e6vk
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
August 1, 2008
INFINEON TECHNOLOGIES AG
Am Campeon 1-12
D-85579 Neubiberg/Munich
Federal Republic of Germany
Tel: +49-89-234-0
(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 þ Form 40-F o
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 o No þ
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b): 82- .
This Report on Form 6-K dated August 1, 2008, contains a quarterly report of Infineon Technologies
AG for the Companys third quarter of the 2008 fiscal year.
INFINEON
TECHNOLOGIES AG
QUARTERLY REPORT
FOR THE THREE AND NINE MONTHS
ENDED
JUNE 30, 2008
INDEX
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1
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Condensed Consolidated Financial Statements
(Unaudited) for the three and nine months ended June 30,
2007 and 2008:
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12
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13
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14
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15
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17
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36
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i
Interim Group
Management Report (Unaudited)
This interim group management report should be read in
conjunction with our condensed consolidated financial statements
and other financial information included elsewhere in this
report.
This interim group management report contains forward-looking
statements. Statements that are not historical facts, including
statements about our beliefs and expectations, are
forward-looking statements. These statements are based on
current plans, estimates and projections. Forward-looking
statements speak only as of the date they are made, and we
undertake no obligation to update any of them in light of new
information or future events. Forward-looking statements involve
inherent risks and uncertainties. We caution you that a number
of important factors could cause actual results or outcomes to
differ materially from those expressed in any forward-looking
statement.
The following were key developments in our business during the
nine months ended June 30, 2008:
Corporate
Activities
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With plans for the ultimate disposal and resulting
deconsolidation of Qimonda AG (Qimonda), the assets
and liabilities of Qimonda are classified as held for
disposal in our condensed consolidated balance sheets for
all periods presented. Following this reclassification, Qimonda
has been re-measured to its estimated current fair value less
costs to sell, resulting in a write-down of
1,004 million in the second quarter of fiscal year
2008 and an additional 411 million in the third quarter
of fiscal year 2008, which were recorded in Income (loss)
from discontinued operations, net of tax. With this
reclassification, the individual line items in our condensed
consolidated statements of operations, including net
sales, reflect our continuing operations without Qimonda
for all periods presented. All results relating to Qimonda are
reported in the line item Income (loss) from discontinued
operations, net of tax for all periods presented. In
addition, the definition of EBIT excludes Qimonda, and is now
being referred to as Infineon EBIT. Furthermore,
earnings per share as well as the statements of cash flows
differentiate between continuing and
discontinued operations for all periods presented.
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In October 2007, we completed the acquisition of the mobility
products business of LSI Corporation (LSI) for cash
consideration of 321 million ($450 million) plus a
contingent performance-based payment of up to $50 million, in
order to further strengthen our activities in the field of
communications. The mobility products business designs
semiconductors and software for cellular telephone handsets.
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In November 2007, we closed a joint venture agreement with
Siemens AG (Siemens), whereby we contributed all
assets and liabilities of our high power bipolar business into a
newly formed legal entity called Infineon Technologies Bipolar
GmbH & Co. KG (Bipolar) and Siemens
subsequently acquired a 40 percent interest in Bipolar. We
realized a gain of 27 million from the sale.
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On April 25, 2008, we closed the sale of our hard disk
drive (HDD) business to LSI for cash consideration
of 60 million ($95 million). The HDD business designs,
manufactures and markets semiconductors for HDD devices. We
transferred our complete HDD activities, including customer
relations as well as know-how to LSI, and we granted LSI a
license for intellectual property. The transaction did not
encompass the sale of significant assets or transfer of
employees. We realized a gain of 41 million for the
sale of the HDD business.
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On April 28, 2008, we acquired Primarion, Inc., Torrance,
California (Primarion) for cash consideration of
32 million ($50 million) plus a contingent
performance-based payment of up to $30 million, in order to
further strengthen our activities in the field of power
management applications. Primarion is among the leaders in
designing, manufacturing and marketing digital power ICs for
computing, graphics and communication applications.
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In December 2007, our Supervisory Board appointed Dr. Marco
Schröter as Chief Financial Officer and Labor Director.
Dr. Marco Schröter took office on April 1, 2008,
succeeding Peter J. Fischl, who retired.
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On June 1, 2008, Dr. Wolfgang Ziebart resigned from
his position as our companys Chief Executive Officer.
Peter Bauer, Member of our Management Board assumed the
companys Chief Executive Officer position.
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1
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During the three months ended June 30, 2008, we repurchased a
notional amount of 100 million of convertible
subordinated notes due 2010. The transaction resulted in a net
gain of 2 million before tax, which was recognized in
interest expense, net during the three months ended
June 30, 2008. The repurchase was made out of available
cash.
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Addressing rising risks in the current market environment,
adverse currency trends as well as below benchmark margins, we
implemented our cost-reduction program IFX 10+ in
the third quarter of the 2008 fiscal year. From the third
quarter of the 2008 fiscal year to the fourth quarter of the
2009 fiscal year, assuming a continuation of current market
conditions and an exchange rate of U.S. dollar 1.55 against
the Euro, IFX 10+ is expected to yield at least
200 million of annualized savings. To achieve those
cost savings, measures have been defined in the following areas:
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Product portfolio management to eliminate unprofitable or
insufficiently profitable product families and to increase
efficiency in Research & Development (R&D);
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Reduction of manufacturing costs and optimization of the value
chain;
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Improved efficiency of processes and tasks in the fields of
G&A, R&D and marketing & sales; and
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Re-organization of the companys structure along its target
markets. Effective October 1, 2008, we will be organized
into five divisions: Automotive, Chipcard & Security,
Industrial & Multimarket, Wireline Communications and
Wireless Solutions.
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Taking into account the levels of risk in the current market
conditions, the adverse foreign exchange rate development and
the requirements of the re-organization of the company,
headcount reductions will be inevitable. We must adapt our size
to todays market conditions. It will be necessary to
reduce headcount by a gross figure of approximately
3,000 employees. This figure refers to all sites, functions
and levels across the company.
Financial
Results
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For the third quarter of the 2008 fiscal year, net sales were
1,029 million, a decrease of 20 million or
2 percent from 1,049 million in the previous
quarter, and an increase of 18 million or
2 percent from 1,011 million in the same quarter
last year. In the nine months ended June 30, 2008, net
sales increased
year-on-year
by 7 percent from 2,947 million to
3,168 million.
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Infineon EBIT in the third quarter of fiscal year 2008 was
71 million, compared to 13 million for the
same quarter last year and 36 million in the previous
quarter. Infineon EBIT improved significantly from negative
23 million to 172 million in the nine
months ended June 30, 2007 and 2008, respectively.
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For the third quarter of the 2008 fiscal year, we reported a net
loss of 592 million, and basic and diluted loss per
share of 0.79, compared to a net loss of
197 million and basic and diluted loss per share of
0.26 in the same quarter last year. For the nine months
ended June 30, 2008, we realized a net loss of
2,359 million and basic and diluted loss per share of
3.15, compared to a net loss of 88 million and
basic and diluted loss per share of 0.12 in the nine
months ended June 30, 2007.
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Our net cash provided by operating activities from continuing
operations was 270 million for the nine months ended
June 30, 2008, improving from net cash used in operating
activities from continuing operations of 66 million
in the nine months ended June 30, 2007.
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Product and
Technology Developments
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We achieved a design win at Volkswagen AG
(Volkswagen) for our 16-bit microcontroller for use
in automotive body and convenience electronics. Volkswagen will
use the XC2200 family microcontroller starting with model year
2009 cars that are based on the Golf platform, to provide
greater gateway capabilities in automobile body and convenience
electronics and to support the increasing networking and
communication requirements between individual automotive
subsystems.
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Focusing on energy efficiency, we developed our HybridPACK 1
power module solution for automotive hybrid applications. We
recently had a design win for a mild hybrid platform with our
HybridPACK 1 at a major car manufacturer. In addition, we had
design wins for our automotive power modules (HEV) used to power
hybrid electric vehicles at the fifth largest Chinese and at a
major European car manufacturer. We support this activity with
our full range of competency comprising power semiconductors
(IGBTs), sensors and microcontrollers.
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2
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The Korean mobile phone manufacturer Samsung Electronics, Inc.,
(Samsung) chose our HSDPA platform XMMtm6080 for its
new family of HEDGE mobile handsets. We have already started
volume shipments of our HSDPA platform. Furthermore, we
introduced a new generation 3G platform family. The new
XMM61xx platform family addresses all major 3G market
segments from cost efficient HSDPA to high-end HSUPA phones.
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We further extended our leading position in single-chip
solutions for mobile phones by sampling our 65-nanometer
GSM/GPRS single-chip solution
X-GOLDtm113
and EDGE single-chip solution
X-GOLDtm213
in February 2008. Both chips integrate the baseband, RF
transceiver, power management unit, and FM radio in one single
die.
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Net Sales by
Segment
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Three months ended
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Nine months ended
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June 30,
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June 30,
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2007
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2008
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2007
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2008
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( in millions)
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Net sales:
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Automotive, Industrial & Multimarket
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752
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712
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2,203
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2,196
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Communication Solutions
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259
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313
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733
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971
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Other
Operating Segments
(1)
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54
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15
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174
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92
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Corporate and
Eliminations
(2)
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(54
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(11
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(163
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(91
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Total
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1,011
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1,029
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2,947
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3,168
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(1) |
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Includes sales of
47 million and 8 million for the three
months ended June 30, 2007 and 2008, respectively, and of
146 million and 78 million for the nine
months ended June 30, 2007 and 2008, respectively, from
sales of wafers from our 200-millimeter facility in Dresden to
Qimonda under a foundry agreement.
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Includes the elimination of sales
of 57 million and 9 million for the three
months ended June 30, 2007 and 2008, respectively, and of
166 million and 87 million for the nine
months ended June 30, 2007 and 2008, respectively,
primarily in connection with sales of wafers from our
200-millimeter facility in Dresden to Qimonda under a foundry
agreement, since these sales are not expected to be part of the
Qimonda disposal plan.
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Automotive,
Industrial & Multimarket
In the third quarter of the 2008 fiscal year, the Automotive,
Industrial & Multimarket segment reported sales of
712 million, down 4 percent sequentially and
5 percent year-on-year. The sequential decline was mostly
due to the impact of the weakening U.S. dollar, the weak
U.S. automotive business and the sale of the HDD business,
effective April 25, 2008. Excluding the effects of currency
fluctuations, primarily between the U.S. dollar and the
Euro, and acquisitions and divestitures, net sales of the
segment decreased 1 percent sequentially and rose 5 percent
year-on-year. Results in the Automotive business decreased
compared to the prior quarter as ongoing weakness in demand from
U.S. car manufacturers could not be offset by continued
solid demand in the European and Asian markets. In the
Industrial & Multimarket business, net sales were
relatively flat compared to the last quarter, despite a more
moderate environment in the consumer, computing and telecom
markets. Demand for high-power products remained strong. The
results of the Security & ASICs business decreased
compared to the second quarter, as anticipated, mostly due to
the expected normalization in demand for chip card ICs as well
as the sale of the HDD business following its sale to LSI.
In the nine months ended June 30, 2008, the Automotive,
Industrial & Multimarket segment reported net sales of
2,196 million, a decrease of 7 million
compared to the nine months ended June 30, 2007. Excluding
the effects of the divestiture of the Polymer Optical Fiber
(POF) business, the sale of part of our interest in
the high-power bipolar business, the sale of the HDD business
and the weakening U.S. dollar, segment net sales increased
by 10 percent.
Communication
Solutions
In the third quarter of the 2008 fiscal year, net sales in the
Communication Solutions segment were 313 million, up
4 percent compared to the prior quarter and up
21 percent
year-on-year.
Excluding the effects of currency fluctuations, primarily
between the U.S. dollar and the Euro, and the contributions
from the mobility products business acquired from LSI and the
DSL Customer Premises Equipment (CPE) activities
acquired from Texas Instruments Inc. (TI), net sales
of the segment increased 8 percent sequentially and 9 percent
year-on-year.
In the wireless business, net sales increased compared to the
3
second quarter, mainly due to the
ramp-up of
the HSDPA mobile phone platform. Results in the broadband
business increased slightly, driven by the infrastructure
business.
In the first nine months of the 2008 fiscal year, net sales
strongly increased by 32 percent compared with the first
nine months of fiscal year 2007, mainly driven by the wireless
business, resulting from a strong increase in mobile phone
platform shipments and the consolidation of the mobility
products business acquired from LSI. Net sales in the wireline
business increased slightly mainly due to the consolidation of
the DSL CPE business acquired from TI and despite negative
currency effects.
Other
Operating Segments and Corporate and Eliminations
Net Sales in Other Operating Segments for the three and nine
months ended June 30, 2007 and 2008 principally reflected
sales of wafers from our 200-millimeter facility in Dresden to
Qimonda under a foundry agreement, which are eliminated in the
Corporate and Eliminations segment. On November 30, 2007,
Qimonda cancelled its foundry agreement, effective March 1,
2008, which is primarily responsible for the sales decrease
year-on-year.
Net Sales by
Region
The following is a summary of net sales by region:
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Three months ended
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Nine months ended
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June 30,
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June 30,
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2007
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2008
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2007
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2008
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( in millions, except percentages)
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Net sales:
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Germany
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220
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22%
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217
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21%
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672
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23%
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677
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21%
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Other Europe
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220
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22%
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205
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20%
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663
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22%
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614
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19%
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North America
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143
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14%
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122
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12%
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404
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14%
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404
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13%
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Asia/Pacific
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357
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35%
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422
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41%
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1,013
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35%
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1,270
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40%
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Japan
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57
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6%
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43
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4%
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157
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5%
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147
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5%
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Other
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14
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1%
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20
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2%
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38
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1%
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56
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2%
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Total
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1,011
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100%
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1,029
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100%
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2,947
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100%
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3,168
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100%
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For the three and nine months ended June 30, 2008, the
composition of sales by region did not significantly change
compared to the three and nine months ended June 30, 2007.
The absolute and relative increases in the share of net sales in
Asia/Pacific during the three and nine months ended
June 30, 2008, compared to the same periods last fiscal
year were mainly due to the acquisition of the mobility products
business from LSI and higher shipments of mobile phone platform
solutions to customers in Asia/Pacific in our Communication
Solutions segment.
Cost of Goods
Sold and Gross Profit
The following table sets forth our cost of goods sold and gross
profit for the periods indicated.
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Three months ended
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Nine months ended
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June 30,
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June 30,
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2007
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2008
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2007
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2008
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( in millions, except percentages)
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Cost of goods sold
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676
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|
666
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1,981
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2,048
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% of net sales
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67
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%
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65
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%
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67
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%
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65
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%
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Gross Profit
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335
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363
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966
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1,120
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The improvement in cost of goods sold as a percentage of net
sales for the three and nine months ended June 30, 2008 is
primarily due to productivity increases and changes in
product-mix.
4
Research and
Development (R&D) Expenses
Our R&D expenses for the periods indicated were as follows:
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Three months ended
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Nine months ended
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June 30,
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June 30,
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|
2007
|
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|
2008
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2007
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2008
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( in millions, except percentages)
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R&D expenses
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196
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|
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|
181
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577
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|
568
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% of net sales
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19
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%
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18
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%
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20
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%
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18
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%
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In the first nine months of the 2008 fiscal year our R&D
expenses decreased by 9 million compared to the same
period in the prior fiscal year, mainly due to savings resulting
from the implementation of cost reduction measures and
government grants, partly offset by in-process R&D of
14 million acquired in connection with the mobility
products business of LSI, which was expensed during in the first
quarter of the 2008 fiscal year.
Selling, General
and Administrative (SG&A) Expenses
The following table sets forth our SG&A expenses for the
periods indicated.
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Three months ended
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Nine months ended
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June 30,
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June 30,
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2007
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2008
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2007
|
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2008
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( in millions, except percentages)
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SG&A expenses
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124
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145
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365
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418
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% of net sales
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12
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%
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14
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%
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12
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%
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13
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%
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SG&A expenses as a percentage of net sales remained
relatively unchanged for the three and nine months ended
June 30, 2008, compared to the three and nine months ended
June 30, 2007.
Other
Items Affecting Earnings
During the 2007 fiscal year, restructuring measures were
initiated, mainly as a result of the insolvency of one of our
largest mobile phone customers, BenQ Mobile GmbH & Co.
OHG, and in order to further streamline certain research and
development locations. These restructuring measures resulted in
restructuring charges of 20 million and
42 million for the three and nine months ended
June 30, 2007. During the three and nine months ended
June 30, 2008, restructuring charges of
2 million and 11 million, respectively,
were recognized as a result of cost reduction initiatives.
Other operating income, net for the nine months ended
June 30, 2008 was 75 million compared to
22 million for the nine months ended June 30,
2007. The increase related primarily to gains of
27 million and 41 million that resulted
from the sale of an interest in our high-power bipolar business
and the sale of our HDD business to LSI, respectively. Other
operating income, net for the nine months ended June 30,
2007 included a gain of 17 million resulting from the
sale of our POF business, based in Regensburg, Germany, to Avago
Technologies Ltd.
Earnings Before
Interest and Taxes (EBIT)
EBIT of our segments was as follows:
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Three months ended
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Nine months ended
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June 30,
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|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
77
|
|
|
|
106
|
|
|
|
189
|
|
|
|
268
|
|
Communication Solutions
|
|
|
(37
|
)
|
|
|
(30
|
)
|
|
|
(151
|
)
|
|
|
(70
|
)
|
Other Operating Segments
|
|
|
(2
|
)
|
|
|
1
|
|
|
|
(10
|
)
|
|
|
(3
|
)
|
Corporate and Eliminations
|
|
|
(25
|
)
|
|
|
(6
|
)
|
|
|
(51
|
)
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon EBIT
|
|
|
13
|
|
|
|
71
|
|
|
|
(23
|
)
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
Infineon EBIT reflects the combined effects of the following
developments of our operating segments:
|
|
|
|
|
Automotive, Industrial & Multimarket
Segment EBIT for the three months ended
June 30, 2008 was 106 million compared to
69 million in the previous quarter and
77 million in the third quarter of the 2007 fiscal
year. Included in the EBIT for this segment for the third
quarter of the 2008 fiscal year was a net gain of
43 million, primarily resulting from the sale of the
HDD business to LSI. Net gains and charges included in the EBIT
of this segment for the second quarter were negligible. Segment
EBIT for the third quarter of the 2007 fiscal year included a
net gain of 17 million from the sale of our POF
business. Segment EBIT for the nine months ended June 30,
2008 was 268 million compared to
189 million in the same period in the prior fiscal
year. Included in Segment EBIT for the first nine months of the
2008 fiscal year was a gain of 27 million from the
sale of part of our interest in the high-power bipolar business
and a gain of 41 million from the sale of our HDD
business. Segment EBIT for the nine months ended June 30,
2007 included a gain of 17 million from the sale of
our POF business. Excluding these gains resulting from sales of
businesses, Segment EBIT margin improved from 8 percent to
9 percent for the first nine months of the 2007 and 2008
fiscal years, respectively. This increase mainly resulted from
changes in product mix.
|
|
|
|
Communication Solutions Segment EBIT for the
third quarter of the 2008 fiscal year was negative
30 million, compared to negative
29 million in the prior quarter and negative
37 million for the third quarter of fiscal year 2007.
Despite the positive effect of the sales increase, EBIT of the
segment was negatively affected by customization expenses
relating to the ramp of new mobile phone platforms. EBIT of the
segment for the second and third quarter of the 2008 fiscal year
contained no significant net gains or charges in either quarter.
Included in this segments EBIT for the third quarter was
amortization of acquired intangible assets of
7 million relating mainly to the mobility products
business acquired from LSI, compared to 5 million in
the second quarter of the 2008 fiscal year. Segment EBIT for the
nine months ended June 30, 2008 improved to negative
70 million from negative 151 million in
the nine months ended June 30, 2007, driven primarily by an
increase in net sales and despite the negative impact from
currency fluctuations between the U.S. dollar and the Euro.
Segment EBIT in the nine months ended June 30, 2008
included a write-off of 14 million of acquired
in-process R&D in connection with the acquisition of the
mobility products business of LSI, while net gains and net
charges for the nine months ended June 30, 2007 were
negligible.
|
|
|
|
Other Operating Segments and Corporate and
Eliminations Combined, Segment EBIT in the three
and nine months ended June 30, 2008 was negative
5 million and negative 26 million,
respectively, compared to negative 27 million and
negative 61 million in the three and nine months
ended June 30, 2007, respectively. For the three months
ended June 30, 2007 and 2008, Corporate and Eliminations
included unallocated excess capacity costs of
2 million and 9 million, respectively,
restructuring charges of 20 million and
2 million, respectively, and stock-based compensation
expense of 3 million and 1 million,
respectively. For the nine months ended June 30, 2007 and
2008, Corporate and Eliminations included unallocated excess
capacity costs of 5 million and 9 million,
respectively, restructuring charges of 42 million and
11 million, respectively, and stock-based
compensation expense of 9 million and
4 million, respectively.
|
Infineon
EBIT
Infineon EBIT is determined as follows from the condensed
consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
( in millions)
|
|
|
|
|
|
Net loss
|
|
|
(197
|
)
|
|
|
(592
|
)
|
|
|
(88
|
)
|
|
|
(2,359
|
)
|
Adjust:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Income) loss from discontinued operations, net of tax
|
|
|
187
|
|
|
|
637
|
|
|
|
(12
|
)
|
|
|
2,468
|
|
Income tax expense
|
|
|
11
|
|
|
|
14
|
|
|
|
44
|
|
|
|
35
|
|
Interest expense, net
|
|
|
12
|
|
|
|
12
|
|
|
|
33
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon EBIT
|
|
|
13
|
|
|
|
71
|
|
|
|
(23
|
)
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
Infineon EBIT in the three and nine months ended June 30,
2008 included net gains of 41 million and
44 million, respectively, compared to net charges of
3 million and 34 million in the three and
nine months ended June 30, 2007, respectively.
Net gains (charges) recognized in operating segments for the
periods indicated were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Impairments, restructuring and other related closure costs
|
|
|
(20
|
)
|
|
|
(2
|
)
|
|
|
(73
|
)
|
|
|
(13
|
)
|
In-process research and development write-offs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
Net gains on sales of assets, businesses, or interests in
subsidiaries
|
|
|
17
|
|
|
|
43
|
|
|
|
18
|
|
|
|
71
|
|
Other
(1)
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (charges) gains
|
|
|
(3
|
)
|
|
|
41
|
|
|
|
(34
|
)
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes primarily a revision to
accrued personnel costs totaling 25 million in the
nine months ended June 30, 2007.
|
Income (loss)
from Discontinued Operations, Net of Tax
Following the reclassification of Qimonda as held for disposal,
we recorded a write-down of 1,004 million during the
three months ended March 31, 2008, and a further write-down
of 411 million during the three months ended
June 30, 2008 in order to reduce Qimonda to its estimated
current fair value less costs to sell. This write-down was
recorded in loss from discontinued operations, net of tax.
Additionally, income (loss) from discontinued operations, net of
tax for the three and nine months ended June 30, 2007 and
2008, included our share in Qimondas net income (loss).
The results of Qimonda presented in the condensed consolidated
statements of operations as discontinued operations, net of tax,
consist of the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net sales
|
|
|
740
|
|
|
|
384
|
|
|
|
2,897
|
|
|
|
1,309
|
|
Costs and expenses
|
|
|
(1,031
|
)
|
|
|
(568
|
)
|
|
|
(2,885
|
)
|
|
|
(2,302
|
)
|
Loss on measurement to fair value less costs to sell
|
|
|
|
|
|
|
(411
|
)
|
|
|
|
|
|
|
(1,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, before tax
|
|
|
(291
|
)
|
|
|
(595
|
)
|
|
|
12
|
|
|
|
(2,408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
104
|
|
|
|
(42
|
)
|
|
|
|
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(187
|
)
|
|
|
(637
|
)
|
|
|
12
|
|
|
|
(2,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our beneficial ownership interest in Qimonda as of June 30,
2008 was 77.5 percent.
7
Financial
Condition
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
|
|
2007
|
|
2008
|
|
Change
|
|
|
( in millions, except percentages)
|
|
Current assets
|
|
|
8,491
|
|
|
5,382
|
|
|
(37)%
|
thereof: Assets held for disposal
|
|
|
5,653
|
|
|
2,958
|
|
|
(48)%
|
Non-current assets
|
|
|
2,318
|
|
|
2,361
|
|
|
2 %
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
10,809
|
|
|
7,743
|
|
|
(28)%
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
3,473
|
|
|
3,358
|
|
|
(3)%
|
thereof: Liabilities held for disposal
|
|
|
1,898
|
|
|
2,049
|
|
|
8 %
|
Non-current liabilities
|
|
|
1,389
|
|
|
1,277
|
|
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,862
|
|
|
4,635
|
|
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
Minority Interests
|
|
|
1,033
|
|
|
649
|
|
|
(37)%
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
4,914
|
|
|
2,459
|
|
|
(50)%
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2008, our total assets decreased in
comparison to September 30, 2007 by
3,066 million, due to a decrease in current assets of
37 percent, or 3,109 million. This decrease
primarily related to a decrease in assets held for disposal of
2,695, of which 1,415 million was due to the
write-down of Qimonda. The remaining decrease in assets held for
disposal primarily relates to changes at Qimonda. Additionally,
our gross cash position, representing cash and cash equivalents
and marketable securities from continuing operations, decreased
from 1,283 million as of September 30, 2007 by
423 million to 860 million as of June 30,
2008 compared with September 30, 2007. This decrease is
primarily due to cash used for the acquisition of the mobility
products business of LSI and Primarion, the repurchase of
convertible subordinated notes due 2010 with a notional amount
of 100 million and repayments of short-term bank
loans, which was partly offset by the proceeds from a part of
our interest in the high-power bipolar business and the sale of
our HDD business.
The decrease in current assets was partly offset by an increase
in non-current assets during the nine months ended June 30,
2008 of 43 million. This increase primarily related
to an increase of 278 million in intangible assets,
net, mainly from additions to intangible assets and goodwill
from the acquisitions of the mobility products business of LSI
and Primarion. This increase was substantially offset by
decreases in property, plant and equipment, lower deferred tax
assets and lower other assets during the nine months ended
June 30, 2008.
As of June 30, 2008, current liabilities decreased by
115 million compared to September 30, 2007,
mainly due to lower trade accounts payable, lower short-term
debt, and a decrease in accrued liabilities. Trade accounts
payable decreased by 131 million primarily as a
result of lower capital expenditures, while the reduction of
67 million in our short-term debt was due to
repayments made during the period. Accrued liabilities decreased
by 50 million mainly due to lower accrued personnel
costs. These decreases were partly offset by increases in
liabilities held for disposal of 151 million, mainly
resulting from changes within Qimonda.
Non-current liabilities decreased by 112 million
during the nine months ended June 30, 2008, primarily due
to a repurchase of convertible subordinated notes due 2010 with a
notional amount of 100 million.
8
Liquidity
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net cash (used in) provided by operating activities from
continuing operations
|
|
|
(66
|
)
|
|
|
270
|
|
Net cash used in investing activities from continuing operations
|
|
|
(27
|
)
|
|
|
(722
|
)
|
Net cash used in financing activities from continuing operations
|
|
|
(320
|
)
|
|
|
(211
|
)
|
Net decrease in cash and cash equivalents from discontinued
operations
|
|
|
(298
|
)
|
|
|
(222
|
)
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(711
|
)
|
|
|
(885
|
)
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash and cash
equivalents
|
|
|
(22
|
)
|
|
|
(17
|
)
|
Depreciation and amortization from continuing operations
|
|
|
464
|
|
|
|
410
|
|
Purchases of property, plant and equipment from continuing
operations
|
|
|
(331
|
)
|
|
|
(227
|
)
|
Cash provided by operating activities from continuing operations
was 270 million during the nine months ended
June 30, 2008, and resulted primarily from net income from
continuing operations of 109 million, which is net of
non-cash charges for depreciation and amortization of
410 million and a 14 million charge for
in-process R&D acquired from LSI. Also included in net
income from continuing operations were gains on sales of
businesses of 68 million. Cash provided by operating
activities from continuing operations was negatively impacted by
the changes in operating assets and liabilities of
228 million, primarily resulting from a decrease in
trade accounts payable and an increase in inventories.
Net cash used in investing activities from continuing operations
increased to 722 million during the nine months ended
June 30, 2008, from 27 million in the nine
months ended June 30, 2007. This increase was mainly due to
higher net purchases of marketable securities of
511 million and cash payments of
353 million for the acquisition of the mobility
products business of LSI and Primarion. These cash outflows were
partially offset by lower net purchases of property, plant and
equipment of 104 million, and higher proceeds from
the sale of businesses and interests in subsidiaries of
71 million resulting from the sale of part of our
interest in the high-power bipolar business and our HDD business.
Net cash used in financing activities from continuing operations
decreased by 109 million to 211 million in
the nine months ended June 30, 2008, compared to the nine
months ended June 30, 2007. During the nine months ended
June 30, 2007, principal repayments of long-term debt
amounted to 703 million, and related primarily to the
repayment of convertible notes due in 2007. During the nine
months ended June 30, 2007, we also received repayments
from related parties of 345 million due to
Qimondas repayment of an intercompany loan. During the
nine months ended June 30, 2008, we made repayments of
short-term and long-term debt of 232 million, of
which 98 million related to the repurchase of
convertible subordinated notes due 2010 with a notional amount
of 100 million. We also made dividend payments to
minority interest holders of 80 million, which were
partly offset by proceeds from issuance of long-term debt of
109 million.
Free cash flow from continuing operations, representing cash
flows from operating and investing activities from continuing
operations excluding purchases or sales of marketable
securities, was negative 206 million for the nine
months ended June 30, 2008, an improvement from negative
358 million for the nine months ended June 30,
2007, primarily due to increased net cash provided by operating
activities from continuing operations of 336 million,
partly offset by higher net cash used in investing activities
from continuing operations excluding purchases of marketable
securities.
Our gross cash position from continuing operations as of
June 30, 2008, representing cash and cash equivalents and
marketable securities, decreased to 860 million from
1,283 million as of September 30, 2007. Our net
cash position from continuing operations as of June 30,
2008, defined as gross cash position less short- and long-term
debt, was negative 407 million, compared with
negative 126 million as of September 30, 2007.
9
Employees
The following table indicates the composition of our workforce
by function and region at the dates shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
|
|
|
2007
|
|
2008
|
|
Change
|
|
|
|
( in millions, except percentages)
|
|
|
Function:
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
20,376
|
|
|
19,483
|
|
|
(4)%
|
|
Research & Development
|
|
|
5,833
|
|
|
6,311
|
|
|
8 %
|
|
Sales & Marketing
|
|
|
1,832
|
|
|
1,957
|
|
|
7 %
|
|
Administrative
|
|
|
1,557
|
|
|
1,605
|
|
|
3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon
|
|
|
29,598
|
|
|
29,356
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
13,481
|
|
|
12,806
|
|
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
43,079
|
|
|
42,162
|
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Region:
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
10,151
|
|
|
10,099
|
|
|
(1)%
|
|
Europe
|
|
|
5,564
|
|
|
5,217
|
|
|
(6)%
|
|
North America
|
|
|
581
|
|
|
861
|
|
|
48 %
|
|
Asia-Pacific
|
|
|
13,145
|
|
|
13,016
|
|
|
(1)%
|
|
Japan
|
|
|
157
|
|
|
163
|
|
|
4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon
|
|
|
29,598
|
|
|
29,356
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
13,481
|
|
|
12,806
|
|
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
43,079
|
|
|
42,162
|
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Our workforce did not change significantly from
September 30, 2007 to June 30, 2008. The increase of
48 percent in North America primarily relates to employees
that joined us as a result of the acquisition of the mobility
products business of LSI.
Outlook
Industry
Environment and Outlook
In the third quarter of the 2008 fiscal year, the world economy
continued to face considerable headwind. The ongoing insecurity
on the financial markets, the negative asset effects of
declining housing and stock markets, high inflation as well as
the recent strong hikes in oil prices increased downward risks
and are likely to continue to weaken economic conditions in the
coming quarters. Through the spring of 2008, however, the world
economic growth remained relatively robust. Thanks to massive
monetary and fiscal incentive, even the United States has thus
far escaped an economic recession as a result of the crisis in
the housing sector and the associated problems in the financial
sector.
There is a similar picture for market growth in the
semiconductor industry. On the basis of current semiconductor
market developments, Gartner Inc. increased its 2008 growth
prognosis by 2 percentage points to an annual growth rate
of 5 percent in its May 2008 forecast, up from
3 percent in the previous forecast. According to available
World Semiconductor Trade Statistics, the global semiconductor
market (in U.S. dollar) increased by 5 percent in the first
five months of the 2008 calendar year, compared to the first
five months of the 2007 calendar year.
All in all, in the third quarter of the 2008 fiscal year growth
prognoses for the semiconductor industry remain positive for the
2008 calendar year as well as for the 2009 calendar year despite
increased risks.
Outlook for
Infineons Continuing Operations
For the fourth quarter of the 2008 fiscal year, we expect net
sales to increase by a mid single-digit percentage compared to
the third quarter. However, we note that market risks in general
are likely to rise and that the persistent weakness of the
U.S. dollar against the Euro is adding to normal price
declines in
10
the markets we are in. We anticipate Infineon EBIT, excluding
net gains or charges, to remain stable or decline slightly.
Infineon EBIT in the fourth quarter will include temporarily
increased costs, as shipments of DRAM wafers out of our
200-millimeter wafer facility in Dresden, Germany, to Qimonda
came to an end in the third quarter. In connection with our IFX
10+ cost-reduction program, we expect to record significant net
charges in the fourth quarter.
In the fourth quarter of the 2008 fiscal year, we expect net
sales of our Automotive, Industrial & Multimarket
segment to increase by a mid single-digit percentage compared to
the third quarter. The increase will be driven mostly by normal
seasonality in the industrial & multimarket business.
Segment EBIT margin is expected to be in the range of 9 to
10 percent, excluding net gains or charges. Sales in the
segments Automotive business are expected to remain
broadly unchanged compared to the third quarter despite
continued weakness in the U.S. automotive market. Sales in
the Industrial & Multimarket business are anticipated
to increase. Results in the Security & ASICs business
are anticipated to increase slightly compared to the prior
quarter, driven by the chip card IC business. The ASIC business
is expected to remain flat sequentially.
In the fourth quarter of the 2008 fiscal year, sales in the
Communication Solutions segment are expected to increase to a
range of 330 million to 350 million. This
increase reflects mainly the continued
ramp-up of
our HSDPA mobile platform solutions. The broadband business is
anticipated to remain broadly unchanged compared to the third
quarter. Segment EBIT loss, excluding net gain or charges, is
expected to improve, driven by the sales increase.
In the fourth quarter, we expect sales in Other Operating
Segments to decline compared to the third quarter as shipments
of DRAM wafers out of our 200-millimeter wafer facility in
Dresden to Qimonda came to an end in the third quarter. Segment EBIT
excluding net gains or charges for Other Operating Segments and
Corporate and Eliminations combined is anticipated to be
approximately negative 20 million. Included in the
combined Segment EBIT will be temporarily increased costs in
connection with the 200-millimeter wafer facility in Dresden. In
connection with the companys IFX 10+ cost-reduction
program, net charges are expected to be significant in the
fourth quarter.
Risks and
Opportunities
We are exposed to a number of risks as a result of the high
volatility of the semiconductor business, its international
orientation and its wide product range. Such risks include, but
are not limited to, 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, the
effects of currency fluctuations, primarily between the
U.S. dollar and the Euro, the success of our disposal plans
and/or
future decreases in fair value with respect to our interest in
Qimonda, as well as the other factors mentioned herein and those
described in our Annual Report for the 2007 fiscal year. To
minimize the negative impact of these risks, we continuously
optimize our company-wide risk and opportunity management
system. For more detailed information on risks and opportunities
and their potential effect on our business, financial condition
or results of operations, please refer to our Annual Report for
the 2007 fiscal year.
11
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
For the three months ended June 30, 2007 and 2008
(in millions, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Net sales
|
|
|
1,011
|
|
|
|
1,029
|
|
|
|
1,620
|
|
Cost of goods sold
|
|
|
676
|
|
|
|
666
|
|
|
|
1,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
335
|
|
|
|
363
|
|
|
|
572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
196
|
|
|
|
181
|
|
|
|
285
|
|
Selling, general and administrative expenses
|
|
|
124
|
|
|
|
145
|
|
|
|
228
|
|
Restructuring charges
|
|
|
20
|
|
|
|
2
|
|
|
|
3
|
|
Other operating income, net
|
|
|
(18
|
)
|
|
|
(43
|
)
|
|
|
(67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
13
|
|
|
|
78
|
|
|
|
123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
|
(19
|
)
|
Equity in earnings of associated companies
|
|
|
|
|
|
|
1
|
|
|
|
2
|
|
Other non-operating income (expense), net
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
Minority interests
|
|
|
(2
|
)
|
|
|
(7
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and discontinued operations
|
|
|
1
|
|
|
|
59
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(11
|
)
|
|
|
(14
|
)
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(10
|
)
|
|
|
45
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(187
|
)
|
|
|
(637
|
)
|
|
|
(1,003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(197
|
)
|
|
|
(592
|
)
|
|
|
(932
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per share from continuing
operations
|
|
|
(0.01
|
)
|
|
|
0.06
|
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share from discontinued operations
|
|
|
(0.25
|
)
|
|
|
(0.85
|
)
|
|
|
(1.34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(0.26
|
)
|
|
|
(0.79
|
)
|
|
|
(1.25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
12
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
For the nine months ended June 30, 2007 and 2008
(in millions, except for share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Net sales
|
|
|
2,947
|
|
|
|
3,168
|
|
|
|
4,989
|
|
Cost of goods sold
|
|
|
1,981
|
|
|
|
2,048
|
|
|
|
3,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
966
|
|
|
|
1,120
|
|
|
|
1,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
577
|
|
|
|
568
|
|
|
|
894
|
|
Selling, general and administrative expenses
|
|
|
365
|
|
|
|
418
|
|
|
|
658
|
|
Restructuring charges
|
|
|
42
|
|
|
|
11
|
|
|
|
17
|
|
Other operating income, net
|
|
|
(22
|
)
|
|
|
(75
|
)
|
|
|
(117
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
4
|
|
|
|
198
|
|
|
|
312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(33
|
)
|
|
|
(28
|
)
|
|
|
(44
|
)
|
Equity in earnings of associated companies
|
|
|
|
|
|
|
3
|
|
|
|
5
|
|
Other non-operating income (expense), net
|
|
|
14
|
|
|
|
(5
|
)
|
|
|
(8
|
)
|
Minority interests
|
|
|
(6
|
)
|
|
|
(24
|
)
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes, discontinued operations, and
extraordinary loss
|
|
|
(21
|
)
|
|
|
144
|
|
|
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(44
|
)
|
|
|
(35
|
)
|
|
|
(55
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(65
|
)
|
|
|
109
|
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
12
|
|
|
|
(2,468
|
)
|
|
|
(3,887
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before extraordinay loss
|
|
|
(53
|
)
|
|
|
(2,359
|
)
|
|
|
(3,715
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extraordinary loss, net of tax
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(88
|
)
|
|
|
(2,359
|
)
|
|
|
(3,715
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per share from continuing
operations
|
|
|
(0.09
|
)
|
|
|
0.15
|
|
|
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per share from discontinued
operations
|
|
|
0.01
|
|
|
|
(3.30
|
)
|
|
|
(5.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share for extraordinary loss, net of
tax
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(0.12
|
)
|
|
|
(3.15
|
)
|
|
|
(4.96
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
13
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
September 30, 2007 and June 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
1,073
|
|
|
|
408
|
|
|
|
643
|
|
Marketable securities
|
|
|
210
|
|
|
|
452
|
|
|
|
712
|
|
Trade accounts receivable, net
|
|
|
620
|
|
|
|
546
|
|
|
|
860
|
|
Inventories
|
|
|
598
|
|
|
|
670
|
|
|
|
1,055
|
|
Deferred income taxes
|
|
|
34
|
|
|
|
25
|
|
|
|
39
|
|
Other current assets
|
|
|
303
|
|
|
|
323
|
|
|
|
509
|
|
Assets held for disposal
|
|
|
5,653
|
|
|
|
2,958
|
|
|
|
4,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
8,491
|
|
|
|
5,382
|
|
|
|
8,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
1,462
|
|
|
|
1,305
|
|
|
|
2,055
|
|
Intangible assets, net
|
|
|
89
|
|
|
|
367
|
|
|
|
578
|
|
Long-term investments
|
|
|
24
|
|
|
|
30
|
|
|
|
47
|
|
Restricted cash
|
|
|
77
|
|
|
|
77
|
|
|
|
121
|
|
Deferred income taxes
|
|
|
446
|
|
|
|
419
|
|
|
|
660
|
|
Pension assets
|
|
|
60
|
|
|
|
55
|
|
|
|
87
|
|
Other assets
|
|
|
160
|
|
|
|
108
|
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
10,809
|
|
|
|
7,743
|
|
|
|
12,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities
|
|
|
260
|
|
|
|
193
|
|
|
|
304
|
|
Trade accounts payable
|
|
|
596
|
|
|
|
465
|
|
|
|
732
|
|
Accrued liabilities
|
|
|
379
|
|
|
|
329
|
|
|
|
518
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
9
|
|
|
|
14
|
|
Short-term pension liabilities
|
|
|
5
|
|
|
|
5
|
|
|
|
8
|
|
Other current liabilities
|
|
|
325
|
|
|
|
308
|
|
|
|
485
|
|
Liabilities held for disposal
|
|
|
1,898
|
|
|
|
2,049
|
|
|
|
3,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
3,473
|
|
|
|
3,358
|
|
|
|
5,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
1,149
|
|
|
|
1,074
|
|
|
|
1,691
|
|
Pension liabilities
|
|
|
88
|
|
|
|
81
|
|
|
|
128
|
|
Deferred income taxes
|
|
|
23
|
|
|
|
10
|
|
|
|
16
|
|
Long-term accrued liabilities
|
|
|
22
|
|
|
|
21
|
|
|
|
33
|
|
Other liabilities
|
|
|
107
|
|
|
|
91
|
|
|
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,862
|
|
|
|
4,635
|
|
|
|
7,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
1,033
|
|
|
|
649
|
|
|
|
1,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share capital
|
|
|
1,499
|
|
|
|
1,499
|
|
|
|
2,361
|
|
Additional paid-in capital
|
|
|
5,864
|
|
|
|
5,870
|
|
|
|
9,244
|
|
Accumulated deficit
|
|
|
(2,148
|
)
|
|
|
(4,511
|
)
|
|
|
(7,104
|
)
|
Accumulated other comprehensive loss
|
|
|
(301
|
)
|
|
|
(399
|
)
|
|
|
(628
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
4,914
|
|
|
|
2,459
|
|
|
|
3,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
|
10,809
|
|
|
|
7,743
|
|
|
|
12,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
14
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Statements of Shareholders
Equity (Unaudited)
For the nine months ended June 30, 2007 and 2008
(in millions of euro, except for share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
Additional minimum
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
|
Issued
|
|
Additional
|
|
|
|
|
currency
|
|
|
pension liability/
|
|
|
gains (loss)
|
|
|
gains (losses) on
|
|
|
|
|
|
|
Ordinary shares
|
|
paid-in
|
|
Accumulated
|
|
|
translation
|
|
|
Defined benefit
|
|
|
on
|
|
|
cash flow
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
capital
|
|
deficit
|
|
|
adjustment
|
|
|
plans
|
|
|
securities
|
|
|
hedges
|
|
|
Total
|
|
Balance as of October 1, 2006
|
|
|
747,609,294
|
|
|
1,495
|
|
|
5,828
|
|
|
(1,780
|
)
|
|
|
(127
|
)
|
|
|
(87
|
)
|
|
|
5
|
|
|
|
(19
|
)
|
|
|
5,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
(88
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(88
|
)
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(73
|
)
|
|
|
|
|
|
|
(11
|
)
|
|
|
2
|
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
1,772,421
|
|
|
4
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
Deferred compensation, net
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2007
|
|
|
749,381,715
|
|
|
1,499
|
|
|
5,857
|
|
|
(1,868
|
)
|
|
|
(200
|
)
|
|
|
(87
|
)
|
|
|
(6
|
)
|
|
|
(17
|
)
|
|
|
5,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of October 1, 2007
|
|
|
749,728,635
|
|
|
1,499
|
|
|
5,864
|
|
|
(2,148
|
)
|
|
|
(232
|
)
|
|
|
(45
|
)
|
|
|
(7
|
)
|
|
|
(17
|
)
|
|
|
4,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
(2,359
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,359
|
)
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(85
|
)
|
|
|
|
|
|
|
(20
|
)
|
|
|
7
|
|
|
|
(98
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,457
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
13,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
Adjustment to initially apply FIN 48
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2008
|
|
|
749,742,085
|
|
|
1,499
|
|
|
5,870
|
|
|
(4,511
|
)
|
|
|
(317
|
)
|
|
|
(45
|
)
|
|
|
(27
|
)
|
|
|
(10
|
)
|
|
|
2,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
15
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the nine months ended June 30, 2007 and 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Net loss
|
|
|
(88
|
)
|
|
|
(2,359
|
)
|
|
|
(3,715
|
)
|
Less: Net (income) loss from discontinued operations
|
|
|
(12
|
)
|
|
|
2,468
|
|
|
|
3,887
|
|
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
464
|
|
|
|
410
|
|
|
|
646
|
|
Acquired in-process research and development
|
|
|
|
|
|
|
14
|
|
|
|
22
|
|
Recovery of doubtful accounts
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
Loss (gain) on sales of marketable securities
|
|
|
(7
|
)
|
|
|
1
|
|
|
|
2
|
|
Gains on sales of businesses and interests in subsidiaries
|
|
|
(19
|
)
|
|
|
(68
|
)
|
|
|
(107
|
)
|
Gains on disposals of property, plant and equipment
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(6
|
)
|
Equity in earnings of associated companies
|
|
|
|
|
|
|
(3
|
)
|
|
|
(5
|
)
|
Minority interests
|
|
|
6
|
|
|
|
24
|
|
|
|
38
|
|
Impairment charges
|
|
|
35
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
9
|
|
|
|
4
|
|
|
|
6
|
|
Deferred income taxes
|
|
|
18
|
|
|
|
11
|
|
|
|
17
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
(5
|
)
|
|
|
70
|
|
|
|
110
|
|
Inventories
|
|
|
(48
|
)
|
|
|
(98
|
)
|
|
|
(154
|
)
|
Other current assets
|
|
|
(15
|
)
|
|
|
(21
|
)
|
|
|
(33
|
)
|
Trade accounts payable
|
|
|
(169
|
)
|
|
|
(108
|
)
|
|
|
(170
|
)
|
Accrued liabilities
|
|
|
(62
|
)
|
|
|
(29
|
)
|
|
|
(46
|
)
|
Other current liabilities
|
|
|
(101
|
)
|
|
|
(36
|
)
|
|
|
(57
|
)
|
Other assets and liabilities
|
|
|
(55
|
)
|
|
|
(6
|
)
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities from
continuing operations
|
|
|
(66
|
)
|
|
|
270
|
|
|
|
426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities from
discontinued operations
|
|
|
769
|
|
|
|
(422
|
)
|
|
|
(665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
703
|
|
|
|
(152
|
)
|
|
|
(239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of marketable securities available for sale
|
|
|
(74
|
)
|
|
|
(577
|
)
|
|
|
(909
|
)
|
Proceeds from sales of marketable securities available for sale
|
|
|
339
|
|
|
|
331
|
|
|
|
521
|
|
Proceeds from sales of businesses and interests in subsidiaries
|
|
|
30
|
|
|
|
101
|
|
|
|
159
|
|
Business acquisitions, net of cash acquired
|
|
|
|
|
|
|
(353
|
)
|
|
|
(556
|
)
|
Investment in associated and related companies
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
Purchases of intangible assets
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
(8
|
)
|
Purchases of property, plant and equipment
|
|
|
(331
|
)
|
|
|
(227
|
)
|
|
|
(357
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
15
|
|
|
|
8
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities from continuing operations
|
|
|
(27
|
)
|
|
|
(722
|
)
|
|
|
(1,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities from discontinued
operations
|
|
|
(724
|
)
|
|
|
(41
|
)
|
|
|
(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(751
|
)
|
|
|
(763
|
)
|
|
|
(1,202
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in short-term debt
|
|
|
|
|
|
|
(68
|
)
|
|
|
(107
|
)
|
Net change in related party financial receivables and payables
|
|
|
345
|
|
|
|
(8
|
)
|
|
|
(13
|
)
|
Proceeds from issuance of long-term debt
|
|
|
29
|
|
|
|
109
|
|
|
|
172
|
|
Principal repayments of long-term debt
|
|
|
(703
|
)
|
|
|
(164
|
)
|
|
|
(258
|
)
|
Change in restricted cash
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of ordinary shares
|
|
|
20
|
|
|
|
|
|
|
|
|
|
Dividend payments to minority interests
|
|
|
|
|
|
|
(80
|
)
|
|
|
(126
|
)
|
Capital contributions
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities from continuing operations
|
|
|
(320
|
)
|
|
|
(211
|
)
|
|
|
(332
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities from
discontinued operations
|
|
|
(343
|
)
|
|
|
241
|
|
|
|
379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(663
|
)
|
|
|
30
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(711
|
)
|
|
|
(885
|
)
|
|
|
(1,394
|
)
|
Effect of foreign exchange rate changes on cash and cash
equivalents
|
|
|
(22
|
)
|
|
|
(17
|
)
|
|
|
(27
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
2,040
|
|
|
|
1,819
|
|
|
|
2,865
|
|
Cash and cash equivalents at end of period
|
|
|
1,307
|
|
|
|
917
|
|
|
|
1,444
|
|
Less: Cash and cash equivalents at end of period from
discontinued operations
|
|
|
629
|
|
|
|
509
|
|
|
|
801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period from continuing
operations
|
|
|
678
|
|
|
|
408
|
|
|
|
643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
16
Infineon
Technologies AG and Subsidiaries
Notes
to the Unaudited Condensed Consolidated Financial Statements
The accompanying condensed consolidated financial statements of
Infineon Technologies AG and its subsidiaries
(Infineon or the Company) as of and for
the three and nine months ended June 30, 2007 and 2008,
have been prepared in accordance with accounting principles
generally accepted in the United States of America
(U.S. GAAP). Accordingly, certain information
and footnote disclosures normally included in annual financial
statements have been condensed or omitted. In addition, although
the condensed consolidated balance sheet as of
September 30, 2007 was derived from audited financial
statements, it does not include all disclosures required by
U.S. GAAP. In the opinion of management, the accompanying
condensed consolidated financial statements contain all
adjustments necessary to present fairly the financial position,
results of operations and cash flows for the interim periods
presented. All such adjustments are of a normal recurring
nature. The results of operations for any interim period are not
necessarily indicative of results for the full fiscal year. The
accompanying condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial
statements for the year ended September 30, 2007. The
accounting policies applied in preparing the accompanying
condensed consolidated financial statements are consistent with
those for the year ended September 30, 2007 (see
note 2).
The preparation of the accompanying condensed consolidated
financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent amounts and liabilities
at the date of the financial statements and reported amounts of
revenues and expenses during the reporting periods. Actual
results could differ materially from those estimates.
All amounts herein are shown in Euro (or )
except where otherwise stated. The accompanying condensed
consolidated balance sheet as of June 30, 2008, and the
condensed consolidated statements of operations for the three
and nine months then ended, and the condensed consolidated
statement of cash flows for the nine months then ended are also
presented in U.S. dollars ($), solely for the
convenience of the reader, at the rate of 1 = $1.5748, the
Federal Reserve noon buying rate on June 30, 2008.
Certain amounts in the prior period condensed consolidated
financial statements and notes have been reclassified to conform
to the current period presentation. Gains and losses from sales
of investments in marketable debt and equity securities,
previously reported as part of the operating segments
EBIT, have been reclassified to the Corporate and Eliminations
segment. In addition, during the second quarter of the 2008
fiscal year the Company committed to a plan to dispose of
Qimonda. As a result, the historical results of Qimonda are
reported as discontinued operations for all periods presented,
and its assets and liabilities have been classified as held for
disposal for all periods presented.
|
|
2.
|
Recent Accounting
Pronouncements
|
Effective October 1, 2007, the Company adopted Financial
Accounting Standards Board (FASB) Interpretation
No. 48, Accounting for Uncertainty in Income
Taxes an Interpretation of FASB Statement
No. 109 (FIN 48), and related
guidance. FIN 48 clarifies the accounting and reporting for
uncertainties in income tax law and prescribes a comprehensive
model for the financial statement recognition, measurement,
presentation and disclosure of uncertain tax positions taken or
expected to be taken in income tax returns. FIN 48 contains
a two-step approach to recognizing and measuring uncertain tax
positions accounted for in accordance with
SFAS No. 109. The first step is to evaluate the tax
position for recognition by determining if the weight of
available evidence indicates that it is more likely than not
that the position will be sustained on audit, including
resolution of any related appeals or litigation processes. The
second step is to measure the tax benefit as the largest amount
that is more than 50 percent likely of being realized upon
ultimate settlement. As a result of the implementation of
FIN 48, the Company recorded a charge to retained earnings
of 4 million as of October 1, 2007 (see
note 6).
On October 24, 2007, the Company completed the acquisition
of the mobility products business of LSI Corporation
(LSI) for cash consideration of
321 million ($450 million) plus a contingent
performance-based payment of up to $50 million, in order to
further strengthen its activities in the field of
17
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
communications. The contingent performance-based payment is
based on the relevant revenues in the measurement period
following the completion of the transaction and ending
December 31, 2008. The mobility products business designs
semiconductors and software for cellular telephone handsets. The
assets acquired and liabilities assumed were recorded at their
estimated fair values as of the date of acquisition. The excess
of the purchase price over the estimated fair values of the
underlying assets acquired and liabilities assumed was allocated
to goodwill.
On April 28, 2008, the Company acquired Primarion, Inc.,
Torrance, California (Primarion) for cash
consideration of 32 million ($50 million) plus a
contingent performance-based payment of up to $30 million.
Primarion designs, manufactures and markets digital power ICs
for computing, graphics and communication applications. The
contingent
performance-based
payment is based on the relevant revenues in the measurement
period beginning July 1, 2008 and ending December 31,
2008. The assets acquired and liabilities assumed were recorded
at their estimated fair values as of the date of acquisition.
The excess of the purchase price over the estimated fair values
of the underlying assets acquired and liabilities assumed was
allocated to goodwill.
The following table summarizes the acquisitions described above:
|
|
|
|
|
|
|
|
|
Acquisition Date
|
|
October 2007
|
|
|
April 2008
|
|
Segment
|
|
Communication
|
|
|
Automotive,
|
|
|
|
Solutions
|
|
|
Industrial &
|
|
|
|
|
|
|
Multimarket
|
|
|
|
( in millions)
|
|
|
Other current assets
|
|
|
19
|
|
|
|
1
|
|
Property, plant and equipment
|
|
|
8
|
|
|
|
1
|
|
Intangible assets:
|
|
|
|
|
|
|
|
|
Technology
|
|
|
42
|
|
|
|
13
|
|
Customer relationships
|
|
|
73
|
|
|
|
|
|
In-process research & development
|
|
|
14
|
|
|
|
|
|
Other
|
|
|
6
|
|
|
|
|
|
Goodwill
|
|
|
160
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
322
|
|
|
|
33
|
|
Current liabilities
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
321
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
Cash paid (Purchase Consideration)
|
|
|
321
|
|
|
|
32
|
|
The above mentioned acquisitions have been accounted for by the
purchase method of accounting and, accordingly, the condensed
consolidated statements of operations include the results of the
acquired businesses from the acquisition date. The Company
engaged an independent third party to assist in the valuation of
net assets acquired. Based on discounted estimated future cash
flows over the respective estimated useful life, an amount of
14 million was allocated to purchased in-process
research and development and expensed as research and
development during the three months ended December 31,
2007, because such costs are not capitalized under
U.S. GAAP. The acquired intangible assets consist of
technology assets of 55 million with a weighted
average estimated useful life of six years, customer
relationship assets of 73 million with a weighted
average estimated useful life of six years, and other intangible
assets of 6 million with a weighted average estimated
useful life of less than one year. The goodwill amounts are
expected to be deductible for tax purposes.
During the quarter ended March 31, 2007, the Company
entered into agreements with Molstanda Vermietungsgesellschaft
mbH (Molstanda) and a financial institution.
Molstanda is the owner of a parcel of land located in the
vicinity of the Companys headquarters south of Munich.
Pursuant to FASB Interpretation No. 46 (revised December
2003), Consolidation of Variable Interest
Entities an interpretation of ARB
No. 51 (FIN 46R), the Company
determined that Molstanda is a variable interest entity since it
does not have sufficient equity to demonstrate that it could
finance its activities without additional financial support, and
as a result of the agreements the Company became its primary
beneficiary. Accordingly, the Company consolidated the assets
and liabilities of Molstanda beginning in the second
18
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
quarter of the 2007 fiscal year. Since Molstanda is not
considered a business pursuant to FIN 46R, the
35 million excess in fair value of liabilities
assumed and consolidated of 76 million, over the fair
value of the newly consolidated identifiable assets of
41 million, was recorded as an extraordinary loss
during the second quarter of the 2007 fiscal year. Due to the
Companys cumulative loss situation no tax benefit was
provided on this loss. The Company subsequently acquired the
majority of the outstanding capital of Molstanda during the
fourth quarter of the 2007 fiscal year. In August 2007, the
Company entered into an agreement to sell part of the acquired
parcel of land to a third-party developer-lessor in connection
with the construction and lease of Qimondas new
headquarters office in the south of Munich.
Pro forma financial information relating to these acquisitions
is not material to the results of operations and financial
position of the Company and has been omitted.
|
|
4.
|
Divestitures and
Discontinued Operations
|
Polymer
Optical Fiber
On June 29, 2007, the Company sold its Polymer Optical
Fiber (POF) business, based in Regensburg, Germany,
to Avago Technologies Ltd. The POF business operates in the
market for automotive multimedia infotainment networks and
transceivers for safety systems. As a result of the sale, the
Company realized a gain before tax of 17 million
which was recorded in other operating income, net during the
three months ended June 30, 2007.
ALTIS
On August 8, 2007, the Company and International Business
Machines Corporation (IBM) signed an agreement in
principle to divest their respective shares in ALTIS
Semiconductor S.N.C., Essonnes, France (ALTIS) via a
sale to Advanced Electronic Systems AG (AES). Under
the terms of the agreement in principle, AES will purchase the
equity, which includes the real estate and technology assets of
ALTIS, from the Company and IBM, and AES agreed to maintain the
level of industrial activity in ALTIS. Pursuant to the
agreement, the Company will enter into a two-year supply
contract with ALTIS and IBM and Infineon will license certain
manufacturing process technologies to AES for use in ALTIS. As a
result of the agreement, the Company classified related assets
and liabilities as assets and liabilities held for disposal in
the condensed consolidated balance sheets for all periods
presented. The Company performed an impairment assessment and
concluded that no write-down was necessary. Pursuant to
SFAS No. 144, Accounting for the Impairment
or Disposal of Long-lived Assets, the recognition of
depreciation expense ceased as of August 1, 2007.
High Power
Bipolar Business
On September 28, 2007, the Company entered into a joint
venture agreement with Siemens AG (Siemens).
Effective September 30, 2007, the Company contributed all
assets and liabilities of its high power bipolar business
(including licenses, patents, and front-end and back-end
production assets) into a newly formed legal entity called
Infineon Technologies Bipolar GmbH & Co. KG
(Bipolar) and Siemens subsequently acquired a
40 percent interest in Bipolar for 37 million.
The transaction received regulatory approval and subsequently
closed on November 30, 2007. As a result of the sale, the
Company realized a gain before tax of 27 million
which was recorded in other operating income, net during the
nine months ended June 30, 2008. The joint venture
agreement grants Siemens certain contractual participating
rights which inhibit the Company from exercising control over
the newly formed entity. Accordingly, the Company accounts for
the retained interest in Bipolar under the equity method of
accounting.
Hard Disk
Drive Business
On April 25, 2008, the Company sold its hard disk drive
(HDD) business to LSI for cash consideration of
60 million ($95 million). The HDD business
designs, manufactures and markets semiconductors for HDD
devices. The Company transferred its complete HDD activities,
including customer relationships, as well as know-how to LSI,
and granted LSI a license for intellectual property. The
transaction did not encompass the sale of significant assets or
transfer of employees. As a result of this transaction, the
Company realized a gain before tax of 41 million
which was recorded in other operating income, net during the
three months ended June 30, 2008.
19
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Qimonda
During the quarter ended March 31, 2008, the Company
committed to a plan to dispose of Qimonda. The Company is
actively pursuing its disposal plan and expects to finalize the
disposal by the end of the second quarter of the 2009 fiscal
year. As a result, the historical results of Qimonda are
reported as discontinued operations in the Companys
condensed consolidated statements of operations for all periods
presented, and the assets and liabilities of Qimonda have been
reclassified as held for disposal in the condensed consolidated
balance sheets for all periods presented. In addition, the
Company recorded after-tax write-downs aggregating
1,415 million, in order to remeasure Qimonda to its
estimated current fair value less costs to sell. Pursuant to
SFAS No. 144, Accounting for the Impairment
or Disposal of Long-lived Assets, the recognition of
depreciation expense ceased as of March 31, 2008.
At September 30, 2007 and June 30, 2008, the carrying
amounts of the major classes of assets and liabilities
classified as held for disposal were as follows:
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
|
2007
|
|
2008
|
|
|
|
( in millions)
|
|
|
Cash and cash equivalents
|
|
|
746
|
|
|
509
|
|
Marketable securities
|
|
|
265
|
|
|
120
|
|
Trade accounts receivable, net
|
|
|
397
|
|
|
210
|
|
Inventories
|
|
|
659
|
|
|
385
|
|
Property, plant and equipment, net
|
|
|
2,350
|
|
|
2,206
|
|
Long-term investments
|
|
|
628
|
|
|
525
|
|
Other assets
|
|
|
608
|
|
|
418
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
5,653
|
|
|
4,373
|
|
|
|
|
|
|
|
|
|
Write-down
|
|
|
|
|
|
(1,415
|
)
|
|
|
|
|
|
|
|
|
Total assets classified as held for disposal
|
|
|
5,653
|
|
|
2,958
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities
|
|
|
128
|
|
|
233
|
|
Trade accounts payable
|
|
|
780
|
|
|
546
|
|
Accrued liabilities
|
|
|
147
|
|
|
141
|
|
Long-term debt
|
|
|
227
|
|
|
439
|
|
Other liabilities
|
|
|
616
|
|
|
690
|
|
|
|
|
|
|
|
|
|
Total liabilities associated with assets held for disposal
|
|
|
1,898
|
|
|
2,049
|
|
|
|
|
|
|
|
|
|
The results of Qimonda presented in the condensed consolidated
statements of operations as discontinued operations consist of
the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net sales
|
|
|
740
|
|
|
|
384
|
|
|
|
2,897
|
|
|
|
1,309
|
|
Costs and expenses
|
|
|
(1,031
|
)
|
|
|
(568
|
)
|
|
|
(2,885
|
)
|
|
|
(2,302
|
)
|
Loss on measurement to fair value less costs to sell
|
|
|
|
|
|
|
(411
|
)
|
|
|
|
|
|
|
(1,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, before tax
|
|
|
(291
|
)
|
|
|
(595
|
)
|
|
|
12
|
|
|
|
(2,408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit
|
|
|
104
|
|
|
|
(42
|
)
|
|
|
|
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(187
|
)
|
|
|
(637
|
)
|
|
|
12
|
|
|
|
(2,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
During the 2007 fiscal year, restructuring measures were taken
by the Company, mainly as a result of the insolvency of one of
its largest mobile phone customers, BenQ Mobile GmbH &
Co. OHG, and in order to further streamline certain research and
development locations. Approximately 280 jobs were affected
worldwide, of which approximately 120 were in the German
locations Munich, Salzgitter and Nuremberg.
During the nine months ended June 30, 2007 and 2008,
charges of 42 million and 11 million,
respectively, were recognized as restructuring charges.
The development of the restructuring liability during the nine
months ended June 30, 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
June 30,
|
|
|
2007
|
|
Restructuring
|
|
|
|
|
2008
|
|
|
Liabilities
|
|
Charges
|
|
Payments
|
|
|
Liabilities
|
|
|
( in millions)
|
|
Employee terminations
|
|
|
38
|
|
|
5
|
|
|
(31
|
)
|
|
|
12
|
Other exit costs
|
|
|
6
|
|
|
6
|
|
|
(5
|
)
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
44
|
|
|
11
|
|
|
(36
|
)
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes and
minority interest, and income tax expense are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Income (loss) from continuing operations before income taxes and
minority interest
|
|
|
3
|
|
|
|
66
|
|
|
|
(15
|
)
|
|
|
168
|
|
Income tax expense
|
|
|
11
|
|
|
|
14
|
|
|
|
44
|
|
|
|
35
|
|
Effective tax rate
|
|
|
304
|
%
|
|
|
21
|
%
|
|
|
|
|
|
|
21
|
%
|
In the three and nine months ended June 30, 2007 and 2008,
the tax expense of the Company is affected by lower foreign tax
rates, tax credits and the need for valuation allowances on
deferred tax assets in certain jurisdictions.
Effective October 1, 2007, the Company adopted FIN 48
(see note 2). The total amount of gross unrecognized tax
benefits from uncertain tax positions, which, if recognized,
would favorably affect the Companys effective tax rate, is
68 million as of October 1, 2007. Additionally,
uncertain tax positions which, if recognized, would increase
available net operating losses for the respective years for
which a valuation allowance is established, aggregate
70 million on a tax effected basis as of
October 1, 2007.
The Company has accrued interest and penalties related to income
tax liabilities of 4 million as of October 1,
2007. Interest and penalties related to income tax liabilities
are included in interest expense, net and other non-operating
income, net, respectively.
Our German and foreign tax returns are periodically examined by
tax authorities, and several entities of the consolidated group
are currently subject to such an examination. Although the
timing of the resolution of tax authority examinations is
uncertain, it is reasonably possible that the balance of gross
unrecognized tax benefits could change within the next
12 months as a result of such ongoing and future
examinations.
|
|
7.
|
Earnings (Loss)
Per Share
|
Basic earnings (loss) per share (EPS) is calculated
by dividing net income (loss) by the weighted average number of
ordinary shares outstanding during the period. Diluted EPS is
calculated by dividing net income by the sum of the weighted
average number of ordinary shares outstanding plus all
additional
21
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
ordinary shares that would have been outstanding if potentially
dilutive instruments or ordinary share equivalents had been
issued.
The computation of basic and diluted EPS is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
Numerator ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(10
|
)
|
|
|
45
|
|
|
|
(65
|
)
|
|
|
109
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(187
|
)
|
|
|
(637
|
)
|
|
|
12
|
|
|
|
(2,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before extraordinary loss
|
|
|
(197
|
)
|
|
|
(592
|
)
|
|
|
(53
|
)
|
|
|
(2,359
|
)
|
Extraordinary loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(197
|
)
|
|
|
(592
|
)
|
|
|
(88
|
)
|
|
|
(2,359
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator (shares in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding basic
|
|
|
749.1
|
|
|
|
749.7
|
|
|
|
748.3
|
|
|
|
749.7
|
|
Effect of dilutive instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding diluted
|
|
|
749.1
|
|
|
|
749.7
|
|
|
|
748.3
|
|
|
|
749.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
per share (in
)
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(0.01
|
)
|
|
|
0.06
|
|
|
|
(0.09
|
)
|
|
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(0.25
|
)
|
|
|
(0.85
|
)
|
|
|
0.01
|
|
|
|
(3.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before extraordinary loss
|
|
|
(0.26
|
)
|
|
|
(0.79
|
)
|
|
|
(0.08
|
)
|
|
|
(3.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extraordinary loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(0.26
|
)
|
|
|
(0.79
|
)
|
|
|
(0.12
|
)
|
|
|
(3.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Quarterly earnings (loss) per share
may not add up to year-to-date earnings (loss) per share due to
rounding.
|
The weighted average of potentially dilutive instruments that
were excluded from the diluted earnings (loss) per share
computations, because the exercise price was greater than the
average market price of the ordinary shares during the period or
were otherwise not dilutive, includes 38.5 million and
32.1 million shares underlying employee stock options for
the three months ended June 30, 2007 and 2008,
respectively, and 41.4 million and 34.2 million shares
underlying employee stock options for the nine months ended
June 30, 2007 and 2008, respectively. Additionally,
68.4 million and 64.5 million ordinary shares issuable
upon conversion of outstanding convertible subordinated notes
during the three months ended June 30, 2007 and 2008,
respectively, and 76.9 million and 67.1 million
ordinary shares issuable upon conversion of outstanding
convertible subordinated notes during the nine months ended
June 30, 2007 and 2008, respectively, were not included in
the computation of diluted earnings (loss) per share as their
impact was not dilutive.
22
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
|
|
8.
|
Trade Accounts
Receivable, net
|
Trade accounts receivable, net consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Third party trade
|
|
|
583
|
|
|
|
540
|
|
Associated and Related Companies trade (note 13)
|
|
|
68
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, gross
|
|
|
651
|
|
|
|
571
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
(31
|
)
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
620
|
|
|
|
546
|
|
|
|
|
|
|
|
|
|
|
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Raw materials and supplies
|
|
|
59
|
|
|
55
|
Work-in-process
|
|
|
354
|
|
|
396
|
Finished goods
|
|
|
185
|
|
|
219
|
|
|
|
|
|
|
|
Total inventories
|
|
|
598
|
|
|
670
|
|
|
|
|
|
|
|
Debt consists of the following:
|
|
|
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Short-term debt:
|
|
|
|
|
|
|
Loans payable to banks, weighted average rate 5.5%
|
|
|
127
|
|
|
51
|
Current portion of long-term debt
|
|
|
133
|
|
|
142
|
|
|
|
|
|
|
|
Total short-term debt and current maturities
|
|
|
260
|
|
|
193
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
Exchangeable subordinated notes, 1.375%, due 2010
|
|
|
215
|
|
|
215
|
Convertible subordinated notes, 5.0%, due 2010
|
|
|
695
|
|
|
597
|
Loans payable to banks:
|
|
|
|
|
|
|
Unsecured term loans, weighted average rate 4.52%, due
2009 2013
|
|
|
214
|
|
|
240
|
Secured term loans, weighted average rate 2.45%, due 2013
|
|
|
4
|
|
|
2
|
Notes payable to governmental entity, due 2010
|
|
|
21
|
|
|
20
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
1,149
|
|
|
1,074
|
|
|
|
|
|
|
|
During the three months ended June, 30, 2008, the Company
repurchased a notional amount of 100 million of its
convertible subordinated notes due 2010. The transaction
resulted in a net gain of 2 million before tax, which
was recognized in interest expense, net during the three months
ended June 30, 2008. The repurchase was made out of
available cash.
Concurrently with the issuance of $248 million in
convertible notes due 2013 by Qimonda (as guarantor) through its
subsidiary Qimonda Finance LLC (as issuer) on February 12,
2008, Infineon loaned Credit Suisse International
20.7 million Qimonda American Depositary Shares ancillary
to the placement of the convertible notes, which remained
outstanding as of June 30, 2008.
23
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
The Company has established independent financing arrangements
with several financial institutions, in the form of both short-
and long-term credit facilities, which are available for
anticipated funding purposes, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of Financial
|
|
|
|
As of June 30, 2008
|
|
|
Institution
|
|
Purpose/
|
|
Aggregate
|
|
|
|
|
Term
|
|
Commitment
|
|
intended use
|
|
facility
|
|
Drawn
|
|
Available
|
|
|
|
|
|
|
( in millions)
|
|
Short-term
|
|
firm commitment
|
|
working capital, guarantees
|
|
|
348
|
|
|
51
|
|
|
297
|
Short-term
|
|
no firm commitment
|
|
working capital, cash management
|
|
|
169
|
|
|
|
|
|
169
|
Long-term
(1)
|
|
firm commitment
|
|
general corporate purposes
|
|
|
414
|
|
|
114
|
|
|
300
|
Long-term
(1)
|
|
firm commitment
|
|
project finance
|
|
|
290
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,221
|
|
|
455
|
|
|
766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Including current maturities.
|
|
|
11.
|
Stock-based
Compensation
|
Infineon Stock
Option Plans
A summary of the status of the Infineon stock option plans as of
June 30, 2008, and changes during the nine months then
ended is presented below (options in millions, exercise prices
in Euro, intrinsic value in millions of Euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
|
|
|
|
average
|
|
average
|
|
Aggregated
|
|
|
Number of
|
|
|
exercise
|
|
remaining life
|
|
Intrinsic
|
|
|
options
|
|
|
price
|
|
(in years)
|
|
Value
|
|
Outstanding at September 30, 2007
|
|
|
39.4
|
|
|
|
16.17
|
|
|
2.99
|
|
|
66
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
(5.4
|
)
|
|
|
40.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2008
|
|
|
34.0
|
|
|
|
12.32
|
|
|
2.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest, net of estimated forfeitures at
June 30, 2008
|
|
|
34.0
|
|
|
|
12.30
|
|
|
2.52
|
|
|
|
Exercisable at June 30, 2008
|
|
|
27.1
|
|
|
|
12.90
|
|
|
2.08
|
|
|
|
Options with an aggregate fair value of 32 million
and 26 million vested during the nine months ended
June 30, 2007 and 2008, respectively. Options with a total
intrinsic value of 8 million and 0 were
exercised during the nine months ended June 30, 2007 and
2008, respectively.
24
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Changes in the Companys unvested options during the nine
months ended June 30, 2008, are summarized as follows
(options in millions, fair values in Euro, intrinsic value in
millions of Euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
|
|
|
|
average
|
|
average
|
|
Aggregated
|
|
|
Number of
|
|
|
grant date
|
|
remaining life
|
|
Intrinsic
|
|
|
options
|
|
|
fair value
|
|
(in years)
|
|
Value
|
|
Unvested at September 30, 2007
|
|
|
13.6
|
|
|
|
3.50
|
|
|
4.77
|
|
|
35
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(6.4
|
)
|
|
|
4.04
|
|
|
|
|
|
|
Forfeited
|
|
|
(0.3
|
)
|
|
|
3.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at June 30, 2008
|
|
|
6.9
|
|
|
|
2.96
|
|
|
4.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested options expected to vest
|
|
|
6.9
|
|
|
|
2.99
|
|
|
4.28
|
|
|
|
As of June 30, 2008, there was a total of
6 million in unrecognized compensation expense
related to unvested stock options of Infineon, which is expected
to be recognized over a weighted-average period of
1.04 years.
Stock-Based
Compensation Expense
Stock-based compensation expense was allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2007
|
|
2008
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Compensation expense recognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
1
|
|
|
1
|
|
|
4
|
|
|
|
3
|
|
Research and development expenses
|
|
|
1
|
|
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
|
3
|
|
|
1
|
|
|
9
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation effect on basic and diluted loss per share in
(1)
|
|
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Quarterly earnings (loss) per share
may not add up to year-to-date earnings (loss) per share due to
rounding.
|
Cash received from stock option exercises was
16 million and 0 during the nine months ended
June 30, 2007 and 2008, respectively. The amount of
stock-based compensation expense which was capitalized and
remained in inventories for the nine months ended June 30,
2007 and 2008 was immaterial. Stock-based compensation expense
does not reflect any income tax benefits, since stock options
are granted in tax jurisdictions where the expense is not
deductible for tax purposes.
25
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
|
|
12.
|
Other
Comprehensive Loss
|
The changes in the components of other comprehensive loss are as
follows:
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Unrealized losses on securities:
|
|
|
|
|
|
|
|
|
Unrealized holding losses
|
|
|
(6
|
)
|
|
|
(15
|
)
|
Reclassification adjustment for gains included in net income or
loss
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
Unrealized losses, net
|
|
|
(11
|
)
|
|
|
(20
|
)
|
Unrealized gains on cash flow hedges
|
|
|
2
|
|
|
|
7
|
|
Foreign currency translation adjustment
|
|
|
(73
|
)
|
|
|
(85
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
(82
|
)
|
|
|
(98
|
)
|
|
|
|
|
|
|
|
|
|
The Company has transactions in the normal course of business
with Associated and Related Companies (Related
Parties). The Company purchases certain of its raw
materials, especially chipsets, from, and sells certain of its
products to, Related Parties. Purchases and sales to Related
Parties are generally based on market prices or manufacturing
cost plus a
mark-up.
Related Party receivables consist of the following:
|
|
|
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Current:
|
|
|
|
|
|
|
Associated and Related Companies trade (note 8)
|
|
|
68
|
|
|
31
|
Associated and Related Companies financial and other
receivables
|
|
|
79
|
|
|
65
|
Employee receivables
|
|
|
5
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
152
|
|
|
107
|
|
|
|
|
|
|
|
Non-current:
|
|
|
|
|
|
|
Employee receivables
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
Total Related Party receivables
|
|
|
153
|
|
|
108
|
|
|
|
|
|
|
|
Related Party payables consist of the following:
|
|
|
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Associated and Related Companies trade
|
|
|
69
|
|
|
46
|
Associated and Related Companies financial and other
payables
|
|
|
12
|
|
|
4
|
|
|
|
|
|
|
|
Total Related Party payables
|
|
|
81
|
|
|
50
|
|
|
|
|
|
|
|
At September 30, 2007 and June 30, 2008, Associated
and Related Companies financial and other
receivables included a revolving term loan of
52 million and 40 million, respectively,
due from ALTIS.
26
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Transactions with Related Parties include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Sales to Related Parties
|
|
|
14
|
|
|
1
|
|
|
41
|
|
|
1
|
Purchases from Related Parties
|
|
|
130
|
|
|
161
|
|
|
437
|
|
|
430
|
Information with respect to the Companys pension plans is
presented for German (Domestic) plans and non-German
(Foreign) plans.
The components of net periodic pension cost are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Three months ended
|
|
|
|
June 30, 2007
|
|
|
June 30, 2008
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
|
( in millions)
|
|
|
Service cost
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
Interest cost
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
Expected return on plan assets
|
|
|
4
|
|
|
|
1
|
|
|
|
5
|
|
|
|
1
|
|
Amortization of unrecognized actuarial losses
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
|
(8
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
|
Nine months ended
|
|
|
|
June 30, 2007
|
|
|
June 30, 2008
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
|
( in millions)
|
|
|
Service cost
|
|
|
(15
|
)
|
|
|
(3
|
)
|
|
|
(12
|
)
|
|
|
(3
|
)
|
Interest cost
|
|
|
(14
|
)
|
|
|
(3
|
)
|
|
|
(14
|
)
|
|
|
(3
|
)
|
Expected return on plan assets
|
|
|
12
|
|
|
|
3
|
|
|
|
16
|
|
|
|
3
|
|
Amortization of unrecognized actuarial losses
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
|
(23
|
)
|
|
|
(3
|
)
|
|
|
(10
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.
|
Financial
Instruments
|
The Company periodically enters into derivatives, including
foreign currency forward and option contracts as well as
interest rate swap agreements. The objective of these
transactions is to reduce the impact of interest rate and
exchange rate fluctuations on the Companys foreign
currency denominated net future cash flows. The Company does not
enter into derivatives for trading or speculative purposes.
Gains and losses on derivative financial instruments are
included in determining net loss, with those related to
operations included primarily in cost of goods sold, and those
related to financial activities included in other non-operating
income (expense).
27
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
The Euro equivalent notional amounts in millions and fair values
of the Companys derivative instruments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
June 30, 2008
|
|
|
|
Notional
|
|
|
|
|
Notional
|
|
|
|
|
|
amount
|
|
Fair value
|
|
|
amount
|
|
Fair value
|
|
|
|
( in millions)
|
|
|
Forward contracts sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
260
|
|
|
14
|
|
|
|
429
|
|
|
16
|
|
Japanese yen
|
|
|
15
|
|
|
|
|
|
|
9
|
|
|
|
|
Malaysian ringgit
|
|
|
3
|
|
|
|
|
|
|
2
|
|
|
|
|
Norwegian krone
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
283
|
|
|
(19
|
)
|
|
|
319
|
|
|
(11
|
)
|
Japanese yen
|
|
|
4
|
|
|
|
|
|
|
5
|
|
|
|
|
Singapore dollar
|
|
|
19
|
|
|
|
|
|
|
15
|
|
|
|
|
Great Britain pound
|
|
|
6
|
|
|
|
|
|
|
4
|
|
|
|
|
Malaysian ringgit
|
|
|
66
|
|
|
(1
|
)
|
|
|
45
|
|
|
(2
|
)
|
Norwegian krone
|
|
|
7
|
|
|
|
|
|
|
3
|
|
|
|
|
Other currencies
|
|
|
1
|
|
|
|
|
|
|
6
|
|
|
|
|
Interest rate swaps
|
|
|
700
|
|
|
(10
|
)
|
|
|
500
|
|
|
(6
|
)
|
Currency options sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
|
|
|
|
|
|
|
100
|
|
|
(1
|
)
|
Currency options purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
|
|
|
|
|
|
|
95
|
|
|
2
|
|
Other
|
|
|
123
|
|
|
9
|
|
|
|
96
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value, net
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2007 and June 30, 2008, all
derivative financial instruments are recorded at fair value.
Other non-operating income (expense), net included losses of
3 million and 8 million for the three and
nine months ended June 30, 2007, respectively, related to
losses from foreign currency derivatives and foreign currency
transactions. Gains and losses included in other non-operating
income (expense), net from foreign currency derivatives and
foreign currency transactions for the three and nine months
ended June 30, 2008, were negligible.
The Company enters into derivative instruments, primarily
foreign exchange forward contracts, to hedge significant
anticipated U.S. dollar cash flows from operations. During
the three months ended June 30, 2008, the Company
designated as cash flow hedges certain foreign exchange forward
contracts and foreign exchange options related to highly
probable forecasted sales denominated in U.S. dollars. The
Company did not record any ineffectiveness for these hedges for
the three months ended June 30, 2008. However, it excluded
differences between spot and forward rates and the time
value from the assessment of hedge effectiveness and included
this component of financial instruments gain or loss as
part of cost of goods sold. It is estimated that
6 million of the net gains recognized directly in
other comprehensive income as of June 30, 2008 will be
reclassified into earnings during the 2008 fiscal year. All
foreign exchange derivatives designated as cash flow hedges held
as of June 30, 2008 have maturities of six months or less.
Foreign exchange derivatives entered into by the Company to
offset exposure to anticipated cash flows that do not meet the
requirements for applying hedge accounting are marked to market
at each reporting period with unrealized gains and losses
recognized in earnings. For the nine months ended June 30,
2007 and 2008, no gains or losses were reclassified from
accumulated other comprehensive income as a result of the
discontinuance of foreign currency cash flow hedges resulting
from a determination that it was probable that the original
forecasted transaction would not occur.
28
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
|
|
16.
|
Commitments and
Contingencies
|
Litigation and
Investigations
In September 2004, the Company entered into a plea agreement
with the Antitrust Division of the U.S. Department of
Justice (DOJ) in connection with its investigation
into alleged antitrust violations in the DRAM industry. Pursuant
to this plea agreement, the Company agreed to plead guilty to a
single count of conspiring with other unspecified DRAM
manufacturers to fix the prices of DRAM products between
July 1, 1999 and June 15, 2002, and to pay a fine of
$160 million. The fine plus accrued interest is being paid
in equal annual installments through 2009. The Company has a
continuing obligation to cooperate with the DOJ in its ongoing
investigation of other participants in the DRAM industry. The
price-fixing charges related to DRAM sales to six Original
Equipment Manufacturer (OEM) customers that
manufacture computers and servers. The Company has entered into
settlement agreements with five of these OEM customers and is
considering the possibility of a settlement with the remaining
OEM customer, which purchased only a very small volume of DRAM
products from the Company. The Company has secured individual
settlements with eight direct customers in addition to those OEM
customers.
Subsequent to the commencement of the DOJ investigation, a
number of putative class action lawsuits were filed against the
Company, its U.S. subsidiary Infineon Technologies North
America Corporation (IF North America) and other
DRAM suppliers, alleging price-fixing in violation of the
Sherman Act and seeking treble damages in unspecified amounts,
costs, attorneys fees, and an injunction against the
allegedly unlawful conduct. In September 2002, the Judicial
Panel on Multi-District Litigation ordered that these federal
cases be transferred to the U.S. District Court for the
Northern District of California for coordinated or consolidated
pre-trial proceedings as part of a Multi District Litigation
(MDL). In September 2005, the Company and IF North
America entered into a definitive settlement agreement with
counsel to the class of direct U.S. purchasers of DRAM
(granting an opportunity for individual class members to opt out
of the settlement). The court entered final judgment and
dismissed the claims with prejudice in November 2006.
In April 2006, Unisys Corporation (Unisys) filed a
complaint against the Company and IF North America, among other
DRAM suppliers, alleging state and federal claims for
price-fixing and seeking recovery as both a direct and indirect
purchaser of DRAM. The complaint was filed in the Northern
District of California and has been related to the MDL
proceeding described above. In October 2007, the court denied a
motion of the Company, IF North America, and the other
defendants to dismiss the Unisys complaint.
In February and March 2007, four more cases were filed by All
American Semiconductor, Inc., Edge Electronics, Inc., Jaco
Electronics, Inc., and DRAM Claims Liquidation Trust, by its
Trustee, Wells Fargo Bank, N.A. The All American Semiconductor
complaint alleges claims for price-fixing under the Sherman Act.
The Edge Electronics, Jaco Electronics and DRAM Claims
Liquidation Trust complaints allege state and federal claims for
price-fixing. All four cases were filed in the Northern District
of California and have been related to the MDL described above.
The court has scheduled a trial date for June 1, 2009.
64 additional cases were filed through October 2005 in
numerous federal and state courts throughout the United States.
Each of these state and federal cases (except for one relating
to foreign purchasers, described below) purports to be on behalf
of a class of individuals and entities who indirectly purchased
DRAM in the United States during specified time periods
commencing in or after 1999 (the Indirect U.S. Purchaser
Class). The complaints variously allege violations of the
Sherman Act, Californias Cartwright Act, various other
state laws, unfair competition law, and unjust enrichment and
seek treble damages in generally unspecified amounts,
restitution, costs, attorneys fees and injunctions against
the allegedly unlawful conduct.
The foreign purchasers case referred to above was dismissed with
prejudice and without leave to amend in March 2006; the
plaintiffs have appealed to the Ninth Circuit Court of Appeals.
23 of the state and federal court cases were subsequently
ordered transferred to the U.S. District Court for the
Northern District of California for coordinated and consolidated
pretrial proceedings as part of the MDL proceeding described
above. 19 of the 23 transferred cases are currently pending in
the MDL litigation. The pending California state cases were
coordinated and transferred to San Francisco County
Superior Court for pre-trial proceedings. The plaintiffs in the
indirect purchaser cases outside California agreed to stay
29
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
proceedings in those cases in favor of proceedings on the
indirect purchaser cases pending as part of the MDL pre-trial
proceedings.
On January 29, 2008 the district court in the MDL
proceedings entered an order granting in part and denying in
part the defendants motion for judgment on the pleadings
directed at several of the claims. Plaintiffs filed a Third
Amended Complaint on February 27, 2008. On March 28,
2008, the court granted plaintiffs leave to immediately appeal
its decision to the Court of Appeals for the Ninth Circuit. On
June 26, 2008, the Ninth Circuit Court of Appeals issued an
order agreeing to hear the appeal. Plaintiffs have agreed to a
stay of further proceedings in the state court cases until the
appeal is complete.
In July 2006, the New York state attorney general filed an
action in the U.S. District Court for the Southern District
of New York against the Company, IF North America and several
other DRAM manufacturers on behalf of New York governmental
entities and New York consumers who purchased products
containing DRAM beginning in 1998. The plaintiffs allege
violations of state and federal antitrust laws arising out of
the same allegations of DRAM price-fixing and artificial price
inflation practices discussed above, and seek recovery of actual
and treble damages in unspecified amounts, penalties, costs
(including attorneys fees) and injunctive and other
equitable relief. In October 2006, this action was made part of
the MDL proceeding described above. In July 2006, the attorneys
general of Alaska, Arizona, Arkansas, California, Colorado,
Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Louisiana,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma,
Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah,
Vermont, Virginia, Washington, West Virginia and Wisconsin filed
a lawsuit in the U.S. District Court for the Northern
District of California against the Company, IF North America and
several other DRAM manufacturers on behalf of governmental
entities, consumers and businesses in each of those states who
purchased products containing DRAM beginning in 1998. In
September 2006, the complaint was amended to add claims by the
attorneys general of Kentucky, Maine, New Hampshire, North
Carolina, the Northern Mariana Islands and Rhode Island. This
action is based on state and federal law claims relating to the
same alleged anticompetitive practices in the sale of DRAM and
plaintiffs seek recovery of actual and treble damages in
unspecified amounts, penalties, costs (including attorneys
fees) and injunctive and other relief. In October 2006, the
Company joined the other defendants in filing motions to dismiss
several of the claims alleged in these two actions. In August
2007, the court entered orders granting the motions in part and
denying the motions in part. Amended complaints in both actions
were filed on October 1, 2007. On April 10, 2008, the
state attorney general of Delaware filed a request for dismissal
of his claims without prejudice. On April 15, 2008, the
court issued two orders in the New York and multistate attorneys
general cases on the defendants motions to dismiss. The
order in the New York action denied the defendants motion
to dismiss. The order in the multistate attorneys general case
partly dismissed and partly granted the motion. Between
June 25, 2007 and April 28, 2008, the state attorneys
general of six states, Alaska, Delaware, Ohio, New Hampshire,
Texas and Vermont, filed requests for dismissal of their claims
without prejudice.
In April 2003, the Company received a request for information
from the European Commission (the Commission) to
enable the Commission to assess the compatibility with the
Commissions rules on competition of certain practices of
which the Commission has become aware in the European market for
DRAM products. In light of its plea agreement with the DOJ, the
Company made an accrual during the 2004 fiscal year for an
amount representing the probable minimum fine that may be
imposed as a result of the Commissions investigation. Any
fine actually imposed by the Commission may be significantly
higher than the reserve established, although the Company cannot
more accurately estimate the amount of the actual fine. The
Company is fully cooperating with the Commission in its
investigation.
In May 2004, the Canadian Competition Bureau advised IF North
America that it, its affiliates and present and past directors,
officers and employees are among the targets of a formal inquiry
into an alleged conspiracy to prevent or lessen competition
unduly in the production, manufacture, sale or supply of DRAM,
contrary to the Canadian Competition Act. No formal steps (such
as subpoenas) have been taken by the Competition Bureau to date.
The Company is fully cooperating with the Competition Bureau in
its inquiry.
Between December 2004 and February 2005, two putative class
proceedings were filed in the Canadian province of Quebec, and
one was filed in each of Ontario and British Columbia against
the
30
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Company, IF North America and other DRAM manufacturers on behalf
of all direct and indirect purchasers resident in Canada who
purchased DRAM or products containing DRAM between July 1999 and
June 2002, seeking damages, investigation and administration
costs, as well as interest and legal costs. Plaintiffs primarily
allege conspiracy to unduly restrain competition and to
illegally fix the price of DRAM.
Between September and November 2004, seven securities class
action complaints were filed against the Company and current or
former officers in U.S. federal district courts, later
consolidated in the Northern District of California, on behalf
of a putative class of purchasers of the Companys
publicly-traded securities who purchased them during the period
from March 2000 to July 2004 (the Securities
Class Actions). The consolidated amended complaint
alleges violations of the U.S. securities laws and asserts
that the defendants made materially false and misleading public
statements about the Companys historical and projected
financial results and competitive position because they did not
disclose the Companys alleged participation in DRAM
price-fixing activities and that, by fixing the price of DRAM,
defendants manipulated the price of the Companys
securities, thereby injuring its shareholders. The plaintiffs
seek unspecified compensatory damages, interest, costs and
attorneys fees. In September 2006, the court dismissed the
complaint with leave to amend. In October 2006, the plaintiffs
filed a second amended complaint. In March 2007, pursuant to a
stipulation agreed with the defendants, the plaintiffs withdrew
the second amended complaint and were granted a motion for leave
to file a third amended complaint. Plaintiffs filed a third
amended complaint in July 2007. A hearing was held on
November 19, 2007. On January 25, 2008, the court
entered into an order granting in part and denying in part the
defendants motions to dismiss the Securities
Class Action complaint. The court denied the motion to
dismiss with respect to plaintiffs claims under
§§ 10(b) and 20(a) of the U.S. Exchange Act
of 1934 and dismissed the claim under § 20A of the act
with prejudice.
The Companys directors and officers insurance
carriers have denied coverage in the Securities
Class Actions and the Company filed suit against the
carriers in December 2005 and August 2006. The Companys
claims against one D&O insurance carrier were finally
dismissed in May 2007. The claim against the other insurance
carrier is still pending.
In April 2007, Lin Packaging Technologies, Ltd.
(Lin) filed a lawsuit against the Company, IF North
America and an additional DRAM manufacturer in the
U.S. District Court for the Eastern District of Texas,
alleging that certain DRAM products infringe two Lin patents. In
November 2007, the parties settled and the case was dismissed.
On October 31, 2007,
Wi-LAN Inc.
filed suit in the U.S. District Court for the Eastern
District of Texas against Westell Technolgies, Inc. and 16 other
defendants, including the Company and IF North America. The
complaint alleges infringement of three U.S. patents by
certain wireless products compliant with the IEEE 802.11
standards and certain ADSL products compliant with the ITU G.992
standards, in each case supplied by certain of the defendants.
On January 25, 2008 the Company and IF North America filed
an answer and counterclaim.
Wi-LANs
answer to the counterclaim was filed on March 20, 2008. On
April 1, 2008 the Court granted the Companys and
other non-US defendants stipulated motion to dismiss
without prejudice with respect to such non-US defendants.
In October 2007, CIF Licensing LLC, New Jersey, USA
(CIF), a member of the General Electric Group, filed
suit in the Civil Court of Düsseldorf, Germany against
Deutsche Telekom AG (DTAG) alleging infringement of
four European patents in Germany by certain CPE-modems and
ADSL-systems (the CIF Suit). DTAG has given
third-party notice to its suppliers which include
customers of Infineon to the effect that a
declaratory judgment of patent infringement would be legally
binding on the suppliers. Since January 2008, various suppliers
also gave their suppliers including
Infineon third-party notice. On January 28,
2008, Infineon became a party in the suit on the side of DTAG.
CIF then filed suit against Infineon alleging indirect
infringement of one of the four European patents. DTAG, most of
its suppliers and most of their suppliers have formed a joint
defense group (see note 18). Infineon is contractually
obliged to indemnify
and/or to
pay damages to its customers upon different conditions and to
different extents, depending on the terms of the specific
contracts.
On April 12, 2008, Third Dimension Semiconductor Inc. filed
suit in the U.S. District Court for the Eastern District of
Texas against the Company and IF North America. The complaint
alleges infringement of 3 U.S. patents by certain products,
including power semiconductor devices sold under the name
31
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
CoolMOS. On May 20, 2008, Third Dimension
Semiconductor Inc. filed an amended complaint adding one more US
patent to the lawsuit.
On April 18, 2008 LSI Corporation (LSI) filed a
complaint with the US International Trade Commission to
investigate an alleged infringement by 18 parties of one LSI
patent (the ITC Case). On June 6, 2008 LSI
filed a motion to amend such complaint to add Qimonda and 4
other respondents to the investigation. In addition, LSI filed a
lawsuit in the Eastern District of Texas on the same patent
against all respondents in the ITC case, including Qimonda.
Qimonda has not yet been served and formally added to these
proceedings, but expects the case in the Eastern District of
Texas to be stayed while the ITC case is pending.
Accruals and
the Potential Effect of these Lawsuits
Liabilities related to legal proceedings are recorded when it is
probable that a liability has been incurred and the associated
amount can be reasonably estimated. Where the estimated amount
of loss is within a range of amounts and no amount within the
range is a better estimate than any other amount, the minimum
amount is accrued. As of June 30, 2008, the Company had
accrued liabilities in the amount of 34 million
related to the DOJ and European antitrust investigations and the
direct and indirect purchaser litigation and settlements
described above, as well as for legal expenses for the DOJ
related and securities class action complaints. In addition, as
of June 30, 2008, Qimonda has accrued 36 million
in connection with these matters. Under the contribution
agreement in connection with the carve-out of the Qimonda
business, Qimonda is required to indemnify the Company, in whole
or in part, for any claim (including any related expenses)
arising in connection with the liabilities, contracts, offers,
uncompleted transactions, continuing obligations, risks,
encumbrances and other liabilities the Company incurs in
connection with the antitrust actions and the Securities
Class Action described above.
As additional information becomes available, the potential
liability related to these matters will be reassessed and the
estimates revised, if necessary. These accrued liabilities would
be subject to change in the future based on new developments in
each matter, or changes in circumstances, which could have a
material adverse effect on the Companys financial
condition and results of operations.
An adverse final resolution of the investigations or lawsuits
described above could result in significant financial liability
to, and other adverse effects on, the Company, which would have
a material adverse effect on its results of operations,
financial condition and cash flows. In each of these matters,
the Company is continuously evaluating the merits of the
respective claims and defending itself vigorously or seeking to
arrive at alternative resolutions in the best interest of the
Company, as it deems appropriate. Irrespective of the validity
or the successful assertion of the claims described above, the
Company could incur significant costs with respect to defending
against or settling such claims, which could have a material
adverse effect on its results of operations, financial condition
and cash flows.
The Company is subject to various other lawsuits, legal actions,
claims and proceedings related to products, patents,
environmental matters, and other matters incidental to its
businesses. The Company has accrued a liability for the
estimated costs of adjudication of various asserted and
unasserted claims existing as of the balance sheet date. Based
upon information presently known to management, the Company does
not believe that the ultimate resolution of such other pending
matters will have a material adverse effect on the
Companys financial position, although the final resolution
of such matters could have a material adverse effect on the
Companys results of operations or cash flows in the period
of settlement.
Other
Contingencies
On a group-wide basis the Company has guarantees outstanding to
external parties of 216 million as of June 30,
2008 (of which 99 million are guarantees of Infineon,
and 117 million are guarantees of Qimonda). In
addition, the Company, as parent company, has in certain
customary circumstances guaranteed the settlement of certain of
its consolidated subsidiaries obligations to third
parties. Such third party obligations are reflected as
liabilities in the condensed consolidated financial statements
by virtue of consolidation. As of June 30, 2008, such
guarantees, principally relating to certain consolidated
subsidiaries third-party debt, aggregated
1,513 million (of which 1,047 million are
guarantees of Infineon, and 466 million are
guarantees of Qimonda), of which 972 million relates
to convertible and
32
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
exchangeable notes issued (of which 815 million
relate to convertible and exchangeable notes issued by Infineon,
and 157 million relates to convertible notes issued
by Qimonda).
The Company has received government grants and subsidies related
to the construction and financing of certain of its production
facilities. These amounts are recognized upon the attainment of
specified criteria. Certain of these grants have been received
contingent upon the Company maintaining compliance with certain
project-related requirements for a specified period after
receipt. The Company is committed to maintaining these
requirements. Nevertheless, should such requirements not be met,
as of June 30, 2008, a maximum of 320 million of
these subsidies could be refundable (of which
268 million relate to Qimonda).
|
|
17.
|
Operating Segment
and Geographic Information
|
The Company reports its operating segment and geographic
information in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related
Information.
The Companys current organizational structure became
effective on May 1, 2006, following the legal separation of
its memory products business into the stand-alone legal entity,
Qimonda AG. Furthermore, effective March 31, 2008, the
historical results of the Qimonda business are reported as
discontinued operations in the Companys condensed
consolidated statements of operations for all periods presented,
and the assets and liabilities of the Qimonda business are
classified as held for disposal in the condensed consolidated
balance sheets for all periods presented. As a result, the
Company operates primarily in two operating segments:
Automotive, Industrial & Multimarket, and
Communication Solutions. Further, certain of the Companys
remaining activities for product lines sold, for which there are
no continuing contractual commitments subsequent to the
divestiture date, as well as new business activities also meet
the SFAS No. 131 definition of an operating segment,
but do not meet the requirements of a reportable segment as
specified in SFAS No. 131. Accordingly, these segments
are combined and disclosed in the Other Operating
Segments category pursuant to SFAS No. 131.
Following the completion of the Qimonda carve-out, certain
corporate overhead expenses are no longer apportioned to Qimonda
and are instead allocated to Infineons logic segments. In
addition, Other Operating Segments included net sales and
earnings that Infineons 200-millimeter production facility
in Dresden recorded from the sale of wafers to Qimonda under a
foundry agreement. The Corporate and Eliminations segment
reflects the elimination of these net sales and earnings.
Furthermore, effective October 1, 2007, raw materials and
work-in-process
of the common production front-end facilities, and raw materials
of the common back-end facilities, are no longer under the
control or responsibility of any of the operating segment
managers, but rather of the operations management. The
operations management is responsible for the execution of the
production schedule, volume and units. Accordingly, this
inventory is no longer attributed to the operating segments, but
is included in the Corporate and Eliminations segment. Only
work-in-process
of the back-end facilities and finished goods are attributed to
the operating segments. Also effective October 1, 2007, the
Company records gains and losses from sales of investments in
marketable debt and equity securities in the Corporate and
Eliminations segment. The segments results of operations
of prior periods have been reclassified to be consistent with
the revised reporting structure and presentation, as well as to
facilitate analysis of current and future operating segment
information.
33
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
The following tables present selected segment data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
752
|
|
|
|
712
|
|
|
|
2,203
|
|
|
|
2,196
|
|
Communication Solutions
|
|
|
259
|
|
|
|
313
|
|
|
|
733
|
|
|
|
971
|
|
Other
Operating Segments
(1)
|
|
|
54
|
|
|
|
15
|
|
|
|
174
|
|
|
|
92
|
|
Corporate and
Eliminations
(2)
|
|
|
(54
|
)
|
|
|
(11
|
)
|
|
|
(163
|
)
|
|
|
(91
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,011
|
|
|
|
1,029
|
|
|
|
2,947
|
|
|
|
3,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes sales of
47 million and 8 million for the three
months ended June 30, 2007 and 2008, respectively, and of
146 million and 78 million for the nine
months ended June 30, 2007 and 2008, respectively, from
sales of wafers from Infineons 200-millimeter facility in
Dresden to Qimonda under a foundry agreement.
|
|
(2) |
|
Includes the elimination of sales
of 57 million and 9 million for the three
months ended June 30, 2007 and 2008, respectively, and of
166 million and 87 million for the nine
months ended June 30, 2007 and 2008, respectively,
primarily in connection with sales of wafers from
Infineons 200-millimeter facility in Dresden to Qimonda
under a foundry agreement, since these sales are not expected to
be part of the Qimonda disposal plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Infineon EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
77
|
|
|
|
106
|
|
|
|
189
|
|
|
|
268
|
|
Communication Solutions
|
|
|
(37
|
)
|
|
|
(30
|
)
|
|
|
(151
|
)
|
|
|
(70
|
)
|
Other Operating Segments
|
|
|
(2
|
)
|
|
|
1
|
|
|
|
(10
|
)
|
|
|
(3
|
)
|
Corporate and Eliminations
|
|
|
(25
|
)
|
|
|
(6
|
)
|
|
|
(51
|
)
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13
|
|
|
|
71
|
|
|
|
(23
|
)
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain items are included in Corporate and Eliminations and are
not allocated to the operating segments, consistent with the
Companys internal management reporting. These include
certain corporate headquarters costs, certain incubator and
early stage technology investment costs, non-recurring gains and
specific strategic technology initiatives. Additionally,
restructuring charges and employee stock-based compensation
expense are included in Corporate and Eliminations and not
allocated to the operating segments for internal or external
reporting purposes, since they arise from corporate directed
decisions not within the direct control of segment management.
Furthermore, legal costs associated with intellectual property
and product matters are recognized by the segments when paid,
which can differ from the period originally recognized by
Corporate and Eliminations. For the three months ended
June 30, 2007 and 2008, Corporate and Eliminations includes
unallocated excess capacity costs of 2 million and
9 million, respectively, restructuring charges of
20 million and 2 million, respectively,
and stock-based compensation expense of 3 million and
1 million, respectively. For the nine months ended
June 30, 2007 and 2008, Corporate and Eliminations includes
unallocated excess capacity costs of 5 million and
9 million, respectively, restructuring charges of
42 million and 11 million, respectively,
and stock-based compensation expense of 9 million and
4 million, respectively.
34
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
The following is a summary of net sales by geographic area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
220
|
|
|
217
|
|
|
672
|
|
|
677
|
Other Europe
|
|
|
220
|
|
|
205
|
|
|
663
|
|
|
614
|
North America
|
|
|
143
|
|
|
122
|
|
|
404
|
|
|
404
|
Asia/Pacific
|
|
|
357
|
|
|
422
|
|
|
1,013
|
|
|
1,270
|
Japan
|
|
|
57
|
|
|
43
|
|
|
157
|
|
|
147
|
Other
|
|
|
14
|
|
|
20
|
|
|
38
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,011
|
|
|
1,029
|
|
|
2,947
|
|
|
3,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers are based on the
customers billing location. No single customer accounted
for more than 10 percent of the Companys sales during
the three and nine months ended June 30, 2007 and 2008,
respectively.
The Company defines Infineon EBIT as earnings (loss) before
income (loss) from discontinued operations, interest and taxes.
The Companys management uses Infineon EBIT, among other
measures, to establish budgets and operational goals, to manage
the Companys business and to evaluate its performance. The
Company reports Infineon EBIT 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 operating segments. Because many
operating decisions, such as allocations of resources to
individual projects, are made on a basis for which the effects
of financing the overall business and of taxation are of
marginal relevance, management finds a metric that excludes the
effects of interest on financing and tax expense useful. In
addition, in measuring operating performance, particularly for
the purpose of making internal decisions, such as those relating
to personnel matters, it is useful for management to consider a
measure that excludes items over which the individuals being
evaluated have minimal control, such as enterprise-level
taxation and financing.
Infineon EBIT is determined as follows from the condensed
consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net loss
|
|
|
(197
|
)
|
|
|
(592
|
)
|
|
|
(88
|
)
|
|
|
(2,359
|
)
|
Adjust:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss (income) from discontinued operations, net of tax
|
|
|
187
|
|
|
|
637
|
|
|
|
(12
|
)
|
|
|
2,468
|
|
Income tax expense
|
|
|
11
|
|
|
|
14
|
|
|
|
44
|
|
|
|
35
|
|
Interest expense, net
|
|
|
12
|
|
|
|
12
|
|
|
|
33
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon EBIT
|
|
|
13
|
|
|
|
71
|
|
|
|
(23
|
)
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By July 16, 2008, DTAG and all the parties who joined the
CIF suit in Düsseldorf had filed their answer to the
complaint. At the same time, DTAG, Ericsson AB, Texas
Instruments Inc., Nokia Siemens Networks and the Company partly
jointly and partly separately filed actions of invalidity before
the Federal Patent Court in Munich with respect to all four
patents (see note 16).
On July 25, 2008, the Company announced restructuring
measures aimed at adapting the Companys size to current
market conditions. In the course of the implementation of these
measures, the Company expects that approximately 3,000 jobs will
be affected worldwide. However, due to the early stages of
implementation of these measures, the exact amount of
restructuring charges to be incurred cannot be estimated at this
time.
35
Supplementary
Information (Unaudited)
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 U.S. GAAP purposes are not considered to be
cash, it reports its gross cash position to provide
investors with an understanding of the Companys overall
liquidity. The gross and net cash positions include only amounts
from continuing operations, and are determined as follows from
the condensed consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Cash and cash equivalents
|
|
|
1,073
|
|
|
|
408
|
|
Marketable securities
|
|
|
210
|
|
|
|
452
|
|
|
|
|
|
|
|
|
|
|
Gross Cash Position
|
|
|
1,283
|
|
|
|
860
|
|
|
|
|
|
|
|
|
|
|
Less: Short-term debt
|
|
|
260
|
|
|
|
193
|
|
Long-term
debt
|
|
|
1,149
|
|
|
|
1,074
|
|
|
|
|
|
|
|
|
|
|
Net Cash Position
|
|
|
(126
|
)
|
|
|
(407
|
)
|
|
|
|
|
|
|
|
|
|
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. Free cash flow is not
intended to represent the residual cash flow available for
discretionary expenditures, since debt service requirements or
other non-discretionary expenditures are not deducted. Free cash
flow include only amounts from continuing operations, and is
determined as follows from the condensed consolidated statements
of cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
Net cash provided by (used in) operating activities from
continuing operations
|
|
|
50
|
|
|
|
146
|
|
|
|
(66
|
)
|
|
|
270
|
|
Net cash provided by (used in) investing activities from
continuing operations
|
|
|
(49
|
)
|
|
|
146
|
|
|
|
(27
|
)
|
|
|
(722
|
)
|
Thereof: Purchases (sales) of marketable securities, net
|
|
|
(30
|
)
|
|
|
(171
|
)
|
|
|
(265
|
)
|
|
|
246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
|
(29
|
)
|
|
|
121
|
|
|
|
(358
|
)
|
|
|
(206
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog
Most standard products are not ordered on a long-term,
fixed-price contract basis due to changing market conditions. It
is common industry practice to permit major customers to change
the date on which products are delivered or to cancel existing
orders. For these reasons, the Company believes that the backlog
at any time of standard products is not a reliable indicator of
future sales. Orders for customized logic products vary
depending on customer needs and industry conditions, capacity
and demand, while many customers request logistics agreements
based on rolling forecasts. As a result, the Company does not
place too much reliance on backlog to manage its business and
does not use it to evaluate performance. Due to possible changes
in customer delivery schedules, cancellation of orders and
potential delays in product shipments, the Companys
backlog as of any particular date may not be indicative of
actual sales for any later period.
36
Dividends
The Company has not declared or paid any dividend during the
three and nine months ended June 30, 2007 and 2008,
respectively.
Employees
As of June 30, 2008, the Company had the following number
of employees worldwide:
|
|
|
|
|
|
June 30,
|
|
|
2008
|
|
Infineon
|
|
|
29,356
|
Qimonda
|
|
|
12,806
|
|
|
|
|
Total
|
|
|
42,162
|
|
|
|
|
Of the Infineon workforce as of June 30, 2008,
6,311 employees were engaged in research and development.
Change of
Management
In its meeting on December 21, 2007, the Supervisory Board
of the Company appointed Dr. Marco Schröter as Chief
Financial Officer and Labor Director. Effective April 1,
2008, Dr. Marco Schröter succeeded Peter J. Fischl,
who retired.
On June 1, 2008, Dr. Wolfgang Ziebart resigned from
his position as the Companys Chief Executive Officer.
Peter Bauer, Member of the Management Board assumed the
Companys Chief Executive Officer position.
Market for
Ordinary Shares
The Companys ordinary shares are listed on the New York
Stock Exchange (NYSE) (in the form of American Depositary
Shares) and the Company is one of the DAX 30 companies
listed on the Frankfurt Stock Exchange (FSE). The Companys
shares are traded under the symbol IFX.
Relative Performance of the IFX shares since October 1,
2005 (based on Xetra daily closing prices, indexed on
September 30, 2005) is as follows:
37
Infineons share price performance and key data were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Nine months ended June 30,
|
|
|
2007
|
|
|
2008
|
|
|
+/- in%
|
|
|
2007
|
|
|
2008
|
|
|
+/- in%
|
|
DAX Beginning of the period
|
|
|
6,937.17
|
|
|
|
6,720.33
|
|
|
|
(3
|
)%
|
|
|
5,999.46
|
|
|
|
7,922.42
|
|
|
|
32
|
%
|
High
|
|
|
8,090.49
|
|
|
|
7,225.94
|
|
|
|
(11
|
)%
|
|
|
8,090.49
|
|
|
|
8,076.12
|
|
|
|
(0)
|
%
|
Low
|
|
|
6,937.17
|
|
|
|
6,418.32
|
|
|
|
(7
|
)%
|
|
|
5,992.22
|
|
|
|
6,182.30
|
|
|
|
3
|
%
|
End of the period
|
|
|
8,007.32
|
|
|
|
6,418.32
|
|
|
|
(20
|
)%
|
|
|
8,007.32
|
|
|
|
6,418.32
|
|
|
|
(20)
|
%
|
IFX closing prices in euros (Xetra) Beginning of the period
|
|
|
11.56
|
|
|
|
4.87
|
|
|
|
(58
|
)%
|
|
|
9.31
|
|
|
|
11.95
|
|
|
|
28
|
%
|
High
|
|
|
12.81
|
|
|
|
7.11
|
|
|
|
(44
|
)%
|
|
|
12.81
|
|
|
|
11.95
|
|
|
|
(7)
|
%
|
Low
|
|
|
10.88
|
|
|
|
4.57
|
|
|
|
(58
|
)%
|
|
|
9.25
|
|
|
|
4.08
|
|
|
|
(56)
|
%
|
End of the period
|
|
|
12.31
|
|
|
|
5.53
|
|
|
|
(55
|
)%
|
|
|
12.31
|
|
|
|
5.53
|
|
|
|
(55)
|
%
|
IFX closing prices in U.S. dollars (NYSE) Beginning of the period
|
|
|
15.52
|
|
|
|
7.66
|
|
|
|
(51
|
)%
|
|
|
11.77
|
|
|
|
17.13
|
|
|
|
46
|
%
|
High
|
|
|
17.28
|
|
|
|
10.96
|
|
|
|
(37
|
)%
|
|
|
17.28
|
|
|
|
17.13
|
|
|
|
(1)
|
%
|
Low
|
|
|
14.75
|
|
|
|
7.20
|
|
|
|
(51
|
)%
|
|
|
11.77
|
|
|
|
6.34
|
|
|
|
(46)
|
%
|
End of the period
|
|
|
16.53
|
|
|
|
8.53
|
|
|
|
(48
|
)%
|
|
|
16.53
|
|
|
|
8.53
|
|
|
|
(48)
|
%
|
Financial
Calendar
|
|
|
|
|
|
|
|
|
Results press release
|
Fiscal Period
|
|
Period end date
|
|
(preliminary)
|
|
Fiscal Year 2008
|
|
September 30, 2008
|
|
December 3, 2008
|
Publication date:
August 1,
2008
Contact
information
Infineon Technologies AG
Investor Relations
Am Campeon 1-12
85579 Neubiberg/Munich, Germany
Phone: +49 89
234-26655
Fax: +49 89
234-9552987
E-Mail: investor.relations@infineon.com
Visit
http://www.infineon.com/investor
for an electronic version of this report and other information.
38
Risk
Factors
We face numerous risks incidental to our business, including
both, risks that are inherent to companies in the semiconductor
industry, and operational, financial and regulatory risks that
are unique to us. Risks relating to the semiconductor industry
include the cyclical nature of the market, which suffers from
periodic downturns and industry overcapacity, particularly for
standard memory products. Our production related risks include
the need to match our production capacity with demand, and to
avoid interruptions in manufacturing and supplies. We may be
exposed to claims from others that we infringe their
intellectual property rights or that we are liable for damages
under warranties. We are the subject of governmental antitrust
investigations and civil claims related to those antitrust
investigations, including civil securities law claims. Financial
risks include our need to have access to sufficient capital and
governmental subsidies, and risks related to our continuing
interest in Qimonda and our intended disposal of some or all of
that interest. Our regulatory risks include potential claims for
environmental remediation. We face numerous risks due to the
international nature of our business, including volatility in
foreign countries and exchange rate fluctuations.
Included in discontinued operations were write-downs associated
with our Qimonda business. The write-downs were based on
managements best estimates of the fair value of the
Qimonda business less costs to sell. The amounts included in
discontinued operations could be adjusted in the near term or
later if experience differs from current estimates.
These and other material risks that we face are described in
detail in the Risk Factors section of our Annual
Report on
Form 20-F,
which we have filed with the U.S. Securities and Exchange
Commission. A copy of our most recent
Form 20-F
is available at the Investor Relations section of our website
http://www.infineon.com/investor,
as well as on the SECs website,
http://www.sec.gov.
We encourage you to read the detailed description of the risks
that we face in our
Form 20-F.
The occurrence of one or more of the events described in the
Risk Factors section of the
Form 20-F
could have a material adverse effect on our Company and our
results of operations, which could result in a drop in our share
price.
Forward-looking
Statements
This quarterly report includes forward-looking statements about
our future business. These forward-looking statements include
statements relating to future developments in the world
semiconductor market, including Infineons 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 continuing
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 any potential disposal or
write-down of Qimonda.
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, the
success of any corporate activities we may undertake with
respect to Qimonda, as well as the other factors mentioned
herein and those described in the Risk Factors
section of the annual report of Infineon on
Form 20-F
filed with the U.S. Securities and Exchange Commission on
December 7, 2007. As a result, our actual results could
differ materially from those contained in the forward-looking
statements. Infineon does not intend or assume any obligation to
update or revise these forward-looking statements in light of
developments which differ from those anticipated.
39
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.
|
|
|
|
|
|
INFINEON TECHNOLOGIES AG
|
|
Date: August 1, 2008 |
By: |
/s/ Peter Bauer |
|
|
|
Peter Bauer |
|
|
|
Member of the Management Board
and Chief Executive Officer |
|
|
|
|
|
|
By: |
/s/ Dr. Marco Schroeter
|
|
|
|
Dr. Marco Schroeter |
|
|
|
Member of the Management Board
and Chief Financial Officer |
|
|