-- Infineon achieved positive EBIT in the second quarter after four quarters of losses. EBIT increased significantly to Euro 28 million from an EBIT loss of Euro 122 million in the prior quarter, primarily due to a return to positive EBIT in the Memory Products segment and improved EBIT in the Automotive, Industrial and Multimarket segment.
-- Second quarter revenues increased strongly to Euro 1.99 billion, up 19 percent sequentially, reflecting significantly higher sales in the Memory Products and the Automotive, Industrial and Multimarket segments.
-- Net loss in the second quarter was Euro 26 million compared to a net loss of Euro 183 million in the prior quarter.
-- Total revenues for the first half of the 2006 financial year were Euro 3.67 billion, up 7 percent from Euro 3.42 billion in the same period last year. EBIT in the first half of the 2006 financial year was negative Euro 94 million, a decrease from positive Euro 94 million in the same period last year.
----------------------------------------------------------------------
In Euro million 3 months 3 months +/- in % 3 months +/- in %
ended ended sequential ended year-on-
Mar 31, Dec 31, Mar 31, year
2006 2005 2005
------------------- -------- --------- ----------- -------- ----------
Revenues 1,993 1,674 19% 1,606 24%
------------------- -------- --------- ----------- -------- ----------
EBIT 28 (122) +++ (117) +++
------------------- -------- --------- ----------- -------- ----------
Net loss (26) (183) 86% (114) 77%
------------------- -------- --------- ----------- -------- ----------
Loss per share (in
Euro) (0.03) (0.25) 88% (0.15) 80%
------------------- -------- --------- ----------- -------- ----------
--------------------------------------------------
In Euro million 6 months 6 months +/- in %
ended ended sequential
Mar 31, Mar 31,
2006 2005
------------------- -------- --------- -----------
Revenues 3,667 3,422 7%
------------------- -------- --------- -----------
EBIT (94) 94 - - -
------------------- -------- --------- -----------
Net (loss) income (209) 28 - - -
------------------- -------- --------- -----------
Earnings (loss) per
share (in Euro) (0.28) 0.04 - - -
------------------- -------- --------- -----------
For the second quarter of the 2006 financial year, Infineon Technologies AG (NYSE: IFX) (FWB: IFX) reported a 19 percent sequential increase in revenues to Euro 1.99 billion, driven mainly by Memory Products and also by the Automotive, Industrial and Multimarket segment. As expected, revenues in the Communication Solutions segment decreased moderately compared to the prior quarter.
EBIT in the second quarter of the 2006 financial year increased significantly compared to the prior quarter, driven primarily by improved EBIT in the Memory Products segment, which achieved positive EBIT after a loss in the first quarter. The company recorded very strong EBIT increase in the Automotive, Industrial and Multimarket segment that more than offset a small increase of the EBIT loss in the Communication Solutions segment.
"Last quarter, we improved our performance significantly. After four quarters of EBIT losses, we are now EBIT positive again," said Dr. Wolfgang Ziebart, CEO and President of Infineon Technologies AG.
Outlook for the third quarter of the 2006 financial year
In the third quarter of the 2006 financial year, compared to the very high second quarter level especially in the Automotive, Industrial and Multimarket segment, Infineon expects revenues and EBIT in the two logic segments combined to decline. Infineon continues to expect the conclusion of the carve-out of its Memory Products segment on May 1, 2006. Effective May 1, 2006, Qimonda will start operations. Additional details concerning the outlook can be found in the respective segments' sections.
"The second quarter results demonstrate that both the Memory Products business and the logic business are well-positioned to operate successfully as separate companies in the future," commented Dr. Wolfgang Ziebart.
Automotive, Industrial and Multimarket
----------------------------------------------------------------------
In Euro million 3 months 3 months +/- in % 3 months +/- in %
ended ended sequential ended year-on-
Mar 31, Dec 31, Mar 31, year
2006 2005 2005
------------------- --------- -------- ---------- --------- ----------
Revenues 733 652 12% 634 16%
------------------- --------- -------- ---------- --------- ----------
EBIT 74 51 45% 36 +++
------------------- --------- -------- ---------- --------- ----------
In the second quarter of the 2006 financial year, revenues in the Automotive, Industrial and Multimarket segment increased significantly compared to the previous quarter, reflecting higher than expected demand and improved operating performance in all business units. This was primarily due to higher sales in power semiconductors, in products from the ASIC & Design Solutions business used in computer peripherals and due to very strong demand and improved product mix in the security and chip-card business. EBIT in the Automotive, Industrial and Multimarket segment increased significantly compared to the previous quarter, benefiting from the increased sales with a marked improvement in particular in the EBIT loss of the security and chip-card business. Overall, the segment's EBIT as a percentage of revenues reached ten percent despite ongoing expenses for the phase-out of production at the Munich-Perlach facility and start-up costs for the new production site in Kulim, Malaysia.
Automotive, Industrial and Multimarket's outlook for the third quarter of the 2006 financial year
With the last quarter being ahead of expectations and normal seasonality, Infineon anticipates revenues in the Automotive, Industrial and Multimarket segment to normalize in the third quarter of the 2006 financial year and stay within the range of the second quarter. The company expects revenues in its automotive and industrial businesses to reach the second quarter's high levels. Sales in the security and chip-card business are anticipated to decline slightly to more normal levels compared to the second quarter. In line with more or less flat revenues, the company anticipates the segment's EBIT to stay within the range of the prior quarter. The EBIT guidance is before taking into account the effect from corporate overhead expenses that will remain with the company's two logic segments following the legal separation of its Memory Products segment. The exact amounts cannot be quantified at this stage.
Communication Solutions
----------------------------------------------------------------------
In Euro million 3 months 3 months +/- in % 3 months +/- in %
ended ended sequential ended year-on-
Mar 31, Dec 31, Mar 31, year
2006 2005 2005
--------------------- -------- -------- ---------- -------- ----------
Revenues 308 334 -8% 332 -7%
--------------------- -------- -------- ---------- -------- ----------
EBIT (29) (21) -38% (142) 80%
--------------------- -------- -------- ---------- -------- ----------
In the Communication Solutions segment, revenues decreased compared to the previous quarter, primarily due to a decline in demand for baseband components, which was not fully offset by significantly higher revenues in the company's broadband access business. The EBIT loss increased sequentially due to the sales decline. In its broadband access business, the company reported another increase in operating results in the second quarter.
Communication Solutions' outlook for the third quarter of the 2006 financial year
In the third quarter of the 2006 financial year, Infineon expects revenues of its Communication Solutions segment to decline compared to the second quarter. On the one hand, the company will no longer benefit from revenues of Fiber Optics products after the Fiber Optics divestiture. On the other hand, the company also expects a return to more normalized revenue levels in broadband access. With operating results driven predominantly by revenue development, the company anticipates the segment's EBIT loss to increase in the third quarter. The EBIT guidance is before taking into account the effect from corporate overhead expenses that will remain with the company's two logic segments following the legal separation of its Memory Products segment. The exact amounts cannot be quantified at this stage.
Memory Products
----------------------------------------------------------------------
In Euro million 3 months 3 months +/- in % 3 months +/- in %
ended ended sequential ended year-on-
Mar 31, Dec 31, Mar 31, year
2006 2005 2005
--------------------- -------- -------- ---------- -------- ----------
Revenues 928 678 37% 633 47%
--------------------- -------- -------- ---------- -------- ----------
EBIT 30 (118) +++ 17 76%
--------------------- -------- -------- ---------- -------- ----------
In the second quarter of the 2006 financial year, revenues in the Memory Products segment improved significantly sequentially due to strong growth in bit-shipments and a slight increase in average selling prices. The latter was driven mainly by higher pricing and shipments of DDR2 memories and a higher share of specialty products within the bit-shipments compared to the previous quarter. In the second quarter, Infineon achieved an EBIT turn around from negative Euro 118 million to positive Euro 30 million, resulting from a strong reduction in cost-per-bit as a result of significantly higher bit-shipments and slightly higher average selling prices.
Memory Products' outlook for the third quarter of the 2006 financial year
In the third quarter of the 2006 financial year, Infineon expects to grow its bit production by approximately 10 percent. The third quarter EBIT will be influenced by benefits from corporate overhead expenses that will remain with the company's two logic segments following the legal separation of its Memory Products segment, offset in part by the establishment of the Qimonda proprietary corporate infrastructure. The exact amounts cannot be quantified at this stage. The third quarter will also include the dilution gain of approximately Euro 30 million from the Inotera Initial Public Offering in March 2006 as part of non operating income within the segment's EBIT.
Other Operating Segments
----------------------------------------------------------------------
In Euro million 3 months 3 months +/- in % 3 months +/- in %
ended ended sequential ended year-on-
Mar 31, Dec 31, Mar 31, year
2006 2005 2005
---------------------- -------- --------- ---------- -------- --------
Revenues 22 2 +++ 4 +++
---------------------- -------- --------- ---------- -------- --------
EBIT (2) - - - - 11 - - -
---------------------- -------- --------- ---------- -------- --------
Revenues of the Other Operating Segments increased sequentially in the second quarter of the 2006 financial year, primarily as a result of the first consolidation of ALTIS, the company's joint venture with IBM, at the end of the prior quarter. EBIT remained relatively unchanged when compared to the first quarter.
Corporate and Reconciliation
----------------------------------------------------------------------
In Euro million 3 months 3 months +/- in % 3 months +/- in %
ended ended sequential ended year-on-
Mar 31, Dec 31, Mar 31, year
2006 2005 2005
----------------------- -------- -------- ---------- -------- --------
Revenues 2 8 -75% 3 -33%
----------------------- -------- -------- ---------- -------- --------
EBIT (45) (34) -32% (39) -15%
----------------------- -------- -------- ---------- -------- --------
Sequential EBIT loss of the Corporate and Reconciliation segment increased in the second quarter of the 2006 financial year, primarily due to costs incurred in connection with the carve-out of the company's Memory Products segment and the move to Infineon's new headquarters, Campeon.
In the third quarter of the 2006 financial year, the company expects the EBIT loss of the Corporate and Reconciliation segment to increase compared to the second quarter, due to costs incurred in connection with the carve-out of the company's Memory Products segment.
On March 17, 2006 Inotera Memories, Inc., the company's joint venture with Nanya Technology Corporation, successfully completed an Initial Public Offering on the Taiwanese stock exchange for an issuance price of NT dollar 33 per share. In conjunction with this Initial Public Offering, the company recorded a dilution gain of approximately Euro 30 million, which will be reflected in the non operating income within the Memory Products segment's EBIT in the third quarter of the 2006 financial year. Infineon's ownership interest after the Initial Public Offering stands at 41.4 percent.
In addition to the dilution gain, the company expects charges in the third quarter, mainly reflecting restructuring of the joint venture ALTIS as already announced by them as well as other items. Overall, the company does not expect a major impact on group results out of the above mentioned events.
For major business highlights of Infineon's segments in the second quarter of the 2006 financial year, go to http://www.infineon.com/news/.
FINANCIAL INFORMATION
According to US GAAP - Unaudited
Condensed Consolidated Statements of Operations
3 months ended 6 months ended
in Euro million Mar 31, Dec 31, Mar 31, Mar 31, Mar 31,
05 05 06 05 06
------------------------------ ------- ------- ------- ------- -------
Net sales 1,606 1,674 1,993 3,422 3,667
Cost of goods sold (1,174) (1,350) (1,467) (2,289) (2,817)
------------------------------ ------- ------- ------- ------- -------
Gross profit 432 324 526 1,133 850
------------------------------ ------- ------- ------- ------- -------
Research and development
expenses (354) (311) (306) (683) (617)
Selling, general and
administrative expenses (164) (173) (179) (326) (352)
Restructuring charges (23) (2) (3) (25) (5)
Other operating expense, net (41) - (12) (35) (12)
------------------------------ ------- ------- ------- ------- -------
Operating income (loss) (150) (162) 26 64 (136)
------------------------------ ------- ------- ------- ------- -------
Interest (expense) income, net - (21) (29) 5 (50)
Equity in earnings (losses) of
associated companies, net 25 17 12 26 29
Other (expense) income, net 9 24 (6) (1) 18
Minority interests (1) (1) (4) 5 (5)
------------------------------ ------- ------- ------- ------- -------
Income (loss) before income
taxes (117) (143) (1) 99 (144)
------------------------------ ------- ------- ------- ------- -------
Income tax (expense) benefit 3 (40) (25) (71) (65)
------------------------------ ------- ------- ------- ------- -------
Net income (loss) (114) (183) (26) 28 (209)
------------------------------ ------- ------- ------- ------- -------
Earnings (loss) per share (EPS)
Shares in million
------------------------------ ------- ------- ------- ------- -------
Weighted average shares
outstanding - basic 748 748 748 748 748
------------------------------ ------- ------- ------- ------- -------
Weighted average shares
outstanding - diluted 748 748 748 748 748
------------------------------ ------- ------- ------- ------- -------
Earnings (loss) per share -
basic and diluted (in Euro) (0.15) (0.25) (0.03) 0.04 (0.28)
----------------------------------------------------------------------
EBIT
3 months ended 6 months ended
in Euro million Mar 31, Dec 31, Mar 31, Mar 31, Mar 31,
05 05 06 05 06
----------------------------- ------- ------- ------- ------- -------
Net income (loss) (114) (183) (26) 28 (209)
- Income tax expense
(benefit) (3) 40 25 71 65
- Interest expense (income),
net - 21 29 (5) 50
----------------------------- ------- ------- ------ ------- -------
EBIT (117) (122) 28 94 (94)
----------------------------- ------- ------- ------ ------- -------
Infineon defines EBIT as earnings (loss) before interest and taxes.
Infineon's management uses EBIT among other measures to establish
budgets and operational goals, to manage the Company's business and to
evaluate its performance. Infineon reports EBIT information because it
believes that it provides investors with meaningful information about
the operating performance of the Company and especially about the
performance of its separate business segments. EBIT is determined as
seen above from the condensed consolidated statements of operations,
without adjustment to the US GAAP amounts presented.
Segment Results
3 months ended 6 months ended
Net sales in Euro Mar 31, Mar 31, +/- Mar 31, Mar 31, +/-
million 05 06 in % 05 06 in %
------------------------- ------- ------- ----- ------- ------- -----
Automotive, Industrial
and Multimarket 634 733 16 1,265 1,385 9
Communication Solutions 332 308 (7) 746 642 (14)
Memory Products 633 928 47 1,399 1,606 15
Other Operating
Segments 4 22 +++ 7 24 +++
Corporate and
Reconciliation 3 2 (33) 5 10 +++
------------------------- ------- ------- ----- ------- ------- -----
Infineon consolidated 1,606 1,993 24 3,422 3,667 7
------------------------- ------- ------- ----- ------- ------- -----
3 months ended 6 months ended
EBIT in Euro million Mar 31, Mar 31, +/- Mar 31, Mar 31, +/-
05 06 in % 05 06 in %
------------------------- ------- ------- ----- ------- ------- -----
Automotive, Industrial
and Multimarket 36 74 +++ 84 125 49
Communication Solutions (142) (29) 80 (161) (50) 69
Memory Products 17 30 76 213 (88) ---
Other Operating
Segments 11 (2) --- 9 (2) ---
Corporate and
Reconciliation (39) (45) (15) (51) (79) (55)
------------------------- ------- ------- ----- ------- ------- -----
Infineon consolidated (117) 28 +++ 94 (94) ---
------------------------- ------- ------- ----- ------- ------- -----
3 months ended
------------------------
Net sales in Euro million Dec 31, Mar 31, +/-
05 06 in %
--------------------------------------------- ------- ------- --------
Automotive, Industrial and Multimarket 652 733 12
Communication Solutions 334 308 (8)
Memory Products 678 928 37
Other Operating Segments 2 22 +++
Corporate and Reconciliation 8 2 (75)
--------------------------------------------- ------- ------- --------
Infineon consolidated 1,674 1,993 19
--------------------------------------------- ------- ------- --------
3 months ended
------------------------
EBIT in Euro million Dec 31, Mar 31, +/- in %
05 06
--------------------------------------------- ------- ------- --------
Automotive, Industrial and Multimarket 51 74 45
Communication Solutions (21) (29) (38)
Memory Products (118) 30 +++
Other Operating Segments - (2) ---
Corporate and Reconciliation (34) (45) (32)
--------------------------------------------- ------- ------- --------
Infineon consolidated (122) 28 +++
--------------------------------------------- ------- ------- --------
Regional Sales Development
3 months ended
--------------------------------
Regional sales in % Mar 31, 05 Dec 31, 05 Mar 31, 06
------------------------------------- ---------- ---------- ----------
Germany 21% 19% 17%
Other Europe 19% 17% 18%
North America 23% 22% 28%
Asia / Pacific 30% 35% 31%
Japan 5% 5% 4%
Other 2% 2% 2%
------------------------------------- ---------- ---------- ----------
Total 100% 100% 100%
------------------------------------- ---------- ---------- ----------
Europe 40% 36% 35%
------------------------------------- ---------- ---------- ----------
Outside-Europe 60% 64% 65%
------------------------------------- ---------- ---------- ----------
Condensed Consolidated Balance Sheets
in Euro million Sep 30, 05 Mar 31, 06
---------------------------------------------- ----------- -----------
Assets
Current assets:
Cash and cash equivalents 1,148 1,384
Marketable securities 858 680
Trade accounts receivable, net 952 1,090
Inventories 1,022 1,200
Deferred income taxes 125 97
Other current assets 469 517
---------------------------------------------- ----------- -----------
Total current assets 4,574 4,968
---------------------------------------------- ----------- -----------
Property, plant and equipment, net 3,751 3,976
Long-term investments, net 779 598
Restricted cash 88 88
Deferred income taxes 550 495
Other assets 542 439
---------------------------------------------- ----------- -----------
Total assets 10,284 10,564
---------------------------------------------- ----------- -----------
in Euro million Sep 30, 05 Mar 31, 06
---------------------------------------------- ----------- -----------
Liabilities and shareholders' equity
Current liabilities:
Short-term debt and current maturities of
long-term debt 99 739
Trade accounts payable 1,069 1,220
Accrued liabilities 497 521
Deferred income taxes 17 25
Other current liabilities 700 584
---------------------------------------------- ----------- -----------
Total current liabilities 2,382 3,089
---------------------------------------------- ----------- -----------
Long-term debt 1,566 1,285
Deferred income taxes 65 21
Other liabilities 642 742
---------------------------------------------- ----------- -----------
Total liabilities 4,655 5,137
---------------------------------------------- ----------- -----------
Total shareholders' equity 5,629 5,427
---------------------------------------------- ----------- -----------
Total liabilities and shareholders' equity 10,284 10,564
---------------------------------------------- ----------- -----------
Condensed Consolidated Statements of Cash Flows
3 months ended 6 months ended
in Euro million Mar 31, Dec 31, Mar 31, Mar 31, Mar 31,
05 05 06 05 06
----------------------------- ------- ------- ------- ------- -------
Net cash provided by
operating activities 164 102 194 587 296
----------------------------- ------- ------- ------- ------- -------
Net cash provided by (used
in) investing activities 18 (168) (239) (92) (407)
----------------------------- ------- ------- ------- ------- -------
Net cash provided by (used
in) financing activities (19) 56 291 17 347
----------------------------- ------- ------- ------- ------- -------
Net increase (decrease) in
cash and cash equivalents 163 (10) 246 512 236
----------------------------- ------- ------- ------- ------- -------
Depreciation and amortization 317 338 365 651 703
----------------------------- ------- ------- ------- ------- -------
Purchases of property, plant
and equipment (385) (405) (314) (841) (719)
----------------------------- ------- ------- ------- ------- -------
Gross and Net Cash Position
Infineon defines gross cash position as cash and cash equivalents
and marketable securities, and net cash position as gross cash
position less short and long-term debt. Since Infineon holds a
substantial portion of its available monetary resources in the form of
readily marketable securities, which for US GAAP purposes are not
considered to be "cash", it reports its gross and net cash positions
to provide investors with an understanding of the Company's overall
liquidity. The gross and net cash position is determined as follows
from the condensed consolidated balance sheets, without adjustment to
the US GAAP amounts presented:
in Euro million Mar 31, Dec 31, Mar 31,
05 05 06
---------------------------------------------- ------- ------- -------
Cash and cash equivalents 1,120 1,138 1,384
Marketable securities 1,229 749 680
---------------------------------------------- ------- ------- -------
Gross Cash Position 2,349 1,887 2,064
---------------------------------------------- ------- ------- -------
Less: short-term debt 548 99 739
long-term debt 1,469 1,627 1,285
---------------------------------------------- ------- ------- -------
Net Cash Position 332 161 40
---------------------------------------------- ------- ------- -------
Free Cash Flow
Infineon defines free cash flow as cash from operating and investing
activities excluding purchases or sales of marketable securities.
Since Infineon holds a substantial portion of its available monetary
resources in the form of readily marketable securities, and operates
in a capital intensive industry, it reports free cash flow to provide
investors with a measure that can be used to evaluate changes in
liquidity after taking capital expenditures into account. The free
cash flow is determined as follows from the condensed consolidated
cash flow statements, without adjustment to the US GAAP amounts
presented:
3 months ended 6 months ended
in Euro million Mar 31, Dec 31, Mar 31, Mar 31, Mar 31,
05 05 06 05 06
----------------------------- ------- ------- ------- ------- -------
Net cash provided by
operating activities 164 102 194 587 296
Net cash (used in) provided
by investing activities 18 (168) (239) (92) (407)
Thereof: Sale of marketable
securities, net (379) (109) (68) (749) (177)
----------------------------- ------- ------- ------- ------- -------
Free cash flow (197) (175) (113) (254) (288)
----------------------------- ------- ------- ------- ------- -------
Employee Data Mar 31, Dec 31, Mar 31,
05 05 06
---------------------------------------------- ------- ------- -------
Infineon worldwide 36,440 40,673 40,839
Thereof: Research and Development 7,401 7,632 7,621
---------------------------------------------- ------- ------- -------
Analyst and press telephone conferences
Infineon Technologies AG will host a telephone conference (in English only) with analysts and investors on April 26, 2006, 10:00 a.m. Central European Summer Time (CEST), 4:00 a.m. Eastern Daylight Time (U.S. EDT), to discuss operating performance during the second quarter of the 2006 financial year. In addition, the Infineon Management Board will conduct a telephone conference with the media at 11:30 a.m. (CEST), 5:30 a.m. (U.S. EDT). It can be followed in German and English over the Internet. Both conference calls will be available live and for download on the Infineon web site at http://www.infineon.com.
D I S C L A I M E R
This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments of the world semiconductor market, especially the market for memory products, Infineon's future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the transitioning of our production processes to smaller structure sizes, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our cost savings and growth targets, and the impact of our planned carve-out of the Memory Product business and any further corporate reorganization measures in that regard. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, the outcome of antitrust investigations and litigation matters, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements.
Infineon, the stylized Infineon Technologies design are trademarks and service marks of Infineon Technologies AG. All other trademarks are the property of their respective owners.
Contact:
Infineon Technologies AG Media Relations Corporate: Worldwide Headquarters Gunter Gaugler, +49 89 234 28481 fax: +49 89 9552397 email: Email Contact or U.S.A. Gerhard Zimmermann, +1 408 501 6383 fax: +1 408 501 2424 email: Email Contact or Asia Kaye Lim, +65 6876 3070 fax: +65 6876 3074 email: Email Contact or Japan Hirotaka Shiroguchi, +81 3 5449 6795 fax: +81 3 5449 6401 email: Email Contact or Investor Relations: EU/APAC/USA/CAN Phone: +49 89 234 26655 fax: +49 89 9552987 email: Email Contact