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Dialog Semiconductor Reports Q3

KIRCHHEIM/TECK, Germany — Dialog Semiconductor plc (FWB:DLG), a leading provider of high integrated innovative Power Management Semiconductor solutions, today reports results for its third quarter ending 1 October 2010. Commenting on the results Dialog Chief Executive, Dr Jalal Bagherli, said:

'I am proud of the contribution that all of our employees have made in achieving what is a record quarter in Dialog's public company history. I am also very pleased with the healthy pipeline of innovative standard and custom products that we intend to release to the market in the coming months, underlying my continued confidence in our strategy to keep on delivering consistent, profitable and long-term growth.'

FINANCIAL OVERVIEW

Revenue in Q3 2010 was $79.5 million, an increase of 16.1% over the $68.5 million achieved in the prior quarter and an increase of 34.6% on the $59.0 million of revenue delivered in the corresponding quarter of 2009.

Gross margin for the third quarter was 46.3%, representing a decrease of 2.0 percentage points over that achieved in the prior quarter and an increase of 1.0 percentage point over that achieved in Q3 2009. This reduction in gross margin was a result of the product mix shipped and higher associated manufacturing costs.

Our operating expenses increased in Q3 2010 by $1.9 million over the prior quarter to $22.9 million. However, R&D and SG&A in Q3 2010 stood at 18.1% and 10.8% of revenue respectively, compared to 19.5% and 10.5% in the prior quarter, demonstrating the strong control we continue to exercise within our model over the cost base. The operating expenses included a net charge of $2.4 million for share-based compensation. Excluding the additional charges recorded during the quarter as a result of a higher share price, the underlying share-based compensation for Q3 2010 would have been approximately $1.8 million.

Operating profit or EBIT in Q3 2010 was $13.9 million or 17.4% of revenue compared to the $12.0 million or 17.5% of revenue delivered in the prior quarter and the $9.6 million or 16.3% of revenue delivered in Q3 2009.

Q3 2010 taxable profits continued to benefit from the utilisation of brought forward tax losses resulting in a residual minimum level tax charge mainly applying to taxable profits in Germany. A net tax charge of $1.1 million was recorded for Q3 2010 which included a benefit of $1.0 million or 1.5 cents per diluted and 1.6 cent per basic share, being a further recognition of a proportion of the deferred tax assets principally relating to carried forward losses. Consequently, the effective tax rate in Q3 2010 was 7.8%. As we have previously stated, going forward and on a quarterly basis, we will consider whether it is appropriate to continue to recognise further currently unrecognised deferred tax assets.

Net income for Q3 2010 was $13.3 million or 16.7% of revenue. Earnings per basic and diluted share were 22 cents and 20 cents respectively: These Q3 2010 figures compare to a net income of $11.2 million or 19 cents per basic and 17 cents per diluted share in the prior quarter and to the $8.8 million or 19 cents per basic and 18 cents per diluted share delivered in Q3 2009.

At the end of Q3 2010, Dialog had a cash, cash equivalents and restricted cash balance of $145.6 million. This represents an increase of $13.7 million over the cash, cash equivalents and restricted cash balance at the end of Q2 2010 and an increase of $99.2 million over the cash and cash equivalents balance at the end of Q3 2009. In September 2009 net proceeds of $59.7 million were raised from an international equity offering which contributed to the increase in cash balances over the prior 12 months.

At the end of Q3 2010, our inventory level was $37.7 million, an increase of $11.6 million over the prior quarter, in line with increased lead time from suppliers and sustained seasonal demand as we enter Q4 2010.

{complink 12485|Dialog Semiconductor plc}

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