Exhibit 99.1
                           Zarlink Semiconductor Inc.
                     (incorporated under the laws of Canada)
                           CONSOLIDATED BALANCE SHEETS
                     (in millions of U.S. dollars, CDN GAAP)

                                                    September 27,     March 29,
                                                       2002             2002
                                                    -------------     ---------
ASSETS                                              (Unaudited)

Current assets:
  Cash and cash equivalents                            $ 67.9          $ 75.6
  Short-term investments                                 64.8            78.8
  Trade accounts receivable                              27.6            26.9
  Other receivables                                       3.5             5.5
  Inventories                                            27.9            32.6
  Future income tax assets                                2.3             4.0
  Prepaid expenses and other                             10.5            11.7
                                                       ------          ------
                                                        204.5           235.1
Fixed assets - net                                       64.1            65.7
Long-term receivables                                    14.9            29.7
Long-term investments                                    14.6            14.1
Other assets                                             19.5             2.7
                                                       ------          ------
                                                       $317.6          $347.3
                                                       ======          ======
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Trade accounts payable                               $ 10.8          $ 14.6
  Employee-related payables                              12.1            12.8
  Income and other taxes payable                          8.7             5.9
  Provisions for exit activities                         14.3            19.8
  Other accrued liabilities                              14.5            18.9
  Deferred revenue                                        2.5             2.0
  Current portion of long-term debt                       1.1             2.1
                                                       ------          ------
                                                         64.0            76.1
Long-term debt                                            0.3             0.7
Pension liability                                        16.8            14.9
Future income tax liabilities                             6.2             8.3
                                                       ------          ------
                                                         87.3           100.0
                                                       ------          ------
Shareholders' equity:
  Redeemable preferred shares, unlimited
    shares authorized; 1,526,000 shares
    issued and outstanding
    (March 29, 2002 - 1,558,700)                         22.2            22.6
  Common shares, unlimited shares
    authorized; no par value; 127,191,316
    shares issued and outstanding
    (March 29, 2002 - 127,082,123)                      407.6           407.1
  Contributed surplus                                     5.8             5.8
  Deficit                                              (214.7)         (189.1)
  Translation account                                     9.4             0.9
                                                       ------          ------
                                                        230.3           247.3
                                                       ------          ------
                                                       $317.6          $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)

<TABLE>
<CAPTION>
                                                     Three Months Ended         Six Months Ended
                                                   ----------------------    ----------------------
                                                   Sept. 27,    Sept. 28,    Sept. 27,    Sept. 28,
                                                     2002          2001        2002         2001
                                                   ---------    ---------    ---------    ---------
<S>                                                 <C>          <C>          <C>          <C>
Revenue                                             $  46.2      $  49.1      $  94.2      $ 115.6
Cost of revenue                                        25.9         34.3         51.8         97.1
                                                    -------      -------      -------      -------
Gross margin                                           20.3         14.8         42.4         18.5
                                                    -------      -------      -------      -------
Expenses:
  Research and development                             22.8         19.7         43.5         41.9
  Selling and administrative                           11.9         13.5         24.8         27.5
  Special charge                                         --           --           --         33.9
  Amortization of acquired intangibles                   --          3.4           --         13.4
                                                    -------      -------      -------      -------
                                                       34.7         36.6         68.3        116.7
                                                    -------      -------      -------      -------
Loss from operations                                  (14.4)       (21.8)       (25.9)       (98.2)
Other income (expense) - net                            2.6          0.6          3.0          2.1
Interest expense                                       (0.3)        (0.2)        (0.4)        (0.4)
                                                    -------      -------      -------      -------
Loss before income taxes                              (12.1)       (21.4)       (23.3)       (96.5)
Income tax (expense) recovery                          (1.1)         0.4         (1.3)         1.9
                                                    -------      -------      -------      -------
Net loss for the period                               (13.2)       (21.0)       (24.6)       (94.6)

Deficit, beginning of period                         (201.0)      (110.9)      (189.1)       (36.8)
                                                    -------      -------      -------      -------
                                                     (214.2)      (131.9)      (213.7)      (131.4)
Dividends on preferred shares                          (0.5)        (0.5)        (1.0)        (1.0)
                                                    -------      -------      -------      -------
Deficit, end of period                              $(214.7)     $(132.4)     $(214.7)     $(132.4)
                                                    =======      =======      =======      =======
Net loss attributable to common shareholders
  after preferred share dividends                   $ (13.7)     $ (21.5)     $ (25.6)     $ (95.6)
                                                    =======      =======      =======      =======
Net loss per common share:
      Basic and diluted                             $ (0.11)     $ (0.17)     $ (0.20)     $ (0.76)
                                                    =======      =======      =======      =======
Weighted average number of common shares
  outstanding (millions):
      Basic and diluted                               127.2        125.6        126.9        125.4
                                                    =======      =======      =======      =======
</TABLE>

        (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)
<TABLE>
<CAPTION>
                                                       Three Months Ended        Six Months Ended
                                                     ----------------------   ----------------------
                                                     Sept. 27,    Sept. 28,    Sept. 27,   Sept. 28,
                                                       2002         2001         2002        2001
                                                     ---------   ----------   ----------  ----------
<S>                                                   <C>         <C>          <C>          <C>
Cash flows from operating activities:
  Net loss for the period                             $(13.2)     $(21.0)      $ (24.6)     $(94.6)
  Depreciation and amortization                          4.8         9.8           9.2        28.0
  Special charges, non-cash                               --          --            --         1.1
  Gain (loss) on disposal of fixed assets                 --        (0.1)           --         0.3
  Inventory write-down                                    --          --            --        28.4
  Future income taxes                                     --         6.1            --        (1.0)
  Change in pension liability                             --         0.1            --         0.3
  Investment tax credits                                  --        (2.5)           --          --
  Equity loss in investment                               --         0.9            --         1.4
  Decrease (increase) in working capital
      Trade accounts and other receivables               1.1         9.0           3.0        18.8
      Inventories                                        4.3         6.6           7.1         3.3
      Prepaid expenses and other                         0.4        (1.7)          2.4         0.7
      Trade accounts payable and other
        accrued liabilities                            (10.2)      (22.2)        (14.8)      (12.3)
      Deferred revenue                                   0.4        (0.1)          0.3         0.1
                                                      ------      ------       -------      ------
Cash used in operating activities                      (12.4)      (15.1)        (17.4)      (25.5)
                                                      ------      ------       -------      ------
Cash flows from investing activities:
      Purchased short-term investments                 (60.5)         --        (146.5)         --
      Matured short-term investments                   114.9          --         161.7          --
      Proceeds from disposal of fixed
        and other assets                                 0.4         0.2           0.4         0.2
      Expenditures for fixed and other assets           (1.6)       (8.0)         (4.3)      (22.3)
      Increase in long-term investments                   --          --          (0.4)       (2.0)
      Proceeds from repayment of note receivable          --         4.4            --         4.4
      Proceeds from sale of discontinued
        operations (net)                                  --          --            --         1.3
                                                      ------      ------       -------      ------
Cash provided by (used in) investing
  activities                                            53.2        (3.4)         10.9       (18.4)
                                                      ------      ------       -------      ------
Cash flows from financing activities:
      Increase (repayment) of long-term debt              --         0.1            --        (0.9)
      Repayment of capital lease liabilities            (0.8)       (1.3)         (1.4)       (2.6)
      Payment of dividends on preferred shares          (0.5)       (0.5)         (1.0)       (1.0)
      Issue of common shares                              --         1.6           0.5         2.0
      Repurchase of preferred shares                    (0.2)       (0.2)         (0.4)       (0.5)
                                                      ------      ------       -------      ------
Cash used in financing activities                       (1.5)       (0.3)         (2.3)       (3.0)
                                                      ------      ------       -------      ------
Effect of currency translation on
  cash and cash equivalents                             (2.3)        1.0           1.1        (0.4)
                                                      ------      ------       -------      ------
Increase (decrease) in cash and
  cash equivalents                                      37.0       (17.8)         (7.7)      (47.3)

Cash and cash equivalents,
  beginning of period                                   30.9       150.2          75.6       179.7
                                                      ------      ------       -------      ------

Cash and cash equivalents,
  end of period                                       $ 67.9      $132.4       $  67.9      $132.4
                                                      ======      ======       =======      ======
</TABLE>

        (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

      These  unaudited  interim  consolidated  financial  statements  have  been
      prepared by Zarlink  Semiconductor  Inc.  ("Zarlink" or the  "Company") in
      United States (U.S.) dollars,  unless otherwise stated,  and in accordance
      with  accounting  principles  generally  accepted  in Canada  for  interim
      financial statements and with the instructions to Form 10-Q and Regulation
      S-X pertaining to interim financial statements. Accordingly, these interim
      consolidated  financial  statements  do not  include all  information  and
      footnotes required by generally accepted  accounting  principles  ("GAAP")
      for complete  financial  statements.  In the opinion of  management of the
      Company, the unaudited interim  consolidated  financial statements reflect
      all adjustments,  which consist only of normal and recurring  adjustments,
      necessary to present  fairly the financial  position at September 27, 2002
      and the results of operations  and cash flows of the Company for the three
      and six month  periods  ended  September  27, 2002 and September 28, 2001,
      respectively,  in accordance  with Canadian GAAP,  applied on a consistent
      basis.  The  consolidated  financial  statements  include the  accounts of
      Zarlink and its wholly owned subsidiaries.  Intercompany  transactions and
      balances have been eliminated. Separate U.S. GAAP financial statements are
      also prepared and presented to shareholders.

      These  financial  statements  should  be  read  in  conjunction  with  the
      financial   statements  and  notes  thereto   contained  in  the  Canadian
      Consolidated  Financial  Statements 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 or future
      periods.

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
      the company's  fiscal year beginning March 30, 2002.  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.


                                       30
<PAGE>

      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:

                                   Three Months Ended       Six Months Ended
                                   --------------------   ---------------------
                                   Sept. 27,   Sept. 28,   Sept. 27,   Sept. 28,
                                     2002        2001        2002        2001
                                   --------   ---------   ---------   ---------
Net loss, as reported                $(13.2)    $(21.0)     $(24.6)    $(94.6)
Adjustments:
  Amortization of goodwill               --         --          --        5.1
                                     ------     ------      ------     ------
                                     $(13.2)    $(21.0)     $(24.6)    $(89.5)
                                     ======     ======      ======     ======
Basic and diluted net loss per
  common share, as reported
                                      (0.11)    $(0.17)      (0.20)    $(0.76)
                                     ======     ======      ======     ======
Basic and diluted net loss
  per common share, adjusted
                                      (0.11)    $(0.17)      (0.20)    $(0.71)
                                     ======     ======      ======     ======

      (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  does not  recognize  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  September 27, 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

                                           September 27,            March 29,
                                               2002                   2002
                                           -------------            ---------
Raw materials                                  $ 2.7                  $ 2.4
Work-in-process                                 23.5                   20.8
Finished goods                                   1.7                    9.4
                                               -----                  -----
                                               $27.9                  $32.6
                                               =====                  =====

4.    Fixed assets

                                           September 27,            March 29,
                                               2002                   2002
                                           -------------            ---------
Cost                                          $171.6                 $163.0
Accumulated depreciation                      (107.5)                 (97.3)
                                              ------                 ------
                                              $ 64.1                 $ 65.7
                                              ======                 ======

      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.


                                       31
<PAGE>

5.    Long-term investments

      As at September 27, 2002, the Company had investments in private companies
      with a carrying  value of $14.6  (March 29,  2002 - $14.1).  On October 3,
      2002,  the  Company  sold  its  investment  in  DALSA  Semiconductor  Inc.
      ("DALSA") for cash proceeds of $4.1. As a result of the sale,  the Company
      will  record a gain of $0.7 in the third  quarter of Fiscal 2003 (see Note
      12).  Following the sale,  the carrying  value of the Company's  remaining
      long-term  investments  approximated  $11.2, of which $10.8 represents the
      Company's nine percent interest in Mitel Networks Corporation.

      Management  periodically reviews the Company's 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 its  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.    Provisions for exit activities

                                                        September 27,  March 29,
                                                            2002        2002
                                                        -------------  --------
Restructuring provisions                                   $ 5.5        $ 7.9
Provision for disposal of discontinued operations            3.9          5.8
Provision for disposal of foundry businesses                 4.9          6.1
                                                           -----        -----
                                                           $14.3        $19.8
                                                           -----        -----

7.    Redeemable Preferred Shares

      There were 27,700  preferred  shares purchased during the six months ended
      September  27, 2002 for cash  consideration  of $0.4.  The transfer  agent
      cancelled  32,700  shares in the first half of Fiscal 2003, of which 5,000
      shares  were  repurchased  in the  fourth  quarter of Fiscal  2002.  As at
      September 27, 2002, all repurchased preferred shares were cancelled.

      During  the  second  quarter,  the  dividend  declared  and  paid  on  the
      redeemable preferred shares was $0.32 (Cdn $0.50) per share,  resulting in
      a cumulative  dividend of $0.64 (Cdn$1.00) per share for the first half of
      Fiscal 2003.

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.  During the six months ended
            September  27,  2002,  no shares were  repurchased  under the normal
            course issuer bid program.

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

                                                       Six Months Ended
                                             -----------------------------------
                                              September 27,        September 28,
                                                  2002                 2001
                                              -------------        ------------
Outstanding Options:
Balance, beginning of period                    10,914,962            9,464,693
Granted                                            357,300            1,586,500
Exercised                                         (109,193)            (435,689)
Forfeited                                       (1,476,966)            (902,069)
                                               -----------          -----------
Balance, end of period                           9,686,103            9,713,435
                                               ===========          ===========

      On August 14, 2002,  1,136,778  unexercised  stock  options held by former
      employees of the discontinued  Systems business expired in accordance with
      the terms of the sales agreement. The options were returned to the pool of
      options  available  for grant.  Available  for grant at September 27, 2002
      were 4,930,576  (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 September 2008. The exercise price of
      stock  options was based on prices in Canadian  dollars  translated at the
      U.S. dollar exchange rate on September 27, 2002.


                                       32
<PAGE>

      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.

                                   Three Months Ended       Six Months Ended
                                   --------------------   ---------------------
                                   Sept. 27,   Sept. 28,   Sept. 27,   Sept. 28,
                                     2002        2001        2002         2001
                                   --------   ---------   ---------    ---------
Stock options                       41,054    1,426,875     208,942    1,366,492
Restricted shares                       --      771,120          --      771,120
                                    ------    ---------     -------    ---------
Total                               41,054    2,197,995     208,942    2,137,612
                                    ======    =========     =======    =========

      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:

                               Three Months Ended        Six Months Ended
                               --------------------    ---------------------
                               Sept. 27,   Sept. 28,    Sept. 27,   Sept. 28,
                                 2002        2001         2002         2001
                               --------   ---------    ---------    ---------
Number of outstanding
  options                      9,420,728   5,306,179    8,219,274    5,714,179

Average exercise price
  per share                   $    9.03   $    10.47   $     9.65   $    10.35

      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 and six
            month periods ended September 27, 2002 and September 28, 2001:

                                Three Months Ended        Six Months Ended
                               ---------------------    ---------------------
                               Sept. 27,    Sept. 28,    Sept. 27,   Sept. 28,
                                 2002         2001         2002         2001
                               --------    ---------    ---------    ---------
Pro Forma  net loss
  attributable to common
  shareholders after
  preferred dividends         $   (17.1)  $   (29.0)     $   (32.3)   $  (106.1)

Pro Forma net loss per
  common share:
  Basic and diluted           $   (0.13)  $    0.23)     $   (0.25)   $   (0.85)

Weighted average fair value
  price of the options        $     3.37  $     3.60     $     3.37   $     3.60

Risk free interest rate            3.69%       4.44%          3.69%        4.44%
Dividend yield                       Nil         Nil            Nil          Nil
Volatility factor of the
  expected market price of
  the Company's common stock       0.628       0.574          0.628        0.574
Weighted-average expected
  life of the options          3.0 years   4.0 years      3.0 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.


                                       33
<PAGE>

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

      The  following  summarizes  the  activity  related  to the March 29,  2002
      restructuring liability during the first half of Fiscal 2003:

                                                            Excess
                                              Workforce     Lease
                                              Reduction     Costs       Total
                                              =========     ======      =====
Provision balance as at March 29, 2002          $ 2.9       $ 5.0       $ 7.9
  Cash draw-downs during Q1 2003                 (0.5)       (0.3)       (0.8)
  Cash draw-downs during Q2 2003                 (0.4)       (0.7)       (1.1)
  Non-cash draw-downs during Q2 2003               --        (0.5)       (0.5)
                                                -----       -----       -----
Provision balance as at September 27, 2002      $ 2.0       $ 3.5       $ 5.5
                                                =====       =====       =====

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

10.   Other income (expense) - net

                                 Three Months Ended        Six Months Ended
                               ----------------------   ----------------------
                               Sept. 27,    Sept. 28,    Sept. 27,   Sept. 28,
                                 2002         2001         2002         2001
                               ---------   ----------   ----------   ---------
Interest income                  $1.0        $ 1.5         $1.9        $ 3.6
Foreign exchange gain (loss)      1.6           --          1.1         (0.1)
Equity loss in Optenia, Inc.       --         (0.9)          --         (1.4)
                                 ----        -----         ----        -----
Other income (expense) (net)     $2.6        $ 0.6         $3.0        $ 2.1
                                 ====        =====         ====        =====

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
      enterprise and metro segments 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 $29.4 and  $57.8,  in  revenue  in the three and six months
      ended  September  27,  2002,  respectively  (three  and six  months  ended
      September 28, 2001 - $25.9 and $60.9, respectively).  User access products
      accounted for $10.4 and $23.0 in revenue in the three and six months ended
      September 27, 2002, respectively (three and six months ended September 28,
      2001 - $16.0 and $38.4, respectively).


                                       34
<PAGE>

      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 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 Sept. 27, 2002             Communications   Medical      Costs        Total
                                              --------------   -------   -----------   ---------
<S>                                               <C>           <C>          <C>        <C>
Revenue                                           $ 39.8        $ 6.4        $ --       $ 46.2
Depreciation of buildings and equipment              4.3           --          --          4.3
Segment's operating loss                           (13.0)        (1.4)         --        (14.4)
</TABLE>

<TABLE>
<CAPTION>
                                                                         Unallocated
Three Months Ended Sept. 28, 2001             Communications   Medical      Costs        Total
                                              --------------   -------   -----------   ---------
<S>                                               <C>            <C>         <C>         <C>
Revenue                                           $ 41.9         $7.2        $ --        $ 49.1
Depreciation of buildings and equipment              6.4          0.1          --           6.5
Amortization of acquired intangibles                 3.4           --          --           3.4
Segment's operating income (loss)                  (24.3)         2.5          --         (21.8)
</TABLE>

<TABLE>
<CAPTION>
                                                                         Unallocated
Six Months Ended Sept. 27, 2002               Communications   Medical      Costs        Total
                                              --------------   -------   -----------   ---------
<S>                                               <C>           <C>          <C>         <C>
Revenue                                           $ 80.8        $13.4        $ --        $ 94.2
Depreciation of buildings and equipment              8.5          0.1          --           8.6
Segment's operating loss                           (24.5)        (1.4)         --         (25.9)
</TABLE>

<TABLE>
<CAPTION>
                                                                         Unallocated
Six Months Ended Sept. 28, 2001               Communications   Medical      Costs        Total
                                              --------------   -------   -----------   ---------
<S>                                               <C>           <C>        <C>           <C>
Revenue                                           $ 99.3        $16.3      $   --        $115.6
Depreciation of buildings and equipment             14.5          0.1          --          14.6
Amortization of acquired intangibles                13.4           --          --          13.4
Special charge                                        --           --        33.9          33.9
Segment's operating income (loss)                  (69.2)         4.9       (33.9)        (98.2)
</TABLE>

12.   Subsequent events

      (a)   On  October 3,  2002,  the  Company  sold its  entire  19.9  percent
            interest in DALSA  Semiconductor  Inc. to DALSA for cash proceeds of
            $4.1 (Cdn$6.5). The Company will record a gain of approximately $0.7
            in the third quarter of Fiscal 2003.

      (b)   On October 17, 2002,  the Company  announced  that it is withdrawing
            from the VDSL (Very high rate  Digital  Subscriber  Line)  market in
            order to concentrate  its R&D resources on higher and more immediate
            growth  opportunities.  The  company  is  ceasing  all VDSL  product
            development,  resulting  in certain  layoffs in its  Network  Access
            group,  based in Ottawa.  Costs  related to these and other  layoffs
            approximate  $3.6 and will be expensed and paid in the third quarter
            of Fiscal  2003.  The company  does not expect this action to impact
            revenues.

13.   Comparative figures

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


                                       35