DLGS Dialog Semiconductor

Dialog Semiconductor plc (FWB: DLG), a leading provider of power management semiconductor solutions, announces results for the Financial Year ended 31 December 2006. OVERVIEW -- Dialog ends FY 2006 with higher cash and securities balances, a growing product portfolio and a more diversified customer base, despite significant market challenges during the year. -- Dialog reports revenues for 2006 of EUR 71.3m (2005: EUR 129.4m) with a net loss after restructuring charges and asset write downs of EUR 33.4m (2005: EUR 23.3m), impacted by the insolvency of BenQ Mobile GmbH; a delay in the mobile phone market's transition from 2G to 3G technology; and Dialog's strategic and planned withdrawal from the lower end of the Display Screen market. -- Q4 06 revenues stand at EUR 10.5m (Q4 2005: EUR 39.2m) with a net loss of EUR 7.0m (Q4 2005: EUR 21.9m) after restructuring charges and foreign exchange translation costs. -- New business wins over the recent months have been very encouraging, supporting management's confidence in a return to growth during H2 2007 and beyond. -- Operational cash inflows for FY 2006 stand at EUR 12.3m (2005: EUR 10.3m), contributing to increased cash and securities balances of EUR 39.0m (2005: EUR 31.8m) and maintaining Dialog's zero debt. Commenting on the results Dialog Chief Executive, Dr Jalal Bagherli, said: '2006 has been a year of deep strategic change for Dialog. We begin 2007 with a strong cash position, our lowest inventory levels since 1999 and a broader base of international customers. I am pleased with the progress we have made towards building a solid, lower cost platform for our business from which we can now make good on our strategy of delivering profitable, sustainable growth for our shareholders.' OPERATIONAL HIGHLIGHTS Financial Year 2006 was a year of strategic change at Dialog. During the period, the Company invested significant resources in a number of key operational measures, each designed to support the delivery of long-term, sustainable growth. Building a lower cost platform The Board and management of Dialog remain committed to the development of a more efficient, lower cost platform from which the Company can embrace the new, higher growth opportunities open to it. In line with this commitment, 2006 saw Dialog implement a number of strategic measures aimed at reducing the cost base and improving margin performance. Firstly, in February, Dialog delivered on its ambition to spin out its non-core Imaging division, Dialog Imaging Systems. Secondly, in September, Dialog announced its decision to transfer its test facilities to dedicated outsourced test organisations in Asia. The transfer is on track for completion in April 2007 and is estimated to result in annual cost savings of approximately EUR 3.0m. This move now prompts Dialog to change its functional currency from Euro to US Dollar effective 1 January 2007 and Dialog will report in US Dollars with a Euro convenience translation from this date. In Q4 06 management announced its decision to terminate Dialog's American Depositary Receipt programmes (ADRs) and to de-register from NASDAQ. Together, these measures will deliver a further reduction in Dialog's annualised costs. Product: identifying higher growth opportunities As a result of these cost reduction measures, Dialog is now in a strong position to take advantage of a number of higher growth, higher margin opportunities. Whilst these opportunities sit primarily in the growing 3G and smart phone segments of the mobile phone market, Dialog, by virtue of its core power management and audio expertise is seeing further traction within a number of consumer handheld product segments such as GPS personal navigators and Multimedia players. In pursuit of these opportunities, Dialog has made a series of important technology investments during the year, as well as forging some key strategic partnerships. For example, in June, Dialog announced a partnership with E-Ink for paper thin display system drivers. This initiative has already resulted in business with an early adopter customer and we expect revenue to ramp up in 2008 with multiple customers. Dialog is also in the early stages of a partnership with a Japanese company aimed at co-operation on OLED display drivers for cell phones, positioning the Company for entry into this emerging high growth segment in 2008. In Dialog's Automotive and Industrial division, further progress has been made to expand the Company's business with leading automotive component producers, creating an intelligent highly integrated motor controller for car seatbelt traction and electric windows. This business builds upon the technology already implemented during the past two years in our growing production of ICs for car windscreen wipers. During FY 06 Dialog invested further marketing and technical resources in engaging with major companies in the consumer electronics market. Dialog, in tandem with its partners, is developing a number of highly optimized and integrated power management ICs for battery operated consumer products in order to address these new opportunities. As a result of these efforts, a Tier 1 consumer electronics company is currently carrying out detailed evaluation of a Dialog sample product which is expected to be completed during Q1 07. Feedback from this process has been such that - on completion of the evaluation - management expects the Tier 1 Company to select this product for volume production; a decision which would lead to a contribution to Dialog revenues during H2 2007. Strengthening Board and management In addition to improving Dialog's cost base and opportunity pipeline, significant effort was made during 2006 to align the knowledge and expertise of senior management with Dialog's business objectives. Dialog has made a number of important hires during the year. Firstly, Jean-Michel Richard joined the Company as CFO in October to support and accelerate Dialog's corporate and cost-reduction initiatives. During 2006, Dialog appointed Udo Kratz, Manoj Thanigasalam and Jurgen Friedel as heads of its Business Units, intended to streamline Dialog's product lines and enhance its focus on market growth opportunities. In 2006 Dialog also welcomed four new Non Executive Directors to the Board, Peter Weber, Chris Burke, Russ Shaw and Peter Tan. Their combined expertise in marketing, the wireless sector and the Far East will stand the business in good stead as it prepares for growth in 2007. FINANCIAL PERFORMANCE Revenues for Q4 2006 stood at EUR 10.5m (Q4 2005: EUR 39.2m) and Dialog posted a net loss for the quarter of EUR 7.0m (Q4 2005: EUR 21.9m). This net loss included a EUR 133,000 charge related to strategic restructuring as well as a EUR 565,000 foreign exchange translation loss driven by a weaker dollar. The Company also booked an additional net EUR 61,000 charge relating to the insolvency of BenQ Mobile GmbH and can confirm that, as forecast, Dialog has no remaining exposure to BenQ Mobile GmbH. Revenues for the full year stood at EUR 71.3 m, a reduction from EUR 129.4 m in 2005. This reduction was due in part to the strategic decisions taken during the year to focus on sustainable profitable growth and partly due to unforeseen factors, such as the delay in the market transition from 2G to 3G products, the BenQ Mobile GmbH closure and the insolvency of an Asian customer, all of which impacted our trading performance. Consequently, operating profit fell from EUR 2.7 m to an operating loss of EUR 31.1 m. The net loss grew from EUR 23.3 m to EUR 33.4 m at the year end. Our cash and securities balance increased to EUR 39.0m (2005: EUR 31.8m) and the Company remains debt free. 2007 STRATEGY Going forward, Dialog will continue to fine tune its strategy to ensure that the company is well positioned to deliver sustainable growth. For the remainder of 2007, Dialog's focus will remain on developing and implementing the following strategic actions: -- Growing its existing business by leveraging core power management and audio expertise; -- Broadening its international focus and customer base; and -- Continuing to improve business practices and operational efficiencies In addition, Dialog will continue to extend and develop its management team in order to support these strategic goals. OUTLOOK Management is confident that FY 2007 will amount to a year of growth for the Company. A similar set of market conditions to those experienced in Q4 2006 are expected to prevail in H1 2007. However, with the commencement in H1 2007 of volume production in Dialog's new 3G offering, the Company expects growth to accelerate throughout H2 2007. This increase is expected to be driven by a broadened product range targeting high growth opportunities in mobile phone, consumer, automotive and industrial markets and supported by a strengthened and diversified customer base. The Company's annual financial statements for the year ending December 31, 2006 has been prepared in accordance with International Financial Reporting Standards (IFRS). Information about Dialog Semiconductor Dialog Semiconductor develops and supplies power management, audio and display driver technology, targeting the wireless, automotive and industrial markets. The company's expertise in mixed signal design, with products manufactured entirely in CMOS technology, enhances the performance and features of wireless, hand-held and portable electronic products. Its technology is also used in intelligent control circuits in automotive and industrial applications. Dialog Semiconductor plc is headquartered near Stuttgart, Germany with operating facilities in the UK, the USA, Austria, Japan and Taiwan. The company is listed on the Frankfurt (FWB: DLG) stock exchange. Forward Looking Statements This press release contains 'forward-looking statements' that reflect management's current views with respect to future events. The words 'anticipate,' 'believe,' 'estimate, 'expect,' 'intend,' 'may,' 'plan,' 'project' and 'should' and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: an economic downturn in the semiconductor and telecommunications markets; changes in currency exchange rates and interest rates, the timing of customer orders and manufacturing lead times, insufficient, excess or obsolete inventory, the impact of competing products and their pricing, political risks in the countries in which we operate or sale and supply constraints. If any of these or other risks and uncertainties occur (some of which are described under the heading 'Risk Factors' in Dialog Semiconductor's most recent Annual Report and under the heading 'Risk Factors' in Dialog Semiconductor's most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission), or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made. Un-audited Consolidated Income Statement -0- *T Three months Three months (in thousands of ended ended Year ended Year ended EUR, except per December 31, December 31, December 31, December 31, share data) 2006 2005 2006 2005 Revenues 10,458 39,190 71,268 129,406 Cost of sales (9,486) (30,727) (57,989) (92,529) Gross profit 972 8,463 13,279 36,877 Selling and marketing expenses (1,341) (1,849) (5,455) (7,205) General and administrative expenses (829) (2,321) (13,386) (6,349) Research and development expenses (5,592) (5,161) (20,885) (20,624) Restructuring and related impairment charges (133) (4,639) - Operating profit (loss) (6,923) (868) (31,086) 2,699 Interest income 356 222 1,029 852 Interest expense (32) (47) (155) (129) Foreign currency exchange gains and losses, net (565) 142 (1,581) 1,018 Other income - - - 28 Result before income taxes (7,164) (551) (31,793) 4,468 Income tax benefit (expense) 213 (15,230) 120 (15,296) Net loss from continuing operations (6,951) (15,781) (31,673) (10,828) Loss from discontinued operations - (6,162) (1,720) (12,517) Net loss (6,951) (21,943) (33,393) (23,345) Loss per share Basic and diluted (0.16) (0.50) (0.75) (0.53) Net loss per share from continuing operations Basic and diluted (0.16) (0.36) (0.71) (0.25) Weighted average number of shares (in thousands) Basic and diluted 44,680 44,256 44,549 44,173 *T Un-audited Consolidated Balance Sheet -0- *T (in thousands of EUR) At December 31, At December 31, 2006 2005 ASSETS Cash and cash equivalents 24,302 16,920 Available-for-sale financial assets 14,681 14,890 Trade accounts receivable, net 3,540 28,364 Inventories 5,659 17,155 Prepaid expenses 372 505 Other current assets 1,098 1,257 49,652 79,091 Non current assets classified as held for sale 1,057 - Total current assets 50,709 79,091 Property, plant and equipment, net 9,420 15,710 Intangible assets 1,198 7,175 Investments 1,229 - Deposits 175 205 Assets for current tax 336 - Prepaid expenses - 957 Total non-current assets 12,358 24,047 TOTAL ASSETS 63,067 103,138 LIABILITIES AND SHAREHOLDERS' EQUITY Trade accounts payable 4,571 8,987 Provisions 1,085 194 Income taxes payable 21 24 Other current liabilities 3,776 5,103 Total current liabilities 9,453 14,308 Total non-current liabilities - 2,932 Ordinary Shares 7,028 7,028 Additional paid-in capital 168,969 168,832 Accumulated deficit (121,136) (88,621) Other reserves (1,071) (1,090) Employee stock purchase plan shares (176) (251) Net Shareholders' equity 53,614 85,898 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 63,067 103,138 *T Un-audited Consolidated Statements of Cash Flows -0- *T Year ended Year ended December 31, December 31, (in thousands of EUR) 2006 2005 Cash flows from operating activities: Net income (loss) (33,393) (23,345) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Recovery of investment - (28) Restructuring and related impairment charges 4,152 - Write-down of inventories 5,993 6,576 Write-down of trade accounts receivable 2,006 - Expense related to stock compensation 878 1,052 Depreciation of property, plant and equipment 5,377 7,619 Impairment of imaging assets - 3,917 Amortization of intangible assets 2,946 2,807 Impairment of deferred tax asset - 15,282 Losses on disposals of fixed assets 1,117 42 Interest income, net (874) (723) Other income tax expense (120) 14 Changes in working capital: Trade accounts receivable 22,792 (4,307) Inventories 5,503 6,063 Prepaid expenses 117 235 Trade accounts payable (4,411) (6,406) Provisions (133) 24 Other assets and liabilities (663) 1,025 Cash generated from operations 11,287 9,847 Interest paid (6) (1) Interest received 1,070 481 Income taxes paid (37) (28) Cash provided by operating activities 12,314 10,299 Cash flows from investing activities: Recovery of investment - 28 Purchases of property, plant and equipment (2,832) (4,036) Purchases of intangible assets (1,011) (5,528) Investments and deposits made (1,187) (7) Sale of available-for-sale financial assets - 2,009 Cash used for investing activities (5,030) (7,534) Cash flows from financing activities: Sale of employee stock purchase plan shares 212 96 Cash provided by financing activities 212 96 Cash provided by operating, investing and financing activities 7,496 2,861 Effect of foreign exchange rate changes on cash and cash equivalents (114) 82 Net increase in cash and cash equivalents 7,382 2,943 Cash and cash equivalents at beginning of period 16,920 13,977 Cash and cash equivalents at end of period 24,302 16,920 *T -0- *T Language: English Issuer: Dialog Semiconductor Plc. Neue Strasse 95 73230 Kirchheim/Teck-Nabern Deutschland Phone: +49 7021 805-0 Fax: +49 7021 805-100 E-mail: jm.richard@diasemi.com WWW: www.diasemi.com ISIN: GB0059822006 WKN: 927200 Indices: MIDCAP, PRIMEALL, TECHALLSHARE Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-Bremen, Dusseldorf, Stuttgart, Munchen, Hamburg; Foreign Exchange(s) Nasdaq *T Dialog Semiconductor plc (FWB: DLG), a leading provider of power management semiconductor solutions, announces results for the Financial Year ended 31 December 2006. OVERVIEW Dialog ends FY 2006 with higher cash and securities balances, a growing product portfolio and a more diversified customer base, despite significant market challenges during the year. Dialog reports revenues for 2006 of EUR 71.3m (2005: EUR 129.4m) with a net loss after restructuring charges and asset write downs of EUR 33.4m (2005: EUR 23.3m), impacted by the insolvency of BenQ Mobile GmbH; a delay in the mobile phone market's transition from 2G to 3G technology; and Dialog's strategic and planned withdrawal from the lower end of the Display Screen market. Q4 06 revenues stand at EUR 10.5m (Q4 2005: EUR 39.2m) with a net loss of EUR 7.0m (Q4 2005: EUR 21.9m) after restructuring charges and foreign exchange translation costs. New business wins over the recent months have been very encouraging, supporting management's confidence in a return to growth during H2 2007 and beyond. Operational cash inflows for FY 2006 stand at EUR 12.3m (2005: EUR 10.3m), contributing to increased cash and securities balances of EUR 39.0m (2005: EUR 31.8m) and maintaining Dialog's zero debt. Commenting on the results Dialog Chief Executive, Dr Jalal Bagherli, said: '2006 has been a year of deep strategic change for Dialog. We begin 2007 with a strong cash position, our lowest inventory levels since 1999 and a broader base of international customers. I am pleased with the progress we have made towards building a solid, lower cost platform for our business from which we can now make good on our strategy of delivering profitable, sustainable growth for our shareholders.' OPERATIONAL HIGHLIGHTS Financial Year 2006 was a year of strategic change at Dialog. During the period, the Company invested significant resources in a number of key operational measures, each designed to support the delivery of long-term, sustainable growth. Building a lower cost platform The Board and management of Dialog remain committed to the development of a more efficient, lower cost platform from which the Company can embrace the new, higher growth opportunities open to it. In line with this commitment, 2006 saw Dialog implement a number of strategic measures aimed at reducing the cost base and improving margin performance. Firstly, in February, Dialog delivered on its ambition to spin out its non-core Imaging division, Dialog Imaging Systems. Secondly, in September, Dialog announced its decision to transfer its test facilities to dedicated outsourced test organisations in Asia. The transfer is on track for completion in April 2007 and is estimated to result in annual cost savings of approximately EUR 3.0m. This move now prompts Dialog to change its functional currency from Euro to US Dollar effective 1 January 2007 and Dialog will report in US Dollars with a Euro convenience translation from this date. In Q4 06 management announced its decision to terminate Dialog's American Depositary Receipt programmes (ADRs) and to de-register from NASDAQ. Together, these measures will deliver a further reduction in Dialog's annualised costs. Product: identifying higher growth opportunities As a result of these cost reduction measures, Dialog is now in a strong position to take advantage of a number of higher growth, higher margin opportunities. Whilst these opportunities sit primarily in the growing 3G and smart phone segments of the mobile phone market, Dialog, by virtue of its core power management and audio expertise is seeing further traction within a number of consumer handheld product segments such as GPS personal navigators and Multimedia players. In pursuit of these opportunities, Dialog has made a series of important technology investments during the year, as well as forging some key strategic partnerships. For example, in June, Dialog announced a partnership with E-Ink for paper thin display system drivers. This initiative has already resulted in business with an early adopter customer and we expect revenue to ramp up in 2008 with multiple customers. Dialog is also in the early stages of a partnership with a Japanese company aimed at co-operation on OLED display drivers for cell phones, positioning the Company for entry into this emerging high growth segment in 2008. In Dialog's Automotive and Industrial division, further progress has been made to expand the Company's business with leading automotive component producers, creating an intelligent highly integrated motor controller for car seatbelt traction and electric windows. This business builds upon the technology already implemented during the past two years in our growing production of ICs for car windscreen wipers. During FY 06 Dialog invested further marketing and technical resources in engaging with major companies in the consumer electronics market. Dialog, in tandem with its partners, is developing a number of highly optimized and integrated power management ICs for battery operated consumer products in order to address these new opportunities. As a result of these efforts, a Tier 1 consumer electronics company is currently carrying out detailed evaluation of a Dialog sample product which is expected to be completed during Q1 07. Feedback from this process has been such that - on completion of the evaluation - management expects the Tier 1 Company to select this product for volume production; a decision which would lead to a contribution to Dialog revenues during H2 2007. Strengthening Board and management In addition to improving Dialog's cost base and opportunity pipeline, significant effort was made during 2006 to align the knowledge and expertise of senior management with Dialog's business objectives. Dialog has made a number of important hires during the year. Firstly, Jean-Michel Richard joined the Company as CFO in October to support and accelerate Dialog's corporate and cost-reduction initiatives. During 2006, Dialog appointed Udo Kratz, Manoj Thanigasalam and J�rgen Friedel as heads of its Business Units, intended to streamline Dialog's product lines and enhance its focus on market growth opportunities. In 2006 Dialog also welcomed four new Non Executive Directors to the Board, Peter Weber, Chris Burke, Russ Shaw and Peter Tan. Their combined expertise in marketing, the wireless sector and the Far East will stand the business in good stead as it prepares for growth in 2007. FINANCIAL PERFORMANCE Revenues for Q4 2006 stood at EUR 10.5m (Q4 2005: EUR 39.2m) and Dialog posted a net loss for the quarter of EUR 7.0m (Q4 2005: EUR 21.9m). This net loss included a EUR 133,000 charge related to strategic restructuring as well as a EUR 565,000 foreign exchange translation loss driven by a weaker dollar. The Company also booked an additional net EUR 61,000 charge relating to the insolvency of BenQ Mobile GmbH and can confirm that, as forecast, Dialog has no remaining exposure to BenQ Mobile GmbH. Revenues for the full year stood at EUR 71.3 m, a reduction from EUR 129.4 m in 2005. This reduction was due in part to the strategic decisions taken during the year to focus on sustainable profitable growth and partly due to unforeseen factors, such as the delay in the market transition from 2G to 3G products, the BenQ Mobile GmbH closure and the insolvency of an Asian customer, all of which impacted our trading performance. Consequently, operating profit fell from EUR 2.7 m to an operating loss of EUR 31.1 m. The net loss grew from EUR 23.3 m to EUR 33.4 m at the year end. Our cash and securities balance increased to EUR 39.0m (2005: EUR 31.8m) and the Company remains debt free. 2007 STRATEGY Going forward, Dialog will continue to fine tune its strategy to ensure that the company is well positioned to deliver sustainable growth. For the remainder of 2007, Dialog's focus will remain on developing and implementing the following strategic actions: Growing its existing business by leveraging core power management and audio expertise; Broadening its international focus and customer base; and Continuing to improve business practices and operational efficiencies In addition, Dialog will continue to extend and develop its management team in order to support these strategic goals. OUTLOOK Management is confident that FY 2007 will amount to a year of growth for the Company. A similar set of market conditions to those experienced in Q4 2006 are expected to prevail in H1 2007. However, with the commencement in H1 2007 of volume production in Dialog's new 3G offering, the Company expects growth to accelerate throughout H2 2007. This increase is expected to be driven by a broadened product range targeting high growth opportunities in mobile phone, consumer, automotive and industrial markets and supported by a strengthened and diversified customer base. The Company's annual financial statements for the year ending December 31, 2006 has been prepared in accordance with International Financial Reporting Standards (IFRS). Information about Dialog Semiconductor Dialog Semiconductor develops and supplies power management, audio and display driver technology, targeting the wireless, automotive and industrial markets. The company's expertise in mixed signal design, with products manufactured entirely in CMOS technology, enhances the performance and features of wireless, hand-held and portable electronic products. Its technology is also used in intelligent control circuits in automotive and industrial applications. Dialog Semiconductor plc is headquartered near Stuttgart, Germany with operating facilities in the UK, the USA, Austria, Japan and Taiwan. The company is listed on the Frankfurt (FWB: DLG) stock exchange. Forward Looking Statements This press release contains 'forward-looking statements' that reflect management's current views with respect to future events. The words 'anticipate,' 'believe,' 'estimate, 'expect,' 'intend,' 'may,' 'plan,' 'project' and 'should' and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: an economic downturn in the semiconductor and telecommunications markets; changes in currency exchange rates and interest rates, the timing of customer orders and manufacturing lead times, insufficient, excess or obsolete inventory, the impact of competing products and their pricing, political risks in the countries in which we operate or sale and supply constraints. If any of these or other risks and uncertainties occur (some of which are described under the heading 'Risk Factors' in Dialog Semiconductor's most recent Annual Report and under the heading 'Risk Factors' in Dialog Semiconductor's most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission), or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made. Un-audited Consolidated Income Statement (in thousands of EUR, except per share data) Three monthsendedDecember 31,2006 Three monthsendedDecember 31,2005 Year endedDecember 31,2006 Year endedDecember 31,2005 Revenues 10,458� 39,190� 71,268� 129,406� Cost of sales (9,486) (30,727) (57,989) (92,529) Gross profit Selling and marketing expenses 972� 8,463� 13,279� 36,877� � � (1,341) (1,849) (5,455) (7,205) General and administrative expenses � (829) (2,321) (13,386) (6,349) Research and development expenses � (5,592) (5,161) (20,885) (20,624) Restructuring and related impairment charges � (133) (4,639) -� Operating profit (loss) (6,923) (868) (31,086) 2,699� Interest income 356� 222� 1,029� 852� Interest expense (32) (47) (155) (129) Foreign currency exchange gains and losses, net � (565) 142� (1,581) 1,018� Other income -� -� -� 28� Result before income taxes (7,164) (551) (31,793) 4,468� Income tax benefit (expense) 213� (15,230) 120� (15,296) Net loss from continuing operations � (6,951) (15,781) (31,673) (10,828) Loss from discontinued operations � -� (6,162) (1,720) (12,517) Net loss (6,951) (21,943) (33,393) (23,345) Loss per share Basic and diluted (0.16) (0.50) (0.75) (0.53) Net loss per share from continuing operations Basic and diluted � � (0.16) (0.36) (0.71) (0.25) Weighted average number of shares (in thousands) Basic and diluted � � 44,680� 44,256� 44,549� 44,173� Un-audited Consolidated Balance Sheet (in thousands of EUR) At December 31, At December 31, 2006� 2005� ASSETS Cash and cash equivalents 24,302� 16,920� Available-for-sale financial assets 14,681� 14,890� Trade accounts receivable, net 3,540� 28,364� Inventories 5,659� 17,155� Prepaid expenses 372� 505� Other current assets 1,098� 1,257� 49,652� 79,091� Non current assets classified as held for sale 1,057� -� Total current assets 50,709� 79,091� Property, plant and equipment, net 9,420� 15,710� Intangible assets 1,198� 7,175� Investments 1,229� -� Deposits 175� 205� Assets for current tax 336� -� Prepaid expenses -� 957� Total non-current assets 12,358� 24,047� TOTAL ASSETS 63,067� 103,138� LIABILITIES AND SHAREHOLDERS' EQUITY � Trade accounts payable 4,571� 8,987� Provisions 1,085� 194� Income taxes payable 21� 24� Other current liabilities 3,776� 5,103� Total current liabilities 9,453� 14,308� Total non-current liabilities -� 2,932� Ordinary Shares 7,028� 7,028� Additional paid-in capital 168,969� 168,832� Accumulated deficit (121,136) (88,621) Other reserves (1,071) (1,090) Employee stock purchase plan shares (176) (251) Net Shareholders' equity 53,614� 85,898� TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 63,067� 103,138� Un-audited Consolidated Statements of Cash Flows Year ended Year ended December 31, December 31, (in thousands of EUR) 2006� 2005� Cash flows from operating activities: Net income (loss) (33,393) (23,345) Adjustments to reconcile net income (loss) to net cash provided by operating activities: � � Recovery of investment -� (28) Restructuring and related impairment charges 4,152� -� Write-down of inventories 5,993� 6,576� Write-down of trade accounts receivable 2,006� -� Expense related to stock compensation 878� 1,052� Depreciation of property, plant and equipment 5,377� 7,619� Impairment of imaging assets -� 3,917� Amortization of intangible assets 2,946� 2,807� Impairment of deferred tax asset -� 15,282� Losses on disposals of fixed assets 1,117� 42� Interest income, net (874) (723) Other income tax expense (120) 14� Changes in working capital: Trade accounts receivable 22,792� (4,307) Inventories 5,503� 6,063� Prepaid expenses 117� 235� Trade accounts payable (4,411) (6,406) Provisions (133) 24� Other assets and liabilities (663) 1,025� Cash generated from operations 11,287� 9,847� Interest paid (6) (1) Interest received 1,070� 481� Income taxes paid (37) (28) Cash provided by operating activities 12,314� 10,299� Cash flows from investing activities: Recovery of investment -� 28� Purchases of property, plant and equipment (2,832) (4,036) Purchases of intangible assets (1,011) (5,528) Investments and deposits made (1,187) (7) Sale of available-for-sale financial assets -� 2,009� Cash used for investing activities (5,030) (7,534) Cash flows from financing activities: Sale of employee stock purchase plan shares 212� 96� Cash provided by financing activities 212� 96� Cash provided by operating, investing and financing activities 7,496� 2,861� Effect of foreign exchange rate changes on cash and cash equivalents (114) 82� Net increase in cash and cash equivalents 7,382� 2,943� Cash and cash equivalents at beginning of period 16,920� 13,977� Cash and cash equivalents at end of period 24,302� 16,920� Language: English Issuer: Dialog Semiconductor Plc. Neue Strasse 95 73230 Kirchheim/Teck-Nabern Deutschland Phone: +49 7021 805-0 Fax: +49 7021 805-100 E-mail: jm.richard@diasemi.com WWW: www.diasemi.com ISIN: GB0059822006 WKN: 927200 Indices: MIDCAP, PRIMEALL, TECHALLSHARE Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-Bremen, Dusseldorf, Stuttgart, Munchen, Hamburg; Foreign Exchange(s) Nasdaq