PDF Mitec COVER E & Fr

11voiceJ O I N I N G F O R C E S T O B E C O M E A G L O B A L P A R T N E RJ O I N I N G F O R C E S T O B E C O M E A G L O B A L P A R T N E R

M I T E C • B E V E

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M I T E C • B E V EA N N U A L R E P O R T 2 0 0 1

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1corporate profile

MITEC·BEVE is a leading designer and manufacturer of telecommunication products

addressing the wireless, microwave-links and satcom markets. The Corporation sells its

components worldwide mainly to network providers for incorporation into high-performing

wireless communication infrastructures that enable voice, data/Internet and ultimately

multimedia communications.

This year's merger between Mitec and Swedish-based BEVE has significantly strengthened

the Corporation's international presence. The merger allows it to further develop the services

it offers to major global players in the telecom industry such as Ericsson, Nokia, Nortel,

Andrew, CPI and EchoStar.

MITEC·BEVE's headquarters are in Montreal, Canada, which is also the head office for

its Americas Division. The Corporation's European and Asian Division is headquartered

in Borås, Sweden, the site of its high-volume manufacturing facility. Additional research and

development, design and manufacturing operations are located in the United States,

Sweden, the United Kingdom and Thailand.

With a global workforce of over 700 employees and a pipeline of products that fully

addresses the worldwide demand for wider band wireless infrastructure products,

MITEC·BEVE's mission is to be a partner of choice in the telecom industry, providing

innovative, high-quality radio frequency products.

MITEC·BEVE is listed on the Toronto Stock Exchange under the symbol MTM. On-line

information is available at: www.mitectelecom.com.

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CANADA: Montreal

UNITED STATES: Tinton Falls (NJ)

SWEDEN: Borås / Vaxjo

UNITED KINGDOM: Copthorne

THAILAND: Bangkok

CHINA: {2002}

BRAZIL: {2003}

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AmplifierAn electrical device that strengthens the signal in digital and analog transmission.

CDMA(code division multiple access)A spread spectrum air interface technologyused in some digital cellular, personal communications services and other wireless networks.

CdmaOneThe IS-95 CDMA standard developed by Qualcomm Inc.

Cdma2000 A third-generation wireless technology proposal submitted to the InternationalTelecommunication Union, which is basedon the IS-95, or cdmaOne, standard.

CDPD (cellular digital packet data)An enhanced system overlay for transmitting and receiving data over cellular networks.

DuplexersSimultaneous transmission in both directions, sometimes referred to as fullduplex to differentiate it from half duplex,which is alternating transmission in eachdirection. In most cases a filter is included in both paths.

EDGE (enhanced data rates for global (or GSM) evolution)An advanced technology for GSM and TDMAnetworks that may offer wireless dataaccess speeds of up to 384 kilobits per second in end-user devices.

EGPRSEnhanced GPRS (general packet radio services) technology.

FiltersDevices that permit a certain range of frequencies to pass while suppressingunwanted frequencies or noise, that separatechannels in communications circuits.

GSM (global system for mobile communications)A digital cellular or PCS network usedthroughout the world.

GPRS(general packet radio services)A 2.5-generation technology (being implemented in GSM networks) that may offer wireless data access speeds of up to 144 kilobits per second in end-user devices.

Multi Carrier Power Amplifier (MCPA)Multi Carrier Power Amplifier,unlike a Single Carrier Power Amplifier,can amplify more than one channel at the same time. MCPAs are used to amplify the transmit (Tx) power.Linearization methods such as predistortionand feed forward are commonly used to “transform” SCPA into MCPA.

Mast Head Amplifier (MHA)MHAs are used to increase the coverage of base station (BTS). They also improve theclarity of the reception. MHAs are placedbetween the antenna and the BTS. They arecomposed of duplexers and amplifiers.

Microwave-LinksCommunication network using microwavefrequencies as signal carriers.

Output ArmsDevices used to improve the performanceand reliability of KPA (Klystron PowerAmplifier) and TWTA (Travelling Wave TubeAmplifier). Output arms are placed at theamplifier output. They are used to monitortransmitted and reflected power. They protectthe amplifier against reflected power.

SatcomSatellite communications.

TDMA (time division multiple access)A digital air interface technology used in cellular, PCS and ESMR networks.

Tactical RadioCommunication equipment that includesswitches, radio relays and bulk encryptionunits. Typical applications are tactical areanetworks, air defense networks and command post communication networks.

UMTS (Universal MobileTelecommunications System)Europe’s approach to standardization for third-generation cellular systems.

W-CDMA (wideband code division multiple access)The third generation standard offered to the International TelecommunicationUnion by GSM proponents.

WirelessDescribing radio-based systems that allowtransmission of telephone and/or data signals through the air without a physicalconnection, such as a metal wire or fiberoptic cable.

WaveguideA hollow conductor that is used to efficientlytransmit high-energy, high-frequency wavesin the centimeter to micrometer range.

1XRTTThe path which CDMA will be following to 3rd generation standards. It provides for data rates of up to 144 kbps.

3XRTTCDMA2000 operating mode at 3 times the basic chip rate of 1.2288 Mbps.

Mitec unveils its first prototype 25-watt rack module Multi-CarrierPower Amplifier (MCPA) at the Chicago PCIA Global XChange tradeshow. the Corporation’s first MCPA product supported CDMA 2000applications in the 1900 MHz frequency band.

Mitec is selected by Nokia as a cooperationpartner to develop state-of-the-art wireless filterand amplifier technology equipment. Mitec alsosigned a milestone supply agreement with NokiaNetworks. Mitec will supply Nokia Networks withradio frequency equipment for high-speed datawireless communications.

Mitec Telecom and BEVE Invest completea milestone merger transaction. Themerger is expected to triple revenues forthe fiscal year ending April 30, 2002,from $42.9 million to an estimated $140 million. It also positions the newCorporation as a global player, with aworkforce that expands from 350 to over700 employees. In exchange for all sharesof BEVE, Mitec issues 6.2 million commonshares for a total value of approximately$18.6 million.

MITEC·BEVE is awarded two orders for a combined value of approximately $20 million from two divisions of a majorEuropean customer. One of the orders is a renewal of an existing product in radiocommunications, with an increase inquantity. The second is for a new 850 MHz2.5G CDMA product.

MITEC·BEVE signs a 12-month supplyagreement valued at approximately $70 million with a major European networkprovider. MITEC·BEVE will manufacture high-volume subsystems used in point-to-pointmicrowave networks. The agreement is the largest ever signed by MITEC·BEVE.

»1major events


JULY 2000 AUGUST 2000 SEPTEMBER 2000 OCTOBER 2000 NOVEMBER 2000 DECEMBER 2000 JANUARY 2001 FEBRUARY 2001 MARCH 2001 APRIL 2001 MAY 2001 JUNE 2001

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1financial highlightsFor the year ended April 30 (in thousands of dollars, except per share data)

2001 2000 1999 1998 1997

Sales $ 77,900 $ 42,911 $ 37,423 $ 34,343 $ 26,360

Growth 81.60 % 14.70 % 8.97 % 30.28 % 37.01 %

Gross profit $ 18,389 $ 11,959 $ 12,356 $ 11,875 $ 10,489

Gross profit margin 23.60 % 27.90 % 33.0 % 34.60 % 39.80 %

EBITDA $ 5,665 $ 1,189 $ 3,974 $ 5,183 $ 4,099

EBITDA margin 7.27 % 2.80 % 10.60 % 15.09 % 15.55 %

Net income (loss) $ ( 259 ) $ ( 628 ) $ 1,633 $ 2,638 $ 2,025

Net income margin ( 0.33 )% ( 1.46 )% 4.40 % 7.70 % 7.70 %

Fully diluted earnings (loss) per shareafter goodwill amortization $ ( 0.02 ) $ ( 0.07 ) $ 0.17 $ 0.27 $ 0.23

As at April 30

Total assets $ 107,551 $ 47,243 $ 38,444 $ 35,958 $ 31,176

Working capital $ 8,576 $ 10,709 $ 13,394 $ 19,022 $ 18,589

Cash flow from operations (1) $ 4,314 $ 1,778 $ 4,205 $ 4,619 $ 3,175

Shareholders' equity $ 45,503 $ 28,782 $ 29,522 $ 29,502 $ 25,802

Book value per common share 2.91 3.06 3.12 3.01 2.87

Current ratio 1.17 1.96 2.78 4.67 5.30

ROA ( 0.24 )% ( 1.33 )% 4.25 % 7.34 % 6.50 %

ROE ( 0.57 )% ( 2.18 )% 5.53 % 8.94 % 7.85 %

Long-term debt to equity 24,62 % 19.06 % 0.32 % 0.33 % 0.69 %

Financial leverage ratio 2.36 1.64 1.30 1.22 1.21

Days receivables 78.40 61.90 66.24 64.25 62.68

Inventory turnover 3.13 3.52 4.79 4.23 3.55

Shares outstanding at year-end (000s) 15,629 9,417 9,467 9,808 8,988

Fully diluted shares (000s) 15,717 (2) 10,478 10,342 10,306 9,027

Before change in non-cash working capital balances related to operations. (2) Calculated under the Treasury Stock Method.(1)

97 98 99 00 01 97 98 99 00 01 97 98 99 00 01

Salesin thousands

EBITDAin thousands

Gross R&DExpenditures

in thousands

01 -77,90000 - 42,911 99 - 37,42398 - 34,34397 - 26,360

01 - 5 ,66500 - 1 ,189 99 - 3 ,97498 - 5 ,18397 - 4 ,099

01 - 7,61000 - 6 ,326 99 - 3 ,07198 - 2 ,08597 - 1 ,808

A N N U A L R E P O R T 2 0 0 1

1visionFiscal 2001 was highlighted by an evolutionary moment in our Corporation’s history. On January 31st, Mitec Telecom

and Swedish-based BEVE completed a milestone transaction that saw the two organizations join forces and become

a single entity.

The basic reasons for this merger are strategically sound. The members of the management teams of both Mitec and BEVE

first met over a year ago, and we were each impressed by the other’s corporate philosophy, entrepreneurial spirit,

and deeply rooted commitment to excellence.

We also recognized the tremendous possibilities for global growth that would be open to us. Mitec had established

a reputation in the telecommunications industry for its extensive research and development expertise, cutting-edge design

and manufacturing capabilities. For its part, BEVE was highly regarded in Scandinavia as a leading contract manufacturer

of advanced electronics components and sub-systems and for its state-of-the-art testing facilities. A profitable private

company, BEVE’s revenues increased over 300% between 1999 and 2000, from $15 million to $50 million.

Myer BentobPresident & Chief Executive Officer

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1joint message to shareholders

Many companies speak of the synergistic benefits that accrue from the transactions they engage in, but in this case these

benefits are clear. Mitec’s strong R&D and design focus, coupled with BEVE’s proven high-volume manufacturing capabilities, permit the merged Corporation tosignificantly boost its capacities as a provider of advanced telecommunicationsproducts to the telecom industry globally. Moreover, the strengths of our management teams

are complementary and provide us with a comprehensive expertise in three market segments we address: wireless,

microwave-links and satcom. Finally, the merged Corporation has a truly international presence, allowing us to better

serve such leading telecom players as Ericsson, Nokia, Nortel, Andrew, CPI, EchoStar and other customers that are actively

doing business on all five continents.

We are both confident about the prospects for the strengthened Corporation’s development and growth. MITEC·BEVE’s

global workforce of over 700 people and our combined pipeline of products enable us to fully address the increasing

worldwide demand for wideband wireless infrastructure products. Indeed, we expect the merger to almost double

revenues for the fiscal year ending April 30, 2002. Most important, we share the same vision for the Corporation, which

is to be a partner of choice in the telecom industry, providing innovative, high-quality radio frequency products.

Thomas NuorimaaPresident & Chief Operating Officer – Europe & Asia

This past year was marked by a good deal of uncertainty in the world’s equity markets. The technology meltdown has

been well documented and the telecom sector was certainly affected by these events. However, we are happy to report

that MITEC·BEVE has demonstrated the ability to grow even during difficult economic times. This past spring,we announced three new supply agreements with major European and North Americancustomers, collectively worth an estimated $100 million. These agreements underscoreour ability to provide superior design expertise and high-volume production.

We have proven that we are able to weather challenging economic climates, but understand, too, how these achievements

cannot be taken for granted. We are committed to ensuring that our R&D, design and manufacturing facilities remain

in the industry forefront. In order to meet the evolving needs of our customers in the wireless, microwave-links and satcom

sectors, we will continue to develop and augment the range of products and expertise we provide. Additionally, we intend

to see that our operations are made as efficient as possible, consolidating efforts where it is prudent to do so,

and expanding our resources only when circumstances demand.

We have set a number of priorities for the year ahead. Chief among these is our consolidation of the two corporate entities.

To best focus our efforts and develop our accounts, we have now implemented a new corporate structure. MITEC·BEVE’s

Corporate Management Committee is headquartered in Montreal and administers two distinct divisions, one responsible

for the Americas and the other overseeing our European and Asian markets. Each division will function under its own

management structure. Our R&D activities, which are presently centered in North America, will be extended into Europe.

Further, we are planning to expand into China in conjunction with our customer partners. The Asian telecommunications

market is enjoying steady growth and we look forward to pursuing the opportunities that exist there.

This has been a very gratifying year for us. We would like to take this opportunity to thank all of our employees for their

significant contributions and for sharing our vision of MITEC·BEVE’s potential. We are also grateful to our clients

for greeting the news of our merger with enthusiasm and for continuing to call upon us for our high-quality products

and expertise. Finally, we would like to thank you, our shareholders, who have all played such a key role in the success

of the Corporation. We are confident that the goals we have set will add real value to your investments in the days ahead.

(Signed)

Myer BentobPresident & Chief Executive Officer

(Signed)

Thomas NuorimaaPresident & Chief Operating Officer – Europe & Asia

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BEST DATASPEED

[RATE/SEC]

GPRS=115K1XRTT=144K EDGE=384K 2M +

CDPD=9.6K TO 19.2KGSM=9.6KCDMA=14.4K

GENERATION 2G 2.5G 3G

TECHNOLOGY

TDMACDPD

EDGEEGPRS

W-CDMA(UMTS)

CDMA 2000(3XRTT)

CDMACDPD

DIGITAL GSM

MITEC·BEVE’s positioning in thetelecommunications industry

GLOBAL

REGIONAL

Macro CellMicro Cell

Pico Cell

LOCAL AREA

HOME/OFFICE

SATELLITE

MICROWAVE-LINKSFilters and SubsystemsWaveguide ComponentsFlexible WaveguidesIsolators and CirculatorsTactical Radios

SATCOMRedundancy Switching

SystemsMaintenance Control

SystemsHP Output ArmsAmplifiers

Today's wireless technology is driven by the demand for a broader bandwidth for applications such as,

instant messaging and Internet access. MITEC·BEVE's expertise covers the full spectrum of 2G and 2.5G

technologies, which currently lead the rollout and upgrade of wireless infrastructures. MITEC·BEVE

is also developing 3G products for the next generation of wireless networks.

GPRS

1XRTT

Wireless Migration Path

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WIRELESSAmplifiers MCPAsRF SubsystemsMHAsDuplexers and Filters

directionJ O I N I N G F O R C E S T O B E C O M E A G L O B A L P A R T N E RJ O I N I N G F O R C E S T O B E C O M E A G L O B A L P A R T N E R

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1review of operations

Fulfilling Objectives Mitec Telecom set and achieved a number of ambitious corporate goals for fiscal 2001. Specifically, these objectives included:

… Meeting organic growth targets by realizing an overall revenue increase of 24% before the merger with BEVE and 82% growth after the merger;

… Enhancing wireless revenues faster than the industry average;

… Maintaining the strong earnings contribution of the satellite communication (satcom) business;

… Continuing to build partnerships with leading telecom network providers;

… Increasing the size of the Corporation through acquisitions in order to improve its competitive stature in the industry.

Establishing a Presence as a Partner of Choice

The merger of Mitec Telecom and BEVE has materially enabled the Corporation to take a decisive step closer to realizingits fundamental corporate aim of being a global partner of choice to such major players in the telecommunicationsindustry as Ericsson, Nokia, Nortel, Andrew, CPI and EchoStar.

Prior to the merger, BEVE was a privately-held company. Its main sources of revenue are derived from the manufactureand sale of telecommunications products used in point-to-point microwave networks. Its over 85,000 square footproduction plant in Borås, Sweden also maintains testing operations. BEVE is a profitable organization, with its salesdistribution concentrated in the Scandinavian marketplace, where it is highly regarded and enjoys a fruitful and enduringrelationship with Swedish network provider Ericsson.

The MITEC·BEVE transaction has strengthened the Corporation considerably in a number of areas. Theconvergence of Mitec’s well-recognized research and development and design expertise and BEVE’s high-volume manufacturing capacity permits the Corporation to offer a more comprehensive range of services toits customers and enables it to benefit from the trend towards outsourcing that is currently taking hold in thetelecommunications industry.

Further, the new combined Corporation now has a strong European presence, facilitating its growth in this importantmarketplace and the critical mass that allows it both to take advantage of economies of scale and to service its presentand potential clients around the world. The consolidated operations now employ over 700 people in 6 engineering andmanufacturing facilities in Canada, the United States, Sweden, the United Kingdom and Thailand.

Finally, the merger is earnings-accretive, so the Corporation’s revenues will increase substantially between fiscal 2000 and 2002, from $42.9 million to an estimated $140 million.

A Year of Growth

Though the telecom industry has been subject to some economic setbacks over this past year, the technology it providesis becoming increasingly important throughout the world. Wireless mobile voice and data communications devices, frompagers and digital assistants to notebook PCs and smart phones, are now a part of our daily lives and growing ever more

A N N U A L R E P O R T 2 0 0 1

»1goal

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indispensable as the tasks they perform multiply and their costs decrease. Similarly, the microwave-links and satcommarkets are being fuelled by the need for broader band applications such as high-speed Internet access and digital mediatelecommunications.

MITEC·BEVE is very well-positioned to serve these expanding wireless, microwave-links and satcom markets with a rangeof products that precisely address the constantly evolving needs of the industry.

Wireless

MITEC·BEVE’s fiscal 2001 R&D achievements and contract wins boosted its global presence in the wireless marketconsiderably. This is the market segment that holds the greatest potential for substantial gains and to this end, theCorporation’s revenues climbed 21%, higher than the industry average.

Wireless represents 40% of MITEC·BEVE’s business and its strong emphasis on organic growth in this sectorled to the successful development of advanced 2G and 2.5G products. This firmly established its technicalcapabilities in the CDMA and GSM markets.

Currently, these are the primary growth markets in the wireless industry. In North America, increasing customer usage anda demand for data and high-speed Internet connections are feeding the growing popularity of CDMA and GSM wirelessproducts, which in turn is encouraging the industry to build out the 2.5G network infrastructure. MITEC·BEVE has alsobeen active during this past year supplying 2G network products.

The situation is analogous in Europe. The need for data connections will spur future network development, while the highpenetration rate for voice applications continues to place demands on existing network infrastructures. Indications arethat Europe will lead the way in 3G deployments, though when this will occur is still uncertain. In the interim, thedeployment of 2.5G networks is in progress.

Over the past year, MITEC·BEVE’s aggressive R&D program made it possible for the Corporation to enter into a series ofnew development agreements with major network providers including Nokia and Lucent. Under the terms of one suchagreement, Nokia selected MITEC·BEVE as a partner to develop state-of-the-art wireless technology equipment, signallingthe Corporation’s decisive entry into the GSM market, the world’s largest wireless infrastructure market. The contractpositions MITEC·BEVE as one of two strategic suppliers of masthead amplifiers to Nokia’s Ultrasite GSM base stations.

In terms of product development, MITEC·BEVE unveiled its first prototype 25-watt Multi-Carrier Power Amplifier (MCPA)at the Chicago PCIA Global XChange trade show in September 2000. This was MITEC·BEVE’s initial MCPA product,designed to support CDMA applications, another wireless market in which the Corporation continues to make advances.

The Corporation’s successful ongoing R&D programs contribute significantly to the establishment of business relationshipsin the telecom field. During the third quarter, MITEC·BEVE signed a milestone supply agreement with Nokia for radiofrequency equipment designed for high-speed wireless data communications. The products are destined for both theEuropean and North American markets. The agreement is additionally significant as it marks the first supply agreementsigned with Nokia, an industry-leading network provider and offers considerable new opportunities.

Microwave-Links

The merger transaction with BEVE has allowed the Corporation to become a larger player in the microwavetelecommunications market, which accounted for roughly 39% of MITEC·BEVE’s combined business this fiscal year.Revenues in this sector reached $30.2 million, an increase of 500% over the previous year. Though margins are low in thissector, manufacturing volumes are very high.

BEVE’s manufacturing expertise in this field led to a substantial contract win. In April 2001, MITEC·BEVE signed a supplyagreement with a major European network provider worth an estimated $70 million, the largest such agreement in theCorporation’s history. The agreement engages MITEC·BEVE’s European division to manufacture high-volume microwavesubsystems used in point-to-point networks and enhances its positioning as a partner of choice.

1strategyJ O I N I N G F O R C E S T O B E C O M E A G L O B A L P A R T N E RJ O I N I N G F O R C E S T O B E C O M E A G L O B A L P A R T N E R

Satellite Communications

The satcom sector accounted for nearly 21% of MITEC·BEVE’s revenues. Over the past fiscal year sales have risen a healthy36%, reflecting strong organic growth. This is a sector with solid margins, and the revenues it generates contributesubstantially to the Corporation’s development efforts in the wireless and microwave-links sectors. Satcom remains anintegral part of the business and MITEC·BEVE will continue to enhance the products and services it provides to thislucrative market segment.

Strategy for Continued Growth

As an integral part of MITEC·BEVE’s efforts to increase its market share in the wireless, microwave-links and satcomsectors of the telecom industry, the Corporation has committed itself to a number of growth strategies in fiscal 2002.

To further secure its front running position, investments in R&D will continue to increase. Developing new products anddesigns is particularly important in regards to accelerating market penetration in the enhanced 2.5G and 3G wirelessmarket segments.

In emerging markets, the primary drivers for growth in the coming fiscal year will involve wireless products for 2G and2.5G network infrastructures, a technology in which MITEC·BEVE has a well-developed expertise. It is more cost effectiveto upgrade these networks than to deploy 3G infrastructures and they meet the growing consumer demand for wirelessdata services. In many emerging economies, mobile and fixed wireless technology is now preferred overtraditional wire line for the expansion of domestic communication infrastructures. Worldwide, 2.5Gnetworks are being increasingly deployed and offer a potential bandwidth for wirelessnetwork subscribers of 115Kb/s up to 384Kb/s, which represents a major increase in datatransfer rates (please refer to Wireless Migration Path on page 5). This group of standardsmakes possible multiple digital applications from hand-held devices and genuineInternet access without the present high costs associated with 3G infrastructures.

To make the most of these industry developments, MITEC·BEVE has set in motionplans to extend the global scope of its operations. The Corporation’s neworganizational structure includes two divisions; the Europe and Asia Division and theAmericas Division. The first is targeting the broad range of opportunities that exist inthe quickly growing Asian telecommunications marketplace. According to theStrategis Group marketing firm, the subscriber base in the Chinese wirelessmarket alone is expected to increase by 41% between 2000 and the end of 2001,to approximately 120 million subscribers. Together with its customer partners, theCorporation expects to expand into China next year.

In the future, MITEC·BEVE’s Americas Division will also be seeking similar partnerships in Brazil in order toestablish a stronger presence in the South American marketplace, where telcos are ramping up the services they provideto a steadily increasing customer base.

The Corporation’s two divisions will also facilitate the establishment of other key relationships in the industry. MITEC·BEVEnow possesses the skilled engineering and manufacturing personnel that enable it to efficiently pursue development andsupply agreements with network providers in North America and Europe. Each division’s specific geographical focus willallow the Corporation to forge new business relationships and deepen existing ones.

With its flexible manufacturing capacities, enlarged workforce and global presence, MITEC·BEVE is also equipped to offerits customers the cutting-edge technology and the expertise in radio frequency products that will be required as thesetelecom network providers increasingly outsource the design and manufacture of integrated RF front-end systems.

MITEC·BEVE’s commitment to strengthening its operations through internal growth and acquisition is motivated by the desireto advance and consolidate its position as a leading designer and manufacturer of components for the telecommunicationsindustry. The next generation of wireless products is in the making and MITEC·BEVE is dedicated to providing its customerswith the specialized products and services they require to meet the needs of this rapidly evolving industry.

A N N U A L R E P O R T 2 0 0 1

MITECMITEC•BEVEBEVE

Europe &Europe & Asia AsiaAmericasAmericas

CANADACANADA USAUSA BRAZIL 2003

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1management’s discussion and analysis offinancial condition and results of operations

This discussion and analysis is to assist readers in their assessment and understanding of the consolidated results ofoperations and the financial position of Mitec Telecom. It contains “forward looking statements” that are subject to risksand uncertainties, the most significant of which are outlined on page 16. It should be read in conjunction with the auditedconsolidated financial statements and supporting notes included in this annual report.

Two major events have transformed Mitec into what it considers as a true player in the somewhat turbulent telecommunications industry:

1. During the fourth quarter, Mitec acquired 100% of the outstanding voting shares of BEVE Invest AB ("BEVE"),a Swedish-based contract manufacturer of advanced electronic components for the telecommunications industry,for a total consideration of $18.6 million.

2. BEVE signed a 12-month supply agreement valued at $70 million with a major European network provider.

results of operationsSales

Total sales in fiscal 2001 increased by 81.6% to $77.9 million as compared to the $42.9 million in fiscal 2000. Internalgrowth in fiscal 2001 was 24% and the remainder of this increase resulted from the acquisition of BEVE on February 1, 2001.

WirelessSales in this segment are derived from wireless components sold to communication network providers,primarily Ericsson, Nortel, Nokia and Lucent. This segment has had a growth of over 40% since fiscal 1999.Growth for fiscal 2001 was 21.4% due to significant contracts won for the 2G and 2.5G products.

Microwave-LinksThis segment is now being reported separately as a result of the BEVE acquisition. These products are sold tonetwork providers. The products are for radio frequency microwave systems sold to customers such as Ericssonand Andrew. Prior to the BEVE acquisition, Mitec had some sales in this segment, but it was classified withSatcom. Sales increased by 499.3%

Fiscal Years Ended April 30, 2001 April 30, 2000(as a percentage of sales)

Sales 100.0% 100.0%

Gross profit 23.6% 27.9%

Research and development 8.2% 13.3%

Selling and administrative 12.6% 17.7%

Financial expenses & interest, net 1.4% 0.6%

Income tax expense (recovery) 0.4% ( 2.6 )%

Net income (loss) before goodwill 1.0% ( 1.1 )%

Goodwill and equity loss 1.3% 0.4%

Net loss after goodwill ( 0.3 )% ( 1.5 )%

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SatcomSales in this segment are derived from both network and service providers, such as Nortel, Andrew, EchoStarand CPI. Demand in this market segment is growing and the Corporation experienced an increase in sales of35.7% in fiscal 2001. This has been a change from the negative growth during the past two years.

Cost of Sales and Gross Profit

The Corporation’s gross profit for fiscal 2001 was $18.4 million as compared to $12.0 million in fiscal 2000. This represents a 53.3% increase. Mitec and BEVE contributed 56.0% and 44.0% respectively to the increase in gross profit during fiscal 2001.

Gross profit as a percentage of sales for the Wireless, Microwave-Links and Satcom segments were as follows:

WirelessThe wireless segment margins were lower in fiscal 2001 due to the significant costs associated with introducingnew major products in the 1900 and 800 frequency bands. Efficiencies from increased production of theseproducts are expected to occur during the first half of the next fiscal year which should have a positivecontribution on margins going forward.

Microwave-LinksMargins in the microwave-links segment decreased as a result of the BEVE acquisition. Margins in BEVE are lower than the other divisions of Mitec as they are a contract manufacturer. The Corporation expectsimprovement in BEVE’s margins as they become fully integrated with Mitec products.

SatcomThe margins in this segment were higher as a result of the strong growth which occurred during the year. Thismarket is now mature and margins have been stable over the past few years.

Research and Development

Mitec’s research and development ("R&D"), net of investment tax credits for fiscal 2001, was $6.4 million, an increase of 11.7% over the previous year. Approximately 75% of R&D efforts are in the wireless segment.

This increase in R&D resulted from the Corporation’s focus on technology to support its growth strategy of 2G, 2.5G and3G products. The Corporation performs its engineering in three centres of excellence located in Canada, the United Statesand Sweden. The Corporation has benefited from their R&D strategy with strong revenue growth being achieved byenhancing Mitec’s product portfolio. The Corporation will continue to invest in R&D and concentrate its efforts on thewireless segment.

Selling and Administrative Expenses

The Corporation’s selling and administrative expenses for fiscal 2001 increased 28.9% to $9.8 million as compared to $7.6 million in fiscal 2000. The majority of this increase resulted from the BEVE transaction. Selling and administrativeexpenses were 12.6% of sales as compared to 17.7% a year earlier. The Corporation expects to continue this trend ofdecreasing its selling and administrative expenses as a percentage of sales as sales volumes increase.

Financial Expenses and Interest Income

Mitec’s financial expenses and interest income for fiscal 2001 was $1.1 million as compared to $0.3 million in fiscal 2000,which represented a 266% increase. This increase was comprised of an increase in interest on long-term debt of $0.5 million and an increase of $0.3 million on the interest on our credit facilities, almost entirely related to BEVE.

F2001 F2000

Wireless 21.2% 23.1%

Microwave links 13.8% 20.4%

Satcom 46.7% 41.4%

TOTAL 23.6% 27.9%

Income Tax Expense (Recovery)Income tax for fiscal 2001 resulted in an expense of $0.3 million as compared to a recovery of $1.1 million for fiscal 2000.This represents an increase in expense of $1.4 million primarily because Mitec and most of its subsidiaries recorded profitsfor tax purposes for the year, including $0.4 million of expenses in BEVE and rate differentials in the various taxjurisdictions.

Goodwill Amortization and Equity Loss

Goodwill amortization and equity loss for fiscal 2001 was $1.0 million as compared to $0.2 million in fiscal 2000. Thisincrease related to the goodwill on the acquisition of BEVE, which is being amortized over 5 years beginning in the fourthquarter of fiscal 2001.

Net Loss

The net loss for fiscal 2001 was $0.3 million as compared to a net loss of $0.6 million in fiscal 2001. Before goodwillamortization, the Corporation returned to profitability primarily as a result of the increase in sales partially offset by areduction in margins and increases in other expense as described above. The Corporation’s decision to amortize thegoodwill relating to the BEVE acquisition over 5 years as opposed to 10 years for previous acquisitions resulted in a lossfor the year.

financial condition, liquidity and capital resources

Liquidity and Capital Resources

Mitec’s cash position increased by $0.2 million in fiscal 2001 from $0.6 million to $0.8 million. However the bankindebtedness increased by $9.4 million from $1.5 million to $10.9 million. In keeping with its strategy of increasing itspresence in Europe, the Corporation acquired BEVE, located in Sweden which accounted for $4.7 million of the increasein bank indebtedness.

The turnaround in Mitec’s operations in fiscal 2001 is apparent as cash flows generated from operating activities beforeinvestments in working capital increased to $4.3 million from $1.8 million for the 2000 fiscal year. Investments in workingcapital items amounted to $4.5 million in fiscal 2001 and $5.2 million in fiscal 2000 which resulted in a use of funds fromoperating activities of $0.2 million in fiscal 2001 and a use of funds of $3.5 million in fiscal 2000.

The investments in working capital items results from our significantly increased business in the last quarter and theforecasted business in Q1 and Q2 of fiscal 2002. The Corporation’s receivables increased from $8.3 million in fiscal 2000to $25.3 million in fiscal 2001 and inventory increased from $8.8 million in fiscal 2000 to $29.3 million in fiscal 2001. Thissubstantial investment was supported by an increase in accounts payable and accrued liabilities which grew to

Quarterly Information (unaudited)(In thousands of dollars Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4except per share data) F2000 F2000 F2000 F2000 F2001 F2001 F2001 F2001

Sales 9,680 11,626 8,750 12,900 12,195 12,699 13,477 39,529

Net income (loss) 54 132 ( 895 ) 100 21 72 152 ( 504 )

Basic and fully diluted EPS before goodwill amortization 0.01 0.01 ( 0.09 ) 0.01 0.00 0.01 0.02 0.02

Basic and fully diluted EPS after goodwill amortization 0.01 0.01 ( 0.09 ) 0.01 0.00 0.01 0.02 ( 0.03 )

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$36.7 million in fiscal 2001 versus $9.0 million in fiscal 2000. The receivables, inventory and payables related to the BEVEacquisition contained in the April 30, 2001 balances amounted to $12.1 million, $16.2 million and $23.2 million,respectively. The increases in accounts receivables without BEVE amounted to $4.9 million, because of the strong sales inthe last quarter of fiscal 2001 and the days sales in receivables increased only 2 days from 54 days in fiscal 2000 to 56 daysin fiscal 2001. The inventory increase without the BEVE increase was $4.3 million, again resulting from Mitec’ssignificantly increased sales anticipated in Q1 and Q2 of fiscal 2002. In terms of day sales in inventory, there are 78 dayssales in inventory as at April 30, 2001 versus 82 days as at April 30, 2000.

Capital expenditures were $3.8 million for fiscal 2001 compared to $8.9 million in fiscal 2000. The greater part of thatamount was for electronic test equipment utilized in our manufacturing facilities and, to a lesser extent, for our researchand development departments as we develop prototypes. These capital expenditures were financed from working capitaland capital leases.

During the year, the Corporation assumed an additional $6.7 million of long-term debt as a result of its acquisition of BEVE.

Mitec has available credit facilities of $12.3 million of which $10.9 million was utilized as at April 30, 2001. The stronggrowth of sales in Q4 of 2001 and anticipated growth in Q1 and Q2 of fiscal 2002 has increased the Corporation’s creditrequirements, particularly in Canada where the credit facility expired on January 31, 2001. This growth and anticipatedgrowth combined with the BEVE acquisition resulted in the Corporation not complying with the financial covenants of itsCanadian credit facilities as at April 30, 2001. The Corporation received a waiver from its credit facility lender in regard tothe April 30, 2001 events of non-compliance and an undertaking to waive July 31, 2001 events of non-compliance insupport of the Corporations efforts to obtain increased credit facilities necessary to support the growth of the businessand the anticipated growth on a go forward basis. The Corporation is actively negotiating alternative financing andexpects to conclude these negotiations by the end of the Q2 fiscal 2002.

As a result of the BEVE acquisition, the Corporation was not in compliance with certain financial ratios on its Canadian long-term debt.The Corporation has obtained appropriate waivers for these events of non-compliance and has re-negotiated thesecovenants to allow for prospective compliance given the significant growth experienced and expected in the business duringfiscal 2001 and 2002.

new accounting pronouncementsEffective May 1, 2001, the Corporation adopted the new recommendations of the Canadian Institute of CharteredAccountants, Section 3500 "Earnings Per Share". Under the new recommendations, diluted earnings per share arecalculated using the treasury stock method whereby the exercise of options is assumed to be at the beginning of theperiod. The proceeds from the exercise of the options are assumed to be used to purchase common stock at the averagemarket price during the period and the incremental shares are included in the calculation of diluted EPS. Diluted EPS asat April 30, 2001 calculated in accordance with the new recommendations would have remained the same.

Fiscal Years Ended April 30, 2001 April 30, 2000(in thousands of dollars)

Cash flows from operating activities before changes in working capital balances 4,314 1,778

Cash flows related to operating activities after changes in working capital balances ( 229 ) ( 3,463 )

Working capital 8,576 10,709

Long-term debt and capital leases 11,203 5,486

Capital expenditures 3,800 8,948

risks and uncertaintiesForeign Exchange Risk

A significant portion of Mitec’s sales are denominated in U.S. dollars and may be adversely affected by any severe currencyfluctuations.

From time to time, the Corporation uses future exchange contracts and foreign exchange contracts through a Board-approved plan, which has proven to be an effective means of mitigating short-term currency risks. The Corporation enteredinto some foreign exchange contracts in fiscal 2001 and has an unrecognized gain as at April 30, 2001.

Customers

A significant portion of Mitec’s sales are with a few customers. Any production delays experienced by telecommunicationsnetwork providers and service providers could have a material financial impact on Mitec. The wireless market isconcentrated with five major network providers. Mitec has established a relationship with four of these network providers.Details of the concentration of trade receivables can be seen under note 3 to the consolidated financial statements as atApril 30, 2001.

Technological Changes

It is extremely important to maintain very strong development support to remain abreast of all technological advancesmade in the Corporation’s segments. As such, Mitec must continuously invest in R&D to secure the Corporation’spositioning in obtaining or maintaining its current supply agreements.

Mitec signs long-term contracts with major customers that provide for the payment to Mitec for inventory and long-leadcomponent orders in the event of cancellation. These contracts and the Corporation’s continuous investment in R&Dprovide Mitec with some protection in the constantly changing and turbulent telecommunications market.

Additional Capital Needs

Mitec is currently actively negotiating to secure increased credit facilities required to support growth in operations. TheCorporation is confident in its ability to successfully complete these negotiations by the end of the Q2 fiscal 2002 and tomeet capital, research and development and other operational requirements for the foreseeable future. There can be no assurance, however, that capital requirements will be met on a timely basis or satisfied on terms acceptable to the Corporation.

outlookFiscal 2001 was a year of significant improvement in both sales growth and profitability.

Mitec will continue to strengthen its relationships with its customers to develop next generation products for thetelecommunications network providers. The Corporation will continue to focus its research and development on "3G"broadband wireless technology and continue addressing the demand for 2G and 2.5G products.

Mitec will continue to exploit synergies with BEVE. Mitec believes that to maximize their growth potential Mitec mustincrease their existing credit facilities. Funds generated from operations will provide the Corporation with significantcapital to finance a major portion of this growth. In the past, Mitec utilized capital lease financing for certain equipmentused in their manufacturing and research and development operations and expect to continue to selectively do so in thefuture, so long as the rates maintain competitive.

Therefore, Mitec is confident in its ability to meet capital and operational requirements for the foreseeable future.

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Mitec Telecom Inc.

management’s responsibility for financial statements and other financial informationThe accompanying consolidated financial statements, which have been prepared in accordance with generally acceptedaccounting principles, and the other financial information provided in the Annual Report, which is consistent with the financialstatements, are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements include some amounts that are based on management’s best estimates and judgementand, in their opinion, present fairly the Corporation’s financial position, it’s results of operations and its cash flows. theCorporation’s procedures and internal control systems are designed to provide reasonable assurance that accounting recordsare reliable and to safeguard the Corporation’s assets.

The Audit Committee, consisting primarily of outside directors, is responsible for reviewing the consolidated financialstatements and Annual Report and recommending their approval to the Board of Directors. In order to fulfill its responsibilities,the Audit Committee meets with management and external auditors to discuss internal control over the financial reportingprocess, significant accounting policies, other financial matters and the results of the examination by the external auditors.

These consolidated financial statements have been audited by the external auditors Ernst & Young LLP, Chartered Accountants,and their report is included herein.

(Signed) (Signed)

Myer T. Bentob Keith FindlayChairman and Vice-President, Finance andChief Executive Officer Chief Financial Officer

auditors’ reportTo the Shareholders ofMitec Telecom Inc.

We have audited the consolidated balance sheets of Mitec Telecom Inc. as at April 30, 2001 and 2000 and the consolidatedstatements of operations, retained earnings and cash flows for the years then ended. These financial statements are theresponsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statementsbased on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require thatwe plan and perform an audit to obtain reasonable assurance whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as at April 30, 2001 and 2000 and the results of its operations and its cash flows for the years then ended inaccordance with Canadian generally accepted accounting principles.

(Signed)Montréal, Canada, Chartered AccountantsJune 18, 2001.[except for note 18 which is as at August 7, 2001]

Mitec Telecom Inc.(Incorporated under the Canada Business Corporations Act)

consolidated balance sheetsAs at April 30[In thousands of Canadian dollars]

2001 2000$ $Assets [notes 8 and 9]

CurrentCash and cash equivalents 1,171 1,351Trade receivables 25,307 8,336Other receivables [note 4] 511 914Income taxes receivable 391 1,479Inventories [note 5] 29,287 8,788Prepaid expenses and other 1,066 513Deferred income taxes 837 476Total current assets 58,570 21,857

Capital assets [note 6] 32,705 22,183Long-term investment [note 7] 1,000 1,102Deferred income taxes 514 1,157Goodwill [net of accumulated amortization of $1,453; 2000 - $528] 14,762 944

107,551 47,243

Liabilities and Shareholders’ EquityCurrentBank indebtedness [note 8] 10,888 1,533Accounts payable and accrued liabilities 36,732 9,007Current portion of long-term debt [note 9] 1,297 523Current portion of obligations under capital lease [note 10] 463 85Deferred income taxes 182 –Deferred government grant [note 11] 432 –Total current liabilities 49,994 11,148

Long-term debt [note 9] 10,520 5,204Obligations under capital lease [note 10] 683 282Deferred income taxes 851 1,827

62,048 18,461

Shareholders’ equityShare capital [note 12] 38,715 20,689Retained earnings 8,270 8,529Cumulative translation adjustment ( 1,482 ) ( 436 )Total shareholders’ equity 45,503 28,782

107,551 47,243

Commitments and contingencies [note 14]See accompanying notes

On behalf of the Board:

(Signed) (Signed)Myer T. Bentob, Director Lionel Hurtubise, Director

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consolidated statements of operationsYears ended April 30[In thousands of Canadian dollars except per share data and number of shares]

2001 2000$ $

Sales 77,900 42,911Cost of sales including amortization of capital

assets of $1,922 [2000 - $1,296] 59,511 30,952Gross profit 18,389 11,959

Expenses [note 6] Selling and administrative 9,791 7,592Research and development [note 11] 6,387 5,716Financial expenses [note 16] 1,152 389Interest income ( 45 ) ( 138 )Equity loss and goodwill amortization on long-term investment 102 –

17,387 13,559Income (loss) before income taxes and goodwill amortization 1,002 ( 1,600 )Income tax expense (recovery) [note 13] 336 ( 1,125 )Income (loss) before goodwill amortization 666 ( 475 )Goodwill amortization ( 925 ) ( 153 )Net loss for the year ( 259 ) ( 628 )

Basic and fully diluted earnings (loss) per common shareBefore goodwill amortization 0.06 ( 0.05 )After goodwill amortization ( 0.02 ) ( 0.07 )Weighted average number of outstanding common shares 10,947,143 9,420,823

See accompanying notes

consolidated statements of retained earningsYears ended April 30[In thousands of Canadian dollars]

2001 2000$ $

Retained earnings, beginning of year 8,529 9,166Net loss for the year ( 259 ) ( 628 )Premiums paid on common shares purchased for cancellation [note 12] – ( 65 )Tax benefit of deemed compensation [note 13] – 56Retained earnings, end of year 8,270 8,529


Mitec Telecom Inc.

consolidated statements of cash flowsAs at April 30[In thousands of Canadian dollars]

2001 2000$ $

Operating ActivitiesNet loss for the year ( 259 ) ( 628 )Add items not affecting cash

Amortization of capital assets and goodwill 4,431 2,786Loss on disposal of capital assets 5 2Deferred income taxes 35 ( 382 )Equity loss and goodwill amortization on long-term investment 102 –

4,314 1,778Changes in non-cash working capital balances related to operations ( 4,543 ) ( 5,241 )Cash flows related to operating activities ( 229 ) ( 3,463 )

Investing ActivitiesDecrease in marketable securities – 6,480Additions to capital assets ( 3,800 ) ( 8,948 )Proceeds on disposal of capital assets 280 337Business acquisition, net of cash acquired [notes 1 & 7] ( 566 ) ( 1,102 )Translation adjustment ( 1,145 ) 90Cash flows related to investing activities ( 5,231 ) ( 3,143 )

Financing ActivitiesIncrease in bank indebtedness [note 8] 6,097 770Decrease in bank indebtedness [note 8] – ( 1,259 )Increase in long-term debt – 5,761Repayment of long-term debt ( 760 ) ( 34 )Increase (decrease) in obligations under capital lease ( 222 ) 367Shares purchased under normal course issuer bid for cancellation [note 12] – ( 203 )Issuance of common shares [note 12] 42 44Translation adjustment 529 –Cash flows related to financing activities 5,686 5,446

Net increase (decrease) in cash and cash equivalents 226 ( 1,160 )Cash and cash equivalents, beginning of year 588 1,748Cash and cash equivalents, end of year 814 588

Cash and cash equivalents consists of:Cash and cash equivalents 1,171 1,351Bank overdraft [note 8] ( 357 ) ( 763 )

814 588

Supplemental disclosure of cash flow informationInterest paid 1,148 294Income taxes paid 295 406


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notes to consolidated financial statementsApril 30, 2001 and 2000 [All tabular amounts are in thousands of Canadian dollars, except for share figures, unless otherwise stated]

1. Basis of Financial Statement Presentation and Business AcquisitionPrinciples of consolidationThese consolidated financial statements include the accounts of the Corporation and its directly and indirectly ownedsubsidiaries. All significant intercompany accounts and transactions have been eliminated on consolidation.

Business acquisitionEffective February 1, 2001, the Corporation purchased 100% of the outstanding voting shares of BEVE Invest AB [“BEVE”] for a purchase price of $18,606,000 including acquisition costs. The acquisition was accounted for by the purchase method.The results of operations of BEVE have been consolidated in the accounts of Corporation since the date of acquisition.

Headquartered in Boras, Sweden, BEVE is a contract manufacturer of advanced electronic components for thetelecommunications industry.

The allocation of the purchase price is summarized as follows:

$Assets acquired at fair value,

including $56 of cash and cash equivalents 35,805Liabilities assumed ( 32,504 )Goodwill 15,305Consideration 18,606

Consideration represented by:Cash 622Share capital [note 12] 17,984

18,606

The goodwill is amortized from the date of acquisition on a straight-line basis over 5 years.

2. Summary of Significant Accounting Policies

These consolidated financial statements have been prepared by management in accordance with Canadian generally acceptedaccounting principles, the more significant of which are outlined below:

Change in accounting policy for income taxes Effective May 1, 2000, the Corporation changed its method of accounting for income taxes from the deferral method to theliability method of tax allocation with the adoption of The Canadian Institute of Chartered Accountants’ Section 3465“Accounting for Income Taxes”. The Corporation has applied the new recommendations retroactively with restatement. Thischange had no material impact on opening retained earnings as at May 1, 1999 or on any of the financial statementspresented.

Under the liability method, deferred income tax assets and liabilities are determined based on the differences between thefinancial reporting and tax bases of assets and liabilities and are measured using substantively enacted tax rates and lawsthat are expected to be in effect in the periods in which the deferred tax assets or liabilities are expected to be realized orsettled. A valuation allowance is provided to the extent that it is more likely than not that deferred income tax assets will notbe realized.

Use of estimatesThe preparation of financial statements in conformity with Canadian generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure ofcontingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenuesand expenses during the reporting periods. Actual results could differ from these estimates.

Mitec Telecom Inc.Notes to Consolidated Financial Statements

2. Summary of Significant Accounting Policies [cont’d]

Government assistance and investment tax creditsGovernment assistance is recorded in the accounts when there is reasonable assurance that the Corporation has compliedwith, and will continue to comply with, all conditions necessary to obtain the assistance.

The Corporation incurs research and development expenditures which are eligible for investment tax credits. The investmenttax credits recorded are based on management’s estimates of amounts expected to be recovered and are subject to audit bytaxation authorities.

Government assistance, including investment tax credits for scientific research and experimental development, is reflected asa reduction in the cost of the assets or expenses to which it relates.

Cash and cash equivalentsIncluded in cash and cash equivalents are cash and short-term investments with maturity dates of 90 days or less at the dateof acquisition.

InventoriesRaw materials and purchased components are stated at the lower of cost on a first-in, first-out basis and replacement cost.Work-in-process and finished goods are stated at the lower of cost and net realizable value.

Capital assetsCapital assets are recorded at cost less applicable investment tax credits and government grants. Capital assets are amortizedover their estimated useful lives using the following methods and rates:

Buildings Straight-line 20 to 40 yearsMachinery and equipment Declining balance 10% to 20%Leasehold improvements Straight-line Term of the lease plus one renewal termFurniture and fixtures Declining balance 20%Tools and dies Straight-line 5 yearsComputer equipment Declining balance 30%Automobiles Declining balance 25% to 30%Trademarks Straight-line 17 yearsMachinery and equipment

under capital lease Declining balance 10% to 20%

During 2000, the Corporation changed the estimate of the useful life of certain machinery and equipment and as a result, theamortization policy was changed from 10% to 20% declining balance and applied prospectively.

GoodwillThe excess of the cost of business acquisitions over the fair value of the identifiable net assets acquired is recorded as goodwilland is amortized on a straight-line basis over a period not exceeding 10 years. On an ongoing basis, management evaluatesthe carrying value of goodwill for possible impairment, comparing current and anticipated undiscounted cash flows fromrelated operations to the unamortized goodwill balance and considering operating trends and other relevant factors.

Revenue recognitionThe Corporation recognizes revenue when products are completed to the customer’s specifications and are delivered to thecustomers.

Foreign currency translation

Canadian operationsMonetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at rates of exchangeprevailing at the balance sheet date. Revenues and expenses are translated into Canadian dollars at rates of exchange in effectat the related transaction dates. Exchange gains and losses arising from the translation of foreign currency items are includedin the determination of net income.

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2. Summary of Significant Accounting Policies [cont’d]

Foreign currency translation [cont’d]

Foreign operationsThe accounts of the self-sustaining foreign subsidiaries are translated into Canadian dollars using the exchange ratesprevailing at the end of the period for assets and liabilities and the average exchange rates during the period for revenue andexpenses. The adjustment arising from the translation of these accounts has been deferred and included in shareholders’equity as a cumulative translation adjustment. The change in the cumulative translation adjustment account reflects the effectof foreign exchange rate variations during the year upon the translation of the net assets of the self-sustaining foreignoperations.

Derivative financial instrumentsThe Corporation enters into foreign exchange contracts to reduce its exposure to the volatility in future exchange ratesapplicable to anticipated revenues in foreign currencies. Gains and losses on contracts designated as hedges of identifiableforeign anticipated revenues are included in income when the related transactions being hedged are recognized.

Financial expensesFinancial expenses include interest charges on bank and long-term indebtedness, bank charges and fees, discounts and foreignexchange gains and losses.

Earnings (loss) per shareBasic earnings (loss) per share has been calculated using the monthly weighted-average number of outstanding commonshares. Stock options outstanding at the end of each year have an antidilutive impact.

Stock option planThe Corporation has a stock option plan described in note 12. No compensation expense is recognized for this plan when stockoptions are issued to employees. Any consideration paid by employees on exercise of stock options is credited to share capital.

3. Financial Instruments[i] Short-term financial assets and liabilitiesThe carrying amounts of these assets and liabilities are a reasonable estimate of the fair values due to the short-term natureof these assets and liabilities.

Short-term financial assets consist of cash and cash equivalents, trade receivables and other receivables. Short-term financialliabilities consist of bank indebtedness, accounts payable and accrued liabilities.

[ii] Capital leasesThe carrying amounts of the Corporation’s capital leases approximate their fair value because of the floating interestcomponent.

[iii] Foreign exchange contracts

Futures contractsThe Corporation enters into foreign exchange futures contracts that oblige it to sell specific amounts of U.S. dollars at setfuture dates at predetermined exchange rates. The contracts are matched with anticipated U.S. dollar cash flows from revenuesin U.S. dollars. The amount of anticipated future revenues in U.S. dollars are projected in light of current economic conditionsin the Corporation’s markets where sales are made in US funds, existing orders from customers and the Corporation’s pastexperience in similar circumstances.

The following table sets out the Canadian dollar amounts to be received, the contractual exchange rates and the settlementdates of outstanding contracts:

Amount Exchange rate Settlement date $ $

2,322 0.6460 September 1, 20012,322 0.6459 December 1, 2001

As at April 30, 2001, the net unrecognized gain on hedges of anticipated future U.S. dollar revenues was $34,000 [2000 – nil].


3. Financial Instruments [cont’d]

[iii] Foreign exchange contracts [cont’d]

Foreign exchange collarThe Corporation has entered into a zero cost foreign exchange collar for the sale of U.S. dollars with a Canadian dollar floorof $1.5275 and ceiling of $1.5400 amounting to $1,500,000 U.S. for anticipated revenues in U.S. dollars up to June 1, 2001.Under the terms of the collar, the Corporation bears the exchange risk or benefit on U.S. dollar revenues when the Canadiandollar trades against the U.S. dollar between the floor and ceiling rates.

As at April 30, 2001, the net unrecognized gain on hedges of anticipated future U.S. dollar revenues was $19,000 (2000 – nil).

Fair valueThe fair value of derivative financial instruments generally reflects the estimated amounts that the Corporation would receiveon settlement of favourable contracts or be required to pay to terminate unfavourable contracts at the reporting date, therebytaking into account the current unrealized gains or losses on open contracts.

Some foreign exchange contracts that qualify as hedges have become favourable to the Corporation since their inception andaccordingly, constitute financial assets. Other contracts have become unfavourable and accordingly constitute financialliabilities. Their fair values as at April 30, 2001, if settlement were to occur, would be as follows:

2001 2000$ $

Favourable foreign exchange futures contracts 66 –Unfavourable foreign exchange futures contracts ( 19 ) –

47 –

Included in financial expenses in the income statement for the year ended April 30, 2001 are foreign exchange gains of$162,000 [2000 - $62,000].

[iv] Concentration of credit risk

RisksThe Corporation is exposed to credit-related losses in the event of non-performance by counter parties to financialinstruments, but it does not expect any counter parties to fail to meet their obligations given their high credit ratings. The creditexposure of foreign exchange contracts is represented by the fair value of contracts with a positive fair value at the reportingdate.

The Corporation sells products to customers primarily in Canada, the United States and Europe. The Corporation performsongoing credit evaluations of customers and generally does not require collateral. Allowances are maintained for potentialcredit losses. It is reasonably possible that the actual amount of loss, if any, incurred on trade receivables will differ frommanagement’s estimate.

The trade receivables of the Canadian operations, except for several major customers where management has assessed thecredit risk as minimal, are guaranteed by the Export Development Corporation [“EDC”] and the remainder of the Corporation’scustomer base comprises many geographically dispersed customers.

Two customers accounted for 10% or more of sales for the year ended April 30, 2001 and one customer accounted for 10%or more of trade receivables as at April 30, 2001.

Sales Trade receivables Customer Business segment [note 15] 2001 2000 2001 2000

% % % %

1 Wireless & Microwave – Links 63 44 64 292 Wireless & Satcom 10 17 – 273 Satcom 7 12 2 9

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3. Financial Instruments [cont’d]

[iv] Concentration of credit risk [cont’d]

The Corporation has increased its business with Customer 1, a large multi-national company, to 63% of its sales. This increaseresults from the acquisition of BEVE and increased contracts for various products. The Corporation deals with numerousdivisions and geographic locations of this customer.

4. Other Receivables2001 2000

$ $

Government assistance [note 11] – 510Employee advances 314 404Other 197 –

511 914

The Corporation has made interest-bearing advances to certain employees for the purchase of the Corporation’s commonshares at $3.29 per share. The advances are repayable within two years and are supported by promissory notes and securedby a pledge of the common shares purchased by the employees.

5. Inventories 2001 2000$ $

Raw materials and purchased components 16,044 4,638Work-in-process 9,616 3,592Finished goods 3,627 558

29,287 8,788

6. Capital AssetsAccumulated Net carrying

Cost amortization value$ $ $

2001Land 1,584 – 1,584Machinery and equipment 18,649 7,386 11,263Buildings and leasehold improvements 16,386 1,043 15,343Furniture and fixtures 2,535 1,124 1,411Tools and dies 521 346 175Computer equipment 3,936 2,346 1,590Automobiles 199 109 90Trademarks 16 7 9

43,826 12,361 31,465Machinery and equipment under capital lease 1,377 137 1,240

45,203 12,498 32,705


6. Capital Assets [cont’d]Accumulated Net carrying

Cost amortization value$ $ $

2000Land 1,097 – 1,097Machinery and equipment 15,598 5,627 9,971Buildings and leasehold improvements 8,342 680 7,662Furniture and fixtures 2,272 786 1,486Tools and dies 403 294 109Computer equipment 3,329 1,816 1,513Automobiles 172 137 35Trademarks 8 6 2

31,221 9,346 21,875Machinery and equipment under capital lease 342 34 308

31,563 9,380 22,183

Included in expenses is amortization of capital assets of $1,584,000 (2000- $1,337,000).

7. Long-Term Investment

On September 1, 1999, the Corporation purchased 176,470 common shares [representing 15% of the outstanding commonshares] of AmpliX Inc. [“AmpliX”], for $1,080,000 in cash substantially consisting of goodwill and technological rights andincurred legal and other costs of $22,000. The goodwill and technological rights are being amortized over 15 years. TheCorporation has the option to purchase an additional 34% of the common shares starting February 29, 2003. The acquisitionwas financed from working capital. The investment has been accounted for on the equity basis. AmpliX specializes in thedesign, fabrication and marketing of predistorsion linearizers for wireless and satellite communication equipment.

The parties have entered into a strategic alliance to exchange information pertinent to the development of Multi-ChannelPower Amplifiers for wireless applications. The Corporation has committed to fund certain research and developmentexpenditures of $400,000 in 2002. In 2001, the Corporation purchased research and development services in the amount of $762,000 [2000 - $62,000]. The amortization of goodwill and technological rights amounted to $60,000 in 2001 and theCorporation’s share of AmpliX’s loss was $42,000 in 2001.

8. Bank Indebtedness

Entity Credit available Credit used Interest$ $

As at April 30, 2001Mitec Telecom Inc. 6,000 5,516 Prime RateGigatec AB 300 300 7.6%BEVE 5,992 4,715 5.95%

12,292 10,531Bank overdraft – 357

12,292 10,888

As at April 30, 2000Mitec Telecom Inc. 5,000 770 Prime RateMitec Europe Co. Ltd. 460 – U.K. Bank Base Rate + 2.5%Gigatec AB 331 – 7.6%

5,791 770 Bank overdraft – 763

5,791 1,533

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8. Bank Indebtedness [cont’d]

The credit facilities for Mitec Telecom Inc. expired on January 31, 2001. Mitec Telecom Inc. has continued to operate under thiscredit facility. The financial covenants of this facility were not met as at April 30, 2001 primarily as a result of the acquisitionof BEVE and management does not expect to meet these financial covenants in the near future. On July 19, 2001, theCorporation received a waiver from its credit facility lender in regard to the April 30, 2001 events of non-compliance and anundertaking to waive July 31, 2001 events of non-compliance.

The Corporation is looking to increase its credit facility in order to support its growing operations. In this regard, theCorporation is currently pursuing alternative financing opportunities. The Corporation’s current credit facility lender has agreedto support the Corporation during this refinancing effort.

Substantially, all the assets of the Corporation and its subsidiaries collateralize the borrowings under these facilities [note 9].As at April 30, 2001, the Royal Bank Prime Rate was 6.5%.

9. Long-Term Debt 2001 2000$ $

[a] Clarica Life Insurance Company [“Clarica”] term loan of $5,000,000, bearing interest at 8.10%, maturing in 2012 with monthly principal installments of $34,722 plus interest. 4,549 4,966

[b] Swedish bank term loan of $761,000 [Swedish Kronor – 4,600,000],bearing interest at 6.95%, maturing in 2005 with monthly principal installments of $13,235 plus interest both payable in Swedish Kronor beginning in September 2000. 594 761

[c] Swedish bank term loan of $6,674,000 [Swedish Kronor – 44,555,000],bearing interest between 5.20% and 6.80%, maturing at various dates starting in 2004 with quarterly installments of $198,000 plus interest,payable in Swedish Kronor. 6,674 –

11,817 5,727Less: Current portion 1,297 523

10,520 5,204

The Clarica loan agreement contains certain restrictive financial and other covenants. As a result of the BEVE acquisition, threeof the financial covenants were not met by the Corporation as at April 30, 2001. A waiver with respect to these covenants asat April 30, 2001 was obtained on July 11th, 2001 and prospective ratio requirements was subsequently amended accordingly.

[a] The collateral provided by the Corporation under the Clarica loan agreement consists of:

[i] a first ranking hypothec in the amount of $6,000,000 on all movable and immovable property other than trade receivables and inventories;

[ii] a second ranking hypothec on trade receivables and inventories; and

[b] The Corporation has provided a chattel mortgage on movable and immovable property of certain subsidiaries of theCorporation as collateral under both Swedish bank loan agreements described in note 9 [b] and [c].

The Corporation has computed the fair value of its debt using future cash outflows discounted at its incremental borrowingrate and has determined that the fair value of this financial liability approximates its carrying value.

The required annual principal payments for each of the next five years are as follows:

$

2002 1,2972003 1,2972004 1,2692005 1,2062006 1,154


10. Obligations Under Capital Lease

The following is a schedule of future minimum lease payments under capital lease:

$

2002 4692003 4352004 3622005 1242006 –

1,390Less: Imputed interest at rates varying between 5.90% and 9.40% 244

1,146Less: Current portion 463

683

11. Government Grants

Pursuant to the expansion project announced on June 5, 1998, the Corporation entered into an agreement with thegovernment of Quebec whereby the government reimbursed the Corporation the amount of $1,600,000 to cover incrementalpersonnel costs associated with the expansion project. The grant is contingently repayable if certain employee levels are notmaintained for a minimum of three years.

In 2000, the Corporation recorded a receivable of $510,000 related to this grant and in 2001 they received the entire grantamount of $1,600,000 and recorded a deferred government grant of $432,000. The grant amounts have been recorded as a reduction in cost of sales of $480,000 (2000 – $372,000), research and development expenditures of $33,000 (2000 – $66,000) and general and administrative expenses of $145,000 (2000 – $72,000).

The Corporation incurred research and development expenditures, some of which are eligible for investment tax credits.The investment tax credits, recorded as a reduction of research and development expenditures, were $1,223,000 (2000 – $610,000).

12. Share CapitalAuthorizedUnlimited number of preferred shares issuable in series and subject to such conditions as may be determined by the Board ofDirectors.

Unlimited number of common shares.

Issued and outstanding common shares2001 2000

Number Amount Number Amount of shares $ of shares $

Balance, beginning of year 9,417,026 20,689 9,467,449 20,783 Changes during the year:

Employee share purchase plan 10,718 42 12,277 44 Issuance of shares on business acquisition [note 1] 6,201,472 17,984 – – Cancellation of shares – – ( 62,700 ) ( 138 )

Balance, end of year 15,629,216 38,715 9,417,026 20,689

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12. Share Capital [cont’d]

On October 19, 1998, the Toronto and Montréal Stock Exchanges accepted notices filed by the Corporation of its intention tomake normal course issuer bids on its common shares. The notice provided that the Corporation may, during the 12-monthperiod ended October 19, 1999, purchase up to 490,744 common shares of the Corporation.

In 2000, the Corporation purchased for cancellation 62,700 common shares at a cost of $203,000. Of the total cost, $138,000reduced share capital and $65,000 was charged to retained earnings representing premiums paid over the average statedvalue of the shares purchased.

Employee share purchase planAn Employee Share Purchase Plan, under which employees may purchase shares in the Corporation at the market price of theshares, has been in existence since May 1, 1998. For every four shares purchased by an employee, the Corporation willcontribute one share. During 2001, the Corporation issued 10,718 [2000 – 12,277] common shares for proceeds of $42,000[2000 – $44,000] as part of its Employee Share Purchase Plan. As at April 30, 2001, the aggregate number of shares stillavailable under the Plan is 264,364.

Stock option planThe Corporation has in place a Stock Option Plan [the “Plan”] for the benefit of key employees, directors and officers of theCorporation to purchase an aggregate maximum of 1,500,000 common shares. The number of common shares granted to a beneficiary and the vesting period will be determined at the discretion of the Board of Directors.

The exercise price of any option granted under the Plan shall be fixed by the Board of Directors at the time of the grant basedon the closing price per common share. The term of an option will not exceed ten years from the date of the grant. Optionsare not transferable and can only be exercised while the beneficiary remains an employee, director or officer of the Corporation.

The changes to the number of stock options granted by the Corporation, and their weighted average exercise price are as follows:

2001 2000# $ # $

Balance, beginning of year 1,061,350 6.05 875,450 6.85Granted 211,800 2.46 388,000 4.33Expired ( 345,200) 6.34 ( 202,100) 6.24Balance, end of year 927,950 5.12 1,061,350 6.05Options exercisable at end of year 428,550 5.80 458,630 6.44

Additional information concerning stock options outstanding as at April 30, 2001 is as follows:

Options outstanding Options exercisableWeighted Weighted Weighted average average averageexercise months exercise

Exercise price Number price to expiry Number price

$2.10 to $2.81 165,300 2.10 115 33,060 2.10$2.82 to $4.60 223,700 3.87 105 70,740 4.13$4.80 to $6.50 407,450 6.00 80 267,850 6.14$6.70 to $7.25 45,000 6.84 83 17,000 7.03$8.00 to $10.25 86,500 9.18 73 39,900 9.01

927,950 428,550


13. Income Taxes[a] Significant components of the income tax expense (recovery) consist of the following:

2001 2000$ $

Current income tax expense (recovery) before the following: 370 ( 684 )Benefit of previously unrecognized losses and temporary differences ( 69 ) ( 59 )Current income tax expense (recovery) 301 ( 743 )Deferred income tax expense (recovery) 35 ( 382 )Income tax expense (recovery) 336 ( 1,125 )

[b] The income tax expense (recovery) reported differs from the amount computed by applying Canadian income tax rates to income before income taxes and goodwill amortization. The reasons for the difference and the related tax effects are as follows:

2001 2000$ $

Income (loss) before income taxes and goodwill amortization 1,002 ( 1,600 )Canadian statutory income tax rate 38.12 % 38.17 %

Expected income tax expense (recovery) 382 ( 611 )

Adjustments:Effect of foreign tax rates 31 63Tax credits and other amounts not taxable in Québec ( 82 ) ( 73 )Benefit of previously unrecognized losses and temporary differences ( 69 ) ( 59 )Tax effect of manufacturing and processing tax credit ( 19 ) ( 26 )Large Corporations Tax and other 93 ( 419 )

Income tax expense (recovery) 336 ( 1,125 )

[c] The tax effects of temporary differences and net operating losses that give rise to deferred income tax assets and liabilities are as follows:

2001 2000$ $

Deferred income tax liabilities:Carrying values of capital assets in excess of tax bases 2,366 1,870Investment tax credits 320 191Reserves and other 426 –

Total deferred income tax liabilities 3,112 2,061

Deferred income tax assets:Net operating losses carried forward 3,000 2,573Provisions and other 336 667

Total deferred income tax assets 3,336 3,240Valuation allowance ( 870 ) ( 1,373 )Net deferred income tax assets 2,466 1,867

Deferred income tax liabilities in excess of deferred income tax assets 646 194Recognized non-refundable investment tax credits ( 964 ) –Net deferred income tax liabilities (assets) ( 318 ) 194

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13. Income Taxes [cont’d]

The Corporation has unrecognized loss carryforwards of approximately $295,000 in Thaïland, which are available to reducefuture years’ taxable income. These loss carryforwards will expire if not used in the years 2002 to 2004.

The Corporation also has available unrecognized loss carryforwards of approximately $1,600,000 in the U.S., which begin to expire in 2018.

The Corporation can claim a tax deduction in the United States for deemed compensation resulting from the exercise of stockoptions. This tax deduction is considered a capital transaction and as a result, in 2001, a benefit in the amount of nil [2000 –$56,000] has been recorded in retained earnings.

14. Commitments and Contingencies[a] The Corporation and its subsidiaries are committed under operating leases for rental of properties and equipment until

2006. Future minimum annual rentals are as follows: $

2002 3622003 1442004 1312005 1312006 76

844

[b] In January 1997, the Corporation received notice from legal counsel to residents of a house in Williston, Vermont, of a potential claim alleging property damages, and possibly health damages, arising from the presence of certain contaminants beneath their property. In February 1999, the Corporation entered into an agreement with the State of Vermont whereby the Corporation has agreed to perform a site investigation, and the State of Vermont has agreed to use its authority and resources to identify all individuals and entities potentially responsible for the site contamination.The U.S. federal authorities have halted their investigation pending the outcome of this site survey and investigation.The Corporation has hired U.S. legal counsel specializing in environmental matters to assess the merits of this potential claim but the outcome is presently not determinable and therefore no provision has been made in the accounts.

15. Segmented Information[a] Segmented information used by management

Management organizes the Corporation into three principal operating segments for making operating decisions and assessingperformance. The operating segments are Wireless Telecommunications [“Wireless”], Satellite and TerrestrialTelecommunications [“SatCom”] and Microwave Telecommunications Links [“Microwave - Links”]. The Corporation currentlyoperates in Canada, the United States, the United Kingdom, Sweden and Thaïland.

Wireless is involved in research, design, development, manufacturing and sale of components, subsystems and multifunctionsubsystems for the wireless and cellular markets.

Microwave - Links is involved in research, design, development, manufacturing and sale of components for radio frequencysystems and microwave communications.

Satcom is involved in research, design, development, manufacturing and sale of components, subsystems and multifunctionsubsystems for satellite earth stations.

Management evaluates segment performance based on gross profit as other expenses cannot be allocated to individualsegments. In addition, the segments share inventory and capital assets and therefore total assets cannot be reasonablydetermined by segment.

As a result of the acquisition of BEVE (see note 1), the Corporation has restated the segmented information from 2000 toconform to the 2001 operating segments.


15. Segmented Information [cont’d]

[a] Segmented information used by management [cont’d]

Wireless Microwave SatCom TotalLinks

$ $ $ $

2001 Sales 31,528 30,244 16,128 77,900 Cost of sales 24,838 26,072 8,601 59,511 Gross profit 6,690 4,172 7,527 18,389 Expenses 17,387 Income before income tax expense and goodwill amortization 1,002 Income tax expense 336 Goodwill amortization 925

Net loss for the year ( 259 )

2000 Sales 25,977 5,047 11,887 42,911Cost of sales 19,973 4,017 6,962 30,952 Gross profit 6,004 1,030 4,925 11,959 Expenses 13,559 Income before income tax recovery and goodwill amortization ( 1,600 ) Income tax recovery ( 1,125 ) Goodwill amortization 153Net loss for the year ( 628 )

[b] Enterprise-wide information

The following tables present sales, assets and capital assets and goodwill based on the geographic location of production.

2001 2000$ $Sales

Canada 47,660 27,861Sweden 26,611 1,203United States 541 16,528Other 3,088 2,870Inter-country – ( 5,551 )

Total 77,900 42,911

Assets Canada 56,951 36,946Sweden 41,972 1,563United States 5,594 5,594Other 3,034 3,140

Total 107,551 47,243

Capital assets and goodwillCanada 16,688 15,965Sweden 26,769 2,510United States 3,059 3,384Other 951 1,268

Total 47,467 23,127

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15. Segmented Information [cont’d]

[b] Enterprise-wide information [cont’d]

The following table presents sales by destination of the product.

2001 2000$ $

Canada 11,949 7,173United States 32,907 29,231Europe 32,875 6,241Asia 169 266

77,900 42,911

16. Financial Expenses Financial expenses consist of:

2001 2000$ $

Interest on bank indebtedness 530 250Interest on long-term debt 570 44Other 52 95

1,152 389

17. Comparative FiguresCertain comparative figures for 2000 have been reclassified to conform to the presentation adopted in 2001.

18. Subsequent Event On July 19, 2001, the Corporation received waivers from its lenders with respect to the non-compliance of certain financialcovenants with respect to its bank indebtedness as disclosed in note 8 and on July 11, 2001 with respect to its long-term debtas disclosed in note 9. On August 7, 2001 the Corporation received an amendment to one of the financial covenants requiredunder the loan agreement described in note 9.

1corporate information

1investor informationauditorsErnst & Young LLP

legal counselFraser Milner Casgrain

bankerRoyal Bank of Canada

transfer agent & registrarThe CIBC-Mellon Trust Company

annual general meetingWednesday, September 25, 2001 at 11:00 A.M.Hotel Ritz-CarltonMontreal, Quebec

stock symbolMTM

listing of stockToronto Stock Exchange

year endApril 30th

shares outstanding15,629,216

fully diluted shares(treasury stock method)15,717,731

investor relationsKeith FindlayVice-President, Finance and CFOTel.: (514) 694-9000Fax: (514) [email protected]

Martin BilodeauDirector, Investor [email protected]

Mitec welcomes all investors to our quarterly conference calls.For further information,please visit our website at:http://www.mitectelecom.com

corporate officeMitec Telecom Inc.9000 Trans-Canada HighwayPointe Claire, QuebecCanada H9R 5Z8Tel.: (514) 694-9000Fax: (514) 694-3933

subsidiariesMitec Wireless Inc.31 Park RoadTinton Falls, New JerseyUnited States 07724

BEVE Invest ABBox 176SE-503 08 BoråsSweden

Mitec Telecom LimitedFactory Estate, Borers Arm RoadCopthorne, West SussexEngland RH10 3LH

Gigatec ABIdavagen 23S-352 46 VAXJOSweden

Microwave TechnologyCorporation129/1 003 Industrial EstateWangchula AmphurWang-Noi, AyutthayaThailand 13170

Written and designed by Maison Brison

directors

Myer T. Bentob 1,2 *President and Chief Executive OfficerMitec Telecom Inc.

Thomas Nuorimaa 1 *President and Chief Operating Officer – Europe and Asia, Mitec Telecom Inc.

Lionel P. Hurtubise 1,2

Co-Chairman of the Board of Mitec Telecom,Chairman of the BoardEricsson Communications Canada

Hubert R. Marleau 2

Co-Chairman of the Board of Mitec TelecomPresidentPalos Capital Corporation

John D. RobinsonDirector Strategic DevelopmentMitec Telecom Inc.

Sven E. BorgstromChief Technology OfficerTelesystem International Wireless Inc.

Charles R. Spector 1

PartnerFraser Milner Casgrain

* Officer of the Corporation1 Compensation Committee2 Audit Committee

officers

Myer T. Bentob President and Chief Executive Officer

Thomas NuorimaaPresident and Chief Operating Officer– Europe and Asia

Keith FindlayVice-President, Finance and Chief Financial Officer

Willy AskVice-President, Operations– Europe and Asia

Marcel LarocqueVice-President, Technology

Julio ValenteVice-President, Special Projects

Oliver de BrouwerVice-President, Quality & Systems

Sylvain DugasVice-President, Operations

Prin

ted

in C

anad

a

CANADA: Montreal

UNITED STATES: Tinton Falls (NJ)

SWEDEN: Borås / Vaxjo

UNITED KINGDOM: Copthorne

THAILAND: Bangkok

CHINA: {2002}

BRAZIL: {2003}

glos

sary

AmplifierAn electrical device that strengthens the signal in digital and analog transmission.

CDMA(code division multiple access)A spread spectrum air interface technologyused in some digital cellular, personal communications services and other wireless networks.

CdmaOneThe IS-95 CDMA standard developed by Qualcomm Inc.

Cdma2000 A third-generation wireless technology proposal submitted to the InternationalTelecommunication Union, which is basedon the IS-95, or cdmaOne, standard.

CDPD (cellular digital packet data)An enhanced system overlay for transmitting and receiving data over cellular networks.

DuplexersSimultaneous transmission in both directions, sometimes referred to as fullduplex to differentiate it from half duplex,which is alternating transmission in eachdirection. In most cases a filter is included in both paths.

EDGE (enhanced data rates for global (or GSM) evolution)An advanced technology for GSM and TDMAnetworks that may offer wireless dataaccess speeds of up to 384 kilobits per second in end-user devices.

EGPRSEnhanced GPRS (general packet radio services) technology.

FiltersDevices that permit a certain range of frequencies to pass while suppressingunwanted frequencies or noise, that separatechannels in communications circuits.

GSM (global system for mobile communications)A digital cellular or PCS network usedthroughout the world.

GPRS(general packet radio services)A 2.5-generation technology (being implemented in GSM networks) that may offer wireless data access speeds of up to 144 kilobits per second in end-user devices.

Multi Carrier Power Amplifier (MCPA)Multi Carrier Power Amplifier,unlike a Single Carrier Power Amplifier,can amplify more than one channel at the same time. MCPAs are used to amplify the transmit (Tx) power.Linearization methods such as predistortionand feed forward are commonly used to “transform” SCPA into MCPA.

Mast Head Amplifier (MHA)MHAs are used to increase the coverage of base station (BTS). They also improve theclarity of the reception. MHAs are placedbetween the antenna and the BTS. They arecomposed of duplexers and amplifiers.

Microwave-LinksCommunication network using microwavefrequencies as signal carriers.

Output ArmsDevices used to improve the performanceand reliability of KPA (Klystron PowerAmplifier) and TWTA (Travelling Wave TubeAmplifier). Output arms are placed at theamplifier output. They are used to monitortransmitted and reflected power. They protectthe amplifier against reflected power.

SatcomSatellite communications.

TDMA (time division multiple access)A digital air interface technology used in cellular, PCS and ESMR networks.

Tactical RadioCommunication equipment that includesswitches, radio relays and bulk encryptionunits. Typical applications are tactical areanetworks, air defense networks and command post communication networks.

UMTS (Universal MobileTelecommunications System)Europe’s approach to standardization for third-generation cellular systems.

W-CDMA (wideband code division multiple access)The third generation standard offered to the International TelecommunicationUnion by GSM proponents.

WirelessDescribing radio-based systems that allowtransmission of telephone and/or data signals through the air without a physicalconnection, such as a metal wire or fiberoptic cable.

WaveguideA hollow conductor that is used to efficientlytransmit high-energy, high-frequency wavesin the centimeter to micrometer range.

1XRTTThe path which CDMA will be following to 3rd generation standards. It provides for data rates of up to 144 kbps.

3XRTTCDMA2000 operating mode at 3 times the basic chip rate of 1.2288 Mbps.

Mitec unveils its first prototype 25-watt rack module Multi-CarrierPower Amplifier (MCPA) at the Chicago PCIA Global XChange tradeshow. the Corporation’s first MCPA product supported CDMA 2000applications in the 1900 MHz frequency band.

Mitec is selected by Nokia as a cooperationpartner to develop state-of-the-art wireless filterand amplifier technology equipment. Mitec alsosigned a milestone supply agreement with NokiaNetworks. Mitec will supply Nokia Networks withradio frequency equipment for high-speed datawireless communications.

Mitec Telecom and BEVE Invest completea milestone merger transaction. Themerger is expected to triple revenues forthe fiscal year ending April 30, 2002,from $42.9 million to an estimated $140 million. It also positions the newCorporation as a global player, with aworkforce that expands from 350 to over700 employees. In exchange for all sharesof BEVE, Mitec issues 6.2 million commonshares for a total value of approximately$18.6 million.

MITEC·BEVE is awarded two orders for a combined value of approximately $20 million from two divisions of a majorEuropean customer. One of the orders is a renewal of an existing product in radiocommunications, with an increase inquantity. The second is for a new 850 MHz2.5G CDMA product.

MITEC·BEVE signs a 12-month supplyagreement valued at approximately $70 million with a major European networkprovider. MITEC·BEVE will manufacture high-volume subsystems used in point-to-pointmicrowave networks. The agreement is the largest ever signed by MITEC·BEVE.

»1major events


JULY 2000 AUGUST 2000 SEPTEMBER 2000 OCTOBER 2000 NOVEMBER 2000 DECEMBER 2000 JANUARY 2001 FEBRUARY 2001 MARCH 2001 APRIL 2001 MAY 2001 JUNE 2001

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1corporate profile

MITEC·BEVE is a leading designer and manufacturer of telecommunication products

addressing the wireless, microwave-links and satcom markets. The Corporation sells its

components worldwide mainly to network providers for incorporation into high-performing

wireless communication infrastructures that enable voice, data/Internet and ultimately

multimedia communications.

This year's merger between Mitec and Swedish-based BEVE has significantly strengthened

the Corporation's international presence. The merger allows it to further develop the services

it offers to major global players in the telecom industry such as Ericsson, Nokia, Nortel,

Andrew, CPI and EchoStar.

MITEC·BEVE's headquarters are in Montreal, Canada, which is also the head office for

its Americas Division. The Corporation's European and Asian Division is headquartered

in Borås, Sweden, the site of its high-volume manufacturing facility. Additional research and

development, design and manufacturing operations are located in the United States,

Sweden, the United Kingdom and Thailand.

With a global workforce of over 700 employees and a pipeline of products that fully

addresses the worldwide demand for wider band wireless infrastructure products,

MITEC·BEVE's mission is to be a partner of choice in the telecom industry, providing

innovative, high-quality radio frequency products.

MITEC·BEVE is listed on the Toronto Stock Exchange under the symbol MTM. On-line

information is available at: www.mitectelecom.com.

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