Gennum Reports 2007 Fourth Quarter and Year-End Results



    BURLINGTON, ON, Feb. 1 /CNW/ - Gennum Corporation (TSX: GND) today
reported unaudited financial results for the fourth quarter and fiscal year
ended November 30, 2007.

    
    ($ millions except per share amounts)
                                                    % of                % of
                                          2007   Revenue      2006   Revenue
                                         ------ ---------    ------ ---------
    Fourth quarter
    Revenue                               29.9                26.2
    Gross margin                          22.3        75      20.3        77

    Net earnings - continuing              4.4        15       5.1        19
    Net earnings per share - continuing   0.12                0.14
    Net loss - discontinued               (4.8)               (2.3)
    Net loss per share - discontinued    (0.13)              (0.06)

    Year
    Revenue                              110.5               104.0
    Gross margin                          83.9        76      80.6        77
    Net earnings - continuing             22.3        20      26.5        25
    Net earnings per share - continuing   0.62                0.74
    Net loss - discontinued              (27.1)               (9.3)
    Net loss per share - discontinued    (0.75)              (0.26)
    

    "2007 was a year in which we took significant actions to focus our
Company. By executing to our strategic plan, we delivered above average
industry growth and have good momentum to build upon for 2008. Our investments
in our global sales infrastructure and new product development are paying off
as we are securing more design-wins with our existing customers and gaining
new business in high-growth adjacent markets," said Dr. Franz Fink, President
and CEO of Gennum. "As we continue through 2008, you can expect to see a broad
set of new product introductions, a strong emphasis on driving operational
excellence and an ongoing commitment to build the best high-performance team
in the industry. While we have made significant progress this past year, we
will continue to execute upon our well-defined strategy with speed and clarity
to further strengthen the Company and maximize shareholder value."

    Revenue

    Our 2007 fiscal year represented a transition year for us as we executed
on several actions to sharpen the focus of our portfolio and build around our
core business. As a result, the following components of the Company qualified
as Discontinued Operations for the purpose of reporting 2007 performance:
Headsets, Hearing, Manufacturing, Falcon(TM), and VXP(R) Image Processing.
    In terms of Continuing Operations which encompasses our video and data
communications product lines, the financial performance was solid as this
business exhibited revenue growth, high gross margins and strong operating
returns. Compared to 2006, our consolidated revenue grew over 6%. The stronger
Canadian dollar, relative to the US dollar and Japanese yen, reduced
consolidated revenue by $4.6 million in 2007 compared to 2006. Before currency
impacts, the increase in revenue over 2006 was 10.7%.
    Consolidated fourth quarter revenue of $29.9 million in 2007, was 14%
higher than the same quarter in 2006 primarily due to higher revenue in the
Data Communications and Video segments. Before currency impacts, consolidated
fourth quarter revenue grew by about 25% over the prior year. The stronger
Canadian dollar reduced consolidated revenue by $3.1 million in the quarter.
    For the year, Video products revenue was $83.3 million, a small decrease
from the prior year. Before currency impacts, the year-over-year revenue was
an increase of 1.5%. During the fourth quarter of 2007, Video products revenue
increased by 3% in the quarter to $21.3 million, compared to the same quarter
in 2006, as decreased standard-definition revenue was offset by an increase in
high-definition products revenue. Before currency impacts, Video products
revenue grew almost 14% over the prior year. The impact of the stronger
Canadian dollar reduced Video products revenue by $2.3 million in the quarter.
    In Data Communications, product revenue continued to grow significantly,
as year-end 2007 sales grew by 44% over the prior year. Before currency
impacts, revenue grew by over 50%. Fourth quarter 2007 revenue rose to
$7.6 million in the quarter from $5.1 million in the same period last year, a
49% gain due to increased sales from high-speed (10 Gigabits per second) XFP
optical transceiver products. Revenue growth before currency impacts would
have been over 60%. Currency impacts reduced Data Communications products
revenue by $0.8 million in the quarter.
    Consolidated gross margin as a percentage of revenue declined in 2007 by
1.5% to 76%, primarily due to currency and pricing pressures. Gross margin
dollars increased by $3.3 million in 2007. During the fourth quarter, gross
margin dollars increased by 10% to $22.4 million, despite the strengthening of
the Canadian dollar and pricing pressures in the marketplace. Gross margin as
a percentage of revenue in the quarter was 75% versus 77% in 2006, which
continues to place us at the leading edge of technology industry performance
for this ratio.
    For the year, sales, marketing and administration expenditures increased
to $28.3 million, up $3.3 million compared to 2006. Fourth quarter expenses
increased to $9.3 million in 2007 from $7.3 million in 2006. Of the increase
in the quarter, $0.6 million related to a re-allocation of accrued expenses
between this area and R&D expense. In order to achieve the aggressive strategy
to optimize our Company, we invested in the fundamental activities such as
broadening our sales presence, accelerating new product introductions,
branding and corporate business development. Now, with a stronger foundation,
we expect 2008 sales, marketing and administration expenditures to be reduced
in the first quarter.
    In 2007, our investment in R&D increased by $4.7 million compared to the
prior year investment of $20.4 million. As a percent of revenue, 2007 spending
was 23% compared to 20% in 2006. R&D expenses in the fourth quarter of 2007
increased to $6.2 million from $3.8 million in the fourth quarter of the prior
year. This increase is a result of aligning our product roadmap investment for
video transport, data communications and consumer connectivity products in
2007 to be more in line with our Company's new focus. The timing of taping out
new products also contributed to the year-over-year increase in R&D spending.
The inclusion of the Snowbush Microelectronics acquisition in October added
$0.7 million to R&D expense in the fourth quarter of 2007. The spending
related to Visual Excellence Processing(R) technology (VXP(R)) is now included
in Discontinued Operations.
    During the fourth quarter of 2006, we incurred a $2.0 million
restructuring charge primarily related to severance accruals caused by a 6%
reduction in our workforce in late 2006 and further restructuring activities
that took place in the first two quarters of 2007.
    Other income (expense) was an expense of $0.6 million in 2007 versus
income of $0.7 million in 2006. The 2006 income related primarily to foreign
currency gains while the 2007 expense included a write down of our investment
in Nanoscience of $0.7 million.
    Net earnings from continuing operations in 2007 was $22.3 million or
20.3% of revenue. This result compared to net earnings of $26.6 million in
2006. In the fourth quarter, net earnings from continuing operations was
$4.4 million in the fourth quarter of 2007 or $0.12 per share versus $5.1
million or $0.14 per share in 2006. Discontinued operations contributed a loss
of $4.8 million or $0.13 per share in 2007 versus a loss of $2.3 million or
$0.06 per share in 2006. More information related to Discontinued Operations
is found in note 2 of the financial statements.

    Financial Condition

    The cash and cash equivalent balance at November 30, 2007 was
$34.2 million, a decrease of $10.8 million from the end of the prior quarter
and a decrease of $13.3 million from the end of the 2006 year. The primary
reason for the decrease in each period was the acquisition of Snowbush
Microelectronics late in the fourth quarter. Divestitures are expected to
contribute $22.0 million to our cash balances in the first fiscal quarter of
2008.

    Product and Customer Developments

    We launched ActiveConnect(TM), the longest reach, highest performance
high-definition multimedia interface (HDMI) connectivity solution. Supporting
distances up to 100 meters, the ActiveConnect(TM) solution is being integrated
into new consumer connectivity products by Belden, Gefen, Orbital Development,
Liberty Cable and Kramer Electronics.
    We are expanding our CDR portfolio and developing innovative ways to
bring cost and performance benefits to the rapidly growing SFP+ module market.
    We secured new data communication product design-wins with some of the
top optical module manufacturers in Asia, Japan and North America.
    By adding the significant silicon-proven IP library to our portfolio of
offerings, we are seeing an increased interest from our existing customer base
to leverage these advanced IP cores in their next-generation products.

    Other Developments

    In January 2008, Gennum and Sigma Designs announced the companies reached
a definitive agreement for Sigma's purchase of Gennum's VXP(R) image
processing business. Sigma will acquire all aspects of the VXP(R) Group
including, but not limited to, products and intellectual property and
approximately 40 employees will be joining Sigma Designs as part of the sale.
The transaction, which is subject to customary closing conditions, is
anticipated to be completed by mid-February 2008. Cash proceeds from the sale
of the VXP(R) business will be approximately US $18.0 million.
    This is the third sale of non-core assets over the past six months. As
previously announced, Gennum's hearing instruments products and manufacturing
operations were sold to Sound Design Technologies, a Gores Equity portfolio
company, in October 2007 for approximately $12.5 million, while Gennum's
consumer headset business was sold to CellPoint Connect (Canada) Inc. in
August 2007. The land and building associated with the sale of our hearing and
manufacturing operations closed for an additional $4.2 million cash in
December 2007.
    In October, Gennum completed its acquisition of Snowbush
Microelectronics, one of the leading suppliers of analogue and mixed-signal
intellectual property (IP) cores, for approximately $24 million. This
acquisition accelerates Gennum's new product introductions for 2008 and
beyond. This, coupled with the experienced mixed-signal design team and
extensive CMOS process expertise, makes Snowbush Microelectronics an ideal
complement to drive future revenue growth. The transaction is forecasted to
contribute approximately $10 million in revenue to Gennum and be earnings
accretive in 2008.
    Continuing to broaden the Company's global sales organization, Gennum
announced the appointment of Ewald Liess as its European Sales Director, as
well as the opening of a sales and support office in Munich, Germany. The new
office allows Gennum to work more closely with its local distributors to
create deeper relationships with new European customers and provide improved
support to our existing customers in the area.

    Patent litigation

    As previously disclosed, we are the subject of a patent infringement
claim in the US courts. This claim relates to a limited number of non-core
Gennum products. A judgement received in June, 2007 ruled that the Gennum
devices which were the subject matter of the claim, did not infringe most of
the asserted claims, and that the rest of the other asserted claims were not
valid. The case has been appealed and Gennum has cross-appealed. It is our
expectation that the appeal will be heard in mid-2008.
    In the ordinary course of business activities, the Company may become
involved in litigation or claims with customers, suppliers, former employees
and third parties.

    Normal Course Issuer Bid

    During the quarter, the Company acquired 131,800 common shares out of the
market at an average cost per share of $10.66. On a year-to-date basis, the
Company has acquired 167,000 common shares at an average cost per share of
$10.72, for total cash consideration of $1.8 million.

    OUTLOOK

    Semiconductor industry analysts forecast a 7.7% growth rate for 2008
versus 3.8% in 2007. With our focus in optical, analogue and mixed-signal, and
IP areas, we address a unique, high-growth segment of the semiconductor
industry. Our total available market includes video transport, optical module
components, backplane/data interfaces, consumer connectivity (e.g., HDMI,
DisplayPort), analogue IP licensing, and BST technology and we anticipate
these segments to achieve above average industry growth.
    Our 2008 goal is to grow faster than the semiconductor industry based on
new product introductions in our core business lines. We have made excellent
progress with securing new design-wins with our current customers and have
achieved early market momentum with product wins in consumer connectivity. We
will continue to increase our investment in R&D to drive accelerated product
development to defend our position in core markets and capitalize on new
opportunities in adjacent markets.
    Now, with a stronger foundation resulting from our increased investment
in 2007, we expect 2008 sales, marketing and administration expenditures to be
reduced in the first quarter of 2008. We are committed to meeting our
operating margin target of greater than 20%.
    2007 has been a remarkable year of transition for Gennum. With the
changes we have made and will continue to make, we believe Gennum will be well
positioned to capitalize on the rising demand for optical, analogue and
mixed-signal, and IP solutions in Asia, Europe and North America. Our global
sales organization added vital resources and support in regions critical to
future growth. Investments made in R&D and Snowbush Microelectronics' IP will
allow us to bring more products to market faster. Management is confident
these changes will strengthen the Company and enhance shareholder value.

    Dividend

    Gennum's Board of Directors has declared a regular cash dividend of
3.5 cents per share to be paid on February 26, 2008 to shareholders of record
on February 12, 2008.

    -------------------------------------------------------------------------
    Management will hold a conference call to discuss fourth quarter and
    year-end results on Monday, February 4, 2008 at 9 a.m. (ET). To access
    the call, participants should dial 1-800-733-7560. The conference call
    will also be Webcast live at www.gennum.com or www.newswire.ca/en/webcast
    and subsequently archived on the Gennum site. A rebroadcast of the call
    will be available until midnight on March 4, 2008. To access the
    rebroadcast, dial 416-640-1917 and enter the passcode 21258556, followed
    by the number sign.
    -------------------------------------------------------------------------

    About Gennum Corporation

    Gennum Corporation (TSX: GND) designs innovative semiconductor solutions
and intellectual property (IP) cores for the world's most advanced consumer
connectivity, enterprise, video broadcast and data communications products.
Leveraging the company's proven optical, analog and mixed-signal products and
IP, Gennum enables multimedia and data communications products to send and
receive information without compromising the signal integrity. A winner of a
Technical Emmy(R) award for advances in high definition (HD) broadcasting,
Gennum is headquartered in Burlington, Canada, and has global design, research
and development and sales offices in Canada, Mexico, Japan, Korea, Germany,
United States, Taiwan and the United Kingdom. www.gennum.com

    Disclaimer

    This document may contain forward-looking statements relating to Gennum's
goals, strategies, financial condition and results as well as the environment
in which Gennum operates, investments, and litigation in which Gennum is
involved, which may involve estimates, forecasts and projections.
Forward-looking statements may include words such as "plans", "intends",
"anticipates", "should", "estimates", "expects", "believes" and similar
expressions. These statements are not guarantees of future performance and
involve risks and uncertainties that are difficult to predict and/or are
beyond Gennum's control. A number of important factors could cause actual
outcomes and results to differ materially from those expressed in these
forward-looking statements. These factors include those set forth in Gennum's
public filings. Consequently, readers should not place any undue reliance on
such forward-looking statements. In addition, these forward-looking statements
relate to the date on which they are made. Gennum disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.


    
                             GENNUM CORPORATION

                 Unaudited Consolidated Financial Statements

                     For the Year ended November 30, 2007

     The attached consolidated financial statements have been prepared by
      Management of Gennum Corporation and have not been reviewed by an
                                   auditor.



    Gennum Corporation

    CONSOLIDATED BALANCE SHEETS (unaudited)
    (Canadian dollars, amounts in thousands except per share data)

                                                   November 30,  November 30,
    As at                                                 2007          2006
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                           34,168        47,421
    Instruments held for trading (note 8)                1,001             -
    Accounts receivable, net                            20,968        14,588
    Inventories                                         12,141        13,978
    Prepaid expenses and other assets                    4,374         2,408
    Promissory notes receivable (note 10)                1,052             -
    Income taxes receivable                              3,056             -
    Future income taxes                                 20,388        10,892
    Assets held for sale (note 2)                        6,581        26,538
    -------------------------------------------------------------------------
    Total current assets                               103,729       115,825
    -------------------------------------------------------------------------

    Capital assets, net (note 8)                        26,058        25,840
    Long-term investments (note 9)                       3,081         3,217
    Intangible assets, net (note 11)                     7,473         1,424
    Loan receivable (note 6)                               659             -
    Promissory note receivable (note 10)                 1,750             -
    Long-term prepaid royalty                                -         1,222
    Goodwill (note 11)                                  19,409         2,531
    Future income taxes                                    894         2,051
    Assets held for sale (note 2)                          923        18,322
    -------------------------------------------------------------------------
                                                       163,976       170,432
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities            17,692        14,184
    Deferred revenue                                       734             -
    Income taxes payable                                   214           432
    Future income taxes                                  2,131         2,594
    Liabilities related to assets held
     for sale (note 2)                                   1,741         3,864
    -------------------------------------------------------------------------
    Total current liabilities                           22,512        21,074
    -------------------------------------------------------------------------

    Long-term payable (note 7)                           2,506             -
    Future income taxes                                  2,493            66
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock (note 8)                              11,289        11,001
    Deferred compensation                               (3,667)       (2,148)
    Retained earnings                                  131,519       143,068
    Contributed surplus                                  1,172            94
    Accumulated other comprehensive loss                (3,848)       (2,723)
    -------------------------------------------------------------------------
    Total shareholders' equity                         136,465       149,292
    -------------------------------------------------------------------------
                                                       163,976       170,432
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments and contingencies (note 18)



    Gennum Corporation

    CONSOLIDATED STATEMENTS OF EARNINGS
    (Canadian dollars, amounts in thousands except per share data)

                                        Three Months Ended      Years Ended
                                            November 30         November 30
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------

    Revenue (note 11)                   29,880    26,239   110,497   104,038
    Cost of goods sold                   7,553     5,951    26,582    23,433
    -------------------------------------------------------------------------

    Gross margin                        22,327    20,288    83,915    80,605

    Sales, marketing and
     administration expense              9,338     7,295    28,272    25,003
    Research and development expense     7,096     4,959    25,074    20,392
      Less government assistance          (915)   (1,157)   (4,052)   (4,183)
    -------------------------------------------------------------------------

    Operating expenses before
     restructuring charge               15,519    11,097    49,294    41,212

    Restructuring charge                     -     1,964         -     1,964
    -------------------------------------------------------------------------

    Operating earnings                   6,808     7,227    34,621    37,429

    Investment income                      397       431     1,741     1,486
    Other income (expense) (note 12)      (602)      745    (1,362)    1,703
    -------------------------------------------------------------------------

    Earnings from continuing
     operations before income taxes      6,603     8,403    35,000    40,618
    Provision for income taxes
     (note 17)                           2,217     3,328    12,708    14,066
    -------------------------------------------------------------------------

    Net earnings for the period, before
     discontinued operations             4,386     5,076    22,292    26,552

    (Loss) on discontinued operations
     (note 2)                           (4,815)   (2,299)  (27,049)   (9,287)
    -------------------------------------------------------------------------

    Net (loss) earnings for the period    (429)    2,777    (4,757)   17,265
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Loss) earnings per share
    Continuing operations - basic
     and diluted                          0.12      0.14      0.62      0.74
    Discontinued operations - basic
     and diluted                         (0.13)    (0.06)    (0.75)    (0.26)
    -------------------------------------------------------------------------
    Net (loss) earnings - basic and
     diluted                            $(0.01)    $0.08    $(0.13)    $0.48
    -------------------------------------------------------------------------

    Dividends declared per share        $0.035    $0.035     $0.14    $0.135
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

    (Canadian dollars, amounts in thousands)

                                        Three Months Ended      Years Ended
                                            November 30         November 30
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    Capital stock
    Balance at beginning of period      11,288    11,067    11,001     9,392
    Proceeds from shares issued on
     exercise of options                     -         -       299     1,675
    Shares repurchased under normal
     course issuer bid                       1       (66)      (11)      (66)
    -------------------------------------------------------------------------
    Balance at end of period            11,289    11,001    11,289    11,001
    -------------------------------------------------------------------------
    Deferred compensation
    Balance at beginning of period      (1,249)     (928)   (2,148)   (1,383)
    New awards                          (2,714)   (1,430)   (2,747)   (1,590)
    Forfeitures                            290         -       472       331
    Amortization                             6       210       756       494
    -------------------------------------------------------------------------
    Balance at end of period            (3,667)   (2,148)   (3,667)   (2,148)
    -------------------------------------------------------------------------
    Retained earnings
    Balance at beginning of period     134,607   141,543   143,068   132,765
    Net (loss) earnings                   (429)    2,777    (4,757)   17,265
    Dividends                           (1,253)   (1,252)   (5,012)   (4,848)
    Repurchase of common shares         (1,406)        -    (1,780)   (2,114)
    -------------------------------------------------------------------------
    Balance at end of period           131,519   143,068   131,519   143,068
    -------------------------------------------------------------------------
    Contributed surplus
    Balance at beginning of period         906         -        94         -
    Stock option amortization              266        94     1,078        94
    -------------------------------------------------------------------------
    Balance at end of period             1,172        94     1,172        94
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     (loss) income, net of income taxes
    Balance at beginning of period      (4,726)   (3,441)   (2,723)   (3,264)
    Transition adjustment on adoption
     of financial instruments standards      -         -      (782)        -
    Other comprehensive (loss) income
     for the period                        878       718      (343)      541
    -------------------------------------------------------------------------
    Balance at end of period            (3,848)   (2,723)   (3,848)   (2,723)
    -------------------------------------------------------------------------
    Total shareholders' equity at end
     of period                         136,465   149,292   136,465   149,292
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    (Canadian dollars, amounts in thousands)

                                        Three Months Ended      Years Ended
                                            November 30         November 30
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------

    Net (loss) earnings for the period    (429)    2,777    (4,757)   17,265
    Other comprehensive income, net of
     income taxes
      Change in unrealized (losses)
       gains on translating financial
       statements of self-sustaining
       foreign operations                  (22)      718    (1,031)      541
      Change in gains on derivative
       instruments designated as cash
       flow hedges(1)                      204         -       911         -
      Reclassification to earnings of
       gains on cash flow hedges(2)       (281)        -      (463)        -
      Change in unrealized gains (losses)
       on available for sale
       financial assets                    754         -      (412)        -
      Reclassification to earning of
       losses on available for sale
       financial assets                    652         -       652         -
    -------------------------------------------------------------------------
    Comprehensive income (loss) for
     the period                            878     3,495    (5,100)   17,806
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) - Net of income taxes of $475
    (2) - Net of income taxes of $240



    Gennum Corporation

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Canadian dollars, amounts in thousands)

                                        Three Months Ended      Years Ended
                                            November 30         November 30
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings from continuing
     operations for the year             4,386     5,076    22,292    26,552
    Items not affecting cash
      Depreciation and amortization      1,806     1,531     6,817     6,363
      Deferred compensation & option
       amortization                        271       305     1,834       588
      Interest on loan receivable          (22)        -       (23)        -
      Inventory impairment                (107)      206       134       660
      Gain on financial instrument
       valuation                            88         -         -         -
      Unrealized gain on long-term
       investment                          (22)        -         -         -
      Write down to fair market value
       of long-term investment             652         -       652         -
      Future income taxes               (1,330)     (651)   (8,677)   (2,958)
    -------------------------------------------------------------------------
                                         5,722     6,467    23,029    31,205
    Net change in non-cash working
     capital balances related to
     continuing operations              10,681     3,093    (2,135)   (1,485)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities of continuing
     operations                         16,403     9,560    20,894    29,720
    Cash (used) by operating
     activities of discontinued
     operations                         (2,408)    1,083      (789)   (9,512)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                         13,995    10,643    20,105    20,208
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of capital assets          (3,170)     (754)   (6,060)   (3,967)
    Acquisition, cash acquired           3,053         -     3,053         -
    Acquisition, other than cash
     acquired                          (25,324)        -   (25,324)        -
    Payment of license fees                (57)        -      (151)       (8)
    Proceeds from sale of hearing
     and manufacturing                   5,050         -     5,050         -
    Advance for sale of land
     and building                          675         -       675         -
    Promissory notes receivable         (2,500)        -    (2,788)        -
    Loans advanced                           -         -      (650)        -
    -------------------------------------------------------------------------
    Cash (used) in investing
     activities of continued
     operations                        (22,273)     (754)  (26,195)   (3,975)
    Cash provided by (used) in
     investing activities of
     discontinued operations             2,385      (182)    1,924    (1,483)
    -------------------------------------------------------------------------
    Cash (used) in investing
     activities                        (19,888)     (936)  (24,271)   (5,458)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Stock options exercised                  -         -       299     1,675
    Deferred compensation awarded,
     net of forfeitures                 (2,424)   (1,430)   (2,275)   (1,259)
    Shares repurchased under normal
     course issuer bid                  (1,408)        -    (1,791)   (2,179)
    Dividends paid                      (1,252)   (1,252)   (5,012)   (4,848)
    -------------------------------------------------------------------------
    Cash used in financing activities   (5,084)   (2,682)   (8,779)   (6,611)
    -------------------------------------------------------------------------

    Effect of exchange rate changes on
     cash and cash equivalents             184       354      (308)      170
    -------------------------------------------------------------------------

    Net increase (decrease) in cash
     and cash equivalents during
     the period                        (10,793)    7,379    (13,253)   8,309
    Cash and cash equivalents,
     beginning of the period            44,961    40,042     47,421   39,112
    -------------------------------------------------------------------------

    Cash and cash equivalents, end
     of the period                      34,168    47,421     34,168   47,421
    -------------------------------------------------------------------------

    In the fourth quarter of 2007, interest expense paid was nil (2006 - nil)
and income taxes paid was nil (2006 - $639). During the year, interest expense
paid was nil (2006 - nil) and income taxes paid was $3,306 (2006 - $5,079).



    GENNUM CORPORATION

    Notes To Consolidated Financial Statements
    (Canadian dollars, amounts in thousands except share and per share data)

    1.  ACCOUNTING POLICIES

    The accompanying unaudited consolidated financial statements have been
    prepared by the Company in accordance with Canadian Generally Accepted
    Accounting Principles (GAAP) on a basis consistent with those followed in
    the most recent audited financial statements. These unaudited
    consolidated financial statements do not include all the information and
    footnotes required by GAAP for annual financial statements and therefore
    should be read in conjunction with the audited consolidated financial
    statements and notes included in the Company's Annual Report for the year
    ended November 30, 2006.

    Changes in accounting policies

    Effective December 1, 2006, the Company adopted the Canadian Institute of
    Chartered Accountants (CICA) Handbook Section 3855, Financial Instruments
    - Recognition and Measurement; Section 3865, Hedges; Section 1530,
    Comprehensive Income and Section 3861, Financial Instruments - Disclosure
    and Presentation. The adoption of the new accounting standards resulted
    in changes in accounting for financial instruments and hedges as well as
    the recognition of certain transition adjustments that have been recorded
    in opening accumulated other comprehensive loss. The comparative
    Consolidated Financial Statements have not been restated, except for the
    presentation of translation gains or losses on self sustaining foreign
    operations.

    a)  Financial Assets and Financial Liabilities

        Under the new standards, all financial instruments are classified
        into one of the following five categories: held for trading, held to
        maturity investments, loans and receivables, available for sale
        financial assets and other financial liabilities. All financial
        instruments, including derivatives, are included in the consolidated
        balance sheet and are measured at fair value except for held to
        maturity investments, loans and receivables which are measured at
        amortized cost.

        Under the new accounting standards, financial assets and financial
        liabilities are initially recognized at fair value and are
        subsequently accounted for based on their classification as described
        below. The classification depends on the purpose for which the
        financial instruments were acquired and their characteristics. Except
        in very limited circumstances, the classification is not changed
        subsequent to initial recognition. Transaction costs are recognized
        immediately in income or are capitalized, depending upon the nature
        of the transaction and the associated product.

        Held for trading

        Financial assets and financial liabilities that are purchased and
        incurred with the intention of generating profits in the near term
        are classified as trading. These instruments are accounted for at
        fair value with the change in the fair value recognized in net
        income.

        Available for sale

        Financial assets classified as available for sale are carried at fair
        value with the changes in fair value recorded in other comprehensive
        income. Securities that are classified as available for sale and do
        not have a readily available market value are recorded at cost.
        Available for sale securities are written down to fair value through
        income whenever it is necessary to reflect other than temporary
        impairment. Gains and losses realized on disposal of available for
        sale securities, which are calculated on an average cost basis, are
        recognized in other income. The long-term investment on the balance
        sheet has been designated as available for sale, which resulted in an
        after-tax loss of $727 recorded as an adjustment to opening
        accumulated other comprehensive loss as at December 1, 2006.

        Held to maturity

        Securities that have a fixed maturity date, where the Company intends
        and has the ability to hold to maturity, are classified as held to
        maturity and accounted for at amortized cost using the effective
        interest rate method. Promissory notes on the balance sheet have been
        designed as held to maturity.

        Loans and receivables

        Loans and receivables are accounted for at amortized cost using the
        effective interest rate method.

    b)  Derivatives and Hedge Accounting

        Embedded derivatives

        Derivatives may be embedded in any contracts (the "host contracts").
        Prior to the adoption of the new accounting standards, such embedded
        derivatives were not accounted for separately from the host contract.
        Under the new accounting standard, embedded derivatives are treated
        as separate derivatives when their economic characteristics and risks
        are not clearly and closely related to those of the host contract.
        Embedded derivatives are measured at fair value with subsequent
        changes recognized in trading income. The change in the fair market
        value of the embedded derivative is offset by the value of the future
        contract.

        Hedge accounting

        The Company is exposed to variability in future revenue cash flows,
        as much of the Company's revenues are denominated in US dollars or
        Japanese yen. The amount and timing of future cash flows are
        projected for the next four quarters. The actual foreign currency
        revenue over time forms the basis for identifying the effective
        portion of gains and losses on the derivatives designated as cash
        flow hedges on forecasted transactions.

        At the inception of a hedging relationship, the Company documents the
        relationship between the hedging instrument and the hedged item, its
        risk management objective and its strategy for undertaking the hedge.
        The Company also requires a documented assessment, both at hedge
        inception and on an ongoing basis, of whether or not the derivatives
        that are used in hedging transactions are highly effective in
        offsetting the changes attributable to the hedged risks in the cash
        flows of the hedged items.

        Under the previous standards, derivatives that met the requirements
        for hedge accounting were generally accounted for on an accrual
        basis. Under the new accounting standards, all derivatives are
        recorded at fair value and are recorded in prepaid expenses and other
        assets or accounts payable and accrued liabilities. The Company's
        hedges are classified as hedges of the variability in highly probable
        future cash flows attributable to a forecasted transaction (cash flow
        hedges).

        The effective portion of changes in the fair value of derivatives
        that are designated and qualify as cash flow hedges is recognized in
        other comprehensive income. Any gains or losses in fair value
        relating to the ineffective portion are recognized immediately in the
        statement of earnings in other income (expense).

        Amounts accumulated in other comprehensive income are reclassified to
        the statement of earnings in the period in which the hedged item
        affects income.

        When a hedging instrument expires or is sold, or when a hedge no
        longer meets the criteria for hedge accounting, any cumulative gain
        or loss existing in other comprehensive income at that time remains
        in other comprehensive income until the forecasted transaction is
        eventually recognized in the statement of earnings. When a forecasted
        transaction is no longer expected to occur, the cumulative gain or
        loss that was reported in other comprehensive income is immediately
        transferred to the statement of earnings. Upon adoption of the new
        accounting standard, the Company recorded a net increase in accounts
        payable and other liabilities of $55 designated as cash flow hedges
        and a decrease of $55 after-tax in accumulated other comprehensive
        income.

    c)  Comprehensive Income

        Comprehensive income is composed of the Company's net earnings and
        other comprehensive income. Other comprehensive income includes
        unrealized gains and losses on available for sale financial assets,
        foreign currency translation gains and losses on the net investment
        in self-sustaining operations and changes in the fair market value of
        derivative instruments designated as cash flow hedges, all net of
        income taxes. The components of comprehensive income are disclosed in
        the Consolidated Statement of Comprehensive Income.

    d)  Capital Assets

        Capital assets are recorded at cost, net of related government
        assistance.

        During the year, the Company re-evaluated the estimated useful lives
        of its buildings and determined that the estimated useful lives
        should be increased to thirty years from twenty years. The impact of
        this change was applied on a prospective basis commencing with the
        first quarter of 2007. The impact of this change of accounting
        estimate resulted in a decrease in depreciation expense of $546 in
        the year.

        Equipment and furniture are depreciated using the straight-line
        method over estimated useful lives ranging from five to seven years.
        Computer software and hardware are depreciated using the straight-
        line method over the estimated useful life of three years.

    e)  Asset Impairment

        The Company follows the guidance in CICA Handbook Section 3063,
        "Impairment of Long-Lived Assets" and CICA Handbook Section 3855;
        "Financial Instruments Recognition and Measurement". When events or
        circumstances warrant a review, the Company evaluates the carrying
        value of long-lived and intangible assets for potential impairment.
        The carrying value of such assets is considered impaired when the
        anticipated net recoverable amount of the asset is less than its
        carrying value or when the change in value is other than temporary.
        In that event, the carrying value of the asset is adjusted to fair
        value and an impairment loss is recorded.

    f)  Discontinued Operations

        Discontinued operations include the income and cash flows from
        product lines with which the Company will have no significant ongoing
        involvement or significant continuing cash flows. Income and cash
        flows from assets held for sale with which the Company will have no
        ongoing involvement or significant continuing cash flows are also
        included in discontinued operations. Refer to note 2 for details of
        assets held for sale and discontinued operations.

    g)  Revenue recognition

        Revenue from sales of products to customers is recognized: when title
        and risk of ownership are transferred to customers; when persuasive
        evidence of an arrangement exists; when the price to the buyer is
        fixed or determinable; and when collection is reasonably assured.

        Revenue is recognized net of estimated product returns, volume
        rebates, and special pricing programs. Payments to resellers for
        customer programs, including cooperative advertising and marketing
        development funds, are accounted for as a marketing expense if an
        identifiable benefit is received in exchange and the fair value of
        the identifiable benefit received can be reasonably estimated,
        otherwise such costs are recorded as a reduction to sales.

        Estimated product returns under product acceptance terms or the
        product warranty program are deducted from revenues upon shipment.
        The estimated returns are based on industry average return rates,
        engineering failure rates, the product stage relative to its expected
        life cycle, and assumptions regarding the rate of sell-through to end
        users from our various channels based on historical sell-through
        rates. In the absence of historical information, industry averages
        are used until sufficient history has been observed.

        Should product lives vary significantly from recorded estimates, or
        should a particular selling channel experience a higher than
        estimated return rate, or a slower sell-through rate causing
        inventory build-up, then the estimated returns, which net against
        revenue, are revised. The Company reviews actual returns on a
        quarterly basis to ensure they are in line with the estimates.

        Reductions to revenue for expected and actual payments to resellers
        for volume rebates and pricing protection are based on actual
        expenses incurred during the period, on estimates of what is due to
        resellers for estimated credits earned during the period and any
        adjustments for credits based on actual activity. The amount of
        allowances required for future price adjustments and product returns
        can be reliably estimated, therefore the Company recognizes revenue,
        net of projected allowances, upon shipment to our customers. However,
        if a situation were to arise where the Company is unable to reliably
        estimate the amount of future price adjustments and product returns,
        revenue recognition would be deferred until the right to future price
        adjustments and product returns lapses and the Company would no
        longer be under any obligation to reduce the price or accept the
        return of the product.

        For the performance of contracts with terms greater than one year,
        revenue has been recognized using the percentage of completion method
        based on labour hours. For contracts with terms less than one year,
        revenue is recognized when the service has been completed.

    h)  Business combinations, goodwill and intangible assets

        The Company follows the guidance in the Canadian Institute of
        Chartered Accountants (CICA) Handbook Section 1581, "Business
        Combinations", which requires all business combinations to be
        accounted for using the purchase method. In addition, any goodwill
        and intangible assets acquired in a business combination are
        accounted for under CICA Handbook Section 3062, "Goodwill and Other
        Intangible Assets". This section requires that goodwill and
        intangible assets with indefinite useful lives are not amortized,
        while those identified intangible assets with finite useful lives are
        amortized over their useful lives.

        Goodwill represents the excess of the purchase price over the fair
        value of the net identifiable assets acquired. Goodwill is tested for
        impairment annually or more frequently if events or changes in
        circumstances indicate that the goodwill might be impaired. The
        impairment test is carried out in two steps. In the first step, the
        identification of a potential impairment is determined by comparing
        the fair value of the reporting unit to its carrying value. Fair
        value is based on estimates of discounted future cash flows or other
        valuation methods. When the fair value of the reporting unit is less
        than its carrying value, the fair value is allocated to all its
        assets and liabilities based on their fair values. The amount that
        the fair value of the reporting unit exceeds the amounts assigned to
        its assets and liabilities is the fair value of goodwill. In the
        second step, impairment is determined by comparing the fair value of
        goodwill to its carrying value. Any excess is charged to earnings.

        Intangible assets with finite useful lives acquired through business
        combinations are recorded at their fair value at the date of
        acquisition. An impairment loss on an intangible asset with a finite
        useful life is recognized when its carrying value exceeds the total
        discounted cash flows expected from its use and disposition. The
        amount of loss is determined by deducting its fair value based on
        discounted cash flows expected from its use and disposition from its
        carrying value.

    2.  RECONCILIATION OF ASSETS AND LIABILITIES HELD FOR SALE AND
        DISCONTINUED OPERATIONS

    As part of the Company's 2007 and future strategic initiatives to focus
    and deliver on innovative analogue, mixed signal and optical solutions to
    the world, management conducted a detailed assessment and prioritization
    of the entire portfolio of businesses and technologies. As a result of
    the assessment, key strategic activities included the divestiture
    activities of our non-core businesses that included consumer headsets
    (see note 3), hearing and manufacturing operations (see note 4), VISUAL
    EXCELLENCE PROCESSING(R) (VXP(R)) Image Processing (see note 5) and
    Falcon(TM) wireless technology (see note 6).

    As a result of the aforementioned divestitures, certain figures for 2006
    and 2007 for assets and liabilities and operating results have been re-
    classified to assets and liabilities held for sale, and operating results
    to discontinued operations in accordance with CICA Handbook Section 3475
    - Disposal of Long-Lived Assets and Discontinued Operations. The
    following table summarizes these reclassifications:

    Assets and Liabilities Held for Sale

    -------------------------------------------------------------------------
                                                  2007
    -------------------------------------------------------------------------
                                               Hearing/
                                    Headset      Mfg        VXP(R)     TOTAL
    -------------------------------------------------------------------------

    ASSETS
    Current
    Accounts receivable, net              -          -        674        674
    Inventories                           -          -        805        805
    Prepaid expenses                      -          -        152        152

    Capital assets, net                   -      4,950          -      4,950
    Intangible assets, net                -          -          -          -
    -------------------------------------------------------------------------
    Total current assets held
     for sale                             -      4,950      1,631      6,581
    -------------------------------------------------------------------------

    Long-Term
    Capital assets, net                   -          -        540        540
    Intangible assets, net                -          -        383        383
    -------------------------------------------------------------------------
    Total long-term assets held
     for sale                             -          -        923        923
    -------------------------------------------------------------------------

    LIABILITIES
    Current
    Accounts payable and accrued
     liabilities                          -        675      1,066      1,741
    -------------------------------------------------------------------------
    Total current liabilities held
     for sale                             -        675      1,066      1,741
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                   Three months ended November 30, 2007
    -------------------------------------------------------------------------
                          Falcon               Hearing/
                          (TM)(*)   Headset      Mfg        VXP(R)     TOTAL
    -------------------------------------------------------------------------

    Revenue                    -          -      2,479      1,804      4,283
    Operating loss,
     before tax           (2,159)         -     (2,219)    (2,480)    (6,858)
    Income tax recovery      646          -        654        743      2,043
    -------------------------------------------------------------------------
    Loss from discontinued
     operations, net
     of tax               (1,513)         -     (1,565)    (1,737)    (4,815)
    -------------------------------------------------------------------------

    (*) The Falcon(TM) product line was abandoned in 2007.


    Discontinued Operations
    -------------------------------------------------------------------------
                                                  2007
    -------------------------------------------------------------------------
                          Falcon               Hearing/
                          (TM)(*)   Headset      Mfg        VXP(R)     TOTAL
    -------------------------------------------------------------------------

    Revenue                    -      1,271     21,091      6,702     29,064
    Operating loss,
     before tax           (4,893)    (4,707)   (12,645)   (10,222)   (32,467)
    Loss on sale               -       (391)    (7,748)         -     (8,139)
    -------------------------------------------------------------------------
                          (4,893)    (5,098)   (20,393)   (10,222)   (40,606)
    Income tax recovery    1,579      1,682      6,912      3,384     13,557
    -------------------------------------------------------------------------
    Loss from discontinued
     operations, net
     of tax               (3,314)    (3,416)   (13,481)    (6,838)   (27,049)
    -------------------------------------------------------------------------

    (*) The Falcon(TM) product line was abandoned in 2007.



    Assets and Liabilities Held for Sale

    -------------------------------------------------------------------------
                                                  2006
    -------------------------------------------------------------------------
                                               Hearing/
                                    Headset      Mfg        VXP(R)     TOTAL
    -------------------------------------------------------------------------

    ASSETS
    Current
    Accounts receivable, net            647      6,648        888      8,183
    Inventories                       3,519     13,325        668     17,512
    Prepaid expenses                      -        299        122        421
    Loan receivable                       -        422          -        422
    -------------------------------------------------------------------------
    Total current assets
     held for sale                    4,166     20,694      1,678     26,538
    -------------------------------------------------------------------------

    Long-Term
    Capital assets, net                 253     16,504        623     17,380
    Intangible assets, net                -         53        889        942
    -------------------------------------------------------------------------
    Total long-term assets
     held for sale                      253     16,557      1,512     18,322
    -------------------------------------------------------------------------

    LIABILITIES
    Current
    Accounts payable and accrued
     liabilities                        298      2,658        908      3,864
    -------------------------------------------------------------------------
    Total current liabilities
     held for sale                      298      2,658        908      3,864
    -------------------------------------------------------------------------


    Discontinued Operations
    -------------------------------------------------------------------------
                                 Three months ended November 30, 2006
    -------------------------------------------------------------------------
                          Falcon               Hearing/
                          (TM)(*)   Headset      Mfg        VXP(R)     TOTAL
    -------------------------------------------------------------------------

    Revenue                    -        489      8,605      1,673     10,767
    Operating (loss)
     profit, before tax   (1,070)    (1,554)     2,332     (3,198)    (3,490)
    Income tax recovery
     (expense)               365        530       (795)     1,091      1,191
    -------------------------------------------------------------------------
    (Loss) profit on
     discontinued
     operations, net of
     tax                    (705)    (1,024)     1,537     (2,107)    (2,299)
    -------------------------------------------------------------------------

    (*) The Falcon(TM) product line was abandoned in 2007.


    Discontinued Operations
    -------------------------------------------------------------------------
                                                  2006
    -------------------------------------------------------------------------
                          Falcon               Hearing/
                          (TM)(*)   Headset      Mfg        VXP(R)     TOTAL
    -------------------------------------------------------------------------

    Revenue                  223      2,309     35,365      5,401     43,298
    Operating (loss)
     profit, before tax   (4,865)    (5,559)     9,836    (13,509)   (14,097)
    Income tax recovery
     (expense)             1,660      1,897     (3,356)     4,609      4,810
    -------------------------------------------------------------------------
    (Loss) profit on
     discontinued
     operations, net
     of tax               (3,205)    (3,662)     6,480     (8,900)    (9,287)
    -------------------------------------------------------------------------

    (*) The Falcon(TM) product line was abandoned in 2007.


    3.  SALE OF CONSUMER HEADSET BUSINESS

    On August 24, 2007, the Company sold its Consumer Headset product line to
    CellPoint Connect (Canada) Inc. ("CellPoint") in exchange for $2,002 in
    shares of CellPoint's parent company, CellPoint Connect AB ("CellPoint
    Connect"), a publicly traded company on the Aktie Torget stock exchange
    in Sweden (see note 8) and a $300 promissory note, due September 30,
    2008. The promissory note was discounted to $288 using the effective
    interest method, resulting in interest income of $12 that will be
    recognized as income from continuing operations over the term of the note
    (see note 10). The Company is also entitled to performance-based payments
    of up to $1,000 payable on or before March 15, 2009. The Company agreed
    to extend a loan to CellPoint in two separate advances of $650, the
    second advance conditional upon the repurchase of CellPoint Connect
    shares by CellPoint Connect which have at least a value of $500; an
    additional repurchase of CellPoint Connect shares by CellPoint which have
    at least a value of $500 is required by February 24, 2008. The advances
    are non-revolving and interest bearing at 5%, compounded quarterly. The
    initial repurchase of CellPoint Connect shares by CellPoint is expected
    to be received in early February 2008.

    The sale of the Consumer Headset product line resulted in a loss of $391,
    net of legal costs, and was part of the Company's Audio & Wireless
    business unit. The loss was calculated as follows:

    Accounts receivable                                                  481
    Inventories                                                        1,893
    Capital assets, net                                                  150
    Legal expenses                                                       251
    Accounts payable and accrued liabilities                             (94)
    -------------------------------------------------------------------------
                                                                       2,681
    -------------------------------------------------------------------------

    Promissory note                                                      288
    CellPoint shares                                                   2,002
    -------------------------------------------------------------------------
                                                                       2,290
    -------------------------------------------------------------------------

    Loss on sale                                                         391
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The assets and liabilities and operating results related to the Company's
    Consumer Headset product line have been reclassified as assets held for
    sale and discontinued operations in accordance with the CICA Handbook
    Section 3475 - Disposal of Long-Lived Assets and Discontinued Operations
    (see note 2).

    4.  SALE OF HEARING INSTRUMENT AND MANUFACTURING OPERATIONS

    On October 19, 2007, the Company completed the sale of its Hearing
    Instrument and Manufacturing Operations, excluding the manufacturing land
    and building, to Sound Design Technologies Ltd (Sound Design), a Gores
    Equity, LLC portfolio company for $5,050 in cash and $2,500 in an
    interest-bearing promissory note. The promissory note bears interest at
    5% per annum with scheduled quarterly principal payments of $250
    beginning in April 2008, and the remaining balance plus accrued interest
    due in April 2010. An advance of $675 was also made by Sound Design on
    the manufacturing land and building that were sold subsequent to year-end
    to a third party for an additional $4,275, who in turn leased the
    manufacturing land and building to Sound Design.

    In addition, following the close of the disposal transaction, we expect
    to receive fees from Sound Design to provide certain administrative
    functions for a limited period of time and for the lease of office space.
    We will not have any significant continuing involvement in or retain any
    ownership interest in these operations and, therefore, the continuing
    cash flows are not considered direct cash flows of the disposal group.

    During the year, an initial non-cash impairment charge totaling $9,595
    was taken on the manufacturing group of assets with an additional
    impairment charge of $663 taken in the fourth quarter as it was
    determined that the fair value was less than carrying value. The
    impairment charge has been included as part of the loss on discontinued
    operations.

    The sale of the Hearing Instrument and Manufacturing Operations,
    excluding the manufacturing land and building, resulted in a loss of
    $7,748, and was part of the Company's Audio & Wireless business unit. The
    loss on the sale was calculated as follows:

    Accounts and other receivables                                     3,626
    Inventories                                                       10,379
    Prepaid and other assets                                             288
    Capital assets, net                                                  342
    Intangible assets                                                    115
    Legal and exit costs                                               1,821
    Accounts payable and accrued liabilities                          (1,273)
    -------------------------------------------------------------------------
                                                                      15,298
    -------------------------------------------------------------------------

    Cash                                                               5,050
    Promissory note                                                    2,500
    -------------------------------------------------------------------------
                                                                       7,550
    -------------------------------------------------------------------------

    Loss on sale                                                       7,748
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The assets and liabilities and operating results related to the Company's
    Hearing Instrument and Manufacturing operations have been reclassified as
    assets held for sale and discontinued operations in accordance with the
    CICA Handbook Section 3475 - Disposal of Long-Lived Assets and
    Discontinued Operations (see note 2).

    5.  SALE OF VXP(R) IMAGE PROCESSING BUSINESS

    In August 2007, the Company announced its intention to explore strategic
    alternatives for its VXP(R) Image Processing business. Subsequent to the
    year-end, on January 3, 2008, the Company reached a definitive agreement
    to sell its VXP(R) Image Processing business to Sigma Designs for
    US$18,200 in cash. The deal is expected to close in February 2008.

    The sale of the VXP(R) Image Processing business has also resulted in the
    termination of approximately 30 employees in January 2008. The cost of
    severing these employees is approximately $1,274. Operating expenses
    related to these employees have been included as part of the loss on
    discontinued operations. The assets and liabilities and operating results
    related to the Company's VXP(R) Image Processing business have been
    reclassified as assets held for sale and discontinued operations in
    accordance with the CICA Handbook Section 3475 - Disposal of Long-Lived
    Assets and Discontinued Operations (see note 2).

    6.  FALCON(TM) BUSINESS ABANDONMENT

    Subsequent to the strategic alternative review for the Audio & Wireless
    division and with the Company's ongoing strategy to focus on its new core
    products, management was unable to find a bona-fide buyer for the
    Falcon(TM) product line and it was abandoned in the fourth quarter of
    2007. The abandonment has resulted in writing-off all assets related to
    the Falcon(TM) product line, including the balance of $1,272 against the
    long-term prepaid royalty and $441 on the remaining balances related to
    accounts receivable, prepaids, inventory and capital assets and have been
    included as part of the loss before tax in discontinued operations (see
    note 2). Severance costs associated with abandonment were approximately
    $130.

    7.  ACQUISITION

    On October 30, 2007, the Company acquired 100% of the shares of Zeptonics
    Corp., the holding company of Snowbush Microelectronics for a total
    consideration of $25,324 including deal-related costs of $630. The
    consideration was comprised of cash of $17,308, accounts payable of $263
    and the following future cash outlays:

    (a) Deferred cash payments totaling $3,760 with one third of the total
        due each subsequent year following the anniversary date of the
        acquisition; $2,506 has been classified as a long-term payable. The
        deferred cash payments have been discounted at 6% using the effective
        interest rate method, resulting in a discount that will be amortized
        as expense from continuing operations over the three-year period.

    (b) Estimated deferred equity payment of $3,775. The deferred equity
        relates to the deliverance of 386,085 of the Company's common shares
        and is expected to be paid in the first quarter of 2008. To hedge
        against the price risk associated with the purchase of the deferred
        equity, the Company entered into a cash-settled share forward
        transaction with a major financial institution, whereby the financial
        institution purchased the 386,085 common shares in the open market.
        The difference between the estimated deferred equity payment and
        actual cost of the common share purchase will be accounted for as a
        purchase price adjustment in the first quarter of 2008.

    The Company allocated the purchase price on a preliminary basis to the
    identified assets and liabilities acquired based on their estimated fair
    values at the time of acquisition. The purchase price allocation is
    considered preliminary until the Company has obtained the necessary
    information to complete its allocations. As a result, the purchase price
    allocation may be adjusted in 2008.

    The acquisition was accounted for under the purchase method and the
    respective operating results have been included in the Company's
    operating results from the acquisition date. The purchase price
    allocation was assigned to the net identifiable assets acquired based on
    their fair values as follows:

    Cash                                                               3,053
    Accounts receivable                                                2,560
    Prepaids and other assets                                            223
    Income taxes recoverable                                             745
    Capital assets                                                       612
    Future income taxes                                                  424
    Identifiable intangible assets subject to amortization
      Technology                                                       4,100
      Supplier relationships                                           1,300
      In process development                                             700
      Customer value                                                     110
      Contracts in process                                               140
    -------------------------------------------------------------------------
                                                                      13,967
    -------------------------------------------------------------------------

    Accounts payable and accrued liabilities                            (644)
    Deferred revenue                                                    (614)
    Income taxes payable                                                (155)
    Dividends payable                                                 (1,600)
    Future income taxes                                               (2,508)
    -------------------------------------------------------------------------
                                                                      (5,521)
    -------------------------------------------------------------------------

    Excess of purchase price over fair value of net
     identifiable net assets acquired (goodwill)                      16,878
    -------------------------------------------------------------------------

    Total purchase price, including deal-related costs                25,324
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    8.  CAPITAL ASSETS

                                                           As at November 30,
    -------------------------------------------------------------------------
                                                             2007       2006
    -------------------------------------------------------------------------

    Land                                                    2,064      2,064
    Buildings                                              14,723     14,442
    Equipment and furniture                                48,990     33,534
    Computer software and hardware                          7,562     18,397
    -------------------------------------------------------------------------
                                                           73,339     68,437
    -------------------------------------------------------------------------
    Less accumulated depreciation
      Buildings                                             6,722      6,316
      Equipment and furniture                              35,468     22,579
      Computer software and hardware                        5,091     13,702
    -------------------------------------------------------------------------
                                                           47,281     42,597
    -------------------------------------------------------------------------
                                                           26,058     25,840
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The depreciation expense for building, equipment and furniture, and
    computer software and hardware was $17, $1,670 and $118 respectively for
    the fourth quarter of 2007 (2006 - $348, $984 and $199).

    The depreciation expense for buildings, equipment and furniture and
    computer software and hardware was $206, $6,040 and $571, respectively
    for the year (2006 - $1,446, $4,090 and $827).

    The carrying value of capital assets of $540 (2006 - $623) associated
    with the sale of the VXP(R) image processing business has been
    reclassified to assets held for sale and the 2006 carrying value of
    capital assets associated with the sale of the Consumer Headset product
    line ($253) and the Hearing Instrument and Manufacturing operations
    ($16,504) have been reclassified to assets held for sale (see note 2).

    The manufacturing land and building was sold subsequent to year-end and
    has been classified as assets held for sale as at November 30, 2007 (see
    note 2).

    9.  INSTRUMENTS HELD FOR TRADING

    On August 24, 2007, the Company received a 9% interest, or $2,002 in
    shares of Cellpoint Connect (2.3 million shares), as partial
    consideration for the sale of its Consumer Headset product line (see
    note 3). The agreement with CellPoint requires them to repurchase $1,001
    of the shares based on the price at which the shares were issued in two
    installments within six months of the transaction date. The shares of
    CellPoint Connect are traded on the AktieTorget stock exchange in Sweden
    and have a market value of $1,033 as at November 30, 2007. Under the new
    accounting standards, half of this investment of $516 has been classified
    as available for sale under long-term investments and is therefore
    recorded on the balance sheet at its fair value with the unrealized loss
    of $485 recorded to Other Comprehensive Income. The other half of this
    investment has been classified as held for trading and is also recorded
    on the balance sheet at its fair value. However, since the agreement
    calls for the repurchase of CellPoint Connect shares to occur at the same
    price at which they were issued to the Company, the change in the fair
    market value of the shares is offset by the value of the future contract.

    10. LONG TERM INVESTMENTS

    In November 2005, the Company received a 6% interest, or $3,217 in shares
    of Nanoscience Inc. (11.1 million shares) as consideration for the sale
    of its investment in Toumaz Technology Limited to Nanoscience. The shares
    of Nanoscience are traded on the AIM exchange in London, England and have
    a market value of $2,565 as at November 30, 2007 (2006 - $2,490). Under
    the new accounting standards, this investment has been classified as
    available for sale and is therefore recorded on the balance sheet at its
    fair value with changes in fair value recorded in Other Comprehensive
    Income. Fair value is based on the trading price of the shares and the
    impact of currency fluctuations. However, since the fair value of the
    shares have been below book value for a significant period of time, an
    impairment charge of $652 was recognized in net income.

    As described in note 9, half of the investment in Cellpoint Connect
    shares with a fair market value of $516 has been classified as available
    for sale under long-term investments.

    11. PROMISSORY NOTES AND LOAN RECEIVABLE

    On August 24, 2007, the Company sold its Consumer Headset product line to
    CellPoint (see note 5). The proceeds included a $300 non-interest bearing
    promissory note, due September 30, 2008. The promissory note has been
    discounted to $288 using the effective interest method, resulting in
    interest income of $12 that will be recognized as income from continuing
    operations over the term of the note. In addition, the Company extended a
    $650 loan to CellPoint, bearing interest at 5%, compounded quarterly. The
    loan is due on the first anniversary of the second advancement of $650,
    which is expected to be received in early February 2008.

    On October 19, 2007, the Company received $2,500 in an interest-bearing
    promissory note as part of the consideration received from the sale of
    the Hearing Instrument and Manufacturing Operations to Sound Design
    Technologies Ltd. The promissory note bears interest at 5% per annum with
    scheduled quarterly principal payments of $250 beginning in April 2008,
    and the remaining balance plus accrued interest due in April 2010 (see
    note 6). Of the $2,500, $764 including accrued interest has been
    classified as short-term, and the balance as long-term.

    12. GOODWILL AND INTANGIBLE ASSETS

    (i)  Goodwill

    Goodwill of $2,531 was acquired in the purchase of SiGe Semiconductor
    Inc.'s LightCharger(TM) optical networking business in May 2004. In
    October 2007, additional goodwill of $16,878 was acquired through the
    purchase of 100% of the shares of Zeptonics (see note 9). Goodwill is
    reviewed annually for impairment. There were no impairment issues
    relating to goodwill in 2007 or 2006.

    (ii) Intangible Assets
                                                               Years Ended
                                                               November 30,
                                                             2007       2006
    -------------------------------------------------------------------------

    Licence fees                                              179         28
    Technology - SiGe                                       2,221      2,221
    Technology - Snowbush                                   4,100          -
    Supplier relationships                                  1,300          -
    In process development                                    700          -
    Customer value                                            110          -
    Contracts in process                                      140          -
    -------------------------------------------------------------------------
                                                            8,750      2,249
    Less accumulated amortization                          (1,277)      (825)
    -------------------------------------------------------------------------
                                                            7,473      1,424
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Licence fees are amortized using the straight-line method over the
    estimated useful lives ranging from three to five years.

    Technology - SiGe represent those intangible assets resulting from the
    SiGe Semiconductor acquisition in May 2004. Technology intangibles are
    amortized using the straight-line method over the estimated useful life
    of seven years.

    Technology, supplier relationships, in-process development, customer
    value and contracts in process represent those intangible assets
    resulting from the Zeptonics acquisition in October 2007 (see note 7).
    These identifiable intangible assets are amortized using the
    straight-line method over the estimated useful lives ranging from one to
    five years.

    In the fourth quarter of 2007 and 2006, no intangible assets have been
    written off. Amortization expense for the fourth quarter was $87 (2006 -
    $81).

    In 2007, no intangible assets have been written off (2006 - $79).
    Amortization expense for the year was $334 (2006 - $327).

    The carrying value of intangible assets of $383 (2006 - $888) associated
    with the sale of the VXP(R) image processing business has been
    reclassified to assets held for sale and the 2006 carrying value of
    intangible assets associated with the sale of the Hearing Instrument and
    Manufacturing Operations ($53) has also been reclassified to assets held
    for sale (see note 2).

    13. CAPITAL STOCK

    The Company has authorized an unlimited number of common shares with no
    par value, of which 35,775,086 common shares of the Company (2006 -
    35,784,636) have been issued as at November 30, 2007 with a stated value
    of $11,289 (2006 - $11,001). An unlimited number of preferred shares have
    also been authorized, none of which have been issued. The number of
    common stock options outstanding as at November 30, 2007 is 2,065,885, of
    which 571,612 are exercisable. In the fourth quarter of 2007, 203,620
    options were granted (year to date - 973,620), none were exercised (year
    to date - 25,650) and 173,500 were forfeited or relinquished (year to
    date - 311,050).

                                                                      Stated
    Reconciliation of shares outstanding            No. of shares      Value
    -------------------------------------------------------------------------

    Number of shares outstanding, November 30, 2005    35,862,286     $9,392
    Stock options exercised                               134,650      1,675
    Shares repurchased under normal course issuer bid    (212,300)       (66)
    -------------------------------------------------------------------------
    Number of shares outstanding, November 30, 2006    35,784,636     11,001
    Stock options exercised                                25,650        299
    Shares repurchased under normal
     course issuer bid(*)                                 (35,200)       (11)
    -------------------------------------------------------------------------
    Number of shares outstanding, November 30, 2007    35,775,086    $11,289
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Shares repurchased of 131,800 for approximately $1,406 by the Company
        under the Normal Course Issuer Bid are included in the number of
        shares outstanding at year end, as they have not yet been cancelled.
        The Company has cancelled these shares subsequent to the year-end
        date.

    During 2007, the Company announced a normal course issuer bid to acquire
    up to 3.5 million of its common shares (2006 - 1.8 million). The normal
    course issuer bid commenced on July 3, 2007 and will terminate on July 2,
    2008. During the year, the Company repurchased 35,200 common shares
    (2006 - 212,300) under the bid for approximately $385 (2006 - $2,179).
    The net excess of the repurchase price over the issue price is allocated
    to shareholders' equity.

    Stock option plan

    The Company has an incentive stock option plan, which provides for the
    granting of options for the benefit of employees and officers. The total
    number of Company shares that may be issued under this plan is 2,700,000
    of which 1,206,153 remain available for new grants. An additional 930,000
    options were issued outside the plan to new officers upon hiring at
    exercise prices ranging from $9.75 - $13.27. Options issued outside the
    plan are governed by the same conditions as applicable to the employee
    stock option plan.

    Subsequent to the year end, 30,000 options were granted in the first
    quarter of 2008.

    All options are granted for a term of seven years from the grant date
    with vesting of 25% at the end of the first, second, third and fourth
    years from the date of grant, respectively. All options allow the holder
    to purchase common shares at a price equal to the market price of such
    shares at the date of grant.

    A summary of the plan and changes during 2007 and 2006 are as follows:

                                                2007                  2006
    -------------------------------------------------------------------------
                                              Weighted              Weighted
                                               average               average
                                     Number   exercise     Number   exercise
                                   of shares    price    of shares    price
    -------------------------------------------------------------------------

    Outstanding, beginning
     of year                       1,428,965     11.53     812,713     12.44
    Granted                          973,620     12.20     774,527     10.79
    Forfeited                       (311,050)    12.74     (23,625)    13.23
    Exercised                        (25,650)    11.62    (134,650)    12.44
    -------------------------------------------------------------------------
    Outstanding, end of year       2,065,885     11.65   1,428,965     11.53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Options exercisable at
     year end                        571,612     11.73     651,938     12.40
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The following table summarizes information about options outstanding at
    November 30, 2007:

                                   Options outstanding   Options Exercisable
    -------------------------------------------------------------------------
                                   Weighted
                                   average     Weighted             Weighted
    Range of                      remaining     average              average
    exercise           Number    contractual   exercise    Number   exercise
    prices          Outstanding      life        price  exercisable    price
    -------------------------------------------------------------------------

    $9.59 - $12.00    1,117,433    4.8 years     10.44    440,063      11.06
    -------------------------------------------------------------------------
    $12.01 - $14.25     912,452    5.9 years     12.98     95,549      13.34
    -------------------------------------------------------------------------
    $14.26 - $16.50      36,000    0.4 years     15.54     36,000      15.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The estimated weighted average fair value of stock options granted during
    2007 was $3.87 (2006 - $3.18) per share using the Black-Scholes
    option-pricing model with the following weighted average assumptions:

                                                             2007       2006
    -------------------------------------------------------------------------
    Risk-free interest rate                                 4.16%      3.98%
    Expected dividend yield                                 1.11%      1.35%
    Expected volatility                                     30.0%      28.3%
    Expected time until exercise                        5.5 years  5.5 years
    -------------------------------------------------------------------------

    In 2007, the Company amortized and credited Contributed Surplus of $1,078
    related to stock options granted after December 1, 2003 (2006 - $94).

    Earnings per share - The Company uses the treasury stock method of
    calculating the dilutive effect of options on earnings per share. The
    following is a reconciliation of the numerator and denominator of
    earnings per share computations:

                                     Three Months Ended        Years Ended
                                         November 30,          November 30,
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    Net earnings from continuing
     operations                       4,386      5,070     22,292     26,552
    Net (loss) from discontinued
     operations                      (4,815)    (2,299)   (27,049)    (9,287)
    -------------------------------------------------------------------------
    Net (loss) earnings for the year   (429)    (2,777)    (4,757)    17,265
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average shares
     outstanding (numbers in
     thousands)                      35,775     35,893     35,791     35,893
    Effect of dilutive stock options    132        125         45        125
    -------------------------------------------------------------------------
    Diluted weighted average
     shares outstanding              35,907     36,018     35,836     36,018
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share

    Earnings per share from
     continuing operations
     - basic and diluted              $0.12      $0.14      $0.62      $0.74

    Earnings per share from
     discontinued operations
     - basic and diluted             $(0.13)    $(0.06)    $(0.75)    $(0.26)

    -------------------------------------------------------------------------
    Earnings per share - basic
     and diluted                     $(0.01)    $(0.08)    $(0.13)     $0.48
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Options to purchase 1,655,202 common shares were not included in the
    computation of diluted earnings per share for the year ended November 30,
    2007 because the option exercise prices and unamortized compensation
    costs were greater than the average market price of the common shares.

    14. Financial Instruments

    (i)   Fair Value of Financial Instruments

    The carrying amounts for accounts receivable, other assets, loan
    receivable, accounts payable and accrued liabilities approximate fair
    value because of the short maturity of these instruments. The fair values
    of the Company's derivative financial instruments are provided below.

    (ii)  Foreign Exchange Rate Risk

    In order to manage the risk associated with fluctuations in foreign
    exchange rates, the Company has entered into foreign exchange forward
    contracts to sell an aggregate amount of US $17,400 and yen 1,016,500 as
    at November 30, 2007. These contracts mature at the latest on October 14,
    2008 at exchange rates varying between Canadian $0.9870 and Canadian
    $1.1468 against the US dollar, and between Canadian $0.00884 and Canadian
    $0.00993 against the Japanese yen. Management estimates that a gain of
    $599 would be realized if the contracts were terminated on November 30,
    2007. The fair values of the foreign exchange forward contracts are based
    on market information from major financial institutions. In accordance
    with new accounting standards effective this year, these forward
    contracts are considered cash flow hedges and therefore this gain, net of
    future income tax liability of $207 has been included in Other
    Comprehensive Income. This gain is expected to be reclassified to net
    income over the next eleven months as the forward contracts mature.
    During the year, there were no firm commitments that no longer qualified
    as hedges and no forecasted transactions that failed to occur. Realized
    gains on foreign exchange forward and spot contracts for the fourth
    quarter were $1,181 (2006 - $242). Realized gains on foreign exchange
    forward and spot contracts were $1,416 for the year (2006 - $2,633).

    (iii) Credit Risk

    The Company is exposed to commercial credit risk from its customers in
    the normal course of business, which is mitigated by the Company's credit
    management policies. The Company is exposed to credit risk from potential
    default by any of its counterparties on its foreign exchange contracts
    and manages this credit risk by dealing with major financial institutions
    with high credit ratings. Credit risks associated with holders of
    promissory notes are managed through regular communication with those
    holders.

    15. SEGMENTED INFORMATION

    The Company has four reportable segments:

    Video Products (Video): In accordance with Canadian GAAP, the VXP(R)
    image processing product line has been classified as discontinued
    operations. Continuing operations include serial digital transmission and
    timing generation components for display and professional video/film
    applications.

    Audio & Wireless Products (Audio): In accordance with Canadian GAAP,
    certain Audio & Wireless operations have been classified as discontinued
    operations. Discontinued operations include the FALCON(TM) product line
    and a wide range of components, systems and sub-systems for use by
    manufacturers of analogue and digital signal processing products in the
    hearing instrument and other specialized markets. Wireless devices
    include low power links for hearing aids and new wireless headset
    products. Operations related to the development of Barium Strontium
    Titanate (BST) related products have been reclassified to Other.

    Data Communication Products (Datacom): Develops and supplies
    high-performance physical layer integrated circuits for high-speed
    backplane and high-speed optical transceiver applications.

    Snowbush Microelectronics: Provides analogue and mixed-signal IC design
    services and licensing IP cores.

    The total of segment earnings (losses) and Other reconciles to earnings
    from continuing operations before income taxes disclosed in the
    Consolidated Statement of Earnings. Corporate allocations consist of
    general and administrative costs, which are charges for corporate
    services and centralized operational activities allocated to the
    operating segments based upon estimates of usage. The Company's Other
    segment revenue is related to BST. The Company has included investment
    income and foreign exchange gains or losses in the determination of Other
    segment profit. The total assets in Other include: cash and cash
    equivalents, instruments held for trading, loan receivable, promissory
    note receivable, long term investments, future income taxes, income tax
    recoverable or payable and capital assets not allocated to the operating
    segments. The significant accounting policies of the reportable segments
    are the same as those referred to in note 1. Substantially all of the
    Company's assets, operations and employees are located in Canada.

                                   Quarter Ended November 30, 2007

                          Video   Audio   Datacom  Snowbush   Other   Total
    -------------------------------------------------------------------------

    Segment revenue      21,308        -    7,642      654      276   29,880
    Segment earnings
     (losses) from
     continuing
     operations           6,214        -    1,637      142   (1,390)   6,603
    Loss from
     discontinued
     operations, net
     of tax               1,532    3,283        -        -        -    4,815
    Depreciation and
     amortization         1,081        -      512       38      175    1,806
    Corporate allocations 2,777        -      921        -      541    4,239
    Capital asset
     additions            2,156        -    1,014        -        -    3,170
    Long-term investment      -        -        -        -    3,081    3,081
    Goodwill                  -        -    2,531   16,878        -   19,409
    -------------------------------------------------------------------------


                                        Quarter Ended November 30, 2006

                                   Video    Audio   Datacom   Other    Total
    -------------------------------------------------------------------------

    Segment revenue               20,729        -    5,147      363   26,329
    Segment earnings (losses)
     from continuing operations    8,680        -      538     (815)   8,403
    Loss from discontinued
     operations, net of tax        2,107      192        -        -    2,299
    Depreciation and amortization    914        -      556       61    1,531
    Intangible asset impairment      248        -       58        -      306
    Corporate allocations          1,832        -      459      878    3,169
    Restructuring charge             642    1,262       60        -    1,964
    Capital asset additions          662        -       92        -      754
    Long-term investment               -        -        -    3,217    3,217
    Goodwill                           -        -    2,531        -    2,531
    -------------------------------------------------------------------------


                                     Year Ended November 30, 2007

                          Video   Audio   Datacom  Snowbush   Other   Total
    -------------------------------------------------------------------------

    Segment revenue      83,318        -   25,130      654    1,395  110,497
    Segment earnings
     (losses) from
     continuing
     operations          34,600        -    3,997      140   (3,737)  35,000
    Loss from
     discontinued
     operations,
     net of tax           6,838   20,211        -        -        -   27,049
    Depreciation and
     amortization         4,321        -    1,640      156      700    6,817
    Corporate allocations 8,484        -    2,743        -    2,935   14,162
    Capital asset
     additions            3,809        -    2,251        -        -    6,060
    Long-term investment      -        -        -        -    3,081    3,081
    Goodwill                  -        -    2,531   16,878        -   19,409
    Total assets         50,163    4,950   16,280   26,375   66,208  163,976
    -------------------------------------------------------------------------


                                          Year Ended November 30, 2006

                                   Video    Audio   Datacom   Other    Total
    -------------------------------------------------------------------------

    Segment revenue               85,497        -   17,445    1,096  104,038
    Segment earnings (losses)
     from continuing operations   42,100        -      (47)  (1,435)  40,618
    Loss from discontinued
     operations, net of tax        8,900      387        -        -    9,287
    Depreciation and amortization  4,361        -    1,941       61    6,363
    Intangible asset impairment        -        -       79        -       79
    Corporate allocations          7,078        -    1,788    3,445   12,311
    Restructuring charge             642    1,262       60        -    1,964
    Capital asset additions        3,100        -      867        -    3,967
    Long-term investment               -        -        -    3,217    3,217
    Goodwill                           -        -    2,531        -    2,531
    Total assets                  49,485   41,586   13,882   65,479  170,432
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenue by principal markets is as follows:

                                     Three Months Ended        Years Ended
                                         November 30,          November 30,
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------

    United States                     8,937      8,652     35,021     35,100
    Europe                            3,812      4,082     14,158     16,651
    Pacific Rim                      12,407      8,276     42,109     33,729
    Canada                            4,724      5,229     19,209     18,558
    -------------------------------------------------------------------------
                                     29,880     26,239    110,497    104,038
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Revenue is attributable to countries based upon the location of
    customers.

    Assets per country are as follows:

                                                           As at November 30,
                                                             2007       2006
    -------------------------------------------------------------------------

    Canada                                                148,200    154,138
    UK                                                      5,570      5,834
    Japan                                                  10,206     10,460
    -------------------------------------------------------------------------
                                                          163,976    170,432
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    16.  OTHER INCOME (EXPENSE)

                                     Three Months Ended        Years Ended
                                         November 30,          November 30,
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------

    Realized gains on foreign
     exchange hedge contracts         1,181        242      1,416      2,633
    Foreign exchange gain (loss) on
     translation                     (1,175)       559     (1,821)      (539)
    -------------------------------------------------------------------------
    (Loss) gain on foreign exchange,
     net                                  6        801       (405)     2,094
    Other(*)                           (609)       (56)      (957)      (391)
    -------------------------------------------------------------------------
                                       (603)       745     (1,362)     1,703
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (*) Other expense in 2007 consists mainly of our Japanese subsidiary's
        business taxes and related items and the partial impairment of the
        investment in Nanoscience

    17.  INCOME TAXES

    The following is a reconciliation of the expected income tax expense
    obtained by applying the combined corporate tax rates to earnings before
    income taxes:

                                                     Years Ended November 30,
                                                             2007       2006
    -------------------------------------------------------------------------

    Expected income tax expense using statutory
     tax rates                                             11,943     13,859
      Adjustment of tax provisions                              -       (278)
      Permanent differences                                   509        167
      Higher income tax rate on earnings of foreign
       subsidiary                                              96        150
      Changes in tax rates and other                          160        168
    -------------------------------------------------------------------------
    Provision for income taxes                             12,708     14,066
    -------------------------------------------------------------------------
    Effective tax rate                                      36.3%      34.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    18.  COMMITMENTS AND CONTINGENCIES

    The Company is committed to future minimum lease payments under operating
    leases for software design tools and buildings as at November 30, 2007 as
    follows:

    -------------------------------------------------------------------------
                                      Design Tools    Buildings        Total
    -------------------------------------------------------------------------

    2008                                     2,609        1,301        3,910
    2009                                     3,059          813        3,872
    2010                                     2,477          533        3,010
    2011                                         -          303          303
    2012 and beyond                              -        2,081        2,081
    -------------------------------------------------------------------------
                                             8,145        5,031       13,176
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The Company has committed to approximately $17.8 million in purchase
    obligations as at November 30, 2007, of which $5.6 million is related to
    authorized capital projects. The remaining purchase obligations relate
    primarily to inventory, product development and general operating costs.

    In the ordinary course of business activities, the Company may be
    contingently liable for litigation and claims with customers, suppliers,
    former employees and third parties. Management believes that adequate
    provisions have been recorded in the accounts where required. Although it
    may not be possible to accurately estimate the extent of potential costs
    and losses, if any, management believes that the ultimate resolution of
    such contingencies would not have a material adverse effect on the
    financial position of the Company.

    19. SUBSEQUENT EVENTS

    Effective December 1, 2007, the Company will adopt the US dollar as the
    reporting currency, but will retain the Canadian dollar as the functional
    currency. We believe that reporting in US dollars will improve the
    comparability of our financial position and results of operations to
    others in our industry.

    In addition, with all of the divestitures completed, the Company has
    realigned its leadership and product portfolio and will be reporting as
    one segment beginning in fiscal 2008.

    20. COMPARATIVE AMOUNTS

    Certain of the comparative amounts have been reclassified to conform to
    the presentation adopted in the current year.

    





For further information:

For further information: Gennum Media Contact: Robin Vaitonis, Director
of Corporate Communications, Gennum Corporation, Tel: (905) 632-2999 ext.
2110, E-mail: vaitonis@gennum.com; Gennum Investor Relations Contact: Gordon
Currie, Senior Vice-President, Finance & Administration and Chief Financial
Officer, Gennum Corporation, Tel: (905) 632-2999 ext. 3060, E-mail:
gcurrie@gennum.com

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