German Dialog to outsource its test operations and cut jobs

Dialog is investing significant resources in repositioning the company for growth and profitability in 2007 and beyond. Whilst maintaining the key core competences the repositioning is focused on three initiatives - refocusing the product and sales strategies on more profitable growth sectors, strengthening the board and management teams and providing a cost platform for improved margin performance. This transfer will be executed in three phases between October 2006 and March 2007 and is estimated to result in annual cost savings of EUR 3.0m. This action will also obviate the need for the company to invest heavily in capital expenditure for test equipment over the next three years. A total restructuring charge is estimated at EUR 4.4m, of which only EUR 1.2m has a cash impact resulting from the severance compensation packages and outplacement services provided to the 33 employees who will be made redundant. The remaining EUR 3.2m has no cash impact as it relates to the write down of manufacturing and test assets associated with the change.