| ACCOUNTING POLICIES (Policies) | 12 Months Ended |
| Dec. 31, 2017 |
| Basis of Presentation | a) Basis of Presentation
These Consolidated Financial Statements have been prepared by the
Company in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) and the rules
and regulations of the U.S. Securities and Exchange Commission (the
“SEC”) for the preparation of financial statements. |
| Basis of Consolidation | b) Basis of Consolidation
The Consolidated Financial Statements include the accounts of the
Company and of its subsidiary companies. Intercompany transactions
and balances have been eliminated on consolidation. |
| Use of Estimates | c) Use of Estimates
The preparation of the Company’s Consolidated Financial
Statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses during the reporting
periods.
Estimates and assumptions are used for, but not limited to, the
determination of the fair values of assets and liabilities acquired
through acquisitions, the fair value of investments, allowance for
doubtful accounts, inventory allowances, goodwill impairment
assessments, estimated useful lives of property, equipment and
intangible assets, accruals, lease recourse liability, warranty
costs, sales returns, pension liability, contingencies, special
charges and restructuring costs, income taxes, the valuation of
stock options and estimated selling prices for certain elements in
multiple-element arrangements. Estimates and assumptions are
reviewed periodically and the effects of revisions are reflected in
the Consolidated Financial Statements in the period that they are
determined. Actual results and outcomes could differ from these
estimates. |
| Foreign Currency Translation | d) Foreign Currency Translation
The parent company’s functional currency is the U.S. dollar
and the Consolidated Financial Statements of the Company are
prepared with the U.S. dollar as the reporting currency. Assets and
liabilities of foreign operations with a functional currency other
than the U.S. dollar are translated from foreign currencies into
U.S. dollars at the exchange rates in effect at the balance sheet
date while revenue and expense items are translated at the average
exchange rate for the period. The resulting unrealized gains and
losses are included as part of the cumulative foreign currency
translation adjustment that is reported as part of other
comprehensive income.
Monetary assets and liabilities denominated in currencies foreign
to the functional currency of each entity are translated into the
functional currency using exchange rates in effect at the balance
sheet date. All non-monetary |
| Revenue Recognition | e) Revenue Recognition
General
The Company generates revenues primarily from the sale of
communications systems and related services (collectively, a
“Solution”), through channel partners and directly to
end-customers.
Enterprise segment revenue
The Enterprise segment generates revenues primarily from sales of
multiple-element Solutions, typically as an upfront sale.
For multiple-element arrangements, the Company allocates the total
arrangement consideration to each separable element of an
arrangement based upon the relative selling price of each element
and revenue is recognized upon delivery or completion of each
element. The relative selling price is determined using Vendor
Specific Objective Evidence (“VSOE”) of selling price,
when available. Where VSOE of selling price cannot be established,
the Company attempts to determine the selling price for the
deliverables using third-party evidence. Generally, third-party
evidence is not available as the Company’s product offerings
differ from those of its competitors and competitor pricing is
often not available. In such cases where VSOE and third-party
evidence cannot establish a selling price, the Company estimates
the selling price for an element by determining the price at which
the Company would transact if the products or services were to be
sold on a standalone basis. In establishing the estimated selling
price, the Company considers a number of factors including, but not
limited to, geographies, customer segments and pricing
practices.
Product revenue is recognized when persuasive evidence of an
arrangement exists, delivery has occurred, title and risk of loss
have been transferred to the customer, the fee is fixed or
determinable, and collection is reasonably assured. Service revenue
is recognized when persuasive evidence of an arrangement exists,
the service has been provided, the fee is fixed or determinable,
and collection is reasonably assured.
The Company’s core enterprise software (“essential
software”) is integrated with hardware and function together
to deliver the essential functionality of the integrated system
product. The Company also sells software applications (“non-essential
The elements of a typical multiple-element Solution are as
follows:
Product Revenue — Hardware and Essential
Software
The Company recognizes hardware and essential software revenue when
the product is shipped or upon product acceptance where the
agreement contains product acceptance terms that are more than
perfunctory. Where hardware and essential software is an element in
a multiple-element arrangement, relative selling price is
established using an estimated selling price.
Non-Essential
The Company recognizes non-essential non-essential non-essential non-essential non-essential
Installation and Training
The Company recognizes revenue related to installation and training
upon delivery of the services. Where installation and training are
elements in a multiple-element arrangement, relative selling price
is established using an estimated selling price.
Post-Contract Support
Post-contract support consists primarily of maintenance revenue and
software assurance revenue, which generate revenue under contracts
that generally range from one to five years. For maintenance
revenue, the Company provides various levels of support for
installed systems for a fixed annual fee. For software assurance
revenue, the Company provides software upgrades on a when and if
available basis and software support for a fixed annual fee. In
certain jurisdictions, maintenance and software assurance is
bundled as post-contract support. Revenue from post-contract
support is recognized ratably over the contractual period.
Where post-contract support is an element in a multiple-element
arrangement, relative selling price is established using VSOE of
selling price based on volume and pricing of standalone sales
within a narrow range. Where VSOE is not available for
post-contract support sold with non-essential non-essential
Return Rights
Sales to the Company’s channel partners generally provide for
30-day
Distribution agreements
Sales to value-added distributors generally include limited
stock-rotation, price protection and return rights. The Company
maintains a reserve for such rights based on its historical
experience. Where a distributor’s return rights are not
limited and are outside the Company’s control, the Company
defers revenue recognition until such time as the product is sold
to an end customer by the distributor.
Sales-type leases
A portion of the Company’s direct sales of Solutions in the
U.S. is made through sales-type leases. The discounted present
values of minimum rental payments, net of provisions for continuing
administration and other expenses over the lease period, are
allocated to each element of the sale and recorded as revenue
consistent with the revenue recognition policies described
above.
After the initial sale, the rental streams are often sold to
funding sources with the income streams discounted by prevailing
like-term rates at the time of sale. Gains or losses resulting from
the sale of net rental payments from such leases are recorded as
net revenues. The Company establishes and maintains reserves
against potential recourse following the re-sales non-current
Cloud segment revenue
The Cloud segment generates recurring revenues from sales of
multiple-element Solutions under a monthly recurring billing model.
A portion of the monthly recurring billing in the U.S. will also
often include billing for voice and data telecommunication
services. Revenue is recognized monthly as the services are
provided. |
| Cash and Cash Equivalents | f) Cash and Cash Equivalents
Cash and cash equivalents are highly liquid investments that have
terms to maturity of three months or less at the time of
acquisition, and generally consist of cash on hand and
investment-grade marketable securities. Cash equivalents are
carried at amortized cost, which approximates their fair value. At
December 31, 2017, the Company had cash of $42.3
(December 31, 2016 — $96.2) and cash equivalents of
$1.0 (December 31, 2016 — $1.1). In addition, at
December 31, 2016, cash and cash equivalents of $3.5 relating
to our Mobile segment (note 4) were included in assets held for
sale. |
| Restricted Cash | g) Restricted Cash
Restricted cash represents cash provided to support letters of
credit outstanding and to support certain of the Company’s
credit facilities. Restricted cash is presented within other
current assets on the consolidated balance sheets. |
| Allowance for Doubtful Accounts | h) Allowance for Doubtful Accounts
The allowance for doubtful accounts represents the Company’s
best estimate of probable losses that may result from the inability
of its customers to make required payments. Additional provisions
or allowances for doubtful accounts are recorded for sales-type
leases, discussed in part (e) Enterprise segment revenue — Sales-type leases |
| Inventories | i) Inventories
Inventories are valued at the lower of cost (calculated on a
first-in, first-out |
| Property and Equipment | j) Property and Equipment
Property and equipment are initially recorded at cost. Depreciation
is provided on a straight-line basis over the anticipated useful
lives of the assets. Estimated lives range from two to ten years
for equipment. Amortization of leasehold improvements is computed
using the shorter of the remaining lease term or the useful life of
the asset, generally five years.
The Company performs reviews for the impairment of property and
equipment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. In
assessing the impairment, the Company compares projected
undiscounted net cash flows associated with the related asset or
group of assets over their estimated remaining useful life against
their carrying amounts. If the projected undiscounted net cash
flows are not sufficient to recover the carrying value of the
assets, the assets are written down to their estimated fair values
based on expected discounted cash flows. Changes in the estimates
and assumptions used in assessing projected cash flows could
materially affect the results of management’s evaluation.
Assets leased on terms that transfer substantially all of the
benefits and risks of ownership to the Company are accounted for as
capital leases, as though the asset had been purchased outright and
a liability incurred. All other leases are accounted for as
operating leases. |
| Identifiable Intangible Assets and Goodwill | k) Identifiable Intangible Assets and Goodwill
Intangible assets include patents, trademarks, customer
relationships and acquired technology. Amortization is provided on
a straight-line basis over the estimated useful lives of the
assets. The Company periodically evaluates intangible assets for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability is assessed based on the carrying value of the asset
and the undiscounted cash flows expected to result from the use and
the eventual disposal of the asset. An impairment loss is
recognized when the carrying amount is not recoverable.
Goodwill represents the excess of the purchase price over the
estimated fair value of net tangible and intangible assets acquired
in business combinations. Goodwill is not amortized, but is subject
to annual impairment tests, or more frequently if circumstances
indicate that it is more likely than not that the fair value of the
reporting unit is below its carrying amount. The Company performs
its annual goodwill impairment test on the first day of its fourth
fiscal quarter, or October 1, of each year.
The Company performs a goodwill impairment test by comparing the
fair value of each reporting unit against each reporting
unit’s carrying amount, including goodwill. If the fair value
exceeds the carrying amount, no impairment charge is recorded. If
the fair value is less than the carrying amount, an impairment is
recorded for the amount the carrying amount exceeds the fair value.
Changes in the estimates and assumptions used in assessing the
projected cash flows could materially affect the results of
management’s evaluation. |
| Derivative Financial Instruments | l) Derivative Financial Instruments
The Company uses foreign currency forward contracts to manage the
impact of currency fluctuations, primarily for fair value hedges on
foreign currency receivables and payables and for cash flow hedges
on probable future cash flows in foreign currencies. Derivative
instruments that are not designated as accounting hedges or
designated as fair value hedges are originally recorded at fair
market value, with subsequent changes in fair value recorded in
other income (expense) during the period of change. For derivative
instruments that qualify for hedge accounting (generally cash flow
hedges), gains or losses for the effective portion of the hedge are
initially reported as a separate component of other comprehensive
income (loss) and subsequently recorded in income when the hedged
transaction occurs or when the hedge is no longer deemed
effective. |
| Income Taxes | m) Income Taxes
Income taxes are accounted for using the asset and liability
method. Under this approach, deferred tax assets and liabilities
are determined based on differences between the carrying amounts
and the tax basis of assets and liabilities, and are measured using
enacted tax rates and laws. Deferred tax assets are recognized only
to the extent that it is more likely than not that the future tax
assets will be realized in the future.
The Company calculates certain tax liabilities based on the likely
outcome of uncertain tax positions (“UTPs”) and records
this amount as an expense or recovery during the year in which UTPs
are identified. The Company also records interest and penalties
associated with these UTPs. The Company classifies penalties and
accrued interest related to income tax liabilities in income tax
expense. |
| Research and Development | n) Research and Development
Research costs are charged to expense in the periods in which they
are incurred. Software development costs are deferred and amortized
when technological feasibility has been established, or otherwise
are expensed as incurred. The Company has not deferred any software
development costs during the years ended December 31, 2017,
2016 and 2015. |
| Defined Benefit Pension Plan | o) Defined Benefit Pension Plan
Pension expense under defined benefit pension plans are actuarially
determined using the projected benefit method, and
management’s best estimate assumptions. Pension plan assets
are valued at fair value. The excess of any cumulative net
actuarial gain (loss) over ten percent of the greater of the
benefit obligation and the fair value of plan assets is amortized
over the average remaining service life of its members, or in the
case where the plan no longer grants service, over the life
expectancy of its members. The under-funded status of the defined
benefit pension plans is recognized as a liability on the
consolidated balance sheets, with an offsetting adjustment made to
accumulated other comprehensive income. The Company measures its
plan assets and obligations at the year-end
The discount rate assumption used reflects prevailing rates
available on high-quality, fixed-income debt instruments. The
assumption for long-term rate of return is based on the yield
available on long-dated government and corporate bonds at the
measurement date with an allowance for outperformance based on
historical returns of each asset class. |
| Stock-Based Compensation | p) Stock-Based Compensation
The Company has stock-based compensation plans for employees that
consist of stock options, restricted share units
(“RSUs”), and performance share units
(“PSUs”) as described in note 16.
The Company grants stock options for a fixed number of shares with
an exercise price at least equal to fair market value of the shares
at the date of grant. Stock-based compensation expense for stock
options is based on the fair value estimate made on the grant date
using the Black-Scholes option-pricing model for each award and is
recognized on a straight-line basis over the employee service
period, which is the vesting period. The Company estimates the
volatility of its stock for the Black-Scholes option-pricing model
using historical volatility of the Company’s stock.
An RSU, once vested, entitles the holder to a Mitel common share
issued out of treasury. RSUs vest one-quarter
PSUs are convertible into a variable number of Mitel common shares
to the extent that a performance target is met at the end of the
three-year term of the PSUs. The performance target for PSUs is a
cumulative annual growth rate (“CAGR”) of Mitel stock
traded on the NASDAQ stock exchange over the term of the PSUs, as
described in note 16. As PSUs are equity-settled, the grant-date
fair value is expensed on a straight-line basis over the term of
the award.
Forfeitures for all awards are accounted for as they occur, through
reversal of the previously recognized expense on the awards that
were forfeited during the year. |
| Net Income per Common Share | q) Net Income per Common Share
Basic net income per common share is computed using the
weighted-average number of common shares outstanding during the
period. Diluted net income per common share is calculated using the
treasury stock method when the impact is dilutive. To compute
diluted net income per share, the weighted-average number of common
shares outstanding is increased by the number of common shares that
would be issued assuming the exercise of stock options and warrants
and the issuance of outstanding RSUs and PSUs. |
| Other Comprehensive Income (Loss) | r) Other Comprehensive Income (Loss)
Other comprehensive income (loss) includes unrealized gains and
losses excluded from the consolidated statements of operations.
These unrealized gains and losses consist of foreign currency
translation adjustments, which are not adjusted for income taxes
since they relate to indefinite investments in foreign
subsidiaries, unrealized gains and losses on cash flow hedges, and
changes in the unfunded status of defined benefit pension
plans. |
| Advertising Costs | s) Advertising Costs
The cost of advertising is expensed as incurred, except for
cooperative advertising obligations, which are expensed at the time
the related sales are recognized and the advertising credits are
earned. Cooperative advertising obligations are recorded as a
reduction to revenue when the cooperative advertising obligation is
estimated to be used for Mitel product or services and are recorded
as selling, general and administrative expenses when the
cooperative advertising obligation is estimated to be used for
cooperative advertising of Mitel products and services. Advertising
costs are recorded in selling, general and administrative expenses.
For the year ended December 31, 2017, the Company incurred
$10.0 in advertising costs (years ended December 31, 2016 and
2015 — $9.1 and $10.1, respectively), of which $5.6 related
to cooperative advertising expenses (years ended December 31,
2016 and 2015 — $5.3 and $5.4, respectively). |
| Product Warranties | t) Product Warranties
At the time revenue is recognized, a provision for estimated
warranty costs is recorded as a component of cost of sales. The
warranty accrual represents the Company’s best estimate of
the costs necessary to settle future and existing claims on
products sold as of the balance sheet date based on the terms of
the warranty, which vary by customer and product, historical
product return rates and estimated average repair costs. The
Company periodically assesses the adequacy of its recorded warranty
provisions and adjusts the amounts as necessary. |
| Special Charges and Restructuring Costs | u) Special Charges and Restructuring Costs
Special charges and restructuring costs consist of costs related to
restructuring and integration activities as well as
acquisition-related costs. Restructuring costs generally relate to
workforce reductions and facility reductions incurred to eliminate
duplication of activities as a result of acquisitions or to improve
operational efficiency. Costs related to workforce reductions are
recorded when the company has committed to a plan of termination
and notified the employees of the terms of the plan. Costs related
to facility reductions primarily consist of lease termination
obligations for vacant facilities, which generally include the
remaining payments on an operating lease. Lease termination
obligations are reduced for probable future sublease income. In
addition, integration costs include professional services and
consulting services incurred to complete the integration of
acquisitions, which are expensed as incurred. Acquisition-related
costs consist of incremental costs incurred for diligence
activities and closing costs, and are expensed as incurred. |
| Accounting pronouncements adopted in 2017 | v) Accounting Pronouncements Adopted in 2017
Stock-based compensation
In March 2016, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) 2016-09 paid-in
Statement of cash flows
In August 2016, the FASB issued ASU 2016-15
Simplifying the test for goodwill impairment
In January 2017, the FASB issued ASU 2017-04 |
| Accounting pronouncements issued but not yet adopted | w) Accounting Pronouncements Issued, but not yet
Adopted
Revenue recognition
In May 2014, the FASB issued ASU 2014-09 2015-14, 2016-08 2016-12, 2014-09. 2014-09
The ASU permits two methods of adoption: retrospectively to each
prior reporting period presented (full retrospective method), or
retrospectively with the cumulative effect of initially applying
the guidance recognized at the date of initial application (the
cumulative catch-up
Leases
In February 2016, the FASB issued ASU 2016-02 right-of-use
Credit losses on financial instruments
In June 2016, the FASB issued ASU 2016-13
Income statement classification of net pension benefit
costs
In March 2017, the FASB issued ASU 2017-07 non-service
Statement of cash flows – presentation of restricted
cash
In November 2016, the FASB issued ASU 2016-18 |
