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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 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended April 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date 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)
 Steven Spooner, Chief Financial Officer
350 Legget Drive
Ottawa, Ontario, Canada K2K 2W7
Tel.: 613-592-2122, Fax.: 613-592-4784
 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 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer  þ(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  U.S. GAAP þ
    
    International Financial Reporting Standards as issued by the
    
    Other oInternational Accounting Standards Board o
  þ o
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TABLE OF CONTENTS
 PART IItem 1. Identity of Directors, Senior Management and Advisors

6Item 2. Offer Statistics and Expected Timetable

6Item 3. Key Information

6A. Selected Financial Data

6B. Capitalization and Indebtedness

7C. Reasons for the Offer and Use of Proceeds

7D. Risk Factors

8Item 4. Information on Mitel

16A. History and Development of Mitel

16B. Business Overview

18C. Organizational Structure

27D. Property, Plant and Equipment

27Item 5. Operating and Financial Review and Prospects

28A. Operating Results

28B. Liquidity and Capital Resources

50C. Research and Development, Patents and Licenses, etc.

53D. Trend Information

53E. Off-balance Sheet Arrangements

54F. Tabular Disclosure of Contractual Obligations

55G. Safe Harbor

56Item 6. Directors, Senior Management and Employees

56A. Directors and Senior Management

56B. Compensation

59C. Board Practices

69D. Employees

71E. Share Ownership

71Item 7. Major Shareholders and Related Party Transactions

71A. Major Shareholders

71B. Related Party Transactions

73C. Interests of Experts and Counsel

76Item 8. Financial Information

76A. Consolidated Statements and Other Financial Information

76B. Significant Changes

76Item 9. The Offer and Listing

76A. Offer and Listing Details

76B. Plan of Distribution

77C. Markets

77D. Selling Shareholders

77E. Dilution

77F. Expenses of the Issue

77Item 10. Additional Information

77A. Share Capital

77B. Memorandum and Articles of Incorporation

77C. Material Contracts

82D. Exchange Controls

86E. Taxation

87F. Dividends and Paying Agents

91G. Statement by Experts

91H. Documents on Display

91I. Subsidiary Information

92Item 11. Quantitative and Qualitative Disclosures About Market Risk

92Item 12. Description of Securities Other than Equity Securities

93
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PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies

93Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

93Item 15. Controls and Procedures

93Item 16. [Reserved]

94A. Audit Committee Financial Expert

94B. Code of Ethics

94C. Principal Accountant Fees and Services

94D. Exemptions from the Listing Standards for Audit Committees

95E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

95F. Change in Registrants Certifying Accountant

95G. Corporate Governance

96PART IIIItem 17. Financial Statements

96Item 18. Financial Statements

96Item 19. Exhibits

96EX-2.16: AMENDMENT NO. 4 TO THE FIRST LIEN CREDIT FACILITYEX-2.1: AMENDMENT NO. 5 TO THE FIRST LIEN CREDIT FACILITYEX-2.22: AMENDMENT NO. 4 TO THE SECOND LIEN CREDIT FACILITYEX-2.23: AMENDMENT NO. 5 TO THE SECOND LIEN CREDIT FACILITYEX-8.1: SUBSIDIARIESEX-12.1: CERTIFICATIONEX-12.2: CERTIFICATIONEX-13.1: CERTIFICATIONEX-13.2: CERTIFICATIONEX-99.1: AUDITOR'S CONSENT
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Basis of Presentation
  Forward Looking Information
  
    
    our ability to achieve profitability in the future;
    
    significant economic instability in our key markets, particularly in the U.S. and United
Kingdom;
    
    intense and increasing competition from our competitors, many of which have greater
financial resources;
    
    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 reliance on cash to support our business;
    
    our significant amount of debt contains customary default clauses which may result in
acceleration of the repayment, of some or all of this debt, if breached;
    
    our future success depends on our existing key personnel;
    
    our dependence on outside contract manufacturers to manufacture our products;
    
    our dependence on sole source and limited source suppliers for key components;
    
    one or more of our preferred shareholders, warrant holders, and option holders, could
have a dilutive effect on the value of our Common Shares as well as our ability to complete
any future equity financing should they opt to exercise their conversion rights;
    
    delay in the delivery of, or lack of access to, software or other intellectual property
licensed from our suppliers;
    
    our solutions may contain design defects, errors, failures or bugs;
    
    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;
    
    our reliance on our channel partners for a significant component of our sales;
    
    uncertainties arising from our foreign operations;
    
    our income tax expenses may be adversely affected by transfer pricing rules;
    
    our operations could be adversely affected by business interruptions;
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
    
    our operating results and future prospects could be adversely affected by governmental
regulation; and
    
    our defined benefit pension plan inherently exposes us to risk.
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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 24,
    
    April 30,
    
    April 30,
    
    April 30,
    
    April 30,
    
    April 30,2005
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009(In millions, except per share data)Consolidated Statement of OperationsRevenues
    
    $
    342.2
    
    
    $
    3.2
    
    
    $
    387.1
    
    
    $
    384.9
    
    
    $
    692.0
    
    
    $
    735.1Cost of revenues
    
    
    213.2
    
    
    
    2.4
    
    
    
    225.7
    
    
    
    225.1
    
    
    
    367.9
    
    
    
    390.6Gross margin
    
    
    129.0
    
    
    
    0.8
    
    
    
    161.4
    
    
    
    159.8
    
    
    
    324.1
    
    
    
    344.5Research and development
    
    
    41.4
    
    
    
    0.7
    
    
    
    44.1
    
    
    
    41.7
    
    
    
    62.6
    
    
    
    60.1Selling, general and administrative
    
    
    114.9
    
    
    
    1.8
    
    
    
    120.7
    
    
    
    123.5
    
    
    
    246.6
    
    
    
    248.5Special charges, integration and
merger-related costs(1)
    
    
    10.6
    
    
    
    
    
    
    
    5.7
    
    
    
    9.3
    
    
    
    16.0
    
    
    
    23.3Loss (gain) on disposal of assets
    
    
    3.4
    
    
    
    
    
    
    
    (2.4
    )
    
    
    (1.0
    )
    
    
    1.0
    
    
    
    Litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.3
    
    
    
    
    
    
    
    Initial public offering costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    In-process research and development(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    284.9Operating loss
    
    
    (41.3
    )
    
    
    (1.7
    )
    
    
    (6.7
    )
    
    
    (33.3
    )
    
    
    (7.1
    )
    
    
    (272.3
    )Other (income) expense, net
    
    
    7.5
    
    
    
    (0.1
    )
    
    
    39.8
    
    
    
    (0.1
    )
    
    
    (8.0
    )
    
    
    (59.3
    )Income tax (recovery) expense
    
    
    0.8
    
    
    
    
    
    
    
    (1.9
    )
    
    
    1.8
    
    
    
    (12.3
    )
    
    
    (19.3
    )Net income (loss)
    
    $
    (49.6
    )
    
    $
    (1.6
    )
    
    $
    (44.6
    )
    
    $
    (35.0
    )
    
    $
    13.2
    
    
    $
    (193.7
    )Net loss per common shareBasic and diluted
    
    $
    (0.49
    )
    
    $
    (0.01
    )
    
    $
    (0.44
    )
    
    $
    (0.36
    )
    
    $
    (0.44
    )
    
    $
    (1.09
    )Weighted average number of common
shares outstanding (in millions)
    
    
    113.8
    
    
    
    117.1
    
    
    
    117.2
    
    
    
    117.3
    
    
    
    186.1
    
    
    
    214.7
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BALANCE SHEET DATA
 As at
    
    
    As at
    
    
    As at
    
    
    As at
    
    
    As at
    
    
    As atApril 24,
    
    
    April 30,
    
    
    April 30,
    
    
    April 30,
    
    
    April 30,
    
    
    April 30,2005
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009(In millions)Consolidated Balance Sheet DataCash and cash equivalents
    
    $
    9.7
    
    
    $
    46.6
    
    
    $
    35.7
    
    
    $
    33.5
    
    
    $
    19.5
    
    
    $
    28.4Other current assets
    
    
    117.5
    
    
    
    115.8
    
    
    
    130.8
    
    
    
    136.9
    
    
    
    273.4
    
    
    
    236.0Property and equipment
    
    
    20.9
    
    
    
    20.6
    
    
    
    17.4
    
    
    
    16.5
    
    
    
    27.0
    
    
    
    21.7Other assets
    
    
    8.5
    
    
    
    12.3
    
    
    
    15.9
    
    
    
    15.3
    
    
    
    656.8
    
    
    
    331.0Total assets
    
    $
    156.6
    
    
    $
    195.3
    
    
    $
    199.8
    
    
    $
    202.2
    
    
    $
    976.7
    
    
    $
    617.1Current liabilities
    
    $
    115.8
    
    
    $
    101.9
    
    
    $
    126.0
    
    
    $
    143.8
    
    
    $
    234.0
    
    
    $
    215.1Long-term debt
    
    
    20.2
    
    
    
    66.7
    
    
    
    56.7
    
    
    
    66.8
    
    
    
    420.7
    
    
    
    420.6Derivative instruments(3)
    
    
    38.0
    
    
    
    37.4
    
    
    
    75.9
    
    
    
    67.3
    
    
    
    108.6
    
    
    
    8.4Other long-term liabilities
    
    
    25.4
    
    
    
    25.1
    
    
    
    45.6
    
    
    
    55.4
    
    
    
    246.4
    
    
    
    571.3Redeemable shares(4)
    
    
    57.2
    
    
    
    57.3
    
    
    
    64.2
    
    
    
    71.5
    
    
    
    208.5
    
    
    
    249.5Capital stock
    
    
    187.6
    
    
    
    187.6
    
    
    
    188.8
    
    
    
    189.1
    
    
    
    277.1
    
    
    
    277.8Other capital accounts
    
    
    14.7
    
    
    
    23.3
    
    
    
    (1.9
    )
    
    
    6.5
    
    
    
    (26.4
    )
    
    
    20.0Accumulated deficit
    
    
    (302.3
    )
    
    
    (304.0
    )
    
    
    (355.5
    )
    
    
    (398.2
    )
    
    
    (492.2
    )
    
    
    (725.0
    )Total liabilities and shareholders equity
    
    $
    156.6
    
    
    $
    195.3
    
    
    $
    199.8
    
    
    $
    202.2
    
    
    $
    976.7
    
    
    $
    617.1
 
 (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 and 2009, 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 and 2009, 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
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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 achieve 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.
  We face intense competition from many competitors and we may not be able to compete effectively
against these competitors.
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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.
   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.
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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;
    
    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.
 
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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.
  Because we depend upon a number of 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;
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
    
    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.
  The exercise of conversion rights by one or more of our preferred shareholders, warrant holders,
and option holders, could have a dilutive effect on the 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 August 31, 2009, each Class 1
Preferred Share was convertible into 891.042 Common Shares;
    
    Stock options to acquire 38,394,912 Common Shares; and
    
    Warrants to acquire up to an additional 81,238,013 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.
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Design defects, errors, failures or bugs, which may be difficult to detect, may occur in our
solutions.
  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.
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Our operations in international markets involve inherent risks that we may not be able to control.
  
    
    macroeconomic conditions adversely affecting geographies where we do business;
    
    political or social unrest or economic instability in a specific country or region;
    
    higher costs of doing business in foreign countries;
    
    infringement claims on foreign patents, copyrights, or trademark rights;
    
    difficulties in 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.
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We are exposed to risks inherent in our defined benefit pension plan.
  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
 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.
  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.
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U.S. investors will suffer adverse U.S. federal income tax consequences if we are characterized as
a passive foreign investment company.
  
 Item 4. Information on Mitel
 
 A. History and Development of Mitel
      
    
    $330 million in a senior secured first lien facility, comprised of:
 (i)
    
    a $300 million term loan facility (the First Lien Loan Facility) ; and
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(ii)
    
    a $30 million revolving credit facility, consisting of US and Canadian
sub-facilities, (the Revolving Credit Facility and, together with the First Lien Loan
Facility, the First Lien Credit Agreement); 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;
    
    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 (now known as Power Corporation of
Canada (PCC));
    
    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; and
    
    issued Class 1 Preferred Shares and warrants to purchase Common Shares to PCC and Dr.
Matthews (all of such transactions, collectively, the Re-Organization Transactions).
  (i)
    
    Francisco Partners, 8,076 Class 1 Preferred Shares and warrants to acquire 611,979
Common Shares; and(ii)
    
    Morgan Stanley Principal Investors Inc., 1,593 Class 1 Preferred Shares and warrants to
acquire 120,714 Common Shares of Mitel.
 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);
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
    
    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:
 (i)
    
    Inter-Tel (Delaware), Inc. (a Delaware corporation) to Mitel (Delaware), Inc.;(ii)
    
    Inter-Tel Technologies, Inc. (an Arizona corporation) to Mitel Technologies, Inc.;(iii)
    
    Inter-Tel Leasing, Inc. (an Arizona corporation) to Mitel Leasing, Inc.; and(iv)
    
    Inter-Tel Business Information Systems, Inc. (an Arizona corporation) to Mitel Business
Systems, Inc.
 
    
    Effective July 17, 2009, ownership of Inter-Tel Lake Limited (an Irish corporation which,
prior to this transfer, was an indirect wholly owned subsidiary of ours and, following the
transfer, is a direct wholly owned subsidiary) was transferred to us from Mitel (Delaware),
Inc. (an indirect wholly owned subsidiary of ours)
  
 B. Business Overview
 Industry Background
     18




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##### Table of Contents



Mitels Business
   Product:
 Partnering: ®
 Network Services:
 19




---



##### Table of Contents



®
 Managed Services: ®
 Product Portfolio
      Communication Direction
  20




---



##### Table of Contents



Phones & Peripherals
   21




---



##### Table of Contents



Mobility
       Collaboration
  22




---



##### Table of Contents




    
    Multi-media contact center solutions which also scale down to help desk support with
remote assistance
    
    A Business Dashboard capability to allow supervision based on business communications
metrics
    
    Audio and Web based Conferencing and Collaboration
    
    Unified Communicator Advanced and Express and associated presence and IM proxy
    
    Integration and proxy with Microsoft OCS and IBM Sametime environments
    
    Unified Messaging, Voicemail, and our Auto Attendants with Speech Recognition
    
    High definition video centric tele-collaboration
       23




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##### Table of Contents



Our Industry Awards
  
    
    Mitel Dynamic Extension Frost & Sullivan Best Practices Award (2009)
    
    Mitel Dynamic Extension CATA AlliancePrivate Sector Innovation and/or Leadership in
Advanced Technology (2009)
    
    Mitel Dynamic Extension TMC Labs Innovation Award Unified Communications (2009)
    
    Mitel Telecollaboration Solution TMC Labs Innovation Award Internet Telephony Magazine
(2009)
    
    Mitel Customer Interaction Solutions- IP Contact Center Technology Pioneer Award
Customer Interaction Solutions Magazine (2009)
    
    Mitel Applications Suite Communications Solutions Product of the Year Award (2008)
    
    Mitel Live Business Gateway Unified Communications Excellence Award (2008)
    
    Mitel Customer Interaction Solutions Customer Interactions Solutions Product of the
Year (2008)
    
    Mitel Communications Suite Internet Telephony Product of the Year (2008)
    
    Mitel Communications Suite TMC Labs Innovation Awards  Internet Telephony Magazine
(2008)
    
    Mitel Communications Suite Winner Best of Interop  VoIP and Collaboration (2008)
 Business Segments and Principal Markets
  Fiscal 2007
    
    
    Fiscal 2008
    
    
    Fiscal 2009% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofRevenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues(In millions, except percentages)United States
    
    $
    161.6
    
    
    
    42.0
    %
    
    $
    409.8
    
    
    
    59.2
    %
    
    $
    487.2
    
    
    
    66.3
    %Europe, Middle East & Africa (EMEA)
    
    
    162.4
    
    
    
    42.2
    %
    
    
    216.4
    
    
    
    31.3
    %
    
    
    184.1
    
    
    
    25.0
    %Canada and Caribbean & Latin America
    
    
    49.4
    
    
    
    12.8
    %
    
    
    51.8
    
    
    
    7.5
    %
    
    
    50.4
    
    
    
    6.9
    %Asia Pacific
    
    
    11.5
    
    
    
    3.0
    %
    
    
    14.0
    
    
    
    2.0
    %
    
    
    13.4
    
    
    
    1.8
    %$
    384.9
    
    
    
    100.0
    %
    
    $
    692.0
    
    
    
    100.0
    %
    
    $
    735.1
    
    
    
    100.0
    %
  Sales, Marketing and Distribution
    24




---



##### Table of Contents



Manufacturing and Supply Chain Management
  rd
   rd
 Research and Development
  25




---



##### Table of Contents



Intellectual Property
       26




---



##### 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)
    
    
    482,244
    
    
    February 15, 2011Caldicot, United Kingdom
    
    U.K. and EMEA Regional Headquarters
    
    
    45,000
    
    
    March 9, 2021Chandler, AZ
    
    Office/Sales/Research & Development
    
    
    97,000
    
    
    June 30, 2012Tempe, AZ
    
    Warehouse
    
    
    68,000
    
    
    June 30, 2012Reno, NV
    
    Office
    
    
    74,000
    
    
    November 14, 2018
 27




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##### Table of Contents



(1)
    
    Sublet to: General Dynamics Canada Ltd. until February 15, 2011
(42,930 square feet); InGenius Software Inc. until February 15, 2011
(4,026 square feet); and Wesley Clover International Corporation, a
company controlled by Dr. Matthews, until November 30, 2010 (10,250 square feet).   
    
    throughout the U.S. (including Little Rock (Arkansas), Tucson, Chandler and Tempe
(Arizona), New York City and Albany (New York), Atlanta (Georgia), Chicago and Arlington
Heights (Illinois), Indianapolis and Kansas City (Kansas), Lexington and Louisville
(Kentucky), Boston (Massachusetts), Minnetonka (Minnesota), Costa Mesa, San Francisco,
Glendale, Sacramento, San Diego, San Jose (California), Denver (Colorado), Beltsville,
(Maryland), Washington (DC), Ft. Lauderdale, Miami, Orlando and Tampa (Florida), Richmond
(Virginia), Waukesha (Wisconsin), Murray Hill, (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 Belgium, France,
Germany, the Netherlands, Italy, Spain, Saudi Arabia, Dubai and South Africa);
    
    in Asia-Pacific (including Hong Kong, Shanghai, 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, 2009
  Inter-Tel Acquisition
  28




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##### Table of Contents



1 2
 1 2
 Software Revenue Recognition
 Overview
    Comparability of Periods
    29




---



##### 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
    30




---



##### Table of Contents



31




---



##### 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
   Other Operating Expenses
  Results of Operations
  32




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##### Table of Contents



Year Ended
    
    Six Days Ended
    
    Year EndedApril 24,
    
    April 30,
    
    April 30,
    
    April 30,
    
    April 30,
    
    April 30,2005
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009(In millions, except per share data)Revenues
    
    $
    342.2
    
    
    $
    3.2
    
    
    $
    387.1
    
    
    $
    384.9
    
    
    $
    692.0
    
    
    $
    735.1Cost of revenues
    
    
    213.2
    
    
    
    2.4
    
    
    
    225.7
    
    
    
    225.1
    
    
    
    367.9
    
    
    
    390.6Gross margin
    
    
    129.0
    
    
    
    0.8
    
    
    
    161.4
    
    
    
    159.8
    
    
    
    324.1
    
    
    
    344.5Research and development
    
    
    41.4
    
    
    
    0.7
    
    
    
    44.1
    
    
    
    41.7
    
    
    
    62.6
    
    
    
    60.1Selling, general and administrative
    
    
    114.9
    
    
    
    1.8
    
    
    
    120.7
    
    
    
    123.5
    
    
    
    246.6
    
    
    
    248.5Special charges, integration and
merger-related costs(1)
    
    
    10.6
    
    
    
    
    
    
    
    5.7
    
    
    
    9.3
    
    
    
    16.0
    
    
    
    23.3Loss (gain) on disposal of assets
    
    
    3.4
    
    
    
    
    
    
    
    (2.4
    )
    
    
    (1.0
    )
    
    
    1.0
    
    
    
    Litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.3
    
    
    
    
    
    
    
    Initial public offering costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    In-process research and development(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    284.9Operating loss
    
    
    (41.3
    )
    
    
    (1.7
    )
    
    
    (6.7
    )
    
    
    (33.3
    )
    
    
    (7.1
    )
    
    
    (272.3
    )Other (income) expense, net
    
    
    7.5
    
    
    
    (0.1
    )
    
    
    39.8
    
    
    
    (0.1
    )
    
    
    (8.0
    )
    
    
    (59.3
    )Income tax (recovery) expense
    
    
    0.8
    
    
    
    
    
    
    
    (1.9
    )
    
    
    1.8
    
    
    
    (12.3
    )
    
    
    (19.3
    )Net income (loss)
    
    $
    (49.6
    )
    
    $
    (1.6
    )
    
    $
    (44.6
    )
    
    $
    (35.0
    )
    
    $
    13.2
    
    
    $
    (193.7
    )Net loss per common shareBasic and diluted
    
    $
    (0.49
    )
    
    $
    (0.01
    )
    
    $
    (0.44
    )
    
    $
    (0.36
    )
    
    $
    (0.44
    )
    
    $
    (1.09
    )Weighted average number of common
shares outstanding (in millions)
    
    
    113.8
    
    
    
    117.1
    
    
    
    117.2
    
    
    
    117.3
    
    
    
    186.1
    
    
    
    214.7
 Fiscal 2009 as compared to Fiscal 2008
  Fiscal2008
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    2009 ChangeAmounts
    
    
    Revenues
    
    
    Amounts
    
    
    Revenues
    
    
    Amount
    
    
    %(In millions, except percentages)Revenues
    
    $
    692.0
    
    
    
    100.0
    %
    
    $
    735.1
    
    
    
    100.0
    %
    
    $
    43.1
    
    
    
    6.2
    %Cost of revenues
    
    
    367.9
    
    
    
    53.2
    %
    
    
    390.6
    
    
    
    53.1
    %
    
    
    22.7
    
    
    
    6.2
    %Gross margin
    
    
    324.1
    
    
    
    46.8
    %
    
    
    344.5
    
    
    
    46.9
    %
    
    
    20.4
    
    
    
    6.3
    %Research and development
    
    
    62.6
    
    
    
    9.0
    %
    
    
    60.1
    
    
    
    8.2
    %
    
    
    (2.5
    )
    
    
    (4.0
    )%Selling, general and administrative
    
    
    246.6
    
    
    
    35.5
    %
    
    
    248.5
    
    
    
    33.8
    %
    
    
    1.9
    
    
    
    0.8
    %Special charges, integration and acquisition-related expenses(1)
    
    
    16.0
    
    
    
    2.3
    %
    
    
    23.3
    
    
    
    3.2
    %
    
    
    7.3
    
    
    
    45.6
    %Litigation settlement
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    *Initial public offering costs
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    *Loss (gain) on sale of manufacturing operations
    
    
    1.0
    
    
    
    0.1
    %
    
    
    
    
    
    
    0.0
    %
    
    
    (1.0
    )
    
    
    *In-process research and development
    
    
    5.0
    
    
    
    0.7
    %
    
    
    
    
    
    
    0.0
    %
    
    
    (5.0
    )
    
    
    *Impairment of goodwill
    
    
    
    
    
    
    0.0
    %
    
    
    284.9
    
    
    
    38.8
    %
    
    
    284.9
    
    
    
    *Operating loss
    
    
    (7.1
    )
    
    
    (1.0
    )%
    
    
    (272.3
    )
    
    
    (37.0
    )%
    
    
    (265.2
    )
    
    
    *Interest expense
    
    
    34.7
    
    
    
    5.0
    %
    
    
    40.1
    
    
    
    5.5
    %
    
    
    5.4
    
    
    
    15.56
    %Debt and warrant retirement costs
    
    
    20.8
    
    
    
    3.0
    %
    
    
    
    
    
    
    
    
    
    
    (20.8
    )
    
    
    *Mark-to-market adjustment on derivatives
    
    
    (61.9
    )
    
    
    (8.9
    )%
    
    
    (100.2
    )
    
    
    (13.6
    )%
    
    
    (38.3
    )
    
    
    *Other (income) expense, net
    
    
    (1.6
    )
    
    
    (0.2
    )%
    
    
    0.8
    
    
    
    (0.1
    )%
    
    
    2.4
    
    
    
    *Income tax (recovery) expense
    
    
    (12.3
    )
    
    
    (1.8
    )%
    
    
    (19.3
    )
    
    
    (2.6
    )%
    
    
    (7.0
    )
    
    
    *Net income (loss)
    
    $
    13.2
    
    
    
    1.9
    %
    
    $
    (193.7
    )
    
    
    (26.4
    )%
    
    $
    (206.9
    )
    
    
    *EBITDA (a non-GAAP measure)
    
    $
    64.2
    
    
    
    9.3
    %
    
    $
    85.3
    
    
    
    11.6
    %
    
    $
    21.1
    
    
    
    32.9
    %
 
 *
    
    percentage change for these balances would not be reflective of a trend and therefore have not been shown(1)
    
    Special charges relate to restructuring activities and other loss accruals undertaken to improve our
operational efficiency and realign our business. In fiscal 2008 and 2009, it also includes Inter-Tel
Acquisition related integration costs. Revenues:
 Geographic Segment Revenues:
  33




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##### Table of Contents




    
    the U.S.;
    
    Europe, Middle East & Africa (collectively EMEA);
    
    Canada and Caribbean & Latin America (collectively CALA); and
    
    Asia Pacific.
  Fiscal2008
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    2009 ChangeRevenues
    
    
    Revenues
    
    
    Revenues
    
    
    Revenues
    
    
    Amount
    
    
    %(In millions, except percentages)United States
    
    $
    409.8
    
    
    
    59.2
    %
    
    $
    487.2
    
    
    
    66.3
    %
    
    $
    77.4
    
    
    
    18.9
    %EMEA
    
    
    216.4
    
    
    
    31.3
    
    
    
    184.1
    
    
    
    25.0
    
    
    
    (32.3
    )
    
    
    (14.9
    )%Canada and CALA
    
    
    51.8
    
    
    
    7.5
    
    
    
    50.4
    
    
    
    6.9
    
    
    
    (1.4
    )
    
    
    (2.7
    )%Asia Pacific
    
    
    14.0
    
    
    
    2.0
    
    
    
    13.4
    
    
    
    1.8
    
    
    
    (0.6
    )
    
    
    (4.3
    )%$
    692.0
    
    
    
    100.0
    %
    
    $
    735.1
    
    
    
    100.0
    %
    
    $
    43.1
    
    
    
    6.2
    %
 1 2
    Gross Margin:
  Fiscal2008
    
    2009Amount
    
    Amount(In millions, except percentages)TelecommunicationsRevenues
    
    $
    642.1
    
    
    $
    662.0Gross Margin
    
    
    304.7
    
    
    
    313.1Gross Margin %
    
    
    47.5
    %
    
    
    47.3
    %Network ServicesRevenues
    
    $
    49.9
    
    
    $
    73.1Gross Margin
    
    
    19.4
    
    
    
    31.4Gross Margin %
    
    
    38.9
    %
    
    
    43.0
    %TotalRevenues
    
    $
    692.0
    
    
    $
    735.1Gross Margin
    
    
    324.1
    
    
    
    344.5Gross Margin %
    
    
    46.8
    %
    
    
    46.9
    %
 34




---



##### Table of Contents



Operating Expenses
 Research and Development:
 1 2
  Selling, General and Administrative:
 1 2
 Special Charges, Integration and Inter-Tel Acquisition-Related Expenses:
  Impairment of Goodwill:
  35




---



##### Table of Contents



Operating Loss
   Fiscal2008
    
    2009Amount
    
    Amount
    
    Change(In millions, except percentages)Operating loss
    
    $
    (7.1
    )
    
    $
    (272.3
    )
    
    $
    (265.2
    )In-process research and development
    
    
    5.0
    
    
    
    
    
    
    
    (5.0
    )Impairment of goodwill
    
    
    
    
    
    
    284.9
    
    
    
    284.9Adjusted operating income (loss)
    
    
    (2.1
    )
    
    
    12.6
    
    
    
    14.7
 Non-Operating Expenses
 Interest Expense:
  Mark-to-Market Adjustment on Derivatives:
   36




---



##### Table of Contents



Derivative Liability2007
    
    
    2008
    
    
    2009Series A and
    
    
    Series A andSeries B
    
    
    Series B
    
    
    Class 1
    
    
    
    
    
    
    Class 1Preferred
    
    
    Preferred
    
    
    Preferred
    
    
    
    
    
    
    PreferredShares
    
    
    Shares
    
    
    Shares
    
    
    Total
    
    
    Shares(In millions)Mark to market gain (loss)
    
    $
    8.6
    
    
    $
    (2.7
    )
    
    $
    6.0
    
    
    $
    3.3
    
    
    $
    100.2Reversal of derivative liability
    
    
    
    
    
    
    58.6
    
    
    
    
    
    
    
    58.6
    
    
    
    Mark to market adjustment on derivatives
    
    $
    8.6
    
    
    $
    55.9
    
    
    $
    6.0
    
    
    $
    61.9
    
    
    $
    100.2
 Other (Income) Expense, Net:
  Provision for Income Taxes:
  Net Income (Loss):
  EBITDA
   Fiscal2008
    
    2009Amount
    
    Amount
    
    Change(In millions, except percentages)Operating loss
    
    $
    (7.1
    )
    
    $
    (272.3
    )
    
    $
    (265.2
    )Impairment of goodwill
    
    
    
    
    
    
    284.9
    
    
    
    284.9Amortization and depreciation
    
    
    32.6
    
    
    
    38.0
    
    
    
    5.4Special charges, integration and merger related costs
    
    
    16.0
    
    
    
    23.3
    
    
    
    7.3In-process research and development
    
    
    5.0
    
    
    
    
    
    
    
    (5.0
    )Other non-cash items
    
    
    17.7
    
    
    
    11.4
    
    
    
    (6.3
    )EBITDA
    
    $
    64.2
    
    
    $
    85.3
    
    
    $
    21.1
 37




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##### 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
    )%EBITDA (a non-GAAP measure)
    
    $
    4.7
    
    
    
    1.2
    %
    
    $
    64.2
    
    
    
    9.3
    %
    
    $
    59.5
    
    
    
    1266
    %
 
 *
    
    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.;
    
    EMEA;
    
    Canada and CALA; and
    
    Asia Pacific.
  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
    %
 38




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##### Table of Contents



1 2
 Software Revenue Recognition
 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
    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
    %
   39




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##### Table of Contents




    
    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:
   Selling, General and Administrative:
 1 2
 Special Charges, Integration and Inter-Tel Acquisition-Related Expenses:
    40




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##### Table of Contents



Litigation Settlement:
 SFAS No. 5, Accounting for Contingencies
 Initial Public Offering Costs:
   Loss (Gain) on Sale of Manufacturing Operations:
   In-process Research and Development:
 Mitel 5000 CP
 Interest Expense:
  Debt and Warrant Retirement Costs:
  41




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##### Table of Contents



Mark-to-Market Adjustment on Derivatives:
  1 2
  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:
  42




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##### Table of Contents



Net Income (Loss):
  
    
    Income from operations of $5.3 million, excluding the impact of certain Inter-Tel
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
  EBITDA
   Fiscal2007
    
    2008Amount
    
    Amount
    
    Change(In millions, except percentages)Operating loss
    
    $
    (33.3
    )
    
    $
    (7.1
    )
    
    $
    26.2Amortization and depreciation
    
    
    9.8
    
    
    
    32.6
    
    
    
    22.8Special charges, integration and merger related costs
    
    
    9.3
    
    
    
    16.0
    
    
    
    6.7In-process research and development
    
    
    
    
    
    
    5.0
    
    
    
    5.0Litigation settlement
    
    
    16.3
    
    
    
    
    
    
    
    (16.3
    )Initial public offering costs
    
    
    3.3
    
    
    
    
    
    
    
    (3.3
    )Other non-cash items
    
    
    (0.7
    )
    
    
    17.7
    
    
    
    18.4EBITDA
    
    $
    4.7
    
    
    $
    64.2
    
    
    $
    59.5
 Critical Accounting Policies
  Revenue Recognition:
  43




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##### Table of Contents



Sales-type Leases:
    Allowance for Doubtful Accounts:
  44




---



##### Table of Contents



Inventory Obsolescence:
   Warranty Provision:
  April 24,
    
    
    April 30,
    
    
    April 30,2007
    
    
    2008
    
    
    2009Balance, beginning of period
    
    $
    2.0
    
    
    $
    1.8
    
    
    $
    2.4Warranty costs incurred
    
    
    (1.2
    )
    
    
    (1.7
    )
    
    
    (1.4
    )Warranties issued
    
    
    1.1
    
    
    
    1.6
    
    
    
    1.3Other
    
    
    (0.1
    )
    
    
    0.7
    
    
    
    Balance, end of period
    
    $
    1.8
    
    
    $
    2.4
    
    
    $
    2.3
 Accounting for Business Combinations:
 Business Combinations
  Long-Lived Assets:
   45




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##### Table of Contents



Goodwill:
  Special Charges:
  Lease Termination Obligations:
   Deferred Taxes:
   46




---



##### Table of Contents



Pension Costs:
     April 30,
    
    April 30,2008
    
    2009Discount rate
    
    
    5.80
    %
    
    
    7.30
    %Compensation increase rate
    
    
    3.50
    %
    
    
    3.00
    %Inflation rate
    
    
    3.50
    %
    
    
    3.00
    %Average remaining service life of employees
    
    18 years
    
    
    18 years
 Stock Based Compensation:
  Derivative Instruments:
   Use of Non-GAAP Financial Measures:
  47




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##### Table of Contents



Determination of Fair Market Value of our Common Shares
    Recent Accounting Pronouncements
 FIN 48
 Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109
 SFAS 157
 Fair Value Measurements Application of FASB Statement No. 157 to FASB Statement No. 13 and
Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13 Effective Date of FASB Statement No. 157
 48




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##### Table of Contents



SFAS 159
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 SFAS 160
 Noncontrolling Interests in Consolidated
Financial Statements, an Amendment of ARB No. 51
 SFAS 141(R)
 Business Combinations
 SFAS 161
 Disclosures about Derivative Instruments and Hedging Activities
 FSP SFAS 142-3
 Determination of the Useful Life of Intangible
Assets
 SFAS 162
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present
Fairly in Conformity with GAAP.
 49




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##### Table of Contents



FSP SFAS 132(R)-1
 Employers Disclosures about Postretirement
Benefit Plan Assets
 SFAS 165
 Subsequent Events
 SFAS 168
 The FASB Accounting Standards CodificationTM and the
Hierarchy of Generally Accepted Accounting Principlesa replacement of FASB Statement No. 162
 
 B. Liquidity and Capital Resources
      50




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##### Table of Contents



Cash Flows
 Comparison of fiscal 2009 to fiscal 2008:
  Fiscal2008
    
    
    2009
    
    
    Change(In millions)Net cash provided by (used in)Operating activities
    
    $
    (37.8
    )
    
    $
    12.2
    
    
    $
    50.0Investing activities
    
    
    (544.5
    )
    
    
    (6.4
    )
    
    
    538.1Financing activities
    
    
    568.4
    
    
    
    8.1
    
    
    
    (560.3
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (0.1
    )
    
    
    (5.0
    )
    
    
    (4.9
    )Increase (decrease) in cash and cash equivalents
    
    $
    (14.0
    )
    
    $
    8.9
    
    
    $
    22.9Cash and cash equivalents, end of period
    
    $
    19.5
    
    
    $
    28.4
    
    
    $
    8.9
 Cash Provided by (Used in) Operating Activities:
  Cash Provided by (Used in) Investing Activities:
   
    
    Increase in restricted cash of $1.2 million; and
    
    Net unrealized foreign exchange gains from hedging activities of $1.4.
   
    
    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.
 51




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##### Table of Contents



Cash Provided by (Used in) Financing Activities:
   
    
    $17.7 million increase in bank indebtedness; and
    
    $0.7 million in proceeds from repayment of employee share loans.
  
    
    $6.6 million repayment of long-term liabilities, including capital lease obligations; and
    
    $3.7 million payment of litigation settlement obligations.
  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:
  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
 52




---



##### Table of Contents




    
    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
under the First Lien Term  Facility, and $130 million of which is under an the 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.
  
 C. Research and Development, Patents and Licenses, etc.
  
 D. Trend Information
  53




---



##### Table of Contents



E. Off-Balance Sheet Arrangements
  Letters of Credit:
  Bid and Performance Related Bonds:
  Intellectual Property Indemnification Obligations:
  54




---



##### Table of Contents



Off-balance sheet lease 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)
    
    $
    675.9
    
    
    $
    46.8
    
    
    $
    91.6
    
    
    $
    90.9
    
    
    $
    446.6Capital lease(2)
    
    
    4.9
    
    
    
    1.8
    
    
    
    2.0
    
    
    
    1.0
    
    
    
    0.1Operating lease obligations(3)
    
    
    67.5
    
    
    
    21.0
    
    
    
    30.6
    
    
    
    8.0
    
    
    
    7.9Defined benefit pension plan contributions(4)
    
    
    3.6
    
    
    
    3.6
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    11.1
    
    
    
    3.7
    
    
    
    7.4
    
    
    
    
    
    
    
    Note payable
    
    
    0.4
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    Total contractual cash obligations
    
    $
    763.4
    
    
    $
    77.0
    
    
    $
    131.7
    
    
    $
    100.1
    
    
    $
    454.6
 
 (1)
    
    Represents the principal balance and interest payments for the first and second lien
borrowings. Interest on these liens is 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 0.75%.(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, 2009, the
projected benefit obligation of $96.1 million exceeded the fair value of the plan assets of
$76.0 million, resulting in an unfunded status of $20.1 million as recorded in our
consolidated balance sheet as of April 30, 2009.     55




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##### Table of Contents



G. Safeharbor
  
 Item 6. Directors, Senior Management and Employees
 
 A. Directors and Senior Management
    Name and Place of Residence
    
    Age
    
    Position
    
    Principal OccupationDr. Terence H. Matthews(1)
Ottawa, Ontario, Canada
    
    
    66
    
    
    Chairman of the Board
    
    Chairman of the Board of Mitel Chairman
of the Board of March NetworksDonald W. Smith
Ottawa, Ontario, Canada
    
    
    61
    
    
    Chief Executive Officer and Director
    
    Chief Executive Officer of Mitel (CEO)Peter D. Charbonneau(2)
Ottawa, Ontario, Canada
    
    
    56
    
    
    Lead Director
    
    General Partner of Skypoint Capital
CorporationBenjamin H. Ball
San Francisco, CA, US
    
    
    43
    
    
    Director
    
    Partner of Francisco Partners LLPAndrew J. Kowal (3)
San Francisco, CA, US
    
    
    32
    
    
    Director
    
    Principal of Francisco Partners LLPJean-Paul Cossart 
Versailles, France
    
    
    62
    
    
    Director
    
    Associate Director of Infoteria of FranceGilbert S. Palter
Toronto, Ontario, Canada
    
    
    44
    
    
    Director
    
    Chief Investment Officer and Managing
Partner of EdgeStone Capital Partners,
L.P.Norman Stout 
Phoenix, Arizona, US
    
    
    51
    
    
    Director
    
    Chairman of Hypercom CorporationPaul A.N. Butcher
Ottawa, Ontario, Canada
    
    
    47
    
    
    President and Chief Operating Officer
    
    President and Chief Operating Officer of
Mitel (COO)Steven E. Spooner
Ottawa, Ontario, Canada
    
    
    51
    
    
    Chief Financial Officer
    
    Chief Financial Officer of Mitel (CFO)
 56




---



##### Table of Contents



Name and Place of Residence
    
    Age
    
    Position
    
    Principal OccupationGraham Bevington 
Chepstow, Wales
    
    
    49
    
    
    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.Gwilym Funnell 
Coogee, NSW, Australia
    
    
    37
    
    
    Vice President and Managing
Director, Asia-Pacific Region
    
    Vice President and Managing Director,
Asia-Pacific Region of MitelRonald G. Wellard
Ottawa, Ontario, Canada
    
    
    51
    
    
    Executive Vice-President, Product
Development and Operations
    
    Vice President, Product Development of
Mitel
 
 (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.(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.(3)
    
    Mr. Kowal has served as a director since September, 2008 for MagnaChip
Semiconductor LLC which filed for bankruptcy in June, 2009.  Dr. Terence H. Matthews
 Donald W. Smith
 Peter D. Charbonneau
 57




---



##### Table of Contents



Jean-Paul Cossart
 Gilbert S. Palter
 Benjamin H. Ball
 Andrew J. Kowal
 Norman Stout
 Paul A.N. Butcher
 Steven E. Spooner
 58




---



##### Table of Contents



Graham Bevington
 Richard F. Dell
 Gwilym R. Funnell
 Ronald G. Wellard
 
 B. Compensation Discussion and Analysis
   
    
    Base salary;
    
    Annual or short term incentive plans (STIPS); and
    
    Long-term incentive plans (LTIP).
   
    
    Assisting in identifying members of the Corporations peer group for comparison
purposes;
 59




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##### Table of Contents




    
    Helping to determine compensation levels at the peer group companies;
    
    Providing advice regarding executive compensation best practices and market trends;
    
    Assisting with the redesign of any compensation program, as needed;
    
    Preparing for and attending selected management or committee meetings; and
    
    Providing advice throughout the year.
   Base Salaries.
 Annual or Short Term Incentive Plans (STIPS).
  Long Term Incentive Plans.
  60




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##### Table of Contents



Summary Compensation Table
 Annual Non-equity Incentive
    
    Option-Plan
    
    based
    
    Pension
    
    All Other
    
    TotalName and
    
    
    
    
    
    Salary
    
    Compensation
    
    Awards
    
    Value
    
    Compensation
    
    CompensationPrincipal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)(2)
    
    ($)
    
    ($)
    
    ($)Donald W. Smith
Chief Executive
Officer (1)(3)
    
    
    2009
    
    
    $
    564,498
    
    
    
    
    
    
    $
    63,053
    
    
    $
    5,645
    
    
    
    
    
    
    $
    633,197Steven E. Spooner
Chief Financial
Officer(1)
    
    
    2009
    
    
    $
    331,159
    
    
    
    
    
    
    $
    31,526
    
    
    $
    13,733
    
    
    
    
    
    
    $
    376,419Paul A.N. Butcher 
President and Chief
Operating
Officer(1)(4)
    
    
    2009
    
    
    $
    389,371
    
    
    
    
    
    
    $
    25,224
    
    
    $
    16,800
    
    
    $
    46,821
    
    
    $
    478,217Ronald G. Wellard 
Executive Vice
President Product
Development and
Operations (1)
    
    
    2009
    
    
    $
    248,299
    
    
    
    
    
    
    $
    15,763
    
    
    $
    8,545
    
    
    
    
    
    
    $
    272,607Graham Bevington 
Vice President and
Managing Director
Europe, Middle East
and Africa(1)
    
    
    2009
    
    
    $
    203,837
    
    
    
    
    
    
    $
    15,763
    
    
    $
    19,647
    
    
    
    
    
    
    $
    239,248
 
 (1)
    
    Mr. Smith volunteered to receive reductions in his annual base Salary (10% commencing November
8, 2009; 25% commencing January 5, 2009; and, 30% commencing February 2, 2009). Mr. Spooner and Mr.
Butcher each volunteered to receive reductions in their annual base Salary (10% commencing November
8, 2009; 15% commencing January 17, 2009; and, 20% commencing February 14, 2009). Mr. Wellard and
Mr. Bevington each volunteered to receive reductions in their annual base Salary (10% commencing
November 8, 2009; and 15% commencing January 31, 2009).These reductions are reflected in the above
table. Compensation paid in Canadian dollars, but converted to U.S. dollars at the average of the
noon buying rates per Federal Reserve Board of C$1.00 = $0.84. Mr. Bevingtons compensation is paid
in British pounds, but converted to U.S. dollars at the average of the noon buying rates per
Federal Reserve Board of BP£1.00 = $1.67.(2)
    
    The Corporations shares are not listed on a stock exchange. These options were granted
under our 2006 Equity Incentive Plan. As described below, on July 9, 2009, the Board of Directors
approved repricing of all outstanding stock options for current employees and directors, at US
$0.25 per share, under this plan and the 2001 Stock Option Plan.(3)
    
    Mr. Smith is a director of the company but does not receive compensation in that role.(4)
    
    Other compensation for Mr. Butcher includes the issuance of 93,642 Deferred Stock Units. 61




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##### Table of Contents



Incentive Plan Awards
 Outstanding Option-based Awards
 Market orNumber of
    
    payoutNumber of
    
    
    
    
    
    
    
    
    
    
    
    
    
    shares or
    
    value ofsecurities
    
    
    
    
    
    
    
    
    
    Value of
    
    units of
    
    share-basedunderlying
    
    Option
    
    Option
    
    unexercised in-
    
    shares that
    
    awards thatunexercised
    
    Exercise
    
    Expiration
    
    the-money
    
    have not
    
    have notName
    
    options(1)
    
    Price(2)
    
    Date
    
    options
    
    vested (#)
    
    vested ($)Donald W. Smith
    
    
    2,000,000
    (3)(5)
    
    $
    0.84
    
    
    26-Jul-11
    
    
    
    
    
    
    
    
    
    
    Chief Executive
    
    
    600,000
    (5)
    
    $
    0.99
    
    
    1-Feb-12
    
    
    
    
    
    
    
    
    
    
    Officer
    
    
    1,000,000
    (4)(5)
    
    $
    0.50
    
    
    12-Mar-14
    
    
    
    
    
    
    
    
    
    
    Steven E. Spooner
    
    
    225,000
    (3)(5)
    
    $
    0.84
    
    
    26-Jul-11
    
    
    
    
    
    
    
    
    
    
    Chief Financial
    
    
    75,000
    (3)(5)
    
    $
    0.84
    
    
    9-Sep-11
    
    
    
    
    
    
    
    
    
    
    Officer
    
    
    25,000
    (3)(5)
    
    $
    0.84
    
    
    9-Dec-11
    
    
    
    
    
    
    
    
    
    
    100,000
    (5)
    
    $
    0.84
    
    
    17-Mar-10
    
    
    
    
    
    
    
    
    
    
    575,000
    (5)
    
    $
    0.84
    
    
    27-Jul-12
    
    
    
    
    
    
    
    
    
    
    400,000
    (5)
    
    $
    0.99
    
    
    1-Feb-12
    
    
    
    
    
    
    
    
    
    
    500,000
    (4)(5)
    
    $
    0.50
    
    
    12-Mar-14
    
    
    
    
    
    
    
    
    
    
    Paul A.N. Butcher
    
    
    1,500,000
    (3)(5)
    
    $
    0.84
    
    
    26-Jul-11
    
    
    
    
    
    
    242,062
    
    
    $
    121,031President and Chief
    
    
    400,000
    (5)
    
    $
    0.99
    
    
    1-Feb-12
    
    
    
    
    
    
    38,850
    
    
    $
    19,425Operating Officer
    
    
    400,000
    (4)(5)
    
    $
    0.50
    
    
    12-Mar-14
    
    
    
    
    
    
    59,700
    
    
    $
    29,85049,746
    
    
    $
    24,87344,470
    
    
    $
    22,23593,642
    
    
    $
    46,821Graham Bevington
    
    
    300,000
    (3)
    
    $
    0.84
    
    
    26-Jul-11
    
    
    
    
    
    
    
    
    
    
    Vice President and
    
    
    100,000
    
    
    $
    0.84
    
    
    17-Mar-10
    
    
    
    
    
    
    
    
    
    
    Managing Director
    
    
    4,000
    
    
    $
    1.30
    
    
    8-Jun-11
    
    
    
    
    
    
    
    
    
    
    Europe, Middle
    
    
    80,000
    
    
    $
    0.99
    
    
    1-Feb-12
    
    
    
    
    
    
    
    
    
    
    East and Africa
    
    
    250,000
    (4)
    
    $
    0.50
    
    
    12-Mar-14
    
    
    
    
    
    
    
    
    
    
    Ronald G. Wellard
    
    
    175,000
    (3)
    
    $
    0.84
    
    
    26-Jul-11
    
    
    
    
    
    
    
    
    
    
    Executive Vice
    
    
    100,000
    
    
    $
    0.84
    
    
    17-Mar-10
    
    
    
    
    
    
    
    
    
    
    President Product
    
    
    150,000
    
    
    $
    0.84
    
    
    27-July-10
    
    
    
    
    
    
    
    
    
    
    Development and
    
    
    75,000
    
    
    $
    1.08
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    Operations
    
    
    250,000
    (4)
    
    $
    0.50
    
    
    12-Mar-14
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Each stock award was granted pursuant to our 2001 Stock Option Plan or the 2006 Equity
Incentive Plan. See details of both plans set out below.All of these stock options are unexercised. There is no market for the shares and therefore no
in-the-money value.(2)
    
    The exercise price of some options has been granted in US dollars and some have been granted
in Canadian dollars. Options that have been granted in Canadian dollars are converted to U.S.
dollars at the average of the noon buying rates per Federal Reserve Board of C$1.00 = $0.84.On July 9, 2009, our board of directors approved the repricing of all outstanding stock options
for current employees and directors at US$0.25 per share.(3)
    
    Represents stock options that vest as to 15% three months after the five year anniversary
from the date of grant; 15% for the next four 3 month periods after the 5 year anniversary and
the final 25% 18 months after the five year anniversary. They expire on the seven year
anniversary from the date of grant. In the first quarter of fiscal 2009, the board of
directors approved the extension of the term of certain options for two years for options that
would have expired in 2009. Stock options held by the NEOs and certain other management level
employees who were part of this group agreed to a new vesting period in connection with these
options. There was no change made to the vesting schedule of stock options held by all other
employees who were part of this group.All other outstanding stock option grants that have an expiry date later than 2009 vest as per
the plan they were granted under; that is, 25% on the first, second, third and fourth year
anniversaries from the date of grant and expire five years from the date of grant.(4)
    
    Represents performance-based stock options granted under the 2006 Equity Incentive Plan. The
stock options vest as to 12.5% on each of the first, second, third and fourth anniversaries
from the date of grant. The remaining 50% vest upon the trigger of certain events. The stock
options expire five years from the date of grant.(5)
    
    Certain of these stock options are also subject to accelerated vesting (either fully or
partially) upon involuntary termination or constructive termination following a change of
control of the Corporation as discussed below in Termination and Change of Control Benefits. 62




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2001 Stock Option Plan
      2006 Equity Incentive Plan
       63




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##### Table of Contents



Pension
Plan Benefits
 Defined Benefits Plan Table
 Number
    
    Annual benefits
    
    Accruedof years
    
    payable
    
    obligation
    
    
    
    
    
    Non-
    
    Accruedcredited
    
    At year
    
    
    
    
    
    at start of
    
    Compensatory
    
    compensatory
    
    obligationName
    
    service
    
    end
    
    At age 65
    
    year
    
    change
    
    change
    
    at year endGraham Bevington
    
    9 years 3 months
    
    $
    27,694.16
    
    
    $
    67,356.66
    
    
    $
    329,627.94
    
    
    $
    19,647.55
    
    
    $
    130,568.95
    
    
    $
    218,706.54
 Defined Contribution Plan Table
 Accumulated
    
    
    
    
    
    
    
    
    
    Accumulatedvalue at start
    
    
    
    
    
    Non-
    
    value at yearName
    
    of year
    
    Compensatory
    
    compensatory
    
    endDonald W. Smith
    
    $
    31,598
    
    
    $
    5,645
    
    
    
    
    
    
    $
    29,706Steven E. Spooner
    
    $
    15,573
    
    
    $
    13,733
    
    
    
    
    
    
    $
    25,976Paul A.N. Butcher
    
    $
    147,360
    
    
    $
    16,800
    
    
    
    
    
    
    $
    132,285Ronald G. Wellard
    
    $
    10,153
    
    
    $
    8,545
    
    
    
    
    
    
    $
    17,266
     Deferred Share Unit Plan
  64




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##### Table of Contents



Termination and Change of Control Benefits
  Donald W. Smith.
  Paul A.N. Butcher.
  65




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##### Table of Contents



Steven E. Spooner.
 Graham Bevington
 Ronald G. Wellard
   Termination
    
    Change of ControlAcceleration
    
    
    
    
    
    Accelerationof Equity
    
    
    
    
    
    of EquityName
    
    Salary
    
    Vesting (1)
    
    Salary
    
    Vesting (1)Donald W. Smith
    
    $
    564,498
    (2)(3)
    
    $
    0
    
    
    
    
    
    
    $
    0
    (4)Steven E. Spooner
    
    $
    331,159
    (5)(3)
    
    $
    0
    
    
    
    
    
    
    $
    0
    (7)Paul A.N. Butcher
    
    $
    389,371
    (6)(3)
    
    $
    0
    
    
    
    
    
    
    $
    0
    (7)Graham Bevington
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ronald G. Wellard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Based on the termination or change of control taking place as of April 30, 2009, and the
purchase price of US$0.50 per Common Share, all stock options are under water and therefore
have no value.(2)
    
    Reflects continued base salary for 24 months following termination. Mr. Smith would also be
entitled to a bonus.(3)
    
    Mr. Smith volunteered to receive reductions in his annual base Salary (10% commencing
November 8, 2009; 25% commencing January 5, 2009; and, 30% commencing February 2, 2009). Mr.
Spooner and Mr. Butcher each volunteered to receive reductions in their annual base Salary
(10% commencing November 8, 2009; 15% commencing January 17, 2009; and, 20% commencing
February 14, 2009). These reductions are reflected in the above table. Compensation paid in
Canadian dollars, but converted to U.S. dollars at the average of the noon buying rates per
Federal Reserve Board of C$1.00 = $0.84.(4)
    
    Reflects acceleration of vesting as to 100% of the shares. Excludes value of options with
exercise prices exceeding the determined fair market value at April 30, 2009.(5)
    
    Reflects continued base salary for 18 months following termination plus 50% bonus. 66




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##### Table of Contents



(6)
    
    Reflects continued base salary for 18 months following termination plus bonus.(7)
    
    Reflects acceleration of vesting as to 25% of the shares. Excludes value of options with
exercise prices exceeding the determined fair market value at April 30, 2009. Director Compensation
  Annual service on the board of directors (other than Chair)
    
    $25,000 CAD (1)Annual service as Chair of the board of directors
    
    $100,000 CADAnnual service as member of the audit committee (other
than Chair)
    
    $10,000 CADAnnual service as Chair of the audit committee
    
    $15,000 CADAnnual service as a member of other standing committees
    
    $7,500 CADMeeting fees (varies depending on whether in person, by
phone and by Committee)
    
    $500  $2,000 CAD
 
 (1)
    
    Donald Smith is a director of the company but does not receive compensation for that role.
See Summary Compensation Table under Item 6. B. Compensation Discussion and Analysis for Mr.
Smiths compensation.    Share-
    
    
    
    
    
    Non-equitybased
    
    Option-
    
    incentive plan
    
    
    
    
    
    All otherFees
    
    awards
    
    based
    
    compensation
    
    Pension
    
    compensationName
    
    earned
    
    ($)
    
    awards
    
    ($)
    
    value ($)
    
    ($)
    
    Total ($)Benjamin H. Ball
    
    
    
    
    
    
    
    
    
    $
    41,160
    (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    41,160Peter D. Charbonneau
    
    $
    16,800
    
    
    
    
    
    
    $
    44,520
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    61,320Jean-Paul Cossart
    
    $
    16,800
    
    
    
    
    
    
    $
    39,060
    (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    55,860Thomas L. Ludwig
    
    
    
    
    
    
    
    
    
    $
    48,300
    (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    48,300Terence H. Matthews
    
    
    
    
    
    
    
    
    
    $
    94,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    94,500Gilbert S. Palter
    
    
    
    
    
    
    
    
    
    $
    27,720
    (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    27,720J. Norman Stout
    
    
    
    
    
    
    
    
    
    $
    31,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    31,500
 
 (1)
    
    Stock options granted in connection with Mr. Ball and Mr. Ludwig acting as directors of Mitel
were granted to Francisco Partners Management, LLC of which they are Principals.(2)
    
    Stock options granted in connection with Mr. Cossart acting as a director of Mitel were
granted to Scivias s.a.r.l., a company in which Mr. Cossart is the sole shareholder.(3)
    
    Stock options granted in connection with Mr. Palter acting as a director of Mitel were
granted to EdgeStone Capital Equity Fund II Nominee, Inc of which he is a Principal. 67




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##### Table of Contents



Incentive Plan Awards
 Outstanding Option-based Awards
 Market orpayoutvalue ofNumber of
    
    share-Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    shares or
    
    basedsecurities
    
    
    
    
    
    
    
    
    
    Value of
    
    units of
    
    awardsunderlying
    
    Option
    
    Option
    
    unexercised in-
    
    shares that
    
    that haveunexercised
    
    Exercise
    
    Expiration
    
    the-money
    
    have not
    
    not vestedName
    
    options
    
    Price
    
    Date
    
    options
    
    vested (#)
    
    ($)Terence H. Matthews
    
    
    65,934
    (3)
    
    $
    0.84
    
    
    15-Jul-11
    
    
    
    
    
    
    
    
    
    
    Chairman
    
    
    78,947
    
    
    $
    0.84
    
    
    27-Jul-10
    
    
    
    
    
    
    
    
    
    
    5,932
    
    
    $
    1.30
    
    
    8-Jun-11
    
    
    
    
    
    
    
    
    
    
    95,996
    
    
    $
    1.05
    
    
    28-Mar-12
    
    
    
    
    
    
    
    
    
    
    20,679
    
    
    $
    1.05
    
    
    26-Jul-12
    
    
    
    
    
    
    
    
    
    
    120,482
    
    
    $
    1.32
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    148,701
    
    
    $
    1.32
    
    
    8-Oct-13
    
    
    
    
    
    
    
    
    
    
    Benjamin H. Ball
    
    
    39,157
    
    
    $
    1.32
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    Director (6)
    
    
    53,247
    
    
    $
    1.32
    
    
    8-Oct-13
    
    
    
    
    
    
    
    
    
    
    Peter D. Charbonneau
    
    
    52,198
    (3)
    
    $
    0.84
    
    
    15-Jul-11
    
    
    
    
    
    
    
    
    
    
    Vice Chairman
    
    
    30,263
    
    
    $
    0.84
    
    
    9-Jun-10
    
    
    
    
    
    
    
    
    
    
    36,000
    
    
    $
    0.84
    
    
    9-Jun-10
    
    
    
    
    
    
    
    
    
    
    36,184
    
    
    $
    0.84
    
    
    27-Jul-10
    
    
    
    
    
    
    
    
    
    
    22,034
    
    
    $
    1.30
    
    
    8-Jun-11
    
    
    
    
    
    
    
    
    
    
    56,173
    
    
    $
    1.05
    
    
    28-Mar-12
    
    
    
    
    
    
    
    
    
    
    50,926
    
    
    $
    1.05
    
    
    26-Jul-12
    
    
    
    
    
    
    
    
    
    
    33,132
    
    
    $
    1.32
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    71,104
    
    
    $
    1.32
    
    
    8-Oct-13
    
    
    
    
    
    
    
    
    
    
    Jean-Paul Cossart
    
    
    20,000
    (3)(5)
    
    $
    0.84
    
    
    9-Sep-11
    
    
    
    
    
    
    
    
    
    
    Director (4)
    
    
    20,000
    (5)
    
    $
    0.84
    
    
    8-Dec-10
    
    
    
    
    
    
    
    
    
    
    20,000
    (5)
    
    $
    1.05
    
    
    1-Feb-07
    
    
    
    
    
    
    
    
    
    
    15,060
    
    
    $
    1.32
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    42,857
    
    
    $
    1.32
    
    
    8-Oct-13
    
    
    
    
    
    
    
    
    
    
    Thomas Ludwig
    
    
    42,169
    
    
    $
    1.32
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    Director (6)
    
    
    62,987
    
    
    $
    1.32
    
    
    8-Oct-13
    
    
    
    
    
    
    
    
    
    
    Gilbert S. Palter
    
    
    18,132
    (3)
    
    $
    0.84
    
    
    15-Jul-11
    
    
    
    
    
    
    
    
    
    
    Director (7)
    
    
    13,159
    
    
    $
    0.84
    
    
    9-Jun-10
    
    
    
    
    
    
    
    
    
    
    13,158
    
    
    $
    0.84
    
    
    27-Jul-10
    
    
    
    
    
    
    
    
    
    
    5,085
    
    
    $
    1.30
    
    
    8-Jun-11
    
    
    
    
    
    
    
    
    
    
    29,624
    
    
    $
    1.05
    
    
    28-Mar-12
    
    
    
    
    
    
    
    
    
    
    14,506
    
    
    $
    1.05
    
    
    26-Jul-12
    
    
    
    
    
    
    
    
    
    
    30,120
    
    
    $
    1.32
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    43,447
    
    
    $
    1.32
    
    
    8-Oct-13
    
    
    
    
    
    
    
    
    
    
    J. Norman Stout
    
    
    500,000
    (8)
    
    $
    1.32
    
    
    23-Oct-12
    
    
    
    
    
    
    
    
    
    
    Director
    
    
    42,858
    
    
    $
    1.32
    
    
    8-Oct-13
    
    
    
    
    
    
    
    
    
    
    
 68




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##### Table of Contents



(1)
    
    Each stock award was granted pursuant to our 2001 Stock Option Plan or the 2006 Equity
Incentive Plan. See details of both plans set out previously in this section.
All of these stock options are unexercised as there is no market for the shares and therefore no
in-the-money value. (2)
    
    The exercise price of some options has been granted in US dollars and some have been granted
in Canadian dollars. Options that have been granted in Canadian dollars are converted to U.S.
dollars at the average of the noon buying rates per Federal Reserve Board of C$1.00 = $0.84.On July 9, 2009 the board of Directors approved repricing all outstanding stock options for
current employees and directors at US$0.25 per share.(3)
    
    Stock option grants vest as per the plan they were granted under; that is, 25% on the first,
second, third and fourth year anniversaries from the date of grant and expire five years from
the date of grant unless otherwise determined by our board of directors. On October 8, 2008,
our board of directors approved the extension of the term of certain stock options for
employees and directors from 5 years to 7 years from the date of grant.(4)
    
    Stock options granted in connection with Mr. Cossart acting as a director of Mitel were
granted to Scivias s.a.r.l., a company in which Mr. Cossart is the sole shareholder.(5)
    
    Stock options were granted in connection with consulting fees prior to Mr. Cossarts
appointment as a director.(6)
    
    Stock options granted in connection with Mr. Ball and Mr. Ludwig as directors of Mitel were
granted to Francisco Partners Management, LLC of which they are Principals.(7)
    
    Stock options granted in connection with Mr. Palter acting as a director of Mitel were
granted to EdgeStone Capital Equity Fund II Nominee, Inc of which he is a Principal.(8)
    
    Stock option was granted to Mr. Stout as an employee prior to his appointment as a director.  Indebtedness of Directors, Officers and Members of Senior Management
  
 C. Board Practices
   69




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##### Table of Contents



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.
   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;
 70




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##### Table of Contents




    
    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 U.S. Securities and Exchange Commission 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
   
 E. Share Ownership
     71




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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
    
    PowerDr. Matthews GroupDr. Terence H. Matthews
    
    
    13,500
    
    
    
    1,454,013
    
    
    
    13,642,893
    
    
    
    4.3
    %
    
    
    0.7
    %
    
    
    2.7
    %Celtic Tech Jet Limited
    
    
    0
    
    
    
    4,555,169
    
    
    
    4,555,169
    
    
    
    0.0
    %
    
    
    2.1
    %
    
    
    0.9
    %Wesley Clover Corporation
    
    
    0
    
    
    
    158,790,234
    
    
    
    158,790,234
    
    
    
    0.0
    %
    
    
    74.0
    %
    
    
    32.0
    %13,500
    
    
    
    164,799,416
    
    
    
    176,988,296
    (3)
    
    
    4.3
    %
    
    
    76.8
    %
    
    
    35.6
    %Francisco Partners GroupFrancisco PartnersManagement,
LLC
    
    
    0
    
    
    
    93,727
    
    
    
    93,727
    
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Arsenal HoldCo I S.a.r.l.
    
    
    164,463
    
    
    
    12,462,570
    
    
    
    160,952,923
    
    
    
    51.9
    %
    
    
    5.5
    %
    
    
    31.5
    %Arsenal HoldCo II S.a.r.l.
    
    
    63,359
    
    
    
    4,801,209
    
    
    
    62,006,783
    
    
    
    20.0
    %
    
    
    2.2
    %
    
    
    12.3
    %227,822
    
    
    
    17,357,506
    
    
    
    223,053,433
    (4)
    
    
    71.9
    %
    
    
    7.7
    %
    
    
    43.8
    %Morgan Stanley Principal
Investments, Inc.
    
    
    44,933
    
    
    
    3,404,910
    
    
    
    43,974,017
    (5)
    
    
    14.2
    %
    
    
    1.6
    %
    
    
    8.8
    %Her Majesty the Queen in Right
of Canada
    
    
    0
    
    
    
    37,174,887
    
    
    
    37,174,887
    
    
    
    0.0
    %
    
    
    14.8
    %
    
    
    7.0
    %EdgeStone Capital Equity Fund
II Nominee, Inc.
    
    
    19,000
    
    
    
    10,686,689
    
    
    
    27,841,409
    (6)
    
    
    6.0
    %
    
    
    4.9
    %
    
    
    5.5
    %Power Corporation of Canada
    
    
    11,500
    
    
    
    14,327,483
    
    
    
    24,710,603
    (7)
    
    
    3.6
    %
    
    
    6.6
    %
    
    
    5.0
    %
 
 (1)
    
    Beneficial ownership is determined in accordance with U.S. Securities
and Exchange Commission 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 August 31, 2009 (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 902.880 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 12,188,880, warrants to acquire 1,022,996 Common Shares that
are currently exercisable, stock options to acquire 431,017 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 205,695,927, warrants to acquire 17,263,779 Common Shares
that are currently exercisable and stock options to acquire 93,727
Common Shares that are currently exercisable.(5)
    
    Includes the common share equivalent to 44,933 Class 1 Preferred
Shares of 40,569,107 and warrants to acquire 3,404,910 Common Shares
that are currently exercisable.(6)
    
    Includes the common share equivalent to 19,000 Class 1 Preferred
Shares of 17,154,720 and 5,359,893 Common Shares and stock options to
acquire 326,796 Common Shares that are currently exercisable and
warrants to acquire 5,000,000 Common Shares that are currently
exercisable. 72




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##### Table of Contents



(7)
    
    Includes the common share equivalent to 11,500 Class 1 Preferred
Shares of 10,383,120 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
    73




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##### Table of Contents



Kanata Research Park 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
  
    
    CounterPath may be deemed to be a related party because Dr. Matthews indirectly owns
approximately 26% of Counterpath, which acquired NewHeights (a corporation formerly
controlled by Owen Matthews, who is related to Dr. Matthews) on August 2, 2007. During
fiscal 2009, we paid CounterPath $2.2 million in software royalties relating to a customized
desktop communication management software application which we integrate and distribute as
Your Assistant(2007  $2.2 million; 2008  $2.2 million). We also received $50,000 of
rental and other income from CounterPath during fiscal 2009 (2007  $0.1 million; 2008 
$0.1 million). On January 31, 2008, we entered into an amendment to our existing agreement
with CounterPath (the CounterPath 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 CounterPath 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 CounterPath OEM Agreement.
 74




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##### Table of Contents



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 CounterPath. 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.
    
    NCI may be deemed to be a related party because Dr. Matthews directly or indirectly owns
approximately 28% of that company. On April 25, 2006, we entered into an agreement with NCI,
a company in which the Dr. Matthews has an ownership interest, to purchase prepaid software
licenses and convertible debentures for a combined total of $1.2 million. 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 million. 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, we purchased $0.3 million of prepaid software
licenses and $0.9 million of convertible debentures during fiscal 2007. The $0.3 million of
prepaid licenses is included in other current assets at April 30, 2007. Since NCI had
completed a qualifying financing of $10.0 million in November 2006, our entire $0.9 million
balance of debentures and $0.1 million 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, 2009, we had a
combined ownership of 2.76% in NCI but did not exert significant influence over NCI.
Accordingly, the $1.0 million investment recorded on the balance sheet at April 30, 2008 and
April 30, 2009 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;
    
    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.
  75




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##### Table of Contents



Registration Rights
  
 C. Interests of Experts and Counsel
  
 Item 8. Financial Information
 
 A. Consolidated Statements and Other Financial Information
  Legal Proceedings
  Dividend Policy
  
 B. Significant Changes
   
 Item 9. The Offer and Listing
 
 A. Offer and Listing Details
 Securities Act of 1933
 76




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##### Table of Contents



B. Plan of distribution
  
 C. Markets
  
 D. Selling shareholders
  
 E. Dilution
  
 F. Expenses of the issue
  
 Item 10. Additional Information
 
 A. Share Capital
  
 B. Memorandum and Articles of Incorporation
    
    
    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.
  77




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##### Table of Contents



Meetings of Shareholders:
      Directors:
   78




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##### Table of Contents



Share Capital:
      Class 1 Preferred Shares:
 Issue Price  $1,000.00 per Class 1 Preferred Share.
 Conversion, Liquidation and Redemption Value 
 79




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##### Table of Contents



Conversion 
 Ranking 
 Dividends 
 Liquidation Preference 
 Voluntary Redemption after Five Years 
 Mandatory Redemption after Seven Years 
 Mandatory Conversion 
 Anti-dilution Provision 
 Voting Rights 
 Protective Provisions 
 80




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##### Table of Contents



Class 2 Preferred Shares:
 Directors Authority to Issue One or More Series 
 Terms of Each Series 
 Ranking of the Class 2 Preferred Shares 
 Priority 
 (e) Liquidation Preference
   Other Preferences 
 Conversion Right 
 Redemption Right 
 Dividends 
 81




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##### Table of Contents



Voting Rights 
 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 PCC Series B Preferred Shares and repurchase
one-half of the Common Shares issued to PCC upon such conversion, as described above, we
entered into a Common Share Repurchase, Voting and Conversion Agreement with PCC (the PCC
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).
  82




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##### Table of Contents



2007 Shareholders Agreement:
   Registration Rights Agreement:
  Convertible Notes:
 Senior Secured Convertible Note Transaction:
  Debt Financing:
  First Lien Credit Agreement
 Second Lien Credit Agreement :
 83




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##### Table of Contents



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:
        84




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##### Table of Contents



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:
     Agreement between Mr. Peter Charbonneau and Dr. Matthews:
  85




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##### Table of Contents



D. Exchange Controls
      
    
    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;
    
    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.
  86




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##### Table of Contents



E. Taxation
 U.S. FEDERAL INCOME TAX CONSIDERATIONS
    Scope of this Disclosure
 Authorities and Assumptions
   U.S. Holders
  Non-U.S. Holders
  87




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##### Table of Contents



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
    88




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##### Table of Contents



Distribution of Foreign Currency
  Disposition of Common Shares
   Foreign Tax Credit
   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.
 89




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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
  CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS
 Income Tax Act
 90




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##### Table of Contents



Taxation of Dividends
  Disposition of Common Shares
   
 F. Dividends and Paying Agents
  
 G. Statement by Experts
  
 H. Documents on Display
 Securities Exchange Act of 1934
  91




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##### Table of Contents



I. Subsidiary Information
  
 Item 11. Quantitative and Qualitative Disclosures about Market Risk
  Equity Price Risk:
   Foreign Currency Risk:
   92




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##### Table of Contents



Interest Rate Risk:
       
 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
  93




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##### Table of Contents



Managements Annual Report on Internal Control Over Financial Reporting
     Changes in Internal Control over Financial Reporting
  
 Item 16. [Reserved]
 
 A. Audit Committee Financial Expert
  
 B. Code of Ethics
   94




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##### Table of Contents



C. Principal Accountant and Fees
  Fiscal 2008
    
    
    Fiscal 2009Audit Fees
    
    $
    759,682
    
    
    $
    825,000Audit-Related Fees
    
    
    65,837
    
    
    
    37,985Tax Fees
    
    
    146,508
    
    
    
    71,065Other Fees
    
    
    838,401
    
    
    
    161,414Total
    
    $
    1,810,681
    
    
    $
    1,095,464
    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, 2008
    
    
    13,713
    
    
    
    C$1.00
    
    
    
    
    
    
    
    April 30, 2009
    
    
    41,300
    
    
    
    C$1.00
    
    
    
    
    
    
    
    TOTAL
    
    
    55,013
 
 F. Change in Registrants Certifying Accountant
  95




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##### Table of Contents



G. Corporate Governance
  
 PART III
 
 Item 17. Financial Statements
  
 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)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, PCC 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)+
 96




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##### Table of Contents



2.13
    
    Amendment No. 1, dated September 26, 2007, to the First Lien Credit Agreement described above in Exhibit 2.12
(18)2.14
    
    Amendment No. 2, dated December 12, 2007, to the First Lien Credit Agreement described above in Exhibit 2.12
(18)2.15
    
    Amendment No. 3, dated July 31, 2008, to the First Lien Credit Agreement described above in Exhibit 2.12 (18)2.16
    
    Amendment No. 4, dated May 15, 2009, to the First Lien Credit Agreement described above in Exhibit 2.122.17
    
    Amendment No. 5, dated September 14, 2009, to the First Lien Credit Agreement described above in Exhibit 2.122.18
    
    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)+2.19
    
    Amendment No. 1, dated September 26, 2007, to the Second Lien Credit Agreement described above in Exhibit
2.18 (18)2.20
    
    Amendment No. 2, dated December 12, 2007, to the Second Lien Credit Agreement described above in Exhibit 2.18
(18)2.21
    
    Amendment No. 3, dated July 31, 2008, to the Second Lien Credit Agreement described above in Exhibit 2.18 (18)2.22
    
    Amendment No. 4, dated May 15, 2009, to the Second Lien Credit Agreement described above in Exhibit 2.182.23
    
    Amendment No. 5, dated July 24, 2009, to the Second Lien Credit Agreement described above in Exhibit 2.182.24
    
    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)+2.25
    
    Form of Warrant granted to Arsenal Holdco I, S.a.r.l., Arsenal Holdco II, S.a.r.l., Morgan Stanley Principal
Investors Inc., PCC and Dr. Matthews(11)2.26
    
    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
(18)2.27
    
    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 2.26 above)2.28
    
    Shareholder Agreement among Mitel, PCC, 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)2.29
    
    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)4.
    
    Material contracts:4.1
    
    Interest Rate Swap Agreement between Mitel and Morgan Stanley Capital Services Inc. dated August 27, 2007 (18)4.2
    
    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, PCC, 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 PCC 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)
 97




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##### Table of Contents



4.12
    
    Termination Agreement between Mitel, Zarlink, PCC 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 2.24
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., PCC and Dr. Matthews (see Exhibit 2.25 above)4.15
    
    Shareholder Agreement among Mitel, PCC, 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 2.28 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 2.29 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 2.26 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 2.27 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), July 31, 2008 (see Exhibit 2.15 above), May 15, 2009 (see Exhibit
2.16 above) and September 14, 2009 (see Exhibit 2.17 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 2.18 above)+, as amended on September 26, 2007 (see Exhibit 2.19 above),
December 12, 2007 (see Exhibit 2.20 above), July 31, 2008 (see Exhibit 2.21 above), May 15, 2009 (see Exhibit
2.22 above) and July 24, 2009 (see Exhibit 2.23 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)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, 2006
(18)4.34
    
    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)
 98




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##### Table of Contents



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.(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. 99




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##### Table of Contents



(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.(18)
    
    Filed on October 31, 2008 as an exhibit to the Annual Report on Form
20-F of Mitel for the year ended April 30, 2008 and incorporated
therein by reference.+
    
    Portions of this document have been granted Confidential Treatment
by the Secretary of the Securities and Exchange Commission. 100




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##### Table of Contents



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

103Consolidated Balance Sheets

104Consolidated Statements of Operations

105Consolidated Statements of Shareholders Equity

106Consolidated Statement of Cash Flows


107Notes to Consolidated Financial Statements

108Financial 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

143
 101




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##### Table of Contents



(PHOTO)
    
    MITEL NETWORKS
CORPORATION
 CONSOLIDATED FINANCIAL STATEMENTS
(in accordance with US GAAP)
 FOR THE FISCAL YEARS ENDED April 30, 2007, April 30, 2008 and April 30, 2009
  102




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
     Fair Value
Measurement Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans  an Amendment of FASB no. 87, 88, 106 and
132(R)
  
 
 103




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##### 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, 2008
    
    April 30, 2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    19.5
    
    
    $
    28.4Restricted cash
    
    
    2.3
    
    
    
    3.5Accounts receivable (net of allowance for doubtful accounts of $14.0 and $13.2, respectively)
    
    
    138.3
    
    
    
    112.4Sales-type lease receivables (net of allowance for doubtful accounts of $1.5 and $1.5, respectively)
    
    
    23.4
    
    
    
    30.2Inventories (net)
    
    
    49.1
    
    
    
    33.1Income tax receivable
    
    
    0.6
    
    
    
    1.3Deferred tax asset (net)
    
    
    2.8
    
    
    
    7.8Other current assets
    
    
    56.9
    
    
    
    47.7292.9
    
    
    
    264.4Non-current portion of sales-type lease receivables (net)
    
    
    34.2
    
    
    
    29.2Investments and other assets
    
    
    32.9
    
    
    
    22.4Deferred tax asset
    
    
    0.8
    
    
    
    Property and equipment (net)
    
    
    27.0
    
    
    
    21.7Goodwill
    
    
    420.9
    
    
    
    134.5Intangible assets (net)
    
    
    168.0
    
    
    
    144.9$
    976.7
    
    
    $
    617.1LIABILITIES, REDEEMABLE SHARES AND
SHAREHOLDERS DEFICIENCYCurrent liabilities:Bank indebtedness
    
    $
    12.5
    
    
    $
    30.2Accounts payable and accrued liabilities
    
    
    153.9
    
    
    
    126.1Deferred tax liability
    
    
    0.8
    
    
    
    0.3Deferred revenue
    
    
    50.6
    
    
    
    48.3Due to related parties
    
    
    13.8
    
    
    
    6.2Current portion of long-term debt
    
    
    2.4
    
    
    
    4.0234.0
    
    
    
    215.1Long-term debt
    
    
    420.7
    
    
    
    420.6Lease recourse liability
    
    
    13.2
    
    
    
    9.9Long-term income taxes payable
    
    
    3.0
    
    
    
    2.5Deferred revenue and other liabilities
    
    
    45.7
    
    
    
    36.2Litigation settlement obligation
    
    
    8.4
    
    
    
    5.9Derivative liability instruments
    
    
    108.6
    
    
    
    8.4Deferred tax liability
    
    
    99.7
    
    
    
    76.1Pension liability
    
    
    76.4
    
    
    
    20.11,009.7
    
    
    
    794.8Commitments, guarantees and contingencies (notes 18 and 19)Convertible, redeemable preferred shares, without par value  unlimited shares authorized, issued and
outstanding: Class 1: 316,755 and 316,755 shares at April 30, 2008 and April 30, 2009
    
    
    208.5
    
    
    
    249.5Shareholders deficiency:Common shares, without par value  unlimited shares authorized: 214,736,735, and 214,702,440 issued
and outstanding at April 30, 2008 and April 30, 2009
    
    
    277.1
    
    
    
    277.8Warrants
    
    
    56.7
    
    
    
    56.6Additional paid-in capital
    
    
    2.0
    
    
    
    4.4Accumulated deficit
    
    
    (492.2
    )
    
    
    (725.0
    )Accumulated other comprehensive loss
    
    
    (85.0
    )
    
    
    (41.0
    )(241.5
    )
    
    
    (427.2
    )$
    976.7
    
    
    $
    617.1
 APPROVED BY THE BOARD(SIGNATURE)
    
    (SIGNATURE)Director
    
    Director
  104




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##### 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, 2007
    
    April 30, 2008
    
    April 30, 2009Revenues:Telecommunications
    
    $
    384.9
    
    
    $
    642.1
    
    
    $
    662.0Network services
    
    
    
    
    
    
    49.9
    
    
    
    73.1384.9
    
    
    
    692.0
    
    
    
    735.1Cost of revenues:Telecommunications
    
    
    225.1
    
    
    
    337.4
    
    
    
    348.9Network services
    
    
    
    
    
    
    30.5
    
    
    
    41.7225.1
    
    
    
    367.9
    
    
    
    390.6Gross margin
    
    
    159.8
    
    
    
    324.1
    
    
    
    344.5Expenses:Selling, general and administrative
    
    
    123.5
    
    
    
    246.6
    
    
    
    248.5Research and development
    
    
    41.7
    
    
    
    62.6
    
    
    
    60.1Special charges, integration and merger-related costs
    
    
    9.3
    
    
    
    16.0
    
    
    
    23.3Litigation settlement
    
    
    16.3
    
    
    
    
    
    
    
    Initial public offering costs
    
    
    3.3
    
    
    
    
    
    
    
    Loss (gain) on sale of manufacturing operations
    
    
    (1.0
    )
    
    
    1.0
    
    
    
    In-process research and development
    
    
    
    
    
    
    5.0
    
    
    
    Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    284.9193.1
    
    
    
    331.2
    
    
    
    616.8Operating loss
    
    
    (33.3
    )
    
    
    (7.1
    )
    
    
    (272.3
    )Interest expense
    
    
    (9.1
    )
    
    
    (34.7
    )
    
    
    (40.1
    )Debt and warrant retirement costs
    
    
    
    
    
    
    (20.8
    )
    
    
    Fair value adjustment on derivative instruments
    
    
    8.6
    
    
    
    61.9
    
    
    
    100.2Other income (expense)
    
    
    0.6
    
    
    
    1.6
    
    
    
    (0.8
    )Income (loss) before income taxes
    
    
    (33.2
    )
    
    
    0.9
    
    
    
    (213.0
    )Current income tax recovery
    
    
    (0.2
    )
    
    
    (0.9
    )
    
    
    (0.9
    )Deferred income tax expense (recovery)
    
    
    2.0
    
    
    
    (11.4
    )
    
    
    (18.4
    )Net income (loss)
    
    $
    (35.0
    )
    
    $
    13.2
    
    
    $
    (193.7
    )Net loss per common share:Basic and diluted
    
    $
    (0.36
    )
    
    $
    (0.44
    )
    
    $
    (1.09
    )Weighted-average number of common shares outstandingBasic and diluted
    
    
    117,336,927
    
    
    
    186,135,401
    
    
    
    214,732,107
  105




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##### 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
    
    
    
    
    
    Accumulated Other
    
    TotalCommon Shares
    
    
    
    
    
    Paid-in
    
    Accumulated
    
    Comprehensive
    
    ShareholdersShares
    
    Amount
    
    Warrants
    
    Capital
    
    Deficit
    
    Income (Loss)
    
    DeficiencyBalance 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
    
    
    $
    0.2
    
    
    $
    (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
    
    
    $
    0.2
    
    
    $
    (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
    
    
    $
    1.9
    
    
    $
    (499.3
    )
    
    $
    (56.6
    )
    
    $
    (220.2
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.2
    
    
    
    
    
    
    
    13.2Other comprehensive income (loss):Unrealized derivative 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
    
    
    $
    1.9
    
    
    $
    (492.2
    )
    
    $
    (85.0
    )
    
    $
    (241.5
    )Common shares issued:Exercise of stock options
    
    
    6,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired warrants
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Share purchase loan repayments
    
    
    (40,795
    )
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.7Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    2.4Accretion of interest on redeemable preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41.0
    )
    
    
    
    
    
    
    (41.0
    )214,702,440
    
    
    $
    277.8
    
    
    $
    56.6
    
    
    $
    4.4
    
    
    $
    (533.2
    )
    
    $
    (85.0
    )
    
    $
    (279.4
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (193.7
    )
    
    
    
    
    
    
    (193.7
    )Other comprehensive income:Unrealized derivative gain on cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9
    
    
    
    
    
    
    
    1.9Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12.4
    )
    
    
    (12.4
    )Minimum pension liability adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56.4
    
    
    
    56.4Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (191.8
    )
    
    
    44.0
    
    
    
    (147.8
    )Balance at April 30, 2009
    
    
    214,702,440
    
    
    $
    277.8
    
    
    $
    56.6
    
    
    $
    4.4
    
    
    $
    (725.0
    )
    
    $
    (41.0
    )
    
    $
    (427.2
    )
  106




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##### 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, 2007
    
    April 30, 2008
    
    April 30, 2009CASH PROVIDED BY (USED IN)Operating activities:Net income (loss)
    
    $
    (35.0
    )
    
    $
    13.2
    
    
    $
    (193.7
    )Adjustments to reconcile net loss to net cash from operating activities:Amortization and depreciation
    
    
    9.8
    
    
    
    32.6
    
    
    
    38.6Amortization of deferred gain
    
    
    (0.6
    )
    
    
    
    
    
    
    (0.6
    )Fair value adjustment on derivative instruments
    
    
    (8.6
    )
    
    
    (61.9
    )
    
    
    (100.2
    )Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    284.9Accretion of convertible notes to redemption value
    
    
    1.5
    
    
    
    0.5
    
    
    
    Accretion of interest on litigation settlement obligation
    
    
    
    
    
    
    1.5
    
    
    
    1.2In-process research and development
    
    
    
    
    
    
    5.0
    
    
    
    Stock-based compensation
    
    
    0.3
    
    
    
    1.7
    
    
    
    2.4Deferred income taxes
    
    
    2.8
    
    
    
    (6.0
    )
    
    
    (18.4
    )Loss (gain) on sale of manufacturing operations
    
    
    (1.0
    )
    
    
    1.0
    
    
    
    Loss (gain) on disposal of assets
    
    
    
    
    
    
    (0.2
    )
    
    
    1.4Debt and warrant retirement costs
    
    
    
    
    
    
    20.8
    
    
    
    Unrealized foreign exchange loss (gain)
    
    
    (3.2
    )
    
    
    1.3
    
    
    
    (0.8
    )Non-cash movements in provisions
    
    
    4.1
    
    
    
    18.8
    
    
    
    (2.7
    )Non-cash portion of litigation settlement
    
    
    15.3
    
    
    
    
    
    
    
    Change in non-cash operating assets and liabilities, net
    
    
    2.6
    
    
    
    (45.9
    )
    
    
    0.1Net cash provided by (used in) operating activities
    
    
    (12.0
    )
    
    
    (37.8
    )
    
    
    12.2Investing activities:Additions to capital and intangible assets
    
    
    (7.1
    )
    
    
    (18.3
    )
    
    
    (6.6
    )(Increase) decrease in restricted cash
    
    
    (1.9
    )
    
    
    1.3
    
    
    
    (1.2
    )Proceeds on sale of assets
    
    
    
    
    
    
    19.7
    
    
    
    Acquisition of business
    
    
    
    
    
    
    (729.9
    )
    
    
    Acquisition costs
    
    
    
    
    
    
    (12.2
    )
    
    
    Cash and cash equivalents of acquired business
    
    
    
    
    
    
    195.8
    
    
    
    Realized foreign exchange loss on hedging activities
    
    
    (3.9
    )
    
    
    (1.2
    )
    
    
    (3.6
    )Realized foreign exchange gain on hedging activities
    
    
    0.5
    
    
    
    0.3
    
    
    
    5.0Net cash used in investing activities
    
    
    (12.4
    )
    
    
    (544.5
    )
    
    
    (6.4
    )Financing activities:Net increase (decrease) in bank indebtedness
    
    
    (1.6
    )
    
    
    12.0
    
    
    
    17.7Proceeds from issuance of Class 1 preferred shares
    
    
    
    
    
    
    289.5
    
    
    
    Proceeds from issuance of debt
    
    
    
    
    
    
    430.0
    
    
    
    Repayment 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
    )
    
    
    (2.7
    )Payments on lease recourse liability
    
    
    
    
    
    
    
    
    
    
    (3.4
    )Repayment of long-term debt
    
    
    (1.0
    )
    
    
    (9.6
    )
    
    
    (0.5
    )Share issue costs
    
    
    
    
    
    
    (3.0
    )
    
    
    Payment of litigation settlement obligation
    
    
    
    
    
    
    (4.5
    )
    
    
    (3.7
    )Deferred financing costs
    
    
    (2.1
    )
    
    
    (9.9
    )
    
    
    Proceeds from transfer of receivables
    
    
    10.9
    
    
    
    
    
    
    
    Proceeds from issuance of common shares
    
    
    0.1
    
    
    
    0.8
    
    
    
    Proceeds from repayments of employee share purchase loans
    
    
    0.2
    
    
    
    
    
    
    
    0.7Net cash provided by financing activities
    
    
    21.5
    
    
    
    568.4
    
    
    
    8.1Effect of exchange rate changes on cash and cash equivalents
    
    
    0.7
    
    
    
    (0.1
    )
    
    
    (5.0
    )Increase (decrease) in cash and cash equivalents
    
    
    (2.2
    )
    
    
    (14.0
    )
    
    
    8.9Cash and cash equivalents, beginning of year
    
    
    35.7
    
    
    
    33.5
    
    
    
    19.5Cash and cash equivalents, end of year
    
    $
    33.5
    
    
    $
    19.5
    
    
    $
    28.4
  107




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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 OPERATIONS
  Canada Business Corporations Act
 2.
    
    ACCOUNTING POLICIES
      108




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##### Table of Contents



Accounting for Leases (SFAS 13) Software
Revenue Recognition (SOP 97-2)
 109




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##### Table of Contents



Indirect channels
   Direct channels
    Resale of long distance
  Sales-type leases
 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities  A Replacement of FASB Statement No. 125 (SFAS 140)
 110




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##### Table of Contents



Accounting for the
Impairment or Disposal of Long-Lived Assets
    111




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##### Table of Contents



Goodwill and Other
Intangible Assets
  Accounting for Derivative Instruments and Hedging
Activities
      112




---



##### Table of Contents



Share-Based Payment
 Share-Based Payment
  April 30, 2007
    
    April 30, 2008
    
    April 30, 2009Risk-free interest rate
    
    
    4.1
    %
    
    
    4.1
    %
    
    
    3.75
    %Dividends
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    86.6
    %
    
    
    76.0
    %
    
    
    85.0
    %Annual forfeiture rate
    
    
    15
    %
    
    
    10
    %
    
    
    10
    %Expected life of the options
    
    
    5 years
    
    
    
    5 years
    
    
    
    5 yearsFair value per option
    
    $
    0.77
    
    
    $
    0.83
    
    
    $
    0.22
      113




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##### Table of Contents



Accounting for Consideration Given by a
Vendor to a Customer (Including a Reseller of the Vendors Products)
    Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
 Fair Value Measurements Application of FASB Statement No. 157 to FASB Statement
No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of
Lease Classification or Measurement under Statement 13 Effective Date of FASB Statement No. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 114




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##### Table of Contents



Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements, an Amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities
 Determination of the Useful Life of Intangible
Assets
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present
Fairly in Conformity with GAAP.
 Employers Disclosures about Postretirement
Benefit Plan Assets
 Subsequent Events
 3.
    
    FAIR VALUE MEASUREMENTS
  115




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##### Table of Contents



Assets/Liabilities Measured at Fair Value on a Recurring Basis
 Fair Value Measurement at Reporting DateQuoted Price in
    
    SignificantActive Markets
    
    Other
    
    Significantfor Identical
    
    Observable
    
    UnobservableInstruments
    
    Inputs
    
    InputsLevel 1
    
    Level 2
    
    Level 3
    
    TotalAssetsRestricted Cash
    
    $
    3.5
    
    
    $
    
    
    
    $
    
    
    
    $
    3.5$
    3.5
    
    
    $
    
    
    
    $
    
    
    
    $
    3.5LiabilitiesMark to Market Derivative
    
    $
    
    
    
    $
    
    
    
    $
    8.4
    
    
    $
    8.4Interest Rate Swap
    
    
    
    
    
    
    4.2
    
    
    
    
    
    
    
    4.2$
    
    
    
    $
    4.2
    
    
    $
    8.4
    
    
    $
    12.6
   Purchases,
    
    Transfers inNet Realized/Unrealized (Gains)
    
    Sales, Issuances
    
    and/or (out)Losses included in
    
    and
    
    ofMay 1, 2008
    
    Earnings
    
    Other
    
    (Settlements)
    
    Level 3
    
    April 30, 2009LiabilitiesMark to Market Derivative
    
    $
    108.6
    
    
    $
    (100.2
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8.4
  116




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##### Table of Contents



Credit risk
  Interest rate risk
    Foreign currency risk
   Non-derivative and off-balance sheet instruments
  4.
    
    MERGER TRANSACTION
   117




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##### Table of Contents



i)
    
    each existing Series A Preferred Share 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 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 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 22 (iv)iv)
    
    each existing redeemable common share was purchased for cancellationv)
    
    the warrants issued for $15.0 on September 21, 2006, were repurchased for $20.0
 Business Combinations (SFAS 141)
  Purchase PriceAllocationTangible assets:Current assets
    
    $
    326.0Property, plant and equipment
    
    
    35.0Net investment in sales-type 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
   118




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##### Table of Contents



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
    )
  
    
    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, which 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%
   Recognition of
Liabilities in Connection with a Purchase Business Combination (EITF 95-3)
 5.
    
    RELATED PARTY TRANSACTIONS
  119




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##### Table of Contents



Disposal of manufacturing operations
     Leased properties
   Financing
  Prepaid License and Investment Agreement
  120




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##### Table of Contents



Other
  6.
    
    SPECIAL CHARGES
    121




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##### Table of Contents



Lease Termination
    
    AssetsDescription
    
    Workforce Reduction
    
    Obligation
    
    Written off
    
    TotalBalance 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
    
    
    
    
    
    
    $
    7.3Fiscal 2009:Charges
    
    
    10.8
    
    
    
    7.9
    
    
    
    1.6
    
    
    
    20.3Cash payments
    
    
    (8.8
    )
    
    
    (5.4
    )
    
    
    
    
    
    
    (14.2
    )Assets written off
    
    
    
    
    
    
    
    
    
    
    (1.6
    )
    
    
    (1.6
    )Foreign currency impact
    
    
    (0.4
    )
    
    
    (0.6
    )
    
    
    
    
    
    
    (1.0
    )Balance of provision as of April 30, 2009
    
    $
    2.7
    
    
    $
    8.1
    
    
    $
    
    
    
    $
    10.8
 Integration costs and merger-related expenses
  7.
    
    SEGMENT INFORMATION
 General description
  Disclosures about Segments of an Enterprise and Related
Information (SFAS 131) .
 122




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##### Table of Contents



Business segments
  United
    
    Canada and
    
    
    
    
    
    
    
    
    
    CorporateStates
    
    CALA
    
    EMEA
    
    Asia Pacific
    
    and Other
    
    TotalFiscal 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
    )Fiscal 2009RevenueTelecommunications
    
    $
    413.6
    
    
    $
    50.4
    
    
    $
    184.7
    
    
    $
    13.3
    
    
    $
    
    
    
    $
    662.0Network services
    
    
    73.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73.1486.7
    
    
    
    50.4
    
    
    
    184.7
    
    
    
    13.3
    
    
    
    
    
    
    
    735.1Contribution margin
    
    
    167.1
    
    
    
    21.0
    
    
    
    66.8
    
    
    
    3.5
    
    
    
    
    
    
    
    258.4Shared and unallocated costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (530.7
    )
    
    
    (530.7
    )Operating income (loss)
    
    $
    167.1
    
    
    $
    21.0
    
    
    $
    66.8
    
    
    $
    3.5
    
    
    $
    (530.7
    )
    
    $
    (272.3
    )
 Geographic information
  2007
    
    2008
    
    2009Canada
    
    $
    37.6
    
    
    $
    40.5
    
    
    $
    35.4United States
    
    
    161.9
    
    
    
    409.3
    
    
    
    487.2United Kingdom
    
    
    129.0
    
    
    
    170.5
    
    
    
    128.1Other foreign countries
    
    
    56.4
    
    
    
    71.7
    
    
    
    84.4$
    384.9
    
    
    $
    692.0
    
    
    $
    735.1
  April 30, 2008
    
    April 30, 2009Property and
    
    
    
    
    
    Intangible and
    
    Property and
    
    
    
    
    
    Intangible andEquipment
    
    Goodwill
    
    Other Assets
    
    Equipment
    
    Goodwill
    
    Other AssetsCanada
    
    $
    10.8
    
    
    $
    4.2
    
    
    $
    4.0
    
    
    $
    12.1
    
    
    $
    4.0
    
    
    $
    4.7United States
    
    
    13.1
    
    
    
    415.0
    
    
    
    164.0
    
    
    
    7.1
    
    
    
    128.8
    
    
    
    140.2United Kingdom
    
    
    2.8
    
    
    
    1.7
    
    
    
    
    
    
    
    2.2
    
    
    
    1.7
    
    
    
    Other foreign countries
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    $
    27.0
    
    
    $
    420.9
    
    
    $
    168.0
    
    
    $
    21.7
    
    
    $
    134.5
    
    
    $
    144.9
 123




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##### Table of Contents



Concentrations
   8.
    
    DIVESTITURES
 Sale of U.K. land and building
  Sale-Leaseback of Reno Facility
  9.
    
    OTHER CURRENT ASSETS
  April 30, 2008
    
    April 30, 2009Prepaid expenses and deferred charges
    
    $
    21.4
    
    
    $
    18.7Other receivables, including related party receivables
    
    
    26.2
    
    
    
    24.3Service inventory
    
    
    9.3
    
    
    
    4.7$
    56.9
    
    
    $
    47.7
  124




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##### Table of Contents



10. INVENTORIES
 April 30, 2008
    
    April 30, 2009Raw materials and work in process
    
    $
    6.2
    
    
    $
    5.1Finished goods
    
    
    57.8
    
    
    
    40.9Less: provision for inventory
    
    
    (14.9
    )
    
    
    (12.9
    )$
    49.1
    
    
    $
    33.1
 11. NET INVESTMENT IN SALES-TYPE LEASES
 SM
 April 30,
    
    April 30,2008
    
    2009Lease balances included in consolidated accounts receivable, net of allocated allowances of
$3.3 (2008  $3.0)
    
    $
    9.5
    
    
    $
    10.5Net investment in Sales-Type Leases:Current portion, net of allowances of $1.5 (2008  $1.5)
    
    
    23.4
    
    
    
    30.2Long-term portion, includes residual amounts of $2.7 (2008  $1.3); net of allowances of $1.4
(2008  $1.9)
    
    
    34.2
    
    
    
    29.2Total investment in Sales-Type Leases, net of allowances of $6.2 (2008  $6.4)
    
    
    67.1
    
    
    
    69.9Sold rental payments remaining unbilled (subject to limited recourse provisions),
net of lease recourse liability reserves of $9.9 (2008  $13.3)
    
    
    234.3
    
    
    
    205.8Total balance of sales-type leases and sold rental payments remaining unbilled, net of
allowances and reserves
    
    $
    301.4
    
    
    $
    275.7Total allowances and reserves for entire lease portfolio (including lease recourse liabilities)
    
    $
    19.7
    
    
    $
    16.1
 Reserve levels are established based on portfolio size, loss experience, levels of past due
accounts and periodic detailed reviews of the portfolio. Recourse on the sold rental payments is
contractually limited to a percentage of the net credit losses in a given annual period as
compared to the beginning portfolio balance for a specific portfolio of sold leases. While the
Companys recourse is limited, the Company maintain reserves at a level sufficient to cover all
anticipated credit losses. The aggregate reserve for uncollectible lease payments and recourse
liability represents the reserve for the entire lease portfolio. These reserves are either netted
from consolidated accounts receivable, netted against current or long-term investment in
sales-leases or included in long-term liabilities for sold rental payments remaining unbilled.
Sales of rental payments per period:
 Year Ended
    
    Year EndedApril 30, 2008
    
    April 30, 2009Sales of rental payments
    
    $
    69.7
    
    
    $
    73.4Sold payments remaining unbilled at end of year
    
    $
    247.6
    
    
    $
    215.7
 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, 2009, future minimum lease payments related to the sold rental streams remaining
unbilled are: 2010  $79.5, 2011  $61.5, 2012  $42.5, 2013  $25.4, 2014  $6.8.At April 30, 2009, future minimum lease receipts due from customers related to the lease
portfolio included in the April 30, 2009 balance sheet are: 2010  $29.0, 2011  $12.3, 2012 
$8.4, 2013  $5.8, 2014  $4.0.
 125




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12. PROPERTY AND EQUIPMENT
 April 30,
    
    April 30,2008
    
    2009Cost:Equipment
    
    $
    82.5
    
    
    $
    69.8Less accumulated depreciationEquipment
    
    
    55.5
    
    
    
    48.1$
    27.0
    
    
    $
    21.7
  13. GOODWILL
 April 30,
    
    April 30,2008
    
    2009Balance, beginning of the year
    
    $
    6.8
    
    
    $
    420.9Goodwill acquired  Inter-Tel (Note 4)
    
    
    414.3
    
    
    
    Foreign currency impact
    
    
    (0.2
    )
    
    
    (0.3
    )Adjustment resulting from change in estimates
    
    
    
    
    
    
    5.9Revaluation of deferred taxes
    
    
    
    
    
    
    (7.1
    )Impairment
    
    
    
    
    
    
    (284.9
    )Balance, end of year
    
    $
    420.9
    
    
    $
    134.5Gross amount
    
    $
    420.9
    
    
    $
    419.4Accumulated impairment loss
    
    
    
    
    
    
    (284.9
    )Goodwill, net
    
    $
    420.9
    
    
    $
    134.5
 Goodwill and Other Intangible Assets
  126




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##### Table of Contents



14. INTANGIBLE ASSETS (net)
 April 30,
    
    
    April 30,2008
    
    
    2009Cost:Patents, trademarks and other
    
    $
    8.9
    
    
    $
    11.0Customer relationships
    
    
    99.7
    
    
    
    99.9Developed technology
    
    
    78.8
    
    
    
    78.8Trade name
    
    
    2.3
    
    
    
    2.3189.7
    
    
    
    192.0Less accumulated amortizationPatents, trademarks and other
    
    
    4.9
    
    
    
    6.3Customer relationships
    
    
    9.0
    
    
    
    22.0Developed technology
    
    
    7.0
    
    
    
    16.8Trade name
    
    
    0.8
    
    
    
    2.021.7
    
    
    
    47.1$
    168.0
    
    
    $
    144.9
 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 eight years, eight years and two years.Amortization of intangible and other assets was $1.9, $18.1 and $25.4 in fiscal 2007, fiscal 2008
and fiscal 2009, respectively. The estimated amortization expense related to intangible assets in
existence as of April 30, 2009, over the next five years is as follows: fiscal 2010  $23.9;
fiscal 2011  $23.2; fiscal 2012  $22.9 and fiscal 2013  $22.5, fiscal 2014  $22.3 and
thereafter  $28.8. 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 $1.5 (£1.0) available for letters
of credit and other guarantees, $0.2 of which has been drawn at April 30, 2009 (April 30, 2008 
$0.3). The indemnity and credit facilities are unsecured.On August 16, 2007, in connection with the merger transaction with Inter-Tel, the Company secured
a five-year, $30 million revolving credit facility, $30.0 of which was drawn at April 30, 2009
(April 30, 2008  $12.0). 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
2009, LIBOR ranged from 1.1875% to 3.4375% (2008  2.9375% to 4.9375%).Other amounts appearing in bank indebtedness as of April 30, 2008 and April 30, 2009 of $0.5 and
$0.2, respectively, represent credit book balances resulting from an excess of outstanding
cheques over funds on deposit where a right of offset does not exist.16.
    
    ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 April 30,
    
    April 30,2008
    
    2009Trade payables
    
    $
    40.2
    
    
    $
    35.7Employee-related payables
    
    
    36.8
    
    
    
    23.3Restructuring, warranty and other provisions
    
    
    11.4
    
    
    
    9.7Other accrued liabilities
    
    
    65.5
    
    
    
    57.4$
    153.9
    
    
    $
    126.1
 127




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##### Table of Contents



17. LONG-TERM DEBT
 April 30,
    
    April 30,2008
    
    2009First lien, interest at LIBOR plus 3 1/4%, payable quarterly, seven year term
maturing August 16, 2014, secured by all Company assets
    
    $
    289.9
    
    
    $
    289.6Second lien, interest at LIBOR plus 7%, payable upon maturity, eight year term
maturing August 16, 2015, secured by all Company assets
    
    
    129.7
    
    
    
    129.7Capital leases, at interest rates varying from 1.3% to 11.8%, payable in monthly
installments, with maturity dates ranging from eight to 36 months, secured by the
leased assets
    
    
    3.1
    
    
    
    4.9Note payable, at interest of 7.5%, payable in monthly installments, maturing May 2015
    
    
    0.4
    
    
    
    0.4423.1
    
    
    
    424.6Less: current portion
    
    
    2.4
    
    
    
    4.0$
    420.7
    
    
    $
    420.6
 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.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, 2009, 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 $0.3 in fiscal 2009 (2007  $0.2; 2008  $0.2).
Future minimum lease payments as of April 30, 2009 under capital leases total $5.4 of which $2.2,
$1.7, $1.1 and $0.4 relate to fiscal years 2010 to 2014, respectively. Interest costs of $0.8 are
included in the total future lease payments.
 128




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##### Table of Contents



18.
    
    COMMITMENTS AND GUARANTEESOperating leasesThe Company leases certain equipment and facilities under third party operating leases. The
Company is also committed under related party leases and subleases for certain facilities (see
Note 5). Rental expense and income on operating leases were as follows:
 2007
    
    2008
    
    2009Rental expenseArms-length
    
    $
    12.2
    
    
    $
    20.1
    
    
    $
    17.8Related party
    
    
    6.6
    
    
    
    7.3
    
    
    
    5.7Total
    
    $
    18.8
    
    
    $
    27.4
    
    
    $
    23.5Rental incomeArms-length
    
    $
    1.9
    
    
    $
    2.2
    
    
    $
    1.6Related party
    
    
    0.7
    
    
    
    0.5
    
    
    
    0.7Total
    
    $
    2.6
    
    
    $
    2.7
    
    
    $
    2.3
 Future minimum operating lease payments and future sublease income are as follows:
 Future Lease Payments
    
    Future Lease IncomeFiscal year
    
    
    
    Arms-length
    
    Related Party
    
    Arms-length
    
    Related Party2010
    
    
    
    $
    13.8
    
    
    $
    7.2
    
    
    $
    0.9
    
    
    $
    0.22011
    
    
    
    
    11.4
    
    
    
    6.0
    
    
    
    0.7
    
    
    
    0.12012
    
    
    
    
    7.4
    
    
    
    
    
    
    
    
    
    
    
    2013
    
    
    
    
    5.8
    
    
    
    
    
    
    
    
    
    
    
    2014
    
    
    
    
    8.0
    
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    
    
    7.9
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    $
    54.3
    
    
    $
    13.2
    
    
    $
    1.6
    
    
    $
    0.3
 GuaranteesThe Company has the following major types of guarantees that are subject to the accounting and
disclosure requirements of FASB Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others(FIN 45):Product warrantiesThe Company provides its customers with standard warranties on hardware and software for periods
up to fifteen months. The following table details the changes in the warranty liability:
 April 30,
    
    April 30,2008
    
    2009Balance, beginning of year
    
    $
    1.8
    
    
    $
    2.4Warranty costs incurred
    
    
    (1.7
    )
    
    
    (1.4
    )Warranties issued
    
    
    1.6
    
    
    
    1.3Other
    
    
    0.7
    
    
    
    Balance, end of year
    
    $
    2.4
    
    
    $
    2.3
 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, 2008 and April
30, 2009, 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, 2009, the total maximum potential amount of future payments the
Company could be required to make under bid and performance related bonds was $5.5 (2008  $5.6).19.
    
    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 five years from the effective date. In accordance with SFAS No. 5, Accounting for
Contingencies (SFAS 5), a one-time litigation settlement charge of $14.8, representing the
present value of $19.7 payable over a five-year period and discounted using an interest rate of
12%, was recorded during the year ended April 30, 2007 in the Consolidated Statements of
Operations. Also included in the litigation settlement charge of $16.3 are legal costs incurred
of $1.5. At April 30, 2009, $3.5 (April 30, 2008  $3.5) had been recorded in accounts payable
and accrued liabilities and $5.9 (April 30, 2008  $8.4) 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 was 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. On April 24, 2009, the Company and the competitor agreed to drop their
claims by entering into a patent cross-license agreement.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 continues to evaluate and
defend the case vigorously.Prior to the acquisition of Inter-Tel, certain former distributors of phone 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. Discovery, including court
ordered mediation, has continued during fiscal 2009. The Company continues to evaluate and
defend the case vigorously.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. In
circumstances where the outcome of the lawsuit is expected to be unfavorable, the Company has
recorded a provision for at least the minimum expected settlement amount.
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20.
    
    DERIVATIVE LIABILITY INSTRUMENTClass 1 Preferred SharesAs further described in Note 21, the Company issued 307,087 and 9,668 Convertible, Redeemable
Preferred Shares (Class 1 Preferred Shares) on August 16, 2007 and January 18, 2008,
respectively. The preferred shares are subject to mandatory conversion upon the closing of a
qualified public offering, or at the option of the holder. A qualified initial public offering
results if an IPO raises a minimum of $100.0 at $2.55 per share or more. If a qualified IPO 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 21,
or the value of the common shares into which the Class 1 Preferred Shares are convertible.Pursuant to EITF 00-19 Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Companys Own Stockand 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 Statements of Operations. The
fair value of the derivative was determined using the lattice-binomial model, and the following
assumptions: five year life (2008  seven years) interest rate of 2.00% (2008  3.00%),
volatility of 85% (2008  76.6%) and no dividends (2008  none). At April 30, 2009, the fair
value of the embedded derivative on a per share basis was determined to be $26.55 (2008 -
$343.27), which resulted in a gain of $100.2 (2008  $6.0) being recorded 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 21, 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 Statements of Operations of $58.6 and a credit
to accumulated deficit of $11.4 for the year ended April 30, 2008.21.
    
    CONVERTIBLE, REDEEMABLE PREFERRED SHARESClass 1 Preferred SharesIn connection with the merger transaction with Inter-Tel, 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, 2009 (April 30, 2008  $nil).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 Shareholder 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.
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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 was convertible into 759.8207 common shares and on the date that is one
year following the date of issuance, each Class 1 Preferred Share was convertible into 820.6063
common shares.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 five 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 Preferred 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 Preferred 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 seven 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 20. 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, 2009, the amount of accreted interest was $65.4 (April 30, 2008  $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,
    
    April 30,2008
    
    2009Carrying value, beginning of year
    
    $
    
    
    
    $
    208.5Convertible, redeemable preferred sharesIssued for cash
    
    
    289.5
    
    
    
    Issued in exchange for Series A Preferred shares
    
    
    18.2
    
    
    
    Less: 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
    
    
    24.4
    
    
    
    41.0Carrying value, end of year
    
    $
    208.5
    
    
    $
    249.5
 As a condition to completing the Class 1 Preferred Share financing, as well as the debt financing
described in Note 17, on August 16, 2007, each existing Series A Preferred Share was converted
into 0.000871 of a Class 1 Preferred Share and 0.2679946 of a common share, and received a return
of capital for a total amount of $18.5 (C$20.0). Each existing Series B Preferred was converted
into 1.682 common shares, some of which were redeemed in cash for a total of $17.7. Both classes
of shares were subsequently and entirely deleted from the Companys articles of incorporation. As
a result of an amendment to the conversion terms of the Series A Preferred Shares made prior to
the completion of the Class 1 Preferred Shares financing, the resulting transaction was accounted
for as an induced conversion in accordance with EITF D-42 The Effect on the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred Stock. Accordingly, the
excess of the fair value of consideration paid over the original conversion terms was recorded as
a charge to accumulated deficit in fiscal 2008 in the amount of $30.7, of which $1.4 was
allocated to the beneficial conversion feature that was recorded as a deemed dividend upon
issuance of the Series A Preferred Shares.
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The Series B Preferred Shares were converted to common shares in accordance
with their original terms which included receiving additional shares in the event of conversion
occurring more than two years after the issuance date. The issuance of 10,912,085 additional
shares resulted in a beneficial conversion feature of $43.7 recorded as a charge to accumulated
deficit in fiscal 2008. Since one of the Companys Series B Preferred Shareholders exercised its
exclusive right to require the Company to redeem half of its 16,000,000 Series B Preferred
Shares, a loss of $12.6 was triggered and charged to accumulated deficit in fiscal 2008.22.
    
    WARRANTSThe following table outlines the carrying value of warrants outstanding as of April 30, 2008 and
April 30, 2009:
 April 30,
    
    April 30,2008
    
    2009i) 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
    
    
    
    iv) Warrants issued in connection with Senior Secured Convertible Notes
    
    
    10.5
    
    
    
    10.5v) Warrants issued in connection with Class 1 Preferred Shares
    
    
    6.0
    
    
    
    6.0Total warrants outstanding
    
    $
    56.7
    
    
    $
    56.6
      133




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23.  SHARE CAPITAL
   Equity offerings and Share Purchase Loans
   Stock Option Plan
   134




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##### Table of Contents



Fiscal 2007
    
    Fiscal 2008
    
    Fiscal 2009Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedNumber of
    
    Average Exercise
    
    Number of
    
    Average Exercise
    
    Number of
    
    Average ExerciseOptions
    
    Price
    
    Options
    
    Price
    
    Options
    
    PriceOutstanding options:Balance, beginning of year:
    
    
    20,668,538
    
    
    $
    1.06
    
    
    
    22,444,585
    
    
    $
    1.02
    
    
    
    29,272,224
    
    
    $
    1.02Granted
    
    
    6,123,177
    
    
    
    1.13
    
    
    
    8,827,719
    
    
    
    1.29
    
    
    
    4,684,543
    
    
    
    0.70Exercised
    
    
    (45,624
    )
    
    
    1.18
    
    
    
    (27,625
    )
    
    
    1.03
    
    
    
    (6,500
    )
    
    
    0.87Forfeited
    
    
    (1,356,657
    )
    
    
    2.51
    
    
    
    (985,778
    )
    
    
    1.22
    
    
    
    (1,178,850
    )
    
    
    1.08Expired
    
    
    (2,944,849
    )
    
    
    0.94
    
    
    
    (986,677
    )
    
    
    1.88
    
    
    
    (1,520,267
    )
    
    
    1.07Balance, end of year:
    
    
    22,444,585
    
    
    $
    1.02
    
    
    
    29,272,224
    
    
    $
    1.07
    
    
    
    31,251,150
    
    
    $
    0.97Number of options exercisable
    
    
    8,115,722
    
    
    $
    1.04
    
    
    
    12,418,597
    
    
    $
    1.06
    
    
    
    12,119,079
    
    
    $
    0.93Weighted average fair value
of options granted during
the year using the
Black-Scholes option pricing
model
    
    
    
    
    
    $
    0.77
    
    
    
    
    
    
    $
    0.83
    
    
    
    
    
    
    $
    0.22
 The aggregate intrinsic value of options granted, exercised, forfeited and expired for fiscal
2007, fiscal 2008 and fiscal 2009 is $nil since the fair value of the options at the time of
exercise was at least equal to the exercise price.A summary of options outstanding is as follows:
 April 30, 2008Total outstanding
    
    
    
    
    
    
    
    
    
    Total exercisableWeighted-
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    
    
    
    AverageNumber of
    
    Remaining
    
    Aggregate
    
    Number of
    
    Remaining
    
    AggregateExercise Price
    
    
    
    Options
    
    Contractual Life
    
    Intrinsic Value
    
    Options
    
    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
    
    
    3.9 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
 135




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April 30, 2009Total outstanding
    
    
    
    
    
    
    
    
    
    Total exercisableWeighted-
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    
    
    
    AverageNumber of
    
    Remaining
    
    Aggregate
    
    Number of
    
    Remaining
    
    AggregateExercise Price
    
    Options
    
    Contractual Life
    
    Intrinsic Value
    
    Options
    
    Contractual Life
    
    Intrinsic Value$0.50
    
    
    3,284,000
    
    
    4.9 years
    
    $
    
    
    
    
    
    
    
    
    
    $
    $0.84
    
    
    13,983,091
    
    
    1.8 years
    
    
    
    
    
    
    7,552,836
    
    
    1.5 years
    
    
    $0.95
    
    
    62,987
    
    
    2.4 years
    
    
    
    
    
    
    31,493
    
    
    2.4 years
    
    
    $0.97
    
    
    723,704
    
    
    2.9 years
    
    
    
    
    
    
    258,427
    
    
    2.6 years
    
    
    $0.99
    
    
    3,696,750
    
    
    2.8 years
    
    
    
    
    
    
    1,851,875
    
    
    2.8 years
    
    
    $1.04
    
    
    379,805
    
    
    2.9 years
    
    
    
    
    
    
    189,902
    
    
    2.9 years
    
    
    $1.07
    
    
    2,658,704
    
    
    3.5 years
    
    
    
    
    
    
    664,674
    
    
    3.5 years
    
    
    $1.10
    
    
    53,500
    
    
    3.9 years
    
    
    
    
    
    
    13,375
    
    
    3.9 years
    
    
    $1.12
    
    
    4,841,625
    
    
    3.7 years
    
    
    
    
    
    
    1,022,500
    
    
    3.6 years
    
    
    $1.24
    
    
    562,487
    
    
    4.4 years
    
    
    
    
    
    
    
    
    
    
    
    
    $1.30
    
    
    886,997
    
    
    2.1 years
    
    
    
    
    
    
    454,747
    
    
    2.1 years
    
    
    $1.68
    
    
    117,500
    
    
    1.6 years
    
    
    
    
    
    
    79,250
    
    
    1.6 years
    
    
    31,251,150
    
    
    
    
    
    
    $
    
    
    
    
    12,119,079
    
    
    
    
    
    
    $
    
 The aggregate intrinsic value of outstanding and exercisable stock options represents the amount
by which the fair value of the common shares exceeds the exercise price of in-the-money options.
The amount is based on the fair value of the shares at April 30, 2009, which is assumed to be the
price that would have been received by the option holders had all stock option holders exercised
and sold their options on April 30, 2009.Loss per shareThe following table sets forth the computation of basic and diluted loss per share:
 2007
    
    2008
    
    2009Net income (loss), as reported
    
    $
    (35.0
    )
    
    $
    13.2
    
    
    $
    (193.7
    )Accreted interest on redeemable shares
    
    
    (7.3
    )
    
    
    (26.5
    )
    
    
    (41.0
    )Deemed dividend relating to amortization of beneficial conversion
feature on Series A preferred shares
    
    
    
    
    
    
    (1.4
    )
    
    
    Gain on redemption of redeemable common shares
    
    
    
    
    
    
    6.0
    
    
    
    Charges to deficit on conversion of redeemable preferred shares
    
    
    
    
    
    
    (74.2
    )
    
    
    Net loss attributable to common shareholders
    
    $
    (42.3
    )
    
    $
    (82.9
    )
    
    $
    (234.7
    )Weighted average number of common shares outstanding during the period
    
    
    117,336,927
    
    
    
    186,135,401
    
    
    
    214,732,107Loss per common share  basic and diluted
    
    $
    (0.36
    )
    
    $
    (0.44
    )
    
    $
    (1.09
    )
 As a result of the net losses for each of the following periods, the following potentially
dilutive securities have been excluded from the calculation of diluted loss per common share,
because to do so would have been anti-dilutive:
 (number of shares)
    
    2007
    
    2008
    
    2009Stock options
    
    
    3,588,891
    
    
    
    382,285
    
    
    
    111,159Warrants
    
    
    43,527,960
    
    
    
    37,501,376
    
    
    
    37,355,518Convertible, redeemable preferred shares
    
    
    87,789,300
    
    
    
    241,701,026
    
    
    
    473,778,846134,906,151
    
    
    
    279,584,687
    
    
    
    511,245,523
 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 2009, 31,139,991 stock options were excluded from the above table because they were
anti-dilutive (2007  18,855,694; 2008  28,889,939). Additionally, warrants to acquire
16,500,000 common shares (2007  16,500,000; 2008  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 2009, the Company granted stock options to acquire nil common shares (2007 
300,000; 2008  91,590) 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.
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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, 2009. The following assumptions were used: five-year life, interest rate
of 3.75 percent (2008  4.57%), volatility of 85.0 percent (2008  76.0%) and no dividends.
 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, 2009, there were 528,469 DSUs awarded to executives with
a fair value of $0.1 recorded as a liability (2008  434,827 DSUs and $0.4 recorded as a
liability). The compensation expense recorded in fiscal 2009 to reflect a change in common share
fair value was a credit of $0.4 (2007  $0.2; 2008  $nil).IPO Based Stock OptionsOn March 12, 2009, Mitel granted performance-based stock option awards to selected key employees
to acquire 1,625,000 common shares. The options are to vest contingent upon the achievement of a
Qualified or Non-Qualified IPO as defined in the terms. In the case of a Qualified IPO, 25% of
the options vest immediately upon filing of a final prospectus and 75% vest monthly over an
18-month period following the IPO. In the case of a Non-Qualified IPO, 25% of the options vest
on the trigger date and the remaining 75% vest monthly over 18 months. The trigger date is
defined as the date which is one month following the month in which the 5 day average trading
price is equal to or greater then $2.55/share. All unexercised options expire on the earlier of
24 months after closing of a qualified IPO or 5 years from the date of grant.24.
    
    OTHER INCOME (EXPENSE), NET
 2007
    
    2008
    
    2009Foreign exchange gains (losses), net
    
    $
    (0.3
    )
    
    $
    0.6
    
    
    $
    (3.2
    )Interest income
    
    
    0.3
    
    
    
    0.8
    
    
    
    1.8Amortization of gain on sale of assets
    
    
    0.6
    
    
    
    0.6
    
    
    
    0.6Other expenses
    
    
    
    
    
    
    (0.4
    )
    
    
    $
    0.6
    
    
    $
    1.6
    
    
    $
    (0.8
    )
 25.
    
    INCOME TAXESDetails of income taxes are as follows:
 2007
    
    
    2008
    
    
    2009Income (loss) before income taxes:Canadian
    
    $
    (24.1
    )
    
    $
    28.8
    
    
    $
    99.3Foreign
    
    
    (9.1
    )
    
    
    (27.9
    )
    
    
    (312.3
    )$
    (33.2
    )
    
    $
    0.9
    
    
    $
    (213.0
    )Income tax (expense) recovery:Current:Canadian
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    0.2
    
    
    
    0.9
    
    
    
    0.90.2
    
    
    
    0.9
    
    
    
    0.9Deferred:Canadian
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    (2.0
    )
    
    
    11.4
    
    
    
    18.4$
    (1.8
    )
    
    $
    12.3
    
    
    $
    19.3
 The income tax (expense) recovery reported differs from the amount computed by applying the
Canadian rates to the loss before income taxes. The reasons for these differences and their tax
effects are as follows:
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2007
    
    
    2008
    
    
    2009Expected tax rate
    
    
    36.0
    %
    
    
    35.3
    %
    
    
    33.3
    %Expected tax benefit (expense)
    
    $
    12.0
    
    
    $
    (0.3
    )
    
    $
    70.9Foreign tax rate differences
    
    
    (5.2
    )
    
    
    1.8
    
    
    
    1.6Tax effect of temporary differences and losses not recognized
    
    
    (6.4
    )
    
    
    (9.8
    )
    
    
    3.2Use of losses not previously recognized
    
    
    0.0
    
    
    
    5.7
    
    
    
    0.0Recognition (write-off) of deferred tax asset
    
    
    (2.0
    )
    
    
    0.0
    
    
    
    5.9Permanent differences
    
    
    (2.4
    )
    
    
    14.9
    
    
    
    (61.0
    )Tax refunds and other adjustments related to prior years
    
    
    2.2
    
    
    
    0.0
    
    
    
    (1.3
    )Income tax (expense) recovery
    
    $
    (1.8
    )
    
    $
    12.3
    
    
    $
    19.3
 The tax effect of components of the deferred tax assets and liabilities are as follows:
 April 30,
    
    April 30,
    
    April 30,2007
    
    2008
    
    2009Assets:Net operating loss and credit carry-forwards
    
    $
    67.7
    
    
    $
    100.5
    
    
    $
    114.7Allowance for doubtful accounts
    
    
    0.6
    
    
    
    0.9
    
    
    
    0.6Inventories
    
    
    0.6
    
    
    
    0.5
    
    
    
    0.4Restructuring and other accrued liabilities
    
    
    11.0
    
    
    
    15.9
    
    
    
    17.3Pension liability
    
    
    3.2
    
    
    
    2.1
    
    
    
    3.0Revenue recognition
    
    
    0.0
    
    
    
    5.4
    
    
    
    7.7Lease obligations and long-term debt
    
    
    1.0
    
    
    
    2.6
    
    
    
    0.9Property and equipment
    
    
    6.7
    
    
    
    4.7
    
    
    
    0.0Intangible and other assets
    
    
    6.8
    
    
    
    16.7
    
    
    
    22.4Total deferred tax assets
    
    
    97.6
    
    
    
    149.3
    
    
    
    167.0Lease obligations
    
    
    
    
    
    
    (56.2
    )
    
    
    (37.0
    )Acquisition intangibles
    
    
    
    
    
    
    (68.1
    )
    
    
    (61.8
    )Property and equipment
    
    
    
    
    
    
    
    
    
    
    (17.4
    )Deferred tax liabilities
    
    
    
    
    
    
    (124.3
    )
    
    
    (116.2
    )Total gross deferred tax assets net of total deferred tax liabilities
    
    
    97.6
    
    
    
    25.0
    
    
    
    50.8Valuation allowance
    
    
    (97.6
    )
    
    
    (121.9
    )
    
    
    (119.2
    )Total deferred tax assets (liabilities)
    
    $
    
    
    
    $
    (96.9
    )
    
    $
    (68.4
    )
 The valuation allowance mainly relates to deferred tax assets of Mitel Networks Corporation and
certain subsidiaries with operating loss carry-forwards and tax credit carry-forwards for tax
purposes that are not more likely than not to be realized. The net change in the total valuation
allowance is a net decrease of $2.7 million for the fiscal year ended April 30, 2009 and an
increase of $24.3 in the fiscal year ended April 30, 2008. For fiscal year April 30, 2009, the
decrease in the valuation allowance resulted mainly from a revaluation of certain subsidiaries
deferred tax assets related to book liabilities such as inventory and restructuring reserves. It
was determined that recognition of these deferred tax assets in the amount of $5.8 million was
required since the net deferred tax assets related to these liabilities will be utilized in the
near term. In addition, $3.5 million of US net operating losses will expire and was written off
for both the deferred tax assets and valuation allowance. The increase in valuation allowance for
fiscal year April 30, 2008 resulted from continued losses recorded by certain subsidiaries and by
increased tax credits that have been generated but not utilized.The Company and its subsidiaries had the following tax loss carry forwards and tax credits:
 April 30, 2008
    
    April 30, 2009Year of
    
    Tax
    
    Tax
    
    Tax
    
    TaxExpiry
    
    Losses
    
    Credits
    
    Losses
    
    Credits$
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    2010
    
    
    28.0
    
    
    
    
    
    
    
    26.0
    
    
    
    2011
    
    
    56.8
    
    
    
    
    
    
    
    57.3
    
    
    
    2012
    
    
    43.9
    
    
    
    
    
    
    
    34.7
    
    
    
    2013-2023
    
    
    112.6
    
    
    
    46.8
    
    
    
    120.4
    
    
    
    54.2Indefinite
    
    
    101.6
    
    
    
    0.8
    
    
    
    109.9
    
    
    
    0.8Total
    
    $
    342.9
    
    
    $
    47.6
    
    
    $
    348.3
    
    
    $
    55.0
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These tax loss carry forwards relate to operations in Canada, the US, Italy, Hong Kong and
Barbados. The US has restrictions on the utilization of $25.9 million of these losses related to
the acquisition in 2001.Tax credit carry-forwards relate to the Canadian and US operations amounting to $51.5 and $3.5
respectively. These credits consist of $51.5 in investment tax credits, $2.7 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.26.
    
    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 2009, a change in valuation assumptions, in particular changes in discount rates,
produced a favorable impact on the Companys defined benefit pension plan assets and obligations
for the year ended April 30, 2009. The pension liability decreased from £100.2 to £65.0 as a
result of these changes in assumptions. After the effects of foreign currency translation of
British Pounds to US dollars, the overall pension liability decreased by $102.7 to $96.2 (2008 
increase of $24.9 to $198.8).United Kingdom Defined Benefit Pension PlanIn September 2006, the FASB issued SFAS 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. While the requirement to measure
plan assets and benefit obligations as of the year-end date was 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 estimated portion of net gain or loss, net prior service cost, and transition obligation
remaining in other comprehensive loss that is expected to be recognized as a component of net
periodic benefit cost over the next fiscal year is £0.2 or $0.3. The net loss recognized in other
comprehensive loss in fiscal 2009 is £Nil.
 139




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The actuarial present value of the accrued pension benefits and the net assets available to
provide for these benefits, at market value, were as follows:
 April 30,
    
    April 30,2008
    
    2009Change in accrued pension benefits:Benefit obligation at beginning of year
    
    $
    173.9
    
    
    $
    198.8Service cost
    
    
    1.0
    
    
    
    1.5Interest cost
    
    
    9.7
    
    
    
    9.6Plan participants contributions
    
    
    0.8
    
    
    
    0.7Actuarial (gain) loss
    
    
    17.1
    
    
    
    (68.3
    )Benefits paid
    
    
    (2.0
    )
    
    
    (1.5
    )Foreign exchange
    
    
    (1.7
    )
    
    
    (44.7
    )Benefit obligation at end of year
    
    $
    198.8
    
    
    $
    96.1Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    123.4
    
    
    $
    122.4Actual return on plan assets
    
    
    (1.8
    )
    
    
    (19.3
    )Employer contributions
    
    
    3.0
    
    
    
    3.1Employee contributions
    
    
    0.8
    
    
    
    0.7Benefits paid
    
    
    (2.0
    )
    
    
    (1.5
    )Foreign exchange
    
    
    (1.0
    )
    
    
    (29.4
    )Fair value of plan assets at end of year
    
    $
    122.4
    
    
    $
    76.0
 The following table provides information with respect to the Companys Projected Benefit
Obligation and Accumulated Benefit Obligation, both of which are in excess of plan assets:
 April 30,
    
    April 30,
    
    April 30,2007
    
    2008
    
    2009Projected benefit obligation
    
    $
    173.9
    
    
    $
    198.8
    
    
    $
    96.1Accumulated benefit obligation
    
    
    148.8
    
    
    
    175.5
    
    
    
    80.5Fair value of plan assets
    
    
    123.4
    
    
    
    122.4
    
    
    
    76.0
 The Companys net periodic benefit cost was as follows:
 2007
    
    2008
    
    2009Current service cost  defined contribution
    
    $
    1.5
    
    
    $
    1.7
    
    
    $
    2.9Current service cost  defined benefit
    
    
    1.5
    
    
    
    1.0
    
    
    
    1.4Interest cost
    
    
    8.6
    
    
    
    9.7
    
    
    
    9.6Expected return on plan assets
    
    
    (8.0
    )
    
    
    (9.7
    )
    
    
    (7.9
    )Recognized actuarial loss
    
    
    2.1
    
    
    
    1.4
    
    
    
    2.5Net periodic benefit cost
    
    $
    5.7
    
    
    $
    4.1
    
    
    $
    8.5
  April 30,
    
    April 30,
    
    April 30,2007
    
    2008
    
    2009Discount rate
    
    
    5.0
    %
    
    
    5.5
    %
    
    
    5.8
    %Compensation increase rate
    
    
    2.75
    %
    
    
    3.00
    %
    
    
    3.50
    %Investment returns assumption
    
    
    7.25
    %
    
    
    7.75
    %
    
    
    7.70
    %Inflation rate
    
    
    2.75
    %
    
    
    3.00
    %
    
    
    3.50
    %Average remaining service life of employees
    
    20 years
    
    
    18 years
    
    
    18 years
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The following assumptions were used to determine the net present value of the accrued pension
benefits
 April 30,
    
    April 30,
    
    April 30,2007
    
    2008
    
    2009Discount rate
    
    
    5.5
    %
    
    
    5.80
    %
    
    
    7.30
    %Compensation increase rate
    
    
    3.00
    %
    
    
    3.50
    %
    
    
    3.00
    %Inflation rate
    
    
    3.00
    %
    
    
    3.50
    %
    
    
    3.00
    %Average remaining service life of employees
    
    20 years
    
    
    18 years
    
    
    18 years
 Estimated Future Benefit PaymentsThe table below reflects the total pension benefits expected to be paid in future years.
 BenefitPayments2010
    
    $
    1.32011
    
    
    1.42012
    
    
    1.42013
    
    
    1.52014
    
    
    1.52015-2019
    
    
    8.2
 ContributionsThe Company expects contributions from employees of $0.3 (£0.2) and employer contributions of
$3.6 (£2.4) to the pension plan in 2010.Plan AssetsThe Companys target allocation and actual pension plan asset allocation by asset category as of
April 30, 2008 and April 30, 2009 are as follows:
 2008
    
    2009
    
    2009Actual
    
    Actual
    
    TargetEquities
    
    
    80
    %
    
    
    80
    %
    
    
    80
    %Bonds
    
    
    19
    %
    
    
    19
    %
    
    
    20
    %Cash
    
    
    1
    %
    
    
    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.
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27.
    
    SUPPLEMENTARY CASH FLOW INFORMATION
 2007
    
    2008
    
    2009Change in non-cash operating assets and liabilities:Accounts receivable
    
    $
    1.6
    
    
    $
    14.5
    
    
    $
    23.5Other current assets
    
    
    (5.1
    )
    
    
    10.1
    
    
    
    3.6Inventories
    
    
    1.0
    
    
    
    (13.4
    )
    
    
    13.3Accounts payable and accrued liabilities
    
    
    12.9
    
    
    
    (55.2
    )
    
    
    27.5Deferred revenue and other liabilities
    
    
    (5.5
    )
    
    
    7.8
    
    
    
    (6.6
    )Change in pension liability
    
    
    1.0
    
    
    
    (1.9
    )
    
    
    (53.9
    )Due to related parties
    
    
    (1.8
    )
    
    
    (8.9
    )
    
    
    (7.7
    )Income and other taxes payable/receivable
    
    
    (1.5
    )
    
    
    1.1
    
    
    
    0.4$
    2.6
    
    
    $
    (45.9
    )
    
    $
    0.1Interest payments
    
    $
    
    
    
    $
    28.0
    
    
    $
    36.8Income tax payments
    
    $
    
    
    
    $
    2.3
    
    
    $
    1.3Disclosure of non-cash activities during the period:Adjustment to minimum pension liability
    
    $
    16.6
    
    
    $
    
    
    
    $
    SFAS 158 pension adjustment
    
    $
    25.1
    
    
    $
    27.8
    
    
    $
    Warrants issued in connection with financing
    
    $
    
    
    
    $
    6.0
    
    
    $
    Accretion of interest on redeemable common and preferred shares
    
    $
    7.3
    
    
    $
    26.5
    
    
    $
    41.0Charges to accumulated deficit relating to merger financing transactions
    
    $
    
    
    
    $
    74.6
    
    
    $
    Conversion 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
    )
    
    $
    Property and equipment additions financed through capital lease
    
    $
    
    
    
    $
    
    
    
    $
    4.8
 142




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SCHEDULE II
VALUATION OF QUALIFYING ACCOUNTS
AS AT APRIL 30, 2009
(in millions of United States dollars)
 Balance,
    
    AdditionsBeginning
    
    
    
    
    
    Charged to
    
    
    
    
    
    Balance,of
    
    Charged to
    
    other
    
    
    
    
    
    End ofDescription
    
    Period
    
    expenses
    
    Accounts (1)
    
    Deductions
    
    PeriodFiscal 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-type leases and lease recourse liability
    
    $
    
    
    
    $
    3.0
    
    
    $
    15.2
    
    
    $
    (3.5
    )
    
    $
    14.7Fiscal 2009Allowance for doubtful accounts
    
    $
    14.0
    
    
    $
    0.9
    
    
    
    
    
    
    $
    (1.7
    )
    
    $
    13.2Allowance for sales-type leases and lease recourse liability
    
    $
    14.7
    
    
    $
    3.5
    
    
    
    
    
    
    $
    (6.8
    )
    
    $
    11.4
 
 (1)
    
    Acquisition related adjustment 143




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SIGNATURE
  MITEL NETWORKS CORPORATION/s/  Donald W. SmithName:
    Donald W. SmithTitle:
    Chief Executive Officer  144