Neubiberg, Germany – November 19, 2009 – Infineon Technologies AG (FSE: IFX /
OTCQX: IFNNY) today reported results for the fourth quarter and the full 2009 fiscal year, ended September 30, 2009.1
Fourth quarter: positive net income and strong free cash flow2 driven by cost
discipline and economic recovery Infineon’s revenues in the fourth quarter were Euro 855 million, a strong increase of 12 percent compared to the third quarter, but a decline of 18 percent year-over-year.
Infineon’s fourth quarter combined Segment Result3 was Euro 52 million, a significant improvement compared to break-even combined Segment Result in the third quarter.
Income from continuing operations increased to Euro 24 million, up from a loss from continuing operations of Euro 26 million in the prior quarter. Net income was also positive at Euro 14 million compared to a net loss of Euro 23 million in the third quarter.
For the fourth quarter, Infineon’s free cash flow from continuing operations was Euro 151 million, compared to free cash flow from continuing operations of Euro 143 million in the third quarter.

“The significant improvement in results in the fourth quarter, including positive net income and free cash flow from continuing operations of Euro 151million, reflects our cost-reduction efforts and continuing strong cost discipline, as well as a recovery in demand across all our operating segments”, said Peter Bauer, CEO of Infineon Technologies AG. “Building on this momentum, we look back on a fiscal year, which was extremely demanding but also featured the most remarkable improvements and achievements in Infineon’s history. For the 2010 fiscal year, we are well positioned to grow market share in our four target markets and deliver improved results on a sustainable basis.”
The sequential increase in revenues reflects growth in all of the company’s four operating segments, driven by the economic recovery and improved demand in the supply chain as well as at end customers.
Fourth quarter combined Segment Result of Euro 52 million improved significantly compared with break-even combined Segment Result in the third quarter. All of the company’s four operating segments achieved positive Segment Result. Higher sales levels, continued tight cost control, and higher factory loading were the main drivers of the earnings improvement, which were, however, partially offset by the weaker U.S. dollar against the Euro.
For the fourth quarter, income from continuing operations improved significantly on a sequential basis and was Euro 24 million, with basic and diluted earnings per share from continuing operations of Euro 0.03. For the third quarter, net loss from continuing operations was Euro 26 million, and basic and diluted loss per share from continuing operations was Euro 0.03.
Infineon reported a loss from discontinued operations, net of income taxes, of Euro 10 million for the fourth quarter. Also included in this amount was the net income of the Wireline Communications (WLC) business which was classified as discontinued operations in the company’s consolidated financial statements for the entire 2009 fiscal year and prior periods, reflecting the sale of this business to Lantiq, affiliates of Golden Gate Private Equity Inc. The sale closed on November 6, 2009.
Net income was Euro 14 million in the fourth quarter, a strong improvement from the net loss of Euro 23 million in the prior quarter. Basic and diluted earnings per share were Euro 0.02 for the fourth quarter compared to a basic and diluted loss per share of Euro 0.03 for the third quarter.
For the fourth quarter, Infineon’s free cash flow from continuing operations was Euro 151 million, compared to free cash flow from continuing operations of Euro 143 million in the third quarter. The sequential increase in free cash flow was driven by the improvement of the operating results as well as ongoing tight working capital management and low capital expenditures (CapEx). CapEx, including capitalized intangible assets, were Euro 40 million in the fourth quarter, compared to Euro 25 million in the third quarter. Depreciation and amortization was Euro 114 million, compared to Euro 128 million in the prior quarter. Free cash flow from continuing operations included cash outflows of Euro 12 million in connection with the IFX10+ cost-reduction program.
The company’s gross cash increased by Euro 636 million from the end of the prior quarter, to a gross cash position of Euro 1,507 million at the end of the fourth quarter. This reflected both the proceeds of the successful rights offering, which closed in August, and strong free cash flow, offset in part by voluntary repurchases and redemptions of the 2010 convertible and exchangeable bonds, totaling Euro 115 million at book values. This amount includes the voluntary early final repayment of the exchangeable bonds. In addition, the increase of the fourth quarter’s gross cash position was offset partially by the repayment of other debt of Euro 68 million. The company’s net debt position of Euro 151 million as of the end of the third quarter swung to a net cash position of Euro 657 million as of September 30, 2009.
The 2009 fiscal year ends with a solid balance sheet and strong net cash position
Infineon’s revenues in the 2009 fiscal year were Euro 3,027 million, down 22 percent compared to the 2008 fiscal year, reflecting the strong contraction of the semiconductor market in all of the company’s target markets. Infineon’s 2009 fiscal year combined Segment Result was negative Euro 167 million compared to positive Euro 237 million in the prior fiscal year. Loss from continuing operations was Euro 273 million, down from a loss from continuing operations of Euro 204 million in the 2008 fiscal year. Basic and diluted loss per share from continuing operations in the 2009 fiscal year was Euro 0.32, compared to basic and diluted loss per share from continuing operations of Euro 0.23 in the prior fiscal year.
Loss from discontinued operations, net of income taxes, was Euro 398 million for the 2009 fiscal year, up from a loss from discontinued operations, net of income taxes, of Euro 3,543 million in the prior fiscal year. The year-over-year change primarily reflects lower charges in connection with Qimonda. Due to Qimonda’s insolvency proceedings, the company deconsolidated Qimonda in the second quarter of the 2009 fiscal year. Basic and diluted loss per share from discontinued operations was Euro 0.41 compared to basic and diluted loss per share from discontinued operations of Euro 3.38 in the 2008 fiscal year. Net loss for the 2009 fiscal year was Euro 671 million, a significant improvement from net loss of Euro 3,747 million in the 2008 fiscal year. Basic and diluted loss per share was Euro 0.73 for the 2009 fiscal year compared to Euro 3.61 in the prior fiscal year.

Driven by the strong improvement in free cash flow towards the end of the 2009 fiscal year and the company’s successful capital market transactions, Infineon’s gross cash position increased to Euro 1,507 million as of September 30, 2009 compared to Euro 883 million at the end of the 2008 fiscal year, despite voluntary repurchases and redemption of the 2010 exchangeable and convertible notes, including the voluntary early final repayment of the exchangeable bonds, and repayments of other debt. In total, during the 2009 fiscal year, total short-term and long-term debt decreased by Euro 320 million compared to the end of the 2008 fiscal year, resulting in a net cash position of Euro 657 million as of September 30, 2009. This compares to a net debt position of Euro 287 million at the end of the 2008 fiscal year.
Outlook for the first quarter of the 2010 fiscal year
Flat revenues and combined Segment Result despite adverse currency trend and end of temporary labor cost reduction measures
Having closed the sale of the WLC business to Lantiq on November 6, 2009, Infineon and Lantiq have entered into various product supply and transitional service agreements. Beginning with the closing, Infineon will report its business with Lantiq in Other Operating Segments within continuing operations.
For the first quarter of the 2010 fiscal year, Infineon expects group revenues, including sales to Lantiq under product supply agreements, to be approximately on the same level as in the fourth quarter of the 2009 fiscal year. Revenues in the Automotive (ATV) and Industrial & Multimarket (IMM) segments should continue to grow. Revenues in the Chip Card & Security (CCS) segment are likely to experience some seasonal slow-down. Revenues in the Wireless Solutions (WLS) segment are expected to be negatively impacted by the weaker U.S. dollar against the Euro.

The termination of temporary labor cost reduction measures (short-time work and unpaid leave) is expected to lead to an increase in operating expenses of around Euro 25 million in the first quarter of the 2010 fiscal year compared to the fourth quarter of the 2009 fiscal year. Despite this increase and an assumed U.S. dollar/Euro exchange rate of 1.50, Infineon expects combined Segment Result for the first quarter to stay approximately on the same level as in the fourth quarter. In light of the combination of strong demand and low inventories, Infineon is increasing production levels further during the first quarter. The positive earnings impact of higher utilization rates is expected to offset the above-mentioned negative effects.
Outlook for the 2010 fiscal year
Revenues to grow by ten percent or more with mid single-digit positive Segment Result margin
Assuming a stabilizing or growing world economy, currently high demand and order levels lead Infineon to expect sales growth of ten percent or more for the 2010 fiscal year at an assumed U.S. dollar/Euro exchange rate of 1.50. The year-over-year increase is anticipated to be driven by increases in revenues in all of the company’s operating segments, particularly in the ATV segment, with lower revenue increases anticipated in the WLS and IMM segments, and the lowest growth rate expected in the CCS segment. Revenues in Other Operating Segments are expected to be impacted positively by the product supply agreements with Lantiq by a mid- to high double-digit million Euro amount.
Infineon expects combined Segment Result in the 2010 fiscal year to improve considerably from the 2009 fiscal year and to be significantly positive, with combined Segment Result margin of a mid single-digit percentage. As is the case for the revenue outlook, this forecast assumes a stable to growing world economy and hence no significant declines in capacity utilization. The forecasted increase in revenues, significantly higher utilization rates in the company’s manufacturing facilities and continued cost discipline are expected to drive a strong recovery in combined Segment Result despite the termination of temporary cost reduction measures and the adverse impact of the weaker U.S. dollar against the Euro.
The outlook for the 2010 fiscal year assumes that Infineon will complete the sale of ALTIS, its manufacturing joint venture in France, in the first half of the 2010 fiscal year. Should this not be feasible, the company will have to re-assess all options. In all conceivable scenarios, Infineon anticipates that it will record a non-recurring charge as part of its non-segment result.
For the 2010 fiscal year, Infineon anticipates that CapEx, including capitalized intangible assets, will increase to approximately Euro 220 million to Euro 250 million compared to Euro 154 million in the 2009 fiscal year. Depreciation and amortization is expected to decrease to approximately Euro 400 million in the 2010 fiscal year compared to Euro 513 million in the 2009 fiscal year.
“The strong impact of our cost reduction measures and the successful completion of the capital market transactions during the 2009 fiscal year have stabilized our balance sheet and helped to increase our financial freedom and flexibility,” said Peter Bauer. “It will remain our goal to increase revenues and profitability on a sustainable basis and thus generate value for shareholders and other stakeholders alike.”