For over 30 years, Zarlink Semiconductor has delivered semiconductor solutions that drive the capabilities of voice, enterprise, broadband and wireless communications. The Company's success is built on its technology strengths including voice and data networks, optoelectronics and ultra low-power communications. For more information, visit www.zarlink.com.
Shareholders and other individuals wishing to receive, free of charge, copies of the reports filed with the U.S. Securities and Exchange Commission and Regulatory Authorities, should visit the Company's web site at www.zarlink.com or contact Investor Relations.
Certain statements in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and assumptions include, among others, the following: our dependence on the successful development and market introduction of new products; our dependence on revenue generation from our legacy products in order to fund development of our new products; our ability to successfully integrate Legerity and any businesses acquired in the future; any potential undisclosed liabilities associated with the Legerity acquisition; our ability to operate profitably and generate positive cash flows in the future; our dependence on our foundry suppliers and third-party subcontractors; order cancellations and deferrals by our customers; and other factors referenced in our Annual Report on Form 20-F. Investors are encouraged to consider the risks detailed in this filing.
Zarlink and the Zarlink Semiconductor logo are trademarks of Zarlink Semiconductor Inc.
An open conference call for analysts will be held today beginning at 5:00 p.m. EST. Investors, media and other parties are listen-only. Please dial 1-800-732-9307 or 416-644-3414. The replay number is 1-877-289-8525 (passcode 21259846#) or 416-640-1917 (passcode 21259846#). The replay is available until midnight, February 19th, 2008. A live audio webcast will be available through www.marketwire.com (Marketwire) or from the Company's website at www.zarlink.com.
Zarlink Semiconductor Inc.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) DATA
(in millions of U.S dollars, except per share amounts, U.S. GAAP)
(Unaudited)
--------------------------------------------------------------------------
Three months ended Nine months ended
--------------------------------------------------------------------------
Dec. 28, Sept. 28, Dec. 29, Dec. 28, Dec. 29,
2007 2007 2006 2007 2006
--------------------------------------------------------------------------
Revenue $48.6 $49.6 $34.1 $128.8 $110.6
Cost of revenue 25.8 27.0 17.0 70.2 50.9
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Gross margin 22.8 22.6 17.1 58.6 59.7
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Expenses:
Research and
development (R&D) 13.1 12.0 7.9 33.9 24.9
Selling and
administrative 16.8 13.6 8.4 40.3 27.9
Acquired in-proces
R&D - 20.3 - 20.3 -
Amortization of
intangible assets 1.8 1.2 0.1 3.2 0.2
Gain on sales of
business (0.7) - (4.1) (0.7) (4.1)
Gain on sales of
assets (2.4) - - (2.4) -
Contract impairment
& other 1.4 0.7 0.5 2.6 1.0
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30.0 47.8 12.8 97.2 49.9
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Operating income
(loss) (7.2) (25.2) 4.3 (38.6) 9.8
Gain on sale of
Mitel investment - 12.9 - 12.9 -
Interest income 0.6 0.9 1.6 3.0 3.9
Interest expense (1.2) (0.7) - (1.9) -
Amortization of
debt issue costs (0.2) (0.1) - (0.3) -
Foreign exchange
gain (loss) (0.6) (3.5) (0.2) (4.4) 0.1
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Income (loss)
before income taxes (8.6) (15.7) 5.7 (29.3) 13.8
Income tax (expense)
recovery 0.2 (0.2) (0.1) - 2.9
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Net income (loss) $(8.4) $(15.9) $5.6 $(29.3) $16.7
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Net income (loss)
attributable to
common shareholders
after preferred
share dividends
and premiums
on preferred
shares $(9.2) $(16.7) $5.1 $(32.0) $14.9
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Net income (loss)
per common share:
Basic and diluted $(0.07) $(0.13) $0.04 $(0.25) $0.12
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Weighted average
number of common
shares outstanding
(millions):
Basic 127.3 127.3 127.3 127.3 127.3
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Diluted 127.3 127.3 127.4 127.3 127.4
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Percentage of
revenue:
Gross margin 47% 46% 50% 45% 54%
Research and
development 27% 24% 23% 26% 23%
Selling and
administrative 35% 27% 25% 31% 25%
Zarlink Semiconductor Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS DATA
(in millions of U.S. dollars, U.S. GAAP)
(Unaudited)
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Three months ended Nine months ended
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Dec. 28, Sept. 28, Dec. 29, Dec. 28, Dec. 29,
2007 2007 2006 2007 2006
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CASH PROVIDED BY
(USED IN)
Operating activities:
Net income (loss) $(8.4) $(15.9) $5.6 $(29.3) $16.7
Depreciation of
fixed assets 1.5 1.5 1.2 4.2 3.9
Amortization of
other assets 1.8 1.2 0.1 3.2 0.2
Stock compensation
expense 0.4 0.5 0.3 1.4 0.9
Other non-cash
changes in
operating
activities 1.5 10.7 (4.1) 12.2 (4.4)
(Gain)/Loss on
disposal of fixed
assets (2.5) - - (2.5) -
Deferred income taxes 1.9 1.8 0.2 3.3 (1.0)
Decrease (increase) in
working capital:
Trade accounts and
other receivables (1.3) (5.3) (3.1) (4.9) (6.9)
Inventories - (1.0) 0.4 (2.3) 0.3
Prepaid expenses
and other 1.8 (0.9) 0.6 1.2 1.0
Payables and accrued
liabilities (1.7) 1.8 0.7 (3.8) (8.2)
Deferred credits (0.4) 1.2 (0.3) 0.7 (0.3)
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Total (5.4) (4.4) 1.6 (16.6) 2.2
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Investing activities:
Acquisition of
business (0.1) (135.9) - (136.0) (7.1)
Matured short-term
investments - 3.3 - 3.3 24.6
Expenditures for
fixed assets (3.5) (1.7) (0.5) (5.9) (1.8)
Proceeds from sale
of investments - 12.9 - 12.9 -
Proceeds from sale
of business - - 4.7 - 4.7
Proceeds from insurance
for fixed assets 3.4 - - 3.4 -
Proceeds from disposal
of fixed assets 2.7 - - 2.7 0.1
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Total 2.5 (121.4) 4.2 (119.6) 20.5
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Financing activities:
Increase in (repayment
of) long term debt - 74.5 - 74.5 (0.1)
Payment of dividends
on preferred shares (0.5) (0.6) - (1.7) (1.2)
Repurchase of
preferred shares (0.5) (1.1) - (2.1) (0.1)
Debt issue costs (0.2) (3.5) - (3.7) -
Decrease in
restricted cash - 0.2 - 0.2 1.0
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Total (1.2) 69.5 - 67.2 (0.4)
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Effect of currency
translation on cash 0.2 1.1 0.1 1.4 0.5
Increase (decrease) in
cash and cash
equivalents (3.9) (55.2) 5.9 (67.6) 22.8
Cash and cash
equivalents,
beginning of
period 47.6 102.8 107.6 111.3 90.7
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Cash and cash
equivalents, end
of period $43.7 $47.6 $113.5 $43.7 $113.5
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Zarlink Semiconductor Inc.
CONSOLIDATED BALANCE SHEET DATA
(in millions of U.S. dollars, U.S. GAAP)
(Unaudited)
Dec. 28, Sept. 28, March 30,
2007 2007 2007
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ASSETS
Current assets:
Cash and cash equivalents $43.7 $47.6 $111.3
Short-term investments - - 3.3
Restricted cash 15.5 15.4 14.6
Trade accounts receivable - net 24.1 27.3 16.3
Other receivables 10.4 9.3 6.6
Inventories 30.3 30.3 19.1
Prepaid expenses and other 5.6 6.8 5.4
Deferred income taxes - current portion 1.4 1.5 -
Assets held for sale 3.1 3.4 3.1
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134.1 141.6 179.7
Fixed assets - net 27.3 24.9 21.0
Deferred income tax assets - net 7.6 9.4 4.9
Goodwill 46.9 46.6 3.8
Intangible assets 58.3 60.2 1.6
Other assets 3.6 4.4 -
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$277.8 $287.1 $211.0
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--------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $12.1 $15.0 $6.5
Employee-related accruals 9.7 11.0 11.5
Income and other taxes payable 0.5 0.4 4.7
Current portion of provisions
for exit activities 2.3 1.8 0.8
Other accrued liabilities 7.1 5.7 3.2
Deferred credits 1.3 1.7 0.6
Deferred income tax liabilities -
current portion 0.1 0.1 0.1
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33.1 35.7 27.4
Long-term debt 80.6 79.1 -
Long-term portion of provisions
for exit activities 0.5 0.5 0.5
Pension liabilities 16.8 16.6 15.9
Deferred income tax liabilities -
long-term portion 0.3 0.3 0.2
Long-term accrued income taxes 10.4 9.5 -
Other long-term liabilities 0.8 0.8 -
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142.5 142.5 44.0
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Redeemable preferred shares, unlimited
shares authorized; 1,171,200 shares
issued and outstanding as at
December 28, 2007 15.0 15.3 16.1
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Shareholders' equity:
Common shares, unlimited shares
authorized; no par value;
127,345,682 shares issued and
outstanding as at December 28, 2007 768.5 768.5 768.5
Additional paid-in capital 4.7 4.6 4.3
Deficit (618.6) (609.7) (587.6)
Accumulated other comprehensive loss (34.3) (34.1) (34.3)
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120.3 129.3 150.9
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$277.8 $287.1 $211.0
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Zarlink Semiconductor Inc.
SUPPLEMENTARY SCHEDULES
(in millions of U.S. dollars, U.S. GAAP)
(Unaudited)
Geographic Information:
Revenue, based on the geographic location of Zarlink's customers,
was distributed as follows:
Three Three Three
Months Months Months
Ended Ended Ended
Dec. 28, % of Sept. 28, % of Dec. 29, % of
2007 Total 2007 Total 2006 Total
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Asia - Pacific $21.3 44 % $26.3 53 % $9.6 28 %
Europe 13.9 29 12.6 25 13.3 39
Americas 13.4 27 10.7 22 11.2 33
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$48.6 100 % $49.6 100 % $34.1 100 %
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-------------------------------------------------------------------------
Nine Nine
Months Months
Ended Ended
Dec. 28, % of Dec. 29, % of
2007 Total 2006 Total
-------------------------------------------------------------------------
Asia - Pacific $58.2 45 % $31.3 28 %
Europe 38.3 30 44.7 41
Americas 32.3 25 34.6 31
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$128.8 100 % $110.6 100 %
-------------------------------------------------------------------------
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Product Segment Information:
Revenue, based on product segment, was distributed as follows:
Three Three Three
Months Months Months
Ended Ended Ended
Dec. 28, % of Sept. 28, % of Dec. 29, % of
2007 Total 2007 Total 2006 Total
-------------------------------------------------------------------------
Wired $31.2 64 % $33.7 68 % $14.3 42 %
Communications
Medical 7.6 16 6.3 13 6.6 19
Optical 3.9 8 3.6 7 4.4 13
Custom & Foundry 5.9 12 6.0 12 8.8 26
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$48.6 100 % $49.6 100 % $34.1 100 %
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Nine Nine
Months Months
Ended Ended
Dec. 28, % of Dec. 29, % of
2007 Total 2006 Total
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Wired $79.7 62 % $50.5 46 %
Communications
Medical 20.5 16 21.4 19
Optical 11.0 8 11.8 11
Custom & Foundry 17.6 14 26.9 24
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$128.8 100 % $110.6 100 %
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