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Zarlink Releases Third Quarter Fiscal 2007 Results
OTTAWA, CANADA, January 25, 2007 – Zarlink Semiconductor Inc.
(NYSE/TSX:ZL) today released results for the Fiscal 2007 third quarter
ended December 29, 2006, prepared in accordance with U.S. Generally
Accepted Accounting Principles (GAAP).
In line with guidance, third quarter revenue was US$34.1 million,
compared with second quarter revenue of US$38.1 million and US$37.4
million in the third quarter of Fiscal 2006.
Zarlink earned third quarter net income of US$5.6 million or US$0.04 per
share. This compares with second quarter Fiscal 2007 net income of
US$6.9 million or US$0.05 per share. In Fiscal 2006 third quarter the
Company recorded a net loss from continuing operations of US$4.8 million
or US$0.04 per share.
As previously announced in the quarter, Zarlink sold its packet
switching product line to Conexant Systems Inc. The sale resulted in a
gain of US$4.1 million, reduced by a charge of US$0.5 million related to
idle space under lease contract for this facility. These two items
resulted in US$0.03 of earnings in the third quarter.
“I am pleased to advise that we met quarterly guidance in what has
proven to be a very challenging market,” said Kirk K. Mandy, President
and Chief Executive Officer, Zarlink Semiconductor. “In line with our
industry peers, we expect to see this market slowdown continue into the
fourth quarter. However, as we continue to focus on opportunities in
optoelectronics, network communications, low-power wireless telemetry,
and analog foundry, I am confident that when the semiconductor market
rebounds we are well-positioned for long-term success.”
Review of Operations
Gross margin in the third quarter was 50% of revenue, compared with 53%
in the Fiscal 2007 second quarter. Lower gross margin was due primarily
to weaker product mix, as well as severance costs of US$0.3 million.
Gross margin in the third quarter last year was 52%.
R&D expenses in the third quarter were US$7.9 million or 23% of revenue,
compared with US$7.5 million or 20% of revenue in the previous quarter.
Included in the third quarter R&D expenses was severance of US$1.0
million, partially offset by lower spending. R&D expenses were US$9.1
million or 24% of revenue in the Fiscal 2006 third quarter.
S&A expenses in the third quarter were US$8.5 million or 25% of revenue,
compared with S&A expenses of US$9.6 million or 25% of revenue in the
previous quarter. Included in the third quarter S&A expenses was the
reduction of a provision for estimated loss contingencies of US$0.8
million. S&A expenses were US$10.2 million or 27% of revenue in the
third quarter of Fiscal 2006.
During the third quarter, the Company made several important technology
announcements, including:
On January 25, 2007, Zarlink Semiconductor declared a quarterly dividend
of CDN$0.50 per share on its preferred shares, payable on March 30,
2007, to preferred shareholders of record as of March 9, 2007.
Fourth quarter Fiscal 2007 guidance
The opening order backlog at the start of the Fiscal 2007 fourth quarter
was US$22 million, compared to the US$23 million opening backlog in the
third quarter. Zarlink is forecasting fourth quarter revenues will be
between US$32 million and US$34 million. As a result, Zarlink expects
fourth quarter earnings will be between a loss of US$0.01 to breakeven.
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
www.zarlink.com.
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 www.zarlink.com 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: rapid technological developments and changes; our ability to
continue 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;
increasing price and product competition; and other factors referenced
in our Annual Report on Form 20-F. Investors are encouraged to consider
the risks detailed in this filing.
- 30 -
Zarlink and the Zarlink Semiconductor logo are trademarks of Zarlink
Semiconductor Inc.
An open conference call for analysts will be held today beginning at 5:00 p.m. EST. Investors, media and other parties are listen-only. Please dial 1-800-733-7571 or 613-287-8027. The replay number is 1-877-289-8525 (passcode 21215572#) or 416-640-1917 (passcode 21215572#). The replay is available until midnight, February 8th, 2007. A live audio webcast will be available through www.newswire.ca (Canada NewsWire) or from the Company’s website at www.zarlink.com.
For further information:
| Ed Goffin | Mike McGinn |
| Media Relations | Investor Relations |
| 613 270-7112 | 613 270-7210 |
| edward.goffin@zarlink.com | mike.mcginn@zarlink.com |
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| Copyright 2008, Zarlink Semiconductor Inc. All Rights Reserved. | ||||||||||||
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