Zarlink Semiconductor appoints Kirk Mandy as new CEO; issues guidance for fourth quarter of fiscal 2005

February 17, 2005

2 Min Read

OTTAWA -- The Board of Directors of Zarlink Semiconductor Inc. (NYSE/TSX:ZL) today announced the appointment of Kirk K. Mandy as the company's new President and Chief Executive Officer. He has been serving in that role on an interim basis since January 26, 2005.

Mr. Mandy has been associated with Zarlink Semiconductor and Mitel Corporation for 21 years in a variety of increasingly senior positions. He was named Vice President and General Manager of Mitel's Semiconductor division in 1992 and later assumed responsibility for the Business Communications Systems division. Mr. Mandy was CEO of Mitel from 1998 to 2001 and joined the Board as Vice Chairman when Zarlink was formed in 2001.

"The Board is very pleased that Kirk Mandy is taking on the CEO position on a permanent basis," said Dr. Henry Simon, Chairman of the Board, Zarlink Semiconductor. "We have the utmost confidence that he will take the necessary steps to restore profitability and lead the Company on a growth path. We know that Kirk has the support of the entire management team and Zarlink's employees."

Fourth Quarter Fiscal 2005 Guidance and Restructuring

Zarlink today also issued guidance for the Fiscal 2005 fourth quarter ending March 25, 2005. Based on current booking patterns, Zarlink is forecasting that revenues will be between US$47 million and US$49 million in the fourth quarter.

In addition, the Company is today announcing cost reductions that are expected to generate annualized savings of US$20 million, the quarterly benefit of which will begin to be realized in the first quarter of Fiscal 2006. Accordingly, Zarlink expects to record additional charges in the fourth quarter of approximately US$18 million or US$0.14 per share, related to reducing its workforce by approximately 15% and stopping certain R&D programs, primarily the development of a digital video decoder. These programs do not involve products currently generating revenue.

The company will also record a US$2 million gain, relating to the receipt on January 28, 2005, of a note receivable payment from X-FAB Semiconductor Foundries.

As a result of these actions and events, and the revenue guidance given above, Zarlink expects to record a fourth quarter net loss of US$0.19 to US$0.21 per share.

"Due to a continued slow recovery in the telecom industry, we have decided to reduce our spending and restructure the company," said Kirk Mandy, President and Chief Executive Officer, Zarlink Semiconductor. "We are focusing our R&D investments on products where we are achieving market success and our best new opportunities."

Zarlink Semiconductor Inc.

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