UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2005
DIALOG SEMICONDUCTOR PLC
(Translation of registrant's name into English)
Neue Strasse 95, D-73230 Kirchheim/Teck-Nabern, Germany
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form-20-F or Form 40-F.)
Form 20-F__X__ Form 40-F_____
(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes____ No__X__
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
82-_________.)
TABLE OF CONTENTS
Part 1 Press Release of Dialog Semiconductor Plc dated April 20, 2005:
"Dialog Semiconductor reports first quarter 2005 results"
Part 2 Interim Report as of March 31, 2005
Dialog Semiconductor Reports First Quarter 2005 Results
KIRCHHEIM/TECK, Germany--(BUSINESS WIRE)--April 20, 2005--Dialog
Semiconductor Plc (FWB:DLG)(Nasdaq:DLGS):
-- First quarter revenues of EUR 18.6 million, loss per share EUR 0.09
-- Doubling of LCD display driver IC revenue compared to Q4 2004; ramp up
of color LCD drivers to Sharp for major mobile phone manufacturers
-- Diversification of customer base - five major customers each
representing 10% or more of revenue; no single customer greater than
25%
-- Reduction in operational costs of 8.2% compared to Q1 2004
-- Positive free cash flow
Dialog Semiconductor Plc (FWB:DLG, Nasdaq:DLGS) today reported sales of EUR
18.6 million for the first quarter of 2005 (compared to EUR 23 million for Q1
2004). Sales from products for automotive/industrial increased by 16% compared
to Q1 2004; however this was not sufficient to offset the lower wireless revenue
for Q1 2005 which were down by EUR 5.3 million compared to Q1 2004. The
Company's operational costs in Q1 2005 have been reduced by 8.2% compared to Q1
2004, and by 13.8% compared with Q4 2004. This optimization of costs together
with tight control of the Company's working capital cost and capital expenditure
resulted in a positive free cash flow. Key developments during the quarter were
strong growth in demand for LCD display drivers, including the start of volume
shipments to Sharp for leading mobile handset manufacturers; and the success in
developing a broader customer base for the company's products. These factors
place Dialog Semiconductor in a good position to achieve single digit percentage
growth for the full year 2005.
Roland Pudelko, CEO & president said, "Q1 2005 revenues have decreased from
levels achieved in Q1 2004 as a major customer consolidated its inventory
holdings given its challenging market conditions. Revenues from other customers
grew more than 70% compared to Q1 2004. The most encouraging development for
Dialog Semiconductor during the first quarter of 2005 is our success in LCD
display drivers. The forecast consumer demand for handsets with more
sophisticated multiple displays is being reflected in the interest we are seeing
in our ICs. As both 2.5G and 3G service providers push improved entertainment,
information and gaming capabilities on handsets, we expect to see a continuation
of the strong demand in display driver ICs."
Pudelko added, "Dialog Semiconductor's revenue continues to be driven by
demand for integrated power management and audio ICs. However display driver ICs
and system-on-chip (SoC) solutions for automotive are now providing a much
higher proportion of our revenues. This product portfolio has allowed us to
widen our customer base: we can report five customers each representing 10% or
more of our Q1 revenue. Of these, two are among the top 10 global mobile handset
manufacturers."
The Company's interim report as of March 31, 2005 has been prepared for the
first time in accordance with International Financial Reporting Standards (IFRS)
and is available at www.dialog-semiconductor.com.
Information about Dialog Semiconductor
Dialog Semiconductor develops and supplies power management, audio and
imaging technology, delivering innovative mixed signal standard products as well
as application specific IC solutions for wireless, automotive and industrial
applications. 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
additional design facilities in the UK, the USA, Austria and Japan. The company
is listed on the Frankfurt (FWB: DLG) and NASDAQ (DLGS) stock exchanges.
Forward Looking Statement
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.
Selected Financial Data (in accordance with IFRS)
Three Three
months months
(in thousands of EUR, ended March ended March Year ended
except per share, equity 31, 2005 31, 2004 December
ratio and employee data (unaudited) (unaudited) 31, 2004
Earnings data
Revenues 18,596 23,000 116,044
--------------------------------------------------------------------------------
Research and development (6,861) (7,474) (29,592)
--------------------------------------------------------------------------------
Operating loss (4,646) (2,674) (6,739)
--------------------------------------------------------------------------------
Net loss (3,990) (1,536) (6,393)
--------------------------------------------------------------------------------
Cash flow from operations 1,828 3,843 (8,601)
--------------------------------------------------------------------------------
Balance Sheet data
Cash and cash equivalents 14,787 6,650 13,977
--------------------------------------------------------------------------------
Marketable securities 17,162 46,802 17,542
--------------------------------------------------------------------------------
Liquid Assets 31,949 53,452 31,519
--------------------------------------------------------------------------------
Shareholders' equity 104,502 112,545 108,227
--------------------------------------------------------------------------------
Equity ratio in % 90.2 86.0 84.5
--------------------------------------------------------------------------------
Total assets 115,913 130,842 128,024
--------------------------------------------------------------------------------
Capital expenditures 1,068 3,256 12,321
--------------------------------------------------------------------------------
Share data
Basic loss per share (0.09) (0.03) (0.13)
--------------------------------------------------------------------------------
Number of shares in thousands
(period end) 44,094 44,069 44,025
--------------------------------------------------------------------------------
Other data
Employees (period end) 280 276 296
--------------------------------------------------------------------------------
Investor Information
Corporate Calendar
May 11, 2005 Annual shareholders' meeting
July 20, 2005 Release of second quarter results
October 19, 2005 Release of third quarter results
CONTACT: Dialog Semiconductor
Birgit Hummel
Telephone +49-7021-805-412
Fax +49-7021-805-200
E-mail birgit.hummel@diasemi.com
Internet www.dialog-semiconductor.com
Part 2 Interim Report as of March 31, 2005
Table of Contents
Operating and Financial Review
Results of Operations
Liquidity and Capital Resources
Unaudited Interim Consolidated Financial Statements
Interim Consolidated Income Statement
Interim Consolidated Balance Sheets
Interim Consolidated Statements of Cash Flows
Interim Consolidated Statements of Changes in Shareholders' Equity
Notes to the Interim Consolidated Financial Statements (Unaudited)
Operating and Financial Review
Forward-looking statements
This interim report contains "forward-looking statements". All
statements regarding our future financial condition, results of
operations and businesses, strategy, plans and objectives are
forward-looking. Statements containing the words "believes",
"intends", "expects" and words of similar meaning are also
forward-looking. Such statements involve unknown risks, uncertainties
and other factors that may cause our results, performance or
achievements or conditions in the markets in which we operate to
differ from those expressed or implied in such statements. These
factors include, among others, product demand, the effect of economic
conditions and conditions in the semiconductor and telecommunications
markets, exchange-rate and interest-rate movements, capital and credit
market developments, the timing of customer orders and manufacturing
lead times, the changes in customer order and payment patterns, the
financial condition and strategic plans of our major customers,
insufficient, excess or obsolete inventory, and the impact of
competing products and their pricing, product development,
commercialization and technological difficulties, 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 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. It is
not possible to predict or identify all such factors. Consequently,
any such list should not be considered to be a complete statement of
all potential risks or uncertainties. We do not assume the obligations
to update forward-looking statements. Results for interim periods are
not necessarily indicative of results for the full fiscal year or any
future periods.
Three months ended March 31, 2005 compared to three months ended March 31,
2004:
Three months Three months
ended March ended March
31, 2005 31, 2004
(in thousands of EUR ) (unaudited) % (unaudited) % Change %
----------------------------------------------------------------------
Revenues 18,596 100.0 23,000 100.0 (19.1)
----------------------------------------------------------------------
Cost of sales (13,495) (72.6) (15,060) (65.5) (10.4)
----------------------------------------------------------------------
Gross margin 5,101 27.4 7,940 34.5 (35.8)
----------------------------------------------------------------------
Selling and marketing
expenses (1,433) (7.7) (1,228) (5.3) 16.7
----------------------------------------------------------------------
General and administrative
expenses (1,209) (6.5) (1,460) (6.3) (17.2)
----------------------------------------------------------------------
Research and development (6,861) (36.9) (7,474) (32.5) (8.2)
----------------------------------------------------------------------
Amortization of intangible
assets (244) (1.3) (452) (2.0) (46.0)
----------------------------------------------------------------------
Operating loss (4,646) (25.0) (2,674) (11.6) 73.7
----------------------------------------------------------------------
Interest income, net 152 0.8 359 1.6 (57.7)
----------------------------------------------------------------------
Foreign currency exchange
gains and losses, net 539 2.9 (111) (0.5) 585.6
----------------------------------------------------------------------
Recovery of investment 28 0.2 54 0.2 (48.1)
----------------------------------------------------------------------
Result before income taxes (3,927) (21.1) (2,372) (10.3) 65.6
----------------------------------------------------------------------
Income tax (expense) /
benefit (63) (0.3) 836 3.6 (107.5)
----------------------------------------------------------------------
Net loss (3,990) (21.4) (1,536) (6.7) 159.8
----------------------------------------------------------------------
Results of Operations
Revenues
Revenues were EUR 18.6 million for the three months ended March
31, 2005 compared with EUR 23.0 million for the corresponding period
in the prior year. The decrease of 19% in revenues primarily results
from lower sales volumes in our wireless communication market which
more than offset an increase in revenues in our automotive /
industrial applications sector during the period. Revenues in the
wireless communications sector were EUR 12.0 million for the three
months ended March 31, 2005 compared with EUR 17.3 million for the
corresponding period in the prior year, comprising 64% and 75% of our
total revenues for the three months ended March 31, 2005 and 2004,
respectively. Revenues from our automotive / industrial applications
sector were EUR 6.6 million and EUR 5.7 million, representing 36% and
25% of our total revenues for the three months ended March 31, 2005
and 2004, respectively. Due to shipments during the balance of 2005 of
new products currently entering volume production we expect revenues
for the year ended December 31, 2005 to be higher than those for the
year ended December 31, 2004. However, our forward visibility with
respect to customer demand is limited and a successful introduction of
new products depends on the completion of new designs on a timely
basis. Our revenues for 2005 will also be highly dependent on
continued growth in the worldwide market for cellular handsets. We
cannot give any assurance that this growth trend will continue
throughout 2005.
Cost of Sales
Cost of sales consists of the costs of outsourcing production and
assembly, related personnel costs and applicable overhead and
depreciation of test and other equipment. Cost of sales decreased by
10% from EUR 15.0 million (or 65.5% of our total revenues) for the
three months ended March 31, 2004 to EUR 13.5 million (or 72.6% of our
total revenues) for the three months ended March 31, 2005 in line with
decreased production volumes. In addition, as a result of lower
production volume, our internal testing operation has been running at
an decreased utilization level, which in turn has increased per unit
production costs and increased cost of sales as a percentage of total
revenues.
Gross Margin
Our gross margin decreased from 34.5% of revenues for the three
months ended March 31, 2004 to 27.4% of revenues for the three months
ended March 31, 2005. The increase in per unit production costs was
the primary factor contributing to the decrease in our gross margin.
In addition, as a result of introducing new products to volume
production in the last months, per unit production costs increased
during their ramp-up phase and also increased cost of sales as a
percentage of total revenues.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of salaries,
travel expenses, sales commissions and costs associated with
advertising and other marketing activities. Selling and marketing
expenses increased from EUR 1.2 million for the three months ended
March 31, 2004, to EUR 1.4 million for the three months ended March
31, 2005, due primarily to an increase in sales commissions incurred
in connection with higher sales volumes of products subject to
commission payments. As a percentage of total revenues, selling and
marketing expenses increased from 5.3% to 7.7%.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel
and support costs for our finance, human resources, information
systems and other management departments. General and administrative
expenses decreased from EUR 1.5 million for the three months ended
March 31, 2004 to EUR 1.2 million for the three months ended March 31,
2005 due primarily to lower legal fees and other costs incurred in
connection with the filing of patent applications. General and
administrative expenses increased from 6.3% of total revenues to 6.5%
of total revenues resulting from the proportionally lower revenue
base.
Research and Development
Research and development expenses consist principally of
unreimbursed design and engineering related costs associated with the
development of new application specific integrated circuits ("ASICs")
and application specific standard products ("ASSPs"). Research and
development expenses decreased 8% from EUR 7.5 million for the three
months ended March 31, 2004 to EUR 6.9 million for the three months
ended March 31, 2005. Research and development expenses increased from
32.5% to 36.9% as a percentage of total revenues, resulting from the
proportionately lower revenue base.
Amortization of Intangible Assets
Amortization expense for the three months ended March 31, 2005 was
EUR 0.2 million as compared to EUR 0.5 million for the three months
ended March 31, 2004, a decrease of 46%. Amortization expense
decreased as certain intangible assets reached the end of their useful
lives.
Operating Loss
We reported an operating loss of EUR 4.6 million for the three
months ended March 31, 2005 and EUR 2.7 million for the three months
ended March 31, 2004. This increase in operating loss was primarily
due to a lower gross margin in the first three months ended March 31,
2005.
Interest Income, net
Interest and similar income, net from the Company's investments
(primarily short-term deposits and securities) was EUR 0.2 million for
the three months ended March 31, 2005 and EUR 0.4 million for the
three months ended March 31, 2004 reflecting mainly higher cash
equivalents and marketable securities balances during the first three
months ended March 31, 2004.
Foreign Currency Exchange Gains and Losses, net
Foreign currency transaction gains and losses result from amounts
ultimately realized upon settlement of foreign currency transactions
and from the period end remeasurement of foreign currency denominated
receivables, prepaid expenses and payables into Euro. Foreign currency
exchange gains, net were EUR 0.5 million for the three months ended
March 31, 2005 compared with foreign currency exchange losses of EUR
0.1 million for the three months ended March 31, 2004.
Recovery of Investment
In the fourth quarter of 2001, we determined that our ability to
recover the full amount of our investments in silicon supplier ESM
Holding Limited ("ESM") was impaired. Accordingly we wrote off our
investments in ESM. In March 2002, International Rectifier acquired
ESM. As a result we were able to recover EUR 28 thousand and EUR 54
thousand for the three months ended March 31, 2005 and 2004,
respectively.
Income Taxes
Income tax expense was EUR 0.1 million for the three months ended
March 31, 2005 compared with an income tax benefit of EUR 0.8 million
for the three months ended March 31, 2004. Due to further losses
incurred in the period ended March 31, 2005, we have not recognized
deferred tax assets on additional tax-loss carryforwards. As a result
the company reports an income tax expense for the three months ended
March 31, 2005 as compared to an income tax benefit for the
corresponding period in the prior year, in which deferred tax assets
on tax loss carryforwards were recognized.
Net Loss
For the reasons described above, we reported net loss of EUR 4.0
million for the three months ended March 31, 2005 compared with net
loss of EUR 1.5 million for the three months ended March 31, 2004.
Liquidity and Capital Resources
Cash flows
Cash provided by operating activities was EUR 1.8 million for
three months ended March 31, 2005 compared with cash provided by
operating activities of EUR 3.8 million for the three months ended
March 31, 2004. In the three months ended March 31, 2005, our working
capital (excluding cash and cash equivalents and marketable
securities) decreased primarily due to lower trade accounts
receivable, partially offset by lower trade accounts payable. This
resulted in an operating cash inflow. In the three months ended March
31, 2004, our working capital (excluding cash and cash equivalents and
marketable securities) decreased primarily due to higher trade
accounts payable and contractually required refunds of advanced
payments (classified in the balance sheet under "Prepaid expenses")
from a silicon supplier in proportion to our wafer purchases,
partially offset by an increased inventory level. This resulted in an
increase in related operating cash inflow.
Cash used for investing activities was EUR 1.0 million for the
three months ended March 31, 2005 compared with EUR 5.3 million for
the three months ended March 31, 2004. Cash used for investing
activities for the three months ended March 31, 2005 consisted mostly
of the purchase of test equipment, tooling (masks), laboratory
equipment, probecards and loadboards of EUR 1.1 million, partially
offset by a payment we received in connection with the recovery of the
investment in ESM Limited of EUR 28 thousand. Cash used for investing
activities for the three months ended March 31, 2004 consisted mostly
of the purchase of test equipment, tooling (masks), laboratory and
electronic data processing equipment of EUR 3.3 million, the increase
in marketable securities of EUR 1.9 million and the purchase of
software, licenses and patents of EUR 0.2 million.
Liquidity
At March 31, 2005 we had EUR 14.8 million in cash and cash
equivalents and EUR 17.2 million in marketable securities. Our working
capital was EUR 63.7 million.
Our primary sources of liquidity have historically been cash from
operations, cash from the issuance of ordinary shares in 1999 and
2000, short-term borrowings, the recovery of the investment in ESM
Limited and in 2003 the early repayment of a deposit from Chartered.
As of March 31, 2005 we had no long-term debt. We expect to reduce our
working capital in 2005, thereby increasing our cash and cash
equivalents and marketable securities in 2005. A decrease in customer
demand for our products caused by unfavorable industry conditions or
an inability to develop new products in response to technological
changes could materially reduce the amount of cash generated from
operations.
If necessary, we have available for use a short-term credit
facility of EUR 12.5 million that bears interest at a rate of EURIBOR
+ 0.75% per annum. At March 31, 2005 we had no amounts outstanding
under this facility. Accordingly, we believe the funding available
from these and other sources will be sufficient to satisfy our working
capital requirements in the near to medium term.
Backlog
In accordance with Frankfurt Stock Exchange rules and regulations,
companies are required to disclose information regarding their
backlog. Purchase order patterns of our customers can vary widely and
therefore no consistent shipping arrangements have been established.
"Ship-to-line" agreements with major customers underlie our
responsibility to act on a timely basis to ensure appropriate
inventory levels and production capabilities. Other customers place
purchase orders ranging from four to twelve weeks and provide
forecasts for a further period, generally not to exceed twelve months,
and these purchase orders are not legally binding. Since any backlog
information published would not be based on a consistent pattern of
purchase orders by our customers, we believe such information not to
be meaningful and, accordingly, do not provide such information here.
Unaudited Interim Consolidated Financial Statements
Interim Consolidated Income Statement
Three monthsThree months
ended March ended March
(in thousands of EUR, except per 31, 2005 31, 2004
share data) Notes (unaudited) (unaudited)
----------------------------------------------------------------------
Revenues 3 18,596 23,000
----------------------------------------------------------------------
Cost of sales (13,495) (15,060)
----------------------------------------------------------------------
Gross margin 5,101 7,940
----------------------------------------------------------------------
Selling and marketing expenses (1,433) (1,228)
----------------------------------------------------------------------
General and administrative expenses (1,209) (1,460)
----------------------------------------------------------------------
Research and development expenses (6,861) (7,474)
----------------------------------------------------------------------
Amortization of intangible assets (244) (452)
----------------------------------------------------------------------
Operating loss (4,646) (2,674)
----------------------------------------------------------------------
Interest income, net 152 359
----------------------------------------------------------------------
Foreign currency exchange gains and
losses, net 539 (111)
----------------------------------------------------------------------
Recovery of investment 28 54
----------------------------------------------------------------------
Result before income taxes (3,927) (2,372)
----------------------------------------------------------------------
Income tax expense (benefit) (63) 836
----------------------------------------------------------------------
Net loss (3,990) (1,536)
----------------------------------------------------------------------
Loss per share
Basic and diluted (0.09) (0.03)
----------------------------------------------------------------------
Weighted average number of shares (in
thousands)
Basic and diluted 44,094 43,998
----------------------------------------------------------------------
The accompanying notes are an integral part of these Consolidated
Financial Statements
Interim Consolidated Balance Sheets
At March 31, At
2005 December
(in thousands of EUR) Notes (unaudited) 31, 2004
----------------------------------------------------------------------
ASSETS
Cash and cash equivalents 14,787 13,977
----------------------------------------------------------------------
Trade accounts receivable, net 13,199 24,036
----------------------------------------------------------------------
Inventories 5 28,981 29,794
----------------------------------------------------------------------
Marketable securities 6 17,162 17,542
----------------------------------------------------------------------
Prepaid expenses 659 616
----------------------------------------------------------------------
Other current assets 337 281
----------------------------------------------------------------------
Total current assets 75,125 86,246
----------------------------------------------------------------------
Property, plant and equipment, net 20,412 21,238
----------------------------------------------------------------------
Intangible assets 7 2,958 3,144
----------------------------------------------------------------------
Deposits 196 194
----------------------------------------------------------------------
Deferred taxes 16,145 16,125
----------------------------------------------------------------------
Prepaid expenses 1,077 1,077
----------------------------------------------------------------------
TOTAL ASSETS 115,913 128,024
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade accounts payable 8,025 15,429
----------------------------------------------------------------------
Accrued expenses 3,031 3,084
----------------------------------------------------------------------
Income taxes payable 6 9
----------------------------------------------------------------------
Other current liabilities 349 1,275
----------------------------------------------------------------------
Total current liabilities 11,411 19,797
----------------------------------------------------------------------
Ordinary Shares 7,028 7,028
----------------------------------------------------------------------
Additional paid-in capital 168,790 168,782
----------------------------------------------------------------------
Accumulated deficit (70,118) (66,328)
----------------------------------------------------------------------
Accumulated other comprehensive loss (906) (958)
----------------------------------------------------------------------
Employee stock purchase plan shares (292) (297)
----------------------------------------------------------------------
Net Shareholders' equity 104,502 108,227
----------------------------------------------------------------------
----------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 115,913 128,024
----------------------------------------------------------------------
The accompanying notes are an integral part of these Consolidated
Financial Statements
Interim Consolidated Statements of Cash Flows
Three months Three months
ended March ended March
31, 2005 31, 2004
(in thousands of EUR) (unaudited) (unaudited)
----------------------------------------------------------------------
Cash flows from operating activities:
Net loss (3,990) (1,536)
----------------------------------------------------------------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Recovery of investment (28) (54)
----------------------------------------------------------------------
Restructuring and related impairment charges - (388)
----------------------------------------------------------------------
Stock compensation 200 142
----------------------------------------------------------------------
Depreciation of property, plant and equipment 1,863 3,107
----------------------------------------------------------------------
Amortization of intangible assets 244 452
----------------------------------------------------------------------
Change in deferred taxes 55 (845)
----------------------------------------------------------------------
Changes in current assets and liabilities:
Trade accounts receivable 10,837 (315)
----------------------------------------------------------------------
Inventories 813 (4,050)
----------------------------------------------------------------------
Prepaid expenses (39) 731
----------------------------------------------------------------------
Trade accounts payable (7,408) 6,975
----------------------------------------------------------------------
Other assets and liabilities (719) (376)
----------------------------------------------------------------------
Cash provided by operating activities 1,828 3,843
----------------------------------------------------------------------
Cash flows from investing activities:
Recovery of investment 28 54
----------------------------------------------------------------------
Purchases of property, plant and equipment (1,068) (3,256)
----------------------------------------------------------------------
Purchases of intangible assets (5) (196)
----------------------------------------------------------------------
Purchase of marketable securities - (8,497)
----------------------------------------------------------------------
Sale of marketable securities - 6,560
----------------------------------------------------------------------
Cash used for investing activities (1,045) (5,335)
----------------------------------------------------------------------
Cash flows from financing activities:
Sale of employee stock purchase plan shares 13 2
----------------------------------------------------------------------
Cash provided by financing activities 13 2
----------------------------------------------------------------------
Cash provided by (used for) operating,
investing and financing activities 796 (1,490)
----------------------------------------------------------------------
Effect of foreign exchange rate changes on
cash and cash equivalents 14 31
----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 810 (1,459)
----------------------------------------------------------------------
Cash and cash equivalents at beginning of
period 13,977 8,109
----------------------------------------------------------------------
Cash and cash equivalents at end of period 14,787 6,650
----------------------------------------------------------------------
The accompanying notes are an integral part of these Consolidated
Financial Statements
Interim Consolidated Statements of Changes in Shareholders' Equity
Accumulated other
comprehensive loss
Employee
stock
Additional Accumu- Currency Available purchase
Ordinary paid-in lated translation for sale plan
(in thousands of EUR) Shares capital deficit adjust-ment securities shares Total
------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003 6,737 168,795 (60,790) (915) (69) (26)113,732
------------------------------------------------------------------------------------------------------------------------
Net loss - - (1,536) - - - (1,536)
------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss) - - - 229 (25) - 205
------------------------------------------------------------------------------------------------------------------------
Total comprehensive loss (1,332)
------------------------------------------------------------------------------------------------------------------------
Sale of employee stock purchase plan shares - - - - - 2 2
------------------------------------------------------------------------------------------------------------------------
Equity settled transactions, net of tax - - 142 - - - 142
------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2004 6,737 168,795 (62,184) (686) (93) (24)112,545
------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2004 7,028 168,782 (66,328) (930) (28) (297)108,227
------------------------------------------------------------------------------------------------------------------------
Net loss - - (3,990) - - - (3,990)
------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss) - - - 86 (34) - 52
------------------------------------------------------------------------------------------------------------------------
Total comprehensive loss (3,938)
------------------------------------------------------------------------------------------------------------------------
Sale of employee stock purchase plan shares - 8 - - - 5 13
------------------------------------------------------------------------------------------------------------------------
Equity settled transactions, net of tax - - 200 - - - 200
------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2005 7,028 168,790 (70,118) (844) (62) (292)104,502
------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these Consolidated
Financial Statements
Notes to the Interim Consolidated Financial Statements (Unaudited)
(in thousands of EUR unless otherwise stated)
1. General
a) Description of Business
Dialog Semiconductor Plc and subsidiaries ("Dialog" or the
"Company") is a fabless semiconductor company that develops and
supplies power management, audio and imaging technology, delivering
innovative mixed signal standard products as well as application
specific IC solutions for wireless, automotive and industrial
applications. 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. Production
of these designs is then outsourced, and the final products are
returned to Dialog for approval and testing before delivery to the
customers.
b) Vulnerability Due to Certain Significant Concentrations
The Company's future results of operations involve a number of
risks and uncertainties. Factors that could affect the Company's
future operating results and cause actual results to vary materially
from historical results include, but are not limited to, the highly
cyclical nature of both the semiconductor and wireless communications
industries, dependence on certain customers and the ability to obtain
adequate supply of sub-micron wafers.
The Company's products are generally utilized in the cellular
communications and automotive industries. The Company generates a
substantial portion of its revenue from the wireless communications
market, which accounted for 64% and 75% of the Company's total revenue
for the three months ended March 31, 2005 and 2004, respectively.
The Company's revenue base is diversified by geographic region and
by individual customer. Changes in foreign currency exchange rates
influence the Company's results of operations. The Company's sales are
primarily denominated in Euros and US dollars whereas purchases of raw
materials and manufacturing services are primarily denominated in US
dollars. The Company also has foreign currency exchange risks with
respect to its net investments in foreign subsidiaries in Japan, the
United Kingdom and the United States. Fluctuations in these currencies
could significantly impact the Company's reported results from
operations.
The Company depends on a relatively small number of customers for
a substantial portion of its revenues, and the loss of one or more of
these customers may result in a significant decline in future revenue.
For the three months ended March 31, 2005 five customers individually
accounted for 10% or more of the Company's revenues. For the three
months ended March 31, 2004 one customer individually accounted for
more than 10% of the Company's revenues. The Company performs ongoing
credit evaluations of its customers' financial condition and,
generally, requires no collateral from its customers.
c) Basis of Presentation
In compliance with the European Parliament and Council Regulation
on the application of International Financial Reporting Standards
(IFRS) adopted in July 2002, all listed European Union companies are
required to prepare their consolidated financial statements in
accordance with IFRS for fiscal years commencing on or after January
1, 2005.
Accordingly the accompanying interim consolidated financial
statements have been prepared in accordance with IFRS and its
interpretation adopted by the International Accounting Standards Board
(IASB). These are the Group's first consolidated interim financial
statements.
The financial statements are presented in Euro, rounded to the
nearest thousand. They are prepared on the historical cost basis
except that financial instruments classified as available-for-sale are
stated at their fair value.
IFRS 1, First-Time Adoption of International Financial Reporting
Standards, requires disclosures that explain how the transition from
previous GAAP to IFRS affected the entity's reported financial
position, financial performance and cash flows and to comply with each
IFRS effective at the reporting date for its first IFRS financial
statements. An entity shall prepare an opening IFRS balance sheet at
the date of transition and present at least one year of comparative
information under IFRS. Accordingly our date of transition to IFRS is
the beginning of business on 1 January 2004 (opening IFRS balance
sheet date). As a UK company, Dialog has to use its financial
statements prepared in accordance with accounting principles generally
accepted in the United Kingdom ("UK GAAP") which are filed at
Companies House for purposes of conversion from previous GAAP to IFRS.
An explanation of how the transition to IFRS has affected the
reported financial position and financial performance of the group is
provided in note 9. The interim consolidated financial statements have
been prepared without audit. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with International Financial Reporting Standards (IFRS)
have been condensed or omitted. The interim condensed consolidated
financial statements should be read in conjunction with the Company's
December 31, 2004 consolidated financial statements and the notes
thereto, prepared in accordance with UK GAAP.
The accompanying interim consolidated financial statements reflect
all adjustments (consisting of only normal recurring adjustments)
which, in the opinion of management, are necessary for a fair
statement of the results of the interim periods presented. Operating
results for the three months ended March 31, 2005 are not necessarily
indicative of the results to be expected for the full year ending
December 31, 2005.
2. Summary of Significant Accounting Policies
Principles of Consolidation and Investments in Affiliated
Companies
The consolidated financial statements include Dialog Semiconductor
Plc and all of its owned subsidiaries:
Name Registered Office Participation
---------------------------------------------------------------------------
Kirchheim/Teck - Nabern,
Dialog Semiconductor GmbH Germany 100%
---------------------------------------------------------------------------
Dialog Semiconductor (UK)
Limited Swindon, UK 100%
---------------------------------------------------------------------------
Dialog Semiconductor Inc Clinton, New Jersey, USA 100%
---------------------------------------------------------------------------
Dialog Semiconductor KK Tokyo, Japan 100%
---------------------------------------------------------------------------
All intercompany accounts and transactions are eliminated in
consolidation.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with
original maturity dates of three months or less.
Marketable Securities
Marketable securities at March 31, 2005 and December 31, 2004
consist of exchange traded funds that are classified as
available-for-sale and are accounted for on the basis of the
settlement date and recorded at fair value as determined by the most
recently quoted market price of each security at the balance sheet
date. Unrealized gains and losses, net of the related tax effect, on
available-for-sale securities are excluded from earnings and are
reported as a component of other comprehensive income (loss) until
realized. Realized gains and losses from the sale of
available-for-sale securities are determined on a
specific-identification basis. Any impairment losses on
available-for-sale security are charged to earnings. Interest income
is recognized when earned.
Inventories
Inventories are valued at the lower of cost or market. Cost, which
includes direct materials, labor and overhead plus indirect overhead,
is determined using the first-in, first-out (FIFO) or weighted average
cost methods.
Trade Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and
do not bear interest. The allowance for doubtful accounts is the
Company's best estimate of the amount of probable credit losses in the
Company's existing accounts receivable. The Company reviews its
allowance for doubtful accounts quarterly. Management, considering
current information and events regarding the customers' ability to
repay their obligations, considers the collectibility of a trade
account receivable to be impaired when it is probable that the Company
will be unable to collect all amounts due according to the sales
terms. When a trade receivable is considered to be impaired, the
amount of the impairment is measured based on the present value of
expected future cash flows. Any credit losses are included in the
allowance for doubtful accounts through a charge to bad debt expense.
Account balances are charged off against the allowance after all means
of collection have been exhausted and the potential for recovery is
considered remote. In the profit and loss account, impairment losses
are included in sales and marketing expenses. Recoveries of trade
receivables previously written-off are recorded when received.
Reversals of impairment losses, if any, would be included in other
operating income. The Company does not have any off-balance-sheet
credit exposure related to its customers.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is charged on a straight-line basis over
the estimated useful lives of the assets as follows:
Equipment Useful life
Test equipment 3 to 8 years
----------------------------------------------
Leasehold improvements Shorter of useful life
or lease term
----------------------------------------------
Office and other
equipment 3 to 13 years
----------------------------------------------
Intangible Assets
Purchased intangible assets with estimable useful lives primarily
consist of licenses, software and patents and are recorded at
acquisition cost less accumulated amortization. Intangible assets
other than goodwill are amortized on a straight-line basis over the
estimated useful lives of the assets ranging from 3 to 17 years.
Accounting for Goodwill
Goodwill represents the excess of purchase price over fair value
of net assets of businesses acquired. In accordance with IFRS 1, we do
not apply IFRS 3, Business Combinations, retrospectively to past
business combinations. Therefore the carrying amount of goodwill in
the opening IFRS balance sheet is the carrying amount under previous
GAAP at the date of transition to IFRS. We previously have amortized
goodwill over a five year period resulting in a zero balance as of
December 31, 2003 in our UK GAAP financial statements. Accordingly,
goodwill is not recorded as an asset in our IFRS financial statements.
Impairment of Long-Lived Assets
In accordance with IAS 36, long-lived assets, such as property,
plant and equipment, and purchased intangibles subject to
amortization, are evaluated for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset or group
of assets to future undiscounted net cash flows expected to be
generated by the asset or group of assets. If the carrying amount of
an asset or group of asset exceeds its estimated future cash flows, an
impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. In accordance
with IFRS 5, non-current assets to be disposed of would be separately
presented in the balance sheet and reported at the lower of the
carrying amount or fair value less costs to sell, and are no longer
depreciated.
Foreign Currencies
The functional currency for the Company's operations is generally
the applicable local currency. Accordingly, the assets and liabilities
of companies whose functional currency is other than the Euro are
included in the consolidation by translating the assets and
liabilities into the reporting currency (the Euro) at the exchange
rates applicable at the end of the reporting year. Equity accounts are
measured at historical rates. The statements of income and cash flows
are translated at the average exchange rates during the year.
Translation gains or losses are accumulated as a separate component of
shareholders' equity. Foreign currency transaction gains and losses
are included in financial income, net at each reporting period. They
result from amounts ultimately realized upon settlement of foreign
currency transactions and from the period end re-measurement of
foreign currency denominated monetary assets and liabilities into the
functional currency of the respective entity.
Revenue Recognition
Substantially all of the Company's revenue is derived from the
sale of its products. Product revenue, net of discounts, is recognized
when persuasive evidence of an arrangement exists, delivery has
occurred, the price of the transaction is fixed and determinable, and
collectibility is reasonably assured.
Product-Related Expenses
Cost of sales consist of the costs of outsourcing production and
assembly, personnel costs and applicable overhead and depreciation of
test and other equipment. Provisions for estimated product warranty
are recorded in cost of sales at the time the related sale is
recognized. Expenditures for advertising and sales promotion and for
other sales-related expenses are charged to marketing expenses as
incurred.
Research and development costs
Costs identified as research costs are expensed as incurred,
whereas development costs are capitalized as an intangible asset and
amortized if the Company can demonstrate all of the following:
-- the technical feasibility of completing the intangible asset
so that it will be available for use or sale.
-- its intention to complete the intangible asset and use or sell
it.
-- its ability to use or sell the intangible asset.
-- how the intangible asset will generate probable future
economic benefits. Among other things, the Company can
demonstrate the existence of a market for the output of the
intangible asset or the intangible asset itself or, if is to
be used internally, the usefulness of the intangible asset.
-- the availability of adequate technical, financial and other
resources to complete the development and use or sell the
intangible asset.
-- its ability to measure reliably the expenditure attributable
to the intangible asset during its development.
As these conditions were not satisfied, development costs have not
been capitalized as an intangible asset.
Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using tax rates that have been enacted or
substantially enacted by the balance sheet date expected to apply to
taxable income in the years, in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. A deferred tax asset is
recognized to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences can be
utilized.
Stock-Based Compensation
The Company has established a share option scheme under which
employees and executive directors may be granted stock options to
acquire shares of the company. The fair value of options granted is
recognized as an employee expense with a corresponding increase in
equity. The fair value is measured at grant date and spread over the
period during which the employees become unconditionally entitled to
the options. The fair value of the options granted is measured using
the Black-Scholes option pricing model, taking into account the terms
and conditions upon which the options were granted. Expectations of
early exercise are accounted for within the average life of the
options.
Derivative Instruments and Hedging Activities
The Company operates internationally, giving rise to exposure to
changes in foreign currency exchange rates. The Company applies IAS 39
which provides guidance on accounting for all derivative instruments,
and for hedging activities. Derivative financial instruments are
recorded at their fair value and included in other current assets or
other current liabilities.
Earnings (Loss) per Share
Earnings (loss) per share has been computed using the weighted
average number of outstanding ordinary shares for each year. Because
the Company reported a net loss in each of the two periods presented
in these interim financial statements, only basic per share amounts
have been presented for those periods. Had the Company reported net
income in the three months ended March 31, 2005 and 2004, the weighted
average number of shares outstanding would have potentially been
diluted by 3,257,040 and 3,436,808 stock options, respectively (not
assuming the effects of applying the treasury stock method).
Use of Estimates
The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities, as well as disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Significant items subject to such estimates and judgments include the
recoverability of the long-lived assets, the realizability of deferred
income tax assets and inventories, and the fair value of stock-based
employee compensation awards. Actual results may differ from those
estimates.
Interim Report Q1 2005 13
3. Segment Reporting
Segment information is presented in respect of the Group`s business and
geographical segments. The primary format, business segments, is based on the
Company's principal sales markets.
a) Business Segments
Three months ended March Three months ended March
31, 2005 (unaudited) 31, 2004 (unaudited)
(in thousands of Automotive/ Automotive/
EUR) Wireless Industrial Total Wireless Industrial Total
----------------------------------------------------------------------
Revenues 11,978 6,618 18,596 17,295 5,705 23,000
----------------------------------------------------------------------
Operating loss (1) (4,445) (201)(4,646) (1,681) (993)(2,674)
----------------------------------------------------------------------
(1) Certain overhead costs are allocated mainly based on sales and headcount.
b) Geographical Segments - Revenues by shipment destination
Three months Three months
ended March ended March
31, 2005 31, 2004
(in thousands of EUR ) (unaudited) (unaudited)
----------------------------------------------------------------------
Germany 2,829 9,932
----------------------------------------------------------------------
Austria 2,349 1,662
----------------------------------------------------------------------
Hungary 2,107 1,226
----------------------------------------------------------------------
Other European countries 920 985
----------------------------------------------------------------------
Taiwan 2,202 277
----------------------------------------------------------------------
Japan 1,988 304
----------------------------------------------------------------------
China 1,690 5,187
----------------------------------------------------------------------
Other countries 4,511 3,427
----------------------------------------------------------------------
18,596 23,000
----------------------------------------------------------------------
4. Stock-Based Compensation
Stock option plan activity for the period ended March 31, 2005 was as follows:
Weighted
average
exercise
price in
Options EUR
Outstanding at beginning of year 3,299,406 2.34
----------------------------------------------------------------------
Granted 59,400 1.57
----------------------------------------------------------------------
Exercised (54,226) 0.55
----------------------------------------------------------------------
Forfeited (47,540) 3.49
----------------------------------------------------------------------
Outstanding at period end 3,257,040 2.34
----------------------------------------------------------------------
Options exercisable at period end 1,777,462 1.56
----------------------------------------------------------------------
The Company established an employee share option trust (the
"Trust"). The Trust purchases shares in the Company for the benefit of
employees under the Company's share option scheme. At March 31, 2005
the Trust held 1,944,384 shares.
5. Inventories
Inventories consisted of the following at March 31, 2005 and
December 31, 2004:
At March 31, At
2005 December
(in thousands of EUR) (unaudited) 31 2004
----------------------------------------------------------------------------
Raw materials 8,243 9,893
----------------------------------------------------------------------------
Work-in-process 12,767 13,906
----------------------------------------------------------------------------
Finished goods 7,971 5,995
----------------------------------------------------------------------------
28,981 29,794
----------------------------------------------------------------------------
6. Marketable Securities
The Company has invested in highly liquid "investment grade" rated
debt based fund classified as available for sale. The aggregate costs,
fair values and unrealized losses per security class are as follows:
At March 31, 2005 (unaudited At December 31, 2004
Unrealized Unrealized
Fair gain Fair gain
(in thousands of EUR) Cost value (loss) Cost value (loss)
---------------------------------------------------------------------------------------------
Debt based funds 17,252 17,162 (90) 17,581 17,542 (39)
---------------------------------------------------------------------------------------------
7. Intangible assets
Intangible assets subject to amortization represent licenses,
patents and software:
At March 31, At
2005 December
(in thousands of EUR) (unaudited) 31 2004
----------------------------------------------------------------------------
Gross carrying amount 12,090 12,001
----------------------------------------------------------------------------
Accumulated depreciation (9,132) (8,857)
----------------------------------------------------------------------------
Net carrying amount 2,958 3,144
----------------------------------------------------------------------------
During the three months ended March 31, 2005, the Company acquired
software and licenses for a total purchase price of EUR 5. The
expected weighted average useful life of these assets is 4 years. The
aggregate amortization expense for the three months ended March 31,
2005 and 2004 was EUR 244 and EUR 452, respectively. Amortization
expense of the gross carrying amount of intangible assets at March 31,
2005 is estimated to be EUR 641 for the remainder of 2005, EUR 499 in
2006, EUR 410 in 2007, EUR 386 in 2008 and EUR 379 in 2009.
8. Directors' Holdings
Directors' Holdings at March 31, 2005 and December 31, 2004 were
as follows:
At March 31, 2005 At December 31, 2004
Shares Options Shares Options
Number % Number %
---------------------------------------------------------------------------------------------
Roland Pudelko 320,405 0.70 517,450 320,405 0.70 517,450
---------------------------------------------------------------------------------------------
Timothy Anderson 75,166 0.16 - 75,166 0.16 -
---------------------------------------------------------------------------------------------
Michael Glover 195,000 0.42 - 195,000 0.42 -
---------------------------------------------------------------------------------------------
Gregorio Reyes 35,000 0.08 - 35,000 0.08 -
---------------------------------------------------------------------------------------------
Michael Risman 1,172 0.00 - 1,172 0.00 -
---------------------------------------------------------------------------------------------
Jan Tufvesson 175,062 0.38 - 175,062 0.38 -
---------------------------------------------------------------------------------------------
801,805 1.74 517,450 801,805 1.74 517,450
---------------------------------------------------------------------------------------------
9. Explanation of transition to IFRS
As stated in note 1c), these are the Company's first consolidated
financial statements prepared in accordance with IFRS.
The accounting policies set out in note 2 have been applied in
preparing the financial statements for the three months ended March
31, 2005, the comparative information presented in these financial
statements for the three months ended March 31, 2004 and in the
preparation of an opening IFRS balance sheet at January 1, 2004 (the
Company's date of transition).
In preparing its opening IFRS balance sheet, the Company has
adjusted amounts reported previously in financial statements prepared
in accordance with its old basis of accounting (UK GAAP). An
explanation of how the transition from UK GAAP to IFRS has affected
the Company's financial position, financial performance and cash flows
is set out in the following tables and the notes that accompany the
tables.
Reconciliation of equity
December 31, 2004 January 1, 2004
Effect of Effect of
transition transition
(in thousands of EUR) Notes UK-GAAP to IFRS IFRS UK-GAAP to IFRS IFRS
----------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents 13,977 - 13,977 8,109 - 8,109
----------------------------------------------------------------------------------------------
Trade accounts receivable, net 24,036 - 24,036 14,338 - 14,338
----------------------------------------------------------------------------------------------
Inventories 29,794 - 29,794 13,242 - 13,242
----------------------------------------------------------------------------------------------
Marketable securities 17,542 - 17,542 44,900 - 44,900
----------------------------------------------------------------------------------------------
Deferred taxes 9a 16,125 (16,125) - 16,152 (16,152) -
----------------------------------------------------------------------------------------------
Prepaid expenses 9b 1,693 (1,077) 616 3,058 (927) 2,131
----------------------------------------------------------------------------------------------
Other current assets 281 - 281 993 - 993
----------------------------------------------------------------------------------------------
Total current assets 103,448 (17,202) 86,246 100,792 (17,079) 83,713
----------------------------------------------------------------------------------------------
Property, plant and equipment,
net 21,238 - 21,238 20,590 - 20,590
----------------------------------------------------------------------------------------------
Intangible assets 3,144 - 3,144 4,181 - 4,181
----------------------------------------------------------------------------------------------
Deposits 194 - 194 183 - 183
----------------------------------------------------------------------------------------------
Deferred taxes 9a - 16,125 16,125 - 16,152 16,152
----------------------------------------------------------------------------------------------
Prepaid expenses 9b - 1,077 1,077 - 927 927
----------------------------------------------------------------------------------------------
TOTAL ASSETS 128,024 - 128,024 125,746 - 125,746
----------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Trade accounts payable 15,429 - 15,429 7,157 - 7,157
----------------------------------------------------------------------------------------------
Accrued expenses 3,084 - 3,084 3,165 - 3,165
----------------------------------------------------------------------------------------------
Income taxes payable 9 - 9 18 - 18
----------------------------------------------------------------------------------------------
Other current liabilities 1,275 - 1,275 1,674 - 1,674
----------------------------------------------------------------------------------------------
Total current liabilities 19,797 - 19,797 12,014 - 12,014
----------------------------------------------------------------------------------------------
Issued capital 7,028 - 7,028 6,737 - 6,737
----------------------------------------------------------------------------------------------
Share premium 9c 168,505 277 168,782 168,527 268 168,795
----------------------------------------------------------------------------------------------
9c, 9d,
Accumulated deficit 9e (67,009) 681 (66,328)(61,506) 716 (60,790)
----------------------------------------------------------------------------------------------
Reserves 9d, 9e - (958) (958) - (984) (984)
----------------------------------------------------------------------------------------------
Employee stock purchase plan
shares (297) - (297) (26) - (26)
----------------------------------------------------------------------------------------------
Net Shareholders' equity 108,227 - 108,227 113,732 - 113,732
----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 128,024 - 128,024 125,746 - 125,746
----------------------------------------------------------------------------------------------
Reconciliation of net loss for the three months ended March 31,
2004
Effect of
transition
(in thousands of EUR, except per share data) Notes UK-GAAP to IFRS IFRS
----------------------------------------------------------------------------------------------
Revenues 23,000 - 23,000
----------------------------------------------------------------------------------------------
Cost of sales 9f (15,026) (34)(15,060)
----------------------------------------------------------------------------------------------
Gross margin 7,974 - 7,940
----------------------------------------------------------------------------------------------
Selling and marketing expenses 9f (1,219) (9) (1,228)
----------------------------------------------------------------------------------------------
General and administrative expense 9f (1,449) (11) (1,460)
----------------------------------------------------------------------------------------------
Research and development 9f (7,387) (87) (7,474)
----------------------------------------------------------------------------------------------
Amortization of intangible assets (452) - (452)
----------------------------------------------------------------------------------------------
Exchange rate losses, net 9g (159) 159 -
----------------------------------------------------------------------------------------------
Other operating income 9h 54 (54) -
----------------------------------------------------------------------------------------------
Operating loss (2,638) (36) (2,674)
----------------------------------------------------------------------------------------------
Interest income, net 359 - 359
----------------------------------------------------------------------------------------------
Foreign currency exchange gains and losses, net 9g 48 (159) (111)
----------------------------------------------------------------------------------------------
Recovery of investment 9h - 54 54
----------------------------------------------------------------------------------------------
Expense from revaluation of marketable securities 9e (35) 35 -
----------------------------------------------------------------------------------------------
Result before income taxes (2,231) (141) (2,372)
----------------------------------------------------------------------------------------------
Income tax benefit 9e 847 (11) 836
----------------------------------------------------------------------------------------------
Net loss (1,385) (152) (1,536)
----------------------------------------------------------------------------------------------
Loss per share
Basic and diluted (0.03) (0.00) (0.03)
----------------------------------------------------------------------------------------------
Weighted average number of shares (in thousands)
Basic and diluted 43,998 43,998 43,998
----------------------------------------------------------------------------------------------
9a Deferred taxes
In accordance with IAS 12.74, deferred tax assets and deferred tax
liabilities are offset if the Company has a legally enforceable right
to set off current tax assets against current tax liabilities. In
addition, the deferred tax assets and the deferred tax liabilities
must relate to income taxes levied by the same taxation authority for
either the same taxable entity or different taxable entities which
intend either to settle current tax liabilities and assets on a net
basis, or to realize the assets and settle the liabilities
simultaneously in each future period in which significant amounts of
deferred tax liabilities or assets are expected to be settled or
recovered. This was the case for the Company's deferred tax assets and
its deferred tax liabilities. Therefore the Company offset the
deferred tax assets and liabilities. Furthermore, in accordance with
IAS 1.70 deferred tax liabilities and assets should always be
classified as non-current. Therefore, in the IFRS balance sheet the
net amount of all deferred tax assets and liabilities is shown under
non-current assets. Under UK-GAAP, the Company showed the net amount
of its deferred tax assets under current assets.
9b Prepaid expenses
In accordance with IAS 1.57 an asset shall be classified as
current, when it is expected to be realized within twelve months after
the balance sheet date. Included in the Company's prepayments are
advance payments, which are expected to be refunded to the Company
after the next twelve months. This amount of the prepaid expenses is
therefore shown under non current assets in the Company's IFRS balance
sheet. Under UK-GAAP, the Company showed the total amount of prepaid
expenses under current assets.
9c Consideration received on the sale of stock purchase plan
shares
In accordance with IAS 32.33 the Company recognizes the
consideration received on the sale of shares directly in equity. In
the IFRS balance sheet the Company presents the gain on the sale of
those shares as additional share premium. In the Company's UK-GAAP
balance sheet, the Company presents this gain within the accumulated
deficit.
9d Currency translation adjustment
In accordance with IAS 21.39(c) and IAS 21.44 exchange differences
resulting from the translation of the financial statements of foreign
entities for incorporation in the Company's financial statements,
shall be recognized as a separate component of equity. In the
Company's UK-GAAP Balance sheet this equity component has been
presented within the Company's accumulated deficit.
9e Gains or losses on available-for-sale financial assets
In accordance with IAS 39.55 (b) a gain or loss arising from a
change in the fair value of an available-for-sale financial asset is
recognized directly in equity through the statement of changes in
equity until the financial asset is derecognized. The Company
considers it best practice, to show this equity component in a
separate line item within the equity section of its IFRS balance
sheet. In the Company's UK-GAAP financial statements such a gain or
loss is shown as an income or an expense in the profit and loss
account in the line "Expense from revaluation of marketable
securities" with the relating tax effect in the line "income tax
benefit". Accordingly in the Company's UK-GAAP Balance sheet the net
effect of such a gain or loss from the revaluation of marketable
securities is presented within the Company's accumulated deficit.
9f Equity settled share based payment transactions
In accordance with IFRS 2.8 goods or services received or acquired
in a share based payment transaction which do not qualify for
recognition as assets, are recognized as expenses. The Company has a
stock-based employee compensation plan which allows Group employees to
acquire shares of the Company. The fair value of options granted is
recognized as an employee expense with a corresponding increase in
equity (IFRS2.7). The Company considers it best practice to increase
retained earnings for the corresponding goods and services received.
In the Company's IFRS Profit and Loss account, the employee expense is
allocated to the corresponding operating expenses. Under UK-GAAP, no
expense and no increase in equity is recorded for equity settled share
based payment transactions.
9g Foreign currency exchange gains and losses
For UK-GAAP, the Company allocates its foreign currency exchange
gains and losses into operating and non-operating expenses. In the
IFRS Profit and loss account all foreign currency exchange gains and
losses are classified as non-operating expenses.
9h Recovery of investment
The Company recovered a part of an investment which previously was
written off (for further information see Note 7 to the Company's
December 31, 2004 consolidated financial UK-GAAP statements). For
UK-GAAP, the Company shows this benefit within the operating result.
In the IFRS Profit and loss account this benefit is shown as
non-operating income.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DIALOG SEMICONDUCTOR PLC
Date April 20, 2005 By /s/ ROLAND PUDELKO
-------------- ------------------
Roland Pudelko
Executive Director, CEO and President