Exhibit 99.1

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

                                                          June 25,     March 26,
                                                            2004         2004
                                                          --------     ---------
ASSETS
Current assets:
 Cash and cash equivalents                               $  23.3        $  27.0
 Short-term investments                                     54.6           54.8
 Restricted cash                                            10.0           10.0
 Trade accounts  receivable,  less allowance for
   doubtful accounts of $0.3 (March 26,  2004 - $0.3)       29.2           24.1

 Other receivables                                           3.3            2.3
 Current portion of long-term receivables                   10.4            9.8
 Inventories                                                25.1           20.8
 Prepaid expenses and other                                  8.3            5.3
                                                         -------        -------
                                                           164.2          154.1
Fixed assets - net                                          41.0           42.3
Long-term receivables                                        8.4           16.0
Other assets                                                 4.6            4.6
                                                         -------        -------
                                                         $ 218.2        $ 217.0
                                                         =======        =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Trade accounts payable                                  $  20.5        $  15.0
 Employee-related payables                                  10.2           11.1
 Income and other taxes payable                              7.0            7.9
 Provisions for exit activities                              1.5            2.7
 Other accrued liabilities                                   9.4           10.9
 Deferred credits                                            0.6            0.7
 Current portion of long-term debt                           0.1            0.1
                                                         -------        -------
                                                            49.3           48.4
Long-term debt                                               0.1            0.1
Pension liabilities                                         16.9           16.7
Future income tax liabilities                                1.1            1.1
                                                         -------        -------
                                                            67.4           66.3
                                                         -------        -------
Commitments and contingencies (Note 8)

Shareholders' equity:
 Preferred  shares,   unlimited  shares  authorized;
  1,390,300  shares  issued  and outstanding
  (March 26, 2004 - 1,390,300)                              19.6           19.6
 Common shares, unlimited shares authorized;
   no par value; 127,302,973 shares issued
   and outstanding (March 26, 2004 - 127,301,411)          407.9          407.9
 Contributed surplus                                         6.7            6.3
 Deficit                                                  (297.0)        (296.7)
 Translation account                                        13.6           13.6
                                                         -------        -------
                                                           150.8          150.7
                                                         -------        -------
                                                         $ 218.2        $ 217.0
                                                         =======        =======

        (See accompanying notes to the consolidated financial statements)

<PAGE>

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

                                                       Three Months Ended
                                                    June 25,        June 27,
                                                      2004            2003
                                                    --------        --------
Revenue                                             $   55.8        $   53.7
Cost of revenue                                         30.8            28.3
                                                    --------        --------
Gross margin                                            25.0            25.4
                                                    --------        --------
Expenses:
  Research and development                              14.9            19.2
  Selling and administrative                            10.6            11.8
  Stock compensation expense                             0.4             --
                                                    --------        --------
                                                        25.9            31.0
                                                    --------        --------
Operating loss                                          (0.9)           (5.6)
Other income (expense)- net                              0.1            (0.2)
                                                    --------        --------
Loss before income taxes                                (0.8)           (5.8)
Income tax (expense) recovery                            1.0            (0.1)
                                                    --------        --------
Net income (loss) for the period                    $    0.2        $   (5.9)

Deficit, beginning of period                          (296.7)         (256.3)
                                                    --------        --------
                                                      (296.5)         (262.2)
Dividends on preferred shares                           (0.5)           (0.5)
                                                    --------        --------
Deficit, end of period                              $ (297.0)         (262.7)
                                                    ========        ========
Net loss attributable to common shareholders
  after preferred share dividends                   $   (0.3)       $   (6.4)
                                                    ========        ========
Net income (loss) per common share:
      Basic and diluted                             $   --          $  (0.05)
                                                    ========        ========
Weighted average number of common shares
  outstanding (millions):
      Basic                                            127.3           127.3
                                                    ========        ========
      Diluted                                          127.5           127.3
                                                    ========        ========

        (See accompanying notes to the consolidated financial statements)

<PAGE>

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


                                                          Three Months Ended
                                                        June 25,       June 27,
                                                          2004           2003
                                                       -------         -------
CASH PROVIDED BY (USED IN)

Operating activities:
  Net income (loss) for the period                     $   0.2         $  (5.9)
  Depreciation of fixed assets                             2.5             3.8
  Amortization of other assets                             --              0.3
  Future income taxes                                      0.2             0.1
  Other non cash changes in operating activities           --              1.0
  Stock compensation expense                               0.4             --
  Decrease (increase) in working capital:                                  --
      Trade accounts and other receivable                 (6.1)           (7.4)
      Inventories                                         (4.3)            0.8
      Prepaid expenses and other                          (3.4)           (3.5)
      Payables and accrued liabilities                     0.6             1.3
      Deferred credits                                    (0.1)           (0.2)
                                                       -------         -------
    Total                                                (10.0)           (9.7)
                                                       -------         -------
Investing activities:
  Purchased short-term investments                       (54.6)          (62.3)
  Matured short-term investments                          54.8            89.5
  Expenditures for fixed and other assets                 (0.4)           (1.2)
  Proceeds from disposal of fixed and other assets         --              0.4
  Proceeds from repayment of note receivable               7.0             --
                                                       -------         -------
     Total                                                 6.8            26.4
                                                       -------         -------
Financing activities:
  Repayment of capital lease liabilities and
   long-term debt                                         (0.1)           (0.2)
  Payment of dividends on preferred shares                (0.5)           (0.5)
  Repurchase of preferred shares                           --             (0.4)
                                                       -------         -------
     Total                                                (0.6)           (1.1)
                                                       -------         -------
Effect of currency translation on cash and
  cash equivalents                                         0.1             0.1
                                                       -------         -------
Increase (decrease) in cash and cash equivalents          (3.7)           15.7

Cash and cash equivalents, beginning of period            27.0            23.5
                                                       -------         -------
Cash and cash equivalents, end of period               $  23.3         $  39.2
                                                       =======         =======

        (See accompanying notes to the consolidated financial statements)

<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 June 25, 2004 and
      the  results of  operations  and cash flows of the  Company  for the three
      month  period ended June 25,  2004,  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.  U.S. GAAP
      financial  statements for interim  periods are also prepared and presented
      to shareholders.

      The  balance  sheet at March 26,  2004 has been  derived  from the audited
      consolidated financial statements at that date but does not include all of
      the information and footnotes  required by generally  accepted  accounting
      principles for complete financial  statements.  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 26, 2004. 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.    Stock-based compensation

      Effective  in  Fiscal  2004,  the  Company  elected  to  expense  employee
      stock-based compensation using the fair value method prospectively for all
      awards granted or modified after March 29, 2003. In October 2003, the CICA
      revised CICA Handbook  Section 3870,  "Stock-Based  Compensation and Other
      Stock-Based Payments" (Section 3870). Prior to Fiscal 2004 the Company, as
      permitted  under  Section  3870,  did  not  expense  employee  stock-based
      compensation  using the fair  value  based  method.  The fair value of the
      Company's   stock-based   awards  to  employees   is  estimated   using  a
      Black-Scholes  option pricing model.  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.

<PAGE>

        (in millions of U.S. dollars, except per share amounts, CDN GAAP)

                                                            Three Months Ended
                                                           June 25,     June 27,
                                                             2004         2003
                                                           -------      -------
       Net income (loss), as reported                      $  0.2       $ (5.9)
       Adjustments:
          Stock compensation expense as reported              0.4          --
          Pro forma stock compensation expense               (2.9)        (3.1)
                                                           -------      -------
       Pro forma net loss                                  $ (2.3)      $ (9.0)
                                                           =======      =======
       Net income (loss) per common share, as reported
          Basic and diluted                                $  --        $ (0.05)
                                                           =======      =======
       Pro forma net loss per common share:
          Basic and diluted                                $ (0.02)     $ (0.07)
                                                           =======      =======

      Based  upon the fair value  method of  accounting  for stock  compensation
      expense,  the pro forma net loss for the quarter ended June 25, 2004,  was
      increased by $2.5 (quarter  ended June 27, 2003 - $3.1) as compared to the
      net loss, as reported.

      Pro forma financial information required by CICA Handbook 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 fiscal periods
      ended June 25, 2004 and June 27, 2003:

                                                            Three Months Ended
                                                          June 25,      June 27,
                                                            2004          2003
                                                          --------      --------
      Weighted  average fair value price of the
        options  granted  during the quarter              $  1.97       $  2.31


      Risk free interest rate                               4.06%         3.19%
      Dividend yield                                          Nil           Nil
      Volatility factor of the expected market
        price of the Company's common stock                 65.4%         68.2%
      Weighted-average expected life of the options     4.1 years     3.3 years

      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.

3.    Inventories

                                               June 25,        March 26,
                                                 2004            2004
                                               ------           ------
      Raw materials                            $  2.7           $  2.2
      Work-in-process                            16.8             13.3
      Finished goods                              5.6              5.3
                                               ------           ------
                                               $ 25.1           $ 20.8
                                               ======           ======

4.    Fixed assets

                                             June 25,           March 26,
                                               2004               2004
                                             --------           ---------
      Cost                                   $  194.7           $  193.6
      Accumulated depreciation                 (153.7)            (151.3)
                                             --------           --------
                                             $   41.0           $   42.3
                                             ========           ========

<PAGE>

        (in millions of U.S. dollars, except per share amounts, CDN GAAP)

5.  Long term receivables

                                                 June 25,           March 26,
                                                   2004               2004
                                                 --------           ---------

      Note receivable, non-interest bearing      $  10.4             $ 17.2
      Investment tax credits recoverable             8.4                8.6
                                                 -------             ------
                                                    18.8               25.8
      Less: current portion                        (10.4)              (9.8)
                                                 -------             ------
                                                 $   8.4             $ 16.0
                                                 =======             ======

      Based upon the terms of the  Plymouth  Foundry sale  agreement  with X-FAB
      Semiconductor  Foundries AG, payment of the note  receivable was scheduled
      to occur in two  installments of $10.0 and $8.0.  During the first quarter
      of Fiscal 2005, X-FAB exercised its option to make early payments totaling
      $7.0  against the $10.0  installment  due in the second  quarter of Fiscal
      2005.

      Based  upon the  terms  of the sale  agreement,  the note  receivable  was
      discounted by $0.1 as a result of the early  payments made by X-FAB.  This
      discount was applied  against the remaining  $3.0  installment  due in the
      second  quarter of Fiscal 2005.  On July 1, 2004,  the Company  received a
      payment of $2.9 from X-FAB,  to settle the  installment  due at that time.
      (See also Note 16).

      The  final  installment  payment  of $8.0 is due from  X-FAB in the  first
      quarter of Fiscal 2006.

6.    Provisions for exit activities

      The remaining balance in the  restructuring  provision relates to idle and
      excess space as a result of exit  activities  implemented and completed in
      previous  years,  and will be paid  over the  lease  term  unless  settled
      earlier.

      The following  table  summarizes  the  continuity  of these  restructuring
      provisions for the three months ended June 25, 2004:

                                     Workforce   Lease and contract
                                     reduction      settlement          Total
                                     ---------      ----------          -----
      Balance, March 26, 2004         $  0.7         $  2.0            $  2.7
      Cash drawdowns during quarter     (0.7)          (0.5)             (1.2)
                                      ------         ------            ------
      Balance, June 25, 2004          $  --          $  1.5            $  1.5
                                      ======         ======            ======

7.    Guarantees

      Performance   guarantees  are  contracts  that  contingently  require  the
      guarantor  to make  payments  to the  guaranteed  party  based on  another
      entity's failure to perform under an obligating agreement. The Company has
      an  outstanding  performance  guarantee  related  to  a  managed  services
      agreement (project  agreement)  undertaken by the Systems business,  which
      was sold to companies  controlled  by Dr.  Terence H. Matthews on February
      16, 2001 and is now operated as Mitel Networks Corporation  (Mitel).  This
      performance  guarantee remained with the Company following the sale of the
      Systems business to Dr. Matthews.  The project agreement and the Company's
      performance guarantee extend until July 16, 2012. The terms of the project
      agreement  continue to be fulfilled by Mitel. The maximum potential amount
      of future  undiscounted  payments  the  Company  could be required to make
      under the guarantee,  at June 25, 2004,  was $36.4 (20.0 British  Pounds),
      assuming  the Company is unable to secure the  completion  of the project.
      The  Company  was not aware of any  factors as at June 25, 2004 that would
      prevent the project's completion under the terms of the agreement.  In the
      event that  Mitel is unable to  fulfill  the  commitments  of the  project
      agreement,  the Company believes that an alternate third-party  contractor
      could be secured to complete the agreement  requirements.  The Company has
      not  recorded  a  liability  in  its  consolidated   financial  statements
      associated with this guarantee.

      The Company  periodically  has entered into  agreements with customers and
      suppliers that include limited intellectual property indemnifications that
      are  customary in the industry.  These  guarantees  generally  require the
      Company  to  compensate  the other  party for  certain  damages  and costs
      incurred as a result of third party  intellectual  property claims arising
      from  these  transactions.   The  nature  of  the  intellectual   property
      indemnification  obligations prevents the Company from making a reasonable
      estimate  of the maximum  potential  amount it could

<PAGE>

        (in millions of U.S. dollars, except per share amounts, CDN GAAP)

      be required  to pay to its  customers  and  suppliers.  Historically,  the
      Company has not made any significant  indemnification  payments under such
      agreements and no amount has been accrued in the accompanying consolidated
      financial statements with respect to these indemnification obligations.

      In connection with the sale of the Systems  business on February 16, 2001,
      the Company provided to the purchaser  certain income tax indemnities with
      an indefinite life and with no maximum  liability for the taxation periods
      up to February  16,  2001,  the closing  date of the sale.  As at June 25,
      2004,  the taxation  years 2000 to February 16, 2001 were subject to audit
      by taxation authorities in certain foreign jurisdictions.

      On November  19,  2002,  the Company  provided  security to the  financial
      institution  of a subsidiary in the form of a guarantee in relation to the
      subsidiary's  liability for custom and excise duties. As at June 25, 2004,
      the maximum amount of the guarantee was $2.9 ($1.6 British Pounds)

      The Company  records a liability  based on its historical  experience with
      warranty claims. The warranty accrual was immaterial for the quarter ended
      June 25, 2004.

8.    Commitments

      The  Company  had  letters of credit  outstanding  as at June 25,  2004 of
      approximately  $9.4 (June 27,  2003 - $6.2),  which  expire  within  seven
      months.  Cash and cash  equivalents  of $9.4 have been pledged as security
      against  certain  outstanding  letters of  credit,  and are  presented  as
      restricted  cash.  Of this  amount,  $8.0 was issued to secure  letters of
      credit  related  to the  Company's  pension  plan in  Sweden,  and $0.7 of
      letters  of  credit  were  outstanding  related  to the  Company's  Senior
      Executive  Retirement Plan (SERP). In addition,  $0.7 was issued to secure
      certain  obligations  under  a  performance  guarantee  and  office  lease
      arrangement.  The Company has also  pledged  $0.6 as security for a custom
      bond and related credit facilities.

9.    Redeemable Preferred Shares

      There were no  preferred  shares  purchased  during the three months ended
      June  25,  2004.  As at June  25,  2004,  there  were  13,200  repurchased
      preferred shares that had not been cancelled by the transfer agent.  These
      preferred shares were repurchased during Fiscal 2004.

      During the first  quarter of Fiscal  2005,  the Company  declared and paid
      dividends on its redeemable  preferred shares of $0.5 based on a quarterly
      dividend of $0.37 (Cdn $0.50) per share.

10.   Capital stock

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

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

                                                        Three Months Ended
                                                  -----------------------------
                                                   June 25,          June 27,
                                                     2004              2003
                                                  ----------        ----------
      Outstanding Options:
      Balance, beginning of period                11,534,680        10,828,557
      Granted                                        298,000           106,500
      Exercised                                       (1,562)           (8,582)
      Forfeited                                     (156,321)         (646,022)
                                                  ----------        ----------
      Balance, end of period                      11,674,797        10,280,453
                                                  ==========        ==========

      As at June 25,  2004,  there were  2,830,225  (March 26, 2004 - 2,971,904)
      options  available  for grant under the stock option plan  approved by the
      Company's  shareholders  on  December  7,  2001.  The  exercise  price  of
      outstanding  stock  options  ranges  from  $2.52 to $27.69  per share with
      exercise  periods  extending  to June 2010.  The  exercise  price of stock
      options  issued in Canadian  dollars  was  translated  at the U.S.  dollar
      exchange rate on June 25, 2004.


      c) The net income (loss) per common share figures were calculated based on
      the net income (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.

<PAGE>

        (in millions of U.S. dollars, except per share amounts, CDN GAAP)

        The common  shares and  dilutive  common share  equivalents  used in the
        computation of the Company's basic and diluted earnings per common share
        are as follows:

                                                         Three Months Ended
                                                     --------------------------
                                                       June 25,        June 27,
                                                         2004           2003
                                                     -----------     -----------
      Weighted average common shares outstanding     127,302,973     127,273,898
      Dilutive effect of stock options                   149,619            --
                                                     -----------     -----------
      Weighted average common shares outstanding,
       assuming dilution                             127,452,592     127,273,898
                                                     ===========     ===========

      For the three months ended June 27, 2003,  612,952 stock options have been
      excluded from the  computation of diluted loss per share because they were
      anti-dilutive due to the reported net loss for the period.

      The following  stock options were excluded from the  computation of common
      share equivalents because the options' exercise price exceeded the average
      market price of the common shares, thereby making them anti-dilutive:

                                                     Three Months Ended
                                               ------------------------------
                                                 June 25,            June 27,
                                                   2004               2003
                                                 --------            --------
      Number of outstanding options             8,965,608          7,698,178

      Average exercise price per share         $     8.85         $    10.63

      The average  exercise price of stock options  granted in Canadian  dollars
      was translated at the closing period-end U.S. dollar exchange rate.

11.   Other income (expense) - net

                                                      Three Months Ended
                                                   -------------------------
                                                   June 25,         June 27,
                                                     2004             2003
                                                   --------         --------
      Interest income                              $  0.4           $  0.8
      Foreign exchange loss                          (0.3)            (1.0)
                                                   ------           ------
      Other income (expense) - net                 $  0.1           $ (0.2)
                                                   ======           ======

12.   Income taxes

      An income  tax  recovery  of $1.0 was  recorded  for the first  quarter of
      Fiscal  2005,  as a result of a recovery  of domestic  and foreign  income
      taxes,  compared with an expense of $0.3 for the  corresponding  period in
      Fiscal 2004.  The  recovery of $1.0  related to the release of  previously
      recognized  provision no longer  required as a result of settlements  with
      tax  authorities.  In  addition,  the Company  recorded a recovery of $0.2
      relating to income tax refunds received in excess of provisions previously
      recorded, offset by income tax expense of $0.2.

      The Company has a valuation  allowance  against its deferred tax assets at
      June 25, 2004 of $174.5  (March 26, 2004 - $176.8).  The decrease  relates
      mainly to the reversal of temporary differences and losses incurred in the
      Company's foreign jurisdictions and temporary differences in the Company's
      foreign and domestic operations. Management has determined that sufficient
      uncertainties  exist  regarding the realization of certain of its deferred
      tax assets.

      Management  periodically  reviews the  Company's  valuation  allowance  to
      determine   whether  the  overall  tax  estimates  are  reasonable.   When
      management performs its quarterly  assessments of the valuation allowance,
      it may be  determined  that an  adjustment  is required  to the  valuation
      allowance,  which may have a material  impact on the  Company's  financial
      position and results of operations.

<PAGE>

        (in millions of U.S. dollars, except per share amounts, CDN GAAP)

13.   Information on business segments

      Business Segments

      The  Company's  operations  are  comprised  of three  reportable  business
      segments  - Network  Communications,  Consumer  Communications,  and Ultra
      Low-Power  Communications.  Reportable  segments are  business  units that
      offer  different  products  and  services,   employ  different  production
      processes and methods of distribution,  sell to different  customers,  and
      are managed separately because of these differences.

      The  Company  targets  the  communications  industry  with  products  that
      specialize in broadband  connectivity  solutions over wired,  wireless and
      optical  media,  as  well  as  through  ultra   low-power   communications
      solutions.  The Network  Communications  business  segment offers products
      that provide  connectivity  to the  enterprise  and metro  sectors such as
      feeder,  aggregation  and  transmission  applications,  and products  that
      address the  multi-protocol  physical  and network  layers.  The  Consumer
      Communications  business  segment  offers  products  that  allow  users to
      connect to the network.  These  products  include  wireless  (for example,
      cellular  chipsets) and infotainment  applications  (for example,  set-top
      boxes and digital TV). The Ultra Low-Power Communications business segment
      provides    Application-Specific    Integrated    Circuit    (ASIC)    and
      Application-Specific  Standard  Product (ASSP)  solutions for applications
      such as  pacemakers,  hearing aids,  electronic  shelf labels and portable
      instruments.

      The Chief Executive Officer (CEO) is the chief operating decision maker in
      assessing the  performance of the segments and the allocation of resources
      to the  segments.  The CEO evaluates  the  financial  performance  of each
      business segment and allocates  resources based on operating  income.  The
      Company does not allocate stock compensation  expense,  special charges or
      gains, interest income, interest expense or income taxes to its reportable
      segments.  In  addition,  the  Company  does not use a measure  of segment
      assets to assess performance or allocate resources. As a result, segmented
      asset information is not presented;  however, depreciation of fixed assets
      is allocated  to the  segments  based on the  estimated  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>

Three Months Ended June 25, 2004                 Network             Consumer        Ultra Low-Power   Unallocated
                                              Communications      Communications     Communications       Costs          Total
                                            ------------------- ------------------- ------------------ ------------- -------------
<S>                                              <C>                 <C>                 <C>              <C>           <C>
Total external sales revenue                     $ 25.9              $ 19.2              $ 10.7           $  --         $ 55.8
Depreciation of buildings and equipment             1.0                 1.0                 0.5              --            2.5
Stock compensation expense                          --                  --                  --               0.4           0.4
Segment's operating income (loss)                   2.1                (2.2)               (0.4)            (0.4)         (0.9)
</TABLE>

<TABLE>
<CAPTION>

                                                 Network             Consumer        Ultra Low-Power   Unallocated
Three Months Ended June 27, 2003              Communications      Communications     Communications       Costs          Total
                                            ------------------- ------------------- ------------------ ------------- -------------
<S>                                              <C>                 <C>                 <C>              <C>           <C>
Total external sales revenue                     $ 29.3              $ 13.4              $ 11.0           $  --         $ 53.7
Depreciation of buildings and equipment             1.8                 1.3                 0.7              --            3.8
Segment's operating income (loss)                  (1.9)               (4.7)                1.0                           (5.6)
</TABLE>

<PAGE>

        (in millions of U.S. dollars, except per share amounts, CDN GAAP)

14.   Supplementary cash flow information

      The following  table  summarizes  the Company's  other non cash changes in
      operating activities:

                                                           Three Months Ended
                                                        ------------------------
                                                        June 25,        June 27,
                                                          2004           2003
                                                        --------        --------
      Cash provided by (used in)
        Gain on disposal of fixed assets                $ (0.1)         $  --
        Change in pension liabilities                      0.2             1.1
        Other                                             (0.1)           (0.1)
                                                        ------          ------
      Other non cash changes in operating activities    $  --           $  1.0
                                                        ======          ======

15.   Comparative figures

      Certain of the Fiscal 2004 comparative  figures have been  reclassified to
      conform to the presentation adopted in Fiscal 2005.

16.   Subsequent event

      Based upon the terms of the  Plymouth  Foundry  sale  agreement,  the note
      receivable  was  discounted by $0.1 as a result of the early payments made
      by X-FAB. This discount was applied against the remaining $3.0 installment
      due in the second  quarter of Fiscal  2005.  On July 1, 2004,  the Company
      received a payment of $2.9 from X-FAB,  to settle the  installment  due at
      that time (See also Note 5).