Exhibit 99.1

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

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

Current assets:
  Cash and cash equivalents                               $ 27.8         $ 75.6
  Short-term investments                                   105.3           78.8
  Trade accounts receivable - net                           21.0           24.2
  Other receivables                                          5.8            5.5
  Inventories                                               23.1           33.0
  Future income tax assets                                   1.7            4.0
  Prepaid expenses and other                                 8.9           11.7
                                                          ------         ------
                                                           193.6          232.8
Fixed assets - net                                          60.6           65.7
Long-term receivables                                       14.9           29.7
Long-term investments                                       11.2           14.1
Other assets                                                20.7            2.7
                                                          ------         ------

                                                          $301.0         $345.0
                                                          ======         ======

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Trade accounts payable                                  $  7.2         $ 14.6
  Employee-related payables                                 13.8           12.8
  Income and other taxes payable                             8.3            5.9
  Provisions for exit activities                            12.2           19.8
  Other accrued liabilities                                 11.5           16.6
  Deferred credits                                           6.4            2.0
  Current portion of long-term debt                          0.8            2.1
                                                          ------         ------
                                                            60.2           73.8
Long-term debt                                               0.2            0.7
Pension liabilities                                         17.8           14.9
Future income tax liabilities                                5.7            8.3
                                                          ------         ------
                                                            83.9           97.7
                                                          ------         ------
Shareholders' equity:
  Redeemable preferred shares, unlimited
    shares authorized; 1,473,900 shares issued              21.3           22.6
    and outstanding (March 29, 2002 - 1,558,700)
  Common shares, unlimited shares authorized;
    no par value; 127,191,316 shares issued                407.6          407.1
    and outstanding (March 29, 2002 - 127,082,123)
  Contributed surplus                                        5.7            5.8
  Deficit                                                 (230.2)        (189.1)
  Translation account                                       12.7            0.9
                                                          ------         ------
                                                           217.1          247.3
                                                          ------         ------
                                                          $301.0         $345.0
                                                          ======         ======

        (See accompanying notes to the consolidated financial statements)


                                        1
<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                     Nine Months Ended
                                                                   --------------------------            --------------------------
                                                                   Dec. 27,           Dec 28,            Dec. 27,           Dec. 28,
                                                                     2002              2001                2002               2001
                                                                   -------            -------            -------            -------
<S>                                                                <C>                <C>                <C>                <C>
Revenue                                                            $  46.8            $  51.7            $ 141.0            $ 167.3
Cost of revenue                                                       25.8               32.2               77.6              129.3
                                                                   -------            -------            -------            -------
Gross margin                                                          21.0               19.5               63.4               38.0
                                                                   -------            -------            -------            -------

Expenses:
  Research and development                                            24.6               19.9               68.1               61.8
  Selling and administrative                                          12.5               12.9               37.3               40.4
  Special charge                                                        --                 --                 --               33.9
  Amortization of acquired intangibles                                  --               11.1                 --               24.5
                                                                   -------            -------            -------            -------
                                                                      37.1               43.9              105.4              160.6
                                                                   -------            -------            -------            -------
Loss from operations                                                 (16.1)             (24.4)             (42.0)            (122.6)
Other income (expense) - net                                           0.8               (0.8)               3.8                1.3
Interest expense                                                      (0.3)              (0.2)              (0.7)              (0.6)
                                                                   -------            -------            -------            -------
Loss before income taxes                                             (15.6)             (25.4)             (38.9)            (121.9)
Income tax (expense) recovery                                          0.6               (0.1)              (0.7)               1.8
                                                                   -------            -------            -------            -------
Net loss for the period                                              (15.0)             (25.5)             (39.6)            (120.1)

Deficit, beginning of period                                        (214.7)            (132.1)            (189.1)             (36.5)
                                                                   -------            -------            -------            -------
                                                                    (229.7)            (157.6)            (228.7)            (156.6)
Cost of issuing common shares                                           --               (0.1)                --               (0.1)
Dividends on preferred shares                                         (0.5)              (0.5)              (1.5)              (1.5)
                                                                   -------            -------            -------            -------
Deficit, end of period                                             $(230.2)           $(158.2)           $(230.2)           $(158.2)
                                                                   =======            =======            =======            =======
Net loss attributable to common
 shareholders after preferred
 share dividends                                                   $ (15.5)           $ (26.0)           $ (41.1)           $(121.6)
                                                                   =======            =======            =======            =======
Net loss per common share:
      Basic and diluted                                            $ (0.12)           $ (0.21)           $ (0.32)           $ (0.97)
                                                                   =======            =======            =======            =======
Weighted average number of common shares
 outstanding (millions):
      Basic and diluted                                              127.2              126.0              127.0              125.4
                                                                   =======            =======            =======            =======
</TABLE>

        (See accompanying notes to the consolidated financial statements)


                                        2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                         Three Months Ended                  Nine Months Ended
                                                                      -------------------------          -------------------------
                                                                      Dec. 27,          Dec 28,          Dec. 27,         Dec. 28,
                                                                        2002             2001              2002             2001
                                                                      -------           -------          -------          --------
<S>                                                                   <C>               <C>               <C>             <C>
Cash flows from operating activities:
  Net loss for the period                                              $(15.0)          $(25.5)          $(39.6)          $(120.1)
  Depreciation and amortization                                           4.5             19.4             13.7             47.4
  Special charges, non-cash                                                --               --               --              1.1
  Loss (gain) on disposal of fixed assets                                (0.1)              --             (0.1)             0.3
  Gain on sale of long-term investment                                   (0.7)              --             (0.7)              --
  Inventory write-down                                                     --               --               --             28.4
  Future income taxes                                                     0.1             (1.2)             0.1             (2.2)
  Change in pension liability                                              --              0.1               --              0.4
  Equity loss in investment                                                --              0.8               --              2.2
  Decrease (increase) in working capital
      Trade accounts and other receivables                                3.9              7.1              6.4             24.6
      Inventories                                                         5.6              8.4             12.9             11.9
      Prepaid expenses and other                                          1.8               --              4.2              0.7
      Trade accounts payable and other accrued
       liabilities                                                       (5.8)            (4.9)           (20.3)           (16.1)
      Deferred credits                                                    3.7             (0.1)             4.0               --
                                                                       ------           ------           ------           ------
Cash provided by (used in) operating activities                          (2.0)             4.1            (19.4)           (21.4)
                                                                       ------           ------           ------           ------

Cash flows from investing activities:
      Purchased short-term investments                                 (105.4)           (28.0)          (251.9)           (28.0)
      Matured short-term investments                                     65.3               --            227.0               --
      Proceeds from disposal of fixed and
       other assets                                                        --               --              0.4              0.2
      Expenditures for fixed and other assets                            (1.4)            (6.1)            (5.7)           (28.4)
      Increase in long-term investments                                    --               --             (0.4)            (2.0)
      Proceeds from sale of long-term investments                         4.2               --              4.2               --
      Proceeds from repayment of note receivable                           --               --               --              4.4
      Proceeds from sale of discontinued
       operations - net                                                    --               --               --              1.3
                                                                       ------           ------           ------           ------
Cash used in investing activities                                       (37.3)           (34.1)           (26.4)           (52.5)
                                                                       ------           ------           ------           ------

Cash flows from financing activities:
      Repayment of long-term debt                                          --               --               --             (0.9)
      Repayment of capital lease liabilities                             (0.4)            (1.6)            (1.8)            (4.2)
      Payment of dividends on preferred shares                           (0.5)            (0.5)            (1.5)            (1.5)
      Issue of common shares                                               --              1.3              0.5              3.3
      Repurchase of preferred shares                                     (0.9)            (0.2)            (1.3)            (0.7)
                                                                       ------           ------           ------           ------
Cash used in financing activities                                        (1.8)            (1.0)            (4.1)            (4.0)
                                                                       ------           ------           ------           ------

Effect of currency translation on cash and
 cash equivalents                                                         1.0              0.1              2.1             (0.3)
                                                                       ------           ------           ------           ------

Decrease in cash and cash equivalents                                   (40.1)           (30.9)           (47.8)           (78.2)

Cash and cash equivalents, beginning of period                           67.9            132.4             75.6            179.7
                                                                       ------           ------           ------           ------

Cash and cash equivalents, end of period                               $ 27.8           $101.5           $ 27.8           $101.5
                                                                       ======           ======           ======           ======
</TABLE>

        (See accompanying notes to the consolidated financial statements)


                                        3
<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 December 27, 2002
      and the results of operations  and cash flows of the Company for the three
      and nine month  periods  ended  December  27, 2002 and  December 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.


                                       4
<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:

<TABLE>
<CAPTION>
                                                                  Three Months Ended                  Nine Months Ended
                                                               -------------------------          -------------------------
                                                               Dec. 27,          Dec 28,          Dec. 27,         Dec. 28,
                                                                 2002             2001              2002             2001
                                                               -------           -------          -------          --------
<S>                                                            <C>               <C>               <C>             <C>
Net loss, as reported                                          $(15.0)           $(25.5)           $ (39.6)        $(120.1)
Adjustments:
  Amortization of goodwill                                         --                --                 --             5.1
                                                               ------            ------            -------         -------
                                                               $(15.0)           $(25.5)           $ (39.6)        $(115.0)
                                                               ======            ======            =======         =======

Basic and diluted net loss per
  common share, as reported
                                                                (0.12)           $(0.21)             (0.32)        $ (0.97)
                                                               ======            ======            =======         =======
Basic and diluted net loss per
  common share, adjusted
                                                                (0.12)           $(0.21)             (0.32)        $ (0.92)
                                                               ======            ======            =======         =======
</TABLE>

      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
            December 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
            11).

3.    Recently issued accounting pronouncements

      a)    The CICA has  issued  a new  Handbook  Section  3475,  "Disposal  of
            Long-Lived Assets and Discontinued Operations". The new Section 3475
            applies  to  disposal   activities   initiated  by  an  enterprise's
            commitment to a plan on or after May 1, 2003, with earlier  adoption
            encouraged.  The new standard replaces  requirements on the disposal
            of assets and discontinued operations that were contained in Section
            3061,  Property,  Plant and Equipment,  and in the previous  Section
            3475,  Discontinued  Operations,  and harmonizes Canadian accounting
            with U.S. GAAP (Financial  Accounting Standard No. 144,  "Accounting
            for the  Impairment  or Disposal of  Long-Lived  Assets")  for these
            topics.  Application  of the new Section  3475 is  prospective.  The
            adoption  of the new  Section  3475 will  impact the  accounting  of
            future disposals of long-lived assets and discontinued operations.

      b)    The CICA has issued a new  Handbook  Section  3063,  "Impairment  of
            Long-Lived Assets".  Section 3063 will be effective for fiscal years
            beginning  on  or  after  April  1,  2003,  with  earlier   adoption
            encouraged.  Application  of Section  3063 is  prospective.  The new
            standard   replaces   requirements   on  the  write-down  of  assets
            previously contained in Section 3061, Property, Plant and Equipment,
            and harmonizes  Canadian accounting for the impairment of long-lived
            assets  with U.S.  GAAP  (Financial  Accounting  Standard  No.  144,
            "Accounting  for the Impairment or Disposal of Long-Lived  Assets").
            The adoption of Section 3063 is not  anticipated  to have a material
            impact on the Company's financial statements.

      c)    The CICA has issued a new Accounting  Guideline AcG-14,  "Disclosure
            of Guarantees".  The new Guideline requires additional disclosure by
            a guarantor in its interim and annual financial statements about its
            obligations under certain guarantees.  The new guideline  harmonizes
            Canadian  disclosure  requirements  with the U.S.  GAAP (FASB issued
            Interpretation  No.  45,  "Guarantor's   Accounting  and  Disclosure
            Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
            Indebtedness  of Others").  This  Guideline is effective for interim


                                       5
<PAGE>

            and annual  periods  beginning  on or after  January  1, 2003,  with
            earlier adoption encouraged.  This Company adopted this Guideline in
            the quarter ended December 27, 2002.

4.    Inventories

                                                   December 27,      March 29,
                                                       2002            2002
                                                   ------------      ---------
      Raw materials                                  $   2.5         $   2.4
      Work-in-process                                   15.9            20.8
      Finished goods                                     4.8             9.8
                                                     -------         -------
                                                     $  23.1         $  33.0
                                                     =======         =======

5.    Fixed assets

                                                   December 27,      March 29,
                                                       2002            2002
                                                   ------------      ---------
      Cost                                           $ 175.3         $ 163.0
      Accumulated depreciation                        (114.7)          (97.3)
                                                     -------         -------
                                                     $  60.6         $  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.

      Management periodically reviews the Company's fixed assets to evaluate the
      realizability  of these  assets  based upon the fair value as estimated by
      reference to  undiscounted  expected  future net cash flows of the related
      assets.  When management  performs future  assessments of these long-lived
      assets in the coming  quarters,  a decline in the  realizability  of these
      assets  below the  carrying  value may require  the  Company to  recognize
      impairment  on the  carrying  value of its  fixed  assets  which  could be
      material.

6.    Long-term investments

      As at December 27, 2002, the Company had a nine percent ownership interest
      in Mitel Networks  Corporation,  a Canadian  corporation that files annual
      and  other  reports  with  the  United  States   Securities  and  Exchange
      Commission  under the  Securities  Exchange  Act of 1934,  with a carrying
      value of $11.2 (March 29, 2002 - $14.1).  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.

      The Company sold its investment in DALSA  Semiconductor  Inc. ("DALSA") on
      October 3, 2002 for cash  proceeds of $4.2 and  recorded a gain of $0.7 in
      the third quarter of Fiscal 2003.

7.    Provisions for exit activities

                                                   December 27,      March 29,
                                                       2002            2002
                                                   ------------      ---------
      Restructuring provisions                       $   4.2         $   7.9
      Provision for disposal of discontinued
       operations                                        3.8             5.8
      Provision for disposal of foundry businesses       4.2             6.1
                                                     -------         -------
                                                     $  12.2         $  19.8
                                                     -------         -------

8.    Deferred credits

      On December 31,  2002, a tenant to space leased by the Company  terminated
      its lease.  In  settlement  of the lease,  the former  tenant  paid to the
      Company an amount of $3.3 in cash on December 20,  2002,  all of which was
      treated as a deferred  credit as at December 27, 2002.  The entire  amount
      will be recorded  as income in the fourth  quarter of Fiscal 2003 when the
      termination date expires.


                                       6
<PAGE>

9.    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 discontinued  Systems
      business,  which  was  sold to  companies  controlled  by Dr.  Terence  H.
      Matthews  on  February  16,  2001  and  now  operated  as  Mitel  Networks
      Corporation.   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 26,
      2012. The terms of the project agreement continue to be fulfilled by Mitel
      Networks Corporation.  The maximum potential amount of future undiscounted
      payments  the Company  could be required to make under the  guarantee,  at
      December  27,  2002,  was $32.0,  based upon the Company  being  unable to
      secure the  completion  of the  project.  The  Company is not aware of any
      factors  as  at  December  27,  2002  that  would  prevent  the  project's
      completion  under the terms of the  agreement.  In the  event  that  Mitel
      Networks  Corporation was 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.  At December 27,
      2002, the carrying value of these guarantees is nil.

      In connection with the sale of the Systems  business  described in note 21
      (a) to the consolidated  financial statements for the year ended March 29,
      2002, 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
      December 27,  2002,  the  taxation  years 1997 to February  16, 2001,  are
      subject to audit by taxation authorities.

10.   Redeemable Preferred Shares

      There were 86,000  preferred shares purchased during the nine months ended
      December  27, 2002 for cash  consideration  of $1.3.  The  transfer  agent
      cancelled  84,800  shares in the first nine months of Fiscal  2003.  As at
      December 27, 2002,  there were 6,200  repurchased  preferred  shares to be
      cancelled in the fourth quarter Fiscal 2003.

      During the third 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 $0.96  (Cdn$1.50)  per share  for the first  nine
      months of Fiscal 2003.

11.   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 would be cancelled.  During the nine months ended
            December  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:

                                                         Nine Months Ended
                                                    ----------------------------
                                                    December 27,    December 28,
                                                        2002           2001
                                                    -----------     ------------
      Outstanding Options:
      Balance, beginning of period                   10,914,962       9,464,693
      Granted                                           400,300       2,125,550
      Exercised                                        (109,193)       (638,663)
      Forfeited                                      (1,896,121)       (983,599)
                                                    -----------     -----------
      Balance, end of period                          9,309,948       9,967,981
                                                    ===========     ===========

      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 December 27, 2002 were
      5,306,731 (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 November 2008. The exercise price of stock
      options was based on prices in  Canadian  dollars  translated  at the U.S.
      dollar exchange rate on December 27, 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.


                                       7
<PAGE>

            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           Nine Months Ended
                             ----------------------       ---------------------
                             Dec. 27,       Dec 28,       Dec. 27,     Dec. 28,
                               2002          2001           2002         2001
                             ----------------------       ---------------------
Stock options                30,473       1,720,301       91,921      1,392,736
Restricted shares                --         704,379           --        704,379
                             ----------------------       ---------------------
Total                        30,473       2,424,680       91,921      2,097,115
                             ======================       =====================

            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       Nine Months Ended
                                  ----------------------   ---------------------
                                  Dec. 27,       Dec 28,   Dec. 27,     Dec. 28,
                                    2002          2001       2002         2001
                                  ----------------------   ---------------------
Number of outstanding options     9,218,448    2,996,080   8,837,767   3,086,580

Average exercise price
 per share                        $    8.92    $   11.71   $    9.21   $   11.64

      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 nine
            month periods ended December 27, 2002 and December 28, 2001:

                                    Three Months Ended       Nine Months Ended
                                  ----------------------   ---------------------
                                    Dec. 27,     Dec 28,     Dec. 27,   Dec. 28,
                                      2002        2001        2002        2001
                                  ----------------------   ---------------------

Pro Forma net loss attributable
  to common shareholders
  after preferred dividends         $ (18.8)    $ (30.2)    $ (51.1)    $(136.3)

Pro Forma net loss per
common share:
  Basic and diluted                 $ (0.15)    $ (0.24)    $ (0.40)    $ (1.09)

Weighted average fair value price
  of the options                    $  1.19     $  5.00     $  1.82     $  3.63

Risk free interest rate                3.45%       5.19%       3.82%       5.19%
Dividend yield                          Nil         Nil         Nil         Nil
Volatility factor of the expected
  market price of the Company's
  common stock                        0.673       0.501       0.622       0.501
Weighted-average expected life
  of the options                  3.1 years   4.0 years   3.1 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.

12.   Inventory write-down and restructuring

      a)    Fiscal 2003 Workforce Reduction

            During the third  quarter and first nine months of Fiscal 2003,  the
            Company  continued  to reduce its  workforce  across all  geographic
            regions and incurred  severance  costs of $3.6 ($5.0  year-to-date).
            Worldwide


                                       8
<PAGE>

            headcount was reduced by approximately  200 employees over the first
            nine  months  of the  year  in a  continuing  effort  to  streamline
            operations.   Severance   costs  of  $0.3  in  the   quarter   ($0.9
            year-to-date)  were included in cost of revenue.  The balance of the
            severance costs increased  research and development  ("R&D") expense
            by $2.5 in the quarter ($2.7  year-to-date),  and increased  selling
            and various general administration function ("S&A") expenses by $0.8
            in the quarter ($1.4 year-to-date). As a result of the restructuring
            activities  undertaken  in the first  nine  months  of Fiscal  2003,
            accrued  severance  payments of $0.6,  included in  employee-related
            payables,  are  expected to be paid in the fourth  quarter of Fiscal
            2003.

      b)    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:

<TABLE>
<CAPTION>
                                                 Workforce      Excess Lease
                                                 Reduction         Costs           Total
                                                 ---------      ------------       -----
<S>                                               <C>              <C>             <C>
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)
  Cash draw-downs during Q3 2003                   (0.8)            (0.5)           (1.3)
                                                   ----             ----            ----
Provision balance as at December 27, 2002          $1.2             $3.0            $4.2
                                                   ====             ====            ====
</TABLE>

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

13.   Other income (expense) - net

<TABLE>
<CAPTION>
                                                     Three Months Ended                 Nine Months Ended
                                             ---------------------------------  ---------------------------------
                                              Dec. 27, 2002     Dec. 28, 2001    Dec. 27, 2002     Dec. 28, 2001
                                             ---------------------------------  ---------------------------------
<S>                                               <C>              <C>               <C>               <C>
Interest income                                   $ 0.7            $ 1.0             $ 2.6             $ 4.5
Foreign exchange gain (loss)                       (0.6)            (1.0)              0.5              (1.0)
Equity loss in Optenia, Inc.                         --             (0.8)               --              (2.2)
Gain on sale of DALSA investment                    0.7              0.7                                  --
                                             ---------------------------------  ---------------------------------
Other income (expense) (net)                      $ 0.8            $(0.8)            $ 3.8             $ 1.3
                                             =================================  =================================
</TABLE>

14.   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


                                       9
<PAGE>

      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 $27.8 and $85.6 in
      revenue in the three and nine months ended December 27, 2002, respectively
      (three  and  nine  months  ended  December  28,  2001 - $25.8  and  $86.7,
      respectively).  User  access  products  accounted  for  $12.0 and $35.0 in
      revenue in the three and nine months ended December 27, 2002, respectively
      (three  and  nine  months  ended  December  28,  2001 - $16.9  and  $55.3,
      respectively).

      The  Medical  business   provides  ultra  low  power  ASIC  solutions  for
      applications such as pacemakers, hearing aids 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,
      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 Dec. 27, 2002                                   Communications        Medical          Costs              Total
                                                                   --------------        -------       -----------           -----
<S>                                                                    <C>                <C>              <C>               <C>
Revenue                                                                $ 39.8             $ 7.0            $  --             $ 46.8
Depreciation of buildings and equipment                                   4.2                --               --                4.2
Segment's operating loss                                                (14.9)             (1.2)              --              (16.1)
<CAPTION>

                                                                                                       Unallocated
Three Months Ended Dec. 28, 2001                                   Communications        Medical          Costs              Total
                                                                   --------------        -------       -----------           -----
<S>                                                                    <C>                <C>              <C>               <C>
Revenue                                                                $ 42.7             $ 9.0            $  --             $ 51.7
Depreciation of buildings and equipment                                   7.4               0.1               --                7.5
Amortization of acquired intangibles                                     11.1                --               --               11.1
Segment's operating income (loss)                                       (25.6)              1.2               --              (24.4)

<CAPTION>
                                                                                                       Unallocated
Nine Months Ended Dec. 27, 2002                                    Communications        Medical          Costs              Total
                                                                   --------------        -------       -----------           -----
<S>                                                                    <C>                <C>              <C>               <C>
Revenue                                                                $120.6             $20.4            $  --             $141.0
Depreciation of buildings and equipment                                  12.7               0.1               --               12.8
Segment's operating loss                                                (39.4)             (2.6)              --              (42.0)

<CAPTION>
                                                                                                       Unallocated
Nine Months Ended Dec. 28, 2001                                    Communications        Medical          Costs              Total
                                                                   --------------        -------       -----------           -----
<S>                                                                    <C>                <C>             <C>               <C>
Revenue                                                                $142.0             $25.3           $   --            $ 167.3
Depreciation of buildings and equipment                                  21.9               0.2               --               22.1
Amortization of acquired intangibles                                     24.5                --               --               24.5
Special charge                                                             --                --             33.9               33.9
Segment's operating income (loss)                                       (94.8)              6.1            (33.9)            (122.6)
</TABLE>


                                       10
<PAGE>

15.   Subsequent events

      a)    On January 28, 2003,  and  subsequent to the third quarter of Fiscal
            2003,  cash and cash  equivalents  totaling  $6.1 were  hypothecated
            under  the  Company's  revolving  global  credit  facility  to cover
            outstanding letters of credit.

      b)    During  Fiscal  2002,  the Company took steps to wind up its defined
            benefit  pension  plan in the United  Kingdom and replaced it with a
            defined  contribution  plan. The cash settlement of the pension plan
            is expected to cost  approximately  $10.5.  On January 28, 2003, and
            subsequent  to the third  quarter of Fiscal  2003,  the Company paid
            $8.0 as partial  consideration of the pension obligation  settlement
            to a large,  AAA-rated insurance company in the U.K. under a wind-up
            agreement.  In addition,  the Company will transfer its pension plan
            assets of approximately  $15.5 in February 2003. The Company expects
            to make a  final  payment  of  approximately  $2.5 to the  insurance
            company  later in  Fiscal  2004  after  the  final  adjustments  are
            calculated.

            As a result  of the  settlement,  the  pension  liabilities  will be
            reduced by $3.8, representing the accrued U.K. pension plan balance.
            The Company  expects to record an expense of  approximately  $6.6 in
            the fourth quarter of Fiscal 2003 related to this settlement.

16.   Comparative figures

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


                                       11