##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 20-F
  o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934ORþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    April 30, 2008ORo

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

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company report   Commission file number: 0-49984
  MITEL NETWORKS
    CORPORATION/CORPORATION MITEL NETWORKS
 (Exact name of Registrant as
    specified in its charter)
  MITEL NETWORKS CORPORATION
 (Translation of
    Registrants name into English)
  Canada
 (Jurisdiction of incorporation
    or organization)
  350 Legget Drive
 Ottawa, Ontario, Canada K2K 2W7
 (Address of principal executive
    offices)
  Securities registered or to be registered pursuant to
    Section 12(b) of the Act:
 None
  Securities registered or to be registered pursuant to
    Section 12(g) of the Act:
 Common Shares, Without Par Value
    o þ
  o þ
  þ o
    o o þ
    þ o
  Rule 12b-2 o þ




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##### Table of Contents





TABLE OF
    CONTENTS
   
 PART IItem 1.


Identity of Directors, Senior Management and
    Advisors


3Item 2.


Offer Statistics and Expected Timetable


3Item 3.


Key Information


3A. Selected Financial Data


3B. Capitalization and Indebtedness


4C. Reasons for the Offer and Use of Proceeds


4D. Risk Factors


5Item 4.


Information on Mitel


17A. History and Development of Mitel


17B. Business Overview


19C. Organizational Structure


34D. Property, Plant and Equipment


34Item 5.


Operating and Financial Review and
    Prospects


35A. Operating Results


35B. Liquidity and Capital Resources


58C. Research and Development, Patents and
    Licenses, etc.


61D. Trend Information


62E. Off-balance Sheet Arrangements


63F. Tabular Disclosure of Contractual
    Obligations


63G. Safe Harbor


64Item 6.


Directors, Senior Management and
    Employees


64A. Directors and Senior Management


64B. Compensation


69C. Board Practices


73D. Employees


74E. Share Ownership


75Item 7.


Major Shareholders and Related Party
    Transactions


77A. Major Shareholders


77B. Related Party Transactions


78C. Interests of Experts and Counsel


81Item 8.


Financial Information


81A. Consolidated Statements and Other Financial
    Information


81B. Significant Changes


82Item 9.


The Offer and Listing


82A. Offer and Listing Details


82B. Plan of Distribution


82C. Markets


82D. Selling Shareholders


82E. Dilution


82F. Expenses of the Issue


82Item 10.


Additional Information


83A. Share Capital


83B. Memorandum and Articles of Incorporation


83C. Material Contracts


88D. Exchange Controls


92




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E. Taxation


93F. Dividends and Paying Agents


98G. Statement by Experts


98H. Documents on Display


98I. Subsidiary Information


98Item 11.


Quantitative and Qualitative Disclosures About
    Market Risk


98Item 12.


Description of Securities Other than Equity
    Securities


100PART IIItem 13.


Defaults, Dividend Arrearages and
    Delinquencies


100Item 14.


Material Modifications to the Rights of
    Security Holders and Use of Proceeds


100Item 15.


Controls and Procedures


100Item 16.


[Reserved]


101A. Audit Committee Financial Expert


101B. Code of Ethics


101C. Principal Accountant Fees and Services


101D. Exemptions from the Listing Standards for
    Audit Committees


102E. Purchases of Equity Securities by the Issuer
    and Affiliated Purchasers


102PART IIIItem 17.


Financial Statements


102Item 18.


Financial Statements


102Item 19.


Exhibits


102EX-2.13: AMENDMENT NO.1 TO FIRST LIEN CREDIT AGREEMENTEX-2.14: AMENDMENT NO.2 TO FIRST LIEN CREDIT AGREEMENTEX-2.15: AMENDMENT NO.3 TO FIRST LIEN CREDIT AGREEMENTEX-2.17: AMENDMENT NO.1 TO SECOND LIEN CREDIT AGREEMENTEX-2.18: AMENDMENT NO.2 TO SECOND LIEN CREDIT AGREEMENTEX-2.19: AMENDMENT NO.3 TO SECOND LIEN CREDIT AGREEMENTEX-2.22: CLASS 1 CONVERTIBLE PREFERRED SHARE AND WARRANT SUBSCRIPTION AGREEMENTEX-4.1: INTEREST RATE SWAP AGREEMENTEX-4.33: EMPLOYMENT CONTRACTEX-8.1: SUBSIDIARIESEX-12.1: CERTIFICATIONEX-12.2: CERTIFICATIONEX-13.1: CERTIFICATIONEX-13.2: CERTIFICATIONEX-99.1: AUDITORS CONSENT




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Basis of
    Presentation
  Form 20-F
  Forward
    Looking Information
    
    our ability to sustain profitability in the future;
    significant economic instability in our key markets,
    particularly in the U.S. and United Kingdom;
    the fluctuations in our quarterly and annual revenues and
    operating results;
    intense competition from our competitors, many of which have
    greater financial resources;
    the continued development of the market opportunity for
    IP-based and
    unified communications solutions and related services;
    technological developments and evolving industry standards;
    our ability to protect our intellectual property and our
    possible infringement of the intellectual property rights of
    third parties;
    our dependence on outside contract manufacturers to manufacture
    our products;
    our dependence on sole source and limited source suppliers for
    key components;
    delay in the delivery of, or lack of access to, software or
    other intellectual property licensed from our suppliers;
    our reliance on strategic alliances;
    our solutions may contain design defects, errors, failures or
    bugs;
    our reliance on our channel partners for a significant component
    of our sales; and
    uncertainties arising from our foreign operations.   2




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PART I Item 1.
    Identity
    of Directors, Senior Management and Advisors    Item 2.
    Offer
    Statistics and Expected Timetable    Item 3.
    Key
    Information  A.
    Selected
    Financial Data    STATEMENT
    OF OPERATIONS DATA
  Year Ended


Six Days Ended


Year EndedApril 25,


April 24,


April 30,


April 30,


April 30,


April 30,2004


2005


2005


2006


2007


2008(In millions, except per share data)Consolidated Statement of OperationsRevenues

$
340.7


$
342.2


$
3.2


$
387.1


$
384.9


$
692.0Cost of revenues


202.9



213.2



2.4



225.7



225.1



367.9Gross margin


137.8



129.0



0.8



161.4



159.8



324.1Research and development


36.2



41.4



0.7



44.1



41.7



62.6Selling, general and administrative


111.4



114.9



1.8



120.7



123.5



246.6Special charges, integration and merger-related costs(1)


11.7



10.6







5.7



9.3



16.0Loss (gain) on disposal of assets


0.6



3.4







(2.4
)


(1.0
)


1.0Litigation settlement


















16.3



Initial public offering costs


















3.3



In-process research and development(2)


0.2



















5.0Operating loss


(22.3
)


(41.3
)


(1.7
)


(6.7
)


(33.3
)


(7.1
)Other (income) expense, net


8.0



7.5



(0.1
)


39.8



(0.1
)


(8.0
)Income tax (recovery) expense


0.3



0.8







(1.9
)


1.8



(12.3
)Net income (loss)

$
(30.6
)

$
(49.6
)

$
(1.6
)

$
(44.6
)

$
(35.0
)

$
13.2Net loss per common shareBasic and diluted

$
(0.26
)

$
(0.49
)

$
(0.01
)

$
(0.44
)

$
(0.36
)

$
(0.44
)Weighted average number of common shares outstanding (in
    millions)


127.8



113.8



117.1



117.2



117.3



186.1  3




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BALANCE
    SHEET DATA
  As at


As at


As at


As at


As at


As atApril 25,


April 24,


April 30,


April 30,


April 30,


April 30,2004


2005


2005


2006


2007


2008(In millions)Consolidated Balance Sheet DataCash and cash equivalents

$
26.7


$
9.7


$
46.6


$
35.7


$
33.5


$
19.5Other current assets


115.0



117.5



115.8



130.8



136.9



273.4Property and equipment


20.3



20.9



20.6



17.4



16.5



27.0Other assets


7.4



8.5



12.3



15.9



15.3



656.8Total assets

$
169.4


$
156.6


$
195.3


$
199.8


$
202.2


$
976.7Current liabilities

$
103.2


$
115.8


$
101.9


$
126.0


$
143.8


$
234.0Long-term debt


15.5



20.2



66.7



56.7



66.8



420.7Derivative instruments(3)


29.2



38.0



37.4



75.9



67.3



108.6Other long-term liabilities


24.8



25.4



25.1



45.6



55.4



246.4Redeemable shares(4)


51.3



57.2



57.3



64.2



71.5



208.5Capital stock


184.8



187.6



187.6



188.8



189.1



277.1Other capital accounts


7.7



14.7



23.3



(1.9
)


6.5



(26.4
)Accumulated deficit


(247.1
)


(302.3
)


(304.0
)


(355.5
)


(398.2
)


(492.2
)Total liabilities and shareholders equity

$
169.4


$
156.6


$
195.3


$
199.8


$
202.2


$
976.7     (1)
    
    Special charges related to restructuring activities, product
    line exit and other loss accruals undertaken to improve our
    operational efficiency and to realign our business. Integration
    and merger-related transaction expenses principally consist of
    legal and consulting fees incurred in connection with the
    acquisition of Inter-Tel in fiscal 2008, as well as other
    incremental non-recurring costs directly related to this
    acquisition (see Item 4.A. Information on
    Mitel  History and Development of Mitel).(2)
    
    In process research and development costs represents research
    and development acquired as part of the Inter-Tel acquisition
    (see Item 4.A. Information on Mitel 
    History and Development of Mitel).(3)
    
    Prior to fiscal 2008, the derivative instruments related to our
    Class A Preferred Shares, Series 1 (the
    Series A Preferred Shares) and the Class B
    Preferred Shares, Series 1 (the Series B
    Preferred Shares). The derivative instruments arose
    because a portion of the redemption price of the Series A
    Preferred Shares and Series B Preferred Shares was indexed
    to our common share price and as required by SFAS 133 had
    been bifurcated and accounted for separately.In fiscal 2008, the derivative instrument related to the
    Class 1 convertible, redeemable preferred shares (the
    Class 1 Preferred Shares) issued on
    August 16, 2007. The holders of the Class 1 Preferred
    Shares have the ability to receive cash equal to the value of
    shares into which the instrument converts after 7 years and
    as such must also be bifurcated and accounted for separately
    under SFAS 133.(4)
    
    Prior to fiscal 2008, redeemable shares included 10,000,000
    Common Shares (which were redeemable by virtue of a shareholders
    agreement dated April 23, 2004, as amended, among certain
    of our shareholders and us), 20,000,000 Series A Preferred
    Shares and 67,789,300 Series B Preferred Shares (see
    Item 6.A. Directors, Senior Management and
    Employees  Directors and Senior Management).In fiscal 2008, redeemable shares included 316,755 Class 1
    Preferred Shares issued in connection with the acquisition of
    Inter-Tel (see Item 4.A. Information on
    Mitel  History and Development of Mitel and see
    Item 6.A. Directors, Senior Management and
    Employees  Directors and Senior Management).  B.
    Capitalization
    and Indebtedness    C.
    Reasons
    for the offer and use of proceeds   4




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D.
    Risk
    Factors  An investment in our Common Shares should be regarded as
    highly speculative and is suitable only for those investors who
    are able to sustain a total loss of their investment. You should
    carefully consider the following risks, as well as the other
    information contained in this annual report, when evaluating us
    and our business and prospects. Any of the following risks, as
    well as risks not currently known to us, could materially and
    adversely affect our business, results of operations or
    financial condition, and could result in a complete loss of your
    investment.
  Risks
    Relating to our Business
  We may
    not be able to sustain profitability in the
    future.
    Current
    and ongoing global economic instability in our key markets,
    particularly the U.S. and the United Kingdom, may adversely
    impact our business.
    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.
    
    significant economic instability in our key markets,
    particularly the U.S. and United Kingdom;
    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;
    foreign currency exchange rates;
    the mix and volume of products sold by us; and
    the timing of the announcement, introduction and delivery of new
    products
    and/or
    product enhancements by us and our competitors.   5




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We
    face intense competition from many competitors and we may not be
    able to compete effectively against these
    competitors.
      As
    voice and data networks converge, we are likely to face
    increased competition from companies in the information
    technology, personal and business applications and software
    industries.
     6




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A key
    component of our strategy is our focus on the development and
    marketing of
    IP-based and
    unified communications solutions and related services, and this
    strategy may not be successful or may adversely affect our
    business.
  IP-based IP-based
  
    the demand for
    IP-based and
    unified communications solutions, value-added applications and
    services will grow as fast as we anticipate;
    current or future competitors or new technologies will cause the
    market to evolve in a manner different than we expect; or
    other technologies will become more accepted or standard in our
    industry.  Our
    solutions may fail to keep pace with rapidly changing technology
    and evolving industry standards.
    Our
    business may be harmed if we infringe intellectual property
    rights of third parties.
       7




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Our
    success is dependent on our intellectual property. Our inability
    or failure to protect our intellectual property could seriously
    harm our ability to compete and our financial
    success.
        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.
    
    the level of sales and the related margins on those sales; 8




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
    the collection of receivables;
    the timing and volume of sales of leases to third party funding
    sources;
    the timing and size of capital expenditures;
    the timing and size of purchase of inventory and related
    components;
    costs associated with potential restructuring actions; and
    customer financing obligations.      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.
    Our
    future success depends on our existing key
    personnel.
   9




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Because
    we depend upon outside contract manufacturers to manufacture our
    products, our operations could be delayed or interrupted if we
    encounter problems with these contractors.
    
    the financial viability of the contract manufacturer;
    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;
    overestimating our forecast requirements resulting in excess
    inventory and related carrying charges;
    underestimating 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
    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.
   10




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The
    exercise of conversion rights by one or more of our preferred
    shareholders, warrant holders, and option holders, could
    adversely affect the market value of our Common Shares as well
    as our ability to complete any future equity
    financing.
    
    316,755 Class 1 Preferred Shares. These Class 1
    Preferred Shares are convertible into Common Shares at the
    option of the holders and upon certain triggering events. As of
    September 30, 2008, each Class 1 Preferred Share was
    convertible into 828.812 Common Shares;
    Stock options to acquire 29,202,509 Common Shares; and
    Warrants to acquire up to an additional 82,238,013 Common Shares.    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 suffer if our strategic alliances are not
    successful.
    Design
    defects, errors, failures or bugs, which may be
    difficult to detect, may occur in our solutions.
   11




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Our
    competitive position may be affected by fluctuations in exchange
    rates, and our current currency hedging strategy may not be
    sufficient to counter such fluctuations.
    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
    operations in international markets involve inherent risks that
    we may not be able to control.
    
    political or social unrest or economic instability in a specific
    country or region;
    macroeconomic conditions adversely affecting geographies where
    we do business;
    higher costs of doing business in foreign countries;
    infringement claims on foreign patents, copyrights, or trademark
    rights; 12




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
    difficulties in 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 may 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
    widespread medical epidemics; and
    our ability to recruit and retain channel partners in foreign
    jurisdictions.  Transfer
    pricing rules may adversely affect our income tax
    expenses.
    Business
    interruptions could adversely affect our
    operations.
    Governmental
    regulation could harm our operating results and future
    prospects.
  voice-over-Internet-Protocol
   13




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E-Rate E-Rate
  Governmental
    regulation of third party long distance and network service
    entities on which we rely may harm our business.
  and/or
  We are
    exposed to risks inherent in our defined benefit pension
    plan.
    We may
    fail to fully realize the anticipated cost savings, revenue
    enhancements and other benefits expected from our acquisition of
    Inter-Tel.
     14




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Future
    changes in financial accounting standards could adversely affect
    our reported results of operations.
    The
    costs and risks associated with Sarbanes-Oxley regulatory
    compliance may have a material adverse effect on
    us.
  and/or
  Risks
    Related to an Investment in our Common Shares
  There
    are significant restrictions on the resale of our securities and
    there can be no assurance as to when such restrictions will
    cease to apply, if ever.
  Securities Act of
    1933 and/or
  Each
    of Francisco Partners and Dr. Matthews is a significant
    shareholder and each has the potential to exercise significant
    influence over matters requiring approval by our
    shareholders.
   15




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Each
    of Francisco Partners and Dr. Matthews
    ownership of our shares, as well as provisions contained in our
    articles of incorporation and Canadian law, may reduce the
    likelihood of a change of control occurring and, as a
    consequence, may deprive you of the opportunity to sell your
    Common Shares at a control premium.
  Competition Act Investment Canada Act
  You
    may be unable to bring actions or enforce judgments against us,
    certain of our directors and officers, certain of the selling
    shareholders or our independent public accounting firm under
    U.S. federal securities laws.
    U.S.
    investors will suffer adverse U.S. federal income tax
    consequences if we are characterized as a passive foreign
    investment company.
  mark-to-market
 16




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Item 4.
    Information
    on Mitel  A.
    History
    and Development of Mitel            
    $330 million in a senior secured first lien facility,
    comprised of:    sub-facilities; and
  
    $130 million in a senior secured second lien facility (the
    Second Lien Credit Agreement).    
    reduced the stated capital of the Series A Preferred Shares
    and made a return of capital to the holder of the Series A
    Preferred Shares;
    amended the conversion rights attaching to the Series A
    Preferred Shares to provide that such Series A Preferred
    Shares be convertible, at the option of the holder thereof, into
    0.000871 of a Class 1 Preferred Share and 0.2679946 of a
    Common Share;
    converted each existing Series A Preferred Share into
    0.000871 of a Class 1 Preferred Share and 0.2679946 of a
    Common Share;
    converted each existing Series B Preferred Share into 1.682
    Common Shares;
    deleted from the articles of the Corporation the
    Class Series A Preferred Shares, the Class B
    Preferred Shares, the Series A Preferred Shares and the
    Series B Preferred Shares; 17




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
    repaid all of the $55 million senior secured convertible
    notes (the Convertible Notes) issued by us on
    April 27, 2005;
    purchased for cancellation certain Common Shares upon the
    exercise of put rights held by Zarlink and Power Technology
    Investment Corporation (PTIC);
    terminated the put rights held by EdgeStone Capital Equity
    Fund II-B
    GP, Inc., as agent for EdgeStone Capital Equity
    Fund II-A,
    L.P. and its parallel investors, and EdgeStone Capital Equity
    Fund II Nominee, Inc., as nominee for EdgeStone Capital
    Equity
    Fund II-A,
    L.P. and its parallel investors (collectively
    EdgeStone);
    repurchased common share warrants issued to Wesley Clover on
    September 21, 2006 (under which we had sold 15,000 warrants
    to Wesley Clover for total consideration of $15 million);
    terminated the Series 2 Warrants held by EdgeStone
    (collectively, the Re-Organization
    Transactions); and
    issued Class 1 Preferred Shares and warrants to purchase
    Common Shares to PTIC and Dr. Matthews.        Internal
    Re-Organization and Restructurings
    
    Effective October 15, 2007, ownership of Mitel Networks
    Inc. (MNI) (an indirect wholly owned subsidiary of
    ours) was transferred from Mitel Networks Limited (an indirect
    wholly owned subsidiary of ours in the United Kingdom) to
    Mitel U.S. Holdings, Inc. (MUSHI);
    Effective February 29, 2008, we changed the legal entity
    name of Inter-Tel Netsolutions, Inc. (a Texas corporation) to
    Mitel Netsolutions, Inc.;
    Effective April 4, 2008, ownership of MNI was further
    transferred from MUSHI to Inter-Tel (now Mitel (Delaware),
    Inc.  see below);
    Immediately following the above transfer of ownership, effective
    April 4, 2008, Inter-Tel Integrated Systems, Inc. (an
    Arizona corporation and an indirect wholly owned subsidiary of
    ours) merged with and into MNI; and
    Effective July 18, 2008, we changed the legal names of the
    following indirect wholly owned subsidiaries of ours:          (613) 592-2122, (613) 592-4784.
 18




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Significant
    developments subsequent to April 30, 2007:
  Inter-Tel
    Acquisition:
    B.
    Business
    Overview      IP-based IP-based IP-based IP-based IP-based IP-based
  IP-based IP-based
 19




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Our
    Solutions
  IP-based IP-
      
    Mitel Communications Suite  TMC Labs
    Innovation Awards  Internet Telephony Magazine (2008)
    Mitel Communications Suite  Winner Best of
    Interop  VoIP and Collaboration (2008)
    Mitel Applications Suite  Communications
    Solution Product of the Year Award (2007)
    Mitel Intelligent Phone Applications Suite 
    Communications Solution Product of the Year Award (2007)
    Mitel Applications Suite  Unified
    Communications Magazine Product of the Year (2007)
    Mitel Intelligent Phone Applications Suite 
    Unified Communications Magazine Product of the Year (2007)
    Mitel Intelligent Phone Applications Suite 
    Internet Telephony Product of the Year (2007)
    Inter-Tel Web Conferencing and Remote Support 
    Customer Interaction Solutions Product of the Year (2007)
    Mitel Your
    Assistanttm 

    INTERNET TELEPHONY Excellence Award  Internet
    Telephony Magazine (2007)
    Inter-Tel 3000 CE Pro High Impact Product
    (CHIPs) award (2007)
    Mitel Customer Interaction Solutions: TMC Labs Innovation
    Award for Customer Interaction Solutions Magazine (2007)
    Mitel Applications Suite: TMC Labs Innovation Award for
    Internet Telephony Magazine (2007)
    Mitel Customer Interaction Solutions: IP Contact Center
    Technology Pioneer Award (2007)  IP-based IP-based
   20




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The
    Mitel 3300 IP Communications Platform
  
    The Mitel 3300 ICPis the cornerstone of our IP and
    unified communications solutions portfolio for our SMB and
    enterprise customers. Available on a worldwide basis, it
    supports our suite of advanced call processing and related
    applications and desktop devices. Our call processing software
    supports over 500 networking and end user features and is
    available in multiple languages. The Mitel 3300 ICPsupports analog, digital, and IP phones and trunks. The
    Mitel 3300 ICPhas the flexibility to operate as either a
    single site, distributed or hosted solution and interoperates
    with a customers traditional solution. The Mitel 3300
    ICPis scalable to serve the needs of small and medium
    businesses with as few as 20 users and large enterprises with as
    many as 65,000 users. To offer customers maximum flexibility,
    the Mitel 3300 ICPcan be delivered in various
    configurations scaling from up to 150 concurrent users per
    controller to a maximum of 5000. Multiple Mitel 3300 ICPscan be clustered to create a single system. As the industry
    moves towards open standards and a software delivery model the
    Mitel 3300 ICPcall processing software and media gateway
    (Mitel 3300 Communications Director) has been
    ported to the Linux operating system and is delivered on the
    highly resilient Sun Fire X4150 server from Sun Microsystems
    (Sun). All hardware and software variants of the
    Mitel 3300 ICPrun the same software delivering the same
    features and applications to all customers independent of size.
    Additionally, in conjunction with Sun we have developed the
    Mitel Unified Client for Sun Rayto operate with
    Suns thin client desktop providing integrated
    authentication for voice and data hotdesking delivering enhanced
    security, flexibility and lower power consumption and other
    operational savings.
    The Mitel 3300 ICPalso acts as an applications and
    services gateway, allowing customers access to advanced
    applications such as messaging, mobility and teleworking. With
    the Mitel Live Business Gatewayattributes enabled, the
    applications and services gateway provides connectivity to
    Microsofts Office Communications Server 2007for
    our solutions and the traditional infrastructure of competitors.
    The applications and services gateway uses open industry
    standards to interoperate both with our applications and devices
    and, through the Mitel Solutions Allianceprogram
    (MSA), third party business applications and devices.
    For customers with branch offices, we offer the ability to
    either implement a Mitel 3300 ICPat each location or
    allow users at a remote site to receive a hosted service from a
    Mitel 3300 ICPsituated in a data center elsewhere in the
    network (or a combination of both options). Those customers
    using a hosted model have access to the same software
    applications and services as those situated at the office where
    the Mitel 3300 ICPphysically resides. The Mitel 3300
    ICPcan also be implemented as a survivable gateway at a
    branch office such that if the network to the office from which
    they are being hosted becomes unavailable, then the local
    Mitel 3300 ICPwill provide the same services seamlessly
    until the network connection is restored. We are able to
    distribute the features, software applications and services
    normally only available at larger corporate offices to any part
    of the network, addressing the communications challenges facing
    organizations with decentralized operations and personnel. This
    approach also provides alternative network configurations for
    customers concerned with disaster recovery and business
    continuity.
    The Mitel 3300 ICPalso supports the peripheral cabinets
    and bays of our traditional PBX systems; the Mitel SX-2000and the Mitel SX-200.This provides a migration path
    for our customers who wish to transition to
    IP-based and
    unified communications at their own pace and also allows them to
    maximize their existing investments  Applications
    for the Mitel 3300 ICP
  IP-based IP-based
  
    Contact Center Applications.  A contact center
    is generally a dedicated function within a business that
    typically serves as an inside sales help desk, providing
    customer support, lead generation, emergency response, telephone
    answering service, inbound response and outbound telemarketing.
    In addition to 21




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##### Table of Contents



delivering solutions to this requirement we have developed
    capabilities in anticipation of trends in this sector. This
    includes supporting integrated customer service groups for staff
    in any location, including work at home agents. Also, customer
    service organizations need to serve their clients via any
    media  a reality in todays consumer market. To
    meet these requirements we provide sophisticated routing for
    voice and other forms of media, such as instant messaging, email
    and fax, and agent capabilities as well as a suite of web-based
    applications for streamlining contact center management and
    reporting. Customers can therefore choose to implement those
    elements that are most relevant to their business needs. Our
    contact center applications provide multimedia functionality
    incorporating routing of an inquiry to the first available agent
    or the agent that has been idle for the longest period.
    Visibility of the presence and availability of colleagues or
    resources can be provided by integration with
    Microsofts Office Communications Server using the
    Mitel Live Business Gatewayto facilitate first call
    resolution. An inquiry can be associated with an incoming call,
    e-mail, fax
    or web chat. Contact center agents are fully supported across a
    centralized or multi-site environment including home working.  
    Wireless Telephony Applications.  We offer
    wireless telephony applications for in-building mobility as well
    as to enable the seamless convergence of in-building wired or
    wireless networks with mobile cellular-based networks. Our
    in-building wireless applications provide roaming users with the
    majority of the features available on a desktop device including
    extension-to-extension
    dialing, attendant functions, voice mail and messaging as well
    as external calling. We use wireless devices, supporting the
    Digitally Enhanced Cordless Telephony, or DECT, and the IEEE
    802.3 Wi-Fi standards, that work with other major
    manufacturers wireless access points allowing customers
    the use of their existing access point investment for
    in-building mobile telephony. We also provide the functionality
    to pair a cellular phone with an office extension or any other
    telephone such that each device will ring simultaneously if the
    office extension is called. This pairing significantly reduces
    the number of calls that are missed. When a call is answered on
    a cellular phone it is still presented at the office extension,
    which means that by pressing a single key on the office
    telephone, the call can be moved from the cellular phone to the
    office extension. This process can also be achieved in reverse,
    so that an employee who may need to leave for a meeting, can
    transfer the call from the office extension to the cellular
    device. This feature reduces charges and enables the user to
    operate with one phone number and one voice mail box whether in
    the office, at home or traveling.
    Video Applications.  Our video applications
    provide businesses access to video conferencing at the desktop.
    Our video applications also incorporate collaboration tools,
    including those from Microsoft Office, that allow users to share
    computer applications during conferences. Our solutions can
    simultaneously support eight separate locations involved in the
    video conference.
    Unified Communications Client and Server Based Collaboration
    Tools.We offer a client  server based
    unified communications application, Mitel Your Assistant,that provides contact management, presence and availability,
    secure instant messaging, audio conferencing and video and data
    collaboration plus softphone capability integrated with the call
    control capabilities of the Mitel 3300 ICP. In addition,
    the unified communications client integrates with leading
    business productivity software like Microsoft Exchange,
    Microsoft Outlook and Microsoft Office and Lotus Notes. The
    softphone provides a number of important features of a Mitel
    desktop telephone on a personal computer, at the users
    desk or from any location around the world where there is
    suitable access to the Internet. Mitel Your Assistantinteracts with the users contact database and offers
    secure instant messaging capabilities, video conferencing,
    knowledge management (automatic retrieval of pertinent files
    associated with the name and number of the caller) and enables
    simplified drag and drop call and conference call
    initiation by moving, with a computer mouse, the name of a
    contact from a list or directory into the communications window.
    Mitel Your Assistantalso enables the simple sharing of
    presentations, documents or spreadsheets and also offers the
    ability to create a virtual white board on each users
    computer screen for the purposes of creating drawings, diagrams
    or for making notes. In addition, a video conference can be
    established with a non-user of Mitel Your Assistantby
    publishing the name of an Internet web page associated with the
    conference call.
    Speech Enabled Messaging, Unified Messaging and Voice
    Mail.Mitel NuPoint Messenger, our branded
    unified messaging application, provides a scalable
    and reliable way to relay, store, and retrieve voice messages
    using either a phone, fax machine, pager or personal computer.
    NuPoint Messengeralso allows 22




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users to have their calls routed to them while they are
    travelling, or access their voice or fax messages from their
    personal computer. NuPoint Messengerprovides a high
    availability and highly scalable solution, which can be suitable
    as a carrier or large enterprise solution and operates with
    other competitive corporate environments. Our Mitel Messaging
    Server product allows businesses to mix and match the
    requirements of individual employees by supporting both unified
    messaging and traditional voicemail on the same platform. Speech
    recognition capability is integrated into the system giving
    users the ability to control their messaging via speech enabled
    commands. Messaging Serversupports Microsoft Outlook,
    MicrosoftExchange, IBM Lotus/Domino and Novell GroupWise
    messaging environments. Our messaging solutions also
    interoperate with Microsoft Live Communications Server.  
    Teleworking.  Our
    IP-based
    teleworker solution enables users to make secure and encrypted
    IP phone calls from their home office or any remote office by
    extending the features and functionality of an office telephone
    over the Internet. As a result, long distance charges can be
    significantly reduced or in some cases eliminated. As an option,
    our Teleworker telephone can support an integral module that
    allows the telephone to access the public switched telephone
    network for making local calls and calls to emergency services
    and to receive incoming calls. Customers can download reports
    that provide detailed usage statistics on teleworker activity.
    This information provides return on investment feedback as a
    means of itemizing savings.
    Collaboration  Audio and Web Conferencing
    (AWC).  Our AWCsolution
    addresses the dynamic communications needs of our customers by
    providing a feature-rich, cost effective
    IP-based
    collaboration solution for conducting interactive online
    meetings, such as brainstorming, training sessions, and
    presentations. Its audio conferencing and web presentation
    capabilities facilitate better collaboration among internal and
    external employees, business partners and customers. The
    browser-based interface enables users to quickly and easily
    schedule and conduct conference calls and share documents with
    any participant. AWCenables businesses to quickly bring
    people together, wherever they may be, so that decisions can be
    made faster and more effectively. It also enables organizations
    to reduce costs, improve workgroup collaboration and increase
    employee productivity.
    Integration with Microsoft Unified
    Communications.  We offer a range of solutions
    that, in conjunction with the Mitel 3300 ICP, provides
    telephony and presence integration with Microsoft Live
    Communications Server 2005 and Microsoft Office Communications
    Server 2007. Telephony integration solutions include the
    Mitel Live Business Gatewaythat enables a user to
    control their Mitel IP phone via the Microsoft Communicator
    client and
    PC-to-Phone
    enabling the Microsoft Communicator client to operate as a
    Session Initiation Protocol (SIP) soft phone
    connected to the Mitel 3300 ICPvia SIP trunks. A wide
    range of our applications offer Microsoft presence integration
    enabling employees to work more efficiently, smarter, and more
    collaboratively resulting in improved productivity and
    communication within a customers business.
    Mitel Applications Suite.  The Mitel
    Applications Suitehas been developed to make
    IP-based
    communications applications easier to acquire, implement and
    use. The product integrates the applications into a single
    server or into the Mitel 3300 ICPto further reduce the
    total cost of ownership for our customers. A configuration
    wizard provides step by step configuration of both
    communications applications and users on the Mitel 3300 ICPresulting in lower installation costs for our partners. A
    system administration portal is available for day to day moves,
    adds and changes and an end user portal is available to allow
    our customers to change their personal settings. This allows
    these applications to be delivered cost effectively and with
    simplicity to the small business market and is a unique and
    differentiated offering consisting of applications such as:  
    Feature-rich voice mail
    Flexible unified messaging
    Speech-enabled auto-attendant
    Personalized auto-attendant and call routing
    Comprehensive audio conferencing
    Integrated web collaboration and desktop sharing 23




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
    Single identity mobile integration
    Secure remote worker / teleworker  
    Mitel Enterprise Manager.  Our enterprise
    management application allows our customers to administer and
    control their network of Mitel 3300 ICPs and associated
    applications and devices. This application allows our customers
    to administer users, monitor and control telecommunication
    spending as well as network monitoring, alarm handling and
    troubleshooting. Our enterprise management application include
    the following:  
    Enterprise Manager.  The Enterprise Managerprovides a single management interface to monitor and manage
    all of the activities of the Mitel 3300 ICPand perform
    day-to-day
    management tasks helping control costs by delivering simplified
    PC-based administration.
    Remote Management.  The Remote Management
    capabilities allow the maintainer or administrator to access
    network and system information and resolve issues remotely.
    Integrated Management Applications.  Integrated
    Management Applications provides the ability to analyze the IP
    networks capability to support IP communications. Voice
    quality metrics and diagnostics can be used to test the network
    capabilities and to help troubleshoot potential issues.  
    Technology Interfaces.  Recognizing that some
    customers may have specialized requirements beyond our standard
    applications, we offer a wide range of technology interfaces and
    APIs for specific enhancements. Open interfaces allow
    integration to third party management solutions, such as those
    from Microsoft and Hewlett Packard.  The
    Mitel 5000 Communications Platform
  
    Designed for small- or medium-sized organizations with single or
    multiple sites, the family of Mitel 5000 Communications
    Platforms(Mitel 5000 CP) is an
    IP-based
    communications solution designed for businesses with up to 250
    users. It delivers an integrated solution consisting of: call
    processing, IP, digital and analog endpoints, and digital and
    analog trunks. Software has been built on a platform that
    efficiently and reliably combines the best of both traditional
    and IP communications. The combination of both IP and
    traditional switching within the system provides customers the
    flexibility to deploy a solution that most meets the needs of
    their business. The Mitel 5000 CPalso provides a
    migration path for customers currently using the traditional
    Inter-Tel Axxess Converged Communications System (the
    Axxess). The Mitel 5000 CPis currently
    available in the U.S. and the United Kingdom.
    As part of our portfolio rationalization process we have ported
    Mitel designed IP phones to the Mitel 5000 CPto offer
    our customers a greater choice among our family of handsets.
    During the course of fiscal 2009 we plan to enhance the Mitel
    5000 CPwith the introduction of the Mitel Applications
    Suite.  Applications
    for the Mitel 5000 CP
  Mitel 5000
    CP on-site
  
    System Manager.  System Manager software is a
    network management system for the Axxess Converged
    Communications System (Axxess) and the Mitel
    5000 CP. It simplifies management of the Mitel 5000 CPcommunication platform, allowing administration of all
    network components through a single web-based interface. The
    following functions can all be conducted through this web-based
    application: communications platform, voice mail and endpoint
    configuration, licensing, software updates and downloads, and
    diagnostics and disaster recovery (backup/restore). System
    administrators and technicians can remotely manage and
    troubleshoot the supported products. 24




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##### Table of Contents




    Mitel Unified Communicator 5000.  The Mitel
    Unified Communicator 5000is a productivity tool that
    combines presence management and collaboration functionality
    designed to allow stationary and mobile users a way to more
    effectively manage their communications and increase efficiency
    while streamlining business processes. Integration of Mitel
    Web Conferencingand Mitel Remote Support(described
    below) can also be incorporated to provide specialized
    permission-based tools for conducting support sessions remotely
    over the internet. The Mitel Unified Communicator
    5000s flexible interface options include text to
    speech and speech recognition support, the ability to access the
    interface via a variety of tools and applications, such as a web
    browser or personal digital assistant.
    Mitel Connection Assistant.  Mitel Connection
    Assistantsoftware is designed to enhance work group
    productivity and provide our customers with a personalized
    service through the use of screen pops of key information to the
    desktop or through a web browser. This presence application
    provides customers with the ability to view the status of
    colleagues and provides users with control of their extensions
    to better manage communications. Using a rules-based system,
    users can assign actions to specific events occurring at their
    extensions, such as diverting unidentified calls or those from a
    particular number to another extension or voice mail.
    Audio and Web Conferencing.  Our Audio and Web
    Conferencing application is common to the Mitel 3300 ICPand the Mitel 5000 CP.
    Mitel Remote Support.  Our Mitel Remote
    Supportapplication is designed to help our customers
    improve their support and online sales environments. Remote
    Support also includes new features such as voice chat, user
    interface wizard, customized
    e-mail
    invite and a more flexible licensing scheme to provide our
    customers with improved support functionality and service
    branding opportunities.
    Contact Center Suite.  Contact Center Suite,
    optimized for the informal contact center environment, is a
    collection of modular computer telephony software applications
    that help organizations optimize multi-media contact center and
    work group performance. Combined with a flexible infrastructure,
    this suite of applications consists of management tools for
    reporting and activity monitoring, plus agent and work group
    tools to aid in increasing productivity and delivering
    consistent customer service.
    Enterprise Messaging.  Enterprise Messagingis
    a voice processing and unified messaging platform that combines
    e-mail,
    voice mail and fax into a single mail management program.
    Depending on the level of integration our customers choose,
    messages are either converted to standard file formats or
    integrated so that users can view, access and process messages
    through a variety of devices, including Microsofts
    Exchange messaging application, Lotus Notes, and Novells
    GroupWise, as well as other internet mail applications. Our
    interactive voice response solution provides an automated
    attendant feature that automatically guides callers to the
    person or information they need.  Mitel
    SX-200 ICP
  Mitel SX-200 ICP Mitel SX-200 ICP Mitel SX-200
  Applications
    for the Mitel SX-200 ICP
  Mitel SX-200 ICP Mitel 3300 ICP. Mitel 3300 ICP Mitel
    SX-200 ICP.
  
    Contact Center Applications
    Teleworker
    Unified and embedded messaging 25




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
    Call accounting
    Mitel Your Assistant  MSA
  Mitel
    3000 Communications System
  Mitel 3000 Communications System Mitel 3000
    CS Mitel 3000 CS on-site Mitel 3000 CS
  Mitel
    1000 Communications System
  Mitel 1000 CS Mitel 1000 CS Mitel 1000 CS
  
    Wired and DECT extensions
    DSL modem
    four port router
    firewall
    wireless local area network access point
    up to 2 standard outside lines and 2 voice over IP channels for
    extra voice lines  Mitel
    3600 Hosted IP Key System
  Mitel 3600 Hosted IP Key System Mitel 3600
  Desktop
    Portfolio.
    IP-based
   26




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##### Table of Contents



Mitel
    Intelligent Directory
  Our
    Traditional Telephony Communication Solutions
  Mitel
    SX-2000
  Mitel SX-2000 Mitel SX-2000 Mitel SX-2000 Mitel SX-200 Mitel 3300 ICP Mitel
    SX-200 ICP
  Axxess small-to-medium Mitel SX-2000 Axxess Mitel SX-2000 Axxess Axxess Mitel 5000 CP Axxess
  SX-2000 IP-based Mitel 3300 ICP
    Our
    Services
  IP-based
  IP-based end-to-end
 27




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##### Table of Contents



Other
    Products and Services (U.S. only)
  Network,
    Local and Long Distance Services
  ,
    Networking
    Technologies Integration
  state-of-the-art IP-based
    Leasing
    Services
     28




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##### Table of Contents



Peripheral
    Products
  message-on-hold,
  Business
    Segments and Principal Markets
    Fiscal 2006


Fiscal 2007


Fiscal 2008% of





% of





% ofRevenues


Revenues


Revenues


Revenues


Revenues


Revenues(In millions, except percentages)United States

$
178.5



46.1
%

$
161.6



42.0
%

$
409.8



59.2
%Europe, Middle East & Asia (EMEA)


156.3



40.4
%


162.4



42.2
%


216.4



31.3
%Canada and Caribbean & Latin America


43.6



11.3
%


49.4



12.8
%


51.8



7.5
%Asia Pacific


8.7



2.2
%


11.5



3.0
%


14.0



2.0
%$
387.1



100.0
%

$
384.9



100.0
%

$
692.0



100.0
%     Sales,
    Marketing and Distribution
    case-by-case
     29




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##### Table of Contents



Our
    Strategy
    
    continue to expand our market focus through our highly scalable
    portfolio which ranges from solutions that address the needs of
    the very small business to the large, multinational enterprise;
    continue to leverage and maximize our operating model;
    continue to rationalize and expand our applications portfolio to
    add further value to and satisfy the business needs of our
    customers and channel partners;
    increase our focus on software applications;
    continue to provide a migration path to IP and unified
    communications that enables our customers, and those of our
    competitors, to leverage their existing investments in
    information, data networking and communications
    expand our geographic presence and channel partner
    capabilities; and
    broaden and deepen our strategic partnerships and alliances.    Manufacturing
    and Supply Chain Management
    
    focus on the design, development, sales and support of our
    products;
    leverage the scale and expertise of specialized contract
    manufacturers;
    reduce manufacturing and supply chain risk; and
    ensure competitive pricing and levels of service.   30




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##### Table of Contents



state-of-the-art
      
    evaluating, selecting, pricing and negotiating contracts with
    suppliers;
    monitoring supplier and contract manufacturer performance
    against established service level agreements;
    maintaining the authorized vendor list of component suppliers;
    managing finished goods inventory;
    monitoring and managing material profiles;
    developing custom service solutions for major customers;
    selecting outbound freight partners, shipping methods, remote
    stocking strategies and shipping routes; and
    managing distribution services, globally.    Research
    and Development
  IP-based IP-based IP-based IP-based
  IP-based
 31




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##### Table of Contents



IP-based IP-based
    Intellectual
    Property
  IP-based
  IP-based
    IP-based
    IP-based IP-based
   32




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##### Table of Contents



Competition
  IP-based IP-based IP-based
    
    the quality of our IP product portfolio and richness of our
    software applications;
    the usability of our software and its application to vertical
    markets;
    our unique TotalSolutions managed service model;
    the interoperability with equipment supplied by other vendors
    and with traditional circuit-switched network equipment;
    the scalability and flexibility of our solutions and our
    customer migration strategies;
    the ease of deployment in either a centrally-managed,
    remotely-distributed or hosted architecture;
    the strength of our strategic alliances;
    the ease of doing business for our channel partners; and
    our track record of customer focused innovation.         33




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##### Table of Contents



C.
    Organizational
    Structure      
  D.
    Property,
    Plant and Equipment  Leased
    Facilities:
  Properties
    Area


ExpirationLocation

Purpose

(In Square Feet)


Date of LeaseOttawa, Canada

Corporate Head Office/Sales/Research
    & Development(1)


512,000


February 15, 2011Caldicot, United Kingdom

U.K. and EMEA Regional
    Headquarters


45,000


March 9, 2021Chandler, AZ

Office/Sales/Research & Development


97,000


April 30, 2009Tempe, AZ

Warehouse


68,000


September 30, 2009Reno, NV

Office


74,000


November 14, 2018     (1)
    
    Sublet to: General Dynamics Canada Ltd. until August 14,
    2009 (42,930 square feet); InGenius Software Inc. until
    August 31, 2009 (4,026 square feet); and Wesley Clover
    International, Corporation until November 30, 2010
    (10,250 square feet). 34




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##### Table of Contents




    throughout the U.S. (including Little Rock (Arkansas),
    Phoenix, Tucson and Tempe (Arizona), New York City and Albany
    (New York), Atlanta and Roswell (Georgia), Chicago and Arlington
    Heights (Illinois), Indianapolis and Kansas City (Kansas),
    Lexington and Louisville (Kentucky), Boston (Massachusetts),
    Eagan and Minnetonka (Minnesota), Costa Mesa,
    San Francisco, Glendale, Sacramento, San Diego,
    San Jose and Santa Ana (California), Denver (Colorado),
    Beltsville, (Maryland), Washington (DC), Ft. Lauderdale,
    Miami, Orlando and Tampa (Florida), Herndon and Richmond
    (Virginia), Waukesha (Wisconsin), Murray Hill, Marlton and
    Kenilworth (New Jersey) Columbia, Springfield and St Louis
    (Missouri), Charlotte and Winston-Salem (North Carolina),
    Albuquerque and Santa Fe (New Mexico), Las Vegas and Reno
    (Nevada) Akron and Columbus (Ohio), Portland (Oregon),
    Philadelphia and Pittsburgh (Pennsylvania), Greenville (South
    Carolina), Sioux Falls (South Dakota), Memphis and Nashville
    (Tennessee), Austin, Dallas, El Paso, Houston,
    Ft. Worth and San Antonio (Texas), Salt Lake City
    (Utah), Seattle, (Washington));
    throughout Canada (including Toronto (Ontario), Montreal
    (Quebec), Calgary (Alberta), Winnipeg (Manitoba), Burnaby
    (British Columbia) and Halifax (Nova Scotia));
    throughout the United Kingdom (including London, Slough,
    Birmingham, Kettering, Northampton (England) and Strathclyde,
    Glasgow (Scotland) and Dublin (Ireland));
    throughout Continental Europe, the Middle East and Africa
    (including France, Germany, the Netherlands, Italy, Spain, Saudi
    Arabia, Dubai and South Africa);
    in Asia-Pacific (including Hong Kong and Beijing (China),
    Singapore and Sydney (Australia)); and
    in Mexico City (Mexico), Guaynabo (Puerto Rico), Rio de Janeiro
    (Brazil) and Barbados.    Item 5.
    Operating
    and Financial Review and Prospects A.  Operating
    Results  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations for the Fiscal Year Ended April 30,
    2008
    Inter-Tel
    Acquisition
   35




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##### Table of Contents



1 2
  1 2
  97-2, Software Revenue Recognition (SOP 97-2)
  Overview
  IP-based IP-based IP-based
    IP-based IP-based IP-based IP-based IP-based IP-based
  Comparability
    of Periods
  IP-based
   36




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##### Table of Contents



Key
    Performance Indicators
            
    status with our key customers on a global basis;
    the achievement of expected milestones of our key R&D
    projects; and
    the achievement of our key strategic initiatives.    Sources
    of Revenues and Expenses
    Revenues
       37




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when-and-if
             38




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##### Table of Contents



Cost
    of Revenues
        Research
    and Development (R&D) Expenses
      Sales,
    General and Administrative Expenses
    Special
    Charges, Integration and Inter-Tel Acquisition-Related
    Expenses
  IP-based
   39




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##### Table of Contents



Other
    Operating Expenses
    Results
    of Operations
    Six DaysYear Ended


Ended


Year EndedApril 25,


April 24,


April 30,


April 30,


April 30,


April 30,2004


2005


2005


2006


2007


2008Revenues

$
340.7


$
342.2


$
3.2


$
387.1


$
384.9


$
692.0Cost of revenues


202.9



213.2



2.4



225.7



225.1



367.9Gross margin


137.8



129.0



0.8



161.4



159.8



324.1Research and development


36.2



41.4



0.7



44.1



41.7



62.6Selling, general and administrative


111.4



114.9



1.8



120.7



123.5



246.6Special charges, integration and acquisition-related expenses


11.7



10.6







5.7



9.3



16.0Loss (gain) on disposal of assets


0.6



3.4







(2.4
)


(1.0
)


1.0Litigation settlement


















16.3



Initial public offering costs


















3.3



In-process research and development


0.2



















5.0Operating loss


(22.3
)


(41.3
)


(1.7
)


(6.7
)


(33.3
)


(7.1
)Other (income) expense, net


8.0



7.5



(0.1
)


39.8



(0.1
)


(8.0
)Income tax (recovery) expense


0.3



0.8







(1.9
)


1.8



(12.3
)Net income (loss)

$
(30.6
)

$
(49.6
)

$
(1.6
)

$
(44.6
)

$
(35.0
)

$
13.2Net loss per common shareBasic and diluted

$
(0.26
)

$
(0.49
)

$
(0.01
)

$
(0.44
)

$
(0.36
)

$
(0.44
)Weighted average number of common shares outstanding (in
    millions)


127.8



113.8



117.1



117.2



117.3



186.1  40




---



##### Table of Contents



Fiscal
    2008 as compared to Fiscal 2007
    Fiscal2007


2008% of





% of


2008 ChangeAmounts


Revenues


Amounts


Revenues


Amount


%(In millions, except percentages)Revenues

$
384.9



100.0
%

$
692.0



100.0
%

$
307.1



79.8
%Cost of revenues


225.1



58.5
%


367.9



53.2
%


142.8



63.4
%Gross margin


159.8



41.5
%


324.1



46.8
%


164.3



102.8
%Research and development


41.7



10.8
%


62.6



9.0
%


20.9



50.1
%Selling, general and administrative


123.5



32.0
%


246.6



35.5
%


123.1



99.7
%Special charges, integration and acquisition-related expenses(1)


9.3



2.4
%


16.0



2.3
%


6.7



72.0
%Litigation settlement


16.3



4.2
%






0.0
%


(16.3
)


*Initial public offering costs


3.3



0.9
%






0.0
%


(3.3
)


*Loss (gain) on sale of manufacturing operations


(1.0
)


(0.3
)%


1.0



0.1
%


2.0



*In-process research and development






0.0
%


5.0



0.7
%


5.0



*Operating loss


(33.3
)


(8.7
)%


(7.1
)


(1.0
)%


26.2



*Interest expense


9.1



2.4
%


34.7



5.0
%


25.6



281.3
%Debt and warrant retirement costs






0.0
%


20.8



3.0
%


20.8



*Mark-to-market adjustment on derivatives


(8.6
)


(2.2
)%


(61.9
)


(8.9
)%


(53.3
)


*Other (income) expense, net


(0.6
)


(0.2
)%


(1.6
)


(0.2
)%


(1.0
)


*Income tax (recovery) expense


1.8



0.5
%


(12.3
)


(1.8
)%


(14.1
)


*Net income (loss)

$
(35.0
)


(9.1
)%

$
13.2



1.9
%

$
48.2



(137.7
)%     *
    
    the comparison is not meaningful(1)
    
    Special charges relate to restructuring activities and other
    loss accruals undertaken to improve our operational efficiency
    and realign our business. In fiscal 2008, it also includes
    Inter-Tel Acquisition related integration costs.  Revenues:
  Geographic
    Segment Revenues:
    
    the U.S.;
    Europe, Middle East & Africa (EMEA);
    Canada and Caribbean & Latin America (CALA); and
    Asia Pacific. 41




---



##### Table of Contents



Fiscal2007


2008% of





% of


2008 ChangeRevenues


Revenues


Revenues


Revenues


Amount


%(In millions, except percentages)United States

$
161.6



42.0
%

$
409.8



59.2
%

$
248.2



153.6
%EMEA


162.4



42.2
%


216.4



31.3
%


54.0



33.3
%Canada and CALA


49.4



12.8
%


51.8



7.5
%


2.4



4.9
%Asia Pacific


11.5



3.0
%


14.0



2.0
%


2.5



21.7
%$
384.9



100.0
%

$
692.0



100.0
%

$
307.1



79.8
%   1 2
  97-2, Software Revenue Recognition (SOP 97-2) SOP 97-2
  Fiscal


Fiscal2007


2008


Change


2007


2008


ChangePre-Adoption of SOP 97-


Post-Adoption of SOP 97-2 on Sales Lease


2 on Sales LeaseTransactions


TransactionsRevenues  U.S.

$
161.6


$
373.9


$
212.3


$
161.6


$
359.9


$
198.3   1 2
       42




---



##### Table of Contents



Gross
    Margin:
    Fiscal2007


2008Amount


Amount(In millions, except percentages)TelecommunicationsRevenues

$
384.9


$
642.1Gross Margin


159.8



304.7Gross Margin %


41.5
%


47.5
%Network ServicesRevenues

$



$
49.9Gross Margin






19.4Gross Margin %



%


38.9
%TotalRevenues

$
384.9


$
692.0Gross Margin


159.8



324.1Gross Margin %


41.5
%


46.8
%       
    operational synergies achieved from the Inter-Tel Acquisition,
    specifically freight and distribution cost savings resulting
    from the move of our U.S. warehousing and distribution to
    Tempe, Arizona, negotiated cost reductions with vendors, and
    lower technician costs; and
    improved mix of software applications revenues compared to
    hardware revenues, as software applications typically generate
    higher margins than either communication platforms and desktop
    appliances or other product revenues.    Operating
    Expenses
  Research
    and Development:
    IP-based
 43




---



##### Table of Contents



Selling,
    General and Administrative:
  1 2
  Special
    Charges, Integration and Inter-Tel Acquisition-Related
    Expenses:
        Litigation
    Settlement:
  SFAS No. 5, Accounting for Contingencies
  Initial
    Public Offering Costs:
  Form F-1
    Loss
    (Gain) on Sale of Manufacturing Operations:
   44




---



##### Table of Contents



In-process
    Research and Development:
  Mitel 5000 CP
  Interest
    Expense:
    Debt and
    Warrant Retirement Costs:
    Mark-to-Market
    Adjustment on Derivatives:
    1 2
 45




---



##### Table of Contents



Derivative LiabilitySeries A and


Class 1Series B


PreferredPreferred Shares


Shares


Total(In millions)Mark to market gain (loss)

$
(2.7
)

$
6.0


$
3.3Reversal of derivative liability


58.6







58.6Mark to market adjustment on derivatives

$
55.9


$
6.0


$
61.9     Other
    (Income) Expense, Net:
    Provision
    for Income Taxes:
    Net
    Income (Loss):
    
    Income from operations of $5.3 million, excluding the
    impact of certain Acquisition-related costs in fiscal 2008 such
    as $7.4 of integration and merger-related costs and
    $5.0 million for in-process research and developments
    costs. This is compared to an operating loss of
    $17.0 million in fiscal 2007 excluding the impact of the
    one-time litigation settlement cost incurred in that year.
    Gain of $61.9 million resulting from the fair value
    adjustments on our embedded derivatives
    Deferred tax benefit of $12.3 million   46




---



##### Table of Contents



Fiscal
    2007 as compared to Fiscal 2006
    Fiscal2006


2007% of





% of


2007 ChangeAmounts


Revenues


Amounts


Revenues


Amount


%(In millions, except percentages)Revenues

$
387.1



100.0
%

$
384.9



100.0
%

$
(2.2
)


(0.6
)%Cost of revenues


225.7



58.3
%


225.1



58.5
%


(0.6
)


(0.3
)%Gross margin


161.4



41.7
%


159.8



41.5
%


(1.6
)


(1.0
)%Research and development


44.1



11.4
%


41.7



10.8
%


(2.4
)


(5.4
)%Selling, general and administrative


120.7



31.1
%


123.5



32.0
%


2.8



2.3
%Special charges(1)


5.7



1.5
%


9.3



2.4
%


3.6



63.2
%Litigation settlement






0.0
%


16.3



4.2
%


16.3



*Initial public offering costs






0.0
%


3.3



0.9
%


3.3



*Loss (gain) on sale of manufacturing operations


(0.9
)


(0.2
)%


(1.0
)


(0.3
)%


(0.1
)


*Gain on sale of assets


(1.5
)


(0.4
)%






0.0
%


1.5



*Operating loss


(6.7
)


(1.7
)%


(33.3
)


(8.7
)%


(26.6
)


*Interest expense


7.6



2.0
%


9.1



2.4
%


1.5



19.7
%Mark-to-market adjustment on derivatives


32.6



8.4
%


(8.6
)


(2.2
)%


(41.2
)


*Other (income) expense, net


(0.4
)


(0.1
)%


(0.6
)


(0.2
)%


(0.2
)


*Income tax (recovery) expense


(1.9
)


(0.5
)%


1.8



0.5
%


3.7



*Net loss

$
(44.6
)


(11.5
)%

$
(35.0
)


(9.1
)%

$
9.6



(21.5
)%     *
    
    the comparison is not meaningful(1)
    
    Special charges relate to restructuring activities and other
    loss accruals undertaken to improve our operational efficiency
    and realign our business.  Revenues:
  Geographic
    Segment Revenues:
    
    the U.S.;
    Europe, Middle East & Africa (EMEA);
    Canada and Caribbean & Latin America (CALA); and
    Asia Pacific. 47




---



##### Table of Contents



Fiscal2006


2007% of





% of


2007 ChangeRevenues


Revenues


Revenues


Revenues


Amount


%(In millions, except percentages)U.S.

$
178.5



46.1
%

$
161.6



42.0
%

$
(16.9
)


(9.5
)%EMEA


156.3



40.4
%


162.4



42.2
%


6.1



3.9
%Canada and CALA


43.6



11.3
%


49.4



12.8
%


5.8



13.3
%Asia Pacific


8.7



2.2
%


11.5



3.0
%


2.8



32.2
%$
387.1



100.0
%

$
384.9



100.0
%

$
(2.2
)


(0.6
)%             Gross
    Margin:
      
    a 1.1% decline as a result of an individual project which
    incurred a loss due primarily to the sale of original equipment
    manufacturers products that were re-sold at a negative margin.
    a 0.8% improvement as a result of (i) an improved mix of
    software applications revenues as a total of product revenues as
    software applications typically generate higher margins than
    either communication platforms and desktop appliances or other
    product revenues; and (ii) cost reductions on
    communications platforms and desktop appliances resulting from
    product re-design efforts and improved costs from electronic
    contract manufacturers; and
    a 0.3% decline as a result of temporary pricing promotions on
    certain IP desktop appliances in fiscal 2007. Similar promotions
    were not run during fiscal 2006.
    Slight improvement in service margins due primarily to the
    change in mix of service revenues, as total service revenues
    contained a lower proportion of relatively lower margin
    installation services revenue in fiscal 2007 compared to fiscal
    2006. 48




---



##### Table of Contents



Operating
    Expenses
  Research
    and Development:
    Selling,
    General and Administrative:
    Special
    Charges:
      Litigation
    Settlement:
      Initial
    Public Offering Costs:
  Form F-1
 49




---



##### Table of Contents



Loss
    (Gain) on Sale of Manufacturing Operations:
        Gain on
    Sale of Assets:
  6-month 10-year 1 2
  Interest
    Expense:
    Mark-to-Market
    Adjustment on Derivatives:
   50




---



##### Table of Contents



Other
    (Income) Expense, Net:
    Provision
    for Income Taxes:
    Critical
    Accounting Policies
    Revenue
    Recognition:
   51




---



##### Table of Contents



Sales
    Leases:
        Allowance
    for Doubtful Accounts:
   52




---



##### Table of Contents



Inventory
    Obsolescence:
      Warranty
    Provision:
    April 24,


April 30,


April 30,2006


2007


2008Balance, beginning of period

$
2.6


$
2.0


$
1.8Warranty costs incurred


(1.8
)


(1.2
)


(1.7
)Warranties issued


1.0



1.1



1.6Other


0.2



(0.1
)


0.7Balance, end of period

$
2.0


$
1.8


$
2.4   Accounting
    for Business Combinations:
  Business Combinations
    Long-Lived
    Assets:
   53




---



##### Table of Contents



Goodwill:
    Special
    Charges:
    Lease
    Termination Obligations:
      Deferred
    Taxes:
   54




---



##### Table of Contents



non-U.S. jurisdictions
    Pension
    Costs:
          April 30,


April 30,2007


2008Discount rate


5.50
%


5.80
%Compensation increase rate


3.00
%


3.50
%Inflation rate


3.00
%


3.50
%Average remaining service life of employees


20 years



18 years   Stock
    Based Compensation:
   55




---



##### Table of Contents



Derivative
    Instruments:
    
    Redemption feature on the convertible, redeemable Series A
    Preferred Shares and Series B Preferred Shares that is
    indexed to our Common Share price.
    Redemption rights upon a Fundamental Change on the
    Convertible Notes (as that term is defined in the Convertible
    Notes) and the Make-Whole Premium (as that term is
    defined in the Convertible Notes).          Determination
    of Fair Market Value of our Common Shares
     56




---



##### Table of Contents



Recent
    Accounting Pronouncements
  FIN 48
  Accounting for Uncertainty in Income Taxes, an
    interpretation of FASB Statement No. 109
  SFAS 157
  Fair Value Measurements,
  SFAS 159
   57




---



##### Table of Contents



SFAS 141(R)
  Business Combinations
  SFAS 161
  Disclosures about Derivative Instruments and Hedging
    Activities
  FSP
    APB
    14-1
  14-1,
  B.
    Liquidity
    and Capital Resources       58




---



##### Table of Contents



Cash
    Flows
  Comparison
    of fiscal 2008 to fiscal 2007:
    Fiscal2007


2008


Change(In millions)Net cash provided by (used in)Operating activities

$
(12.0
)

$
(37.8
)

$
(25.8
)Investing activities


(12.4
)


(544.5
)


(532.1
)Financing activities


21.5



568.4



546.9Effect of exchange rate changes on cash and cash equivalents


0.7



(0.1
)


(0.8
)Decrease in cash and cash equivalents

$
(2.2
)

$
(14.0
)

$
(11.8
)Cash and cash equivaents, end of period

$
33.5


$
19.5


$
(14.0
)   Cash
    Used in Operating Activities:
   59




---



##### Table of Contents



Cash
    Provided by (Used in) Investing Activities:
      
    The sale of an office building and surrounding land in Reno,
    Nevada for cash proceeds of $19.7 million;
    Capital expenditures of $18.3 million (which includes
    Inter-Tel capital expenditures for 8.5 months of fiscal
    2008); and
    Decrease in restricted cash of $1.3 million.    Cash
    Provided by (Used in) Financing Activities:
      
    $430.0 million proceeds from debt borrowed from a syndicate
    of lenders, $300 million of which is under a seven-year
    term First Lien Credit Agreement, and $130 million of which
    is under an eight-year Second Lien Credit Agreement;
    $289.5 million net proceeds raised from the issuance
    Class 1 Preferred Shares; and
    $12.0 million increase in bank indebtedness under a
    five-year revolving credit facility.    
    $66.0 million paid to extinguish the Convertible Notes;
    $36.2 million paid in settlement of the Series A
    Preferred Shares and Series B Preferred Shares;
    $12.9 million paid in settlement of redeemable Common
    Shares;
    $20.0 million paid in settlement of the 2006 Wesley Clover
    Warrants issued in fiscal 2007; and
    $12.9 million in financing costs, of which
    $9.9 million related to the $430.0 million of debt
    borrowings, and $3.0 million related to the issuance of
    Class 1 Preferred Shares.    
    $11.4 million repayment of long-term debt, including
    capital lease obligations; and
    $4.5 million payment of litigation settlement obligations.   60




---



##### Table of Contents



Comparison
    of fiscal 2007 to fiscal 2006:
    Fiscal2006


2007


Change(In millions)Net cash provided by (used in)Operating activities

$
(2.3
)

$
(12.0
)

$
(9.7
)Investing activities


3.7



(12.4
)


(16.1
)Financing activities


(11.7
)


21.5



33.2Effect of exchange rate changes on cash and cash equivalents


(0.6
)


0.7



1.3Increase (decrease) in cash and cash equivalents

$
(10.9
)

$
(2.2
)

$
8.7Cash and cash equivaents, end of period

$
35.7


$
33.5


$
(2.2
)   Cash
    Used in Operating Activities:
    Cash
    Provided by (Used in) Investing Activities:
        Cash
    Provided by (Used in) Financing Activities:
    
    $15.0 million proceeds received upon issuing the 2006
    Wesley Clover Warrants;
    $10.9 million proceeds received upon transfer of
    receivables; and
    $1.6 million used to reduce bank indebtedness and to repay
    certain capital lease obligations.    C.
    Research
    and Development, Patents and Licenses, etc.   61




---



##### Table of Contents



D.
    Trend
    Information        IP-based. IP-based IP-based
  Inter-Tel
  IP-based year-on-year
  IP-based
  IP-based
 62




---



##### Table of Contents



E.
    Off-Balance
    Sheet Arrangements    Letters
    of Credit:
    Bid
    and Performance Related Bonds:
  and/or
  Intellectual
    Property Indemnification Obligations:
    F.
    Tabular
    Disclosure of Contractual Obligations    Payments Due by PeriodLess than








AfterContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 Years(In millions)Long-term debt obligations(1)

$
655.8


$
40.1


$
83.0


$
41.2


$
491.5Capital lease(2)


3.5



2.1



0.7



0.6



0.1Operating lease obligations(3)


68.2



17.1



23.6



15.5



12.0Defined benefit pension plan Contributions(4)


4.0



4.0











Other


14.8



3.7



7.4



3.7



Note payable


0.4



0.1



0.1



0.2



Total contractual cash obligations

$
746.7


$
67.1


$
114.8


$
61.2


$
503.6  63




---



##### Table of Contents



(1)
    
    Represents the principal balance and interest payments for the
    first and second lien borrowings. Interest on these liens are
    based on LIBOR plus 325 basis points, and LIBOR plus
    700 basis points for the first and second liens
    respectively, as described in our consolidated financial
    statements. For the purposes of estimating the variable
    interest, LIBOR has been assumed to be 5%.(2)
    
    Represents the principal and interest payments for capital lease
    obligations. Interest rates on these loans range from 1.3% to
    11.8%, 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 twelve months.
    We expect our funding requirements to increase in future years.
    The amount of the increase will depend upon the time period in
    which the deficit is amortized. We expect to fund any future
    increase in the annual contributions out of our expected future
    cash flows from operations. Liabilities arising from the deficit
    in our defined benefit pension plan are not included in the
    above table. As at April 30, 2008, the projected benefit
    obligation of $198.8 million exceeded the fair value of the
    plan assets of $122.4 million, resulting in an unfunded
    status of $76.4 million as recorded in our consolidated
    balance sheet as of April 30, 2008.            G.
    Safeharbor    Item 6.
    Directors,
    Senior Management and Employees  A.
    Directors
    and Senior Management     64




---



##### Table of Contents



Name and Place of Residence

Age

Position

Principal OccupationDr. Terence H. Matthews(1)
    Ottawa, Ontario, Canada


65


Chairman of the Board

Chairman of the Board of Mitel Chairman of the Board of March
    NetworksDonald W. Smith
    Ottawa, Ontario, Canada


60


Chief Executive Officer and Director

Chief Executive Officer of Mitel (CEO)Peter D. Charbonneau(2)
    Ottawa, Ontario, Canada


55


Lead Director

General Partner of Skypoint Capital CorporationBenjamin H. Ball
    San Francisco, CA, US


42


Director

Partner of Francisco Partners LLPThomas L. Ludwig
    San Francisco, CA, US


32


Director

Principal of Francisco Partners LLPJean-Paul Cossart
    Versailles, France


61


Director

Associate Director of Infoteria of FranceGilbert S. Palter
    Toronto, Ontario, Canada


43


Director

Chief Investment Officer and Managing Partner of EdgeStone
    Capital Partners, L.P.Norman Stout
    Phoenix, Arizona, US


50


Director

Chairman of Hypercom CorporationPaul A.N. Butcher
    Ottawa, Ontario, Canada


46


President and Chief Operating Officer

President and Chief Operating Officer of MitelSteven E. Spooner
    Ottawa, Ontario, Canada


50


Chief Financial Officer

Chief Financial Officer of Mitel (CFO)Graham Bevington
    Chepstow, Wales


48


Vice President and Managing Director, Europe, Middle East and
    Africa Region

Vice President and Managing Director, Europe, Middle East and
    Africa Region of MitelRichard F. Dell
    Reno, Nevada, US


48


President, Mitel U.S.

President, Mitel U.S.Roger K. Fung
    Hong Kong, China


56


Vice President and Managing Director, Asia-Pacific Region

Vice President and Managing Director, Asia-Pacific Region of
    MitelDouglas W. Michaelides
    Ottawa, Ontario, Canada


47


Vice President, Global Marketing

Vice President, Global Marketing of MitelRonald G. Wellard
    Ottawa, Ontario, Canada


50


Executive Vice President, Product Development

Vice President, Product Development of Mitel  65




---



##### Table of Contents



(1)
    
    Dr. Matthews 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.
    Dr. Matthews was a director of Ironbridge Networks
    Corporation, which went into receivership in January 2001 and
    West End Systems Corporation, which went into receivership in
    February 1999.(2)
    
    Mr. Charbonneau was a director of METConnex Inc., which
    filed a notice of intention to file for bankruptcy protection on
    September 28, 2006. He resigned from the board in June 2007.    Dr. Terence H. Matthews
  Donald W. Smith
  Peter D. Charbonneau
  Jean-Paul Cossart
 66




---



##### Table of Contents



Gilbert S. Palter
  Benjamin H. Ball
  Thomas L. Ludwig
  Norman Stout
  Paul A.N. Butcher
 67




---



##### Table of Contents



Steven E. Spooner
  Graham Bevington
  Richard F. Dell
  Roger K. Fung
  Douglas W. Michaelides
  Ronald G. Wellard
 68




---



##### Table of Contents



B.
    Compensation    Summary
    Compensation Table
  Long Term CompensationSecurities Underlying Optionsand Deferred Share UnitsAnnual Compensation



All OtherName and Principal Position

Salary

Bonus

Granted

CompensationDonald W. Smith

$
735,000



279,199



nil


$
11,760
(2)Chief Executive Officer(1)Paul A.N. Butcher

$
490,000



145,997



nil


$
37,240
(3)President and Chief Operating Officer(1)Steven E. Spooner

$
328,300


$
193,204



nil


$
11,760
(4)Chief Financial Officer(1)Ronald G. Wellard(1)

$
256,178



90,058



75,000


$
7,840
(5)Douglas W. Michaelides

$
288,120


$
53,491



nil


$
7,840
(6)Vice President Global Marketing(1)     (1)
    
    Compensation paid in Canadian dollars, but converted to U.S.
    dollars at the average of the noon buying rates per Federal
    Reserve Bank of New York for fiscal 2008 of C$1.00 = $0.98.(2)
    
    Mr. Smiths other compensation is a car allowance of
    $11,760.(3)
    
    Mr. Butchers other compensation is comprised of a car
    allowance of $17,640 and a company contribution to our Deferred
    Share Unit Plan of $19,600.(4)
    
    Mr. Spooners other compensation is a car allowance of
    $11,760.(5)
    
    Mr. Wellards other compensation is a car allowance of
    $7,840.(6)
    
    Mr. Michaelides other compensation is a car allowance
    of $7,840. 69




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##### Table of Contents



Market ValueNumber of





Exercise


ofCommon


Percent of


Price


CommonShares


Total Options


per Common


SharesUnderlying


Granted to


Share


UnderlyingOptions


Employees in


($/Common


Options on


ExpirationName

Granted(1)


Fiscal Year


Share)(2)


Date of Grant


DateDonald W. Smith







%

$








Paul A.N. Butcher







%

$








Steven E. Spooner







%

$








Graham Bevington







%

$








Richard F. Dell


300,000



3.44
%

$
1.25







23-Oct-12Roger K. Fung







%

$








Douglas W. Michaelides







%

$








Ronald G. Wellard


75,000



0.86
%

$
1.25







23-Oct-12Dr. Terence H. Matthews


20,679



0.24
%

$
1.14







26-July-12120,482



1.38
%

$
1.25







23-Oct-12Peter D. Charbonneau


50,926



0.58
%

$
1.14







26-July-1233,132



0.38
%

$
1.25







23-Oct-12Jean-Paul Cossart


15,060
(3)


0.17
%

$
1.25







23-Oct-12Benjamin H. Ball



(4)



%










David T. ibnAle



(4)














Thomas L. Ludwig



(4)














Norman Stout


500,000
(5)


5.73
%

$
1.25







23-Oct-12Gilbert S. Palter



(6)














Guthrie J. Stewart



(6)Kirk K. Mandy


50,309
(7)


0.58


$
1.14







26-July-1220,783
(7)


0.24


$
1.25







23-Oct-12     (1)
    
    The options vest as to 25% on the first anniversary of the date
    of grant and as to an additional 25% each year thereafter.(2)
    
    Option exercise prices have been set in Canadian dollars but
    converted to U.S. dollars at the noon buying rate per Federal
    Reserve Bank of New York on April 30, 2008 of C$1.00 =
    $0.98.(3)
    
    Options awarded to Mr. Cossart are held in the name of
    Scivias s.a.r.l., a company in which Mr. Cossart is the
    sole shareholder.(4)
    
    Options to purchase 123,495 Common Shares have been granted to
    Francisco Partners Management, LLC in connection with
    Mr. Ball and Mr. Ludwig (and Mr. ibnAle who resigned
    in March 2008) acting as directors of Mitel.(5)
    
    Options granted to Mr. Stout were granted in his capacity
    as an Executive Officer. Mr. Stout is no longer a Named
    Executive Officer for the Corporation but is on the Board of
    Directors.(6)
    
    Options to purchase 109,069 Common Shares have been granted to
    EdgeStone Capital Equity Fund II Nominee, Inc. in
    connection with Mr. Palter and Mr. Stewart acting as
    directors of Mitel. Mr. Stewart ceased to be a director of
    Mitel in October 2007.(7)
    
    Mr. Mandy ceased to be a director of Mitel in October 2007.     70




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##### Table of Contents



Annual service on the board of directors (other than the Chair)

C

$
25,000Annual service as the Chair of the board of directors

C

$
100,000Annual service as a member of the audit committee (other than
    the Chair)

C

$
10,000Annual service as the Chair of the audit committee

C

$
15,000Annual service as a member of other standing committees

C

$
7,500Meeting fees (varies depending on whether in person, by
    telephone and by committee)

C

$
500-2,000     Employment
    Contracts:
  Donald W. Smith. 24-month
    Paul A.N. Butcher. 18-month
 71




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##### Table of Contents



Steven E. Spooner. 18-month
  Ronald G. Wellard
  Douglas W. Michaelides
    Indebtedness
    of Directors, Officers and Members of Senior
    Management:
    Pension
    and Retirement Plans
       72




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##### Table of Contents



Deferred
    Share Unit Plan
          C.
    Board
    Practices      Board
    Committees:
    Audit Committee.
    
    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. 73




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##### Table of Contents



Compensation Committee.
  
    compensation, development, succession and retention of the chief
    executive officer and key employees;
    the establishment of fair and competitive compensation and
    performance incentive plans; and
    the production of an annual report on executive compensation for
    inclusion in our public disclosure documents.  Compensation Committee Interlocks and Insider
    Participation.
  Other
    Committees:
    
    reviewing all forward-looking information in our continuous
    disclosure documents;
    implementation of the disclosure committee policy and the
    education of employees, officers and directors on matters
    related to the policy;
    approving the designation of spokespersons;
    ensuring that appropriate processes are in place to monitor our
    corporate website;
    ensuring that when a public disclosure requires corrections,
    such correction is timely and made under the supervision of the
    disclosure committee;
    monitoring the integrity and effectiveness of our disclosure
    controls and procedures on an ongoing basis and reporting
    findings to the CEO and CFO;
    reviewing and supervising the preparation of documentation that
    are required to be or are voluntarily filed with a securities
    commission, stock exchange or government under applicable
    securities or corporate law including annual certifications,
    annual reports filed with the SEC on
    Form 20-F
    and
    6-K; and
    evaluating the effectiveness of our disclosure controls and
    procedures as of the end of each year end.  D.
    Employees     74




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##### Table of Contents



E.
    Share
    Ownership      Employee
    Equity Compensation Plans:
  2001
    Stock Option Plan:
          2006
    Equity Incentive Plan:
     75




---



##### Table of Contents




    to amend general vesting provisions;
    to amend the term of any option, subject to limits contained in
    the plan;
    to amend the provisions in the plan dealing with retirement,
    death, disability or termination of participants;
    to make amendments for the protection of participants in the
    plan, including amendments resulting from changes in law in any
    jurisdiction; and
    to make amendments to cure or correct ambiguities, defects or
    mistakes in the plan.      Employee
    Share Purchase Round:
       76




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##### Table of Contents



Item 7.
    Major
    Shareholders and Related Party Transactions  A.
    Major
    Shareholders    Beneficial Amount Owned(1)


Percentage Held(2)Class 1








Class 1Preferred


Common


Voting


Preferred


Common


VotingShares


Shares


Power


Shares


Shares


Power(2)Dr. Matthews Group(8)Dr. Matthews


13,500



1,210,394



12,547,073



4.3
%


0.6
%


2.6
%Celtic Tech Jet Corporation


0



4,555,169



4,555,169



0.0
%


2.1
%


1.0
%Wesley Clover Corporation


0



158,790,234



158,790,234



0.0
%


73.9
%


33.3
%13,500



164,555,797



175,892,476
(3)


4.3
%


76.6
%


36.9
%Francisco Partner Group(8)Francisco Partners Management, LLC






30,873



30,873



0.0



0.0



0.0Arsenal HoldCo I S.a.r.l.


164,463



12,462,570



150,571,032



51.9
%


5.5
%


30.6
%Arsenal HoldCo II S.a.r.l.


63,359



4,801,209



58,007,185



20.0
%


2.2
%


12.0
%227,822



17,294,652



208,609,088
(4)


71.9
%


7.7
%


42.6
%Her Majesty the Queen in Right of Canada


0



37,174,887



37,174,887



0.0
%


14.8
%


7.2
%Morgan Stanley Principal Investments, Inc.


44,933



3,404,910



41,137,576
(5)


14.2
%


1.6
%


8.5
%EdgeStone


19,000



10, 538,524



26,389,850
(6)


6.0
%


4.8
%


5.5
%PTIC


11,500



14,327,483



23,984,654
(7)


3.6
%


6.6
%


5.0
%     (1)
    
    Beneficial ownership is determined in accordance with SEC rules,
    which generally attribute beneficial ownership of securities to
    each person or entity who 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
    September 30, 2008 (the Determination Date).(2)
    
    All Common Shares that a person would receive upon exercise of
    stock options, or warrants or upon conversion of any other
    convertible security held by that person that are exercisable
    within 60 days of the Determination Date, 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. For the
    purposes of calculating the percentage of Voting Power, the
    Class 1 Preferred Shares convert into our Common Shares on
    a 1 for 839.754 basis (after taking into consideration the 8%
    per annum accretion, calculated to 60 days after the
    Determination Date).(3)
    
    Includes the common share equivalent to 13,500 Class 1
    Preferred Shares of 11,336,679 warrants to acquire 1,022,996
    Common Shares that are currently exercisable, stock options to
    acquire 187,398 Common Shares that are currently exercisable,
    158,790,234 Common Shares owned by Wesley Clover and 4,555,169
    Common Shares owned by CTJL.(4)
    
    Includes the common share equivalent to 227,822 Class 1
    Preferred Shares of 191,314,436 warrants to acquire 17,263,779
    Common Shares that are currently exercisable and stock options
    to acquire 30,873 Common Shares that are currently exercisable.(5)
    
    Includes the common share equivalent to 44,933 Class 1
    Preferred Shares of 37,732,666 and warrants to acquire 3,404,910
    Common Shares that are currently exercisable. 77




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##### Table of Contents



(6)
    
    Includes the common share equivalent to 19,000 Class 1
    Preferred Shares of 15,955,326 and 5,359,893 Common Shares and
    stock options to acquire 178,631 Common Shares that are
    currently exercisable and warrants to acquire 5,000,000 Common
    Shares that are currently exercisable.(7)
    
    Includes the common share equivalent to 11,500 Class 1
    Preferred Shares of 9,657,171 and 13,456,042 Common Shares and
    warrants to acquire 871,441 Common Shares that are
    currently exercisable.(8)
    
    The parties to the 2007 Shareholders Agreement agreed,
    among other matters, to act and vote from time to time so that
    on any election of directors by our shareholders, the Francisco
    Partners and Matthews nominees are elected. See Item 10.C.
    Additional Information  Material
    Contracts  2007 Shareholders Agreement for
    a discussion of the 2007 Shareholders Agreement.    U.S.
    Shareholders:
    B.
    Related
    Party Transactions    BreconRidge
    Corporation (formerly BreconRidge Manufacturing Solutions
    Corporation)
    Outsourcing
    of Manufacturing and Repair Operations
       78




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##### Table of Contents



Brookstreet
    Research Park Corporation
    Wesley
    Clover Corporation
      Wesley
    Clover Solutions North America, Inc.
    Canandia
    Inc. and certain of its subsidiaries, namely Kanandia
    International Limited, Petan Communication Solutions Private
    Limited and Wesley Clover Communication Solutions Private
    Limited
    
    Financing Agreement entered into with Canandia, Kanandia
    International Limited (Kanandia) and Petan
    Communications Solutions Private Limited (Petan),
    under which we have been granted the option to acquire
    beneficial ownership of all of the shares of Petan and Kanandia
    at any time during a five year period commencing on the
    effective date of the India Market Development Agreement.
    Product Enhancement Agreement entered into with Petan, granting
    to it a limited license to make modifications to our products in
    order to meet certain market requirements and specifications for
    the sale and use of those products in the Indian market;
    Distribution Agreement entered into with Petan, granting it a
    limited license to sell certain of our products in the Indian
    market; and
    Trademark License Agreement entered into with Petan and Wesley
    Clover Communication Solutions Private Limited
    (WCCSPL), licensing Petan and WCCSPL the right to
    use certain of our trademarks and tradenames in the Indian
    market.  Other
    Transactions
   79




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##### Table of Contents




    NewHeights Software/CounterPath Corporation (a corporation
    formerly controlled by Owen Matthews, who is related to
    Dr. Matthews) may be deemed to be a related party because
    Dr. Matthews indirectly owns approximately 26% of
    Counterpath Solutions, which acquired NewHeights on
    August 2, 2007. During fiscal 2008, we paid NewHeights
    $2.2 million in software royalties relating to a customized
    desktop communication management software application which we
    integrate and distribute as Your Assistant(2006  $2.6 million; 2007 
    $2.2 million). We also received $0.1 million of rental
    and other income from NewHeights during fiscal 2008
    (2006  $0.1 million; the Transition
    Period  $nil; 2007  $0.1 million). On
    January 31, 2008, we entered into an amendment to our
    existing agreement with NewHeights Software (the OEM
    Agreement). Under the amendment, we agreed to a minimum
    purchase commitment of $0.5 million in exchange for an
    increased discount on products purchased under the OEM
    Agreement. On April 30, 2008, the minimum purchase
    commitment was increased to $0.7 million in exchange for an
    additional increase in our discount on products purchased under
    the OEM Agreement. On April 30, 2008, we also entered into
    an agreement to provide a final royalty payment of
    $0.4 million as fulfillment of all payment obligations for
    the transfer to us of certain intellectual property owned by
    NewHeights Software. On July 31, 2008, we entered into a
    source code license agreement with CounterPath for
    $0.65 million plus certain royalty payments to be made over
    time. This agreement was entered into on terms and conditions
    which reflect conditions that reflect what management believes
    are prevailing market conditions.
    Natural Convergence may be deemed to be a related party because
    Dr. Matthews directly or indirectly owns approximately 28%
    of that company. On April 25, 2006, the Company entered
    into an agreement with Natural Convergence Inc
    (NCI), a company in which the Major Shareholder has
    an ownership interest, to purchase prepaid software licenses and
    convertible debentures for a combined total of $1.2. The secured
    convertible debentures were (a) repayable to debenture
    holders (plus a credit fee of 25% per annum of any outstanding
    principal) on the earlier of December 31, 2006, or on the
    occurrence of certain events, or (b) automatically
    convertible into preferred shares of NCI upon the closing of a
    qualifying financing of no less than $6.0. The convertible
    debentures were also issued with warrants to acquire a number of
    common shares of NCI equal to the dollar amount of the
    investment divided by $1.00, at an exercise price per common
    share of C$0.0001. Under this agreement, the Company purchased
    $0.3 of prepaid software licenses and $0.9 of convertible
    debentures during fiscal 2007. The $0.3 of prepaid licenses is
    included in other current assets at April 30, 2007. Since
    NCI had completed a qualifying financing of $10.0 in November
    2006, the Companys entire $0.9 balance of debentures and
    $0.1 accrued interest was automatically converted into NCI
    Class C Preferred Shares at a 5% discount in accordance
    with the terms of the agreement. Following the conversion, and
    upon exercising its warrants, the Company received 8,467,523
    Class C Preferred Shares and acquired 600,000 common
    shares. At April 30, 2007 and April 30, 2008, the
    Company had a combined ownership of 5.6% in NCI but did not
    exert significant influence over NCI. Accordingly, the $1.0
    investment recorded on the balance sheet at April 30, 2007
    and April 30, 2008 has been accounted for using the cost
    method.        
    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; 80




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##### Table of Contents




    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
    arms length; and
    for related party transactions involving our officers or
    directors, whether there has been any loss of a corporate
    opportunity.    Registration
    Rights
  and/or U.S. and/or
 C.  Interests
    of Experts and Counsel    Item 8.
    Financial
    Information A.  Consolidated
    Statements and Other Financial Information    Legal
    Proceedings
    Dividend
    Policy
   81




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##### Table of Contents



B.
    Significant
    Changes      Item 9.
    The
    Offer and Listing  A.
    Offer
    and Listing Details  Securities Act of 1933
  B.
    Plan
    of distribution    C.
    Markets    D.
    Selling
    shareholders    E.
    Dilution    F.
    Expenses
    of the issue   82




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##### Table of Contents



Item 10.
    Additional
    Information  A.
    Share
    Capital    B.
    Memorandum
    and Articles of Incorporation  385460-4.
      
    amendments to By-Law No. 1A which reflect our current
    corporate governance structure and enhanced practices including
    an increase in the quorum requirement for meetings of
    shareholders as well as current provisions of the CBCA; and
    amendments to our articles of incorporation to (a) increase
    the minimum number of directors from one (1) to three
    (3) and the maximum number of directors from ten
    (10) to fifteen (15) in order to support any future
    increases in the size of the board of directors, and (b) to
    change our name from Mitel Networks Corporation to
    Mitel Corporation.        Meetings
    of Shareholders:
     83




---



##### Table of Contents



and/or
  Directors:
        his/her
 84




---



##### Table of Contents



he/she his/her
  Share
    Capital:
  winding-up
          Class 1
    Preferred Shares:
  Issue Price  $1,000.00 per
    Class 1 Preferred Share.
  Conversion, Liquidation and
    Redemption Value 
  Conversion 
  Ranking 
  Dividends 
 85




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##### Table of Contents



Liquidation Preference 
  Voluntary Redemption after Five
    Years 
  Mandatory Redemption after Seven
    Years 
  Mandatory Conversion 
  Anti-dilution Provision 
  Voting Rights 
  Protective Provisions 
  Class 2
    Preferred Shares:
  Directors Authority to Issue One or More
    Series 
 86




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##### Table of Contents



Terms of Each Series 
  Ranking of the Class 2 Preferred
    Shares 
  Priority 
  (e) Liquidation Preference
      Other Preferences 
  Conversion Right 
  Redemption Right 
  Dividends 
  Voting Rights 
 87




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##### Table of Contents



Variation of Rights 
    C.
    Material
    Contracts    Merger
    Agreement:
      
    In order to effect a return of capital on Series A
    Preferred Shares, the conversion of the Series A Preferred
    Shares into Class 1 Preferred Shares and Common Shares and
    the termination of the Series 2 Warrants, each as described
    in Item 4.A. Information on Mitel  History
    and Development of Mitel, we entered into a Return of
    Capital, Voting and Conversion Agreement with EdgeStone (the
    EdgeStone Return of Capital, Voting and Conversion
    Agreement).
    In order to effect the conversion of the PTIC Series B
    Preferred Shares and repurchase one-half of the Common Shares
    issued to PTIC upon such conversion, as described above, we
    entered into a Common Share Repurchase, Voting and Conversion
    Agreement with PTIC (the PTIC Common Share Repurchase,
    Voting and Conversion Agreement).
    In order to effect the repurchase of the Zarlink Common Shares,
    as described above, we entered into a Common Share Repurchase
    and Voting Agreement with Zarlink (the Zarlink Common
    Share Repurchase and Voting Agreement).
    In order to effect the conversion of the Wesley Clover
    Series B Preferred Shares and the repurchase for
    cancellation and termination of the 2006 Wesley Clover Warrants,
    as described above, we entered into a Warrant Repurchase,
    Voting, and Conversion Agreement with Dr. Matthews, Wesley
    Clover and CTJL (the Matthews Warrant Repurchase, Voting
    and Conversion Agreement).   88




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##### Table of Contents



2007 Shareholders
    Agreement:
      Registration
    Rights Agreement:
  and/or U.S. and/or
  Convertible
    Notes:
  Senior
    Secured Convertible Note Transaction:
    Debt
    Financing:
    First Lien Credit Agreement
 89




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##### Table of Contents



Second Lien Credit Agreement:
  Default:
  Pledge, Security and Guarantee:
  Equity
    Financing:
  Subscription Agreement:
  
    Issued and sold to the Investors 263,087 Class 1 Preferred
    Shares at a purchase price of $1,000 per share.
    Issued and sold to the Investors, for the aggregate price of
    $0.01, warrants to purchase 19,936,071 Common Shares at an
    exercise price set out above under the heading
    Warrants.            Warrants:
           90




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##### Table of Contents



Y(A-B)A   whereY

=

the number of warrant shares in respect of which the net
    issuance election is being made.A

=

the Fair Market Value (as defined in the warrant) of
    one Common Share as at the time the net issuance election is
    made.B

=

the Exercise Price (initially $1.32, as adjusted to the date of
    calculation)   Agreements
    with Related Parties and Others:
  Interest Rate Swap agreement between us and Morgan Stanley
    Capital Services Inc
    Agreements
    with Key Employees:
    TPC
    Agreement, as amended:
     91




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##### Table of Contents



12-month
    Agreement
    between Mr. Peter Charbonneau and
    Dr. Matthews:
    D.
    Exchange
    Controls  Competition Act
    Investment
    Canada Act
  Investment Canada Act Investment Canada
    Act Investment Canada Act Investment Canada Act Investment
    Canada Act Investment Canada Act
  Investment Canada Act
  
    the acquisition of our Common Shares by a person in the ordinary
    course of that persons business as a trader or dealer in
    securities; 92




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##### Table of Contents




    the acquisition or control of us in connection with the
    realization of security granted for a loan or other financial
    assistance and not for any purpose related to the provisions of
    the Investment Canada Act; and
    the acquisition or control of us by reason of an amalgamation,
    merger, consolidation or corporate reorganization following
    which the ultimate direct or indirect control in fact of us,
    through the ownership of voting interests, remains unchanged.    E.
    Taxation  U.S.
    FEDERAL INCOME TAX CONSIDERATIONS
        Scope of
    this Disclosure
  Authorities
    and Assumptions
      U.S.
    Holders
   93




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##### Table of Contents



Non-U.S.
    Holders
  non-U.S. Holder non-U.S. Holders non-U.S. Holder
  U.S.
    Holders Subject to Special U.S. Federal Income Tax
    Rules Not Addressed
      Tax
    Consequences Other than U.S. Federal Income Tax Consequences Not
    Addressed
    U.S.
    Federal Income Tax Consequences of the Ownership and Disposition
    of Common Shares
  Distributions
    on Common Shares
   94




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##### Table of Contents



121-day
    Distribution
    of Foreign Currency
    Disposition
    of Common Shares
      Foreign
    Tax Credit
  year-by-year
   95




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##### Table of Contents



Passive
    Foreign Investment Company Rules
    
    at least 75% of its gross income is passive income
    (referred to as the income test); or
    at least 50% of the average value of its assets is attributable
    to assets that produce passive income or are held for the
    production of passive income (referred to as the asset
    test).    
    dividends, royalties, rents, annuities, interest, and income
    equivalent to interest; and
    net gains from the sale or exchange of property that gives rise
    to dividends, interest, royalties, rents, or annuities and
    certain gains from the commodities transactions.           96




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##### Table of Contents



Each U.S. Holder should consult its own tax advisor
    regarding the status of the Company as a PFIC, the possible
    effect of the PFIC rules to such holder, as well as the
    availability of any election that may be available to such
    holder to mitigate adverse U.S. federal income tax
    consequences of holding shares in a PFIC.
  Information
    Reporting; Backup Withholding
  Form W-9),
  CANADIAN
    FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS
  Income Tax Act
      Taxation
    of Dividends
   97




---



##### Table of Contents



Disposition
    of Common Shares
    60-month
  F.
    Dividends
    and Paying Agents    G.
    Statement
    by Experts    H.
    Documents
    on Display  Securities Exchange Act of 1934 1-800-SEC-0330.
      613-592-2122.
  I.
    Subsidiary
    Information    Item 11.
    Quantitative
    and Qualitative Disclosures about Market Risk   98




---



##### Table of Contents



Equity
    Price Risk:
    Foreign
    Currency Risk:
      Interest
    Rate Risk:
             99




---



##### Table of Contents



Item 12.
    Description
    of Securities Other than Equity Securities   PART II  Item 13.
    Defaults,
    Dividend Arrearages and Delinquencies    Item 14.
    Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds    Item 15.
    Controls
    and Procedures  Securities Exchange Act
    of 1934
    Managements
    Annual Report on Internal Control Over Financial
    Reporting
         100




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f)
  Item 16.
    [Reserved]  A.
    Audit
    Committee Financial Expert    B.
    Code
    of Ethics  613-592-2122.
    C.
    Principal
    Accountant and Fees    Fiscal 2008


Fiscal 2007Audit Fees

$
759,682


$
780,840Audit-Related Fees


65,837



45,618Tax Fees


146,508



28,921Other Fees


838,401



Total

$
1,810,681


$
855,379        101




---



##### Table of Contents



Audit
    committee pre-approval process:
      D.
    Exemptions
    from the Listing Standards for Audit Committees    E.
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers      (d) MaximumNumber (orApproximateDollar(c) Total


Value) ofNumber of


SharesShares


(or Units)(or Units)


that mayPurchased


yet be(a) Total


(b) Average


as Part


PurchasedNumber of


Price


of Publicly


Under theShares (or


Paid per


Announced Plans


Plans orPeriod

Units) Purchased


Share (or Units)


or Programs


ProgramsOctober 31, 2007


13,252


C$
1.00







April 22, 2008


14,277


C$
1.34







TOTAL


27,529  PART III  Item 17.
    Financial
    Statements  page F-1
  Item 18.
    Financial
    Statements    Item 19.
    Exhibits  1
.

Articles of Incorporation and bylaws as currently in effect:1
.1

Articles of Incorporation and amendments thereto prior to April
    22, 2004(4)1
.2

Articles of Amendment dated April 22, 2004(4)1
.3

Articles of Amendment dated April 23, 2004(4)1
.4

Articles of Amendment dated October 12, 2006(10)1
.5

Articles of Amendment dated August 16, 2007(11) 102




---



##### Table of Contents



1
.6

Articles of Amendment dated August 16, 2007(16)1
.7

Bylaws(4), as amended on September 7, 2006(10)2
.

Instruments defining the rights of holders of equity securities
    being registered:2
.1

See Articles of Incorporation described above in Exhibit 1.1,
    Articles of Amendment dated April 22, 2004 described above in
    Exhibit 1.2, Articles of Amendment dated April 23, 2004
    described above in Exhibit 1.3 and Articles of Amendment dated
    October 12, 2006 described above in Exhibit 1.4, Articles of
    Amendment dated August 16, 2007 described above in Exhibit 1.5
    and Articles of Amendment dated August 16, 2007 described above
    in Exhibit 1.62
.2

Specimen Common Share certificate(1)2
.3

Specimen Class 1 Share Certificate(16)2
.4

Securities Purchase Agreement between Mitel and the Noteholders,
    dated April 27, 2005(11)+2
.5

Form of Note (See Exhibit 2.4 above)2
.6

Form of Warrant (10), as amended on August 16, 2007(16)2
.7

Class A Convertible Preferred Share Subscription Agreement
    between Mitel and EdgeStone dated April 23, 2004(10)+2
.8

Form of Warrant (See Exhibit 2.7 above)(10)2
.9

Securities Purchase Agreement between Mitel and Wesley Clover
    Corporation dated September 21, 2006(10)+2
.10

Form of Warrant (See Exhibit 2.9 above)(10)2
.11

Termination Agreement between Mitel, Zarlink, PTIC EdgeStone,
    Dr. Matthews, Wesley Clover and CTJL dated August 16,
    2007(13)2
.12

First Lien Credit Agreement among Mitel, Mitel US Holdings Inc.,
    certain lenders, Morgan Stanley Senior Funding, Inc., Morgan
    Stanley & Co, Incorporated and Merrill Lynch, Pierce,
    Fenner & Smith Incorporated dated August 16, 2007(16)+2
.13

Amendment No. 1, dated September 26, 2007, to the First Lien
    Credit Agreement described above in Exhibit 2.122
.14

Amendment No. 2, dated December 12, 2007, to the First Lien
    Credit Agreement described above in Exhibit 2.122
.15

Amendment No. 3, dated July 31, 2008, to the First Lien Credit
    Agreement described above in Exhibit 2.122
.16

Second Lien Credit Agreement among Mitel, Mitel US Holdings
    Inc., certain lenders, Morgan Stanley Senior Funding, Inc.,
    Morgan Stanley & Co, Incorporated and Merrill Lynch,
    Pierce, Fenner & Smith Incorporated dated August 16,
    2007(16)+2
.17

Amendment No. 1, dated September 26, 2007, to the Second Lien
    Credit Agreement described above in Exhibit 2.162
.18

Amendment No. 2, dated December 12, 2007, to the Second Lien
    Credit Agreement described above in Exhibit 2.162
.19

Amendment No. 3, dated July 31, 2008, to the Second Lien Credit
    Agreement described above in Exhibit 2.162
.20

Class 1 Convertible Preferred Share Subscription Agreement among
    Mitel, Arsenal Holdco I, S.a.r.l., Arsenal Holdco II,
    S.a.r.l. and Morgan Stanley Principal Investors Inc. dated
    August 16, 2007(16)+2
.21

Form of Warrant granted to Arsenal Holdco I, S.a.r.l.,
    Arsenal Holdco II, S.a.r.l., Morgan Stanley Principal Investors
    Inc., PTIC and Dr. Matthews(11)2
.22

Class 1 Convertible Preferred Share and Warrant Subscription
    Agreement among Mitel, Arsenal Holdco I, S.a.r.l, Arsenal
    Holco II, S.a.r.l. and Morgan Stanley Principal Investments,
    Inc. dated January 18, 20082
.23

Form of Warrant granted to Arsenal Holdco I, S.a.r.l,
    Arsenal Holco II, S.a.r.l. and Morgan Stanley Principal
    Investments, Inc. dated January 18, 2008 (See Exhibit A of
    Exhibit 2.22 above)2
.24

Shareholder Agreement among Mitel, PTIC, Dr. Matthews,
    Wesley Clover, CTJL, EdgeStone, Arsenal Holdco I, S.a.r.l.,
    Arsenal Holdco II, S.a.r.l. and Morgan Stanley Principal
    Investors Inc. dated August 16, 2007(13)2
.25

Registration Rights Agreement among Mitel, Arsenal
    Holdco I, S.a.r.l., Arsenal Holdco II, S.a.r.l. and Morgan
    Stanley Principal Investors Inc. dated August 16, 2007(13) 103




---



##### Table of Contents



4
.

Material contracts:4
.1

Interest Rate Swap Agreement between Mitel and Morgan Stanley
    Capital Services Inc. dated August 27, 20074
.2

Securities Purchase Agreement between Mitel and the Noteholders,
    dated April 27, 2005 (See Exhibit 2.4 above) (10)+4
.3

Form of Note (See Exhibit 2.5 above)4
.4

Form of Warrant, as amended on August 16, 2007 (See Exhibit 2.6
    above)4
.5

Class A Convertible Preferred Share Subscription Agreement
    between Mitel and EdgeStone dated April 23, 2004 (see
    Exhibit 2.7 above)+4
.6

Shareholders Agreement between Mitel, Mitel Knowledge, PTIC,
    Zarlink, Mitel Systems (now Wesley Clover), WCC (now Wesley
    Clover), EdgeStone, and Dr. Matthews, dated April 23,
    2004(2) , as amended on June 26, 2006(10)4
.7

Securities Purchase Agreement between Mitel and Wesley Clover
    Corporation dated September 21, 2006 (see Exhibit 2.9 above)+4
.8

Return of Capital, Voting and Conversion Agreement between Mitel
    and EdgeStone dated June 22, 2007(14)4
.9

Common Share Repurchase, Voting and Conversion Agreement between
    Mitel and PTIC dated August 15, 2007(16)4
.10

Common Share Repurchase and Voting Agreement between Mitel and
    Zarlink dated May 30, 2007(16)4
.11

Warrant Repurchase, Voting and Conversion Agreement between
    Mitel, Dr. Matthews, Wesley Clover and CTJL dated August
    15, 2007(13)4
.12

Termination Agreement between Mitel, Zarlink, PTIC EdgeStone,
    Dr. Matthews, Wesley Clover and CTJL dated August 16, 2007
    (see Exhibit 2.11 above)4
.13

Class 1 Convertible Preferred Share Subscription Agreement among
    Mitel, Arsenal Holdco I, S.a.r.l., Arsenal Holdco II,
    S.a.r.l. and Morgan Stanley Principal Investors Inc. dated
    August 16, 2007 (see Exhibit 2.20 above)+4
.14

Form of Warrant granted to Arsenal Holdco I, S.a.r.l.,
    Arsenal Holdco II, S.a.r.l., Morgan Stanley Principal Investors
    Inc., PTIC and Dr. Matthews (see Exhibit 2.21 above)4
.15

Shareholder Agreement among Mitel, PTIC, Dr. Matthews,
    Wesley Clover, CTJL, EdgeStone, Arsenal Holdco I, S.a.r.l.,
    Arsenal Holdco II, S.a.r.l. and Morgan Stanley Principal
    Investors Inc. dated August 16, 2007 (see Exhibit 2.24 above)4
.16

Registration Rights Agreement among Mitel, Arsenal
    Holdco I, S.a.r.l., Arsenal Holdco II, S.a.r.l. and Morgan
    Stanley Principal Investors Inc. dated August 16, 2007 (see
    Exhibit 2.25 above)4
.17

Class 1 Convertible Preferred Share and Warrant Subscription
    Agreement among Mitel, Arsenal Holdco I, S.a.r.l, Arsenal
    Holco II, S.a.r.l. and Morgan Stanley Principal Investments,
    Inc. dated January 18, 2008 (See Exhibit 2.22 above)4
.18

Form of Warrant granted to Arsenal Holdco I, S.a.r.l,
    Arsenal Holco II, S.a.r.l. and Morgan Stanley Principal
    Investments, Inc. dated January 18, 2008 (see Exhibit 2.23 above)4
.19

First Lien Credit Agreement among Mitel, Mitel US Holdings Inc.,
    certain lenders, Morgan Stanley Senior Funding, Inc., Morgan
    Stanley & Co, Incorporated and Merrill Lynch, Pierce,
    Fenner & Smith Incorporated dated August 16, 2007 (see
    Exhibit 2.12 above)+, as amended on September 26, 2007 (see
    Exhibit 2.13 above), December 12, 2007 (see Exhibit 2.14 above)
    and July 31, 2008 (see Exhibit 2.15 above)4
.20

Second Lien Credit Agreement among Mitel, Mitel US Holdings
    Inc., certain lenders, Morgan Stanley Senior Funding, Inc.,
    Morgan Stanley & Co, Incorporated and Merrill Lynch,
    Pierce, Fenner & Smith Incorporated dated August 16, 2007
    (see Exhibit 2.16 above)+, as amended on September 26, 2007 (see
    Exhibit 2.17 above), December 12, 2007 (See Exhibit 2.18 above)
    and July 31, 2008 (see Exhibit 2.19 above)4
.21

Merger Agreement among Mitel, Inter-Tel (Delaware), Incorporated
    and Arsenal Inter-Tel Acquisition Corporation dated April 26,
    2007(12)4
.22

Deferred Share Unit Plan (DSU Plan) for Executives effective
    December 9, 2004(5)4
.23

Employee Stock Option Plan, dated March 6, 2001, as amended(6)4
.24

2004 U.S. Employee Stock Purchase Plan(8) 104




---



##### Table of Contents



4
.25

Form of Global Mitel Employment Agreement(7)4
.26

2006 Equity Incentive Plan(10)4
.27

2007 U.S. Employee Stock Purchase Plan(17)4
.28

Amended and Restated Employment Contract between Mitel and
    Donald Smith, dated April 17, 2001 (the Smith Employment
    Contract)(7)4
.29

Agreement Amending the Smith Employment Contract, dated May 5,
    2006(7)4
.30

Amended and Restated Employment Contract between Mitel and Paul
    Butcher, dated February 16, 2001 (the Butcher Employment
    Contract)(7)4
.31

Agreement Amending the Butcher Employment Contract, dated May 5,
    2006(7)4
.32

Employment Contract, dated January 1, 2006, between Mitel and
    Steven Spooner(7)4
.33

Employment contract between Mitel and Ron Wellard, dated
    December 15, 2003, as amended on December 8, 20064
.34

Letter agreement, dated March 1, 2002, between Terence H.
    Matthews and Paul Butcher (the Butcher Letter
    Agreement)(9)4
.35

Amendment No. 1 to the Butcher Letter Agreement, dated May 1,
    2006(9)4
.36

Letter agreement, dated March 1, 2002, between Terence H.
    Matthews and Donald Smith (the Smith Letter
    Agreement)(9)4
.37

Amendment No. 1 to the Smith Letter Agreement, dated May 1,
    2006(9)4
.38

Letter agreement, dated May 1, 2006, between Terence H. Matthews
    and Peter D. Charbonneau(9)4
.39

Integrated Communications Solutions R&D Project Agreement
    between Mitel, Mitel Knowledge, March Networks and Her
    Majesty the Queen in Right of Canada dated October 10, 2002(1)+,
    as amended on March 27, 2003(4), May 2, 2004(10), September 16,
    2004(10), June 27, 2005(10), and October 3, 2005(10),
    respectively4
.40

Lease Agreement between Mitel and MRPC dated March 27, 2001(1)4
.41

Supply Agreement between Mitel and its subsidiaries and
    BreconRidge and its subsidiaries dated August 30, 2001(1)+,
    and related amendment dated February 27, 2003(3)+4
.42

Amendment to the Supply Agreement between Mitel and its
    subsidiaries and BreconRidge and its subsidiaries dated February
    27, 2003(3)4
.43

Tri-Party Agreement between MNOL, MNIL and MNL dated June 30,
    2005(10)4
.44

Inter-Tel, Incorporated Tax Deferred Savings Plan and Retirement
    Trust(15)4
.45

CIBC Warrant, dated April 29, 2004(7), as amended(10)8
.1

Subsidiaries of Mitel Networks Corporation12
.1

Certification by CEO pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200212
.2

Certification by CFO pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200213
.1

Certification by CEO pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200213
.2

Certification by CFO pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200299
.1

Auditors Consent     (1)
    
    Filed as an exhibit to the Registration Statement on
    Form 20-F,
    as amended (File
    No. 0-49984)
    of Mitel and incorporated herein by reference.(2)
    
    Filed on May 3, 2004 as an exhibit to a Schedule 13D
    (Mitel as issuer) by EdgeStone Capital Equity
    Fund II-A,
    L.P.; EdgeStone Capital Equity
    Fund II-US,
    L.P.; EdgeStone Capital Equity
    Fund II-US-Inst.,
    L.P.; National Bank Financial & Co. Inc.; EdgeStone
    Capital Equity Fund II-A GP, L.P.; EdgeStone Capital Equity
    Fund II US GP, L.P.; EdgeStone Capital Equity
    Fund II-US-Inst.
    GP, L.P.; EdgeStone Capital Equity
    Fund II-A
    GP, Inc.; EdgeStone Capital Equity
    Fund II-US
    Main GP, Inc.; EdgeStone Capital Equity
    Fund II-US-Inst.
    GP, Inc.; Samuel L. Duboc; Gilbert S. Palter; Bryan W. Kerdman;
    Sandra Cowan; and EdgeStone Capital Equity
    Fund II-B
    GP, Inc. and incorporated herein by reference.(3)
    
    Filed on August 1, 2003 as an exhibit to the annual report
    on
    Form 20-F
    of Mitel for the year ended April 27, 2003 and incorporated
    herein by reference. 105




---



##### Table of Contents



(4)
    
    Filed on August 31, 2004 as an exhibit to the annual report
    on
    Form 20-F
    of Mitel for the year ended April 25, 2004, and
    incorporated herein by reference.(5)
    
    Filed on October 24, 2005 as an exhibit to the annual
    report on
    Form 20-F
    of Mitel for the year ended April 24, 2005 and the
    transition period ended April 30, 2005 and incorporated
    therein by reference.(6)
    
    Filed as an exhibit to the
    Form S-8
    of the Registrant, dated March 6, 2006, filed with the
    Commission on March 6, 2006 and incorporated therein by
    reference.(7)
    
    Filed as an exhibit to the
    Form F-1
    of the Registrant, dated May 9, 2006, filed with the
    Commission on May 9, 2006 and incorporated therein by
    reference.(8)
    
    Filed as an exhibit to the
    Form S-8
    of the Registrant, dated November 29, 2004, filed with the
    Commission on November 29, 2004 and incorporated therein by
    reference.(9)
    
    Filed as an exhibit to Amendment No. 1 to the
    Schedule 13D (the Registrant as issuer) filed with the
    Commission on May 5, 2006 by Terence H. Matthews, Wesley
    Clover Corporation and Celtic Tech Jet Limited and incorporated
    therein by reference.(10)
    
    Filed on October 30, 2006 as an exhibit to the annual
    report on
    Form 20-F
    of Mitel for the year ended April 30, 2006 and incorporated
    therein by reference.(11)
    
    Filed as an exhibit to Amendment No. 2 to the
    Schedule 13D (the Registrant as issuer) filed with the
    Commission 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., and Francisco Partners Parallel
    Fund II, L.P. and incorporated therein by reference.(12)
    
    Filed as an exhibit to the
    Form 8-K
    of Inter-Tel (Delaware), Incorporated filed with the Commission
    on April 26, 2007 and incorporated therein by reference.(13)
    
    Filed as an exhibit to Amendment No. 2 to the
    Schedule 13D (the Registrant as issuer) filed with the
    Commission on September 28, 2007 by Terence H. Matthews,
    Wesley Clover Corporation and Celtic Tech Jet Limited and
    incorporated therein by reference.(14)
    
    Filed on August 28, 2007 as an exhibit to Amendment
    No. 2 of Schedule 13D (Mitel as issuer) by EdgeStone
    Capital Equity
    Fund II-A,
    L.P.; EdgeStone Capital Equity
    Fund II-US,
    L.P.; EdgeStone Capital Equity
    Fund II-US-Inst.,
    L.P.; National Bank Financial & Co. Inc.; EdgeStone
    Capital Equity
    Fund II-A
    GP, L.P.; EdgeStone Capital Equity Fund II US GP, L.P.;
    EdgeStone Capital Equity
    Fund II-US-Inst.
    GP, L.P.; EdgeStone Capital Equity
    Fund II-A
    GP, Inc.; EdgeStone Capital Equity
    Fund II-US
    Main GP, Inc.; EdgeStone Capital Equity
    Fund II-US-Inst.
    GP, Inc.; Samuel L. Duboc; Gilbert S. Palter; Bryan W. Kerdman;
    Sandra Cowan; and EdgeStone Capital Equity
    Fund II-B
    GP, Inc. and incorporated herein by reference.(15)
    
    Filed as an exhibit to the
    Form 10-K
    of Inter-Tel (Delaware), Incorporated filed with the Commission
    for the year ended November 30, 1984 and incorporated
    therein by reference.(16)
    
    Filed on October 24, 2007 as an exhibit to the annual
    report on
    Form 20-F
    of Mitel for the year ended April 30, 2007 and incorporated
    therein by reference.(17)
    
    Filed as an exhibit to the
    Form S-8
    of the Registrant, filed with the Commissioner on
    November 26, 2007, and incorporated therein by reference.+
    
    Portions of this document have been granted Confidential
    Treatment by the Secretary of the Securities and Exchange
    Commission. 106




---



##### 



Index
    to Financial Statements
      
 Independent Auditors Report 
    Deloitte & Touche LLP


F-3Consolidated Balance Sheets


F-4Consolidated Statements of Operations


F-5Consolidated Statements of Shareholders
    Equity


F-6Consolidated Statement of Cash Flows


F-8Notes to Consolidated Financial Statements


F-9Financial Statement Schedules:(Note: Schedules other than that listed below are omitted as
    they are not applicable or not required, or the information is
    included in the consolidated financial statements or notes
    thereto)Schedule II  Valuation of
    Qualifying Accounts


F-45   107




---



##### Table of Contents



CONSOLIDATED FINANCIAL STATEMENTS

(in accordance with US GAAP)
 FOR THE FISCAL YEARS ENDED April 30, 2006, April 30, 2007

and April 30, 2008
  F - 2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
     Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans-an Amendment of FASB no. 87, 88, 106 and 132(R) Share-Based Payment
  
 
 F - 3




---



##### Table of Contents



MITEL NETWORKS CORPORATION
(incorporated under the laws of Canada)
CONSOLIDATED BALANCE SHEETS
(in millions of US dollars, except share amounts)
 April 30, 2007
    
    April 30, 2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    33.5
    
    
    $
    19.5Restricted cash
    
    
    3.6
    
    
    
    2.3Accounts receivable (net of allowance of $2.5 and $14.0, respectively)
    
    
    81.7
    
    
    
    138.3Sales  lease receivables (net of allowance of $nil and $1.5, respectively)
    
    
    
    
    
    
    23.4Inventories
    
    
    19.8
    
    
    
    49.1Income tax receivable
    
    
    0.8
    
    
    
    0.6Deferred tax asset
    
    
    
    
    
    
    2.8Other current assets
    
    
    31.0
    
    
    
    56.9170.4
    
    
    
    292.9Non-current portion of sales-lease receivables (net)
    
    
    
    
    
    
    34.2Investments, and other assets
    
    
    5.2
    
    
    
    32.9Deferred tax asset
    
    
    
    
    
    
    0.8Property and equipment
    
    
    16.5
    
    
    
    27.0Goodwill
    
    
    6.8
    
    
    
    420.9Intangibles (net)
    
    
    3.3
    
    
    
    168.0$
    202.2
    
    
    $
    976.7LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS DEFICIENCYCurrent liabilities:Bank indebtedness
    
    $
    0.5
    
    
    $
    12.5Accounts payable and accrued liabilities
    
    
    98.8
    
    
    
    153.9Deferred tax liability
    
    
    
    
    
    
    0.8Deferred revenue
    
    
    19.6
    
    
    
    50.6Due to related parties
    
    
    23.0
    
    
    
    13.8Current portion of long-term debt
    
    
    1.9
    
    
    
    2.4143.8
    
    
    
    234.0Long-term debt
    
    
    2.1
    
    
    
    420.7Lease recourse liability
    
    
    
    
    
    
    13.2Long-term income taxes payable
    
    
    
    
    
    
    3.0Deferred revenue and other liabilities
    
    
    8.6
    
    
    
    45.7Litigation settlement obligation
    
    
    10.8
    
    
    
    8.4Convertible notes
    
    
    50.2
    
    
    
    Derivative instruments
    
    
    67.3
    
    
    
    108.6Deferred tax liability
    
    
    
    
    
    
    99.7Pension liability
    
    
    50.5
    
    
    
    76.4333.3
    
    
    
    1,009.7Commitments and contingenciesRedeemable common shares, without par value: 10,000,000 and nil shares authorized,
issued and outstanding at April 30, 2007 and April 30, 2008
    
    
    19.0
    
    
    
    Convertible, redeemable preferred shares, without par value  unlimited shares
Authorized, issued and outstanding: Series A: 20,000,000 and nil shares at April
30, 2007, and April 30, 2008; Series B: 67,789,300 and nil shares at April
30,2007 and April 30, 2008; Class 1: nil and 316,755 shares at April 30, 2007 and
April 30, 2008
    
    
    52.5
    
    
    
    208.571.5
    
    
    
    208.5Shareholders deficiency:Common
shares, without par value  unlimited shares authorized: 107,344,086, and 214,736,735 issued and outstanding at April 30, 2007, and
April 30, 2008
    
    
    189.1
    
    
    
    277.1Warrants
    
    
    62.9
    
    
    
    56.7Deferred stock-based compensation
    
    
    (0.1
    )
    
    
    (0.1
    )Additional paid-in capital
    
    
    0.3
    
    
    
    2.0Accumulated deficit
    
    
    (398.2
    )
    
    
    (492.2
    )Accumulated other comprehensive loss
    
    
    (56.6
    )
    
    
    (85.0
    )(202.6
    )
    
    
    (241.5
    )$
    202.2
    
    
    $
    976.7
 APPROVED BY THE BOARD-s- ILLEGIBLE
    
    -s- ILLEGIBLEDirector
    
    Director
  F - 4




---



##### Table of Contents



MITEL NETWORKS CORPORATION
(incorporated under the laws of Canada)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions of US dollars, except share and per share amounts)
 Year Ended
    
    Year Ended
    
    Year EndedApril 30, 2006
    
    April 30, 2007
    
    April 30, 2008Revenues:Telecommunications
    
    $
    387.1
    
    
    $
    384.9
    
    
    $
    642.1Network services
    
    
    
    
    
    
    
    
    
    
    49.9387.1
    
    
    
    384.9
    
    
    
    692.0Cost of revenues:Telecommunications
    
    
    225.7
    
    
    
    225.1
    
    
    
    337.4Network services
    
    
    
    
    
    
    
    
    
    
    30.5225.7
    
    
    
    225.1
    
    
    
    367.9Gross margin
    
    
    161.4
    
    
    
    159.8
    
    
    
    324.1Expenses:Selling, general and administrative
    
    
    120.7
    
    
    
    123.5
    
    
    
    246.6Research and development
    
    
    44.1
    
    
    
    41.7
    
    
    
    62.6Special charges, integration and merger-related costs
    
    
    5.7
    
    
    
    9.3
    
    
    
    16.0Litigation settlement
    
    
    
    
    
    
    16.3
    
    
    
    Initial public offering costs
    
    
    
    
    
    
    3.3
    
    
    
    Loss (gain) on sale of manufacturing operations
    
    
    (0.9
    )
    
    
    (1.0
    )
    
    
    1.0In-process research and development
    
    
    
    
    
    
    
    
    
    
    5.0Gain on sale of assets
    
    
    (1.5
    )
    
    
    
    
    
    
    168.1
    
    
    
    193.1
    
    
    
    331.2Operating income (loss)
    
    
    (6.7
    )
    
    
    (33.3
    )
    
    
    (7.1
    )Interest expense
    
    
    (7.6
    )
    
    
    (9.1
    )
    
    
    (34.7
    )Debt and warrant retirement costs
    
    
    
    
    
    
    
    
    
    
    (20.8
    )Fair value adjustment on derivative instruments
    
    
    (32.6
    )
    
    
    8.6
    
    
    
    61.9Other income
    
    
    0.4
    
    
    
    0.6
    
    
    
    1.6Income (loss) before income taxes
    
    
    (46.5
    )
    
    
    (33.2
    )
    
    
    0.9Current income tax expense (recovery)
    
    
    0.9
    
    
    
    (0.2
    )
    
    
    (0.9
    )Deferred income tax expense (recovery)
    
    
    (2.8
    )
    
    
    2.0
    
    
    
    (11.4
    )Net income (loss)
    
    $
    (44.6
    )
    
    $
    (35.0
    )
    
    $
    13.2Net loss per common share:Basic and diluted
    
    $
    (0.44
    )
    
    $
    (0.36
    )
    
    $
    (0.44
    )Weighted-average number of common shares outstandingBasic and diluted
    
    
    117,230,198
    
    
    
    117,336,927
    
    
    
    186,135,401
  F - 5







---



##### Table of Contents



MITEL NETWORKS CORPORATION
(incorporated under the laws of Canada)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS DEFICIENCY AND COMPREHENSIVE LOSS
(in millions of US dollars, except share amounts)
 Additional
    
    Deferred Stock-
    
    
    
    
    
    Accumulated Other
    
    TotalCommon Shares
    
    
    
    
    
    Paid-in
    
    based
    
    Accumulated
    
    Comprehensive
    
    ShareholdersShares
    
    Amount
    
    Warrants
    
    Capital
    
    Compensation
    
    Deficit
    
    Income (Loss)
    
    DeficiencyBalances at April
30, 2005
    
    
    107,149,933
    
    
    $
    187.6
    
    
    $
    47.9
    
    
    $
    
    
    
    $
    (0.4
    )
    
    $
    (304.0
    )
    
    $
    (24.2
    )
    
    $
    (93.1
    )Common shares
issued:Exercise of stock
options
    
    
    58,174
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Professional
services received
    
    
    132,261
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Fair value
adjustment relating
to stock option
plan
    
    
    
    
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    Share purchase loan
repayments
    
    
    
    
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.1Shares repurchased
    
    
    (38,046
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred
stock-based
compensation
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of
deferred
stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1Accretion of
interest on
redeemable common
and
preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.9
    )
    
    
    
    
    
    
    (6.9
    )107,302,322
    
    
    $
    188.8
    
    
    $
    47.9
    
    
    $
    
    
    
    $
    (0.1
    )
    
    $
    (310.9
    )
    
    $
    (24.2
    )
    
    $
    (98.5
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44.6
    )
    
    
    
    
    
    
    (44.6
    )Other comprehensive
income:Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.9
    )
    
    
    (10.9
    )Minimum pension
liability
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14.6
    )
    
    
    (14.6
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44.6
    )
    
    
    (25.5
    )
    
    
    (70.1
    )Balance at April
30, 2006
    
    
    107,302,322
    
    
    $
    188.8
    
    
    $
    47.9
    
    
    $
    
    
    
    $
    (0.1
    )
    
    $
    (355.5
    )
    
    $
    (49.7
    )
    
    $
    (168.6
    )Common shares
issued:Exercise of stock
options
    
    
    45,624
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Professional
services received
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Warrants issued
    
    
    
    
    
    
    
    
    
    
    15.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.0Share purchase loan
repayments
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Shares repurchased
    
    
    (13,860
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Accretion of
interest on
redeemable common
and
preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.3
    )
    
    
    
    
    
    
    (7.3
    )107,344,086
    
    
    $
    189.1
    
    
    $
    62.9
    
    
    $
    0.3
    
    
    $
    (0.1
    )
    
    $
    (362.8
    )
    
    $
    (49.7
    )
    
    $
    (160.3
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35.0
    )
    
    
    
    
    
    
    (35.0
    )Other comprehensive
income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2
    
    
    
    1.2Minimum pension
liability
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.6
    
    
    
    16.6Comprehensive
income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35.0
    )
    
    
    17.8
    
    
    
    (17.2
    )Adoption of SFAS
158 pension
liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    (24.7
    )
    
    
    (25.1
    )Balance at April
30, 2007
    
    
    107,344,086
    
    
    $
    189.1
    
    
    $
    62.9
    
    
    $
    0.3
    
    
    $
    (0.1
    )
    
    $
    (398.2
    )
    
    $
    (56.6
    )
    
    $
    (202.6
    )
  F - 6







---



##### Table of Contents



MITEL NETWORKS CORPORATION
(incorporated under the laws of Canada)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS DEFICIENCY AND COMPREHENSIVE LOSS
(in millions of US dollars, except share amounts)
 Additional
    
    Deferred Stock-
    
    
    
    
    
    Accumulated Other
    
    TotalCommon Shares
    
    
    
    
    
    Paid-in
    
    based
    
    Accumulated
    
    Comprehensive
    
    ShareholdersShares
    
    Amount
    
    Warrants
    
    Capital
    
    Compensation
    
    Deficit
    
    Income (Loss)
    
    DeficiencyBalance at April
30, 2007
    
    
    107,344,086
    
    
    $
    189.1
    
    
    $
    62.9
    
    
    $
    0.3
    
    
    $
    (0.1
    )
    
    $
    (398.2
    )
    
    $
    (56.6
    )
    
    $
    (202.6
    )Common shares
issued:Cash and employee
loans
    
    
    1,481,739
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.0Exercise of stock
options
    
    
    27,625
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares repurchased
    
    
    (42,529
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share purchase loans
    
    
    
    
    
    
    (1.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.2
    )Repayment of
warrants
    
    
    
    
    
    
    
    
    
    
    (15.0
    )
    
    
    
    
    
    
    
    
    
    
    (5.0
    )
    
    
    
    
    
    
    (20.0
    )Induced conversion
of Series A
preferred shares
    
    
    5,359,893
    
    
    
    5.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29.3
    )
    
    
    
    
    
    
    (23.9
    )Deemed dividend
relating to
beneficial
conversion feature
originally recorded
on Series A
preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.4
    )
    
    
    
    
    
    
    (1.4
    )Induced conversion
charge relating to
the derivative
liability on Series
A preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.4
    
    
    
    
    
    
    
    11.4Conversion of
Series B preferred
shares, net of
partial redemption
    
    
    100,565,921
    
    
    
    38.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12.6
    )
    
    
    
    
    
    
    25.5Beneficial
conversion feature
upon conversion of
Series B preferred
shares
    
    
    
    
    
    
    43.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43.7
    )
    
    
    
    
    
    
    Redemption of
redeemable common
shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    
    
    
    
    6.0Warrants issued in
connection with
Class 1 preferred
shares
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.0Modification of
warrants issued in
connection with
convertible
debentures
    
    
    
    
    
    
    
    
    
    
    2.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.8Stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.7Accretion of
interest on
redeemable common
and
preferred A and B
shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.1
    )
    
    
    
    
    
    
    (2.1
    )Accretion of
interest on Class 1
preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24.4
    )
    
    
    
    
    
    
    (24.4
    )214,736,735
    
    
    $
    277.1
    
    
    $
    56.7
    
    
    $
    2.0
    
    
    $
    (0.1
    )
    
    $
    (499.3
    )
    
    $
    (56.6
    )
    
    $
    (220.2
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.2
    
    
    
    
    
    
    
    13.2Other comprehensive
income (loss):Unrealized
derivative gain
(loss) on cash flow
hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.1
    )
    
    
    
    
    
    
    (6.1
    )Change in
unamortized pension
and post-retirement
actuarial losses
and prior service
cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27.8
    )
    
    
    (27.8
    )Foreign currency
translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.6
    )Comprehensive
income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.1
    
    
    
    (28.4
    )
    
    
    (21.3
    )Balance at April
30, 2008
    
    
    214,736,735
    
    
    $
    277.1
    
    
    $
    56.7
    
    
    $
    2.0
    
    
    $
    (0.1
    )
    
    $
    (492.2
    )
    
    $
    (85.0
    )
    
    $
    (241.5
    )
  F - 7







---



##### Table of Contents



MITEL NETWORKS CORPORATION
(incorporated under the laws of Canada)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of US dollars)
 Year Ended
    
    Year Ended
    
    Year EndedApril 30, 2006
    
    April 30, 2007
    
    April 30, 2008CASH PROVIDED BY (USED IN)Operating activities:Net income (loss)
    
    $
    (44.6
    )
    
    $
    (35.0
    )
    
    $
    13.2Adjustments to reconcile net loss to net cash from operating activities:Amortization and depreciation
    
    
    10.2
    
    
    
    9.8
    
    
    
    32.6Amortization of deferred gain
    
    
    (0.3
    )
    
    
    (0.6
    )
    
    
    Fair value adjustment on derivative instruments
    
    
    32.6
    
    
    
    (8.6
    )
    
    
    (61.9
    )Accretion of convertible notes to redemption value
    
    
    1.5
    
    
    
    1.5
    
    
    
    0.5Accretion of interest on litigation settlement obligation
    
    
    
    
    
    
    
    
    
    
    1.5In-process research and development
    
    
    
    
    
    
    
    
    
    
    5.0Stock-based compensation
    
    
    0.3
    
    
    
    0.3
    
    
    
    1.7Deferred income taxes
    
    
    (2.8
    )
    
    
    2.8
    
    
    
    (6.0
    )Loss (gain) on sale of manufacturing operations
    
    
    (0.9
    )
    
    
    (1.0
    )
    
    
    1.0Loss (gain) on sale of business and assets
    
    
    (1.5
    )
    
    
    
    
    
    
    (0.2
    )Loss on early extinguishment of convertible notes and
warrant modification
    
    
    
    
    
    
    
    
    
    
    20.8Unrealized foreign exchange loss (gain)
    
    
    2.1
    
    
    
    (3.2
    )
    
    
    1.3Non-cash movements in provisions
    
    
    4.2
    
    
    
    4.1
    
    
    
    8.7Non-cash portion of litigation settlement
    
    
    
    
    
    
    15.3
    
    
    
    Change in non-cash operating assets and liabilities, net
    
    
    (3.1
    )
    
    
    2.6
    
    
    
    (56.0
    )Net cash used in operating activities
    
    
    (2.3
    )
    
    
    (12.0
    )
    
    
    (37.8
    )Investing activities:Additions to capital and intangible assets
    
    
    (8.8
    )
    
    
    (7.1
    )
    
    
    (18.3
    )(Increase) decrease in restricted cash
    
    
    (0.5
    )
    
    
    (1.9
    )
    
    
    1.3Proceeds on sale of assets
    
    
    12.4
    
    
    
    
    
    
    
    19.7Acquisition of business
    
    
    
    
    
    
    
    
    
    
    (729.9
    )Acquisition costs
    
    
    
    
    
    
    
    
    
    
    (12.2
    )Cash and cash equivalents of acquired business
    
    
    
    
    
    
    
    
    
    
    195.8Realized foreign exchange loss on hedging activities
    
    
    (8.0
    )
    
    
    (3.9
    )
    
    
    (1.2
    )Realized foreign exchange gain on hedging activities
    
    
    8.6
    
    
    
    0.5
    
    
    
    0.3Net cash provided by (used in) investing activities
    
    
    3.7
    
    
    
    (12.4
    )
    
    
    (544.5
    )Financing activities:Increase (decrease) in bank indebtedness
    
    
    0.7
    
    
    
    (1.6
    )
    
    
    12.0Proceeds from issuance of Class 1 preferred shares
    
    
    
    
    
    
    
    
    
    
    289.5Proceeds from issuance of debt
    
    
    
    
    
    
    
    
    
    
    430.0Repayment of convertible debentures
    
    
    
    
    
    
    
    
    
    
    (66.0
    )Settlement of convertible redeemable preferred shares
    
    
    
    
    
    
    
    
    
    
    (36.2
    )Repayment of redeemable common shares
    
    
    
    
    
    
    
    
    
    
    (12.9
    )Proceeds from issuance (repayment) of warrants
    
    
    
    
    
    
    15.0
    
    
    
    (20.0
    )Repayment of capital lease liabilities
    
    
    
    
    
    
    
    
    
    
    (1.8
    )Repayment of long-term debt
    
    
    (11.9
    )
    
    
    (1.0
    )
    
    
    (9.6
    )Share issue costs
    
    
    
    
    
    
    
    
    
    
    (3.0
    )Payment of litigation settlement obligation
    
    
    
    
    
    
    
    
    
    
    (4.5
    )Deferred financing costs
    
    
    (1.8
    )
    
    
    (2.1
    )
    
    
    (9.9
    )Proceeds from transfer of receivables
    
    
    
    
    
    
    10.9
    
    
    
    Proceeds from issuance of common shares
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.8Proceeds from repayments of employee share purchase loans
    
    
    1.1
    
    
    
    0.2
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (11.7
    )
    
    
    21.5
    
    
    
    568.4Effect of exchange rate changes on cash and cash equivalents
    
    
    (0.6
    )
    
    
    0.7
    
    
    
    (0.1
    )Decrease in cash and cash equivalents
    
    
    (10.9
    )
    
    
    (2.2
    )
    
    
    (14.0
    )Cash and cash equivalents, beginning of period
    
    
    46.6
    
    
    
    35.7
    
    
    
    33.5Cash and cash equivalents, end of period
    
    $
    35.7
    
    
    $
    33.5
    
    
    $
    19.5
  F - 8







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##### Table of Contents



MITEL NETWORKS CORPORATION
(incorporated under the laws of Canada)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    BACKGROUND AND NATURE OF OPERATIONSMitel 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 (US), 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 most intellectual property assets) and
subsidiaries of the Communications Systems Division of Zarlink Semiconductor Inc.
(Zarlink), formerly Mitel Corporation. On August 16, 2007, the Company acquired Inter-Tel
(Delaware) Incorporated (Inter-Tel), a full-service provider of business communications
solutions.2.
    
    ACCOUNTING POLICIESThese consolidated financial statements have been prepared by the Company in accordance with
US 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.Certain reclassifications have been made to the 2006 and 2007 financial statements to conform
to the 2008 presentation. The most significant change was a revision in the Companys
allocation of revenues and cost of revenues from a product and service group presentation, to
telecommunications and network services.Amounts less than fifty thousand dollars are deemed to be insignificant in these financial
statements.a)  Basis of ConsolidationThe 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. The financial statements include the results of operations of
Inter-Tel (Delaware), Incorporated, from the date of acquisition (August 16, 2007) through
April 30, 2008.b)  Use of EstimatesThe 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.c)  Foreign Currency TranslationThe parent companys functional currency is the U.S. dollar and the consolidated financial
statements of the Company are prepared with U.S. dollar 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 other comprehensive
income.Monetary assets and liabilities denominated in currencies foreign to the functional currency
of each entity, are translated into 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. Foreign exchange
gains and losses resulting from the translation of these accounts are included in the
determination of income for the period. During fiscal 2008, the Company recorded a foreign
exchange gain of $0.8 (2006  $0.4 gain; 2007  $0.3 loss).
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d)  Revenue RecognitionThe 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
values, 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 Financial Accounting Standards (SFAS) No. 13, Accounting for
Leases. Revenues from software, including applications, upgrades, software support, and
embedded software, are deferred and recognized over the period of support in accordance with
American Institute of Certified Public Accountants (AICPA) Statement of Position 97-2,
Software Revenue Recognition. Revenues from sales-type leases are allocated between hardware
and software elements based on managements best estimate of relative fair values.Indirect channelsThe 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 relative 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.Direct channelsThe 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 rendered 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 free customer support and maintenance
services extending twelve months from the date of installation. Customer support and
maintenance contracts are also sold separately. When customer support or maintenance
services are provided free of 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 upon performance.The Company provides long-term outsourcing services of communication systems. Under these
arrangements, systems management services (Managed Services) and communication equipment
are 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 to cost of sales over the contract period.
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Resale of long distanceRevenue is recognized from long distance resale services as services are provided.Sales leasesFor sales-type lease accounting, the Company follows guidance provided by SFAS 13, Accounting
for Leasesand FASB Statement No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities  A Replacement of FASB Statement No. 125. 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 SEC Staff Accounting Bulletin No. 104, for sales to end user
customers, and upon receipt of the executed lease documents. The costs of systems installed
under these sales-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. The Company establishes and maintains 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 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-Lease Receivables on the balance sheet,
or included in lease recourse liability on the consolidated balance sheet for the estimated
recourse liability for lease streams sold.e)  Cash and Cash EquivalentsCash 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.f)  Restricted CashRestricted cash represents cash provided to support letters of credit outstanding and to
support certain of the Companys credit facilities.g)  Allowance for Doubtful AccountsThe 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
note d) Sales 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 needed. Consideration is given to accounts in excess of 60 days old as well as
other risks in the more current portion of the accounts included.h)  InventoriesInventories 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.i)  Transfer of ReceivablesTransfers of accounts receivable are accounted for as sales if the terms of the transfer meet
the criteria for surrender of control under FASB Statement of Financial Accounting Standards
(SFAS) No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities  A Replacement of FASB Statement No. 125. The Company
entered into an agreement on April 30, 2007 under which it sold $12.8 of its non-interest
bearing trade accounts receivable to an unaffiliated financial institution at a rate of 7.5%
on Canadian dollar receivables and 10.25% on US dollar receivables. The Company is not
considered to have ceded control over the transferred receivables, and so the transfer has
not been accounted for as a sale.j)  Property and EquipmentProperty 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 and twenty-five years for buildings. 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 FASB Statement No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets(SFAS 144) 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.
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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 AssetsIntangible 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 in accordance with SFAS
144 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 its fair value, which is generally determined based on the discounted 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 and exceeds fair value.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 accordance with FASB Statement No. 142,
Goodwill and Other Intangible Assets(SFAS 142). Under SFAS 142 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 their carrying amounts. 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, upon completion of its annual goodwill impairment
tests, determined that no impairments existed as of the balance sheet dates.l)  Derivative Financial InstrumentsThe Company uses derivatives, including foreign currency forward and swap contracts, to
minimize the short-term impact of currency fluctuations 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 into earnings when the hedged transaction occurs or
when the hedge is no longer deemed effective in according with FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities (SFAS 133). 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 LIBOR
rates related to the merger financing debt. As described in Note 29, the derivative was
designated as a cash flow hedge.As explained in Note 23, the Company issued convertible, redeemable preferred shares to
investors in fiscal 2004. The preferred shares gave the investors the right, at any time
after five years to redeem the shares for cash. The redemption amount was equal to the
original issue price of $1.00 per preferred share times the number of Series A and Series B
Preferred Shares outstanding, plus any declared but unpaid dividends, plus the then current
fair market value of the common shares into which the Series A and Series B Preferred Shares
are convertible. The requirement to redeem the shares on an as-if-converted-to-common share
basis qualified as an embedded derivative under FASB Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities(SFAS 133). Accordingly, the proceeds
received from the issuance of the preferred shares were allocated between the embedded
derivative and the preferred shares. Throughout the period to redemption, the embedded
derivative was marked to market with changes in value recorded in the Consolidated Statements
of Operations. When the convertible, redeemable preferred shares were redeemed on August 16,
2007 in connection with the merger transaction described in Note 3, the derivative liability
was reversed from the Companys balance sheet as further described in Note 22 and Note 23.An embedded derivative also exists within the Class 1 convertible, redeemable preferred
 shares issued on August 16, 2007, as described further in Note 22, since the holders of the
preferred shares have the ability to receive cash equal to the value of shares into which the
instrument converts after 7 years. As such, the derivative is marked to market throughout the
period to redemption with changes in value recorded in the Consolidated Statements of
Operations.m)  Income TaxesIncome 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.
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n)  Research and DevelopmentResearch 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 PlanPension 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 balance sheet, with an offsetting adjustment made to
accumulated other comprehensive income. Effective fiscal 2007, 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.p)  Stock-Based Compensation PlanThe Company has a stock-based compensation plan described in Note 25. The Company generally
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.Prior to May 1, 2006, the Company accounted for employee stock option grants in accordance
with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(APB 25), and related interpretations. Under APB 25, options granted to employees and
directors will result in the recognition of compensation expense only if the exercise price
is lower than the market price of common shares on the date of grant. Under FASB Statement
No. 123, Accounting for Stock-Based Compensation (SFAS 123), the Company recognizes
compensation expense in connection with grants to non-employees and former employees by
applying the fair value based method of accounting and also applies variable plan accounting
to such unvested grants.On May 1, 2006, the Company adopted Statement No. 123(R), Share-Based Payment(SFAS 123R),
which supercedes SFAS 123 and APB 25, and also applied the provisions of SAB 107 in its
adoption of SFAS 123R. SFAS 123R requires all share-based payments to employees, including
grants of stock options, to be recognized in the financial statements based on their fair
values. The Company has applied the provisions of this statement prospectively to new awards
and to awards modified, repurchased, or cancelled after May 1, 2006 with the associated
compensation expense being recognized on a straight-line basis over the requisite service
period for the entire award. In accordance with the prospective method, the consolidated
financial statements for prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123R.Share-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 over the employees requisite service period, which is generally the
vesting period. Forfeitures are estimated based on the Companys historical rates of
forfeiture. In the Companys pro-forma information, required under SFAS 123 for periods prior
to fiscal 2007, the Company accounted for forfeitures as they occurred.In accordance with SFAS 123(R) and SAB 107, the Company is no longer able to use the minimum
value method of measuring equity share options and so has estimated the volatility of its
stock using historical volatility of comparable public companies. The Company will continue
to use the volatility of comparable companies until historical volatility is relevant to
measure expected volatility for option grants.The assumptions used in the Black Scholes option-pricing model are summarized as follows:
 April 30, 2007
    
    April 30, 2008Risk-free interest rate
    
    
    4.1
    %
    
    
    4.1
    %Dividends
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    86.6
    %
    
    
    76.0
    %Annual forfeiture rate
    
    
    15
    %
    
    
    10
    %Expected life of the options
    
    5 years
    
    5 yearsFair value per option
    
    $
    0.77
    
    
    $
    0.83
 Based on these assumptions, share based compensation expense reduced the Companys
results of operations by $1.9 for the year ended April 30, 2008 (2007  $0.3). Changes in the
subjective input assumptions can, however, materially affect the fair value estimate, and
therefore the model used above does not necessarily provide reliable results.
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q)  Net Loss per Common ShareBasic loss per common share is computed using the weighted-average number of common shares
outstanding during the period, with net loss adjusted for the impact of accreted interest on
redeemable shares, as well as other charges and credits to deficit resulting from the
settlement of the redeemable common and redeemable preferred A and B shares in fiscal 2008.
Diluted loss per common share is computed using the treasury stock method and assumes that,
if a dilutive effect is produced, all dilutive securities had been exercised at the later of
the beginning of the fiscal period and the security issue date.r)  Other Comprehensive LossOther comprehensive loss is recorded directly to a separate section of shareholders
deficiency 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, changes
in the unfunded status of the pension plan, and changes in the fair value of the effective
portion of cash flow hedges where the hedged item has not yet been recognized in income.s)  Advertising CostsThe 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 Emerging Issues Task Force 01-9,
Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the
Vendors Products). Advertising costs are recorded in selling, general and administrative
expenses. During fiscal 2008, the Company incurred $16.0 in advertising costs (2006  $10.3;
2007  $8.3). During fiscal 2008, the Company incurred $4.7 in cooperative advertising
obligations (2006  $4.6; 2007  $3.3).t)  Product WarrantiesThe 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 PronouncementsIn June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for
uncertainty in income tax positions and refunds. The interpretation prescribes a
more-likely-than-not threshold and a measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return.
FIN 48 also provides accounting guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 was originally
intended to be effective for all companies in fiscal years beginning after December 15, 2006.
In February 2008, however, the FASB issued a staff position deferring the effective date for
non-public companies until periods beginning after December 15, 2007. The Company meets the
definition of a non-public company as defined in the FSP and is therefore not required to
adopt requirements of FIN 48 until fiscal 2009. The Company is currently assessing the
impact of FIN 48 on its consolidated financial statements.In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair
Value Measurements, (SFAS 157). This Standard defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands disclosures
about fair value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB
issued a staff position (FSP) that would defer SFAS 157s effective date for all
non-financial assets and liabilities, except those items recognized or disclosed at fair
value on an annual or more frequently recurring basis, until years beginning after November
1, 2008. The Company is currently evaluating the requirements of SFAS 157, and has not yet
fully determined the impact, if any, on the consolidated financial statements.In February 2007, the FASB issued Statement of Financial Accounting Standards No 159, The
Fair Value Option for Financial Assets and Financial Liabilities  Including an amendment of
FASB Statement No. 115(SFAS 159), which allows measurement at fair value of eligible
financial assets and liabilities that are not otherwise measured at fair value. If the fair
value option for an eligible item is elected, unrealized gains and losses for that item shall
be reported in current earnings at each subsequent reporting date. SFAS 159 also establishes
presentation and disclosure requirements designed to draw comparison between the different
measurement attributes the Company elects for similar types of assets and liabilities. SFAS
159 is effective for fiscal years beginning after November 15, 2007. The Company is currently
assessing the impact of SFAS 159 on its financial statements.In December 2007, the FASB issued Statement of Financial Accounting Standards No 141(R),
Business Combinations(SFAS 141(R)), which replaces SFAS 141 and significantly changes the
accounting for business combinations. SFAS 141(R) requires assets and liabilities acquired in
a business combination, contingent consideration, and certain acquired contingencies to be
measured at their fair values as of the date of acquisition. SFAS 141(R) also requires that
(1) acquisition-related costs and restructuring costs be recognized separately from the
business combination and expensed as incurred; (2) noncontrolling interests (formerly known
as minority interests) be valued at fair value at the acquisition date; (3) in-process
research and development be
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recorded at fair value as an indefinite-lived intangible asset at
the acquisition date; (4) restructuring costs associated with a business
combination be expensed subsequent to the acquisition date; and (5) changes in deferred tax
asset valuation allowances and income tax uncertainties after the acquisition date generally
will affect income tax expense. SFAS 141(R) is effective for fiscal years beginning after
December 15, 2008, and will be effective for business combinations that are entered into
after May 1, 2009. Earlier adoption is not permitted.In December 2007, the FASB issued Statement of Financial Accounting Standards No 160,
Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51
(SFAS 160). SFAS 160 clarifies the accounting for noncontrolling interests and establishes
accounting and reporting standards for the noncontrolling interest in a subsidiary, including
classification as a component of equity. SFAS 160 is effective for fiscal years beginning
after December 15, 2008. The Company does not currently have any minority interests.In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (SFAS
161), Disclosures about Derivative Instruments and Hedging Activities. SFAS 161 requires
companies to expand their disclosure on derivatives to include information about the fair
value of derivatives, related credit risks and a companys strategies and objectives for
using derivatives so that users can understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items affect a companys financial
position, financial performance and cash flows. SFAS 161 is effective for financial
statements issued for fiscal years beginning after November 15, 2008. The Company is
currently evaluating the impact, if any, that SFAS 161 will have on its consolidated
financial statements.In April 2008, the FASB issued FSP SFAS 142-3, Determination of the Useful Life of
Intangible Assets(FSP SFAS 142-3). FSP SFAS 142-3 provides guidance with respect to
estimating the useful lives of recognized intangible assets acquired on or after the
effective date and requires additional disclosure related to the renewal or extension of the
terms of recognized intangible assets. FSP SFAS 142-3 is effective for fiscal years beginning
after December 15, 2008. The Company does not expect this staff position to have a
significant impact on its results of operations and financial condition.In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments
that May be Settled in Cash Upon Conversion, which addresses the accounting for convertible
debt securities that, upon conversion, may be settled by the issuer fully or partially in
cash. The FSP clarifies that: (1) convertible debt instruments that may be settled in cash
upon conversion, including partial cash settlement, are not considered debt instruments
within the scope of APB 14, Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants, and (2) issuers of such instruments should separately account for the
liability and equity components of those instruments by allocating the proceeds from issuance
of the instrument between the liability component and the equity component. The FSP
is effective for fiscal years beginning after December 15, 2008 and would need to be applied
retrospectively to all past periods presented even if the instrument was extinguished as of
the FSPs effective date. This FSP is not considered applicable to the convertible
debentures that were extinguished by cash settlement in fiscal 2008 since there was no
conversion prior to settlement, and is not applicable to the redeemable class A, class B or
Class 1 preferred shares since all qualify as mezzanine equity and are outside the scope of
SFAS 150.Effective fiscal 2008, the Company adopted FASB Statement No 155 Accounting for Certain
Hybrid Financial Instruments. The adoption of this accounting pronouncement did not have a
material impact on the Companys results of operations, financial condition or cash flows.3.
    
    MERGER TRANSACTIONOn August 16, 2007, the Company acquired all of the outstanding shares of Inter-Tel
(Delaware) Incorporated (Inter-Tel), a full-service provider of business communications
solutions, for US$25.60 per Inter-Tel share in cash representing a total purchase price of
approximately $729.9.In order to finance the acquisition, the Company issued 307,087 new Class 1 preferred shares
(Note 23), and received gross cash proceeds of $300.0 from a seven year senior secured first
lien credit agreement (Note 17), and cash proceeds of $130.0 from an eight year senior
secured second lien credit agreement (Note 17). The combined proceeds, along with $195.8 of
Inter-Tels cash, were used to consummate the purchase of Inter-Tel, retire all existing
convertible notes, fund secondary selling by certain shareholders and terminate the put
rights held by the holders of the 10,000,000 redeemable common shares and the redeemable
preferred shares described in Notes 21 and 23.Changes in the Companys debt and equity structure arising from the merger transaction were
as follows:
 i)
    
    each existing Series A Preferred Share, as described in Note 23, was amended and
converted into 0.000871 of a Class 1 Preferred Share and 0.2679946 of a Common Share,
the entire class of shares was subsequently deleted from the Companys articles of
incorporationii)
    
    each existing Series B Preferred Share, as described in Note 23, was converted
into 1.682 common shares before it was partially            redeemed for cash and the entire
class of shares was subsequently deleted from the Companys articles of incorporationiii)
    
    the $55.0 of convertible notes, as described in Note 18, were repaid with
$66.0 of cash plus accrued interest, and the warrants issued in connection with the
convertible notes were modified as described further in Note 24 (iv)
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iv)
    
    each existing redeemable common share, as described in Note 21, was purchased for
cancellationv)
    
    the warrants issued for $15.0 on September 21, 2006, as described in Note 24 (v),
were repurchased for $20.0
 Business Combinations
  Purchase PriceAllocationTangible assets:Current assets
    
    $
    326.0Property, plant and equipment
    
    
    35.0Net investment in sales-leases
    
    
    33.6Other assets
    
    
    37.9Total tangible assets acquired
    
    
    432.5Liabilities:Current liabilities
    
    
    121.1Long-term income taxes payable
    
    
    114.2Other liabilities
    
    
    55.2Total liabilities assumed
    
    
    290.5Fair value of net tangible and monetary assets
    
    
    142.0In-process research and development
    
    
    5.0Intangible assets:Customer relationships
    
    
    99.7Developed technology
    
    
    78.8Trade name
    
    
    2.3180.8Goodwill
    
    
    414.3Purchase Price, including acquisition costs
    
    $
    742.1
     April 30, 2007
    
    April 30, 2008Revenue
    
    $
    825.3
    
    
    $
    825.7Net income (loss)
    
    $
    (32.3
    )
    
    $
    (12.3
    )Earnings (loss) per common share  basic
    
    $
    (0.60
    )
    
    $
    (0.50
    )Earnings (loss) per common share  diluted
    
    $
    (0.60
    )
    
    $
    (0.50
    )
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
    
    Additional estimated depreciation and amortization expense as a result of
identifiable intangible assets arising from the acquisition
    
    Additional interest expense on first and second liens, bearing interest at
LIBOR. The adjustment is based on the rate that was in effect on the date of acquisition
and the effect on net income of a 1/8% variance in LIBOR would be $0.5
    
    Reduction in interest expense on convertible notes, bearing interest at
LIBOR, that were paid off as a result of the acquisition. The adjustment is based on the
rate that was in effect on the date of acquisition and the effect on net income of a
1/8% variance in LIBOR would be $0.1
    
    Elimination of fair value adjustment on derivative liability embedded in
preferred A and B shares that were redeemed and converted immediately prior to the
acquisition
    
    Tax provision based on consolidated tax rate of 30%
 The pro forma results include non-recurring charges such as in-process research and
development expense, and acquisition related expenses incurred by Inter-Tel including SFAS
123R and proxy costs for $4.6 and $6.3, and $1.1 and $3.5, for the years ended April 30, 2007
and April 30, 2008 respectively.The pro forma results are not necessarily indicative of the results of operations that
actually would have resulted had the acquisition been in effect at the beginning of the
respective periods and are not necessarily representative of future results.As part of its integration efforts, the Company implemented restructuring actions throughout
the year, which resulted in the termination of employees across functional groups and around
the world and the closure of certain facilities. In accordance with EITF No. 95-3,
Recognition of Liabilities in Connection with a Purchase Business Combination, the Company
recorded liabilities of $8.1 consisting of $7.6 for employee separation costs and $0.5 to the
closure of redundant facilities. Payment of the $2.8 balance remaining at April 30, 2008 is
expected to be complete by the end of fiscal 2009. The liability will be subject to
refinement until the end of the first quarter of fiscal 2009 and could therefore impact the
purchase price allocation. Integration, merger and related costs are described further in
Note 5. Other restructuring actions that have not been included in the purchase price
allocation are also described further in Note 5.4.
    
    RELATED PARTY TRANSACTIONSAs at April 30, 2007 and April 30, 2008, amounts receivable from related parties were $0.8
and $0.4 which are included with other current assets, and amounts payable to related parties
were $23.0 and $13.8 respectively. Significant related party transactions with companies
controlled by or related to Dr. Terence Matthews (a Major Shareholder), not otherwise
disclosed in the financial statements, include the following:Disposal of manufacturing operationsOn August 31, 2001, the Company recorded a loss on the sale of its manufacturing operations,
comprising plant, equipment, workforce and certain liabilities to BreconRidge Manufacturing
Solutions Corporation (BreconRidge), a company in which the Major Shareholder holds a
significant interest. During fiscal 2004, BreconRidge vacated premises that had been
subleased from the Company pursuant to the disposal of the manufacturing operations. In
fiscal 2006, a reversal of $0.9 was recorded against the loss to reflect the receipt of new
information that had a favorable impact on operating cost assumptions and corresponding
estimates. In fiscal 2007, Mitel successfully subleased certain areas of the vacated premises
to new tenants, and accordingly, recorded a reversal of $1.0 against the loss. In fiscal
2008, it became evident that sublease income that was included in previous estimates would no
longer be realized, and as a result an additional loss of $1.0 was recorded.In connection with the disposal of the manufacturing operations, the Company entered into a
supply agreement dated August 31, 2001 whereby BreconRidge provided certain products and
services under terms and conditions reflecting prevailing market conditions at the time the
agreement was entered into. The initial term of the agreement was for six years with an
extended term expiring on June 20, 2008. The Company entered into a replacement agreement
with BreconRidge which became effective June 30, 2008. Under the terms of the initial supply
agreement, BreconRidge is required to purchase the Companys raw material inventory, before
turning to third party suppliers for raw material procurement. During fiscal 2008, the
Company purchased $83.9 of products and services (2006  $101.4; 2007  $91.0) and sold $3.0
of raw material inventory (2006  $0.4; 2007  $2.1) under this agreement. As of April 30,
2008, balances payable pursuant to this agreement amounted to $14.0 (April 30, 2006  $24.0;
April 30, 2007  $24.2) and balances receivable pursuant to this agreement amounted to $0.9
(April 30, 2006  $0.7; April 30, 2007  $2.8).Under the terms of the supply agreement, the Company is required to purchase from BreconRidge
certain tools used in the manufacturing process. These manufacturing tools are capitalized
as part of fixed assets and are depreciated over their estimated useful lives. During fiscal
2008, manufacturing tools purchased from BreconRidge amounted to $0.3 (2006  $0.9; 2007 
$0.2).On August 31, 2001, the Company also entered into service agreements with BreconRidge to
provide facilities management services for the period covering the term of the premise lease
agreements, as well as human resource and information systems support services. Amounts
charged to BreconRidge were equal to, and recorded as a reduction of, the costs incurred to
provide the related services in the Consolidated Statements of Operations. During fiscal
2008, the Company provided services valued at $0.1 under these agreements (2006  $0.5; 2007
  $0.2).
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Leased propertiesIn March 2001 the Company and Brookstreet Research Park Corporation (formerly known as Mitel
Research Park Corporation), a company controlled by the Major Shareholder entered into a
lease agreement for its Ottawa-based headquarter facilities, under terms
and conditions reflecting prevailing market conditions at the time the lease was entered
into. The lease agreement is for 10 years expiring in March 2011.On August 31, 2001, the Company entered into sublease agreements with BreconRidge for certain
office and manufacturing facilities in Ottawa and in the United Kingdom (U.K.) under terms
and conditions reflecting prevailing market conditions at the time the leases were entered
into. The sublease agreement was amended on May 31, 2002 to increase leased space. The
Ottawa sublease agreement was for a term of five years expiring on August 31, 2006. In
August 2005, the building in the U.K. was sold to an unrelated third party. In August 2006,
the Ottawa sublease expired and was not renewed. Accordingly, the Company no longer receives
rental income from BreconRidge for either facilities in the U.K. or Ottawa.See Note 19 for disclosure of related party rental expense, sublease income, committed future
minimum lease payments and future sublease income. As of April 30, 2008, balances due from
the company controlled by the Major Shareholder and related to the lease agreement amounted
to $0.4 (April 30, 2006  $0.4 due to; April 30, 2007  $0.6 due to).FinancingDuring fiscal 2007, the Company borrowed funds to fund short term working capital
requirements from Wesley Clover Corporation, a company controlled by the Major Shareholder.
The promissory notes bore interest at three-month LIBOR plus 5% and the interest expense
incurred on these related party loans during the year amounted to $0.1. The amount borrowed
never exceeded $5.0 at any one time, all funding was repaid within the year and there was no
balance payable at April 30, 2007 or April 30, 2008.During fiscal 2008, and as described in more detail in Note 24 (v), the warrants issued for
$15.0 to Wesley Clover on September 21, 2006 were repurchased for $20.0 cash. Subsequent to
this repayment, Wesley Clover received 13,500 Class 1 Preferred shares in exchange for $13.5
of cash. The terms and rights associated with these preferred shares are outlined in Note 23.Prepaid License and Investment AgreementOn April 25, 2006, the Company entered into an agreement with Natural Convergence Inc
(NCI), a company in which the Major Shareholder has an ownership interest, to purchase
prepaid software licenses and convertible debentures for a combined total of $1.2. The
secured convertible debentures were (a) repayable to debenture holders (plus a credit fee of
25% per annum of any outstanding principal) on the earlier of December 31, 2006, or on the
occurrence of certain events, or (b) automatically convertible into preferred shares of NCI
upon the closing of a qualifying financing of no less than $6.0. The convertible debentures
were also issued with warrants to acquire a number of common shares of NCI equal to the
dollar amount of the investment divided by $1.00, at an exercise price per common share of
C$0.0001.Under this agreement, the Company purchased $0.3 of prepaid software licenses and $0.9 of
convertible debentures during fiscal 2007. The $0.3 of prepaid licenses is included in other
current assets at April 30, 2007. Since NCI had completed a qualifying financing of $10.0 in
November 2006, the Companys entire $0.9 balance of debentures and $0.1 accrued interest was
automatically converted into NCI Class C Preferred Shares at a 5% discount in accordance with
the terms of the agreement. Following the conversion, and upon exercising its warrants, the
Company received 8,467,523 Class C Preferred Shares and acquired 600,000 common shares. At
April 30, 2007 and April 30, 2008, the Company had a combined ownership of 5.6% in NCI but
did not exert significant influence over NCI. Accordingly, the $1.0 investment recorded on
the balance sheet at April 30, 2007 and April 30, 2008 has been accounted for using the cost
method.In addition to the license and financing agreement described above, the Company also
purchased $0.7 of products and services from NCI for the year ended April 30, 2008 (2006 
$0.3, 2007  $2.1). The related net balance payable at April 30, 2008 was $0.1 (April 30,
2006  $0.2; April 30, 2007  $0.5).OtherIn September 2001, the Company entered into a strategic alliance agreement and a global
distribution agreement with March Networks Corporation (March Networks), a company
controlled at that time by the Major Shareholder, to broaden its product portfolio and its
distribution channel. The strategic alliance and global distribution agreements terminated
on March 31, 2005 and October 31, 2005 respectively. During fiscal 2008, the Company
therefore had no purchases of products and services (2006  $0.3; 2007  $0.1) from March
Networks and had no balances payable at April 30, 2008 (April 30, 2006  $0.1; April 30, 2007
  $nil).Other sales to and purchases from companies related to the Major Shareholder and arising in
the normal course of the Companys business were $0.6 and $2.8 respectively for the year
ended April 30, 2008 (2006  $0.4 and $3.6 respectively; 2007  $0.6 and $3.0 respectively).
The net balances payable as a result of these transactions was $0.8 at April 30, 2008 (April
30, 2007  $0.8).
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##### Table of Contents



5.
    
    SPECIAL CHARGESDuring fiscal 2006 the Company recorded pre-tax special charges of $5.7. The components
of the charge include $5.7 of employee severance and benefits incurred in the termination of
84 employees around the world, $0.8 of accreted interest related to lease termination
obligation and a reversal of $0.8 related to a new sublease of a facility previously provided
for in special charges. Payment of the workforce reduction liabilities was completed during
fiscal 2007. The lease termination obligation incurred in prior
fiscal years continues to be reduced over the remaining term of the leases. Accordingly, a
balance of $3.1 representing the long-term portion of the lease obligation has been recorded
under long term liabilities as of April 30, 2006.During fiscal 2007, the Company recorded pre-tax special charges of $9.3 as a result of
continuing efforts to improve the Companys operational efficiency and realign its business
to focus on IP-based communications solutions. The components of the charge include $8.7 of
employee severance and benefits incurred in the termination of 129 employees around the
world, $0.4 of accreted interest related to lease termination obligations and $0.2 related to
additional lease terminations in the period. Payment of workforce reduction liabilities was
completed during fiscal 2008. The lease termination obligation incurred in prior fiscal years
continues to be reduced over the remaining term of the leases. Accordingly, a balance of $3.0
representing the long-term portion of the lease obligation has been recorded under long term
liabilities as of April 30, 2007.During fiscal 2008, the Company recorded pre-tax special charges of $8.6 as a result of
actions post acquisition of Inter-Tel in order to improve the Companys operational
efficiency and realign its business segments. The components of the charge include $4.3 of
employee severance and benefits incurred in the termination of 74 employees around the world,
$0.9 of accreted interest related to lease termination obligations and $3.4 related to
additional lease terminations in the period. Payment of workforce reduction liabilities is
expected to be complete within the next twelve months. The lease termination obligation
incurred in prior fiscal years continues to be reduced over the remaining term of the leases.
Accordingly, a balance of $5.1 representing the long-term portion of the lease obligation has
been recorded under long term liabilities.The following table summarizes details of the Companys special charges and related reserve
during fiscal 2006, fiscal 2007 and fiscal 2008:
 Lease TerminationDescription
    
    Workforce Reduction
    
    Obligation
    
    TotalBalance of provision as of April 30, 2005
    
    $
    1.8
    
    
    $
    5.6
    
    
    $
    7.4Fiscal 2006:Charges
    
    
    5.7
    
    
    
    0.8
    
    
    
    6.5Adjustments
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.8
    )Cash payments
    
    
    (6.0
    )
    
    
    (1.3
    )
    
    
    (7.3
    )Foreign currency impact
    
    
    0.2
    
    
    
    (0.3
    )
    
    
    (0.1
    )Balance of provision as of April 30, 2006
    
    $
    1.7
    
    
    $
    4.0
    
    
    $
    5.7Fiscal 2007:Charges
    
    
    8.7
    
    
    
    0.6
    
    
    
    9.3Cash payments
    
    
    (9.5
    )
    
    
    (1.0
    )
    
    
    (10.5
    )Foreign currency impact
    
    
    0.3
    
    
    
    0.4
    
    
    
    0.7Balance of provision as of April 30, 2007
    
    $
    1.2
    
    
    $
    4.0
    
    
    $
    5.2Fiscal 2008:Charges
    
    
    4.3
    
    
    
    4.3
    
    
    
    8.6Cash payments
    
    
    (4.4
    )
    
    
    (2.3
    )
    
    
    (6.7
    )Foreign currency impact
    
    
    
    
    
    
    0.2
    
    
    
    0.2Balance of provision as of April 30, 2008
    
    $
    1.1
    
    
    $
    6.2
    
    
    $
    7.3
 Integration costs and merger-related expensesIntegration and merger-related transaction expenses for the year ended April 30, 2008 totaled
$7.4 and principally consisted of legal and consulting fees incurred in the period relating
to the acquisition of Inter-Tel, as well as other incremental and non-recurring internal
costs directly related to the acquisition.6.
    
    SEGMENT INFORMATIONGeneral descriptionMitel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
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##### Table of Contents



Companys reportable
segments are represented by the four geographic areas: United States, Canada and 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 SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information. 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 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.Business segmentsFinancial information by geographic area for fiscal years 2006, 2007 and 2008 is summarized
below. External revenues are attributed to geographic area based on sales office location.
 United
    
    Canada and
    
    
    
    
    
    
    
    
    
    CorporateStates
    
    CALA
    
    EMEA
    
    Asia Pacific
    
    and Other
    
    TotalFiscal 2006RevenueTelecommunications
    
    $
    178.5
    
    
    $
    43.6
    
    
    $
    156.3
    
    
    $
    8.7
    
    
    $
    
    
    
    $
    387.1Network services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178.5
    
    
    
    43.6
    
    
    
    156.3
    
    
    
    8.7
    
    
    
    
    
    
    
    387.1Contribution margin
    
    
    73.9
    
    
    
    17.1
    
    
    
    52.1
    
    
    
    0.6
    
    
    
    
    
    
    
    143.7Shared and unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (150.4
    )
    
    
    (150.4
    )Operating income (loss)
    
    $
    73.9
    
    
    $
    17.1
    
    
    $
    52.1
    
    
    $
    0.6
    
    
    $
    (150.4
    )
    
    $
    (6.7
    )Fiscal 2007RevenueTelecommunications
    
    $
    161.6
    
    
    $
    49.4
    
    
    $
    162.4
    
    
    $
    11.5
    
    
    $
    
    
    
    $
    384.9Network services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161.6
    
    
    
    49.4
    
    
    
    162.4
    
    
    
    11.5
    
    
    
    
    
    
    
    384.9Contribution margin
    
    
    63.0
    
    
    
    20.0
    
    
    
    51.2
    
    
    
    1.9
    
    
    
    
    
    
    
    136.1Shared and unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (169.4
    )
    
    
    (169.4
    )Operating income (loss)
    
    $
    63.0
    
    
    $
    20.0
    
    
    $
    51.2
    
    
    $
    1.9
    
    
    $
    (169.4
    )
    
    $
    (33.3
    )Fiscal 2008RevenueTelecommunications
    
    $
    359.9
    
    
    $
    51.8
    
    
    $
    216.4
    
    
    $
    14.0
    
    
    $
    
    
    
    $
    642.1Network services
    
    
    49.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49.9409.8
    
    
    
    51.8
    
    
    
    216.4
    
    
    
    14.0
    
    
    
    
    
    
    
    692.0Contribution margin
    
    
    162.7
    
    
    
    18.9
    
    
    
    81.6
    
    
    
    2.5
    
    
    
    
    
    
    
    265.7Shared and unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (272.8
    )
    
    
    (272.8
    )Operating income (loss)
    
    $
    162.7
    
    
    $
    18.9
    
    
    $
    81.6
    
    
    $
    2.5
    
    
    $
    (272.8
    )
    
    $
    (7.1
    )
 F - 20




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##### Table of Contents



Geographic information
  2006
    
    2007
    
    2008Canada
    
    $
    30.9
    
    
    $
    37.6
    
    
    $
    40.5United States
    
    
    178.9
    
    
    
    161.9
    
    
    
    409.3United Kingdom
    
    
    130.2
    
    
    
    129.0
    
    
    
    170.5Other foreign countries
    
    
    47.1
    
    
    
    56.4
    
    
    
    71.7$
    387.1
    
    
    $
    384.9
    
    
    $
    692.0
  April 30, 2007
    
    April 30, 2008Property and
    
    
    
    
    
    Intangible and
    
    Property and
    
    
    
    
    
    Intangible andEquipment
    
    Goodwill
    
    Other Assets
    
    Equipment
    
    Goodwill
    
    Other AssetsCanada
    
    $
    11.6
    
    
    $
    4.2
    
    
    $
    3.3
    
    
    $
    10.8
    
    
    $
    4.2
    
    
    $
    4.0United States
    
    
    1.1
    
    
    
    0.9
    
    
    
    
    
    
    
    13.1
    
    
    
    415.0
    
    
    
    159.0United Kingdom
    
    
    3.6
    
    
    
    1.7
    
    
    
    
    
    
    
    2.8
    
    
    
    1.7
    
    
    
    5.0Other foreign countries
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    $
    16.5
    
    
    $
    6.8
    
    
    $
    3.3
    
    
    $
    27.0
    
    
    $
    420.9
    
    
    $
    168.0
 ConcentrationsThe 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 within
numerous 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, 2008 and April 30, 2006. For the period
ended April 30, 2007, sales of $48.4 were made to one customer in the United States and
accounted for more than 10 percent of the Companys revenue.As a result of the disposal of the manufacturing operations described in Note 4, BreconRidge
manufactures a significant portion of the Companys products. The Company is not obligated
to purchase products from BreconRidge in any specific quantity, except as the Company
outlines in forecasts or orders for products required to be manufactured by BreconRidge. In
addition, the Company may be obligated to purchase certain excess inventory levels from
BreconRidge that could result from the Companys actual sales of product varying from
forecast. As of April 30, 2008, there was excess inventory of $2.9 (2007  $4.0) for which
the Company was liable, and has been recorded in the due to related parties amount. The
Companys supply agreement with BreconRidge 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
source of supply could create a temporary, adverse effect on product shipments.7.
    
    DIVESTITURESSale of U.K. land and buildingOn August 31, 2005, the Company sold land and building relating to its U.K. subsidiary for
cash consideration of $12.4 (£7.1), resulting in a pre-tax gain of $7.3 (£4.2). The
transaction included a commitment for the Company to lease back a portion of the property,
which provided the Company with more than a minor part but less than substantially all of the
use of the property, and thereby qualified the transaction as a sale-leaseback arrangement
under SFAS 13. As a result, the Company entered into a 6-month interim lease and a 10-year
long-term lease for a portion of the property sold. Accordingly, $5.8 of the gain has been
deferred and will be amortized over the combined term of the leases (10 1/2 years). The
remaining gain of $1.5 was recognized immediately at the time of the sale and included in
gain on sale of assets. The deferred and unamortized balance at April 30, 2007 and April 30,
2008 was $4.9 and $4.3 respectively. The provision for income taxes in fiscal 2006 relating
to the sale of the land and buildings was $0.9 (£0.6).
 F - 21




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##### Table of Contents



Sale-Leaseback of Reno FacilityIn the fourth quarter of fiscal 2008, the Company sold an office building and surrounding
land located in Reno, Nevada. The Company also signed an agreement to lease back the
building for a ten year period, with options for two five year extensions at current market
rates. The sales price was $20.2, of which $19.7 was received in cash. The remaining $0.5
will only be received if certain water rights are subsequently obtained by the purchaser.
The contingent portion of the purchase price has not been recognized as of April 30, 2008 due
to uncertainty of collection. The carrying value of the building at the date of sale was
approximately $19.5, resulting in a net gain on sale of approximately $0.2. The provision for
income taxes irelating to the sale of the land and buildings was $4.5.8.
    
    RECEIVABLES PURCHASE AGREEMENTOn April 30, 2007, the Company entered into an agreement under which it sold $12.8 of its
non-interest bearing trade accounts receivable to an unaffiliated financial institution at a
rate of 7.5% on Canadian dollar receivables and 10.25% on US dollar receivables. Under the
Agreement, the Company will continue to service, administer and collect the pool of accounts
receivable without a fee, on behalf of the purchaser and, in certain events of breach can be
required to repurchase the receivables. The Agreement is guaranteed by the Companys Major
Shareholder, for which a fee of $0.012 was paid, and $1.9 was recorded as restricted cash in
connection with the agreement. The Company is not considered to have ceded control over the
transferred receivables, and so the transfer has not been accounted for as a sale. The
agreement does not provide the financial institution with the right to pledge or resell the
transferred receivables. The Company remitted all amounts outstanding at the close of the
Merger Transaction. The Company did not transfer any of its receivable balances in fiscal
2008.9.
    
    OTHER CURRENT ASSETSThe following are included in other current assets as of April 30, 2007 and April 30, 2008.
 April 30, 2007
    
    April 30, 2008Prepaid expenses and deferred charges
    
    $
    11.7
    
    
    $
    21.4Other receivables, including related party receivables
    
    
    12.4
    
    
    
    26.2Service inventory
    
    
    6.9
    
    
    
    9.3$
    31.0
    
    
    $
    56.9
  10.
    
    INVENTORIES
 April 30, 2007
    
    April 30, 2008Raw materials and work in process
    
    $
    3.7
    
    
    $
    6.2Finished goods
    
    
    20.1
    
    
    
    57.8Less: provision for inventory
    
    
    (4.0
    )
    
    
    (14.9
    )$
    19.8
    
    
    $
    49.1
 11.
    
    NET INVESTMENT IN SALES TYPE LEASESNet investment in sales-leases represents the value of sales-leases presently held under the
TotalSolutionSM program. The Company currently sells the rental payments due to
the Company from some of the sales-leases. The Company maintains reserves against its
estimate of potential recourse for the balance of sales-leases and for the balance of sold
rental payments remaining unbilled. The following table provides detail on the total net
balances in sales-leases:
 April 30,2008Lease balances included in consolidated accounts receivable, net of allocated allowances of $3.0 in 2008
    
    $
    9.5Net investment in Sales-Leases:Current portion, net of allowances of $1.5 in 2008
    
    
    23.4
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##### Table of Contents



April 30,2008Long-term portion, includes residual amounts of $1.3 in 2008; net
of allowances of $1.9 in 2008
    
    
    34.2Total investment in Sales-Leases, net of allowances of $6.4 in 2008
    
    
    67.1Sold rental payments remaining unbilled (subject to limited
    
    
    234.3recourse provisions), net of lease recourse liability reserves of
$13.3 in 2008Total balance of sales-leases and sold rental payments remaining
unbilled, net of allowances and reserves
    
    $
    301.4Total allowances and reserves for entire lease portfolio
(including lease recourse liabilities)
    
    $
    19.7
  Period EndedApril 30, 2008Sales of rental payments
    
    $
    69.7Sold payments remaining unbilled at end of year
    
    $
    247.6
 Sales of rental payments represents the gross selling price or total present value of the
payment stream on the sale of the rental payments to third parties. Sold payments remaining
unbilled at the end of the year represents the total balance of leases that is not included
in our balance sheet. The Company does not expect to incur any significant losses in excess
of reserves from the recourse provisions related to the sale of rental payments. The Company
is compensated for administration and servicing of rental payments sold.At April 30, 2008, future minimum lease payments related to the sold rental streams remaining
unbilled are: 2009  $87.4, 2010  $71.5, 2011  $49.5, 2012  $28.3, 2013  $10.9.At April 30, 2008, future minimum lease receipts due from customers related to the lease
portfolio included in our April 30, 2008 balance sheet are: 2009  $26.0, 2010  $13.6, 2011
  $9.1, 2012  $6.2, 2013  $4.8.12.
    
    PROPERTY AND EQUIPMENT
 April 30,
    
    April 30,2007
    
    2008Cost:Equipment
    
    $
    69.9
    
    
    $
    82.569.9
    
    
    
    82.5Less accumulated depreciationEquipment
    
    
    53.4
    
    
    
    55.5$
    16.5
    
    
    $
    27.0
 As of April 30, 2008, equipment included leased assets with cost of $6.6 (2007  $6.2)
and accumulated depreciation of $4.1 (2007  $2.8) and equipment utilized in the provision of
Managed Services (see Note 2(d)) with cost of $7.4 (2007  $7.5) and accumulated depreciation
of $6.8 (2007  $6.6). Depreciation expense recorded in fiscal 2008 amounted to $13.5 (2006
  $8.6; 2007  $7.1).
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13.
    
    GOODWILL
 April 30,
    
    April 30,2007
    
    2008Balance, beginning of the period
    
    $
    6.0
    
    
    $
    6.8Goodwill acquired  Inter-Tel
    
    
    
    
    
    
    414.3Foreign currency impact
    
    
    0.8
    
    
    
    (0.2
    )Balance, end of period
    
    $
    6.8
    
    
    $
    420.9
 Except for the year of acquisition, the Company performs its impairment tests of goodwill
annually on January 31 in accordance with SFAS 142, Goodwill and Other Intangible
Assets. The Company concluded that there was no impairment since the fair value
determinations of the reporting units were found to exceed the carrying values in fiscal 2007
and fiscal 2008.14.
    
    INTANGIBLE AND OTHER ASSETS
 April 30,
    
    April 30,2007
    
    2008Cost:Patents, trademarks and other
    
    $
    6.9
    
    
    $
    8.9Customer relationships
    
    
    
    
    
    
    99.7Developed technology
    
    
    
    
    
    
    78.8Trade name
    
    
    
    
    
    
    2.36.9
    
    
    
    189.7Less accumulated amortizationPatents, trademarks and other
    
    
    3.6
    
    
    
    4.9Customer relationships
    
    
    
    
    
    
    9.0Developed technology
    
    
    
    
    
    
    7.0Trade name
    
    
    
    
    
    
    0.83.6
    
    
    
    21.7$
    3.3
    
    
    $
    168.0
 During fiscal 2008, the Company recorded approximately $180.8 of intangible assets
related to the acquisition of Inter-tel. The amount represents the fair value of the customer
relationships, developed technology, and trade name. The intangible assets have a
weighted-average useful life of 8 years, 8 years and 2 years.Amortization of intangible and other assets was $1.7, $1.9 and $18.1 each in fiscal 2006,
fiscal 2007, and fiscal 2008 respectively. The estimated amortization expense related to
intangible assets in existence as of April 30, 2008, over the next five years is as follows:
fiscal 2009  $25.5; fiscal 2010  $24.1; fiscal 2011  $23.1; fiscal 2012  $23.1 and fiscal
2012  $22.6. 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.15.
    
    BANK INDEBTEDNESSThe Companys UK subsidiary has indemnity facilities totaling $1.9 (£1.0) available for
letters of credit and other guarantees, $0.3 of which has been drawn at April 30, 2008 (April
30, 2007  $0.9). The indemnity and credit facilities are unsecured.On August 16, 2007, in connection with the merger transaction described in Note 3, the
Company secured a five-year, $30 million revolving credit facility, $12.0 of which was drawn
at April 30, 2008. Under the revolving credit facility, borrowings are available in both U.S
dollars and Canadian dollars, and include letters of credit. The revolving credit facility
bears interest at LIBOR plus 3 1/4% and is fully secured by the Companys assets. During
fiscal 2008 LIBOR ranged from 2.9375% to 4.9375%.Amounts appearing in bank indebtedness as of April 30, 2007 and April 30, 2008 represent
credit book balances resulting from an excess of outstanding cheques over funds on deposit
where a right of offset does not exist.
 F - 24




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16.
    
    ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 April 30,
    
    April 30,2007
    
    2008Trade payable
    
    $
    40.0
    
    
    $
    40.2Employee-related payables
    
    
    14.0
    
    
    
    36.8Restructuring, warranty and other provisions
    
    
    5.1
    
    
    
    11.4Receivables purchase obligation
    
    
    12.8
    
    
    
    Other accrued liabilities
    
    
    26.9
    
    
    
    65.5$
    98.8
    
    
    $
    153.9
 17.
    
    LONG-TERM DEBT
 April 30,
    
    April 30,2007
    
    2008First lien, interest at LIBOR plus 3 1/4%, payable quarterly, 7 year term maturing
August 16, 2014, secured by all Company assets
    
    $
    
    
    
    $
    289.9Second lien, interest at LIBOR plus 7%, payable upon maturity, 8 year term maturing
August 16, 2015, secured by all Company assets
    
    
    
    
    
    
    129.7Capital leases, at interest rates varying from 1.3% to 11.8%, payable in monthly
installments, with maturity dates ranging from 8 to 36 months, secured by the leased
assets
    
    
    4.0
    
    
    
    3.1Note payable, at interest of 7.5%, payable in monthly installments, maturing May 2015
    
    
    
    
    
    
    0.44.0
    
    
    
    423.1Less: current portion
    
    
    1.9
    
    
    
    2.4$
    2.1
    
    
    $
    420.7
 On August 16, 2007, the Company borrowed, from a syndicate of lenders, $300 million under
a seven-year term First Lien Credit Agreement and $130 million under an eight-year Second
Lien Credit Agreement. In addition, as part of the transaction, the Company secured a
five-year, $30 million revolving credit facility, as described in Note 15. All three credit
agreements bear interest based on LIBOR and are fully secured by all of the Companys assets.
During fiscal 2008 LIBOR ranged from 2.9375% to 4.9375%.The term loans are repayable in full on their respective maturity dates, but 1% of the first
liens original balance matures each year in equal quarterly installments until August 16,
2014. All three of the credit agreements have customary default clauses, wherein repayment of
one or more of the credit agreements may be accelerated in the event of uncured default. The
proceeds from the issuance of equity or debt, and proceeds from the sale of Company assets,
as well as excess annual cash flows (as defined in the agreements), may also be required to
be used, in whole or in part, to make mandatory prepayments under the First and Second Lien
Credit Agreements.The credit agreements contain affirmative and negative covenants, including: (a) periodic
financial reporting requirements, (b) maintaining a maximum ratio of consolidated debt to
earnings before interest, taxes, depreciation and amortization, adjusted for certain business
restructuring charges and related expenses and non-cash charges, referred to as adjusted
EBITDA, that ranges from 7.10:1 and 2.00:1 depending on the fiscal quarter to which the
calculation relates, (c) limitations on the incurrence of subsidiary indebtedness and also
the borrowers themselves, (d) limitations on liens, (e) limitations on investments and (f)
capital expenditures.As of April 30, 2008, the Company was in compliance with all of the covenants included in the
credit agreements which were applicable at that time.Interest expense related to capital leases, was $0.2 in fiscal 2008 (2006  $0.5; 2007 -
$0.2). Future minimum lease payments as of April 30, 2008 under capital leases total $3.5 of
which $2.1, $0.7, $0.6 and $0.1 relate to fiscal years 2009 to 2012, respectively. Interest
costs of $0.4 are included in the total future lease payments.18.
    
    CONVERTIBLE NOTESOn April 27, 2005, the Company issued Senior Secured Convertible Notes, with attached
warrants, for gross proceeds of $55.0 to a group of private investors (Holders). The notes
were set to mature on April 28, 2010 and accrued interest, payable semi-annually in arrears,
at LIBOR plus 5.0% for any period prior to the consummation of a Qualified IPO, LIBOR plus
2.5% for any period following the consummation of a Qualified IPO and LIBOR plus 10.0% on or
after the 30 month anniversary of the issuance date of the convertible notes if a
Qualified IPO has not been consummated. At any time on or after the consummation of a
Qualified IPO or upon the occurrence of a Fundamental Change, the Holders of the notes were
entitled to convert any portion of the outstanding
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##### Table of Contents



principal and accrued and unpaid interest
into common shares of the Company with the number of common shares to be received being
calculated based on a formula that considers the fair value of the common shares in the case
of an IPO and, in the case of a Fundamental Change, is based on $1.50 per common share
subject to adjustment for a Make-Whole Premium. The Make-Whole
Premium, which was based on the effective date of the Fundamental Change, the current fair
value of the Companys common shares and whether the Fundamental Change occurs Pre-IPO or
Post-IPO could have been settled in cash, by delivery of common shares or a combination
thereof at the option of the Company. The determination of the Make-Whole Premium was not
based on interest rates or credit risk and therefore was not considered clearly and closely
related to the host instrument and qualifies as an embedded derivative under SFAS 133.
Accordingly, the fair value of the embedded derivative was required to be recorded at fair
value separate from the debt host. As at April 30, 2007, and immediately prior to the
repayment, management had determined the fair value of the derivative instrument to be
nominal.At any time commencing on or after the later of (i) May 1, 2008 and (ii) the 18 month
anniversary of the Lock-Up Expiration Date provided that on each of the 10 consecutive
trading days, the closing sale price per share is at least 200% of the conversion price of
the notes, the Company had the right to redeem all or any portion of the principal remaining
under the notes at a redemption price equal to the principal plus interest accrued to the
date of redemption plus the net present value of the remaining interest payments to April 28,
2010. Upon the occurrence of a Fundamental Change, the Company had the right to irrevocably
offer to repurchase all or a portion of the notes at a price equal to (i) 125% of the
principal of the notes (plus accrued and unpaid interest) if the Fundamental Change occurs
during 18 months after issuance but prior to the consummation of a Qualified IPO, (ii) 120%
of the principal of the notes (plus accrued and unpaid interest) if the Fundamental Change
occurs following the 18 months after issuance but prior to the consummation of a Qualified
IPO or (iii) 100% of the principal of the notes (plus accrued and unpaid interest) if the
Fundamental Change occurs following the consummation of a Qualified IPO. A Fundamental Change
includes a consolidation or merger, sale, transfer or assignment of all or substantially all
of the Companys assets, a purchase of more than 50% of the Companys outstanding common
 shares, consummation of a stock purchase agreement or other business combination, or
reorganization, recapitalization or reclassification of the common shares of the Company, or
any event that results in the Principal Shareholder beneficially owning in aggregate less
than 115 million of the issued and outstanding shares in the capital of the Company.The Holders of the notes did not have any voting rights and all payments due under the notes
ranked pari passuwith all additional notes and were not subordinate to any indebtedness of
the Company. The notes were secured by a first priority, perfected security interest over
the assets of the Company and over the assets and stock of specific subsidiaries.In conjunction with the issuance of the Senior Secured Convertible notes, the Company issued
16.5 million warrants, which are described further in Note 24. The gross proceeds from the
financing were allocated between the notes and the warrants based on their relative fair
values. Debt issue costs of $4.5 were incurred in connection with the financing transaction,
and were recorded as a deferred charge within the Investments, and Other Assets balance in
the Consolidated Balance Sheet.On August 16, 2007, in connection with the merger transaction described in Note 3 and the
financing transactions described in Notes 17 and 23, the Senior Secured Convertible notes
were repaid with $66.0 of cash plus accrued interest of $1.7, and the terms of the 16.5
million warrants were amended such that the exercise price decreased from $1.50 to $1.28, the
expiration date was extended until August 16, 2012 and the anti-dilution rights were amended
to provide the same protection as the shareholders of the Class 1 Preferred shares (described
in Note 23). The retirement of the convertible notes and the modification of the warrants
resulted in a combined loss of $20.8 comprised of $15.3 relating to the convertible notes
carrying value, $2.7 on unamortized deferred debt issue costs and $2.8 on the modification of
the warrants.The following table summarizes the movement in the carrying value of the convertible notes:
 April 30,
    
    April 30,2007
    
    2008Balance, beginning of period
    
    $
    48.7
    
    
    $
    50.2Accretion of convertible notes to redemption value prior to merger
    
    
    1.5
    
    
    
    0.5Foreign currency impact
    
    
    
    
    
    
    Settlement upon merger
    
    
    
    
    
    
    (66.0
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    15.3Balance, end of period
    
    $
    50.2
    
    
    $
    
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##### Table of Contents



19.
    
    COMMITMENTS AND GUARANTEESOperating leasesThe Company leases certain equipment and facilities under 3rd party operating leases. The
Company is also committed under related party leases and subleases for certain facilities
(see Note 4). Rental expense and income on operating leases were as follows:
 2006
    
    2007
    
    2008Rental expenseArms-length
    
    $
    8.1
    
    
    $
    12.2
    
    
    $
    20.1Related party
    
    
    6.5
    
    
    
    6.6
    
    
    
    7.3Total
    
    $
    14.6
    
    
    $
    18.8
    
    
    $
    27.4Rental incomeArms-length
    
    $
    0.2
    
    
    $
    1.9
    
    
    $
    2.2Related party
    
    
    2.8
    
    
    
    0.7
    
    
    
    0.5Total
    
    $
    3.0
    
    
    $
    2.6
    
    
    $
    2.7
  Future Lease Payments
    
    Future Lease IncomeFiscal year
    
    Arms-length
    
    Related Party
    
    Arms-length
    
    Related Party2009
    
    $
    17.1
    
    
    $
    9.0
    
    
    $
    1.9
    
    
    $
    0.22010
    
    
    13.4
    
    
    
    9.0
    
    
    
    0.3
    
    
    
    0.22011
    
    
    10.2
    
    
    
    7.5
    
    
    
    
    
    
    
    0.12012
    
    
    8.3
    
    
    
    
    
    
    
    
    
    
    
    2013
    
    
    7.2
    
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    12.0
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    68.2
    
    
    $
    25.5
    
    
    $
    2.2
    
    
    $
    0.5
 Guarantees
 Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others
 Product warranties
  April 30,
    
    April 30,2007
    
    2008Balance, beginning of period
    
    $
    2.0
    
    
    $
    1.8Warranty costs incurred
    
    
    (1.2
    )
    
    
    (1.7
    )Warranties issued
    
    
    1.1
    
    
    
    1.6Other
    
    
    (0.1
    )
    
    
    0.7Balance, end of period
    
    $
    1.8
    
    
    $
    2.4
 Intellectual property indemnification obligationsThe 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.
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Bid and performance related bondsThe 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 may
be related to the Companys performance and/or the Companys resellers performance under the
applicable contract. Under FIN 45, 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, 2007 and April 30, 2008 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,
2008, the total maximum potential amount of future payments the Company could be required to
make under bid and performance related bonds was $5.6 (2007  $3.6).20.
    
    CONTINGENCIESOn June 23, 2006, one of the Companys competitors filed a complaint in the United States
District Court for the Eastern District of Virginia alleging that the Company is infringing
on certain of its patents and requested damages. On September 8, 2006 the Company filed a
defense to the competitors complaint and a counterclaim alleging that the competitor is
infringing on certain of the Companys patents and also requested damages. The competitor had
also filed a complaint in the United States District Court for the District of New Jersey
seeking a declaratory judgment that certain of the Companys patents are not being infringed
by them or are invalid. During fiscal 2007, the Company and the competitor both expressed
willingness to settle all litigation claims outside of court, and a final agreement was
reached on March 19, 2007. Under the terms of the settlement agreement, the competitor agreed
to release the Company from all past infringements and the parties have also entered into a
covenant to not sue each other for a period of 5 years from the effective date. In
accordance with SFAS No. 5, Accounting for Contingencies, a one-time litigation settlement
charge of $14.8, representing the present value of $19.7 payable over a 5-year period and
discounted using an interest rate of 12%, was recorded during the year ended April 30, 2007
in the consolidated statement of operations. Also included in the litigation settlement
charge of $16.3 are legal costs incurred of $1.5. At April 30, 2008, $3.5 (April 30, 2007 -
$5.9) had been recorded in accounts payable and accrued liabilities and $8.4 (April 30, 2007
  $10.8) was recorded in the litigation settlement obligation.On June 27, 2007, the Company filed a suit against one of its competitors alleging that the
competitor infringed on a number of Mitels patents. The Company is seeking unspecified
monetary damages as well as a preliminary injunction. The competitor responded by filing a
counterclaim against the Company alleging that the Company infringed on one of its patents,
and also filed a related action in the Ontario Superior Court of Justice alleging that Mitel
committed trade libel by inter alia issuing a press release that announced the filing of the
infringement case in the Eastern District of Texas. Potential damages from the counterclaim
and trade libel claim cannot be assessed at this time. The Company has analyzed the patent
asserted by the competitor and believes that both the counterclaim and defamation claims are
without merit.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. The Company believes that the counterclaim is without merit and intends
to defend itself vigorously, but is not able to determine the outcome at this point in
time.Prior to the acquisition, certain former distributors of telephone equipment under dealer
agreements with Executone, a company whose assets were acquired by Inter-Tel in January 2000,
brought suit against Inter-Tel asserting that Inter-Tel was liable for Executones breaches
of such dealer agreements. The plaintiffs also asserted that Inter-Tel misled them by
promising to continue certain Executone lines of products when they had no intention to do
so. The plaintiffs have asserted claims for breach of contract and promissory estoppel, and
seek compensatory and consequential damages in an unspecified amount. At the time of the
acquisition, Inter-Tel was still in the process of evaluating the complaints and was
conducting discovery. As at the date of issuing these financial statements, discovery is
ongoing and the Company continues to evaluate and defend the case. No amounts have been
accrued at April 30, 2008.The Company is also party to a small number of other legal proceedings, claims or potential
claims arising in the normal course of its 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.21.
    
    REDEEMABLE COMMON SHARESPursuant to the shareholders agreement dated April 23, 2004, upon failure to complete an
initial public offering (IPO) of its common shares by September 1, 2006 (the put date),
Zarlink, a shareholder of the Company, had a right to require the Company to redeem for cash
all or part of its 10,000,000 common shares held in the Company at a price of C$2.85 per
common share which translates to a total cash outlay of $25.8 based on April 30, 2007 foreign
exchange rates. On June 26, 2006 the agreement was amended to extend the put date until May
1, 2007. On May 30, 2007, the put date was again extended until the earlier of the completion
of the merger transaction described in Note 3, or November 2, 2007.On August 16, 2007, in connection with the merger transaction and the financing transactions
described in Note 3, all of the Zarlink Redeemable common shares were purchased for
cancellation for aggregate consideration of $12.9. The difference between the
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redemption
price and the original carrying value of $16.8 plus accreted interest of $2.1, was recorded
as a reduction to the accumulated deficit. If the Company completes an acquisition or IPO
within twelve months of the refinancing an additional consideration could be payable if the
effective price was at least $1.75 per share. If this price was reached the additional
consideration would be $3.5 and would increase by 75% of value in excess of $1.75 for each
share that Zarlink owned prior to the refinancing. The Company does not expect any
additional consideration to be payable.22.
    
    DERIVATIVE LIABILITY INSTRUMENTClass 1 Preferred SharesAs further described in Note 23, the Company issued 307,087 and 9,668 Convertible, Redeemable
Preferred Shares ((Class 1 Preferred Shares) on August 16, 2007 and January 18, 2008. The
preferred shares are subject to mandatory conversion upon the closing of a qualified public
offering, as defined in Note 23, or at the option of the holder. If a qualified public
offering is not complete by August 16, 2014, the Class 1 Preferred Shares will be subject to
mandatory redemption for an amount that is the greater of the Net Accreted Value, as
defined in Note 23, or the value of the common shares into which the Class 1 Preferred Shares
are convertible.Pursuant to EITF 00-19 and SFAS 133, since the holders of the preferred shares have the
ability to receive cash for an amount equal to the value of the common shares into which the
Class 1 Preferred Shares would convert in the event of a mandatory redemption on August 16,
2014, the entire conversion option must be separately accounted for as a derivative
liability. In accordance with SFAS 133, the derivative is originally recorded at fair value,
and subsequent changes in fair value are recorded in the Consolidated Statement of
Operations. The fair value of the derivative was determined using the lattice-binomial model,
and the following assumptions: seven year life, interest rate of 3.00%, volatility of 76.6%
and no dividends. At August 16, 2007, January 18, 2008 and April 30, 2008 the fair value of
the embedded derivative on a per share basis was determined to be $361.91, $356.60 and
$343.27 respectively. The combined change in fair value between the issuance date of the
 shares and April 30, 2008 of $6.0 was recorded as a gain in the Consolidated Statement of
Operations.Upon closing of a qualified public offering, where the underlying Class 1 Preferred Shares
are automatically converted into common shares of the Company, the derivative liability will
transfer to equity.Preferred A and B SharesAs described further in Note 23, since a portion of the redemption price of the preferred A
and B shares was indexed to the common share price of the Company, an embedded derivative
existed which was bifurcated and accounted for separately, under SFAS 133. The derivative
component relating to both the Series A and B Preferred Shares was valued at $70.0 just prior
to the merger (April 30, 2007  $67.3). Upon completion of the merger transaction, the
derivative liability was reversed, resulting in a gain in the Companys consolidated
statement of operations of $58.6 and a credit to accumulated deficit of $11.4 for the year
ended April 30, 2008.23.
    
    CONVERTIBLE, REDEEMABLE PREFERRED SHARESClass 1 Preferred SharesIn connection with the merger transaction described in Note 3, the Company issued 307,087 and
9,668 Class 1 Preferred Shares on August 16, 2007 and January 18, 2008 respectively for cash
consideration of $1,000 per share, together with attached common stock purchase warrants. The
warrants entitle the holders of the Class 1 Preferred Shares to purchase an aggregate of
22,563,201 common shares of the Company at an exercise price of $1.32 per share. The
warrants are immediately exercisable and expire 5 years from the original issuance date. The
relative fair value of each warrant on the date of issuance of $0.27 was allocated from the
net proceeds on issuance of the shares and is recorded as a component of shareholders
deficiency.The holders of the Class 1 Preferred Shares are entitled to non-cumulative dividends if, as
and when declared by the Board of Directors of the Company. The amount of any dividends
declared is determined as the amount that the holders of Class 1 Preferred Shares would have
received by way of dividends paid on the Common Shares had they converted their Class 1
Preferred Shares into Common Shares. No dividends had been declared as of April 30, 2008.In addition to voting as a class in respect of matters pertaining to that class, the holders
of the Class 1 Preferred Shares are entitled to vote together with the Common Shares. Each
Class 1 Preferred Share entitles the Class 1 Preferred Holder to the number of votes per
share equal to the number of Common Shares that would be issuable on conversion of such Class
1 Preferred Share.Each Class 1 Preferred Share is convertible at any time, in whole or in part, at the holders
option without payment of any additional consideration, into a number of common shares that
is equivalent to the accreted value of each Class 1 Preferred Share divided by $1.3161. The
accreted value of each share is equal to $1,000 per share increasing at the rate of 8% per
annum. Accordingly, on the date the Class 1 Preferred Shares were issued, each Class 1
Preferred Share is convertible into 759.8207 Common Shares. On the date that is one year
following the date of issuance of the Class 1 Preferred Shares, assuming no other adjustments
are applicable, each Class 1 Preferred Share will be convertible into 820.6063 Common Shares.
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The Company has the right to require the conversion of the issued and outstanding Class 1
Preferred Shares into common shares at the then-applicable conversion ratio immediately prior
to, and conditional upon, the closing of a public offering in which the aggregate gross cash
proceeds are not less than $100.0 and in which the Common Shares are listed on and posted for
trading, traded
or quoted on the Toronto Stock Exchange, the New York Stock Exchange or the Nasdaq Stock
Market, provided that the value per Class 1 Preferred Share on an as-converted to Common
Shares basis is equal or greater than: (a) 150% of the Net Accreted Value, which is defined
as $970.35 per share increasing at the rate of 8% per annum, if the public offering is
completed within one year after the issuance of the Class 1 Preferred Shares; (b) 175% of the
Net Accreted Value if the public offering is completed after the first anniversary but on or
before the end of the second anniversary of the issuance of the Class 1 Preferred Shares; or
(c) 200% of the Net Accreted Value if the public offering is completed after the second
anniversary of the issuance of the Class 1 Preferred Shares.At any date that is after 5 years and one day from the original issuance date of the Class 1
Preferred Shares, both the Company and the majority holders of the Class 1 Preferred Shares
have a right to require the Company to redeem the shares for cash. The Class 1 shares are
redeemable by the holders at a redemption amount equal to the Net Accreted Value ($970.35
per share increasing at the rate of 8% per annum). The Class 1 shares are redeemable by the
Company at a redemption amount equal to the greater of the Net Accreted Value and value of
common shares into which the Class 1 Preferred Shares are convertible. At any date after 7
years from the original issuance date, the Class 1 Preferred Shares are subject to mandatory
redemption for an amount that is the greater of the Net Accreted Value or the value of common
 shares into which the Class 1 Preferred Shares are convertible. Payment of redemption amounts
will be subject to any restrictions pursuant to the Debt Financing described in Note 17.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, is classified in
the mezzanine section of the Consolidated Balance Sheet net of the embedded derivative
liability described in Note 22. The difference between the initial carrying amount and the
redemption amount is being accreted through deficit over the five-year period to redemption
using the effective interest method. At April 30, 2008, the amount of accreted interest was
$24.4.The following table summarizes the allocation of the Class 1 Preferred Shares net of share
issue costs, among its different elements:
 April 30,2008Convertible, redeemable preferred sharesIssued for cash
    
    $
    289.5Issued in exchange for Series A Preferred shares
    
    
    18.2Less: amount allocated to warrants
    
    
    (6.0
    )Less: amount allocated to embedded derivative liability (Note 22)
    
    
    (114.6
    )Less: other issuance costs
    
    
    (3.0
    )Accreted interest
    
    
    24.4Carrying value as of April 30, 2008
    
    $
    208.5
  Series A Preferred Shares
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Series B Preferred Shares
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Series A
    
    Series B
    
    TotalCarrying value as of April 30, 2006
    
    $
    8.6
    
    
    $
    36.9
    
    
    $
    45.5Fiscal 2007Accreted interest
    
    
    2.1
    
    
    
    4.9
    
    
    
    7.0Carrying value as of April 30, 2007
    
    $
    10.7
    
    
    $
    41.8
    
    
    $
    52.5Fiscal 2008Accreted interest pre-merger
    
    
    0.7
    
    
    
    1.4
    
    
    
    2.1Cash redemption
    
    
    (18.5
    )
    
    
    
    
    
    
    (18.5
    )Cash redemption (immediately following the exchange of redeemable preferred shares for
common shares)
    
    
    
    
    
    
    (17.7
    )
    
    
    (17.7
    )Exchange of redeemable preferred shares for common shares upon merger
    
    
    (5.4
    )
    
    
    (38.1
    )
    
    
    (43.5
    )Exchange of redeemable Series A Preferred Shares for redeemable Class 1 Preferred Shares
    
    
    (18.2
    )
    
    
    
    
    
    
    (18.2
    )Deemed dividend relating to beneficial conversion feature recorded upon issuance of
Series A Preferred Shares
    
    
    1.4
    
    
    
    
    
    
    
    1.4Charge to accumulated deficit
    
    
    29.3
    
    
    
    12.6
    
    
    
    41.9Carrying value as of April 30, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
 24.
    
    WARRANTSThe following table outlines the carrying value of warrants outstanding as of April 30, 2007
and April 30, 2008:
 April 30,
    
    April 30,2007
    
    2008i) Warrants issued/issuable in connection with government funding
    
    $
    39.1
    
    
    $
    39.1ii) Warrants issued in connection with Series A Preferred Shares
    
    
    1.0
    
    
    
    1.0iii) Warrants issued to financing agent
    
    
    0.1
    
    
    
    0.1iv) Warrants issued in connection with Senior Secured Convertible Notes
    
    
    7.7
    
    
    
    10.5v) Warrants issued to Wesley Clover Corporation
    
    
    15.0
    
    
    
    vi) Warrants issued in connection with Class 1 Preferred Shares
    
    
    
    
    
    
    6.0Total warrants outstanding
    
    $
    62.9
    
    
    $
    56.7
 i) During fiscal 2003, the Company, in conjunction with the Partner Company and the
Funding Company, signed an agreement for funding from the Canadian Government for up to
C$60.0 of the Funding Companys, the Partner Companys and the Companys research and
development activities over a three-year period. Pursuant to the terms of the agreement, in
exchange for funding received from the Government of Canada, the Company committed to issue
warrants to Her Majesty the Queen in Right of Canada exercisable into common shares for no
additional consideration. The number of warrants to be issued on September 30 in each fiscal
year was determined based on the funding received and the fair market value of the common
 shares at the date of issuance. The warrants have no expiry date.As at April 25, 2004 the Company had issued warrants to acquire 12,986,968 common shares
pursuant to the above agreement. During fiscal 2005, an additional 13,862,943 warrants were
issued at the then fair value of C$1.00 per share, of which 11,481,109 warrants related to
$8.7 of government funding that was receivable and received during fiscal 2004, and the
remaining 2,381,834 relate to funding received during fiscal 2005. As at April 24, 2005 a
total of 26,849,911 warrants had been issued pursuant to the above agreement. Warrants
relating to the $7.2 of government funding received in fiscal 2005 totaled 12,887,440 and
were issued in fiscal 2006 in accordance with the terms of the agreement. Since the Company
had reached its maximum funding limit in fiscal 2005, no additional funding was received and
no additional warrants were issued in fiscal 2006 or fiscal 2007. As of April 30, 2008 there
are 37,355,518 warrants outstanding and no remaining amounts receivable (April 30, 2007 
$nil).ii) In connection with the issuance of Series A Preferred Shares in fiscal 2004, the Company
issued to the holders of the Series A Preferred Shares warrants to acquire 5,000,000 common
 shares of the Company. The warrants are exercisable at C$1.25 per common share and have a
seven year life. The warrants were valued using the Black-Scholes option pricing model with
the
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following assumptions: seven year life, interest rate of 4.37 percent, volatility of
forty percent and no dividends. The warrants are automatically exercisable based on a formula
in connection with a Qualified IPO.iii) In connection with the issuance of Series A Preferred Shares in fiscal 2004, the Company
issued warrants to the placement agent to acquire 1,000,000 common shares of the Company, as
consideration for services rendered in connection with the financing
transaction and accounted for them as an issue cost. The fair value of the warrants was
estimated based on the fair value of services received. The warrants are exercisable at the
earlier of 5 years or an IPO at C$1.00 per share.iv) As described in Note 18, in connection with the issuance of the Senior Secured
Convertible Notes on April 27, 2005, the Company issued to the holders warrants to acquire
16,500,000 common shares of the Company. The warrants are exercisable at any time on or after
the earliest of the date of effectiveness of a Qualified IPO as defined in the warrants, the
date of effectiveness of any other public offering of the common shares or upon and following
a fundamental change. The warrants are exercisable at a price per share equal to the lower of
(i) USD $1.50 and (ii) the arithmetic average of the closing sales prices of the Companys
 shares during the first 10 trading days following the date of expiry of any lock-up
restrictions entered into by the Company in connection with a Qualified IPO. The warrants
expire the later of (i) the 4th anniversary of the issuance date and (ii) if a
Qualified IPO occurs prior to the 4th anniversary, the 1st anniversary
of the effective date of the Qualified IPO. The Holder may elect, in lieu of making the cash
payment upon exercise of the warrants, to receive the net number of common shares which
equates to the excess of the fair value of the common shares over its exercise price. The
relative fair value of the warrants on the date of issuance of $7.7 was allocated from the
proceeds on the issuance of the convertible notes and has been recorded as a component of
shareholders deficiency. The warrants were valued using the Black-Scholes option pricing
model with the following assumptions: five year life, interest rate of 3.83 percent,
volatility of one hundred percent and no dividends.On August 16, 2007, in connection with the merger transaction described in Note 3 and
the financing transactions described in Notes 17 and 23, the warrants were amended such that
the exercise price per share decreased from USD $1.50 to USD $1.28, the expiration date was
extended until August 16, 2012 and the anti-dilution rights were amended to provide the same
protection as the shareholders of the Class 1 Preferred shares. As a result of these
modifications, the fair value of the warrants was re-measured using the Black-Scholes option
pricing model with the following assumptions: additional five year life, interest rate of
4.33 percent, volatility of 77%, strike price of $1.28 and no dividends. The re-measurement
expense increased the loss on debt extinguishment by $2.8 and the fair value of the warrants
increased accordingly.v)
    
    On September 21, 2006, the Company issued 15,000 warrants to Wesley Clover for
an aggregate purchase price of $15.0. Each of the warrants entitled the holder to purchase
the Companys common shares. The warrants were automatically exercisable, without the
payment of any additional consideration, at the time that is either (i) immediately prior to
the completion of an initial public offering (ii) immediately prior to a sale of all or
substantially all of the Companys equity to a purchaser for cash or for a mix of cash and
 shares or (iii) immediately prior to a Fundamental Change as defined in Note 18, but in no
event later than September 21, 2008.The warrants were exercisable at a price per share equal to the lesser of $1,000 divided by
(i) 85% of the US dollar price per common share being offered in the initial public offering
or upon the change of control event if it occurs in the first 12 months and increasing by 1
1/4% per month thereafter subject to a maximum additional discount of 15%, and (ii) $1.50. In
the event of a Fundamental Change, the warrants were exercisable at a price per share equal
to $1,000 divided by $1.50. The terms of the warrant do not limit the number of shares that
are issuable on conversion.On August 16, 2007, as a condition to completing the merger and financing transactions
described in Note 3, 17 and 23, the warrants were repurchased for $20.0. The $5.0 difference
between the repurchase price and the carrying value at the date of repurchase, was recorded
as an increase to deficit.vi) In connection with the issuance of Class 1 Preferred Shares on August 16, 2007 and
January 18, 2008, the Company issued to the holders of the Class 1 Preferred Shares warrants
to acquire 21,830,508 and 732,693 common shares, respectively, of the Company. The warrants
are immediately exercisable at $1.32 and have a five-year life. The relative fair value of
each warrant on the date of issuance of $0.27 was determined on a relative fair value basis
using a Black-Scholes option pricing model with the following assumptions: five year life,
interest rate of 4.71 percent, volatility of 22.79 per cent and no dividends.25.
    
    SHARE CAPITALAs at April 30, 2008 the Companys authorized capital stock consists of an unlimited number
of common shares, and an unlimited number of Class 1 Preferred Shares and Class 2 Preferred
Shares. The holders of common shares are entitled to one vote per share and are entitled to
dividends when and if declared by the Board of Directors. The terms of the Class 1 preferred
 shares are described further in Note 23 of these financial statements. The Company had not
issued any Class 2 Preferred Shares at April 30, 2008.As described in Note 23, in connection with the merger transaction, 5,359,893 common shares
were issued as part of the settlement of the Series A Preferred shares, and 111,478,006 were
issued in exchange for Series B Preferred shares. Immediately following the conversion of the
Series B Preferred shares, 10,912,085 common shares were redeemed for cash.
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Equity offerings and Share Purchase LoansDuring fiscal 2008 the Company completed an equity offering to certain employees. The
Company issued 1,481,739 common shares at USD $1.32 per share, for total consideration of
$2.0, of which $0.7 was received in cash and $1.3 was covered by employee interest-free loans
repayable to the Company over a maximum two-year period from the date of the offering.The loans allowing eligible employees up to a maximum of 20,000 Canadian dollars to purchase
common shares in the Company. Shares purchased using company loans are secured by the
underlying shares, repayable by means of payroll deduction over a maximum two year period and
non-interest bearing unless there is a default in payment, in which case the loan bears
simple interest calculated at 10% per annum. In fiscal 2008, outstanding employee share
purchase loans receivable, in the amount of $1.2 were recorded against shareholders
deficiency. Minimal repayments were made against the loans during fiscal 2008, and so the
entire balance of $1.2 was receivable at April 30, 2008.Stock Option PlanIn 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 and authorized 25,000,000 shares for issuance
thereunder. The options are granted at no less than the fair market value of the common
shares of the Company on the date of grant and may generally be exercised in equal portions
during the years following 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.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 which was approved by the shareholders of Mitel
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 exercised, termination or expiry.The 2006 Equity Incentive Plan permits grants of stock options, deferred share units,
restricted stock units, performance share units and other share-based awards. Under the new
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, and vest 25% each
year over a four year period on the anniversary date of the 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. The aggregate number of common shares that may be
issued under the 2006 Equity Incentive Plan is 12% of the total number of common shares
outstanding from time to time (calculated on an as-if-converted to common share basis less
the issued options outstanding under the 2001 Stock Option Plan). Common shares subject to
outstanding awards under this new plan which lapse, expire or are forfeited or terminated
will, subject to plan limitations, again become available for grants under this plan.The number of common shares available for grant under the 2006 Equity Incentive Plan at April
30, 2008 was 31,987,616 options (2007-2,028,666 under the 2001 Stock Option Plan).
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Following is a summary of the Companys stock option activity under both stock option plans
and related information. The exercise price of stock options were in some cases based on
prices in Canadian dollars translated at the year-end exchange rate.
 Fiscal 2006
    
    Fiscal 2007Number of
    
    Weighted Average
    
    Aggregate Intrinsic
    
    Number of
    
    Weighted Average
    
    Aggregate IntrinsicShares
    
    Exercise Price
    
    Value
    
    Shares
    
    Exercise Price
    
    ValueOutstanding options:Balance, beginning of period:
    
    
    18,456,249
    
    
    $
    1.34
    
    
    $
    
    
    
    
    20,668,538
    
    
    $
    1.06
    
    
    $
    Granted
    
    
    5,227,233
    
    
    
    0.90
    
    
    
    
    
    
    
    6,123,177
    
    
    
    1.13
    
    
    
    Exercised
    
    
    (58,174
    )
    
    
    2.81
    
    
    
    
    
    
    
    (45,624
    )
    
    
    1.18Forfeited
    
    
    (879,766
    )
    
    
    1.27
    
    
    
    
    
    
    
    (1,356,657
    )
    
    
    2.51
    
    
    
    Expired
    
    
    (2,077,004
    )
    
    
    3.07
    
    
    
    
    
    
    
    (2,944,849
    )
    
    
    0.94
    
    
    
    Balance, end of period:
    
    
    20,668,538
    
    
    $
    1.06
    
    
    $
    
    
    
    
    22,444,585
    
    
    $
    1.02
    
    
    $
    Number of options exercisable
    
    
    4,947,519
    
    
    $
    1.48
    
    
    $
    
    
    
    
    8,115,722
    
    
    $
    1.04
    
    
    $
    Weighted average fair value
of options granted during
the period using the
Black-Scholes option pricing
model
    
    
    
    
    
    $
    0.14
    
    
    
    
    
    
    
    
    
    
    $
    0.77
 Fiscal 2008Number of
    
    Weighted Average
    
    Aggregate IntrinsicShares
    
    Exercise Price
    
    ValueOutstanding options:Balance, beginning of period:
    
    
    22,444,585
    
    
    $
    1.02
    
    
    $
    Granted
    
    
    8,827,719
    
    
    
    1.29
    
    
    
    Exercised
    
    
    (27,625
    )
    
    
    1.03
    
    
    
    Forfeited
    
    
    (985,778
    )
    
    
    1.22
    
    
    
    Expired
    
    
    (986,677
    )
    
    
    1.88
    
    
    
    Balance, end of period:
    
    
    29,272,224
    
    
    $
    1.07
    
    
    $
    Number of options exercisable
    
    
    12,418,597
    
    
    $
    1.06
    
    
    $
    Weighted average fair value
of options granted during
the period using the
Black-Scholes option pricing
model
    
    
    
    
    
    $
    0.83
  F - 35




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##### Table of Contents



April 30, 2007Total outstanding
    
    
    
    
    
    
    
    
    
    Total exercisableWeighted-
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    
    
    
    AverageNumber of
    
    Remaining
    
    Aggregate
    
    Number of
    
    Remaining
    
    AggregateExercise Price
    
    Shares
    
    Contractual Life
    
    Intrinsic Value
    
    Shares
    
    Contractual Life
    
    Intrinsic Value$0.90
    
    
    15,699,201
    
    
    2.6 years
    
    $
    2,298,520
    
    
    
    7,320,196
    
    
    2.5 years
    
    $
    1,071,750$1.02
    
    
    62,987
    
    
    4.4 years
    
    
    1,823
    
    
    
    
    
    
    
    
    
    
    
    $1.05
    
    
    227,633
    
    
    3.9 years
    
    
    418
    
    
    
    58,532
    
    
    3.9 years
    
    
    4,205$1.07
    
    
    4,047,900
    
    
    4.8 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $1.12
    
    
    546,305
    
    
    4.9 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0$1.40
    
    
    1,042,247
    
    
    4.1 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0$1.81
    
    
    141,562
    
    
    1.6 years
    
    
    
    
    
    
    108,494
    
    
    1.6 years
    
    
    0$2.48
    
    
    676,750
    
    
    0.6 years
    
    
    
    
    
    
    628,500
    
    
    0.6 years
    
    
    022,444,585
    
    
    
    
    
    
    $
    2,300,761
    
    
    
    8,115,722
    
    
    
    
    
    
    $
    1,075,955
 April 30, 2008Total outstanding
    
    
    
    
    
    
    
    
    
    Total exercisableWeighted-
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    
    
    
    AverageNumber of
    
    Remaining
    
    Aggregate
    
    Number of
    
    Remaining
    
    AggregateExercise Price
    
    Shares
    
    Contractual Life
    
    Intrinsic Value
    
    Shares
    
    Contractual Life
    
    Intrinsic Value$0.99
    
    
    15,136,083
    
    
    1.6 years
    
    $
    142,430
    
    
    
    10,722,777
    
    
    1.5 years
    
    $
    100,902$1.12
    
    
    62,987
    
    
    3.4 years
    
    
    
    
    
    
    15,746
    
    
    3.4 years
    
    
    $1.15
    
    
    813,454
    
    
    4.0 years
    
    
    
    
    
    
    88,566
    
    
    2.9 years
    
    
    $1.17
    
    
    3,901,000
    
    
    3.8 years
    
    
    
    
    
    
    979,562
    
    
    3.8 years
    
    
    $1.23
    
    
    388,055
    
    
    3.9 years
    
    
    
    
    
    
    97,575
    
    
    3.91 years
    
    
    $1.27
    
    
    2,806,898
    
    
    4.8 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $1.30
    
    
    63,500
    
    
    4.9 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $1.33
    
    
    4,793,500
    
    
    4.6 years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $1.54
    
    
    992,497
    
    
    3.1 years
    
    
    
    
    
    
    250,121
    
    
    3.1 years
    
    
    $1.98
    
    
    125,250
    
    
    0.6 years
    
    
    
    
    
    
    125,250
    
    
    0.6 years
    
    
    $2.72
    
    
    189,000
    
    
    0.3 years
    
    
    
    
    
    
    139,000
    
    
    0.3 years
    
    
    29,272,224
    
    
    
    
    
    
    $
    142,430
    
    
    
    12,418,597
    
    
    
    
    
    
    $
    100,902
  F - 36




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##### Table of Contents



Earnings (loss) per share
  2006
    
    2007
    
    2008Net income (loss), as reported
    
    $
    (44.6
    )
    
    $
    (35.0
    )
    
    $
    13.2Accreted interest on redeemable shares
    
    
    (6.9
    )
    
    
    (7.3
    )
    
    
    (26.5
    )Deemed dividend relating to amortization of beneficial conversion
feature on Series A preferred shares
    
    
    
    
    
    
    
    
    
    
    (1.4
    )Gain on redemption of redeemable common shares
    
    
    
    
    
    
    
    
    
    
    6.0Charges to deficit on conversion of redeemable preferred shares
    
    
    
    
    
    
    
    
    
    
    (74.2
    )Net loss available to common shareholders
    
    $
    (51.5
    )
    
    $
    (42.3
    )
    
    $
    (82.9
    )Weighted average number of common shares outstanding during the period
    
    
    117,230,198
    
    
    
    117,336,927
    
    
    
    186,135,401Loss per common share  basic and diluted
    
    $
    (0.44
    )
    
    $
    (0.36
    )
    
    $
    (0.44
    )
  (number of shares)
    
    2006
    
    2007
    
    2008Stock options
    
    
    1,624,155
    
    
    
    3,588,891
    
    
    
    382,285Warrants
    
    
    37,695,141
    
    
    
    43,527,960
    
    
    
    37,501,376Convertible, redeemable preferred shares
    
    
    87,789,300
    
    
    
    87,789,300
    
    
    
    241,701,026127,108,596
    
    
    
    134,906,151
    
    
    
    279,584,687
 Options that are anti-dilutive because the exercise price is greater than the average
market price of the common shares, are not included in the computation of diluted earnings
per share. For fiscal 2008, 28,889,939 stock options were excluded from the above table
because they were anti-dilutive (2006  19,044,383; 2007  18,855,694). Additionally,
warrants to acquire 16,500,000 common shares (2006  16,500,000; 2007  16,500,000), which
could potentially dilute basic earnings per share in the future, were also excluded from the
above table since they are contingently issuable and since the conditions for issuance had
not been met by the end of the period.Stock-based CompensationDuring fiscal 2008, the Company granted stock options to acquire 91,590 common shares (2006
  132,000; 2007  300,000) at an exercise price at least equal to the market price of the
common shares on the date of grant to consultants and advisory directors, as well as
employees who, subsequent to the options grants, became former employees of the Company as a
result of restructuring activities. The fair market value of these stock options was
determined using a Black-Scholes model based on the fair value of the common shares at the
vesting date and, for the unvested shares, as of April 30, 2008. The following assumptions
were used: five-year life, interest rate of 4.57 percent, volatility of 76 percent and no
dividends.Performance-Based Stock OptionsOn July 27, 2005, the shareholders of Mitel approved 2,810,000 performance-based stock option
awards to selected key employees to acquire 2,810,000 common shares. The options were to vest
contingent upon the achievement of certain targets, as measured on April 30, 2006, in
accordance with the normal four-year vesting term. At the time of the grant, the options were
considered variable plan awards as defined by APB 25 and so were subject to remeasurement for
changes in the market price of the underlying stock at the end of each reporting period until
the measurement date. The measurement date was defined to be April 30, 2006, since it was
determined that the objectives had not been met as of that date. The options were formally
cancelled in fiscal 2007 and the expense amount recorded for the year ended April 30, 2007
was $nil. The Company did not grant any performance-based awards in fiscal 2008.Deferred Share Unit PlansIn December 2004, Mitel granted deferred share units (DSUs) to certain executive members of
the Company. The number of DSUs that may be awarded to each participant is equal to 15% of
the participants annual salary less the maximum amount of the participants eligible
retirement savings plans contributions in that particular taxable year. Since the participant
will receive a lump sum payment in cash upon termination of employment, the award must be
classified as a liability and remeasured to reflect changes in the market price of the common
 shares until settlement. For the year ended April 30, 2008 there were 434,827 DSUs awarded to
executives with a fair value of $0.4 recorded as a liability (2007  390,358 DSUs and $0.5
recorded as a liability). The compensation expense recorded in fiscal 2008 to reflect a
change in common share fair value was negligible (2006  $0.3; 2007  $0.2).
 F - 37




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##### Table of Contents



26.
    
    OTHER INCOME (EXPENSE), NET
 2006
    
    2007
    
    2008Foreign exchange gains (losses), net
    
    $
    (0.6
    )
    
    $
    (0.3
    )
    
    $
    0.6Interest income
    
    
    0.7
    
    
    
    0.3
    
    
    
    0.8Amortization of gain on sale of assets
    
    
    0.3
    
    
    
    0.6
    
    
    
    0.6Other expenses
    
    
    
    
    
    
    
    
    
    
    (0.4
    )$
    0.4
    
    
    $
    0.6
    
    
    $
    1.6
 27.
    
    INCOME TAXESDetails of income taxes are as follows:
 2006
    
    2007
    
    2008Income (loss) before income taxes:Canadian
    
    $
    (35.0
    )
    
    $
    (24.1
    )
    
    $
    28.8Foreign
    
    
    (11.5
    )
    
    
    (9.1
    )
    
    
    (27.9
    )$
    (46.5
    )
    
    $
    (33.2
    )
    
    $
    0.9Income tax (expense) recovery:Current:Canadian
    
    $
    1.2
    
    
    $
    
    
    
    $
    Foreign
    
    
    (2.1
    )
    
    
    0.2
    
    
    
    0.9(0.9
    )
    
    
    0.2
    
    
    
    0.9Deferred:Canadian
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    2.8
    
    
    
    (2.0
    )
    
    
    11.4$
    1.9
    
    
    $
    (1.8
    )
    
    $
    12.3
  2006
    
    2007
    
    2008Expected tax rate
    
    
    36.0
    %
    
    
    36.0
    %
    
    
    35.3
    %Expected tax benefit (expense)
    
    $
    16.7
    
    
    $
    12.0
    
    
    $
    (0.3
    )Foreign tax rate differences
    
    
    (7.4
    )
    
    
    (5.2
    )
    
    
    1.8Tax effect of temporary differences and losses not recognized
    
    
    (1.6
    )
    
    
    (6.4
    )
    
    
    (9.8
    )Use of losses not previously recognized
    
    
    2.4
    
    
    
    
    
    
    
    5.7Recognize (write-off) deferred tax asset
    
    
    2.8
    
    
    
    (2.0
    )
    
    
    Permanent differences
    
    
    (12.4
    )
    
    
    (2.4
    )
    
    
    14.9Tax refunds and other adjustments related to prior years
    
    
    1.4
    
    
    
    2.2
    
    
    
    Income tax (expense) recovery
    
    $
    1.9
    
    
    $
    (1.8
    )
    
    $
    12.3
 F - 38




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##### Table of Contents



April 30,
    
    April 30,
    
    April 30,2006
    
    2007
    
    2008Assets:Net operating loss and credit carryforwards
    
    $
    55.5
    
    
    $
    67.7
    
    
    $
    100.5Allowance for doubtful accounts
    
    
    3.0
    
    
    
    0.6
    
    
    
    0.9Inventory
    
    
    (0.5
    )
    
    
    0.6
    
    
    
    0.5Restructuring and other accrued liabilities
    
    
    5.1
    
    
    
    11.0
    
    
    
    15.9Pension
    
    
    2.7
    
    
    
    3.2
    
    
    
    2.1Revenue recognition
    
    
    0.0
    
    
    
    0.0
    
    
    
    5.4Lease obligations and long-term debt
    
    
    1.3
    
    
    
    1.0
    
    
    
    2.6Property and equipment
    
    
    6.8
    
    
    
    6.7
    
    
    
    4.7Intangible and other assets
    
    
    10.4
    
    
    
    6.8
    
    
    
    16.7Total deferred tax assets
    
    
    84.3
    
    
    
    97.6
    
    
    
    149.3Lease obligations
    
    
    
    
    
    
    
    
    
    
    (56.2
    )Acquisition intangibles
    
    
    
    
    
    
    
    
    
    
    (68.1
    )Long term debt
    
    
    
    
    
    
    
    
    
    
    Deferred tax liabilities
    
    
    
    
    
    
    
    
    
    
    (124.3
    )Total gross deferred tax assets net of total deferred tax liabilities
    
    
    84.3
    
    
    
    97.6
    
    
    
    25.0Valuation allowance
    
    
    (81.5
    )
    
    
    (97.6
    )
    
    
    (121.9
    )Total deferred tax assets (liabilities)
    
    $
    2.8
    
    
    $
    
    
    
    $
    (96.9
    )
   April 30, 2007
    
    April 30, 2008Year of
    
    Tax
    
    Tax
    
    Tax
    
    TaxExpiry
    
    Losses
    
    Credits
    
    Losses
    
    Credits2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2010
    
    
    31.9
    
    
    
    
    
    
    
    28.0
    
    
    
    2011
    
    
    55.6
    
    
    
    
    
    
    
    56.8
    
    
    
    2012
    
    
    43.9
    
    
    
    
    
    
    
    43.9
    
    
    
    2013-2023
    
    
    107.1
    
    
    
    33.1
    
    
    
    112.6
    
    
    
    46.8Indefinite
    
    
    54.5
    
    
    
    
    
    
    
    101.6
    
    
    
    0.8Total
    
    $
    293.0
    
    
    $
    33.1
    
    
    $
    342.9
    
    
    $
    47.6
 These tax loss carry forwards relate to operations in Canada, the US, Italy, Hong Kong
and Barbados. As a result of acquisitions there are restrictions on the use of certain of
these losses to offset taxable income in future periods.Tax credit carryforwards relate to the Canadian and US operations amounting to $44.8 and $2.8
respectively. These credits consist of $44.8 in investment tax credits, $2.0 in research and
development credits and $0.8 in alternative minimum tax credits that can be used to offset
future Federal income taxes payable.The Company does not expect the unremitted earnings of its subsidiaries will be subject to
income tax or withholding taxes as it plans to reinvest the earnings of its subsidiaries
indefinitely. Accordingly, no provision has been made for potential income tax or
withholding taxes on repatriation of subsidiary earnings.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.
 F - 39




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##### Table of Contents



28.
    
    PENSION PLANSThe 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. The Company matches the contributions of participating employees to the
defined contribution pension plans on the basis of the percentages specified in each plan.
The costs of the defined contribution pension plans are expensed as incurred. 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.In June 2001, the defined benefit pension plan was closed to new employees and a defined
contribution option was introduced to members of the defined benefit pension plan. Members
were given the choice to continue in the defined benefit plan or transfer their assets to the
defined contribution plan.In fiscal 2008, a change in valuation assumptions, in particular changes in discount rates
and increases in expected mortality rates, produced an unfavorable impact on the Companys
defined benefit pension plan assets and obligations for the year ended April 30, 2008. The
pension liability increased from £87.0 to £100.2 as a result of these changes in assumptions.
After the effects of foreign currency translation of British Pounds to US dollars, the
overall pension liability increased by $24.9 to $198.8 (2007  increase of $9.7 to $173.9).United Kingdom Defined Benefit Pension PlanIn September 2006, the FASB issued Statement of Financial Accounting Standards No. 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an
amendment of FASB Statement No. 87, 88, 106 and 132(R),(SFAS 158).SFAS 158 requires
companies to recognize 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 standard also requires companies to measure plan assets and
obligations at their year-end balance sheet date. The Company is required to initially
recognize the funded status of its defined benefit pension plans and to provide the required
disclosures as of April 30, 2007. The requirement to measure plan assets and benefit
obligations as of the year-end date is not required until April 30, 2009, the Company chose
to early adopt in fiscal 2007 and has measured its assets and liabilities at April 30 rather
than March 31.The effect of the initial adoption of SFAS 158 was as follows:
 April 30, 2007
    
    SFAS 158
    
    April 30, 2007Pre-SFAS 158
    
    Adjustments
    
    Post-SFAS 158Pension liability
    
    $
    25.4
    
    
    $
    25.1
    
    
    $
    50.5Accumulated deficit
    
    $
    (397.8
    )
    
    $
    (0.4
    )
    
    $
    (398.2
    )Accumulated other comprehensive loss
    
    $
    (31.9
    )
    
    $
    (24.7
    )
    
    $
    (56.6
    )
   F - 40




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##### Table of Contents



April 30,
    
    April 30,2007
    
    2008Change in accrued pension benefits:Benefit obligation at beginning of period
    
    $
    164.1
    
    
    $
    173.9Service cost
    
    
    1.5
    
    
    
    1.0Interest cost
    
    
    8.6
    
    
    
    9.7Plan participants contributions
    
    
    1.0
    
    
    
    0.8Actuarial (gain) loss
    
    
    (15.5
    )
    
    
    17.1Benefits paid
    
    
    (1.9
    )
    
    
    (2.0
    )Adjustment for change in measurement date
    
    
    0.4
    
    
    
    Foreign exchange
    
    
    15.7
    
    
    
    (1.7
    )Benefit obligation at end of period
    
    
    173.9
    
    
    
    198.8Change in plan assets:Fair value of plan assets at beginning of period
    
    
    104.2
    
    
    
    123.4Actual return on plan assets
    
    
    6.2
    
    
    
    (1.8
    )Employer contributions
    
    
    3.2
    
    
    
    3.0Employee contributions
    
    
    1.0
    
    
    
    0.8Benefits paid
    
    
    (1.9
    )
    
    
    (2.0
    )Foreign exchange
    
    
    10.7
    
    
    
    (1.0
    )Fair value of plan assets at end of period
    
    
    123.4
    
    
    
    122.4
  April 30,
    
    April 30,
    
    April 30,2006
    
    2007
    
    2008Projected benefit obligation
    
    $
    164.1
    
    
    $
    173.9
    
    
    
    198.8Accumulated benefit obligation
    
    
    144.3
    
    
    
    148.8
    
    
    
    175.5Fair value of plan assets
    
    
    104.2
    
    
    
    123.4
    
    
    
    122.4
  2006
    
    2007
    
    2008Current service cost  defined contribution
    
    $
    1.5
    
    
    $
    1.5
    
    
    $
    1.7Current service cost  defined benefit
    
    
    1.1
    
    
    
    1.5
    
    
    
    1.0Interest cost
    
    
    6.2
    
    
    
    8.6
    
    
    
    9.7Expected return on plan assets
    
    
    (6.1
    )
    
    
    (8.0
    )
    
    
    (9.7
    )Recognized actuarial loss
    
    
    1.1
    
    
    
    2.1
    
    
    
    1.4Net periodic benefit cost
    
    $
    3.8
    
    
    $
    5.7
    
    
    $
    4.1
  April 30,
    
    April 30,
    
    April 30,2006
    
    2007
    
    2008Discount rate
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.5
    %Compensation increase rate
    
    
    2.75
    %
    
    
    2.75
    %
    
    
    3.00
    %Investment returns assumption
    
    
    7.25
    %
    
    
    7.25
    %
    
    
    7.75
    %Inflation rate
    
    
    2.75
    %
    
    
    2.75
    %
    
    
    3.00
    %Average remaining service life of employees
    
    21 years
    
    20 years
    
    18 years
 F - 41




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##### Table of Contents



April 30,
    
    April 30,
    
    April 30,2006
    
    2007
    
    2008Discount rate
    
    
    5.0
    %
    
    
    5.5
    %
    
    
    5.80
    %Compensation increase rate
    
    
    2.75
    %
    
    
    3.00
    %
    
    
    3.50
    %Inflation rate
    
    
    2.75
    %
    
    
    3.00
    %
    
    
    3.50
    %Average remaining service life of employees
    
    21 years
    
    20 years
    
    18 years
 Estimated Future Benefit Payments
  BenefitPayments2009
    
    $
    1.62010
    
    
    1.62011
    
    
    1.72012
    
    
    1.72013
    
    
    1.82014-2018
    
    
    10.0
 Contributions
  Plan Assets
  2007
    
    2008
    
    2008Actual
    
    Actual
    
    TargetEquities
    
    
    81
    %
    
    
    80
    %
    
    
    80
    %Bonds
    
    
    19
    %
    
    
    19
    %
    
    
    20
    %Cash
    
    
    
    
    
    
    1
    %
    
    
    
 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.29.
    
    FINANCIAL INSTRUMENTSFair valueThe Companys financial instruments include cash and cash equivalents, restricted cash, bank
indebtedness, accounts receivable, long-term receivables, accounts payable, amounts due to
(from) related parties, net investment in sales-leases, long-term debt including convertible
notes, derivative instruments, foreign exchange forward contracts and foreign exchange swaps.
Due to the short-term maturity of cash and cash equivalents, restricted cash, accounts
receivable, bank indebtedness, amounts due to and due 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 amounted to $0.1 classified
as accounts payable and accrued liabilities and $0.3 classified as other current assets at
April 30, 2008 (April 30, 2007  $0.1 classified as accounts payable and accrued liabilities
and $0.2 classified as other current assets). The fair value of the foreign exchange
contracts reflects the estimated amount that the Company would have been required to pay if
forced 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. The fair value of long-term receivables and long-term debt was determined by
discounting future cash receipts and future payments of interest and principal, at estimated
interest rates that would be available to the Company at year-end. The fair value of
financial instruments approximate their carrying value, with the exception of convertible
notes. The carrying value of the convertible notes was determined based on the allocation of
gross proceeds received between the notes and the warrants based on their relative estimated
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fair values. The fair value of derivative instruments is determined by management and
reflects the present value of the obligation and the likelihood of contingent events
occurring.The following table summarizes the financial assets and liabilities for which fair values
differed from the carrying amount and fair values recorded for derivative financial
instruments in accordance with FAS 133:
 April 30, 2007
    
    April 30, 2008Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueInterest rate swap
    
    $
    
    
    
    $
    
    
    
    $
    6.1
    
    
    $
    6.1Net investment in sales-leases
    
    $
    
    
    
    $
    
    
    
    $
    57.6
    
    
    $
    57.6Convertible notes
    
    $
    50.2
    
    
    $
    55.2
    
    
    $
    
    
    
    $
    
 Credit riskThe Companys financial assets that are exposed to credit risk consist primarily of cash and
cash equivalents, restricted cash, accounts receivable, other receivables and sales-lease
receivables. Cash and 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.Interest rate riskThe Company is exposed to interest rate risk on its credit facilities which bear interest
rates based on the prime rate, and is also exposed to risk on its long-term debt which bears
interest based on the London Inter-Bank Offer Rate or LIBOR.In September 2005, the Company entered into a derivative contract to limit the impact of
changes in LIBOR on interest expense related to the convertible notes for the period
commencing November 1, 2005 and ending November 1, 2007. This derivative contract effectively
provided a cap on LIBOR of 5.27% and a floor on LIBOR of 4.00%.On August 27, 2007, in connection with the debt financing described in Note 17, the Company
entered into an interest rate swap agreement which effectively swaps the LIBOR rate for a
fixed rate of 4.85% on a notional amount of $215 million for the period from October 31, 2007
to October 31, 2009. The agreement was designated a cash flow hedge in accordance with SFAS
133 since the relevant terms of the interest rate swap agreements matched the corresponding
terms of the liens. Accordingly, the effective portion of the derivatives gain or loss has
been recorded in other comprehensive income and will subsequently be recognized in earnings
when the hedging relationship is terminated or when the hedge is no longer considered to be
effective.The Company is not exposed to other significant interest rate risk due to the short-term
maturity of its monetary assets and current liabilities.Foreign currency riskThe Company is exposed to currency rate fluctuations related primarily to its future net cash
flows from operations in Canadian dollars, British pounds and Euros. The Company uses
foreign currency forward contracts and foreign currency swaps 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. Related foreign currency gains and losses are recorded in other expense, net, in the
consolidated statements of operations and offset foreign exchange gains or losses from the
revaluation of intercompany balances and other current assets and liabilities denominated in
currencies other than the functional currency of the reporting entity.The foreign exchange contracts outstanding at April 30, 2008 are due to mature in May 2008.
As of April 30, 2008, other income (expense), net included a net unrealized gain of $0.2
(2006  $3.7; 2007  $3.8) for changes in the fair value of foreign exchange contracts. As
at April 30, 2008, the Company had outstanding foreign exchange contracts requiring it (i) to
exchange British Pounds for US dollars with aggregate notional amounts of $16.5 (2007
$12.8), (ii) to exchange US dollars for Canadian dollars with a notional amount of $2.9
(2007  $9.0), and (iii) to exchange Euro dollars for US dollars with aggregate notional
amounts of $8.7 (2007  $9.9).Non-derivative and off-balance sheet instrumentsRequests 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, 2007 and April 30, 2008, 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 $0.6 as of April 30, 2008 (April 30, 2007  $1.2). The
estimated fair value of letters of credit, which is equal to the fees paid to obtain the
obligations, was insignificant as of April 30, 2007 and April 30, 2008.
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30.
    
    SUPPLEMENTARY CASH FLOW INFORMATION
 2006
    
    2007
    
    2008Change in non-cash operating assets and liabilities:Accounts receivable
    
    $
    (12.4
    )
    
    $
    1.6
    
    
    $
    4.4Other current assets
    
    
    5.1
    
    
    
    (5.1
    )
    
    
    10.1Inventories
    
    
    (8.0
    )
    
    
    1.0
    
    
    
    (13.4
    )Accounts payable and accrued liabilities
    
    
    8.7
    
    
    
    12.9
    
    
    
    (55.2
    )Deferred revenue and other liabilities
    
    
    (4.8
    )
    
    
    (5.5
    )
    
    
    7.8Change in pension liability
    
    
    (1.7
    )
    
    
    1.0
    
    
    
    (1.9
    )Due to related parties
    
    
    9.5
    
    
    
    (1.8
    )
    
    
    (8.9
    )Income and other taxes payable/receivable
    
    
    0.5
    
    
    
    (1.5
    )
    
    
    1.1$
    (3.1
    )
    
    $
    2.6
    
    
    $
    (56.0
    )Interest payments
    
    $
    1.8
    
    
    $
    
    
    
    $
    28.0Income tax payments
    
    $
    3.5
    
    
    $
    
    
    
    $
    2.3Disclosure of non-cash activities during the period:Adjustment to minimum pension liability
    
    $
    (15.0
    )
    
    $
    16.6
    
    
    $
    SFAS 158 pension adjustment
    
    $
    
    
    
    $
    25.1
    
    
    $
    27.8Warrants issued in connection with financing
    
    $
    
    
    
    $
    
    
    
    $
    6.0Accretion of interest on redeemable common and preferred shares
    
    $
    6.9
    
    
    $
    7.3
    
    
    $
    26.5Charges to accumulated deficit relating to merger financing transactions
    
    $
    
    
    
    $
    
    
    
    $
    74.6Conversion of Series B Preferred Shares to common shares, net of partial redemption
    
    $
    
    
    
    $
    
    
    
    $
    (38.1
    )Conversion of Series A Preferred Shares to common shares
    
    $
    
    
    
    $
    
    
    
    $
    (5.4
    )Common shares issued in exchange for employee loans
    
    $
    
    
    
    $
    
    
    
    $
    (1.2
    )
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SCHEDULE II
VALUATION OF QUALIFYING ACCOUNTS
AS AT APRIL 30, 2008
(in millions of United States dollars)
 Balance,
    
    AdditionsBeginning
    
    
    
    
    
    Charged to
    
    
    
    
    
    Balance,of
    
    Charged to
    
    other
    
    
    
    
    
    End ofDescription
    
    Period
    
    expenses
    
    Accounts (1)
    
    Deductions
    
    PeriodFiscal 2006Allowance for doubtful accounts
    
    $
    3.0
    
    
    $
    0.6
    
    
    
    
    
    
    $
    (1.1
    )
    
    $
    2.5Fiscal 2007Allowance for doubtful accounts
    
    $
    2.5
    
    
    $
    0.3
    
    
    
    
    
    
    $
    (0.3
    )
    
    $
    2.5Fiscal 2008Allowance for doubtful accounts
    
    $
    2.5
    
    
    $
    3.3
    
    
    $
    8.9
    
    
    $
    (0.7
    )
    
    $
    14.0Allowance for sales-leases and lease
recourse liability
    
    $
    0
    
    
    $
    3.0
    
    
    $
    15.2
    
    
    $
    (3.5
    )
    
    $
    14.7
 
 (1)
    
    Acquisition related adjustment




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##### Table of Contents



SIGNATURE
  Form 20-F
    
   Title:
    Chief Executive Officer