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Financial

Zarlink Reports Q4

OTTAWA -- Zarlink Semiconductor (NYSE/TSX:ZL) today issued fourth quarter and Fiscal 2006 results for the year ended March 31, 2006, prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). For Fiscal 2006, the year-end of the Company is March 31, 2006, resulting in a 53-week year, compared to a 52-week year in Fiscal 2005. Zarlink's fourth quarter of Fiscal 2006 consisted of 14 weeks compared to a 13-week quarter in the third quarter.

Fourth quarter revenue exceeded guidance and rose to US$39.2 million, up 5% from US$37.4 million in the third quarter of Fiscal 2006, and up 9.5% from US$35.8 million in the fourth quarter of Fiscal 2005.

Zarlink earned fourth quarter net income of US$3.7 million or US$0.02 per share. This compares with third quarter net income of US$51.0 million or US$0.39 per share. Included in the third quarter results was a US$55.8 million gain related to disposition of the RF Front-End Business, as well as impairment and severance costs of US$5.4 million and US$0.9 million, respectively. Excluding the gain on disposition, impairment and severance costs, third quarter net income was US$1.5 million, or US$0.01 per share. In the Fiscal 2005 fourth quarter, the Company recorded a net loss of US$23.9 million, or US$0.19 per share.

For Fiscal 2006, Zarlink recorded net income of US$48.8 million, or US$0.36 cents per share, on revenue of US$144.9 million. This compares favorably to Fiscal 2005, when the Company recorded a net loss of US$20.8 million, or US$0.18 cents per share, on revenue of US$160.8 million.

"I am gratified to announce that Zarlink finished the fiscal year in its strongest financial position in many years," said Kirk K. Mandy, President and Chief Executive Officer, Zarlink Semiconductor. "The Company is profitable on a net and operating basis, cash flow is positive and growing, margins are higher, and the quarterly revenue trend is favorable. We are delivering on our commitment to improve shareholder value." Gross margin in the fourth quarter improved to 54% of revenue, compared with 52% in the third quarter, and 30% in the fourth quarter a year ago.

Zarlink Semiconductor Inc. (NYSE/Toronto: ZL)

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