Exhibit 99.3

                           Zarlink Semiconductor Inc.
                     (incorporated under the laws of Canada)
                           CONSOLIDATED BALANCE SHEETS
                     (in millions of U.S. dollars, CDN GAAP)



                                                           June 28,    March 29,
                                                             2002        2002
                                                          -----------  ---------
ASSETS                                                    (Unaudited)

Current assets:
  Cash and cash equivalents                                 $ 30.9      $ 75.6
  Short-term investments                                     122.2        78.8
  Accounts receivable                                         32.3        32.4
  Inventories                                                 32.0        32.6
  Future income tax assets                                     1.3         4.0
  Prepaid expenses and other                                  11.0        11.7
                                                            ------      ------
                                                             229.7       235.1
Fixed assets - net                                            68.0        65.7
Long-term receivables                                         31.3        29.7
Long-term investments                                         15.3        14.1
Other assets                                                   3.2         2.7
                                                            ------      ------
                                                            $347.5      $347.3
                                                            ======      ======

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities                  $ 67.3      $ 67.9
  Income and other taxes payable                               4.3         4.1
  Deferred revenue                                             2.0         2.0
  Current portion of long-term debt                            1.6         2.1
                                                            ------      ------
                                                              75.2        76.1
Long-term debt                                                 0.5         0.7
Pension liability                                             16.7        14.9
Future income tax liabilities                                  5.4         8.3
                                                            ------      ------
                                                              97.8       100.0
                                                            ------      ------
Shareholders' equity:
  Preferred shares, unlimited shares authorized;
    1,558,700 shares issued and outstanding
    (March 29, 2002 - 1,558,700)                              22.4        22.6
  Common shares, unlimited shares authorized;
    no par value; 127,175,941 shares issued and
    outstanding (March 29, 2002 - 127,082,123)               407.6       407.1
  Contributed surplus                                          5.8         5.8
  Deficit                                                   (201.0)     (189.1)
  Translation account                                         14.9         0.9
                                                            ------      ------
                                                             249.7       247.3
                                                            ------      ------
                                                            $347.5      $347.3
                                                            ======      ======

        (See accompanying notes to the consolidated financial statements)


                                       27
<PAGE>

                           Zarlink Semiconductor Inc.
                   CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
        (in millions of U.S. dollars, except per share amounts, CDN GAAP)
                                   (Unaudited)

                                                            Three Months Ended
                                                           June 28,     June 29,
                                                            2002          2001
                                                           --------     --------
Revenue                                                    $  48.0      $  66.5
Cost of revenue                                               25.9         62.8
                                                           -------      -------
Gross margin                                                  22.1          3.7
                                                           -------      -------

Expenses:
  Research and development                                    20.7         22.2
  Selling and administrative                                  12.9         14.0
  Special charge                                                --         33.9
  Amortization of goodwill                                      --          5.1
  Amortization of other acquired intangibles                    --          4.9
                                                           -------      -------
                                                              33.6         80.1
                                                           -------      -------
Operating loss                                               (11.5)       (76.4)
Other income - net                                             0.4          1.5
Interest expense                                              (0.1)        (0.2)
                                                           -------      -------
Loss before income taxes                                     (11.2)       (75.1)
Income tax (expense) recovery                                 (0.2)         1.5
                                                           -------      -------

Net loss for the period                                      (11.4)       (73.6)

Deficit, beginning of period                                (189.1)       (36.8)
                                                           -------      -------
                                                            (200.5)      (110.4)
Dividends on preferred shares                                 (0.5)        (0.5)
                                                           -------      -------

Deficit, end of period                                     $(201.0)     $(110.9)
                                                           =======      =======

Net loss attributable to common shareholders
  after preferred share dividends                          $ (11.9)     $ (74.1)
                                                           =======      =======

Net loss per common share:
  Basic and diluted                                        $ (0.09)     $ (0.59)
                                                           =======      =======

Weighted average number of common shares
  outstanding (millions):
  Basic and diluted                                          126.6        124.6
                                                           =======      =======

        (See accompanying notes to the consolidated financial statements)


                                       28
<PAGE>

                           Zarlink Semiconductor Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (in millions of U.S. dollars, CDN GAAP)
                                   (Unaudited)

                                                             Three Months Ended
                                                             June 28,   June 29,
                                                               2002       2001
                                                             --------   --------
CASH PROVIDED BY (USED IN)
Operating activities:
  Net loss for the period                                    $(11.4)     $(73.6)
  Amortization of fixed and other assets                        4.4        18.2
  Special charges, non-cash                                      --         1.1
  Investment tax credits                                         --         2.5
  Loss on disposal of fixed assets                               --         0.4
  Inventory write-down                                           --        28.4
  Equity loss in investment                                      --         0.5
  Future income taxes                                            --        (7.1)
  Change in pension liability                                    --         0.2
  Decrease (increase) in working capital:
      Accounts receivable                                       1.9         9.8
      Inventories                                               2.8        (3.3)
      Accounts payable and accrued liabilities                  2.0         9.9
      Deferred revenue                                         (4.6)        0.2
      Other                                                    (0.1)        2.4
                                                             ------      ------
    Total                                                      (5.0)      (10.4)
                                                             ------      ------

Investing activities:
  Purchased short-term investments                            (86.0)         --
  Matured short-term investments                               46.8          --
  Expenditures for fixed and other assets                      (2.7)      (14.3)
  Increase in long-term investments                            (0.4)       (2.0)
  Proceeds from sale of discontinued
     operations - net                                            --         1.3
                                                             ------      ------
     Total                                                    (42.3)      (15.0)
                                                             ------      ------

Financing activities:
  Repayment of long-term debt                                    --        (1.0)
  Repayment of capital lease liabilities                       (0.7)       (1.3)
  Dividends on preferred shares                                (0.5)       (0.5)
  Issue of common shares, net                                   0.6         0.4
  Repurchase of preferred shares                               (0.2)       (0.3)
                                                             ------      ------
     Total                                                     (0.8)       (2.7)
                                                             ------      ------

Effect of currency translation on cash                          3.4        (1.4)
                                                             ------      ------

Decrease in cash and cash equivalents                         (44.7)      (29.5)

Cash and cash equivalents, beginning of period                 75.6       179.7
                                                             ------      ------

Cash and cash equivalents, end of period                     $ 30.9      $150.2
                                                             ======      ======

        (See accompanying notes to the consolidated financial statements)


                                       29
<PAGE>

                           ZARLINK SEMICONDUCTOR INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
        (in millions of U.S. dollars, except per share amounts, CDN GAAP)
                                   (Unaudited)

1.    Basis of presentation

      In the opinion of management of Zarlink  Semiconductor Inc.  ("Zarlink" or
      the "Company"),  the unaudited  consolidated  financial statements reflect
      all adjustments,  which consist only of normal and recurring  adjustments,
      necessary to present  fairly the  financial  position at June 28, 2002 and
      the  results of  operations  and cash flows of the  Company  for the three
      month periods  ended June 28, 2002 and June 29, 2001,  in accordance  with
      Canadian GAAP, applied on a consistent basis.

      These  financial  statements  should  be  read  in  conjunction  with  the
      financial  statements and notes thereto  contained in the Company's Annual
      Report on Form 10-K,  including  Exhibit  99, for the year ended March 29,
      2002. The Company's fiscal year-end is the last Friday in March.

      The results of operations  for the periods  presented are not  necessarily
      indicative of the results to be expected for the full year.

      All information is presented in U.S. dollars, unless otherwise stated.

2.    Change in accounting policies

      (a) Accounting for goodwill and other intangible assets

      In June 2001,  the Canadian  Institute of Chartered  Accountants  ("CICA")
      issued  new  Handbook  sections  1581,  Business  Combinations  and  3062,
      Goodwill and Other Intangible Assets ("the pronouncements"), effective for
      fiscal years  beginning  after  December  15,  2001.  Under the new rules,
      goodwill (and intangible  assets deemed to have indefinite  lives) will no
      longer be  amortized  but will be  subject to annual  impairment  tests in
      accordance with the pronouncements.  Other intangible assets will continue
      to be amortized over their useful lives. The Company adopted the new rules
      on accounting for goodwill and other  intangible  assets  beginning in the
      first quarter of Fiscal 2003.  The adoption of Section 3062 did not have a
      material  impact  on the  Company's  financial  position,  as it does  not
      possess goodwill or intangible assets with indefinite lives.

      (b) Business combinations

      On March 30, 2002, the Company  implemented,  on a prospective basis, CICA
      Handbook Section 1581,  Business  Combinations.  As a result, all business
      combinations  initiated  in the  future  will be  accounted  for under the
      purchase  method.  The  adoption of Section 1581 did not have any material
      impact on the Company's financial position or cash flows.

      The impact of  Sections  1581 and 3062 on net loss and net loss per common
      share if the standards had been in effect for the comparative prior period
      is as follows:


                                       30
<PAGE>

                                                           Three Months Ended
                                                         June 28,       June 29,
                                                           2002           2001
                                                         --------       --------
      Net loss for the period, as reported                $(11.4)        $(73.6)
      Adjustments:
        Amortization of goodwill                              --            5.1
                                                          ------         ------
                                                          $(11.4)        $(68.5)
                                                          ======         ======

      Basic and diluted net loss per
        common share, as reported                         $(0.09)        $(0.59)
                                                          ======         ======
      Basic and diluted net loss per
        common share, adjusted                            $(0.09)        $(0.55)
                                                          ======         ======

      (c) Stock-based compensation

      Effective March 30, 2002, the Company adopted CICA Handbook  Section 3870,
      "Stock-Based   Compensation  and  Other  Stock-Based  Payments"  ("Section
      3870").   Section  3870   establishes   standards  for  the   recognition,
      measurement,   and  disclosure  of  stock-based   compensation  and  other
      stock-based  payments  made in exchange for goods and services and applies
      to  transactions,  including  non-reciprocal  transactions,  in  which  an
      enterprise   grants  common  shares,   stock  options,   or  other  equity
      instruments,  or incurs liabilities based on the price of common shares or
      other equity instruments.  Section 3870 outlines a fair value based method
      of accounting  required for certain  stock-based  transactions,  effective
      January 1, 2002 and  applied to awards  granted on or after that date.  As
      permitted by Section  3870,  the Company did not adopt the  provisions  in
      respect of the fair value  method of  accounting  for all of its  employee
      stock-based  compensation  and was not  affected  by the  requirements  to
      account for the fair value of certain other stock-based transactions.  The
      Company has chosen to recognize no  compensation  when options are granted
      to  employees  and  directors  and the  plans  have  no cash  compensation
      features.

      As a result of following the CICA's Emerging Issues Committee  Abstract 98
      "Stock-Based  Compensation  Plans-Disclosures",  the Company  provided the
      majority of the  disclosure  required  by Section  3870 in the Fiscal 2002
      Annual Report.  During the period ended June 28, 2002, there was no impact
      on the Company's financial position, results of operations and cash flows.
      The  additional  disclosure  required  by Section  3870 as a result of the
      Company not adopting the fair value method of  accounting  provisions  for
      employee  stock-based  compensation has been provided  retroactively  (see
      note 8).

3.    Inventories

                                                             June 28,  March 29,
                                                               2002      2002
                                                             --------  ---------
      Raw materials                                          $   2.6    $  2.4
      Work-in-process                                           21.6      20.8
      Finished goods                                             7.8       9.4
                                                             -------    ------
                                                             $  32.0    $ 32.6
                                                             =======    ======

4.    Fixed Assets

                                                             June 28,  March 29,
                                                               2002      2002
                                                             --------  ---------
      Cost                                                   $ 176.7    $ 163.0
      Accumulated amortization                                (108.7)     (97.3)
                                                             -------    -------
                                                             $  68.0    $  65.7
                                                             =======    =======


                                       31
<PAGE>

      The comparative  gross amounts of cost and accumulated  amortization  have
      each been adjusted by $57.9 to properly reflect the disposition of certain
      fixed  assets.  There was no impact to the  previously  reported net fixed
      assets.

5.    Long-term investments

      As at June 28, 2002, the Company had investments in private companies with
      a  carrying   value  of  $15.3  (March  29,  2002  -  $14.1).   Management
      periodically  reviews  these  investments  to  determine if there has been
      other than a temporary  decline in the market  value of these  investments
      below the carrying value. When management  performs future  assessments of
      these investments in the coming quarters,  a decline in the value of these
      companies may require the Company to recognize impairment on the remaining
      value of its investments which could be material.

6.    Accounts payable and accrued liabilities

                                                             June 28,  March 29,
                                                               2002      2002
                                                             --------  ---------
      Trade payables                                          $ 10.4    $ 11.5
      Employee-related payables                                 10.7      10.5
      Restructuring provisions                                   7.1       7.9
      Provision for disposal of discontinued operations          5.5       5.8
      Provision for disposal of foundry businesses               5.7       6.1
      Goods received not invoiced                                4.9       3.1
      Other accrued liabilities                                 23.0      23.0
                                                              ------    ------
                                                              $ 67.3    $ 67.9
                                                              ======    ======

7.    Redeemable Preferred Shares

      There were 15,900 preferred shares purchased during the three months ended
      June 28, 2002 for cash consideration of $0.2. The shares will be cancelled
      by the transfer agent in the second quarter of Fiscal 2003.

      During  the first  quarter,  a $0.32  (Cdn$0.50)  per share  dividend  was
      declared and paid on the redeemable preferred shares.

8.    Capital stock

      a)    The Company has not  declared  or paid any  dividends  on its common
            shares.

      b)    On June 6, 2002, the Company announced its intention to continue its
            normal course  issuer bid program for up to 6,358,203  common shares
            (5 percent of  127,164,078  common shares issued and  outstanding at
            May  31,  2002)  between  June  10,  2002  and  June  9,  2003.  All
            repurchased shares will be cancelled.  In the quarter ended June 28,
            2002, no shares were repurchased  under the normal course issuer bid
            program.


                                       32
<PAGE>

      c)    A summary of the Company's stock option activity is as follows:

                                                         Three Months Ended
                                                       June 28,       June 29,
                                                         2002           2001
                                                      ----------     ----------
               Outstanding options:
               Balance, beginning of period           10,914,962      9,464,693
               Granted                                    63,300      1,382,000
               Exercised                                 (93,818)       (90,477)
               Forfeited                                 (37,287)      (449,142)
                                                      ----------     ----------
               Balance, end of period                 10,847,157     10,307,074
                                                      ==========     ==========

            Available for grant at June 28, 2002 were 3,784,897  (March 29, 2002
            - 3,810,910) common shares.  The exercise price on outstanding stock
            options ranges from $1.77 to $24.95 per share with exercise  periods
            extending  to June 2008.  The  exercise  price of stock  options was
            based on prices in Canadian  dollars  translated at the U.S.  dollar
            exchange rate on June 28, 2002.

      d)    The net loss per common share figures were  calculated  based on net
            loss after the deduction of preferred  share dividends and using the
            weighted  monthly  average number of shares  outstanding  during the
            respective  periods.  Diluted  earnings  per  share is  computed  in
            accordance  with the  treasury  stock  method  based on the  average
            number of common shares and dilutive common share equivalents.

      The  following  common  share   equivalents  have  been  excluded  in  the
      computation for diluted earnings per share because they were anti-dilutive
      due to the reported net loss for the periods presented.

      i)    774,049  weighted  average  common  shares  on  conversion  of stock
            options for the three months ended June 28, 2002 (three months ended
            June 29, 2001 - 1,476,485 weighted average common shares).

      ii)   570,897  weighted  average common shares subject to restrictions for
            the three  months  ended June 28, 2002 (three  months ended June 29,
            2001 - 1,634,947 weighted average common shares).

      The  following  options were excluded in the  computation  of common share
      equivalents  because the  options'  exercise  price  exceeded  the average
      market price of the common shares:

      i)    Options  outstanding  for the three  months  ended June 28,  2002 to
            purchase  7,789,298  shares of common  stock at an average  price of
            $10.69 per share;

      ii)   Options  outstanding  for the three  months  ended June 29,  2001 to
            purchase  6,177,630  shares of common  stock at an average  price of
            $10.67 per share.

      e)    Pro Forma  financial  information  required by Section 3870 has been
            determined as if the Company had  accounted  for its employee  stock
            options using the Black-Scholes fair value option pricing model with
            the  following  weighted-average  assumptions  for the  three  month
            periods ended June 28, 2002 and June 29, 2001:


                                       33
<PAGE>

                                                           Three Months Ended
                                                          June 28,      June 29,
                                                            2002          2001

      Pro Forma net loss attributable to common
        shareholders after preferred dividends            $ (15.2)      $ (77.1)

      Pro Forma net loss per common share:
      Basic and diluted                                   $ (0.12)      $ (0.62)

      Weighted average fair value price
        of the options                                    $  3.43       $  3.51

      Risk-free interest rate                                4.68%         5.55%
      Dividend yield                                          Nil           Nil
      Volatility factor of the expected market
        price of the Company's common stock                 0.561         0.556
      Weighted-average expected life of the options     3.5 years     4.0 years

      The  Black-Scholes  option  valuation  model  was  developed  for  use  in
      estimating  the  fair  value  of  traded  options  that  have  no  vesting
      restrictions  and are fully  transferable.  In addition,  option valuation
      models require the input of highly  subjective  assumptions  including the
      expected  stock price  volatility.  Because the Company's  employee  stock
      options have characteristics  significantly different from those of traded
      options,  and because  changes in the  subjective  input  assumptions  can
      materially affect the fair value estimate,  in management's  opinion,  the
      existing  models do not  necessarily  provide a reliable single measure of
      the fair value of its employee stock options.

      For purposes of Pro Forma  disclosures,  the  estimated  fair value of the
      options is  amortized to expense  over the  options'  vesting  period on a
      straight-line basis.

9.    Inventory write-down and special charge

      First Quarter of Fiscal 2002
      ----------------------------

      In the first  quarter of Fiscal 2002,  the Company  reviewed its inventory
      requirements  for the  future  12  months  in light  of the  semiconductor
      industry-wide slowdown and higher channel inventories. As a result of this
      review,  the Company  recorded an excess inventory charge to cost of sales
      amounting  to $28.4 for  inventories  estimated to be beyond its needs for
      the following 12 months.

      In the  first  quarter  of Fiscal  2002 and in  response  to the  industry
      downturn,  the Company  implemented  a  cost-containment  plan in order to
      preserve cash resources.  The  cost-containment  plan included a workforce
      reduction of the Company's total employee base by 439 employees,  globally
      across all job categories,  which was completed by the end of Fiscal 2002.
      The total  cost of the  first  quarter  Fiscal  2002  workforce  reduction
      program was estimated to be $25.0.

      As a result of the workforce  reduction program and  consolidating  design
      activity,  the Company took steps to provide for excess leased  facilities
      in Canada,  the United States,  the United Kingdom,  and the Far East. The
      cost of the lease and contract  settlements  amounted to $8.9 in the first
      quarter of Fiscal 2002.

      The total of these pre-tax special charges  amounted to $33.9 in the first
      quarter of Fiscal 2002. In the fourth quarter of Fiscal 2002,  $3.1 of the
      first quarter  special charge was reversed due to


                                       34
<PAGE>

      savings  on  the  workforce   reduction  program  and  to  the  subsequent
      sub-letting of vacant space in Irvine, California.

      The following  summarizes the activity in the March 29, 2002 restructuring
      liability during the first quarter of Fiscal 2003:

<TABLE>
<CAPTION>
                                                                                Provision                                Provision
                                                                                 balance                                  balance
                                                                                  as at                       Cash         as at
                                                                              March 29, 2002   Reversals   Drawdowns   June 28, 2002
                                                                              --------------   ---------   ---------   -------------
<S>                                                                               <C>            <C>         <C>           <C>
      Restructuring activities:
         Workforce reduction                                                      $  2.9         $   --      $ (0.5)       $  2.4
         Excess lease costs                                                          5.0             --        (0.3)          4.7
                                                                                  ------         ------      ------        ------
      Total restructuring                                                         $  7.9         $   --      $ (0.8)       $  7.1
                                                                                  ======         ======      ======        ======
</TABLE>

      All of the liability relating to the workforce  reduction is in respect of
      the fourth quarter Fiscal 2002 restructuring program.

10.   Other income - net

                                                             Three Months Ended
                                                            --------------------
                                                            June 28,    June 29,
                                                              2002        2001
                                                            --------    --------

         Interest income                                    $   0.9     $   2.1
         Foreign exchange loss                                 (0.5)       (0.1)
         Equity loss in Optenia, Inc.                            --        (0.5)
                                                            -------     -------
         Other income - net                                 $   0.4     $   1.5
                                                            =======     =======

11.   Information on business segments

      The  Company's   reportable   business   segments  are  comprised  of  the
      Communications and Medical groups.  Reportable segments are business units
      that offer  different  products and  services  and are managed  separately
      because of these differences.

      The  Communications   business   specializes  in  broadband   connectivity
      solutions  over wired,  wireless  and optical  media.  The  Communications
      business includes network access products that provide connectivity to the
      network's  core  backbone  such as feeder,  aggregation  and  transmission
      applications  and those  that  address  the  multi-protocol  physical  and
      network layers.  In addition,  the  Communications  business includes user
      access products that allow users to connect to the network. These products
      include  wireless and infotainment  applications.  Network access products
      accounted  for $28.4 in revenue in the three  months  ended June 28,  2002
      (three months ended June 29, 2001 - $35.0). User access products accounted
      for $12.6 in revenue in the three months ended June 28, 2002 (three months
      ended June 29, 2001 - $22.4).

      The  Medical  business   provides  ultra  low  power  ASIC  solutions  for
      applications such as pacemakers, hearing aids and portable instruments.

      The  Company  evaluates  the  performance  of each  business  segment  and
      allocates  resources  based  on  operating  income,   which  excludes  any
      intersegment sales of products and services. The Company does not allocate
      stock compensation  expense,  special charges or gains, interest


                                       35
<PAGE>

      income or interest expense or income taxes to its reportable segments.  In
      addition,  total  assets  are  not  allocated  to each  segment;  however,
      depreciation  of fixed assets is  allocated  to the segments  based on the
      asset usage.  The accounting  policies of the reportable  segments are the
      same as those of the Company as  reflected in the  consolidated  financial
      statements.

<TABLE>
<CAPTION>
                                                                                                          Unallocated
Three Months Ended June 28, 2002                                       Communications       Medical          Costs           Total
                                                                       --------------       -------       -----------       -------
<S>                                                                       <C>                <C>            <C>             <C>
Revenue                                                                   $  41.0            $ 7.0          $  --           $  48.0
Amortization of buildings and equipment                                       4.2               --             --               4.2
Segment's operating loss                                                    (11.5)              --             --             (11.5)
</TABLE>

<TABLE>
<CAPTION>
                                                                                                           Unallocated
Three Months Ended June 29, 2001                                       Communications       Medical           Costs          Total
                                                                       --------------       -------        -----------      --------
<S>                                                                      <C>                 <C>             <C>            <C>
Revenue                                                                  $  57.4             $ 9.1           $    --        $  66.5
Amortization of buildings and equipment                                      8.1               0.1                --            8.2
Amortization of goodwill                                                     5.1                --                --            5.1
Amortization of other acquired intangibles                                   4.9                --                --            4.9
Special charge                                                                --                --              33.9           33.9
Segment's operating income (loss)                                          (44.8)              2.3             (33.9)         (76.4)
</TABLE>

12.   Comparative figures

      Certain of the Fiscal 2002 comparative  figures have been  reclassified to
      conform to the presentation adopted in Fiscal 2003.


                                       36