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We may take additional restructuring actions in the future to reduce our operating expenses
and gain operating efficiencies. The timing and potential amount of such actions will depend on several factors, including future revenue levels and opportunities for operating efficiencies identified by management.

Litigation Settlement

In the fourth quarter of fiscal 2011, we adjusted our estimate of the expected payments under our litigation settlements and recorded a $1.0 million charge. In the fourth quarter of fiscal 2010 we
recorded pre-tax income of $5.5 million primarily related to a settlement of litigation, as described in the Results of Operations  Fiscal 2010 Compared to Fiscal 2009, below.

Operating Income (Loss)

We reported operating income of $19.4 million in fiscal 2011 compared to $51.2 million in fiscal 2010. The decrease in operating income was due primarily due to an increase in SG&A and R&D
expenses largely the result of the phase-out of the reduced work-week program, an increase in special charges and restructuring costs and an increased litigation settlement expense, as described above.

Non-Operating Expenses

Interest Expense

Interest expense was $20.0 million in fiscal 2011
compared to $29.8 million in fiscal 2010. Our interest expense relates predominantly to two credit agreements bearing interest based on LIBOR that were entered into to finance a portion of the Inter-Tel acquisition in fiscal 2008. The decrease in
interest expense was due to lower debt balances as well as a lower effective interest rate.

In April 2010, we used a portion
of the proceeds from our IPO to repay the $30.0 million outstanding on our revolving credit facility and prepaid $72.0 million of our first lien term loan. In March 2011, we prepaid an additional $25.0 million of our first lien term loan. In
connection with such prepayment, the maximum consolidated debt to EBITDA covenant under our credit agreement governing the first lien term loan was increased for the fourth quarter of fiscal 2011 and for subsequent quarters up to and including the
second quarter of fiscal 2014. We did not draw any amounts on our revolving credit facility during fiscal 2011. The lower average long-term debt balance resulted in approximately $4.1 million of the decrease in interest expense in fiscal 2011
compared to fiscal 2010.

The remainder of the decrease was due to a lower average LIBOR, on which the interest expense on our
debt is based, coupled with the expiry of an interest rate swap agreement where we had fixed a portion of our interest expense. The fixed rate under the interest rate swap agreement was higher than the variable rate, LIBOR. The interest rate swap
agreement expired at the end of the second quarter of fiscal 2010 and was not renewed or replaced upon expiry. For fiscal 2011, we paid an average LIBOR rate of 0.4% (fiscal 2010, excluding the unfavorable swap agreement  0.5%).

Our interest expense will fluctuate from period to period depending on the movement in the LIBOR.

Debt and Warrant Retirement Costs, Including Write-Off of Related Deferred Costs.

In April 2010, we prepaid $72.0 million of our outstanding first lien term loan, at par. As a result, we wrote-off $1.0 million of
unamortized deferred financing charges representing a pro-rata portion of the unamortized deferred charges related to the first lien term loan.

In March 2011, we prepaid an additional $25.0 million of our outstanding first lien term loan, at par. As a result, we expensed $0.2 million of unamortized deferred financing charges and $0.4 of related
expenses.

Fair Value Adjustment on Derivative Instruments

In fiscal 2011, the fair value adjustment on derivative instruments consists of the mark-to-mark adjustment on warrants that have an
exercise price in Canadian dollars. As a result of Derivatives and Hedging Topic of the FASB ASC, we are required to record an adjustment for the change in fair value of our warrants that are denominated in a currency (Canadian dollars) other than
our functional currency. At April 30, 2010, these warrants had a fair value of $1.0 million. In fiscal 2011, these warrants expired out-of-the-money. As a result, we recorded the $1.0 million change in fair value as income during fiscal 2011.

In fiscal 2010, the fair value adjustment on derivative instruments consists of two items; the mark-to-market adjustment on
the embedded derivative in the Class 1 Preferred Shares and the mark-to-mark adjustment on the warrants that have an exercise price in Canadian dollars.

The holders of Class 1 Preferred Shares, issued in connection with the acquisition of Inter-Tel, had the right to redeem the preferred shares and receive cash equal to the value of our common shares into
which the instrument would convert after seven years.



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As a portion of the redemption price of the preferred shares was indexed to our common share price, an embedded derivative was accounted for separately and was marked to market in each reporting
period. In April 2010, in conjunction with the IPO, the preferred shares were converted. As a result, a mark-to-market non-cash gain of $8.4 million was recorded in fiscal 2010.

For the year ended April 30, 2010, due primarily to an increase in the fair value of our common stock as a result of the IPO, we
recorded a loss of $1.0 million for the fair value adjustment on warrants that had an exercise price in Canadian dollars. These warrants expired in April 2011.

Other Income

In fiscal 2011, other income was $0.8 million compared
to $0.9 million during fiscal 2010. Other income in both fiscal years consisted of interest income and amortization of the deferred gain on sale of land and building in the U.K. in fiscal 2006, partially offset by a foreign exchange loss.

Income Tax Recovery

In fiscal 2011, we updated our assessment of the realizability of our deferred tax assets. Based on a number of factors, including completion of a reorganization of certain subsidiaries, cumulative income
for the previous 36 months and forecasted income (excluding non-recurring items), we determined that it was now more-likely-than-not that the Company would realize a benefit from a significant portion of its deferred tax assets in Canada. As a
result, we relieved a valuation allowance of $87.2 million primarily relating to the deferred tax assets in Canada. Future changes in estimates of taxable income could result in a significant change to the valuation allowance. At April 30,
2011, there continues to be a valuation allowance of $71.2 against deferred tax assets, primarily in Canada and the United Kingdom.

During fiscal 2010, there was no change in the assessment of the realizability of our deferred tax assets. At April 30, 2010 we concluded that a substantial valuation allowance was appropriate due to
the uncertainty surrounding the Companys ability to earn taxable income in certain jurisdictions.

Excluding changes in
valuation allowance, we recorded a net income tax benefit of $0.3 million in fiscal 2011 compared to $8.5 million in fiscal 2010. The fiscal 2011 tax recovery was due primarily to the use of losses not previously recognized, which was
partially offset by the tax effect of temporary differences, related to differences in accounting and tax treatment pertaining primarily to the leasing portfolio and other accruals. The fiscal 2010 tax benefit primarily resulted from a benefit of
timing differences in accounting and tax treatment pertaining primarily to the leasing portfolio and other accruals, which more than offset the expected tax expense on our pre-tax income at statutory rates.

Net Income

In fiscal 2011, our net income was driven by a reduction in our valuation allowance, as described above. Excluding taxes, our net income decreased from fiscal 2010 due to a non-recurring fair value
adjustment of $7.4 million recorded in fiscal 2010, coupled with lower operating income, as described above. This was partially offset by lower interest expense during the year.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP measure, was $76.1 million in fiscal 2011 compared to $89.8 million in fiscal 2010, a $13.7 million, or 15.3% decrease. This decrease in Adjusted EBITDA was driven by lower
gross margin, as well as the effect of the phase-out of the reduced work-week program, which began in July 2010. For a definition and explanation of Adjusted EBITDA as well a reconciliation of Adjusted EBITDA to net income, see Item 6,
Selected Financial Data.



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Results of OperationsFiscal 2010 Compared to Fiscal 2009

The following table sets forth our comparative results of operations, both in dollars and as a percentage of total revenues, for fiscal
2010 and 2009:



|                                                                                   |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |        |   |  |  |       |  
|---------------------------------------------------------------------------------- |  | --------------------------------- | ----- | - | ----------- |  | ----- | ------- |  | - | ----------- | - |  | ------ | ----- | -- | - | - | ------ | - |  |  | ----- | -
|                                                                                   |  | Fiscal Year Ended April 30,       |       |   | Change      | 
|                                                                                   |  | 2010                              |       |   | 2009        |  |      
|                                                                                   |  | Amounts                           |       |   | % ofRevenue |  |       | Amounts |  |   | % ofRevenue |   |  | Amount |       |    | % |  
|                                                                                   |  | (in millions, except percentages) |      
|Revenues                                                                           |  | $                                 | 647.9 |   |             |  | 100.0 | %       |  | $ | 735.1       |   |  |        | 100.0 | %  |   | $ | (87.2  | ) |  |  | (11.9 | )
|Cost of revenues                                                                   |  |                                   | 334.0 |   |             |  | 51.6  | %       |  |   | 390.6       |   |  |        | 53.1  | %  |   |   | (56.6  | ) |  |  | (14.5 | )
|                                                                                   |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |        |   |  |  |       |  
|Gross margin                                                                       |  |                                   | 313.9 |   |             |  | 48.4  | %       |  |   | 344.5       |   |  |        | 46.9  | %  |   |   | (30.6  | ) |  |  | (8.9  | )
|Selling, general and administrative                                                |  |                                   | 211.3 |   |             |  | 32.6  | %       |  |   | 248.5       |   |  |        | 33.8  | %  |   |   | (37.2  | ) |  |  | (15.0 | )
|Research and development                                                           |  |                                   | 51.7  |   |             |  | 8.0   | %       |  |   | 60.1        |   |  |        | 8.2   | %  |   |   | (8.4   | ) |  |  | (14.0 | )
|Special charges and restructuring costs                                            |  |                                   | 5.2   |   |             |  | 0.8   | %       |  |   | 23.3        |   |  |        | 3.2   | %  |   |   | (18.1  | ) |  |  | (77.7 | )
|Litigation settlement                                                              |  |                                   | (5.5  | ) |             |  | (0.8  | )%      |  |   |            |   |  |        | 0.0   | %  |   |   | (5.5   | ) |  |  | *     |  
|Impairment of goodwill                                                             |  |                                   |      |   |             |  |      |         |  |   | 284.5       |   |  |        | 38.7  | %  |   |   | (284.5 | ) |  |  | *     |  
|                                                                                   |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |        |   |  |  |       |  
|Operating income (loss)                                                            |  |                                   | 51.2  |   |             |  | 7.9   | %       |  |   | (271.9      | ) |  |        | (37.0 | )% |   |   | 323.1  |   |  |  | +     |  
|Interest expense                                                                   |  |                                   | (29.8 | ) |             |  | (4.6  | )%      |  |   | (40.1       | ) |  |        | (5.5  | )% |   |   | 10.3   |   |  |  | (25.7 | )
|Debt and warrant retirement costs, including write-off of related deferred charges |  |                                   | (1.0  | ) |             |  | (0.2  | )%      |  |   |            |   |  |        |      |    |   |   | (1.0   | ) |  |  | *     |  
|Fair value adjustment on derivative instruments                                    |  |                                   | 7.4   |   |             |  | 1.1   | %       |  |   | 100.2       |   |  |        | 13.6  | %  |   |   | (92.8  | ) |  |  | +     |  
|Other income (expense)                                                             |  |                                   | 0.9   |   |             |  | 0.1   | %       |  |   | (0.8        | ) |  |        | (0.1  | )% |   |   | 1.7    |   |  |  | +     |  
|Income tax recovery (expense)                                                      |  |                                   | 8.5   |   |             |  | 1.3   | %       |  |   | 19.1        |   |  |        | 2.6   | %  |   |   | (10.6  | ) |  |  | (55.5 | )
|                                                                                   |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |        |   |  |  |       |  
|Net income (loss)                                                                  |  | $                                 | 37.2  |   |             |  | 5.7   | %       |  | $ | (193.5      | ) |  |        | (26.3 | )% |   | $ | 230.7  |   |  |  | +     |  
|                                                                                   |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |        |   |  |  |       |  
|Adjusted EBITDA (a non-GAAP measure)                                               |  | $                                 | 89.8  |   |             |  | 13.9  | %       |  | $ | 78.7        |   |  |        | 10.7  | %  |   | $ | 11.1   |   |  |  | 14.1  |  
|                                                                                   |  |                                   |       |   |             |  |       |         |  |   |             |   |  |        |       |    |   |   |        |   |  |  |       |  



|* | No comparison to other period.
|- | ------------------------------

|+ | The comparison is not meaningful.
|- | ---------------------------------

Revenues

The following table sets forth revenues from our
telecommunications and network services business segments.



|                   |  |                                   |       |  |              |  |       |          |  |  |              |  |  |        |       |   |   |   |       |   |  |  |       |  
|------------------ |  | --------------------------------- | ----- |  | ------------ |  | ----- | -------- |  |  | ------------ |  |  | ------ | ----- | - | - | - | ----- | - |  |  | ----- | -
|                   |  | Fiscal Year Ended April 30,       |       |  |              |  |       |          | 
|                   |  | 2010                              |       |  | 2009         |  |       | Change   | 
|                   |  | (in millions, except percentages) |      
|                   |  | Revenues                          |       |  | % ofRevenues |  |       | Revenues |  |  | % ofRevenues |  |  | Amount |       |   | % |  
|Telecommunications |  | $                                 | 572.4 |  |              |  | 88.3  | %        |  |  | 662.0        |  |  |        | 90.1  | % |   | $ | (89.6 | ) |  |  | (13.5 | )
|Network services   |  |                                   | 75.5  |  |              |  | 11.7  | %        |  |  | 73.1         |  |  |        | 9.9   | % |   |   | 2.4   |   |  |  | 3.3   |  
|                   |  |                                   |       |  |              |  |       |          |  |  |              |  |  |        |       |   |   |   |       |   |  |  |       |  
|                   |  | $                                 | 647.9 |  |              |  | 100.0 | %        |  |  | 735.1        |  |  |        | 100.0 | % |   | $ | (87.2 | ) |  |  | (11.9 | )
|                   |  |                                   |       |  |              |  |       |          |  |  |              |  |  |        |       |   |   |   |       |   |  |  |       |  

Revenues in fiscal 2010 decreased 11.9% to $647.9 million compared to $735.1 million in fiscal 2009, with
telecommunications revenues decreasing 13.5% to $572.4 million from $662.0 million and network revenues increasing 3.3% to $75.5 million from $73.1 million.

Our revenues in fiscal 2010 and fiscal 2009 were adversely affected by the global recession. In the weakened economic climate, many of our existing and prospective customers reduced their capital
expenditures or delayed new equipment purchases, which resulted in lower telecommunications revenues. Our revenues from network services increased, however, due to an increase in both the number of active customers and the number of services we
billed to those customers compared to fiscal 2009.



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Geographic Segment Revenues

Our reportable segments are represented by the following four geographic sales regions:



| |  |  | the United States;
| | - |  | ------------------



| |  |  | EMEA;
| | - |  | -----



| |  |  | Canada and CALA; and
| | - |  | --------------------



| |  |  | Asia Pacific.
| | - |  | -------------

These reportable segments were determined in accordance with how our management views and evaluates our business. The following table sets forth total revenues by geographic regions both in dollars and as
a percentage of total revenues:



|                |  |                                   |       |  |              |  |       |          |  |   |              |  |  |        |       |   |   |   |       |   |  |  |       |  
|--------------- |  | --------------------------------- | ----- |  | ------------ |  | ----- | -------- |  | - | ------------ |  |  | ------ | ----- | - | - | - | ----- | - |  |  | ----- | -
|                |  | Fiscal Year Ended April 30,       |       |  | Change       | 
|                |  | 2010                              |       |  | 2009         |  |      
|                |  | Revenues                          |       |  | % ofRevenues |  |       | Revenues |  |   | % ofRevenues |  |  | Amount |       |   | % |  
|                |  | (in millions, except percentages) |      
|United States   |  | $                                 | 431.1 |  |              |  | 66.5  | %        |  | $ | 486.7        |  |  |        | 66.2  | % |   | $ | (55.6 | ) |  |  | (11.4 | )
|EMEA            |  |                                   | 159.5 |  |              |  | 24.6  | %        |  |   | 184.7        |  |  |        | 25.1  | % |   |   | (25.2 | ) |  |  | (13.6 | )
|Canada and CALA |  |                                   | 44.0  |  |              |  | 6.8   | %        |  |   | 50.4         |  |  |        | 6.9   | % |   |   | (6.4  | ) |  |  | (12.7 | )
|Asia Pacific    |  |                                   | 13.3  |  |              |  | 2.1   | %        |  |   | 13.3         |  |  |        | 1.8   | % |   |   | (0.0  | ) |  |  | (0.0  | )
|                |  |                                   |       |  |              |  |       |          |  |   |              |  |  |        |       |   |   |   |       |   |  |  |       |  
|                |  | $                                 | 647.9 |  |              |  | 100.0 | %        |  | $ | 735.1        |  |  |        | 100.0 | % |   | $ | (87.2 | ) |  |  | (11.9 | )
|                |  |                                   |       |  |              |  |       |          |  |   |              |  |  |        |       |   |   |   |       |   |  |  |       |  

Revenues in the United States decreased by $55.6 million, or 11.4%, in fiscal 2010 compared to fiscal
2009, comprised of a $58.0 million decrease in sales from our telecommunications products and a $2.4 million increase in sales from our network services products. We believe that the decrease in telecommunications revenues was primarily due to the
weakened economic climate in the United States, which adversely affected consumer demand. The increase in revenues from network services in fiscal 2010 was due to an increase in the number of customers and the number of services we billed to those
customers compared to the prior periods.

Revenues in EMEA decreased by $25.2 million, or 13.6%, in fiscal 2010 compared to
fiscal 2009, as a result of the global recession and the weakening of the British pound sterling against the U.S. dollar. As approximately 90% of this regions revenues are generated in currencies other than the U.S. dollar, most significantly
the British pound sterling and the Euro, our revenues, as reported in U.S. dollars, are impacted by significant changes in exchange rates. Revenues in the region decreased 13.6% year over year, of which 6.8% was attributed to the effects of the
recession which reduced revenues across all regions; with the remainder of the decrease due to a lower average exchange rate of the British pound sterling during fiscal 2010 versus fiscal 2009.

Revenues in Canada and CALA decreased $6.4 million in fiscal 2010 compared to fiscal 2009 primarily as a result of the global recession.
Revenues in Asia Pacific remained stable during fiscal 2010.

Gross Margin

The following table sets forth gross margin, both in dollars and as a percentage of revenues, for the fiscal years indicated:



|                   |  |                                   |       |  |               |  |      |             |  |   |               |  |  |  |      |  
|------------------ |  | --------------------------------- | ----- |  | ------------- |  | ---- | ----------- |  | - | ------------- |  |  |  | ---- | -
|                   |  | Fiscal Year Ended April 30,       |      
|                   |  | 2010                              |       |  | 2009          | 
|                   |  | GrossMargin                       |       |  | GrossMargin % |  |      | GrossMargin |  |   | GrossMargin % | 
|                   |  | (in millions, except percentages) |      
|Telecommunications |  | $                                 | 281.3 |  |               |  | 49.1 | %           |  | $ | 313.1         |  |  |  | 47.3 | %
|Network services   |  |                                   | 32.6  |  |               |  | 43.2 | %           |  |   | 31.4          |  |  |  | 43.0 | %
|                   |  |                                   |       |  |               |  |      |             |  |   |               |  |  |  |      |  
|Total              |  | $                                 | 313.9 |  |               |  | 48.4 | %           |  | $ | 344.5         |  |  |  | 46.9 | %
|                   |  |                                   |       |  |               |  |      |             |  |   |               |  |  |  |      |  

Gross margin percentage improved in fiscal 2010, increasing by 1.5% to 48.4% from 46.9% in fiscal 2009.
The decline in revenues in fiscal 2010 as a result of the global recession was offset by lower costs to sell our products. Lower costs were driven by lower labor and other overhead charges resulting from headcount and salary reductions. These cost
saving actions and an increase in sales of higher margin products aided in maintaining our gross margin as a percentage of revenues.



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Gross margin percentage on telecommunication revenues increased in fiscal 2010 by 1.8% to
49.1% from 47.3% in fiscal 2009. This increase in gross margin was primarily the result of initiatives we undertook commencing in the latter half of fiscal 2009 to streamline product costs and lower our overall cost of sales. These initiatives
included renegotiating supply agreements to reduce product costs, reductions in headcount and salaries to better align labor and overhead costs with current market demand, improved inventory management to lower our excess and obsolete inventories
and other general cost saving measures.

Network services typically generate lower gross margins as compared to sales of
software and systems. The gross margin percentage from our network services revenues improved to 43.2% in fiscal 2010 from 43.0% in fiscal 2009 predominantly as a result of lower rates negotiated with our local and long distance carriers.

Operating Expenses

Research and Development

R&D expenses decreased to 8.0% of total
revenues in fiscal 2010 from 8.2% of total revenues in fiscal 2009, a decrease of $8.4 million in absolute dollars. The decrease in R&D expenses is primarily due to reductions in headcount and salaries and other cost saving measures implemented
during the year.

Selling, General and Administrative

SG&A expenses decreased to 32.6% of revenues in fiscal 2010 from 33.8% of revenues in fiscal 2009 a decrease of $37.2 million in
absolute dollars. The decrease was a result of proactive cost cutting measures undertaken during the latter half of fiscal 2009 and fiscal 2010, most notably reductions in headcount and salaries and consolidation of facilities across the globe. Our
SG&A expenditures for fiscal 2010 included certain non-cash charges, most significantly $23.6 million (2009$25.4 million) for the amortization of intangible assets such as customer relationships, developed technology and trade name,
primarily related to the acquisition of Inter-Tel. In addition, SG&A included $3.3 million (2009$2.4 million) of non-cash compensation expense associated with employee stock options.

Special Charges, Integration and Merger-Related Expenses

We recorded pre-tax special charges of $5.2 million in fiscal 2010 as a result of actions taken to lower our operating cost structure. The components of the special charges included $2.5 million of
employee severance and benefits incurred in the termination of approximately 20 employees around the world, $0.5 million of accreted interest related to lease termination obligations, $0.9 million related to additional lease terminations in the
period and $1.2 million in assets written off related to the termination of a product line. Payment of workforce reduction liabilities is expected to be complete by the end of fiscal 2011. The lease termination obligations incurred in the current
and prior fiscal years will be reduced over the remaining term of the leases, with $3.5 million of the outstanding $6.5 million balance to be paid in fiscal 2011. Also included in special charges was $0.1 million of costs related to integration
activities following our acquisition of Inter-Tel.

Litigation Settlement

In the fourth quarter of fiscal 2010 we recorded pre-tax income of $5.5 million primarily related to a settlement of litigation. Upon the
acquisition of Inter-Tel in August 2007, the Company assumed liability for a lawsuit brought forward by certain former independent distributors of products of a manufacturing company whose partial assets were purchased by Inter-Tel in 2000. The
lawsuit asserted that Inter-Tel was liable for, among other things, breaches of the underlying dealer agreements between the plaintiffs and the seller. In April 2010, we negotiated a settlement with the plaintiffs in this suit, which included a cash
payment to the plaintiffs. The difference between the initial provision and the settlement was recorded as income in the fourth quarter of fiscal 2010.

Impairment of Goodwill

In accordance with GAAP, goodwill is tested for
impairment at least annually at the reporting unit level. The fair value of each reporting unit is estimated using a combination of the market approach and the income approach. Under the market approach, a multiple of earnings before interest,
taxes, depreciation and amortization of each reporting unit is calculated and compared to marketplace participants to corroborate the results of the calculated fair value. Under the income approach, discounted cash flows for each reporting unit are
used to estimate the fair value of the reporting unit. We generally use the average of the results under the two approaches as the fair value of the reporting unit.

In the fourth quarter of 2010, we performed our annual impairment test of goodwill and determined that goodwill was not impaired.

In fiscal 2009, we recorded a goodwill impairment charge of $284.5 million on the goodwill initially recorded as part of the Inter-Tel acquisition. Due to the economic downturn and its impact on
consumer spending, we lowered our expected cash flow



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forecasts and this, combined with significantly lower market multiples as a result of the general decline in global capital markets, resulted in a decline in the fair value of our U.S. reporting
unit. Accordingly, the carrying amount of the goodwill exceeded the implied fair value and an impairment charge of $284.5 million was recorded in fiscal 2009. This non-cash goodwill impairment charge did not affect our liquidity, cash flows or
future operations.

Operating Income (Loss)

We reported operating income of $51.2 million in fiscal 2010 compared to an operating loss of $271.9 million in fiscal 2009. The
fiscal 2009 loss was driven by the $284.5 million impairment of goodwill, as described above. Absent the impairment of goodwill, our fiscal 2009 results would have shown operating income of $12.6 million. Despite the effect of the recession on our
sales, operating income increased in fiscal 2010 as a result of proactive measures we undertook to control expenses and achieve operational efficiencies in our business. In addition the lower level of restructuring charges recorded in fiscal 2010
coupled with the litigation settlement gain drove a portion of the increase in operating income.

Non-Operating Expenses

Interest Expense

Interest expense was $29.8 million in fiscal 2010 compared to $40.1 million in fiscal 2009. Our interest expense relates predominantly to two credit agreements bearing interest based on LIBOR that
were entered into to finance a portion of the Inter-Tel acquisition in fiscal 2008. The decrease in interest is due to a lower average LIBOR during the year, coupled with the expiry during the year of an interest rate swap agreement.

In August 2007 we entered into an interest rate swap agreement, which effectively swapped the LIBOR rate for a fixed rate of 4.85% on a
notional amount of $215.0 million for the period from October 2007 to October 2009. The agreement was not renewed or replaced upon expiry. As a result, for a portion of the third quarter and all of the fourth quarter of fiscal 2010, our
interest expense was recorded based solely on LIBOR, plus a margin, rather than a portion of the interest expense being recorded at the 4.85% swap rate, plus a margin. For fiscal 2010, LIBOR ranged from 0.25% to 1.06% versus a range of 1.19% to
3.44% during fiscal 2009.

In April 2010, using a portion of the proceeds from our IPO, we repaid $30.0 million on our
revolving credit facility and prepaid $72.0 million of our first lien term loan. As the payments occurred at the end of the fiscal year, the repayments did not have a significant effect on the interest expense for fiscal 2010.

Debt and Warrant Retirement Costs, Including Write-Off of Related Deferred Costs.

In April 2010, we prepaid $72.0 million of our outstanding first lien term loan, at par. As a result, we wrote-off $1.0 million of
unamortized deferred financing charges representing a pro-rata portion of the unamortized deferred charges related to the first lien term loan. No prepayments were made in fiscal 2009.

Fair Value Adjustment on Derivative Instruments

Fair value adjustment on derivative instruments consists of two items in fiscal 2010; the mark-to-market adjustment on the embedded derivative in the Class 1 Preferred Shares and the mark-to-mark
adjustment on the warrants that have an exercise price in Canadian dollars.

The holders of Class 1 Preferred Shares had the
right to redeem them and receive cash equal to the value of our common shares into which the instrument would convert after seven years. As a portion of the redemption price of the preferred shares was indexed to our common share price, an embedded
derivative was accounted for separately and was marked to market in each reporting period. In April 2010, in conjunction with the IPO, the preferred shares were converted. As a result, a mark-to-market non-cash gain of $8.4 million was recorded in
fiscal 2010. In fiscal 2009, we recorded a non-cash gain of $100.2 million representing the mark-to-market adjustment on the derivative liability embedded in the Class 1 Preferred Shares.

As a result of adopting the Derivatives and Hedging Topic of the FASBASC on May 1, 2009, we were required to record an adjustment
for the change in fair value of our warrants that are denominated in a currency (Canadian dollars) other than our functional currency. For the year ended April 30, 2010, we recorded a loss of $1.0 million, due primarily to an increase in the
fair value of our common stock as a result of the IPO. No mark to market adjustment was recorded in the prior year as the standard was not required to be adopted at that time.

Other (Income) Expense

Other (income) expense, on a net basis,
consists of foreign exchange rate losses, interest income and amortization of the deferred gain on sale of the United Kingdom land and building in fiscal 2006. Other income, on a net basis, amounted to $0.9 million



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of income in fiscal 2010 compared to $0.8 million of expense during fiscal 2009. The $1.7 million increase in other income was driven by lower foreign exchange losses recorded in fiscal 2010
as a result of a more stable foreign exchange rates on fiscal 2010 transactions than on fiscal 2009 transactions. The lower foreign exchange loss was partially offset by a decrease in interest income caused by a decrease in interest rates.

Provision for Income Taxes

We recorded a net income tax benefit of $8.5 million in fiscal 2010 compared to $19.1 million in fiscal 2009. The net income tax benefit for fiscal 2010 reflects a current income tax expense of
$4.1 million, which was more than offset by a deferred income tax benefit of $12.6 million. The fiscal 2010 current tax expense was a result of taxable income in certain jurisdictions where we do not have net operating loss carry-forwards available
to offset taxable income. The fiscal 2010 deferred income tax benefit resulted from recognition of net operating losses as well as differences in accounting and tax treatment pertaining primarily to the leasing portfolio and other accruals. The net
income tax benefit for fiscal 2009 reflects a current income tax benefit of $0.7 million and a deferred tax benefit of $18.4 million resulting from differences in accounting and tax treatment pertaining to revenue recognition, the leasing
portfolio and other accruals.

In assessing the realizability of deferred tax assets, we consider whether it is more likely
than not that some portion or none of the deferred tax assets will be realized. During fiscal 2010, there was no change in the assessments of the realizability of the deferred tax assets by entity. During fiscal 2009, we recognized a tax benefit of
$5.8 million to reflect a change in the valuation allowance because it was determined that it was more likely than not that tax assets in certain subsidiaries would be realized.

Net Income (Loss)

In fiscal 2010, our net income was driven by a number of the factors discussed above. In particular, despite the effect of the recession on our sales, net income increased in fiscal 2010 as a result of
proactive measures we undertook to control expenses and achieve operational efficiencies in our business.

In fiscal 2009 our
net loss was predominantly impacted by the $284.5 million impairment of goodwill, partially offset by a $100.2 million gain from fair value adjustments on our embedded derivatives and a $18.4 million deferred tax benefit.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP measure, was $89.8 million in fiscal 2010 compared to $78.7 million in fiscal 2009, a $11.1 million, or 14.1% improvement. This improvement in Adjusted EBITDA, despite the
global recession, was driven by proactive cost cutting measures we took during fiscal 2009, from which the full benefit was realized in fiscal 2010, plus additional cost-cutting measures taken in early fiscal 2010. For a definition and explanation
of Adjusted EBITDA as well a reconciliation of Adjusted EBITDA to net income (loss), see Item 6, Selected Financial Data.

Share Capital

The change in the Companys preferred share and common share
capital was as follows:



|                                                                   |  |                 |        |   |              |   |       | 
|------------------------------------------------------------------ |  | --------------- | ------ | - | ------------ | - | ----- | 
|                                                                   |  | PreferredShares |        |   | CommonShares |  
|Balance, April 30, 2008                                            |  | $               | 208.5  |   |              | $ | 277.1 | 
|Accretion on preferred shares                                      |  |                 | 41.0   |   |              |   |      | 
|Other                                                              |  |                 |       |   |              |   | 0.7   | 
|                                                                   |  |                 |        |   |              |   |       | 
|Balance, April 30, 2009                                            |  |                 | 249.5  |   |              |   | 277.8 | 
|Accretion on preferred shares                                      |  |                 | 48.3   |   |              |   |      | 
|Amended conversion of preferred shares                             |  |                 | 96.2   |   |              |   |      | 
|Conversion of preferred shares                                     |  |                 | (394.0 | ) |              |   | 394.0 | 
|Initial public offering, net of underwriting commissions and costs |  |                 |       |   |              |   | 130.7 | 
|Other                                                              |  |                 |       |   |              |   | 0.3   | 
|                                                                   |  |                 |        |   |              |   |       | 
|Balance, April 30, 2010                                            |  |                 |       |   |              |   | 802.8 | 
|Issue of shares from exercise of options                           |  |                 |       |   |              |   | 2.7   | 
|                                                                   |  |                 |        |   |              |   |       | 
|Balance, April 30, 2011                                            |  |                 |       |   |              |   | 805.5 | 
|                                                                   |  |                 |        |   |              |   |       | 

In April 2010, we sold 10.5 million common shares in the IPO at a price of $14.00 per share. Our net
proceeds from the IPO were $130.7 million after underwriting commissions of $10.3 million and other associated costs of $6.3 million. The net proceeds of



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the IPO were used to repay $30.0 million outstanding under the revolving credit facility and $72.0 million to prepay amounts outstanding under the first lien term loan, with the remainder to be
used for general corporate purposes.

In conjunction with the IPO, all of the 0.3 million Class 1 Preferred Shares, which
were redeemable for cash at the option of the holder in August 2012, were converted into common shares. The original terms of the Class 1 Preferred Shares included the right of the Class 1 Preferred Share holders to redeem the Class 1 Preferred
Shares for their full accreted value in August 2012. In addition, the Class 1 Preferred Shares included a conversion feature at the option of the holder. Subsequent to the IPO, had the Class 1 Preferred Shares not converted, the common shares
issuable upon conversion would have been the accreted value divided by $18.56 per share. The amended terms resulted in conversion of the Class 1 Preferred Shares into common shares based on the accreted value at the time of conversion ($1,235.03 per
share) divided by the IPO offering price of $14.00 per share. As the amended terms resulted in a conversion, the difference between the original conversion terms and the amended conversion terms was recorded as $96.2 million increase to share
capital.

Liquidity and Capital Resources

As of April 30, 2011, our liquidity consisted primarily of cash and cash equivalents of $73.9 million and an undrawn $30.0
million revolving facility that matures in August 2012. Historically, our primary source of funds has been proceeds from financing activities, including the issuance of share capital and long-term debt. At April 30, 2011, we had $318.4 million
of liability outstanding under our credit facilities, consisting of a first lien term loan and second lien term loan and had stated common share capital of $805.5 million.

We have a defined benefit pension plan in place for a number of our past and present employees in the United Kingdom. The plan has been closed to new members since 2001. At April 30, 2011, the plan
had an unfunded pension liability of $61.4 million. The contributions to fund the benefit obligations under this plan are based on actuarial valuations, which themselves are based on certain assumptions about the long-term operations of the plan,
including employee turnover and retirement rates, the performance of the financial markets and interest rates. The amount of annual employer contributions required to fund the pension deficit annually is determined every three years, in accordance
with U.K. regulations and is based on a calendar year. In October 2010, the Companys annual funding requirement to fund the pension deficit for the 2011 calendar year was determined to be $4.2 million (£2.5 million), and will increase at
an annual rate of 3% for the calendar years 2012 and 2013. In fiscal year 2011, we contributed $5.0 million (£3.2 million) to the U.K. pension plan for currency service and deficit funding. We expect to contribute $5.2 million (£3.1
million) in fiscal 2012 for current service and deficit funding.

Borrowings under the first and second lien term loans are
repayable in full on their respective maturity dates. In addition, the first lien term loan requires annual repayments of $2.0 million payable in quarterly installments, plus excess annual cash flows (as defined in the credit agreement) due 100 days
after fiscal year end. We expect to pay approximately $12.0 million in August 2011 relating to the excess cash flows for fiscal 2011. Proceeds from the issuance of equity or debt, and proceeds from the sale of our assets, may also be required to be
used, in whole or in part, to make mandatory prepayments under the first and second lien term loans. The credit agreements relating to the first and second lien term loans have customary default clauses, wherein repayment of one or more of the
credit agreements may be accelerated in the event of an uncured event of default. Each of the credit agreements contains affirmative and negative covenants, including: (a) periodic financial reporting requirements, (b) maintaining a
maximum ratio of Consolidated Total Debt (as calculated under our first and second lien credit agreements) to Consolidated EBITDA (as calculated under our first and second lien credit agreements) as specified in our first and second lien credit
agreements, (c) limitations on the incurrence of subsidiary indebtedness and also the borrowers themselves, (d) limitations on liens, (e) limitations on investments, (f) limitations on the payment of dividends and
(g) limitations on capital expenditures. In connection with the March 2011 $25.0 million prepayment, the maximum Consolidated Total Debt to Consolidated EBITDA ratio under the first lien credit agreement was increased for the fourth quarter of
fiscal 2011 and for subsequent quarters up to and including the second quarter of fiscal 2014. As of April 30, 2011, we were in compliance with all of the applicable covenants included in our current credit agreements.

Our source for cash in the future is expected to come from existing operations, and borrowings under our revolving credit facility, which
expires in August 2012. Our most significant source of cash from operations is expected to be the collection of accounts receivable from our customers and the sale of future rental payments associated with sales leases which we provide to our
customers to finance their purchases as part of our managed services offering program. The primary use of cash is expected to include funding operating expenses, working capital, capital expenditures, debt service and other contractual obligations.

We believe that we will have sufficient liquidity to support our business operations for the next 12 months. However, we
may elect to seek additional funding prior to that time. Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support product development efforts and expansion of
sales and marketing, the timing of introductions of new products and enhancements to existing products, and market acceptance of our products. Additional



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equity or debt financing may not be available on acceptable terms or at all. In addition, any proceeds from the issuance of equity or debt may be required to be used in whole or in part, to make
mandatory payments under our credit agreements.

Cash FlowsComparison of Fiscal 2011 to Fiscal 2010

Below is a summary of comparative results of cash flows and a more detailed discussion of results for fiscal 2011 and
fiscal 2010.



|                                                             |  |                            |       |   |        |   |      |   |  |   |       |  
|------------------------------------------------------------ |  | -------------------------- | ----- | - | ------ | - | ---- | - |  | - | ----- | -
|                                                             |  | Fiscal Year EndedApril 30, |       |   | Change |  
|                                                             |  | 2011                       |       |   | 2010   |   |     
|                                                             |  | (in millions)              |      
|Net cash provided by (used in)                               |  |                            |       |   |        |   |      |   |  |   |       |  
|Operating activities                                         |  | $                          | 32.5  |   |        | $ | 34.4 |   |  | $ | (1.9  | )
|Investing activities                                         |  |                            | (5.3  | ) |        |   | (6.5 | ) |  |   | 1.2   |  
|Financing activities                                         |  |                            | (31.4 | ) |        |   | 20.5 |   |  |   | (51.9 | )
|Effect of exchange rate changes on cash and cash equivalents |  |                            | 1.5   |   |        |   | (0.2 | ) |  |   | 1.7   |  
|                                                             |  |                            |       |   |        |   |      |   |  |   |       |  
|Increase (decrease) in cash and cash equivalents             |  | $                          | (2.7  | ) |        | $ | 48.2 |   |  | $ | (50.9 | )
|                                                             |  |                            |       |   |        |   |      |   |  |   |       |  
|Cash and cash equivalents, end of period                     |  | $                          | 73.9  |   |        | $ | 76.6 |   |  | $ | (2.7  | )
|                                                             |  |                            |       |   |        |   |      |   |  |   |       |  

Cash Provided by Operating Activities

Cash generated from operating activities in fiscal 2011 was $32.5 million compared with $34.4 million in fiscal 2010. The decreased cash
flows from operations was the result of lower operating performance as discussed above under Results of OperationsFiscal 2011 compared to Fiscal 2010Operating Income, which was partially offset by cash from changes in working
capital due to collections from accounts receivable and sales-type leases.

Cash Used in Investing Activities

Net cash used for investing activities was $5.3 million in fiscal 2011 compared to net cash used of $6.5 million in fiscal
2010. The primary use of cash in fiscal 2011 and fiscal 2010 was additions to capital assets of $6.2 million and $7.1 million, respectively.

Cash Provided by Financing Activities

In fiscal 2011 net cash used by
financing activities was $31.4 million, compared to cash provided by financing activities of $20.5 million during fiscal 2010. Fiscal 2011 cash used by financing activities was driven primarily by repayments of long-term debt, including the $25.0
million first lien prepayment made in March 2011.

Fiscal 2010 cash provided by financing activities related primarily to the
April 2010 IPO. The IPO provided cash proceeds of $137.0 million, net of underwriting commissions. This cash was used to repay $30.0 million outstanding under the revolving credit facility and $72.0 million of amounts outstanding under the first
lien term loan. In addition, costs relating to the IPO of $6.3 million were paid. The net proceeds from this transaction of $28.7 million were partially offset by $3.7 million of payments of a litigation settlement obligation, $2.5 million for
repayments of capital leases and $2.1 million for regular, quarterly principal repayments of the first lien term loan.

Effect of exchange rate changes on cash

Our overall cash position was also impacted by exchange rate changes during the period, which increased cash by $1.5 million during fiscal 2011 (2010$0.2 million decrease).

Cash FlowsComparison of Fiscal 2010 to Fiscal 2009

Below is a summary of comparative results of cash flows and a more detailed discussion of results for fiscal 2010 and fiscal 2009.



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|                                                             |  |                            |      |   |        |   |      |   |  |   |      |  
|------------------------------------------------------------ |  | -------------------------- | ---- | - | ------ | - | ---- | - |  | - | ---- | -
|                                                             |  | Fiscal Year EndedApril 30, |      |   | Change |  
|                                                             |  | 2010                       |      |   | 2009   |   |     
|                                                             |  | (in millions)              |     
|Net cash provided by (used in)                               |  |                            |      |   |        |   |      |   |  |   |      |  
|Operating activities                                         |  | $                          | 34.4 |   |        | $ | 8.8  |   |  | $ | 25.6 |  
|Investing activities                                         |  |                            | (6.5 | ) |        |   | (6.4 | ) |  |   | (0.1 | )
|Financing activities                                         |  |                            | 20.5 |   |        |   | 11.5 |   |  |   | 9.0  |  
|Effect of exchange rate changes on cash and cash equivalents |  |                            | (0.2 | ) |        |   | (5.0 | ) |  |   | 4.8  |  
|                                                             |  |                            |      |   |        |   |      |   |  |   |      |  
|Increase in cash and cash equivalents                        |  | $                          | 48.2 |   |        | $ | 8.9  |   |  | $ | 39.3 |  
|                                                             |  |                            |      |   |        |   |      |   |  |   |      |  
|Cash and cash equivalents, end of period                     |  | $                          | 76.6 |   |        | $ | 28.4 |   |  | $ | 48.2 |  
|                                                             |  |                            |      |   |        |   |      |   |  |   |      |  

Cash Provided by Operating Activities

Cash generated from operating activities in fiscal 2010 was $34.4 million compared with $8.8 million in fiscal 2009. The increased cash
flows from operations was the result of improved operating performance as discussed above under Results of OperationsFiscal 2010 compared to Fiscal 2009Operating Loss, which was partially offset by decreases in accounts
payable and accrued liabilities and deferred revenue.

Cash Used in Investing Activities

Net cash used for investing activities was $6.5 million in fiscal 2010 compared to net cash used of $6.4 million in fiscal 2009. The
primary use of cash in fiscal 2010 and fiscal 2009 was additions to capital assets of $7.1 million and $6.6 million, respectively.

Cash Provided by Financing Activities

In fiscal 2010 net cash provided by
financing activities was $20.5 million, compared to $11.5 million during fiscal 2009.

Fiscal 2010 cash provided by financing
activities related primarily to the April 2010 IPO. The IPO provided cash proceeds of $137.0 million, net of underwriting commissions. This cash was used to repay $30.0 million outstanding under the revolving credit facility and $72.0 million of
amounts outstanding under the first lien term loan. In addition, costs relating to the IPO of $6.3 million were paid. The net proceeds from this transaction of $28.7 million were partially offset by $3.7 million of payments of a litigation
settlement obligation, $2.5 million for repayments of capital leases and $2.1 million for regular, quarterly principal repayments of the first lien term loan.

Fiscal 2009 cash provided by financing activities related primarily to an increase of $17.7 million in bank indebtedness caused by an increase of amounts outstanding under the revolving facility. This was
partially offset by $3.7 million of payments for a litigation settlement obligation and $2.7 million for repayments of capital leases.

Effect of exchange rate changes on cash

Our overall cash position was also
impacted by exchange rate changes during the period, which decreased cash slightly by $0.2 million during fiscal 2010 (2009$5.0 million decrease).

Contractual Obligations

The following table sets forth our
contractual obligations as of April 30, 2011:



|                                               |  |                             |       |  |      |   |      |      |  |   |      |  |  |      |      |  |      |   |       |              |  |   |       |  |  |   |      | 
|---------------------------------------------- |  | --------------------------- | ----- |  | ---- | - | ---- | ---- |  | - | ---- |  |  | ---- | ---- |  | ---- | - | ----- | ------------ |  | - | ----- |  |  | - | ---- | 
|                                               |  | Payments Due by Fiscal Year |      
|Contractual Obligations                        |  | Total                       |       |  | 2012 |   |      | 2013 |  |   | 2014 |  |  | 2015 |      |  | 2016 |   |       | After 5Years | 
|                                               |  | (in millions)               |      
|Long-term debt obligations (1)                 |  | $                           | 389.0 |  |      | $ | 34.4 |      |  | $ | 20.4 |  |  | $    | 20.6 |  |      | $ | 181.1 |              |  | $ | 132.5 |  |  | $ |     | 
|Capital lease obligations (2)                  |  |                             | 5.2   |  |      |   | 2.5  |      |  |   | 1.4  |  |  |      | 0.9  |  |      |   | 0.4   |              |  |   |      |  |  |   |     | 
|Operating lease obligations (3)                |  |                             | 71.6  |  |      |   | 17.4 |      |  |   | 14.7 |  |  |      | 11.3 |  |      |   | 9.4   |              |  |   | 7.6   |  |  |   | 11.2 | 
|Defined benefit pension plan contributions (4) |  |                             | 14.1  |  |      |   | 5.2  |      |  |   | 5.2  |  |  |      | 3.7  |  |      |   |      |              |  |   |      |  |  |   |     | 
|Other (5)                                      |  |                             | 24.7  |  |      |   | 9.7  |      |  |   | 4.6  |  |  |      | 4.3  |  |      |   | 4.1   |              |  |   | 2.0   |  |  |   |     | 
|                                               |  |                             |       |  |      |   |      |      |  |   |      |  |  |      |      |  |      |   |       |              |  |   |       |  |  |   |      | 
|Total                                          |  | $                           | 504.6 |  |      | $ | 69.2 |      |  | $ | 46.3 |  |  | $    | 40.8 |  |      | $ | 195.0 |              |  | $ | 142.1 |  |  | $ | 11.2 | 
|                                               |  |                             |       |  |      |   |      |      |  |   |      |  |  |      |      |  |      |   |       |              |  |   |       |  |  |   |      | 



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|(1) | Represents the principal balance and interest payments for the first and second lien term loans. Interest on the first and second lien term loans is based on LIBOR plus
3.25%, and LIBOR plus 7.0%, respectively, as described in our consolidated financial statements. For the purposes of estimating the variable interest, the average 3-month LIBOR from the last three years, 1.00%, has been used. Included in fiscal 2012
is an estimated $12.0 million of first lien term loan repayment relating to excess cash flow from fiscal 2011, as described the Liquidity and Capital Resources section, above.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents the principal and interest payments for capital lease obligations. Interest rates on these loans range from 5.6% to 11.6%, as described in our consolidated
financial statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Operating lease obligations exclude payments to be received by us under sublease arrangements.
|--- | ----------------------------------------------------------------------------------------------

|(4) | Represents the estimated contribution to our defined benefit pension plan in the United Kingdom over the next 12 months. The amount of annual employer contributions
required to fund the deficit is determined every three years in accordance with U.K. regulations, and is based on a calendar year. In October 2010, the Companys annual funding requirement to fund the pension deficit for the calendar year 2011
was determined to be $4.2 million (£2.5 million), and will increase at an annual rate of 3% for calendar years 2012 and 2013. We expect to contribute $5.2 million (£3.1 million) in fiscal 2012 for current service and deficit funding.
Future funding requirements after fiscal 2013 are highly dependent on the unfunded pension liability and the time period in which the deficit is amortized. Liabilities arising from the remaining unfunded deficit in our defined benefit pension plan
are not included in the above table. As of April 30, 2011, the projected benefit obligation of $194.5 million exceeded the fair value of the plan assets of $133.1 million, resulting in an unfunded liability of $61.4 million.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents payments under the fiscal 2007 litigation settlement and an information technology outsourcing agreement.
|--- | --------------------------------------------------------------------------------------------------------------------

Total contractual obligations listed do not include contractual obligations recorded on the balance sheet as current liabilities, except
for those associated with a long-term liability. Contractual obligations also exclude $11.9 million of liabilities relating to uncertain tax positions due to the uncertainty of the timing of any potential settlement.

Obligations arising from R&D spending commitments under an agreement, dated as of October 10, 2002, among us, Mitel Knowledge
Corporation, March Networks and Her Majesty the Queen in Right of Canada are not included in the above table. The agreement, as last amended on March 10, 2010, requires us to spend at least 3.5% of our annual revenues in R&D in Canada each
year, and to make at least 50% of our total R&D expenditures in Canada each year, until an aggregate of C$366.5 million worth of R&D has been spent in Canada since April 1, 2006.

Purchase orders or contracts for the purchase of raw materials and other goods and services are not included in the table above. We are
not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements.

Off-Balance Sheet Arrangements

We have the following significant off-balance sheet arrangements:

Letters of
Credit

We had $1.1 million in letters of credit outstanding as of April 30, 2011 (April 30, 2010$0.6 million).

Bid and Performance Related Bonds

We enter into bid and performance related bonds related to various customer contracts. Potential payments due under these may be related to our performance and/or our channel partners performance
under the applicable contract. The total maximum potential amount of future payments we could be required to make under bid and performance related bonds, excluding letters of credit, was $1.6 million as of April 30, 2011 (April 30,
2010$4.8 million). Of this amount, the amount relating to guarantees of our channel partners performance was nil as of April 30, 2011 (April 30, 2010$1.3 million). Historically, we have not made any payments and we do not
anticipate that we will be required to make any material payments under these types of bonds.

Intellectual Property
Indemnification Obligations

We enter into agreements on a regular basis with customers and suppliers that include limited
intellectual property indemnification obligations that are customary in the industry. These obligations generally require us to compensate the other party for certain damages and costs incurred as a result of third party intellectual property claims
arising from these transactions. The nature of these intellectual property indemnification obligations prevents us from making a reasonable estimate of the maximum potential amount we could be required to pay to our customers and suppliers.
Historically, we have not made any significant indemnification payments under such agreements and no amount has been accrued in the consolidated financial statements with respect to these obligations.



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Off-balance sheet lease obligations

We offer our customers lease financing and other services under our managed services offering. We fund this offering,
which we have branded as the TotalSolution®program, in part through the sale to financial institutions
of rental payment streams under the leases. Such financial institutions have the option to require us to repurchase such income streams, subject to limitations, in the event of defaults by lease customers and, accordingly, we maintain reserves based
on loss experience and past due accounts. In addition, such financial institutions have the option to require us to repurchase such income streams upon any uncured breach by us under the terms of the underlying sale agreements. At April 30,
2011, sold payments remaining unbilled net of lease recourse reserves, which represents the total balance of leases that is not included in our balance sheet were $158.8 million (April 30, 2010$177.0 million).

Critical Accounting Policies

The preparation of our consolidated financial statements and related disclosures in conformity with U.S. GAAP requires us to make estimates and assumptions about future events that can have a material
impact on the amounts reported in our consolidated financial statements and accompanying notes. The determination of estimates requires the use of assumptions and the exercise of judgment and as such actual results could differ from those estimated.
Our significant accounting policies are described in Note 2 to our audited consolidated financial statements for fiscal 2011. The following critical accounting policies are those that we believe require a high level of subjectivity and judgment and
have a material impact on our financial condition and operating performance: revenue recognition, allowance for doubtful accounts and the lease recourse liability, provisions for inventory, provisions for product warranties, long-lived asset
depreciation, goodwill valuation, special charges, contingencies, deferred taxes, pension and post-retirement benefits, and the valuation of stock options, warrants and other derivative instruments.

Revenue Recognition

For products sold through our network of wholesale distributors, solution providers, system integrators, authorized channel partners, and other technology providers, arrangements usually involve multiple
elements, including post-contract technical support and training. We also sell products and installation and related maintenance and support services directly to customers. Due to the complexity of our sales agreements, judgment is routinely applied
principally in the areas of customer acceptance, product returns, unbundling of multiple element arrangements, and collectability.

Our sales arrangements frequently include a contractual acceptance provision that specifies certain acceptance criteria and the period in which a product must be accepted or returned. We make an
assessment of whether or not these acceptance criteria will be met by referring to prior experience in successfully complying with customer specifications. In those cases where experience supports that acceptance will be met, we recognize revenue
once delivery is complete, title and risk of loss has passed, the fee is fixed and determinable and persuasive evidence of an arrangement exists.

The provision for estimated sales returns is recorded as a reduction of revenues at the time of revenue recognition. If our estimate of sales returns is too low, additional charges will be incurred in
future periods and these additional charges could have a material adverse effect on our results of operations. As a percentage of annual revenues, the provision for sales returns was 0.16% as of April 30, 2011 compared to 0.09% as of
April 30, 2010.

Direct revenue sales are comprised of multiple elements which consist of products, maintenance and
installation services. We unbundle these products, maintenance and installation services based on VSOE with any discounts allocated across all elements on a pro-rata basis.

Collectability is assessed based primarily on the credit worthiness of the customer as determined by credit checks and analysis, as well as customer payment history. Different judgments or different
contract terms could adversely affect the amount and timing of revenues recorded.

Sales-Type Leases

In a transaction containing a sales-type lease, hardware revenues are recognized at the present value of the payments allocated to the
hardware lease element at the time of system sale in accordance with the Leases Topic of the United States Financial Accounting Standards Board Accounting Standard Codification (FASB ASC). With respect to the software lease elements
included in the sales-type lease, which are comprised of software, including applications, upgrades, software support, and embedded software, prior to the Company establishing VSOE for these elements, revenues from the software elements were
deferred and recognized over the period of support in accordance with the Software Topic of the FASB ASC. Where the Company has now established VSOE for these elements, revenue is recognized upon delivery, based on their VSOE, in accordance with the
Software Topic of the FASB ASC. Revenues from sales-type leases are allocated between hardware and software elements on a relative fair value basis. The application of the relative fair value allocation method is based on managements best
estimate of relative fair values and requires the use of professional judgment in obtaining evidence of fair value for the various elements.



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The costs of systems installed under these sales-type leases are recorded as costs of sales.
The net rental streams are sold to financial institutions on a regular basis with the income streams discounted by prevailing like-term rates at the time of sale. Gains or losses resulting from the sale of net rental payments from such leases are
recorded as net sales. Furthermore, when the initial term of the lease is concluded, customers have the option to renew the lease at a payment and term less than the original lease. We establish and maintain reserves against potential recourse
following the resales based upon historical loss experience, past due accounts and specific account analysis. The allowance for uncollectible minimum lease payments and recourse liability at the end of the year represents reserves against the entire
lease portfolio. Management reviews the adequacy of the allowance on a regular basis and adjusts the allowance as required. These reserves are either netted in the accounts receivable, netted in the current and long term components of Net
investments in sales-type leases on the balance sheet, or, for off-balance sheet leases, recorded as a lease recourse liability and included in long term liabilities on our balance sheet.

Our total reserve for losses related to the entire lease portfolio, including amounts classified as accounts receivable on our balance
sheet was 5.3% of the ending aggregate lease portfolio as of April 30, 2011 compared to 5.6% at April 30, 2010. The reserve is based on a review past write-off experience and a review of the accounts receivable ageing as of April 30,
2011. We believe our reserves are adequate to cover future potential write-offs. Should, however, the financial condition of our customers deteriorate in the future, additional reserves in amounts that could be material to the financial statements
could be required.

Allowance for Doubtful Accounts

Our allowance for doubtful accounts is based on our assessment of the collectability of customer accounts. A considerable amount of
judgment is required in order to make this assessment including a detailed analysis of the aging of our accounts receivable and the current credit worthiness of our customers and an analysis of historical bad debts and other adjustments. If there is
a deterioration of a major customers credit worthiness or actual defaults are higher than our historical experience, our estimate of the recoverability of amounts due could be adversely affected. We review in detail our allowance for doubtful
accounts on a quarterly basis and adjust the allowance amount estimate to reflect actual portfolio performance and change in future portfolio performance expectations. As of April 30, 2011 and April 30, 2010, the provision represented 5.4%
and 8.9% of gross receivables, respectively. The decrease in reserve level at April 30, 2011 was due primarily to timing of write-offs of accounts receivable in fiscal 2011 that were provided for at April 30, 2010.

Inventory Obsolescence

In order to record inventory at the lower of cost or net realizable value, we must assess our inventory valuation, which requires judgment as to future demand. We adjust our inventory balance based on
economic considerations, historical usage, inventory turnover and product life cycles through the recording of a write-down which is included in the cost of revenue. Assumptions relating to economic conditions and product life cycle changes are
inherently subjective and have a significant impact on the amount of the write-down.

If there is a sudden and significant
decrease in demand for our products, or a higher risk of inventory obsolescence because of rapidly changing technology and customer requirements, we may be required to increase our inventory write-downs and our gross margin could be adversely
affected.



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Warranty Provision

We accrue warranty costs, as part of cost of revenues, based on expected material and labor support costs. The cost to service the
warranty is estimated on the date of sale based upon historical trends in the volume of product returns within a warranty period and the cost to repair or replace the equipment. If we experience an increase in warranty claims that is higher than our
past experience, or an increase in actual costs to service the claims is experienced, gross margin could be adversely affected. Our provision for warranty costs has decreased in fiscal 2011 and fiscal 2010 as a result of improved claims experience.
The following table provides a continuity of the warranty provision over the past two years.



|                                   |  |                            |      |   |      |   |      |  
|---------------------------------- |  | -------------------------- | ---- | - | ---- | - | ---- | -
|                                   |  | Fiscal Year EndedApril 30, |     
|                                   |  | 2011                       |      |   | 2010 |  
|                                   |  | (in millions)              |     
|Balance, beginning of year         |  | $                          | 1.6  |   |      | $ | 2.3  |  
|Warranty costs incurred            |  |                            | (0.4 | ) |      |   | (1.0 | )
|Warranties issued                  |  |                            | 0.4  |   |      |   | 1.3  |  
|Change in estimated warranty costs |  |                            | (0.7 | ) |      |   | (1.0 | )
|                                   |  |                            |      |   |      |   |      |  
|Balance, end of year               |  | $                          | 0.9  |   |      | $ | 1.6  |  
|                                   |  |                            |      |   |      |   |      |  

Long-Lived Assets

We have recorded property, plant and equipment and intangible assets at cost less accumulated amortization. The determination of useful lives and whether or not these assets are impaired involves
significant judgment. We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

In response to changes in industry and market conditions, we may strategically realign our resources and consider restructuring or disposing of our existing businesses, which could result in an impairment
charge. We have not recorded any impairment charges in fiscal 2011, fiscal 2010 or fiscal 2009.

Goodwill

We assess goodwill for impairment on an annual basis, or more frequently if circumstances warrant, as required by the
IntangiblesGoodwill and Other Topic of the FASB ASC. An impairment charge is recorded if the implied fair value of goodwill of a reporting unit is less than the book value of goodwill for that unit. We have four geographic units that have
assigned goodwill of $134.5 million in total as of April 30, 2011 (April 30, 2010$134.5 million): the U.S., Canada and CALA, EMEA and Asia Pacific. Quoted stock market prices are not available for these individual reporting units.
Accordingly, consistent with this Topic, our methodology for estimating the fair value of each reporting unit primarily considers estimated future revenues and cash flows for those reporting units along with many other assumptions.

Our U.S. geographic unit represented 96% of our total goodwill value and 67% of our total revenue in fiscal 2011. Our valuation approach
therefore recognizes the significant concentration of goodwill in the U.S. reporting unit. Our valuation approach includes a detailed valuation analysis of both the Company as a whole and the U.S. reporting unit.

In performing the annual goodwill impairment test we considered three generally accepted approaches for valuing a business: the income,
market and cost approaches. Based on the nature of our business and the U.S. reporting units current and expected financial performance, we determined that the income and market approaches were the most appropriate methods for estimating the
fair value of the U.S. reporting unit under the first step of the analysis. For the income approach we used the discounted cash flow method, and considered such factors as revenue and earnings before interest, taxes, depreciation and amortization,
cash flow adjustments, terminal value, discount rate, tax rate, and tax amortization benefit. For the market approach, we analyzed the valuation indicators that our market capitalization implies, including enterprise value to EBITDA. Consideration
of these factors inherently involves a significant amount of judgment, and significant movements in revenues or changes in the underlying assumptions used may result in fluctuations in the value of goodwill that is supported.

The result of the most recent annual impairment test, performed in the fourth quarter of fiscal 2011 resulted in no impairment charge.
The fair values of each reporting unit exceeded its carrying value. The fiscal 2010 annual impairment test also resulted in no impairment charge.

In fiscal 2009, due to the economic downturn, we lowered our expected cash flow forecasts and this, combined with significantly lower market multiples as a result of the general decline in global capital
markets, resulted in a decline in the fair value of our U.S. reporting unit in fiscal 2009. Accordingly, the carrying amount of the goodwill exceeded the implied fair value and an impairment charge of $284.5 million was recorded on the consolidated
statement of operations for the year ended April 30, 2009.



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Erosion in capital markets, material reductions in our expected cash flow forecasts,
significant reductions in our market capitalization or a significant decline in economic conditions, in addition to changes to the underlying assumptions used in our valuation approach described above, could all lead to future impairment in
goodwill.

Special Charges

We record restructuring, exit and other loss accruals when the liability has been incurred. We reassess the accruals on a regular basis to reflect changes in the timing or amount of estimated
restructuring and termination costs on which the original estimates were based. New restructuring accruals or reversals of previous accruals are recorded in the period of change. Additional accruals for fiscal 2011, fiscal 2010 and fiscal 2009
resulted from new restructuring activities and primarily relate to lease terminations and severance costs. No significant additions or reversals were made in fiscal 2011, 2010 or 2009 as a result of changes in estimates.

Estimates used to establish reserves related to real estate lease obligations have been reduced for sublease income that we believe is
probable. Certain assumptions have been made as to the timing, availability and amount of sublease income that we expect to receive. Because we are required to project sublease income for many years into the future, estimates and assumptions
regarding the commercial real estate market that were used to calculate future sublease income may be different from actual sublease income. As of April 30, 2011, the liability relating to lease termination obligations was $7.0 million, with
$3.9 million recorded as current (April 30, 2010total of $6.5 million, with $3.5 million recorded as current). This estimate will change as a result of actual results, the passage of time and changes in assumptions regarding vacancy,
market rate, and operating costs.

Deferred Taxes

We have significant net deferred tax assets resulting from operating loss carryforwards, tax credit carryforwards and deductible temporary
differences that may reduce taxable income in future periods. Valuation allowances have been established for deferred tax assets based on a more likely than not threshold. We assess the likelihood that our deferred tax assets will be
recovered from our ability to generate sufficient future taxable income, and to the extent that recovery is not believed to be more likely than not, a valuation allowance is recorded. Future changes in estimates of taxable income could result in a
significant change to the valuation allowance.

In fiscal 2011, we updated our assessment of the realizability of our deferred
tax assets. Based on a number of factors, including completion of a reorganization of certain subsidiaries, cumulative income for the previous 36 months and forecasted income (excluding non-recurring items), we determined that the weight of the
evidence indicated that it was now morelikely-than-not that we would realize a benefit from a significant portion of our deferred tax assets in Canada. As a result, we relieved a valuation allowance of approximately $87.2 million, primarily
relating to the deferred tax assets in Canada. At April 30, 2011, as a result of uncertainty regarding the future utilization of certain deferred tax assets, there continues to be a valuation allowance of $71.2 million, against deferred tax
assets primarily in Canada and the United Kingdom.

At April 30, 2010, based on our circumstances and uncertainty
regarding the future utilization of net deferred tax assets on certain jurisdictions relating to most areas of the business, we recorded a $127.6 million valuation allowance.

Numerous taxing authorities in the jurisdictions in which we do business are increasing their scrutiny of various tax positions taken by businesses. We believe that we maintain adequate tax reserves to
offset the potential tax liabilities that may arise upon audit in these jurisdictions. If such amounts ultimately prove to be unnecessary, the resulting reversal of such reserves would result in tax benefits being recorded in the period the reserves
are no longer deemed necessary. If such amounts ultimately prove to be less than the ultimate assessment, a future charge to expense would result.

Pension Costs

We currently maintain a defined benefit pension plan for a
number of our past and present employees in the United Kingdom. The plan was closed to new employees in June 2001. Our defined benefit pension costs are developed from actuarial valuations. Inherent in these valuations are key assumptions
provided by us to the actuaries, including discount rates, expected return on plan assets and rate of compensation increases. In estimating the rates and returns, we consider current market conditions and anticipate how these will affect discount
rates, expected returns and rates of compensation increases. Material changes in our pension benefit costs may occur in the future as a result of changes to these assumptions or from fluctuations in our related headcount or market conditions.

In fiscal 2011, our pension liability decreased by $6.7 million to $61.4 million from $68.1 million at April 30, 2010.
This decrease was the result our funding contributions and actual return on plan assets being higher than the expected return, partially offset by a strengthening of the British pound sterling against the U.S. dollar. We did not make any significant
changes in our actuarial assumptions in fiscal 2011.



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In fiscal 2010, our pension liability recorded on our balance sheet increased from $20.1
million to $68.1 million due to an increase in projected benefit obligation. This increase in the projected benefit obligation is largely attributable to changes in valuation assumptions in fiscal 2010, in particular a decrease in the discount rate
used to present value the future obligation, which produced an unfavorable impact on the pensions projected benefit obligation.

During fiscal 2009 the pension liability recorded on our balance sheet decreased from $76.4 million to $20.1 million due to a decrease in the projected benefit obligation. This decrease in the
projected benefit obligation is largely attributable to changes in valuation assumptions in fiscal 2009, in particular an increase in the discount rate used to present value the future obligation, which produced a favorable impact on the plans
projected benefit obligations.

Actuarial gains or losses arise from assumption changes in the obligations and from the
difference between expected and actual return on assets. The following assumptions were used in valuing the liabilities and benefits under the pension plan:



|                                            |  |                            |          |   |      |  |          |  
|------------------------------------------- |  | -------------------------- | -------- | - | ---- |  | -------- | -
|                                            |  | Fiscal Year EndedApril 30, |         
|                                            |  | 2011                       |          |   | 2010 | 
|Discount rate                               |  |                            | 5.30     | % |      |  | 5.60     | %
|Compensation increase rate                  |  |                            | 3.30     | % |      |  | 3.50     | %
|Inflation rate                              |  |                            | 3.30     | % |      |  | 3.00     | %
|Average remaining service life of employees |  |                            | 18 years |   |      |  | 18 years |  

Stock-Based Compensation

We recognize stock-based compensation expense in accordance with the Stock Compensation Topic of the FASB ASC. The fair value of the stock options granted is estimated on the grant date using the
Black-Scholes option-pricing model for each award, net of estimated forfeitures, and is recognized over the employees requisite service period, which is generally the vesting period. We have estimated the volatility of our common shares using
historical volatility of comparable public companies. We expect to continue to use the historical volatility of comparable companies until our historical volatility as a publicly-traded company is sufficiently established to measure expected
volatility for option grants.

The assumptions used in the Black-Scholes option-pricing model are summarized as follows:



|                             |  |               |         |   |               |   |         |               |  |   |         |  
|---------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | ------------- |  | - | ------- | -
|                             |  | April 30,2011 |         |   | April 30,2010 |   |         | April 30,2009 | 
|Risk-free interest rate      |  |               | 1.8     | % |               |   | 2.3     | %             |  |   | 3.8     | %
|Dividends                    |  |               | 0.0     | % |               |   | 0.0     | %             |  |   | 0.0     | %
|Expected volatility          |  |               | 55.0    | % |               |   | 80.0    | %             |  |   | 85.0    | %
|Annual forfeiture rate       |  |               | 10.0    | % |               |   | 10.0    | %             |  |   | 10.0    | %
|Expected life of the options |  |               | 5 years |   |               |   | 5 years |               |  |   | 5 years |  
|Fair value per option        |  | $             | 3.15    |   |               | $ | 1.35    |               |  | $ | 3.30    |  

As of each stock option grant date, we considered the fair value of the underlying common shares in order
to establish a minimum option exercise price. As of each stock option grant date, we reviewed an average of the disclosed year-end volatility of a group of companies that we considered peers based on a number of factors including, but not limited
to, similarity to us with respect to industry, business model, stage of growth and financial risk, along with considering the future plans of our company to determine the appropriate volatility. The expected life was based on our historical stock
option activity. The risk-free interest rate was determined by reference to the United States treasury rates with the remaining term approximating the expected life assumed at the date of grant. In addition, we are required to estimate the expected
forfeiture rate and only recognize expense for those options expected to vest. To the extent our actual forfeiture rate is different from our estimate, stock-based compensation expense is adjusted accordingly.

For stock option modifications, such as the fiscal 2010 repricing and the fiscal 2009 and 2010 extension of option terms, we calculate
the fair value of the options before the modification and the fair value of the options immediately after the modification, using the same principles as described above. We recognize immediately as compensation expense the incremental fair value for
vested options. For unvested options we recognize as compensation expense the incremental fair value over the remaining vesting period.

Based on these assumptions, stock-based compensation expense reduced our results of operations by $4.7 million for the year ended April 30, 2011 (year ended April 30,
2010$3.3 million, 2009$2.4 million). Changes in the subjective input assumptions can, however, materially affect the fair value estimate.



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As of April 30, 2011, there was approximately $10.4 million of unrecognized stock-based
compensation expense related to non-vested stock option awards (April 30, 2010$4.3 million). We expect these to be recognized over a weighted average period of 3.1 years (April 30, 20101.9 years).

Derivative Instruments

In fiscal 2011, our change in fair value of derivative instruments was $1.0 million due the change in fair value of certain warrants that are required to be recorded as a liability. These warrants expired
in fiscal 2011.

In connection with the Inter-Tel acquisition an embedded derivative was identified on the Class 1
Preferred Shares, since holders had the ability to receive cash equal to the value of shares into which the instrument converted after seven years. Accordingly, the embedded derivative was recorded at fair value, and marked to market at each
reporting period with changes in value recorded in the Consolidated Statements of Operations. In conjunction with the IPO, the Class 1 Preferred Shares were converted into common shares. As a result, in fiscal 2010, we recorded an $8.4 million gain
due to the change in fair value. This was partially offset by a $1.0 million expense due to the change in value of certain warrants that are required to be recorded as a liability.

In fiscal 2009, a fair value gain of $100.2 million was recorded as a result of re-measuring the derivative instrument. The gain in
fiscal 2009 was primarily driven by the reduction in the fair value of our shares.

Recent Accounting Pronouncements

In October 2009, the FASB issued Accounting Standards Update (ASU) 2009-14, to address concerns raised by
constituents relating to the accounting for revenue arrangements that contain tangible products and software. The amendments in this ASU change the accounting model for revenue arrangements that include both tangible products and software
elements. Tangible products containing software components and non-software components that function together to deliver the tangible products essential functionality will no longer be within the scope of guidance in the
SoftwareRevenue Recognition Subtopic of the FASB ASC. The amendments in this ASU will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15,
2010. We are required to adopt this ASU in fiscal 2012. We are currently evaluating the effect that the adoption of this ASU will have on our consolidated financial statements.

In October 2009, the FASB issued ASU, 2009-13, to address the accounting for multiple-deliverable arrangements to enable vendors to
account for products or services (deliverables) separately rather than as a combined unit. This ASU provides amendments to the criteria in the Revenue RecognitionMultiple-Element Arrangements Subtopic of the FASB ASC. As a result of
those amendments, multiple-deliverable arrangements will be separated in more circumstances than under existing GAAP. The amendments in this ASU will be effective prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. We are required to adopt this ASU in fiscal 2012. We are currently evaluating the effect that the adoption of this ASU will have on our consolidated financial statements.

In July 2010, the FASB issued ASU 2010-20 to enhance disclosure about the credit quality of financing receivables and the related
allowance for credit losses. We adopted this ASU in the third quarter of fiscal 2011. As a result of this ASU, we provided additional disclosures surrounding our sales-type lease receivables and the related allowances within note 3 to the
consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04 to achieve common fair value measurement and
disclosure requirements in U.S. GAAP and International Financial Reporting Standards (IFRS). We are required to adopt this ASU in the fourth quarter of fiscal 2012. We do not expect to the adoption to have a material impact on our
consolidated financial statements.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Market risk is the risk of loss in our future earnings due to adverse changes in financial markets. We are exposed to market risk from changes in our common share price, foreign exchange rates and
interest rates. Inflation has not had a significant impact on our results of operations.

Equity Price Risk

Under our deferred share unit plan, adopted December 9, 2004, when a participant ceases to be an executive of
ours, the deferred share unit plan participant will receive a cash amount equal to the number of deferred share units in his or her account multiplied by the price of a common share as of the date the deferred share unit plan participant ceases to
be an executive of ours, or on a later date selected by the deferred share unit plan participant, which shall in any event be a date prior to the end of the following calendar year. The obligation to pay the cash amount is recorded as a liability in
our financial statements and is marked-to-market in each reporting



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period, with changes in the obligation recorded in our consolidated statement of operations. A $1.00 increase in our common share price would have decreased our net incomes for fiscal 2011 and
fiscal 2010 by less than $0.1 million.

Foreign Currency Risk

We are exposed to currency rate fluctuations related primarily to our future net cash flows from operations in Canadian dollars, British
pounds sterling and Euros. When possible, we use foreign currency forward contracts to minimize the short-term impact of currency fluctuations on foreign currency receivables, payables and intercompany balances. These contracts are not entered into
for speculative purposes, and are not treated as hedges for accounting purposes. Foreign currency contracts are recorded at fair market value. The fair value of our foreign currency forward contract is sensitive to changes in foreign currency
exchange rates. As of April 30, 2011, a 5.0% appreciation in the U.S. dollar against all currencies would have resulted in an additional unrealized loss of $0.4 million on those foreign currency forward contracts. As at April 30, 2010, a
5.0% appreciation in the U.S. dollar against all currencies would have resulted in an additional unrealized loss of $0.5 million on those foreign currency forward contracts.

Interest Rate Risk

In accordance with our corporate policy, cash
equivalent and short-term investment balances are primarily comprised of high-grade commercial paper and money market instruments with original maturity dates of less than three months. Due to the short-term maturity of these investments, we are not
subject to significant interest rate risk.

We are exposed to interest rate risk on our $30.0 million revolving credit
facility, which currently bears interest at a rate of LIBOR plus 3.25%. If the entire revolving credit facility were utilized, each adverse change in the LIBOR rate of 1.0% would currently result in an additional $0.3 million in interest
expense per year. At April 30, 2011, no amount was outstanding under the revolving facility.

We are exposed to interest
rate risk on $188.6 million outstanding on April 30, 2011 under our first lien term loan which matures on August 16, 2014 and bears interest at a rate of LIBOR plus 3.25% and $129.8 million outstanding on April 30, 2011 under our
second lien term loan which matures on August 16, 2015 and bears interest at a rate of LIBOR plus 7.0%.

The impact of
each adverse change in the LIBOR rate of 1.0% on the first lien term loan and the second lien term loan, in aggregate, would result in an additional $3.2 million in interest expense per year.

The interest rates on our obligations under capital leases are fixed and therefore not subject to interest rate risk.

Credit Risk

Our financial assets that are exposed to credit risk consist primarily of cash equivalents, accounts receivable and other receivables. Cash equivalents are invested in government and commercial paper with
investment grade credit rating. We are exposed to normal credit risk from customers. However, we have a large number of diverse customers to minimize concentrations of credit risk.

As part of the TotalSolution® program, we offer sales-type leases to our customers to fund their purchases. As of April 30, 2011, we had $59.5 million (April 30, 2010$72.3 million)
of sales-type lease receivables, net of reserves for uncollectible lease repayments, on our balance sheet. We regularly sell the net rental streams from sales-type leases to financial institutions. Recourse on the sold rental payments is
contractually limited to the lesser of (i) the net credit losses in a given period and (ii) a percentage of the sum of the portfolio balance for a specific portfolio of sold leases at the beginning of the period plus the purchase price
paid for leases acquired during the given period. As of April 30, 2010 and 2011, we were subject to limited recourse on rental streams sold to financial institutions with such recourse in any year varying from 9.9% to 15.0% of the net book
value of sold rental streams. We maintain reserves against our estimate of potential recourse for the balance of sales-type leases and for the balance of sold rental payments remaining unbilled. Reserve levels are established based on portfolio
size, loss experience, levels of past due accounts and periodic detailed reviews of the portfolio. The aggregate reserve for uncollectible lease payments and recourse liability represents the reserve for the entire lease portfolio. We believe our
current reserve levels are sufficient given our historic loss rates. The following table provides detail on the total net balances in sales-type leases:



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|                                                                                                                                                                      |  |               |       |  |               |   |       |               |  |   |       | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----- |  | ------------- | - | ----- | ------------- |  | - | ----- | 
|                                                                                                                                                                      |  | April 30,2011 |       |  | April 30,2010 |   |       | April 30,2009 | 
|                                                                                                                                                                      |  | millions      |      
|Lease balances included in consolidated accounts receivable, net of allocated allowances of $2.9 (April
2010$4.1, April 2009$3.3)                                   |  | $             | 9.4   |  |               | $ | 9.3   |               |  | $ | 10.5  | 
|Net investment in Sales-Type Leases:                                                                                                                                  |  |               |       |  |               |   |       |               |  |   |       | 
|Current portion, net of allowances of $0.9 (April 2010$1.5, April 2009$1.5)                                                                                         |  |               | 20.0  |  |               |   | 33.8  |               |  |   | 30.2  | 
|Long-term portion, includes residual amounts of $6.0 (April 2010$4.9, April 2009$2.7); net of allowances of $1.3
(April 2010$1.3, April 2009$1.4)                 |  |               | 30.1  |  |               |   | 29.2  |               |  |   | 29.2  | 
|                                                                                                                                                                      |  |               |       |  |               |   |       |               |  |   |       | 
|Total investment in Sales-Type Leases, net of allowances of $5.1 (April 2010$6.9, April
2009$6.2)                                                                   |  |               | 59.5  |  |               |   | 72.3  |               |  |   | 69.9  | 
|Sold rental payments remaining unbilled (subject to limited recourse provisions), net of lease recourse liability reserves of
$7.1 (April 2010$7.9, April 2009$9.9) |  |               | 158.8 |  |               |   | 177.0 |               |  |   | 205.8 | 
|                                                                                                                                                                      |  |               |       |  |               |   |       |               |  |   |       | 
|Total balance of sales-type leases and sold rental payments remaining unbilled, net of allowances and reserves                                                        |  | $             | 218.3 |  |               | $ | 249.3 |               |  | $ | 275.7 | 
|                                                                                                                                                                      |  |               |       |  |               |   |       |               |  |   |       | 
|Total allowances and reserves for entire lease portfolio (including lease recourse liabilities)                                                                       |  | $             | 12.2  |  |               | $ | 14.8  |               |  | $ | 16.1  | 



|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

Management is responsible for preparation of the Consolidated Financial Statements and other related financial information included in this Report. The Consolidated Financial Statements have been prepared
in conformity with accounting principles generally accepted in the United States, incorporating managements reasonable estimates and judgments, where applicable.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



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|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                                            |  | Page |   
|                                                                                                                                                            | 
|Reports of Independent Registered Chartered Accountants                                                                                                     |  |      | 56 | 
|                                                                                                                                                            | 
|Consolidated Balance SheetsYears ended April 30, 2011 and April 30,
2010                                                                                   |  |      | 58 | 
|                                                                                                                                                            | 
|Consolidated Statements of OperationsYears ended April 30, 2011, April 
30, 2010 and April 30, 2009                                                        |  |      | 59 | 
|                                                                                                                                                            | 
|Consolidated Statements of Shareholders Equity (Deficiency) and Comprehensive Income (Loss)Years
 ended April 30, 2011, April 30, 2010 and April 30, 2009 |  |      | 60 | 
|                                                                                                                                                            | 
|Consolidated Statements of Cash FlowsYears ended April 30, 2011, April 
30, 2010 and April 30, 2009                                                        |  |      | 61 | 
|                                                                                                                                                            | 
|Notes to the Consolidated Financial Statements                                                                                                              |  |      | 62 | 
|                                                                                                                                                            | 
|Schedule II of the Consolidated Financial Statements                                                                                                        |  |      | 95 | 



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Report of Independent Registered Chartered Accountants

To the Board of Directors and Shareholders of Mitel Networks Corporation

We have audited the accompanying consolidated balance sheets of Mitel Networks Corporation and its subsidiaries (the Company) as of April 30, 2011 and 2010, and the related consolidated
statements of operations, shareholders equity (deficiency) and comprehensive income (loss) and cash flows for each of the three years in the period ended April 30, 2011. Our audits also included the financial statement schedule listed in
the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
position of Mitel Networks Corporation and subsidiaries as of April 30, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 2011, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Companys internal control over financial reporting as of April 30, 2011, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated July 1, 2011 expressed an unqualified opinion on the Companys internal control over financial reporting.

/s/ Deloitte & Touche LLP

Independent Registered Chartered Accountants

Licensed Public Accountants

Ottawa, Canada

July 1, 2011



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Report of Independent Registered Chartered Accountants

To the Board of Directors and Shareholders of Mitel Networks Corporation

We have audited the internal control over financial reporting of Mitel Networks Corporation and subsidiaries (the Company) as of April 30, 2011, based on the criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Companys management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons
performing similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or
fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2011, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended April 30, 2011 of the Company and our report dated July 1, 2011 expressed an unqualified opinion on those financial
statements and financial statement schedule.

/s/ Deloitte & Touche LLP

Independent Registered Chartered Accountants

Licensed Public Accountants

Ottawa, Canada

July 1, 2011



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MITEL NETWORKS CORPORATION

(incorporated under the laws of Canada)

CONSOLIDATED BALANCE SHEETS

(in U.S. dollars, millions)



|                                                                                                                                                  |  |               |        |   |               |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | - | ------------- | - | ------ | -
|                                                                                                                                                  |  | April 30,2011 |        |   | April 30,2010 |  
|ASSETS                                                                                                                                            |  |               |        |   |               |   |        |  
|Current assets:                                                                                                                                   |  |               |        |   |               |   |        |  
|Cash and cash equivalents                                                                                                                         |  | $             | 73.9   |   |               | $ | 76.6   |  
|Accounts receivable (net of allowance for doubtful accounts of $7.3 and $11.9, respectively)                                                      |  |               | 127.5  |   |               |   | 121.5  |  
|Sales-type lease receivables (net) (note 3)                                                                                                       |  |               | 20.0   |   |               |   | 33.8   |  
|Inventories (net) (note 4)                                                                                                                        |  |               | 27.1   |   |               |   | 26.7   |  
|Deferred tax asset (note 22)                                                                                                                      |  |               | 5.9    |   |               |   | 15.0   |  
|Other current assets (note 5)                                                                                                                     |  |               | 37.1   |   |               |   | 46.5   |  
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|                                                                                                                                                  |  |               | 291.5  |   |               |   | 320.1  |  
|Non-current portion of sales-type lease receivables (net) (note 3)                                                                                |  |               | 30.1   |   |               |   | 29.2   |  
|Deferred tax asset (note 22)                                                                                                                      |  |               | 91.1   |   |               |   | 5.0    |  
|Property and equipment (net) (note 6)                                                                                                             |  |               | 15.7   |   |               |   | 17.0   |  
|Identifiable intangible assets (net) (note 7)                                                                                                     |  |               | 100.6  |   |               |   | 123.1  |  
|Goodwill (note 8)                                                                                                                                 |  |               | 134.5  |   |               |   | 134.5  |  
|Other non-current assets                                                                                                                          |  |               | 8.7    |   |               |   | 12.1   |  
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|                                                                                                                                                  |  | $             | 672.2  |   |               | $ | 641.0  |  
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIENCY)                                                                                                 |  |               |        |   |               |   |        |  
|Current liabilities:                                                                                                                              |  |               |        |   |               |   |        |  
|Accounts payable and accrued liabilities (note 9)                                                                                                 |  | $             | 106.8  |   |               | $ | 107.7  |  
|Due to related parties (note 10)                                                                                                                  |  |               | 0.2    |   |               |   | 7.2    |  
|Current portion of deferred revenue                                                                                                               |  |               | 40.0   |   |               |   | 46.2   |  
|Current portion of long-term debt (note 11)                                                                                                       |  |               | 16.4   |   |               |   | 4.1    |  
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|                                                                                                                                                  |  |               | 163.4  |   |               |   | 165.2  |  
|Long-term debt (note 11)                                                                                                                          |  |               | 306.9  |   |               |   | 345.7  |  
|Lease recourse liability (note 3)                                                                                                                 |  |               | 7.1    |   |               |   | 7.9    |  
|Long-term portion of deferred revenue                                                                                                             |  |               | 13.2   |   |               |   | 14.1   |  
|Deferred tax liability (note 22)                                                                                                                  |  |               | 50.5   |   |               |   | 70.9   |  
|Pension liability (note 23)                                                                                                                       |  |               | 61.4   |   |               |   | 68.1   |  
|Other non-current liabilities                                                                                                                     |  |               | 20.2   |   |               |   | 24.0   |  
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|                                                                                                                                                  |  |               | 622.7  |   |               |   | 695.9  |  
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|Commitments, guarantees and contingencies (notes 12 and 13)                                                                                       |  |               |        |   |               |   |        |  
|Shareholders equity (deficiency):                                                                                                                |  |               |        |   |               |   |        |  
|Common shares, without par valueunlimited shares authorized, issued and outstanding: 53.1 at April 30, 2011 and 52.8
at April 30, 2010 (note 14) |  |               | 805.5  |   |               |   | 802.8  |  
|Preferred sharesunlimited shares authorized, nil issued and outstanding (note 15)                                                                |  |               |       |   |               |   |       |  
|Warrants (note 16)                                                                                                                                |  |               | 55.6   |   |               |   | 55.6   |  
|Additional paid-in capital                                                                                                                        |  |               | 10.8   |   |               |   | 7.7    |  
|Accumulated deficit                                                                                                                               |  |               | (741.8 | ) |               |   | (829.9 | )
|Accumulated other comprehensive loss                                                                                                              |  |               | (80.6  | ) |               |   | (91.1  | )
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|                                                                                                                                                  |  |               | 49.5   |   |               |   | (54.9  | )
|                                                                                                                                                  |  |               |        |   |               |   |        |  
|                                                                                                                                                  |  | $             | 672.2  |   |               | $ | 641.0  |  
|                                                                                                                                                  |  |               |        |   |               |   |        |  

(The accompanying notes are an integral part of these Consolidated Financial Statements)



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MITEL NETWORKS CORPORATION

(incorporated under the laws of Canada)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in U.S. dollars, millions, except
per share amounts)



|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|------------------------------------------------------------------------------ |  | ------------------------ | ----- | - | ------------------------ | - | ----- | ------------------------ |  | - | ------ | -
|                                                                               |  | Year EndedApril 30, 2011 |       |   | Year EndedApril 30, 2010 |   |       | Year EndedApril 30, 2009 | 
|Revenues:                                                                      |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Telecommunications                                                             |  | $                        | 570.8 |   |                          | $ | 572.4 |                          |  | $ | 662.0  |  
|Network services                                                               |  |                          | 78.9  |   |                          |   | 75.5  |                          |  |   | 73.1   |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|                                                                               |  |                          | 649.7 |   |                          |   | 647.9 |                          |  |   | 735.1  |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Cost of revenues:                                                              |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Telecommunications                                                             |  |                          | 294.8 |   |                          |   | 291.1 |                          |  |   | 348.9  |  
|Network services                                                               |  |                          | 43.4  |   |                          |   | 42.9  |                          |  |   | 41.7   |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|                                                                               |  |                          | 338.2 |   |                          |   | 334.0 |                          |  |   | 390.6  |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Gross margin                                                                   |  |                          | 311.5 |   |                          |   | 313.9 |                          |  |   | 344.5  |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Expenses:                                                                      |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Selling, general and administrative                                            |  |                          | 221.5 |   |                          |   | 211.3 |                          |  |   | 248.5  |  
|Research and development                                                       |  |                          | 54.1  |   |                          |   | 51.7  |                          |  |   | 60.1   |  
|Special charges and restructuring costs (note 18)                              |  |                          | 15.5  |   |                          |   | 5.2   |                          |  |   | 23.3   |  
|Loss (gain) on litigation settlement                                           |  |                          | 1.0   |   |                          |   | (5.5  | )                        |  |   |       |  
|Impairment of goodwill (note 8)                                                |  |                          |      |   |                          |   |      |                          |  |   | 284.5  |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|                                                                               |  |                          | 292.1 |   |                          |   | 262.7 |                          |  |   | 616.4  |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Operating income (loss)                                                        |  |                          | 19.4  |   |                          |   | 51.2  |                          |  |   | (271.9 | )
|Interest expense                                                               |  |                          | (20.0 | ) |                          |   | (29.8 | )                        |  |   | (40.1  | )
|Debt retirement costs, including write-off of related deferred financing costs |  |                          | (0.6  | ) |                          |   | (1.0  | )                        |  |   |       |  
|Fair value adjustment on derivative instruments (note 19)                      |  |                          | 1.0   |   |                          |   | 7.4   |                          |  |   | 100.2  |  
|Other income (expense), net                                                    |  |                          | 0.8   |   |                          |   | 0.9   |                          |  |   | (0.8   | )
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Income (loss) before income taxes                                              |  |                          | 0.6   |   |                          |   | 28.7  |                          |  |   | (212.6 | )
|Current income tax recovery (expense) (note 22)                                |  |                          | (8.9  | ) |                          |   | (4.1  | )                        |  |   | 0.7    |  
|Deferred income tax recovery (expense) (note 22)                               |  |                          | 96.4  |   |                          |   | 12.6  |                          |  |   | 18.4   |  
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Net income (loss)                                                              |  | $                        | 88.1  |   |                          | $ | 37.2  |                          |  | $ | (193.5 | )
|                                                                               |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Net income (loss) attributable per common share (note 17):                     |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Basic                                                                          |  | $                        | 1.66  |   |                          | $ | (7.30 | )                        |  | $ | (16.38 | )
|Diluted                                                                        |  | $                        | 1.57  |   |                          | $ | (7.30 | )                        |  | $ | (16.38 | )
|Weighted-average number of common shares outstanding:                          |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Basic                                                                          |  |                          | 52.9  |   |                          |   | 14.7  |                          |  |   | 14.3   |  
|Diluted                                                                        |  |                          | 56.0  |   |                          |   | 14.7  |                          |  |   | 14.3   |  

(The accompanying notes are an integral part of these Consolidated Financial Statements)



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MITEL NETWORKS CORPORATION

(incorporated under the laws of Canada)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIENCY)

AND
COMPREHENSIVE INCOME (LOSS)

(in U.S. dollars, millions)



|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|---------------------------------------------------- |  | ------------- | ---- | --- | ------ | - | ----- | ------------------------ |  | - | ------------------ | - |  | --------------------------------- | ---- | - | ------------------------------------ | - | ------ | - |  | - | ----- | - |  | - | ------ | -
|                                                     |  | Common Shares |      |     |        |   |       | AdditionalPaid-inCapital |  |   | AccumulatedDeficit |   |  | AccumulatedOtherComprehensiveLoss |      |   | TotalShareholdersEquity(Deficiency) |  
|                                                     |  | Shares        |      |     | Amount |   |       | Warrants                 |  |   |                    |   | 
|Balance at April 30, 2008                            |  |               | 14.3 |     |        | $ | 277.1 |                          |  | $ | 56.7               |   |  | $                                 | 1.9  |   |                                      | $ | (495.4 | ) |  | $ | (85.0 | ) |  | $ | (244.7 | )
|Expired warrants                                     |  |               |     |     |        |   |      |                          |  |   | (0.1               | ) |  |                                   | 0.1  |   |                                      |   |       |   |  |   |      |   |  |   |       |  
|Share purchase loan repayments                       |  |               |     | (1) |        |   | 0.7   |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   |      |   |  |   | 0.7    |  
|Stock-based compensation                             |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   | 2.4  |   |                                      |   |       |   |  |   |      |   |  |   | 2.4    |  
|Accretion of interest on redeemable preferred shares |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | (41.0  | ) |  |   |      |   |  |   | (41.0  | )
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|                                                     |  |               | 14.3 |     |        | $ | 277.8 |                          |  | $ | 56.6               |   |  | $                                 | 4.4  |   |                                      | $ | (536.4 | ) |  | $ | (85.0 | ) |  | $ | (282.6 | )
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Net loss                                             |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | (193.5 | ) |  |   |      |   |  |   | (193.5 | )
|Other comprehensive income (loss):                   |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Unrealized derivative gain on cash flow hedges       |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | 1.9    |   |  |   |      |   |  |   | 1.9    |  
|Foreign currency translation adjustments             |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   | (12.3 | ) |  |   | (12.3  | )
|Pension liability adjustments                        |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   | 56.4  |   |  |   | 56.4   |  
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Comprehensive income (loss)                          |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | (191.6 | ) |  |   | 44.1  |   |  |   | (147.5 | )
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Balance at April 30, 2009                            |  |               | 14.3 |     |        | $ | 277.8 |                          |  | $ | 56.6               |   |  | $                                 | 4.4  |   |                                      | $ | (728.0 | ) |  | $ | (40.9 | ) |  | $ | (430.1 | )
|Adoption of the ASC Derivatives and Hedging Topic    |  |               |     |     |        |   |      |                          |  |   | (1.0               | ) |  |                                   |     |   |                                      |   | 1.0    |   |  |   |      |   |  |   |       |  
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Balance at May 1, 2009                               |  |               | 14.3 |     |        | $ | 277.8 |                          |  | $ | 55.6               |   |  | $                                 | 4.4  |   |                                      | $ | (727.0 | ) |  | $ | (40.9 | ) |  | $ | (430.1 | )
|Exercise of stock options                            |  |               | 0.1  |     |        |   | 0.1   |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   |      |   |  |   | 0.1    |  
|Share purchase loan repayments                       |  |               |     |     |        |   | 0.2   |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   |      |   |  |   | 0.2    |  
|Stock-based compensation                             |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   | 3.3  |   |                                      |   |       |   |  |   |      |   |  |   | 3.3    |  
|Issuance of common shares through public offering    |  |               | 10.5 |     |        |   | 137.0 |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   |      |   |  |   | 137.0  |  
|Costs associated with public offering                |  |               |     |     |        |   | (6.3  | )                        |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   |      |   |  |   | (6.3   | )
|Accretion of interest on redeemable preferred shares |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | (48.3  | ) |  |   |      |   |  |   | (48.3  | )
|Amended conversion of redeemable preferred shares    |  |               |     |     |        |   | 96.2  |                          |  |   |                   |   |  |                                   |     |   |                                      |   | (96.2  | ) |  |   |      |   |  |   |       |  
|Conversion of redeemable preferred shares            |  |               | 27.9 |     |        |   | 297.8 |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   |      |   |  |   | 297.8  |  
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|                                                     |  |               | 52.8 |     |        | $ | 802.8 |                          |  | $ | 55.6               |   |  | $                                 | 7.7  |   |                                      | $ | (871.5 | ) |  | $ | (40.9 | ) |  | $ | (46.3  | )
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Net income                                           |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | 37.2   |   |  |   |      |   |  |   | 37.2   |  
|Other comprehensive income (loss):                   |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Unrealized derivative gain on cash flow hedges       |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | 4.4    |   |  |   |      |   |  |   | 4.4    |  
|Foreign currency translation adjustments             |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   | (2.2  | ) |  |   | (2.2   | )
|Pension liability adjustments                        |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   | (48.0 | ) |  |   | (48.0  | )
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Comprehensive income (loss)                          |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | 41.6   |   |  |   | (50.2 | ) |  |   | (8.6   | )
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Balance at April 30, 2010                            |  |               | 52.8 |     |        | $ | 802.8 |                          |  | $ | 55.6               |   |  | $                                 | 7.7  |   |                                      | $ | (829.9 | ) |  | $ | (91.1 | ) |  | $ | (54.9  | )
|Exercise of stock options                            |  |               | 0.3  |     |        |   | 2.7   |                          |  |   |                   |   |  |                                   | (1.4 | ) |                                      |   |       |   |  |   |      |   |  |   | 1.3    |  
|Stock-based compensation                             |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   | 4.5  |   |                                      |   |       |   |  |   |      |   |  |   | 4.5    |  
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|                                                     |  |               | 53.1 |     |        | $ | 805.5 |                          |  | $ | 55.6               |   |  | $                                 | 10.8 |   |                                      | $ | (829.9 | ) |  | $ | (91.1 | ) |  | $ | (49.1  | )
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Net income                                           |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | 88.1   |   |  |   |      |   |  |   | 88.1   |  
|Other comprehensive income (loss):                   |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Foreign currency translation adjustments             |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   | (2.4  | ) |  |   | (2.4   | )
|Pension liability adjustments                        |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   |       |   |  |   | 12.9  |   |  |   | 12.9   |  
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Comprehensive income (loss)                          |  |               |     |     |        |   |      |                          |  |   |                   |   |  |                                   |     |   |                                      |   | 88.1   |   |  |   | 10.5  |   |  |   | 98.6   |  
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  
|Balance at April 30, 2011                            |  |               | 53.1 |     |        | $ | 805.5 |                          |  | $ | 55.6               |   |  | $                                 | 10.8 |   |                                      | $ | (741.8 | ) |  | $ | (80.6 | ) |  | $ | 49.5   |  
|                                                     |  |               |      |     |        |   |       |                          |  |   |                    |   |  |                                   |      |   |                                      |   |        |   |  |   |       |   |  |   |        |  



|(1) | Change in shares was less than 0.1 for the period.
|--- | --------------------------------------------------

(The accompanying notes are an integral part of these Consolidated Financial Statements)



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MITEL NETWORKS CORPORATION

(incorporated under the laws of Canada)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in U.S. dollars, millions)



|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------ | ----- | - | ------------------------ | - | ----- | ------------------------ |  | - | ------ | -
|                                                                                                   |  | Year EndedApril 30, 2011 |       |   | Year EndedApril 30, 2010 |   |       | Year EndedApril 30, 2009 | 
|CASH PROVIDED BY                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Operating activities:                                                                              |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Net income (loss)                                                                                  |  | $                        | 88.1  |   |                          | $ | 37.2  |                          |  | $ | (193.5 | )
|Adjustments to reconcile net income (loss) to net cash from operating activities:                  |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Amortization and depreciation                                                                      |  |                          | 34.0  |   |                          |   | 34.4  |                          |  |   | 38.0   |  
|Fair value adjustment on derivative instruments                                                    |  |                          | (1.0  | ) |                          |   | (7.4  | )                        |  |   | (100.2 | )
|Goodwill impairment                                                                                |  |                          |      |   |                          |   |      |                          |  |   | 284.5  |  
|Accretion of interest on litigation settlement obligation                                          |  |                          | 0.6   |   |                          |   | 0.9   |                          |  |   | 1.2    |  
|Stock-based compensation                                                                           |  |                          | 4.7   |   |                          |   | 3.3   |                          |  |   | 2.4    |  
|Deferred income taxes                                                                              |  |                          | (96.4 | ) |                          |   | (11.2 | )                        |  |   | (18.2  | )
|Loss on disposal of assets                                                                         |  |                          |      |   |                          |   | 0.9   |                          |  |   | 1.4    |  
|Investment impairment                                                                              |  |                          |      |   |                          |   | 0.9   |                          |  |   |       |  
|Non-cash portion of debt retirement costs, including write-off of related deferred financing costs |  |                          | 0.2   |   |                          |   | 0.8   |                          |  |   |       |  
|Unrealized foreign exchange loss (gain)                                                            |  |                          |      |   |                          |   | 1.6   |                          |  |   | (0.8   | )
|Non-cash movements in provisions                                                                   |  |                          | (4.4  | ) |                          |   | (6.1  | )                        |  |   | (6.1   | )
|Change in non-cash operating assets and liabilities, net (note 20)                                 |  |                          | 6.7   |   |                          |   | (20.9 | )                        |  |   | 0.1    |  
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Net cash provided by operating activities                                                          |  |                          | 32.5  |   |                          |   | 34.4  |                          |  |   | 8.8    |  
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Investing activities:                                                                              |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Additions to property and equipment and intangible assets                                          |  |                          | (6.2  | ) |                          |   | (7.1  | )                        |  |   | (6.6   | )
|Decrease (increase) in restricted cash                                                             |  |                          | 0.9   |   |                          |   | 1.2   |                          |  |   | (1.2   | )
|Net realized foreign exchange loss (gain) on hedging activities                                    |  |                          |      |   |                          |   | (0.6  | )                        |  |   | 1.4    |  
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Net cash used in investing activities                                                              |  |                          | (5.3  | ) |                          |   | (6.5  | )                        |  |   | (6.4   | )
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Financing activities:                                                                              |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Net increase (decrease) in bank indebtedness                                                       |  |                          |      |   |                          |   | (30.1 | )                        |  |   | 17.7   |  
|Repayment of capital lease liabilities                                                             |  |                          | (2.0  | ) |                          |   | (2.5  | )                        |  |   | (2.7   | )
|Repayment of long-term debt                                                                        |  |                          | (27.0 | ) |                          |   | (74.1 | )                        |  |   | (0.5   | )
|Payment of litigation settlement obligation                                                        |  |                          | (3.7  | ) |                          |   | (3.7  | )                        |  |   | (3.7   | )
|Proceeds from issuance of common shares                                                            |  |                          | 1.3   |   |                          |   | 137.0 |                          |  |   |       |  
|Share issue costs                                                                                  |  |                          |      |   |                          |   | (6.3  | )                        |  |   |       |  
|Proceeds from repayments of employee share purchase loans                                          |  |                          |      |   |                          |   | 0.2   |                          |  |   | 0.7    |  
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Net cash provided by (used in) financing activities                                                |  |                          | (31.4 | ) |                          |   | 20.5  |                          |  |   | 11.5   |  
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Effect of exchange rate changes on cash and cash equivalents                                       |  |                          | 1.5   |   |                          |   | (0.2  | )                        |  |   | (5.0   | )
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Increase (decrease) in cash and cash equivalents                                                   |  |                          | (2.7  | ) |                          |   | 48.2  |                          |  |   | 8.9    |  
|Cash and cash equivalents, beginning of year                                                       |  |                          | 76.6  |   |                          |   | 28.4  |                          |  |   | 19.5   |  
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  
|Cash and cash equivalents, end of year                                                             |  | $                        | 73.9  |   |                          | $ | 76.6  |                          |  | $ | 28.4   |  
|                                                                                                   |  |                          |       |   |                          |   |       |                          |  |   |        |  

(The accompanying notes are an integral part of these Consolidated Financial Statements)



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MITEL NETWORKS CORPORATION

(incorporated under the laws of Canada)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in U.S. dollars,
millions, except per share amounts)

1. BACKGROUND AND NATURE OF OPERATIONS

Mitel Networks Corporation (the Company) is a leading provider of integrated communications solutions and services for
business customers. Through direct and indirect channels as well as strategic technology partnerships, the Company currently serves a wide range of industry vertical markets, including education, government, healthcare, hospitality and retail in the
United States (U.S.), Europe, Middle East and Africa, Canada, Caribbean and Latin America, and Asia-Pacific regions.

The Company was incorporated under the Canada Business Corporations Acton January 12, 2001. On February 16, 2001, the Company acquired the Mitel name and substantially all of
the assets (other than Canadian real estate) and subsidiaries of the Communications Systems Division of Zarlink Semiconductor Inc., formerly Mitel Corporation. On August 16, 2007, the Company acquired Inter-Tel (Delaware), Incorporated
(Inter-Tel), a full-service provider of business communications solutions.

Initial public offering and
related transactions

In April 2010, in connection with the Companys initial public offering (IPO),
the Company sold 10.5 million common shares at the IPO price of $14.00 per share. The Company received net proceeds of $130.7 after payments for underwriting commissions of $10.3 and other associated costs of $6.3. The proceeds were used to
repay $30.0 outstanding under the revolving credit facility and to make a partial repayment of $72.0 on the first lien term loan, with the remainder used for general corporate purposes. Concurrently with the IPO, the Companys Class 1
Preferred Shareholders converted their Class 1 Preferred Shares into common shares. The 0.3 million Class 1 Preferred Shares, with a value of $1,000 per share, plus accretion, were converted into 27.9 million common shares. Notes
14 and 15 contain further details on the Companys share capital. Note 11 describes the Companys credit agreements.

2.
ACCOUNTING POLICIES

a) Basis of Presentation

These Consolidated Financial Statements have been prepared by the Company in accordance with United States generally accepted accounting
principles (GAAP) and the rules and regulations of the U.S. Securities and Exchange Commission (the SEC) for the preparation of financial statements.

b) Basis of Consolidation

The Consolidated Financial Statements
include the accounts of the Company and of its majority-owned subsidiary companies. Intercompany transactions and balances have been eliminated on consolidation.

c) Use of Estimates

The preparation of the Companys
Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods.

Estimates
and assumptions are used for, but not limited to, the determination of the allowance for doubtful accounts, inventory allowances, special charges, contingencies, other accruals, lease recourse liability, warranty costs, sales returns, pension costs,
taxes, goodwill and impairment assessments, purchase price allocation, estimated useful lives of intangible assets and equipment, asset valuations, and the valuation of stock options, warrants and derivatives. Estimates and assumptions are reviewed
periodically and the effects of revisions are reflected in the Consolidated Financial Statements in the period that they are determined to be necessary. In the opinion of management, these Consolidated Financial Statements reflect all adjustments
necessary to present fairly the results for the periods presented. Actual results and outcomes could differ from these estimates.



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d) Foreign Currency Translation

The parent companys functional currency is the U.S. dollar and the Consolidated Financial Statements of the Company are prepared
with the U.S. dollar as the reporting currency using the current rate method. Assets and liabilities of foreign operations are translated from foreign currencies into U.S. dollars at the exchange rates in effect at the balance sheet date while
revenue and expense items are translated at the weighted-average exchange rates for the period. The resulting unrealized gains and losses have been included as part of the cumulative foreign currency translation adjustment which is reported as part
of other comprehensive income.

Monetary assets and liabilities denominated in currencies foreign to the functional currency
of each entity are translated into the functional currency using exchange rates in effect at the balance sheet date. All other assets and liabilities are translated at the exchange rates prevailing at the date the assets were acquired or the
liabilities incurred. Revenue and expense items are translated at the average exchange rate for the period, except for amortization and depreciation which are translated at historical rates. Foreign exchange gains and losses resulting from the
translation of these accounts are included in the determination of net income for the period. During fiscal 2011, the Company recorded a foreign exchange loss of $0.7 (2010$0.3; 2009$3.2).

e) Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, title and risk of loss have been transferred to the customer, the fee is fixed or determinable, and
collection is reasonably assured.

Software revenue is recognized when persuasive evidence of an arrangement exists, delivery
has occurred in accordance with the terms and conditions of the contract, the fee is fixed or determinable, and collection is reasonably assured. For software arrangements involving multiple elements, revenue is allocated to each element based on
the relative fair value or the residual method, as applicable, and using vendor specific objective evidence of fair value, which is based on prices charged when the element is sold separately. Revenue related to post-contract support
(PCS), including technical support and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term for contracts that are greater than one year. For contracts where the post contract period is one year or
less, the costs are deemed insignificant, and the unspecified software upgrades are expected to be and historically have been infrequent, revenue is recognized together with the initial licensing fee and the estimated costs are accrued.

In a transaction containing a sales-type lease, hardware revenues are recognized at the present value of the payments allocated to the
hardware lease element at the time of system sale in accordance with the Leases Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). With respect to the software lease elements
included in the sales-type lease, which are comprised of software, including applications, upgrades, software support, and embedded software, prior to the Company establishing vendor specific objective evidence of fair value (VSOE) for
these elements, revenues from the software elements were deferred and recognized over the period of support in accordance with the Software Topic of the FASB ASC. Where the Company has now established VSOE for these elements, revenue is recognized
upon delivery, based on their VSOE, in accordance with the Software Topic of the FASB ASC. Revenues from sales-type leases are allocated between hardware and software elements based on managements best estimate of relative fair values.

Indirect channels

The Company makes sales to distributors and resellers based on contracts with terms ranging from one to three years. For products sold through these distribution channels, revenue is recognized at the
time the risk of loss is transferred to distributors and resellers according to contractual terms and if all contractual obligations have been satisfied. These arrangements usually involve multiple elements, including post-contract technical support
and training. Costs related to insignificant technical support obligations, including second-line telephone support for certain products, are accrued. For other technical support and training obligations, revenue from product sales is allocated to
each element based on vendor specific objective evidence of fair values, generally representing the prices charged when the element is sold separately, with any discount allocated proportionately. Revenue attributable to undelivered elements is
deferred and recognized upon performance or ratably over the contract period.

The Companys standard warranty period
extends fifteen months from the date of sale and extended warranty periods are offered on certain products. Sales to the Companys resellers do not provide for return or price protection rights, while sales to distributors provide for such
rights. Product return rights are typically limited to a percentage of sales over a maximum three month period. A reserve for estimated product returns and price protection rights based on past experience is recorded as a reduction of sales at the
time product revenue is recognized. The Company offers various cooperative marketing programs to assist its distribution channels to market the Companys products. Allowances for such programs are recorded as marketing expenses at the time of
shipment based on contract terms and prior claims experience.



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Direct channels

The Company sells products, including installation and related maintenance and support services, directly to customers. For products sold
through direct channels, revenue is recognized at the time of delivery and at the time risk of loss is transferred, based on prior experience of successful compliance with customer specifications. Revenue from installation is recognized as services
are delivered and when contractual obligations, including customer acceptance, have been satisfied. Revenue is also derived from professional service contracts with terms that range from two to six weeks for standard solutions and for longer periods
for customized solutions. Revenue from customer support, professional services and maintenance contracts is recognized ratably over the contractual period, generally one year. Billings in advance of services are included in deferred revenue. Revenue
from installation services provided in advance of billing is included in unbilled accounts receivable.

Certain arrangements
with direct customers provide for customer support and maintenance services extending twelve months from the date of installation at no charge. Customer support and maintenance contracts are also sold separately. When customer support or maintenance
services are provided at no charge, such amounts are unbundled from the product and installation revenue at their fair market value based on the prices charged when the element is sold separately and recognized ratably over the contract period.
Consulting and training revenues are recognized as services are performed.

The Company provides long-term outsourcing
services of communication systems. Under these arrangements, systems management services (Managed Services) and communication equipment is provided to customers for terms that typically range from one to ten years. Revenue from Managed
Services is recognized ratably over the contract period. The Company retains title and risk of loss associated with the equipment utilized in the provision of the Managed Services. Accordingly, the equipment is capitalized as part of property and
equipment and is amortized on a straight-line basis to cost of sales, over the contract period.

Resale of long distance

Revenue is recognized from long distance resale services as services are provided.

Sales-type leases

For sales-type lease accounting, the Company follows guidance provided by the Leases and the Transfers and Servicing Topics of the FASB ASC. The Company records the discounted present values of minimum
rental payments under sales-type leases as sales, net of provisions for continuing administration and other expenses over the lease period. The Company records the lease sales at the time of system sale and installation pursuant to the Revenue
Recognition Topic of the FASB ASC, for sales to end user customers, and upon receipt of the executed lease documents. The costs of systems installed under these sales-type leases are recorded as costs of sales. The net rental streams are sold to
funding sources on a regular basis with the income streams discounted by prevailing like-term rates at the time of sale. Gains or losses resulting from the sale of net rental payments from such leases are recorded as net sales within
Telecommunications on the Consolidated Statements of Operations. The Company establishes and maintains reserves against potential recourse following the re-sales based upon historical loss experience, past due accounts and specific account analysis.
The allowance for uncollectible minimum lease payments and recourse liability at the end of the period represents reserves against the entire lease portfolio. Management reviews the adequacy of the allowance on a regular basis and adjusts the
allowance as required. These reserves are either netted in the accounts receivable, current and long-term components of sales-type lease receivables on the Consolidated Balance Sheets, or included in lease recourse liability on the Consolidated
Balance Sheets for the estimated recourse liability for lease streams sold.

f) Cash and Cash Equivalents

Cash and cash equivalents are highly liquid investments that have terms to maturity of three months or less at the
time of acquisition, and generally consist of cash on hand and marketable securities. Cash equivalents are carried at cost, which approximates their fair value. At April 30, 2011, the Company had cash of $51.4 (2010$46.6) and cash
equivalents of $22.5 (2010$30.0).

g) Restricted Cash

Restricted cash represents cash provided to support letters of credit outstanding and to support certain of the Companys credit
facilities. Restricted cash is presented within other current assets on the consolidated balance sheets.



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h) Allowance for Doubtful Accounts

The allowance for doubtful accounts represents the Companys best estimate of probable losses that may result from the inability of
its customers to make required payments. Additional reserves or allowances for doubtful accounts are recorded for sales-type leases, discussed in part e) of this note under Sales-type leases. Reserves are established and maintained against estimated
losses based upon historical loss experience, past due accounts, and specific account analysis. The Company regularly reviews the level of allowances for doubtful accounts and adjusts the level of allowances as needed. Consideration is given to
accounts in excess of 90 days old as well as other risks in the more current portion of the accounts.

i)
Inventories

Inventories are valued at the lower of cost (calculated on a first-in, first-out basis) or net realizable
value for finished goods, and current replacement cost for raw materials. The Company provides inventory allowances based on estimated excess and obsolete inventories.

j) Property and Equipment

Property and equipment are initially
recorded at cost. Depreciation is provided on a straight-line basis over the anticipated useful lives of the assets. Estimated lives range from three to ten years for equipment. Amortization of leasehold improvements is computed using the shorter of
the remaining lease terms or five years. The Company performs reviews for the impairment of property and equipment in accordance with the Property, Plant and Equipment Topic of the FASB ASC, whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. In assessing the impairment, the Company compares projected and undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful life
against their carrying amounts. If projected undiscounted net cash flows are not sufficient to recover the carrying value of the assets, the assets are written down to their estimated fair values based on expected discounted cash flows. Changes in
the estimates and assumptions used in assessing projected cash flows could materially affect the results of managements evaluation.

Assets leased on terms that transfer substantially all of the benefits and risks of ownership to the Company are accounted for as capital leases, as though the asset had been purchased outright and a
liability incurred. All other leases are accounted for as operating leases.

k) Goodwill and Intangible Assets

Intangible assets include patents, trademarks, customer relationships and acquired technology. Amortization is
provided on a straight-line basis over five years for patents and over a period of two to eight years for other intangible assets with finite useful lives. The Company periodically evaluates intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is assessed based on the carrying value of the asset and the undiscounted cash flows expected to result from the use and the eventual
disposal of the asset. An impairment loss is recognized when the carrying amount is not recoverable.

Goodwill represents the
excess of the purchase price over the estimated fair value of net tangible and intangible assets acquired in business combinations. The Company reviews the carrying value of goodwill on an annual basis in the fourth quarter. Goodwill is not
amortized, but is subject to annual impairment tests, or more frequently if circumstances indicate that it is more likely than not that the fair value of the reporting unit is below its carrying amount. In assessing the impairment, the Company
compares the fair value of the reporting unit, including goodwill, with its carrying amount. If the fair value exceeds the carrying amount of the reporting unit, no impairment charge is recorded. If the fair value is less than the carrying amount,
the Company compares the implied fair value of the goodwill, determined as if a purchase had just occurred, to the carrying amount to determine the amount of impairment charge to be recorded. Changes in the estimates and assumptions used in
assessing the projected cash flows could materially affect the results of managements evaluation. The Company did not record any impairment in fiscal 2010 and 2011. As described in note 8, upon completion of its annual goodwill impairment
tests for 2009, the Company recorded an impairment charge of $284.5.

l) Derivative Financial Instruments

The Company uses foreign currency forward contracts to minimize the short-term impact of currency fluctuations,
primarily on foreign currency receivables and payables. Derivative instruments that are not designated as accounting hedges are originally recorded at fair market value, with subsequent changes in fair value recorded in other income (expense) during
the period of change. For derivative instruments that qualify for hedge accounting, and are designated as a cash flow hedge, gains or losses for the effective portion of the hedge are initially reported as a separate component of other comprehensive
income (loss) and subsequently recorded in earnings when the hedged transaction occurs or when the hedge is no longer deemed effective in accordance with the Derivatives and



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Hedging Topic of the FASB ASC. For a derivative designated as a fair value hedge, changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized
in net earnings (loss) in the period in which the changes occur. The Company does not hold or issue derivative financial instruments for speculative or trading purposes. The Company also utilizes non-derivative financial instruments including
letters of credit and commitments to extend credit. In fiscal 2008, the Company entered into an interest rate swap to limit the impact of changes in London InterBank Offer Rate (LIBOR) related to the Inter-Tel acquisition financing debt.
The derivative was designated as a cash flow hedge and expired in October 2009.

An embedded derivative also existed within
the Class 1 convertible, redeemable Preferred Shares issued on August 16, 2007 since the holders of the Preferred Shares had the ability to receive cash equal to the value of shares into which the instrument would convert after seven years, if
not previously converted. On conversion of the redeemable Preferred Shares concurrent with the IPO, the derivative ceased to exist. It was marked to market until that time with changes in value recorded in the Consolidated Statements of Operations.
Further details on the Companys Class 1 Preferred Shares can be found in note 15.

m) Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and
liabilities are determined based on differences between the carrying amounts and the tax basis of assets and liabilities, and are measured using enacted tax rates and laws. Deferred tax assets are recognized only to the extent that it is more likely
than not, in the opinion of management, that the future tax assets will be realized in the future.

The Company records
certain tax liabilities or benefits based on the guidance in the Income Taxes Topic of the FASB ASC. This Topic requires companies to determine the likely outcome of uncertain tax positions (UTPs) and record this amount as an expense or
recovery during the year in which UTPs are identified. It also requires companies to identify specifically where interest and penalties associated with these UTPs are recorded. The Company classifies accrued interest related to liabilities for
income taxes and penalties in income tax expense.

n) Research and Development

Research costs are charged to expense in the periods in which they are incurred. Software development costs are deferred and amortized
when technological feasibility has been established, or otherwise are expensed as incurred. The Company has not deferred any software development costs to date.

o) Defined Benefit Pension Plan

Pension expense under the defined
benefit pension plan is actuarially determined using the projected benefit method prorated on service, and managements best estimate assumptions. Pension plan assets are valued at fair value. The excess of any cumulative net actuarial gain
(loss) over ten percent of the greater of the benefit obligation and the fair value of plan assets is amortized over the average remaining service period of active employees. The over-funded or under-funded status of the defined benefit pension plan
is recognized as an asset or liability, respectively, on the Consolidated Balance Sheets, with an offsetting adjustment made to accumulated other comprehensive income. The Company measures its plan assets and obligations at the year-end balance
sheet date.

The discount rate assumptions used reflect prevailing rates available on high-quality, fixed-income debt
instruments. The rate of compensation increase is another significant assumption used for pension accounting and is determined by the Company, based upon its long-term plans for such increases. The assumption for long-term rate of return is based on
the yield available on long-dated government and corporate bonds at the measurement date, with an allowance for equity outperformance of 3.50%.

p) Stock-Based Compensation Plan

The Company has stock-based
compensation plans, as described in note 14. The Company grants stock options for a fixed number of shares to employees and non-employees with an exercise price at least equal to fair market value of the shares at the date of grant.

Stock-based compensation expense is based on a fair value estimate made on the grant date using the Black-Scholes option-pricing model
for each award, net of estimated forfeitures, and is recognized on a straight-line basis over the employee service period, which is generally the vesting period.

The Company estimates the volatility of its stock using historical volatility of comparable public companies. The Company will continue to use the volatility of comparable companies until the
Companys historical volatility is sufficiently established to measure expected volatility for option grants.



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The assumptions used in the Black-Scholes option-pricing model are summarized as follows:



|                                       |  |               |         |   |               |   |         |               |  |   |         |  
|-------------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | ------------- |  | - | ------- | -
|                                       |  | April 30,2011 |         |   | April 30,2010 |   |         | April 30,2009 | 
|Risk-free interest rate                |  |               | 1.83    | % |               |   | 2.30    | %             |  |   | 3.75    | %
|Dividends                              |  |               | 0.0     | % |               |   | 0.0     | %             |  |   | 0.0     | %
|Expected volatility                    |  |               | 55.0    | % |               |   | 80.0    | %             |  |   | 85.0    | %
|Annual forfeiture rate                 |  |               | 10.0    | % |               |   | 10.0    | %             |  |   | 10.0    | %
|Expected life of the options           |  |               | 5 years |   |               |   | 5 years |               |  |   | 5 years |  
|Weighted average fair value per option |  | $             | 3.15    |   |               | $ | 1.35    |               |  | $ | 3.30    |  

Based on these assumptions, stock-based compensation expense reduced the Companys results of
operations by $4.7 for the year ended April 30, 2011 (2010$3.3; 2009 $2.4).

As of April 30, 2011, there
was $10.4 million of unrecognized stock-based compensation expense related to stock option awards (April 30, 2010$4.3 million). The Company expects these to be recognized over a weighted average period of 3.1 years (April 30, 20101.9
years).

q) Net Income (Loss) per Common Share

Basic net income (loss) per common share is computed using the weighted-average number of common shares outstanding during the period,
with net income (loss) adjusted for the impact of accreted interest on redeemable shares, where applicable. Because the holders of the Class 1 Preferred Shares were entitled to dividends on a basis equivalent to holders of common shares, the
Company calculated basic loss per common share using the two-class method, for the period up until conversion of the Class 1 Preferred Shares to common shares, to determine income attributable to common shareholders and dividing it by the
weighted-average common shares outstanding for the period. Diluted net income (loss) per common share is calculated using the if-converted or the treasury stock methods, as appropriate, when the impact is considered to be dilutive. To compute
diluted net income (loss) per share, the weighted-average number of common shares outstanding is increased by the assumed conversion of outstanding redeemable shares from the beginning of the year or date of issuance, if later, and the number of
common shares that would be issued assuming the exercise of stock options and warrants. As described in note 1, in conjunction with the April 27, 2010 IPO, the Class 1 Preferred Shares were converted into common shares.

r) Other Comprehensive Income (Loss)

Other comprehensive income (loss) is recorded directly to a separate section of shareholders equity in accumulated other comprehensive loss and includes unrealized gains and losses excluded from the
Consolidated Statements of Operations. These unrealized gains and losses consist of foreign currency translation adjustments, which are not adjusted for income taxes since they primarily relate to indefinite investments in non-Canadian subsidiaries
and changes in the unfunded status of the pension plan.

s) Advertising Costs

The cost of advertising is expensed as incurred, except for cooperative advertising obligations, which are expensed at the time the
related sales are recognized and the advertising credits are earned. Cooperative advertising obligations are classified as a revenue reduction or cost of sale in accordance with the Revenue Recognition Topic of the FASB ASC. Advertising costs are
recorded in selling, general and administrative expenses. During fiscal 2011, the Company incurred $10.0 in advertising costs (2010$6.3; 2009$11.0), of which $3.2 related to cooperative advertising expenses (2010$1.7;
2009$3.2).

t) Product Warranties

The Companys product warranties are generally for periods up to fifteen months. At the time revenue is recognized, a provision for estimated warranty costs is recorded as a component of cost of
sales. The warranty accrual represents the Companys best estimate of the costs necessary to settle future and existing claims on products sold as of the balance sheet date based on the terms of the warranty, which vary by customer and product,
historical product return rates and estimated average repair costs. The Company periodically assesses the adequacy of its recorded warranty provisions and adjusts the amounts as necessary.

u) Recent Accounting Pronouncement

In October 2009, the FASB issued ASU 2009-14  Software: Certain Revenue Arrangements That Include Software Elements, to address concerns raised by constituents relating to the accounting for revenue
arrangements that contain tangible products and software. The amendments in this ASU changed the accounting model for revenue arrangements that include both tangible products and software elements. Tangible products containing software components
and non-software components that function together to



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deliver the tangible products essential functionality will no longer be within the scope of guidance in the SoftwareRevenue Recognition Subtopic of the FASB ASC. The amendments
in this ASU are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is required to adopt this ASU in fiscal 2012. The Company is currently
evaluating the effect that the adoption of this ASU will have on its Consolidated Financial Statements.

In October 2009, the
FASB issued ASU 2009-13  Revenue Recognition: Multiple-Deliverable Revenue Arrangements, to address the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather
than as a combined unit. This ASU provides amendments to the criteria in the Revenue RecognitionMultiple-Element Arrangements Subtopic of the FASB ASC. As a result of those amendments, multiple-deliverable arrangements will be separated
in more circumstances than under existing GAAP. The amendments in this ASU are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is
required to adopt this ASU in fiscal 2012. The Company is currently evaluating the effect that the adoption of this ASU will have on its Consolidated Financial Statements.

In July 2010, the FASB issued ASU 2010-20  Receivables: Disclosures about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses to enhance disclosure about the credit quality of financing receivables and the related allowance for credit losses. The Company adopted this ASU in the third quarter of fiscal 2011. As a result of this ASU, the Company
has provided additional disclosures surrounding its sales-type lease receivables and the related allowances within note 3.

In
May 2011, the FASB issued ASU 2011-04  Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs to achieve common fair value measurement and disclosure requirements in U.S.
GAAP and International Financial Reporting Standards (IFRS). The Company is required to adopt this ASU in the fourth quarter of fiscal 2012. The Company does not expect the adoption to have a material impact on the Companys
Consolidated Financial Statements.



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3. NET INVESTMENT IN SALES-TYPE LEASES

Net investment in sales-type leases represents the value of sales-type leases presently held under the TotalSolution® program. The Company currently sells the rental payments due to the Company from some of the sales-type leases. The
Company maintains reserves against its estimate of potential recourse for the balance of sales-type leases (recorded net, against the receivable) and for the balance of sold rental payments remaining unbilled (recorded separately as a lease recourse
liability). For accounts receivable and investments in sales-type leases, the Company writes off uncollectible accounts when there appears to be no possibility of collecting the related amount outstanding.

The following table provides detail on the sales-type leases:



|                                                                                             |  |                |       |  |                |   |       |      |  |   |       |  |  |           |       |  |     |   |       |      |  |   |       | 
|-------------------------------------------------------------------------------------------- |  | -------------- | ----- |  | -------------- | - | ----- | ---- |  | - | ----- |  |  | --------- | ----- |  | --- | - | ----- | ---- |  | - | ----- | 
|                                                                                             |  | April 30, 2011 |       |  | April 30, 2010 |  
|                                                                                             |  | Gross          |       |  | Allowance      |   |       | Net  |  |   | Gross |  |  | Allowance |       |  | Net |  
|Lease balances included in consolidated accounts receivable                                  |  | $              | 12.3  |  |                | $ | (2.9  | )    |  | $ | 9.4   |  |  | $         | 13.4  |  |     | $ | (4.1  | )    |  | $ | 9.3   | 
|Current portion of investment in sales-type leases                                           |  |                | 20.9  |  |                |   | (0.9  | )    |  |   | 20.0  |  |  |           | 35.3  |  |     |   | (1.5  | )    |  |   | 33.8  | 
|Non-current portion of investment in sales-type leases                                       |  |                | 31.4  |  |                |   | (1.3  | )    |  |   | 30.1  |  |  |           | 30.5  |  |     |   | (1.3  | )    |  |   | 29.2  | 
|                                                                                             |  |                |       |  |                |   |       |      |  |   |       |  |  |           |       |  |     |   |       |      |  |   |       | 
|Total unsold sales-type leases (recorded as assets, net, on the consolidated balance sheets) |  |                | 64.6  |  |                |   | (5.1  | )    |  |   | 59.5  |  |  |           | 79.2  |  |     |   | (6.9  | )    |  |   | 72.3  | 
|Sold rental payments remaining unbilled                                                      |  |                | 165.9 |  |                |   | (7.1  | )(1) |  |   | 158.8 |  |  |           | 184.9 |  |     |   | (7.9  | )(1) |  |   | 177.0 | 
|                                                                                             |  |                |       |  |                |   |       |      |  |   |       |  |  |           |       |  |     |   |       |      |  |   |       | 
|Total of sales-type leases unsold and sold                                                   |  | $              | 230.5 |  |                | $ | (12.2 | )    |  | $ | 218.3 |  |  | $         | 264.1 |  |     | $ | (14.8 | )    |  | $ | 249.3 | 
|                                                                                             |  |                |       |  |                |   |       |      |  |   |       |  |  |           |       |  |     |   |       |      |  |   |       | 



|(1) | Allowance for sold rental payments is recorded as a lease recourse liability on the consolidated balance sheets
|--- | ---------------------------------------------------------------------------------------------------------------

A sale of rental payments represents the total present value of the payment stream on the sale of the rental payments to third parties.
For fiscal 2011, the Company sold $63.0 of rental payments and recorded gains on sale of those rental payments of $10.0 (2010sold $62.6 and recorded gains of $8.1; 2009sold $73.4 and recorded gains of $10.5). Sold rental payments
remaining unbilled at the end of the period represents the total balance of leases that are not included on the consolidated balance sheets. The Company is compensated for administration and servicing of rental payments sold.

At April 30, 2011, future minimum lease payments related to the sold rental streams remaining unbilled are: 2012$62.7,
2013$49.0, 2014$32.0, 2015$17.2, 2016$5.0.

At April 30, 2011, future minimum lease receipts due
from customers related to the lease portfolio included in the April 30, 2011 Consolidated Balance Sheet are: 2012$20.9, 2013$12.0, 2014$8.8, 2015$6.6, 2016$4.0.

Financing receivables

The Company considers its lease balances included in consolidated accounts receivable and its investment in sales-type leases to be
financing receivables. Additional disclosures on the credit quality of the Companys sold and unsold sales-type leases and lease balances included in accounts receivable are as follows:

Age analysis as at April 30, 2011



|                                                              |  |              |       |   |                   |   |      |                             |  |   |               |   |  |                        |      |   |  |   |       |  
|------------------------------------------------------------- |  | ------------ | ----- | - | ----------------- | - | ---- | --------------------------- |  | - | ------------- | - |  | ---------------------- | ---- | - |  | - | ----- | -
|                                                              |  | Not past due |       |   | 1-90 dayspast due |   |      | Greater than90 days pastdue |  |   | Total pastdue |   |  | Total sales-typeleases |     
|Lease balances included in consolidated accounts receivable   |  | $            | 5.3   |   |                   | $ | 3.4  |                             |  | $ | 3.6           |   |  | $                      | 7.0  |   |  | $ | 12.3  |  
|Investment in sold and unsold sales-type lease receivables(1) |  |              | 181.0 |   |                   |   | 33.5 |                             |  |   | 3.7           |   |  |                        | 37.2 |   |  |   | 218.2 |  
|                                                              |  |              |       |   |                   |   |      |                             |  |   |               |   |  |                        |      |   |  |   |       |  
|Total gross sales-type leases                                 |  | $            | 186.3 |   |                   | $ | 36.9 |                             |  | $ | 7.3           |   |  | $                      | 44.2 |   |  | $ | 230.5 |  
|                                                              |  |              |       |   |                   |   |      |                             |  |   |               |   |  |                        |      |   |  |   |       |  
|Allowance                                                     |  |              | (5.1  | ) |                   |   | (2.0 | )                           |  |   | (5.1          | ) |  |                        | (7.1 | ) |  |   | (12.2 | )
|                                                              |  |              |       |   |                   |   |      |                             |  |   |               |   |  |                        |      |   |  |   |       |  
|Total net sales-type leases                                   |  | $            | 181.2 |   |                   | $ | 34.9 |                             |  | $ | 2.2           |   |  | $                      | 37.1 |   |  | $ | 218.3 |  
|                                                              |  |              |       |   |                   |   |      |                             |  |   |               |   |  |                        |      |   |  |   |       |  



|(1) | Remaining unbilled amounts related to past-due billed amounts
|--- | -------------------------------------------------------------



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Allowance for credit losses

The Companys allowance for credit losses is based on managements assessment of the collectability of customer accounts. A considerable amount of judgment is required in order to make this
assessment including a detailed analysis of the aging of the lease receivables and the current credit worthiness of our customers and an analysis of historical bad debts and other adjustments. If there is a deterioration of a major customers
credit worthiness or actual defaults are higher than historical experience, the estimate of the recoverability of amounts due could be adversely affected. The Company reviews in detail the allowance for doubtful accounts on a quarterly basis and
adjusts the allowance estimate to reflect actual portfolio performance and any changes in future portfolio performance expectations.

The following table shows the activity of the allowance for credit losses on sales-type leases during the year ended April 30, 2011:



|                                                                   |  |   |       |  
|------------------------------------------------------------------ |  | - | ----- | -
|Allowance for credit losses on sales-type leases, April 30, 2010   |  | $ | (14.8 | )
|Write-offs                                                         |  |   | 6.0   |  
|Recoveries                                                         |  |   | (0.1  | )
|Provision                                                          |  |   | (3.3  | )
|                                                                   |  |   |       |  
|Allowance for credit losses on sales-type leases, April 30, 2011   |  | $ | (12.2 | )
|                                                                   |  |   |       |  
|Ending balance of allowance: individually evaluated for impairment |  |   | (6.2  | )
|Ending balance of allowance: collectively evaluated for impairment |  |   | (6.0  | )
|                                                                   |  |   |       |  
|                                                                   |  | $ | (12.2 | )
|                                                                   |  |   |       |  
|Total sales-type leases, gross:                                    |  |   |       |  
|Ending balance, gross: individually evaluated for impairment       |  |   | 9.2   |  
|Ending balance, gross: collectively evaluated for impairment       |  |   | 221.3 |  
|                                                                   |  |   |       |  
|                                                                   |  | $ | 230.5 |  
|                                                                   |  |   |       |  

4. INVENTORIES



|                                       |  |                |      |   |                |   |      |  
|-------------------------------------- |  | -------------- | ---- | - | -------------- | - | ---- | -
|                                       |  | April 30, 2011 |      |   | April 30, 2010 |  
|Raw materials and work in process      |  | $              | 5.9  |   |                | $ | 5.1  |  
|Finished goods                         |  |                | 27.5 |   |                |   | 30.0 |  
|Less: provision for obsolete inventory |  |                | (6.3 | ) |                |   | (8.4 | )
|                                       |  |                |      |   |                |   |      |  
|                                       |  | $              | 27.1 |   |                | $ | 26.7 |  
|                                       |  |                |      |   |                |   |      |  

5. OTHER CURRENT ASSETS



|                                      |  |                |      |  |                |   |      | 
|------------------------------------- |  | -------------- | ---- |  | -------------- | - | ---- | 
|                                      |  | April 30, 2011 |      |  | April 30, 2010 |  
|Prepaid expenses and deferred charges |  | $              | 17.4 |  |                | $ | 16.5 | 
|Unbilled receivables                  |  |                | 6.5  |  |                |   | 14.3 | 
|Other receivables                     |  |                | 6.2  |  |                |   | 6.7  | 
|Service inventory                     |  |                | 5.6  |  |                |   | 6.7  | 
|Restricted cash                       |  |                | 1.4  |  |                |   | 2.3  | 
|                                      |  |                |      |  |                |   |      | 
|                                      |  | $              | 37.1 |  |                | $ | 46.5 | 
|                                      |  |                |      |  |                |   |      | 

6. PROPERTY AND EQUIPMENT



|          |  |                |      |  |                         |   |       |     |  |   |      |  |  |                         |      |  |     |   |       |   |  |   |      | 
|--------- |  | -------------- | ---- |  | ----------------------- | - | ----- | --- |  | - | ---- |  |  | ----------------------- | ---- |  | --- | - | ----- | - |  | - | ---- | 
|          |  | April 30, 2011 |      |  | April 30, 2010          |  
|          |  | Cost           |      |  | Accumulatedamortization |   |       | Net |  |   | Cost |  |  | Accumulatedamortization |      |  | Net |  
|Equipment |  | $              | 63.3 |  |                         | $ | (47.6 | )   |  | $ | 15.7 |  |  | $                       | 56.0 |  |     | $ | (39.0 | ) |  | $ | 17.0 | 
|          |  |                |      |  |                         |   |       |     |  |   |      |  |  |                         |      |  |     |   |       |   |  |   |      | 

As of April 30, 2011, equipment included leased assets with cost of $9.3 (2010$8.1) and
net book value of approximately $4.5 (2010$3.9). Depreciation expense recorded in fiscal 2011 amounted to $8.7 (2010$9.7; 2009$12.2).



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2005 Sales-Leaseback transaction

In August 2005, the Company entered into a sale-leaseback transaction on land and building in the U.K. A portion of the gain from the
transaction was deferred over the 10 year term of the lease. The deferred and unamortized balance at April 30, 2011 was $2.0 (2010$2.3).

7. IDENTIFIABLE INTANGIBLE ASSETS



|                              |  |                |       |  |                         |   |       |     |  |   |       |  |  |                         |       |  |     |   |       |   |  |   |       | 
|----------------------------- |  | -------------- | ----- |  | ----------------------- | - | ----- | --- |  | - | ----- |  |  | ----------------------- | ----- |  | --- | - | ----- | - |  | - | ----- | 
|                              |  | April 30, 2011 |       |  | April 30, 2010          |  
|                              |  | Cost           |       |  | Accumulatedamortization |   |       | Net |  |   | Cost  |  |  | Accumulatedamortization |       |  | Net |  
|Patents, trademarks and other |  | $              | 14.5  |  |                         | $ | (9.5  | )   |  | $ | 5.0   |  |  | $                       | 12.8  |  |     | $ | (7.7  | ) |  | $ | 5.1   | 
|Customer relationships        |  |                | 99.9  |  |                         |   | (36.6 | )   |  |   | 63.3  |  |  |                         | 99.9  |  |     |   | (34.0 | ) |  |   | 65.9  | 
|Developed technology          |  |                | 78.8  |  |                         |   | (46.5 | )   |  |   | 32.3  |  |  |                         | 78.8  |  |     |   | (26.7 | ) |  |   | 52.1  | 
|Trade name                    |  |                |      |  |                         |   |      |     |  |   |      |  |  |                         | 2.3   |  |     |   | (2.3  | ) |  |   |      | 
|                              |  |                |       |  |                         |   |       |     |  |   |       |  |  |                         |       |  |     |   |       |   |  |   |       | 
|                              |  | $              | 193.2 |  |                         | $ | (92.6 | )   |  | $ | 100.6 |  |  | $                       | 193.8 |  |     | $ | (70.7 | ) |  | $ | 123.1 | 
|                              |  |                |       |  |                         |   |       |     |  |   |       |  |  |                         |       |  |     |   |       |   |  |   |       | 

The amounts recorded for customer relationships and developed technology primarily relate to the
acquisition of Inter-Tel in fiscal 2008. The amounts represent the fair value of the customer relationships and developed technology acquired, which are being amortized on a straight-line basis over eight years. Patents, trademarks and other
consists primarily of the cost to register and defend patents and are primarily amortized on a straight-line basis over five years.

Amortization of identifiable intangible assets was $24.1, $23.6 and $25.4 in fiscal 2011, fiscal 2010 and fiscal 2009, respectively. The estimated amortization expense related to intangible assets in
existence as of April 30, 2011, over the next five fiscal years is as follows: 2012$24.1, 2013$23.8, 2014$23.4, 2015$22.8 and 2016$6.5. The Company does not allocate intangible assets to its segments, as management
does not use this information to measure the performance of the operating segments or make resource allocation decisions.

8. GOODWILL



|                            |  |                |        |   |                |   |        |  
|--------------------------- |  | -------------- | ------ | - | -------------- | - | ------ | -
|                            |  | April 30, 2011 |        |   | April 30, 2010 |  
|Gross amount                |  | $              | 419.0  |   |                | $ | 419.0  |  
|Accumulated impairment loss |  |                | (284.5 | ) |                |   | (284.5 | )
|                            |  |                |        |   |                |   |        |  
|Goodwill, net               |  | $              | 134.5  |   |                | $ | 134.5  |  
|                            |  |                |        |   |                |   |        |  

The Company performs its impairment test of goodwill annually in the fourth quarter. Substantially all of
the goodwill is recorded in the U.S. reporting unit. The fair value of each reporting unit is estimated using the market approach and the income approach. Under the market approach, a multiple of normalized earnings of each reporting unit is
calculated and compared to market participants to corroborate the results of the calculated fair value. Under the income approach, discounted cash flows for each reporting unit are used to estimate the fair value of the reporting unit. The estimate
of fair value of the reporting units involves significant assumptions regarding revenue growth rates, gross margin percentages, projected working capital needs, selling, general and administrative expenses, research and development expenses, capital
expenditures, discount rates and terminal growth rates. Changes in these assumptions could materially affect the results of the Companys assessment.

In fiscal 2011 and 2010, the Company concluded that there was no impairment since the fair value determinations of the reporting units were found to exceed the carrying values.

During fiscal 2009, the fair value of each of the reporting units was determined by an independent appraiser with significant inputs and
judgments provided by management. Due to the economic downturn and its impact on consumer spending, the Company lowered its expected cash flow forecasts and this, combined with significantly lower market multiples as a result of the general decline
in global capital markets, resulted in a decline in the fair value of the Companys U.S. reporting unit. Accordingly, the carrying amount of the goodwill exceeded the implied fair value and an impairment charge of $284.5 was recorded on the
Consolidated Statements of Operations. This non-cash goodwill impairment charge did not affect the Companys liquidity, cash flows or future operations.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES



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|                                             |  |                |       |  |                |   |       | 
|-------------------------------------------- |  | -------------- | ----- |  | -------------- | - | ----- | 
|                                             |  | April 30, 2011 |       |  | April 30, 2010 |  
|Trade payables                               |  | $              | 31.5  |  |                | $ | 27.5  | 
|Employee-related payables                    |  |                | 11.6  |  |                |   | 16.4  | 
|Restructuring, warranty and other provisions |  |                | 9.1   |  |                |   | 6.2   | 
|Other accrued liabilities                    |  |                | 54.6  |  |                |   | 57.6  | 
|                                             |  |                |       |  |                |   |       | 
|                                             |  | $              | 106.8 |  |                | $ | 107.7 | 
|                                             |  |                |       |  |                |   |       | 

10. RELATED PARTY TRANSACTIONS

Significant related party transactions not otherwise disclosed in the financial statements consist of the following:

The Matthews Group

Dr. Terence Matthews (Dr.
Matthews) and certain entities controlled by Dr. Matthews (collectively, the Matthews Group) are significant common shareholders of the Company. In addition, the Matthews Group holds certain warrants and options and, prior to
their conversion in April 2010, held a portion of the Class 1 Preferred Shares outstanding. Significant transactions with companies controlled by or related to Dr. Matthews include the following:

BreconRidge Manufacturing agreement

Throughout fiscal 2010 and fiscal 2009, the Matthews Group had a significant interest in BreconRidge Manufacturing Solutions (BreconRidge), a significant supplier to Mitel. In May 2010, the
Matthews Group and other BreconRidge shareholders sold their interest in BreconRidge to Sanmina-SCI (Sanmina). As a result, for fiscal 2011, BreconRidge was no longer a related party to Mitel.

During fiscal 2010, the Company purchased $47.3 of products and services (2009$50.1) and sold $0.4 of raw material inventory
(2009$1.1) under a manufacturing supply agreement with BreconRidge. As of April 30, 2010, balances payable pursuant to this agreement amounted to $6.6 and balances receivable pursuant to this agreement amounted to $0.7.

Leased properties

Up to the end of the second quarter of fiscal 2011, the Company leased its Ottawa-based headquarter facilities from the Matthews Group under a 10-year lease which was to expire in February 2011. During
the third quarter of fiscal 2011, the Company negotiated a new lease with the Matthews Group under terms and conditions which management believes reflect current market rates. The new lease has a term of five years and three months, and can be
renewed at the option of the Company for an additional five years. The new lease contains property reinstatement terms which have not been accrued at this time as the amount is not estimable. The new lease contains certain changes in the rental rate
over the term of the lease. The changes in the rental rate have been recorded on a straight-line basis over the term of the lease. The total annual expense for base rent under the lease is expected to be approximately $2.3 Canadian dollars.

During fiscal 2011, Mitel recorded lease payments for base rent and operating costs of $8.5 (2010$9.2). At
April 30, 2011, balances payable relating to the lease totaled nil (April 30, 2010$0.7).

Prepaid License and
Investment Agreement

On April 25, 2006, the Company entered into an agreement with Natural Convergence Inc.
(NCI), a company in which Dr. Matthews had a significant ownership interest, to purchase convertible debentures for $0.9.

In fiscal 2010, NCI entered receivership. As a result, the Company recorded an asset impairment charge of $0.9 with the full amount of the investment written off to special charges on the Companys
Consolidated Statements of Operations. In addition, the Company also wrote off $0.3 related to prepaid expenses, receivables and deferred product costs.

In addition to the financing agreement described above, the Company also purchased $0.1 of products and services from NCI for the year ended April 30, 2010 (2009$1.4).

Other

The Company has paid $1.0 for an option to invest in a company in India, over which company the Matthews Group has significant influence.
Sales to and purchases from this venture, arising in the normal course of the Companys business, were $0.5 and $0.4, respectively, for the year ended April 30, 2011 (2010$0.2 and $0.2, respectively; 2009$0.2 and $nil,
respectively).). The net balance receivable and payable as a result of these transactions were $0.2 and $0.1, respectively (2010$0.1 and $nil, respectively; 2009$0.1 and $nil, respectively).



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Other sales to and purchases from companies related to the Matthews Group arising in the
normal course of the Companys business were $1.3 and $3.5, respectively, for the year ended April 30, 2011 (2010$1.1 and $2.1, respectively; 2009$1.1 and $2.2, respectively). The net balances receivable as a result of these
transactions was $0.7 (2010$0.3).

Summary of the Matthews Group transactions

In total, amounts receivable from related parties of the Matthews Group were $0.9 at April 30, 2011 (April 30, 2010$2.3),
which are included in other current assets, and amounts payable to related parties of the Matthews Group were $0.2 (April 30, 2010$7.2).

The Francisco Group

Francisco Partners Management, LLC and certain
of its affiliates (collectively, the Francisco Group) are significant common shareholders of the Company. In addition, the Francisco Group holds certain warrants and options and, prior to their conversion in April 2010, held a portion of
the Class 1 Preferred Shares outstanding. Significant transactions with companies controlled by or related to the Francisco Group include the following:

Second Lien Debt

During the third quarter of fiscal 2010, an affiliate of
the Francisco Group purchased $21.2 in principal of the outstanding second lien term debt. The Matthews Group had a 40% participating interest in the second lien debt held by such affiliate of the Francisco Group but was neither a party to nor a
lender under the second lien term loan and had no contractual rights or enforcement rights against the Company in connection with its participating interest in such second lien debt. In the third quarter of fiscal 2011, the affiliate sold $11.2 of
face value of the debt, which included the Matthews Groups 40% participating interest. At April 30, 2011, the affiliate of the Francisco Group held $10.0 of the Companys second lien debt.

Interest of $1.2 was expensed during fiscal 2011 relating to the second lien debt held by an affiliate of the Francisco Group
(2010$0.5).

11. LONG-TERM DEBT



|                                                                                                                                                                       |  |                |       |     |                |   |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----- | --- | -------------- | - | ----- | 
|                                                                                                                                                                       |  | April 30, 2011 |       |     | April 30, 2010 |  
|First lien revolving credit facility, interest at LIBOR plus 3.25%, maturing August 2012, secured by all Company
assets                                                |  | $              |      |     |                | $ |      | 
|First lien term loan, interest at LIBOR plus 3.25%, payable quarterly, seven year term maturing August 2014, secured by all
Company assets                             |  |                | 188.6 |     |                |   | 215.5 | 
|Second lien term loan, interest at LIBOR plus 7.00%, payable upon maturity, eight year term maturing August 2015, secured by
all Company assets                        |  |                | 129.8 |     |                |   | 129.8 | 
|Capital leases, at interest rates varying from 5.60% to 11.55%, payable in monthly installments, with maturity dates of up to
four years, secured by the leased assets |  |                | 4.6   |     |                |   | 4.0   | 
|Other                                                                                                                                                                  |  |                | 0.3   |     |                |   | 0.5   | 
|                                                                                                                                                                       |  |                |       |     |                |   |       | 
|                                                                                                                                                                       |  |                | 323.3 |     |                |   | 349.8 | 
|Less: current portion                                                                                                                                                  |  |                | 16.4  | (1) |                |   | 4.1   | 
|                                                                                                                                                                       |  |                |       |     |                |   |       | 
|                                                                                                                                                                       |  | $              | 306.9 |     |                | $ | 345.7 | 
|                                                                                                                                                                       |  |                |       |     |                |   |       | 



|(1) | Includes additional repayment based on fiscal 2011 excess cash flow, as described below.
|--- | ----------------------------------------------------------------------------------------

In August 2007, the Company borrowed, from a syndicate of lenders, $300.0 under a seven-year first lien credit agreement and $130.0 under
an eight-year second lien credit agreement. In addition, under the first lien credit agreement, the Company secured a five-year, $30.0 revolving credit facility.

In April 2010, the Company used a portion of the proceeds from the IPO to repay the $30.0 outstanding balance on the revolving credit facility and used $72.0 of the proceeds to repay a portion of the
first lien term loan.

In March 2011, the Company made an additional prepayment of $25.0, plus certain fees and expenses,
against its outstanding debt under the first lien credit agreement. In connection with this prepayment, the maximum Consolidated Total Debt to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) covenant under the
first lien credit agreement was increased for the fourth quarter of fiscal 2011 and for subsequent quarters up to and including the second quarter of fiscal 2014.

The credit agreements bear interest based on LIBOR and are fully secured by all of the Companys assets. The average LIBOR paid in fiscal 2011 was 0.4% (20100.5%).



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The first lien term loan requires annual principal payments totaling $2.0, payable
quarterly. In addition, an annual repayment, based on a percentage of excess cash flow as defined in the first lien credit agreement, is required within 100 days of the end of the fiscal year. The annual repayment for fiscal 2011 is estimated to be
approximately $12.0 (2010 and 2009nil) and is included in the current portion of long-term debt. The first lien credit agreement matures in 2014. The second lien term loan is repayable at maturity in 2015.

The credit agreements have customary default clauses, wherein repayment of one or more of the credit agreements may be accelerated in the
event of an uncured default. The proceeds from the issuance of equity or debt, and proceeds from the sale of Company assets, may also be required to be used, in whole or in part, to make mandatory prepayments under the first lien credit agreement
and, once the first lien term loan is repaid, under the second lien credit agreement.

The credit agreements contain
affirmative and negative covenants, including: (a) periodic financial reporting requirements, (b) maintaining a maximum ratio of Consolidated Total Debt to earnings before interest, taxes, depreciation and amortization, adjusted for
certain non-recurring, non-cash or other charges, referred to as Consolidated EBITDA (as calculated under the first and second lien credit agreements), (c) limitations on the incurrence of subsidiary indebtedness and also the borrowers
themselves, (d) limitations on liens, (e) limitations on investments, (f) limitations on the payment of dividends and (g) limitations on capital expenditures. The maximum Consolidated Total Debt to Consolidated EBITDA ratio under
the First Lien Credit Agreement was initially 7.10:1.00 and decreases quarterly to 2.00:1.00 in 2014. The March 2011 amendment resulted in an increase in the covenant for the fourth quarter of fiscal 2011 and for subsequent quarters up to and
including the second quarter of 2014. The ratio for fiscal 2012 ranges from 4.10:1.00 to 3.60:1.00. The Second Lien Credit agreement has a maximum Consolidated Total Debt to Consolidated EBITDA ratio covenant that is higher or equal to the covenant
under the First Lien Credit Agreement amendment.

As of April 30, 2011 and April 30, 2010, the Company was in
compliance with all of the covenants included in the credit agreements.

In addition, the Company has a $1.7
(£1.0) unsecured facility in the U.K., under which $0.4 of letters of credit are outstanding at April 30, 2011 (April 30, 2010$0.3).

Interest expense related to capital leases, was $0.4 in fiscal 2011 (2010$0.5; 2009$0.3). Future minimum lease payments as of April 30, 2011 under capital leases total $4.7 of which $2.2,
$1.3, $0.8 and $0.4 relate to fiscal years 2012 to 2015, respectively. Interest costs of $0.5 are included in the total future lease payments.

12. COMMITMENTS AND GUARANTEES

Operating leases

The Company leases certain equipment and
facilities under third party operating leases. The Company is also committed under a related party lease (see note 10). Rental expense and sub-lease income on operating leases were as follows:



|                  |  |      |      |  |      |   |      |      |  |   |      | 
|----------------- |  | ---- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|                  |  | 2011 |      |  | 2010 |   |      | 2009 | 
|Rental expense(1) |  |      |      |  |      |   |      |      |  |   |      | 
|Arms-length       |  | $    | 10.4 |  |      | $ | 17.3 |      |  | $ | 17.8 | 
|Related party     |  |      | 6.7  |  |      |   | 6.6  |      |  |   | 5.7  | 
|                  |  |      |      |  |      |   |      |      |  |   |      | 
|Total             |  | $    | 17.1 |  |      | $ | 23.9 |      |  | $ | 23.5 | 
|                  |  |      |      |  |      |   |      |      |  |   |      | 
|Rental income     |  |      |      |  |      |   |      |      |  |   |      | 
|Arms-length       |  | $    | 1.2  |  |      | $ | 0.6  |      |  | $ | 1.6  | 
|Related party     |  |      | 0.2  |  |      |   | 0.1  |      |  |   | 0.7  | 
|                  |  |      |      |  |      |   |      |      |  |   |      | 
|                  |  | $    | 1.4  |  |      | $ | 0.7  |      |  | $ | 2.3  | 
|                  |  |      |      |  |      |   |      |      |  |   |      | 



|(1) | Presented net of amounts that have been provided for under restructuring provisions.
|--- | ------------------------------------------------------------------------------------

Future minimum operating lease payments are as follows:



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|            |  |                           |      |  |                   |   |      | 
|----------- |  | ------------------------- | ---- |  | ----------------- | - | ---- | 
|            |  | Future Lease 
Payments(1) |     
|Fiscal year |  | Arms-length               |      |  | Related 
Party(2) |  
|2012        |  | $                         | 12.6 |  |                   | $ | 4.8  | 
|2013        |  |                           | 9.0  |  |                   |   | 5.7  | 
|2014        |  |                           | 6.5  |  |                   |   | 4.8  | 
|2015        |  |                           | 4.6  |  |                   |   | 4.8  | 
|2016        |  |                           | 3.6  |  |                   |   | 4.0  | 
|Thereafter  |  |                           | 11.2 |  |                   |   |     | 
|            |  |                           |      |  |                   |   |      | 
|            |  | $                         | 47.5 |  |                   | $ | 24.1 | 
|            |  |                           |      |  |                   |   |      | 



|(1) | Future lease payments are shown gross of the lease restructuring provision of $7.0, as described note 18.
|--- | ---------------------------------------------------------------------------------------------------------

|(2) | As described in note 10
|--- | -----------------------

Guarantees

The Company has the following major types of guarantees that are subject to the accounting and disclosure requirements of the Guarantees Topic of the FASB ASC:

Product warranties

The Company provides its customers with standard warranties on hardware and software for periods up to fifteen months. The following table details the changes in the warranty liability:



|                                   |  |                |      |   |                |   |      |  
|---------------------------------- |  | -------------- | ---- | - | -------------- | - | ---- | -
|                                   |  | April 30, 2011 |      |   | April 30, 2010 |  
|Balance, beginning of year         |  | $              | 1.6  |   |                | $ | 2.3  |  
|Warranty costs incurred            |  |                | (0.4 | ) |                |   | (1.0 | )
|Warranties issued                  |  |                | 0.4  |   |                |   | 1.3  |  
|Change in estimated warranty costs |  |                | (0.7 | ) |                |   | (1.0 | )
|                                   |  |                |      |   |                |   |      |  
|Balance, end of year               |  | $              | 0.9  |   |                | $ | 1.6  |  
|                                   |  |                |      |   |                |   |      |  

Intellectual property indemnification obligations

The Company enters on a regular basis into agreements with customers and suppliers that include limited intellectual property
indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party intellectual property claims arising from
these transactions. The nature of these intellectual property indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to its customers and suppliers.
Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the Consolidated Financial Statements with respect to these guarantees.

Bid and performance related bonds

The Company enters into bid and performance related bonds related to various customer contracts. Performance related bonds usually have a term of twelve months and bid bonds generally have a much shorter
term. Potential payments due under these bonds may be related to the Companys performance and/or the Companys resellers performance under the applicable contract. The Company must measure and recognize a liability equal to the fair
value of bid and performance related bonds involving the performance of the Companys resellers. At April 30, 2011 and April 30, 2010, the liability recognized in accounts payable and accrued liabilities related to these bid and
performance related bonds, based on past experience and managements best estimate, was insignificant. At April 30, 2011, the total maximum potential amount of future payments the Company could be required to make under bid and performance
related bonds was $1.6 (2010$4.8).

Letters of credit

Requests for providing commitments to extend credit and financial guarantees are reviewed and approved by senior management. Management
regularly reviews all outstanding commitments, letters of credit and financial guarantees, and the results of these reviews are considered in assessing the adequacy of the Companys reserve for possible credit and guarantee losses. As of
April 30, 2011 and April 30, 2010, there were no outstanding commitments to extend credit to third parties or financial guarantees outstanding other than letters of credit. Letters of credit amounted to $1.1 as of April 30, 2011
(April 30, 2010$0.6). The estimated fair value of letters of credit, which is equal to the fees paid to obtain the obligations, was not significant as of April 30, 2011 and April 30, 2010.



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13. CONTINGENCIES

In March 2007, the Company entered into a settlement agreement with a competitor regarding the competitors patent infringement claim. The settlement required Mitel to make payments totaling $19.7
over a five-year period ending in fiscal 2012. In addition, the agreement requires an additional payment based on the percentage of sales in excess of a cumulative threshold. As a result of exceeding this threshold in fiscal 2011, the Company has
expensed an additional $1.0 as litigation settlement expense in the consolidated statement of operations. The Company expects remaining payments relating to the percentage of sales in excess of the cumulative threshold to be within a range of $0.5
to $1.5 and will be expensed in fiscal 2012 as the related revenues are earned. At April 30, 2011, $4.5 (2010$3.5) has been recorded in accounts payable and accrued liabilities as current and nil (2010$3.1) was recorded in
other non-current liabilities on the consolidated balance sheets.

On February 27, 2008, the Company issued a statement
of claim against one of its customers for non-payment of invoices arising from the provision of hardware, software and services. The customer responded with a counterclaim for a return of amounts paid plus other unquantified costs. In September
2010, the parties reached a settlement, including a consent to dismiss all outstanding claims and counterclaims in the matter.

Prior to the acquisition of Inter-Tel in fiscal 2008, certain former independent distributors of products of a manufacturing company
whose partial assets were purchased by Inter-Tel in 2000 brought suit against Inter-Tel asserting that it was liable for, among other things, breaches of the underlying dealer agreements between the plaintiffs and the seller. In April 2010, the
Company negotiated a settlement with the plaintiffs in this suit, which included a cash payment to the plaintiffs. The difference between the initial provision and the settlement was recorded as a gain on litigation settlement in the fourth quarter
of fiscal 2010.

The Company is also party to a small number of other legal proceedings, claims or potential claims arising in
the normal course of business. In the opinion of the Companys management and legal counsel, any monetary liability or financial impact of such claims or potential claims to which the Company might be subject after final adjudication would not
be material to the consolidated financial position of the Company, its results of operations or its cash flows. In circumstances where the outcome of the lawsuit is expected to be unfavorable, the Company has recorded a provision for the expected
settlement amount. Where the expected settlement amount is a range, the Company has provided for at least the minimum amount of the range.

14. COMMON SHARES

On
March 5, 2010, the shareholders of Mitel Networks Corporation approved several special resolutions in preparation for the Companys IPO. The shareholders approved an amendment of the articles of incorporation to change Mitels issued
and outstanding common shares into a smaller amount of common shares through a reverse split of the Companys common shares. On March 15, 2010, the IPO Committee, a committee of the Companys Board of Directors, approved a 1-for-15
reverse split of the Companys common shares to be effected immediately prior to the effective date of the Companys IPO. The Consolidated Financial Statements presented give retroactive effect to the reverse split. The holders of common
shares are entitled to one vote per share and are entitled to dividends if and when declared by the Board of Directors.

Shareholders Agreement

In conjunction with the closing of the IPO, the Company, the Francisco Group and the Matthews Group became parties to a shareholders agreement (the Shareholders Agreement). Under
the Shareholders Agreement, the Francisco Group is entitled to nominate three members to the Board of Directors provided the Francisco Group controls at least 15% of the outstanding common shares. In addition, the Matthews Group is entitled to
nominate two members to the Board of Directors provided the Matthews Group controls at least 10% of the outstanding common shares. In addition, the Francisco Group and the Matthews Group will nominate the Companys Chief Executive Officer to
serve as a member of the Board of Directors, provided the Francisco Group and the Matthews Group each control at least 5% of the outstanding common shares. The Matthews Group and Francisco Group agree to vote their shares in favor of the election of
the other partys nominees. The number of members on the Board of Directors shall be no more than ten.

If the Francisco
Group controls less than 15% but more than 10% of the outstanding common shares, it can nominate two directors and if it controls less than 10% but more than 5%, it can nominate one director. If the Matthews Group controls less than 10% but more
than 5% of the outstanding common shares, it can nominate one director.

The Shareholders Agreement also provides that
the Company will not take certain significant actions without the approval of the Francisco Group, so long as the Francisco Group controls 15% of the outstanding common shares. The significant actions include actions related to:



| |  |  | amendments to the Companys articles or by-laws;
| | - |  | ------------------------------------------------



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| |  |  | issuance of securities, with certain exceptions such as the issuance of securities under the 2006 Equity Incentive Plan and in acquisitions that
involve an issuance of securities of less than $25.0;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | declaring or paying dividends or distributions on any securities;
| | - |  | -----------------------------------------------------------------



| |  |  | incurring additional indebtedness;
| | - |  | ----------------------------------



| |  |  | mergers, acquisitions and sales of assets or subsidiaries; and
| | - |  | --------------------------------------------------------------



| |  |  | any liquidation, winding-up, dissolution, or other distribution of assets of the Company to its shareholders.
| | - |  | -------------------------------------------------------------------------------------------------------------

Stock Option Plans

2001 Stock Option Plan

In March 2001, the Companys shareholders
approved the Mitel Networks Corporation Employee Stock Option Plan (the 2001 Stock Option Plan) applicable to the Companys employees, directors, consultants and suppliers. The options were granted at no less than the fair market
value of the common shares of the Company on the date of grant and vested in equal portions on the first, second, third and fourth anniversaries of the date of grant, and expire on the earlier of the fifth anniversary and termination of employment.

In fiscal 2009, the Board of Directors approved the extension of the expiry date of certain options granted in 2003 and 2004
calendar years. The expiry date was extended by two years for 0.6 million options held by 837 employees such that the options would expire in calendar years 2010 and 2011. In the fourth quarter of 2010, the Board of Directors approved the
extension of the expiry date of certain options granted in calendar year 2005. The expiry date was extended by one year for 0.3 million options held by 918 employees such that the options would expire in calendar year 2011. The impact on the
Companys Consolidated Financial Statements was not material.

Beginning in September 2006, new stock options and other
equity grants have been made under the 2006 Equity Incentive Plan which was approved by the shareholders of the Company and became effective on September 7, 2006. All existing options that have been previously granted under the 2001 Stock
Option Plan will continue to be governed under that plan until exercise, termination or expiry.

2006 Equity Incentive Plan

The 2006 Equity Incentive Plan (the 2006 plan) permits grants of stock options, deferred share units,
restricted stock units, performance share units and other stock-based awards. Under the 2006 plan, options are generally granted for a fixed number of shares with an exercise price at least equal to the fair market value of the shares at the date of
grant. The Companys Board of Directors has the discretion to amend general vesting provisions and the term of any option, subject to limits contained in the plan. Options granted up to March 5, 2010 vest 25% each year over a four year
period on the anniversary date of the grant and expire in the fifth year. On March 5, 2010, the 2006 Equity Incentive Plan was amended such that options granted subsequent to March 5, 2010 will vest 1/16 over each of the first 16 quarters,
and expire seven years after the date of grant. On March 5, 2010, the shareholders passed a resolution to amend the 2006 Equity Incentive Plan to fix the maximum number of common shares available for issuance under the 2006 Equity Incentive
Plan and all other security-based compensation arrangements at 5.6 million common shares, subject to an annual increase of such maximum number of up to three percent (3%) of the then outstanding common shares of the Company. Common shares
subject to outstanding awards under the 2006 plan which lapse, expire or are forfeited or terminated will, subject to plan limitations, again become available for grants under this plan. Effective March 5, 2011, the compensation committee
approved an increase to the Initial Option Pool of three percent, such that the total aggregate number of common shares that may be issued under the 2006 Equity Incentive Plan and all other security-based compensation arrangements of the Company is
now 7.2 million.

The number of options to purchase common shares available for grant at April 30, 2011 was
1.6 million options (20102.9 million).

In the second quarter of fiscal 2010, the Company modified substantially
all of the outstanding options so that the exercise price was $3.75 per share with exercise periods extending to 2015. As a result of this modification, the Company immediately recorded $0.4 of additional expense and anticipates recording $0.7
additional expense over the remaining vesting period of these options.

Inducement Options

In fiscal 2011, the Company granted 0.5 million inducement options upon the hiring of its new CEO in January, 2011. These options are
outside of the pool of stock options available for grant under the 2006 Equity Incentive Plan. These options vest 1/16 over each of the first 16 quarters, and expire seven years after the date of grant.



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Following is a summary of the Companys stock option activity under both stock option
plans and related information.



|                                                                                                            |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |                  |       |     |                              |  |      |     |  |   |       | 
|----------------------------------------------------------------------------------------------------------- |  | ---------------- | ---- | - | ---------------------------- | - | ---- | ---------------- |  |  | ---------------------------- | - |  | ---------------- | ----- | --- | ---------------------------- |  | ---- | --- |  | - | ----- | 
|                                                                                                            |  | Fiscal 2011      |      |   | Fiscal 2010                  |   |      | Fiscal 2009      | 
|                                                                                                            |  | Number ofOptions |      |   | WeightedAverageExercisePrice |   |      | Number ofOptions |  |  | WeightedAverageExercisePrice |   |  | Number ofOptions |       |     | WeightedAverageExercisePrice | 
|Outstanding options:                                                                                        |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |                  |       |     |                              |  |      |     |  |   |       | 
|Balance, beginning of year                                                                                  |  |                  | 2.6  |   |                              | $ | 4.02 |                  |  |  | 2.1                          |   |  | $                | 14.55 |     |                              |  | 2.0  |     |  | $ | 16.05 | 
|Granted                                                                                                     |  |                  | 3.7  |   |                              |   | 6.64 |                  |  |  | 0.8                          |   |  |                  | 4.78  |     |                              |  | 0.3  |     |  |   | 10.50 | 
|Exercised(1)                                                                                                |  |                  | (0.3 | ) |                              |   | 3.75 |                  |  |  | (0.1                         | ) |  |                  | 4.16  |     |                              |  |     | (2) |  |   | 13.05 | 
|Forfeited                                                                                                   |  |                  | (0.1 | ) |                              |   | 6.01 |                  |  |  | (0.1                         | ) |  |                  | 5.63  |     |                              |  | (0.1 | )   |  |   | 16.20 | 
|Expired                                                                                                     |  |                  | (0.1 | ) |                              |   | 5.62 |                  |  |  | (0.1                         | ) |  |                  | 10.72 |     |                              |  | (0.1 | )   |  |   | 16.05 | 
|                                                                                                            |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |                  |       |     |                              |  |      |     |  |   |       | 
|Balance, end of year                                                                                        |  |                  | 5.8  |   |                              | $ | 5.72 |                  |  |  | 2.6                          |   |  | $                | 4.02  | (3) |                              |  | 2.1  |     |  | $ | 14.55 | 
|                                                                                                            |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |                  |       |     |                              |  |      |     |  |   |       | 
|Number of options exercisable                                                                               |  |                  | 1.7  |   |                              | $ | 4.95 |                  |  |  | 1.1                          |   |  | $                | 4.23  | (3) |                              |  | 0.8  |     |  | $ | 13.95 | 
|                                                                                                            |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |                  |       |     |                              |  |      |     |  |   |       | 
|Weighted average fair value of options granted during the year using the Black-Scholes option pricing model |  |                  |      |   |                              | $ | 3.15 |                  |  |  |                              |   |  | $                | 1.35  |     |                              |  |      |     |  | $ | 3.30  | 
|                                                                                                            |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |                  |       |     |                              |  |      |     |  |   |       | 



|(1) | The total intrinsic value of options exercised during the year ended April 30, 2011 was $0.6 (2010$0.1 and 2009nil).
|--- | ----------------------------------------------------------------------------------------------------------------------

|(2) | Number of options is less than 0.1 million for the period.
|--- | ----------------------------------------------------------

|(3) | Weighted average exercise prices are impacted by the modification in the second quarter of fiscal 2010, as described above.
|--- | ---------------------------------------------------------------------------------------------------------------------------



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The following table summarizes information about the Companys stock options
outstanding and exercisable at April 30, 2011:



|                  |  |                  |     |     |                                          |               |                         |   |     |                  |  |  |                                          |     |  |                         |               |  |  |   |     |    
|----------------- |  | ---------------- | --- | --- | ---------------------------------------- | ------------- | ----------------------- | - | --- | ---------------- |  |  | ---------------------------------------- | --- |  | ----------------------- | ------------- |  |  | - | --- | ---
|April 30, 2011    | 
|Total outstanding |  |                  |     |     | Total exercisable                        |              
|Exercise Price    |  | Number ofOptions |     |     | Weighted-AverageRemainingContractualLife |               | AggregateIntrinsicValue |   |     | Number ofOptions |  |  | Weighted-AverageRemainingContractualLife |     |  | AggregateIntrinsicValue |              
|$3.75             |  |                  | 2.1 |     |                                          | 1.8 years     |                         | $ | 3.2 |                  |  |  | 1.3                                      |     |  |                         | 1.2 years     |  |  | $ | 2.1 |    
|$4.34             |  |                  |    | (1) |                                          | 3.2 years     |                         |   |    | (1)              |  |  |                                         | (1) |  |                         | 3.2 years     |  |  |   |    | (1)
|$5.16             |  |                  | 2.0 |     |                                          | 6.2 
years(2) |                         |   | 0.3 |                  |  |  | 0.1                                      |     |  |                         | 6.7 
years(2) |  |  |   |    | (1)
|$6.50             |  |                  | 0.3 |     |                                          | 6.4 years     |                         |   |    |                  |  |  |                                         | (1) |  |                         | 6.4 years     |  |  |   |    |    
|$8.79             |  |                  | 1.3 |     |                                          | 6.2 years     |                         |   |    |                  |  |  | 0.3                                      |     |  |                         | 6.2 years     |  |  |   |    |    
|$11.87  22.98    |  |                  | 0.1 |     |                                          | 2.8 years     |                         |   |    |                  |  |  |                                         | (1) |  |                         | 1.5 years     |  |  |   |    |    
|                  |  |                  |     |     |                                          |               |                         |   |     |                  |  |  |                                          |     |  |                         |               |  |  |   |     |    
|                  |  |                  | 5.8 |     |                                          |               |                         | $ | 3.5 |                  |  |  | 1.7                                      |     |  |                         |               |  |  | $ | 2.1 |    
|                  |  |                  |     |     |                                          |               |                         |   |     |                  |  |  |                                          |     |  |                         |               |  |  |   |     |    



|(1) | Less than 0.1.
|--- | --------------

|(2) | During the third quarter of fiscal 2011, the Company granted options to the new Chief Executive Officer to purchase 2.0 common shares. Of the grant,
1.5 million options were subject to the regular vesting schedule of 1/16theach quarter, and have a seven year contractual life. The remaining 0.5 million options vest as follows: 12.5% of the options vest on the trigger date and the remainder vest monthly over
an 18-month period following the trigger date. The trigger date is defined as the date that is one month following the month in which the five-day average trading price of the Companys common shares is equal to or greater than $16.80 per
share. All unexercised options expire on the earlier of 24 months after the trigger date or five years from the date of grant.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The aggregate intrinsic value of outstanding and exercisable stock options represents the amount by which the fair value of the common shares exceeds the exercise price of in-the-money options. The amount
is based on the fair value of the shares at April 30, 2011, which is assumed to be the price that would have been received by the option holders had all stock option holders exercised and sold their options on April 30, 2011.

Additional information with respect to stock option activity is as follows:



|                             |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |   |       |    
|---------------------------- |  | ---------------- | ---- | - | ---------------------------- | - | ---- | ---------------- |  |  | ---------------------------- | - |  | - | ----- | ---
|                             |  | Fiscal 2011      |      |   | Fiscal 2010                  |  
|                             |  | Number ofOptions |      |   | WeightedAverageExercisePrice |   |      | Number ofOptions |  |  | WeightedAverageExercisePrice |  
|Outstanding options:         |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |   |       |    
|Unvested, beginning of year: |  |                  | 1.5  |   |                              | $ | 4.17 |                  |  |  | 1.3                          |   |  | $ | 13.59 |    
|Granted                      |  |                  | 3.7  |   |                              |   | 6.64 |                  |  |  | 0.8                          |   |  |   | 4.78  |    
|Vested                       |  |                  | (1.0 | ) |                              |   | 5.54 |                  |  |  | (0.5                         | ) |  |   | 13.59 |    
|Forfeited                    |  |                  | (0.1 | ) |                              |   | 6.01 |                  |  |  | (0.1                         | ) |  |   | 5.63  |    
|                             |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |   |       |    
|Unvested, end of year:       |  |                  | 4.1  |   |                              | $ | 6.05 |                  |  |  | 1.5                          |   |  | $ | 4.17  | (1)
|                             |  |                  |      |   |                              |   |      |                  |  |  |                              |   |  |   |       |    



|(1) | Weighted average exercise prices are impacted by the modification in the second quarter of fiscal 2010, as described above.
|--- | ---------------------------------------------------------------------------------------------------------------------------

Deferred Share Unit (DSU) Plans

In December 2004, the Company granted DSUs to certain executive members of the Company. Upon termination of employment, a lump sum payment in cash equal to the fair value of DSUs outstanding must be paid
by the end of the subsequent calendar year. In the fourth quarter of fiscal 2011, the employment of the final member of the DSU plan was terminated. As a result, the final payment under the DSU plan will occur in July 2012.



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The award is classified as a liability and re-measured to reflect changes in the market
price of the common shares until settlement. For the year ended April 30, 2011, there were 0.05 million DSUs outstanding with a fair value of $0.2 recorded as a liability (20100.04 million DSUs and $0.4 recorded as a liability). The
compensation expense recorded in fiscal 2011 to reflect a change in common share fair value was income of $0.2 (2010$0.4 expense; 2009income of $0.4).

15. PREFERRED SHARES

On March 5, 2010, the shareholders approved
amending the articles of incorporation by canceling the authorized and unissued Class 1 and Class 2 Preferred Shares immediately following and conditional upon the conversion of all Class 1 Preferred Shares for common shares. The
Class 1 Preferred Shares were converted in April 2010, as described below. As well, the shareholders approved the creation of an unlimited number of preferred shares, which are issuable in series, and removed the share transfer restrictions as
currently set out in the articles of incorporation.

At April 30, 2011 and 2010, there was an unlimited number of
preferred shares authorized, issuable in series. At April 30, 2011 and 2010 there were nil preferred shares outstanding.

Class 1 Preferred Shares

During fiscal 2010 and 2009, the Company had Class 1 Preferred Shares outstanding that were converted into common shares in conjunction with the April 2010 IPO. The following table summarizes the activity
of the Class 1 Preferred Shares:



|                                           |  |                |        |   |                |   |       | 
|------------------------------------------ |  | -------------- | ------ | - | -------------- | - | ----- | 
|                                           |  | April 30, 2010 |        |   | April 30, 2009 |  
|Carrying value, beginning of year          |  | $              | 249.5  |   |                | $ | 208.5 | 
|Accreted interest                          |  |                | 48.3   |   |                |   | 41.0  | 
|Amended conversion feature                 |  |                | 96.2   |   |                |   |      | 
|Converted to common shares, April 27, 2010 |  |                | (394.0 | ) |                |   |      | 
|                                           |  |                |        |   |                |   |       | 
|Carrying value, end of year                |  | $              |       |   |                | $ | 249.5 | 
|                                           |  |                |        |   |                |   |       | 

In April 2010, in conjunction with the Companys IPO, all of the Class 1 Preferred Shares were
converted into 27.9 million common shares. The conversion of these Class 1 Preferred Shares occurred pursuant to amended conversion terms that were agreed to by the holders of the Class 1 Preferred Shares prior to the conversion, as described
below.

The initial value of the Class 1 Preferred Shares of $307.7, after relative fair value allocation of proceeds between
the Class 1 Preferred Shares and warrants, was classified in the mezzanine section of the consolidated balance sheets net of the embedded derivative liability. The difference between the initial carrying amount and the redemption amount was being
accreted through the deficit over the five-year period to redemption using the effective interest method.

The original terms
of the Class 1 Preferred Shares included the right of the Class 1 Preferred Share holders to redeem the Preferred Shares for their full accreted value in August 2012. In addition, the Class 1 Preferred Shares included a conversion
feature, at the option of the holder. Subsequent to the IPO, had the Preferred Shares not converted, the common shares issuable upon conversion would have been the accreted value divided by $18.56 per share. The amended terms resulted in conversion
of the Preferred Shares into common shares based on the accreted value at the time of conversion ($1,235.03 per share) divided by the IPO offering price of $14.00 per share. As the amended terms resulted in a conversion, the difference between the
original conversion terms and the amended conversion terms was recorded as an increase to share capital.

16. WARRANTS

The following table outlines the carrying value of warrants outstanding as of April 30, 2011 and 2010:



|                                                                        |  |                |      |  |                |   |      | 
|----------------------------------------------------------------------- |  | -------------- | ---- |  | -------------- | - | ---- | 
|                                                                        |  | April 30, 2011 |      |  | April 30, 2010 |  
|Warrants issued in connection with government funding (a)               |  | $              | 39.1 |  |                | $ | 39.1 | 
|Warrants issued in connection with Senior Secured Convertible Notes (b) |  |                | 10.5 |  |                |   | 10.5 | 
|Warrants issued in connection with Class 1 Preferred Shares (c)         |  |                | 6.0  |  |                |   | 6.0  | 
|Warrants issued in connection with Series A Preferred Shares (d)        |  |                |     |  |                |   |     | 
|                                                                        |  |                |      |  |                |   |      | 
|                                                                        |  | $              | 55.6 |  |                | $ | 55.6 | 
|                                                                        |  |                |      |  |                |   |      | 



|(a) | At April 30, 2011, there were 2.48 million warrants outstanding that were issued in connection with government funding (April 30, 20102.48 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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(b) | At April 30, 2011, there were 1.35 million warrants outstanding that were issued in connection with the issuance of the Senior Secured Convertible Notes
(April 30, 20101.35 million). The warrants have an exercise price of $15.69 per share, are exercisable at any time at the option of the holder and expire in August 2012.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | At April 30, 2011, there were 1.83 million warrants outstanding that were issued in connection with the issuance of Class 1 Preferred Shares (April 30,
20101.81 million). The warrants have an exercise price of $16.25 per share, are exercisable at any time at the option of the holder and expire in August 2012.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | At April 30, 2011, there were nil warrants outstanding that were issued in connection with Series A Preferred Shares (April 30, 20100.44 million). The
warrants had an exercise price of C$14.18 per share, and expired in April 2011. At April 30, 2010, as a result of the exercise price being in a currency other than U.S. dollars, the warrants were recorded at their fair value of $1.0 and are
included in other non-current liabilities in the consolidated balance sheet.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17. EARNINGS (LOSS) PER SHARE (EPS)

The following table sets forth the computation of basic and diluted loss per share:



|                                                             |  |      |      |  |      |   |        |      |  |   |        |  
|------------------------------------------------------------ |  | ---- | ---- |  | ---- | - | ------ | ---- |  | - | ------ | -
|                                                             |  | 2011 |      |  | 2010 |   |        | 2009 | 
|Net income (loss), as reported                               |  | $    | 88.1 |  |      | $ | 37.2   |      |  | $ | (193.5 | )
|Accreted interest on the Class 1 Preferred Shares            |  |      |     |  |      |   | (48.3  | )    |  |   | (41.0  | )
|Amended conversion of Class 1 Preferred Shares               |  |      |     |  |      |   | (96.2  | )    |  |   |       |  
|                                                             |  |      |      |  |      |   |        |      |  |   |        |  
|Net income (loss) attributable to common shareholders        |  | $    | 88.1 |  |      | $ | (107.3 | )    |  | $ | (234.5 | )
|                                                             |  |      |      |  |      |   |        |      |  |   |        |  
|Weighted average number of common shares outstandingbasic   |  |      | 52.9 |  |      |   | 14.7   |      |  |   | 14.3   |  
|Weighted average number of common shares outstandingdiluted |  |      | 56.0 |  |      |   | 14.7   |      |  |   | 14.3   |  
|                                                             |  |      |      |  |      |   |        |      |  |   |        |  
|Income (loss) per common sharebasic                         |  | $    | 1.66 |  |      | $ | (7.30  | )    |  | $ | (16.38 | )
|Income (loss) per common sharediluted                       |  | $    | 1.57 |  |      | $ | (7.30  | )    |  | $ | (16.38 | )

The following securities have been excluded in the computation of diluted earnings per share because to
do so would have been anti-dilutive based on the terms of the securities:



|                     |  |      |     |  |      |  |     |      |  |  |     | 
|-------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|(Number outstanding) |  | 2011 |     |  | 2010 |  |     | 2009 | 
|Stock options        |  |      | 1.8 |  |      |  | 0.1 |      |  |  | 1.9 | 
|Warrants             |  |      | 3.2 |  |      |  | 3.6 |      |  |  | 1.8 | 

As a result of the net losses attributable to common shareholders incurred during fiscal 2010 and 2009,
the following potentially dilutive securities have been excluded from the calculation of diluted loss per common share, because to do so would have been anti-dilutive:



|                                         |  |      |     |     |      |  |     | 
|---------------------------------------- |  | ---- | --- | --- | ---- |  | --- | 
|(Number outstanding)                     |  | 2010 |     |     | 2009 | 
|Stock options                            |  |      | 2.4 |     |      |  | 0.2 | 
|Warrants                                 |  |      | 2.5 |     |      |  | 2.5 | 
|Convertible, redeemable preferred shares |  |      | 0.3 | (1) |      |  | 0.3 | 



|(1) | The convertible, redeemable Preferred Shares were converted into common shares during April 2010
|--- | ------------------------------------------------------------------------------------------------



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Additionally, for fiscal 2011, 0.5 million options (2010  nil, 2009 -
1.1 million warrants), which could potentially dilute basic earnings per share in the future, were also excluded from the above table since they were contingently issuable and since the conditions for issuance had not been met by the end of the
period.

18. SPECIAL CHARGES AND RESTRUCTURING COSTS

During fiscal 2009, the Company recorded pre-tax special charges of $20.3, as a result of actions taken to lower its operating cost structure. The components of the charge included $10.8 of employee
severance and benefits incurred in the termination of approximately 450 employees around the world, $0.5 of accreted interest related to lease termination obligations, $7.4 related to additional lease terminations in the period and $1.6 in assets
written off.

During fiscal 2010, the Company recorded pre-tax special charges of $5.1, as part of continued actions to lower
its operating cost structure. The components of the charge included $2.5 of employee severance and benefits incurred in the termination of approximately 20 employees around the world, $0.5 of accreted interest related to lease termination
obligations, and $0.9 related to additional lease terminations in the period. In addition, the Company wrote off $1.2 in assets related to the termination of a product line in the current year and recorded $0.1 of integration expenses related to its
fiscal 2008 acquisition of Inter-Tel.

During fiscal 2011, the Company undertook additional actions to reduce its cost
structure and improve operational efficiency. The components of the charge included $10.2 of workforce reduction related charges, including severance for approximately 100 employees, which are expected to be paid within the next two years, as well
as $5.3 of lease termination obligations, which include costs to reinstate, back to their original condition, certain leased premises that had been provided for previously.

The current portion of the workforce reduction liability of $4.2 and lease termination obligation liability of $3.9 are included in accounts payable and accrued liabilities, with the remaining balance
included in other non-current liabilities.

The following table summarizes details of the Companys special charges and
related reserves during fiscal 2011, fiscal 2010 and fiscal 2009:



|                                          |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|----------------------------------------- |  | ------------------ | ---- | - | -------------------------- | - | ---- | ----------------- |  | - | ----- | - |  | - | ----- | -
|Description                               |  | WorkforceReduction |      |   | LeaseTerminationObligation |   |      | AssetsWritten off |  |   | Total |  
|Balance of provision as of April 30, 2008 |  | $                  | 1.1  |   |                            | $ | 6.2  |                   |  | $ |      |   |  | $ | 7.3   |  
|Fiscal 2009:                              |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|Charges(1)                                |  |                    | 10.8 |   |                            |   | 7.9  |                   |  |   | 1.6   |   |  |   | 20.3  |  
|Cash payments                             |  |                    | (8.8 | ) |                            |   | (5.4 | )                 |  |   |      |   |  |   | (14.2 | )
|Assets written off                        |  |                    |     |   |                            |   |     |                   |  |   | (1.6  | ) |  |   | (1.6  | )
|Foreign currency impact                   |  |                    | (0.4 | ) |                            |   | (0.6 | )                 |  |   |      |   |  |   | (1.0  | )
|                                          |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|Balance of provision as of April 30, 2009 |  | $                  | 2.7  |   |                            | $ | 8.1  |                   |  | $ |      |   |  | $ | 10.8  |  
|                                          |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|Fiscal 2010:                              |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|Charges(1)                                |  |                    | 2.5  |   |                            |   | 1.4  |                   |  |   | 1.2   |   |  |   | 5.1   |  
|Cash payments                             |  |                    | (5.2 | ) |                            |   | (3.0 | )                 |  |   |      |   |  |   | (8.2  | )
|Assets written off                        |  |                    |     |   |                            |   |     |                   |  |   | (1.2  | ) |  |   | (1.2  | )
|Foreign currency impact                   |  |                    | 0.3  |   |                            |   |     |                   |  |   |      |   |  |   | 0.3   |  
|                                          |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|Balance of provision as of April 30, 2010 |  | $                  | 0.3  |   |                            | $ | 6.5  |                   |  | $ |      |   |  | $ | 6.8   |  
|Fiscal 2011:                              |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|Charges                                   |  |                    | 10.2 |   |                            |   | 5.3  |                   |  |   |      |   |  |   | 15.5  |  
|Cash payments                             |  |                    | (6.8 | ) |                            |   | (5.0 | )                 |  |   |      |   |  |   | (11.8 | )
|Foreign currency impact and other         |  |                    | 0.5  |   |                            |   | 0.2  |                   |  |   |      |   |  |   | 0.7   |  
|                                          |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  
|Balance of provision as of April 30, 2011 |  | $                  | 4.2  |   |                            | $ | 7.0  |                   |  | $ |      |   |  | $ | 11.2  |  
|                                          |  |                    |      |   |                            |   |      |                   |  |   |       |   |  |   |       |  



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|(1) | Included in special charges for fiscal 2010 and fiscal 2009 are $0.1 and $3.0, respectively, of integration and merger-related charges as a result of the fiscal 2008
Inter-Tel acquisition.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19. FAIR VALUE ADJUSTMENT ON DERIVATIVE INSTRUMENTS

The change in fair value of the Companys derivative instruments that are required to be recorded as a liability is as follows:



|                                                                                                           |  |      |     |  |      |   |      |      |  |   |       | 
|---------------------------------------------------------------------------------------------------------- |  | ---- | --- |  | ---- | - | ---- | ---- |  | - | ----- | 
|                                                                                                           |  | 2011 |     |  | 2010 |   |      | 2009 | 
|Gain on change in fair value of Class 1 Preferred Shares (a)                                               |  | $    |     |  |      | $ | 8.4  |      |  | $ | 100.2 | 
|Gain (loss) on change in fair value of warrants with an exercise price denominated in Canadian dollars (b) |  |      | 1.0 |  |      |   | (1.0 | )    |  |   |      | 
|                                                                                                           |  |      |     |  |      |   |      |      |  |   |       | 
|                                                                                                           |  | $    | 1.0 |  |      | $ | 7.4  |      |  | $ | 100.2 | 
|                                                                                                           |  |      |     |  |      |   |      |      |  |   |       | 



|(a) | As described in note 15, the Class 1 Preferred Shares had a conversion option which was required to be recorded at fair value each reporting period, with changes in
fair value recorded in the consolidated statements of operations. The change in fair value of the derivative for the year ended April 30, 2010 was a decrease in the liability of $8.4 (2009$100.2) resulting in a corresponding gain to
the consolidated statements of operations. As described in note 1, in connection with the April 2010 initial public offering, the Class 1 Preferred Shares were converted into common shares. At April 30, 2009, the fair value of the conversion
option was determined using a lattice-binomial model with the following assumptions: five-year life, risk-free rate of 2.00%, common stock volatility of 85% and no dividends.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | At April 30, 2011, there were nil warrants outstanding (April 30, 2010  0.44 million warrants outstanding with an exercise price of C$14.18). These
warrants expired in April 2011. Since the warrants were exercisable in a currency other than U.S. dollars, the fair value of the warrants was recorded as a liability, with changes in fair value recorded in the consolidated statements of operations.
For the year ended April 30, 2011, the Company has recorded a gain of $1.0 (2010 loss of $1.0; 2009 nil).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20. SUPPLEMENTARY CASH FLOW INFORMATION



|                                                                |  |      |       |   |      |   |        |      |  |   |       |  
|--------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | ---- |  | - | ----- | -
|                                                                |  | 2011 |       |   | 2010 |   |        | 2009 | 
|Change in non-cash operating assets and liabilities:            |  |      |       |   |      |   |        |      |  |   |       |  
|Accounts receivable and sales-type lease receivables            |  | $    | 15.7  |   |      | $ | (10.0  | )    |  | $ | 23.5  |  
|Inventories                                                     |  |      | 2.5   |   |      |   | 4.7    |      |  |   | 13.3  |  
|Other current assets(1)                                         |  |      | 4.4   |   |      |   | 12.5   |      |  |   | 3.6   |  
|Other non-current assets                                        |  |      | 0.2   |   |      |   |       |      |  |   |      |  
|Accounts payable and accrued liabilities                        |  |      | (16.4 | ) |      |   | (10.6  | )    |  |   | (28.8 | )
|Due to related parties                                          |  |      | (0.5  | ) |      |   | 0.3    |      |  |   | (7.7  | )
|Deferred revenue                                                |  |      | (2.6  | ) |      |   | (10.7  | )    |  |   | (13.8 | )
|Other non-current liabilities(2)                                |  |      | 2.5   |   |      |   | (5.3   | )    |  |   | 7.6   |  
|Change in pension liability                                     |  |      | 0.9   |   |      |   | (1.8   | )    |  |   | 2.4   |  
|                                                                |  |      |       |   |      |   |        |      |  |   |       |  
|                                                                |  | $    | 6.7   |   |      | $ | (20.9  | )    |  | $ | 0.1   |  
|                                                                |  |      |       |   |      |   |        |      |  |   |       |  
|Interest payments                                               |  | $    | 18.6  |   |      | $ | 27.6   |      |  | $ | 36.8  |  
|Income tax payments                                             |  | $    | 7.0   |   |      | $ | 1.4    |      |  | $ | 1.3   |  
|Disclosure of non-cash activities during the period:            |  |      |       |   |      |   |        |      |  |   |       |  
|Accretion of interest on Redeemable Common and Preferred Shares |  | $    |      |   |      | $ | 48.3   |      |  | $ | 41.0  |  
|Amended conversion of Class 1 Preferred Shares                  |  | $    |      |   |      | $ | (96.2  | )    |  | $ |      |  
|Conversion of Class 1 Preferred Shares                          |  | $    |      |   |      | $ | (297.8 | )    |  | $ |      |  
|Property and equipment additions financed through capital lease |  | $    | 2.5   |   |      | $ | 0.5    |      |  | $ | 4.8   |  



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|(1) | Included in other current assets on the consolidated balance sheets is restricted cash, the change in which is presented separately on the consolidated statements of
cash flows.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Included in other non-current liabilities on the consolidated balance sheets are the derivative instrument liability and the litigation settlement obligation, the
changes in which is presented separately on the consolidated statements of cash flows.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21. SEGMENT INFORMATION

General description

The Companys portfolio of solutions provide advanced voice, video and data communications platforms, desktop phones and Internet appliances, applications for customer relationship management and
mobility, messaging and multimedia collaboration. The Companys reportable segments are represented by the four geographic areas: United States, Canada, Caribbean and Latin America (CALA), Europe, Middle East and Africa
(EMEA), and Asia Pacific. These reportable segments were determined in accordance with how management views and evaluates the Companys business.

The Companys Chief Executive Officer (CEO) has been identified as the chief operating decision maker as defined by the Segment Reporting Topic of the FASB ASC. The CEO evaluates the
performance of the segments and allocates resources based on information provided by the Companys internal management system. The primary financial measure of performance used by the CEO is the contribution margin, which includes segment
revenues less the related cost of sales and direct selling costs.The Company does not allocate research and development, marketing, general and administrative expenses, amortization, stock-based compensation expense and one-time charges to
its segments as management does not use this information to measure the performance of the operating segments. These unallocated expenses are included in shared and unallocated costs in the reconciliation of operating results. In addition, total
asset information by segment is not presented because the CEO does not use such segmented measures to allocate resources and assess performance. Inter-segment sales are based on fair market values and are eliminated on consolidation. With the
exception of contribution margin defined above, the accounting policies of reported segments are the same as those described in the summary of significant accounting policies.

In May 2011, the Company announced a reorganization of the business. Beginning in the first quarter of fiscal 2012, the Companys chief operating decision maker (the CEO) will evaluate the
performance of the Company and allocate resources based on three key business units. As such, beginning in the first quarter of fiscal 2012, the Company expects to report its segmented disclosure based on those key business units.

Business segments

Financial information by geographic area for fiscal years 2011, 2010 and 2009 is summarized below. External revenues are attributed to geographic area based on sales office location:



|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|---------------------------- |  | ------------ | ----- |  | ---- | - | ----- | ------------- |  | - | ----------- |  |  | ------------------ | ---- |  | ----- | - | ------ | - |  | - | ------ | -
|                             |  | UnitedStates |       |  | EMEA |   |       | CanadaandCALA |  |   | AsiaPacific |  |  | Corporateand Other |      |  | Total |  
|Fiscal 2011                  |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Revenue                      |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Telecommunications           |  | $            | 353.9 |  |      | $ | 153.0 |               |  | $ | 45.0        |  |  | $                  | 18.9 |  |       | $ |       |   |  | $ | 570.8  |  
|Network services             |  |              | 78.9  |  |      |   |      |               |  |   |            |  |  |                    |     |  |       |   |       |   |  |   | 78.9   |  
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|                             |  |              | 432.8 |  |      |   | 153.0 |               |  |   | 45.0        |  |  |                    | 18.9 |  |       |   |       |   |  |   | 649.7  |  
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Contribution margin          |  |              | 155.7 |  |      |   | 55.3  |               |  |   | 20.4        |  |  |                    | 5.7  |  |       |   |       |   |  |   | 237.1  |  
|Shared and unallocated costs |  |              |      |  |      |   |      |               |  |   |            |  |  |                    |     |  |       |   | (217.7 | ) |  |   | (217.7 | )
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Operating income (loss)      |  | $            | 155.7 |  |      | $ | 55.3  |               |  | $ | 20.4        |  |  | $                  | 5.7  |  |       | $ | (217.7 | ) |  | $ | 19.4   |  
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Fiscal 2010                  |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Revenue                      |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Telecommunications           |  | $            | 355.6 |  |      | $ | 159.5 |               |  | $ | 44.0        |  |  | $                  | 13.3 |  |       | $ |       |   |  | $ | 572.4  |  
|Network services             |  |              | 75.5  |  |      |   |      |               |  |   |            |  |  |                    |     |  |       |   |       |   |  |   | 75.5   |  
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|                             |  |              | 431.1 |  |      |   | 159.5 |               |  |   | 44.0        |  |  |                    | 13.3 |  |       |   |       |   |  |   | 647.9  |  
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Contribution margin          |  |              | 152.6 |  |      |   | 61.0  |               |  |   | 18.5        |  |  |                    | 2.4  |  |       |   |       |   |  |   | 234.5  |  
|Shared and unallocated costs |  |              |      |  |      |   |      |               |  |   |            |  |  |                    |     |  |       |   | (183.3 | ) |  |   | (183.3 | )
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  
|Operating income (loss)      |  | $            | 152.6 |  |      | $ | 61.0  |               |  | $ | 18.5        |  |  | $                  | 2.4  |  |       | $ | (183.3 | ) |  | $ | 51.2   |  
|                             |  |              |       |  |      |   |       |               |  |   |             |  |  |                    |      |  |       |   |        |   |  |   |        |  



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|                             |  |   |       |  |  |   |       |  |  |   |      |  |  |   |      |  |  |   |        |   |  |   |        |  
|---------------------------- |  | - | ----- |  |  | - | ----- |  |  | - | ---- |  |  | - | ---- |  |  | - | ------ | - |  | - | ------ | -
|Fiscal 2009                  |  |   |       |  |  |   |       |  |  |   |      |  |  |   |      |  |  |   |        |   |  |   |        |  
|Revenue                      |  |   |       |  |  |   |       |  |  |   |      |  |  |   |      |  |  |   |        |   |  |   |        |  
|Telecommunications           |  | $ | 413.6 |  |  | $ | 184.7 |  |  | $ | 50.4 |  |  | $ | 13.3 |  |  | $ |       |   |  | $ | 662.0  |  
|Network services             |  |   | 73.1  |  |  |   |      |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   | 73.1   |  
|                             |  |   |       |  |  |   |       |  |  |   |      |  |  |   |      |  |  |   |        |   |  |   |        |  
|                             |  |   | 486.7 |  |  |   | 184.7 |  |  |   | 50.4 |  |  |   | 13.3 |  |  |   |       |   |  |   | 735.1  |  
|                             |  |   |       |  |  |   |       |  |  |   |      |  |  |   |      |  |  |   |        |   |  |   |        |  
|Contribution margin          |  |   | 167.1 |  |  |   | 66.8  |  |  |   | 21.0 |  |  |   | 3.5  |  |  |   |       |   |  |   | 258.4  |  
|Shared and unallocated costs |  |   |      |  |  |   |      |  |  |   |     |  |  |   |     |  |  |   | (530.3 | ) |  |   | (530.3 | )
|                             |  |   |       |  |  |   |       |  |  |   |      |  |  |   |      |  |  |   |        |   |  |   |        |  
|Operating income (loss)      |  | $ | 167.1 |  |  | $ | 66.8  |  |  | $ | 21.0 |  |  | $ | 3.5  |  |  | $ | (530.3 | ) |  | $ | (271.9 | )
|                             |  |   |       |  |  |   |       |  |  |   |      |  |  |   |      |  |  |   |        |   |  |   |        |  

Geographic information

Revenues from external customers are attributed to the following countries based on location of the customers:



|                        |  |      |       |  |      |   |       |      |  |   |       | 
|----------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                        |  | 2011 |       |  | 2010 |   |       | 2009 | 
|United States           |  | $    | 432.8 |  |      | $ | 432.0 |      |  | $ | 487.2 | 
|United Kingdom          |  |      | 108.6 |  |      |   | 110.3 |      |  |   | 128.1 | 
|Canada                  |  |      | 34.4  |  |      |   | 32.2  |      |  |   | 35.4  | 
|Other foreign countries |  |      | 73.9  |  |      |   | 73.4  |      |  |   | 84.4  | 
|                        |  |      |       |  |      |   |       |      |  |   |       | 
|                        |  | $    | 649.7 |  |      | $ | 647.9 |      |  | $ | 735.1 | 
|                        |  |      |       |  |      |   |       |      |  |   |       | 

Geographic long-lived asset information is based on the physical location of the assets as of the end of
each fiscal period. The following table sets forth long-lived assets by geographic areas:



|                        |  |                       |      |  |                |   |       |                            |  |   |                       |  |  |          |      |  |                            |   |       |  |  |   |       | 
|----------------------- |  | --------------------- | ---- |  | -------------- | - | ----- | -------------------------- |  | - | --------------------- |  |  | -------- | ---- |  | -------------------------- | - | ----- |  |  | - | ----- | 
|                        |  | April 30, 2011        |      |  | April 30, 2010 |  
|                        |  | Property andEquipment |      |  | Goodwill       |   |       | Intangible andOther Assets |  |   | Property andEquipment |  |  | Goodwill |      |  | Intangible andOther Assets |  
|United States           |  | $                     | 2.6  |  |                | $ | 128.8 |                            |  | $ | 95.7                  |  |  | $        | 3.2  |  |                            | $ | 128.8 |  |  | $ | 118.0 | 
|United Kingdom          |  |                       | 2.6  |  |                |   | 1.7   |                            |  |   |                      |  |  |          | 2.8  |  |                            |   | 1.7   |  |  |   |      | 
|Canada                  |  |                       | 10.2 |  |                |   | 4.0   |                            |  |   | 4.9                   |  |  |          | 10.8 |  |                            |   | 4.0   |  |  |   | 5.1   | 
|Other foreign countries |  |                       | 0.3  |  |                |   |      |                            |  |   |                      |  |  |          | 0.2  |  |                            |   |      |  |  |   |      | 
|                        |  |                       |      |  |                |   |       |                            |  |   |                       |  |  |          |      |  |                            |   |       |  |  |   |       | 
|                        |  | $                     | 15.7 |  |                | $ | 134.5 |                            |  | $ | 100.6                 |  |  | $        | 17.0 |  |                            | $ | 134.5 |  |  | $ | 123.1 | 
|                        |  |                       |      |  |                |   |       |                            |  |   |                       |  |  |          |      |  |                            |   |       |  |  |   |       | 



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Concentrations

The Company sells its products and services to a broad set of enterprises ranging from large, multinational enterprises, to small and
mid-sized enterprises, government agencies, health care organizations and schools. Management believes that the Company is exposed to minimal concentration risk since the majority of its business is conducted with companies in numerous diverse
industries. The Company performs periodic credit evaluations of its customers financial condition and generally does not require collateral for its accounts receivable. In some cases, the Company will require payment in advance or security in
the form of letters of credit or third-party guarantees. No single customer accounted for more than 10 percent of the Companys revenue for the periods ended April 30, 2011, April 30, 2010 and April 30, 2009.

Sanmina (formerly BreconRidge, a related party up to May 2010, as described in note 10) and one other independent supplier manufacture a
significant portion of the Companys products. The Company is not obligated to purchase products from these specific suppliers in any specific quantity, except as the Company outlines in forecasts or orders for products required to be
manufactured by these companies. The Companys supply agreements with these suppliers results in a concentration that, if suddenly eliminated, could have an adverse effect on the Companys operations. While the Company believes that
alternative sources of supply would be available, disruption of its primary sources of supply could create a temporary, adverse effect on product shipments. Finally, the Company may be obligated to purchase certain excess inventory levels from
Sanmina that could result from the Companys actual sales of product varying from forecast. As of April 30, 2011, there was excess inventory of nil (2010nil) for which the Company was liable.

22. INCOME TAXES

Details of income taxes are as follows:



|                                        |  |      |       |   |      |   |      |      |  |   |        |  
|--------------------------------------- |  | ---- | ----- | - | ---- | - | ---- | ---- |  | - | ------ | -
|                                        |  | 2011 |       |   | 2010 |   |      | 2009 | 
|Income (loss) before income taxes:      |  |      |       |   |      |   |      |      |  |   |        |  
|Canadian                                |  | $    | (17.5 | ) |      | $ | 32.5 |      |  | $ | 99.3   |  
|Foreign                                 |  |      | 18.1  |   |      |   | (3.8 | )    |  |   | (311.9 | )
|                                        |  |      |       |   |      |   |      |      |  |   |        |  
|                                        |  | $    | 0.6   |   |      | $ | 28.7 |      |  | $ | (212.6 | )
|                                        |  |      |       |   |      |   |      |      |  |   |        |  
|Current income tax recovery (expense):  |  |      |       |   |      |   |      |      |  |   |        |  
|Canadian                                |  | $    | (5.3  | ) |      | $ |     |      |  | $ |       |  
|Foreign                                 |  |      | (3.6  | ) |      |   | (4.1 | )    |  |   | 0.7    |  
|                                        |  |      |       |   |      |   |      |      |  |   |        |  
|                                        |  |      | (8.9  | ) |      |   | (4.1 | )    |  |   | 0.7    |  
|Deferred income tax recovery (expense): |  |      |       |   |      |   |      |      |  |   |        |  
|Canadian                                |  | $    | 89.0  |   |      | $ |     |      |  | $ |       |  
|Foreign                                 |  |      | 7.4   |   |      |   | 12.6 |      |  |   | 18.4   |  
|                                        |  |      |       |   |      |   |      |      |  |   |        |  
|                                        |  | $    | 96.4  |   |      | $ | 12.6 |      |  | $ | 18.4   |  
|                                        |  |      |       |   |      |   |      |      |  |   |        |  



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The income tax recovery (expense) reported differs from the amount computed by applying the
Canadian rates to the income (loss) before income taxes. The reasons for these differences and their tax effects are as follows:



|                                                              |  |      |      |   |      |   |      |      |  |   |       |  
|------------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ----- | -
|                                                              |  | 2011 |      |   | 2010 |   |      | 2009 | 
|Expected tax rate                                             |  |      | 29.8 | % |      |   | 32.7 | %    |  |   | 33.3  | %
|                                                              |  |      |      |   |      |   |      |      |  |   |       |  
|Expected tax benefit (expense)                                |  | $    | (0.2 | ) |      | $ | (9.4 | )    |  | $ | 70.9  |  
|Foreign tax rate differences                                  |  |      | 0.6  |   |      |   | 0.9  |      |  |   | 1.6   |  
|Tax effect of temporary differences and losses not recognized |  |      |     |   |      |   | 10.4 |      |  |   | 3.2   |  
|Use of losses not previously recognized                       |  |      | (0.1 | ) |      |   | 3.4  |      |  |   |      |  
|Release of valuation allowance on deferred tax assets         |  |      | 87.2 |   |      |   |     |      |  |   | 5.9   |  
|Permanent differences                                         |  |      | (2.1 | ) |      |   | 1.9  |      |  |   | (61.2 | )
|Tax credits and other adjustments related to prior years      |  |      | 2.1  |   |      |   | 1.3  |      |  |   | (1.3  | )
|                                                              |  |      |      |   |      |   |      |      |  |   |       |  
|Income tax recovery                                           |  | $    | 87.5 |   |      | $ | 8.5  |      |  | $ | 19.1  |  
|                                                              |  |      |      |   |      |   |      |      |  |   |       |  

The tax effect of components of the deferred tax assets and liabilities are as follows:



|                                                                      |  |               |        |   |               |   |        |               |  |   |        |  
|--------------------------------------------------------------------- |  | ------------- | ------ | - | ------------- | - | ------ | ------------- |  | - | ------ | -
|                                                                      |  | April 30,2011 |        |   | April 30,2010 |   |        | April 30,2009 | 
|Assets:                                                               |  |               |        |   |               |   |        |               |  |   |        |  
|Net operating loss and credit carry-forwards                          |  | $             | 101.5  |   |               | $ | 105.1  |               |  | $ | 114.3  |  
|Allowance for doubtful accounts                                       |  |               | 2.4    |   |               |   | 3.4    |               |  |   | 0.6    |  
|Inventories                                                           |  |               | 1.6    |   |               |   | 1.9    |               |  |   | 0.4    |  
|Restructuring and other                                               |  |               | 13.7   |   |               |   | 13.6   |               |  |   | 23.3   |  
|Pension liability                                                     |  |               | 17.3   |   |               |   | 19.7   |               |  |   | 3.0    |  
|Revenue recognition                                                   |  |               | 9.7    |   |               |   | 10.0   |               |  |   | 7.7    |  
|Lease obligations, share issuance costs and long-term debt            |  |               | 3.4    |   |               |   | 4.7    |               |  |   | 0.9    |  
|Intangibles                                                           |  |               | 71.1   |   |               |   | 29.7   |               |  |   | 22.4   |  
|                                                                      |  |               |        |   |               |   |        |               |  |   |        |  
|Total deferred tax assets                                             |  |               | 220.7  |   |               |   | 188.1  |               |  |   | 172.6  |  
|                                                                      |  |               |        |   |               |   |        |               |  |   |        |  
|Lease obligations                                                     |  |               | (31.4  | ) |               |   | (38.2  | )             |  |   | (37.0  | )
|Acquisition intangibles                                               |  |               | (65.1  | ) |               |   | (64.1  | )             |  |   | (61.8  | )
|Property and equipment                                                |  |               | (6.5   | ) |               |   | (9.1   | )             |  |   | (17.4  | )
|                                                                      |  |               |        |   |               |   |        |               |  |   |        |  
|Total deferred tax liabilities                                        |  |               | (103.0 | ) |               |   | (111.4 | )             |  |   | (116.2 | )
|                                                                      |  |               |        |   |               |   |        |               |  |   |        |  
|Total gross deferred tax assets net of total deferred tax liabilities |  |               | 117.7  |   |               |   | 76.7   |               |  |   | 56.4   |  
|Valuation allowance                                                   |  |               | (71.2  | ) |               |   | (127.6 | )             |  |   | (119.0 | )
|                                                                      |  |               |        |   |               |   |        |               |  |   |        |  
|Net deferred tax assets (liabilities)                                 |  | $             | 46.5   |   |               | $ | (50.9  | )             |  | $ | (62.6  | )
|                                                                      |  |               |        |   |               |   |        |               |  |   |        |  

In fiscal 2011, the Company updated its assessment of the realizability of its deferred tax assets. Based
on a number of factors, including completion of a reorganization of certain subsidiaries, cumulative income for the last thirty six months and forecasted income, the Company determined that the weight of the evidence indicated that it was more
likely than not that the Company will realize a benefit from a portion of its deferred tax assets in Canada and relieved approximately $87.2 of valuation allowance. Future changes in estimates of taxable income could result in a significant change
to the valuation allowance. At April 30, 2011, there continues to be a valuation allowance of $71.2 against deferred tax assets, primarily in Canada and the U.K.

At April 30, 2010 and April 30, 2009, the Company assessed the realizability of its deferred tax assets and determined that a substantial valuation allowance was appropriate due to the
uncertainty surrounding the Companys ability to earn taxable income in certain jurisdictions and cumulative losses for the past thirty six months. For fiscal 2010, the net change in the valuation allowance resulted mainly from the changes
within certain subsidiaries deferred tax asset balances related to book liabilities such as pension, restructuring reserves as well as utilization of net operating losses.

During fiscal 2011, the Company completed a reorganization of certain subsidiaries that increased the deferred tax assets recorded. The
increase was due to an increase in tax basis for intangible assets in certain jurisdictions which more than offset reduced tax loss carry forwards in certain other jurisdictions.



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The Company and its subsidiaries had the following tax loss carry forwards and tax credits:



|               |  |                |       |  |            |   |      | 
|-------------- |  | -------------- | ----- |  | ---------- | - | ---- | 
|               |  | April 30, 2011 |      
|Year of Expiry |  | TaxLosses      |       |  | TaxCredits |  
|2013           |  | $              |      |  |            | $ | 2.9  | 
|2016-2031      |  |                | 13.1  |  |            |   | 53.3 | 
|Indefinite     |  |                | 159.9 |  |            |   |     | 
|               |  |                |       |  |            |   |      | 
|Total          |  | $              | 173.0 |  |            | $ | 56.2 | 
|               |  |                |       |  |            |   |      | 

These tax loss carry-forwards relate to operations in Canada, United States, France and Hong Kong. The
United States has an annual restriction on the utilization of $2.3 of these losses related to a change in ownership in 2001.

Tax credit carry-forwards relate to the Canadian and United States operations amounting to $50.4 and $5.8 respectively. These credits
consist primarily of investment tax credits that can be used to offset future Federal, provincial and state income taxes payable.

The Company operates in multiple jurisdictions throughout the world and its returns are subject to ongoing examinations by certain taxing authorities in which it operates. The Company regularly assesses
the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provisions for income taxes. The Company believes that it has adequately provided for tax adjustments that are probable as a result of any
ongoing or future examination.

The Company has undistributed earnings of its foreign subsidiaries which are considered to be
indefinitely reinvested and accordingly no provision for income taxes has been provided. The determination of the amount of unrecognized deferred income tax liability for undistributed earnings is not practicable. If circumstances change and it
becomes apparent that some or all of the undistributed earnings of the Companys foreign subsidiaries will be remitted to a parent company, the Company will record a tax liability.

Uncertain tax positions

The following table reconciles the activity related to the Companys unrecognized tax benefits, which are included in other non-current liabilities in the consolidated balance sheets:



|                                                     |  |      |      |   |      |   |      |  
|---------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|                                                     |  | 2011 |      |   | 2010 |  
|Opening balance                                      |  | $    | 10.2 |   |      | $ | 10.7 |  
|Increase related to current year tax positions       |  |      | 5.5  |   |      |   | 3.4  |  
|Decrease related to prior year tax positions         |  |      | (0.7 | ) |      |   | (0.4 | )
|Decrease related to settlements with tax authorities |  |      |     |   |      |   | (0.2 | )
|Reductions due to lapse in statute of limitations    |  |      | (3.2 | ) |      |   | (3.3 | )
|Other                                                |  |      | 0.1  |   |      |   |     |  
|                                                     |  |      |      |   |      |   |      |  
|Closing balance                                      |  | $    | 11.9 |   |      | $ | 10.2 |  
|                                                     |  |      |      |   |      |   |      |  

The amount of unrecognized tax benefits at April 30, 2011 that would affect the effective tax rate,
if recognized, was approximately $8.3 (2010$4.8).

The Company recognizes any interest and penalties related to
unrecognized tax benefits in income tax expense. As of April 30, 2011, the Company has a balance of $0.9 (2010$1.3) for the potential payment of interest and penalties. During the fiscal 2011 the Company expensed $0.5
(2010$0.4, 2009$1.2) for the potential payment of interest and penalties.

The Company expects that the amount of
unrecognized tax benefits, inclusive of related interest, will change in the next twelve months. The amount of tax and interest related to unrecognized tax benefits is expected to decrease by approximately $2.0. While the Company continues to pursue
the settlement of its uncertain tax positions, it is unable to quantify the amounts that will be settled in the next 12 months.

The Company or its subsidiaries file income tax returns in Canada, the U.S., the U.K. and various other foreign jurisdictions. These tax
returns are subject to examination by local taxing authorities. The following summarizes the open years by major jurisdiction: Canada 2007 to 2011 and for specific types of transactions from 2005 to 2011, the U.S. 2007 to 2011 and the U.K. 2005 to
2011.



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At April 30, 2011, the Company is currently under audit in France for the years 2006 to
2009. The resolution of tax matters in this jurisdiction is not expected to be material to the Consolidated Financial Statements. At April 30, 2010, the Company was under audit by a local tax jurisdiction in the U.S. for 2006 and 2007. This
audit was closed in fiscal 2011, with no adjustments to the income tax returns as filed.

23. PENSION PLANS

The Company and its subsidiaries maintain defined contribution pension plans that cover substantially all employees. In addition, the
Companys U.K. subsidiary maintains a defined benefit pension plan, which has been closed to new employees since 2001.

Defined contribution plans

The Company matches the contributions of participating employees to the defined contribution pension plans on the basis of the percentage specified in each plan. The costs of the defined contribution
plans are expensed as incurred. In fiscal 2011, the Company made contributions to these plans of $2.2 (2010$2.1; 2009$2.9).

Defined benefit plan

The defined benefit plan provides pension
benefits based on length of service and final average earnings. The pension costs of the defined benefit pension plan are actuarially determined using the projected benefits method pro-rated on services and managements best estimate of the
effect of future events. Pension plan assets are valued at fair value. The Company recognizes a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to report the funded status of defined benefit pension and
other postretirement benefit plans. The Company measures plan assets and obligations at its year-end balance sheet date.

In
fiscal 2011, there were no significant changes in valuation assumptions.

In fiscal 2010, changes in valuation assumptions, in
particular a change in discount rate, produced an unfavorable impact on the Companys defined benefit pension plan obligations for the year ended April 30, 2010. The pension liability increased from £65.0 to £113.3 as a result
of these changes in assumptions. After the effects of foreign currency translation of British pounds sterling to U.S. dollars, the overall pension liability increased by $77.3 to $173.4.

In fiscal 2009, changes in valuation assumptions, in particular a change in discount rate, produced a favorable impact on the
Companys defined benefit pension plan obligations for the year ended April 30, 2009. The pension liability decreased from £100.2 to £65.0 as a result of these changes in assumptions. After the effects of foreign currency
translation of British pounds sterling to U.S. dollars, the overall pension liability decreased by $102.8 to $96.1.

The
actuarial present value of the accrued pension benefits and the net assets available to provide for these benefits, at market value, were as follows:



|                                               |  |               |       |   |               |   |       |  
|---------------------------------------------- |  | ------------- | ----- | - | ------------- | - | ----- | -
|                                               |  | April 30,2011 |       |   | April 30,2010 |  
|Change in accrued pension benefits:            |  |               |       |   |               |   |       |  
|Benefit obligation at beginning of year        |  | $             | 173.4 |   |               | $ | 96.1  |  
|Service cost                                   |  |               | 1.4   |   |               |   | 0.8   |  
|Interest cost                                  |  |               | 9.9   |   |               |   | 7.5   |  
|Plan participants contributions               |  |               | 0.6   |   |               |   | 0.6   |  
|Actuarial (gain) loss                          |  |               | (4.8  | ) |               |   | 70.4  |  
|Benefits paid                                  |  |               | (2.2  | ) |               |   | (1.9  | )
|Foreign exchange                               |  |               | 16.2  |   |               |   | (0.1  | )
|                                               |  |               |       |   |               |   |       |  
|Benefit obligation at end of year              |  | $             | 194.5 |   |               | $ | 173.4 |  
|                                               |  |               |       |   |               |   |       |  
|Change in plan assets:                         |  |               |       |   |               |   |       |  
|Fair value of plan assets at beginning of year |  | $             | 105.3 |   |               | $ | 76.0  |  
|Actual return on plan assets                   |  |               | 13.7  |   |               |   | 25.5  |  
|Employer contributions                         |  |               | 5.0   |   |               |   | 3.8   |  
|Employee contributions                         |  |               | 0.6   |   |               |   | 0.6   |  
|Benefits paid                                  |  |               | (2.2  | ) |               |   | (1.9  | )
|Foreign exchange                               |  |               | 10.7  |   |               |   | 1.3   |  
|                                               |  |               |       |   |               |   |       |  
|Fair value of plan assets at end of year       |  | $             | 133.1 |   |               | $ | 105.3 |  
|                                               |  |               |       |   |               |   |       |  



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The following table provides information with respect to the Companys projected
benefit obligation and accumulated benefit obligation, both of which are in excess of plan assets:



|                               |  |               |       |  |               |   |       |               |  |   |      | 
|------------------------------ |  | ------------- | ----- |  | ------------- | - | ----- | ------------- |  | - | ---- | 
|                               |  | April 30,2011 |       |  | April 30,2010 |   |       | April 30,2009 | 
|Projected benefit obligation   |  | $             | 194.5 |  |               | $ | 173.4 |               |  | $ | 96.1 | 
|Accumulated benefit obligation |  |               | 173.1 |  |               |   | 155.6 |               |  |   | 80.5 | 
|Fair value of plan assets      |  |               | 133.1 |  |               |   | 105.3 |               |  |   | 76.0 | 

The Companys net periodic benefit cost was as follows:



|                                     |  |      |      |   |      |   |      |      |  |   |      |  
|------------------------------------ |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                     |  | 2011 |      |   | 2010 |   |      | 2009 | 
|Current service costdefined benefit |  |      | 1.4  |   |      |   | 0.8  |      |  |   | 1.5  |  
|Interest cost                        |  |      | 9.9  |   |      |   | 7.5  |      |  |   | 9.6  |  
|Expected return on plan assets       |  |      | (8.1 | ) |      |   | (6.1 | )    |  |   | (7.9 | )
|Recognized actuarial loss            |  |      | 2.7  |   |      |   | 0.3  |      |  |   | 2.4  |  
|                                     |  |      |      |   |      |   |      |      |  |   |      |  
|Net periodic defined benefit cost    |  | $    | 5.9  |   |      | $ | 2.5  |      |  | $ | 5.6  |  
|                                     |  |      |      |   |      |   |      |      |  |   |      |  

The following assumptions were used to determine the periodic pension expense:



|                              |  |               |      |   |               |  |      |               |  |  |      |  
|----------------------------- |  | ------------- | ---- | - | ------------- |  | ---- | ------------- |  |  | ---- | -
|                              |  | April 30,2011 |      |   | April 30,2010 |  |      | April 30,2009 | 
|Discount rate                 |  |               | 5.60 | % |               |  | 7.30 | %             |  |  | 5.80 | %
|Compensation increase rate    |  |               | 3.50 | % |               |  | 3.00 | %             |  |  | 3.50 | %
|Investment returns assumption |  |               | 7.40 | % |               |  | 7.30 | %             |  |  | 7.70 | %
|Inflation rate                |  |               | 3.50 | % |               |  | 3.00 | %             |  |  | 3.50 | %

The following assumptions were used to determine the net present value of the accrued pension benefits:



|                                            |  |               |          |   |               |  |          |               |  |  |          |  
|------------------------------------------- |  | ------------- | -------- | - | ------------- |  | -------- | ------------- |  |  | -------- | -
|                                            |  | April 30,2011 |          |   | April 30,2010 |  |          | April 30,2009 | 
|Discount rate                               |  |               | 5.30     | % |               |  | 5.60     | %             |  |  | 7.30     | %
|Compensation increase rate                  |  |               | 3.30     | % |               |  | 3.50     | %             |  |  | 3.00     | %
|Inflation rate                              |  |               | 3.30     | % |               |  | 3.00     | %             |  |  | 3.00     | %
|Average remaining service life of employees |  |               | 18 years |   |               |  | 18 years |               |  |  | 18 years |  

Estimated Future Benefit Payments

The table below reflects the total pension benefits expected to be paid in future years.



|          |  |                 |      | 
|--------- |  | --------------- | ---- | 
|          |  | BenefitPayments |     
|2012      |  |                 | 2.3  | 
|2013      |  |                 | 2.4  | 
|2014      |  |                 | 2.5  | 
|2015      |  |                 | 2.6  | 
|2016      |  |                 | 2.7  | 
|2017-2021 |  |                 | 14.6 | 



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Contributions

The Company expects contributions from employees of $0.7 (£0.4) and employer contributions of $5.2 (£3.1) to the U.K.
pension plan in fiscal 2012. The amount of annual employer contributions required to fund the pension deficit is determined every three years in accordance with U.K. regulations, and is based on a calendar year. In October 2010, the Companys
annual requirement to fund the pension deficit for calendar year 2011 was determined to be $4.2 (£2.5), and will increase at an annual rate of 3% for calendar years 2012 and 2013.

Plan Assets

The Companys target allocation and actual pension plan asset allocation by asset category as of April 30, 2011 and April 30, 2010 are as follows:



|         |  |            |    |   |            |  |    |            |  |  |            |   |  |  |    |  
|-------- |  | ---------- | -- | - | ---------- |  | -- | ---------- |  |  | ---------- | - |  |  | -- | -
|         |  | 2011Actual |    |   | 2011Target |  |    | 2010Actual |  |  | 2010Target |  
|Equities |  |            | 64 | % |            |  | 64 | %          |  |  | 80         | % |  |  | 80 | %
|Bonds    |  |            | 32 | % |            |  | 32 | %          |  |  | 20         | % |  |  | 20 | %
|Cash     |  |            | 4  | % |            |  | 4  | %          |  |  |           |   |  |  |   |  

The investment objectives of the pension portfolio of assets (the Fund) are designed to generate returns that
will enable the Fund to meet its future obligations. The performance benchmark for the investment managers is to earn in excess of the index return in those asset categories, which are actively managed. In setting the overall expected rate of
return, the various percentages of assets held in each asset class together with the investment return expected from that class are taken into account. For cash and bonds, the rate used is that derived from an appropriate index at the valuation
date. For equities, a model is used which combines price inflation, dividend yield and an allowance for gross domestic product growth.

The following table discloses the major category of fair value (as described in note 25):



|                      |  |                                                       |       |  |                                  |   |      |                               |  |   |       |  |  |   |       | 
|--------------------- |  | ----------------------------------------------------- | ----- |  | -------------------------------- | - | ---- | ----------------------------- |  | - | ----- |  |  | - | ----- | 
|                      |  | Fair Value Measurement at April 30, 2011              |      
|                      |  | Quoted Price inActive Marketsfor IdenticalInstruments |       |  | SignificantOtherObservableInputs |   |      | SignificantUnobservableInputs |  |   | Total | 
|                      |  | Level 1                                               |       |  | Level 2                          |   |      | Level 3                       |  |  
|Assets                |  |                                                       |       |  |                                  |   |      |                               |  |   |       |  |  |   |       | 
|Equities              |  | $                                                     | 85.3  |  |                                  | $ |     |                               |  | $ |      |  |  | $ | 85.3  | 
|Government securities |  |                                                       | 14.5  |  |                                  |   |     |                               |  |   |      |  |  |   | 14.5  | 
|Corporate debt        |  |                                                       |      |  |                                  |   | 28.0 |                               |  |   |      |  |  |   | 28.0  | 
|Cash                  |  |                                                       | 5.3   |  |                                  |   |     |                               |  |   |      |  |  |   | 5.3   | 
|                      |  |                                                       |       |  |                                  |   |      |                               |  |   |       |  |  |   |       | 
|                      |  | $                                                     | 105.1 |  |                                  | $ | 28.0 |                               |  | $ |      |  |  | $ | 133.1 | 
|                      |  |                                                       |       |  |                                  |   |      |                               |  |   |       |  |  |   |       | 

24. FOREIGN CURRENCY, CREDIT AND INTEREST RATE RISK

Foreign currency risk

The Company is exposed to currency rate fluctuations related primarily to its future net cash flows from operations in Canadian dollars, British pound sterling and Euros. The Company uses foreign currency
forward contracts to minimize the short-term impact of currency fluctuations on foreign currency receivables, payables and intercompany balances. These contracts are not entered into for speculative purposes, and are not treated as hedges for
accounting purposes. Foreign currency contracts are recorded at fair value. Related foreign currency gains and losses are recorded in other income (expense), net, in the Consolidated Statements of Operations



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and offset foreign exchange gains or losses from the revaluation of assets and liabilities denominated in currencies other than the functional currency of the reporting entity.

At April 30, 2011, the Company held forward option contracts to sell Australian dollars at a fixed rate on a notional amount of $1.6
U.S. dollars. As well, the Company held forward option contracts to buy British pounds sterling and Canadian dollars at a fixed rate on a total notional amount of $8.6 U.S. dollars. At April 30, 2011, the Company recorded a net unrealized gain
on fair value adjustments on the outstanding forward contracts of $0.1.

At April 30, 2010, the Company held forward
contracts to sell Euros and Australian dollars at a fixed rate on a notional amount of $2.8 U.S. dollars. As well, the Company held forward option contracts to buy British pounds sterling and Canadian dollars at a fixed rate on a notional amount of
$12.9 U.S. dollars. At April 30, 2010, the Company had an unrealized loss on fair value adjustments on the outstanding forward contracts of $0.1.

Credit risk

The Companys financial assets that are exposed to credit
risk consist primarily of cash equivalents, restricted cash, accounts receivable, other receivables and sales-type lease receivables. Cash equivalents are invested in government and commercial paper with investment grade credit rating. The Company
is exposed to normal credit risk from customers. However, the Company has a large number of diverse customers to minimize concentrations of credit risk. No customer represented more than 10% of accounts receivable at April 30, 2011 and
April 30, 2010.

Interest rate risk

As described in note 11, the Company is exposed to interest rate risk primarily on its credit facilities which bear interest at LIBOR. As a result the Company is exposed to changes in interest rates. To
mitigate this risk, the Company entered into an interest rate swap agreement in fiscal 2008. The interest rate swap expired in October 2009.

In addition, the Companys defined benefit plan, as described in note 23, is exposed to changes in interest rate risk through its investment in bonds and the discount rate assumption.

The Company is not exposed to any other significant interest rate risk due to the short-term maturity of its monetary assets and current
liabilities. The Companys sales-type lease receivables have fixed future cash flows and are therefore not exposed to significant interest rate risk.



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25. FAIR VALUE MEASUREMENTS

The Company has adopted the Fair Value Measurements and Disclosure Topic of the FASB. This Topic applies to certain assets and liabilities that are being measured and reported on a fair value basis.
The Fair Value Measurements and Disclosure Topic defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. This Topic enables the reader of the financial
statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Topic requires that financial assets and liabilities carried
at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in
active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that
are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Assets/Liabilities Measured at Fair Value on a Recurring Basis



|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|------------------------------- |  | ----------------------------------------------------- | --- |  | -------------------------------- | - | ---- | ----------------------------- |  | - | ----- |  |  | - | ---- | 
|                                |  | Fair Value Measurement at April 30, 2011              |    
|                                |  | Quoted Price inActive Marketsfor IdenticalInstruments |     |  | SignificantOtherObservableInputs |   |      | SignificantUnobservableInputs |  |   | Total | 
|                                |  | Level 1                                               |     |  | Level 2                          |   |      | Level 3                       |  |  
|Assets                          |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|Cash equivalents                |  | $                                                     |    |  |                                  | $ | 22.5 |                               |  | $ |      |  |  | $ | 22.5 | 
|Restricted cash                 |  |                                                       | 1.4 |  |                                  |   |     |                               |  |   |      |  |  |   | 1.4  | 
|Forward contracts               |  |                                                       |    |  |                                  |   | 0.2  |                               |  |   |      |  |  |   | 0.2  | 
|Investment                      |  |                                                       |    |  |                                  |   |     |                               |  |   | 1.0   |  |  |   | 1.0  | 
|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|                                |  | $                                                     | 1.4 |  |                                  | $ | 22.7 |                               |  | $ | 1.0   |  |  | $ | 25.1 | 
|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|Liabilities                     |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|Forward contracts               |  | $                                                     |    |  |                                  | $ | 0.1  |                               |  | $ |      |  |  | $ | 0.1  | 
|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|                                | 
|                                |  | Fair Value Measurement at April 30, 2010              |    
|                                |  | Quoted Price inActive Marketsfor IdenticalInstruments |     |  | SignificantOtherObservableInputs |   |      | SignificantUnobservableInputs |  |   | Total | 
|                                |  | Level 1                                               |     |  | Level 2                          |   |      | Level 3                       |  |  
|Assets                          |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|Cash equivalents                |  | $                                                     |    |  |                                  | $ | 30.0 |                               |  | $ |      |  |  | $ | 30.0 | 
|Restricted cash                 |  |                                                       | 2.3 |  |                                  |   |     |                               |  |   |      |  |  |   | 2.3  | 
|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|                                |  | $                                                     | 2.3 |  |                                  | $ | 30.0 |                               |  | $ |      |  |  | $ | 32.3 | 
|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|Liabilities                     |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|Derivative liability instrument |  | $                                                     |    |  |                                  | $ |     |                               |  | $ | 1.0   |  |  | $ | 1.0  | 
|Forward contracts               |  |                                                       |    |  |                                  |   | 0.1  |                               |  |   |      |  |  |   | 0.1  | 
|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 
|                                |  | $                                                     |    |  |                                  | $ | 0.1  |                               |  | $ | 1.0   |  |  | $ | 1.1  | 
|                                |  |                                                       |     |  |                                  |   |      |                               |  |   |       |  |  |   |      | 

The Companys financial instruments include cash and cash equivalents, restricted cash, bank
indebtedness, accounts receivable, accounts payable, amounts due to (from) related parties, net investment in sales-type leases, long-term debt, derivative instruments and foreign exchange forward contracts. Due to the short-term maturity of cash
and cash equivalents, restricted cash, accounts



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receivable, bank indebtedness, amounts due to (from) related parties, and accounts payable, the carrying value of these instruments is a reasonable estimate of their fair value. Foreign exchange
contracts are carried at fair value and reflect the estimated amount that the Company would pay in an orderly transaction between market participants to settle all outstanding contracts at year-end. This fair value represents a point-in-time
estimate that may not be relevant in predicting the Companys future earnings or cash flows. At April 30, 2011, the fair value of the first lien term loan and second lien term loan was approximately 95% and 92%, respectively, of the
principal balance outstanding.

The following table presents the changes in the Level 3 fair value category for the year ended
April 30, 2011:



|                                |  |            |          |  |                                                   |       |      |                                            |  |   |                                   |  |  |               |     |  |  |   |   |  |  |   |     | 
|------------------------------- |  | ---------- | -------- |  | ------------------------------------------------- | ----- | ---- | ------------------------------------------ |  | - | --------------------------------- |  |  | ------------- | --- |  |  | - | - |  |  | - | --- | 
|                                |  | May 1,2010 |          |  | Net Realized/Unrealized (Gains)Losses included in |       |      | Purchases,Sales, Issuancesand(Settlements) |  |   | Transfers inand/or(out)of Level 3 |  |  | April 30,2011 |    
|                                |  |            | Earnings |  |                                                   | Other |      |                                            |  |  
|Assets                          |  |            |          |  |                                                   |       |      |                                            |  |   |                                   |  |  |               |     |  |  |   |   |  |  |   |     | 
|Investment                      |  | $          |         |  |                                                   | $     |     |                                            |  | $ |                                  |  |  | $             | 1.0 |  |  | $ |  |  |  | $ | 1.0 | 
|Liabilities                     |  |            |          |  |                                                   |       |      |                                            |  |   |                                   |  |  |               |     |  |  |   |   |  |  |   |     | 
|Derivative liability instrument |  | $          | 1.0      |  |                                                   | $     | (1.0 | )                                          |  | $ |                                  |  |  | $             |    |  |  | $ |  |  |  | $ |    | 



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SCHEDULE II

VALUATION OF QUALIFYING ACCOUNTS

AS OF APRIL 30, 2011

(in millions of United States dollars)



|                                                                                |  |                            |      |  |                    |   |      |                             |  |   |            |   |  |                      |      |   |  |   |      | 
|------------------------------------------------------------------------------- |  | -------------------------- | ---- |  | ------------------ | - | ---- | --------------------------- |  | - | ---------- | - |  | -------------------- | ---- | - |  | - | ---- | 
|                                                                                |  |                            |      |  | Additions          |   |      |                             |  |   |            |  
|Description                                                                     |  | Balance,Beginningof Period |      |  | Charged toexpenses |   |      | Charged tootheraccounts (1) |  |   | Deductions |   |  | Balance,End ofPeriod |     
|Fiscal 2009                                                                     |  |                            |      |  |                    |   |      |                             |  |   |            |   |  |                      |      |   |  |   |      | 
|Allowance for doubtful accounts, excluding amounts related to lease receivables |  | $                          | 14.0 |  |                    | $ | 0.9  |                             |  | $ |           |   |  | $                    | (1.7 | ) |  | $ | 13.2 | 
|Allowance for sales-type leases and lease recourse liability                    |  | $                          | 16.7 |  |                    | $ | 3.5  |                             |  | $ |           |   |  | $                    | (7.4 | ) |  | $ | 12.8 | 
|Inventory valuation allowance                                                   |  | $                          | 14.9 |  |                    | $ | 2.4  |                             |  | $ |           |   |  | $                    | (4.4 | ) |  | $ | 12.9 | 
|Fiscal 2010                                                                     |  |                            |      |  |                    |   |      |                             |  |   |            |   |  |                      |      |   |  |   |      | 
|Allowance for doubtful accounts, excluding amounts related to lease receivables |  | $                          | 13.2 |  |                    | $ | 1.4  |                             |  | $ | (4.1       | ) |  | $                    | (2.7 | ) |  | $ | 7.8  | 
|Allowance for sales-type leases and lease recourse liability                    |  | $                          | 12.8 |  |                    | $ | 4.3  |                             |  | $ | 4.1        |   |  | $                    | (6.4 | ) |  | $ | 14.8 | 
|Inventory valuation allowance                                                   |  | $                          | 12.9 |  |                    | $ | (0.2 | )                           |  | $ | (0.2       | ) |  | $                    | (4.1 | ) |  | $ | 8.4  | 
|Fiscal 2011                                                                     |  |                            |      |  |                    |   |      |                             |  |   |            |   |  |                      |      |   |  |   |      | 
|Allowance for doubtful accounts, excluding amounts related to lease receivables |  | $                          | 7.8  |  |                    | $ | 1.9  |                             |  | $ |           |   |  | $                    | (5.3 | ) |  | $ | 4.4  | 
|Allowance for sales-type leases and lease recourse liability                    |  | $                          | 14.8 |  |                    | $ | 3.4  |                             |  | $ |           |   |  | $                    | (6.0 | ) |  | $ | 12.2 | 
|Inventory valuation allowance                                                   |  | $                          | 8.4  |  |                    | $ | 1.6  |                             |  | $ | (1.7       | ) |  | $                    | (2.0 | ) |  | $ | 6.3  | 



|(1) | Charged to other accounts for fiscal 2010 relates to a reclassification between accounts.
|--- | -----------------------------------------------------------------------------------------



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|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures
|-------- | -----------------------

Disclosure Controls and Procedures

Our management carried out an evaluation, with the participation of the CEO and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures as of
April 30, 2011. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit
under the Exchange Act, is recorded, processed, summarized and reported, within the time period specified in the rules and forms of the SEC.

For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the
issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commissions rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuers management, including its principal
executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and
procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control
objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Managements Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting.

Internal control over financial reporting is a process designed by, or under the supervision of, the CEO and CFO, or persons
performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of April 30, 2011, our management, including the CEO and CFO, completed their evaluation of the effectiveness of our internal control over financial reporting. This evaluation was based on the
criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management identified no material weaknesses that existed in the design or operation of our internal control
over financial reporting and concluded that our internal control over financial reporting was effective.

The effectiveness of
our internal control over financial reporting as of April 30, 2011 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8 of this
Report.

Changes in Internal Control over Financial Reporting

In conjunction with our review and evaluation of our internal control over financial reporting during the year ended April 30, 2011,
we implemented a number of measures to improve our internal control over financial reporting in various processes. These included, among others, such measures as improvements to our financial statement close process, increased standardization of
controls across functions, and further automation of processes. Our management has assessed that, while these changes were an improvement to our control activities, there have not been any changes in the Companys internal control over
financial reporting during the year ended April 30, 2011 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting. Management continues to monitor our business processes, and
expects that it will continue to make improvements to our processes and controls in upcoming periods, in efforts to improve process efficiency and effectively utilize our resources.

In addition, during the quarter ended January 31, 2011, we outsourced certain information technology processes to a third party
provider. Testing, which was completed during the fourth quarter of fiscal 2011, indicated that the controls in place as of April 30, 2011 are effective in preventing or detecting any material misstatements. This conclusion is based on
managements understanding and knowledge of the operation of the controls, is supported by sign-offs by the control owners of the effectiveness of their controls as



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at April 30, 2011, and our control testing performed during this last quarter. Otherwise, there have been no changes in the Companys internal control over financial reporting (as
defined in Rule 13a-15(f) under the Exchange Act) during the year that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



|Item 9B. | Other Information
|-------- | -----------------

None.



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PART III



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

Executive Officers and Directors

The following table sets forth
information with respect to our directors and executive officers as of June 15, 2011. Unless otherwise indicated below, the business address for each of our directors and executive officers is 350 Legget Drive, Ottawa, Ontario, Canada K2K 2W7.



|                                                            |  |     |    |  |          |                                                                                                   |                          |                   |                      |                                                                                                     
|----------------------------------------------------------- |  | --- | -- |  | -------- | ------------------------------------------------------------------------------------------------- | ------------------------ | ----------------- | -------------------- | ----------------------------------------------------------------------------------------------------
|Name and Place of Residence                                 |  | Age |    |  | Position |                                                                                                   | Director orOfficer Since |                   | Principal Occupation
|Dr. Terence H. MatthewsOttawa, Ontario, Canada              |  |     | 68 |  |          | Chairman of the Board                                                                             |                          | February 16, 2001 |                      | Chairman of the Board of Mitel; Chairman of the Board of March Networks                             
|                                                            |  |     |    | 
|Richard D. McBeeDallas, Texas, United States                |  |     | 48 |  |          | President and Chief Executive Officer and Director                                                |                          | January 19, 2011  |                      | President and Chief Executive Officer of Mitel                                                      
|                                                            |  |     |    | 
|Peter D. Charbonneau (1)Ottawa, Ontario, Canada             |  |     | 57 |  |          | Lead Director, Chairman of the
Audit Committee, Chairman of the Nominating & Governance Committee |                          | February 16, 2001 |                      | General Partner of Skypoint Capital Corporation                                                     
|                                                            |  |     |    | 
|Benjamin H. BallSan Francisco, California, United States    |  |     | 45 |  |          | Director, Chairman of the
Compensation Committee, Member of the Nominating & Governance Committee |                          | October 23, 2007  |                      | Partner of Francisco Partners Management, LLC                                                       
|                                                            |  |     |    | 
|Andrew J. Kowal (2)San Francisco, California, United States |  |     | 34 |  |          | Director, Member of the Nominating & Governance Committee                                         |                          | July 2, 2009      |                      | Partner of Francisco Partners Management, LLC                                                       
|                                                            |  |     |    | 
|Jean-Paul CossartVersailles, France                         |  |     | 64 |  |          | Director, Member of the Audit Committee, Member of the Nominating & Governance Committee          |                          | October 23, 2007  |                      | Associate Director of Infoteria of France                                                           
|                                                            |  |     |    | 
|Donald W. SmithOttawa, Ontario, Canada                      |  |     | 63 |  |          | Director                                                                                          |                          | April 20, 2001    |                      | Retired Executive                                                                                   
|                                                            |  |     |    | 
|Norman StoutPhoenix, Arizona, United States                 |  |     | 53 |  |          | Director, Member of Compensation Committee, Member of Nominating & Governance Committee           |                          | October 23, 2007  |                      | Chairman of the Board of Hypercom Corporation Chairman of the Board of EF Johnson Technologies, Inc.
|                                                            |  |     |    | 
|John P. McHugh (3)Newcastle, California, United States      |  |     | 50 |  |          | Director, Member of Compensation Committee, Member of Nominating & Governance Committee           |                          | March 12, 2010    |                      | Chief Marketing Officer of Brocade Communications                                                   



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|                                                     |  |     |    |  |          |                                                                                          |                          |                  |                      |                                                                             
|---------------------------------------------------- |  | --- | -- |  | -------- | ---------------------------------------------------------------------------------------- | ------------------------ | ---------------- | -------------------- | ----------------------------------------------------------------------------
|Name and Place of Residence                          |  | Age |    |  | Position |                                                                                          | Director orOfficer Since |                  | Principal Occupation
|Henry L. PerretAustin, Texas, United States          |  |     | 65 |  |          | Director, Member of the Audit Committee, Member of the Nominating & Governance Committee |                          | March 12, 2010   |                      | President and Chief Executive Officer of the Capital Area Food Bank of Texas
|                                                     |  |     |    | 
|Steven E. SpoonerOttawa, Ontario, Canada             |  |     | 53 |  |          | Chief Financial Officer                                                                  |                          | June 20, 2003    |                      | Chief Financial Officer of Mitel                                            
|                                                     |  |     |    | 
|Graham BevingtonChepstow, Wales, United Kingdom      |  |     | 51 |  |          | Executive Vice President Sales, Service, Marketing International                         |                          | June 28, 2006    |                      | Executive Vice President Sales, Service, Marketing International of Mitel   
|                                                     |  |     |    | 
|Jon BrintonPeoria, Arizona, United States            |  |     | 46 |  |          | General Manager Mitel Netsolutions, Inc.                                                 |                          | May 1, 2011      |                      | General Manager of Mitel Netsolutions                                       
|                                                     |  |     |    | 
|Ryan DonovanSioux Falls, North Dakota, United States |  |     | 35 |  |          | General Manager Mitel DataNet                                                            |                          | May 1, 2011      |                      | General Manager of Mitel DataNet                                            
|                                                     |  |     |    | 
|Gwilym FunnellCoogee, NSW, Australia                 |  |     | 39 |  |          | Vice President and Managing Director, Asia-Pacific Region                                |                          | March 12, 2009   |                      | Vice President and Managing Director, Asia-Pacific Region of Mitel          
|                                                     |  |     |    | 
|Philip KeenanRoswell, Georgia, United States         |  |     | 48 |  |          | Executive Vice President Sales, Service, Marketing Americas                              |                          | December 1, 2010 |                      | Executive Vice President Sales, Service, Marketing - Americas of Mitel      
|                                                     |  |     |    | 
|Ronald G. WellardOttawa, Ontario, Canada             |  |     | 53 |  |          | Executive Vice-President, General Manager Mitel Communications Solutions                 |                          | October 23, 2007 |                      | Executive Vice-President, General Manager of Mitel Communications Solutions 



|(1) | Mr. Charbonneau routinely invests in and sits as a director on the boards of businesses that are at an early stage of development and that, as a result, involve
substantial risks. Mr. Charbonneau was a director of METConnex Inc., which filed a notice of intention to file for bankruptcy protection on September 28, 2006. Mr. Charbonneau resigned from the board of METConnex Inc. in
June 2007. Mr. Charbonneau is currently a director of Trellia Networks Corporation, a portfolio company of Skypoint Telecom Fund II, which filed a proposal under the Canadian Bankruptcy and Insolvency Act that was accepted by the Courts in
February, 2011.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Kowal routinely invests in and sits as a director on the boards of businesses that are at an early stage of development and that, as a result, involve
substantial risks. Mr. Kowal has served as a director of MagnaChip Semiconductor LLC since September 2008. MagnaChip Semiconductor LLC filed for bankruptcy in June 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. McHugh took a position as Vice President and General Manager of the Enterprise Data Networking Product Unit for Nortel Networks in December, 2008. In January,
2009, Nortel Networks filed for Chapter 11 Bankruptcy protection in Canada, the United States and the United Kingdom.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Executive officers are appointed by the board of directors to serve, subject to the discretion of the board of directors, until their successors are appointed.

Dr. Terence H. Matthews is our founder, our Chairman and a shareholder. Dr. Matthews has been a member of our board of
directors since February 16, 2001 and has been involved with us and previously with Mitel Corporation (now Zarlink Semiconductor Inc.), for over 20 years. In 1972, he co-founded Mitel Corporation and served as its President until 1985 when
British Telecommunications plc bought a controlling interest in the company. In 2001, companies controlled by Dr. Matthews purchased a controlling interest in Mitel Corporations communications systems division and the Mitel
trademarks to form Mitel. Between 1986



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and 2000, Dr. Matthews founded Newbridge Networks Corporation and served as its Chief Executive Officer and Chairman. Dr. Matthews is also the founder and Chairman of Wesley Clover
International Corporation, an investment group with offices in the United Kingdom and Canada with investments in a broad range of next-generation technology companies, real estate and hotels and resorts. In addition, Dr. Matthews is currently
Chairman, or serves on the board of directors, of a number of high technology companies including March Networks Corporation, Bridgewater Systems Inc., CounterPath Corporation, TrueContext Corporation, Solace Systems and DragonWave Inc.
Dr. Matthews holds an honors degree in electronics from the University of Wales, Swansea and is a Fellow of the Institute of Electrical Engineers and of the Royal Academy of Engineering. He has been awarded honorary doctorates by several
universities, including the University of Wales, Glamorgan and Swansea, and Carleton University in Ottawa. In 1994, he was appointed an Officer of the Order of the British Empire, and in the 2001 Queens Birthday Honours, he was awarded a
Knighthood. In 2011, he was appointed Patron of the Cancer Stem Cell Research Institute at Cardiff University.

Richard D.
McBee, who brings more than 20 years experience in telecommunications to the Company, was appointed to the role of President and Chief Executive Officer in January 2011. Prior to joining the Company, Mr. McBee served as President of the
Communications & Enterprise Group of Danaher Corporation. In this role, he was responsible for annual sales derived from carrier, enterprise, and SMB markets via both direct sales and channel partners. Mr. McBee joined Danaher in 2007
as President, Tektronix Communications, following the acquisition by Danaher of Tektronix. During his 15 years with Tektronix, he held a variety of positions including Senior Vice President and General Manager, Communications Business Unit; Senior
Vice President of Worldwide Sales, Service and Marketing; and Vice President of Marketing & Strategic Initiatives. Mr. McBee holds a Masters Degree in Business Administration from the Chapman School of Business and Economics and
graduated from the United States Air Force Academy with a Bachelor of Science in 1986.

Peter D. Charbonneau is a
General Partner at Skypoint Capital Corporation, an early-stage technology venture capital firm, a position he has held since January 2001. From June 2000 to December 2000, Mr. Charbonneau was an Executive Vice President of March
Networks Corporation. Mr. Charbonneau was appointed to our board of directors on February 16, 2001. Prior to his involvement with March Networks Corporation, Mr. Charbonneau spent 13 years at Newbridge Networks Corporation acting
in numerous capacities including as Chief Financial Officer, Executive Vice President, President and Chief Operating Officer and Vice Chairman. He also served as a member of Newbridge Networks Corporations board of directors between 1996 and
2000. Mr. Charbonneau currently serves on the board of directors of a number of other companies, the majority of which are technology companies, including CounterPath Corporation, March Networks Corporation, Canadian Broadcasting Corporation,
Teradici Corporation, Trellia Networks Inc. and True Context Corporation. Mr. Charbonneau holds a Bachelor of Science degree from the University of Ottawa and an MBA from University of Western Ontario. He has been a member of the Institute of
Chartered Accountants of Ontario since 1979 and in June 2003 was elected by the Institute as a Fellow of the Institute in recognition of outstanding career achievements and leadership contributions to the community and to the profession.
Mr. Charbonneau also holds the ICD.D certification, having completed the Directors Education Program of the Institute of Corporate Directors of Canada.



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Jean-Paul Cossart is an Associate Director of Infoteria of France, a company that
provides technological coaching. He has held this position since 2004. Mr. Cossart was appointed to our board of directors on October 23, 2007. Prior to his involvement with Infoteria, Mr. Cossart was Vice President Strategy and
Marketing of Cofratel since 2002, a company that provides PBX and LAN integration for the enterprise market and was a subsidiary of France Telecom. Mr. Cossart also held several positions at Alcatel-Lucent S.A. Mr. Cossarts
experience has spanned carrier, corporate and consumer markets; telephony, data/internet and broadcast services; and international development, global sales and marketing. Mr. Cossart currently serves on the board of directors of DragonWave
Inc. and of the Institute of Directors (France). He is also a member of the executive committee of the French chapter of the Institute of Directors, United Kingdom. Mr. Cossart holds an Electronic Engineering degree from Ecole Supérieure
dElectricité.

Benjamin H. Ball is a Founding Partner of Francisco Partners Management, LLC, which is a
leading private equity firm focused exclusively on investing in the information technology market. Mr. Ball focuses primarily on investments in the communications and hardware systems sectors. Mr. Ball was appointed to our board of
directors on October 23, 2007. He also serves on the board of directors of Data Connection, Electrical Components International, WatchGuard and WebTrends. Prior to founding Francisco Partners, Mr. Ball was a Vice President with TA
Associates where he led private equity investments in the software, semiconductor and communications segments. Earlier in his career, Mr. Ball worked for AEA Investors, a New York-based private equity firm, and also for the consulting firm of
Bain & Company. Mr. Ball holds a Bachelor of Arts degree from Harvard College and an MBA from Stanford Graduate School of Business.

Andrew J. Kowal was appointed to our board of directors on July 2, 2009. Mr. Kowal is a Partner with Francisco Partners Management, LLC and has been with the firm since 2001.
Mr. Kowal focuses primarily on investments in the semiconductor and hardware systems sectors. He has served on the board of directors of ADERANT Holdings, Inc., Magnachip Semiconductor LLC and Metrologic Instruments, Inc., and was a principal
participant in the execution and management of Francisco Partners investments in AMI Semiconductor and Ultra Clean Technology. Prior to joining Francisco Partners in 2001, Mr. Kowal was a member of Princes Gate Investors, the private
equity arm of the Institutional Securities Division of Morgan Stanley, where he was responsible for the identification, evaluation and execution of private equity transactions in a variety of industries, including information technology and
hardware. Mr. Kowal holds a Bachelor of Science in Economics degree, summa cum laude, from The Wharton School, University of Pennsylvania.

Donald W. Smith joined us in April 2001 as Chief Executive Officer and a member of our board of directors. He retired from his position as Chief Executive Officer in January 2011 but remains
on our board of directors. Mr. Smith has more than 30 years of experience in the communications technology industry, including over six years at Mitel Corporation (now Zarlink) which he joined in 1979 as a Product Manager and left in 1986,
after over four years at the Executive Vice President level. He later founded and became President and Chief Executive Officer of Cambrian Systems Corporation, which was acquired by Nortel Networks Corporation. While with Nortel, Mr. Smith
became Vice President and General Manager of OPTera Solutions, a division of Nortel and in January 2000, Mr. Smith was promoted to President of Optical Internet, Nortel. Mr. Smith holds a Bachelor of Science degree in Engineering from
Imperial College, London University.

Norman Stout was appointed to our board of directors on October 23, 2007.
Mr. Stout is the chairman of Hypercom Corporation, a public company headquartered in Phoenix, Arizona, and has held that position since December 2007. He has been a director of Hypercom Corporation since April 2003. Mr. Stout is also
Chairman of the Board for EF Johnson Technologies, Inc., a company developing and selling secure land mobile systems and subscriber radios. He was also interim Chief Executive Officer for EF Johnson Technologies, Inc., from August 2010 until
November 2010. He previously held the position of director and Chief Executive Officer of Inter-Tel from February 2006 to June 2008. He began his tenure at Inter-Tel in 1994 as a director. Four years later, he joined Inter-Tel as Executive
Vice President, Chief Administrative Officer and President of Inter-Tel Software and Services. Prior to joining Inter-Tel, Mr. Stout was Chief Operating Officer of Oldcastle Architectural Products and since 1996, Mr. Stout also had served
as President of Oldcastle Architectural West. Mr. Stout held previous positions as President of Superlite Block; Chief Financial Officer and Chief Executive Officer (successively) of Boorhem-Fields, Inc. of Dallas, Texas; and as a
Certified Public Accountant with Coopers & Lybrand. Mr. Stout holds a Bachelor of Business Administration degree in Accounting from Texas A&M and an MBA from the University of Texas.

John McHugh was appointed to our board of directors on March 12, 2010. Mr. McHugh is an enterprise networking industry
veteran with almost 30 years of related experience. Mr. McHugh is the Chief Marketing Officer for Brocade Communications Systems, Inc., a public company which offers data center networking and end-to-end enterprise and service provider
networking solutions. Prior to his current role, Mr. McHugh was Vice President and General Manager of Nortel Networks Limiteds Enterprise



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Network Solutions Business Unit and oversaw the restructuring and divestiture of that organization from Nortel. He also served briefly as a consultative executive at Silver Lake Management,
L.L.C. where he worked on technology and company evaluations. Mr. McHugh also had a 26-year career at Hewlett-Packard Co., where he held a variety of executive management positions including Vice President and Worldwide General Manager of HP
ProCurve. Mr. McHugh was responsible for global operations, sales, channels, marketing, R&D, strategic planning and business development. Mr. McHugh holds a Bachelor of Science in Electrical Engineering and Computer Science from the
Rose-Hulman Institute of Technology.

Henry L. Perret was appointed to our board of directors on March 12, 2010.
Mr. Perret is the President and Chief Executive Officer of the Capital Area Food Bank of Texas and also serves on its Board of Directors. Previously, he was employed by Zarlink Semiconductor, where he was Senior Vice President and General
Manager of the Communication Products Group. Prior to joining Zarlink, Mr. Perret was President and Chief Executive Officer for Legerity, Inc., a communications company, from November 2003 to August 2007. From September 2001 to November 2003,
he was the Chief Financial Officer for Legerity. Prior to joining Legerity, Mr. Perret was the Chief Financial Officer for Actel Corporation. Mr. Perret has also had financial roles at Applied Materials, Inc., National Semiconductor
Corporation, Raytheon Semiconductor and General Electric Company. Mr. Perret holds a Bachelor of Science Degree in Business Administration with a concentration in Accounting from San Jose State University.

Steven E. Spooner joined us in June 2003 as Chief Financial Officer. Mr. Spooner has more than 25 years of
financial, administrative and operational experience with companies in the high technology and telecommunications sectors. Between April 2002 and June 2003, he was an independent management consultant for various technology companies. From
February 2000 to March 2002, Mr. Spooner was President and Chief Executive Officer of Stream Intelligent Networks Corp., a competitive access provider and supplier of point-to-point high speed managed bandwidth. From February 1995 to
February 2000, Mr. Spooner served as Vice President and Chief Financial Officer of CrossKeys Systems Corporation, a publicly traded company between 1997 and 2001. Prior to that, Mr. Spooner was Vice President Finance and Corporate
Controller of SHL Systemhouse Inc., also a publicly traded company. Mr. Spooner held progressively senior financial management responsibilities at Digital Equipment of Canada Ltd. from 1984 to 1990 and at Wang Canada Ltd. from 1990 to 1992. He
is a Chartered Accountant and an honours Commerce graduate of Carleton University. Mr. Spooner also holds the ICD.D certification, having completed the Directors Education Program of the Institute of Corporate Directors of Canada.

Graham Bevington was recently appointed our Executive Vice President, Sales Service, Marketing International and was
previously our Vice President and Managing Director of the Europe, Middle East and Africa Region since February 2001. Between January 2000 and February 2001, Mr. Bevington held the same position for Mitel Corporation (now
Zarlink). From 1997 until December 1999, he was Managing Director at DeTeWe Limited. From 1986 until 1997, Mr. Bevington was Sales Director at Shipton DeTeWe Limited.

Jon Brinton was recently appointed General Manager, Mitel Netsolutions, our networks services division. Mr. Brinton joined
the Company in 1999 through the acquisition of his own corporation, Network Services Agency, Inc. byInter-Tel Technologies, Inc. (now known as Mitel Technologies, Inc.) Through the years, Mr. Brinton has held various positions within the
Company including: Vice President of Networks Services, and President of Mitel NetSolutions, Inc. Mr. Brinton holds a Bachelor of Science degree from Grand Canyon University.

Ryan Donovanwas recently appointed General Manager, Mitel DataNet. Mr. Donovan joined the Company in 1999 through the
acquisition of McLeod USA by Inter-Tel Technologies, Inc., now known as Mitel Technologies, Inc. Through the years, Mr. Donovan has held various positions within the Company including: DataNet Technology Consultant, DataNet National Sales
Manager, and Mitel DataNet CommSource National Director of Sales. Mr. Donovan holds a Bachelor of Arts in Management degree from University of Sioux Falls as well as an Associates Degree of Applied Science in Business Administration from
Southeast Technical Institute.

Gwilym R. Funnell joined Mitel in May 2002 as General Manager for South Pacific
Region. Since May 2008, Mr. Funnell has held a role in marketing for the Asia Pacific region and in November 2008 was appointed Vice President and Managing Director, Asia Pacific Region. Prior to that he was the General Manager for
March Networks Corporation from August 2001. Between 1990 and 2000 Mr. Funnell held progressively senior positions with Newbridge Networks Corporation and its affiliated companies. Following the acquisition of Newbridge by Alcatel-Lucent
S.A., he held the position of Director of Solutions Marketing for Asia Pacific for the Carrier Internetworking Division. Mr. Funnell has over 19 years of experience in the information technology and telecommunications industry and holds a
Bachelor of Engineering Honours degree from University of Manchester Institute of Science and Technology.



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Philip Keenanjoined Mitel in August 2010 as Director, Partner Business U.S.A.
Mr. Keenan was appointed Executive Vice President, Sales, Service, Marketing Americas in May 2011. Prior to joining the Company, Mr. Keenan was a Vice President at Nortel Networks, Inc. from 2008 and held various Senior Vice President
positions at Polycom, Inc. from 2001 to 2008. Mr. Keenan has a Bachelor of Science in Mining Geology from Cardiff University, Wales, U.K.

Ronald G. Wellard joined us in December 2003 as Vice President, R&D and until recently held the position of Executive Vice-President of Product Development and Operations. In May, 2011,
Mr. Wellard was appointed Executive Vice-President and General Manager, Mitel Communications Solutions. Prior to July 2003, Mr. Wellard was a Vice President at Nortel Networks Corporation and held the position of Product Development
Director for Meridian Norstar from 1994 to 1999. Mr. Wellard has a Bachelor of Applied Science, Systems Design Engineering degree from the University of Waterloo.



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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires directors, executive officers (as defined under the 1933 Act as noted above), and
shareholders owning more than 10% of any class of a companys outstanding equity shares (other than certain banks, investment funds and other institutions holding securities for the benefit of third parties or in customer fiduciary accounts),
to file reports of ownership and changes of ownership with the SEC. Section 16(a) does not apply to us because we are a foreign private issuer under U.S. securities laws.

Code of Ethics

We have established a Code of Business Conduct, or
Code, which applies to all of our officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code may be
obtained, without charge, either on-line at http://investor.mitel.com/governance.cfm or, upon request, by contacting the Global Business Ethics and Compliance Office of the Company at 350 Legget Drive, Ottawa, Ontario, Canada, K2K
2W7, phone number: 613-592-2122.

Audit Committee

The Companys Board of Directors has an audit committee. Our audit committee is comprised of Messrs. Peter Charbonneau (Chair),
Jean-Paul Cossart and Henry Perret. Our board of directors has determined that each of these directors meets the independence requirements of the rules and regulations of the Nasdaq and the SEC. As a U.S. listed issuer, we are not subject to the
audit committee independence requirements of Canadian securities laws. The board of directors has determined that each of these directors is financially literate. Peter Charbonneau (Chair) has been identified as an audit committee financial
expert as such term is defined by applicable U.S. securities laws.

The principal duties and responsibilities of our
audit committee are to assist our board of directors in discharging its oversight of:



| |  |  | the integrity of our financial statements and accounting and financial process and the audits of our financial statements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | our compliance with legal and regulatory requirements;
| | - |  | ------------------------------------------------------



| |  |  | our external auditors qualifications and independence;
| | - |  | -------------------------------------------------------



| |  |  | the work and performance of our financial management, internal auditor and external auditor; and
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | our system of disclosure controls and procedures and system of internal controls regarding finance, accounting, legal compliance, risk management and
ethics established by management and our board.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our audit committee has access to all books, records,
facilities and personnel and may request any information about our Company as it may deem appropriate. It also has the authority to retain and compensate special legal, accounting, financial and other consultants or advisors to advise the committee.

Our audit committee also reviews and approves related party transactions and prepares reports for the board of directors on
such related party transactions.

All members of the audit committee have experience reviewing financial statements and
dealing with related accounting and auditing issues. Each current member of the audit committee has the following relevant education and experience:



| |  |  | Peter Charbonneau is a General Partner in Skypoint Capital Corporation, an early-stage technology venture capital firm. He previously served as
the chief financial officer and chief operating officer of Newbridge Networks Corporation. Mr. Charbonneau currently chairs the audit committee for each of March Networks, TrueContext Corporation and Canadian Broadcasting Corporation. He is a
member of the audit committee for Teradici Corporation and CounterPath Corporation. Mr. Charbonneau has also served as a director and audit committee member at other companies, including Telus Corporation, BreconRidge and Cambrian Systems, Inc.
From 1977 to 1986, he worked as an accountant at Deloitte & Touche LLP (as it is now known). Mr. Charbonneau holds a Bachelor of Science from the University of Ottawa, an MBA from the University of Western Ontario and is a Fellow of
the Institute of Chartered Accountants of Ontario.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Jean-Paul Cossart is an Associate Director of Infoteria of France, a company that provides technological coaching. Prior to his involvement with
Infoteria, Mr. Cossart was Vice President Strategy and Marketing of Cofratel, a former subsidiary of France Telecom that provides PBX and LAN integration for the enterprise market. Mr. Cossart also held several
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | positions at Alcatel-Lucent S.A. and currently serves on the board of directors of DragonWave Inc. and the Institute of Directors (France). He is also a member of the executive committee of the
French chapter of the Institute of Directors, United Kingdom. Mr. Cossart holds an Electronic Engineering degree from Ecole Supérieure dElectricité.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Henry L. Perretis President and Chief Executive Officer of the Capital Area Food Bank of Texas. Prior to his current position, he was Senior
Vice President and General Manager of the Communication Products Group of Zarlink Semiconductor Inc. Mr. Perret has previously served as Chief Executive Officer and Chief Financial Officer for Legerity, Inc. and has held financial roles at
Actel Corporation, Applied Materials, Inc., National Semiconductor Corporation, Raytheon Semiconductor and General Electric Company. Mr. Perret holds a Bachelor of Science Degree in Business Administration with a concentration in Accounting
from San Jose State University.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For additional information regarding the education and experience of each
member of the audit committee relevant to the performance of his duties as a member of the audit committee see Item 10 Directors, Executive Officers and Corporate GovernanceExecutive Officers and Directors.



|Item 11. | Executive Compensation
|-------- | ----------------------

As a foreign private issuer in the United States, we are deemed to comply with this Item if we provide information required by Items 6.B
and 6.E.2 of Form 20-F in this Report. Accordingly, we are not required to disclose executive compensation according to the requirements of Regulation S-K that are applicable to U.S. domestic issuers; however, we attempt to comply with the spirit of
those rules when possible and to the extent that they do not conflict with required Canadian disclosure.

Compensation
Committee

Our board of directors has established a compensation committee, the purpose of which is to assist our board
of directors in establishing fair and competitive compensation and performance incentive plans. Our compensation committee is comprised of Messrs. Benjamin Ball (Chair), John McHugh and Norman Stout. Our board of directors has determined that each
of these directors meets the independence requirements of the rules and regulations of the Nasdaq and the SEC. Mr. Stout was considered independent as of June 8, 2011. Prior to June 8, 2011, Mr. Stout was deemed non-independent
because of his role as CEO of Inter-Tel which was acquired by us in 2007. The compensation committee is responsible for annually reviewing the compensation of our directors, our chief executive officer and certain other senior executives. To ensure
an objective process for determining compensation, the compensation committee considers a variety of pre-determined, objective criteria and consults with independent third party advisers. In each case, the committee reviews the compensation received
in the most recent period and assesses its appropriateness in the context of the responsibilities and performance of the individuals and industry trends. On this basis, the committee makes its annual compensation recommendations to the board.

In addition to making compensation recommendations to the board, the committee administers our 2001 Stock Option Plan and
2006 Equity Incentive Plan and may periodically recommend the adoption of other incentive compensation plans. The committee also conducts annual reviews of our succession plan, reviews our policies regarding loans to directors and senior officers
and monitors and maintains our insider trading policy. To fulfill its mandate, the committee is empowered to retain legal, accounting, financial and other professionals. It is also entitled to full access to our books and records and may require our
directors, officers and employees to provide information deemed necessary, by the committee to fulfill its mandate.

Compensation Committee Interlocks and Insider Participation

There were no reportable interlocks or insider participation affecting the Companys compensation committee during the fiscal year
ended April 30, 2011. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation
committee.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Report with
management of the Company and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the information set forth under Compensation Discussion and Analysis below be included in this
Report.

Respectfully submitted,

Compensation Committee

Benjamin Ball, Chair

John McHugh

Norman Stout



105



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Compensation Discussion & Analysis

Director Compensation

Directors who are not employees receive the annual service retainers and fees for attending meetings set forth below:



|                                                                                |  |    |                      | 
|------------------------------------------------------------------------------- |  | -- | -------------------- | 
|Annual service on the board of directors (other than Chair)                     |  | C$ | 25,000               | 
|Annual service as Chair of the board of directors                               |  | C$ | 100,000              | 
|Annual service as member of the audit committee (other than Chair)              |  | C$ | 10,000               | 
|Annual service as Chair of the audit committee                                  |  | C$ | 15,000               | 
|Annual service as a member of other standing committees                         |  | C$ | 7,500                | 
|Meeting fees (varies depending on whether in person, by phone and by Committee) |  | C$ | 500  $2,000         | 
|Annual service on the board of directors (all non-employee directors)           |  |    | 10,000 stock options | 
|Initial grant for new directors                                                 |  |    | 5,000 stock options  | 

All of our directors, with the exception of Richard McBee, who is also our CEO, and Donald Smith, our
former CEO (until September 2012 when the compensatory terms of his Separation Agreement with the Company expire), are eligible to receive cash as a portion of their annual retainer. The directors (except for Mr. McBee and Mr. Smith) may
elect to receive up to, but no more than, C$20,000 of their annual Board retainer in cash (payable quarterly) with the balance to be received in the form of stock options (or such other equity based compensation, as determined by the compensation
committee and the Board).

The stock options have been granted pursuant to the 2006 Equity Incentive Plan. The number of stock
options granted is calculated using the cash value divided by the Black-Scholes value at the time of grant. There were no options exercised by directors during the fiscal year ended April 30, 2011.

A director who is not also an executive officer is reimbursed for any out-of-pocket expenses incurred in connection with attending board
or committee meetings.

There are no loans or other indebtedness outstanding from the Company or any subsidiary to any of its
directors, nor has any director received any financial assistance from the Company or any subsidiary.

The following table
sets forth a summary of compensation earned during the fiscal year ended April 30, 2011 to our non-executive directors:



|                      |  |               |        |  |                      |  |   |                       |  |  |                       |  |  |                                  |         |  |                 |  |   |                          |  |  |           |  |  |  |   |  |  |  |         | 
|--------------------- |  | ------------- | ------ |  | -------------------- |  | - | --------------------- |  |  | --------------------- |  |  | -------------------------------- | ------- |  | --------------- |  | - | ------------------------ |  |  | --------- |  |  |  | - |  |  |  | ------- | 
|Name                  |  | Feesearned($) |        |  | Share-basedawards($) |  |   | Option-basedawards($) |  |  | Option-basedawards($) |  |  | Non-equityincentiveplanawards($) |         |  | Pensionvalue($) |  |   | All othercompensation($) |  |  | Total ($) | 
|Benjamin H. Ball (1)  |  |               |       |  |                      |  |  |                       |  |  |                      |  |  |                                  | 100,012 |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 100,012 | 
|Peter D. Charbonneau  |  |               | 21,084 |  |                      |  |  |                       |  |  |                      |  |  |                                  | 93,687  |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 114,771 | 
|Jean-Paul Cossart (2) |  |               | 21,084 |  |                      |  |  |                       |  |  |                      |  |  |                                  | 84,199  |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 105,283 | 
|Andrew J. Kowal (1)   |  |               |       |  |                      |  |  |                       |  |  |                      |  |  |                                  | 84,990  |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 84,990  | 
|Terence H. Matthews   |  |               |       |  |                      |  |  |                       |  |  |                      |  |  |                                  | 155,884 |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 155,884 | 
|John McHugh           |  |               |       |  |                      |  |  |                       |  |  |                      |  |  |                                  | 106,533 |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 106,533 | 
|Gilbert S. Palter (3) |  |               |       |  |                      |  |  |                       |  |  |                      |  |  |                                  | 65,751  |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 65,751  | 
|Henry L. Perret       |  |               |       |  |                      |  |  |                       |  |  |                      |  |  |                                  | 117,865 |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 117,865 | 
|Norman Stout          |  |               | 5,271  |  |                      |  |  |                       |  |  |                      |  |  |                                  | 104,485 |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  | 109,756 | 
|Donald W. Smith (4)   |  |               |       |  |                      |  |  |                       |  |  |                      |  |  |                                  |        |  |                 |  |  |                          |  |  |          |  |  |  |  |  |  |  |        | 



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|(1) | Stock options granted in connection with Mr. Ball and Mr. Kowal acting as directors of the Company were granted to Francisco Partners Management, LLC of which
Mr. Ball and Mr. Kowal are partners.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Stock options granted in connection with Mr. Cossart acting as a director of the Company were granted to Scivias S.a.r.l., a company in which Mr. Cossart is a
shareholder.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Stock options granted in connection with Mr. Palter acting as a director of the Company were granted to EdgeStone of which he is a Principal. Mr. Palter
resigned as a director on January 19, 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Smith retired from his position of CEO in January, 2011 but will continue to receive severance payments in accordance with the terms of his Separation
Agreement with the Company until September 2012.Mr. Smith remains on the Board of Directors and will not receive compensation in his role as a director until September 2012.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Nasdaq Corporate Governance Rules

Rule 5620(c) of the Nasdaq corporate governance rules generally requires that a listed companys by-laws provide for a quorum for any meeting of the holders of the companys common shares of at
least 33-1/3% of the companys outstanding common shares. Rule 5605(d) of the Nasdaq corporate governance rules generally requires that the compensation of a listed companys executive officers must be determined, or recommended to the
board of directors for determination, either by independent directors constituting a majority of the boards independent directors in a vote in which only independent directors participate or by a compensation committee comprised solely of
independent directors. Rule 5605(e)(1) of the Nasdaq corporate governance rules generally requires that director nominees must be selected or recommended for the board of directors selection either by independent directors constituting a
majority of the boards independent directors in a vote in which only independent directors participate or by a nominations committee comprised solely of independent directors.

Pursuant to the Nasdaq corporate governance rules we, as a foreign private issuer, have elected to comply with practices that are
permitted under Canadian law in lieu of the provisions of Rule 5620(c), Rule 5605(d) and Rule 5605(e)(1). Our by-laws provide that a quorum of shareholders is present at a meeting of our shareholders if the holders of at least 25% of the shares
entitled to vote at the meeting are present in person or represented by proxy, provided that a quorum shall be not less than two persons. Our board of directors determines the compensation of our executive officers, with the assistance of the
compensation committee of our board of directors. The nominating and corporate governance committee of our board of directors is generally responsible for selecting our director nominees, except that pursuant to the terms of the Shareholders
Agreement, certain of our shareholders may nominate some members of our board of directors. See Item 13Shareholders AgreementBoard Nomination Rights.

Executive Officer Compensation

Our compensation program for executive officers is designed to attract, retain, motivate and engage highly skilled and experienced individuals who excel in their field. The objective of the program is to
focus our executives on the key business factors that affect shareholder value.

Compensation for executive officers is
comprised primarily of three main components:



| |  |  | base salary;
| | - |  | ------------



| |  |  | annual or short-term incentive plans; and
| | - |  | -----------------------------------------



| |  |  | long-term incentive plans.
| | - |  | --------------------------

We set cash and equity compensation based on compensation paid to executives at comparable companies. Our compensation committee reviews executive officers overall compensation packages on an annual
basis.

We retain independent compensation consultants from time to time to assist in determining executive compensation
packages. The nature and scope of the services rendered by the consultants include:



| |  |  | assisting in identifying members of our peer group for comparison purposes;
| | - |  | ---------------------------------------------------------------------------



| |  |  | helping to determine compensation levels at the peer group companies;
| | - |  | ---------------------------------------------------------------------



| |  |  | providing advice regarding executive compensation best practices and market trends;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | assisting with the redesign of any compensation program, as needed;
| | - |  | -------------------------------------------------------------------



| |  |  | preparing for and attending selected management or committee meetings; and
| | - |  | --------------------------------------------------------------------------



| |  |  | providing advice throughout the year.
| | - |  | -------------------------------------



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In the fiscal year ended April 30, 2011, we retained Radford, an Aon Consulting
Company, to provide us with survey data and other benchmark information related to trends and competitive practices in executive compensation. The reference market used to benchmark executive compensation included companies who operate in a similar
industry segment to us. The comparable companies used to benchmark our executive compensation included Aastra, ADTRAN, Brocade, CAE, Ciena Corporation, Cognos Incorporated (now part of IBM Corporation), Comtech Telecommunications Corp.,
Constellation Software, Extreme Networks , F5 Networks, JDS Uniphase, MacDonald, Dettwiler and Associates, Open Text , Polycom, Sierra Wireless, Smart Technologies, Tekelec, and Tellabs.

Our compensation committee set our executive officers total overall cash compensation at a level that was at or
near the 50thpercentile of the cash compensation paid to
executives with similar roles at comparable companies. Equity compensation was also targeted at the 50thpercentile of comparable companies. Our compensation committee applies the following criteria in determining or reviewing recommendations for compensation for executive officers in order to ensure an
objective assessment of our executives compensation:

Base Salaries. Individual salaries are determined by each
officers experience, expertise, performance and expected contributions to the Company. Our compensation committee uses industry studies and comparables for reference purposes to assist in setting a range of base salaries for positions,
however, these studies and comparables are only one factor that is reviewed in determining base salary for each executive officer position.

Annual or Short-Term Incentive Plans. We utilize cash bonuses to reward the achievement of corporate objectives and to recognize individual performance. The amount of annual performance incentive
or at risk component of an executive officers compensation increases with the level of responsibility and impact that the executive officer has had and can have on our overall performance. Our CEO provides the compensation
committee with an assessment of each executives performance annually.

For the fiscal year ended April 30, 2011,
the named executive officers (NEOs) include: Richard D. McBee, President and CEO; Donald W. Smith, former CEO; Steven E. Spooner, CFO; Paul A.N. Butcher, former President and COO; Graham Bevington, Executive Vice President Sales, Service
Marketing International (formerly Vice President and Managing Director Europe, Middle East and Africa); and Ronald G. Wellard, Executive Vice President General Manager, Mitel Communications Solutions (formerly Executive Vice President Product
Development and Operations). Mr. Butchers employment with the Company terminated on April 30, 2011. The annual performance incentive targets for the fiscal year ended April 30, 2011, for our NEOs ranged between 50% and 65% of
base salary. The annual performance incentive compensation is contingent upon our achievement of certain financial objectives, including annual revenue, gross margin and operating expense targets, which targets were established by our compensation
committee. With the exception of our new CEO, Richard McBee, the same targets were applicable to all executive officers. Since we did not meet our incentive targets, no compensation was paid under this program during fiscal year 2011. Pursuant to
the terms of his employment agreement, Mr. McBee was paid a guaranteed cash bonus of $100,000 for the period January to April 30, 2011.

Long-Term Incentive Plans. Our compensation committee believes that equity based long-term incentive compensation is a fundamental component of our executives compensation program. Grants of
options under our equity incentive plans assist us in retaining employees and attracting critical key talent by providing individuals with an opportunity for capital investment in the Company. In addition, the granting of options ensures that the
interests of our executive officers are aligned with those of our shareholders. Options are granted primarily based on the extent of the individuals responsibility and performance and are also granted to attract new executive officers and to
recognize job promotions.

Our President and CEO recommends levels of option grants for our NEOs to our compensation committee
based on skills, responsibilities and performance. Previous grants of options are also taken into consideration. Our compensation committee approves grants of options after discussion and analysis of the material provided to them.

During the fiscal year ended April 30, 2010, there were 2,110,000 options granted to the NEOs. There were 70,001 options exercised
by the NEOs during the fiscal year ended April 30, 2011.

There are no loans or other indebtedness outstanding from the
Company or any subsidiary to any of its executive officers nor has any executive officer received any financial assistance from the Company or any subsidiary.



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The following table sets forth a summary of compensation paid during the fiscal year ended
April 30, 2011 to our NEOs:

Summary Compensation Table



|                                                   |  |      |      |  |               |  |         |                                                |  |  |                          |  |  |                 |           |  |                              |  |        |           |  |  |           |  |  |  |           | 
|-------------------------------------------------- |  | ---- | ---- |  | ------------- |  | ------- | ---------------------------------------------- |  |  | ------------------------ |  |  | --------------- | --------- |  | ---------------------------- |  | ------ | --------- |  |  | --------- |  |  |  | --------- | 
|Name andPrincipal Position                         |  | Year |      |  | Salary($) (1) |  |         | Annual Non-equity IncentivePlanCompensation($) |  |  | Option-basedAwards($)(2) |  |  | PensionValue($) |           |  | All OtherCompensation($) (3) |  |        | Total ($) | 
|Richard D. McBee                                   |  |      | 2011 |  |               |  | 190,154 |                                                |  |  |                         |  |  |                 | 4,634,577 |  |                              |  |       |           |  |  | 105,538   |  |  |  | 4,930,269 | 
|Chief Executive Officer(4)                         |  |      | 2010 |  |               |  |        |                                                |  |  |                         |  |  |                 |          |  |                              |  |       |           |  |  |          |  |  |  |          | 
|                                                   |  |      | 2009 |  |               |  |        |                                                |  |  |                         |  |  |                 |          |  |                              |  |       |           |  |  |          |  |  |  |          | 
|Donald W. Smith                                    |  |      | 2011 |  |               |  | 737,375 |                                                |  |  |                         |  |  |                 | 111,079   |  |                              |  | 7,478  |           |  |  | 1,061,327 |  |  |  | 1,917,259 | 
|Chief Executive Officer (5)                        |  |      | 2010 |  |               |  | 485,609 |                                                |  |  |                         |  |  |                 |          |  |                              |  | 4,934  |           |  |  | 126,269   |  |  |  | 616,812   | 
|                                                   |  |      | 2009 |  |               |  | 564,498 |                                                |  |  |                         |  |  |                 | 63,053    |  |                              |  | 5,635  |           |  |  |           |  |  |  | 633,186   | 
|Steven E. Spooner                                  |  |      | 2011 |  |               |  | 398,947 |                                                |  |  |                         |  |  |                 | 111,079   |  |                              |  | 3,989  |           |  |  | 11,592    |  |  |  | 525,607   | 
|Chief Financial Officer(6)                         |  |      | 2010 |  |               |  | 314,484 |                                                |  |  |                         |  |  |                 |          |  |                              |  | 3,234  |           |  |  | 66,643    |  |  |  | 384,361   | 
|                                                   |  |      | 2009 |  |               |  | 331,159 |                                                |  |  |                         |  |  |                 | 31,526    |  |                              |  | 13,733 |           |  |  |           |  |  |  | 376,418   | 
|Paul A.N. Butcher                                  |  |      | 2011 |  |               |  | 469,120 |                                                |  |  |                         |  |  |                 |          |  |                              |  | 23,758 |           |  |  | 1,018,951 |  |  |  | 1,511,829 | 
|President and Chief Operating                      |  |      | 2010 |  |               |  | 369,981 |                                                |  |  |                         |  |  |                 |          |  |                              |  | 20,502 |           |  |  | 120,370   |  |  |  | 510,853   | 
|Officer (7)                                        |  |      | 2009 |  |               |  | 389,371 |                                                |  |  |                         |  |  |                 | 25,224    |  |                              |  | 16,800 |           |  |  | 46,821    |  |  |  | 478,216   | 
|Graham Bevington                                   |  |      | 2011 |  |               |  | 353,417 |                                                |  |  |                         |  |  |                 | 133,295   |  |                              |  | 18,958 |           |  |  | 17,344    |  |  |  | 523,014   | 
|Executive Vice President Sales,                    |  |      | 2010 |  |               |  | 353,100 |                                                |  |  |                         |  |  |                 |          |  |                              |  | 17,533 |           |  |  | 25,746    |  |  |  | 396,379   | 
|Service, Marketing International (8)               |  |      | 2009 |  |               |  | 366,572 |                                                |  |  |                         |  |  |                 | 15,763    |  |                              |  | 19,647 |           |  |  |           |  |  |  | 401,982   | 
|Ronald G. Wellard                                  |  |      | 2011 |  |               |  | 317,336 |                                                |  |  |                         |  |  |                 | 133,295   |  |                              |  | 3,173  |           |  |  | 10,722    |  |  |  | 464,526   | 
|Executive Vice President,                          |  |      | 2010 |  |               |  | 243,733 |                                                |  |  |                         |  |  |                 |          |  |                              |  | 2,500  |           |  |  | 31,544    |  |  |  | 277,777   | 
|General Manager, Mitel Communications Solutions(9) |  |      | 2009 |  |               |  | 234,512 |                                                |  |  |                         |  |  |                 | 15,763    |  |                              |  | 8,545  |           |  |  |           |  |  |  | 258,820   | 



|(1) | Mr. Smith volunteered to receive reductions in his annual base salary (10% commencing November 8, 2008; 25% commencing January 5, 2009; and 30%
commencing February 2, 2009). Mr. Spooner and Mr. Butcher each volunteered to receive reductions in their annual base salary (10% commencing November 8, 2008; 15% commencing January 17, 2009; and 20% commencing
February 14, 2009). Mr. Wellard and Mr. Bevington each volunteered to receive reductions in their annual base salary (10% commencing November 8, 2008; and 15% commencing January 31, 2009). These reductions are reflected in
the above table.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Effective July 1, 2010, as part of a general phase out of the Companys reduced work
program, the Company made the decision to phase out the reductions to annual base salaries detailed above. As a result, on each of July 1, 2010, October 1, 2010, January 1, 2011 and April 1, 2011, the salaries of each
of Mr. Smith, Mr. Spooner and Mr. Butcher increased by an amount equal to 25% of the amount by which their respective salaries had been reduced, returning their salaries to the full amount. Also on July 1, 2010, the salaries of
each of Mr. Wellard and Mr. Bevington increased by an amount equal to 50% of the amount by which their respective salaries had been reduced and on October 1, 2010 and January 1, 2011, their respective salaries increased by 25%,
returning their salaries to the full amount.

Compensation to Mr. Smith, Mr. Spooner, Mr. Butcher and
Mr. Wellard is paid in Canadian dollars, but converted to U.S. dollars at the average of the noon buying rate for the relevant period. The Canadian dollar salaries for 2011, 2010 and 2009 are as follows: Mr. Smith (2011  C$699,471,
2010  C$527,022, 2009  C$672,021), Mr. Spooner (2011  C$378,439, 2010 



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C$341,304, 2009  C$394,237), Mr. Butcher (2011  C$445,005, 2010  C$401,533, 2009  C$463,537) and Mr. Wellard (2011  C$301,024, 2010  C$264,518, 2009
 C$279,181).

Compensation to Mr. Bevington (base, commission and pension value) is paid in British pounds sterling
but converted to U.S. dollars at the average of the noon buying rates for the relevant period. The British pounds sterling earnings, base and commission, for 2011, 2010 and 2009 for Mr. Bevington are as follows: 2011£211,755, 2010
 £221,336, 2009  £216,129.



|(2) | These options were granted under the 2006 Equity Incentive Plan.
|--- | ----------------------------------------------------------------

|(3) | On July 9, 2009, the Board approved a reduction in the exercise price of all outstanding stock options for current employees and directors to $3.75 per share,
under both the 2006 Equity Incentive Plan and the 2001 Stock Option Plan. Option based awards granted to our directors and NEOs are valued on the date of grant using the Black-Scholes option-pricing model, using the same principles as described in
the Companys managements discussion and analysis of financial condition and results of operations for fiscal year 2010 filed with the SEC and the Canadian Securities Administrators and available at www.sec.gov and www.sedar.com.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All Other Compensation for Mr. Smith, Mr. Spooner, Mr. Butcher, Mr. Wellard and
Mr. Bevington for fiscal 2010 includes $126,269, $66,643, $80,672, $26,307 and $25,746 respectively for the additional Black-Scholes value related to the re-pricing of options.



|(4) | Mr. McBee joined the Company as a director and CEO in January 2011. Mr. McBees annual salary is $600,000. Mr. McBee does not receive compensation
in his role as a director. Mr. McBees fiscal 2011 annual non-equity incentive plan compensation consists of a $100,000 bonus. All Other Compensation for Mr. McBee for fiscal 2011 includes $5,538 in respect of car allowance.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | All Other Compensation for Mr. Smith includes $11,961 in respect of car allowance and $969,482 for severance payments in accordance with the terms of his
Separation Agreement with the Company until September 2012.Mr. Smith retired from his position of CEO in January 2011. Mr. Smith remains on the Board of Directors and will not receive compensation in his role as a director until
September 2012.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | All Other Compensation for Mr. Spooner for fiscal 2011 is in respect of a car allowance.
|--- | ----------------------------------------------------------------------------------------

|(7) | All Other Compensation for Mr. Butcher for fiscal 2011 includes $42,369 for the issuance of 7,676 deferred share units, $17,519 in respect of a car allowance and
$959,063 for severance payments in accordance with the terms of his employment contract until October 2012. All Other Compensation for fiscal 2010 includes $39,698 for the issuance of 2,309 deferred share units. Mr. Butchers employment
with the Corporation terminated on April 30, 2011.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Salary for Mr. Bevington includes $148,026, $176,818 and $162,735 in commission payments in fiscal 2011, fiscal 2010 and fiscal 2009 respectively. All Other
Compensation for Mr. Bevington includes $17,344 in respect of a car allowance.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | All Other Compensation for Mr. Wellard includes $7,983 in fiscal 2011 in respect of a car allowance and $2,738 in fiscal 2011 and $5,247 in fiscal 2010 for patent
awards.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Options Outstanding

The following table sets forth information regarding options for the purchase of common shares outstanding as of April 30, 2011 to
our directors and NEOs. The closing price of our common shares on April 30, 2011 was $5.29 per share.



|                    |  |                                                     |       |  |                |  |       |                 |  |  |                     |  |  |                      |      |  |                                          |  |           |                                                       |  |   |                                                               |  |  |  |     |  |  |   |        | 
|------------------- |  | --------------------------------------------------- | ----- |  | -------------- |  | ----- | --------------- |  |  | ------------------- |  |  | -------------------- | ---- |  | ---------------------------------------- |  | --------- | ----------------------------------------------------- |  | - | ------------------------------------------------------------- |  |  |  | --- |  |  | - | ------ | 
|Name                |  | Number ofsecuritiesunderlying unexercisedoptions(1) |       |  | Vested Options |  |       | UnvestedOptions |  |  | OptionExercisePrice |  |  | OptionExpirationDate |      |  | Value of unexercisedin-the-money options |  |           | Number ofshares or units ofshares that havenot vested |  |   | Market orpayout value ofshare-basedawards thathave not
vested | 
|Terence H. Matthews |  |                                                     | 4,396 |  |                |  | 4,396 |                 |  |  |                    |  |  | $                    | 3.75 |  |                                          |  | 15-Jul-11 |                                                       |  | $ | 6,769.84                                                      |  |  |  |    |  |  | $ |       | 
|Chairman            |  |                                                     | 5,264 |  |                |  | 5,264 |                 |  |  |                    |  |  | $                    | 3.75 |  |                                          |  | 27-Jul-11 |                                                       |  | $ | 8,106.56                                                      |  |  |  |    |  |  | $ |       | 
|                    |  |                                                     | 396   |  |                |  | 396   |                 |  |  |                    |  |  | $                    | 3.75 |  |                                          |  | 8-Jun-11  |                                                       |  | $ | 609.84                                                        |  |  |  |    |  |  | $ |       | 
|                    |  |                                                     | 6,400 |  |                |  | 6,400 |                 |  |  |                    |  |  | $                    | 3.75 |  |                                          |  | 28-Mar-12 |                                                       |  | $ | 9,856.00                                                      |  |  |  |    |  |  | $ |       | 
|                    |  |                                                     | 1,379 |  |                |  | 1,034 |                 |  |  | 345                 |  |  | $                    | 3.75 |  |                                          |  | 26-Jul-12 |                                                       |  | $ | 2,123.66                                                      |  |  |  | 345 |  |  | $ | 531.30 | 



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|                     |  |  |        |     |  |  |        |  |  |  |        |  |  |   |      |  |  |  |           |  |  |   |            |  |  |  |        |  |  |   |           | 
|-------------------- |  |  | ------ | --- |  |  | ------ |  |  |  | ------ |  |  | - | ---- |  |  |  | --------- |  |  | - | ---------- |  |  |  | ------ |  |  | - | --------- | 
|                     |  |  | 8,033  |     |  |  | 6,024  |  |  |  | 2,009  |  |  | $ | 3.75 |  |  |  | 23-Oct-12 |  |  | $ | 12,370.82  |  |  |  | 2,009  |  |  | $ | 3,093.86  | 
|                     |  |  | 9,914  |     |  |  | 4,957  |  |  |  | 4,957  |  |  | $ | 3.75 |  |  |  | 8-Oct-13  |  |  | $ | 15,267.56  |  |  |  | 4,957  |  |  | $ | 7,633.78  | 
|                     |  |  | 9,438  |     |  |  | 2,359  |  |  |  | 7,079  |  |  | $ | 3.75 |  |  |  | 9-Jul-14  |  |  | $ | 14,534.52  |  |  |  | 7,079  |  |  | $ | 10,901.66 | 
|                     |  |  | 69,549 |     |  |  | 17,387 |  |  |  | 52,162 |  |  | $ | 3.75 |  |  |  | 24-Sep-14 |  |  | $ | 107,105.46 |  |  |  | 52,162 |  |  | $ | 80,329.48 | 
|                     |  |  | 52,295 |     |  |  |       |  |  |  | 52,295 |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 52,295 |  |  | $ |          | 
|Peter D. Charbonneau |  |  | 3,480  |     |  |  | 3,480  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 15-Jul-11 |  |  | $ | 5,359.20   |  |  |  |       |  |  | $ |          | 
|Vice Chairman        |  |  | 2,413  |     |  |  | 2,413  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 27-Jul-11 |  |  | $ | 3,716.02   |  |  |  |       |  |  | $ |          | 
|                     |  |  | 1,469  |     |  |  | 1,469  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 8-Jun-11  |  |  | $ | 2,262.26   |  |  |  |       |  |  | $ |          | 
|                     |  |  | 4,418  |     |  |  | 4,418  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 9-Jun-11  |  |  | $ | 6,803.72   |  |  |  |       |  |  | $ |          | 
|                     |  |  | 3,745  |     |  |  | 3,745  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 28-Mar-12 |  |  | $ | 5,767.30   |  |  |  |       |  |  | $ |          | 
|                     |  |  | 3,396  |     |  |  | 2,547  |  |  |  | 849    |  |  | $ | 3.75 |  |  |  | 26-Jul-12 |  |  | $ | 5,229.84   |  |  |  | 849    |  |  | $ | 1,307.46  | 
|                     |  |  | 2,209  |     |  |  | 1,656  |  |  |  | 553    |  |  | $ | 3.75 |  |  |  | 23-Oct-12 |  |  | $ | 3,401.86   |  |  |  | 553    |  |  | $ | 851.62    | 
|                     |  |  | 4,741  |     |  |  | 2,370  |  |  |  | 2,371  |  |  | $ | 3.75 |  |  |  | 8-Oct-13  |  |  | $ | 7,301.14   |  |  |  | 2,371  |  |  | $ | 3,651.34  | 
|                     |  |  | 19,253 |     |  |  | 4,813  |  |  |  | 14,440 |  |  | $ | 3.75 |  |  |  | 9-Jul-14  |  |  | $ | 29,649.62  |  |  |  | 14,440 |  |  | $ | 22,237.60 | 
|                     |  |  | 19,126 |     |  |  | 4,781  |  |  |  | 14,345 |  |  | $ | 3.75 |  |  |  | 24-Sep-14 |  |  | $ | 29,454.04  |  |  |  | 14,345 |  |  | $ | 22,091.30 | 
|                     |  |  | 32,668 |     |  |  |       |  |  |  | 32,668 |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 32,668 |  |  | $ |          | 
|Benjamin H. Ball     |  |  | 8,233  |     |  |  | 6,174  |  |  |  | 2,059  |  |  | $ | 3.75 |  |  |  | 23-Oct-12 |  |  | $ | 12,678.82  |  |  |  | 2,059  |  |  | $ | 3,170.86  | 
|Director(2)          |  |  | 8,529  |     |  |  | 4,264  |  |  |  | 4,265  |  |  | $ | 3.75 |  |  |  | 8-Oct-13  |  |  | $ | 13,134.66  |  |  |  | 4,265  |  |  | $ | 6,568.10  | 
|                     |  |  | 29,446 |     |  |  | 7,361  |  |  |  | 22,085 |  |  | $ | 3.75 |  |  |  | 9-Jul-14  |  |  | $ | 45,346.84  |  |  |  | 22,085 |  |  | $ | 34,010.90 | 
|                     |  |  | 46,945 |     |  |  | 11,736 |  |  |  | 35,209 |  |  | $ | 3.75 |  |  |  | 24-Sep-14 |  |  | $ | 72,295.30  |  |  |  | 35,209 |  |  | $ | 54,221.86 | 
|                     |  |  | 62,200 |     |  |  |       |  |  |  | 62,200 |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 62,200 |  |  | $ |          | 
|Jean-Paul Cossart    |  |  | 1,334  | (3) |  |  | 1,334  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 9-Sep-11  |  |  | $ | 2,054.36   |  |  |  |       |  |  | $ |          | 
|Director(4)          |  |  | 1,334  | (3) |  |  | 1,334  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 8-Dec-11  |  |  | $ | 2,054.36   |  |  |  |       |  |  | $ |          | 
|                     |  |  | 1,334  | (3) |  |  | 1,334  |  |  |  |       |  |  | $ | 3.75 |  |  |  | 1-Feb-12  |  |  | $ | 2,054.36   |  |  |  |       |  |  | $ |          | 
|                     |  |  | 1,004  |     |  |  | 753    |  |  |  | 251    |  |  | $ | 3.75 |  |  |  | 23-Oct-12 |  |  | $ | 1,546.16   |  |  |  | 251    |  |  | $ | 386.54    | 
|                     |  |  | 2,858  |     |  |  | 1,429  |  |  |  | 1,429  |  |  | $ | 3.75 |  |  |  | 8-Oct-13  |  |  | $ | 4,401.32   |  |  |  | 1,429  |  |  | $ | 2,200.66  | 
|                     |  |  | 18,121 |     |  |  | 4,530  |  |  |  | 13,591 |  |  | $ | 3.75 |  |  |  | 9-Jul-14  |  |  | $ | 27,906.34  |  |  |  | 13,591 |  |  | $ | 20,930.14 | 
|                     |  |  | 15,649 |     |  |  | 3,912  |  |  |  | 11,737 |  |  | $ | 3.75 |  |  |  | 24-Sep-14 |  |  | $ | 24,099.46  |  |  |  | 11,737 |  |  | $ | 18,074.98 | 
|                     |  |  | 27,499 |     |  |  |       |  |  |  | 27,499 |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 27,499 |  |  | $ |          | 
|Andrew Kowal         |  |  | 8,233  |     |  |  | 6,174  |  |  |  | 2,059  |  |  | $ | 3.75 |  |  |  | 23-Oct-12 |  |  | $ | 12,678.82  |  |  |  | 2,059  |  |  | $ | 3,170.86  | 
|Director(2)          |  |  | 8,529  |     |  |  | 4,264  |  |  |  | 4,265  |  |  | $ | 3.75 |  |  |  | 8-Oct-13  |  |  | $ | 13,134.66  |  |  |  | 4,265  |  |  | $ | 6,568.10  | 
|                     |  |  | 29,446 |     |  |  | 7,361  |  |  |  | 22,085 |  |  | $ | 3.75 |  |  |  | 9-Jul-14  |  |  | $ | 45,346.84  |  |  |  | 22,085 |  |  | $ | 34,010.90 | 
|                     |  |  | 46,945 |     |  |  | 11,736 |  |  |  | 35,209 |  |  | $ | 3.75 |  |  |  | 24-Sep-14 |  |  | $ | 72,295.30  |  |  |  | 35,209 |  |  | $ | 54,221.86 | 
|                     |  |  | 62,200 |     |  |  |       |  |  |  | 62,200 |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 62,200 |  |  | $ |          | 



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|                          |  |  |           |     |  |  |         |  |  |  |           |  |  |   |      |  |  |  |           |  |  |   |            |  |  |  |           |  |  |   |            | 
|------------------------- |  |  | --------- | --- |  |  | ------- |  |  |  | --------- |  |  | - | ---- |  |  |  | --------- |  |  | - | ---------- |  |  |  | --------- |  |  | - | ---------- | 
|John McHugh               |  |  | 33,276    |     |  |  |        |  |  |  | 33,276    |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 33,276    |  |  | $ |           | 
|Director                  |  |  |           |     |  |  |         |  |  |  |           |  |  |   |      |  |  |  |           |  |  |   |            |  |  |  |           |  |  | $ |           | 
|Henry L. Perret           |  |  | 34,376    |     |  |  |        |  |  |  | 34,376    |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 34,376    |  |  | $ |           | 
|Director                  |  |  |           |     |  |  |         |  |  |  |           |  |  |   |      |  |  |  |           |  |  |   |            |  |  |  |           |  |  |   |            | 
|Donald W. Smith           |  |  | 133,334   |     |  |  | 133,334 |  |  |  |          |  |  | $ | 3.75 |  |  |  | 26-Jul-11 |  |  | $ | 205,334.36 |  |  |  |          |  |  | $ |           | 
|Director                  |  |  | 40,000    |     |  |  | 40,000  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 1-Feb-12  |  |  | $ | 61,600.00  |  |  |  |          |  |  | $ |           | 
|                          |  |  | 66,668    | (6) |  |  | 16,666  |  |  |  | 50,002    |  |  | $ | 3.75 |  |  |  | 12-Mar-14 |  |  | $ | 102,668.72 |  |  |  | 50,002    |  |  | $ | 77,003.08  | 
|                          |  |  | 25,000    |     |  |  | 4,687   |  |  |  | 20,313    |  |  | $ | 3.75 |  |  |  | 15-Jul-17 |  |  | $ | 38,500.00  |  |  |  | 20,313    |  |  | $ | 31,282.02  | 
|Norman Stout              |  |  | 33,334    | (5) |  |  | 25,001  |  |  |  | 8,333     |  |  | $ | 3.75 |  |  |  | 23-Oct-12 |  |  | $ | 51,334.36  |  |  |  | 8,333     |  |  | $ | 12,832.82  | 
|Director                  |  |  | 2,858     |     |  |  | 1,429   |  |  |  | 1,429     |  |  | $ | 3.75 |  |  |  | 8-Oct-13  |  |  | $ | 4,401.32   |  |  |  | 1,429     |  |  | $ | 2,200.66   | 
|                          |  |  | 9,438     |     |  |  | 2,359   |  |  |  | 7,079     |  |  | $ | 3.75 |  |  |  | 9-Jul-14  |  |  | $ | 14,534.52  |  |  |  | 7,079     |  |  | $ | 10,901.66  | 
|                          |  |  | 17,388    |     |  |  | 4,347   |  |  |  | 13,041    |  |  | $ | 3.75 |  |  |  | 24-Sep-14 |  |  | $ | 26,777.52  |  |  |  | 13,041    |  |  | $ | 20,083.14  | 
|                          |  |  | 25,359    |     |  |  |        |  |  |  | 25,359    |  |  | $ | 6.50 |  |  |  | 16-Sep-17 |  |  | $ |           |  |  |  | 25,359    |  |  | $ |           | 
|Richard D. McBee          |  |  | 1,500,000 | (7) |  |  | 61,551  |  |  |  | 1,438,449 |  |  | $ | 5.16 |  |  |  | 19-Jan-18 |  |  | $ | 195,000.00 |  |  |  | 1,438,449 |  |  | $ | 186,998.37 | 
|Chief Executive Officer   |  |  | 500,000   |     |  |  | 32,198  |  |  |  | 467,802   |  |  | $ | 5.16 |  |  |  | 19-Jan-18 |  |  | $ | 65,000.00  |  |  |  | 467,802   |  |  | $ | 60,814.26  | 
|Steven E. Spooner         |  |  | 15,000    |     |  |  | 15,000  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 26-Jul-11 |  |  | $ | 23,100.00  |  |  |  |          |  |  | $ |           | 
|Chief Financial Officer   |  |  | 5,000     |     |  |  | 5,000   |  |  |  |          |  |  | $ | 3.75 |  |  |  | 9-Sep-11  |  |  | $ | 7,700.00   |  |  |  |          |  |  | $ |           | 
|                          |  |  | 1,667     |     |  |  | 1,250   |  |  |  | 417       |  |  | $ | 3.75 |  |  |  | 9-Dec-11  |  |  | $ | 2,567.18   |  |  |  | 417       |  |  | $ | 642.18     | 
|                          |  |  | 38,334    |     |  |  | 38,334  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 27-Jul-11 |  |  | $ | 59,034.36  |  |  |  |          |  |  | $ |           | 
|                          |  |  | 26,667    |     |  |  | 26,667  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 1-Feb-12  |  |  | $ | 41,067.18  |  |  |  |          |  |  | $ |           | 
|                          |  |  | 33,334    | (6) |  |  | 8,333   |  |  |  | 25,001    |  |  | $ | 3.75 |  |  |  | 12-Mar-14 |  |  | $ | 51,334.36  |  |  |  | 25,001    |  |  | $ | 38,501.54  | 
|                          |  |  | 25,000    |     |  |  | 4,687   |  |  |  | 20,313    |  |  | $ | 8.79 |  |  |  | 23-Oct-12 |  |  | $ |           |  |  |  | 20,313    |  |  | $ |           | 
|Paul A. N. Butcher        |  |  | 50,000    |     |  |  | 50,000  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 26-Jul-11 |  |  | $ | 77,000.00  |  |  |  |          |  |  | $ |           | 
|President & Chief         |  |  | 26,667    |     |  |  | 26,667  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 1-Feb-12  |  |  | $ | 41,067.18  |  |  |  |          |  |  | $ |           | 
|Operating Officer         |  |  | 26,668    | (6) |  |  | 6,666   |  |  |  | 20,002    |  |  | $ | 3.75 |  |  |  | 12-Mar-14 |  |  | $ | 41,068.72  |  |  |  | 20,002    |  |  | $ | 30,803.08  | 
|Graham Bevington          |  |  | 20,000    |     |  |  | 20,000  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 26-Jul-11 |  |  | $ | 30,800.00  |  |  |  |          |  |  | $ |           | 
|Vice President and        |  |  | 267       |     |  |  | 267     |  |  |  |          |  |  | $ | 3.75 |  |  |  | 8-Jun-11  |  |  | $ | 411.18     |  |  |  |          |  |  | $ |           | 
|Managing Director Europe- |  |  | 5,334     |     |  |  | 5,334   |  |  |  |          |  |  | $ | 3.75 |  |  |  | 1-Feb-12  |  |  | $ | 8,214.36   |  |  |  |          |  |  | $ |           | 
|Middle East and Africa    |  |  | 16,668    | (6) |  |  | 4,166   |  |  |  | 12,502    |  |  | $ | 3.75 |  |  |  | 12-Mar-14 |  |  | $ | 25,668.72  |  |  |  | 12,502    |  |  | $ | 19,253.08  | 
|                          |  |  | 30,000    |     |  |  | 5,625   |  |  |  | 24,375    |  |  | $ | 8.79 |  |  |  | 15-Jul-17 |  |  | $ |           |  |  |  | 24,375    |  |  | $ |           | 
|Ronald G. Wellard         |  |  | 11,667    |     |  |  | 11,667  |  |  |  |          |  |  | $ | 3.75 |  |  |  | 26-Jul-11 |  |  | $ | 17,967.18  |  |  |  |          |  |  | $ |           | 



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| |  |  |        |     |  |  |        |  |  |  |        |  |  |   |      |  |  |  |           |  |  |   |           |  |  |  |        |  |  |   |           | 
| |  |  | ------ | --- |  |  | ------ |  |  |  | ------ |  |  | - | ---- |  |  |  | --------- |  |  | - | --------- |  |  |  | ------ |  |  | - | --------- | 
| |  |  | 10,000 |     |  |  | 10,000 |  |  |  |       |  |  | $ | 3.75 |  |  |  | 27-Jul-11 |  |  | $ | 15,400.00 |  |  |  |       |  |  | $ |          | 
| |  |  | 5,000  |     |  |  | 3,750  |  |  |  | 1,250  |  |  | $ | 3.75 |  |  |  | 23-Oct-12 |  |  | $ | 7,700.00  |  |  |  | 1,250  |  |  | $ | 1,925.00  | 
| |  |  | 16,668 | (6) |  |  | 4,166  |  |  |  | 12,502 |  |  | $ | 3.75 |  |  |  | 12-Mar-14 |  |  | $ | 25,668.72 |  |  |  | 12,502 |  |  | $ | 19,253.08 | 
| |  |  | 30,000 |     |  |  | 5,625  |  |  |  | 24,375 |  |  | $ | 8.79 |  |  |  | 1-Feb-12  |  |  | $ |          |  |  |  | 24,375 |  |  | $ |          | 



|(1) | Each stock option award was granted pursuant to our 2001 Stock Option Plan, our 2006 Equity Incentive Plan or, in the case of Mr. McBee, as an inducement (as
described in note 10 below). All of these stock options are unexercised.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The stock options granted to Francisco Partners Management, LLC have been reflected next to the names of Mr. Ball and Mr. Kowal, who are partners of Francisco
Partners Management, LLC. An aggregate of 155,353 options have been granted to Francisco Partners Management, LLC.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Stock options were granted in connection with consulting fees prior to Mr. Cossarts appointment as a director of the Company.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(4) | Stock options granted in connection with Mr. Cossart acting as a director of the Company were granted to Scivias S.a.r.l., a company in which Mr. Cossart is a
shareholder.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Stock options were granted to Mr. Stout as an employee prior to his appointment as a director of the Company.
|--- | -------------------------------------------------------------------------------------------------------------

|(6) | Represents performance-based stock options granted under the 2006 Equity Incentive Plan. The stock options vest as to 12.5% on each of the first, second, third and
fourth anniversaries from the date of grant. The remaining 50% vest as follows: 12.5% of the options vest on the trigger date and the remainder vest monthly over an 18-month period following the issue date. The trigger date is defined as the date
that is one month following the month in which the five-day average trading price is equal to or greater than $16.80 per share (Trigger Date). All unexercised options expire on the earlier of 24 months after the Trigger Date or five
years from the date of grant.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | 515,175 of the stock options granted to Mr. McBee as a component of his employment compensation, have been granted as an inducement, material to his entering into
employment with us. These inducement options will vest on the same vesting schedule as options granted under the 2006 Equity Incentive Plan. These options are outside of the pool of stock options available for grant under the 2006 Equity Incentive
Plan and all other security-based compensation arrangements of the Company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Incentive Plan Awards 
Value Vested or Earned During the Year

The following table lists, with respect to each NEO, the value of all option-based
and share-based awards that have vested, and all non-equity incentive plan compensation earned, during the fiscal year ended April 30, 2011.



|                     |  |                                                          |         |  |                                                                            |  |   | 
|-------------------- |  | -------------------------------------------------------- | ------- |  | -------------------------------------------------------------------------- |  | - | 
|Name                 |  | Option-based awards - Valuevested during the year ($)(1) |         |  | Non-equity incentive plancompensation - Value earnedduring the year
($)(2) | 
|Richard D. McBee     |  | $                                                        | 12,187  |  |                                                                            |  |  | 
|Steven E. Spooner    |  | $                                                        | 35,164  |  |                                                                            |  |  | 
|Paul A.N. Butcher    |  | $                                                        | 100,100 |  |                                                                            |  |  | 
|Ronald G. Wellard    |  | $                                                        | 15,015  |  |                                                                            |  |  | 
|Graham Bevington     |  | $                                                        | 22,305  |  |                                                                            |  |  | 
|Donald W. Smith      |  | $                                                        | 141,167 |  |                                                                            |  |  | 
|Benjamin H. Ball     |  | $                                                        | 35,862  |  |                                                                            |  |  | 
|Peter D. Charbonneau |  | $                                                        | 20,767  |  |                                                                            |  |  | 
|Jean-Paul Cossart    |  | $                                                        | 15,003  |  |                                                                            |  |  | 
|Andrew J. Kowal      |  | $                                                        | 35,862  |  |                                                                            |  |  | 
|Terence H. Matthews  |  | $                                                        | 40,467  |  |                                                                            |  |  | 
|John McHugh          |  |                                                          |        |  |                                                                            |  |  | 
|Henry L. Perret      |  |                                                          |        |  |                                                                            |  |  | 
|Norman Stout         |  | $                                                        | 24,263  |  |                                                                            |  |  | 



|(1) | Represents the total value of options that vested in fiscal 2011. The closing price of our common shares on April 30, 2011 was $5.29 per share.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | Represents the total value of annual cash incentive awards for fiscal 2011. These amounts are also reported in the Summary Compensation Table.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

Stock Option and Other Compensation Plans

2001 Stock Option Plan

We adopted an employee stock option plan in March
2001, or the 2001 Stock Option Plan. Further amendments to the 2001 Stock Option Plan have been approved by our board of directors from time to time in accordance with the terms of the plan. The 2001 Stock Option Plan provides for the grant of
options to acquire common shares to our employees, directors and consultants.

The 2001 Stock Option Plan provides that our
compensation committee has the authority to determine the individuals to whom options will be granted, the number of common shares subject to option grants and other terms and conditions of option grants. The 2001 Stock Option Plan also provides
that, unless otherwise determined by our compensation committee, one-quarter of the common shares that an option holder is entitled to purchase become eligible for purchase on each of the first, second, third and fourth anniversaries of the date of
grant, and that options expire on the fifth anniversary of the date of grant. The 2001 Stock Option Plan provides that in no event may an option remain exercisable beyond the tenth anniversary of the date of grant. The 2001 Stock Option Plan
contains change of control provisions which accelerate vesting of options under certain circumstances.

As of June 15,
2011, there are options to acquire 547,585 common shares granted under our 2001 Stock Option Plan.

Effective
September 7, 2006, shares subject to outstanding awards under the 2001 Stock Option Plan which lapse, expire or are forfeited or terminated will no longer become available for grants under this plan. Instead, new stock options and other equity
grants will be made under the 2006 Equity Incentive Plan (described below), which became effective on September 7, 2006.

In the first quarter of fiscal 2009, our board of directors approved the extension of the expiry date of outstanding stock option grants for 837 employees and directors holding options to purchase
604,095 common shares. The expiry date was extended by two years so that options expiring in July 2009 now expire in July 2011. Stock options held by NEOs and certain other management level employees who were part of this group agreed
to a new vesting schedule in connection with these options. The options were extended to foster continued employee confidence in the value potential of the Company and to acknowledge ongoing and outstanding employee commitment.

In the fourth quarter of fiscal 2010, our board of directors approved the extension of the expiry date of outstanding stock option
grants for 918 employees and directors holding options to purchase 302,312 common shares. The expiry date was extended by one year so that options expiring in calendar 2010 now expire in calendar 2011.

2006 Equity Incentive Plan

We adopted a second employee stock option plan on September 7, 2006, or the 2006 Equity Incentive Plan. No new options will be granted under the 2001 Stock Option Plan and all future equity awards
will be granted under the 2006 Equity Incentive Plan. All existing options that have been previously granted under the 2001 Stock Option Plan will continue to be governed under that plan until exercise, termination or expiry.

The 2006 Equity Incentive Plan provides that our compensation committee has the authority to determine the individuals to whom options
will be granted, the number of common shares subject to option grants and other terms and conditions of option grants. The 2006 Equity Incentive Plan also provides that, unless otherwise determined by our compensation committee, one-quarter of the
common shares that an option holder is entitled to purchase become eligible for purchase on each of the first, second, third and fourth anniversaries of the date of grant, and that options expire on the fifth anniversary of the date of grant. The
2006 Equity Incentive Plan was amended on March 5, 2010 such that, unless otherwise determined by our compensation committee, any options granted after that date will vest as to one-sixteenth of the common shares that an option holder is
entitled to purchase on the date which is three months after the date of grant and on each subsequent quarter, and that options expire on the seventh anniversary of the date of grant. The 2006 Equity Incentive Plan provides that in no event may an
option remain exercisable beyond the tenth anniversary of the date of grant.

The 2006 Equity Incentive Plan provides us with
increased flexibility and choice in the types of equity compensation awards, including options, deferred share units, restricted stock units, performance share units and other share-based awards. The principal purpose of the 2006 Equity Incentive
Plan is to assist us in attracting, retaining and motivating employees, directors, officers and consultants through performance-related incentives.

The initial aggregate number of common shares that may be issued under the 2006 Equity Incentive Plan and all other security-based compensation arrangements was 5,600,000 common shares (the Initial
Option Pool) provided that an additional number of common shares of up to three percent of the number of our common shares then outstanding may be added to the Initial Option Pool



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each year for three years starting on March 5, 2011, at the discretion of the compensation committee. Effective March 5, 2011, the compensation committee approved an increase to the
Initial Option Pool of three percent, such that the total aggregate number of common shares that may be issued under the 2006 Equity Incentive Plan and all other security-based compensation arrangements of the Company is now 7,188,298. Common shares
subject to outstanding awards under our 2006 Equity Incentive Plan which lapse, expire or are forfeited or terminated will, subject to plan limitations, again become available for grants under this plan.

In order to motivate and retain our employees, on July 9, 2009, our board of directors approved a reduction in the exercise price of
all outstanding stock options, under both our 2006 Equity Incentive Plan and our 2001 Stock Option Plan, for employees and directors to $3.75 per share.

As of June 15, 2011, options to acquire 4,601,949 common shares were issued and outstanding under the 2006 Equity Incentive Plan. During fiscal 2011, the Company issued options to acquire 3,186,372
common shares, under the 2006 Equity Incentive Plan, and 377,866 options to acquire Common Shares vested, under both the 2006 Equity Incentive Plan and the 2001 Stock Option Plan.

Inducement Options

On January 19, 2011, Richard McBee was granted 515,175 stock options as a component of his employment compensation. These stock options were granted as an inducement material to his entering into
employment with us and will vest on the same vesting schedule as options granted under the 2006 Equity Incentive Plan. The grant of the options was approved by all of the independent directors of the board in reliance on Nasdaq Listing Rule
5635(c)(4), which exempts employment inducement grants from the general requirement of the Nasdaq Listing Rules that equity-based compensation plans and arrangements be approved by shareholders. These options are outside of the pool of stock options
available for grant under the 2006 Equity Incentive Plan and all other security-based compensation arrangements. As of June 15, 2011, all of these options were outstanding.

Total Options Outstanding

As of June 15, 2011, options to acquire 5,664,709 common shares were issued and outstanding under the 2001 Stock Option Plan and the 2006 Equity Incentive Plan and inducement options granted to
Mr. McBee, representing approximately 10.7% of our outstanding common shares.

Deferred Share Unit Plan

On December 9, 2004, we adopted a deferred share unit plan in order to promote a greater alignment of interests among
two of our executive officers and our shareholders. During fiscal 2011, Paul Butcher, our former President and COO, was the only remaining participant in our deferred share unit plan. Our previous supplemental executive retirement plan was wound up
and terminated by us in favor of the deferred share unit plan.

Each deferred share unit entitles the holder to receive a cash
lump sum payment equal to the market value of our common shares the day immediately following the date the participant ceases to be an executive of the Company, unless the participant elects to receive the that lump sum payment at a later date,
which cannot be later than the last business day of the calendar year following the year in which the participant ceased to be an executive of the Company. Deferred share units are not considered shares, nor is the holder of any deferred share unit
entitled to voting rights or any other rights attaching to the ownership of shares.

As of June 15, 2011, 45,217 deferred
share units had been awarded to Mr. Butcher under our deferred share unit plan. Mr. Butchers employment with the Company ended on April 30, 2011. Pursuant to the terms of the deferred share unit plan, Mr. Butcher has
elected and is entitled to receive a lump sum payment for deferred share units granted to him on July 12, 2012 (in accordance with a payment formula set forth in the plan).

As of April 30, 2011 we had recorded a liability of $0.2 million in the consolidated balance sheet in respect of our obligations
under the deferred share unit plan. Upon Mr. Butchers pay-out on July 12, 2012, there will be no further participants under this plan.

Pension and Retirement Plans

We maintain defined contribution pension
plans that cover a number of our employees. Where a contribution is provided by the Company, we provide a contribution of either 1% or 6% of participating employees pensionable earnings.

The following table sets forth, for each NEO, information regarding defined contribution pension amounts credited to or earned by the NEO
during or as at the end of fiscal year 2011.

Defined Contribution Plan Table



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|                  |  |                                       |         |  |               |  |        |                   |  |  |                              |  |  |  |         | 
|----------------- |  | ------------------------------------- | ------- |  | ------------- |  | ------ | ----------------- |  |  | ---------------------------- |  |  |  | ------- | 
|Name              |  | Accumulatedvalue at startof year$ (1) |         |  | Compensatory$ |  |        | Non-compensatory$ |  |  | Accumulatedvalue at yearend$ | 
|Donald W. Smith   |  |                                       | 53,963  |  |               |  | 7,478  |                   |  |  | 9,740                        |  |  |  | 71,181  | 
|Steven E. Spooner |  |                                       | 58,133  |  |               |  | 3,989  |                   |  |  | 19,086                       |  |  |  | 81,208  | 
|Paul A.N. Butcher |  |                                       | 215,650 |  |               |  | 23,758 |                   |  |  | 21,714                       |  |  |  | 261,122 | 
|Ronald G. Wellard |  |                                       | 28,621  |  |               |  | 3,173  |                   |  |  | 2,664                        |  |  |  | 34,458  | 



|(1) | The accumulated value at the start of fiscal 2011 may vary from the accumulated value at the end of the fiscal 2010 due to the fluctuation in foreign exchange rates.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

There were no material accrued obligations at the end of fiscal 2011 pursuant to our defined contribution
pension plans.

We currently maintain a defined benefit pension plan for certain of our past and present employees in the
United Kingdom. The plan was closed to employees in June 2001. The defined benefit plan provides pension benefits based on length of service and final average earnings. The pension costs are actuarially determined using the projected benefits method
pro-rated on services and managements best estimate of the effect of future events. Pension plan assets are valued at fair value. As of April 30, 2011, the $194.5 million projected benefit obligation exceeded the fair value of the defined
benefit plan assets of $133.1 million, resulting in a pension liability of $61.4 million.

Defined Benefits Plan Table



|                 |  |                               |  |                        |           |  |                                          |  |        |                     |  |  |                         |  |  |                                     |       |  |  |  |        |  |  |  |         | 
|---------------- |  | ----------------------------- |  | ---------------------- | --------- |  | ---------------------------------------- |  | ------ | ------------------- |  |  | ----------------------- |  |  | ----------------------------------- | ----- |  |  |  | ------ |  |  |  | ------- | 
|Name             |  | Numberof
yearscreditedservice |  | Annual benefitspayable |           |  | Accruedobligationat start offiscal year$ |  |        | Compensatorychange$ |  |  | Non-compensatorychange$ |  |  | Accruedobligationat fiscalyear end$ |      
|                 |  | At yearend$                   |  |                        | At age65$ |  |                                          |  |        |                    
|Graham Bevington |  | 11 years and 3months          |  |                        | 35,321    |  |                                          |  | 72,745 |                     |  |  | 446,825                 |  |  |                                     | 9,377 |  |  |  | 80,664 |  |  |  | 536,867 | 

For the purposes of our pension plan in the United Kingdom, the age of retirement is 65 years. There are
provisions for early retirement starting at 55 years with the benefit decreasing for each of the years retired before 65 years. This value is determined by the plan actuary. There is no policy for granting additional years of service or additional
credit of service.

Employment Agreements

Richard D. McBee.Rich McBee is employed as our CEO. Effective as of January 13, 2011, we executed an Employment Agreement
with Mr. McBee. Mr. McBee is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement. If Mr. McBees employment is terminated by us without cause, or if, in the event of a
change of control (as such term is defined in his employment agreement) of the Company we either terminate Mr. McBees employment without cause or Mr. McBee ends his employment relationship with us, in either case within
12 months of such change of control, he will receive a severance payment totaling 24 months salary and bonus compensation (paid over a 24-month period), plus benefit continuation and, except in the event of a change of control,
continued vesting of options for the same period. Mr. McBee receives an annual base salary of $600,000, a monthly car allowance of $1,500, fuel and maintenance reimbursement for one vehicle and he participates in our standard employee benefit
plans. Mr. McBee is also entitled to receive an annual bonus payment of $400,000 dependent upon the achievement of business goals and subject to the approval of the compensation committee of our board of directors. In addition, pursuant to the
terms of his employment agreement, Mr. McBee was granted options to purchase 2,000,000 common shares (500,000 of which are performance based and the remaining 1,500,000 are regular time-based). Mr. McBees employment agreement
contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Donald W. Smith.Don Smith was employed as our CEO until January 2011. Effective January 17, 2011, Mr. Smith retired as
our CEO but remains on our board of directors. Effective September 1, 2010, we entered into a separation agreement with Mr. Smith (the Separation Agreement). In accordance with the terms of the Separation Agreement,
Mr. Smith will continue to receive his salary, benefits and continued vesting of options until August 31, 2012. Mr. Smith also received a payment in lieu of bonus until August 31, 2012 which will be calculated based on his
average bonus for the previous three fiscal years. Mr. Smith continues to be bound by all confidentiality, non-disclosure, non-solicitation and intellectual property obligations as contained in his amended and restated employment agreement with
the Company, dated March 12, 2010.



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Prior to January 17, 2011, Mr. Smith received an annual base salary of C$750,000,
stock options, a monthly car allowance of C$1,000, fuel and maintenance reimbursement for one vehicle and participated in our standard employee benefit plans Mr. Smiths employment agreement contains provisions addressing confidentiality,
non-disclosure, non-competition and ownership of intellectual property.

By way of a letter agreement between Mr. Smith
and Dr. Matthews dated March 1, 2002, as amended, Dr. Matthews granted to Mr. Smith options to purchase 200,000 of our common shares with an exercise price of C$52.50 from the holdings of Dr. Matthews. All of these options
have vested and none have been exercised. These options to Mr. Smith expire on March 1, 2012.

Paul A.N. Butcher.Paul Butcher was employed as our President and COO, reporting to the CEO until April 30, 2011. On March 12, 2010, we executed an Amended and Restated Employment Agreement with Mr. Butcher. Effective April 30, 2011,
Mr. Butchers employment with the Company was terminated without cause and therefore under the terms of Mr. Butchers employment agreement, Mr. Butcher will receive severance payments totaling 18 months of salary and
bonus compensation (paid over an 18-month period), plus benefit continuation (or benefits in lieu where such benefits are not available) and continued vesting of stock options for the same period. During fiscal 2011, Mr. Butcher received an
annual base salary of C$500,000, a monthly car allowance of C$1,500, fuel and maintenance reimbursement for one vehicle and participated in our standard employee benefit plans. Mr. Butcher also holds 45,217 deferred share units
(DSUs) under the Companys DSU Plan and, as such, is entitled to a lump-sum payment on July 12, 2012 (the Payment Date) equal to the number of DSUs held at such time multiplied by the five-day weighted average
trading price (immediately preceding the Payment Date) of the Companys common shares on Nasdaq. Mr. Butchers employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of
intellectual property.

By way of a letter agreement between Mr. Butcher and Dr. Matthews dated March 1, 2002,
as amended, Dr. Matthews granted to Mr. Butcher options to purchase 66,667 of our common shares with an exercise price of C$52.50 from the holdings of Dr. Matthews. All of these options have vested and none have been exercised. These
options to Mr. Butcher expire on March 1, 2012.

Steven E. Spooner.Steve Spooner is employed as our CFO,
reporting to our President and CEO. Effective as of March 12, 2010, we executed an Amended and Restated Employment Agreement with Mr. Spooner under which he is employed for an indefinite term, subject to termination in accordance with its
terms. If Mr. Spooners employment is terminated by us without cause, or if, in the event of a change of control (as such term is defined in his employment agreement) of the Company we either terminate Mr. Spooners
employment without cause or Mr. Spooner ends his employment relationship with us, in either case within 12 months of such change of control, he will receive a severance payment totaling 18 months salary and bonus compensation (paid
over an 18-month period), plus benefit continuation and, except in the event of a change of control, continued vesting of options for the same period. Upon death or disability, Mr. Spooner is entitled to a lump sum payment of one years
total salary plus bonus and, in addition, accelerated vesting of 25% of any remaining unvested options. Mr. Spooner receives an annual base salary of C$425,000, stock options, a monthly car allowance of C$1,000, fuel and maintenance
reimbursement for one vehicle and he participates in our standard employee benefit plans. Mr. Spooner is also entitled to receive an annual bonus payment in an amount determined by the compensation committee of our board of directors, in its
sole discretion. Mr. Spooners employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Graham Bevington.Graham Bevington is employed as our Executive Vice President Sales, Service, Marketing International, reporting
to our President and CEO. Mr. Bevington is employed for an indefinite term, subject to termination in accordance with the terms of his employment letter agreement, as amended. If Mr. Bevington is terminated without cause, he will receive a
severance payment totaling a minimum of six months notice of termination. Mr. Bevington receives an annual base salary of £130,000, stock options, a monthly car allowance of £866, fuel and maintenance reimbursement for one
vehicle and he participates in our standard employee benefit plans. Mr. Bevington is also entitled to receive an annual bonus payment related to his achievement of defined targets. Mr. Bevingtons employment agreement contains
provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Ronald G.
Wellard. Ron Wellard is employed as our Executive Vice President, General Manager, Mitel Communications Solutions, reporting to the President and CEO. Effective as of March 12, 2010, we executed an Amended and Restated Employment Agreement
with Mr. Wellard. Mr. Wellard is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement, as amended. If Mr. Wellards employment is terminated by us without cause, or if,
in the event of a change of control (as such term is defined in his employment agreement) of the Company we either terminate Mr. Wellards employment without cause or Mr. Wellard ends his employment relationship with us
for Good Reason (as that term is defined in his employment agreement), in either case within 12 months of such change of control, he will receive a severance payment totaling 12 months salary and bonus compensation (paid
over a 12-month period), plus benefit continuation and, except in the event of a change of control, continued vesting of options for the same period. Upon death or disability, Mr. Wellard is entitled to a lump sum payment of one years
total salary plus bonus and, in addition, accelerated vesting of 25% of any remaining unvested options.



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Mr. Wellard receives an annual base salary of C$310,000, stock options, an annual car allowance of C$8,000, fuel and maintenance reimbursement for one vehicle and he participates in our
standard employee benefit plans. Mr. Wellard is also entitled to receive an annual bonus payment in an amount determined by the compensation committee of our board of directors, in its sole discretion. Mr. Wellards employment
agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Potential Payments upon Termination or Change of Control

Information
regarding payments to the NEOs in the event of a termination or a change in control may be found in the table below. This table sets forth the estimated amount of payments each NEO would be entitled to receive upon the occurrence of the indicated
event, assuming that the event occurred on April 30, 2011 and using average exchange rates for fiscal 2011. The salary payments are calculated based on the salaries stated in the employment agreements of each NEO as of April 30, 2011.
Amounts potentially payable under plans which are generally available to all salaried employees, such as health, life and disability insurance, are excluded from the table. Actual payments made at any future date may vary, including the amount the
NEO would have accrued under the applicable benefit or compensation plan as well as the price of the common shares.

In the
event of retirement, resignation or termination for cause, no salary, benefits or other compensation is payable to a NEO beyond the last effective date of employment and the NEO would only be entitled to exercise options that had already vested or
would continue to vest in accordance with the plan under which they were granted.



|                      |  |                           |           |  |                   |   |         |                        |  |   |                  |  |  |   |         | 
|--------------------- |  | ------------------------- | --------- |  | ----------------- | - | ------- | ---------------------- |  | - | ---------------- |  |  | - | ------- | 
|                      |  | Termination without Cause |           |  | Change of Control |  
|Name                  |  | Salary andBonus(1) (2)    |           |  | EquityVesting(5)  |   |         | Salary andBonus(1) (2) |  |   | EquityVesting(6) | 
|Richard D. McBee      |  | $                         | 1,400,000 |  |                   | $ | 110,000 |                        |  | $ | 1,400,000        |  |  | $ | 21,000  | 
|Donald W. Smith       |  | $                         | 1,554,000 |  |                   | $ | 313,000 |                        |  |   | N/A              |  |  |   | N/A     | 
|Steven E. Spooner     |  | $                         | 672,000   |  |                   | $ | 153,000 |                        |  | $ | 672,000          |  |  | $ | 154,000 | 
|Paul A.N. Butcher (3) |  | $                         | 948,000   |  |                   | $ | 133,000 |                        |  |   | N/A              |  |  |   | N/A     | 
|Graham Bevington (4)  |  | $                         | 257,000   |  |                   | $ | 46,000  |                        |  | $ | 257,000          |  |  | $ | 49,000  | 
|Ronald G. Wellard     |  | $                         | 327,000   |  |                   | $ | 49,000  |                        |  | $ | 327,000          |  |  | $ | 48,000  | 



|(1) | With the exception of Mr. McBee, who received $100,000 in fiscal 2011, there were no bonuses paid out in the last three fiscal years.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(2) | In addition, upon termination without cause or a change of control resulting in termination, each NEO would be entitled to:
|--- | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | benefit continuation during the severance or notice periods, as applicable, or where not available, a cash payment in-lieu,
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | a payment equal to car allowance over the applicable period, and
| | - |  | ----------------------------------------------------------------



| |  |  | in respect of pension, an amount equal to the employer contribution over the applicable period.
| | - |  | -----------------------------------------------------------------------------------------------

In the event of a change of control without termination, each NEO would only be entitled to the indicated payments under Change of
Control  Equity Vesting. No payments for salary or bonus would be payable.



|(3) | Mr. Butcher was terminated without cause on April 30, 2011. In addition to the amounts above, he is also entitled to a lump sum payment for his deferred share
units on July 12, 2012 (the Payment Date) which will be calculated at that time in accordance with the terms of the DSU Plan, namely, the number of DSUs held at such time multiplied by the five-day weighted average trading price
(immediately preceding the Payment Date) of the Companys common shares on the Nasdaq.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Bevington is not subject to the terms and conditions of an executive employment agreement. Payments for salary and bonus are based on the terms of a letter
agreement which specifies that each party must provide not less than six months notice of termination of employment, or such longer period as may be provided for pursuant to the Employment Protection (Consolidation) Act 1978.
Mr. Bevingtons salary includes $148,026 in commission for fiscal 2011.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The amounts related to stock options and other equity awards are based upon the fair market value of the common shares of $5.29 per share as reported on the Nasdaq on
April 29, 2011, the last trading day of the Companys fiscal year.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Upon a change of control, all vested options are paid out at the change of control price. The amounts related to stock options and other equity awards are based upon a
value of the common shares of $5.38 per share (change of control price), which is the highest per share price in the 5 trading days prior to April 30, 2011 as reported on the Nasdaq, as required by the plan under which the specific stock
options or awards were granted.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The following table sets forth information regarding the beneficial ownership of our common shares as of June 15, 2011 and shows the
number of shares and percentage of outstanding common shares owned by:



| |  |  | each person or entity who is known by us to own beneficially 5% or more of our common shares;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | each member of our board of directors;
| | - |  | --------------------------------------



| |  |  | each of our NEOs; and
| | - |  | ---------------------



| |  |  | all members of our board of directors and our executive officers as a group.
| | - |  | ----------------------------------------------------------------------------



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Beneficial ownership is determined in accordance with SEC rules, which generally attribute
beneficial ownership of securities to each person or entity that possesses, either solely or shared with others, the power to vote or dispose of those securities. These rules also treat as outstanding all shares that a person would receive upon
exercise of stock options or warrants, or upon conversion of convertible securities held by that person that are exercisable or convertible within 60 days of the determination date, which in the case of the following table is August 14,
2011. Shares issuable pursuant to exercisable or convertible securities are deemed to be outstanding for computing the percentage ownership of the person holding such securities, but are not deemed outstanding for computing the percentage ownership
of any other person. The percentage of beneficial ownership for the following table is based on 53,183,509 common shares outstanding as of June 15, 2011. To our knowledge, except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have sole voting and investment power with respect to all common shares shown as beneficially owned by them.



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|               |  |                                                                   |  |                                          |            |  |   |  |      |  
|-------------- |  | ----------------------------------------------------------------- |  | ---------------------------------------- | ---------- |  | - |  | ---- | -
|               |  |                                                                   |  | Amount and Nature ofBeneficial Ownership |           
|Title of Class |  | Name and Address of Beneficial Owner (1)                          |  | Number                                   |            |  | % | 
|               |  | Five Percent Shareholders:                                        |  |                                          |            |  |   |  |      |  
|Common Shares  |  | Matthews Group (2)                                               |  |                                          |            |  |   |  |      |  
|               |  | Dr. Terence H. Matthews                                           |  |                                          | 133,585    |  |   |  | 0.2  | %
|               |  | Wesley Clover Corporation                                         |  |                                          | 12,080,610 |  |   |  | 22.9 | %
|               |  |                                                                   |  |                                          |            |  |   |  |      |  
|               |  | Total                                                             |  |                                          | 12,214,195 |  |   |  | 23.1 | %
|               |  |                                                                   |  |                                          |            |  |   |  |      |  
|Common Shares  |  | Francisco Partners Group (3)                                      |  |                                          |            |  |   |  |      |  
|               |  | Francisco Partners Management, LLC                                |  |                                          | 36,896     |  |   |  | 0.0  | %
|               |  | Arsenal Holdco I S.a.r.l.                                         |  |                                          | 15,520,134 |  |   |  | 30.5 | %
|               |  | Arsenal Holdco II S.a.r.l.                                        |  |                                          | 5,979,100  |  |   |  | 11.9 | %
|               |  |                                                                   |  |                                          |            |  |   |  |      |  
|               |  | Total                                                             |  |                                          | 21,536,130 |  |   |  | 42.4 | %
|               |  |                                                                   |  |                                          |            |  |   |  |      |  
|Common Shares  |  | Morgan Stanley Principal Investments, Inc. (4)                    |  |                                          | 4,240,263  |  |   |  | 8.5  | %
|Common Shares  |  | Executive Officers and Directors:                                 |  |                                          |            |  |   |  |      |  
|               |  | Dr. Terence H. Matthews (2)                                       |  |                                          | 12,214,195 |  |   |  | 23.1 | %
|               |  | Richard D. McBee                                                  |  |                                          | 192,499    |  |   |  | 0.7  | %
|               |  | Peter D. Charbonneau (5)                                          |  |                                          | 53,400     |  |   |  | 0.2  | %
|               |  | Benjamin H. Ball (3)                                              |  |                                          | 21,536,130 |  |   |  | 42.4 | %
|               |  | Andrew J. Kowal (3)                                               |  |                                          | 21,536,130 |  |   |  | 42.4 | %
|               |  | Jean-Paul Cossart (6)                                             |  |                                          | 19,156     |  |   |  | 0.1  | %
|               |  | John McHugh                                                       |  |                                          | 0          |  |   |  | 0.0  | %
|               |  | Henry L. Perret                                                   |  |                                          | 0          |  |   |  | 0.0  | %
|               |  | Donald W. Smith (7)                                               |  |                                          | 398,000    |  |   |  | 1.5  | %
|               |  | Norman Stout                                                      |  |                                          | 35,495     |  |   |  | 0.1  | %
|               |  | Steven E. Spooner (9)                                             |  |                                          | 126,351    |  |   |  | 0.4  | %
|               |  | Paul A.N. Butcher (8)                                             |  |                                          | 169,749    |  |   |  | 0.6  | %
|               |  | Graham Bevington                                                  |  |                                          | 38,518     |  |   |  | 0.1  | %
|               |  | Ronald G. Wellard                                                 |  |                                          | 37,083     |  |   |  | 0.1  | %
|               |  | All directors and executive officers as a group (14 persons) (10) |  |                                          | 34,679,034 |  |   |  | 68.6 | %



|(1) | Except as otherwise indicated, the address for each beneficial owner is c/o Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario, Canada, K2K 2W7.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes warrants to acquire 83,060 common shares that are currently exercisable, stock options to acquire 50,525 common shares that are currently exercisable and
12,080,610 common shares owned by Wesley Clover Corporation. Dr. Matthews has voting and investment power over the common shares owned by Wesley Clover Corporation and therefore beneficially owns the common shares held by Wesley Clover
Corporation. The address for the Matthews Group and Dr. Matthews is 350 Legget Drive, Kanata, Ontario, Canada K2K 2W7.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 20,097,546 common shares, warrants to acquire 1,401,688 common shares that are currently exercisable and stock options to acquire 36,896 common shares that are
exercisable. Benjamin Ball and Andrew Kowal, both partners of Francisco Partners Management, LLC, have voting and investment power over the common shares owned by each of Francisco Partners, Arsenal Holdco I S.a.r.l. and Arsenal Holdco II S.a.r.l.
and therefore beneficially own the common shares held by each of these entities. The address for each of the Francisco Partners Group, Benjamin Ball and Andrew Kowal is c/o Francisco Partners Management, LLC One Letterman Drive, Building
CSuite 410, San Francisco, California, 94129.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes 3,963,810 common shares and warrants to acquire 276,453 common shares that are currently exercisable. The address for Morgan Stanley Principal Investments,
Inc. is 1585 Broadway, New York, New York, 10036.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Of this total, 2,019 common shares are registered to Peter Charbonneau Trust #2, a trust of which Mr. Charbonneau is the sole trustee, and 13,927 common shares are
registered to Mr. Charbonneaus wife, Joan Charbonneau. Includes options to acquire 31,467 common shares from us at an exercise price of $3.75.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(6) | Includes options to acquire common shares granted to Scivias s.a.r.l. Mr. Cossart has voting and investment power over the common shares owned by Scivias s.a.r.l.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes options to acquire 200,000 common shares granted to Mr. Smith from the holdings of Dr. Matthews at an exercise price of C$52.50, and 196,250 common
shares issuable upon the exercise of options at an exercise price of $3.75.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Includes options to acquire 66,667 common shares granted to Mr. Butcher from the holdings of Dr. Matthews at an exercise price of C$52.50, and 83,333 common
shares issuable upon the exercise of options at an exercise price of $3.75.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Of this total, 5,100 common shares are registered to the Spooner Children Trust, a trust of which Mr. Spooner is one of three trustees, and 101,251 common shares
issuable upon the exercise of options at an exercise price of $3.75.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | In calculating this total, the common shares held by Mr. Ball and held by Mr. Kowal have been counted only once, as all such shares are held by and through
the Francisco Partners Group. The total also excludes Mr. Butchers common shares held as he was no longer an employee as at June 15, 2011.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 13. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------

Transactions Involving Related Parties

The audit committee of our
board of directors reviews and approves related party transactions between us and persons or entities that are deemed to be related parties to us to ensure that the terms are fair and reasonable to us and to ensure that corporate opportunities are
not usurped. The audit committee provides a report to our board of directors that includes:



| |  |  | a summary of the nature of the relationship with the related party and the significant commercial terms of the transaction, such as price and total
value;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the parties to the transaction;
| | - |  | -------------------------------



| |  |  | an outline of the benefits to us of the transaction;
| | - |  | ----------------------------------------------------



| |  |  | whether terms are at market and whether they were negotiated at arms length; and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | for related party transactions involving our officers or directors, whether there has been any loss of a corporate opportunity.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------

Set forth below is a description of material related party transactions.

BreconRidge

We have or had certain agreements and related transactions involving BreconRidge. Prior to being acquired on May 28, 2010 by Sanmina, BreconRidge was a related party. Prior to Sanminas
acquisition of BreconRidge, the Matthews Group held an 18.6% ownership interest and EdgeStone Capital Equity Fund II Nominee Inc. (Edgestone) held a 66.4% ownership interest. EdgeStone is one of our shareholders. One of our former
directors, Mr. Gilbert Palter, is a partner of EdgeStone Capital Partners L.P., which controls EdgeStone. Prior to the acquisition, Mr. Palter was a director of BreconRidge. Mr. Charbonneau, who is a member of our board of directors,
also sat, prior to the acquisition, on the BreconRidge board of directors, as did a nominee of Dr. Matthews. However, as a result of the acquisition, Mr. Palter, Mr. Charbonneau and Dr. Matthews nominee no longer sit on
BreconRidges board of directors and BreconRidge, now a wholly-owned subsidiary of Sanmina, is no longer a related party.

During fiscal 2010, we purchased $47.3 million of products and services (2009$50.1 million) and sold $0.4 million of raw material
inventory (2009$1.1 million) under a manufacturing supply agreement with BreconRidge. As of April 30, 2010, balances payable pursuant to this agreement amounted to $6.6 million and balances receivable pursuant to this agreement amounted
to $0.7 million.

Our supply agreement, which management believes reflected prevailing market conditions at the time it was
negotiated and entered into, with BreconRidge has not materially changed since its acquisition by Sanmina.

Kanata
Research Park Corporation (KRPC)

Up to the end of the second quarter of fiscal 2011, we leased our Ottawa-based
headquarters facilities from KRPC, a corporation wholly-owned by our chairman Dr. Matthews, under a 10-year lease which was to expire in February 2011. During the third quarter of fiscal 2011, we negotiated a new lease with KRPC for 226,096
square feet under terms and conditions which management believes reflect current market rates. The new lease has a term of five years and three months and can be renewed at our option for an additional five years. The new lease contains property
reinstatement terms which have not been accrued at this time as the amount is not estimable. The new lease contains certain changes in the rental rate over the term of the lease. During fiscal 2011, we recorded lease payments for base rent and
operating costs of $8.5 million (2010  $9.2 million). At April 30, 2011, balances payable relating to the lease totaled nil (April 30, 2010$0.7 million).



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Natural Convergence Inc.

On April 25, 2006, we entered into an agreement with Natural Convergence Inc. (NCI), a company in which Dr. Matthews
had a significant ownership interest, to purchase convertible debentures for $0.9 million. In fiscal 2010, NCI entered receivership. As a result, we recorded an asset impairment charge of $0.9 million. In addition, we also wrote off $0.3 million
related to prepaid expenses, receivables and deferred product costs. In addition to the financing agreement described above, we also purchased $0.1 million of products and services from NCI for the year ended April 30, 2010

Other Parties Related to Dr. Matthews

We have entered into technology transfer, technology licensing and distribution agreements with certain companies related to Dr. Matthews under terms reflecting what management believes were
prevailing market conditions at the time the agreements were entered into. These companies develop technology that we integrate with, distribute or sell alone or as part of our own products. In the normal course of business, we may enter into
purchase and sale transactions with other companies related to Dr. Matthews under terms reflecting what management believes are then-prevailing market conditions.

In the normal course of business, we made sales to and purchases from other companies related to the Matthews Group of $1.3 million and $3.5 million, respectively, for the year ended April 30, 2011
(2010$1.1 million and $2.1 million). The net balances receivable as a result of these transactions was $0.7 million (2010$0.3 million).

By way of letter agreements between Dr. Matthews and Mr. Donald Smith, a director and our former CEO, and Mr. Paul Butcher, our former President and COO, dated, in each case, March 1,
2002 and, as amended, Dr. Matthews granted to Mr. Smith options to purchase 200,000 of our common shares owned by Dr. Matthews and to Mr. Butcher options to purchase 66,667 of our common shares owned by Dr. Matthews. Any
proceeds on the exercise of these options will be payable by Mr. Smith and Mr. Butcher to Dr. Matthews and not to us. The options granted to Mr. Smith and Mr. Butcher expire on March 1, 2012. As of June 15, 2011,
all of these options had vested and none had been exercised. A similar agreement was entered into between Mr. Peter Charbonneau, one of our directors, and Dr. Matthews on February 16, 2001, as amended, for 60,000 of our common shares
indirectly owned by Dr. Matthews. These options granted to Mr. Charbonneau expired on February 16, 2011.

We
also paid $1.0 million for an option to invest in a company in India, over which company the Matthews Group has significant influence. Sales to and purchases from this company, arising in the normal course of business, were $0.5 million and $0.4
million, respectively, for the year ended April 30, 2011 (2010$0.2 million and $0.2 million, respectively; 2009$0.2 million and nil, respectively). The net balance receivable and payable at April 30, 2011 as a result of these
transactions were $0.2 million and $0.1 million, respectively (2010$0.1 million and nil, respectively; 2009$0.1 million and nil, respectively).

Francisco Partners Group

During the third quarter of fiscal 2010,
an affiliate of the Francisco Partners Group purchased $21.2 million in principal of the Companys outstanding second lien term loan. The Matthews Group had a 40% participating interest in the second lien term loan held by such affiliate of the
Francisco Partners Group but was neither a party to nor a lender under the second lien term loan and had no contractual rights or enforcement rights against the Company in connection with its participating interest in such second lien debt. In the
third quarter of fiscal 2011, the affiliate sold $11.2 million of face value of the second lien term loan, which included the Matthews Groups 40% participating interest. At June 15, 2011, the affiliate of the Francisco Group held $10.0
million of our second lien term loan.

Interest of $1.2 million was expensed during fiscal 2011 relating to the second lien
debt held by an affiliate of the Francisco Partners Group (2010$0.5 million).

Registration Rights

In connection with our financing of the acquisition of Inter-Tel in 2007, we entered into a registration rights
agreement dated August 16, 2007 with a number of our shareholders, including the Francisco Partners Group, Morgan Stanley Principal Investments Inc., EdgeStone, Dr. Matthews and Wesley Clover Corporation. The registration rights agreement,
or the Registration Rights Agreement, was amended and restated as of the date of closing of our IPO. The Registration Rights Agreement provides for the registration of the shares held by such shareholders under the securities laws of the United
States and/or the qualification for distribution of the shares held by such shareholders under the securities laws of the provinces and territories of Canada. Mr. Ball and Mr. Kowal are both partners of Francisco Partners Management, LLC.
Mr. Palter, one of our former directors, is the Chief Investment Officer and Managing Partner of EdgeStone Capital Partners, L.P. Dr. Matthews is the Chairman of our board.



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Shareholders Agreement

We, the Francisco Partners Group and the Matthews Group are parties to a shareholders agreement, or the Shareholders
Agreement, which became effective at the closing of our IPO. The Shareholders Agreement covers matters of corporate governance, restrictions on transfer of our common shares and information rights.

Board Nomination Rights

Pursuant to the terms of the Shareholders Agreement, the Francisco Partners Group is entitled to nominate three members of our board of directors, the Matthews Group is entitled to nominate two
members of our board of directors, and the number of our board directors will consist of no more than 10 members. The Shareholders Agreement provides that so long as the Francisco Partners Group beneficially owns at least 15% of our
outstanding common shares, the Francisco Partners Group may nominate three members of our board of directors; that so long as the Francisco Partners Group beneficially owns at least 10% of our outstanding common shares, the Francisco Partners Group
may nominate two members of our board of directors; and that so long as the Francisco Partners Group beneficially owns at least 5% of our outstanding common shares, the Francisco Partners Group may nominate one member of our board of directors. The
Shareholders Agreement also provides that so long as the Matthews Group beneficially owns at least 10% of our outstanding common shares, the Matthews Group may nominate two members of our board of directors; and that so long as the Matthews
Group beneficially owns at least 5% of our outstanding common shares, the Matthews Group may nominate one member of our board of directors. The Shareholders Agreement also provides that each of the Francisco Partners Group and the Matthews
Group, to the extent they beneficially own at least 5% of our outstanding common shares, will nominate our CEO to serve as a member of our board of directors. The Francisco Partners Group and the Matthews Group will lose the right to nominate any
board members upon either party beneficially owning less than 5% of our outstanding common shares. Each of the Francisco Partners Group and the Matthews Group will agree to vote their shares in favor of the election or removal of the other
partys nominees.

Committee Representation

The Shareholders Agreement provides that, for so long as the Francisco Partners Group beneficially owns at least 10% of our
outstanding common shares, unless prohibited by U.S. federal securities laws or the Nasdaq rules, the Francisco Partners Group is entitled to designate one member of each committee of our board of directors, other than our audit committee.

Special Approval Rights of the Francisco Partners Group

The Shareholders Agreement provides that we may not take certain significant actions without the approval of the Francisco Partners
Group, so long as the Francisco Partners Group owns at least 15% of our outstanding common shares. These actions include:



| |  |  | amendments to our articles or by-laws;
| | - |  | --------------------------------------



| |  |  | issuance of any securities that are senior to our common shares in respect of dividend, liquidation preference or other rights and privileges;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | issuance of equity securities or rights, options or warrants to purchase equity securities, with certain exceptions where we issue securities pursuant
to our 2006 Equity Incentive Plan, in connection with acquisitions that involve the issuance of less than $25 million of our securities, upon the conversion of our currently outstanding warrants, as consideration paid to consultants for services
provided to us, or in connection with technology licensing or other non-equity interim financing transactions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | declaring or paying any dividends or making any distribution or return of capital, whether in cash, in stock or in specie, on any equity securities;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | incurring, assuming or otherwise becoming liable for debt obligations, other than refinancing our debt obligations following the closing of our IPO and
the application of the intended use of proceeds, incurring additional indebtedness in connection with our leasing program, or incurring up to $50 million in new indebtedness;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | mergers, acquisitions, sales of assets or material subsidiaries, or the entering into any joint venture, partnership or similar arrangement that have a
value of more than $25 million per such transaction;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any change in the number of directors that comprise our board of directors;
| | - |  | ---------------------------------------------------------------------------



| |  |  | an amalgamation, merger or other corporate reorganization by the Company with or into any other corporation (other than a short-form amalgamation with
a wholly-owned subsidiary); or an agreement to sell or sale of all or substantially all of the assets of the Company or other transaction that has the effect of a change of control of the Company; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any liquidation, winding up, dissolution or bankruptcy or other distribution of the assets of the Company to its shareholders.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



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All of the provisions of the Shareholders Agreement are expressly subject to any
requirements as to governance imposed by applicable securities laws and by any exchange on which our securities are listed.

Information Rights

So long as the Francisco Partners Group or the Matthews Group hold at least 10% of our outstanding common shares, such shareholder will have the right to receive from us monthly consolidated financial
results, copies of all other financial statements, reports or projections, and material information provided to our lenders, and such additional information regarding our financial position or business as such shareholder reasonably requests.

Restrictions on Transfer of our Common Shares

Until such time as a party to the Shareholders Agreement holds less than 5% of our outstanding common shares, common shares held by such shareholder shall only be transferrable pursuant to
(i) a tag-along or drag-along sale, (ii) a permitted transferee and among the parties to the Shareholders Agreement, (iii) transfers in brokers sales in accordance with Rule 144 under the Securities Act (including its
volume and manner of sale limitations) and (iv) pursuant to a registration statement provided for in the Registration Rights Agreement.

The Francisco Partners Group, so long as it owns or controls at least 10% of our outstanding common shares, is entitled to drag the other parties to the Shareholders Agreement into a non-affiliated
change of control transaction if 50.1% of our outstanding common shares have voted in favor of that transaction or tendered into it. Notwithstanding the foregoing, the Francisco Partners Groups drag along rights do not apply at any time that
the Matthews Group owns or controls a greater percentage of our outstanding common shares than the Francisco Partners Group.

Also, until such time as the Francisco Partners Group has sold or transferred $281.3 million of common shares pursuant to a registration
statement or no longer owns at least 10% of our outstanding common shares, the Matthews Group may not sell or transfer more than an aggregate of $50 million of our common shares (measured in gross proceeds and taking into account sales made under
Rule 144 under the Securities Act) pursuant to a registration statement. This provision expires automatically on the fifth anniversary of the closing of this offering.

Director Independence

Seven of our directors are considered
independent, as defined under the Nasdaq rules and for purposes of Canadian securities laws. Our independent directors are Peter Charbonneau, Benjamin Ball, Andrew Kowal, Jean-Paul Cossart, John McHugh, Henry Perret and Norman Stout.
Mr. Stout was considered independent as of June 8, 2011. Prior to June 8, 2011, Mr. Stout was deemed non-independent because of his role as CEO of Inter-Tel which was acquired by Mitel in 2007. For purposes of the Nasdaq rules,
an independent director means a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the companys board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. A director is considered to be independent for the purposes of Canadian securities laws if the director has no direct or indirect material relationship to the company. A
material relationship is a relationship that could, in the view of the board, be reasonably expected to interfere with the exercise of a directors independent judgment. Certain individuals, such as employees and executive officers of the
Company, are deemed by Canadian securities laws to have material relationships with the Company.



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Our non-independent Company directors are Richard McBee, Donald Smith and Terence Matthews.
Our Board of Directors determined that Rich McBee is non-independent due to his insider position as Chief Executive Officer and President of the Company. Don Smith is deemed to be non-independent because he is our former CEO. Terence
Matthews, as chairman of our board of directors, is also deemed non-independent as an executive officer of the Company. The Nasdaq rules and Canadian securities rules deem past employees of a company or its affiliates to be non-independent for a
period of three years after the conclusion of their employment.

The chairman of our board is Terence Matthews. As chairman,
Dr. Matthews role is to promote the boards effectiveness in providing oversight to the Company. In particular, the chairman has the responsibility to:



| |  |  | preside over board meetings in an efficient and effective manner that is compliant with governance policies and procedures;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | in conjunction with the CEO, communicate and maintain relationships with the Company, its shareholders and other stakeholders;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | set board meeting agendas based on input from directors and senior management;
| | - |  | ------------------------------------------------------------------------------



| |  |  | work cooperatively with the lead director in fulfilling the lead directors mandate and, in the event of a conflict in their duties, yield to the
lead director; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | carry out other duties, as requested by the board or the CEO.
| | - |  | -------------------------------------------------------------

For purposes of the Nasdaq rules and Canadian securities laws, Dr. Matthews is deemed not to be an independent director.
Accordingly, we also have a lead director, Peter Charbonneau. The responsibility of the lead director is to provide independent leadership to the board and ensure that it functions in an independent manner. Together with the chairman of the board,
the lead director ensures that the board understands its responsibilities and communicates effectively with its subcommittees and with management.



|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------

External Auditors Fees.Deloitte & Touche LLP is our auditor. Fees billed by Deloitte & Touche LLP to the Company in fiscal years 2011 and 2010 were
approximately $1,394,000 and $2,017,000, respectively, as detailed below.



|                       |  |                 |           |  |                 |   |           | 
|---------------------- |  | --------------- | --------- |  | --------------- | - | --------- | 
|                       |  | Fiscal Year2011 |           |  | Fiscal Year2010 |  
|Audit fees (1)         |  | $               | 1,306,000 |  |                 | $ | 1,917,000 | 
|Audit-related fees (2) |  |                 | 31,000    |  |                 |   | 67,000    | 
|Tax fees (3)           |  |                 | 42,000    |  |                 |   | 33,000    | 
|All other fees (4)     |  |                 | 15,000    |  |                 |   |          | 
|                       |  |                 |           |  |                 |   |           | 
|Total                  |  | $               | 1,394,000 |  |                 | $ | 2,017,000 | 
|                       |  |                 |           |  |                 |   |           | 



|(1) | Audit fees relate to professional services rendered for the audit of our annual consolidated financial statements and, as required, the unconsolidated statutory
financial statements of certain of our subsidiaries. Audit fees include professional services related to quarterly reviews of our consolidated financial statements as well as, in fiscal 2010, professional services related to the filing of our
prospectus and other related documents pertaining to our April 2010 IPO.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Audit-related fees billed by Deloitte & Touche LLP relate to defined contribution pension plans in Canada, the United States and the United Kingdom. It also
includes fees for accounting consultation and advisory services.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Tax fees relate to assistance with tax compliance, expatriate tax return preparation, tax planning and various tax advisory services.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(4) | Fiscal 2011 all other fees include other non-audit attestation services.
|--- | --------------------------------------------------------------------------

Pre-approval of Policies and Procedures

From time to time, management recommends to and requests approval from the audit committee for audit and non-audit services to be provided by our auditors. The audit committee considers such requests on a
quarterly basis and, if acceptable, pre-approves such audit and non-audit services. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered prohibited services as
contemplated by the SEC, and whether the services requested and the fees related to such services could impair the independence of the auditors. Since the implementation of our audit committee pre-approval process in December 2003, all audit and
non-audit services rendered by our auditors have been pre-approved by our audit committee.



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##### Table of Contents

PART IV



|Item 15. | Exhibits and Financial Statement Schedules
|-------- | ------------------------------------------



| | 1. | (1) and (2)The following Consolidated Financial Statements of the Company are included in Item 8 herein.
| | -- | ---------------------------------------------------------------------------------------------------------



| | (A) | Reports of Independent Registered Chartered Accountants.
| | --- | --------------------------------------------------------



| | (B) | Consolidated Balance SheetsYears ended April 30 2011 and April 30, 2010.
| | --- | -------------------------------------------------------------------------



| | (C) | Consolidated Statements of OperationsYears ended April 30, 2011, April 30, 2010 and April 30, 2009.
| | --- | ----------------------------------------------------------------------------------------------------



| | (D) | Consolidated Statements of Shareholders Equity (Deficiency) and Comprehensive Income (Loss) Years ended April 30 2011, April 30, 2010 and
April 30, 2009.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (E) | Consolidated Statements of Cash FlowsYears ended April 30, 2011, April 30, 2010 and April 30, 2009.
| | --- | ----------------------------------------------------------------------------------------------------



| | (F) | Notes to the Consolidated Financial Statements.
| | --- | -----------------------------------------------



| | (3) | Listing of ExhibitsSee Exhibit Index.
| | --- | --------------------------------------

The management contracts or compensatory plans or arrangements required to be filed as exhibits to this Report are denoted in the Exhibit Index.



| | 2. | Our consolidated valuation of qualifying accounts (Schedule II) financial statement schedule is included in Item 8 herein.
| | -- | --------------------------------------------------------------------------------------------------------------------------

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related
instructions, are inapplicable, or the information has been disclosed elsewhere.



| | 3. | Exhibits filed with this report are listed in the Exhibit Index.
| | -- | ----------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized on July 1, 2011.



MITEL NETWORKS CORPORATIONBy:

/S/    STEVEN E.
SPOONERSteven E. SpoonerChief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by
the following persons on behalf of the Registrant in the capacities and on the dated indicated.



|                                                       |  |                                                                                |  |             
|------------------------------------------------------ |  | ------------------------------------------------------------------------------ |  | ------------
|Signature                                              |  | Title                                                                          |  | Date        
|                                                       |  |                                                                               
|/s/    RICHARD D.
MCBEE Richard D. McBee               |  | Chief Executive Officer & President (Principal Executive Officer) and Director |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    STEVEN E.
SPOONER Steven E. Spooner             |  | Chief Financial Officer
(Principal Financial and Accounting Officer)           |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    DR. TERENCE H.
MATTHEWS Dr. Terence H. Matthews |  | Chairman of the Board                                                          |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    PETER D.
CHARBONNEAU Peter D. Charbonneau       |  | Director                                                                       |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    BENJAMIN H.
BALL Benjamin H. Ball               |  | Director                                                                       |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    DONALD W.
SMITH Donald W. Smith                 |  | Director                                                                       |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    JEAN-PAUL
COSSART Jean-Paul Cossart             |  | Director                                                                       |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    ANDREW J.
KOWAL Andrew J. Kowal                 |  | Director                                                                       |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    NORMAN
STOUT Norman Stout                       |  | Director                                                                       |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    HENRY L.
PERRET Henry L. Perret                 |  | Director                                                                       |  | July 1, 2011
|                                                       |  |                                                                               
|/s/    JOHN P.
MCHUGH John P. McHugh                   |  | Director                                                                       |  | July 1, 2011



128



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##### Table of Contents

EXHIBIT INDEX



|3.1 | Restated Articles of Incorporation (incorporated by reference to Amendment No. 4 to Mitels Registration Statement on Form F1, filed with the SEC on
April 16, 2010)
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3.2 | Bylaws (incorporated by reference to Amendment No. 3 to Mitels Registration Statement on Form F1, filed with the SEC on March 30, 2010)
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



|4.1 | Form of Common Share Certificate (incorporated by reference to Amendment No. 4 to Mitels Registration Statement on Form F1, filed with the SEC on
April 16, 2010)
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.1 | Form of Warrant granted to Francisco Partners and Morgan Stanley dated August 16, 2007 (incorporated by reference to Schedule 13D (Mitel as issuer) filed with the
SEC on August 27, 2007 by Arsenal Holdco I, S.a.r.l., Arsenal Holdco II, S.a.r.l., Francisco Partners GP II (Cayman), L.P., Francisco Partners GP II Management (Cayman) Limited, Francisco Partners GP II, L.P., Francisco Partners II (Cayman),
L.P., Francisco Partners Parallel Fund II, L.P. and Francisco Partners GP II Management, LLC)
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.2 | Form of Warrant granted to Francisco Partners and Morgan Stanley dated January 18, 2008 (incorporated by reference to Mitels Annual Report on Form 20F,
filed with the SEC on October 31, 2008)
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.3 | First Lien Credit Agreement among Mitel, Mitel Networks, Inc., Mitel U.S. Holdings, Inc., Arsenal Acquisition Corporation, certain lenders, Morgan Stanley Senior
Funding (Nova Scotia) Co., Morgan Stanley Senior Funding, Inc., Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated August 16, 2007 (incorporated by reference to Mitels Annual
Report on Form 20F, filed with the SEC on October 24, 2007)
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 (a) | Amendment No. 1 dated September 26, 2007, to the First Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed
with the SEC on October 31, 2008)
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 (b) | Amendment No. 2 dated December 12, 2007, to the First Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed
with the SEC on October 31, 2008)
| | -------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 (c) | Amendment No. 3 dated July 31, 2008, to the First Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed with
the SEC on October 31, 2008)
| | -------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 (d) | Amendment No. 4 dated May 15, 2009, to the First Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed with
the SEC on October 14, 2009)
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 (e) | Amendment No. 5 dated September 14, 2009, to the First Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed
with the SEC on October 14, 2009)
| | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 (f)* | Amendment No. 6 dated August 31, 2010, to the First Lien Credit Agreement
| | --------- | -------------------------------------------------------------------------



| | 10.3 (g) | Amendment No. 7 dated March 1, 2011, to the First Lien Credit Agreement (incorporated by reference to Mitels Form 8K, filed with the SEC on
March 1, 2011)
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 (h) | First Lien Agency Assignment and Amendment Agreement dated as of July 24, 2009 in respect of the First Lien Credit Agreement (incorporated by reference to
Amendment No. 2 to Mitels Registration Statement on Form F1, filed with the SEC on March 17, 2010)
| | -------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.4 | Second Lien Credit Agreement among Mitel, Mitel U.S. Holdings Inc., certain lenders, Morgan Stanley Senior Funding, Inc., Morgan Stanley & Co. Incorporated and
Merrill Lynch, Pierce, Fenner & Smith Incorporated dated August 16, 2007 (incorporated by reference to Mitels Annual Report on Form 20F, filed with the SEC on October 24, 2007) +
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 (a) | Amendment No. 1 dated July 31, 2008, to the Second Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed
with the SEC on October 31, 2008)
| | -------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 (b) | Amendment No. 2 dated May 15, 2009, to the Second Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed with
the SEC on October 31, 2008)
| | -------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 (c) | Amendment No. 3 dated July 24, 2009, to the Second Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed
with the SEC on October 31, 2008)
| | -------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 (d) | Amendment No. 4 dated May 15, 2009, to the Second Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed with
the SEC on October 14, 2009)
| | -------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 (e) | Amendment No. 5 dated July 24, 2009, to the Second Lien Credit Agreement (incorporated by reference to Mitels Annual Report on Form 20F, filed
with the SEC on October 14, 2009)
| | -------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | 10.4 (f) | Second Lien Agency Assignment and Amendment Agreement dated as of November 30, 2009 in respect of the Second Lien Credit Agreement (incorporated by reference to
Amendment No. 1 to Mitels Registration Statement on Form F1, filed with the SEC on February 4, 2010)
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.5 | Deferred Share Unit Plan for Executives effective July 1, 2004 (incorporated by reference to Mitels Annual Report on Form 20F, filed with the SEC on
October 24, 2005)
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.6 | Employee Stock Option Plan dated March 6, 2001, as amended (incorporated by reference to Mitels Form S8, filed with the SEC on March 6, 2006)
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------



|10.7 | Form of Global Mitel Employment Agreement (incorporated by reference to Amendment No. 1 to Mitels Registration Statement on Form F1, filed with the SEC
on July 6, 2006)
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.8 | 2006 Equity Incentive Plan, as amended (incorporated by reference to Mitels Annual Report on Form 20F, filed with the SEC on October 31, 2006)
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------



|10.9 | Amended and Restated Employee Agreement between Mitel and Donald Smith effective as of March 12, 2010 (incorporated by reference to Amendment No. 2 to
Mitels Registration Statement on Form F1, filed with the SEC on March 17, 2010)
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.10 | Separation Agreement dated September 1, 2011, between Mitel and Donald W. Smith (incorporated by reference to Mitels Form 10Q, filed with the SEC on
September 14, 2011)
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.11 | Amended and Restated Employment Agreement between Mitel and Paul Butcher effective as of March 12, 2010 (incorporated by reference to Amendment No. 2 to
Mitels Registration Statement on Form F1, filed with the SEC on March 17, 2010)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.12 | Amended and Restated Employment Agreement effective as of March 12, 2010, between Mitel and Steven Spooner (incorporated by reference to Amendment No. 2 to
Mitels Registration Statement on Form F1, filed with the SEC on March 17, 2010)
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.13 | Employment Contract dated August 31, 1999, between Mitel and Graham Bevington (the Bevington Employment Contract) (incorporated by reference to
Amendment No. 1 to Mitels Registration Statement on Form F1, filed with the SEC on July 6, 2006)
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.13 (a) | Alterations to terms and conditions of the Bevington Employment Contract dated July 20, 2001 (incorporated by reference to Amendment No. 1 to Mitels
Registration Statement on Form F1, filed with the SEC on July 6, 2006)
| | --------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.14 | Amended and Restated Employment Agreement between Mitel and Ron Wellard effective as of March 12, 2010 (incorporated by reference to Amendment No. 2 to
Mitels Registration Statement on Form F1, filed with the SEC on March 17, 2010)
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.15 | Employment Contract dated January 13, 2011, between Mitel and Richard McBee (incorporated by reference to Mitels Form 8K, filed with the SEC on
January 13, 2011)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.16 | Integrated Communications Solutions R&D Project Agreement (the R&D Project Agreement) between Mitel, Mitel Knowledge Corporation, March Networks
Corporation, March Healthcare and Her Majesty the Queen in Right of Canada dated October 10, 2002 (incorporated by reference to Amendment No. 3 to the Mitels Registration Statement on Form 20F, filed with the SEC on
February 12, 2003) +
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (a) | Amendment No. 1 to the R&D Project Agreement dated March 27, 2003 (incorporated by reference to Mitels Annual Report on Form 20F, filed with
the SEC on August 31, 2004)
| | --------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (b) | Amendment No. 2 to the R&D Project Agreement dated May 2, 2004 (incorporated by reference to Mitels Annual Report on Form 20F, filed with the
SEC on October 31, 2006)
| | --------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (c) | Amendment No. 3 to the R&D Project Agreement dated September 16, 2004 (incorporated by reference to Mitels Annual Report on Form 20F, filed
with the SEC on October 31, 2006)
| | --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (d) | Amendment No. 4 to the R&D Project Agreement dated June 27, 2005 (incorporated by reference to Mitels Annual Report on Form 20F, filed with
the SEC on October 31, 2006)
| | --------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (e) | Amendment No. 5 to the R&D Project Agreement dated October 3, 2005 (incorporated by reference to Mitels Annual Report on Form 20F, filed with
the SEC on October 31, 2006)
| | --------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (f) | Amendment No. 6 to the R&D Project Agreement dated October 31, 2010 (incorporated by reference to Mitels Registration Statement on Form F1,
filed with the SEC on November 8, 2006)
| | --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (g)* | Amendment No. 7 to the R&D Project Agreement dated March 10, 2010
| | ---------- | -----------------------------------------------------------------



130



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##### Table of Contents

|10.17 | Form of Warrant granted to Her Majesty in Right of Canada (incorporated by reference to Mitels Annual Report on Form 20F, filed with the SEC on
October 31, 2006)
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.18 | Master Manufacturing Services Agreement between Mitel and its subsidiaries and BreconRidge Corporation and its subsidiaries dated June 20, 2008 (incorporated by
reference to Amendment No. 1 to Mitels Registration Statement on Form F1, filed with the SEC on February 4, 2010)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.19 | Master Manufacturing Services Agreement between Mitel and Flextronics Telecom Systems, Ltd. dated as at May 1, 2007 (incorporated by reference to Amendment
No. 1 to Mitels Registration Statement on Form F1, filed with the SEC on February 4, 2010)
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.20 | Shareholder Agreement among Mitel, Terence H. Matthews, Wesley Clover and Francisco Partners dated as of April 27, 2010 (incorporated by reference to Mitels
Form 6-K, filed with the SEC on April 28, 2010)
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.21 | Amended and Restated Registration Rights Agreement among Mitel, Terence H. Matthews, Wesley Clover, EdgeStone, Francisco Partners and Morgan Stanley dated as of
April 27, 2010 (incorporated by reference to Mitels Form 6-K, filed with the SEC on April 28, 2010)
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.22 | Purchase Agreement dated as of April 21, 2010 among Mitel Networks Corporation (Mitel), the selling shareholders named therein, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., UBS Securities LLC, Piper Jaffray & Co., Genuity Capital Markets and JMP Securities LLC (incorporated by reference to Mitels Annual Report on
Form 10-K, filed with the SEC on July 27, 2010)
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10.23 | Lease Agreement between Mitel and Kanata Research Park Corporation dated as at November 1, 2010 (incorporated by reference to Mitels Form 8K, filed with the
SEC on February 2, 2011)
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|21.1* | Subsidiaries of Mitel
|----- | ---------------------



|23.1* | Consent of Deloitte & Touche LLP
|----- | --------------------------------



|31.1* | Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|----- | ------------------------------------------------------------------------------



|31.2* | Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|----- | ------------------------------------------------------------------------------



|32.1* | Certification by CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|----- | ------------------------------------------------------------------------------



|32.2* | Certification by CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|----- | ------------------------------------------------------------------------------



|+ | Portions of this document have been granted Confidential Treatment by the Secretary of the SEC.
|- | -------------------------------------------------------------------------------------------------

|* | Filed herewith.
|- | ---------------



131