Zarlink Revises Guidance for Second Quarter Fiscal 2008 Following Acquisition of Legerity Holdings, Inc.

    OTTAWA, Aug. 20 /CNW Telbec/ - Zarlink Semiconductor Inc. (NYSE/TSX:ZL)
today announced revised guidance for its Fiscal 2008 second quarter, ending
September 28, 2007, following the closing of its acquisition of Legerity
Holdings, Inc. ('Legerity') which was announced on August 3, 2007.
    On July 24, 2007, Zarlink had projected second quarter revenues of
between US$32 million and US$34 million and a second quarter loss of US$0.02
to US$0.03 per share. Including eight weeks of second quarter revenue from
Legerity, Zarlink's guidance for the second quarter Fiscal 2008 revenue has
been revised to between US$47 million and US$50 million.
    Zarlink expects to incur integration costs of approximately US$5 million
during the second quarter of Fiscal 2008 as a result of the acquisition of
Legerity, and anticipates incurring costs of a similar magnitude in the
third quarter.
    Under U.S. Generally Accepted Accounting Principles (GAAP) for business
combinations, Zarlink must perform a valuation of the acquired business and
allocate the purchase price between the acquired assets. The value of
In-Process Research and Development (IP R&D) identified as part of the
valuation is required to be immediately expensed at the date of acquisition.
Based on Zarlink's preliminary evaluation, it expects to record a one-time,
non-cash expense of US$20 million for IP R&D during the second quarter of
Fiscal 2008.
    Zarlink will also record a second quarter gain of US$12.9 million, or
US$0.10 per share, related to the sale of its investment in Mitel Networks
Corporation, which was announced on August 16, 2007.
    As a result, Zarlink expects a second quarter loss of US$0.13 to US$0.15
per share. The Company also expects to finish the second quarter Fiscal 2008
with unrestricted cash and cash equivalents of approximately US$40 million,
and restricted cash balances of approximately US$15 million.

    About Zarlink Semiconductor

    For over 30 years, Zarlink Semiconductor has delivered semiconductor
solutions that drive the capabilities of voice, enterprise, broadband and
wireless communications. The Company's success is built on its technology
strengths including voice and data networks, optoelectronics and ultra
low-power communications. For more information, visit

    Shareholders and other individuals wishing to receive, free of charge,
copies of the reports filed with the U.S. Securities and Exchange Commission
and Regulatory Authorities, should visit the Company's web site at or contact Investor Relations.

    Certain statements in this press release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and assumptions include,
among others, the following: our dependence on the successful development and
market introduction of new products; our ability to successfully integrate
businesses acquired in the future; our ability to operate profitably and
generate positive cash flows in the future; our dependence on our foundry
suppliers and third-party subcontractors; order cancellations and deferrals by
our customers; and other factors referenced in our Annual Report on Form 20-F.
Investors are encouraged to consider the risks detailed in this filing.

    Zarlink and the Zarlink Semiconductor logo are trademarks of Zarlink
    Semiconductor Inc.

For further information:

For further information: Ed Goffin, Media Relations, (613) 270-7112,; Mike McGinn, Investor Relations, (613) 270-7210,

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