e6vk
UNITED STATES
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
July 16, 2009
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-___.
On July 16, 2009, Infineon Technologies AG (the Company) filed a Registration Statement on Form
F-3 (F-3 Registration Statement) in connection with a rights offering of up to 337,000,000
ordinary shares, including ordinary shares represented by American depositary shares. Also on July
16, 2009, the Companys German prospectus (the German Prospectus) in connection with the rights
offering was approved by the German Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht).
This Report on Form 6-K contains a complete copy of the German Prospectus. The German Prospectus
submitted on this Report on Form 6-K is being furnished for informational purposes only and is not
incorporated by reference into, and does not form a part of, the F-3 Registration Statement.
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.
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INFINEON TECHNOLOGIES AG
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Date: July 16, 2009 |
By: |
/s/
Peter Bauer
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Peter Bauer |
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Member of the Management
Board
and Chief Executive Officer |
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By: |
/s/ Dr. Marco Schröter
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Dr. Marco Schröter |
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Member of the Management
Board
and Chief Executive Officer |
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PROSPECTUS DATED
JULY 16, 2009
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NOT FOR DISTRIBUTION
IN THE UNITED STATES
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Offering of up to
337,000,000 Registered Shares
(with no par value) of
Infineon
Technologies AG
(a stock corporation (Aktiengesellschaft) incorporated
under the laws of Germany)
This prospectus (the Prospectus) relates to a
share capital increase against cash contributions and an
offering of up to 337,000,000 registered shares of Infineon
Technologies AG (Infineon Technologies AG or
the Company and, together with its
consolidated subsidiaries, the Group or
Infineon) with no par value, each
representing a notional amount of the Companys issued
share capital of 2.00 (each, a New
Share and together, the New Shares)
and with full dividend entitlement for the fiscal year ending
September 30, 2009 and admission of up to
337,000,000 New Shares and 74,942,528 registered shares of
Infineon Technologies AG with no par value, each representing a
notional amount of the Companys share capital of
2.00, from the conditional capital to service the
conversion rights from the 195,600,000 7.5% guaranteed
subordinated convertible note due 2014 (each, a
Conversion Share, together, the
Conversion Shares; together with the New
Shares, the Admission Shares) to the
regulated market segment (regulierter Markt) of the
Frankfurt Stock Exchange and to the sub-segment of the regulated
market segment with further post admission obligations of the
Frankfurt Stock Exchange (Prime Standard). The Admission Shares
will rank pari passu in all respects with each other and
with all other issued shares of Infineon Technologies AG (the
Existing Shares).
The offering (the Offering) comprises:
(i) a rights offering (the Rights
Offering) in which the existing shareholders of the
Company will receive rights to subscribe for New Shares (the
Subscription Rights) at the Subscription
Price (as defined below), by way of public offerings in the
Federal Republic of Germany (Germany), The
Grand Duchy of Luxembourg (Luxembourg) and
the United States of America (United States
or U.S.), and (ii) a private placement of any
New Shares not subscribed for by the Companys shareholders
(the Investment Shares) that will under
certain circumstances be subscribed for by Admiral
Participations (Luxembourg) S.à r.l. (the
Backstop Investor) at the Subscription Price
(the Investment Share Placement), up to a
number of Investment Shares that does not lead to a shareholding
in the Company exceeding 30 percent minus one share in the
Companys share capital and voting rights post execution of
the Offering, and subject to the Backstop Investor being able to
establish a participation in the equity capital and voting
rights in the Company of at least 15 percent post execution
of the Offering, unless such requirement is waived by the
Backstop Investor. See The Offering
Backstop Arrangement.
Subject to the terms and conditions set out in this Prospectus,
holders of Existing Shares after close of business on July 17,
2009 (the Record Date) will be allotted one
Subscription Right for each Existing Share held. The exercise of
9 Subscription Rights entitles the exercising holder to
subscribe for 4 New Shares against payment of a subscription
price of 2.15 per New Share (the Subscription
Price). On July 14, 2009, the closing price of
the Infineon Technologies AG shares was 2.90 per share on
the Frankfurt Stock Exchange.
The Subscription Rights will not be traded on the regulated
market of the Frankfurt Stock Exchange or any other German stock
exchange. Holders of Subscription Rights held through the
clearing facilities of Clearstream Banking AG
(Clearstream) wishing to subscribe for New
Shares must exercise their Subscription Rights during the period
from July 20, 2009 through August 3, 2009 (the
Subscription Period). Subscription Rights may
be exercised only in integral multiples of the subscription
ratio. Subscription Rights held through Clearstream and not
validly exercised during the Subscription Period, including
Subscription Rights in excess of the nearest integral multiple
of the subscription ratio, will expire without compensation and
become worthless.
Exercising the Subscription Rights or investing in the New
Shares involves risks. For a discussion of material risks which
the investors should consider before exercising their
Subscription Rights or investing in the New Shares, see
Risk Factors beginning on page 48.
Subscription
Price: 2.15 per New Share
Subject to the satisfaction of certain conditions set forth in
the Underwriting Agreement (as defined below), the New Shares
have been underwritten by an underwriting syndicate consisting
of Credit Suisse Securities (Europe) Limited, Deutsche Bank
Aktiengesellschaft and Merrill Lynch International, (the
Joint Bookrunners) and Citigroup Global
Markets Limited (together with the Joint Bookrunners, the
Joint Lead Managers, and alternatively, the
Underwriters).
The Existing Shares are listed on the Frankfurt Stock Exchange
(where they are traded on the regulated market segment
(regulierter Markt)) (Prime Standard) under the symbol
IFX. Beginning on July 20, 2009, the Existing Shares
are expected to be traded on the Frankfurt Stock Exchange
ex rights. Applications will be made for
listing of the Admission Shares on the regulated market segment
of the Frankfurt Stock Exchange with simultaneous admission to
the
sub-segment
of the regulated market segment with additional post-admission
obligations (Prime Standard) of the Frankfurt Stock Exchange.
The decision on admission of the Conversion Shares is
anticipated for August 6, 2009. The decision on admission
of the New Shares subscribed for under the Rights Offering is
anticipated for August 6, 2009. The decision on admission
of the New Shares under the Investment Share Placement is
anticipated without undue delay following applicable regulatory
clearances. Trading of the New Shares subscribed for under the
Rights Offering is expected to commence on or about
August 7, 2009 and, with respect to New Shares subscribed
for under the Investment Share Placement, without undue delay
following applicable regulatory clearances.
Application has been or will be made for the Subscription Rights
and the New Shares to be accepted for clearance through
Clearstream. The New Shares subscribed for under the Rights
Offering are expected to be delivered through the facilities of
Clearstream on or about August 7, 2009. Delivery of the New
Shares subscribed for under the Investment Share Placement is
expected without undue delay following applicable regulatory
clearances.
This Prospectus is intended for use only in connection with the
Offering outside the United States in accordance with
Regulation S (Regulation S) under
the U.S. Securities Act of 1933, as amended (the
Securities Act) and should not be sent
into the United States.
This document constitutes a prospectus for the purposes of
Article 3 of the prospectus directive 2003/71/EC (the
Prospectus Directive) and has been filed with
and approved by the German Federal Financial Supervisory
Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht) (the
BaFin). The BaFin approved the Prospectus
after completing a review of the Prospectus for completeness,
including a review of the coherence and comprehensibility of the
information provided. The approved Prospectus will be notified
by the BaFin to the competent authorities in Luxembourg for
passporting in accordance with Article 18 of the Prospectus
Directive.
Joint Bookrunners
and Joint Lead Managers
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Credit Suisse
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Deutsche Bank
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Merrill Lynch
International
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Joint Lead Manager
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Citi
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Selling Agent
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Erste Bank
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This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the
Subscription Rights and the New Shares (the
Securities) offered hereby, and does not
constitute an offer to sell or a solicitation of an offer to buy
any Securities offered hereby to any person in any jurisdiction
in which it is unlawful to make any such offer or solicitation
to such person. Neither the delivery of this Prospectus nor any
sale made hereby shall under any circumstances imply that there
has been no change in the affairs of Infineon Technologies AG or
its subsidiaries or that the information contained herein is
correct as of any date subsequent to the earlier of the date
hereof and any earlier specified date with respect to such
information.
The distribution of this Prospectus and the offer of the
Securities may be restricted by law in certain jurisdictions.
Infineon Technologies AG and the Underwriters require persons
into whose possession this Prospectus comes to inform themselves
of and observe all such restrictions. This Prospectus does not
constitute an offer of, or an invitation to purchase the
Securities in any jurisdiction in which such offer or invitation
would be unlawful. For a description of certain restrictions on
the offer and sale of the Securities, see the notices below.
Neither Infineon Technologies AG nor any of the Underwriters
accept any legal responsibility for any violation by any person,
whether or not a prospective investor in the Securities, of any
such restrictions. Neither Infineon Technologies AG nor any of
the Underwriters nor any of their respective representatives are
making any representation to any offeree or purchaser of the
Securities offered hereby regarding the legality of an
investment by such offeree or purchaser under applicable legal
investment or similar laws. Each investor should consult with
its own advisors as to the legal, tax, business, financial and
related aspects of the subscription and the purchase of the
securities.
This Prospectus has been prepared by Infineon Technologies AG in
connection with the Offering solely for the purpose of enabling
a prospective investor to consider the subscription or the
purchase of the New Shares or the purchase of the Subscription
Rights. Reproduction and distribution of this Prospectus or
disclosure or use of the information contained herein for any
purpose other than considering an investment in the New Shares
is prohibited. The information contained in this Prospectus has
been provided by Infineon Technologies AG and other sources
identified herein. No representation or warranty, expressed or
implied, is made by any of the Underwriters as to the accuracy
or completeness of the information set forth herein and nothing
contained in this Prospectus is, or shall be relied upon as, a
promise or representation, whether as to the past or the future.
No person has been authorized to give any information or to make
any representation not contained in this Prospectus in
connection with the Offering and, if given or made, any such
information or representation should not be relied upon as
having been authorized by Infineon Technologies AG or the
Underwriters.
The Joint Lead Managers are acting for the Company and for no
one else in connection with the Offering and will not regard any
other person as the respective clients of each of the Joint Lead
Managers in relation to the Offering and will not be responsible
to anyone other than the Company for providing the protections
afforded to the respective clients of each of the Joint Lead
Managers nor for providing advice in relation to the Offering or
any transaction or arrangement referred to in this Prospectus.
In making an investment decision, investors must rely on their
own examination of Infineon Technologies AG and the terms of the
Offering, including the merits and risks involved. Any decision
to subscribe for or purchase New Shares or to purchase
Subscription Rights should be based solely on this Prospectus.
There shall be no stabilization in connection with the Offering.
Notice to
investors in the European Economic Area
This Prospectus has been prepared on the basis that all offers
of New Shares (other than the offers in Germany and Luxembourg
contemplated in this Prospectus) will be made pursuant to an
exemption under the Prospectus Directive, as implemented in
member states of the European Economic Area
(EEA), from the requirement to produce a
prospectus for offers of shares. Accordingly, any person making
or intending to make any offer within any such EEA member state
of the New Shares should only do so in circumstances in which no
obligation arises for Infineon Technologies AG or any of the
Underwriters to produce a prospectus for such offer. Neither
Infineon Technologies AG nor the Underwriters have authorized,
nor do they authorize, the making of any offer of New Shares
through any financial intermediary, other than offers made by
the Underwriters which constitute the final placement of the New
Shares contemplated in this Prospectus.
In relation to each EEA member state which has implemented the
Prospectus Directive (each, a Relevant Member
State), an offer of any New Shares may not be made in
that Relevant Member State (other than the offers in Germany and
Luxembourg contemplated in this Prospectus), except that an
offer
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in that Relevant Member State of any of the New Shares may be
made at any time under the following exemptions from the
Prospectus Directive, if they have been implemented in that
Relevant Member State:
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1.
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to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
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2.
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to any legal entity which has two or more of (A) an average
of at least 250 employees during the last financial year;
(B) a total balance sheet of more than 43,000,000 and
(C) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts; or
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3.
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in any other circumstances falling within Article 3(2) of
the Prospectus Directive,
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provided that no such offer of the New Shares shall result in a
requirement for the publication by Infineon Technologies AG or
any Underwriter of a prospectus pursuant to Article 3 of
the Prospectus Directive.
This Prospectus is directed at and for distribution in the
United Kingdom only to (i) persons who have professional
experience in matters relating to investments falling within
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (the
Order) or (ii) high net worth entities
falling within Article 49(2)(a) to (d) of the Order
(all such persons being together referred to as
relevant persons). This Prospectus is
directed only at relevant persons. Any person who is not a
relevant person should not act or rely on this Prospectus or any
of its contents. Any investment or investment activity to which
this Prospectus relates is available only to relevant persons
and will be engaged in only with relevant persons.
Furthermore, the Underwriters have warranted that they
1. have only invited or will only invite participation in
investment activities in connection with the Offering or the
sale of the New Shares within the meaning of Section 21 of
the Financial Services and Markets Act 2000
(FSMA) and have only initiated or will only
initiate such investment activities to the extent that
Section 21(1) of the FSMA does not apply to the
Company; and
2. have complied and will comply with all applicable
provisions of the FSMA with respect to all activities already
undertaken by each of them or will undertake in the future in
relation to the New Shares in, from, or otherwise involving the
United Kingdom.
iii
CONTENTS
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U-1
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vi
SUMMARY
The following summary (the Summary) is
intended to be read as an introduction of this prospectus (the
Prospectus) and summarizes only selected
information from the Prospectus. Because of the more detailed
information contained elsewhere in this Prospectus, including
the Financial Information section, investors are strongly
recommended to carefully read the entire Prospectus, and base
their decision on whether to invest in the shares of the Company
on a review of the entire Prospectus.
Infineon Technologies AG, Neubiberg, Germany (Infineon
Technologies AG or the Company and,
together with its subsidiaries, the Group or
Infineon) along with Credit Suisse Securities
(Europe) Limited, London, United Kingdom (Credit
Suisse), Deutsche Bank Aktiengesellschaft, Frankfurt,
Germany (Deutsche Bank) and Merrill Lynch
International, London, United Kingdom (Merrill
Lynch and, together with Credit Suisse and Deutsche
Bank, the Joint Bookrunners) as well as
Citigroup Global Markets Limited, London, United Kingdom
(Citi and, together with the Joint
Bookrunners, the Joint Lead Managers or the
Underwriters) assume responsibility for the
content of the Summary pursuant to Section 5(2) Sentence 3
No. 4 of the German Securities Prospectus Act
(Wertpapierprospektgesetz). However, the Company and the
Underwriters can be held liable for such content only if the
Summary is misleading, inaccurate or contradictory when read in
conjunction with the other portions of the Prospectus. If an
investor files claims in court on the basis of the information
contained in this Prospectus, the plaintiff investor may be
required by the laws of the individual member states of the
European Economic Area (EEA) to bear the cost
of translating the Prospectus before the proceedings begin.
Summary of the
Companys Business
Business
Infineon is one of the worlds leading semiconductor
suppliers by revenue. Infineon has been at the forefront of the
development, manufacture and marketing of semiconductors for
more than 50 years, first as the Siemens Semiconductor
Group and then, from 1999, as an independent group. Infineon
Technologies AG has been a publicly traded company since March
2000. According to the market research company iSuppli (June
2009), Infineon (excluding Qimonda) was ranked the number 10
semiconductor company in the world by revenue in the 2008
calendar year.
Infineon designs, develops, manufactures and markets a broad
range of semiconductors and complete system solutions used in a
wide variety of applications for energy efficiency, security and
communications. Infineons main business is currently
conducted through its five operating segments: Automotive,
Industrial & Multimarket, Chip Card &
Security, Wireless Solutions and Wireline Communications. On
July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, and such
sale is expected to close in the fall of 2009.
In the 2009 fiscal year, Infineon is taking significant
measures, in particular through its cost-reduction program
IFX10+, with the aim of cutting costs, reducing
debt, preserving cash and otherwise improving its financial
condition. The efforts continue at present. Infineon believes
that due to the positive impact of its overall cost reduction
and cash preservation measures to retain liquidity it will be
able to finance its normal business operations out of cash flows
from continuing operations despite the sharp decline in revenue
levels.
Core
Strengths
Infineon believes that its core strengths are based on a variety
of factors, including its technical competencies, its strong
position in a broad set of markets, its deep customer
relationships and its capabilities in semiconductor design and
manufacturing.
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Infineon believes it has deep technical core competencies in the
design and manufacturing of semiconductors. These competencies
are based in part on over 50 years of industry experience
by the Company and its predecessors. Four core competencies are
of particular importance, namely: Radio Frequency
(RF), embedded control, analog/mixed signal,
and high power.
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Radio frequency competency: The ability
to produce
best-in-class RF
transceivers (and integrate RF transceivers with standard logic
circuitry) is a key differentiator of cellular modem solutions.
The increasing complexity of transceiver products has forced
most competitors out of this market and led to the current
(2008) situation with four suppliers generating almost
85 percent of revenues; Infineon ranked second with over
22 percent market share (Strategy Analytics, May
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2009). Infineon believes that its RF competency was the main
facilitator of recent years remarkable recovery of its
Wireless business and that it will help it gain further market
share in the overall Wireless market in the future.
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Embedded control competency: In
contrast to general purpose computing platforms, embedded
systems are designed for particular applications. Today,
embedded systems designers demand microcontrollers that are
specifically tailored to their needs. Infineons 32-bit
Tricore microcontroller family is a typical example. It combines
the real-time capability of a microcontroller, the computational
power of a DSP, and high performance features of RISC
architectures. In automotive applications, these
microcontrollers enable outstanding engine performance at lower
fuel consumption, meeting the highest emission standards,
including EURO5 and US-LEV2. Infineon believes that due to its
exceptional embedded control competency, it could further extend
its current leading market position in the automotive
semiconductor market, and that it will benefit from significant
growth rates in market segments like engine control/power train.
According to Strategy Analytics (January 2009), worldwide
revenues with semiconductors for automotive power train
applications are expected to grow at a compound annual growth
rate of over 14 percent from 2009 to 2012, the fastest
growth of all automotive applications.
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Analog/Mixed signal
competency: According to iSuppli (June 2009),
Infineon ranks among the top three analog/mixed signal
semiconductor companies worldwide measured by revenues generated
with analog ICs, discretes and sensors. Infineon believes that
analog and mixed signal markets generally offer particularly
attractive revenue growth opportunities. For example, iSuppli
(May 2009) views semiconductor sensors, typically Analog
semiconductors, as one of the fastest growing semiconductor
categories, with a compound annual growth rate of
13 percent from 2009 through 2012. Another example is
on-chip integration of RF transceivers and cellular baseband
processors. Infineon believes that it is the largest supplier by
units shipped of such single chip RF / baseband
products for cellular phones. Strategy Analytics (December
2008) expects revenues with single chip products to grow at
a compound annual growth rate of over 70 percent from 2009
to 2013 and that the share of single chip products will rise
from 6 percent of all baseband units in 2009 to
22 percent in 2013.
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High power competency: Only a few
semiconductor suppliers offer high power semiconductor devices
and modules. According to IMS Research (August 2008), the top 5
power module suppliers generate over 80 percent of the
worldwide revenues, with Infineon the worldwide market leader in
power semiconductors with particularly strong positions in high
power semiconductors and modules. Infineon believes that the
market outlook for high power semiconductor modules is
particularly promising. According to IMS Research (February
2009), the expected compound annual growth rate for power
modules is 10 percent in the period from 2009 to 2012.
Infineon believes that its high power competency will enable it
to participate in this growing market.
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Infineon has a large and diversified business that covers a
broad range of endmarkets and spans multiple product categories.
With the exception of memory ICs and microprocessors, Infineon
provides products of all major product categories such as
Discretes, Sensors, Analog & Logic ICs and ICs in Chip
Card applications. After the closing of the sale of the Wireline
Communications business, Infineon will focus on the target
markets automotive, industrial and multimarket, chip
card & security and wireless communications. According
to the external market research cited below, Infineon holds a
leading position by revenue in the four target markets.
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A leader in the automotive chip
industry. According to Strategy Analytics
(May 2009), Infineon has been the number two chip manufacturer
for the automotive industry worldwide by revenue for the past
five years. In the 2008 calendar year, Infineons total
revenue from the automotive industry amounted to
USD 1,742 million, which according to the same
Strategy Analytics report was USD 2 million behind the
number one chip manufacturer. Infineon is the number one chip
manufacturer for the automotive industry by revenue in Europe
and holds the following market positions based on total revenue:
number two in Rest of World (excluding Japan), number three in
North America and number six in Japan. Infineon has increased
its market share continuously over the course of the past
fourteen years from 3.9 percent in 1994 to 9.5 percent
in 2008. The main core competencies that helped drive such
growth are embedded control and power semiconductors. In
addition, Infineon attributes this growth to its goal of
delivering zero-defect products. Infineon believes that in-house
manufacturing capabilities are a competitive advantage due to
the high quality standards demanded by automotive customers.
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Leader in design and production of control electronics for
energy efficiency and the miniaturization of such electronics in
industrial and multimarket
applications. Efficient generation and
transmission and reliable distribution of electrical energy are
vital for an environmental-friendly electricity supply. Infineon
believes that it is the only company to offer power
semiconductors and power modules for the entire electricity
generation, transmission and consumption chain. According to IMS
Research (November 2002, August 2008), Infineons revenues
with Power Discretes and Power Modules grew by more than
145 percent from 2001 to 2007. With such growth, Infineon
outperformed the competition and improved its market revenue
ranking position from fourth place to number one in that period,
with Infineons share of the global power semiconductor
market increasing from 6.6 percent to 9.7 percent in
such period. In the industrial market, according to the market
research firm Semicast (June 2008), Infineon has outperformed
competing semiconductor suppliers. Infineon ranked second in
2006 by revenue with a global market share of 6.4 percent.
Within one year, Infineon increased revenues by more than
30 percent and rose to the number one position in 2007.
While there is no external market research data available yet
for 2008, Infineon believes it has solidified its market leading
position in 2008. Infineons extensive know-how in its core
competency of power semiconductors was the main driver for this
growth.
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Market leader in chips for card
applications. Each year from 1997 to 2008,
Infineon was the global market leader in chips for card
applications according to iSuppli (2009) and
Frost & Sullivan
(1998-2008).
In addition, Infineon is the worlds leading supplier of
Smart Cards ICs, according to Frost & Sullivan
(September 2008). These chips are mainly used for credit cards,
debit cards, access cards, government identification
applications, personal and object identification, and platform
security applications. Infineons strategic focus is on
these security-critical fields where it can make the most of its
experience in high-security applications. Infineon believes that
it has the industrys largest portfolio of chips and
interfaces to meet the relevant security requirements in these
areas. Due to Infineons strategic shift from high-volume
markets to security-driven applications, Infineon was able to
significantly improve its profitability. The main core
competencies driving Infineons success in this market are
embedded control and RF (the latter for contactless cards only).
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A market leader in wireless
solutions. Infineon not only manufactures
traditional components such as baseband processors, RF
transceivers and power management chips, but also offers
complete platforms including software solutions, customized
modifications and interoperability tests. Many mobile phone
manufacturers rely increasingly on these third-party complete
platforms and reduce their in-house chipset production
accordingly. Infineon has become the fourth-largest supplier for
these platforms (iSuppli, March 2009). A key component of mobile
phone platforms is the RF transceiver where Infineon has built
on the success of its CMOS technology based products. The
insolvency of BenQ in September 2006 had a negative effect on
Infineon. BenQ generated approximately 80 percent of
Infineons wireless platform business. As a result of
restructuring efforts and new customer design wins, Infineon
believes that it will be able to successfully turn around this
business, which is underscored by the positive Segment Result
generated by Infineons Wireless business in the three
months ended June 30, 2009. The main core competencies
employed in Infineons wireless business are RF,
analog/mixed-signal and embedded control technologies.
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Infineon believes it has strong and longlasting customer
relationships:
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Infineon believes it has strong customer relationships. For
example, Infineon is often the sole supplier to a customer due
to a high specific development investment on the part of the
customer to integrate Infineons products into the
customers application.
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Infineon believes many of its customer relationships are
longlasting. In many cases, the customers development may
take one to three years, with development input requiring up to
100 person years for one product. In addition, tests,
validation, and if appropriate certification of the customer
product with the integrated Infineon product may take six months
to three years. For some applications, such as automotive,
contract terms of up to 15 years are common.
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Infineon believes that its manufacturing competences and assets
for specialty manufacturing processes are an important
competitive advantage, including among others:
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Infineons proprietary process technologies, which allow it
to manufacture ultrathin wafers for power semiconductors, enable
great advances in energy efficiency;
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Infineon developed an embedded Wafer-Level Ball Grid Array
(eWLB) technology for semiconductor packages
which achieves a 30 percent reduction of dimension compared
to conventional (lead-frame laminate) packages, offers improved
electrical performance and better cost; and
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Infineons new power-logic plant in Kulim, Malaysia, which
will allow Infineon to further expand its presence in the
growing Asian market, as well as to strengthen its cost and
competitive positions.
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Strategy
Infineon strives to achieve profitable growth by maintaining and
expanding its leadership position in semiconductor solutions in
the four target markets automotive, industrial and multimarket,
chip card & security, and wireless solutions. Infineon
will exit the wireline communications market upon the sale of
its Wireline Communications business and focus on these four
target markets. Infineon is leveraging key market trends towards
energy efficiency, security, and communications and seeks to:
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Build on its leadership position in key markets, in
particular by helping to improve energy
efficiency. Infineon believes that its
success to date has been based on a deep understanding of a wide
range of applications for the automotive and industrial sectors
as well as for personal computers and other consumer devices.
Infineons leading position in these areas is built on
high-performance products, superior process technologies and
optimized in-house manufacturing capabilities. Infineon sees
significant growth potential for its power business, in
particular, driven by high energy costs, a shift towards
renewable energy generation, and the need for ever longer
battery life in mobile devices.
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Strengthen Infineons leadership position in security
solutions. Infineon seeks to benefit from
growth in electronic and mobile communication and the growing
desire to access data anywhere and at any time, which drives
demand for data protection and data integrity such as secure
authentication and identification of users. Infineon intends to
leverage its know-how to address applications in new areas, and
believes it is well positioned to benefit from future trends,
such as the transition to
e-Passports,
e-Health
cards and RFID ICs in logistics.
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Provide the technology to be connected every day and
everywhere. Infineon seeks to continue to
profit from its key strengths in areas such as RF and mixed
signal technologies employed, in particular, in its wireless
business. In order to benefit from the ever-increasing need for
mobility and communication in all aspects of day-to-day life,
Infineon intends to grow its broad customer base and to focus on
the most promising solutions for future profitable growth. In
the wireless market, these include, in particular, highly
integrated, cost efficient single-chip solutions and highly
integrated cellular phone platforms for wireless high speed data
transfer in HSPA-enabled phones and smart phones.
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In addition, it is part of Infineons manufacturing
strategy to carefully manage the mix of in-house versus
outsourced manufacturing capacity and process technology
development. Infineon intends to continue to invest in those
process technologies that provide it with a competitive
advantage. This is the case in particular for Infineons
power process technologies and in manufacturing capacity that
can meet the very strict quality requirements of automotive
customers. At the same time, in standard CMOS below the
90-nanometer node, Infineon will continue to share risks and
expand its access to leading-edge technology through long-term
strategic partnerships with other leading industry participants.
Infineon does not intend to invest in in-house capacity for
standard CMOS processes below the 90-nanometer node, and will
make use of outsourced manufacturing capacity at silicon
foundries instead.
Infineon believes that ongoing cost control and projects to
continually improve productivity are important elements to
support the successful implementation of Infineons
profitable growth strategy.
Reasons for the
Offering and Use of Proceeds
The entire semiconductor industry, including Infineon, has been
adversely affected by the global economic downturn and financial
crisis. Infineons revenues declined from
1,153 million in the fourth quarter of the 2008
fiscal year to 845 million in the third quarter of
the 2009 fiscal year. Infineons gross cash position
decreased during the first nine months of the 2009 fiscal year
by 12 million, from 883 million
4
as of September 30, 2008 to 871 million as of
June 30, 2009. Included in this decline in the gross cash
position were:
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approximately 106 million of cash outflows in
connection with Infineons IFX10+ cost reduction program,
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scheduled debt repayments of approximately
101 million, which included 41 million for
Infineons syndicated loan facility, and
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voluntary repurchases of an aggregate nominal amount of
246 million of guaranteed subordinated convertible
notes due 2010 that were issued by the Companys subsidiary
Infineon Technologies Holding B.V. (Convertible Notes
due 2010) and guaranteed subordinated exchangeable
notes due 2010 that were issued by the Companys subsidiary
Infineon Technologies Investment B.V. (Exchangeable
Notes due 2010) for an aggregate of
161 million in cash.
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These outflows were partly offset by a reimbursement of
112 million by the Deposit Protection Fund of the
German Private Commercial Banks (Einlagensicherungsfonds des
Bundesverbandes deutscher Banken e.V.) in relation to the
insolvency of Lehman Brothers Bankhaus AG and gross proceeds of
182 million from the issuance of a new guaranteed
subordinated convertible note by Infineon Technologies Holding
B.V. (the New Convertible Note due 2014).
Despite the very significant revenue decline, Infineon generated
sufficient free cash flow from operations to fund the majority
of the cash outflows relating to its IFX 10+ cost reduction
program.
Infineons management believes that it should seek to
maintain a gross cash position of at least 250 to
300 million to operate the Companys business
effectively. As a result, Infineon has acted vigorously to
reduce operating expenses, conserve cash and improve its balance
sheet. The steps that Infineon has taken to this end include,
among other things, the IFX10+ cost reduction program, debt
repurchases, the issuance of the New Convertible Note due 2014
and the divestiture of the Wireline Communications business.
Through its IFX 10+ cost reduction program, the Company has
achieved significant cost reductions. The Companys
operating expenses for the three months ended June 30, 2009
decreased by 88 million when compared to the three
months ended September 30, 2008. Company management
believes that these savings are mainly due to its IFX 10+ cost
reduction program. In aggregate, Infineon is targeting total
cost reductions from this program of 600 million for
the 2009 fiscal year when compared to Infineons total
costs in the 2008 fiscal year, some of which are temporary in
nature.
In addition, on July 7, 2009, the Company entered into an
asset purchase agreement with an entity affiliated with Golden
Gate Private Equity, Inc. to sell its Wireline Communications
business for a cash consideration of 250 million. The
majority of the purchase price is payable at closing, which is
expected to occur in the fall of 2009, with
20 million of the purchase price being payable
9 months after the closing date. Infineon is selling its
Wireline Communications business in order to focus on the
further development of its main business, its strategy and
strong position in the key areas of energy efficiency, security
and communications, while further improving the Companys
balance sheet and strengthening its liquidity position.
Infineons management believes that the positive impact of
its cost reduction and cash preservation measures will enable it
to finance its ordinary business operations out of cash flows
from continuing operations, despite the sharp decline in revenue
levels. However, its ability to refinance certain liabilities
while maintaining its target level of liquidity is a concern.
The current outstanding nominal amount as of June 30, 2009
of 522 million of Convertible Notes due 2010 will
become due for repayment on June 5, 2010, and the current
nominal amount as of June 30, 2009 of 48 million
of Exchangeable Notes due 2010 will become due for repayment on
August 31, 2010. Also, Infineon is expecting other
scheduled debt repayments of an aggregate of approximately
110 million through the end of September 2010,
including its multi-currency revolving facility. Infineon will
also incur further cash outflows in connection with its IFX10+
cost reduction program, and may incur additional expenses in
connection with the insolvency of Qimonda and the resolution of
its ongoing negotiations regarding ALTIS, the manufacturing
joint venture between Infineon and IBM in France. Infineon is
taking a number of measures, including the Offering, its cost
reduction program and the sale of the Wireline Communications
business, in order to meet these obligations and maintain the
desired level of liquidity.
Infineons management believes that prior to the
announcement of the Offering on July 10, 2009, the market
perception factored in a degree of uncertainty as to the
Companys liquidity position, its ability to repay the
Convertible Notes due 2010 and the Exchangeable Notes due 2010
as they come due and its contingent liabilities relating to
Qimonda and ALTIS. Infineons management also believes that
the
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successful completion of the Offering will further improve the
capital markets confidence in Infineons ability to
repay these notes and satisfy these contingent liabilities while
maintaining a sufficient amount of liquidity, and will help
market participants perceive Infineon as well placed to achieve
sustainable and, ultimately improved, profitability.
The net proceeds of the Offering are expected to be up to
approximately 700 million, assuming the maximum of
337 million New Shares are subscribed for and deducting
estimated fees and expenses relating to the Offering of
approximately 25 million. At a minimum, the net
proceeds of the Offering are expected to be approximately
335 million assuming holders of Subscription Rights
exercise 52 percent (which represents the minimum number of
Subscription Rights which would need to be exercised so that the
Backstop Investor would have no obligation to purchase New
Shares) of such Subscription Rights, the Backstop Investor does
not purchase any New Shares and the fees and expenses relating
to the Offering amount to approximately 40 million.
Infineon believes that the successful completion of the
Offering, resulting in net proceeds of between 335 to
700 million, will strengthen the Companys
capital structure. In particular, assuming Infineon is able to
place all of the 337 million New Shares, it plans to use
approximately 570 million to repay the Convertible
Notes due 2010 and the Exchangeable Notes due 2010, of which as
of June 30, 2009, 570 million were outstanding.
Infineon intends to use any net proceeds, together with
available cash reserves and the proceeds of the sale of the
Wireline Communications business, that exceed the amount needed
to repay these notes, to strengthen its liquidity position,
satisfy any contingent liabilities, and repay other indebtedness
as well as to continue to invest in a very innovation driven
industry and to pursue strategic opportunities in an
increasingly consolidating industry.
Summary of the
Offering
Rights
Offering
This Offering relates to up to 337,000,000 new registered no par
value shares, each such share with a notional par value of
2.00 and full dividend rights for the fiscal year ending
September 30, 2009 (the New Shares).
The New Shares originate from the capital increase against cash
contributions with indirect subscription rights resolved by the
Management Board on July 9, 2009, approved by the Companys
supervisory board (the Supervisory Board) on
July 9, 2009, by recourse to the Companys statutory
Authorized Capitals 2007 and 2009/I. The New Shares, with the
exception of a fractional amount of up to 7,562,592,
amounting to up to 3,781,296 New Shares, are to be offered to
the existing shareholders for subscription by way of indirect
subscription rights through public offerings in Germany and
Luxembourg at the Subscription Ratio and at the Subscription
Price (the Rights Offering). The completion
of the capital increase has not yet been registered in the
commercial register of the Local Court of Munich; the Company
expects the capital increase relating to the New Shares
subscribed for under the Rights Offering to be registered on
August 6, 2009.
Publication of the Rights Offering (as defined herein) in the
electronic version of the German Federal Gazette
(elektronischer Bundesanzeiger) and in the
Börsen-Zeitung is expected on July 17, 2009.
Investment
Share Placement
Any New Shares that are not subscribed for in the Rights
Offering (the Investment Shares) will be
offered to the Backstop Investor by way of a private placement
for subscription at the Subscription Price (the
Investment Share Placement and, together with
the Rights Offering, the Offering). The
Backstop Investor has agreed to subscribe for all New Shares not
subscribed for by the Companys Shareholders subject to the
terms and conditions of the Backstop Arrangement. However, the
maximum number of New Shares to be acquired by the Backstop
Investor together with any shares to be acquired by the Backstop
Investor through Subscription Rights purchased by the Backstop
Investor, if any, must not lead to a shareholding that would
represent more than 30 percent minus one share in the
Companys equity capital and voting rights post execution
of the Offering.
The completion of the capital increase has not yet been
registered in the commercial register of the Local Court of
Munich. In the event that any New Shares not subscribed for by
the current shareholders of the Company are allotted to the
Backstop Investor under the Backstop Arrangement, the
registration of the
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capital increase relating to those New Shares is anticipated
without undue delay following applicable merger clearances
and/or clearance by the German Ministry of Economy and
Technology (Bundesministerium für Wirtschaft und
Technologie) pursuant to the German Foreign Trade Act
(Außenwirtschaftsgesetz).
Admission to
Trading
Application is expected to be made on July 17, 2009 for
admission of the New Shares to the regulated market segment
(regulierter Markt) of the Frankfurt Stock Exchange with
simultaneous admission to the
sub-segment
of the regulated market with additional post-admission
obligations (Prime Standard) of the Frankfurt Stock Exchange.
The decision on admission of the New Shares subscribed for under
the Rights Offering is anticipated for August 6, 2009.
The decision on admission of New Shares subscribed for under the
Investment Share Placement is expected to be made without undue
delay following the subscription and payment of the Subscription
Price with regard to the Investment Shares, subject to
applicable merger clearances and/or clearance by the German
Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz) having
been obtained, which clearances, if applicable, are expected to
be received during the course of August 2009 at the latest.
Commencement
of Trading
Trading of the New Shares subscribed for under the Rights
Offering is expected to begin on August 7, 2009. On this same
day, those New Shares will be included in the existing quotation
of the Companys shares.
In the event any New Shares not subscribed for by the current
shareholders of the Company are allotted to the Backstop
Investor under the Backstop Arrangement, trading of such New
Shares is expected to begin without undue delay following the
subscription and payment of the Subscription Price with regard
to the Investment Shares, subject to applicable merger
clearances and clearance by the German Ministry of Economy and
Technology (Bundesministerium für Wirtschaft und
Technologie) pursuant to the German Foreign Trade Act
(Außenwirtschaftsgesetz) having been obtained,
which clearances, if applicable, are expected to be received
during the course of August 2009 at the latest. The New Shares
allotted to the Backstop Investor will be included in the
existing quotation of the Companys shares upon
commencement of trading of such New Shares, which is expected in
the course of August 2009.
Exercise of
Subscription Rights
Shareholders of Infineon Technologies AG will be asked through
the Rights Offering being published, presumably on July 17,
2009, to exercise their subscription rights (the
Subscription Rights) during the period from
July 20, 2009 up to and including August 3, 2009 (the
Subscription Period) to avoid being excluded
from the capital increase.
Subscription
Ratio
The subscription ratio is 9 to 4, that is, 9 Existing Shares
entitle its holder to subscribe for 4 New Shares at the
Subscription Price.
Subscription
Price
The subscription price is 2.15 per New Share subscribed
(the Subscription Price).
Subscription
Agent
The subscription agent is Deutsche Bank.
No Trading of
Subscription Rights on the regulated market
Infineon Technologies AG will not initiate trading of the
Subscription Rights (ISIN DE000A0Z2227 / German
Securities Code (WKN) A0Z222) on the regulated market of the
Frankfurt Stock Exchange or any other German stock exchange.
Accordingly, Subscription Rights cannot be purchased or sold on
the regulated market of such a stock exchange. However,
Subscription Rights
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are transferable. No compensation will be paid for unexercised
Subscription Rights. Upon the expiration of the Subscription
Period, unexercised Subscription Rights will lapse and become
worthless. Starting July 20, 2009, all of the
Companys existing shares (ISIN
DE0006231004 / German Securities Code (WKN) 623100)
(the Existing Shares) will be traded on the
regulated market segment (regulierter Markt) of the
Frankfurt Stock Exchange without Subscription Rights
(ex rights).
Delivery and
Settlement of the New Shares
The Subscription Price for each New Share subscribed for under
the Rights Offering is payable no later than August 3, 2009. The
New Shares subscribed for in the Rights Offering are expected to
be credited to a collective securities deposit account and made
available to shareholders as from August 7, 2009.
The Subscription Price for each subscribed New Share under the
Investment Share Placement is payable no later than on the tenth
business day following the business day subsequent to the last
day of the Subscription Period, subject to applicable merger
clearances and/or clearance by the German Ministry of Economy
and Technology (Bundesministerium für Wirtschaft und
Technologie) pursuant to the German Foreign Trade Act
(Außenwirtschaftsgesetz) having been obtained,
which clearances, if applicable, are expected to be received
during the course of August 2009 at the latest. The New Shares
allotted to the Backstop Investor will be included in the
existing quotation of the Companys shares upon
commencement of trading of such New Shares. The New Shares
subscribed for under the Investment Share Placement are expected
to be credited to a collective securities deposit account and
made available to the Backstop Investor as from the business day
following such payment of the Subscription Price.
Backstop
Arrangement
Admiral Participations (Luxembourg) S.à r.l. (the
Backstop Investor), a subsidiary of a fund
managed by Apollo Global Management LLC has agreed to acquire
all New Shares (including the Fractional Amount) not subscribed
for by the Companys shareholders (the Investment
Shares) at the Subscription Price, but not more than
the Maximum Investment Amount (as described below), subject to
the Minimum Threshold (as described below) being met (the
Backstop Arrangement). The maximum number of
Investment Shares to be acquired by the Backstop Investor
together with any shares to be acquired by the Backstop Investor
through Subscription Rights purchased by the Backstop Investor,
if any, must not lead to a shareholding that would represent
more than 30 percent minus one share in the Companys
equity capital and voting rights post execution of the Offering
(the Maximum Investment Amount). The Backstop
Investor may, but is not required to, acquire Investment Shares
if the number of the Investment Shares available together with
any shares to be acquired by the Backstop Investor through
Subscription Rights purchased by the Backstop Investor, if any,
does not allow the Backstop Investor to establish a
participation in the Companys equity capital and voting
rights of at least 15 percent post execution of the
Offering (the Minimum Threshold).
The obligation of the Backstop Investor to acquire any
Investment Shares is subject to certain conditions precedent
being met or waived by the Backstop Investor, including, but not
limited to, applicable merger clearances, clearance by the
German Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz), and the
appointment of one representative of the Backstop Investor,
Mr. Manfred Puffer, by the competent court to the
Supervisory Board, the resignation of Mr. Max Dietrich
Kley, the current chairman of the Supervisory Board, as of
September 30, 2009, the election of Mr. Manfred Puffer
as chairman of the Supervisory Board as of October 1, 2009,
and the nomination of another representative of the Backstop
Investor, Mr. Gernot Löhr, as member of the
Supervisory Board to be appointed by the competent court subject
to the resignation of the current chairman as member of the
Supervisory Board taking effect.
The Backstop Investor will have no obligation, but will be
entitled, to subscribe for Investment Shares if the number of
Investment Shares does not exceed the Minimum Threshold. If the
Backstop Investor wishes to subscribe for the Investment Shares
despite the Minimum Threshold not being met, the Backstop
Investor has to declare a waiver to the Company on the business
day following the end of the Subscription Period. The Backstop
Investor may declare its unconditional commitment in the waiver
notice to acquire other than through the Investment Share
Placement, within 30 days following the satisfaction or
waiver of the conditions precedent, such amount of the
Companys shares that following the acquisition the
Backstop Investors shareholding will equal or exceed 15
percent. In this case, the obligation of the Backstop Investor
to acquire Investment Shares is subject to the condition
precedent
8
that (a) Mr. Manfred Puffer has been appointed by
the competent court to Supervisory Board, (b) Mr. Max
Dietrich Kley, the current chairman of the Supervisory Board,
has submitted (i) a letter to the Backstop Investor in
which he commits to resign as of September 30, 2009 and
(ii) a resignation letter to the Management Board and the
co-chairman of the Supervisory Board, resigning as chairman and
Supervisory Board member as of September 30, 2009, subject
to the Backstop Investor by that date holding a shareholding in
the Company of 15 percent or more, or as of October 15,
2009, if only by that date the Investor holds a respective
shareholding in the Company, in each case evidenced by a
corresponding notice to the Company according to Section 21
(1) German Securities Trading Act (WpHG),
(c) Mr. Manfred Puffer has been elected as chairman of
the Supervisory Board as of October 1, 2009 subject to the
resignation of the current chairman having taken effect and
(d) the nomination committee of the supervisory board has
nominated Mr. Gernot Löhr as member of the Supervisory
Board to be appointed by the competent court subject to the
resignation of the current chairman as member of the Supervisory
Board having taken effect.
As long as the applicable merger clearances and/or clearance by
the German Ministry of Economy and Technology pursuant to the
German Foreign Trade Act remain outstanding, the Backstop
Investor will only be allowed to acquire or subscribe for
Investment Shares that lead to a shareholding of the Backstop
Investor in the Company of 25 percent minus one share.
After the applicable merger clearances and/or clearance by the
German Ministry of Economy and Technology pursuant to the German
Foreign Trade Act have been obtained, the Backstop Investor may,
at its sole discretion, also subscribe for the Investment Shares
that are in excess of a shareholding of the Backstop Investor of
25 percent up to the Maximum Investment Amount. The capital
increase and the listing with regard to these shares will be
implemented as soon as reasonably possible.
Should the Backstop Investor not purchase any New Shares in the
Offering for any reason, the Company has to pay the Backstop
Investor a lump sum of 21 million. If the Backstop
Investor acquires a shareholding in the equity capital and
voting rights of the Company of 25 percent or less, the
Company has to pay the Backstop Investor an amount equal to the
sum of (i) 5.5 million plus (ii) an amount of
0.057 per share by which the shareholding of the Backstop
Investor falls short of 25 percent plus one share.
During the Backstop Investor
Lock-Up (as
defined below), the Company will not, either directly or
indirectly, solicit, initiate, encourage or assist any third
party in the acquisition of a stake of 10 percent or more
of the shares or voting rights in the Company.
For as long as the Backstop Investor holds at least
15 percent of the shares and voting rights in the Company,
the Backstop Investor will be entitled to recommend two
individuals, and for as long as the Backstop Investor holds at
least 10 percent of the shares and voting rights in the
Company, one individual, to be elected to the Supervisory Board.
Placement of
Unsubscribed New Shares
Any New Shares that are not subscribed for in the Rights
Offering will be offered to the Backstop Investor by way of a
private placement for acquisition or subscription at the
Subscription Price subject to the terms and conditions of the
Backstop Arrangement.
Lock-Up
Agreements
The Company has committed itself to the Underwriters not to
carry out a capital increase or other capital measures, without
written consent of the Underwriters, which may only be withheld
with good cause, for a period of 6 months following the
admission to listing of the New Shares.
Provided that the Backstop Investor acquires a stake of at least
15 percent of the shares and the voting rights in the
Company, the Backstop Investor undertakes not to sell, transfer,
pledge, encumber or otherwise dispose of (verfügen
über) (including the granting of any option over or the
creation of any form of trust relationship in respect of) any
Investment Shares, not to enter into any agreement or
transaction in respect of any voting rights or other rights
attached to Investment Shares, or enter into any transaction
(including derivative transactions) and not to carry out any
other action that would be the economic equivalent of any of the
above for a period of 12 months following the date of
acquisition of the Investment Shares, without the consent of the
Companys management board (the Backstop Investor
Lock-up).
This undertaking does not apply to the sale
and/or
transfer of Investment Shares (i) to an affiliated company
of the Backstop Investor pursuant to sections 15 et seq. of
the German Stock Corporation Act, (ii) of up to
10 percent of the Investment Shares to co-investors until
October 31, 2009, (iii) in connection
9
with a mandatory public takeover offer (Pflichtangebot)
of a third party under the German Act on the Acquisition of
Securities and on Takeovers (WpÜG), (iv) in
connection with a voluntary public takeover offer of a third
party under the German Act on the Acquisition of Securities and
on Takeovers, (v) in connection with a merger or other
business combination of the Company with a third party,
(vi) in connection with a share buy-back by the Company,
and (vii) in such quantity to be able to self-fund (net of
transaction fees and expenses) the issuance price resulting from
the exercise of subscription rights in connection with a rights
offering for shares by the Company. The Backstop Investor will
consult with the management board of the Company before
transferring any Investment Shares in connection with any public
takeover offer. Subject to the condition that the Backstop
Investor acquired a stake of at least 15 percent of the
shares and voting rights in the Company, the Backstop Investor
undertakes that for the entire term of the Backstop Investor
Lock-Up its
Investment Shares subscribed for will be booked in a blocked
security deposit (Sperrdepot).
The Backstop Investors obligation with regard to the
Backstop Investor
Lock-up will
automatically terminate if one of the following occurs:
(i) at any time, a person other than a person proposed by
the Backstop Investor becomes the chairman of the Supervisory
Board, or (ii) Mr. Gernot Löhr is not appointed
as member of the Supervisory Board by the competent court within
10 business days after the date on which such filing had to be
made, or (iii) at any time, less than two persons proposed
by the Backstop Investor are members of the Supervisory Board,
provided that, in each case, the situation has not been remedied
within 30 days after the later of the occurrence of the
relevant event or receipt by the Company from the Backstop
Investor of a nomination of alternative eligible Investors
nominee(s).
The Backstop Investors obligation with regard to the
Backstop Investor
Lock-up will
further automatically terminate if any of the following occurs:
(i) the reduction of the maximum number of Supervisory
Board members from sixteen to twelve persons has not become
effective by the date of the next ordinary shareholders
meeting relating to the 2008/2009 fiscal year in 2010; or
(ii) not all governmental or regulatory clearances which
are required for an acquisition by the Investor of the Maximum
Investment Amount have been granted by October 1, 2009.
Termination of
Rights Offering
The Underwriters reserve the right to terminate the Underwriting
Agreement or extend the completion of the Rights Offering upon
the occurrence of certain circumstances. These circumstances
include, but are not limited to, (i) the Companys
failure to provide certain legal opinions, (ii) the
amendment, withdrawal or termination of the Investment Agreement
between the Company and the Backstop Investor, and
(iii) the non-occurrence of other conditions precedent. In
the event of a termination of the Underwriting Agreement, the
Rights Offering will not take place other than in relation to
Subscription Rights which have been validly exercised by then.
The Underwriters are further relieved of their obligations if
the consummation of the capital increase relating to the New
Shares subscribed for by the Underwriters under the Rights
Offering is not registered in the Commercial Register by
August 6, 2009 and the Underwriters and Infineon
Technologies AG fail to reach an agreement on a later deadline.
Condition
Precedent and Termination of the Backstop
Arrangement
The obligation of the Backstop Investor to acquire any
Investment Shares is subject to certain conditions precedent
being met or waived by the Backstop Investor, including, but not
limited to, applicable merger clearances, clearance by the
German Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz), and the
appointment of one representative of the Backstop Investor,
Mr. Manfred Puffer, by the competent court to the
Supervisory Board and the resignation of Mr. Max Dietrich
Kley, the current chairman of the Supervisory Board, as of
September 30, 2009 and the election of Mr. Manfred
Puffer as chairman of the Supervisory Board as of
October 1, 2009, and the nomination of another
representative of the Backstop Investor, Mr. Gernot
Löhr, as member of the Supervisory Board to be appointed by
the competent court, subject to the resignation of the current
chairman as member of the Supervisory Board taking effect.
In case the Backstop Investor wishes to subscribe for the
Investment Shares despite the Minimum Threshold not being met,
the Backstop Investor has to declare to the Company a waiver on
the business day following the end of the Subscription Period.
The Backstop Investor may declare to the Company its
unconditional commitment in the waiver notice to acquire other
than through the Investment Share Placement such amount of the
Companys shares that following the acquisition the
Backstop Investors shareholding will equal or exceed
15 percent. In this case, the obligation of the Backstop
Investor to
10
acquire Investment Shares is subject to
(a) Mr. Manfred Puffer has been appointed by the
competent court to Supervisory Board, (b) Mr. Max
Dietrich Kley, the current chairman of the supervisory board,
has submitted (i) a letter to the Backstop Investor in
which he commits to resignation as of September 30, 2009
and (ii) a resignation letter to the Management Board and
the co-chairman of the Supervisory Board, resigning as chairman
and Supervisory Board member as of September 30, 2009,
subject to the Backstop Investor by that date holding a
shareholding in the Company of 15 percent or more, or as of
October 15, 2009, if only by that date the Investor holds a
respective shareholding in the Company, in each case evidenced
by a corresponding notice to the Company according to
Section 21 (1) German Securities Trading Act
(WpHG), (c) Mr. Manfred Puffer has been elected
as chairman of the Supervisory Board as of October 1, 2009
subject to the resignation of the current chairman having taken
effect and (d) the nomination committee of the supervisory
board has nominated Mr. Gernot Löhr as member of the
Supervisory Board to be appointed by the competent court,
subject to the resignation of the current chairman as member of
the Supervisory Board having taken effect.
The Backstop Investor reserves the right to terminate the
Backstop Arrangement upon the occurrence of certain
circumstances. These circumstances include, but are not limited
to, the Companys failure to provide a legal opinion and
the non-occurrence of the other conditions precedent. The
Backstop Investor can also terminate the Backstop Arrangement if
the Capital Increase relating to the Investment Shares has not
been registered with the commercial register within twelve
business days after application by the Company for such
registration. In these cases, the Backstop Investor may, by
written notice to the Company, withdraw from the Backstop
Arrangement. To the extent that it has not yet been exercised,
such right of withdrawal will lapse upon registration of the
consummation of the Capital Increase relating to the Investment
Shares in the commercial register.
Right to
Withdraw in case a supplement to the Prospectus is
published
The Company expects its quarterly report for the three and nine
months ended June 30, 2009 to be published on or about July
29, 2009. The Company will publish on or about July 29, 2009 a
supplement to the Prospectus to reflect the recent developments
for the interim period up to and including June 30, 2009 in
the Prospectus.
In accordance with Section 16(3) of the German
Securities Prospectus Act (Wertpapierprospektgesetz),
investors who have made a declaration of intention regarding the
acquisition or the subscription of securities prior to the
publication of the supplement may revoke this within two days
after publication of the supplement, provided that settlement
has not yet occurred.
The revocation does not need to be substantiated and is to be
sent in text form to the locations at which the investor
concerned has made his declaration of intention regarding the
acquisition of the New Shares. In order to meet the deadline,
timely dispatch is sufficient.
Offering in
the United States
The New Shares and the Subscription Rights will be registered
under the provisions of the Securities Act. In this connection,
the Company intends to file with the U.S. Securities and
Exchange Commission a
Form F-3
Registration Statement pursuant to the Securities Act with
respect to the New Shares and the Subscription Rights.
Stabilization
There shall be no stabilization in connection with the Offering.
Offering
Expenses and Net Proceeds of the Offering
The estimated total Offering expenses, including the commissions
payable to the Underwriters, are expected to be potentially as
high as 40 million, including approximately
18 million to the Underwriters and up to
21 million to the Backstop Investor relating to the
Backstop Arrangement. Should the Backstop Investor fail to
purchase any New Shares in the Offering for any reason, the
Company will pay the Backstop Investor a lump sum of
21 million. If the Backstop Investor acquires a
shareholding in the equity capital and voting rights of the
Company of 25 percent or less, the Company will pay the Backstop
Investor an amount equal to the sum of (i)
5.5 million plus (ii) an amount of
0.057 per share by which the shareholding quota of
the Backstop Investor falls short of 25 percent plus one share.
Infineon expects the total net proceeds from the capital
increase to be approximately 700 million in case all
New Shares will
11
be subscribed for by or placed with investors. If the Minimum
Threshold is not met and the Backstop Investor decides not to
waive the Minimum Threshold requirement, Infineon expects the
minimum net proceeds from the Offering to be approximately
335 million.
Form and
Certification of New Shares/Delivery
The New Shares will be issued as registered no par value shares
(ISIN DE0006231004 / German Securities Code (WKN)
623100) in accordance with the Companys current
articles of association (Articles of
Association). The New Shares will be evidenced by one
or more global share certificates deposited in collective
custody with Clearstream Banking AG, Neue Börsenstrasse 1,
60487 Frankfurt am Main, Germany.
The right of the Companys shareholders to receive
individual share certificates for their shares is, to the extent
legally permissible and unless not required under the regulation
of a stock exchange, excluded by Section 4(4) of the
Articles of Association. The New Shares bear the same rights as
all other shares of the Company and do not bear any additional
rights or benefits.
ISIN, WKN,
Common Code and Trading Symbol
The International Securities Identification Number
(ISIN) for the New Shares is DE0006231004,
the German Securities Code (WKN) is 623100
and the Common Code is 010745900. The trading symbol is IFX.
ISIN and WKN
of the Subscription Rights
The ISIN for the Subscription Rights is DE000A0Z2227, the WKN is
A0Z222.
Paying and
Registration Agent
The paying and registration agent is Bayerische Hypo- und
Vereinsbank AG, Kardinal-Faulhaber-Strasse 1, 80333 Munich,
Germany.
12
Summary of Share
Capital and Management of the Company
|
|
|
Management Board |
|
Peter Bauer (chairman of the Management Board), Dr. Marco
Schröter, Prof. Dr. Hermann Eul and Dr. Reinhard
Ploss. |
|
Supervisory Board |
|
The Supervisory Board currently consists of 15 members. The
chairman of the Supervisory Board is Max Dietrich Kley. |
|
Share capital (prior to completion of the Offering) |
|
The Companys issued share capital as of the date of this
Prospectus amounts to 1,499,484,170, divided into
749,742,085 registered shares. The shares are issued as no par
value shares. Each of the Companys shares entitles the
holder to one vote at the Companys general
shareholders meeting. The share capital has been fully
paid. All of the Existing Shares have been admitted to the
regulated market segment (regulierter Markt) of the
Frankfurt Stock Exchange and to the sub-segment with additional
post-admission obligations (Prime Standard) of the Frankfurt
Stock Exchange. |
|
Auditor for the 2006, 2007 and 2008 fiscal years |
|
KPMG AG Wirtschaftsprüfungsgesellschaft (formerly KPMG
Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft), Ganghoferstrasse 29,
80339 Munich, Germany (KPMG). |
|
Employees |
|
Infineon had 26,108 employees as of June 30, 2009. |
|
Registered office, applicable law, duration and fiscal year
of the Company |
|
The Companys registered office is in Neubiberg, Germany.
The Companys headquarters are located at: Am Campeon 1-12,
85579 Neubiberg, Germany (telephone: +49-89-234-0). As a stock
corporation (Aktiengesellschaft) organized under German
law, the Company is subject to German stock corporation law. The
Companys duration is perpetual. |
|
|
|
The Companys fiscal year runs from October 1 until
September 30 of the following year. |
13
Summary Selected
Consolidated Financial and Operating Information Prepared in
Accordance with IFRS
For periods beginning October 1, 2008, Infineon has
prepared its consolidated financial statements in accordance
with International Financial Reporting Standards
(IFRS). In connection with Infineons
transition to IFRS, Infineon has prepared financial statements
for the fiscal year ended September 30, 2008 (with
comparative figures as of and for the fiscal year ended
September 30, 2007) in accordance with IFRS. Below,
Infineon presents its selected consolidated statements of
operations data, selected consolidated statement of cash flows
data and selected segment data for the 2007 and 2008 fiscal
years and the six months ended March 31, 2008 and 2009, and
selected consolidated balance sheet data at September 30,
2007 and 2008 and at March 31, 2009, derived from
Infineons consolidated IFRS financial statements. The
selected consolidated statements of operations data, and
selected consolidated statement of cash flows data for the 2007
and 2008 fiscal years and the selected consolidated balance
sheet data at September 30, 2007 and 2008, prepared in
accordance with IFRS, have been extracted from the financial
statements as of and for the fiscal year ended
September 30, 2008, prepared in accordance with IFRS.
Infineon also presents selected consolidated statements of
operations and statements of cash flows for the six month ended
March 31, 2008 and 2009, and selected consolidated balance
sheet data at March 31, 2009, derived from Infineons
condensed consolidated IFRS financial statements as of and for
the six months ended March 31, 2009.
Infineon also issued consolidated financial statements under
accounting principles generally accepted in the United States
(U.S. GAAP) as of and for the fiscal
year ended September 30, 2008 since U.S. GAAP were
considered the primary accounting principles for that period.
These financial statements are not included in this Prospectus.
Selected Data
from the Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September
30,(1)
|
|
|
March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions, except per share data)
|
|
|
Revenue
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
2,139
|
|
|
|
1,577
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(44
|
)
|
|
|
(147
|
)
|
|
|
82
|
|
|
|
(264
|
)
|
Income (loss) from continuing operations
|
|
|
(43
|
)
|
|
|
(188
|
)
|
|
|
59
|
|
|
|
(266
|
)
|
Loss from discontinued operations, net of income taxes
|
|
|
(327
|
)
|
|
|
(3,559
|
)
|
|
|
(2,543
|
)
|
|
|
(396
|
)
|
Net loss
|
|
|
(370
|
)
|
|
|
(3,747
|
)
|
|
|
(2,484
|
)
|
|
|
(662
|
)
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
(23
|
)
|
|
|
(812
|
)
|
|
|
(552
|
)
|
|
|
(49
|
)
|
Shareholders of Infineon Technologies AG
|
|
|
(347
|
)
|
|
|
(2,935
|
)
|
|
|
(1,932
|
)
|
|
|
(613
|
)
|
Basic and diluted earnings (loss) per share from continuing
operations
|
|
|
(0.08
|
)
|
|
|
(0.33
|
)
|
|
|
0.06
|
|
|
|
(0.36
|
)
|
Basic and diluted loss per share from discontinued operations
|
|
|
(0.38
|
)
|
|
|
(3.58
|
)
|
|
|
(2.64
|
)
|
|
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(0.46
|
)
|
|
|
(3.91
|
)
|
|
|
(2.58
|
)
|
|
|
(0.82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
During the 2008 fiscal year,
Infineon committed to a plan to dispose of Qimonda. As a
consequence, the results of Qimonda are reported as discontinued
operations in the Selected Consolidated Statements of Operations
data for the fiscal years ended September 30, 2007 and 2008
and for the six months ended March 31, 2008 and 2009. On
January 23, 2009, Qimonda and its wholly owned subsidiary
Qimonda Dresden GmbH & Co. oHG filed an application at
the Munich Local Court to commence insolvency proceedings. As a
result of this application, Infineon deconsolidated Qimonda
during the second quarter of the 2009 fiscal year. On
April 1, 2009, the insolvency proceedings formally opened.
|
|
(2) |
|
Unaudited.
|
14
Selected Data
from the Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
As of
September 30,(1)
|
|
|
March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Cash and cash equivalents
|
|
|
1,809
|
|
|
|
749
|
|
|
|
532
|
|
Available-for-sale financial assets
|
|
|
417
|
|
|
|
134
|
|
|
|
133
|
|
Working
capital(3)
(deficit)
|
|
|
(43
|
)
|
|
|
86
|
|
|
|
(28
|
)
|
Assets classified as held for disposal
|
|
|
303
|
|
|
|
2,129
|
|
|
|
6
|
|
Total assets
|
|
|
10,599
|
|
|
|
6,982
|
|
|
|
3,977
|
|
Short-term debt and current maturities of long-term debt
|
|
|
336
|
|
|
|
207
|
|
|
|
170
|
|
Liabilities associated with assets held for disposal
|
|
|
129
|
|
|
|
2,123
|
|
|
|
|
|
Long-term debt
|
|
|
1,227
|
|
|
|
963
|
|
|
|
816
|
|
Total equity
|
|
|
6,004
|
|
|
|
2,161
|
|
|
|
1,703
|
|
Notes
|
|
|
(1) |
|
During the 2008 fiscal year,
Infineon committed to a plan to dispose of Qimonda. As a
consequence, the assets and liabilities of Qimonda have been
reclassified as held for disposal in the Selected Consolidated
Balance Sheet data as of March 31, 2009 and as of
September 30, 2008. On January 23, 2009, Qimonda and
its wholly owned subsidiary Qimonda Dresden GmbH & Co.
oHG filed an application at the Munich Local Court to commence
insolvency proceedings. As a result of this application,
Infineon deconsolidated Qimonda during the second quarter of the
2009 fiscal year. On April 1, 2009, the insolvency
proceedings formally opened.
|
|
(2) |
|
Unaudited.
|
|
(3) |
|
Working capital consists of current
assets less short-term liabilities, cash and cash equivalents,
available-for-sale financial assets and net assets held for
disposal.
|
Selected Data
from the Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September 30,(1)
|
|
|
March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Net cash provided by (used in) operating activities from
continuing operations
|
|
|
256
|
|
|
|
580
|
|
|
|
149
|
|
|
|
(65
|
)
|
Net cash provided by (used in) operating activities
|
|
|
1,251
|
|
|
|
(84
|
)
|
|
|
(121
|
)
|
|
|
(463
|
)
|
Net cash provided by (used in) investing activities from
continuing operations
|
|
|
(48
|
)
|
|
|
(665
|
)
|
|
|
(894
|
)
|
|
|
31
|
|
Net cash provided by (used in) investing activities
|
|
|
(917
|
)
|
|
|
(662
|
)
|
|
|
(1.021
|
)
|
|
|
52
|
|
Net cash used in financing activities from continuing operations
|
|
|
(214
|
)
|
|
|
(230
|
)
|
|
|
(97
|
)
|
|
|
(180
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(525
|
)
|
|
|
113
|
|
|
|
103
|
|
|
|
(220
|
)
|
Net decrease in cash and cash equivalents from discontinued
operations
|
|
|
(185
|
)
|
|
|
(318
|
)
|
|
|
(197
|
)
|
|
|
(417
|
)
|
Net decrease in cash and cash equivalents
|
|
|
(191
|
)
|
|
|
(633
|
)
|
|
|
(1,039
|
)
|
|
|
(631
|
)
|
Notes
|
|
(1)
|
During the 2008 fiscal year, Infineon committed to a plan to
dispose of Qimonda. As a consequence, the cash flows of Qimonda
are reported as net cash provided by (used in) activities from
discontinued operations in the separate line below cash flows
from continuing operations. On January 23, 2009, Qimonda
and its wholly owned subsidiary Qimonda Dresden GmbH &
Co. oHG filed an application at the Munich Local Court to
commence insolvency proceedings. As a result of this
application, Infineon deconsolidated Qimonda during the second
quarter of the 2009 fiscal year. On April 1, 2009, the
insolvency proceedings formally opened.
|
|
(2)
|
Unaudited.
|
Selected
Segment Data
Selected
Operating Segment Data
Effective October 1, 2008, Infineon reorganized its main
business into five operating segments: Automotive,
Industrial & Multimarket, Chip Card &
Security, Wireless Solutions and Wireline Communications.
Segment results for the fiscal years ended September 30,
2007 and 2008 have been reclassified to be consistent with the
current reporting structure and presentation, as well as to
facilitate analysis of current and future operating segment
information. These reclassified segment results are not included
in the consolidated financial statements for the 2008 fiscal
year prepared in accordance with IFRS. On July 7,
15
2009, the Company entered into an asset purchase agreement to
sell the Wireline Communications business, and such sale is
expected to close in the fall of 2009.
Infineon has two additional segments for reporting purposes, its
Other Operating Segments, which includes remaining activities
for certain product lines that have been disposed of and for
other business activities, and its Corporate and Eliminations
segment, which contains items not allocated to its operating
segments, such as certain corporate headquarters costs and
unabsorbed excess capacity.
Effective as of May 1, 2006 through September 30,
2008, Infineon was organized in three major operating segments.
Two of these segments were application focused: Automotive,
Industrial & Multimarket and Communication Solutions.
The other segment was the memory product business of Qimonda.
These operating segments are reflected in Infineons
consolidated financial statements for the fiscal years ended
September 30, 2006, 2007 and 2008, prepared in accordance
with U.S. GAAP.
Beginning October 1, 2008, the Management Board uses the
financial measure Segment Result to assess the operating
performance of Infineons reportable segments and as a
basis for allocating resources among the segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September 30,
|
|
|
March
31,(1)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Automotive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)
|
|
|
1,267
|
(1)
|
|
|
1,257
|
(1)
|
|
|
634
|
|
|
|
395
|
|
Segment Result
|
|
|
122
|
(1)
|
|
|
105
|
(1)
|
|
|
48
|
|
|
|
(121
|
)
|
Industrial & Multimarket
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)
|
|
|
1,188
|
(1)
|
|
|
1,171
|
(1)
|
|
|
567
|
|
|
|
427
|
|
Segment Result
|
|
|
127
|
(1)
|
|
|
134
|
(1)
|
|
|
49
|
|
|
|
(5
|
)
|
Chip Card & Security
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)
|
|
|
438
|
(1)
|
|
|
465
|
(1)
|
|
|
237
|
|
|
|
171
|
|
Segment Result
|
|
|
20
|
(1)
|
|
|
52
|
(1)
|
|
|
36
|
|
|
|
(9
|
)
|
Wireless Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(3)(4)(5)
|
|
|
637
|
(1)
|
|
|
941
|
(1)
|
|
|
450
|
|
|
|
401
|
|
Segment Result
|
|
|
(126
|
)(1)
|
|
|
(18
|
)(1)
|
|
|
2
|
|
|
|
(73
|
)
|
Wireline
Communications(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(3)
|
|
|
414
|
(1)
|
|
|
420
|
(1)
|
|
|
208
|
|
|
|
167
|
|
Segment Result
|
|
|
(16
|
)(1)
|
|
|
12
|
(1)
|
|
|
7
|
|
|
|
3
|
|
Other Operating Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)(6)(7)
|
|
|
343
|
(1)
|
|
|
169
|
(1)
|
|
|
123
|
|
|
|
10
|
|
Segment Result
|
|
|
2
|
(1)
|
|
|
(3
|
)(1)
|
|
|
7
|
|
|
|
(4
|
)
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(8)(9)
|
|
|
(213
|
)
|
|
|
(102
|
)
|
|
|
(80
|
)
|
|
|
6
|
|
Segment Result
|
|
|
7
|
(1)
|
|
|
(24
|
)(1)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
2,139
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Result
|
|
|
136
|
(1)
|
|
|
258
|
(1)
|
|
|
147
|
|
|
|
(212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
Unaudited.
|
|
(2) |
|
In Infineons IFRS financial
statements as of and for the fiscal year ended
September 30, 2008, Infineon recorded
3,017 million and 2,963 million in revenue
in the former Automotive, Industrial & Multimarket
segment for the 2007 and 2008 fiscal year, respectively.
Following reclassification to reflect the current segment
structure, these amounts are mostly allocated to the Automotive
segment, the Industrial & Multimarket segment and the
Chip Card & Security segment, while
124 million and 70 million for the 2007
and 2008 fiscal year, respectively, relating to the HDD
business, is now recorded under Other Operating Segments.
|
|
(3) |
|
In its IFRS financial statements as
of and for the fiscal year ended September 30, 2008,
Infineon recorded 1,051 million and
1,360 million in revenue for its Communication
Solutions segment for the 2007 and 2008 fiscal year,
respectively. Following reclassification to reflect the current
segment structure, these amounts are mostly allocated to the
Wireless Solutions and Wireline Communications segments.
|
|
(4) |
|
Includes inter-segment revenues of
30 million and 10 million for the fiscal
years ended September 30, 2007 and 2008, respectively, from
sales of wireless communication applications to Qimonda.
|
16
|
|
|
(5) |
|
Includes revenues of
8 million and 1 million for the six months
ended March 31, 2008 and 2009, respectively, from sales of
wireless communication applications to Qimonda.
|
|
(6) |
|
Includes inter-segment revenues of
189 million and 79 million for the fiscal
years ended September 30, 2007 and 2008, respectively, from
sales of wafers from Infineons 200-millimeter facility in
Dresden to Qimonda under a foundry agreement.
|
|
(7) |
|
Includes revenues of
70 million for the six months ended March 31,
2008 from sales of wafers from Infineons 200-millimeter
facility in Dresden to Qimonda under a foundry agreement.
|
|
(8) |
|
Includes the elimination of
inter-segment revenues of 219 million and
89 million for the fiscal years ended
September 30, 2007 and 2008, respectively, since these
sales were not expected to be part of the Qimonda disposal plan.
|
|
(9) |
|
Includes the elimination of
revenues of 78 million and 1 million for
the six months ended March 31, 2008 and 2009, respectively,
since these sales were not part of the Qimonda disposal plan.
|
|
(10) |
|
On July 7, 2009, the Company
entered into an asset purchase agreement to sell the Wireline
Communications business, and such sale is expected to close in
the fall of 2009.
|
Selected
Geographic Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September
30,(1)
|
|
|
March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
907
|
|
|
|
924
|
|
|
|
460
|
|
|
|
315
|
|
Other Europe
|
|
|
888
|
|
|
|
818
|
|
|
|
409
|
|
|
|
286
|
|
North America
|
|
|
564
|
|
|
|
503
|
|
|
|
282
|
|
|
|
164
|
|
Asia/Pacific
|
|
|
1,450
|
|
|
|
1,800
|
|
|
|
848
|
|
|
|
720
|
|
Japan
|
|
|
213
|
|
|
|
198
|
|
|
|
104
|
|
|
|
72
|
|
Other
|
|
|
52
|
|
|
|
78
|
|
|
|
36
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
2,139
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
During the 2008 fiscal year,
Infineon committed to a plan to dispose of Qimonda. As a
consequence, the results of Qimonda are reported as discontinued
operations in the Selected Consolidated Statements of Operations
data for the fiscal years ended September 30, 2007 and 2008
and for the six months ended March 31, 2008 and 2009. On
January 23, 2009, Qimonda and its wholly owned subsidiary
Qimonda Dresden GmbH & Co. oHG filed an application at
the Munich Local Court to commence insolvency proceedings. As a
result of this application, Infineon deconsolidated Qimonda
during the second quarter of the 2009 fiscal year. On
April 1, 2009, the insolvency proceedings formally opened.
|
|
(2) |
|
Unaudited.
|
Selected Other
Key Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September
30,(1)
|
|
|
March
31,(1)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions, except employee data)
|
|
|
Capital Expenditures
|
|
|
498
|
|
|
|
312
|
|
|
|
170
|
|
|
|
69
|
|
Employees (at end of period)
|
|
|
43,079
|
(2)
|
|
|
41,343
|
(3)
|
|
|
42,837
|
(4)
|
|
|
26,362
|
|
Notes
|
|
|
(1) |
|
During the 2008 fiscal year,
Infineon committed to a plan to dispose of Qimonda. As a
consequence, the cash flows of Qimonda are reported as net cash
provided by (used in) activities from discontinued operations in
the Selected Consolidated Statements of Cash Flow data for all
periods presented. On January 23, 2009, Qimonda and its
wholly owned subsidiary Qimonda Dresden GmbH & Co. oHG
filed an application at the Munich Local Court to commence
insolvency proceedings. As a result of this application,
Infineon deconsolidated Qimonda during the second quarter of the
2009 fiscal year. Subsequent to the deconsolidation, the
employees of Qimonda are no longer reported in the
Companys consolidated financial statements. On
April 1, 2009, the insolvency proceedings formally opened.
|
|
(2) |
|
Including 13,481 employees of
Qimonda.
|
|
(3) |
|
Including 12,224 employees of
Qimonda.
|
|
(4) |
|
Including 13,298 employees of
Qimonda.
|
17
Summary Selected
Consolidated Financial and Operating Information Prepared in
Accordance with U.S. GAAP
For periods prior to October 1, 2008, Infineon prepared its
financial statements in accordance with U.S. GAAP. Below,
Infineon presents selected consolidated statements of operations
data, selected consolidated statements of cash flows data and
selected segment data for the 2006 and 2007 fiscal years and
selected consolidated balance sheet data at September 30,
2006 and 2007 derived from its consolidated U.S. GAAP
financial statements. The selected consolidated statements of
operations data, selected consolidated statements of cash flows
data and selected segment data for the 2006 and 2007 fiscal
years and the selected consolidated balance sheet data at
September 30, 2006 and 2007, prepared in accordance with
U.S. GAAP, have been extracted from the consolidated
financial statements as of and for the fiscal year ended
September 30, 2007 (with comparative figures as of and for
the fiscal year ended September 30, 2006).
Selected financial information prepared in accordance with IFRS
as of and for the fiscal year ended September 30, 2008
(with comparative figures as of and for the fiscal year ended
September 30, 2007) is included in the section headed
Summary Selected Consolidated Financial and Operating
Information prepared in accordance with IFRS.
Selected Data
from the Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions, except per share data)
|
|
|
Total net sales
|
|
|
7,929
|
|
|
|
7,682
|
|
Loss before income taxes
|
|
|
(107
|
)
|
|
|
(254
|
)
|
Net loss
|
|
|
(268
|
)
|
|
|
(368
|
)
|
Basic and diluted loss per share
|
|
|
(0.36
|
)
|
|
|
(0.49
|
)
|
Selected Data
from the Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Cash and cash equivalents
|
|
|
2,040
|
|
|
|
1,819
|
|
Marketable securities
|
|
|
615
|
|
|
|
475
|
|
Working
capital(1)
(deficit)
|
|
|
(279
|
)
|
|
|
(18
|
)
|
Assets classified as held for disposal
|
|
|
|
|
|
|
272
|
|
Total assets
|
|
|
11,185
|
|
|
|
10,679
|
|
Short-term debt and current maturities
|
|
|
797
|
|
|
|
336
|
|
Liabilities associated with assets held for disposal
|
|
|
|
|
|
|
117
|
|
Long-term debt, excluding current portion
|
|
|
1,208
|
|
|
|
1,376
|
|
Total shareholders equity
|
|
|
5,315
|
|
|
|
4,914
|
|
Notes:
|
|
|
(1) |
|
Working capital consists of current
assets less short-term liabilities, cash and cash equivalents,
marketable securities and net assets held for disposal.
|
Selected Data
from the Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Net cash provided by operating activities
|
|
|
1,003
|
|
|
|
1,207
|
|
Net cash used in investing activities
|
|
|
(853
|
)
|
|
|
(867
|
)
|
Net cash (used in) provided by financing activities
|
|
|
762
|
|
|
|
(521
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
892
|
|
|
|
(221
|
)
|
18
Selected
Segment Data
Selected
Operating Segment Data
Effective as of May 1, 2006 through September 30,
2008, Infineon was organized in three major operating segments.
Two of these segments were application focused: Automotive,
Industrial & Multimarket and Communication Solutions.
The other segment was the memory product business of Qimonda.
The Management Board used the financial measure earnings before
interest and taxes (EBIT) to assess the
operating performance of Infineons reportable segments and
as a basis for allocating resources among the segments.
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
2,839
|
|
|
|
3,017
|
|
EBIT
|
|
|
246
|
|
|
|
300
|
|
Communication
Solutions(4)
|
|
|
|
|
|
|
|
|
Net
sales(1)
|
|
|
1,205
|
|
|
|
1,051
|
|
EBIT
|
|
|
(231
|
)
|
|
|
(160
|
)
|
Other Operating Segments
|
|
|
|
|
|
|
|
|
Net
sales(2)
|
|
|
310
|
|
|
|
219
|
|
EBIT
|
|
|
4
|
|
|
|
(12
|
)
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
Net
sales(3)
|
|
|
(240
|
)
|
|
|
(213
|
)
|
EBIT
|
|
|
(236
|
)
|
|
|
(177
|
)
|
Qimonda
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
3,815
|
|
|
|
3,608
|
|
EBIT
|
|
|
202
|
|
|
|
(207
|
)
|
Total
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
7,929
|
|
|
|
7,682
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
|
(15
|
)
|
|
|
(256
|
)
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
Includes inter-segment sales of
0 and 30 million for the fiscal years ended
September 30, 2006 and 2007, respectively, from sales of
wireless communication applications to Qimonda.
|
|
(2) |
|
Includes inter-segment sales of
256 and 189 million for the fiscal years ended
September 30, 2006 and 2007, respectively, from sales of
wafers from Infineons 200-millimeter facility in Dresden
to Qimonda under foundry agreements.
|
|
(3) |
|
Includes the elimination of
inter-segment sales of 256 and 219 million for
the fiscal years ended September 30, 2006 and 2007,
respectively, since these sales were not expected to be part of
the Qimonda disposal plan.
|
|
(4) |
|
On July 7, 2009, the Company
entered into an asset purchase agreement to sell the Wireline
Communications business, which was part of the Communication
Solutions segment, and such sale is expected to close in the
fall of 2009.
|
Selected
Geographic Information
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Net sales
|
|
|
|
|
|
|
|
|
Germany
|
|
|
1,327
|
|
|
|
1,164
|
|
Other Europe
|
|
|
1,360
|
|
|
|
1,218
|
|
North America
|
|
|
2,126
|
|
|
|
1,887
|
|
Asia/Pacific
|
|
|
2,498
|
|
|
|
2,632
|
|
Japan
|
|
|
461
|
|
|
|
661
|
|
Other
|
|
|
157
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,929
|
|
|
|
7,682
|
|
|
|
|
|
|
|
|
|
|
19
Selected Other
Key Financial Data
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
2006
|
|
2007
|
|
|
(U.S. GAAP) ( in millions, except employee data)
|
|
Capital Expenditures
|
|
|
1,253
|
|
|
|
1,375
|
|
Employees (at end of period)
|
|
|
41,651
|
(1)
|
|
|
43,079
|
(2)
|
Notes
|
|
|
(1) |
|
Including 11,802 employees of
Qimonda.
|
|
(2) |
|
Including 13,481 employees of
Qimonda.
|
20
Summary of Risk
Factors
Risks Relating
to the Companys Business and the Market
The financial resources available to Infineon, including the
proceeds of the Offering, may be insufficient to meet
Infineons capital needs.
If Infineon is unsuccessful in implementing its operational
restructuring plans, Infineons revenues and profitability
may be adversely affected.
Ongoing financial market volatility and adverse developments in
the global economic environment have had and could continue to
have a significant adverse impact on Infineons business,
financial condition and operating results.
The semiconductor industry is characterized by intense
competition, which could reduce Infineons sales or put
continued pressure on Infineons sales prices.
Infineon operates in a highly cyclical industry and its business
has in the past suffered, is currently suffering and could again
suffer from periodic downturns.
Infineon may not be able to match its production capacity to
demand.
Infineons business could suffer as a result of volatility
in different parts of the world.
In difficult market conditions, Infineons high fixed costs
adversely affect its results.
The competitive environment of the semiconductor industry has
led to industry consolidation, and Infineon may face even more
intense competition from newly merged competitors.
Infineon intends to continue to engage in acquisitions, joint
ventures and other transactions that may complement or expand
its business. Infineon may not be able to complete these
transactions, and even if executed, these transactions pose
significant risks and could have a negative effect on
Infineons operations.
Infineon may be unable to successfully integrate businesses it
acquires and may be required to record charges related to the
goodwill or other long-lived assets associated with the acquired
businesses.
Infineon may not be able to protect its proprietary intellectual
property and may be accused of infringing the intellectual
property rights of others.
Infineons business could suffer due to decreases in
customer demand.
The loss of one or more of Infineons key customers, for
example, owing to a decrease in customer confidence in Infineon
due to its perceived liquidity position, may adversely affect
Infineons business.
Fluctuations in the mix of products sold may adversely affect
Infineons financial results.
If Infineon fails to successfully implement an optimum
make-or-buy strategy, Infineons business could suffer from
higher costs.
Infineons business could suffer from problems with
manufacturing.
If Infineons outside foundry suppliers fail to meet
Infineons expectations, Infineons results of
operations and its ability to exploit growth opportunities could
be adversely affected.
Products that do not meet customer specifications or that
contain, or are perceived to contain, defects or errors or that
are otherwise incompatible with their intended end use could
impose significant costs on Infineon.
Infineon may be adversely affected by property loss and business
interruption.
Infineons business could suffer if Infineon is not able to
secure the development of new technologies or if Infineon cannot
keep pace with the technology development of Infineons
competition.
Infineon relies on strategic partners and other third parties,
and Infineons business could be harmed if they fail to
perform as expected or relationships with them were to be
terminated.
New business is often subject to a competitive selection process
that can be lengthy and uncertain and that requires Infineon to
incur significant expenses in advance. Even if Infineon wins and
begins a product design, a customer may decide to cancel or
change Infineons product plans, which could cause Infineon
to generate no sales from a product and adversely affect
Infineons results of operations.
21
Infineon relies on a limited number of suppliers of
manufacturing equipment and materials and could suffer shortages
if these suppliers were to interrupt supply or increase their
prices.
Infineon may be adversely affected by rising raw material prices.
Infineons business could suffer if Infineon is unable to
secure dependable power supplies at reasonable cost.
Infineons operations rely on complex information
technology systems and networks, and any disruptions in such
systems or networks could have a material adverse impact on
Infineons business and results of operations.
Infineon has recorded significant reorganization and impairment
charges in the past and may do so again in the future, which
could materially adversely affect Infineons business.
Infineons business could suffer if third-party service
providers fail to perform as expected.
Infineons success depends on its ability to recruit and
retain sufficient qualified key personnel.
Reductions in government subsidies or demands for repayment of
such subsidies could increase Infineons reported expenses
or limit its ability to fund capital expenditures.
Infineons operating results fluctuate significantly from
quarter to quarter, and as a result Infineon may fail to meet
the expectations of securities analysts and investors, which
could cause the Companys stock price to decline.
Infineons results of operations and financial condition
can be adversely impacted by changes in exchange rates.
If Infineon fails to maintain effective internal controls,
Infineon may not be able to report financial results accurately
or on a timely basis, or to detect fraud, which could have a
material adverse effect on the Companys business or share
price.
Infineon is exposed to various tax risks, and several factors
could have an adverse effect on the tax burden of Infineon.
Infineons deferred tax assets are subject to regular
reassessment, which may result in additional valuation
allowances.
Environmental laws and regulations may expose Infineon to
liability and increase Infineons costs.
Infineon may face significant liabilities as a result of the
insolvency of Qimonda.
Infineon might be required to repay any outstanding Exchangeable
Notes due 2010 prior to their maturity date, which could
materially adversely affect its financial condition.
A sale or closure of the ALTIS facility may result in the
Company incurring material additional costs.
The Wireline Communications business could be adversely impacted
if the intended sale is not completed.
Infineon may be held liable for damages in connection with the
sale of the Wireline Communications business.
Infineon may face increased expenses or charges due to the sale
of the Wireline Communications business.
Infineons business and financial condition could be
adversely affected by current or future litigation.
Infineon is a subject of investigations in several jurisdictions
in connection with pricing practices in the Dynamic Random
Access Memory industry, and is a defendant in civil antitrust
claims in connection with these matters.
Purported class action lawsuits have been filed against the
Company alleging securities fraud.
Infineon is the subject of an investigation by the European
Commission in connection with alleged violations of competition
laws in the Chip Card & Security segment.
Infineon might be faced with product liability or warranty
claims.
22
Risks Related
to the New Shares and Risks Related to the
Offering
The Backstop Investor may influence Infineons business
activities and may be in a position to control the outcome of
certain matters submitted to the Companys shareholders.
Sales of a large volume of shares in the Company by major
shareholders could cause significant downward pressure on the
Companys share price.
The Companys share price is subject to risks associated
with market-price fluctuations.
The Companys share price is subject to risks relating to
securities transactions engaged by the Backstop Investor and/or
its affiliates.
The investments of shareholders who fail to participate in this
Offering will be diluted considerably.
Trading in Subscription Rights is expected to not develop and
the value of Subscription Rights may decline.
The Underwriters may withdraw from the Underwriting Agreement.
Future corporate actions could result in a further material
dilution of shareholders investments in the Company.
23
GERMAN
TRANSLATION OF THE SUMMARY OF THE PROSPECTUS
ZUSAMMENFASSUNG
DES PROSPEKTS
Die folgende Zusammenfassung (,,Zusammenfassung)
ist als Einführung zu diesem Wertpapierprospekt
(,,Prospekt) zu verstehen und fasst lediglich
ausgewählte Informationen dieses Prospekts zusammen.
Anleger sollten wegen der wesentlich detaillierteren
Informationen in anderen Teilen des Prospekts
(einschließlich des Finanzteils) in jedem Fall den gesamten
Prospekt aufmerksam lesen und ihre Entscheidung zur Anlage in
Aktien der Gesellschaft auf die Prüfung des gesamten
Prospekts stützen.
Die Infineon Technologies AG, Neubiberg, Deutschland
(,,Infineon Technologies AG oder die
,,Gesellschaft und zusammen mit ihren
Tochtergesellschaften die ,,Gruppe oder
,,Infineon) sowie Credit Suisse Securities (Europe)
Limited, London, Vereinigtes Königreich (,,Credit
Suisse), Deutsche Bank Aktiengesellschaft, Frankfurt,
Deutschland (,,Deutsche Bank) und Merrill Lynch
International, London, Vereinigtes Königreich (,,Merrill
Lynch und zusammen mit Credit Suisse und der Deutschen
Bank die ,,Joint Bookrunners), sowie Citigroup
Global Markets Limited, London, Vereinigtes Königreich
(,,Citi und zusammen mit den Joint Bookrunners die
,,Konsortialbanken) übernehmen gemäß
§ 5 Abs. 2 Satz 3 Nr. 4 Wertpapierprospektgesetz die
Verantwortung für den Inhalt dieser Zusammenfassung. Die
Gesellschaft und die Konsortialbanken können jedoch
für den Inhalt der Zusammenfassung nur haftbar gemacht
werden, falls die Zusammenfassung irreführend, unrichtig
oder widersprüchlich ist, wenn sie zusammen mit den anderen
Teilen dieses Prospekts gelesen wird. Für den Fall, dass
vor einem Gericht Ansprüche aufgrund der in diesem Prospekt
enthaltenen Informationen geltend gemacht werden, könnte
der als Kläger auftretende Anleger in Anwendung
einzelstaatlicher Rechtsvorschriften der Staaten des
Europäischen Wirtschaftsraums (,,EWR) die
Kosten für die Übersetzung des Prospekts vor
Prozessbeginn zu tragen haben.
Z
USAMMENFASSUNG
DER
GESCHÄFTSTÄTIGKEIT
DER
G
ESELLSCHAFT
Geschäftstätigkeit
Infineon ist gemessen an den Umsatzerlösen einer der
weltweit führenden Hersteller von Halbleitern. Infineon
steht seit mehr als 50 Jahren an der Spitze der Entwicklung, der
Herstellung und des Vertriebs von Halbleitern, zunächst als
Siemens Halbleitergruppe und seit 1999 als unabhängige
Gruppe. Die Aktien der Infineon Technologies AG werden seit
März 2000 öffentlich gehandelt. Nach Einschätzung
des Marktforschungsinstituts iSuppli (Juni 2009) nahm
Infineon (ohne Qimonda) im Kalenderjahr 2008 in der Rangfolge
der Halbleitergesellschaften gemessen an den Umsatzerlösen
die 10. Position ein.
Infineon entwirft, entwickelt, produziert und vertreibt ein
breites Spektrum von Halbleitern und kompletten
Systemlösungen für den Einsatz in einer Vielzahl von
Anwendungen für Energieeffizienz, Sicherheit und
Kommunikation. Infineons Hauptgeschäft ist derzeit in
fünf operative Segmente aufgeteilt: Automobilelektronik
(Automotive), Industrieelektronik (Industrial &
Multimarket), Chipkarten & Sicherheitslösungen
(Chip Card & Security), drahtlose Kommunikation
(Wireless Solutions) und drahtgebundene Kommunikation (Wireline
Communications). Am 7. Juli 2009 schloss die Gesellschaft einen
Kaufvertrag hinsichtlich des Verkaufs des Geschäftsbereichs
drahtgebundene Kommunikation (Wireline Communications); dieser
Verkauf soll voraussichtlich im Herbst 2009 vollzogen werden.
Seit dem Geschäftsjahr 2009 unternimmt Infineon wesentliche
Schritte, insbesondere durch das Kostensenkungsprogramm
,,IFX10+, um Kosten zu senken, Schulden abzubauen,
Liquidität zu erhalten sowie durch weitere Maßnahmen
die finanzielle Situation zu verbessern. Diese Bemühungen
dauern gegenwärtig noch an. Infineon geht davon aus, dass
sie aufgrund der positiven Effekte der umfassenden
Kosteneinsparungen und der liquiditätsschonenden
Maßnahmen trotz des starken Rückgangs der
Umsatzerlöse in der Lage sein wird, die normalen
Geschäftsaktivitäten durch Mittelzuflüsse aus der
operativen Geschäftstätigkeit finanzieren zu
können.
Wettbewerbsstärken
Nach Ansicht von Infineon basieren ihre Hauptstärken auf
mehreren Faktoren; hierzu zählen ihre technischen
Kompetenzen, ihre starke Position auf zahlreichen Märkten,
ihre guten Kundenbeziehungen und ihre Kompetenzen beim Design
und der Herstellung von Halbleitern.
24
|
|
|
|
|
Infineon ist der Ansicht, dass das Unternehmen über
fundierte technische Kernkompetenzen in der Entwicklung und
Herstellung von Halbleitern verfügt. Diese Kompetenzen
beruhen zum Teil auf der über 50-jährigen Erfahrung
der Gesellschaft und ihrer Vorgängerinnen. Dabei sind vier
Kernkompetenzen von besonderer Bedeutung: Hochfrequenz
(,,HF), eingebettete Steuerung,
Analog-/Mixed-Signal und Leistungshalbleiter.
|
|
|
|
|
|
Kompetenz im Bereich HF: Die
Fähigkeit zur Herstellung der klassenbesten HF-Transceiver
(und integrierter HF-Transceiver mit Standard-Logik-Schaltungen)
ist ein Hauptunterscheidungsmerkmal bei Modemlösungen
für Mobiltelefone. Die zunehmende Komplexität der
Transceiver-Produkte hat die meisten Konkurrenten aus diesem
Markt gedrängt und zu der aktuellen (2008) Situation
geführt, in der vier Anbieter knapp 85 Prozent der
Erlöse generieren; Infineon lag dabei mit einem Marktanteil
von 22 Prozent auf dem zweiten Platz (Strategy Analytics, Mai
2009). Infineon ist der Auffassung, dass ihre Kompetenz im
Bereich HF einer der wesentlichen Treiber für die
bemerkenswerte Erholung ihres Mobilfunk-Geschäfts in den
vergangenen Jahren war und helfen wird, den eigenen Marktanteil
am Gesamt-Mobilfunk-Chipmarkt auch künftig auszubauen.
|
|
|
|
Kompetenz im Bereich eingebettete
Steuerung: Im Gegensatz zu
Computer-Plattformen für allgemeine Zwecke werden
eingebettete Systeme für bestimmte Anwendungen entworfen.
Entwickler von eingebetteten Systemen verlangen heutzutage nach
Microcontrollern, die speziell auf ihre Bedürfnisse
zugeschnitten sind. Die 32-bit-Tricore-Microcontroller-Familie
von Infineon ist dafür ein typisches Beispiel. Sie vereint
in sich die Echtzeit-Fähigkeit eines Microcontrollers, die
Rechenleistung eines DSP und die Hochleistungseigenschaften von
RISC-Architekturen. Sie ermöglicht in automobilen
Anwendungen außergewöhnliche Motorleistungen bei
geringerem Kraftstoffverbrauch und somit die Erfüllung der
höchsten Emissionsstandards einschließlich EURO5 und
US-LEV2. Infineon ist der Auffassung, dass sie aufgrund ihrer
außergewöhnlichen Kompetenzen im Bereich eingebettete
Steuerung in der Lage sein wird, ihre derzeitige Position als
Markführer im Markt für automobile Halbleiter weiter
auszubauen und von den hohen Wachstumsraten in Bereichen wie
Motorsteuerung/Antriebsstrang zu profitieren. Nach Strategy
Analytics (Januar 2009) werden die weltweiten Erlöse
aus Halbleitern für Antriebsstranganwendungen von 2009 bis
2012 voraussichtlich jährlich um über 14 Prozent
wachsen; dies bedeutet das stärkste Wachstum aller
Automotive-Anwendungen.
|
|
|
|
Kompetenz im Bereich Analog-/Mixed
Signal: Nach iSuppli (Juni
2009) rangiert Infineon gemessen am Erlös aus
Analog-ICs, diskreten Halbleitern und Sensoren weltweit unter
den Top-Drei der Unternehmen für
Analog-/Mixed-Signal-Halbleiter. Nach Ansicht von Infineon
bieten die Märkte für Analog-/Mixed-Signal im
Allgemeinen besonders gute Aussichten auf ein Einnahmenwachstum.
So erachtet zum Beispiel auch iSuppli (Mai
2009) Halbleitersensoren - diese werden
üblicherweise als analoge Halbleiter
betrachtet - als eine der am stärksten wachsenden
Halbleiterkategorien mit einem jährlichen Wachstum von 13
Prozent zwischen 2009 und 2012. Ein weiteres Beispiel ist die
Integration von HF-Transceivern und
Mobilfunk-Basisband-Prozessoren auf dem Chip. Infineon ist nach
eigener Ansicht, gemessen an der Zahl der verschickten
Einheiten, der größte Anbieter solcher
Ein-Chip-HF-/Basisband-Produkte für Handys. Strategy
Analytics (Dezember 2008) erwartet, dass die Erlöse
aus Ein-Chip-Produkten von 2009 bis 2013 jährlich mit einer
Rate von über 70 Prozent wachsen und der Anteil von
Ein-Chip-Produkten von 6 Prozent aller Basisband-Einheiten 2009
auf 22 Prozent im Jahr 2013 wächst.
|
|
|
|
Kompetenz im Bereich
Leistungshalbleiter: Nur wenige
Halbleiterhersteller bieten Leistungshalbleiter und -module an.
Nach IMS Research (August 2008) generieren die 5
größten Leistungsmodul-Anbieter über 80 Prozent
der weltweiten Erlöse, wobei Infineon bei
Leistungshalbleitern Weltmarktführer mit einer besonders
starken Position bei Halbleitern und Modulen im Bereich
Hochleistung ist. Infineon ist der Auffassung, dass der
Marktausblick für Halbleitermodule im Bereich Hochleistung
besonders vielversprechend ist. Nach IMS Research (Februar
2009) ist bei Leistungsmodulen von 2009 bis 2012 ein
jährliches Wachstum von 10 Prozent zu erwarten. Infineon
ist der Ansicht, dass die eigenen Kompetenzen im Bereich
Hochleistung es ihr ermöglichen werden, an diesem
wachsenden Markt teilzuhaben.
|
|
|
|
|
|
Infineon verfügt über ein umfangreiches und
diversifiziertes Geschäft, das eine Vielzahl von
Endmärkten abdeckt und zahlreiche Produktkategorien
umfasst. Mit Ausnahme von integrierten Speicher-Schaltkreisen
und Mikroprozessoren liefert Infineon Produkte aller wichtigen
Produktkategorien wie diskrete Kleinsignal-Halbleiter, Sensoren,
Logik-ICs sowie ICs in Chipkarten-
|
25
|
|
|
|
|
Anwendungen. Nach Vollzug des Verkaufs des
Geschäftsbereichs drahtgebundene Kommunikation (Wireline
Communications) wird sich Infineon auf die Zielmärkte
Automobilelektronik (Automotive), Industrieelektronik
(Industrial & Multimarket), Chipkarten und Sicherheit
(Chip Card & Security) und drahtlose Kommunikation
(Wireless Communications) fokussieren. Nach den unten zitierten
externen Marktanalysen hat Infineon gemessen an
Umsatzerlösen in den vier Zielmärkten eine
führende Position inne.
|
|
|
|
|
|
Führendes Unternehmen bei
Automotive-Chips. Nach Strategy Analytics
(Mai 2009) war Infineon gemessen am Umsatz während der
letzten fünf Jahre weltweit die Nummer zwei unter den
Chip-Herstellern im Bereich Automotive. Im Kalenderjahr 2008
belief sich der Gesamtumsatz von Infineon mit der
Automotive-Branche auf 1.742 Mio. USD und lag somit nach diesem
Bericht von Strategy Analytics um 2 Mio. USD niedriger als beim
Chip-Hersteller Nummer eins. Gemessen am Umsatz ist Infineon der
größte Chip-Hersteller für die Automotive-Branche
in Europa und hält gemessen am Gesamtumsatz die folgenden
Marktpositionen: Nummer zwei in der Übrigen Welt (ohne
Japan), Nummer drei in Nordamerika und Nummer sechs in Japan.
Infineon konnte ihren Marktanteil über die letzten vierzehn
Jahre nach Strategy Analytics (1995-2009) von 3,9 Prozent im
Jahr 1994 kontinuierlich auf 9,5 Prozent im Jahr 2008 steigern.
Die wichtigsten Kernkompetenzen hinter diesem Wachstum waren
eingebettete Steuerung und Leistungshalbleiter. Außerdem
führt Infineon dieses Wachstum auf ihr Ziel der Lieferung
absolut fehlerfreier Produkte zurück. Infineon ist der
Auffassung, dass ihre eigenen Fertigungskompetenzen aufgrund der
von den Kunden im Automotive-Bereich geforderten hohen
Qualitätsstandards einen Wettbewerbsvorteil darstellen.
|
|
|
|
Führende Position bei Design und Produktion von
Steuerelektronik für Energieeffizienz sowie Verkleinerung
dieser Bausteine für industrielle
Anwendungen. Die Effizienz bei Erzeugung und
Transport sowie verlässliche Verteilung von elektrischer
Energie sind für eine umweltfreundliche Stromversorgung von
entscheidender Bedeutung. Infineon ist nach eigener
Einschätzung das einzige Unternehmen, das
Leistungshalbleiter und Leistungsmodule für die gesamte
Kette von der Produktion über die Übertragung bis zum
Verbrauch elektrischer Energie liefert. Nach IMS Research
(November 2002, August 2008) wuchs der Umsatz von Infineon
mit Leistungsbausteinen und Leistungsmodulen von 2001 bis 2007
um mehr als 145 Prozent. Mit dieser Wachstumsrate übertraf
Infineon die Wettbewerber und verbesserte ihre Marktposition
nach Umsatz in dieser Zeit vom vierten auf den ersten Platz,
während der Marktanteil von Infineon bei
Leistungshalbleitern im gleichen Zeitraum von 6,6 Prozent auf
9,7 Prozent stieg. Im Industrie-Markt schnitt Infineon nach dem
Marktforschungsunternehmen Semicast (Juni 2008) besser ab
als konkurrierende Halbleiteranbieter. Gemessen am Erlös
belegte Infineon 2006 mit einem Marktanteil von 6,4 Prozent den
zweiten Platz. Innerhalb eines Jahres steigerte Infineon ihren
Erlös um mehr als 30 Prozent und rückte 2007 auf den
ersten Platz vor. Obwohl für 2008 noch keine externen Daten
über den Markt verfügbar sind, geht Infineon davon
aus, im Jahr 2008 ihre Position als Marktführer gefestigt
zu haben. Hauptverantwortlich für dieses Wachstum war das
umfangreiche Know-how von Infineon bei ihrer Kernkompetenz
Leistungshalbleiter.
|
|
|
|
Marktführer bei Chips für
Karten-Anwendungen. Nach iSuppli
(2009) und Frost & Sullivan
(1998-2008)
war Infineon in jedem Jahr von 1997 bis 2008
Weltmarktführer bei Chips für Kartenanwendungen. Zudem
ist Infineon nach Frost & Sullivan (September
2008) der weltweit führende Anbieter von Smart Card
ICs. Diese Chips werden hauptsächlich für
Kreditkarten, Debitkarten, Zugangskarten, Pässe und
Ausweise, Personen- und Objektidentifikation und
Sicherheitsplattformen verwendet. Dabei legt Infineon ihren
strategischen Schwerpunkt auf diese sicherheitskritische
Bereiche, in denen Infineon ihre Erfahrung bei
Hochsicherheitsanwendungen bestmöglichst nutzen kann.
Infineon verfügt nach eigener Einschätzung innerhalb
der Branche über das größte Portfolio an Chips
und Schnittstellen, um den relevanten Sicherheitsanforderungen
auf diesen Gebieten gerecht zu werden. Aufgrund des von Infineon
vollzogenen strategischen Wechsels von Märkten mit hohen
Volumen hin zu sicherheitsrelevanten Applikationen konnte
Infineon ihre Profitabilität erheblich steigern. Die
wichtigsten Kernkompetenzen hinter dem Erfolg von Infineon auf
diesem Markt sind eingebettete Steuerung und HF (letztere nur
für kontaktlose Karten).
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Marktführer bei drahtlosen
Lösungen. Infineon stellt nicht nur
traditionelle Komponenten wie Basisband-Prozessoren,
HF-Transceiver und Chips für das Energiemanagement her,
sondern bietet darüber hinaus komplette Plattformen
einschließlich Software-Lösungen, kundenspezifischer
Modifikationen und Interoperabilitätstests an. Viele
Mobiltelefon-Hersteller verlassen sich zunehmend auf solche
vollständigen Plattformen von Drittanbietern und reduzieren
ihre interne Chipset-Herstellung entsprechend. Infineon ist zum
viertgrößten Anbieter solcher Plattformen
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26
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aufgestiegen (iSuppli, März 2009). Eines der wichtigsten
Teile von Handy-Plattformen ist der HF-Transceiver, bei dem
Infineon auf den Erfolg ihrer auf der CMOS-Technologie
basierenden Produkte aufbaut. Die Insolvenz von BenQ im
September 2006 wirkte sich negativ auf Infineon aus. Auf BenQ
entfielen ungefähr 80 Prozent von Infineons Geschäft
im Bereich Mobilfunk-Plattformen. Angesichts der
Umstrukturierungsmaßnahmen und erfolgreichen
Neukundengewinnung geht Infineon davon aus, die Trendwende bei
diesem Geschäft erfolgreich zu gestalten, was durch die
positiven Segmentergebnisse aus Infineons drahtlosem
Geschäft im Dreimonatszeitraum zum 30. Juni 2009
unterstrichen wird. Die wichtigsten Kernkompetenzen im
drahtlosen Geschäft von Infineon sind HF,
Analog-/Mixed-Signal und eingebettete Steuerungs-Technologien.
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Infineon ist der Ansicht, dass sie enge und langlebige
Beziehungen zu ihren Kunden hat:
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Infineon hat nach eigener Auffassung enge Kundenbeziehungen. So
ist Infineon aufgrund einer hohen spezifischen
Entwicklungsinvestition auf Seiten des Kunden häufig der
einzige Anbieter.
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Nach Auffassung von Infineon sind viele der Kundenbeziehungen
langfristiger Natur. In vielen Fällen kann die Entwicklung
durch den Kunden ein bis drei Jahre und für ein einziges
Produkt bis zu 100 Personenjahre in Anspruch nehmen.
Darüber hinaus können Tests, Validierung und ggf.
Abnahme des Produkts des Kunden mit dem integrierten
Infineon-Produkt zwischen sechs Monaten und drei Jahren dauern.
Bei einigen Anwendungen wie etwa im Bereich Automotive sind
Vertragslaufzeiten von bis zu 15 Jahren üblich.
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Infineon ist der Ansicht, dass die eigenen Fertigungskompetenzen
und Anlagen für spezialisierte Herstellungsverfahren einen
wichtigen Wettbewerbsvorteil darstellen; hierzu zählen
unter anderem folgende:
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Die proprietären Verfahrenstechnologien von Infineon, die
ihr die Herstellung ultradünner Wafer für
Leistungshalbleiter erlauben, ermöglichen große
Vorteile bei der Energieeffizienz;
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Infineon hat eine Technologie für ein ,embedded
Wafer-Level Ball Grid Array (,,eWLB) für
Halbleitergehäuse entwickelt, das gegenüber
konventionellen Gehäusen um 30 Prozent geringere
Dimensionen aufweist und eine bessere elektrische Leistung bei
geringeren Kosten bietet; und
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Infineons neues Werk für Leistungshalbleiter und
integrierte Schaltkreise in Kulim, Malaysia, wird Infineon in
die Lage versetzen, ihre Präsenz im wachsenden asiatischen
Markt auszudehnen und die eigene Kosten- und Wettbewerbsposition
weiter zu verbessern.
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Unternehmensstrategie
Infineon strebt ein profitables Wachstum durch Erhalt und
Ausdehnung ihrer führenden Position bei
Halbleiterlösungen in den vier Zielmärkten
Automobilelektronik (Automotive), Industrieelektronik
(Industrial & Multimarket), Chipkarten und
Sicherheitslösungen (Chip Card & Security), sowie
drahtlose Kommunikation (Wireless Solutions) an. Infineon wird
sich aus dem Markt für drahtgebundene Kommunikation
(Wireline Communications) mit dem Verkauf ihres
Geschäftsbereichs drahtgebundene Kommunikation (Wireline
Communications) zurückziehen und sich auf diese vier
Zielmärkte fokussieren. Infineon nutzt Schlüsseltrends
zu mehr Energieeffizienz, Sicherheit und Kommunikation als Hebel
und strebt Folgendes an:
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Ausbau der führenden Position in Zielmärkten,
insbesondere durch Unterstützung bei der Verbesserung der
Energieeffizienz. Infineon ist davon
überzeugt, dass ihr bisheriger Erfolg auf einem profunden
Verständnis einer großen Bandbreite von Anwendungen
sowohl für den automobilen und industriellen Sektor als
auch für PCs und andere Endverbrauchergeräte basiert.
Infineons führende Position auf diesen Gebieten
gründet auf herausragenden Produkten, überlegenen
Prozesstechnologien und optimierten eigenen
Produktionskapazitäten. Infineon sieht erhebliches
Wachstumspotenzial für ihr Geschäft mit
Leistungshalbleitern, insbesondere getrieben durch hohe
Energiekosten, den Wechsel zu erneuerbaren Energien und die
Nachfrage nach immer längeren Batterielaufzeiten in mobilen
Endgeräten.
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Stärkung von Infineons führender Position bei
Sicherheitslösungen. Infineon
möchte von der Zunahme elektronischer und mobiler
Kommunikation und der wachsenden Nachfrage nach je-derzeitigem
und örtlich unbeschränktem Zugang zu Informationen
profitieren, die die Nachfrage nach Datenschutz und
Datensicherheit wie die sichere Authentifizierung und
Identifizierung der
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27
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Nutzer steigert. Infineon möchte ihr Know-how dazu nutzen,
mögliche Anwendungen auf neuen Gebieten zu identifizieren
und sieht sich gut positioniert, um von zukünftigen Trends,
wie dem Übergang zu elektronischen Ausweisen
(e-Passports),
Gesundheitskarten
(e-Health
cards) und HFID ICs in der Logistikbranche, zu profitieren.
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Bereitstellung von Technologie, um jederzeit und
überall zu allen Kommunikationsnetzen Zugang zu
haben. Infineon möchte weiterhin von
ihren Kernkompetenzen bei HF und Mixed-Signal-Technologien
profitieren, insbesondere auf dem Gebiet der drahtlosen
Kommunikation. Um von der stetig steigenden Nachfrage nach
Mobilität und Kommunikation in allen Facetten des
täglichen Lebens zu profitieren, beabsichtigt Infineon,
ihre breite Kundenbasis zu erweitern und sich auf die
aussichtsreichsten Lösungen für zukünftiges
profitables Wachstum zu konzentrieren.
Insbesondere schließt dies im Markt drahtlose
Kommunikation hochintegrierte, kosteneffiziente
Ein-Chip-Lösungen und hoch integrierte
Mobilfunk-Plattformen für drahtlosen
Hochgeschwindigkeits-Datentransfer in HSPA-geeigneten Telefonen
und Smartphones.
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Darüber hinaus ist es Teil der Produktionsstrategie von
Infineon, den Mix aus eigenen und aus-gelagerten
Produktionskapazitäten und Prozesstechnologien
sorgfältig zu überwachen. Infineon beabsichtigt,
weiter in solche Prozesstechnologien zu investieren, die ihr
einen Wettbewerbsvorteil verschaffen. Dies ist insbesondere der
Fall für Infineons Prozesse zur Fertigung von
Leistungshalbleitern und für Produktionskapazitäten,
die den sehr strengen Qualitätsanforderungen der
Automobilindustrie entsprechen können. Gleichzeitig wird
Infineon auf dem Gebiet der Standard-CMOS-Fertigungstechnologien
mit Strukturbreiten unterhalb des 90-Nanometern-Knotens
weiterhin Risiken teilen und ihren Zugang zu modernsten
Technologien durch langfristige strategische Partnerschaften mit
anderen führenden Industrieteilnehmern ausbauen. Infineon
beabsichtigt nicht, in eigene Produktionsstätten für
Standard-CMOS-Prozesse unterhalb des 90-Nanometer-Knotens zu
investieren und wird stattdessen durch Outsourcing
Produktionskapazitäten von
Halbleiter-Fertigungsdienstleistern nutzen.
Infineon ist der Überzeugung, dass die fortgesetzte
Kostenkontrolle und weitere Projekte zur Stei-gerung ihrer
Produktivität wesentliche Elemente zur Implementierung
ihrer Strategie des profitablen Wachstums sind.
Gründe
für das Angebot und Verwendung des
Emissionserlöses
Die gesamte Halbleiterindustrie, Infineon eingeschlossen, wurde
von der weltweiten Wirtschafts- und Finanzkrise in
Mitleidenschaft gezogen. Infineons Umsatzerlöse gingen von
1.153 Mio. im vierten Quartal des Geschäftsjahres
2008 auf 845 Mio. im dritten Quartal des
Geschäftsjahres 2009 zurück. Infineons
Brutto-Cash-Position ging während der ersten neun Monate
des Geschäftsjahres 2009 um 12 Mio. von
883 Mio. zum 30. September 2008 auf 871 Mio. zum 30.
Juni 2009 zurück. Dieser Rückgang der
Brutto-Cash-Position beinhaltet:
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einen Zahlungsmittelabfluss in Höhe von ungefähr
106 Mio. im Zusammenhang mit Infineons
Kostensenkungsprogramm IFX10+,
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planmäßige Tilgungen von Finanzverbindlichkeiten in
Höhe von ungefähr 101 Mio., einschließlich
41 Mio. für den syndizierten Kredit, und
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freiwillige Rückkäufe der von der Tochtergesellschaft
Infineon Technologies Holding B.V. begebenen garantierten
nachrangigen Wandelanleihe mit Endfälligkeit 2010 (die
,,Wandelanleihe endfällig 2010) und der von
der Tochtergesellschaft Infineon Technologies Investment B.V.
begebenen garantierten nachrangigen Umtauschanleihe mit
Endfälligkeit 2010 (die ,,Umtauschanleihe endfällig
2010) im Gesamtnennbetrag von insgesamt 246 Mio.
gegen Barzahlung von 161 Mio.
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Teilweise wurde dieser Zahlungsmittelabfluss durch eine
Erstattung von 112 Mio. durch den Einlagensicherungsfonds
des Bundesverbandes deutscher Banken e.V. im Zusammenhang mit
der Insolvenz von Lehman Brothers sowie durch die Ausgabe einer
neuen garantierten nachrangigen Wandelanleihe der Infineon
Technologies Holding B.V. (die ,,Neue Wandelanleihe
endfällig 2014) mit einem Brutto-Mittelzufluss
von rund 182 Mio. ausgeglichen. Trotz des signifikanten
Erlösrückganges erwirtschaftete Infineon weitgehend
aus dem laufenden Geschäft ausreichend freie
Liquidität, um größtenteils die
Liquiditätsabflüsse finanzieren zu können, die
aus dem Kostensenkungsprogramm IFX10+ resultieren.
Die Geschäftsführung von Infineon ist der Ansicht,
dass sie anstreben sollte, eine Brutto-Cash-Position von
mindestens 250 to 300 Mio. einzuhalten, um das
Geschäft der Gesellschaft effektiv zu
28
betreiben. Daher hat Infineon drastische Schritte zur Senkung
der operativen Kosten, zum Schutz der Liquidität und zur
Stärkung der Bilanz eingeleitet. Die Schritte hierzu
beinhalten unter anderem das Kostensenkungsprogramm IFX10+, den
Rückkauf von Anleihen, die Ausgabe der Neuen Wandelanleihe
endfällig 2014 und den Verkauf des Geschäftsbereichs
drahtgebundene Kommunikation (Wireline Communications). Durch
das Kostensenkungsprogramm IFX10+ hat die Gesellschaft
erhebliche Kostensenkungen erzielt. Die operativen Kosten der
Gesellschaft im Dreimonatszeitraum zum 30. Juni 2009 sind
um 88 Mio. im Vergleich zum Dreimonatszeitraum zum
30. September 2008 gesunken. Der Vorstand der Gesellschaft
geht davon aus, dass diese Einsparungen überwiegend auf das
Kostensenkungsprogramm IFX10+ zurückzuführen sind.
Insgesamt strebt Infineon eine Kostensenkung von 600 Mio.
für das Geschäftsjahr 2009 im Vergleich zu Infineons
Gesamtkosten im Geschäftsjahr 2008 an, wobei diese zum Teil
von nur vorübergehender Natur ist.
Des weiteren schloss die Gesellschaft am 7. Juli 2009 einen
Kaufvertrag mit einer mit Golden Gate Private Equity Inc.
verbundenen Gesellschaft, um den Geschäftsbereich drahtlose
Kommunikation zu einem Kaufpreis von 250 Mio. zu
verkaufen. Der Großteil des Kaufpreises wird mit Vollzug
des Verkaufs, der im Herbst 2009 stattfinden soll, fällig;
ein Anteil von 20 Mio. des Kaufpreises wird 9 Monate nach
Vollzug des Verkaufs fällig. Infineon verkauft den
Geschäftsbereich drahtgebundene Kommunikation (Wireline
Communications), um sich auf die weitere Entwicklung ihres
Kerngeschäftes, auf ihre Strategie und auf ihre starke
Position in den Schlüsselbereichen Energieeffizienz,
Sicherheit und Kommunikation zu fokussieren und dabei weiter die
Bilanz der Gesellschaft und ihre Liquiditätsposition zu
verstärken.
Infineons Geschäftsführung ist der Ansicht, dass sie
der positive Einfluss der Kostensenkungen und der
liquiditätserhaltenden Maßnahmen in die Lage versetzen
wird, trotz des starken Rückgangs der Umsatzerlöse die
normale operative Geschäftstätigkeit aus den
Mittelzuflüssen aus fortgeführten Aktivitäten zu
finanzieren. Gleichwohl ist ihre Fähigkeit zur
Refinanzierung bestimmter Verbindlichkeiten unter Beibehaltung
der angestrebten Liquidität ein Problem. Die
Rückzahlung des zum 30. Juni 2009 ausstehenden Nennbetrags
von 522 Mio. aus der Wandelanleihe endfällig 2010
wird am 5. Juni 2010 fällig, und die Rückzahlung des
zum 30. Juni 2009 ausstehenden Nennbetrags von 48 Mio. aus
der Umtauschanleihe endfällig 2010 wird am 31. August 2010
fällig. Infineon erwartet darüber hinaus andere
anstehenden Rückzahlungen von Finanzverbindlichkeiten in
einem Gesamtvolumen von insgesamt ungefähr 110 Mio.
bis Ende September 2010, einschließlich für ihre
Multi-currency Revolving Kreditfazilität. Infineon werden
ferner weitere Mittelabflüsse im Zusammenhang mit ihrem
Kostensenkungsprogramm IFX10+ entstehen und es können
zusätzliche Kosten im Zusammenhang mit der Insolvenz von
Qimonda und den fortgeführten Verhandlungen über
ALTIS, dem Gemeinschaftsunternehmen zwischen Infineon und IBM in
Frankreich, entstehen. Infineon unternimmt eine ganze Reihe von
Maßnahmen, dieses Angebot, das Kostensenkungsprogramm und
der Verkauf des Geschäftsbereichs drahtgebundene
Kommunikation (Wireline Communications) eingeschlossen, um ihren
Verpflichtungen nachzukommen und das angestrebte Niveau von
Liquidität zu erhalten.
Infineons Geschäftsführung ist der Ansicht, dass vor
der Ankündigung des Angebots am 10. Juli 2009 im Markt eine
gewisse Unsicherheit hinsichtlich der Liquiditätsposition
der Gesellschaft, ihrer Fähigkeit, die Wandelanleihe
endfällig 2010 und die Umtauschanleihe endfällig 2010
zurückzuzahlen und der bedingten Verbindlichkeiten in Bezug
auf Qimonda und ALTIS, herrschte. Infineon geht auch davon aus,
dass der erfolgreiche Abschluss des Angebots das Vertrauen des
Kapitalmarkts in die Fähigkeit von Infineon zur
Rückzahlung der Anleihen und der bedingten
Verbindlichkeiten unter Beibehaltung einer ausreichenden
Liquidität stärken wird, und es den Marktteilnehmern
somit ermöglichen wird, Infineon als ein Unternehmen mit
nachhaltiger und letztlich wachsender Profitabilität
wahrzunehmen.
Es wird ein Nettoemissionserlös des Angebots von bis zu
700 Mio. erwartet, davon ausgehend, dass die maximale
Anzahl der Aktien in Höhe von 337 Mio. gezeichnet werden
und unter Abzug der erwarteten Provisionen und Aufwendungen des
Angebots in Höhe von etwa 25 Mio. Es wird mindestens
ein Nettoemissionserlös von 335 Mio. erwartet, falls
die Inhaber der Bezugsrechte 52 Prozent dieser Rechte
ausüben (dies entspricht der Mindestanzahl von
ausgeübten Bezugsrechten, bei der keine Verpflichtung des
Backstop Investors bestehen würde, Aktien zu zeichnen), der
Backstop Investor keine Aktien kauft und die Provisionen und
Aufwendungen des Angebots etwa 40 Mio. betragen.
Infineon geht davon aus, dass ein erfolgreicher Abschluss des
Angebots, der zu einem Nettoemissionserlös zwischen
335 Mio. und 700 Mio. führt, die
Kapitalstruktur der Gesellschaft stärken wird. Davon
ausgehend, dass Infineon in der Lage ist alle 337 Mio. Aktien zu
platzieren, plant die Gesellschaft insbesondere etwa 570
Mio. zur Rückzahlung der Wandelanleihe endfällig 2010
und der
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Umtauschanleihe endfällig 2010 zu verwenden, deren
ausstehende Nennbeträge zum 30. Juni 2009 570 Mio.
betrugen.
Infineon plant den Nettoemissionserlös, zusammen mit
verfügbaren Barreserven und den Erlösen aus dem
Verkauf des Geschäftsbereichs drahtgebundene Kommunikation
(Wireline Communications), welche den Betrag übersteigen,
der zur Rückzahlung der Anleihen benötigt wird, zur
Stärkung der Liquiditätsposition, zur Befriedigung der
bedingten Verbindlichkeiten, zur Rückzahlung anderer
Verbindlichkeiten, zur weiteren Investition in ein sehr
innovationsgetriebenes Geschäft und für strategische
Optionen in einer sich zunehmend konsolidierenden Industrie zu
nutzen.
Zusammenfassung
des Angebots
Bezugsangebot
Das Angebot umfasst bis zu 337,000,000 neue, auf den Namen
lautende Aktien ohne Nennbetrag (Stückaktien) mit einem
anteiligen Betrag am Grundkapital von 2,00 je
Stückaktie und mit voller Gewinnanteilberechtigung für
das Geschäftsjahr 2009 (die ,,Neuen Aktien).
Die Neuen Aktien stammen aus der vom Vorstand am 16. Juli 2009
mit Zustimmung des Aufsichtsrats der Gesellschaft (der
,,Aufsichtsrat) vom 16. Juli 2009 beschlossenen
Barkapitalerhöhung aus den Genehmigten Kapitalia 2007 und
2009/I der Gesellschaft mit mittelbarem Bezugsrecht der
Aktionäre. Die Neuen Aktien, mit Ausnahme eines
Spitzenbetrags von bis zu 7.562.592,00 entsprechend bis zu
3.781.296 Neuen Aktien, werden den Altaktionären im Wege
einer indirekten Bezugsrechtsemission durch öffentliche
Angebote in Deutschland und Luxemburg zum Bezugsverhältnis
und zum Bezugspreis angeboten (das
,,Bezugsangebot). Die Durchführung der
Kapitalerhöhung ist noch nicht im Handelsregister des
Amtsgerichts München eingetragen worden; die Gesellschaft
erwartet die Eintragung der Kapitalerhöhung hinsichtlich
der im Wege des Bezugsangebots gezeichneten Neuen Aktien
für den 6. August 2009.
Das Bezugsangebot (wie hier definiert) wird voraussichtlich am
17. Juli 2009 im elektronischen Bundesanzeiger und in der
Börsen-Zeitung veröffentlicht.
Investment Aktien
Platzierung
Sämtliche Neue Aktien, die nicht im Wege des Bezugsangebots
gezeichnet werden (die ,,Investment Aktien) werden
dem Backstop Investor im Wege einer Privatplatzierung zur
Zeichnung zum Bezugspreis angeboten (die ,,Investment Aktien
Platzierung und zusammen mit dem Bezugsangebot das
,,Angebot). Der Backstop Investor hat sich
verpflichtet, sämtliche Aktien, die nicht unter den
bestehenden gesetzlichen Bezugsrechten gezeichnet wurden,
gemäß den Bedingungen der Backstop Vereinbarung von
den Konsortialbanken zu erwerben oder zu zeichnen. Die
Maximalzahl der vom Backstop Investor zu erwerbenden Neuen
Aktien darf, zusammen mit sämtlichen vom Backstop Investor
über vom Backtop Investor erworbene Bezugsrechte etwaig
erhaltenen Aktien nicht zu einem Aktienbesitz führen,
welcher mehr als 30 Prozent minus einer Aktie am
Grundkapital und den Stimmrechten der Gesellschaft nach
Durchführung des Angebots entspricht.
Die Durchführung der Kapitalerhöhung ist noch nicht im
Handelsregister des Amtsgerichts München eingetragen
worden. Sollten sämtliche der Neuen Aktien, die nicht von
den Altaktionären der Gesellschaft gezeichnet wurden, dem
Backstop Investor gemäß der Backstop Vereinbarung
zugeteilt werden, wird die Eintragung der Kapitalerhöhung
bezüglich der dem Backstop Investor zugeteilten Neuen
Aktien voraussichtlich ohne ungebührliche Verzögerung
im Anschluss an die anwendbare Fusionsfreigabe und/oder Freigabe
durch das Bundesministerium für Wirtschaft und Technologie
nach dem Außenwirtschaftsgesetz erfolgen.
Börsenzulassung
Die Zulassung der Neuen Aktien zum Handel im regulierten Markt
an der Frankfurter Wertpapierbörse mit gleichzeitiger
Zulassung zum Teilbereich des regulierten Marktes mit weiteren
Zulassungsfolgepflichten (Prime Standard) an der Frankfurter
Wertpapierbörse wird voraussichtlich am 17. Juli 2009
beantragt werden. Der Zulassungsbeschluss bezüglich der im
Rahmen des Bezugsangebots gezeichneten Neuen Aktien wird
für den 7. August 2009 erwartet.
Der Zulassungsbeschluss bezüglich der Neuen Aktien, die im
Rahmen der Investment Aktien Platzierung gezeichnet wurden, wird
voraussichtlich ohne ungebührliche Verzögerung nach
der Zeichnung und der Zahlung des Bezugspreises für die
Investment Aktien erwartet, unter der Voraussetzung, dass u.a.
die einschlägigen kartellrechtlichen Fusionsfreigaben
und/oder die Freigabe durch das
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Bundesministerium für Wirtschaft und Technologie nach dem
Außenwirtschaftsgesetz erteilt wurden; die Erteilung dieser
Freigaben, sofern einschlägig, wird spätestens im
Verlauf des August 2009 erwartet.
Notierungsaufnahme
Der Handel der im Wege des Bezugsangebots gezeichneten Neuen
Aktien wird voraussichtlich am 7. August aufgenommen. Diese
Neuen Aktien werden an diesem Tag in die bestehende
Preisfeststellung der Aktien der Gesellschaft einbezogen.
Für den Fall, dass sämtliche von den
Altaktionären nicht gezeichneten Neue Aktien dem Backstop
Investor gemäß der Backstop Vereinbarung zugeteilt
werden, wird der Beginn des Handels dieser Neuen Aktien
voraussichtlich ohne ungebührliche Verzögerung nach
der Zeichnung und der Zahlung des Bezugspreises für die
Investment Aktien erwartet, unter der Voraussetzung, dass die
einschlägigen Fusionsfreigaben und die Freigabe durch das
Bundesministerium für Wirtschaft und Technologie nach dem
Außenwirtschaftsgesetz erteilt wurden; die Erteilung dieser
Freigaben, sofern einschlägig, wird spätestens im
Verlauf des August 2009 erwartet. Die dem Backstop Investor
zugeteilten Neuen Aktien werden zum Handelsbeginn dieser Neuen
Aktien in die bestehende Preisfeststellung der Aktien der
Gesellschaft einbezogen, was im Verlauf des August 2009 erwartet
wird.
Ausübung
der Bezugsrechte
Die Aktionäre der Infineon Technologies AG werden durch
Veröffentlichung des Bezugsangebots voraussichtlich am 17.
Juli 2009 aufgefordert, ihre Bezugsrechte (die
,,Bezugsrechte) zur Vermeidung des Ausschlusses in
der Zeit vom 20. Juli 2009 bis einschließlich 3. August
2009 (die ,,Bezugsfrist) auszuüben.
Bezugsverhältnis
Das Bezugsverhältnis ist 9 zu 4, d.h. 9 Alte Aktien
berechtigen zum Bezug von 4 Neuen Aktien zum Bezugspreis.
Bezugspreis
Der Bezugspreis je bezogener Neuer Aktie beträgt 2,15
(der ,,Bezugspreis).
Bezugsstelle
Bezugsstelle ist die Deutsche Bank.
Kein
Bezugsrechtshandel auf dem regulierten Markt
Ein Handel der Bezugsrechte (ISIN
DE000A0Z2227 / Wertpapier-Kennnummer (WKN) A0Z222) auf
dem regulierten Markt der Frankfurter Wertpapierbörse oder
einer anderen deutschen Wertpapierbörse wird von der
Infineon Technologies AG nicht veranlasst werden. Ein An-oder
Verkauf von Bezugsrechten über den regulierten Markt einer
Börse ist daher nicht möglich. Die Bezugsrechte sind
jedoch übertragbar. Ein Ausgleich für nicht
ausgeübte Bezugsrechte findet nicht statt. Bezugsrechte,
die bei Ablauf der Bezugsfrist nicht ausgeübt wurden,
verfallen wertlos. Vom 20. Juli 2009 an notieren alle von der
Gesellschaft bereits ausgegebenen Aktien (ISIN
DE0006231004 / German Securitities Code (WKN) 623100)
(die ,,Alten Aktien) am regulierten Markt der
Frankfurter Wertpapierbörse ,,ex Bezugsrecht.
Lieferung und
Abrechnung der Neuen Aktien
Der Bezugspreis je Neuer Aktie, die im Rahmen des Bezugsangebots
bezogen wird, ist spätestens am 3. August 2009 zu zahlen.
Die im Rahmen des Bezugsangebots bezogenen Neuen Aktien werden
voraussichtlich am 7. August 2009 durch
Girosammeldepotgutschrift zur Verfügung gestellt.
Der Bezugspreis für jede unter der Investment Aktien
Platzierung gezeichnete Neue Aktie ist bis spätestens zum
zehnten Geschäftstag nach dem auf den letzten Tag der
Bezugsfrist folgenden Geschäftstag zu zahlen, unter der
Voraussetzung, dass u.a. die einschlägigen
kartellrechtlichen Fusionsfreigaben und/oder die Freigabe durch
das Bundesministerium für Wirtschaft und Technologie nach
dem Außenwirtschaftsgesetz erteilt wurden; die Erteilung
dieser Freigaben, sofern einschlägig, wird spätestens
im Verlauf des August 2009 erwartet. Die dem Backstop Investor
zugeteilten Neuen Aktien werden zum Handelsbeginn in die
bestehende Preisfeststellung der Aktien der Gesellschaft
einbezogen, was im Verlauf des August 2009 erwartet wird. Die im
Rahmen der Investment Aktien Platzierung gezeichneten
31
Aktien werden voraussichtlich an dem auf die Bezahlung des
Bezugspreises folgenden Geschäftstag dem
Wertpapiersammeldepot gutgeschrieben und dem Backstop Investor
zugänglich gemacht.
Backstop
Vereinbarung
Admiral Participations (Luxemburg) S.à r.l. (der
,,Backstop Investor), eine Tochtergesellschaft
eines von Apollo Global Management LLC verwalteten Fonds hat
sich unter der Bedingung des Erreichens einer
Mindestbeteiligungsschwelle (wie nachfolgend definiert)
verpflichtet, sämtliche Neuen Aktien (einschließlich
des Spitzenbetrags), die nicht von den Aktionären der
Gesellschaft bezogen werden (die ,,Investment
Aktien), bis zu einem bestimmten Maximalbetrag (wie
nachfolgend definiert) zum Bezugspreis zu erwerben (die
,,Backstop Vereinbarung). Die Maximalzahl der vom
Backstop Investor zu erwerbenden Investment Aktien darf,
zusammen mit sämtlichen vom Backstop Investor über vom
Backtop Investor erworbene Bezugsrechte etwaig erhaltenen Aktien
nicht zu einem Aktienbesitz führen, welcher mehr als 30
Prozent minus einer Aktie am Grundkapital und den Stimmrechten
der Gesellschaft nach Durchführung des Angebots entspricht
(der ,,Maximale Investitionsbetrag). Der Backstop
Investor ist berechtigt, jedoch nicht verpflichtet, Investment
Aktien zu erwerben, sofern die Anzahl der zur Verfügung
stehenden Investment Aktien, zusammen mit sämtlichen vom
Backstop Investor über vom Backtop Investor erworbene
Bezugsrechte etwaig erhaltenen Aktien, dem Backstop Investor
keine Beteiligung von mindestens 15 Prozent (die
,,Mindestbeteiligungsschwelle) am Grundkapital und
den Stimmrechten der Gesellschaft ermöglicht.
Die Verpflichtung des Backstop Investors, Investment Aktien zu
erwerben, ist von dem Eintritt bestimmter Bedingungen oder dem
Verzicht durch den Backstop Investor auf diese abhängig,
insbesondere der einschlägigen Fusionsfreigaben, der
Freigabe durch das Bundesministerium für Wirtschaft und
Technologie aufgrund des Außenwirtschaftsgesetz, sowie der
Bestellung eines Vertreters des Backstop Investors, Manfred
Puffer, durch das zuständige Gericht in den Aufsichtsrat
der Gesellschaft, dem Rücktritt des derzeitigen
Vorsitzenden des Aufsichtsrats der Gesellschaft, Max Dietrich
Kley, zum 30. September 2009 sowie der Ernennung von
Manfred Puffer zum Vorsitzenden des Aufsichtsrats der
Gesellschaft zum 1. Oktober 2009, und der Nominierung eines
weiteren Vertreters des Backstop Investors, Gernot Löhr,
als Mitglied des Aufsichtsrats, vorbehaltlich des Wirksamwerdens
der Amtsniederlegung durch den derzeitigen
Aufsichtsratsvorsitzenden, für die Bestellung durch das
zuständige Gericht.
Der Backtop Investor wird nicht verpflichtet, aber berechtigt
sein, Investment Aktien zu zeichnen, wenn die Zahl der Aktien
nicht die Mindestbeteiligungsschwelle übersteigt. Wenn der
Backstop Investor Investment Aktien zeichnen möchte,
obgleich die Mindestbeteiligungsschwelle nicht erreicht ist,
muss der Backstop Investor gegenüber der Gesellschaft an
dem auf das Ende der Bezugsfrist folgenden Geschäftstag den
Verzicht darauf erklären. Der Backstop Investor kann
gegenüber der Gesellschaft die unbedingte Verpflichtung
erklären, auf anderem Wege als durch die Investment
Aktienplatzierung, innerhalb von 30 Tagen nach der
Erfüllung der oder dem Verzicht auf die aufschiebenden
Bedingungen, eine solche Anzahl der Aktien der Gesellschaft zu
erwerben, die nach dem Erwerb zu einer Beteiligung des Backstop
Investors von mindestens 15 Prozent führt. In diesem Fall
steht die Verpflichtung des Backstop Investors Investment Aktien
zu erwerben, unter dem Vorbehalt, dass (a) Manfred Puffer
vom zuständigen Gericht in den Aufsichtsrat bestellt wird,
(b) Max Dietrich Kley, der derzeitige Vorsitzende des
Aufsichtsrats folgende Schreiben übermittelt hat:
(i) einen Brief an den Backstop Investor, in dem er sich zu
seinen Rücktritt zum 30. September 2009 verpflichtet, und
(ii) ein Rücktrittsschreiben an den Vorstand und den
stellvertretenden Aufsichtsratsvorsitzenden, in dem er als
Aufsichtsratsvorsitzender und Aufsichtsratsmitglied zum
30. September zurücktritt, sofern der Backstop
Investor zu diesem Zeitpunkt eine Beteiligung an der
Gesellschaft von mindestens 15 Prozent hält, oder zum
15. Oktober 2009, wenn der Backstop Investor erst zu diesem
Zeitpunkt eine entsprechende Beteiligung an der Gesellschaft
hält, jeweils belegt durch eine entsprechende Mitteilung an
die Gesellschaft nach § 21 Abs. 1
Wertpapierhandelsgesetz (WpHG), (c) Manfred Puffer zum 1.
Oktober 2009 zum Aufsichtsratsvorsitzenden gewählt worden
ist, vorbehaltlich der Wirksamkeit des Rücktritts des
derzeitigen Vorsitzenden und (d) der Nominierungsausschuss
des Aufsichtsrats Gernot Löhr als Mitglied des
Aufsichtsrats zur Bestimmung durch das zuständige Gericht,
vorbehaltlich der Wirksamkeit des Rücktritts des
derzeitigen Vorsitzenden, vorgeschlagen hat.
Solange die einschlägigen Fusionsfreigaben und die Freigabe
durch das Bundesministeriums für Wirtschaft und Technologie
nach dem Außenwirtschaftsgesetz noch nicht erteilt wurden,
darf der Backstop Investor lediglich Investment Aktien erwerben
oder zeichnen, die zu einer Beteiligung von 25 Prozent minus
einer Aktie führen. Nachdem die einschlägigen
Kartellfreigaben und die Freigabe durch das Bundesministeriums
für Wirtschaft und Technologie nach dem
Außenwirtschaftsgesetz erlangt wurde, darf der Backstop
Investor, nach freiem Ermessen, auch Investment Aktien zeichnen,
die zu einer höheren
32
Beteiligung als 25 Prozent und bis zum Maximalen
Investitionsbetrag führen. Die Kapitalerhöhung und die
Zulassung zum Handel in Hinblick auf diese Aktien werden so
schnell wie vernünftigerweise möglich
durchgeführt.
Sollte der Backstop Investor im Rahmen des Angebots aus
irgendeinem Grund keine Neuen Aktien erwerben, muss die
Gesellschaft dem Backstop Investor einen Pauschalbetrag von
21 Mio. zahlen. Für den Fall, dass der Backstop
Investor nach Vollzug des Angebots lediglich eine Beteiligung
von weniger als 25 Prozent am Grundkapital und den Stimmrechten
der Gesellschaft erwirbt, muss die Gesellschaft dem Backstop
Investor einen Betrag zahlen, welcher der Summe aus (i)
5,5 Mio. und (ii) einem Betrag in Höhe von
0,057 je Aktie, um die der Investor die Erreichung einer
Beteiligung in Höhe von 25 Prozent plus eine Aktie am
Grundkapital und den Stimmrechten der Gesellschaft verfehlt,
entspricht.
Während des Backstop Investor Marktschutzes (wie unten
definiert) wird die Gesellschaft, weder direkt noch indirekt,
eine dritte Partei weder darum bitten, noch sie veranlassen,
ermutigen oder unterstützen, einen Anteil von
10 Prozent oder mehr der Aktien oder der Stimmrechte der
Gesellschaft zu erwerben.
Solange der Backstop Investor eine Beteiligung von mindestens
15 Prozent der Aktien und der Stimmrechte der Gesellschaft
hält, wird der Backstop Investor berechtigt sein, zwei
natürliche Personen, und solange der Backtop Investor eine
Beteiligung von mindestens 10 Prozent der Aktien und der
Stimmrechte der Gesellschaft hält, eine natürliche
Person, zur Wahl in den Aufsichtsrat vorzuschlagen.
Verwertung
nicht bezogener Neuer Aktien / Privatplatzierung an den Backstop
Investor
Neue Aktien, die nicht im Rahmen des Bezugsangebots bezogen
werden, werden im Rahmen einer Privatplatzierung verwertet. Der
Backstop Investor hat sich unter der Bedingung des Erreichens
der Mindestbeteiligungsschwelle sowie verschiedenen anderen
Bedingungen verpflichtet, sämtliche Neuen Aktien, die nicht
von den Aktionären der Gesellschaft bezogen werden, bis zum
Maximalen Investitionsbetrag zum Bezugspreis zu erwerben oder zu
zeichnen.
Marktschutzvereinbarungen
Die Gesellschaft hat sich für die Dauer von sechs Monaten
nach der Zulassung der Neuen Aktien zum Handel gegenüber
den Konsortialbanken verpflichtet, keine Kapitalerhöhung
oder andere Kapitalmaßnahmen ohne die schriftliche
Einwilligung der Konsortialbanken, die nur aus guten Grund
verweigert werden darf, durchzuführen.
Für den Fall, dass der Backstop Investor eine Beteiligung
von mindestens 15 Prozent der Aktien und Stimmrechte der
Gesellschaft hält, hat sich der Backstop Investor für
die Dauer von 12 Monaten nach dem Tag des Erwerbs der Investment
Aktien verpflichtet, ohne die Zustimmung des Vorstands der
Gesellschaft weder Investment Aktien zu verkaufen, zu
übertragen, zu verpfänden, zu belasten oder
anderweitig über sie zu verfügen (einschließlich
der Einräumung von Optionen oder der Begründung
irgendeiner Art von Treuhandbeziehung in Bezug auf die
Investment Aktien), keine Vereinbarung oder Transaktion
bezüglich der Stimmrechte oder andere mit den Investment
Aktien verbundenen Rechte abzuschließen, und keine
Transaktion (einschließlich Derivattransaktionen)
abzuschließen bzw. keine andere Maßnahme
durchzuführen, die wirtschaftlich einer der zuvor genannten
entspricht, noch eine Beteiligung von über 30 Prozent
minus einer Aktie am Grundkapital und den Stimmrechten der
Gesellschaft zu begründen (der ,,Backstop Investor
Marktschutz). Diese Verpflichtung besteht nicht
hinsichtlich des Verkaufs oder der Übertragung von
Investment Aktien (i) an eine mit dem Backstop Investor
nach §§ 15 ff. Aktiengesetz verbundene
Gesellschaft, (ii) von bis zu 10 Prozent der
Investment Aktien an einen Co-Investor bis zum 31. Oktober
2009, (iii) im Zusammenhang mit einem Pflichtangebot einer
dritten Partei nach dem Wertpapierübernahmegesetz
(WpÜG), (iv) im Zusammenhang mit einem freiwilligen
Übernahmeangebot nach dem WpÜG, (v) im
Zusammenhang mit einer Verschmelzung oder einer
Geschäftsverbindung der Gesellschaft mit einer dritten
Partei, (vi) im Zusammenhang mit einem Aktienrückkauf
durch die Gesellschaft, und (vii) in einer solchen Anzahl,
um in der Lage zu sein, den aus der Ausübung von
Bezugsrechten im Zusammenhang mit einem Bezugsrechtsangebot von
Aktien der Gesellschaft resultierenden Emissionspreis selbst zu
finanzieren (bereinigt um die Transaktionsgebühren und die
Kosten). Der Backstop Investor wird sich mit dem Vorstand der
Gesellschaft beraten, bevor er Investment Aktien im Zusammenhang
mit einem öffentlichen Übernahmeangebot
überträgt. Vorbehaltlich der Bedingung, dass der
Backstop Investor einen Anteil von mindestens 15 Prozent
der Aktien und Stimmrechte an der Gesellschaft erwirbt,
verpflichtet sich der Backstop Investor für die gesamte
Dauer des Backstop Investor Marktschutzes dazu, dass seine
gezeichneten Investment Aktien in ein Sperrdepot gebucht sein
werden.
33
Die Verpflichtung des Backstop Investors in Hinblick auf den
Backstop Investor Marktschutz endet automatisch, wenn innerhalb
einer Frist von 12 Monaten nach dem Tag des Erwerbs der
Investment Aktien eines der folgenden Ereignisse eintritt:
(i) jederzeit, wenn eine andere Person als die vom Backstop
Investor vorgeschlagene Person Aufsichtsratsvorsitzender wird,
oder (ii) Gernot Löhr innerhalb von 10
Geschäftstagen nach dem diese Einreichung vorgenommen
werden musste, nicht vom zuständigen Gericht als Mitglied
des Aufsichtsrats bestellt worden ist, oder (iii) zu
irgendeinem Zeitpunkt weniger als zwei vom Backstop Investor
vorgeschlagene Personen Mitglieder des Aufsichtsrats sind und,
in jedem dieser Fälle, wenn dieser Zustand nicht innerhalb
von 30 Tagen nach dem relevanten Ereignis oder dem Erhalt eines
Vorschlags des Backstop Investors bezüglich der Ernennung
eines alternativen geeigneten oder mehrerer alternativer
geeigneter Kandidaten des Backstop Investors durch die
Gesellschaft beseitigt worden ist.
Die Verpflichtung des Backstop Investors in Hinblick auf den
Backstop Investor Marktschutz endet zudem automatisch, wenn
eines der folgenden Ereignisse eintritt: (i) eine
Reduzierung der Höchstzahl der Aufsichtsratsmitglieder von
16 auf 12 ist nicht bis zum Tag der nächsten
Hauptversammlung in Bezug auf das Geschäftsjahr 2008/2009
im Jahr 2010 wirksam geworden; oder (ii) nicht alle
staatlichen und behördlichen Freigaben, die in Bezug auf
einen Erwerb des Maximalen Investitionsbetrages erforderlich
sind, sind bis zum 1. Oktober 2009 gewährt worden.
Beendigung des
Bezugsangebots
Die Konsortialbanken behalten sich vor, unter bestimmten
Umständen vom Übernahmevertrag zurückzutreten
oder die Durchführung des Bezugsangebots zu
verlängern. Zu diesen Umständen zählen
insbesondere, dass (i) die Gesellschaft bestimmte Legal
Opinions nicht vorlegt, (ii) die Investment Vereinbarung
zwischen der Gesellschaft und dem Backstop Investor
geändert, widerrufen oder gekündigt wird und
(iii) andere aufschiebende Bedingungen nicht erfüllt
sind. Im Falle einer Beendigung des Übernahmevertrages wird
das Bezugsangebot außer für die bis dahin wirksam
ausgeübten Bezugsrechte nicht stattfinden. Die
Verpflichtung der Konsortialbanken endet ferner, wenn die
Durchführung der Kapitalerhöhung bezüglich der im
Wege des Bezugsangebots durch die Konsortialbanken gezeichneten
Aktien nicht bis zum 6. August 2009 in das Handelsregister
eingetragen ist und sich die Konsortialbanken und die Infineon
Technologies AG nicht auf einen späteren Termin einigen
können.
Aufschiebende
Bedingung und Kündigung der Backstop Vereinbarung
Die Verpflichtung des Backstop Investors, Investment Aktien zu
erwerben, ist von dem Eintritt bestimmter Voraussetzungen oder
dem Verzicht auf diese abhängig, unter anderem der
einschlägigen kartellrechtlichen Freigaben, der Freigabe
durch das Bundesministerium für Wirtschaft und Technologie
aufgrund des Außenwirtschaftsgesetz, sowie der Bestellung
eines Vertreters des Backstop Investors, Manfred Puffer, durch
das zuständige Gericht in den Aufsichtsrat der Gesellschaft
und dem Rücktritt des derzeitigen Vorsitzenden des
Aufsichtsrats der Gesellschaft, Max Dietrich Kley, bis zum 30.
September 2009 sowie der Ernennung von Manfred Puffer zum
Vorsitzenden des Aufsichtsrats der Gesellschaft zum
1. Oktober 2009 und der Nominierung eines weiteren
Vertreters des Backstop Investors, Gernot Löhr, als
Mitglied des Aufsichtsrats für die Bestellung durch das
zuständige Gericht vorbehaltlich des Wirksamwerdens der
Amtsniederlegung durch den derzeitigen Aufsichtsratsvorsitzenden.
Wenn der Backtop Investor Investment Aktien zeichnen
möchte, obgleich die Mindestbeteiligungsschwelle nicht
erreicht ist, muss der Backstop Investor gegenüber der
Gesellschaft an dem auf das Ende der Bezugsfrist folgenden
Geschäftstag, den Verzicht darauf erklären. Der
Backstop Investor kann gegenüber der Gesellschaft die
unbedingte Verpflichtung erklären auf anderem Wege als
durch die Investment Aktienplatzierung, innerhalb von 30 Tagen
nach der Erfüllung der oder dem Verzicht auf die
aufschiebenden Bedingungen, eine solche Anzahl der Aktien der
Gesellschaft zu erwerben, die nach dem Erwerb zu einer
Beteiligung des Backstop Investors von mindestens
15 Prozent führt. In diesem Fall steht die
Verpflichtung des Backstop Investors, sämtliche Investment
Aktien zu erwerben, unter dem Vorbehalt, dass (a) Manfred
Puffer vom zuständigen Gericht in den Aufsichtsrat bestellt
wird, (b) Max Dietrich Kley, der derzeitige Vorsitzende des
Aufsichtsrats folgende Schreiben übermittelt:
(i) einen Brief an den Backstop Investor, in dem er sich zu
seinen Rücktritt zum 30. September 2009 verpflichtet, und
(ii) ein Rücktrittsschreiben an den Vorstand und den
stellvertretenden Aufsichtsratsvorsitzenden, in dem er als
Aufsichtsratsvorsitzender und Aufsichtsratsmitglied zum
30. September zurücktritt, sofern der Backstop
Investor zu diesem Zeitpunkt eine Beteiligung an der
Gesellschaft von mindestens 15 Prozent hält, oder zum
15. Oktober 2009, wenn der Backstop Investor erst zu diesem
Zeitpunkt eine entsprechende Beteiligung an der Gesellschaft
hält, jeweils belegt durch eine entsprechende Mitteilung an
die
34
Gesellschaft nach § 21 Abs. 1 Wertpapierhandelsgesetz
(WpHG), (c) Manfred Puffer zum 1. Oktober 2009 zum
Aufsichtsratsvorsitzenden gewählt worden ist, vorbehaltlich
der Wirksamkeit des Rücktritts des derzeitigen Vorsitzenden
und (d) der Nominierungsausschuss des Aufsichtsrats Gernot
Löhr als Mitglied des Aufsichtsrats, vorbehaltlich der
Wirksamkeit des Rücktritts des derzeitigen Vorsitzenden,
zur Bestimmung durch das zuständige Gericht vorgeschlagen
hat.
Der Backstop Investor behält sich das Recht vor, die
Backstop Vereinbarung bei Eintritt bestimmter Umstände zu
kündigen. Diese Umstände schließen insbesondere
das Ausbleiben der Vorlage einer Legal Opinion seitens der
Gesellschaft und den Nicht-Eintritt bestimmter anderer
aufschiebender Bedingungen ein. Der Backstop Investor kann die
Backstop Vereinbarung auch kündigen, wenn die auf die
Investment Aktien bezogene Kapitalerhöhung nicht innerhalb
von zwölf Tagen nach der Beantragung der Eintragung erfolgt
ist. In diesen Fällen darf der Backstop Investor durch
schriftliche Erklärung gegenüber der Gesellschaft von
der Backstop Vereinbarung zurücktreten. Soweit es noch
nicht ausgeübt ist, verfällt dieses
Rücktrittsrecht mit Eintragung der Durchführung der
auf die Investmentaktien bezogenen Kapitalerhöhung in das
Handelsregister.
Widerrufsrecht
im Falle der Veröffentlichung eines Nachtrags zum
Prospekt
Die Gesellschaft wird voraussichtlich am 29. Juli 2009 ihren
Quartalsbericht für die drei und neun Monate der zum 30.
Juni 2009 endenden Berichtsperiode veröffentlichen. In
diesem Zusammenhang wird voraussichtlich am 29. Juli 2009 ein
Nachtrag zum Wertpapierprospekt veröffentlicht, um die
jüngsten Entwicklungen des Berichtszeitraums bis
einschließlich 30. Juni 2009 im Rahmen des
Wertpapierprospekts zu berücksichtigen.
Nach § 16 Abs. 3 Wertpapierprospektgesetz
können Anleger, die vor der Veröffentlichung des
Nachtrags eine auf den Erwerb oder die Zeichnung der Wertpapiere
gerichtete Willenserklärung abgegeben haben, diese
innerhalb von zwei Werktagen nach der Veröffentlichung
dieses Nachtrags widerrufen, sofern noch keine Erfüllung
eingetreten ist.
Der Widerruf muss keine Begründung enthalten und ist in
Textform gegenüber derjenigen Stelle zu erklären, bei
der der betreffende Anleger seine auf den Erwerb der Neuen
Aktien gerichtete Willenserklärung abgegeben hat. Zur
Fristwahrung genügt die rechtzeitige Absendung.
Angebot in den
Vereinigten Staaten
Die Neuen Aktien und die Bezugsrechte werden nach den
Vorschriften des U.S. Securities Act von 1933, in der
jeweils gültigen Fassung (der ,,Securities
Act) registriert. In diesem Zusammenhang beabsichtigt
die Gesellschaft, für die Neuen Aktien und die Bezugsrechte
ein
Form F-3
Registration Statement nach dem Securities Act bei der
U.S. Securities Exchange Commission einzureichen.
Stabilisierung
Es findet keine Stabilisierung in Zusammenhang mit dem Angebot
statt.
Kosten des
Angebots und Nettoemissionserlös
Die geschätzten Kosten des Angebots, einschließlich
der Gebühren für die Konsortialbanken, werden
voraussichtlich bis zu 40 Mio. betragen,
einschließlich ungefähr 18 Mio. für die
Konsortialbanken und bis zu 21 Mio. für den Backtop
Investor im Zusammenhang mit der Backstop Vereinbarung. Sollte
sich der Backstop Investor entscheiden, im Rahmen des Angebots
aus irgendeinem Grund keine Neuen Aktien zu erwerben, wird die
Gesellschaft dem Backstop Investor einen Pauschalbetrag von
21 Mio. zahlen. Für den Fall, dass der Backstop
Investor nach Vollzug des Angebots lediglich eine Beteiligung
von weniger als 25 Prozent am Grundkapital und den Stimmrechten
der Gesellschaft erwirbt, wird die Gesellschaft dem Backstop
Investor einen Betrag zahlen, welcher der Summe aus (i)
5,5 Mio. und (ii) einem Betrag in Höhe von
0,057 je Aktie, um die der Investor die Erreichung einer
Beteiligung in Höhe von 25 Prozent plus eine Aktie am
Grundkapital und den Stimmrechten der Gesellschaft verfehlt,
entspricht. Die Gesellschaft geht davon aus, dass der
Nettoemissionserlös voraussichtlich 700 Mio. betragen
wird, wenn sämtliche Neuen Aktien gezeichnet oder bei
Investoren platziert werden. Sollte die
Mindestbeteiligungsschwelle nicht erreicht werden und sich der
Backstop Investor entscheiden, nicht auf die
Mindestbeteiligungsschwelle zu
35
verzichten, schätzt die Gesellschaft den
Mindestnettoemissionserlös aus dem Angebot auf
ungefähr 335 Mio.
Art,
Verbriefung und Lieferung der Neuen Aktien
Die Neuen Aktien werden in Übereinstimmung mit der
geltenden Satzung der Gesellschaft (die ,,Satzung)
als Namensaktien ohne Nennbetrag (ISIN
DE0006231004 / Wertpapier-Kennnummer (WKN)
623100) ausgegeben. Die Neuen Aktien werden in einer oder
mehreren Globalurkunde(n) verbrieft, die bei der Clearstream
Banking AG, Neue Börsenstraße 1, 60487 Frankfurt am
Main, zur Girosammelverwahrung hinterlegt werden.
Der Anspruch der Aktionäre auf Verbriefung ihres Anteils
ist gemäß Artikel 4 Abs. 4 der Satzung ausgeschlossen,
soweit dies gesetzlich zulässig und eine Verbriefung nach
den Regeln einer Börse nicht erforderlich ist. Die Neuen
Aktien verbriefen die gleichen Rechte wie alle anderen Aktien
der Gesellschaft und beinhalten keine darüber
hinausgehenden Rechte oder Vorteile.
ISIN, WKN,
Common Code und Börsenkürzel
Die International Securities Identification Number
(,,ISIN) für die Neuen Aktien lautet
DE0006231004, die Wertpapier-Kennnummer (,,WKN) ist
623100 und der Common Code lautet D10745900. Das
Börsenkürzel ist IFX.
ISIN und WKN
der Bezugsrechte
Die ISIN für die Bezugsrechte ist DE000A0Z2227, die WKN ist
A0Z222.
Zahl- und
Anmeldestelle
Zahl- und Anmeldestelle ist Bayerische Hypo- und Vereinsbank AG,
Kardinal-Faulhaber-Straße 1, 80333 München.
36
Zusammenfassung
betreffend das Grundkapital und den Vorstand
|
|
|
Vorstand |
|
Peter Bauer (Sprecher des Vorstands), Dr. Marco
Schröter, Prof. Dr. Hermann Eul und Dr. Reinhard
Ploss. |
|
Aufsichtsrat |
|
Der Aufsichtsrat besteht derzeit aus 15 Mitgliedern.
Vorsitzender des Aufsichtsrats ist Max Dietrich Kley. |
|
Grundkapital (vor Vollzug des Angebots) |
|
Das derzeitige Grundkapital der Gesellschaft beträgt
1.499.484.170 eingeteilt in 749.742.085 Namensaktien. Die
Aktien sind als Stückaktien ausgegeben. Jede Aktie der
Gesellschaft gewährt ihrem Inhaber in der Hauptversammlung
der Gesellschaft eine Stimme. Das Grundkapital ist voll
eingezahlt. Alle von der Gesellschaft ausgegebenen Alten Aktien
sind zum Börsenhandel im regulierten Markt der Frankfurter
Wertpapierbörse mit gleichzeitiger Zulassung zum
Teilbereich des regulierten Markts mit weiteren
Zulassungsfolgepflichten (Prime Standard) zugelassen. |
|
Abschlussprüfer für die Geschäftsjahre 2006,
2007 und 2008 |
|
KPMG AG Wirtschaftsprüfungsgesellschaft (vormals KPMG
Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft), Ganghoferstrasse 29,
80339 München (,,KPMG). |
|
Mitarbeiter |
|
Infineon beschäftigte zum 30. Juni 2009 insgesamt 26.108
Mitarbeiter. |
|
Sitz, anwendbares Recht, Dauer und Geschäftsjahr der
Gesellschaft |
|
Der Sitz der Gesellschaft ist Neubiberg, Deutschland. Die
Geschäftsanschrift der Gesellschaft lautet: Am Campeon
1-12, 85579 Neubiberg, Deutschland (Telefon: +49-89-234-0). Als
nach deutschem Recht gegründete Aktiengesellschaft
unterliegt die Gesellschaft dem deutschen Aktienrecht. Die
Gesellschaft ist auf unbestimmte Zeit errichtet. |
|
|
|
Das Geschäftsjahr der Gesellschaft läuft vom 1.
Oktober bis zum 30. September des Folgejahres. |
37
Z
USAMMENGEFASSTE
AUSGEWÄHLTE
K
ONZERNFINANZANGABEN
UND
GESCHÄFTSINFORMATIONEN
NACH
IFRS
Seit dem 1. Oktober 2008 erstellt Infineon ihre
Konzernabschlüsse in Übereinstimmung mit den
International Financial Reporting Standards
(,,IFRS). Im Zusammenhang mit der Überleitung
der Rechnungslegung auf IFRS hat Infineon den
Konzernjahresabschluss für das zum 30. September 2008
endende Geschäftsjahr (mit Vergleichszahlen bezogen auf das
zum 30. September 2007 endende Geschäftsjahr) nach IFRS
erstellt. Nachfolgend werden Infineons ausgewählte Angaben
aus den Konzern-Gewinn-und-Verlust-Rechnungen, ausgewählte
Angaben aus den Konzern-Kapitalflussrechnungen und
ausgewählte Segmentdaten für die Geschäftsjahre
2007 und 2008 sowie für die sechs Monate jeweils zum 31.
März 2008 und 2009 und ausgewählte Informationen aus
der Konzern-Bilanz jeweils zum 30. September 2007 und 2008 sowie
zum 31. März 2009 dargestellt, die Infineons
IFRS-Konzernabschlüssen entnommen sind. Die nach IFRS
erstellten ausgewählten Angaben aus den
Konzern-Gewinn-und-Verlust-Rechnungen, ausgewählten Angaben
aus den Konzern-Kapitalflussrechnungen und ausgewählten
Segmentdaten für die Geschäftsjahre 2007 und 2008 und
die ausgewählten Angaben aus den Konzern-Bilanzen jeweils
zum 30. September 2007 und 2008 sind den nach IFRS erstellten
Konzernjahressabschlüssen für das zum 30.
September 2008 endende Geschäftsjahr entnommen. Dargestellt
werden ferner ausgewählte Angaben aus den
Konzern-Gewinn-und-Verlust-Rechnungen und
Konzern-Kapitalflussrechnungen für die sechs Monate jeweils
zum 31. März 2008 und 2009 und ausgewählte Finanz
informationen aus der Konzern-Bilanz jeweils zum 31. März
2008 und 2009, die aus Infineons ungeprüften
IFRS-Konzernabschlüssen für die zum 31. März
endenden Monate stammen.
Infineon hat für das zum 30. September 2008 endende
Geschäftsjahr auch einen nach den in den USA allgemein
anerkannten Rechnungslegungsstandards
(,,U.S. GAAP) erstellten Konzernabschluss
erstellt, weil U.S. GAAP die führenden
Rechnungslegungsstandards für die Gesellschaft für
diesen Zeitraum waren; er ist nicht im diesem Prospekt enthalten.
Ausgewählte
Daten aus den
Konzern-Gewinn-und-Verlust-Rechnungen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre
|
|
|
Für die sechs Monate
|
|
|
|
zum 30.
September(1)
|
|
|
zum 31.
März(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) (in Mio. , mit Ausnahme der Angaben je Aktie)
|
|
|
Umsatzerlöse
|
|
|
4.074
|
|
|
|
4.321
|
|
|
|
2.139
|
|
|
|
1.577
|
|
Ergebnis aus fortgeführten Aktivitäten vor Steuern vom
Einkommen und vom Ertrag
|
|
|
(44
|
)
|
|
|
(147
|
)
|
|
|
82
|
|
|
|
(264
|
)
|
Ergebnis aus fortgeführten Aktivitäten
|
|
|
(43
|
)
|
|
|
(188
|
)
|
|
|
59
|
|
|
|
(266
|
)
|
Ergebnis aus nicht fortgeführten Aktivitäten,
abzüglich Steuern
|
|
|
(327
|
)
|
|
|
(3.559
|
)
|
|
|
(2.543
|
)
|
|
|
(396
|
)
|
Konzernfehlbetrag
|
|
|
(370
|
)
|
|
|
(3.747
|
)
|
|
|
(2.484
|
)
|
|
|
(662
|
)
|
Davon entfallen auf:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minderheitsanteile
|
|
|
(23
|
)
|
|
|
(812
|
)
|
|
|
(552
|
)
|
|
|
(49
|
)
|
Aktionäre der Infineon Technologies AG
|
|
|
(347
|
)
|
|
|
(2.935
|
)
|
|
|
(1.932
|
)
|
|
|
(613
|
)
|
Ergebnis je Aktie (in ) aus fortgeführten
Aktivitäten unverwässert und
verwässert
|
|
|
(0,08
|
)
|
|
|
(0,33
|
)
|
|
|
0,06
|
|
|
|
(0,36
|
)
|
Ergebnis je Aktie (in ) aus nicht fortgeführten
Aktivitäten unverwässert und
verwässert
|
|
|
(0,38
|
)
|
|
|
(3,58
|
)
|
|
|
(2,64
|
)
|
|
|
(0,46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Konzernfehlbetrag je Aktie (in )
unverwässert und verwässert
|
|
|
(0,46
|
)
|
|
|
(3,91
|
)
|
|
|
(2,58
|
)
|
|
|
(0,82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anmerkungen:
|
|
|
(1) |
|
Im Geschäftsjahr 2008 legte
Infineon einen Plan zur Veräußerung von Qimonda fest.
Demzufolge werden die Ergebnisse von Qimonda als nicht
fortgeführte Aktivitäten in den ausgewählten
Daten aus den Konzern-Gewinn-und-Verlust-Rechnungen für die
Geschäftsjahre zum 30. September 2007 und 2008 sowie
für die sechs Monate zum 31. März 2008 und 2009
ausgewiesen. Am 23. Januar 2009 haben Qimonda und ihre 100%ige
Tochtergesellschaft Qimonda Dresden GmbH & Co. oHG
beim Amtsgericht München Antrag auf Eröffnung des
Insolvenzverfahrens gestellt. Als Folge dieser Antragstellung
hat Infineon Qimonda im zweiten Quartal des Geschäftsjahres
2009 entkonsolidiert. Am 1. April 2009 wurde das
Insolvenzverfahren eröffnet.
|
|
(2) |
|
Ungeprüft.
|
38
Ausgewählte
Daten aus der Konzern-Bilanz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zum 30.
September(1)
|
|
|
Zum 31.
März(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) (in Mio. )
|
|
|
Zahlungsmittel und Zahlungsmitteläquivalente
|
|
|
1.809
|
|
|
|
749
|
|
|
|
532
|
|
Zur Veräußerung verfügbare finanzielle
Vermögenswerte
|
|
|
417
|
|
|
|
134
|
|
|
|
133
|
|
Geschäftskapital
(Defizit)(3)
|
|
|
(43
|
)
|
|
|
86
|
|
|
|
(28
|
)
|
Zur Veräußerung stehende Vermögenswerte
|
|
|
303
|
|
|
|
2,129
|
|
|
|
6
|
|
Summe Aktiva
|
|
|
10.599
|
|
|
|
6.982
|
|
|
|
3.977
|
|
Kurzfristige Finanzverbindlichkeiten sowie kurzfristig
fällige Bestandteile langfristiger Finanzverbindlichkeiten
|
|
|
336
|
|
|
|
207
|
|
|
|
170
|
|
Verbindlichkeiten, verbunden mit den zur Veräußerung
stehenden Vermögenswerten
|
|
|
129
|
|
|
|
2.123
|
|
|
|
|
|
Langfristige Finanzverbindlichkeiten
|
|
|
1.227
|
|
|
|
963
|
|
|
|
816
|
|
Summe Eigenkapital
|
|
|
6.004
|
|
|
|
2.161
|
|
|
|
1.703
|
|
Anmerkungen:
|
|
|
(1) |
|
Im Geschäftsjahr 2008 legte
Infineon einen Plan zur Veräußerung von Qimonda fest.
Demzufolge wurden die Vermögenswerte und Verbindlichkeiten
in den ausgewählten Daten aus der Konzern-Bilanz zum 31.
März 2009 und zum 30. September 2008 in zur
Veräußerung stehende Vermögenswerte und
Verbindlichkeiten umgegliedert. Am 23. Januar 2009 haben Qimonda
und ihre 100%ige Tochtergesellschaft Qimonda Dresden
GmbH & Co. oHG beim Amtsgericht München Antrag
auf Eröffnung des Insolvenzverfahrens gestellt. Als Folge
dieser Antragstellung hat Infineon Qimonda im zweiten Quartal
des Geschäftsjahres 2009 entkonsolidiert. Am 1. April 2009
wurde das Insolvenzverfahren eröffnet.
|
|
(2) |
|
Ungeprüft.
|
|
(3) |
|
Geschäftskapital besteht aus
Umlaufvermögen minus kurzfristige Verbindlichkeiten,
Zahlungsmittel und Zahlungsmitteläquivalente, zur
Veräußerung verfügbare finanzielle
Vermögenswerte und netto zur Veräußerung stehende
Vermögenswerte.
|
Ausgewählte
Daten aus den Konzern-Kapitalflussrechnungen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre zum 30.
September(1)
|
|
|
Für die sechs Monate zum 31.
März(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) (in Mio. )
|
|
|
Mittelzufluss (-abfluss) aus laufender
Geschäftstätigkeit aus fortgeführten
Aktivitäten
|
|
|
256
|
|
|
|
580
|
|
|
|
149
|
|
|
|
(65
|
)
|
Mittelzufluss (-abfluss) aus laufender
Geschäftstätigkeit
|
|
|
1.251
|
|
|
|
(84
|
)
|
|
|
(121
|
)
|
|
|
(463
|
)
|
Mittelzufluss (-abfluss) aus Investitionstätigkeit aus
fortgeführten Aktivitäten
|
|
|
(48
|
)
|
|
|
(665
|
)
|
|
|
(894
|
)
|
|
|
31
|
|
Mittelzufluss (-abfluss) aus Investitionstätigkeit
|
|
|
(917
|
)
|
|
|
(662
|
)
|
|
|
(1.021
|
)
|
|
|
52
|
|
Mittelabfluss aus der Finanzierungstätigkeit aus
fortgeführten Aktivitäten
|
|
|
(214
|
)
|
|
|
(230
|
)
|
|
|
(97
|
)
|
|
|
(180
|
)
|
Mittelzufluss (-abfluss) aus der Finanzierungstätigkeit
|
|
|
(525
|
)
|
|
|
113
|
|
|
|
103
|
|
|
|
(220
|
)
|
Rückgang der Zahlungsmittel und
Zahlungsmitteläquivalente aus nicht fortgeführten
Aktivitäten
|
|
|
(185
|
)
|
|
|
(318
|
)
|
|
|
(197
|
)
|
|
|
(417
|
)
|
Rückgang der Zahlungsmittel und
Zahlungsmitteläquivalente
|
|
|
(191
|
)
|
|
|
(633
|
)
|
|
|
(1.039
|
)
|
|
|
(631
|
)
|
Anmerkungen:
|
|
|
(1) |
|
Im Geschäftsjahr 2008 legte
Infineon einen Plan zur Veräußerung von Qimonda fest.
Demzufolge werden die Mittelzuflüsse (-abflüsse) aus
nicht fortgeführten Aktivitäten gesondert unterhalb
der Mittelzuflüsse (-abflüsse) aus fortgeführten
Aktivitäten ausgewiesen. Am 23. Januar 2009 haben Qimonda
und ihre 100%ige Tochtergesellschaft Qimonda Dresden
GmbH & Co. oHG beim Amtsgericht München Antrag
auf Eröffnung des Insolvenzverfahrens gestellt. Als Folge
dieser Antragstellung hat Infineon Qimonda im zweiten Quartal
des Geschäftsjahres 2009 entkonsolidiert. Am 1. April 2009
wurde das Insolvenzverfahren eröffnet.
|
|
(2)
|
|
Ungeprüft.
|
39
Ausgewählte
Daten aus den Segmenten
Ausgewählte
Geschäftsinformationen aus den Segmenten
Mit Wirkung ab dem 1. Oktober 2008 hat Infineon ihr
Geschäft in fünf operative Segmente aufgegliedert:
Automotive, Industrial & Multimarket, Chip
Card & Security, Wireless Solutions und Wireline
Communications. Die Segmentergebnisse für die
Geschäftsjahre zum 30. September 2007 und 2008 wurden zur
Herstellung der Vergleichbarkeit mit der aktuellen
Segmentberichterstattung und zur erleichterten Analyse der
gegenwärtigen und zukünftigen operativen
Segmentergebnisse umgegliedert. Diese umgegliederten
Segmentergebnisse sind nicht in dem nach IFRS erstellten
Konzernjahresabschluss für das Geschäftsjahr 2008
enthalten. Am 7. Juli 2009 schloss die Gesellschaft einen
Kaufvertrag hinsichtlich des Verkaufs des Geschäftsbereichs
drahtgebundene Kommunikation (Wireline Communications) ab;
dieser Verkauf soll voraussichtlich im Herbst 2009 vollzogen
werden.
Für Berichtszwecke hat Infineon zwei zusätzliche
Segmente, nämlich Sonstige Geschäftsbereiche, die die
verbleibenden Aktivitäten für bestimmte zur
Veräußerung stehende Produktlinien und für andere
Geschäftsaktivitäten umfassen, und Konzernfunktionen
und Eliminierungen, die sonstige Tätigkeiten umfassen, die
nicht den operativen Segmenten zugeordnet sind, wie zum Beispiel
bestimmte Verwaltungskosten und nicht aufgenommene
Überkapazitäten.
Zwischen dem 1. Mai 2006 und dem 30. September 2008 war Infineon
in drei operativen Hauptsegmenten organisiert. Zwei dieser
Segmente waren anwendungsbezogen: Automobil- und
Industrieelektronik (Automotive, Industrial &
Multimarket) und Kommunikationslösungen (Communication
Solutions). Das andere Segment war das Speichergeschäft von
Qimonda. Diese operativen Segmente werden in Infineons jeweils
nach U.S. GAAP erstellten Konzernjahresabschlüssen
für die Geschäftsjahre zum 30. September 2006, 2007
und 2008 dargestellt.
Seit dem 1. Oktober 2008 verwendet der Vorstand die
Finanz-Kennzahl Segmentergebnisse, um den operativen Erfolg von
Infineons Segmenten zu messen, und als Grundlage für die
Allokation von Betriebsmitteln innerhalb der Segmente.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre zum 30. September
|
|
|
Für die sechs Monate zum 31.
März(1)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(in Mio. )
|
|
|
Automotive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse(2)
|
|
|
1.267
|
(1)
|
|
|
1.257
|
(1)
|
|
|
634
|
|
|
|
395
|
|
Segmentergebnis
|
|
|
122
|
(1)
|
|
|
105
|
(1)
|
|
|
48
|
|
|
|
(121
|
)
|
Industrial & Multimarket
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse(2)
|
|
|
1.188
|
(1)
|
|
|
1.171
|
(1)
|
|
|
567
|
|
|
|
427
|
|
Segmentergebnis
|
|
|
127
|
(1)
|
|
|
134
|
(1)
|
|
|
49
|
|
|
|
(5
|
)
|
Chip Card & Security
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse(2)
|
|
|
438
|
(1)
|
|
|
465
|
(1)
|
|
|
237
|
|
|
|
171
|
|
Segmentergebnis
|
|
|
20
|
(1)
|
|
|
52
|
(1)
|
|
|
36
|
|
|
|
(9
|
)
|
Wireless Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse(3)(4)(5)
|
|
|
637
|
(1)
|
|
|
941
|
(1)
|
|
|
450
|
|
|
|
401
|
|
Segmentergebnis
|
|
|
(126
|
)(1)
|
|
|
(18
|
)(1)
|
|
|
2
|
|
|
|
(73
|
)
|
Wireline
Communications(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse(3)
|
|
|
414
|
(1)
|
|
|
420
|
(1)
|
|
|
208
|
|
|
|
167
|
|
Segmentergebnis
|
|
|
(16
|
)(1)
|
|
|
12
|
(1)
|
|
|
7
|
|
|
|
3
|
|
Sonstige Geschäftsbereiche
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse(2)(6)(7)
|
|
|
343
|
(1)
|
|
|
169
|
(1)
|
|
|
123
|
|
|
|
10
|
|
Segmentergebnis
|
|
|
2
|
(1)
|
|
|
(3
|
)(1)
|
|
|
7
|
|
|
|
(4
|
)
|
Konzernfunktionen und Eliminierungen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse(8)(9)
|
|
|
(213
|
)
|
|
|
(102
|
)
|
|
|
(80
|
)
|
|
|
6
|
|
Segmentergebnis
|
|
|
7
|
(1)
|
|
|
(24
|
)(1)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gesamt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Umsatzerlöse
|
|
|
4.074
|
|
|
|
4.321
|
|
|
|
2.139
|
|
|
|
1.577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmentergebnis
|
|
|
136
|
(1)
|
|
|
258
|
(1)
|
|
|
147
|
|
|
|
(212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anmerkungen:
|
|
|
(1) |
|
Ungeprüft.
|
|
(2) |
|
In Infineons Konzernjahresabschluss
nach IFRS für das Geschäftsjahr zum 30. September 2008
hat Infineon 3.017 Mio. und 2.963 Mio.
Umsatzerlöse aus dem früheren Segment Automobil- und
Industrieelektroinik (Automotive, Industrial &
Multimarket) für die Geschäftsjahre 2007 bzw. 2008
berichtet. Nach Umgliederung in Anpassung an die aktuelle
Segmentstruktur werden diese Beträge
|
40
|
|
|
|
|
überwiegend den
Umsatzerlösen Automobilelektronik (Automotive),
Industrieelektronik (Industrial & Multimarket) und
Chipkarten & Sicherheitslösungen (Chip
Card & Security) zugewiesen während ein Betrag
von 124 Mio. und ein Betrag von 70 Mio. bezogen auf
das HDD Geschäft für die Geschäftsjahre 2007 bzw.
2008 jetzt den Umsatzerlösen Sonstige
Geschäftsbereiche zugeteilt werden.
|
|
(3) |
|
In ihrem Konzernjahresabschluss
nach IFRS für das Geschäftsjahr zum 30. September 2008
hat Infineon 1.051 Mio. und 1.360 Mio.
Umsatzerlöse aus ihrem Segment Kommunikationslösungen
(Communication Solutions) für die Geschäftsjahre 2007
bzw. 2008 berichtet. Nach Umgliederung in Anpassung an die
aktuelle Segmentstruktur werden diese Beträge berwiegend
den Umsatzerlösen für drahtlose
Kommunikationslösungen (Wireless Solutions) und
drahtgebundene Kommunikation (Wireline Communications)
zugewiesen.
|
|
(4) |
|
Beinhaltet konzerninterne
Umsätze zwischen den Segmenten in Höhe von 30
Mio. und 10 Mio. in den Geschäftsjahren zum 30.
September 2007 und 2008 aus dem Verkauf von drahtlosen
Kommunikationsanwendungen an Qimonda.
|
|
(5) |
|
Beinhaltet Umsätze von 8
Mio. und 1 Mio. für die sechs Monate zum 31.
März 2008 und 2009 aus dem Verkauf von drahtlosen
Kommunikationsanwendungen an Qimonda.
|
|
(6) |
|
Beinhaltet konzerninterne
Umsätze zwischen den Segmenten in Höhe von 189
Mio. und 79 Mio. in den Geschäftsjahren zum 30.
September 2007 und 2008 aus dem Verkauf von Wafern von Infineons
200-Millimeter-Fertigungsstätte in Dresden an Qimonda auf
Grund einer Produktionsvereinbarung.
|
|
(7) |
|
Beinhaltet Umsätze in
Höhe von 70 Mio. für die sechs Monate zum 31.
März 2008 aus dem Verkauf von Wafern von Infineons
200-Millimeter-Fertigungsstätte in Dresden an Qimonda
aufgrund einer Produktionsvereinbarung.
|
|
(8) |
|
Beinhaltet die Eliminierung der
Umsätze zwischen den Segmenten in Höhe von 219
Mio. und 89 Mio. in den Geschäftsjahren zum 30.
September 2007 und 2008, da diese Umsätze nicht Teil des
Plans zur Veräußerung von Qimonda waren.
|
|
(9) |
|
Beinhaltet die Eliminierung der
Umsätze in Höhe von 78 Mio. und 1 Mio.
für die sechs Monate zum 31. März 2008 und 2009, da
diese Umsätze nicht Teil des Plans zur
Veräußerung von Qimonda waren.
|
|
|
|
(10) |
|
Am 7. Juli 2009 schloss die
Gesellschaft einen Kaufvertrag hinsichtlich des Verkaufs des
Geschäftsbereichs drahtgebundene Kommunikation (Wireline
Communications) ab; dieser Verkauf soll voraussichtlich im
Herbst 2009 vollzogen werden.
|
Ausgewählte
Informationen nach Regionen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre zum 30.
September(1)
|
|
|
Für die sechs Monate zum 31.
März(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(in Mio. )
|
|
|
Umsatzerlöse
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deutschland
|
|
|
907
|
|
|
|
924
|
|
|
|
460
|
|
|
|
315
|
|
Übriges Europa
|
|
|
888
|
|
|
|
818
|
|
|
|
409
|
|
|
|
286
|
|
Nordamerika
|
|
|
564
|
|
|
|
503
|
|
|
|
282
|
|
|
|
164
|
|
Asien-Pazifik
|
|
|
1.450
|
|
|
|
1.800
|
|
|
|
848
|
|
|
|
720
|
|
Japan
|
|
|
213
|
|
|
|
198
|
|
|
|
104
|
|
|
|
72
|
|
Andere
|
|
|
52
|
|
|
|
78
|
|
|
|
36
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gesamt
|
|
|
4.074
|
|
|
|
4.321
|
|
|
|
2.139
|
|
|
|
1.577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anmerkungen:
|
|
|
(1) |
|
Im Geschäftsjahr 2008 legte
Infineon einen Plan zur Veräußerung von Qimonda fest.
Demzufolge werden die Ergebnisse von Qimonda in den
ausgewählten Angaben aus den
Konzern-Gewinn-und-Verlust-Rechnungen für die
Geschäftsjahre zum 30. September 2007 und 2008 und für
die sechs Monate zum 31. März 2008 und 2009 als nicht
fortgeführte Aktivitäten ausgewiesen. Am 23. Januar
2009 haben Qimonda und ihre 100%ige Tochtergesellschaft Qimonda
Dresden GmbH & Co. oHG beim Amtsgericht München
Antrag auf Eröffnung des Insolvenzverfahrens gestellt. Als
Folge dieser Antragstellung hat Infineon Qimonda im zweiten
Quartal des Geschäftsjahres 2009 entkonsolidiert. Am 1.
April 2009 wurde das Insolvenzverfahren eröffnet.
|
|
(2) |
|
Ungeprüft.
|
Ausgewählte
weitere Konzern-Kennzahlen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre zum 30.
September(1)
|
|
Für die sechs Monate zum 31.
März(1)
|
|
|
2007
|
|
2008
|
|
2008
|
|
2009
|
|
|
(in Mio. , mit Ausnahme der Mitarbeiterzahlen)
|
|
Investitionen
|
|
|
498
|
|
|
|
312
|
|
|
|
170
|
|
|
|
69
|
|
Mitarbeiter (zum Ende der Berichtsperiode)
|
|
|
43.079
|
(2)
|
|
|
41.343
|
(3)
|
|
|
42.837
|
(4)
|
|
|
26.362
|
|
Anmerkungen:
|
|
|
(1) |
|
Im Geschäftsjahr 2008 legte
Infineon einen Plan zur Veräußerung von Qimonda fest.
Demzufolge werden die Mittelzuflüsse (-abflüsse) aus
nicht fortgeführten Aktivitäten in den
ausgewählten Daten aus der Konzern-Kapitalflussrechnung
gesondert unterhalb der Zahlungsmittelzuflüsse
(-abflüsse) aus fortgeführten Aktivitäten
ausgewiesen. Am 23. Januar 2009 haben Qimonda und ihre 100%ige
Tochtergesellschaft Qimonda Dresden GmbH & Co. oHG
beim Amtsgericht München Antrag auf Eröffnung des
Insolvenzverfahrens gestellt. Als Folge dieser Antragstellung
hat Infineon Qimonda im zweiten Quartal des Geschäftsjahres
2009 entkonsolidiert. Nach der Entkonsolidierung werden die
Mitarbeiterzahlen von Qimonda nicht länger in den
Konzernabschlüssen der Gesellschaft berichtet. Am 1. April
2009 wurde das Insolvenzverfahren eröffnet.
|
|
(2) |
|
Beinhaltet 13.481 Mitarbeiter von
Qimonda.
|
|
(3) |
|
Beinhaltet 12.224 Mitarbeiter von
Qimonda.
|
|
(4) |
|
Beinhaltet 13.298 Mitarbeiter von
Qimonda.
|
41
Z
USAMMENGEFASSTE
AUSGEWÄHLTE
K
ONZERN
F
INANZANGABEN UND
GESCHÄFTSINFORMATIONEN
NACH
U.S. GAAP
Für die Berichtszeiträume vor dem 1. Oktober 2008 hat
Infineon ihre Konzernabschlüsse nach U.S. GAAP
erstellt. Nachfolgend werden ausgewählte Angaben aus den
Konzern-Gewinn-und-Verlust-Rechnungen, ausgewählte Angaben
aus den Konzern-Kapitalflussrechnungen und ausgewählte
Segmentdaten für die Geschäftsjahre 2006 und 2007 und
ausgewählte Informationen aus der Konzern-Bilanz jeweils
zum 30. September 2006 und 2007 dargestellt, die aus den nach
U.S. GAAP erstellten Konzernabschlüssen entnommen
wurden. Die ausgewählten Angaben aus den
Konzern-Gewinn-und-Verlust-Rechnungen, die ausgewählten
Angaben aus den Konzern-Kapitalflussrechnungen und
ausgewählten Segmentdaten für die Geschäftsjahre
2006 und 2007 und die ausgewählten Angaben aus der
Konzern-Bilanz zum 30. September 2006 und 2007, die jeweils nach
U.S. GAAP erstellt wurden, wurden dem Konzernabschluss
für das zum 30. September 2007 endende Geschäftsjahr
entnommen (mit Vergleichszahlen für das zum 30. September
2006 endende Geschäftsjahr).
Nach IFRS erstellte ausgewählte Konzern-Finanzangaben
für das zum 30. September 2008 endende Geschäftsjahr
(mit Vergleichszahlen für das Geschäftsjahr zum 30.
September 2007) sind im Abschnitt ,,Zusammengefasste
ausgewählte Konzern-Finanzangaben und
Geschäftsinformationen nach IFRS enthalten.
Ausgewählte
Informationen aus den
Konzern-Gewinn-und-Verlust-Rechnungen
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre
|
|
|
|
zum 30. September
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) (in Mio. , außer bei Angaben je
Aktie)
|
|
|
Umsatzerlöse
|
|
|
7.929
|
|
|
|
7.682
|
|
Ergebnis vor Steuern vom Einkommen und vom Ertrag
|
|
|
(107
|
)
|
|
|
(254
|
)
|
Konzernjahresfehlbetrag
|
|
|
(268
|
)
|
|
|
(368
|
)
|
Konzernjahresfehlbetrag je Aktie unverwässert
und verwässert in
|
|
|
(0,36
|
)
|
|
|
(0,49
|
)
|
Ausgewählte
Informationen aus der Konzern-Bilanz
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre
|
|
|
|
zum 30. September
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) (in Mio. )
|
|
|
Zahlungsmittel und Zahlungsmitteläquivalente
|
|
|
2.040
|
|
|
|
1.819
|
|
Wertpapiere des Umlaufvermögens
|
|
|
615
|
|
|
|
475
|
|
Nettoumlaufvermögen(1)
|
|
|
(279
|
)
|
|
|
(18
|
)
|
Zur Veräußerung gehaltene Vermögenswerte
|
|
|
|
|
|
|
272
|
|
Summe Aktiva
|
|
|
11.185
|
|
|
|
10.679
|
|
Kurzfristige Finanzverbindlichkeiten sowie kurzfristig
fällige
Bestandteile langfristiger Finanzverbindlichkeiten
|
|
|
797
|
|
|
|
336
|
|
Verbindlichkeiten im Zusammenhang mit zur Veräußerung
gehaltenen Vermögenswerten
|
|
|
|
|
|
|
117
|
|
Langfristige Finanzverbindlichkeiten ohne kurzfristig
fällige
Bestandteile
|
|
|
1.208
|
|
|
|
1.376
|
|
Summe Eigenkapital
|
|
|
5.315
|
|
|
|
4.914
|
|
Anmerkungen:
|
|
|
(1) |
|
Nettoumlaufvermögen besteht
aus Umlaufvermögen minus kurzfristige Verbindlichkeiten,
Zahlungsmittel und Zahlungsmitteläquivalente, Wertpapiere
des Umlaufvermögens und zur Veräußerung stehende
Vermögenswerte und Verbindlichkeiten.
|
42
Ausgewählte
Daten aus der Konzern-Kapitalflussrechnung
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre
|
|
|
|
zum 30. September
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) (in Mio. )
|
|
|
Mittelzufluss aus laufender Geschäftstätigkeit
|
|
|
1.003
|
|
|
|
1.207
|
|
Mittelabfluss aus Investitionstätigkeit
|
|
|
(853
|
)
|
|
|
(867
|
)
|
Mittelzufluss (-abfluss) aus der Finanzierungstätigkeit
|
|
|
762
|
|
|
|
(521
|
)
|
Zunahme (Abnahme) der Zahlungsmittel und
Zahlungsmitteläquivalente
|
|
|
892
|
|
|
|
(221
|
)
|
Ausgewählte
Daten aus den Segmenten
Ausgewählte
Geschäftsinformationen aus den Segmenten
Vom 1. Mai 2006 bis zum 30. September 2008 war Infineon
schwerpunktmäßig in drei operativen Segmenten
tätig. Zwei von ihnen waren anwendungsorientiert:
Automotive, Industrial & Multimarket und Communication
Solutions. Das andere Segment war das Speichergeschäft von
Qimonda. Der Vorstand hat die Finanz-Kennzahl Ergebnis vor
Zinsen und Steuern (,,EBIT) verwendet, um die
operative Leistungsfähigkeit von Infineons
berichtsfähigen Segmenten zu messen, und als Basis für
die Allokation von Betriebsmitteln zwischen diesen Segmenten.
|
|
|
|
|
|
|
|
|
|
|
Für das Geschäftsjahr
|
|
|
|
zum 30. September
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) (in Mio. )
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
|
|
Umsatzerlöse
|
|
|
2.839
|
|
|
|
3.017
|
|
EBIT
|
|
|
246
|
|
|
|
300
|
|
Communication
Solutions(4)
|
|
|
|
|
|
|
|
|
Umsatzerlöse(1)
|
|
|
1.205
|
|
|
|
1.051
|
|
EBIT
|
|
|
(231
|
)
|
|
|
(160
|
)
|
Sonstige Geschäftsbereiche
|
|
|
|
|
|
|
|
|
Umsatzerlöse(2)
|
|
|
310
|
|
|
|
219
|
|
EBIT
|
|
|
4
|
|
|
|
(12
|
)
|
Konzernfunktionen und Eliminierungen
|
|
|
|
|
|
|
|
|
Umsatzerlöse(3)
|
|
|
(240
|
)
|
|
|
(213
|
)
|
EBIT
|
|
|
(236
|
)
|
|
|
(177
|
)
|
Qimonda
|
|
|
|
|
|
|
|
|
Umsatzerlöse
|
|
|
3.815
|
|
|
|
3.608
|
|
EBIT
|
|
|
202
|
|
|
|
(207
|
)
|
Total
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
7.929
|
|
|
|
7.682
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
|
(15
|
)
|
|
|
(256
|
)
|
|
|
|
|
|
|
|
|
|
Anmerkungen:
|
|
|
(1) |
|
Beinhaltet konzerninterne
Umsätze zwischen den Segmenten von 0 und 30
Mio. für das zum 30. September 2006 bzw. 2007 endende
Geschäftsjahr, die aus dem Verkauf von drahtlosen
Kommunikationsanwendungen an Qimonda resultieren.
|
|
(2) |
|
Beinhaltet konzerninterne
Umsätze zwischen den Segmenten in Höhe von 256
Mio. und 189 Mio. für das zum 30. September 2006 bzw.
2007 endende Geschäftsjahr aus dem Verkauf von Wafern von
Infineon 200-Millimeter-Fertigungsstätte in Dresden an
Qimonda auf Grund der Produktionsvereinbarung.
|
|
(3) |
|
Beinhaltet die Eliminierung der
konzerninternen Umsätze zwischen den Segmenten in Höhe
von 256 Mio. und 219 Mio. für das zum 30.
September 2006 bzw. 2007 endende Geschäftsjahr, da diese
Umsätze nicht Teil des Plans zur Veräußerung von
Qimonda waren.
|
|
(4) |
|
Am 7. Juli 2009 schloss die
Gesellschaft einen Kaufvertrag hinsichtlich des Verkaufs des
Geschäftsbereichs drahtgebundene Kommunikation (Wireline
Communications) ab; dieser Verkauf soll voraussichtlich im
Herbst 2009 vollzogen werden.
|
43
Ausgewählte
Segmentdaten nach Regionen
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre
|
|
|
|
zum 30. September
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) (in Mio. )
|
|
|
Umsatzerlöse
|
|
|
|
|
|
|
|
|
Deutschland
|
|
|
1.327
|
|
|
|
1.164
|
|
Übriges Europa
|
|
|
1.360
|
|
|
|
1.218
|
|
Nordamerika
|
|
|
2.126
|
|
|
|
1.887
|
|
Asien-Pazifik
|
|
|
2.498
|
|
|
|
2.632
|
|
Japan
|
|
|
461
|
|
|
|
661
|
|
Andere
|
|
|
157
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
Summe Umsatzerlöse
|
|
|
7.929
|
|
|
|
7.682
|
|
|
|
|
|
|
|
|
|
|
Ausgewählte
weitere Konzern-Kennzahlen
|
|
|
|
|
|
|
|
|
|
|
Für die Geschäftsjahre
|
|
|
zum 30. September
|
|
|
2006
|
|
2007
|
|
|
(U.S. GAAP) (in Mio. , mit Ausnahme der
Mitarbeiterzahlen)
|
|
Investitionen
|
|
|
1.253
|
|
|
|
1.375
|
|
Mitarbeiter (zum Ende der Berichtsperiode)
|
|
|
41.651
|
(1)
|
|
|
43.079
|
(2)
|
Anmerkungen:
|
|
|
(1) |
|
Einschließlich 11.802
Mitarbeitern von Qimonda.
|
|
(2) |
|
Einschließlich 13.481
Mitarbeitern von Qimonda.
|
44
Zusammenfassung
der Risikofaktoren
Risiken im
Zusammenhang mit der Gesellschaft und dem Markt
Die Infineon zur Verfügung stehenden finanziellen Mittel,
inklusive des Erlöses aus dem Angebot, könnten nicht
ausreichen, um dem Kapitalbedarf von Infineon zu genügen.
Wenn Infineon bei der Implementierung ihrer betrieblichen
Restrukturierungspläne nicht erfolgreich ist, könnten
Infineons Einnahmen und Rentabilität darunter leiden.
Die anhaltende Volatilität der Finanzmärkte und die
ungünstigen Entwicklungen der globalen wirtschaftlichen
Rahmenbedingungen hatten einen erheblichen nachteiligen Einfluss
auf Infineons Geschäftstätigkeit, die finanzielle
Situation und die betriebliche Ertragslage und könnten dies
weiter haben.
Die Halbleiterindustrie ist durch intensiven Wettbewerb
gekennzeichnet, der Infineons Absatz reduzieren oder Druck auf
Infineons Verkaufspreise ausüben könnte.
Infineon agiert in einem stark zyklischen Industriebereich und
ihr Geschäft hat in der Vergangenheit unter
regelmäßig wiederkehrenden
Geschäftsrückgängen gelitten, leidet derzeit
darunter und könnte auch zukünftig wieder darunter
leiden.
Infineon könnte nicht in der Lage sein, ihre
Produktionskapazität an die Nachfrage anzupassen.
Infineons Geschäftstätigkeit könnte als Folge der
Volatilität in verschiedenen Teilen der Welt leiden.
In schwierigen Marktbedingungen wirken sich Infineons hohe
Fixkosten negativ auf ihr Ergebnis aus.
Das umkämpfte Umfeld in der Halbleiterindustrie hat zu
einer Konsolidierung der Industrie geführt und Infineon
könnte sich noch stärkerem Wettbewerb durch neu
verschmolzene Wettbewerber ausgesetzt sehen.
Infineon beabsichtigt, sich weiterhin um Akquisitionen, Joint
Ventures und andere Transaktionen zu bemühen, die ihre
Geschäftstätigkeit ergänzen oder erweitern.
Infineon kann diese Transaktionen möglicherweise nicht zum
Abschluss bringen und diese Transaktionen bringen, selbst wenn
sie ausgeführt wurden, signifikante Risiken mit sich und
könnten negative Auswirkungen auf das operative
Geschäft von Infineon haben.
Infineon könnte außerstande sein, erworbene
Unternehmen erfolgreich zu integrieren und könnte
verpflichtet sein, im Zusammenhang mit den erworbenen
Unternehmen Abschreibungen hinsichtlich des Goodwill oder
anderer langlebiger Vermögensgegenstände vorzunehmen.
Infineon ist möglicherweise nicht in der Lage, ihr
patentrechtlich geschütztes geistiges Eigentum zu
schützen und könnte beschuldigt werden, geistige
Eigentumsrechte anderer zu verletzen.
Infineons Geschäft könnte wegen nachlassender
Kundennachfrage leiden.
Der Verlust eines oder mehrerer zentraler Kunden von Infineon,
zum Beispiel wegen eines Rückganges des Vertrauens der
Kunden in Infineon auf Grund der wahrgenommenen
Liquiditätslage, könnte sich negativ auf die
Geschäftstätigkeit von Infineon auswirken.
Schwankungen in der Zusammensetzung der verkauften Produkte
könnten sich negativ auf Infineons finanzielles Ergebnis
auswirken.
Wenn Infineon es nicht erfolgreich schafft, eine optimale
Make-or-Buy-Strategie
zu implementieren, könnte Infineons
Geschäftstätigkeit unter höheren Kosten leiden.
Infineons Geschäftstätigkeit könnte unter
Problemen bei der Herstellung leiden.
Sollten Infineons externe Lieferanten Infineons Erwartungen
nicht entsprechen, so könnten Infineons Betriebsergebnis
und ihre Fähigkeit, Wachstumschancen auszunutzen, negativ
beeinflusst werden.
Produkte, welche die Kundenvorgaben nicht einhalten oder die
Defekte oder Störungen haben oder die als fehlerhaft
wahrgenommen werden oder auf sonstige Weise nicht für die
beabsichtigte Verwendung geeignet sind, könnten zu
signifikanten Kosten für Infineon führen.
Infineon ist Risiken im Zusammenhang mit Betriebsschäden
und Betriebsunterbrechungen ausgesetzt.
45
Infineons Geschäftstätigkeit könnte
beeinträchtigt werden, wenn es Infineon nicht gelingt, neue
Technologien zu entwickeln oder mit den technologischen
Entwicklungen der Mitbewerber Schritt zu halten.
Infineon ist abhängig von strategischen Partnerschaften und
anderen Dritten und Infineons Geschäft könnte
beeinträchtigt werden, wenn sich die Erwartungen in die
strategischen Partner nicht erfüllen oder Kooperationen
beendet werden müssen.
Neue Aufträge sind häufig von kompetitiven
Selektionsprozessen begleitet, die langwierig und deren Ausgang
ungewiss sein können und die bei Infineon zu erheblichen
Auslagen führen. Selbst wenn Infineon einen Prozess gewinnt
und mit der Produktentwicklung beginnt, könnte ein Kunde
sich zur Beendigung oder Änderung von Infineons
Produktionsplänen entscheiden, was zu Umsatzausfällen
und Beeinträchtigungen von Infineons Betriebsergebnis
führen könnte.
Infineon ist von einer begrenzten Anzahl von
Maschinenherstellern abhängig und könnte unter
Ausfällen leiden, sofern diese Zulieferer ihre Lieferungen
einstellen oder ihre Preise erhöhen.
Infineon könnte von steigenden Rohstoffpreisen betroffen
sein.
Infineons Geschäftstätigkeit könnte
beeinträchtigt werden, sofern Infineon nicht in der Lage
ist, eine zuverlässige Stromversorgung zu angemessenen
Kosten zu sichern.
Infineons Geschäft ist abhängig von komplexen
Datenverarbeitungssystemen und jede Unterbrechung dieser Systeme
oder Netzwerke könnte Infineons
Geschäftstätigkeit und Betriebsergebnis wesentlich
beeinträchtigen.
Infineon hatte in der Vergangenheit erhebliche
Restrukturierungs- und Wertberichtigungskosten zu verzeichnen;
es ist nicht ausgeschlossen, dass dies auch in der Zukunft der
Fall ist, was die Geschäftstätigkeit von Infineon
wesentlich beeinträchtigen könnte.
Infineons Geschäft könnte beeinträchtigt sein,
wenn dritte Dienstleister ihre Leistungen nicht wie erwartet
erbringen.
Infineons Erfolg hängt von ihrer Fähigkeit ab,
zukünftig eine ausreichende Anzahl qualifizierter
Schlüsselmitarbeiter zu gewinnen und zu halten.
Der Rückgang staatlicher Fördermaßnahmen oder die
Rückzahlung von in der Vergangenheit gewährten
Fördermitteln könnten Infineons Aufwendungen
erhöhen und ihre Investitionsfähigkeit
beeinträchtigen.
Infineons Quartalsergebnisse unterliegen starken Schwankungen;
infolgedessen könnte Infineon die Erwartungen von
Wertpapieranalysten und Investoren verfehlen, was einen
Kursrückgang der Aktien der Gesellschaft auslösen
könnte.
Infineons Betriebsergebnis und Finanzlage können durch
Wechselkursschwankungen beeinträchtigt werden.
Sollte Infineon nicht in der Lage sein, effiziente interne
Kontrollen aufrechtzuerhalten, könnte in Zukunft Infineons
Fähigkeit, Finanzergebnisse akkurat und rechtzeitig zu
berichten oder betrügerische Handlungen aufzudecken,
eingeschränkt sein, was die Geschäftstätigkeit
der Gesellschaft und ihren Aktienkurs erheblich
beeinträchtigen könnte.
Infineon ist verschiedenen steuerlichen Risiken ausgesetzt und
die Steuerlast der Gesellschaft könnte aufgrund
verschiedener Faktoren zukünftig steigen.
Infineons Steuerabgrenzungsposten sind Gegenstand von
regelmäßigen Überprüfungen, die zu
zusätzlichen Wertberichtigungen führen könnten.
Umweltrechtliche Anforderungen könnten zu einer Haftung von
Infineon und zu Kostensteigerungen führen.
Infineon könnte sich im Zusammenhang mit der Insolvenz von
Qimonda erheblichen Verbindlichkeiten ausgesetzt sehen.
Infineon könnte zur Rückzahlung der ausstehenden
Umtauschanleihe endfällig 2010 vor ihrem
Fälligkeitsdatum verpflichtet sein, was die Finanzlage der
Gesellschaft erheblich beeinträchtigen könnte.
46
Der Verkauf oder die Schließung des ALTIS-Werks könnte
dazu führen, dass Infineon erhebliche zusätzliche
Kosten übernimmt.
Der Geschäftsbereich drahtgebundene Kommunikation (Wireline
Communications) könnte vom geplanten Verkauf negativ
belastet werden, wenn dieser nicht vollzogen wird.
Infineon könnte Schadensersatzverpflichtungen im
Zusammenhang mit dem Verkauf des Geschäftsbereichs
drahtgebundene Kommunikation (Wireline Communications)
ausgesetzt sein.
Infineon könnte mit steigenden Ausgaben oder Kosten infolge
des Verkaufs des Geschäftsbereichs drahtgebundene
Kommunikation (Wireline Communications) konfrontiert sein.
Infineons Geschäfts- und Finanzlage könnten durch
aktuelle oder zukünftige Rechtsstreitigkeiten
beeinträchtigt werden.
Gegen Infineon wird in mehreren Jurisdiktionen im Zusammenhang
mit Preisabsprachen in der Dynamic Random Access
Memory-Industrie ermittelt und Infineon ist Beklagte in mehreren
zivilen Kartellklagen, die hiermit im Zusammenhang stehen.
Gegen die Gesellschaft wurden mehrere Gruppenklagen mit der
Behauptung von betrügerischem Wertpapierhandel erhoben.
Die Europäischen Kommission ermittelt im Zusammenhang mit
vermeintlichen Wettbewerbsverletzungen in den
Geschäftsbereichen Chipkarten und Sicherheitslösungen
gegen die Gesellschaft.
Infineon könnte Produkthaftungs- oder
Gewährleistungsansprüchen ausgesetzt sein.
Risikofaktoren
im Zusammenhang mit den Neuen Aktien und angebotsbezogene
Risiken
Der Backstop Investor könnte Einfluss auf die
Geschäftstätigkeit der Gesellschaft nehmen und
Abstimmungen über bestimmte, der Hauptversammlung der
Gesellschaft unterbreitete Beschlussgegenstände
kontrollieren.
Wenn Großaktionäre der Gesellschaft in
größerem Umfang Aktien der Gesellschaft verkaufen,
kann dies einen erheblichen Kursdruck bewirken.
Der Kurs der Aktien der Gesellschaft unterliegt Kursschwankungen.
Der Kurs der Aktien der Gesellschaft unterliegt Risiken
bezüglich vom Backstop Investor und/oder dessen
Tochtergesellschaften eingegangener Wertpapiertransaktionen.
Die Beteiligung von Aktionären, die nicht an dem Angebot
teilnehmen, wird erheblich verwässert werden.
Es wird nicht erwartet, dass sich ein Bezugsrechtshandel
entwickelt und der Wert der Bezugsrechte könnte sich
vermindern.
Die Konsortialbanken könnten vom Übernahmevertrag
zurücktreten.
Zukünftige gesellschaftsrechtliche Maßnahmen
könnten zu einer weiteren erheblichen Verwässerung der
Beteiligung der Aktionäre an der Gesellschaft führen.
47
RISK
FACTORS
In considering whether to invest in the Companys
shares, investors should consider carefully the following risks
and investment considerations related to Infineon and this
offering (the Offering), in addition to the
other information in this prospectus (the
Prospectus). Investors should also be aware
of and consider the risks described below related to
Infineons business and related to the securities markets
and ownership of the Companys shares.
The risks and uncertainties described below may not be the
only ones facing Infineon. Additional risks and uncertainties
not currently known to Infineon or that Infineon currently deems
immaterial could also adversely affect Infineons business.
If any of the following risks actually occurs, Infineons
business could be adversely affected. In such cases, the trading
price of the Companys shares could decline, and investors
could lose all or part of their investment.
The order of the risk factors below does not indicate the
likelihood of these risks actually occurring or the scope of any
potential impairment these risks might cause to Infineons
business. The risks mentioned may materialize individually or
cumulatively.
Risks Relating to
the Company and the Market
The financial
resources available to Infineon, including the proceeds of the
Offering, may be insufficient to meet Infineons capital
needs.
Infineon faces considerable liquidity risks arising from the
current economic downturn, tight credit markets, and
Infineons existing financial liabilities, as well as the
relatively low recent trading price of Infineons shares.
Infineons net losses have increased over the past two
years, primarily due to the losses of Qimonda and the generally
poor performance of the economy in general, and the
semiconductor industry in particular, throughout that period.
While Infineon continues to bear relatively high levels of debt
amounting to 986 million as of March 31, 2009,
the Companys lower share price and the tighter credit
markets have made it more difficult for Infineon to obtain
financing. Infineons cash from operating activities,
current cash resources, existing sources of external financing
and the proceeds from the Offering may be insufficient to meet
Infineons further capital needs.
Furthermore, Infineon may be unable to successfully place the
shares that are the subject of the Offering, since the capital
increase has not been guaranteed by the underwriters (the
Underwriters), and the Backstop Arrangement
entered into on July 10, 2009, among the Company and
Admiral Participations (Luxembourg) S.à r.l. (the
Backstop Investor), a subsidiary of a fund
managed by Apollo Global Management LLC
(Apollo) is subject to certain conditions
precedent being met or waived by the Backstop Investor and may
be terminated under certain circumstances. The Backstop Investor
has agreed to acquire all New Shares including the Fractional
Amount not subscribed for by the Companys shareholders
(the Investment Shares) at the Subscription
Price, but not more than the Maximum Investment Amount (as
described below), subject to the Minimum Threshold (as described
below) being met (the Backstop Arrangement).
The maximum number of Investment Shares to be acquired by the
Backstop Investor together with any shares to be acquired by the
Backstop Investor through Subscription Rights purchased by the
Backstop Investor, if any, must not lead to a shareholding that
would represent more than 30 percent minus one share in the
Companys equity capital and voting rights post execution
of the Offering (the Maximum Investment
Amount). The obligation of the Backstop Investor to
acquire any Investment Shares is subject to certain conditions
precedent being met or waived by the Backstop Investor,
including, but not limited to, applicable merger clearances,
clearance by the German Ministry of Economy and Technology
(Bundesministerium für Wirtschaft und Technologie)
pursuant to the German Foreign Trade Act
(Außenwirtschaftsgesetz), and the appointment of one
representative of the Backstop Investor, Mr. Manfred Puffer, by
the competent court to the Supervisory Board and the election as
chairman of the Supervisory Board as of October 1, 2009,
the resignation of Mr. Max Dietrich Kley, the current chairman
of the Supervisory Board as of September 30, 2009, and the
nomination of another representative, Mr. Gernot Löhr,
of the Backstop as member of the Supervisory Board to be
appointed by the competent court, subject to the resignation of
the current chairman as member of the Supervisory Board taking
effect. Furthermore, the Backstop Investor may, but is not
required to, acquire Investment Shares if the number of the
Investment Shares available together with any shares to be
acquired by the Backstop Investor through Subscription Rights
purchased by the Backstop Investor, if any, does not allow the
Backstop Investor to establish a participation in the
Companys equity capital and voting rights of at least
15 percent post execution of the Offering (the
Minimum Threshold). The Backstop Investor may
declare to the
48
Company in a waiver of the Minimum Threshold requirement an
unconditional commitment to acquire other than through the
Investment Share Placement such amount of the Companys
shares that following the acquisition the Backstop
Investors shareholding will equal or exceed
15 percent. The obligation of the Backstop Investor to
acquire Investment Shares is subject to (a) Mr. Manfred
Puffer having been appointed by the competent court to
Supervisory Board, (b) Mr. Max Dietrich Kley, the current
chairman of the Supervisory Board, having committed to the
Backstop Investor and the co-chairman of the Supervisory Board
his resignation as of September 30, 2009, subject to the
Backstop Investor by that date holding a shareholding in the
Company of 15 percent or more, or as of October 15,
2009, if only by that date the Investor holds a respective
shareholding in the Company, in each case evidenced by a
corresponding notice to the Company according to Section 21
(1) German Securities Trading Act (WpHG), (c)
Mr. Manfred Puffer having been elected as chairman of the
Supervisory Board as of October 1, 2009 subject to the
resignation of the current chairman having taken effect, and (d)
the nomination committee of the supervisory board having
nominated Mr. Gernot Löhr as member of the Supervisory
Board to be appointed by the competent court subject to the
resignation of the current chairman as member of the Supervisory
Board having taken effect. The Backstop Investor reserves the
right to terminate the Backstop Arrangement upon the occurrence
of certain circumstances, including, but not limited to, the
Companys failure to provide a legal opinion and the
non-occurrence of the other conditions precedent, or if the
Capital Increase relating to the Investment Shares has not been
registered with the commercial register within twelve business
days after application by the Company for such registration. AIF
VII Euro Holdings, L.P., a company which currently directly owns
the Backstop Investor, has issued a binding and irrevocable
commitment letter in favor of the Backstop Investor and the
Company to fund the full Subscription Price with regard to the
subscribed Investment Shares by the Backstop Investor up to the
Maximum Investment Amount when due, conditional only upon
(i) satisfaction or waiver of the conditions precedent as
set forth in the Backstop Arrangement and (ii) the Minimum
Threshold being met unless waived by the Backstop Investor.
There can be no assurance, however, that the Backstop
Arrangement will be fulfilled and, as a result, the proceeds
from the Offering may be less than the minimum gross proceeds
anticipated by the Company.
The purchaser of the Wireline Communications business may
terminate the asset purchase agreement. Pursuant to the asset
purchase agreement dated July 7, 2009 (the Asset
Purchase Agreement) between the Company and Wireline
Holdings S.à r.l. (Wireline Holdings),
an entity affiliated with Golden Gate Private Equity, Inc.
(Golden Gate Private Equity), Wireline
Holdings has agreed to purchase the Wireline Communications
business for 250 million. The majority of the
purchase price is payable at closing, which is expected to occur
in the fall of 2009, with 20 million of the purchase
price being payable 9 months after the closing date.
Wireline Holdings is able to terminate the Asset Purchase
Agreement in certain circumstances, including if the closing has
not occurred by December 31, 2009. The closing is subject
to the receipt of the required antitrust approvals. Furthermore,
under German labor law, the separation of the Wireline
Communications business qualifies as a measure requiring the
prior conclusion of the negotiations with the Companys
competent works councils (Betriebsräte) with respect
to the balancing of interest (Interessenausgleich)
procedures. Successful termination of the negotiations is a
condition precedent for the closing of the transaction.
Negotiations will commence in July and the Company expects them
to last for several weeks.
If the Offering fails to raise the anticipated amount of capital
or if Infineon is unable to obtain financing from other sources
on commercially reasonable terms, or at all, then Infineon may
face difficulties in repaying or be unable to repay its debts as
they come due, in particular its guaranteed subordinated
convertible notes due 2010 that were issued by the
Companys subsidiary Infineon Technologies Holding
B.V.s (Convertible Notes due 2010) and
guaranteed subordinated exchangeable notes due 2010 that were
issued by the Companys subsidiary Infineon Technologies
Investment B.V. (Exchangeable Notes due
2010). As of June 30, 2009, Infineon has
Convertible Notes due 2010 outstanding in the nominal amount of
522 million and Exchangeable Notes due 2010
outstanding in the nominal amount of 48 million. If
for these or other reasons Infineon is unable to meet its
repayment obligations in respect of its outstanding notes or
other debts, the Companys share price could decline
further or experience increased volatility, and investors could
lose all or part of their investment.
If Infineon is
unsuccessful in implementing its operational restructuring
plans, Infineons revenues and profitability may be
adversely affected.
Infineons future success and financial performance are
largely dependent on its ability to successfully implement its
business strategy and achieve sustained profitability. In
furtherance of its overall strategy,
49
Infineon has restructured and is continuing to restructure its
operations to improve its focus on its main business. These
operational restructuring plans include the implementation of
Infineons cost-reduction program IFX10+, which
includes the following primary measures:
|
|
|
|
|
product portfolio management to eliminate unprofitable or
insufficiently profitable product families and to increase
efficiency in research and development
(R&D);
|
|
|
|
reduction of manufacturing costs and optimization of the value
chain;
|
|
|
|
improved efficiency of processes and tasks in the fields of
general and administrative expenses, R&D, and marketing and
sales;
|
|
|
|
re-organization of Infineons structure along its target
markets; effective October 1, 2008, Infineon is divided
into five segments: Automotive, Industrial &
Multimarket, Chip Card & Security, Wireless Solutions
and Wireline Communications; and
|
|
|
|
reductions in workforce.
|
Any failure to continue to execute Infineons strategy
successfully, including the execution of Infineons cost
reduction program IFX10+, could have a material
adverse effect on Infineons operations or financial
performance.
Ongoing
financial market volatility and adverse developments in the
global economic environment have had and could continue to have
a significant adverse impact on Infineons business,
financial condition and operating results.
Infineons business, financial condition and results of
operations have been and could continue to be significantly
negatively impacted by general economic conditions and the
related downturn in the semiconductor market. The global economy
has recently experienced a significant downturn, reflecting the
effects of the credit market crisis, slower economic activity, a
generally negative economic outlook, and a decrease in consumer
and business confidence. A prolonged economic downturn would
pose a number of significant risks for Infineon, including:
|
|
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|
|
significant declines in revenue;
|
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|
significant reductions in selling prices;
|
|
|
|
increased volatility
and/or
declines in the Companys share price;
|
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|
|
increased volatility or adverse movements in foreign currency
exchange rates;
|
|
|
|
delays in, or curtailment of, purchasing decisions by
Infineons customers or potential customers either as a
result of overall economic uncertainty or as a result of their
inability to access the liquidity necessary to engage in
purchasing initiatives or new product development;
|
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increased credit risk associated with Infineons customers
or potential customers, particularly those that may operate in
industries most affected by the economic downturn, such as
automotives;
|
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|
|
unprofitable operations;
|
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|
impairment of goodwill or other long-lived assets; and
|
|
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|
negative cash flows.
|
To the extent that the current economic downturn worsens or is
prolonged, Infineons business, financial condition and
results of operations could continue to be significantly and
adversely affected.
The
semiconductor industry is characterized by intense competition,
which could reduce Infineons sales or put continued
pressure on Infineons sales prices.
The semiconductor industry is highly competitive, and has been
characterized by rapid technological change, short product
lifecycles, high capital expenditures, intense pricing pressure
from major customers, periods of oversupply and continuous
advancements in process technologies and manufacturing
facilities. Increased competitive pressure or the relative
weakening of Infineons competitive position could
materially and adversely affect Infineons business,
financial condition and results of operations.
50
Infineon
operates in a highly cyclical industry and its business has in
the past suffered, is currently suffering and could again suffer
from periodic downturns.
The semiconductor industry is highly cyclical and has suffered
from significant economic downturns at various times. These
downturns have involved periods of production overcapacity,
oversupply, lower prices and lower revenues. In addition,
average selling prices for Infineons products can
fluctuate significantly from quarter to quarter or month to
month.
There can be no assurance that the markets in which Infineon
operates will resume growth in the near term, that the growth
rates experienced in past periods will be attainable again in
future years, or that Infineon will be successful in managing
any future downturn or substantial decline in average selling
prices, any of which could have a material adverse effect on
Infineons results of operations and financial condition.
Infineon may
not be able to match its production capacity to
demand.
It is difficult to predict future developments in the markets
Infineon serves, making it hard to estimate requirements for
production capacity. If markets do not grow or shrink faster
than Infineon has anticipated, Infineon risks underutilization
of its facilities or having insufficient capacity to meet
customer demand.
Market developments and industry overcapacity may lead to
underutilization of Infineons facilities, which may result
in idle capacity costs, write-offs of inventories and losses on
products due to falling average selling prices. Such a
development could potentially require Infineon to undertake
restructuring activities that may involve significant charges to
Infineons results of operations. In particular,
semiconductor companies have added significant capacity from
time to time, also prior to the economic downturn. In the past,
the net increases of supply sometimes exceeded demand
requirements, leading to oversupply situations and downturns in
the industry. Downturns, such as the current downturn, have had
a severe negative effect on the profitability of the industry.
Given the volatility and competition in the semiconductor
industry, Infineon is likely to face downturns again in the
future, which would likely have similar effects. Fluctuations in
the rate at which industry capacity grows relative to the growth
rate in demand for semiconductor products may in the future put
pressure on Infineons average selling prices and
negatively affect Infineons results of operations.
In addition, during periods of increased demand, Infineon may
not have sufficient capacity to meet customer orders. In the
past, Infineon has responded to increased demand by opening new
production facilities or entering into strategic alliances,
which in many cases resulted in significant expenditures.
Infineon has also purchased an increasing number of processed
wafers and packages from semiconductor foundries and
subcontractors to meet higher levels of demand and has incurred
higher costs of goods sold as a result. To expand
Infineons production capacity in the future, Infineon may
have to spend substantial amounts, which could negatively affect
Infineons results of operations.
Infineons
business could suffer as a result of volatility in different
parts of the world.
Infineon operates globally, with numerous manufacturing,
assembly and testing facilities on three continents, including
facilities that Infineon operates jointly with a partner. In the
2008 fiscal year and for the six months ended March 31,
2009, 78.6 percent and 80.0 percent of Infineons
revenues, respectively, were generated outside Germany and
59.7 percent and 61.9 percent, respectively, were
generated outside Europe. Infineons business is therefore
subject to risks involved in international business, including:
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negative economic developments in foreign economies and
instability of foreign governments, including the threat of war,
terrorist attacks, epidemic, pandemic or civil unrest;
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changes in laws and policies affecting trade and
investment; and
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varying practices of the regulatory, tax, judicial and
administrative bodies in the jurisdictions where Infineon
operates.
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Substantial changes in any of these conditions could have an
adverse effect on Infineons business and results of
operations. Infineons results of operations could also be
hurt if demand for the products made by Infineons
customers decreases due to adverse economic conditions in any of
the regions where they sell their own products.
51
In difficult
market conditions, Infineons high fixed costs adversely
affect its results.
In less favorable industry conditions, in addition to price
pressure, Infineon is faced with a decline in the utilization
rates of its manufacturing facilities due to decreases in
product demand. Since the semiconductor industry is
characterized by high fixed costs, Infineons ability to
reduce its total costs in line with revenue declines is limited.
The costs associated with the excess capacity, particularly for
Infineons front-end fabrication facilities
(fabs), are charged directly to cost of sales
as idle capacity charges. Infineon cannot guarantee that
difficult market conditions will not adversely affect the
capacity utilization of Infineons fabs and, consequently,
Infineons future gross margins.
The
competitive environment of the semiconductor industry has led to
industry consolidation, and Infineon may face even more intense
competition from newly merged competitors.
The highly competitive environment of the semiconductor industry
and the high costs associated with manufacturing technologies
and developing marketable products have resulted in significant
consolidation in the industry and are likely to lead to further
consolidation in the future. Such consolidation can allow
competitors of Infineon to further benefit from economies of
scale, enjoy improved or more comprehensive product portfolios
and increase the size of their serviceable markets. In addition,
Infineon may become a target for a company looking to improve
its competitive position. Any such corporate event could result
in unpredictable consequences, which could have a material
adverse effect on Infineons results of operations and
financial condition. Consequently, Infineons competitive
position may be adversely impacted by consolidation among other
industry participants, who may leverage increased market share
and economies of scale to improve their competitive position.
Infineon
intends to continue to engage in acquisitions, joint ventures
and other transactions that may complement or expand its
business. Infineon may not be able to complete these
transactions, and even if executed, these transactions pose
significant risks and could have a negative effect on
Infineons operations.
Infineons future success may be dependent on opportunities
to enter into joint ventures and to buy other businesses or
technologies that could complement, enhance or expand
Infineons current business or products or that might
otherwise offer Infineon growth opportunities or gains in
productivity. If Infineon is unable to identify suitable
targets, its growth prospects may suffer, and Infineon may not
be able to realize sufficient scale advantages to compete
effectively in all relevant markets. Infineon may also face
competition for desirable targets from other companies in the
semiconductor industry. Infineons ability to acquire
targets may also be limited by applicable antitrust laws and
other regulations in the United States, the European Union and
other jurisdictions in which Infineon does business. Infineon
may not be able to complete such transactions, for reasons
including, but not limited to, a failure to secure financing or
as a result of restrictive covenants in Infineons debt
instruments. Any transactions that Infineon is able to identify
and complete may involve a number of risks, including:
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the diversion of Infineons managements attention
from Infineons existing business to integrate the
operations and personnel of the acquired or combined business or
joint venture;
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possible negative impacts on Infineons operating results
during the integration process; and
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Infineons possible inability to achieve the intended
objectives of the transaction.
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Infineon may
be unable to successfully integrate businesses it acquires and
may be required to record charges related to the goodwill or
other long-lived assets associated with the acquired
businesses.
Infineon has acquired other companies, businesses and
technologies from time to time. Infineon intends to continue to
make acquisitions of, and investments in, other companies.
Infineon faces risks resulting from the expansion of its
operations through acquisitions, including the risk that
Infineon might be unable to successfully integrate new
businesses or teams with Infineons culture and strategies
on a timely basis or at all. Infineon also cannot be certain
that it will be able to achieve the full scope of the benefits
it expects from a particular acquisition or investment.
Infineons business, financial condition and results of
operations may suffer if Infineon fails to coordinate its
resources effectively to manage both its existing businesses and
any businesses it acquires.
Infineon reviews the goodwill associated with its acquisitions
for impairment at least once a year. Changes in Infineons
expectations due to changes in market developments which
Infineon cannot foresee
52
have in the past resulted in Infineon writing off amounts
associated with the goodwill of acquired companies, and future
changes may require additional write-offs in future periods,
which could have a material adverse effect on its financial
results.
Infineon may
not be able to protect its proprietary intellectual property and
may be accused of infringing the intellectual property rights of
others.
Infineons success depends on its ability to obtain
patents, licenses and other intellectual property rights
covering Infineons products and its design and
manufacturing processes. The process of seeking patent
protection can be long and expensive. Patents may not be granted
on currently pending or future applications or may not be of
sufficient scope or strength to provide Infineon with meaningful
protection or commercial advantage. In addition, effective
copyright, trademark and trade secret protection may be
unavailable or limited in some countries, and Infineons
trade secrets may be vulnerable to disclosure or
misappropriation by employees, contractors and other persons.
Competitors may also develop technologies that are protected by
patents and other intellectual property rights. These
technologies may therefore either be unavailable to Infineon or
be made available to Infineon only on unfavorable terms and
conditions. Litigation, which could require significant
financial and management resources, may be necessary to enforce
Infineons patents or other intellectual property rights or
to defend against claims of infringement of intellectual
property rights brought against Infineon by others. Lawsuits may
have a material adverse effect on Infineons business.
Infineon may be forced to stop producing substantially all or
some of its products or to license the underlying technology
upon economically unfavorable terms and conditions or Infineon
may be required to pay damages for the prior use of third-party
intellectual property.
Infineons
business could suffer due to decreases in customer
demand.
Infineons sales volume depends significantly on the market
success of Infineons customers in developing and selling
end-products that incorporate Infineons products. The fast
pace of technological change, difficulties in the execution of
individual projects, general economic conditions and other
factors may limit the market success of Infineons
customers, resulting in a decrease in the volume of demand for
Infineons products and adversely affecting Infineons
results of operations.
Due to the time needed to develop the final product for end
customers and the time until such products are ultimately
introduced to the market, Infineon may face significant and
sometimes unpredictable delays between the implementation of
Infineons products and volume ramp up. This may cause
significant idle capacity costs.
The loss of
one or more of Infineons key customers, for example, owing
to a decrease in customer confidence in Infineon due to its
perceived liquidity position, may adversely affect
Infineons business.
Historically, a significant portion of Infineons revenue
has come from a relatively small number of customers and
distributors. The loss or financial failure of any significant
customer or distributor, or any reduction in orders by any of
Infineons key customers or distributors, for example,
owing to a loss of customer confidence in Infineon due to its
perceived liquidity position, could materially and adversely
affect Infineons business.
Fluctuations
in the mix of products sold may adversely affect Infineons
financial results.
Infineon achieves differing gross margins across its wide range
of products. Infineons financial results therefore depend
in part on the structure of its product portfolio. Fluctuations
in the mix and types of Infineons products may also affect
the extent to which Infineon is able to recover its fixed costs
and investments that are associated with a particular product,
and as a result can negatively impact Infineons financial
results.
If Infineon
fails to successfully implement an optimum
make-or-buy
strategy, Infineons business could suffer from higher
costs.
Infineon intends to continue to invest in leading-edge process
technologies such as power, embedded flash and radio-frequency
technologies. At the same time, for complementary
metal-oxide-semiconductors, or CMOS, below 90-nanometers,
Infineon plans to continue to share risks and expand its access
to
53
leading-edge technology through long-term strategic partnerships
with other leading industry participants and by making more
extensive use of manufacturing at silicon foundries. However,
the decision to develop its own solutions or to cooperate with
third-party suppliers could adversely affect Infineons
results of operations if Infineon fails to achieve sufficient
volume production, if market conditions for the services
Infineon obtains from foundries become more expensive due to
increases in worldwide demand for foundry services, or if
strategic partners fail to perform properly.
Infineons
business could suffer from problems with
manufacturing.
The semiconductor industry is characterized by the introduction
of new or enhanced products with short life cycles in a rapidly
changing technological environment. Infineon manufactures its
products using processes that are highly complex, require
advanced and costly equipment and must continuously be modified
to improve yields and performance. Difficulties in the
manufacturing process can reduce yields or interrupt production,
especially during rapid ramp up periods, and as a result of such
problems Infineon may on occasion not be able to deliver
products on time or in a cost-effective, competitive manner.
Infineon cannot foresee and prepare for every contingency. If
production at a fabrication facility is interrupted, Infineon
may not be able to shift production to other facilities on a
timely basis or customers may purchase products from other
suppliers. In either case, the loss of revenues and damage to
the relationship with Infineons customers could be
significant. Increasing production capacity to reduce exposure
to potential production interruptions would increase
Infineons fixed costs. If demand for Infineons
products does not increase proportionally to the increase in
production capacity, Infineons operating results could be
harmed.
If
Infineons outside foundry suppliers fail to meet
Infineons expectations, Infineons results of
operations and its ability to exploit growth opportunities could
be adversely affected.
Infineon outsources production of some of its products to
third-party suppliers, including semiconductor foundry
manufacturers and assembly and test facilities, and expects that
its reliance on outsourcing will increase. If Infineons
outside suppliers are unable to satisfy Infineons demand,
or experience manufacturing difficulties, delays or reduced
yields, Infineons results of operations and ability to
satisfy customer demand could suffer. In addition, purchasing
rather than manufacturing these products may adversely affect
Infineons gross profit margin if the purchase costs of
these products are higher than Infineons own manufacturing
costs. Infineons internal manufacturing costs include
depreciation and other fixed costs, while costs for products
outsourced are based in large part on market conditions. Prices
for foundry products also vary depending on capacity utilization
rates at Infineons suppliers, quantities demanded, product
technology and geometry. Furthermore, these outsourcing costs
can vary materially from quarter to quarter and, in cases of
industry shortages, they can increase significantly, negatively
impacting Infineons results of operations.
Products that
do not meet customer specifications or that contain, or are
perceived to contain, defects or errors or that are otherwise
incompatible with their intended end use could impose
significant costs on Infineon.
The design and production processes for Infineons products
are highly complex. It is possible that Infineon may produce
products that do not meet customer specifications, contain or
are perceived to contain defects or errors, or are otherwise
incompatible with their intended uses. Infineon may incur
substantial costs in remedying such defects or errors, which
could include material inventory write-downs. Moreover, if
actual or perceived problems with nonconforming, defective or
incompatible products occur after Infineon has shipped the
products, Infineon might not only bear direct liability for
providing replacements or otherwise compensating customers, but
could also suffer from long-term damage to Infineons
relationship with important customers or to Infineons
reputation in the industry generally. This could have a material
adverse effect on Infineons business, financial condition
and results of operations.
Infineon may
be adversely affected by property loss and business
interruption.
Damage and loss caused by fire, natural hazards, supply
shortage, or other disturbance at semiconductor facilities or
within Infineons supply chain at customers as
well as at suppliers can be severe. Thus, even
though Infineon has constructed and operates its facilities in
ways that minimize the specific risks and that enable a quick
response if such event should occur, damages from such events
could nonetheless be severe. Furthermore, despite
Infineons continued expectations to invest in
54
prevention and response measures at its facilities and to
maintain property loss and business interruption insurance, any
loss may exceed the amounts recoverable under Infineons
insurance policies. As a result, any such events could have a
material adverse effect on Infineons business, financial
condition and results of operations, and any such loss may
exceed the amounts recoverable under Infineons insurance
policies.
Infineons
business could suffer if Infineon is not able to secure the
development of new technologies or if Infineon cannot keep pace
with the technology development of Infineons
competitors.
The semiconductor industry is characterized by rapid
technological changes. New process technologies using smaller
feature sizes and offering better performance characteristics
are introduced every one to two years. The introduction of new
technologies allows Infineon to increase the functions per chip
while at the same time improving performance parameters, such as
decreasing power consumption or increasing processing speed. In
addition, the reduction of feature sizes allows Infineon to
produce smaller chips offering the same functionality and
thereby considerably reduce the costs per function. In order to
remain competitive, it is essential that Infineon secures the
capabilities to develop and qualify new technologies for the
manufacturing of new products. If Infineon is unable to develop
and qualify new technologies and products, or if Infineon
devotes resources to the pursuit of technologies or products
that fail to be accepted in the marketplace or that fail to be
commercially viable, Infineons business may suffer.
Infineon
relies on strategic partners and other third parties, and
Infineons business could be harmed if they fail to perform
as expected or relationships with them were to be
terminated.
As part of Infineons strategy, Infineon has entered into a
number of long-term strategic alliances with leading industry
participants, both to manufacture semiconductors and to develop
new manufacturing process technologies and products. If
Infineons strategic partners encounter financial
difficulty or change their business strategies, they may no
longer be able or willing to participate in these alliances.
Some of the agreements governing Infineons strategic
alliances allow Infineons partners to terminate the
agreement if the Companys equity ownership changes so that
a third party gains control of the Company or of a significant
portion of the Companys shares. Infineons business
could be harmed if any of Infineons strategic partners
were to discontinue Infineons participation in a strategic
alliance or if the alliance were otherwise terminated. To the
extent Infineon relies on alliances and third-party design
and/or
manufacturing relationships, Infineon faces the risks of:
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reduced control over delivery schedules and product costs;
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manufacturing costs that are higher than anticipated;
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the inability of Infineons manufacturing partners to
develop manufacturing methods appropriate for Infineons
products and their unwillingness to devote adequate capacity to
produce Infineons products;
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a decline in product reliability;
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an inability to maintain continuing relationships with
Infineons suppliers; and
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limited ability to meet customer demand when faced with product
shortages.
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If any of these risks materialize, Infineon could experience an
interruption in its supply chain or an increase in costs, which
could delay or decrease Infineons revenues or adversely
affect Infineons business, financial condition and results
of operations.
New business
is often subject to a competitive selection process that can be
lengthy and uncertain and that requires Infineon to incur
significant expenses in advance. Even if Infineon wins and
begins a product design, a customer may decide to cancel or
change Infineons product plans, which could cause Infineon
to generate no sales from a product and adversely affect
Infineons results of operations.
In several of Infineons business areas, Infineon focuses
on winning competitive bid selection processes, known as
design wins, to develop products for use in
Infineons customers products. These selection
processes can be lengthy and can require Infineon to incur
significant design and development expenditures. Infineon may
not win the competitive selection process and may never generate
any revenues despite incurring significant design and
development expenditures.
55
If Infineon wins a product design and receives corresponding
orders from its customers, Infineon may experience delays in
generating revenues from its products as a result of the lengthy
development and design cycle. In addition, a delay or
cancellation of a customers plans could significantly
adversely affect Infineons financial results, as Infineon
may have incurred significant expenses and generated no
revenues. Finally, if Infineons customers fail to
successfully market and sell their products, Infineons
results of operations could be materially adversely affected as
the demand for Infineons products falls.
Infineon
relies on a limited number of suppliers of manufacturing
equipment and materials and could suffer shortages if these
suppliers were to interrupt supply or increase their
prices.
Infineons manufacturing operations depend upon obtaining
deliveries of equipment and adequate supplies of materials on a
timely basis. Infineon purchases equipment and materials from a
number of suppliers on a
just-in-time
basis. From time to time, suppliers may extend lead times, limit
supply to Infineon or increase prices due to capacity
constraints or other factors. Because the equipment that
Infineon purchases is complex, it is difficult for Infineon to
substitute one supplier for another or one piece of equipment
for another. Some materials are only available from a limited
number of suppliers. Although Infineon believes that supplies of
the materials Infineon uses are currently adequate, shortages
could occur in critical materials, such as silicon wafers or
specialized chemicals used in production, due to interruption of
supply or increased industry demand. Infineons results of
operations would be hurt if Infineon were not able to obtain
adequate supplies of quality equipment or materials in a timely
manner or if there were significant increases in the costs of
equipment or materials.
Infineon may
be adversely affected by rising raw material
prices.
Infineon is exposed to fluctuations in raw material prices. In
the recent past, gold, copper and petroleum-based organic
polymer prices in particular have fluctuated on a worldwide
basis. If Infineon is not able to compensate for or pass on its
increased costs to customers, such price increases could have a
material adverse impact on Infineons financial results.
Infineons
business could suffer if Infineon is unable to secure dependable
power supplies at reasonable cost.
Infineons business requires reliable electrical power at
reasonable cost and may be adversely affected by power shortages
due to disruptions in supply, as well as by increases in market
prices for fuel or electricity.
Infineons
operations rely on complex information technology systems and
networks, and any disruptions in such systems or networks could
have a material adverse impact on Infineons business and
results of operations.
Infineon relies heavily on information technology systems and
networks to support business processes as well as internal and
external communications. These systems and networks are
potentially vulnerable to damage or interruption from a variety
of sources. However, despite precautions taken by Infineon to
manage its risks related to system and network disruptions,
including the use of multiple suppliers, an extended outage in a
telecommunications network utilized by Infineons systems
or a similar event could lead to an extended unanticipated
interruption of Infineons systems or networks, which could
have an adverse effect on Infineons business. Furthermore,
any data leaks resulting from information technology security
breaches despite use of sophisticated information technology
security to protect its highly confidential information could
adversely affect Infineons business operations or
reputation.
Infineon has
recorded significant reorganization and impairment charges in
the past and may do so again in the future, which could
materially adversely affect Infineons
business.
In the past, Infineon has recorded restructuring and asset
impairment charges relating to Infineons efforts to
consolidate and refocus its business. For example, for the 2008
fiscal year and the six months ended March 31, 2009,
Infineon recorded 325 million and
7 million, respectively, in such charges. As Infineon
responds to continuing rapid change in the semiconductor
industry in order to remain competitive, Infineon may incur
additional employee termination, restructuring and asset
impairment charges in the future.
In addition, Infineon tests its long-lived assets, including
intangible assets, for impairment when events or changes in
circumstances indicate that its carrying value may not be
recoverable. Given the fact
56
that Infineons market capitalization has in recent periods
occasionally been less than its book value, Infineon conducted
such an impairment analysis as of March 31, 2009. Infineon
believes that the substantial decrease in its market value in
recent periods was largely due to factors which do not impact
the fair value of its cash generating units to the same extent,
and therefore concluded that long-lived assets were not impaired
as of such date. Infineon will continue to review its long-lived
assets for potential impairment, and may in the future be
required to record charges in that regard.
Charges related to employee termination, restructuring and asset
impairments may have a material adverse effect on
Infineons business, financial condition and results of
operations, especially in the periods in which such charges are
recorded.
Infineons
business could suffer if third-party service providers fail to
perform as expected.
The Company has outsourced a number of business functions and
processes, including some of its IT-services, which may comprise
the usual risks of such outsourcing in case a service provider
encounters difficulties providing the required services. For
example, if a service provider is not able to provide the agreed
services, the Company may not be able to replace such service
provider on short notice, which may have an adverse effect on
the Companys business.
Infineons
success depends on its ability to recruit and retain sufficient
qualified key personnel.
Infineons success depends significantly on the recruitment
and retention of highly skilled personnel, particularly in the
areas of R&D, marketing, production management and general
management. The competition for such highly skilled employees is
intense and the loss of the services of key personnel without
adequate replacement or the inability to attract new qualified
personnel could have a material adverse effect on Infineon.
Infineon can provide no assurance that it will be able to
successfully retain
and/or
recruit the key personnel Infineon requires.
Reductions in
government subsidies or demands for repayment of such subsidies
could increase Infineons reported expenses or limit its
ability to fund capital expenditures.
Infineons reported expenses have been reduced in recent
years by various subsidies received from governmental entities.
In particular, Infineon has received, and expects to continue to
receive, subsidies for investment projects as well as for
R&D projects. Infineon recognized governmental subsidies as
a reduction of R&D expenses and cost of sales in an
aggregate amount of 110 million in the 2007 fiscal
year, 84 million in the 2008 fiscal year and
36 million in the six months ended March 31,
2009.
As the general availability of government funding is outside
Infineons control, Infineon can provide no assurance that
it will continue to benefit from such support, that sufficient
alternative funding would be available if necessary or that any
such alternative funding would be provided on terms as favorable
to Infineon as those Infineon currently receives. In addition,
if certain conditions are not met or certain events occur,
Infineon may have to repay the government subsidies that it has
already received.
The application for and implementation of such subsidies often
involves compliance with extensive regulatory requirements,
including, in the case of subsidies to be granted within the
European Union, notification to the European Commission of the
contemplated grant prior to disbursement. In particular,
establishment of compliance with project-related ceilings on
aggregate subsidies defined under European Union law often
involves highly complex economic evaluations. If Infineon fails
to meet applicable requirements, Infineon may not be able to
receive the relevant subsidies or may be obliged to repay
current or future subsidies, which could have a material adverse
effect on Infineons business.
The terms of certain of the subsidies Infineon has received
impose conditions that may limit Infineons flexibility to
utilize subsidized facilities as Infineon deems appropriate, to
divert equipment to other facilities, to reduce employment at
the site, or to use related intellectual property outside the
European Union. This could impair Infineons ability to
operate its business in the manner Infineon believes to be most
cost effective.
57
Infineons
operating results fluctuate significantly from quarter to
quarter, and as a result Infineon may fail to meet the
expectations of securities analysts and investors, which could
cause the Companys stock price to decline.
Infineons operating results have fluctuated significantly
from quarter to quarter in the past and are likely to continue
to do so due to a number of factors, many of which are not
within Infineons control. If Infineons operating
results do not meet the expectations of securities analysts or
investors, the market price of the Companys shares will
likely decline. Infineons reported results can be affected
by numerous factors, including:
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the overall cyclicality of, and changing economic and market
conditions in, the semiconductor industry, as well as
seasonality in sales of consumer products in which
Infineons products are incorporated;
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Infineons ability to scale its operations in response to
changes in demand for Infineons existing products and
services or demand for new products requested by Infineons
customers;
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intellectual property disputes, customer indemnification claims
and other types of litigation risks;
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the gain or loss of a key customer, design win or order;
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the timing, rescheduling or cancellation of significant customer
orders and Infineons ability, as well as the ability of
Infineons customers, to manage inventory;
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changes in accounting rules;
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Infineons success in implementing cost reductions measures;
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the length of particular product development cycles; and
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liabilities arising as a result of Qimondas insolvency.
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Due to the foregoing factors and the other risks discussed in
this Prospectus, investors should not rely on
quarter-to-quarter
comparisons of Infineons operating results as an indicator
of future performance.
Infineons
results of operations and financial condition can be adversely
impacted by changes in exchange rates.
Infineons results of operations can be negatively affected
by changes in exchange rates, particularly between the euro and
the U.S. dollar or the Japanese yen. In addition, the
balance sheet impact of currency translation adjustments has
been, and may continue to be, material. Furthermore, while
Infineon operates in an industry with prices primarily
denominated in U.S. dollars and therefore receives a large
proportion of its revenues in U.S. dollars, a large
proportion of its expenses are in euro and it also reports its
financial results in euro, which is its operational currency. As
a result, Infineons financial results can be significantly
negatively affected by exchange rate fluctuations of the
U.S. dollar against the euro.
If Infineon
fails to maintain effective internal controls, Infineon may not
be able to report financial results accurately or on a timely
basis, or to detect fraud, which could have a material adverse
effect on the Companys business or share
price.
Effective internal controls are necessary for Infineon to
provide reasonable assurance with respect to Infineons
financial reports and to effectively prevent financial fraud.
Pursuant to the Sarbanes Oxley Act, Infineon is required to
periodically evaluate the effectiveness of the design and
operation of Infineons internal controls. Internal
controls over financial reporting may not prevent or detect
misstatements because of inherent limitations, including the
possibility of human error or collusion, the circumvention or
overriding of controls, or fraud. If Infineon fails to maintain
an effective system of internal controls, Infineons
business and operating results could be harmed, and Infineon
could fail to meet its reporting obligations, which could have a
material adverse effect on the Companys business and the
Companys share price.
Infineon is
exposed to various tax risks, and several factors could have an
adverse effect on the tax burden of Infineon.
Infineons 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.
The most recent finalized corporate income, trade and sales tax
audit of Infineon Technologies AG and its German subsidiaries
covered the 1999 through 2001 fiscal years; for the 2002 through
2005 fiscal years a tax audit has started.
58
Given the considerable amount of available tax losses incurred
by the Company, additional tax assessments at Company level
should not trigger substantial tax charges, if any. Infineon
regularly assesses the adequacy of its domestic and foreign tax
provisions in light of new evidence and makes adjustments to the
extent necessary. Due to the complexities in tax laws and their
interpretation by the tax authorities there can be no assurance
that the outcome of German and foreign tax audits will not
differ from these estimates, that is, additional tax charges
imposed by the tax authorities may exceed taxes accrued for as
liabilities or provisions and may require additional liquidity.
In case of changes in the shareholders structure of the
Company there is a risk that its tax losses, tax loss
carry-forwards and interest carry-forwards may be eliminated
entirely or in part. Such elimination in whole or in part may,
in particular, result from a direct or indirect acquisition of
shares (e.g. straight acquisition, capital increase) of more
than 50 percent or of more than 25 percent up to
50 percent respectively, by an individual shareholder, a
related party, or a defined group of shareholders within a
five-year period (see Section 8c of the German Corporate
Income Tax Act (Körperschaftsteuergesetz)). If,
therefore, under the Backstop Arrangement the Backstop Investor
acquired Investment Shares representing more than
25 percent of the shares in the Company, an according
amount of tax losses, tax loss carry-forwards and interest
carry-forwards may be eliminated. The elimination of the tax
loss carry-forwards would have a non-cash effect in the
consolidated financial statements of Infineon Technologies AG as
a consequence of the derecognition of deferred tax assets
relating to those tax loss carry-forwards. In addition, the tax
burden in Germany for future tax assessment periods could
increase as respective tax losses, tax loss carry-forwards or
interest carry-forwards would no longer be available to offset
future taxable income.
Furthermore, future changes of the tax laws in Germany or other
jurisdictions relevant for Infineon could increase the tax
burden of Infineon. This as well as the above mentioned risks
could have a material adverse effect on cash flows, financial
condition and results of operations of Infineon.
Infineons
deferred tax assets are subject to regular reassessment, which
may result in additional valuation allowances.
Infineon recognized deferred tax assets in a total amount of
400 million as of September 30, 2008. The
realization of deferred tax assets is dependent upon the
Companys ability to generate the appropriate character of
future taxable income sufficient to utilize loss carry-forwards
or tax credits before their expiration. A change of the
estimated amounts and character of future income may require
additional valuation allowances.
Environmental
laws and regulations may expose Infineon to liability and
increase Infineons costs.
Infineons operations are subject to many environmental
laws and regulations wherever Infineon operates, governing,
among other things, air and noise emissions, wastewater
discharges, the use and handling of hazardous substances, waste
disposal and the investigation and remediation of soil and
ground water contamination.
An EU Directive imposes a take-back obligation on
manufacturers to finance the collection, recovery and disposal
of electrical and electronic equipment. Because of unclear
statutory definitions and interpretations in individual member
states, as well as ongoing discussions on national implementing
measures, Infineon is unable at this time to determine in detail
the consequences of this directive for Infineon. Additional
European legislation restricts the use of lead and other
hazardous substances in electrical and electronic equipment from
July 2006. Both Directives are under revision and their possible
impacts currently cannot be determined in detail. A further EU
Directive restricts the use of hazardous substances in
automotive vehicles. Because the Directive has been changed and
further revision is foreseen, the future impact on Infineon
cannot currently be determined in detail.
Another Directive describes eco-design requirements for
energy-using products, including information requirements for
components and
sub-assemblies.
Furthermore the European regulatory framework for chemicals,
called REACH, deals with the registration, evaluation,
authorization and restriction of chemicals. This legislation may
complicate Infineons research and development activities
and may require Infineon to change certain of its manufacturing
processes to utilize more costly materials or to incur
substantial additional costs. In addition, pursuant to the EU
Directive on environmental liability with regard to the
prevention and remedying of environmental damage, Infineon could
face increased environmental liability, which may result in
higher costs and potential damage claims.
59
In addition, the Chinese government restricts the use of lead
and other hazardous substances in electronic products. Because
neither all implementing measures nor the key product catalogue
are in place, the consequences for Infineon cannot currently be
determined in detail. Similar regulations or substance bans are
being proposed or implemented in various countries of the world.
Infineon is not able at this time to estimate the amount of
additional costs that Infineon may incur in connection with
these regulations.
There is a risk that Infineon may become the subject of
environmental, health or safety liabilities or litigation.
Environmental, health, and safety claims or the failure to
comply with current or future regulations could result in the
assessment of damages or imposition of fines against Infineon,
suspension of production or a cessation of operations.
Significant financial reserves or additional compliance
expenditures could be required in the future due to changes in
law or new information regarding environmental conditions or
other events, and those expenditures could adversely affect
Infineons business or financial condition. As with other
companies engaged in similar activities, Infineon faces inherent
risks of environmental liability in its current and historical
manufacturing locations. Costs associated with future additional
environmental compliance or remediation obligations could
adversely affect Infineons business.
Infineon may
face significant liabilities as a result of the insolvency of
Qimonda.
As a result of the commencement of insolvency proceedings by
Qimonda, Infineon is exposed to potential liabilities arising in
connection with the Qimonda business. Such potential liabilities
include, among others, pending antitrust and securities law
claims, potential claims for repayment of governmental
subsidies, employee-related contingencies and purported unfair
dismissal claims by employees of Qimonda North America. Infineon
recorded aggregate provisions and allowances of
203 million as of March 31, 2009 relating to
such of those liabilities which management believes are probable
and can be estimated with reasonable accuracy at that time.
There can be no assurance that such provisions and allowances
recorded will be sufficient to cover all liabilities that may
ultimately be incurred in relation to these matters. In
preparing its financial statements for the current and
subsequent quarters, the Company will review the provisions and
allowances with respect to these and any new potential
liabilities to determine whether any adjustments should be made.
In addition, Infineon may be subject to claims by the insolvency
administrator under German insolvency laws for repayment of
certain amounts received by Infineon from Qimonda, for example,
payments for intra-group services and supplies, during defined
periods prior to the commencement of insolvency proceedings.
Furthermore, Infineon may lose the right to use Qimondas
intellectual property rights under the contribution agreement
between Infineon and Qimonda if and to the extent this agreement
was successfully challenged by the insolvency administrator
under German insolvency laws.
The insolvency of Qimonda may also subject Infineon to other
claims arising in connection with certain liabilities,
contracts, offers, uncompleted transactions, continuing
obligations, risks, encumbrances and other liabilities
contributed to Qimonda in connection with the carve-out of the
Qimonda business, as it is unlikely that Qimonda will be able to
fulfill its obligation to indemnify Infineon against any such
liabilities due to its insolvency.
Finally, there can be no assurance that the insolvency
administrator or creditors of Qimonda will not seek to recover
money from Infineon by asserting claims that Infineon cannot
currently foresee. Even if a court were to dismiss or otherwise
rule against such claims, defending against them could require
Infineon to expend significant time, money and management
attention.
Infineon might
be required to repay any outstanding Exchangeable Notes due 2010
prior to their maturity date, which could materially adversely
affect its financial condition.
Infineons outstanding Exchangeable Notes due 2010 might
become repayable prior to their maturity date upon the
occurrence of stated events, for example, a change of control or
liquidation of all or substantially all of the assets of Qimonda
or the termination of the deposit agreement relating to
Qimondas ADR facility without a replacement agreement. In
the event that the Qimonda insolvency administrator is
successful in consummating a sale of all or a material portion
of the business of Qimonda or its assets, or the deposit
agreement is terminated without a replacement agreement, or if
any part of the reorganization is deemed to trigger a repayment
obligation as to the Exchangeable Notes due 2010,
60
Infineon could become obligated to repay such Exchangeable Notes
due 2010 at par. The outstanding nominal amount of Exchangeable
Notes was 48 million as of June 30, 2009. Any early
repayment of the Exchangeable Notes due 2010 would require a
substantial expenditure of cash and could have a material
adverse effect on Infineons financial condition and
results of operations.
A sale or
closure of the ALTIS facility may result in the Company
incurring material additional costs and charges.
Infineon and its joint venture partner IBM are currently
involved in ongoing negotiations with strategic and financial
partners regarding a divestiture of their respective shares in
ALTIS, a manufacturing joint venture in France. The outcome of
these negotiations cannot be predicted at this stage. In the
event of a failure to reach an agreement with the potential
buyers, Infineon and IBM may well have to resort to the closure
of the ALTIS manufacturing facility. Either the sale or the
closure of the facility may result in the Company incurring
material additional costs and charges. In the event of a sale,
Infineon may incur, amongst others, expenses under a wafer
supply agreement that is to be concluded between the joint
venture partners and the potential buyer. In the event of a
closure, Infineon and IBM may incur material expenses relating
to the closing. Although the exact amount of any such expenses
cannot be reliably assessed as yet, such expenses could have a
material adverse effect on Infineons results of operations
and financial position.
The Wireline
Communications business could be adversely impacted if the
intended sale is not completed.
If the sale of the Wireline Communications business is not
completed, the Wireline Communications business could be
adversely impacted because of lower demand for its products due
to customer uncertainty, decreased efficiency and employee
attrition as a result of employee uncertainty .
Infineon may
be held liable for damages in connection with the sale of the
Wireline Communications business.
Under the Asset Purchase Agreement, Infineon made certain
representations and warranties to Wireline Holdings and may be
required to pay damages if these representations and warranties
turn out to have been incorrect or if Infineon breaches its
obligations under the Asset Purchase Agreement. Infineon could
therefore become involved in disputes and litigation with regard
to these representations and warranties and be forced to pay
damages. If Infineon does not have sufficient cash to cover
damages, Infineon may be forced to borrow money or to sell
assets in order to procure these funds, which would reduce
Infineons revenue or operating results. If these risks
should materialize, this could have an adverse effect on
Infineons business, operating results, or financial
condition.
Infineon may
face increased expenses due to the sale of the Wireline
Communications business.
Certain fixed costs that are associated with the Wireline
Communications business will not be transferred in connection
with the Asset Purchase Agreement. If such fixed costs are not
transferred to Wireline Holdings, Infineon will continue to be
responsible for such expenses. Infineon will participate in
certain
set-up costs
of Wireline Holdings that will arise in connection with the
transfer of the Wireline Communications business. Furthermore,
should the sale of the Wireline Communications business be
completed and should Infineon not be able to either transfer,
reduce or eliminate the fixed costs associated with the Wireline
Communications business or should Infineon incur substantial
restructuring costs associated with the sale of the Wireline
Communications business, this could have a material adverse
effect on Infineons operations or financial performance.
Infineons
business and financial condition could be adversely affected by
current or future litigation.
Infineon is a party to lawsuits in the normal course of
Infineons business, including suits involving allegations
of intellectual property infringement, product liability and
breaches of contract. The results of complex legal proceedings
are difficult to predict. There can be no assurance that the
results of current or future legal proceedings will not
materially harm Infineons business, reputation or brand.
Infineon records a provision for litigation risks when it is
probable that a liability has been incurred and the associated
amount can be reasonably estimated. Infineon maintains liability
insurance for certain legal
61
risks at levels Infineons management believes are
appropriate and consistent with industry practice. Infineon may
incur losses relating to litigation beyond the limits, or
outside the coverage, of such insurance and such losses may have
a material adverse effect on the results of Infineons
operations or financial condition, and Infineons
provisions for litigation-related losses may not be sufficient
to cover its ultimate loss or expenditure. An unfavorable
resolution of a particular lawsuit could have a material adverse
effect on Infineons business, operating results, or
financial condition.
Infineon is a
subject of investigations in several jurisdictions in connection
with pricing practices in the Dynamic Random Access Memory
(DRAM) industry, and is a defendant in civil
antitrust claims in connection with these matters.
In September 2004, the Company entered into a plea agreement
with the Antitrust Division of the U.S. Department of
Justice (the DOJ) in connection with its
investigation of alleged antitrust violations in the DRAM
industry. Pursuant to this plea agreement, the Company agreed to
plead guilty to a single count relating to the price fixing of
DRAM products and to pay a fine of $160 million, payable in
equal annual installments through 2009.
Subsequent to the commencement of the DOJ investigation, a
number of purported class action lawsuits were filed against the
Company and other DRAM suppliers in U.S. federal courts and
in state courts in various U.S. states and Canadian
provinces. The complaints allege violations of U.S. federal
and state or Canadian antitrust and competition laws and seek
treble damages in unspecified amounts, costs, attorneys
fees and an injunction against the allegedly unlawful conduct on
behalf of the plaintiffs. In July 2006, the state attorney
generals of a number of U.S. states filed actions against
the Company and other DRAM suppliers in U.S. federal
courts. The claims involve allegations of DRAM price fixing and
artificial price inflation and seek to recover three times
actual damages and other relief.
In April 2003, the Company received a request for information
regarding DRAM industry practices from the European Commission
and in May 2004 the Company received a notice of a formal
inquiry into alleged DRAM industry competition law violations
from the Canadian Competition Bureau. The Company is cooperating
with the European Commission and the Canadian Competition Bureau
in their inquiries.
An adverse final resolution of the matters described above could
result in significant financial liability to, and other adverse
effects upon, the Company which would have a material adverse
effect on Infineons business, results of operations and
financial condition. Irrespective of the validity or the
successful assertion of the above-referenced claims, Infineon
could incur significant costs with respect to defending against
or settling such claims, which could have a material adverse
effect on Infineons results of operations, financial
condition and cash flow.
Purported
class action lawsuits have been filed against Infineon alleging
securities fraud.
Following the Companys announcement in September 2004 of
its agreement to plead guilty in connection with the DOJs
antitrust investigation and to pay a fine of $160 million,
several purported securities class action lawsuits have been
brought against the Company in U.S. district courts. The
lawsuits were consolidated into one complaint that is pending at
the U.S. District Court for the Northern District of
California. Plaintiffs allege violations of the
U.S. securities laws and assert among other things that the
Company made materially false and misleading public statements
about its historical and projected financial results as well as
competitive position and manipulated the price of its
securities, thereby injuring its shareholders. Although the
Company is defending against these suits vigorously, a
significant settlement or negative outcome at trial could have a
material adverse effect on Infineons financial results.
Infineon is
the subject of an investigation by the European Commission in
connection with alleged violations of competition laws in the
Chip Card & Security segment.
In October 2008, the Company learned that the European
Commission had commenced an investigation involving the
Companys Chip Card & Security segment for
alleged violations of competition laws. This investigation is in
the very early stages. The Company is assessing this situation
and will continue to monitor the investigation carefully. If the
European Commission were to find that the Companys Chip
Card & Security segment violated European Union
competition laws, the fines and penalties that would likely be
imposed on the Company could be substantial and would be
expected to have a material adverse effect on Infineons
business, operations and financial condition.
62
Infineon might
be faced with product liability or warranty
claims.
Despite Infineons current efforts, defects may occur in
Infineons products. The occurrence of defects,
particularly in consumer areas and areas in which personal
injury could result, such as Infineons automotive
division, could give rise to warranty claims or to liability for
damages caused by such defects. Infineon could also incur
consequential damages and experience limited acceptance of
Infineons products in the market. In addition, customers
have from time to time notified Infineon of potential
contractual warranty claims in respect of products that Infineon
supplied, and are likely to do so in the future. These matters
could have a material adverse effect on Infineons business
and financial condition.
Risks Related to
the New Shares and Risks Related to the Offering
The Backstop
Investor may influence Infineons business activities and
may be in a position to control the outcome of certain matters
submitted to the Companys shareholders.
The Backstop Investor has agreed to acquire the Investment
Shares at the Subscription Price, but not more than the Maximum
Investment Amount, representing 30 percent minus one share
in the Companys share capital and voting rights post
execution of the Offering, subject to the terms and conditions
of the investment agreement entered into between the Company and
the Backstop Investor. Based on the historical numbers of votes
present at the Companys general meetings during 2006
through 2009, a shareholding interest of 30 percent minus
one share in the Companys share capital and voting rights
may provide the Backstop Investor with a blocking minority with
respect to important decisions of the Company, that is, those
requiring a qualified majority. Such decisions include, but are
not limited to, certain corporate actions (such as capital
increases excluding shareholders subscription rights) and
certain reorganization measures. Moreover, this interest may
provide the Backstop Investor, either alone or in cooperation
with other major shareholders, with a majority of those votes
present at the Companys general meeting. In that case, the
Backstop Investor would be in a position to have resolutions
passed by a simple majority. This would enable the Backstop
Investor to exert considerable influence in the Companys
general meeting and therefore also on decisions submitted for
the vote of the general meeting (for example, regarding the
composition of the Supervisory Board or the amount of dividends).
Through a blocking minority or any majority presence, the
Backstop Investor may also be able to exert influence on the
corporate policies of Infineon Technologies AG and such
influence could conflict with the Companys interests
and/or those
of the Companys other shareholders.
Sales of a
large volume of shares in the Company by major shareholders
could cause significant downward pressure on the Companys
share price.
The price of the Companys shares could decline
significantly if one or more of the Companys major
shareholders, including Dodge & Cox International
Stock Fund, Merrill Lynch International, Capital Group
International Inc., Templeton Investment Counsel LLC, FMR LLC,
Platinum International Fund, Odey Asset Management LLP, Platinum
Investment Management Limited, Brandes Investment Partners L.P.,
and the Backstop Investor or other holders of a significant
percentage of the Companys shares were to sell a large
volume of their shares. Provided that the Backstop Investor
acquires a stake of at least 15 percent of the shares and
the voting rights in the Company, the Backstop Investor may
become a major shareholder and undertakes not to sell, transfer,
pledge, encumber or otherwise dispose of (verfügen
über) (including the granting of any option over or the
creation of any form of trust relationship in respect of) any
Investment Shares, not to enter into any agreement or
transaction in respect of any voting rights or other rights
attached to Investment Shares, not to enter into any transaction
(including derivative transactions) and not to carry out any
other action that would be the economic equivalent of any of the
above for a period of 12 months following the date of
acquisition of the Investment Shares, without the consent of the
Companys management board (the Backstop Investor
Lock-up).
This undertaking does not apply to the sale
and/or
transfer of Investment Shares (i) to an affiliated company
of the Backstop Investor pursuant to sections 15 et seq. of
the German Stock Corporation Act, (ii) of up to
10 percent of the Investment Shares to co-investors until
October 31, 2009, (iii) in connection with a mandatory
public takeover offer (Pflichtangebot) of a third party
under the German Act on the Acquisition of Securities and on
Takeovers (WpÜG), (iv) in connection with a
voluntary public takeover offer of a third party under the
German Act on the Acquisition of Securities and on Takeovers,
(v) in connection with a merger or other business
combination of the Company with a third party, (vi) in
connection with a share buy-back by the Company, and
(vii) in such quantity to be able to self-fund (net of
transaction fees and expenses) the issuance price resulting from
the exercise of subscription rights in connection with a rights
offering for shares by the
63
Company. The Backstop Investor will consult with the management
board of the Company before transferring any Investment Shares
in connection with any public takeover offer.
However, the Backstop Investors obligation with regard to
the Backstop Investor
Lock-up will
automatically terminate if during the period of 12 months
following the date of acquisition of the Investment Shares one
of the following occurs: (i) at any time, a person other
than a person proposed by the Backstop Investor becomes the
chairman of the Supervisory Board, or (ii) Mr. Gernot
Löhr is not appointed as member of the Supervisory Board by
the competent court within 10 business days after the date on
which such filing had to be made, or (iii) at any time,
less than two persons proposed by the Backstop Investor are
members of the Supervisory Board, provided that in each case,
the situation has not been remedied within 30 days after
the later of the occurrence of the relevant event or receipt by
the Company from the Backstop Investor of a nomination of
alternative eligible Investors nominee(s). The Backstop
Investors obligation with regard to the Backstop Investor
Lock-up will
further automatically terminate if any of the following occurs:
(i) the reduction of the maximum number of Supervisory
Board members from sixteen to twelve persons has not become
effective by the date of the next ordinary shareholders
meeting relating to the
2008/2009
fiscal year in 2010; or (ii) not all governmental or
regulatory clearances which are required for an acquisition by
the Investor of the Maximum Investment Amount have been granted
by October 1, 2009. There is no assurance that the major
shareholders will continue to hold their shares in the Company.
Moreover, a decline in the price of the Companys shares
resulting from sales by one or more major shareholders could
make it more difficult for the Company to issue new shares at a
time and price the Companys management board (the
Management Board) deems reasonable.
The
Companys share price is subject to risks associated with
market-price fluctuations.
Regardless of a potential sale of shares by major shareholders
of the Company, the price of the Companys shares could
vary considerably, especially because of fluctuations in actual
or forecast results of operations, changes in profit forecasts
or the non-fulfillment of securities analysts profit
expectations, changes in general economic conditions, or other
factors. The general volatility of share prices, which has
increased considerably over the course of the worsening credit
crisis in the financial market in 2008 and 2009, could also put
pressure on the price of the Companys shares without this
being directly related to Infineons business activities,
cash flow, financial condition, results of operations, or
business outlook. Furthermore, the possibility exists that hedge
funds having short-term investment goals have already acquired,
or will acquire, large blocks of shares, which would enable such
funds to deliberately affect the Companys share price.
The
Companys share price is subject to risks relating to
securities transactions engaged by the Backstop Investor and/or
its affiliates.
The Backstop Investor may from time to
time purchase or sell shares, options,
subscription rights or enter into and withdraw from various
derivative transactions with respect to the shares of the
Company, provided that the Backstop Investor may not, until the
end of the Subscription Period, buy shares of the Company or
other instruments that lead to an attribution of voting rights
pursuant to the rules of the German Securities Trading Act. In
addition, after expiry of the Subscription Period until the
settlement of the Investment Shares, if any, the Backstop
Investor may not establish a participation in the equity capital
or voting rights of the Company if such acquisition, together
with the Investment Shares finally subscribed for by the
Investor, would, pursuant to the rules of the German Securities
Trading Act, result in the Investors participation
exceeding the Maximum Investment Amount. Any purchase or sale by
the Backstop Investor and/or its affiliates could have an
increasing or decreasing effect on the value of any such rights
or the shares before, during or after the Subscription Period.
The
investments of shareholders who fail to participate in this
Offering may be diluted considerably.
Subscription Rights that have not been exercised by August 3,
2009 will become void and worthless. If a shareholder fails to
exercise his Subscription Rights during the Subscription Period,
his proportional investment in the Company may decrease, with
the exact amount of such dilution depending on the total amount
of subscribed New Shares. If a shareholder fails to sell any
unexercised Subscription Rights during the Rights Trading
Period, the shareholder will receive no economic value for the
unexercised and unsold Subscription Rights.
64
Trading in
Subscription Rights is expected to not develop and the value of
Subscription Rights may decline.
Infineon and the Underwriters will not initiate trading of the
Subscription Rights (ISIN DE000A0Z2227 / German
Securities Code (WKN) A0Z222) on the regulated market of the
Frankfurt Stock Exchange or any other German stock exchange.
Accordingly, Subscription Rights cannot be purchased or sold on
the regulated market of such a stock exchange. However,
Subscription Rights are transferable and may be traded over the
counter. There is no guarantee that shareholders will be able to
trade in Subscription Rights. As a consequence, there can be no
assurance that shareholders will be able to realize the inherent
value of their Subscription Rights by selling their Subscription
Rights and, thus, might suffer a significant loss upon
expiration of the Subscription Period.
Furthermore, the value of the Subscription Rights depends
largely on the price of the Companys shares. Therefore, a
significant decline in the price of the Companys shares
could also adversely affect the value of the Subscription Rights.
The
Underwriters may withdraw from the Underwriting
Agreement.
Pursuant to the Underwriting Agreement, the Underwriters have
agreed to the following: (i) to offer the New Shares to the
shareholders of Infineon, (ii) to subscribe for the New
Shares and (iii) to allot to the shareholders the shares
subscribed in accordance with the exercise of their Subscription
Rights after the registration of the capital increase in the
Commercial Register. The Underwriters plan to subscribe for the
New Shares pursuant to the Underwriting Agreement. The
Underwriters can, under certain conditions, terminate the
Underwriting Agreement until such time as the New Shares have
been delivered. If the Underwriting Agreement is terminated, the
Offering expires and the Subscription Rights become void or
worthless. Even investors who have acquired Subscription Rights
in the secondary market will then suffer a corresponding loss
since transactions involving Subscription Rights in connection
with a termination of the Offering will not be reversed.
Future
corporate actions could result in a further material dilution of
shareholders investments in the Company.
To finance the Companys business activities and growth, as
well as its continuing and future obligations, the Company may
require additional capital in the future. The issuance of
additional new shares or convertible notes or notes with
warrants would cause further dilution of the proportionate
holdings of the Companys existing shareholders. Moreover,
the acquisition of other enterprises or equity investments in
companies in exchange for new shares to be issued by the Company
and the exercise of stock options by the Companys
employees could result in further dilution.
65
GENERAL
INFORMATION
Responsibility
for the Contents of this Prospectus
Infineon Technologies AG (Infineon Technologies
AG or the Company and, together
with its subsidiaries, the Group or
Infineon), with its registered office in
Neubiberg, Germany, Credit Suisse, Deutsche Bank, Merrill Lynch,
and Citi, assume responsibility for the content of this
Prospectus, pursuant to Section 5(4) of the German
Securities Prospectus Act (Wertpapierprospektgesetz), and
declare that the information contained in this Prospectus is, to
their knowledge, in accordance with the facts and contains no
omission likely to affect its import, and that they have taken
all reasonable care to ensure that the information contained in
this Prospectus is, to their knowledge, in accordance with the
facts and contains no omission likely to affect its import.
Notwithstanding Section 16 of the German Securities
Prospectus Act, neither the Company, nor the Underwriters, are
required by law to update this Prospectus.
Documents
Available for Inspection
For as long as this Prospectus is valid, the following
documents, or copies thereof, may be inspected during regular
business hours at Infineons offices at Am Campeon 1-12,
85579 Neubiberg, Germany:
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Infineons articles of association (Articles of
Association), as amended to date;
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the unaudited condensed consolidated financial statements
(prepared in accordance with International Financial Reporting
Standards (IFRS)) of Infineon Technologies AG
as of and for the three and six months ended March 31, 2009
(with comparative figures as of and for the six months ended
March 31, 2008);
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the audited consolidated financial statements (prepared in
accordance with IFRS) of Infineon Technologies AG as of and for
the fiscal year ended September 30, 2008 (with comparative
figures as of and for the fiscal year ended September 30,
2007);
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the audited consolidated financial statements (prepared in
accordance with generally accepted accounting principles in the
United States (U.S. GAAP)) of Infineon
Technologies AG as of and for the fiscal year ended
September 30, 2007 (with comparative figures as of and for
the fiscal years ended September 30, 2005 and 2006);
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the audited consolidated financial statements (prepared in
accordance with U.S. GAAP) of Infineon Technologies AG as
of and for the fiscal year ended September 30, 2006 (with
comparative figures as of and for the fiscal years ended
September 30, 2004 and 2005); and
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the audited stand-alone financial statements (prepared in
accordance with HGB) of Infineon Technologies AG as of and for
the fiscal year ended September 30, 2008 (with comparative
figures as of and for the fiscal year ended September 30,
2007).
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The aforementioned documents will also be available in
electronic form for 12 months after publication of the
Prospectus at www.infineon.com.
Future annual reports and interim reports of the Company will
also be available at the Company as well as in electronic form
on the aforementioned website.
Subject Matter of
this Prospectus
For purposes of the Offering, the subject matter of this
Prospectus are up to 337,000,000 new ordinary registered shares
with no par value, each representing a notional amount of
2.00 of the Companys issued share capital, with full
dividend entitlement for the full fiscal year ending
September 30, 2009, from the capital increase against cash
contributions from authorized capital with subscription rights
resolved by the Management Board on July 9 with the
approval of the Supervisory Board on July 9 (the
New Shares).
For purposes of the admission to the regulated market segment
(regulierter Markt) of the Frankfurt Stock Exchange and
to the sub-segment of the regulated market segment with further
post-admission obligations of the Frankfurt Stock Exchange
(Prime Standard), the subject matter of this Prospectus
are the New Shares and 74,942,528 ordinary registered shares
with no par value, each representing a notional amount of
2.00 of the Companys issued share capital, with full
dividend entitlement as of the beginning of the fiscal year in
which the conversion right is exercised, from the conditional
capital to service the
66
conversion rights of the 195,600,000 7.5% guaranteed
subordinated convertible note due 2014 issued by Infineon
Technologies Holding B.V. (the New Convertible Note due
2014) (the Conversion Shares, and,
together with the New Shares, the Admission
Shares). The Admission Shares are subject to German
law.
Presentation of
Financial Information
For periods beginning October 1, 2008, Infineon has
prepared its financial statements in accordance with IFRS issued
by the International Accounting Standards Board
(IASB), as adopted by the European Union
(EU) and additionally with the requirements
set forth in Section 315a(1) of the German Commercial Code
(Handelsgesetzbuch). In connection with Infineons
transition to IFRS, Infineon has prepared financial statements
for the fiscal year ended September 30, 2008 (with
comparative figures as of and for the fiscal year ended
September 30, 2007) in accordance with IFRS.
For periods prior to October 1, 2008, Infineon prepared its
financial statements in accordance with U.S. GAAP. In
addition to the IFRS consolidated financial statements for the
fiscal year ended September 30, 2008, Infineon issued
consolidated financial statements in accordance with
U.S. GAAP as of and for the fiscal year ended as of
September 30, 2008 since U.S. GAAP were considered the
primary accounting principles for that period. The consolidated
financial statements in accordance with U.S. GAAP for the
fiscal year ended September 30, 2008, have not been
included in this Prospectus. The consolidated financial
statements in accordance with U.S. GAAP for the fiscal year
ended September 30, 2007 (with comparative figures as of
and for the fiscal years ended September 30, 2005 and
2006) appear in this Prospectus beginning on
page F-88.
The consolidated financial statements in accordance with
U.S. GAAP for the fiscal year ended September 30, 2006
(with comparative figures as of and for the fiscal years ended
September 30, 2004 and 2005) appear in this Prospectus
beginning on
page F-161.
Beginning with the first quarter of the 2009 fiscal year, IFRS
serves as the Companys primary accounting principles.
Commencing in the 2009 fiscal year, the Company prepares its
consolidated financial statements exclusively on the basis of
IFRS. Note 4 to Infineons consolidated financial
statements for the fiscal year ended September 30, 2008
prepared in accordance with IFRS, describes the decisions made
for the retrospective application of IFRS (reproduced starting
on
page F-4);
it also explains the impact of the adjustments made in changing
over the accounting from U.S. GAAP to IFRS, the
reconciliation of Infineons equity as of October 1,
2006, September 30, 2007 and September 30, 2008,
respectively, and the conversion of Infineons net loss for
the fiscal years ended September 30, 2007 and 2008 from
U.S. GAAP to IFRS.
Information on
Infineons Operating Segments
Effective October 1, 2008, Infineon reorganized its main
business into five operating segments, Automotive,
Industrial & Multimarket, Chip Card &
Security, Wireless Solutions and Wireline Communications. On
July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, and such
sale is expected to close in the fall of 2009. Beginning
October 1, 2008, the Management Board uses the financial
measure Segment Result to assess the operating performance of
Infineons reportable segments and as a basis for
allocating resources among the segments. In the
Selected Consolidated Financial and Operating
Information prepared in accordance with IFRS and
Managements Discussion and Analysis of Financial
Condition and Results of Operations sections of this
Prospectus, the data relating to the segments results of
operations for the fiscal years ended September 30, 2007
and 2008, prepared in accordance with IFRS, have been
reclassified to be consistent with the revised reporting
structure and presentation.
In Infineons consolidated financial statements for the
2008 fiscal year prepared in accordance with IFRS, the results
of Qimonda were reported as discontinued operations in
Infineons consolidated statements of operations and as of
September 30, 2008, the assets and liabilities of Qimonda
were classified as held for disposal in the consolidated balance
sheet.
Effective as of May 1, 2006 through September 30,
2008, Infineon was organized in three major operating segments,
two of which were application focused: Automotive,
Industrial & Multimarket and Communication Solutions;
and one of which was product focused: Qimonda. These operating
segments are reflected in Infineons consolidated financial
statements for the fiscal year ended September 30, 2006 and
2007, prepared in accordance with U.S. GAAP.
67
Forward-Looking
Statements
This Prospectus contains certain forward-looking statements. A
forward-looking statement is any statement that does not relate
to historical facts and events. This applies, in particular, to
statements in this Prospectus containing information on future
earning capacity, plans and expectations regarding
Infineons business and management, Infineons growth
and profitability, and general economic and regulatory
conditions and other factors that affect it.
Forward-looking statements in this Prospectus are based on
current estimates and assumptions that Infineon makes to the
best of the Companys present knowledge. These
forward-looking statements are subject to risks, uncertainties
and other factors which could cause actual results, including
Infineons financial condition and results of operations,
to differ materially from and be worse than the results that
Infineon has expressly or implicitly assumed or described in
these forward-looking statements. Infineons business is
also subject to a number of risks and uncertainties that could
cause a forward-looking statement, estimate or prediction in
this Prospectus to become inaccurate. Accordingly, investors are
strongly advised to read the following sections of this
Prospectus: Summary, Risk
Factors, Managements Discussion and
Analysis of Financial Condition and Results of
Operations, Business and
Recent Developments and Outlook. These
sections include more detailed descriptions of factors that
might have an impact on Infineons business and the markets
in which Infineon operates.
In light of these risks, uncertainties and assumptions, future
events described in this Prospectus may not occur, and
forward-looking estimates and forecasts derived from third-party
studies that have been reproduced in this Prospectus may prove
to be inaccurate. See Presentation of
Sources of Market Data; Accounting Regulations; Additional
Financial and Numerical Data. In addition, neither the
Company nor the Underwriters assume any obligation, except as
required by law, to update any forward-looking statements or to
conform these forward-looking statements to actual events or
developments.
Currency
Presentation
The amounts in this Prospectus in EUR,
or euro refer to the legal
currency of Germany since January 1, 1999.
The amounts in this Prospectus in $,
U.S. dollars or USD refer to the
legal currency of the United States of America, in
JPY or Japanese yen refer to the legal
currency of Japan, in CNY refer to the legal
currency of Peoples Republic of China, and in
MYR refer to the legal currency of Malaysia.
The following table contains information regarding the exchange
rates between the U.S. dollar and the euro, between the
Japanese yen and the euro, between CNY and the euro and between
MYR and the euro for the periods and dates listed. These
exchange rates are based on the public exchange rates fixed
daily by the European Central Bank as of the relevant period end
dates and the average exchange rates calculated for the relevant
periods.
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October 1, 2008
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October 1, 2007
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October 1, 2006
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October 1, 2005
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to March 31,
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to September 30,
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to September 30,
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to September 30,
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Exchange Rate
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2009
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2008
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2007
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2006
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Period end ($ to EUR)
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1.3308
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1.4303
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1.4179
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1.2660
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Average ($ to EUR)
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1.3096
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1.5037
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1.3350
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1.2325
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Period end (JPY to EUR)
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127.6500
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153.2000
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159.8200
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148.9900
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Average (JPY to EUR)
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123.3477
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161.6716
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157.7185
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142.9495
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Period end (CNY to EUR)
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8.9210
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9.8252
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10.4533
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10.0971
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Average (CNY to EUR)
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8.9556
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10.6653
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10.2619
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9.8750
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Period end (MYR to EUR)
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4.7949
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4.9461
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4.8249
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|
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4.6724
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Average (MYR to EUR)
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4.7006
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4.9401
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|
|
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4.6607
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4.5567
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Presentation of
Sources of Market Data; Accounting Regulations; Additional
Financial and Numerical Data
This Prospectus contains or refers to numerical data, market
data, analyst reports, and other publicly available information
about Infineons industry and estimates that Infineon has
made based largely on
68
published market data or on numerical data derived from publicly
available sources including data prepared or reported by Gartner
Inc. and its unit Dataquest Inc. (together Gartner
Dataquest), Frost & Sullivan, IMS Research,
Strategy Analytics, Inc. (Strategy
Analytics), and World Semiconductor Trade Statistics
(WSTS). To the extent Infineons
estimates are based on information that is not available from
publicly available sources, Infineon has prepared these
estimates with due care and has taken into consideration the
relevant information in a neutral manner. Any information in
this Prospectus that Infineon has derived from publicly
available sources or that it has otherwise derived from
third-party sources has been accurately reproduced with
reference to the respective source. To the best of
Infineons knowledge, and to the extent that Infineon was
able to determine from publicly available sources or information
otherwise obtained from third parties, no facts have been
omitted that would render the statements in this Prospectus
false or misleading. However, investors should be aware that
market studies are often based on information or assumptions
that may not be accurate or appropriate, and their methodology
is often inherently predictive and speculative.
Investors should also be aware that Infineon has not verified
numerical data, market data, and other information from publicly
available sources and assumes no liability for the correctness
of numerical data, market data, and other information from
publicly available sources.
Unless otherwise indicated, the financial information in this
Prospectus has been prepared in accordance with IFRS that are
applicable as of the relevant reporting date of the respective
annual or interim financial statements.
Certain numerical data, financial information and market data in
this Prospectus are subject to rounding adjustments that were
carried out according to established commercial standards. As a
result, the aggregate amounts in this Prospectus may not
correspond in all cases to the amounts contained in the
underlying sources.
69
REASONS FOR THE
OFFERING AND USE OF PROCEEDS
The entire semiconductor industry, including Infineon, has been
adversely affected by the global economic downturn and financial
crisis. Infineons revenues declined from
1,153 million in the fourth quarter of the 2008
fiscal year to 845 million in the third quarter of
the 2009 fiscal year. Infineons gross cash position
decreased during the first nine months of the 2009 fiscal year
by 12 million, from 883 million as of
September 30, 2008 to 871 million as of
June 30, 2009. Included in this decline in the gross cash
position were:
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approximately 106 million of cash outflows in
connection with Infineons IFX10+ cost reduction program,
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scheduled debt repayments of approximately
101 million, which included 41 million for
Infineons syndicated loan facility, and
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voluntary repurchases of an aggregate nominal amount of
246 million of guaranteed subordinated convertible
notes due 2010 that were issued by the Companys subsidiary
Infineon Technologies Holding B.V. (Convertible Notes
due 2010) and guaranteed subordinated exchangeable
notes due 2010 that were issued by the Companys subsidiary
Infineon Technologies Investment B.V. (Exchangeable
Notes due 2010) for an aggregate of
161 million in cash.
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These outflows were partly offset by a reimbursement of
112 million by the Deposit Protection Fund of the
German Private Commercial Banks (Einlagensicherungsfonds des
Bundesverbandes deutscher Banken e.V.) in relation to the
insolvency of Lehman Brothers Bankhaus AG and gross proceeds of
182 million from the issuance of the New Convertible
Note due 2014. Despite the very significant revenue decline,
Infineon generated sufficient free cash flow from operations to
fund the majority of the cash outflows relating to its IFX 10+
cost reduction program.
Infineons management believes that it should seek to
maintain a gross cash position of at least 250 to
300 million to operate the Companys business
effectively. As a result, Infineon has acted vigorously to
reduce operating expenses, conserve cash and improve its balance
sheet. The steps that Infineon has taken to this end include,
among other things, the IFX10+ cost reduction program, debt
repurchases, the issuance of the New Convertible Note due 2014
and the divestiture of the Wireline Communications business.
Through its IFX 10+ cost reduction program, the Company has
achieved significant cost reductions. The Companys
operating expenses for the three months ended June 30, 2009
decreased by 88 million when compared to the three
months ended September 30, 2008. Company management
believes that these savings are mainly due to its IFX 10+
cost reduction program. In aggregate, Infineon is targeting
total cost reductions from this program of
600 million for the 2009 fiscal year when compared to
Infineons total costs in the 2008 fiscal year, some of
which are temporary in nature.
In addition, on July 7, 2009, the Company entered into an
asset purchase agreement with an entity affiliated with Golden
Gate Private Equity, Inc. to sell its Wireline Communications
business for a cash consideration of 250 million. The
majority of the purchase price is payable at closing, which is
expected to occur in the fall of 2009, with
20 million of the purchase price being payable
9 months after the closing date. Infineon is selling its
Wireline Communications business in order to focus on the
further development of its main business, its strategy and
strong position in the key areas of energy efficiency, security
and communications, while further improving the Companys
balance sheet and strengthening its liquidity position. See
Business Acquisitions, Dispositions and
Discontinued Operations Sale of Wireline
Communications business.
Infineons management believes that the positive impact of
its cost reduction and cash preservation measures will enable it
to finance its ordinary business operations out of cash flows
from continuing operations, despite the sharp decline in revenue
levels. However, its ability to refinance certain liabilities
while maintaining its target level of liquidity is a concern.
The current outstanding nominal amount as of June 30, 2009
of 522 million of Convertible Notes due 2010 will
become due for repayment on June 5, 2010, and the current
nominal amount as of June 30, 2009 of 48 million
of Exchangeable Notes due 2010 will become due for repayment on
August 31, 2010. Also, Infineon is expecting other
scheduled debt repayments of an aggregate of approximately
110 million through the end of September 2010,
including its multi-currency revolving facility. Infineon will
also incur further cash outflows in connection with its IFX10+
cost reduction program, and may incur additional expenses in
connection with the insolvency of Qimonda and the resolution of
its ongoing negotiations regarding ALTIS, the manufacturing
joint venture between Infineon and IBM in France. Infineon is
taking a number of measures, including the Offering, its
70
cost reduction program and the sale of the Wireline
Communications business, in order to meet these obligations and
maintain the desired level of liquidity.
Infineons management believes that prior to the
announcement of the Offering on July 10, 2009, the market
perception factored in a degree of uncertainty as to the
Companys liquidity position, its ability to repay the
Convertible Notes due 2010 and the Exchangeable Notes due 2010
as they come due and its contingent liabilities relating to
Qimonda and ALTIS. Infineons management also believes that
the successful completion of the Offering will further improve
the capital markets confidence in Infineons ability
to repay these notes and satisfy these contingent liabilities
while maintaining a sufficient amount of liquidity, and will
help market participants perceive Infineon as well placed to
achieve sustainable and, ultimately improved, profitability.
The net proceeds of the Offering are expected to be up to
approximately 700 million, assuming the maximum of
337 million New Shares are subscribed for and deducting
estimated fees and expenses relating to the Offering of
approximately 25 million. At a minimum, the net
proceeds of the Offering are expected to be approximately
335 million assuming holders of Subscription Rights
exercise 52 percent (which represents the minimum number of
Subscription Rights which would need to be exercised so that the
Backstop Investor would have no obligation to purchase New
Shares) of such Subscription Rights, the Backstop Investor does
not purchase any New Shares and the fees and expenses relating
to the Offering amount to approximately 40 million.
Infineon believes that the successful completion of the
Offering, resulting in net proceeds of between 335 to
700 million, will strengthen the Companys
capital structure. In particular, assuming Infineon is able to
place all of the 337 million New Shares, it plans to use
approximately 570 million to repay the Convertible
Notes due 2010 and the Exchangeable Notes due 2010, of which as
of June 30, 2009, 570 million were outstanding.
Infineon intends to use any net proceeds, together with
available cash reserves and the proceeds of the sale of the
Wireline Communications business, that exceed the amount needed
to repay these notes, to strengthen its liquidity position,
satisfy any contingent liabilities, and repay other indebtedness
as well as to continue to invest in a very innovation driven
industry and to pursue strategic opportunities in an
increasingly consolidating industry.
71
THE
OFFERING
General
The Offering relates to up to 337,000,000 new registered no par
value shares of the Company. Up to 112,000,000 New Shares
originate from the statutory authorized capital as stipulated in
Section 4(2) of the Articles of Association (the
Authorized Capital 2007). The establishment
of the Authorized Capital 2007 was resolved upon by the general
shareholders meeting of the Company on February 15,
2007 and registered in the commercial register of the Local
Court in Munich (the Commercial Register) on
March 28, 2007, authorizing the Management Board, with the
consent of the Supervisory Board, to increase the share capital
until February 14, 2012 in one or more steps, through the
issue of new registered no par value shares by up to
224,000,000 against contributions in cash or in kind. Up
to 225,000,000 New Shares originate from the statutory
authorized capital as stipulated in Section 4(10) of the
Articles of Association (the Authorized Capital
2009/I), authorizing the Management Board, with the
consent of the Supervisory Board, to increase the share capital
until February 11, 2014 in one or more steps, through the
issue of new registered no par value shares by up to
450,000,000 against contributions in cash or in kind. The
Authorized Capital 2009/I was initially resolved upon by the
general shareholders meeting of the Company on
February 12, 2009 as Authorized Capital 2009/II to be
introduced as Section 4(11) of the Articles of Association.
After the general shareholders meeting of the Company on
February 12, 2009 rejected, inter alia, the establishment
of the initial authorized capital 2009/I, the executive
committee of the Supervisory Board resolved to amend the
Articles of Association pursuant to Section 10(4) of the
Articles of Association to reflect the rejection of the former
authorized capital 2009/I by the Companys general
shareholders meeting by renumbering Authorized Capital
2009/II to the Authorized Capital 2009/I. The resolution
regarding the establishment of the Authorized Capital 2009/I, as
amended, was registered in the Commercial Register on
April 28, 2009.
On July 9, 2009 the Management Board resolved to increase
the share capital by way of recourse to the authorized capital
by issuing up to 337,000,000 New Shares, against contributions
in cash. Further, the Management Board resolved to set the
subscription price per New Share at 2.15 (the
Subscription Price). The Supervisory Board
approved the Management Boards resolution on July 9,
2009. The New Shares, with the exception of a fractional amount
of up to 7,562,592, amounting to up to 3,781,296 New
Shares, are to be offered to the existing shareholders for
subscription by way of indirect subscription rights through
public offerings in Germany and Luxembourg at a ratio of 9:4
(that is, 9 Existing Shares will have the right to subscribe to
4 New Shares) (the Rights Offering). Pursuant
to Section 4(2)(a) and (10) of the Articles of
Association, the shareholders subscription rights were
excluded for the fractional amount of up to 7,562,592,
which amounts to up to 3,781,296 New Shares.
Any New Shares that are not subscribed for in the Rights
Offering (the Investment Shares) and the
Fractional Amount will be offered to the Backstop Investor by
way of a private placement for acquisition or subscription at
the Subscription Price (the Investment Share
Placement and, together with the Rights Offering, the
Offering). The Backstop Investor has agreed
to acquire from the Underwriters, or subscribe for, all New
Shares not subscribed by the Companys existing
shareholders subject to the terms and conditions of the Backstop
Arrangement (See The Offering Backstop
Arrangement). The completion of the capital increase
has not yet been registered in the Commercial Register. The
Company expects the implementation of the capital increase
relating to the New Shares subscribed for in the Rights Offering
to be registered on August 6, 2009. In the event any New Shares
not subscribed for by the current shareholders of the Company
(including the Fractional Amount) are allotted to the Backstop
Investor under the Backstop Arrangement, the registration of the
capital increase relating thereto is anticipated without undue
delay following applicable merger clearances and/or clearance by
the German Ministry of Economy and Technology
(Bundesministerium für Wirtschaft und Technologie)
pursuant to the German Foreign Trade Act
(Außenwirtschaftsgesetz). After the registration of
the capital increase in the amount of up to 674,000,000 in
the Commercial Register, the Companys share capital will
amount to up to 2,173,484,170.
The Rights Offering is based on an Underwriting Agreement
between the Company and Credit Suisse, Deutsche Bank, Merrill
Lynch, and Citi which was entered into on July 16, 2009. The
Rights Offering is subject to the condition, among others, that
the implementation of the capital increase be registered in the
Commercial Register. The Rights Offering may be cancelled under
certain circumstances. See The Rights
Offering.
72
Timetable
Projected timetable for the Rights Offering:
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July 16, 2009
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Approval of the Prospectus by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) ( the BaFin) and notification to other relevant European securities regulatory agencies
Publication of the Prospectus on the Companys website at www.infineon.com
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July 17, 2009
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|
Publication of the Rights Offering, including the Subscription Price, in the electronic version of the German Federal Gazette (elektronischer Bundesanzeiger)
Publication of the Rights Offering in the Börsen-Zeitung
Listing application at the Frankfurt Stock Exchange
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July 20, 2009
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Booking (Einbuchung) of Subscription Rights as of July 17, 2009 (evening) into the shareholders securities deposit account
Commencement of the Subscription Period
Trading of Companys shares ex rights
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July 29, 2009
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Approval of supplement no. 1 to the Prospectus, including the Companys quarterly report for the three and nine months period ended June 30, 2009, by BaFin and notification of supplement no. 1 to other relevant European securities regulatory agencies
Publication of supplement no. 1 to the Prospectus on the Companys website at www.infineon.com
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August 3, 2009
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End of Subscription Period; deadline for payment of the
Subscription Price
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August 4, 2009
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|
Placement of Investment Shares with Backstop Investor, if any
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August 6, 2009
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|
Registration of the capital increase relating to the New Shares
subscribed for under the Rights Offering in the Commercial
Register
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Decision on admission by the Frankfurt Stock Exchange and
publication of the decision on admission on the Frankfurt Stock
Exchanges Website at
http://www.deutsche-boerse.com
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August 7, 2009
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Inclusion of the New Shares subscribed for under the Rights Offering in the existing stock quotation of the Companys shares
Delivery of the New Shares subscribed for under the Rights Offering by book-entry via the collective securities depositary
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The Prospectus will be published on the Companys website
at
http://www.infineon.com
starting on July 16, 2009 and the supplemented Prospectus
starting on July 29, 2009. In accordance with Section 16(3)
of the German Securities Prospectus Act
(Wertpapierprospektgesetz), investors who have made a
declaration of intention regarding the acquisition or the
subscription of securities prior to the publication of the
supplemented Prospectus may revoke this within two days after
publication of the supplement, provided that settlement has not
yet occurred. Printed copies of the Prospectus and the
supplemented Prospectus are also available free of charge during
regular business hours in the Companys offices at Am
Campeon 1-12, 85579 Neubiberg, Germany, at the offices of Credit
Suisse Securities (Europe) Limited at Junghofstrasse 16, 60311
Frankfurt am Main, Germany, Deutsche Bank AG at Große
Gallusstr.
10-14, 60311
Frankfurt am Main, Germany, Merrill Lynch International at Neue
Mainzer Strasse 52, 60311 Frankfurt am Main, Germany, and
Citigroup Global Markets Limited at Reuterweg 16, 60323
Frankfurt am Main, Germany and at the paying and registration
agent listed in this Prospectus. See Information on the
Offered New Shares Announcements, Paying and
Registration Agent.
73
The Rights
Offering
The following is an
English-language
translation of the Rights Offering. The German language Rights
Offering is expected to be published on July 17, 2009 in
the electronic version of the German Federal Gazette
(elektronischer Bundesanzeiger) and in the
Börsen-Zeitung:
Infineon
Technologies AG
Neubiberg, Germany
(ISIN DE0006231004 / German Securities Code (WKN) 623100)
Rights
Offering
On February 15, 2007, the general shareholders
meeting of Infineon Technologies AG, Neubiberg, Germany (the
Company) resolved on the establishment of an
authorized capital, authorizing the Management Board, with the
consent of the Supervisory Board, to increase the share capital
until February 14, 2012 in one or more steps, through the
issue of new registered no par value shares by up to
224,000,000 against contributions in cash or in kind (the
Authorized Capital 2007, registered in the
commercial register of the Local Court of Munich (the
Commercial Register) as Authorized Capital
2007/I). The resolution regarding the establishment of the
Authorized Capital 2007 was registered in the Commercial
Register on March 28, 2007. On February 12, 2009, the
general shareholders meeting of the Company resolved on
the establishment of an additional authorized capital,
authorizing the Management Board, with the consent of the
Supervisory Board, to increase the share capital until
February 11, 2014 in one or more steps, through the issue
of new registered no par value shares by up to 450,000,000
against contributions in cash
and/or in
kind (the Authorized Capital 2009/I). The
Authorized Capital 2009/I was originally resolved on by the
Companys shareholders meeting as Authorized
Capital 2009/II. After the general shareholders
meeting of the Company on February 12, 2009 rejected, inter
alia, the establishment of the original authorized capital
2009/I, the Executive Committee of the Supervisory Board
resolved to amend the wording of the Companys articles of
association (the Articles of Association)
pursuant to Section 10(4) of the Articles of Association to
reflect the rejection of the original authorized capital 2009/I
by means of renaming the Authorized Capital 2009/II as
Authorized Capital 2009/I. The resolution regarding the
establishment of the Authorized Capital 2009/I, as amended by
resolution of the executive committee of the Supervisory Board
on April 2, 2009 was registered in the Commercial Register
on April 28, 2009.
On July 9, 2009 the Management Board resolved, with
approval of the Supervisory Board, to increase the share capital
of the Company by way of complete recourse to the Authorized
Capital 2007 and the Authorized Capital 2009/I from
1,499,484,170 by up to 674,000,000 to up to
2,173,484,170, by issuing up to 337,000,000 new registered
no par value shares, each representing a notional amount of
2.00 in the share capital, against contributions in cash
(the New Shares). The New Shares are issued
at the minimum issue value of 2.00 per share and carry
full dividend rights for the fiscal year 2008/2009. Pursuant to
Section 4(2)(a) and (10) of the Articles of
Association, the shareholders subscription rights were
excluded for the fractional amount of up to 7,562,592
which amounts to up to 3,781,296 New Shares (the
Fractional Amount).
Credit Suisse Securities (Europe) Limited, London, United
Kingdom (Credit Suisse), Deutsche Bank
Aktiengesellschaft, Frankfurt am Main, Germany
(Deutsche Bank) and Merrill Lynch
International, London, United Kingdom (Merrill
Lynch and together with Credit Suisse and Deutsche
Bank the Joint Bookrunners) and Citigroup
Global Markets Ltd., London, United Kingdom
(Citi) and together with the Joint
Bookrunners, the Underwriters) have agreed,
pursuant to an underwriting agreement dated July 16, 2009
(the Underwriting Agreement), to
(i) offer the New Shares to the shareholders of Infineon
Technologies AG, with the exception of the Fractional Amount,
subject to the conditions stated below under
Termination of Rights Offering, at a ratio of 9:4
by way of indirect subscription rights, (ii) subscribe for
the New Shares for which subscription rights have been exercised
and (iii) allot to the shareholders the shares subscribed
in accordance with the exercise of their subscription rights
after the registration of the consummation of the capital
increase in the Commercial Register.
The New Shares, excluding the Fractional Amount, are being
offered to the shareholders at a ratio of 9:4 at the
Subscription Price of 2.15 per New Share. The registration
of the consummation of the capital increase from the Authorized
Capitals 2007 and 2009/I has not been effected yet. The
consummation of the capital increase relating to the New Shares
subscribed for under the Rights Offering is expected to be
registered in the Commercial Register on August 6, 2009.
74
The subscription rights under the Companys existing
shares, which are all held in collective custody, will be
automatically credited to the depository banks on basis of the
state as of the evening of July 17, 2009 by Clearstream
Banking AG, Neue Börsenstrasse 1, 60487 Frankfurt am Main
(Clearstream).
To avoid exclusion of the exercise of their subscription rights,
we request that our shareholders exercise their subscription
rights in the New Shares during the period
from July 20, 2009 up to and including August 3, 2009
(the Subscription Period) through their
respective depository bank at the German branches of Deutsche
Bank AG as subscription agent during regular banking hours.
Subscription rights that are not exercised in a timely manner
will lapse and become worthless.
In accordance with the subscription ratio of 9 :
4 shareholders can subscribe for 4 New Shares per 9
existing shares of the Company at the Subscription Price of
2.15 per New Share.
Subscription
Price
The subscription price per subscribed New Share amounts to
2.15 (the Subscription Price). The
Subscription Price is payable no later than August 3, 2009.
No Trading of
Subscription Rights on the Regulated Market
Infineon Technologies AG and the Underwriters will not initiate
trading of the subscription rights (ISIN
DE000A0Z2227 / German Securities Code (WKN) A0Z222) on
the regulated market of the Frankfurt Stock Exchange or any
other German stock exchange. Accordingly, subscription rights
cannot be purchased or sold on the regulated market of a stock
exchange. However, subscription rights are transferable. No
compensation will be paid for unexercised subscription rights.
Upon the expiration of the Subscription Period, unexercised
subscription rights will lapse and become worthless. Starting
July 20, 2009, the Companys existing shares (ISIN
DE0006231004/ German Securities Code (WKN) 623100) will be
traded on the regulated market (regulierter Markt) of the
Frankfurt Stock Exchange without subscription rights (ex rights).
Termination of
Rights Offering
The Underwriters reserve the right to terminate the Underwriting
Agreement or extend the completion of the Rights Offering upon
the occurrence of certain circumstances. These circumstances
include, but are not limited to, (i) the Companys
failure to provide certain legal opinions, (ii) amendment,
withdrawal or termination of the Investment Agreement between
the Company and the Backstop Investor (See Backstop
Arrangement), and (iii) the non-occurrence of
other conditions precedent. The Underwriters are further
relieved of their obligations if the consummation of the capital
increase relating to the New Shares subscribed for under the
Rights Offering is not registered in the Commercial Register by
August 6, 2009 and the Underwriters and Infineon
Technologies AG fail to reach an agreement on a later deadline.
In the event of a termination of the Underwriting Agreement
prior to the registration of the consummation of the capital
increase in the Commercial Register, the subscription rights
will lapse and become worthless. Any investors who purchased
Subscription Rights would suffer a loss in this case. To the
extent the Underwriters terminate the Underwriting Agreement
after the consummation of the capital increase is registered in
the Commercial Register, any shareholders who exercised their
subscription rights will be able to purchase the New Shares at
the subscription price.
If the Underwriters terminate the Underwriting Agreement after
the Rights Offering is completed, which they can do even after
delivery and settlement of the subscribed New Shares and
commencement of trading, the termination would apply only to
unsubscribed New Shares.
Form and
Certification of the New Shares
The New Shares will be issued as registered no par value shares
(ISIN DE0006231004 / German Securities Code (WKN)
623100) in accordance with the current Articles of
Association. The New Shares will be evidenced by one or more
global share certificates deposited in collective custody with
Clearstream.
The right of shareholders to receive individual share
certificates for their shares is, to the extent legally
permissible and unless not required under the regulations of a
stock exchange, excluded by Section 4(4) of
75
the Articles of Association. The New Shares bear the same rights
as all other shares of the Company and do not bear any
additional rights or benefits.
Backstop
Arrangement
Admiral Participations (Luxembourg) S.à r.l., (the
Backstop Investor), a subsidiary of a fund
managed by Apollo Global Management LLC. has agreed to acquire
all New Shares (including the Fractional Amount) not subscribed
for by the Companys shareholders (the Investment
Shares) at the Subscription Price, but not more than
the Maximum Investment Amount (as described below), subject to
the Minimum Threshold (as described below) being met (the
Backstop Arrangement). The maximum number of
Investment Shares to be acquired by the Backstop Investor
together with any shares to be acquired by the Backstop Investor
through Subscription Rights purchased by the Backstop Investor,
if any, must not lead to a shareholding that would represent
more than 30 percent minus one share in the Companys
share capital and voting rights post execution of the Offering
(the Maximum Investment Amount). The Backstop
Investor may, but is not required to, acquire Investment Shares
if the number of the Investment Shares available together with
any shares to be acquired by the Backstop Investor through
Subscription Rights purchased by the Backstop Investor, if any,
does not enable the Backstop Investor to establish a
participation in the Companys share capital and voting
rights of at least 15 percent post execution of the
Offering (the Minimum Threshold).
The obligation of the Backstop Investor to acquire any
Investment Shares is subject to certain conditions precedent
being met or waived by the Backstop Investor, including, but not
limited to, applicable merger clearances, clearance by the
German Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz), and the
appointment of one representative of the Backstop Investor,
Mr. Manfred Puffer, by the competent court to the
Supervisory Board, the resignation of Mr. Max Dietrich
Kley, the current chairman of the Supervisory Board, as of
September 30, 2009, the election of Mr. Manfred Puffer
as chairman of the Supervisory Board as of October 1, 2009,
and the nomination of another representative of the Backstop
Investor, Mr. Gernot Löhr, as member of the
Supervisory Board to be appointed by the competent court,
subject to the resignation of the current chairman as member of
the Supervisory Board taking effect.
As long as the applicable merger clearances and/or clearance by
the German Ministry of Economy and Technology pursuant to the
German Foreign Trade Act remain outstanding, the Backstop
Investor will only be allowed to acquire or subscribe for
Investment Shares that lead to a shareholding of the Backstop
Investor in the Company of 25 percent minus one share. Once
the clearances have been obtained, the Backstop Investor may, at
its sole discretion, also subscribe for Investment Shares up to
the Maximum Investment Amount.
For as long as the Backstop Investor holds at least
15 percent of the shares and voting rights in the Company,
the Backstop Investor will be entitled to propose two
individuals, and for as long as the Backstop Investor holds at
least 10 percent of the shares and voting rights in the
Company, one individual, to be elected to the Supervisory Board.
Delivery and
Settlement of the New Shares
Delivery of the New Shares subscribed for under the Rights
Offering is expected to occur on or about August 7, 2009
unless the Subscription Period has been extended. Delivery of
the unsubscribed New Shares to be sold in the private placement
is expected to occur without undue delay following the
subscription and payment of the Subscription Price with regard
to the Investment Shares, inter alia, subject to applicable
merger clearances and/or clearance by the German Ministry of
Economy and Technology (Bundesministerium für Wirtschaft
und Technologie) pursuant to the German Foreign Trade Act
(Außenwirtschaftsgesetz) having been obtained; the
relevant clearances are expected to be received during the
course of August 2009 at the latest. The New Shares will be made
available to shareholders as co-ownership interest in the
respective global share certificate.
Commissions
The subscription of New Shares in the Rights Offering is subject
to customary banking commissions from the depository banks.
76
Stock Exchange
Admission and Commencement of Trading of the New
Shares
The application for admission of the New Shares to the regulated
market (regulierter Markt) of the Frankfurt Stock
Exchange with simultaneous admission to the sub-segment of the
regulated market with additional post-admission obligations
(Prime Standard) of the Frankfurt Stock Exchange is expected to
be filed on July 17, 2009. The decision on admission of the
New Shares subscribed for under the Rights Offering is
anticipated for August 6, 2009. In the event that any New
Shares not subscribed for by the current shareholders of the
Company will be allotted to the Backstop Investor under the
Backstop Arrangement, the decision on admission of such New
Shares is anticipated without undue delay following the
subscription and payment of the Subscription Price with regard
to the Investment Shares, inter alia subject to relevant
applicable merger clearances and/or clearance by the German
Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz) having
been obtained; the relevant clearances are expected to be
received during the course of August 2009 at the latest.
Commencement of trading and inclusion of the New Shares
subscribed for under the Rights Offering in the existing stock
quotation of the Companys shares is expected on
August 7, 2009. In the event that any New Shares not
subscribed for by the current shareholders of the Company will
be allotted to the Backstop Investor under the Backstop
Arrangement, such New Shares will be included in the existing
stock quotation without undue delay following admission.
Placement of
Unsubscribed New Shares / Private Placement to the Backstop
Investor
Any New Shares that are not subscribed for in the Rights
Offering (including the Fractional Amount) will be utilized by
way of a private placement. The Backstop Investor has agreed to
acquire any New Shares not subscribed for by the Companys
shareholders up to the Maximum Investment Amount at the
subscription price subject to the terms and conditions of the
Backstop Arrangement.
Announcement
In connection with the Rights Offering, a prospectus (the
Prospectus) has been published on Infineon
Technologies AGs website
(http://www.infineon.com)
on July 16, 2009. On July 29, 2009, together with the
publication of the Companys quarterly report for the three
and nine months ended June 30, 2009, a supplement to the
Prospectus is expected to be published on the Companys
website with the respective information (See
Right to Withdraw in case a Supplement to
the Prospectus is Published). Printed copies of the
Prospectus and the supplemented Prospectus will be available
free of charge during regular business hours at the
Companys offices at Am Campeon 1-12, 85579 Neubiberg,
Germany, at the offices of Credit Suisse Securities (Europe)
Limited at Junghofstrasse 16, 60311 Frankfurt am Main, Germany,
Deutsche Bank AG at Große Gallusstr.
10-14, 60311
Frankfurt am Main, Germany, Merrill Lynch International at Neue
Mainzer Strasse 52, 60311 Frankfurt am Main, Germany, and
Citigroup Global Markets Limited at Reuterweg 16, 60323
Frankfurt am Main, Germany, and at the aforementioned
subscription agents.
Right to Withdraw
in case a Supplement to the Prospectus is Published
The Company expects its quarterly report for the three and nine
months ended June 30, 2009 to be published on or about
July 29, 2009. Presumably on July 29, 2009, the
Company will publish a supplement to the Prospectus to reflect
the recent developments for the interim period up to and
including June 30, 2009 in the Prospectus.
In accordance with Section 16(3) of the German
Securities Prospectus Act (Wertpapierprospektgesetz), investors
who have made a declaration of intention regarding the
acquisition or the subscription of securities prior to the
publication of the supplement may revoke this within two days
after publication of the supplement, provided that settlement
has not yet occurred.
77
The revocation does not need to be substantiated and is to be
sent in text form to the locations at which the investor
concerned has made his declaration of intention regarding the
acquisition of the New Shares. In order to meet the deadline,
timely dispatch is sufficient.
Offering in the
United States
The New Shares and the subscription rights will be registered
under the provisions of the Securities Act. On this account, the
Company intends to file with the U.S. Securities and
Exchange Commission a
Form F-3
Registration Statement pursuant to the Securities Act 1933 as
amended from time to time with respect to the New Shares and the
Subscription Rights.
Stabilization
There will be no stabilization in connection with the Rights
Offering.
Lock-up
Agreement of the Company
The Company has committed itself to the Underwriters not to
carry out a capital increase or other capital measures, without
written consent of the Underwriters, which may only be withheld
with good cause, for a period to 6 months following the
admission to trading of the New Shares.
Lock-up
Agreement of the Backstop Investor
Provided that the Minimum Threshold is met, the Backstop
Investor undertakes, for a period of 12 months following
the date of acquisition of the Investment Shares, neither to
dispose of any Investment Shares or to carry out similar
measures without the consent of the Companys Management
Board (the Backstop Investor
Lock-up)
nor to establish a shareholding above 30 percent minus one
share of the share capital and voting rights of the Company (the
Standstill Agreement). Exempted from the
Backstop Investor
Lock-up are
the sale and transfer of any Investment Shares under certain
conditions, e.g. in connection with a voluntary or statutory
takeover offer of a third party under the German Act on the
Acquisition of Securities and on Takeovers (WpÜG).
The Backstop Investors obligations with regard to the
Backstop Investor
Lock-up and
the Standstill Agreement will automatically terminate if, during
the period of 12 months following the date of acquisition
of the Investment Shares, certain circumstances occur. These
include, but are not limited to: (i) a person other than a
person proposed by the Backstop Investor becomes the chairman of
the Supervisory Board, or (ii) Mr. Gernot Löhr is
not appointed as member of the Supervisory Board by the
competent court within 10 business days after the date on which
such filing had to be made, or (iii) not at least two
persons proposed by the Investor are members of the Supervisory
Board.
Important Notice
to Shareholders
Infineon believes that the positive impact of its overall cost
reduction and cash preservation measures will enable it to
finance its ordinary business operations out of cash flows from
continuing operations, despite the sharp decline in revenue
levels. However, its ability to refinance certain liabilities is
a concern. The current outstanding nominal amount as of
June 30, 2009 of 522 million under
Infineons convertible notes will become due for repayment
on June 5, 2010, and the current nominal amount as of
June 30, 2009 of 48 million under
Infineons exchangeable notes will become due for repayment
on August 31, 2010. Infineon will also incur further cash
outflows in connection with its IFX10+ cost reduction program,
and may incur additional expenses in connection with the
insolvency of Qimonda and the resolution of its ongoing
negotiations regarding ALTIS, the manufacturing joint venture
between Infineon and IBM in France. Infineon is taking a number
of measures, including the Offering and the sale of its Wireline
Communications business, in order to meet these obligations. If
such measures, including the capital, increase fail, the Company
may need to find alternative sources of funds to repay these
obligations. In addition, further stabilization of the Infineon
Technologies Group depends on the execution of restructuring
measures, the success of which cannot be guaranteed. Overall,
subscribing for the New Shares entails considerable risks.
78
Neubiberg, July
2009
Infineon
Technologies AG
The Management
Board
Offering Expenses
and Net Proceeds of the Offering
The estimated total Offering expenses, including the commissions
payable to the Underwriters, are expected to be approximately
50 million, including approximately 18 million
to the Underwriters and up to 21 million to the
Backstop Investor relating to the Backstop Arrangement. Should
the Backstop Investor fail to purchase any New Shares in the
Offering for any reason, the Company will pay the Backstop
Investor a lump sum of 21 million. If the Backstop
Investor acquires a shareholding in the equity capital and
voting rights of the Company of 25 percent or less, the Company
will pay the Backstop Investor an amount equal to the sum of (i)
5.5 million plus (ii) an amount of 0.057 per
share by which the shareholding quota of the Backstop Investor
falls short of 25 percent plus one share. See
Backstop Arrangement. Infineon expects
the total net proceeds from the capital increase to be
approximately 700 million in case all New Shares will
be subscribed for by or placed with investors. If the Minimum
Threshold is not met and the Backstop Investor decides not to
waive the Minimum Threshold requirement, Infineon expects the
minimum net proceeds from the Offering to be approximately
335 million.
Additional
Selling Restriction Notices
Sales in the United Kingdom will likewise be subject to
restrictions. The Underwriters have warranted that they
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1.
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have only invited or will only invite participation in
investment activities in connection with the Offering or the
sale of the New Shares within the meaning of Section 21 of the
Financial Services and Markets Act 2000
(FSMA) and have only initiated or will only
initiate such investment activities to the extent that
Section 21(1) of the FSMA does not apply to the
Company; and
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2.
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have complied and will comply with all applicable provisions of
the FSMA with respect to all activities already undertaken by
each of them or will undertake in the future in relation to the
New Shares in, from, or otherwise involving the United Kingdom.
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Moreover, the Underwriters represent and warrant that they have
not publicly offered and will not publicly offer the New Shares
in any member state of the European Economic Area
(EEA) that has implemented Directive
2003/71/EC of the European Parliament and of the Council of
November 4, 2003 on the prospectus to be published when
securities are offered to the public or admitted to trading and
amending Directive 2001/34/EC (the Prospectus
Directive) from the date of implementation of the
Prospectus Directive, unless
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a prospectus for the New Shares has been published in advance
that has been approved by the competent authorities in the
relevant member state or in another member state of the EEA that
has implemented the Prospectus Directive, and the competent
authorities in the member state in which the Offering is taking
place have been notified of this fact in compliance with the
Prospectus Directive;
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2.
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the Offering is directed to legal entities that are licensed to
authorized or regulated to operate in the financial market or,
if not so licensed or regulated, whose sole corporate purpose is
to invest in securities;
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3.
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the Offering is directed at companies that meet at least two of
the following three criteria according to their most recent
annual or consolidated financial statements: (x) an average
of more than 250 employees during the most recent fiscal
year; (y) total assets of more than 43,000,000 and
(z) annual net revenue of more than
50,000,000; or
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4.
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the Offering takes place under other circumstances in which the
publication of a prospectus by the issuer is not required
pursuant to Article 3(2) of the Prospectus Directive.
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Underwriters;
Underwriting Agreement
The Company and the Underwriters signed an Underwriting
Agreement on July 16, 2009. In the Underwriting Agreement, the
Underwriters agreed to underwrite up to 333,218,704 New Shares,
and the Company has undertaken to issue up to 333,218,704 New
Shares to the Underwriters. In the Underwriting
79
Agreement dated July 16, 2009, the Company has agreed to
indemnify the Underwriters from specific liabilities.
Termination of
Rights Offering
The Underwriters reserve the right to terminate the Underwriting
Agreement or extend the completion of the Rights Offering upon
the occurrence of certain circumstances. These circumstances
include, but are not limited to, (i) the Companys
failure to provide certain legal opinions, (ii) amendment,
withdrawal or termination of the Investment Agreement between
the Company and the Backstop Investor, and (iii) the
non-occurrence of other conditions precedent. In the event of a
termination of the Underwriting Agreement, the Rights Offering
will not take place other than in relation to Subscription
Rights which have been validly exercised by then. The
Underwriters are further relieved of their obligations if the
consummation of the capital increase relating to the New Shares
subscribed for by the Underwriters under the Rights Offering is
not registered in the Commercial Register by August 6, 2009
and the Underwriters and Infineon Technologies AG fail to reach
an agreement on a later deadline.
In the event of a termination of the Underwriting Agreement
prior to the registration of the consummation of the capital
increase in the Commercial Register, the Subscription Rights
will lapse. In the event of a withdrawal from the Underwriting
Agreement after the registration of the consummation of the
capital increase in the Commercial Register, Infineon
Technologies AG and the Underwriters shall decide on a course of
action with respect to offering the New Shares that takes the
then-prevailing market conditions into account. Any investors
who purchased their Subscription Rights via the stock exchange
would suffer a loss in this case. To the extent the Underwriter
terminates the Underwriting Agreement after the consummation of
the capital increase is registered in the Commercial Register,
any shareholders who exercised their Subscription Rights will be
able to purchase the New Shares at the subscription price.
If the Underwriters terminate the Underwriting Agreement after
the Rights Offering is completed, which they can do even after
delivery and settlement of the subscribed New Shares and
commencement of trading, the termination would apply only to
unsubscribed New Shares. Therefore, stock exchange purchases
relating to unsubscribed New Shares are conditional. Short
sellers bear the risk of not being able to cover their short
positions with New Shares if they have already made short sales
prior to the cancellation of book transfers of the New Shares.
Condition
Precedent and Termination of the Backstop
Arrangement
The obligation of the Backstop Investor to acquire any
Investment Shares is subject to certain conditions precedent
being met or waived by the Backstop Investor, including, but not
limited to, applicable merger clearances, clearance by the
German Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz), and the
appointment of one representative of the Backstop Investor,
Mr. Manfred Puffer, by the competent court to the
Supervisory Board and the resignation of Mr. Max Dietrich
Kley, the current chairman of the Supervisory Board, as of
September 30, 2009 and the election of Mr. Manfred
Puffer of as chairman of the Supervisory Board as of
October 1, 2009, and the nomination of another
representative of the Backstop Investor, Mr. Gernot
Löhr, as member of the Supervisory Board to be appointed by
the competent court subject to the resignation of the current
chairman as member of the Supervisory Board taking effect. In
case the Backstop Investor wishes to subscribe for the
Investment Shares despite the Minimum Threshold not being met,
the Backstop Investor has to declare a waiver to the Company on
the business day following the end of the Subscription Period.
The Backstop Investor may declare to the Company its
unconditional commitment in the waiver notice to acquire other
than through the Investment Share Placement such amount of the
Companys shares that following the acquisition the
Backstop Investors shareholding will equal or exceed 15
percent. The obligation of the Backstop Investor to acquire
Investment Shares is subject to (a) Mr. Manfred Puffer
having been appointed by the competent court to Supervisory
Board, (b) Mr. Max Dietrich Kley, the current chairman of
the supervisory board, having submitted (i) a letter to the
Backstop Investor in which he commits to resign as of
September 30, 2009 and (ii) a resignation letter to
the Management Board and the co-chairman of the Supervisory
Board, resigning as chairman and Supervisory Board member as of
September 30, 2009, subject to the Backstop Investor by
that date holding a shareholding in the Company of
15 percent or more, or as of October 15, 2009, if only
by that date the Investor holds a respective shareholding in the
Company, in each case evidenced by a corresponding notice to the
Company according to Section 21 (1) German Securities
Trading Act (WpHG), (c) Mr. Manfred Puffer
having been elected as chairman of the Supervisory Board as of
October 1, 2009 subject to the resignation of the current
chairman having taken effect, and (d) the nomination
committee of the supervisory board
80
having nominated Mr. Gernot Löhr as member of the
Supervisory Board to be appointed by the competent court subject
to the resignation of the current chairman as member of the
Supervisory Board having taken effect.
The Backstop Investor reserves the right to terminate the
Backstop Arrangement upon the occurrence of certain
circumstances. These circumstances include, but are not limited
to, Infineons failure to provide a legal opinion and the
non-occurrence of the other conditions precedent. The Backstop
Investor can also terminate the Backstop Arrangement if the
Capital Increase relating to the Investment Shares has not been
registered with the commercial register within twelve business
days after application by the Company for such registration. In
these cases, the Backstop Investor may, by written notice to the
Company, withdraw from the Backstop Arrangement. To the extent
that it has not yet been exercised, such right of withdrawal
will lapse upon registration of the consummation of the Capital
Increase relating to the Investment Shares in the commercial
register.
Right to Withdraw
in case a Supplement to the Prospectus is Published
The Company expects its quarterly report for the three and nine
months ended June 30, 2009 to be published on or about July
29, 2009. The Company will publish on or about July 29, 2009 a
supplement to the Prospectus to reflect the recent developments
for the interim period up to and including June 30, 2009 in
the Prospectus.
In accordance with Section 16(3) of the German Securities
Prospectus Act (Wertpapierprospektgesetz), investors who
have made a declaration of intention regarding the acquisition
or the subscription of securities prior to the publication of
the supplement may revoke this within two days after publication
of the supplement, provided that settlement has not yet occurred.
The revocation needs not be substantiated and is to be sent in
text form to the locations at which the investor concerned has
made his declaration of intention regarding the acquisition of
the offered shares. In order to meet the deadline, timely
dispatch is sufficient.
Dilution
The net book value of the Company (total assets less total
liabilities and minority interests) amounted to
1,648 million as of June 30, 2009 (based on the
unaudited financial statements prepared in accordance with IFRS
as of and for the nine months ended June 30, 2009, or
2.20 per share (calculated on the basis of
749,742,085 shares of the Company outstanding as of
June 30, 2009).
After the implementation of the capital increase by recourse to
the Authorized Capital 2007 and the Authorized Capital 2009/I
resolved by the Management Board on July 9, 2009 and approved by
the Supervisory Board on July 9, 2009, the ordinary share
capital increases by up to 674 million from
1,499 million to up to 2,173 million
through the issue of up to 337,000,000 New Shares against cash
contributions as part of this Offering, and at a subscription
price of 2.15 per New Share and after deduction of the
estimated issuance expenses of approximately
50 million and without having regard to the effects
of the conversion of the New Convertible Bond due 2014, the net
book value of the Company had it received the proceeds on
June 30, 2009 would amount to 2,322 million, or
2.14 per share (calculated on the basis of
1,086,742,085 shares of the Company outstanding after
implementation of the capital increase in connection with the
Offering). This would correspond to a direct decrease in the net
book value of the Company by 0.06 (3 percent) per
share for the existing shareholders not participating in the
Rights Offering, and a direct dilution of 0.01 (less than
1 percent) per share of the purchasers of the shares
offered.
After the implementation of the above mentioned capital increase
as part of this Offering and considering the effects of full
conversion of the New Convertible Bond due 2014, the net book
value of the Company had it received the proceeds on
June 30, 2009 would amount to 2,465 million, or
2.12 per share (calculated on the basis of
1,161,684,614 shares of the Company outstanding after
implementation of the capital increase in connection with the
Offering). This would correspond to a direct decrease in the net
book value of the Company by 0.08 (4 percent) per
share for the existing shareholders not participating in the
Rights Offering, and a direct dilution of approximately
0.03 (1 percent) per share for the purchasers of the
shares offered.
81
Interests of
Participating Parties in the Offering of New Shares
Infineon believes that the positive impact of its cost reduction
and cash preservation measures will enable it to finance its
ordinary business operations out of cash flows from continuing
operations, despite the sharp decline in revenue levels.
However, its ability to refinance certain liabilities is a
concern. The current outstanding nominal amount as of
June 30, 2009 of 522 million of Convertible
Notes due 2010 will become due for repayment on June 5,
2010, and the current nominal amount as of June 30, 2009 of
48 million of Exchangeable Notes due 2010 will become
due for repayment on August 31, 2010. Infineon will also
incur further cash outflows in connection with its IFX10+ cost
reduction program, and may incur additional expenses in
connection with the insolvency of Qimonda and the resolution of
its ongoing negotiations regarding ALTIS, the manufacturing
joint venture between Infineon and IBM in France. See the risk
factor which describes the risks to Infineon arising out of the
insolvency of Qimonda and in connection with a sale or closure
of ALTIS. Infineon is taking a number of measures, including the
Offering, in order to meet these obligations. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations Capital
Requirements.
The Underwriters have entered into a contractual relationship
with Infineon Technologies AG in connection with the Offering
and the stock exchange admission of the New Shares. Credit
Suisse Securities (London) Ltd. has been mandated by the Company
to act as advisory bank with respect to the restructuring of
Infineon, the repurchase of certain nominal amounts of the
Convertible Notes due 2010 and the Exchangeable Notes due 2010,
and the issuance of the New Convertible Notes due 2014.
Credit Suisse, Deutsche Bank and Merrill Lynch have advised the
Company on the execution of the Rights Offering and on the stock
exchange admission of the New Shares, as well as on the
structuring and coordinate the implementation of the Offering.
If the Offering is completed successfully and the shares are
admitted to exchange trading, the Underwriters will receive a
customary commission.
Since the capital increase mainly serves the purpose of
restructuring the Companys balance sheet, remedying a
strain on liquidity and strengthening the Companys balance
sheet, the existing shareholders of the Company, particularly
major shareholders, as well as the holders of the exchangeable
and convertible notes for which the Company has issued
guarantees in the aggregate nominal amount of
915 million, have an interest in the implementation
of the capital increase.
Credit Suisse, Deutsche Bank, Merrill Lynch and Citi maintain
other legal and financial relationships with Infineon that are
customary for the industry. In particular, Credit Suisse acts as
lender to Infineon pursuant to a 100 million
revolving credit facility. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations Capital Requirements Credit
Facilities.
The Backstop Investor has agreed to acquire the Investment
Shares at the Subscription Price, but not more than the Maximum
Investment Amount, subject to the terms and conditions of the
Backstop Arrangement. Should the Backstop Investor fail to
purchase any New Shares in the Offering for any reason, the
Company will pay the Backstop Investor a lump sum of
21 million. If the Backstop Investor acquires a
shareholding in the equity capital and voting rights of the
Company of 25 percent or less, the Company will pay the
Backstop Investor an amount equal to the sum of (i)
5.5 million plus (ii) an amount of 0.057
per share by which the shareholding quota of the Backstop
Investor falls short of 25 percent plus one share. See also
Business Material
Contracts Backstop Arrangement.
Ultimately, all parties doing business with the Company have a
direct or indirect interest in the capital increase.
82
INFORMATION ON
THE OFFERED NEW SHARES
AND ON THE CONVERSION SHARES
Information on
the Offered New Shares
Statutory
Basis for the Issue of the New Shares
The provisions of the German Stock Corporation Act
(Aktiengesetz) on capital increases against cash
contributions by recourse to statutory authorized capital
(Barkapitalerhöhung aus genehmigtem Kapital),
Sections 202 et seq. of the German Stock Corporation Act,
form the statutory basis for the issuance of the New Shares. The
Companys general shareholders meeting resolved on
February 15, 2007 to amend the Articles of Association and
authorize the Management Board, with the consent of the
Supervisory Board, to increase the share capital of the Company
until February 14, 2012, in one or more steps, through the
issuance of new registered no par value shares by up to
224,000,000 against contributions in cash or in kind
(Authorized Capital 2007). The resolution for the establishment
of the Authorized Capital 2007 was registered in the Commercial
Register on March 28, 2007 as Section 4(2) of the
Articles of Association. In addition, the Companys general
shareholders meeting resolved on February 12, 2009 to
authorize the Management Board, with the consent of the
Supervisory Board, to increase the share capital until
February 11, 2014, in one or more steps, through the
issuance of new registered no par value shares by up to
450,000,000 against contributions in cash or in kind
(Authorized Capital 2009/I). The Authorized Capital 2009/I was
initially resolved upon by the general shareholders
meeting of the Company on February 12, 2009 as Authorized
Capital 2009/II, but subsequently renumbered from Authorized
Capital 2009/II into 2009/I by resolution of the Supervisory
Board to reflect that the Companys general
shareholders meeting rejected to approve, inter alia, the
initial Authorized Capital 2009/I. The resolution regarding the
establishment of the Authorized Capital 2009/I, as amended, was
registered in the Commercial Register on April 28, 2009 as
Section 4(10) of the Articles of Association.
On July 9, 2009, the Management Board resolved to increase
the share capital by way of recourse to the aforementioned
authorized capitals by issuing up to 337,000,000 New Shares. The
Investment, Finance and Audit Committee duly authorized by the
Supervisory Board approved the Management Boards
resolution on July 9, 2009. The New Shares are issued at
the minimum issue value of 2.00 per share and carry full
dividend rights for the fiscal year ending on September 30,
2009. Pursuant to Section 4(2)(a) and (10) of the
Articles of Association, the shareholders subscription
rights were excluded for the fractional amount of up to
7,562,592, which amounts to up to 3,781,296 New Shares.
ISIN/German
Securities Code (WKN)/Common Code /Trading Symbol
|
|
|
|
|
International Securities Identification Number (ISIN)
|
|
|
|
|
for the New Shares
|
|
|
DE0006231004
|
|
for the subscription rights to the New Shares
|
|
|
DE000A0Z2227
|
|
German Securities Code (Wertpapierkennnummer
WKN)
|
|
|
|
|
for the New Shares
|
|
|
623100
|
|
for the subscription rights to the New Shares
|
|
|
A0Z222
|
|
Common Code
|
|
|
010745900
|
|
Trading Symbol
|
|
|
IFX.ETR
|
|
Voting
Rights
Each New Share as well as each Existing Share carries one vote
at the Companys general shareholders meeting. There
are no voting right restrictions.
Dividend
Rights; Share of Liquidation Proceeds
According to Section 4(2) of the Articles of Association,
the New Shares created through the statutory authorized capital
have full dividend rights as of the beginning of the fiscal year
in which they are issued and for all subsequent fiscal years.
Dividend payment claims are subject to the three-year standard
limitation period as per Section 195 of the German Civil
Code (Bürgerliches Gesetzbuch).
According to Section 19(3) of the Articles of Association,
dividend rights of new shares issued as part of a capital
increase can be different from the rule of Section 60(2) of
the German Stock Corporation Act.
83
The New Shares that will be admitted to trading shall
participate in any liquidation proceeds according to their
proportionate amount of the share capital.
Transferability
of the New Shares
The New Shares of the Company are freely transferable in
accordance with the applicable legal requirements for registered
shares. Except for the restrictions set forth in The
Offering
Lock-up
Agreement of the Company and The
Offering
Lock-up
Agreement of the Backstop Investor, there are no
prohibitions on disposal or restrictions with respect to the
transferability of the New Shares of the Company.
Delivery of
the New Shares; Settlement
The New Shares subscribed under the Rights Offering are expected
to be made available in the collective custody account on
August 7, 2009 and included in the existing stock quotation
of Infineon Technologies AG shares on August 7, 2009,
unless the Subscription Period is extended. The New Shares from
the fractional amount and any unsubscribed New Shares that are
sold in the private placement to the Private Equity Investor are
expected to be made available in the collective custody account
on August 21, 2009, unless the Subscription Period is
extended or applicable merger clearances and/or clearance by the
German Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz) have not
been obtained by the Backstop Investor on the business day
following the last day of the Subscription Period. In such case,
the New Shares allotted under the private placement are expected
to be made available in the collective custody account without
undue delay following applicable merger clearances and/or
clearance by the German Ministry of Economy and Technology
(Bundesministerium für Wirtschaft und Technologie)
pursuant to the German Foreign Trade Act
(Außenwirtschaftsgesetz). The New Shares are
represented by one or more global certificates. Physical or
individual certificates will not be issued.
Announcements,
Paying and Registration Agent
The Companys announcements are published in the electronic
version of the German Federal Gazette (elektronischer
Bundesanzeiger), as provided by Section 1(4) of the
Articles of Association. Any announcements related to the shares
of the Company will also be published in the electronic version
of the Federal Gazette and in at least one national newspaper
designated for stock exchange notices by the Frankfurt Stock
Exchange. All announcements required under German securities
laws will be published in a national newspaper designated for
stock exchange notices by the Frankfurt Stock Exchange and, if
required, in the printed version of the German Federal Gazette
(elektronischer Bundesanzeiger).
Announcements related to the approval of the Prospectus or any
supplements thereto will be published in accordance with the
German Securities Prospectus Act, and according to the form of
publication required for the prospectus, that is, through
publication on the website of Infineon Technologies AG, Am
Campeon 1-12,
85579 Neubiberg
(http://www.infineon.com)
and by making printed copies available at Infineon Technologies
AG and at the offices of Credit Suisse Securities (Europe)
Limited at Junghofstrasse 16, 60311 Frankfurt am Main, Germany,
Deutsche Bank AG at Große Gallusstr.
10-14, 60311
Frankfurt am Main, Germany, Merrill Lynch International at Neue
Mainzer Strasse 52, 60311 Frankfurt am Main, Germany, and
Citigroup Global Markets Limited at Reuterweg 16, 60323
Frankfurt am Main, Germany.
The paying and registration agent is Bayerische Hypo- und
Vereinsbank AG, Kardinal-Faulhaber-Strasse 1, 80333, Munich.
Information on
the Conversion Shares
Statutory Basis
for the Issue of Conversion Shares
The provisions of the German Stock Corporation Act
(Aktiengesetz) on capital increases by recourse to
conditional capital (Bedingte Kapitalerhöhung),
Sections 192 et seq. of the German Stock Corporation Act,
form the statutory basis for the issuance of the Conversion
Shares. The Companys general shareholders meeting
resolved on February 12, 2009 to amend the Articles of
Association and to conditionally increase the capital by up to
149,900,000 by issuing up to 74,950,000 new no par value
registered shares with full dividend rights as of the beginning
of the fiscal year in which they are issued (see
Description of the Share Capital and Applicable
Provisions Conditional Capital
Conditional Capital 2009/I). The Conditional Capital
2009/I was initially resolved upon by the general
shareholders meeting of the Company on February 12,
2009 as Conditional Capital 2009/II, but subsequently renumbered
from Conditional Capital
84
2009/II into 2009/I by resolution of the Supervisory Board to
reflect that the Companys general shareholders
meeting rejected to approve, inter alia, the initial Conditional
Capital 2009/I. The resolution regarding the creation of the
Conditional Capital 2009/I, as amended, was registered in the
Commercial Register on April 28, 2009 as Section 4(11)
of the Articles of Association. The Conversion Shares from the
Conditional Capital 2009/1 are reserved for any conversions made
of the New Convertible Notes due 2014.
On May 18, 2009, the Management Board resolved to issue the
New Convertible Notes due 2014. The Investment, Finance and
Audit Committee, duly authorized by the Supervisory Board,
approved the Management Boards resolution on May 18,
2009. (For details regarding the New Convertible Notes due 2014
see Description of the Share Capital and Applicable
Provisions Conditional Capital
Conditional Capital 2009/I).
ISIN/German
Securities Code (WKN)/Common Code /Trading Symbol
|
|
|
|
|
International Securities Identification Number (ISIN)
|
|
|
|
|
for the Conversion Shares
|
|
|
DE0006231004
|
|
German Securities Code (Wertpapierkennnummer
WKN)
|
|
|
|
|
for the Conversion Shares
|
|
|
623100
|
|
Common Code
|
|
|
010745900
|
|
Trading Symbol
|
|
|
IFX.ETR
|
|
Voting
Rights
Each Conversion Share, and each Existing Share carries one vote
at the Companys general shareholders meeting. There
are no voting right restrictions.
Dividend Rights;
Share of Liquidation Proceeds
According to Section 4(11) of the Articles of Association,
the Conversion Shares created through the conditional capital
have full dividend rights as of the beginning of the fiscal year
in which they are issued and for all subsequent fiscal years.
Dividend payment claims are subject to the three-year standard
limitation period pursuant to Section 195 of the German
Civil Code (Bürgerliches Gesetzbuch). According to
Section 19(3) of the Articles of Association, dividend
rights of new shares issued as part of a capital increase can be
different from the rule of Section 60(2) of the German
Stock Corporation Act. The Conversion Shares to be admitted to
trading shall participate in any liquidation proceeds in
proportion to their share in of the share capital.
Transferability
of the Conversion Shares
The Conversion Shares of the Company are freely transferable in
accordance with the applicable legal requirements for registered
shares. There are no prohibitions on disposal or restrictions
with respect to the transferability of the Conversion Shares of
the Company.
Admission to
Trading
Application is expected to be made on July 17, 2009 for
admission of the Conversion Shares to the regulated market
market segment (regulierter Markt) of the Frankfurt Stock
Exchange with simultaneous admission to the sub-segment of the
regulated market with additional post-admission obligations
(Prime Standard) of the Frankfurt Stock Exchange. The decision
on admission is anticipated on August 6, 2009.
Delivery of the
Conversion Shares; Settlement
Upon any exercise of the conversion right, only full shares will
be delivered in accordance with the Articles of Association of
Infineon Technologies AG in effect at the time of such delivery.
Fractional shares will not be issued. To the extent that any
conversion of one or several note(s) results in fractions of
shares, the fractions of shares resulting from the conversion of
a note shall be aggregated and full shares resulting from such
aggregation of fractions of shares shall be delivered to the
extent Citibank, N.A. London Branch as conversion agent has
ascertained that several notes have been converted at the same
time for the same noteholder. The shares to be delivered shall
be transferred as soon as practicable after the conversion date
to a securities account of the noteholder designated in the
conversion notice. Until transfer of the shares has been made no
claims arising from the shares shall exist. The Conversion
Shares are represented by one or more global certificates.
Physical or individual certificates will not be issued.
85
Announcements
The Companys announcements are published in the electronic
version of the German Federal Gazette (elektronischer
Bundesanzeiger), as provided by Section 1(4) of the
Articles of Association. Any announcements related to the shares
of the Company will also be published in the electronic version
of the Federal Gazette and in at least one national newspaper
designated for stock exchange notices by the Frankfurt Stock
Exchange. All announcements required under German securities
laws will be published in a national newspaper designated for
stock exchange notices by the Frankfurt Stock Exchange and, if
required, in the printed version of the German Federal Gazette
(elektronischer Bundesanzeiger).
Announcements related to the approval of the Prospectus or any
supplements thereto will be published in accordance with the
German Securities Prospectus Act, and according to the form of
publication required for the prospectus, that is, through
publication on the website of Infineon Technologies AG, Am
Campeon 1-12, 85579 Neubiberg
(http://www.infineon.com)
and by making printed copies available at Infineon Technologies
AG and at the offices of Credit Suisse Securities (Europe)
Limited at Junghofstrasse 16, 60311 Frankfurt am Main, Germany,
Deutsche Bank AG at Große Gallusstr.
10-14, 60311
Frankfurt am Main, Germany, Merrill Lynch International at Neue
Mainzer Strasse 52, 60311 Frankfurt am Main, Germany, and
Citigroup Global Markets Limited at Reuterweg 16, 60323
Frankfurt am Main, Germany.
86
DIVIDEND POLICY
AND EARNINGS PER SHARE
General
Provisions Relating to Profit Allocation and Dividend
Payments
The shareholders share of profits is determined based on
their respective interests in the Companys share capital.
In a German stock corporation (Aktiengesellschaft),
resolutions concerning the distribution of dividends for a given
fiscal year, and the amount and payment date thereof, are
adopted by the general shareholders meeting of the
subsequent fiscal year upon a joint proposal by the Management
Board and the Supervisory Board. Dividends may only be
distributed from the distributable profit of the Company. The
distributable profit is calculated based on the Companys
stand-alone annual financial statements prepared in accordance
with the accounting principles of the German Commercial Code
(Handelsgesetzbuch). Accounting regulations under the
German Commercial Code differ from IFRSs in material respects.
When determining the amount available for distribution, net
income for the year must be adjusted for profit/loss
carryforwards from the prior year and release of or allocations
to reserves. Certain reserves are required to be set up by law
and must be deducted when calculating the profit available for
distribution. The Management Board must prepare the financial
statements (balance sheet, income statement and notes to the
financial statements) and the management report for the previous
fiscal year by the statutory deadline, and present these to the
Supervisory Board and the auditors immediately after
preparation. At the same time, the Management Board and
Supervisory Board must present a proposal for the allocation of
the Companys distributable profit pursuant to
Section 170 of the German Stock Corporation Act. According
to Section 171 of the German Stock Corporation Act, the
Supervisory Board must review the financial statements, the
Management Boards management report and the proposal for
the allocation of the distributable profit, and report to the
general shareholders meeting in writing on the results.
The Supervisory Board must submit its report to the Management
Board within one month after the documents were received. If the
Supervisory Board approves the financial statements after its
review, these are deemed adopted unless the Management Board and
Supervisory Board resolve to assign adoption of the financial
statements to the general shareholders meeting. If the
Management Board and Supervisory Board choose to allow the
general shareholders meeting to adopt the financial
statements, or if the Supervisory Board does not approve the
financial statements, the Management Board must convene a
general shareholders meeting without delay. The general
shareholders meetings resolution on the allocation
of the distributable profit must be passed with a simple
majority of votes. If the Management Board and Supervisory Board
adopt the financial statements, they can allocate an amount of
up to half of the Companys net income for the year to
other surplus reserves. Additions to the legal reserves and loss
carry-forwards must be deducted in advance when calculating the
amount of net income for the year to be allocated to other
surplus reserves.
Dividends resolved by the general shareholders meeting are
paid annually shortly after the general shareholders
meeting, as provided in the dividend resolution, in compliance
with the rules of the respective clearing system. Generally,
withholding tax (Kapitalertragsteuer) of 25 percent
plus a 5.5 percent solidarity surcharge thereon is withheld
from the dividends paid. For more information on the taxation of
dividends, see Taxation in the Federal Republic of
Germany Taxation of Shareholders. Dividend
payment claims are subject to a three-year standard limitation
period. If dividend payment claims expire, then the Company
becomes the beneficiary of the dividends. Details concerning any
dividends resolved by the general shareholders meeting and
the paying agents named by the Company in each case will be
published in the electronic version of the German Federal
Gazette (elektronischer Bundesanzeiger) and in at least
one national newspaper designated for exchange notices by the
Frankfurt Stock Exchange.
Dividend Policy
and Earnings Per Share
No earnings were available for distribution as a dividend for
the 2008 fiscal year, since Infineon Technologies AG on a
stand-alone basis as the ultimate parent incurred a cumulative
loss (Bilanzverlust) as of September 30, 2008.
Subject to market conditions, the Company intends to retain
future earnings, if any, for investment in the development and
expansion of its business and not pay any dividends.
Infineon has not declared or paid any dividend during the 2006,
2007 and 2008 fiscal years.
Basic and diluted loss per share for the 2006 and 2007 fiscal
years based on the Companys consolidated financial
statements prepared in accordance with U.S. GAAP amounted
to losses of 0.36 and 0.49, respectively. Basic and
diluted loss per share attributable to shareholders of Infineon
Technologies AG for the 2007 and 2008 fiscal years based on the
Companys consolidated financial statements prepared in
accordance with IFRS amounted to losses of 0.46 and
3.91, respectively. Basic and diluted loss per share
attributable to shareholders of Infineon Technologies AG for the
six months ended March 31, 2008 and 2009 amounted to losses
of 2.58 and 0.82, respectively.
87
CAPITALIZATION
The following table shows Infineons capitalization
(including financial debt) and net indebtedness as of
May 31, 2009 and following completion of the Offering
(assuming the successful placement of all of the New Shares at
the Subscription Price).
|
|
|
|
|
|
|
|
|
|
|
As of May 31,
|
|
|
After completion of
|
|
|
|
2009(2)(5)
|
|
|
the
Offering(1)(2)(3)
|
|
|
|
(in millions)
|
|
|
Current liabilities
|
|
|
1,250
|
|
|
|
1,250
|
|
Guaranteed
|
|
|
|
|
|
|
|
|
Secured
|
|
|
|
|
|
|
|
|
Unguaranteed/Unsecured
|
|
|
1,250
|
|
|
|
1,250
|
|
Non-current liabilities
|
|
|
1,119
|
|
|
|
1,099
|
|
Guaranteed(4)
|
|
|
691
|
|
|
|
671
|
|
Secured
|
|
|
1
|
|
|
|
1
|
|
Unguaranteed/Unsecured
|
|
|
427
|
|
|
|
427
|
|
Total equity attributable to shareholders of Infineon
Technologies AG
|
|
|
1,663
|
|
|
|
2,340
|
|
Ordinary share capital
|
|
|
1,499
|
|
|
|
2,173
|
|
Additional paid-in capital
|
|
|
6,041
|
|
|
|
6,042
|
|
Accumulated deficit
|
|
|
(5,875
|
)
|
|
|
(5,873
|
)
|
Other components of equity
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Number of shares in the Company
|
|
|
749,742,085
|
|
|
|
1,086,742,085
|
|
Cash and cash equivalents
|
|
|
742
|
|
|
|
1,399
|
|
Available-for-sale financial assets
|
|
|
159
|
|
|
|
159
|
|
Gross Cash Position
|
|
|
901
|
|
|
|
1,558
|
|
Trade and other receivables
|
|
|
471
|
|
|
|
471
|
|
Other current financial assets
|
|
|
46
|
|
|
|
46
|
|
Short-term debt
|
|
|
113
|
|
|
|
113
|
|
Current maturities of long-term debt
|
|
|
53
|
|
|
|
53
|
|
Trade and other payables
|
|
|
325
|
|
|
|
325
|
|
Other current financial liabilities
|
|
|
80
|
|
|
|
80
|
|
Current financial liabilities
|
|
|
571
|
|
|
|
571
|
|
Net current financial assets
|
|
|
847
|
|
|
|
1,504
|
|
Other non-current financial assets
|
|
|
115
|
|
|
|
115
|
|
Long-term debt
|
|
|
898
|
|
|
|
878
|
|
Other non-current financial liabilities
|
|
|
3
|
|
|
|
3
|
|
Net non-current financial liabilities
|
|
|
(786
|
)
|
|
|
(766
|
)
|
Net financial assets
|
|
|
61
|
|
|
|
738
|
|
Minority interests
|
|
|
56
|
|
|
|
56
|
|
Notes
|
|
(1)
|
Figures reflect an assumption of the placement of all of the
337,000,000 New Shares and issue proceeds in the amount of
675 million after deduction of Offering Expenses of
approximately 50 million, see Reasons for
the Offering and Use of Proceeds.
|
|
(2)
|
Unaudited.
|
|
(3)
|
Figures reflect the repurchases of an aggregate nominal amount
of 22 million of the Convertible Notes due 2010 and
Exchangeable Notes due 2010 during the period from May 31,
2009 to June 30, 2009, for a total purchase price of
approximately 19 million, excluding related fees and
expenses.
|
|
(4)
|
Infineon Technologies AG, 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 consolidated financial statements by virtue
of consolidation. Such guarantees, principally relate to certain
consolidated subsidiaries third-party debt, especially to
convertible and exchangeable notes issued.
|
|
(5)
|
The figures as of May 31, 2009 have not been audited or
reviewed, but were extracted from the books and records of the
Company.
|
See Managements Discussion and Analysis of
Financial Condition and Results of Operations
Measures Taken to Date to Improve Infineons Financial
Condition. See Managements Discussion
and Analysis of Financial Condition and Results of
Operations Capital Requirements
Statement of Working Capital for the working capital
statement of Infineon.
88
SELECTED
CONSOLIDATED FINANCIAL AND OPERATING INFORMATION PREPARED IN
ACCORDANCE WITH IFRS
For periods beginning October 1, 2008, Infineon has
prepared its consolidated financial statements in accordance
with IFRS. In connection with Infineons transition to
IFRS, Infineon has prepared financial statements for the fiscal
year ended September 30, 2008 (with comparative figures as
of and for the fiscal year ended September 30,
2007) in accordance with IFRS. Below, Infineon presents its
selected consolidated statements of operations data, selected
consolidated statement of cash flows data and selected segment
data for the 2007 and 2008 fiscal years and the six months ended
March 31, 2008 and 2009, and selected consolidated balance
sheet data at September 30, 2007 and 2008 and at
March 31, 2009, derived from Infineons consolidated
IFRS financial statements. The selected consolidated statements
of operations data, and selected consolidated statement of cash
flows data for the 2007 and 2008 fiscal years and the selected
consolidated balance sheet data at September 30, 2007 and
2008, prepared in accordance with IFRS, have been extracted from
financial statements, which appear in this Prospectus beginning
on
page F-4.
Infineon also presents selected consolidated statements of
operations and statements of cash flows for the six month ended
March 31, 2008 and 2009, and selected consolidated balance
sheet data at March 31, 2009, derived from Infineons
condensed consolidated IFRS financial statements, which appear
in this Prospectus beginning on
page F-233.
Infineon also issued consolidated financial statements in
accordance with U.S. GAAP as of and for the fiscal year
ended September 30, 2008 since U.S. GAAP were
considered the primary accounting principles for that period.
These financial statements are not included in this Prospectus,
The following summary of financial information should be read
together with the section Managements Discussion
and Analysis of Financial Condition and Results of
Operations, as well as the consolidated financial
statements included in this Prospectus and the related notes,
and the additional financial information contained elsewhere in
this Prospectus.
Selected Data
from the Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September
30,(1)
|
|
|
March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions, except per share data)
|
|
|
Revenue
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
2,139
|
|
|
|
1,577
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(44
|
)
|
|
|
(147
|
)
|
|
|
82
|
|
|
|
(264
|
)
|
Income (loss) from continuing operations
|
|
|
(43
|
)
|
|
|
(188
|
)
|
|
|
59
|
|
|
|
(266
|
)
|
Loss from discontinued operations, net of income taxes
|
|
|
(327
|
)
|
|
|
(3,559
|
)
|
|
|
(2,543
|
)
|
|
|
(396
|
)
|
Net loss
|
|
|
(370
|
)
|
|
|
(3,747
|
)
|
|
|
(2,484
|
)
|
|
|
(662
|
)
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
(23
|
)
|
|
|
(812
|
)
|
|
|
(552
|
)
|
|
|
(49
|
)
|
Shareholders of Infineon Technologies AG
|
|
|
(347
|
)
|
|
|
(2,935
|
)
|
|
|
(1,932
|
)
|
|
|
(613
|
)
|
Basic and diluted earnings (loss) per share from continuing
operations
|
|
|
(0.08
|
)
|
|
|
(0.33
|
)
|
|
|
0.06
|
|
|
|
(0.36
|
)
|
Basic and diluted loss per share from discontinued operations
|
|
|
(0.38
|
)
|
|
|
(3.58
|
)
|
|
|
(2.64
|
)
|
|
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(0.46
|
)
|
|
|
(3.91
|
)
|
|
|
(2.58
|
)
|
|
|
(0.82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
(1)
|
During the 2008 fiscal year, Infineon committed to a plan to
dispose of Qimonda. As a consequence, the results of Qimonda are
reported as discontinued operations in the Selected Consolidated
Statements of Operations data for the fiscal years ended
September 30, 2007 and 2008 and for the six months ended
March 31, 2008 and 2009. On January 23, 2009, Qimonda
and its wholly owned subsidiary Qimonda Dresden GmbH &
Co. oHG filed an application at the Munich Local Court to
commence insolvency proceedings. As a result of this
application, Infineon deconsolidated Qimonda during the second
quarter of the 2009 fiscal year. On April 1, 2009, the
insolvency proceedings formally opened.
|
|
(2)
|
Unaudited.
|
89
Selected Data
from the Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
As of
September 30,(1)
|
|
|
March 31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Cash and cash equivalents
|
|
|
1,809
|
|
|
|
749
|
|
|
|
532
|
|
Available-for-sale financial assets
|
|
|
417
|
|
|
|
134
|
|
|
|
133
|
|
Working
capital(1)
(deficit)
|
|
|
(43
|
)
|
|
|
86
|
|
|
|
(28
|
)
|
Assets classified as held for disposal
|
|
|
303
|
|
|
|
2,129
|
|
|
|
6
|
|
Total assets
|
|
|
10,599
|
|
|
|
6,982
|
|
|
|
3,977
|
|
Short-term debt and current maturities of long-term debt
|
|
|
336
|
|
|
|
207
|
|
|
|
170
|
|
Liabilities associated with assets held for disposal
|
|
|
129
|
|
|
|
2,123
|
|
|
|
|
|
Long-term debt
|
|
|
1,227
|
|
|
|
963
|
|
|
|
816
|
|
Total equity
|
|
|
6,004
|
|
|
|
2,161
|
|
|
|
1,703
|
|
Notes
|
|
(1)
|
During the 2008 fiscal year, Infineon committed to a plan to
dispose of Qimonda. As a consequence, the assets and liabilities
of Qimonda have been reclassified as held for disposal in the
Selected Consolidated Balance Sheet data as of March 31,
2009 and as of September 30, 2008. On January 23,
2009, Qimonda and its wholly owned subsidiary Qimonda Dresden
GmbH & Co. oHG filed an application at the Munich
Local Court to commence insolvency proceedings. As a result of
this application, Infineon deconsolidated Qimonda during the
second quarter of the 2009 fiscal year. On April 1, 2009,
the insolvency proceedings formally opened.
|
|
(2)
|
Unaudited.
|
|
(2)
|
Working capital consists of current assets less short-term
liabilities, cash and cash equivalents, available-for-sale
financial assets and net assets held for disposal.
|
Selected Data
from the Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September 30,(1)
|
|
|
March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Net cash provided by (used in) operating activities from
continuing operations
|
|
|
256
|
|
|
|
580
|
|
|
|
149
|
|
|
|
(65
|
)
|
Net cash provided by (used in) operating activities
|
|
|
1,251
|
|
|
|
(84
|
)
|
|
|
(121
|
)
|
|
|
(463
|
)
|
Net cash provided by (used in) investing activities from
continuing operations
|
|
|
(48
|
)
|
|
|
(665
|
)
|
|
|
(894
|
)
|
|
|
31
|
|
Net cash provided by (used in) investing activities
|
|
|
(917
|
)
|
|
|
(662
|
)
|
|
|
(1.021
|
)
|
|
|
52
|
|
Net cash used in financing activities from continuing operations
|
|
|
(214
|
)
|
|
|
(230
|
)
|
|
|
(97
|
)
|
|
|
(180
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(525
|
)
|
|
|
113
|
|
|
|
103
|
|
|
|
(220
|
)
|
Net decrease in cash and cash equivalents from discontinued
operations
|
|
|
(185
|
)
|
|
|
(318
|
)
|
|
|
(197
|
)
|
|
|
(417
|
)
|
Net decrease in cash and cash equivalents
|
|
|
(191
|
)
|
|
|
(633
|
)
|
|
|
(1,039
|
)
|
|
|
(631
|
)
|
Notes
|
|
(1)
|
During the 2008 fiscal year, Infineon committed to a plan to
dispose of Qimonda. As a consequence, the cash flows of Qimonda
are reported as net cash provided by (used in) activities from
discontinued operations in the separate line below cash flows
from continuing operations. On January 23, 2009, Qimonda
and its wholly owned subsidiary Qimonda Dresden GmbH &
Co. oHG filed an application at the Munich Local Court to
commence insolvency proceedings. As a result of this
application, Infineon deconsolidated Qimonda during the second
quarter of the 2009 fiscal year. On April 1, 2009, the
insolvency proceedings formally opened.
|
|
(2)
|
Unaudited.
|
Selected
Segment Data
Selected
Operating Segment Data
Effective October 1, 2008, Infineon reorganized its main
business into five operating segments: Automotive,
Industrial & Multimarket, Chip Card &
Security, Wireless Solutions and Wireline Communications.
Segment results for the fiscal years ended September 30,
2007 and 2008 have been reclassified to be consistent with the
current reporting structure and presentation, as well as to
facilitate analysis of current and future operating segment
information. These reclassified segment results are not included
in
90
the consolidated financial statements for the 2008 fiscal year
prepared in accordance with IFRS, which appear in this
Prospectus beginning on
page F-4.
On July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, and such
sale is expected to close in the fall of 2009.
Infineon has two additional segments for reporting purposes, its
Other Operating Segments, which includes remaining activities
for certain product lines that have been disposed of and for
other business activities, and its Corporate and Eliminations
segment, which contains items not allocated to its operating
segments, such as certain corporate headquarters costs and
unabsorbed excess capacity.
Effective as of May 1, 2006 through September 30,
2008, Infineon was organized in three major operating segments.
Two of these segments were application focused: Automotive,
Industrial & Multimarket and Communication Solutions.
The other segment was the memory product business of Qimonda.
These operating segments are reflected in Infineons
consolidated financial statements for the fiscal years ended
September 30, 2006, 2007 and 2008, prepared in accordance
with U.S. GAAP.
Beginning October 1, 2008, the Management Board uses the
financial measure Segment Result to assess the operating
performance of Infineons reportable segments and as a
basis for allocating resources among the segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
|
|
September 30,
|
|
|
For the six months ended March
31,(1)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Automotive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)
|
|
|
1,267
|
(1)
|
|
|
1,257
|
(1)
|
|
|
634
|
|
|
|
395
|
|
Segment Result
|
|
|
122
|
(1)
|
|
|
105
|
(1)
|
|
|
48
|
|
|
|
(121
|
)
|
Industrial & Multimarket
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)
|
|
|
1,188
|
(1)
|
|
|
1,171
|
(1)
|
|
|
567
|
|
|
|
427
|
|
Segment Result
|
|
|
127
|
(1)
|
|
|
134
|
(1)
|
|
|
49
|
|
|
|
(5
|
)
|
Chip Card & Security
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)
|
|
|
438
|
(1)
|
|
|
465
|
(1)
|
|
|
237
|
|
|
|
171
|
|
Segment Result
|
|
|
20
|
(1)
|
|
|
52
|
(1)
|
|
|
36
|
|
|
|
(9
|
)
|
Wireless Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(3)(4)(5)
|
|
|
637
|
(1)
|
|
|
941
|
(1)
|
|
|
450
|
|
|
|
401
|
|
Segment Result
|
|
|
(126
|
)(1)
|
|
|
(18
|
)(1)
|
|
|
2
|
|
|
|
(73
|
)
|
Wireline
Communications(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(3)
|
|
|
414
|
(1)
|
|
|
420
|
(1)
|
|
|
208
|
|
|
|
167
|
|
Segment Result
|
|
|
(16
|
)(1)
|
|
|
12
|
(1)
|
|
|
7
|
|
|
|
3
|
|
Other Operating Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(2)(6)(7)
|
|
|
343
|
(1)
|
|
|
169
|
(1)
|
|
|
123
|
|
|
|
10
|
|
Segment Result
|
|
|
2
|
(1)
|
|
|
(3
|
)(1)
|
|
|
7
|
|
|
|
(4
|
)
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(8)(9)
|
|
|
(213
|
)
|
|
|
(102
|
)
|
|
|
(80
|
)
|
|
|
6
|
|
Segment Result
|
|
|
7
|
(1)
|
|
|
(24
|
)(1)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
2,139
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Result
|
|
|
136
|
(1)
|
|
|
258
|
(1)
|
|
|
147
|
|
|
|
(212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
(1)
|
Unaudited.
|
|
|
(2)
|
In Infineons IFRS financial statements as of and for the
fiscal year ended September 30, 2008, Infineon recorded
3,017 million and 2,963 million in revenue
in the former Automotive, Industrial & Multimarket
segment for the 2007 and 2008 fiscal year, respectively.
Following reclassification to reflect the current segment
structure, these amounts are mostly allocated to the Automotive
segment, the Industrial & Multimarket segment and the
Chip Card & Security segment, while
124 million and 70 million for the 2007 and
2008 fiscal year, respectively, relating to the HDD business,
are now recorded under Other Operating Segments.
|
|
|
(3)
|
In its IFRS financial statements as of and for the fiscal year
ended September 30, 2008, Infineon recorded
1,051 million and 1,360 million in revenue
for its Communication Solutions segment for the 2007 and 2008
fiscal year, respectively. Following reclassification to reflect
the current segment structure, these amounts are mostly
allocated to the Wireless Solutions and Wireline Communications
segments.
|
91
|
|
|
|
(4)
|
Includes inter-segment revenues of 30 million and
10 million for the fiscal years ended
September 30, 2007 and 2008, respectively, from sales of
wireless communication applications to Qimonda.
|
|
|
(5)
|
Includes revenues of 8 million and
1 million for the six months ended March 31,
2008 and 2009, respectively, from sales of wireless
communication applications to Qimonda.
|
|
|
(6)
|
Includes inter-segment revenues of 189 million and
79 million for the fiscal years ended
September 30, 2007 and 2008, respectively, from sales of
wafers from Infineons 200-millimeter facility in Dresden
to Qimonda under a foundry agreement.
|
|
|
(7)
|
Includes revenues of 70 million for the six months
ended March 31, 2008 from sales of wafers from
Infineons 200-millimeter facility in Dresden to Qimonda
under a foundry agreement.
|
|
|
(8)
|
Includes the elimination of inter-segment revenues of
219 million and 89 million for the fiscal
years ended September 30, 2007 and 2008, respectively,
since these sales were not expected to be part of the Qimonda
disposal plan.
|
|
|
(9)
|
Includes the elimination of revenues of 78 million
and 1 million for the six months ended March 31,
2008 and 2009, respectively, since these sales were not part of
the Qimonda disposal plan.
|
|
|
(10) |
On July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, and such
sale is expected to close in the fall of 2009.
|
Selected
Geographic Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September
30,(1)
|
|
|
March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
(IFRS) ( in millions)
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
907
|
|
|
|
924
|
|
|
|
460
|
|
|
|
315
|
|
Other Europe
|
|
|
888
|
|
|
|
818
|
|
|
|
409
|
|
|
|
286
|
|
North America
|
|
|
564
|
|
|
|
503
|
|
|
|
282
|
|
|
|
164
|
|
Asia/Pacific
|
|
|
1,450
|
|
|
|
1,800
|
|
|
|
848
|
|
|
|
720
|
|
Japan
|
|
|
213
|
|
|
|
198
|
|
|
|
104
|
|
|
|
72
|
|
Other
|
|
|
52
|
|
|
|
78
|
|
|
|
36
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
2,139
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
(1)
|
During the 2008 fiscal year, Infineon committed to a plan to
dispose of Qimonda. As a consequence, the results of Qimonda are
reported as discontinued operations in the Selected Consolidated
Statements of Operations data for the fiscal years ended
September 30, 2007 and 2008 and for the six months ended
March 31, 2008 and 2009. On January 23, 2009, Qimonda
and its wholly owned subsidiary Qimonda Dresden GmbH &
Co. oHG filed an application at the Munich Local Court to
commence insolvency proceedings. As a result of this
application, Infineon deconsolidated Qimonda during the second
quarter of the 2009 fiscal year. On April 1, 2009, the
insolvency proceedings formally opened.
|
|
(2)
|
Unaudited.
|
Selected Other
Key Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
|
September
30,(1)
|
|
For the six months ended March
31,(1)
|
|
|
2007
|
|
2008
|
|
2008
|
|
2009
|
|
|
(IFRS) ( in millions, except employee data)
|
|
Capital Expenditures
|
|
|
498
|
|
|
|
312
|
|
|
|
170
|
|
|
|
69
|
|
Employees (at end of period)
|
|
|
43,079
|
(2)
|
|
|
41,343
|
(3)
|
|
|
42,837
|
(4)
|
|
|
26,362
|
|
Notes
|
|
(1)
|
During the 2008 fiscal year, Infineon committed to a plan to
dispose of Qimonda. As a consequence, the cash flows of Qimonda
are reported as net cash provided by (used in) activities from
discontinued operations in the Selected Consolidated Statements
of Cash Flow data for all periods presented. On January 23,
2009, Qimonda and its wholly owned subsidiary Qimonda Dresden
GmbH & Co. oHG filed an application at the Munich
Local Court to commence insolvency proceedings. As a result of
this application, Infineon deconsolidated Qimonda during the
second quarter of the 2009 fiscal year. Subsequent to the
deconsolidation, the employees of Qimonda are no longer reported
in the Companys consolidated financial statements. On
April 1, 2009, the insolvency proceedings formally opened.
|
|
(2)
|
Including 13,481 employees of Qimonda.
|
|
(3)
|
Including 12,224 employees of Qimonda.
|
|
(4)
|
Including 13,298 employees of Qimonda.
|
92
SELECTED
CONSOLIDATED FINANCIAL AND OPERATING INFORMATION PREPARED IN
ACCORDANCE WITH U.S. GAAP
For periods prior to October 1, 2008, Infineon prepared its
financial statements in accordance with U.S. GAAP. Below,
Infineon presents selected consolidated statements of operations
data, selected consolidated statements of cash flows data and
selected segment data for the 2006 and 2007 fiscal years and
selected consolidated balance sheet data at September 30,
2006 and 2007 derived from its consolidated U.S. GAAP
financial statements. The selected consolidated statements of
operations data, selected consolidated statements of cash flows
data and selected segment data for the 2006 and 2007 fiscal
years and the selected consolidated balance sheet data at
September 30, 2006 and 2007, prepared in accordance with
U.S. GAAP, have been extracted from the consolidated
financial statements as of and for the fiscal year ended
September 30, 2007 (with comparative figures as of and for
the fiscal year ended September 30, 2006), which appear in
this Prospectus beginning on
page F-88.
Selected financial information prepared in accordance with IFRS
as of and for the fiscal year ended September 30, 2008
(with comparative figures as of and for the fiscal year ended
September 30, 2007) is included in the section headed
Summary Selected Consolidated Financial and Operating
Information prepared in accordance with IFRS.
The following summary of financial information should be read
together with the section Managements Discussion
and Analysis of Financial Condition and Results of
Operations, as well as the consolidated financial
statements included in this Prospectus and the related notes,
and the additional financial information contained elsewhere in
this Prospectus.
Selected Data
from the Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions, except per share data)
|
|
|
Total net sales
|
|
|
7,929
|
|
|
|
7,682
|
|
Loss before income taxes
|
|
|
(107
|
)
|
|
|
(254
|
)
|
Net loss
|
|
|
(268
|
)
|
|
|
(368
|
)
|
Basic and diluted loss per share
|
|
|
(0.36
|
)
|
|
|
(0.49
|
)
|
Selected Data
from the Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Cash and cash equivalents
|
|
|
2,040
|
|
|
|
1,819
|
|
Marketable securities
|
|
|
615
|
|
|
|
475
|
|
Working
capital(1)
(deficit)
|
|
|
(279
|
)
|
|
|
(18
|
)
|
Assets classified as held for disposal
|
|
|
|
|
|
|
272
|
|
Total assets
|
|
|
11,185
|
|
|
|
10,679
|
|
Short-term debt and current maturities
|
|
|
797
|
|
|
|
336
|
|
Liabilities associated with assets held for disposal
|
|
|
|
|
|
|
117
|
|
Long-term debt, excluding current portion
|
|
|
1,208
|
|
|
|
1,376
|
|
Total shareholders equity
|
|
|
5,315
|
|
|
|
4,914
|
|
Notes
|
|
(1) |
Working capital consists of current assets less short-term
liabilities, cash and cash equivalents, marketable securities
and net assets held for disposal.
|
93
Selected Data
from the Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Net cash provided by operating activities
|
|
|
1,003
|
|
|
|
1,207
|
|
Net cash used in investing activities
|
|
|
(853
|
)
|
|
|
(867
|
)
|
Net cash (used in) provided by financing activities
|
|
|
762
|
|
|
|
(521
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
892
|
|
|
|
(221
|
)
|
Selected
Segment Data
Selected
Operating Segment Data
Effective as of May 1, 2006 through September 30,
2008, Infineon was organized in three major operating segments.
Two of these segments were application focused: Automotive,
Industrial & Multimarket and Communication Solutions.
The other segment was the memory product business of Qimonda.
The Management Board used the financial measure earnings before
interest and taxes (EBIT) to assess the
operating performance of Infineons reportable segments and
as a basis for allocating resources among the segments.
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
2,839
|
|
|
|
3,017
|
|
EBIT
|
|
|
246
|
|
|
|
300
|
|
Communication
Solutions(4)
|
|
|
|
|
|
|
|
|
Net
sales(1)
|
|
|
1,205
|
|
|
|
1,051
|
|
EBIT
|
|
|
(231
|
)
|
|
|
(160
|
)
|
Other Operating Segments
|
|
|
|
|
|
|
|
|
Net
sales(2)
|
|
|
310
|
|
|
|
219
|
|
EBIT
|
|
|
4
|
|
|
|
(12
|
)
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
Net
sales(3)
|
|
|
(240
|
)
|
|
|
(213
|
)
|
EBIT
|
|
|
(236
|
)
|
|
|
(177
|
)
|
Qimonda
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
3,815
|
|
|
|
3,608
|
|
EBIT
|
|
|
202
|
|
|
|
(207
|
)
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
7,929
|
|
|
|
7,682
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
|
(15
|
)
|
|
|
(256
|
)
|
|
|
|
|
|
|
|
|
|
Notes
|
|
(1)
|
Includes inter-segment sales of 0 and
30 million for the fiscal years ended
September 30, 2006 and 2007, respectively, from sales of
wireless communication applications to Qimonda.
|
|
(2)
|
Includes inter-segment sales of 256 and
189 million for the fiscal years ended
September 30, 2006 and 2007, respectively, from sales of
wafers from Infineons 200-millimeter facility in Dresden
to Qimonda under foundry agreements.
|
|
(3)
|
Includes the elimination of inter-segment sales of 256 and
219 million for the fiscal years ended
September 30, 2006 and 2007, respectively, since these
sales were not expected to be part of the Qimonda disposal plan.
|
|
(4)
|
On July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, which
was part of the Communication Solutions segment, and such sale
is expected to close in the fall of 2009.
|
94
Selected
Geographic Information
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(U.S. GAAP) ( in millions)
|
|
|
Net sales
|
|
|
|
|
|
|
|
|
Germany
|
|
|
1,327
|
|
|
|
1,164
|
|
Other Europe
|
|
|
1,360
|
|
|
|
1,218
|
|
North America
|
|
|
2,126
|
|
|
|
1,887
|
|
Asia/Pacific
|
|
|
2,498
|
|
|
|
2,632
|
|
Japan
|
|
|
461
|
|
|
|
661
|
|
Other
|
|
|
157
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,929
|
|
|
|
7,682
|
|
|
|
|
|
|
|
|
|
|
Selected Other
Key Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
2006
|
|
2007
|
|
|
|
|
|
|
(U.S. GAAP) ( in millions, except employee data)
|
|
Capital Expenditures
|
|
|
1,253
|
|
|
|
1,375
|
|
|
|
|
|
|
|
|
|
Employees (at end of period)
|
|
|
41,651
|
(1)
|
|
|
43,079
|
(2)
|
|
|
|
|
|
|
|
|
Notes
|
|
(1)
|
Including 11,802 employees of Qimonda.
|
|
(2)
|
Including 13,481 employees of Qimonda.
|
95
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This discussion and analysis of Infineons consolidated
financial condition and results of operations should be read in
conjunction with Infineons audited consolidated financial
statements and other financial information included elsewhere in
this Prospectus.
For periods beginning October 1, 2008, Infineon has
prepared its financial statements in accordance with IFRS. In
connection with Infineons transition to IFRS, Infineon has
prepared financial statements for the year ended
September 30, 2008 (with comparative figures as of and for
the fiscal year ended September 30, 2007) in
accordance with IFRS. The financial information included in the
following presentation as of and for the fiscal years ended
September 30, 2007 and 2008 were derived from the
consolidated financial statements (prepared in accordance with
IFRS) of Infineon Technologies AG as of and for the fiscal year
ended September 30, 2008 (with comparative figures as of
and for the fiscal year ended September 30, 2007), which
appear in this Prospectus beginning on
page F-4.
The financial information included in the following presentation
as of and for the six months ended March 31, 2008 and 2009
were derived from the unaudited condensed consolidated financial
statements (prepared in accordance with IFRS) of Infineon
Technologies AG as of and for the six months ended
March 31, 2009 (with comparative figures as of and for the
six months ended March 31, 2008), which appear in this
Prospectus beginning on
page F-233.
For periods prior to October 1, 2008, Infineon prepared
its financial statements in accordance with U.S. GAAP. The
financial information included in the following presentation as
of and for the fiscal years ended September 30, 2006 and
2007 were derived from the audited consolidated financial
statements (prepared in accordance with U.S. GAAP) of
Infineon Technologies AG as of and for the fiscal year ended
September 30, 2007 (with comparative figures as of and for
the fiscal years ended September 30, 2005 and 2006), which
appear in this Prospectus beginning on
page F-88.
This discussion and analysis of Infineons consolidated
financial condition and results of operations contains
forward-looking statements. See General
Information Forward-Looking Statements.
Statements that are not historical facts, including statements
about Infineons 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 Infineon
undertakes no obligation to update any of them in light of new
information or future events. Forward-looking statements involve
inherent risks and uncertainties. Infineon cautions potential
investors that a number of important factors could cause actual
results or outcomes to differ materially from those expressed in
any forward-looking statement. These factors include those
identified under the heading Risk Factors and
elsewhere in this Prospectus.
Infineons
Business
Infineon designs, develops, manufactures and markets a broad
range of semiconductors and complete system solutions used in a
wide variety of microelectronic applications, including computer
systems, telecommunications systems, consumer goods, automotive
products, industrial automation and control systems, and chip
card applications. Infineons products include standard
commodity components, full-custom devices, semi-custom devices,
and application-specific components for analog, digital, and
mixed-signal applications. Infineon has operations, investments,
and customers located mainly in Europe, Asia and North America.
Infineons main business is currently organized in five
operating segments: Automotive, Industrial &
Multimarket, Chip Card & Security, Wireless Solutions,
and Wireline Communications:
|
|
|
|
|
The Automotive segment designs, develops, manufactures and
markets semiconductors for use in automotive applications.
Together with its product portfolio, Infineon offers
corresponding system know-how and support to its customers.
|
|
|
|
The Industrial & Multimarket segment designs,
develops, manufactures and markets semiconductors and complete
system solutions primarily for use in industrial
applications and in applications with customer-specific
product requirements.
|
|
|
|
The Chip Card & Security segment designs, develops,
manufactures and markets semiconductors and complete system
solutions primarily for use in chip card and security
applications.
|
96
|
|
|
|
|
The Wireless Solutions segment designs, develops, manufactures
and markets a wide range of ICs, other semiconductors and
complete system solutions for wireless communication
applications.
|
|
|
|
The Wireline Communications segment designs, develops,
manufactures and markets a wide range of ICs, other
semiconductors and complete system solutions focused on wireline
access applications. On July 7, 2009, the Company entered
into an asset purchase agreement to sell the Wireline
Communications business, and such sale is expected to close in
the fall of 2009.
|
Infineons current segment structure reflects a
reorganization of its operations effective October 1, 2008.
Segment results for the fiscal years ended September 30,
2007 and 2008 and the six months ended March 31, 2008 and
2009 have been reclassified to be consistent with the current
reporting structure and presentation, as well as to facilitate
analysis of current and future operating segment information.
These reclassified segment results are not included in the
consolidated financial statements for the 2008 fiscal year
prepared in accordance with IFRS, which appear in this
Prospectus beginning on
page F-4.
Infineon has two additional segments for reporting purposes, its
Other Operating Segments, which includes remaining activities
for certain product lines that have been disposed of and for
other business activities, and its Corporate and Eliminations
segment, which contains items not allocated to its operating
segments, such as certain corporate headquarters costs,
strategic investments, unabsorbed excess capacity and
restructuring costs.
Effective as of May 1, 2006 through September 30,
2008, Infineon was organized in three major operating segments.
Two of these segments were application focused: Automotive,
Industrial & Multimarket and Communication Solutions.
The other segment was the memory product business of Qimonda.
These operating segments are reflected in Infineons
consolidated financial statements for the fiscal years ended
September 30, 2006, 2007 and 2008, prepared in accordance
with U.S. GAAP.
Infineon currently holds a 77.5 percent interest in the
memory products company Qimonda, which was carved out from
Infineon in 2006. During the 2008 fiscal year, Infineon
committed to a plan to dispose of Qimonda. As a result, Infineon
reports the historical results of Qimonda as discontinued
operations in its consolidated statements of operations in the
fiscal years ended September 30, 2007 and 2008, and the six
months ended March 31, 2008 and 2009, and its assets and
liabilities as held for disposal in the consolidated balance
sheet as of March 31, 2009 and September 30, 2008. On
January 23, 2009, Qimonda and its wholly owned subsidiary
Qimonda Dresden GmbH & Co. oHG filed for an
application to commence insolvency, and formal insolvency
proceedings were opened in the local registry court in Munich on
April 1, 2009. As a result of the application, Infineon
deconsolidated Qimonda during the second quarter of the 2009
fiscal year. The future of Qimonda remains highly uncertain. See
Risk Factors Risks Relating to the Company
and the Market Infineon may face significant
liabilities as a result of the insolvency of Qimonda.
Measures Taken to
Date to Improve Infineons Financial Condition
Infineon has taken the following measures to date with the goal
of cutting costs, reducing debt, preserving cash and otherwise
improving its financial condition:
Repurchase of
the New Convertible Notes due 2010 and Exchangeable Notes due
2010
During the 2008 fiscal year, Infineon repurchased an aggregate
nominal amount of 100 million of its Convertible
Notes due 2010.
Since September 30, 2008, Infineon has continued to
repurchase its Convertible Notes due 2010 and Exchangeable Notes
due 2010. In particular, on May 5, 2009, the Company
invited holders of the Convertible Notes due 2010 and
Exchangeable Notes due 2010 to submit offers to sell their
Convertible Notes due 2010 and Exchangeable Notes due 2010 to
Infineon. Through this invitation and other direct purchases,
the Company purchased an aggregate nominal amount of
246 million of the Convertible Notes due 2010 and
Exchangeable Notes due 2010 during the period from
September 30, 2008 to June 30, 2009, for a total
purchase price of approximately 161 million,
excluding related fees and expenses.
On June 30, 2009, the outstanding nominal amount of the
Convertible Notes due 2010 was 522 million, and the
outstanding nominal amount of the Exchangeable Notes due 2010
was 48 million.
97
Cost Reduction
Measures
To address rising risks in the current market environment,
adverse currency trends and below benchmark margins, Infineon
implemented its cost-reduction program IFX10+ in the
third quarter of the 2008 fiscal year. Subsequent to the end of
the 2008 fiscal year, and in light of continuing adverse
developments in general economic conditions and in its industry,
Infineon identified significant further costs savings in
addition to those originally anticipated. Infineon expects that
this program will result in significant annualized cost savings
in the next fiscal year, primarily through measures in the
following areas:
|
|
|
|
|
product portfolio management to eliminate unprofitable or
insufficiently profitable product families and to increase
efficiency in R&D;
|
|
|
|
reduction of manufacturing costs and optimization of the value
chain;
|
|
|
|
improved efficiency of processes and tasks in the fields of
general and administrative expenses, R&D, and marketing and
sales;
|
|
|
|
re-organization of Infineons structure along its target
markets. Starting October 1, 2008, Infineon is divided into
five segments: Automotive, Industrial & Multimarket,
Chip Card & Security, Wireless Solutions and Wireline
Communications; and
|
|
|
|
reductions in workforce.
|
During the 2008 fiscal year, Infineon incurred restructuring
charges of 188 million, which are primarily related
to the IFX10+ cost-reduction program.
Infineon initially expected to reach annual savings of at least
200 million, but increased annual savings
expectations in December 2008 to at least
250 million. In response to the continued and
increasingly severe deterioration in the general market
environment, Infineon implemented additional substantial cost
reductions and cash savings were achieved, and in February 2009
Infineon increased targeted savings to 600 million
for the 2009 fiscal year compared to actual costs in the 2008
fiscal year, some of which are temporary in nature and
200 million of which related to savings in operating
expenses and 400 million to manufacturing costs
savings.
The Companys operating expenses for the three months ended
June 30, 2009 decreased by 88 million when
compared to the three months ended September 30, 2008.
Company management believes that these savings are mainly due to
its IFX 10+ cost reduction program.
In the second quarter of the 2009 fiscal year, Infineon
continued to make significant progress in reducing the number of
employees. As of March 31, 2009, Infineon employed
26,362 employees compared to 29,119 employees as of
September 30, 2008. As of June 30, 2008, Infineon
employed 26,108 employees. In connection with the sale of the
Wireline Communications business, approximately
900 employees will be transferred to Wireline Holdings, of
which 600 employees are from the Wireline Communications
division and 300 employees are currently working in central
functions mainly for the Wireline Communications segment.
Issuance of
New Notes
On May 26, 2009, the Company, through its subsidiary
Infineon Technologies Holding B.V., issued
196 million in New Convertible Notes due 2014 at a
discount of 7.2 percent in an offering to institutional
investors guaranteed by the Company. The notes are convertible,
at the option of the holders of the notes, into a maximum of
74.9 million ordinary shares of the Company, at a
conversion price of 2.61 per share through maturity. The
notes accrue interest at 7.5 percent per year. The
principal of the notes is unsecured and ranks pari passu
with all present and future unsecured subordinated
obligations of the issuer. The coupons of the notes are secured
and unsubordinated. The noteholders have a negative pledge
relating to future capital market indebtedness and an early
redemption option in the event of a change of control. The
Company may redeem the New Convertible Notes due 2014 after two
and a half years at their nominal amount plus interest accrued
thereon, if the Companys closing share price exceeds
150 percent of the conversion price on 15 out of the last
30 consecutive trading days. The notes are listed on the Open
Market (Freiverkehr) of the Frankfurt Stock Exchange.
98
Divestiture of
the Wireline Communications Business
On July 7, 2009, the Company entered into the Asset
Purchase Agreement to sell the Wireline Communications business
for cash consideration of 250 million. The majority
of the purchase price is payable at closing, which is expected
to occur in the fall of 2009, with 20 million of the
purchase price being payable 9 months after the closing
date. Infineon is selling the Wireline Communications business
in order to focus on the further development of its main
business, its strategy and strong position in the key areas of
energy efficiency, security and communications, while at the
same time further improving its balance sheet and strengthening
its liquidity position. The sale is expected to close in the
fall of 2009. The sale of the Wireline Communications business
will allow Infineon to concentrate on its four remaining
operating segments. Golden Gate Private Equity is expected to
support the Wireline Communications business in its continued
development of innovative broadband products and other growth
opportunities in the wireline communications market. See
Business Acquisitions, Dispositions and
Discontinued Operations Sale of Wireline
Communications business.
The Semiconductor
Industry and Factors that Impact Infineons
Business
Infineons business and the semiconductor industry
generally are highly cyclical and characterized by constant and
rapid technological change, rapid product obsolescence and price
erosion, evolving standards, short product life-cycles and wide
fluctuations in product supply and demand.
Cyclicality
The market for semiconductors has historically been volatile.
Supply and demand have fluctuated cyclically and have caused
pronounced fluctuations in prices and margins. According to
iSuppli (May 2009), the overall market growth compared to the
previous year was 10 percent in 2006 and four percent in
2007, before shrinking by five percent in 2008. iSuppli (May
2009) predicts that the overall market will contract by
approximately 24 percent in the 2009 calendar year.
The industrys cyclicality results from a complex set of
factors, including, in particular, fluctuations in demand for
the end products that use semiconductors and fluctuations in the
manufacturing capacity available to produce semiconductors.
Semiconductor fabs can take several years to plan, construct,
and begin operations. Semiconductor manufacturers have in the
past made capital investments in plant and equipment during
periods of favorable market conditions, in response to
anticipated demand growth for semiconductors. If more than one
of these newly built fabs comes on-line at approximately the
same time, the supply of chips to the market can be vastly
increased. Without sustained growth in demand, this cycle has
typically led to manufacturing over-capacity and oversupply of
products, which in turn has led to sharp drops in semiconductor
prices. When prices drop, manufacturers have in the past cut
back on investing in new fabs. As demand for chips grows over
time, without additional fabs coming on-line, prices tend to
rise, leading to a new cycle of investment. The semiconductor
industry has generally been slow to react to declines in demand,
due to its capital-intensive nature and the need to make
commitments for equipment purchases well in advance of planned
expansion.
Infineon attempts to mitigate the impact of cyclicality by
investing in manufacturing capacities throughout the cycle and
entering into alliances and foundry manufacturing arrangements
that provide flexibility in responding to changes in the cycle.
See Risk Factors Infineon operates in a
highly cyclical industry and its business has in the past
suffered, is currently suffering and could again suffer from
periodic downturns.
Substantial
Capital and R&D Expenditures
Semiconductor manufacturing is very capital-intensive. The
manufacturing capacities that are essential to maintain a
competitive cost position require large capital investments. The
top 10 capital spenders in the industry, according to IC
Insights, account for approximately 60 percent of the
industrys projected 2009 capital spending budgets.
Manufacturing processes and product designs are based on
leading-edge technologies that require considerable R&D
expenditures. A high percentage of the cost of operating a fab
is fixed; therefore, increases or decreases in capacity
utilization can have a significant effect on profitability. See
Risk Factors In difficult market
conditions, Infineons high fixed costs adversely affect
its results.
99
Because pricing, for commodity products in particular, is
market-driven and largely beyond Infineons control, a key
factor in achieving and maintaining profitability is to
continually lower
per-unit
costs by reducing total costs and by increasing unit production
output through productivity improvements.
To reduce total costs, Infineon intends to share the costs of
its R&D and manufacturing facilities with third parties,
either by establishing alliances or through the use of foundry
facilities for manufacturing. Infineon believes that cooperation
in alliances for R&D, as well as manufacturing and foundry
partnerships, provide it with a number of important benefits,
including the sharing of risks and costs, reductions in its own
capital requirements, acquisitions of technical know-how, and
access to additional production capacities. Infineons
principal alliances are with IBM, Chartered Semiconductor
Manufacturing Ltd., Singapore (Chartered
Semiconductor) and Samsung Electronics Co. Ltd.,
Seoul, Korea (Samsung) for CMOS development
and manufacturing at 65-nanometer, 45-nanometer, and
32-nanometer process technologies. Furthermore, Infineon has
established foundry relationships with United Microelectronics
Corporation, Taipei, Taiwan (UMC) for
130-nanometer and 90-nanometer manufacturing and with Taiwan
Semiconductor Manufacturing Corporation
(TSMC), particularly with respect to
leading-edge CMOS products for wireless communications down to
90-nanometer. In the backend field, in August 2008, Infineon,
STMicroelectronics NV and STATS ChipPAC Ltd. announced an
agreement to jointly develop the next-generation of embedded
Wafer-Level Ball Grid Array (eWLB)
technology, based on its first-generation technology, for use in
manufacturing future-generation semiconductor packages. This
project will build on Infineons existing eWLB packaging
technology, which Infineon has licensed to its development
partners. The new R&D effort, for which the resulting
intellectual property (IP) will be jointly
owned by the three companies, will focus on using both sides of
a reconstituted wafer to provide solutions for semiconductor
devices with a higher integration level and a greater number of
contact elements.
Infineon expects to continue to increase unit production output
through improvements in manufacturing, which is achieved by
producing chips with smaller structure sizes and by producing
more chips per silicon wafer (by using larger wafers).
Currently, a substantial portion of Infineons standard
CMOS manufacturing capacity is based on 130-nanometer structure
sizes. Infineons 130-nanometer process technology, with up
to eight layers of copper metallization, is in full production
at several manufacturing sites, including Infineons
Dresden facility. Additional 130-nanometer process options have
been developed to fulfill the needs of specialty applications.
Infineons 90-nanometer technology is in production.
Infineon is currently qualifying 65-nanometer technology at
several manufacturing partners and has begun to develop products
based on 40-nanometer technology which is currently planned to
be manufactured initially at one of its manufacturing
partners facilities.
Approximately half of Infineons fab capacity is used for
the manufacture of power semiconductors used in automotive and
industrial applications. Infineon has front-end power
semiconductor manufacturing sites in Regensburg, Germany, in
Villach, Austria, and in Kulim, Malaysia. Infineon continues to
focus on innovation for power semiconductors, introducing power
copper metallization and special processes to fabricate ever
thinner wafers to optimize electrical resistance.
Technological
Development and Competition
Infineons products generally have a certain degree of
application specification. Sales prices per unit are volatile
and generally decline over time due to technological
developments and competitive pressure. Unit sales prices
typically decline over time as technological developments occur.
Infineon aims to offset the effects of declining unit sales
prices on total net sales by optimizing product mix, by
increasing unit sales volume and by continually reducing
per-unit
production costs. The growth in volume depends in part on
productivity improvements in manufacturing.
Seasonality
Infineons sales are affected by seasonal and cyclical
influences, with sales historically strongest in its fourth
fiscal quarter. These short cycles are influenced by longer
cycles that are a response to innovative technical solutions
from Infineons customers that incorporate its products.
The short-term and mid-term cyclicality of Infineons sales
reflects the supply and demand fluctuations for products that
contain its semiconductors. If anticipated sales or shipments do
not occur when expected, expenses and inventory levels in a
given quarter can be disproportionately high, and
Infineons results of operations for that quarter, and
potentially for future quarters, may be adversely affected.
100
Product
Development Cycles
The cycle for test, evaluation and adoption of Infineons
products by customers before the start of volume production can
range from several months to more than one year or even several
years for automotive products. Due to this lengthy cycle,
Infineon may experience significant delays from the time it
incurs expenses for R&D, marketing efforts, and investments
in inventory, to the time Infineon generates corresponding
revenue, if any.
Acquisition
and Divestiture Strategy
Two key elements of Infineons core business strategy are
to seek to reduce the time required to develop new technologies
and products and bring them to market, and to optimize its
existing product offerings, market coverage, engineering
workforce, and technological capabilities. Infineon plans to
continue to evaluate strategic opportunities as they arise,
including business combination transactions, strategic
relationships, capital investments, and the purchase or sale of
assets or businesses.
Intellectual
Property
Due to the high-technology nature of the semiconductor industry,
intellectual property or IP, meaning intangible assets relating
to proprietary technology, is of significant importance.
Infineon also derives modest revenues from the licensing of its
IP, generally pursuant to cross licensing arrangements.
Challenges
that Lie Ahead
Going forward, Infineons success will remain highly
dependent on its ability to stay at the leading edge of
technology development, and to continue to optimize its product
portfolio. Infineon must achieve both objectives to ensure that
it has the flexibility to react to fluctuations in market demand
for different types of semiconductor products. Infineon believes
that the ability to offer, and the flexibility to manufacture, a
broad portfolio of products will be increasingly important to
its long-term success in many markets within the semiconductor
industry. Establishing and maintaining advantageous technology,
development and manufacturing alliances, including the use of
third-party foundries, and continuing its efforts to broaden its
product portfolio while focusing on its core competencies will
make it easier for Infineon to respond to changes in market
conditions and to improve its financial performance.
101
Results of
Operations
The following table presents the various line items in
Infineons consolidated statements of operations for the
2007 and 2008 fiscal years and for the six months ended March,
31 2008 and 2009, prepared in accordance with IFRS, as well as
expressing them as a percentage of revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September
30,(1)
|
|
|
For the six months ended March
31,(1)(2)
|
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
Percentage
|
|
(IFRS)
|
|
in million
|
|
|
of revenue
|
|
|
In million
|
|
|
of revenue
|
|
|
in million
|
|
|
of revenue
|
|
|
in million
|
|
|
of revenue
|
|
|
Revenue
|
|
|
4,074
|
|
|
|
100.0
|
%
|
|
|
4,321
|
|
|
|
100
|
%
|
|
|
2,139
|
|
|
|
100
|
%
|
|
|
1,577
|
|
|
|
100
|
%
|
Cost of goods sold
|
|
|
(2,716
|
)
|
|
|
(66.7
|
)
|
|
|
(2,843
|
)
|
|
|
(65.8
|
)
|
|
|
(1,390
|
)
|
|
|
(65.0
|
)
|
|
|
(1,312
|
)
|
|
|
(83.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
1,358
|
|
|
|
33.3
|
|
|
|
1,478
|
|
|
|
34.2
|
|
|
|
749
|
|
|
|
35.0
|
|
|
|
265
|
|
|
|
16.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
(743
|
)
|
|
|
(18.2
|
)
|
|
|
(694
|
)
|
|
|
(16.1
|
)
|
|
|
(351
|
)
|
|
|
(16.4
|
)
|
|
|
(271
|
)
|
|
|
(17.2
|
)
|
Selling, and general administrative expenses
|
|
|
(504
|
)
|
|
|
(12.4
|
)
|
|
|
(565
|
)
|
|
|
(13.1
|
)
|
|
|
(270
|
)
|
|
|
(12.6
|
)
|
|
|
(222
|
)
|
|
|
(14.1
|
)
|
Other operating income
|
|
|
38
|
|
|
|
0.9
|
|
|
|
120
|
|
|
|
2.8
|
|
|
|
48
|
|
|
|
2.2
|
|
|
|
18
|
|
|
|
1.2
|
|
Other operating expenses
|
|
|
(57
|
)
|
|
|
(1.4
|
)
|
|
|
(366
|
)
|
|
|
(8.4
|
)
|
|
|
(39
|
)
|
|
|
(1.8
|
)
|
|
|
(50
|
)
|
|
|
(3.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
92
|
|
|
|
2.2
|
|
|
|
(27
|
)
|
|
|
(0.6
|
)
|
|
|
137
|
|
|
|
6.4
|
|
|
|
(260
|
)
|
|
|
(16.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
107
|
|
|
|
2.7
|
|
|
|
58
|
|
|
|
1.3
|
|
|
|
31
|
|
|
|
1.4
|
|
|
|
81
|
|
|
|
5.1
|
|
Financial expense
|
|
|
(243
|
)
|
|
|
(6.0
|
)
|
|
|
(182
|
)
|
|
|
(4.1
|
)
|
|
|
(88
|
)
|
|
|
(4.1
|
)
|
|
|
(88
|
)
|
|
|
(5.6
|
)
|
Income from investments accounted for using the equity method,
net
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
2
|
|
|
|
0.1
|
|
|
|
3
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before income taxes
|
|
|
(44
|
)
|
|
|
(1.1
|
)
|
|
|
(147
|
)
|
|
|
(3.4
|
)
|
|
|
82
|
|
|
|
3.8
|
|
|
|
(264
|
)
|
|
|
(16.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (expense)
|
|
|
1
|
|
|
|
|
|
|
|
(41
|
)
|
|
|
(0.9
|
)
|
|
|
(23
|
)
|
|
|
(1.0
|
)
|
|
|
(2
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(43
|
)
|
|
|
(1.1
|
)
|
|
|
(188
|
)
|
|
|
(4.3
|
)
|
|
|
59
|
|
|
|
2.8
|
|
|
|
(266
|
)
|
|
|
(16.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
(327
|
)
|
|
|
(8.0
|
)
|
|
|
(3,559
|
)
|
|
|
(82.4
|
)
|
|
|
(2,543
|
)
|
|
|
(118.9
|
)
|
|
|
(396
|
)
|
|
|
(25.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(370
|
)
|
|
|
(9.1
|
)%
|
|
|
(3,747
|
)
|
|
|
(86.7
|
)%
|
|
|
(2,484
|
)
|
|
|
(116.1
|
)%
|
|
|
(662
|
)
|
|
|
(42.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
(23
|
)
|
|
|
(0.6
|
)%
|
|
|
(812
|
)
|
|
|
(18.8
|
)%
|
|
|
(552
|
)
|
|
|
(25.8
|
)%
|
|
|
(49
|
)
|
|
|
(3,1
|
)%
|
Shareholders of Infineon Technologies AG
|
|
|
(347
|
)
|
|
|
(8.5
|
)%
|
|
|
(2,935
|
)
|
|
|
(67.9
|
)%
|
|
|
(1,932
|
)
|
|
|
(90.3
|
)%
|
|
|
(613
|
)
|
|
|
(38.9
|
)%
|
Notes
|
|
(1)
|
Columns may not add up due to rounding.
|
|
(2)
|
Unaudited.
|
102
The following table presents the various line items in
Infineons consolidated statements of operations for the
2006 and 2007 fiscal years, prepared in accordance with
U.S. GAAP, as well as expressing them as a percentage of
net sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September
30,(1)
|
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
Percentage
|
|
(U.S. GAAP)
|
|
in million
|
|
|
of net sales
|
|
|
in million
|
|
|
of net sales
|
|
|
Net sales
|
|
|
7,929
|
|
|
|
100.0
|
%
|
|
|
7,682
|
|
|
|
100.0
|
%
|
Cost of goods sold
|
|
|
(5,854
|
)
|
|
|
(73.8
|
)
|
|
|
(6,092
|
)
|
|
|
(79.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
2,075
|
|
|
|
26.2
|
|
|
|
1,590
|
|
|
|
20.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
(1,249
|
)
|
|
|
(15.8
|
)
|
|
|
(1,169
|
)
|
|
|
(15.2
|
)
|
Selling, and general administrative expenses
|
|
|
(751
|
)
|
|
|
(9.5
|
)
|
|
|
(700
|
)
|
|
|
(9.1
|
)
|
Restructuring charges
|
|
|
(23
|
)
|
|
|
(0.3
|
)
|
|
|
(45
|
)
|
|
|
(0.6
|
)
|
Other operating expense, net
|
|
|
(108
|
)
|
|
|
(1.4
|
)
|
|
|
(46
|
)
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(56
|
)
|
|
|
(0.8
|
)
|
|
|
(370
|
)
|
|
|
(4.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(92
|
)
|
|
|
(1.2
|
)
|
|
|
(33
|
)
|
|
|
(0.4
|
)
|
Equity in earnings of associated company, net
|
|
|
78
|
|
|
|
1.0
|
|
|
|
117
|
|
|
|
1.5
|
|
Gain on subsidiaries and associated company share issuance, net
|
|
|
19
|
|
|
|
0.2
|
|
|
|
|
|
|
|
0.0
|
|
Other non-operating income (expense), net
|
|
|
(33
|
)
|
|
|
(0.4
|
)
|
|
|
13
|
|
|
|
0.2
|
|
Minority interests
|
|
|
(23
|
)
|
|
|
(0.3
|
)
|
|
|
19
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(107
|
)
|
|
|
(1.5
|
)
|
|
|
(254
|
)
|
|
|
(3.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(161
|
)
|
|
|
(2.0
|
)
|
|
|
(79
|
)
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before extraordinary loss
|
|
|
(268
|
)
|
|
|
(3.5
|
)
|
|
|
(333
|
)
|
|
|
(4.3
|
)
|
Extraordinary loss, net of tax
|
|
|
|
|
|
|
0.0
|
|
|
|
(35
|
)
|
|
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(268
|
)
|
|
|
(3.5
|
)%
|
|
|
(368
|
)
|
|
|
(4.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
(1) |
Columns may not add up due to rounding.
|
Six Months Ended March 31, 2009 Compared with Six Months
Ended March 31, 2008, based on the Unaudited Condensed
Consolidated Financial Statements (IFRS) as of and for the Three
and Six Months ended March 31, 2009
Revenue
Infineon generates revenues primarily from the sale of its
semiconductor products and systems solutions. Infineons
semiconductor products include a wide array of chips and
components used in electronic applications ranging from wireless
and wireline communication systems, to chip cards, to automotive
electronics, and industrial applications.
Infineons revenues fluctuate in response to a combination
of factors, including the following:
|
|
|
|
|
the global and regional economic cycles;
|
|
|
|
the market prices for Infineons products, including
fluctuations in exchange rates that affect Infineons
prices;
|
|
|
|
Infineons overall product mix and sales volume;
|
|
|
|
the stage of Infineons products in their respective life
cycles;
|
|
|
|
the effects of competition and competitive pricing
strategies; and
|
|
|
|
governmental regulations influencing Infineons markets
(for example, energy efficiency regulations).
|
Infineons revenues decreased by 26 percent, from
2,139 million in the first half of the 2008 fiscal
year to 1,577 million in the first half of the 2009
fiscal year. Infineons Automotive, Industrial &
Multimarket and Chip Card & Security segments were
most affected.
103
Revenue by
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009
|
|
|
|
( in millions, except percentages)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive
|
|
|
634
|
|
|
|
30
|
%
|
|
|
395
|
|
|
|
25
|
%
|
Industrial & Multimarket
|
|
|
567
|
|
|
|
26
|
|
|
|
427
|
|
|
|
27
|
|
Chip Card & Security
|
|
|
237
|
|
|
|
11
|
|
|
|
171
|
|
|
|
11
|
|
Wireless
Solutions(1)
|
|
|
450
|
|
|
|
21
|
|
|
|
401
|
|
|
|
25
|
|
Wireline Communications
|
|
|
208
|
|
|
|
10
|
|
|
|
167
|
|
|
|
11
|
|
Other Operating
Segments(2)
|
|
|
123
|
|
|
|
6
|
|
|
|
10
|
|
|
|
1
|
|
Corporate and
Eliminations(3)
|
|
|
(80
|
)
|
|
|
(4
|
)
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,139
|
|
|
|
100
|
%
|
|
|
1,577
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
(1)
|
Includes revenues of 8 million and
1 million for the six months ended March 31,
2008 and 2009, respectively, from sales of wireless
communication applications to Qimonda.
|
|
(2)
|
Includes revenues of 70 million for the six months
ended March 31, 2008, from sales of wafers from
Infineons 200-millimeter facility in Dresden to Qimonda
under a foundry agreement.
|
|
(3)
|
Includes the elimination of revenues of 78 million
and 1 million for the six months ended March 31,
2008 and 2009, respectively, since these sales were not part of
the Qimonda disposal plan.
|
|
|
|
|
|
Automotive In the six months ended
March 31, 2009, revenues of the Automotive segment
decreased by 38 percent to 395 million, compared
to 634 million in the six months ended March 31,
2008. This decrease mainly reflected the continuing
demand-driven worldwide downturn in the automobile market as
well as inventory adjustments in the value chain.
|
|
|
|
Industrial & Multimarket In
the six months ended March 31, 2009, revenues of the
Industrial & Multimarket segment decreased by
25 percent to 427 million, compared to
567 million in the six months ended March 31,
2008. This decrease primarily resulted from weak demand for
consumer products as well as inventory adjustments in the value
chain.
|
|
|
|
Chip Card & Security In the
six months ended March 31, 2009, revenues of the Chip
Card & Security segment decreased by 28 percent
to 171 million, compared to 237 million in
the six months ended March 31, 2008. This decrease was
mainly driven by decreases in revenues from government
identification and payment & communication
applications.
|
|
|
|
Wireless Solutions In the six months
ended March 31, 2009, revenues of the Wireless Solutions
segment decreased by 11 percent to 401 million,
compared to 450 million in the six months ended
March 31, 2008, mainly driven by a weakened demand due to
the economic downturn and resulting decline in handset sales.
|
|
|
|
Wireline Communications In the six
months ended March 31, 2009, revenues of the Wireline
Communications segment decreased by 20 percent to
167 million, compared to 208 million in
the six months ended March 31, 2008. This decrease was
mainly driven by the economic slowdown and inventory corrections
in the supply chain.
|
|
|
|
Other Operating segments In the six
months ended March 31, 2009, revenues of other operating
segments decreased by 92 percent to 10 million,
compared to 123 million in the six months ended
March 31, 2008. Revenues of other operating segments in the
six months ended March 31, 2008 comprised mainly revenues
from sales of wafers from Infineons 200-millimeter
facility in Dresden to Qimonda under a foundry agreement, which
revenues have been eliminated in the Corporate and Eliminations
segment. Effective November 30, 2007, Qimonda canceled the
foundry agreement. The last wafers were delivered to Qimonda in
May 2008. Furthermore, revenues of other operating segments in
the six months ended March 31, 2008, included revenues from
Infineon hard disk drive (HDD) business which
Infineon sold to LSI Corporation (LSI) in
April 2008.
|
104
Revenue by
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009
|
|
|
|
( in millions, except percentages)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
460
|
|
|
|
21
|
%
|
|
|
315
|
|
|
|
20
|
%
|
Other Europe
|
|
|
409
|
|
|
|
19
|
%
|
|
|
286
|
|
|
|
18
|
%
|
North America
|
|
|
282
|
|
|
|
13
|
%
|
|
|
164
|
|
|
|
11
|
%
|
Asia/Pacific
|
|
|
848
|
|
|
|
40
|
%
|
|
|
720
|
|
|
|
46
|
%
|
Japan
|
|
|
104
|
|
|
|
5
|
%
|
|
|
72
|
|
|
|
4
|
%
|
Other
|
|
|
36
|
|
|
|
2
|
%
|
|
|
20
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,139
|
|
|
|
100
|
%
|
|
|
1,577
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The regional distribution of revenues in the six months ended
March 31, 2009, changed compared to the six months ended
March 31, 2008, primarily reflecting changes in the
revenues of the segments. The shift in the regional distribution
from Germany, other Europe, and North America to Asia/Pacific
resulted primarily from the significant revenue decreases of
Infineons Automotive segment, whose customers are based
largely in Germany, other Europe and North America. Furthermore,
increased revenues of the Wireless Solutions segment in
Asia/Pacific during the six months ended March 31, 2009,
compared to the six months ended March 31, 2008,
contributed to the changes in the regional distribution of
revenues.
Cost of Goods
Sold and Gross Profit
Infineons cost of goods sold consists principally of:
|
|
|
|
|
direct materials costs, which consist principally of raw wafer
costs;
|
|
|
|
labor costs;
|
|
|
|
overhead costs, including maintenance of production equipment,
indirect materials, utilities and royalties;
|
|
|
|
depreciation and amortization, including amortization of
capitalized development cost;
|
|
|
|
subcontracted expenses for assembly and test services;
|
|
|
|
production support costs, including facilities, utilities,
quality control, automated systems and management
functions; and
|
|
|
|
foundry production costs.
|
In addition to factors that affect Infineons revenue, its
gross profit is impacted by:
|
|
|
|
|
factory utilization rates and related idle capacity costs;
|
|
|
|
amortization of purchased intangible assets and capitalized
development costs;
|
|
|
|
product warranty costs;
|
|
|
|
provisions for excess or obsolete inventories; and
|
|
|
|
government grants, which are recognized over the remaining
useful life of the related manufacturing assets.
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009
|
|
|
|
( in millions, except percentages)
|
|
|
Cost of goods sold
|
|
|
1,390
|
|
|
|
1,312
|
|
Gross profit
|
|
|
749
|
|
|
|
265
|
|
Percentage of revenues
|
|
|
35
|
%
|
|
|
17
|
%
|
In the six months ended March 31, 2009, cost of goods sold
decreased by 6 percent to 1,312 million,
compared to 1,390 million in the six months ended
March 31, 2008. As a percentage of revenue,
105
Infineons gross profit decreased from 35 percent in
the six months ended March 31, 2008 to 17 percent in
the six months ended March 31, 2009. This deterioration
primarily resulted from lower sales volumes and higher idle
capacity cost throughout all segments.
Research and
Development Expenses
R&D expenses consist primarily of salaries and benefits for
R&D personnel, material costs, depreciation and maintenance
of equipment used in Infineons R&D efforts, and
contracted technology development costs. R&D expenses also
include Infineons joint technology development
arrangements with partners such as IBM. Costs of research
activities undertaken with the prospect of gaining new
scientific or technical knowledge and understanding are expensed
as incurred. Costs for development activities, whereby research
findings are applied to a plan or design for the production of
new or substantially improved products and processes, are
capitalized if development costs can be measured reliably, the
product or process is technically and commercially feasible,
future economic benefits are probable, and Infineon intends, and
has sufficient resources, to complete development and use or
sell the asset. The costs capitalized include the cost of
materials, direct labor and directly attributable general
overhead expenditure that serves to prepare the asset for use.
Infineon continues to focus its investments on the development
of leading-edge manufacturing technologies and products with
high potential for growth and profitability.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
( in millions, except percentages)
|
|
|
|
|
|
Research and development expenses
|
|
|
|
|
|
|
351
|
|
|
|
271
|
|
|
|
|
|
Percentage of revenue
|
|
|
|
|
|
|
16
|
%
|
|
|
17
|
%
|
|
|
|
|
Government subsidies
|
|
|
|
|
|
|
37
|
|
|
|
29
|
|
|
|
|
|
Percentage of revenue
|
|
|
|
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
|
|
Some of Infineons R&D projects qualify for subsidies
from local and regional governments where it does business. If
the criteria to receive a grant are met, the subsidies received
reduce R&D expenses over the project term as expenses are
incurred.
In the six months ended March 31, 2009, R&D expenses
decreased by 23 percent to 271 million, compared
to 351 million in the six months ended March 31,
2008. This decrease resulted primarily from cost savings
measures which were implemented under Infineons IFX10+
cost-reduction program. Additionally, the reversal of bonus
provisions and lower bonus and incentive expenses due to
Infineons current results contributed to the decrease in
R&D expenses. As a percentage of revenues, R&D
expenses in the six months ended March 31, 2009, slightly
increased compared to the six months ended March 31, 2008,
reflecting lower revenues in the six months ended March 31,
2009.
R&D expenses decreased throughout all segments in the six
months ended March 31, 2009 compared to the six months
ended March 31, 2008, primarily as a result of implemented
cost savings measures. As a percentage of revenues the R&D
expenses decreased in the Wireless Solutions segment, the
Wireline Communications segment and other operating segments
despite the significant decreases in revenues in these segments.
The R&D expenses as a percentage of revenues increased in
the Automotive segment, the Industrial & Multimarket
segment and the Chip Card & Security segment.
Selling,
General and Administrative Expense
Selling expenses consist primarily of salaries and benefits for
personnel engaged in sales and marketing activities, costs of
customer samples, other marketing incentives, and related
marketing expenses.
General and administrative expenses consist primarily of
salaries and benefits for administrative personnel,
non-manufacturing related overhead costs, consultancy, legal and
other fees for professional services, recruitment and training
expenses.
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
( in millions, except percentages)
|
|
|
|
|
|
Selling, general and administrative expense
|
|
|
|
|
|
|
270
|
|
|
|
222
|
|
|
|
|
|
Percentage of revenues
|
|
|
|
|
|
|
13
|
%
|
|
|
14
|
%
|
|
|
|
|
In the six months ended March 31, 2009, selling, general
and administrative expenses decreased by 18 percent to
222 million, compared to 270 million the
six months ended March 31, 2008. This decrease primarily
reflected cost savings as a result of Infineons IFX10+
cost-reduction program. Additionally, the reversal of bonus
provisions and lower bonus and incentive expenses due to
Infineons current results contributed to the decrease of
selling, general and administrative expenses. As a percentage of
revenues, selling, general and administrative expenses increased
slightly to 14 percent in the six months ended
March 31, 2009 compared to 13 percent in the six
months ended March 31, 2008, primarily as a result of lower
revenues, despite lower selling, general and administrative
expenses in absolute terms.
Other
Items Affecting Earnings
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Other operating income
|
|
|
48
|
|
|
|
18
|
|
Other operating expense
|
|
|
(39
|
)
|
|
|
(50
|
)
|
Financial income
|
|
|
31
|
|
|
|
81
|
|
Financial expense
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Income from investments accounted for using the equity method,
net
|
|
|
2
|
|
|
|
3
|
|
In the six months ended March 31, 2009, other operating
income decreased by 63 percent to 18 million,
compared to 48 million in the six months ended
March 31, 2008. Other operating income for the six months
ended March 31, 2008 included a gain before tax of
28 million from the sale of 40 percent of
Infineons interest in Infineon Technologies Bipolar
GmbH & Co. KG (Bipolar) to Siemens
AG (Siemens).
In the six months ended March 31, 2009, other operating
expense increased by 28 percent to 50 million,
compared to 39 million in the six months ended
March 31, 2008. This increase primarily related to the loss
on the sale of the SensoNor business of 16 million,
which was partly offset by lower restructuring expenses in the
six months ended March 31, 2009. Other operating expense in
the six months ended March 31, 2008, also included an
amount of 14 million allocated to purchased
in-process R&D from the acquisition of the mobility product
business of LSI which was expensed because there was no future
economic benefit from its use or disposal.
In the six months ended March 31, 2009, financial income
increased by 161 percent to 81 million, compared
to 31 million the six months ended March 31,
2008. This increase primarily resulted from the
48 million gain Infineon realized in the six months
ended March 31, 2009, from the repurchase of Convertible
Notes due 2010 and Exchangeable Notes due 2010.
In the six months ended March 31, 2009, financial expense
remained unchanged compared to the six months ended
March 31, 2008 at 88 million, as increased
valuation charges and losses on sales of financial assets were
nearly offset by reduced interest expenses.
Income from investments accounted for using the equity method,
net for the periods presented consisted of Infineons share
in the net income of Bipolar.
Segment
Result
Since October 1, 2008, the Management Board has used the
financial measure Segment Result to assess the operating
performance of Infineons reportable segments and as a
basis for allocating resources among the segments. Infineon
defines Segment Result as operating income (loss) excluding
asset impairments net of reversals, restructuring and other
related closure costs, share-based compensation expense,
acquisition-related amortization and gains (losses), gains
(losses) on sales of assets, businesses, or interests in
subsidiaries, and other income (expense), including litigation
settlement costs.
107
Gains (losses) on sales of assets, businesses, or interests in
subsidiaries, include, among others, gains or losses that may be
realized from potential sales of investments and activities.
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Segment Result:
|
|
|
|
|
|
|
|
|
Automotive
|
|
|
48
|
|
|
|
(121
|
)
|
Industrial & Multimarket
|
|
|
49
|
|
|
|
(5
|
)
|
Chip Card & Security
|
|
|
36
|
|
|
|
(9
|
)
|
Wireless Solutions
|
|
|
2
|
|
|
|
(73
|
)
|
Wireline Communications
|
|
|
7
|
|
|
|
3
|
|
Other Operating Segments
|
|
|
7
|
|
|
|
(4
|
)
|
Corporate and Eliminations
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
147
|
|
|
|
(212
|
)
|
|
|
|
|
|
|
|
|
|
Segment Result development for Infineons operating
segments was as follows:
|
|
|
|
|
Automotive In the six months ended
March 31, 2009, Segment Result decreased by
169 million to negative 121 million,
compared to positive 48 million in the six months
ended March 31, 2008, mainly due to the significant decline
in revenues and higher idle capacity costs which were only
partially offset by savings realized by the segment under the
IFX10+ cost-reduction program.
|
|
|
|
Industrial & Multimarket In
the six months ended March 31, 2009, Segment Result
decreased by 54 million to negative
5 million, compared to positive 49 million
in the six months ended March 31, 2008. This decrease was
mainly caused by the decline in revenues and an increase in idle
capacity costs which could only be partially offset by savings
realized by the segment under the IFX10+ cost-reduction program.
|
|
|
|
Chip Card & Security In the
six months ended March 31, 2009, Segment Result decreased
by 45 million to negative 9 million,
compared to positive 36 million in the six months
ended March 31, 2008, mainly due to reduced gross margins
in-line with the revenue decline and accompanied by increased
idle capacity costs. Realized savings under the IFX10+
cost-reduction program only partially offset these effects.
|
|
|
|
Wireless Solutions In the six months
ended March 31, 2009, Segment Result decreased by
75 million to negative 73 million,
compared to positive 2 million in the six months
ended March 31, 2008. This decrease was mainly due to the
significant decline in revenues and an increase in idle capacity
costs which could only be partially offset by the measures the
segment has implemented under the IFX10+ cost-reduction program.
|
|
|
|
Wireline Communications In the
six months ended March 31, 2009, Segment Result decreased
by 57 percent to 3 million, compared to
7 million in the six months ended March 31,
2008. The decline resulted from lower revenues and was partly
offset by the measures the segment has implemented under the
IFX10+ cost-reduction program.
|
|
|
|
Other Operating Segments In the six
months ended March 31, 2009, Segment Result decreased by
11 million to negative 4 million, compared
to positive 7 million in the six months ended
March 31, 2008, primarily due to the significant decrease
in revenues of the other operating segments.
|
108
The following table provides the reconciliation of the combined
Segment Result to Infineons income (loss) from continuing
operations before income tax:
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Combined Segment Result
|
|
|
147
|
|
|
|
(212
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
Asset impairments, net of reversals
|
|
|
2
|
|
|
|
(1
|
)
|
Restructuring and other related closure cost
|
|
|
(9
|
)
|
|
|
(6
|
)
|
Share-based compensation expense
|
|
|
(3
|
)
|
|
|
(1
|
)
|
Acquisition-related amortization and losses
|
|
|
(14
|
)
|
|
|
(12
|
)
|
Gains (losses) on sales of assets, businesses, or interests in
subsidiaries
|
|
|
14
|
|
|
|
(17
|
)
|
Other expense, net
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
137
|
|
|
|
(260
|
)
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
31
|
|
|
|
81
|
|
Financial expense
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Income from investment accounted for using the equity method, net
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income tax
|
|
|
82
|
|
|
|
(264
|
)
|
|
|
|
|
|
|
|
|
|
Income
Taxes
Income (loss) from continuing operations before income taxes and
income tax expense (benefit) are as follows:
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009
|
|
|
|
( in millions, except
|
|
|
|
percentages
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
82
|
|
|
|
(264
|
)
|
Income tax expense
|
|
|
23
|
|
|
|
2
|
|
Effective tax rate
|
|
|
28
|
%
|
|
|
|
|
Generally, deferred tax assets in tax jurisdictions that have a
three-year cumulative loss are subject to a valuation allowance
excluding the impact of forecasted future taxable income.
In the six months ended March 31, 2008 and 2009,
Infineons income tax expense and benefit was affected by
lower foreign tax rates, tax credits and the need for valuation
allowances on deferred tax assets in certain jurisdictions.
109
Loss from
discontinued operations, net of income taxes
The results of Qimonda presented in the condensed consolidated
statements of operations as discontinued operations consist of
the following components:
|
|
|
|
|
|
|
|
|
|
|
Six months ended March 31,
|
|
(IFRS)
|
|
2008
|
|
|
2009(1)
|
|
|
|
( in millions)
|
|
|
Revenue
|
|
|
925
|
|
|
|
314
|
|
Costs and expenses
|
|
|
(2,014
|
)
|
|
|
(867
|
)
|
Reversal (write-down) of measurement to fair value less costs to
sell
|
|
|
(1,442
|
)
|
|
|
460
|
|
Expenses resulting from Qimondas application to open
insolvency proceedings
|
|
|
|
|
|
|
(203
|
)
|
|
|
|
|
|
|
|
|
|
Losses resulting from the realization from accumulated losses
related to unrecognized currency translation effects upon
deconsolidation
|
|
|
|
|
|
|
(100
|
)
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, before income taxes
|
|
|
(2,531
|
)
|
|
|
(396
|
)
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
(2,543
|
)
|
|
|
(396
|
)
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
(1) |
|
No further information concerning
Qimondas condensed consolidated statements of operations
has been available for the period from January 1, 2009 to
January 23, 2009, the date of the application to commence
insolvency proceedings. As disclosed below, due to the write
down of Qimondas net assets to zero as of
September 30, 2008, the operating losses of Qimonda for the
period from October 1, 2008 to January 23, 2009 did
not affect the consolidated net income of Infineon, but instead
were eliminated via an offsetting partial reversal of previously
recorded impairments. Therefore, while the amount of revenue and
costs and expenses in the table above exclude amounts for the
period from January 1, 2009 to January 23, 2009, the
loss from discontinued operations, net of income taxes of
396 million is unaffected.
|
In the six months ended March 31, 2008, loss from
discontinued operations, net of income taxes amounted to
2,543 million and included Qimondas net loss
and an after tax write-down of 1,442 million in order
to remeasure Qimonda to its estimated fair value less costs to
sell as of March 31, 2008. During the six months ended
March 31, 2009, loss from discontinued operations, before
income taxes, totaled 396 million. This amount was
primarily composed of the realization of accumulated currency
translation effects totaling 188 million and
provisions and allowances of 203 million resulting
from Qimondas insolvency described below. The realization
of accumulated currency translation effects, which were
previously recorded in equity, resulted mainly from
Qimondas sale of its interest in Inotera Memories Inc.
(Inotera) to Micron Technology, Inc.
(Micron) in November 2008 and the
deconsolidation of Qimonda in the second quarter of the 2009
fiscal year.
As a result of the commencement of insolvency proceedings by
Qimonda, Infineon is exposed to potential liabilities arising in
connection with the Qimonda business. Such potential liabilities
include, among others, pending antitrust and securities law
claims, potential claims for repayment of governmental
subsidies, employee-related contingencies and purported unfair
dismissal claims by employees of Qimonda North America. For
pending antitrust and securities law claims, Infineon is a named
defendant and therefore potentially liable to third parties.
Qimonda is required to indemnify Infineon, in whole or in part,
for any claim (including any related expenses) arising in
connection with these pending antitrust and securities law
claims. As a result of Qimondas insolvency, it is very
unlikely that Qimonda will be able to indemnify Infineon for
these losses. In addition, as a result of Qimondas
insolvency, Qimonda may not be in compliance with certain
requirements of governmental subsidies received prior to the
carve-out of Qimonda from Infineon. Depending on the actions of
the insolvency administrator, repayment of some of these
subsidies could be sought from Infineon. In addition, in its
capacity as a former general partner of Qimonda Dresden
GmbH &Co OHG (Qimonda Dresden),
Infineon may also be held liable for certain employee-related
contingencies in connection with Qimondas insolvency and
certain subsidies received by Qimonda Dresden. Furthermore,
Infineon is subject to a pending lawsuit in Delaware in which
the plaintiffs are seeking to hold Infineon liable for the
payment of severance and other benefits allegedly due by Qimonda
North America in connection with the termination of employment
in connection with Qimondas insolvency. In addition,
Infineon may be subject to claims by the insolvency
administrator under specific German insolvency laws for
repayment of certain amounts received by Infineon, as a
110
Qimonda shareholder, for example, payments for intra-group
services and supplies, during defined periods prior to the
commencement of insolvency proceedings.
Infineon recorded aggregate provisions and allowances of
203 million as of March 31, 2009, relating to
the amounts which management believes are probable and can be
estimated with reasonable accuracy at this time. The recorded
provisions are primarily reflected within Current
provisions, the remainder is recorded within
Long-term provisions, respectively. There can be no
assurance that such provisions and allowances recorded will be
sufficient to cover all liabilities that may ultimately be
incurred in relation to these matters. No reasonable estimated
amount can be attributed at this time to those potential
liabilities that may occur but which are currently not viewed to
be probable. Any disclosure of amounts with respect to potential
liabilities arising in connection with Qimondas insolvency
could seriously prejudice the position of Infineon, and
therefore not further information is provided in this regard. In
preparing its financial statements for the current and
subsequent quarters, the Company will review the provisions and
allowances with respect to these and any new potential
liabilities to determine whether any adjustments should be made.
Furthermore, Infineon may lose the right to use Qimondas
intellectual property rights under the contribution agreement or
cross-license agreement between Infineon and Qimonda if and to
the extent these agreements were successfully voided or
otherwise challenged.
The insolvency of Qimonda may also subject Infineon to other
claims arising in connection with the liabilities, contracts,
offers, uncompleted transactions, continuing obligations, risks,
encumbrances and other liabilities contributed to Qimonda in
connection with the carve-out of the Qimonda business, as it is
unlikely that Qimonda will be able to fulfill its obligation to
indemnify Infineon against any such liabilities due to its
insolvency. See Risk Factors Infineon may
face significant liabilities as a result of the insolvency of
Qimonda.
The operating losses of Qimonda through deconsolidation,
exclusive of depreciation, amortization and impairment of
long-lived assets, in the three months ended December 31,
2008 were offset by a 460 million partial reversal of
the write-downs recorded in the 2008 fiscal year to reduce the
net assets of Qimonda to fair value less costs to sell. Such
reversal was recorded due to the fact that Infineon had neither
the obligation nor the intention to provide additional equity
capital to fund the operating losses of Qimonda.
Net
Loss
For the six months ended March 31, 2009, Infineon realized
a net loss of 662 million, a decrease of
73 percent compared to 2,484 million in the six
months ended March 31, 2008. In the six months ended
March 31, 2008, net loss was significantly impacted by the
results from discontinued operations, net of income tax, of
negative 2,543 million, primarily due to
Qimondas net loss, which resulted from the deterioration
in memory product prices and a weaker U.S. dollar, and
consequently a significant decrease in Qimondas gross
profit and the write-down of 1,442 million to
remeasure Qimonda to its estimated current fair value less costs
to sell, compared to negative 396 million in the six
months ended March 31, 2009. Furthermore, for the six
months ended March 31, 2009, Infineon realized a loss from
continuing operations of 266 million compared to
income from continuing operations of 59 million in
the six months ended March 31, 2008, a decrease of
325 million. This decline primarily reflected the
decrease in revenues and higher idle capacity cost, which was
partly offset by decreases in R&D expenses and selling,
general and administrative expenses.
2007 Fiscal Year Compared with 2008 Fiscal Year, based on the
Consolidated Financial Statements (IFRS) as of and for the
Fiscal Year ended September 30, 2008
111
Revenue by
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive
|
|
|
1,267
|
|
|
|
31
|
%
|
|
|
1,257
|
|
|
|
29
|
%
|
Industrial & Multimarket
|
|
|
1,188
|
|
|
|
29
|
|
|
|
1,171
|
|
|
|
27
|
|
Chip Card & Security
|
|
|
438
|
|
|
|
11
|
|
|
|
465
|
|
|
|
11
|
|
Wireless
Solutions(1)
|
|
|
637
|
|
|
|
16
|
|
|
|
941
|
|
|
|
22
|
|
Wireline Communications
|
|
|
414
|
|
|
|
10
|
|
|
|
420
|
|
|
|
10
|
|
Other Operating
Segments(2)
|
|
|
343
|
|
|
|
8
|
|
|
|
169
|
|
|
|
4
|
|
Corporate and
Eliminations(3)
|
|
|
(213
|
)
|
|
|
(5
|
)
|
|
|
(102
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,074
|
|
|
|
100
|
%
|
|
|
4,321
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
Includes revenues of
30 million and 10 million for the 2007 and
2008 fiscal years, respectively, from sales of wireless
communication applications to Qimonda.
|
|
(2) |
|
Includes revenues of
189 million and 79 million for 2007 and
2008 fiscal years, respectively, from sales of wafers from
Infineons 200-millimeter facility in Dresden to Qimonda
under a foundry agreement.
|
|
(3) |
|
Includes the elimination of revenue
of 219 million and 89 million for the 2007
and 2008 fiscal years, respectively, since these sales are not
expected to be part of the Qimonda disposal plan.
|
|
|
|
|
|
Automotive In the 2008 fiscal year,
revenues of the segment remained broadly unchanged at
1,257 million, compared to 1,267 million
in the 2007 fiscal year. Higher sales volumes partially offset
the continued pricing pressures caused by technological
developments and competition.
|
|
|
|
Industrial & Multimarket In
the 2008 fiscal year, revenues of the segment decreased by one
percent to 1,171 million, compared to
1,188 million in the 2007 fiscal year, due to the
sale of an interest in Bipolar, which was consolidated under the
equity method of accounting effective October 1, 2007.
Revenues of the remaining businesses increased as higher sales
volumes more than offset the continued pricing pressures caused
by technological developments and competition. Growth in
revenues was driven mainly by continued strong demand for
industrial high power applications, an increase in sales of
multimarket applications.
|
|
|
|
Chip Card & Security In the
2008 fiscal year, revenues of the segment increased by
6 percent to 465 million, compared to
438 million in the 2007 fiscal year. This increase
primarily reflects a continued growing demand for government ID
applications.
|
|
|
|
Wireless Solutions In the 2008 fiscal
year, revenues of the segment increased by 48 percent to
941 million, compared to 637 million in
the 2007 fiscal year, primarily resulting from a strong increase
in mobile phone platform shipments and the consolidation of the
mobility products business acquired from LSI.
|
|
|
|
Wireline Communications In the 2008
fiscal year, revenues of the segment increased slightly by one
percent to 420 million, compared to
414 million in the 2007 fiscal year, primarily as
growth in broadband solutions, mainly driven by the
consolidation of the Customer Premises Equipment
(CPE) business acquired from TI, was
partially offset by declining legacy revenues and negative
currency effects.
|
|
|
|
Other Operating Segments In the 2008
fiscal year, revenues of other operating segments decreased by
51 percent to 169 million, compared to
343 million in the 2007 fiscal year. In the 2007 and
2008 fiscal years, revenues consisted primarily of inter-segment
revenues of wafers from Infineons 200-millimeter facility
in Dresden to Qimonda under a foundry agreement which are
eliminated in the Corporate and Eliminations segment. Effective
November 30, 2007, as part of its measure aimed at further
focusing its production on 300-millimeter capacities, Qimonda
canceled the foundry agreement with Infineon resulting in a
significant decline in revenue during the 2008 fiscal year. The
last wafers were delivered to Qimonda in May 2008. Furthermore,
revenues of other operating segments in the 2007 and 2008 fiscal
years, included revenues from Infineons hard disc drive
business which Infineon sold to LSI in April 2008.
|
112
Revenue by
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Germany
|
|
|
907
|
|
|
|
22
|
%
|
|
|
924
|
|
|
|
21
|
%
|
Other Europe
|
|
|
888
|
|
|
|
22
|
|
|
|
818
|
|
|
|
19
|
|
North America
|
|
|
564
|
|
|
|
14
|
|
|
|
503
|
|
|
|
12
|
|
Asia/Pacific
|
|
|
1,450
|
|
|
|
36
|
|
|
|
1,800
|
|
|
|
42
|
|
Japan
|
|
|
213
|
|
|
|
5
|
|
|
|
198
|
|
|
|
4
|
|
Other
|
|
|
52
|
|
|
|
1
|
|
|
|
78
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,074
|
|
|
|
100
|
%
|
|
|
4,321
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The absolute and relative increase in the share of revenues in
Asia/Pacific in the 2008 fiscal year was mainly due to the
acquisition of the mobility products business from LSI and
higher shipments of mobile phone platforms solutions to
customers in Asia/Pacific in Infineons Communication
Solutions segment.
Cost of Goods
Sold and Gross Profit
Infineon includes in cost of goods sold the cost of inventory
purchased from its joint ventures and other associated and
related companies. Infineons purchases from these
associated and related companies amounted to
47 million and 148 million in the 2007 and
2008 fiscal years, respectively.
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Cost of goods sold
|
|
|
2,716
|
|
|
|
2,843
|
|
Changes
year-on-year
|
|
|
|
|
|
|
5
|
%
|
Percentage of revenue
|
|
|
67
|
%
|
|
|
66
|
%
|
Gross profit
|
|
|
33
|
%
|
|
|
34
|
%
|
During the 2008 fiscal year Infineons gross profit
increased primarily as a result of productivity measures.
|
|
|
|
|
Automotive In the 2008 fiscal year,
gross profit of the segment remained broadly unchanged compared
to the 2007 fiscal year by means of measures to increase
productivity and despite an increase in idle capacity cost.
|
|
|
|
Industrial & Multimarket In
the 2008 fiscal year, gross profit of the segment remained
broadly unchanged compared to the 2007 fiscal year by means of
measures to increase productivity and despite an increase in
idle capacity cost.
|
|
|
|
Chip Card & Security In the
2008 fiscal year, gross profit of the segment increased
significantly compared to the 2007 fiscal year mainly reflecting
the increase in revenue as well as changes in product mix.
|
|
|
|
Wireless Solutions In the 2008 fiscal
year, gross profit of the segment increased compared to the 2007
fiscal year mainly as a result of the revenue increase, cost
savings and productivity measures, despite the negative impact
of currency fluctuations between the U.S. dollar and the
euro.
|
|
|
|
Wireline Communications In the 2008
fiscal year, gross profit of the segment decreased compared to
the 2007 fiscal year mainly as a result of the negative impact
of currency fluctuations between the U.S. dollar and the
euro, despite positive effects from cost savings and
productivity measures.
|
113
Research and
Development Expenses
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Research and development expenses
|
|
|
743
|
|
|
|
694
|
|
Changes
year-on-year
|
|
|
|
|
|
|
(7
|
)%
|
Percentage of revenue
|
|
|
18
|
%
|
|
|
16
|
%
|
Government subsidies
|
|
|
91
|
|
|
|
65
|
|
Percentage of revenue
|
|
|
2
|
%
|
|
|
2
|
%
|
In the 2008 fiscal year R&D expenses decreased by
7 percent to 694 million, compared to
743 million in the 2007 fiscal year. This decrease
partly related to a higher capitalization of development cost in
2008 fiscal year. During the 2008 fiscal year Infineon
capitalized development cost of 44 million compared
to 27 million in the 2007 fiscal year.
|
|
|
|
|
Automotive In the 2008 fiscal year,
R&D expenses remained stable as a percentage of revenues
and decreased in absolute terms.
|
|
|
|
Industrial & Multimarket In
the 2008 fiscal year, R&D expenses remained stable as a
percentage of revenues and decreased in absolute terms.
|
|
|
|
Chip Card & Security In the
2008 fiscal year, R&D expenses remained stable as a
percentage of revenues and increased in absolute terms.
|
|
|
|
Wireless Solutions In the 2008 fiscal
year, R&D expenses decreased as efficiency gains and cost
reduction measures initiated during the 2007 fiscal year were
taking effect for a full fiscal year, despite the acquisition of
the mobility products business from LSI. As a percentage of
revenue, R&D expenses declined sharply, reflecting the
revenue increase.
|
|
|
|
Wireline Communications In the 2008
fiscal year, R&D expenses decreased in absolute terms and
as a percentage of revenues as efficiency gains and cost
reduction measures initiated during the 2007 fiscal year were
taking effect for a full fiscal year.
|
Selling,
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Selling, general and administrative expenses
|
|
|
504
|
|
|
|
565
|
|
Changes
year-on-year
|
|
|
|
|
|
|
12
|
%
|
Percentage of revenue
|
|
|
12
|
%
|
|
|
13
|
%
|
In the 2008 fiscal year, selling, general and administrative
expenses increased by 12 percent to 565 million,
compared to 504 million in the 2007 fiscal year. The
year-on-year
increase in absolute terms in the 2008 fiscal year primarily
reflected increased selling expenses following the acquisitions
of the mobility product business from LSI and the CPE business
from TI.
Other
Items Affecting Earnings
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Other operating income
|
|
|
38
|
|
|
|
120
|
|
Other operating expense
|
|
|
(57
|
)
|
|
|
(366
|
)
|
Financial income
|
|
|
107
|
|
|
|
58
|
|
Financial expense
|
|
|
(243
|
)
|
|
|
(182
|
)
|
Income from investments accounted for using the equity method,
net
|
|
|
|
|
|
|
4
|
|
Other Operating Income. In the 2008
fiscal year, other operating income increased to
120 million, compared to 38 million in the
2007 fiscal year. This increase mainly related to higher gains
from sales of
114
businesses of 80 million resulting from the sale of
40 percent of Infineons interest in Bipolar to
Siemens, the sale of Infineons HDD business to LSI, and
the sale of Infineons acoustic wave filter business to
Avago. Additionally, Infineon realized gains from disposals of
long-term assets of 4 million in the 2008 fiscal
year. In the 2007 fiscal year, other operating income consisted
mainly of gains of 17 million from the sale of the
POF business to Avago Technologies Ltd, and gains of
3 million from the sale of the Sci-Worx business to
Silicon Image Inc.
Other Operating Expense. In the 2008
fiscal year, other operating expense increased to
366 million, compared to 57 million in the
2007 fiscal year. This increase related primarily to higher
restructuring charges of 188 million. During the 2007
fiscal year, Infineon took further restructuring measures,
mainly in response to the insolvency of one of Infineons
largest mobile phone customers, BenQ Mobile GmbH & Co.
OHG, and in order to further streamline certain R&D
locations. Approximately 280 jobs were affected worldwide,
thereof approximately 120 in the German locations Munich,
Salzgitter and Nuremberg. A large portion of these restructuring
measures were completed during the 2007 fiscal year. The
Infineon Complexity Reduction program (ICoRe)
was launched in July 2007, aimed at reducing costs and seeking
added efficiencies by optimizing process flows. To address
rising risks in the current market environment, adverse currency
trends and below benchmark margins, Infineon implemented the
IFX10+ cost-reduction program in the third quarter of the 2008
fiscal year. The IFX10+ program includes measured target areas
including product portfolio management, manufacturing costs
reduction, value chain optimization, processes efficiency,
reorganization of Infineons structure along its target
markets, and reductions in workforce. Approximately
10 percent of Infineons workforce worldwide is
expected to be impacted by IFX10+, which resulted in
restructuring charges of 172 million in the 2008
fiscal year. Furthermore, higher impairment charges of
130 million related primarily to the write-down of
ALTIS to its estimated fair value at the reclassification date
from held for sale to held and used, which contributed to the
increase. Additionally, Infineon recorded a write-down of
in-process R&D acquired from LSI of 14 million
as no future economic benefit from its use or disposal was
expected.
Financial Income and Expense, net. In
the 2008 fiscal year, financial income and expense, net,
including interest income and interest expense, improved by nine
percent to negative 124 million, compared to negative
136 million in the 2007 fiscal year. Infineon derived
interest income primarily from cash and cash equivalents and
available-for-sale
financial assets. Interest expense relates principally to
Infineons convertible subordinated notes issued in
February 2002, its Convertible Notes due 2010, its Exchangeable
Notes due 2010 and, to a lesser extent, bank loans and interest
on outstanding tax obligations. In February 2007, Infineon
redeemed the remaining outstanding nominal amount of the
convertible subordinated notes issued in 2002, which resulted in
a reduction of interest expense in the 2008 fiscal year. In
addition, Infineon realized higher interest income during the
2008 fiscal year. However, this net decrease in interest expense
was partly offset by a loss of 8 million realized as
a result of the repurchase of Convertible Notes due 2010 in the
outstanding nominal amount of 100 million during the
third quarter of the 2008 fiscal year, which was classified as
interest expense.
During the quarter ended March 31, 2007, Infineon 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 Infineons headquarters south of Munich.
Pursuant to SIC 12 Consolidation Special
Purpose Entities, Infineon determined that Molstanda meets
the criteria of a Special Purpose Entity and as a result of the
agreements Infineon controls it. Accordingly, Infineon
consolidated the assets and liabilities of Molstanda beginning
in the second quarter of the 2007 fiscal year. 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 other financial expense
during the second quarter of the 2007 fiscal year. Due to
Infineons loss situation, no tax benefit was provided on
this loss. Infineon subsequently acquired the majority of the
outstanding capital of Molstanda during the fourth quarter of
the 2007 fiscal year.
Income from Investments Accounted for Using the Equity
Method, Net. In the 2008 fiscal year, equity
in earnings of associated companies, net was
4 million, and primarily reflected Infineons
share in the net income of Bipolar.
115
Segment
Result
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Segment Result:
|
|
|
|
|
|
|
|
|
Automotive
|
|
|
122
|
|
|
|
105
|
|
Industrial & Multimarket
|
|
|
127
|
|
|
|
134
|
|
Chip Card & Security
|
|
|
20
|
|
|
|
52
|
|
Wireless Solutions
|
|
|
(126
|
)
|
|
|
(18
|
)
|
Wireline Communications
|
|
|
(16
|
)
|
|
|
12
|
|
Other Operating Segments
|
|
|
2
|
|
|
|
(3
|
)
|
Corporate and Eliminations
|
|
|
7
|
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
136
|
|
|
|
258
|
|
|
|
|
|
|
|
|
|
|
Segment Result development for Infineons reporting
segments were as follows:
|
|
|
|
|
Automotive In the 2008 fiscal year,
Segment Result declined by 14 percent to
105 million, compared to 122 million in
the 2007 fiscal year, primarily as a result from ongoing pricing
pressure and higher idle capacity costs.
|
|
|
|
Industrial & Multimarket In
the 2008 fiscal year, Segment Result increased by 6 percent
to 134 million, compared to 127 million in
the 2007 fiscal year, primarily reflecting the increase in gross
margins as a result of changes in the product mix, despite
ongoing pricing pressure.
|
|
|
|
Chip Card & Security In the
2008 fiscal year, Segment Result increased by
32 million to 52 million, compared to
20 million in the 2007 fiscal year. This increase
mainly reflected the increase in revenues and productivity as
well as effects from changes in product mix.
|
|
|
|
Wireless Solutions In the 2008 fiscal
year, Segment Result increased by 86 percent to negative
18 million, compared to negative
126 million in the 2007 fiscal year. Despite the
negative impact of currency fluctuations between the
U.S. dollar and the euro, this increase was mainly driven
by a strong increase in revenues and efficiency gains and cost
reduction measures initiated during the 2007 fiscal year that
were taking effect for a full fiscal year.
|
|
|
|
Wireline Communications In the 2008
fiscal year, Segment Result increased by 28 million
to positive 12 million, compared to negative
16 million in the 2007 fiscal year. This increase
mainly resulted from efficiency gains and cost reductions
measures initiated during the 2007 fiscal year.
|
|
|
|
Other Operating Segments In the 2008
fiscal year, Segment Result decreased by 5 million to
negative 3 million, compared to positive
2 million in the 2007 fiscal year, resulting
primarily from a decrease in revenues.
|
|
|
|
Corporate and Eliminations In the 2008
fiscal year, Segment Result decreased by 31 million
to negative 24 million, compared to positive
7 million in the 2007 fiscal year, resulting
primarily from increased unabsorbed excess capacity cost.
|
116
The following table provides the reconciliation of Segment
Result to the Companys loss before tax and discontinued
operations for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Total Segment Result
|
|
|
136
|
|
|
|
258
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Asset impairments, net of reversals
|
|
|
(2
|
)
|
|
|
(132
|
)
|
Restructuring and other related closure cost
|
|
|
(45
|
)
|
|
|
(188
|
)
|
Share-based compensation expense
|
|
|
(12
|
)
|
|
|
(5
|
)
|
Acquisition-related amortization and losses
|
|
|
(7
|
)
|
|
|
(27
|
)
|
Gains on sales of assets, businesses, or interests in
subsidiaries
|
|
|
28
|
|
|
|
70
|
|
Other expense, net
|
|
|
(6
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
92
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
107
|
|
|
|
58
|
|
Financial expense
|
|
|
(243
|
)
|
|
|
(182
|
)
|
Income from investment accounted for using the equity method, net
|
|
|
|
|
|
|
4
|
|
Loss from continuing operations before income tax
|
|
|
(44
|
)
|
|
|
(147
|
)
|
|
|
|
|
|
|
|
|
|
Income
Taxes
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Income tax benefit (expense)
|
|
|
1
|
|
|
|
(41
|
)
|
Percentage of net sales
|
|
|
0
|
%
|
|
|
(1
|
)%
|
Effective tax rate
|
|
|
1
|
%
|
|
|
(28
|
)%
|
Generally, deferred tax assets in tax jurisdictions that have a
three-year cumulative loss are subject to a valuation allowance
excluding the impact of forecasted future taxable income.
In the 2007 and 2008 fiscal years Infineon continued to have a
three-year cumulative loss in certain tax jurisdictions and,
accordingly, Infineon recorded increases in the valuation
allowance of 31 million, and 181 million
in those periods, respectively. Infineon assesses its deferred
tax asset position on a regular basis. Infineons ability
to realize benefits from its deferred tax assets is dependent on
its ability to generate future taxable income sufficient to
utilize tax loss carry-forwards or tax credits before
expiration. Infineon expects to continue to recognize no tax
benefits in these jurisdictions until it has ceased to be in a
cumulative loss position for the preceding three-year period.
Loss from
discontinued operations, net of income tax
The results of Qimonda, presented in the consolidated statements
of operations as discontinued operations for the 2007 and 2008
fiscal years, consist of the following components:
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
|
September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Revenues
|
|
|
3,608
|
|
|
|
1,785
|
|
Costs and expenses
|
|
|
(3,956
|
)
|
|
|
(3,773
|
)
|
|
|
|
|
|
|
|
|
|
Loss on measurement to fair value less costs to sell
|
|
|
|
|
|
|
(1,475
|
)
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations before tax
|
|
|
(348
|
)
|
|
|
(3,463
|
)
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit
|
|
|
21
|
|
|
|
(96
|
)
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(327
|
)
|
|
|
(3,559
|
)
|
|
|
|
|
|
|
|
|
|
In the 2008 fiscal year Qimondas total revenues decreased
by 51 percent to 1,785 million, compared to
3,608 million in the 2007 fiscal year. Primarily
responsible for this decrease was a significant decrease
117
in DRAM prices and to a lesser extent the average exchange rate
of the U.S. dollar against the euro. These decreases were
partly offset by increases of higher bit shipments.
In the 2008 fiscal year, cost and expenses of Qimonda decreased
by 5 percent to 3,773 million, compared to
3,956 million in the 2007 fiscal year, mainly as a
result of a decrease in cost of goods sold. This decrease was
partly offset by restructuring charges, impairment charges and
higher R&D expenses primarily related to Qimondas
efforts in the new Buried Wordline technology for 65-nanometers
and 46-nanometers. Restructuring expenses of Qimonda during the
2008 fiscal year related mainly to the relocation of the
back-end production in Malaysia, the combination of the research
centers in North America, a comprehensive cost reduction
program, the shutdown of Flash activities in Italy and a global
repositioning program. During the 2008 fiscal year, Qimonda
recognized impairment charges for goodwill and for long-lived
assets of the Richmond 200-millimeter facility. Additionally, as
a result of Qimondas agreement to sell its
35.6 percent interest in Inotera to Micron for
US$400 million, Qimonda recognized impairment charges to
reduce the carrying value of its investment in Inotera to the
sales price less costs to sell.
Net
Loss
In the 2008 fiscal year, net loss increased to
3,747 million, compared to 370 million in
the 2007 fiscal year. In the 2008 fiscal year, the increase in
net loss was primarily due to the increase in losses from
discontinued operations, resulting from Qimondas net loss
and the write-downs of 1,475 million to reduce
Qimonda to its estimated current fair value less costs to sell.
Furthermore, restructuring charges of 188 million
primarily related to the IFX10+ program, and impairment charges
contributed, to the net loss in the 2008 fiscal year. In the
2007 fiscal year, net loss was significantly impacted by the
results from discontinued operations, net of income tax,
primarily due to Qimondas net loss, which resulted from
the deterioration in memory product prices and a weaker
U.S. dollar, and consequently a significant decrease in
Qimondas gross profit. Net loss from discontinued
operations in the 2007 fiscal year also included an
84 million loss from the sale of 28.75 million
Qimonda ADSs. Restructuring charges of 45 million,
and the expenses of 35 million resulting from the
consolidation of Molstanda also contributed to the net loss in
the 2007 fiscal year.
Adoption of
IFRS
Infineons consolidated financial statements for the fiscal
year ended September 30, 2008, were, for the first time,
prepared in accordance with the accounting standards of the
IASB, the IFRS, as adopted by the EU. All future consolidated
financial statements and interim financial statements will also
be prepared in accordance with IFRS as adopted by the EU. The
Companys consolidated financial statements had also been
prepared in accordance with U.S. GAAP through
September 30, 2008. Note 4 to Infineons
consolidated financial statements for the fiscal year ended
September 30, 2008 prepared in accordance with IFRS,
describes the decisions made for the retrospective application
of IFRS (reproduced starting on
page F-4);
it also explains the impact of the adjustments made in changing
over the reporting from U.S. GAAP to IFRS, the
reconciliation of Infineons equity as of October 1,
2006, September 30, 2007 and September 30, 2008,
respectively, and the conversion of Infineon net loss for the
fiscal years ended September 30, 2007 and 2008 from
U.S. GAAP to IFRS.
The following reconciliation presents the effects of major
differences between U.S. GAAP and IFRS on Infineons
new loss for the year ended September 30, 2007.
|
|
|
|
|
|
|
|
|
|
|
Explanatory
|
|
|
For the year ended
|
|
|
|
Note
|
|
|
September 30, 2007
|
|
|
|
|
|
|
( in millions)
|
|
|
Net loss under U.S. GAAP
|
|
|
|
|
|
|
(368
|
)
|
Change in presentation of minority interest
|
|
|
(a
|
)
|
|
|
(25
|
)
|
Net loss under U.S. GAAP, including minority interest
|
|
|
|
|
|
|
(393
|
)
|
Compound financial instruments
|
|
|
(b
|
)
|
|
|
(52
|
)
|
Capitalization of development costs
|
|
|
(c
|
)
|
|
|
(1
|
)
|
Pensions and other post-employment benefits
|
|
|
(d
|
)
|
|
|
7
|
|
Deferred taxes
|
|
|
(e
|
)
|
|
|
60
|
|
Other
|
|
|
|
|
|
|
9
|
|
Total adjustments
|
|
|
|
|
|
|
23
|
|
Net loss under IFRS
|
|
|
|
|
|
|
(370
|
)
|
Notes
|
|
|
(a) |
|
In accordance with IFRS, minority
interest is reported as a separate item within
shareholders equity, whereas U.S. GAAP requires minority
interest to be presented separately from shareholders
equity.
|
118
|
|
|
(b) |
|
Compound Financial Instruments are
accounted for differently in accordance with U.S. GAAP and IFRS.
In accordance with U.S. GAAP, the conversion feature in
Infineons debt instruments convertible into shares of the
issuer are not separated (bifurcated) from the debt instrument
and accounted for separately at fair value. The instrument is
recorded in its entirety as debt and accreted to nominal value
through maturity. In accordance with IFRS, a compound financial
instrument with terms and conditions that grant the issuer the
right to settle the option in cash upon conversion is divided
into separate liability components at inception. The conversion
right component is considered a derivative financial instrument
and measured at fair value through profit or loss. A residual
liability component representing the debt obligation is measured
at fair value at inception and is subsequently measured at
amortized cost using the effective interest method.
|
|
(c) |
|
In accordance with IFRS,
development costs are capitalized as intangible assets if
specified criteria are met, while in accordance with U.S. GAAP
they are generally expensed as part of R&D expenses.
|
|
(d) |
|
In accordance with IFRS, actuarial
gains and losses resulting from changes in actuarial assumptions
used to measure pension plan obligations are recognized directly
in equity in the period in which they occur based on the so
called SoRIE approach (Statement of Recognized Income and
Expense) under International Accounting Standard
(IAS) 19 Employee benefits
requirements for accounting for pension and other post
employment benefits. As of October 1, 2006 all cumulative
actuarial gains and losses and vested portion of service costs
previously not recognized in accordance with U.S. GAAP were
recorded in retained earnings.
|
|
(e) |
|
The adjustments as described above
resulted in additional differences between the carrying amount
of assets and liabilities in the consolidated financial
statements and their tax basis. Deferred taxes on temporary
differences were adjusted accordingly, with differences in
pension accounting between U.S. GAAP and IFRS having the most
significant impact.
|
2006 Fiscal Year Compared with 2007 Fiscal Year, based on the
Consolidated Financial Statements (U.S. GAAP) as of and for
the Fiscal Year ended September 30, 2007
Reorganization
Infineons organizational structure during the 2006 and
2007 fiscal years became effective on May 1, 2006 through
September 30, 2008, following the legal separation of its
memory products business into the stand-alone legal company
Qimonda. As a result of the reorganization, certain corporate
overhead expenses were no longer apportioned to Qimonda and were
instead allocated to Infineons logic segments.
Infineon operated primarily in three major operating segments.
Two of these segments were application focused: Automotive,
Industrial & Multimarket and Communication Solutions.
The other segment was the memory product business of Qimonda.
Further, certain of Infineons 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 met the Financial
Accounting Standards Board (FASB) Statement
of Financial Accounting Standards (SFAS)
No. 131 Disclosure about Segments of an Enterprise
and Related Information definition of an operating
segment, but did not meet the requirements of a reportable
segment as specified in SFAS No. 131. Accordingly,
those segments were combined and disclosed in the Other
Operating Segments category pursuant to
SFAS No. 131.
Following the completion of the Qimonda carve-out, the Other
Operating Segments also included net sales and earnings that
Infineons 200-millimeter production facility in Dresden
recorded from the sale of wafers to Qimonda under foundry
agreements. The Corporate and Eliminations segment reflected the
elimination of these intra-group net sales and earnings.
Certain amounts in the prior years have been reclassified to
conform to the 2007 fiscal year presentation. Dividends received
from associated companies, previously reported as part of cash
flows from investing activities in the consolidated statements
of cash flows, have been reclassified to cash flows from
operating activities. The consolidated results of operations and
overall cash flows have not been affected by these
reclassifications.
119
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Net sales
|
|
|
7,929
|
|
|
|
7,682
|
|
Changes year-on year
|
|
|
|
|
|
|
(3
|
)%
|
Of which:
|
|
|
|
|
|
|
|
|
License income
|
|
|
29
|
|
|
|
28
|
|
Percentage of net sales
|
|
|
0
|
%
|
|
|
0
|
%
|
Effect of foreign exchange over prior year
|
|
|
142
|
|
|
|
(174
|
)
|
Percentage of net sales
|
|
|
2
|
%
|
|
|
(2
|
)%
|
Impact of acquisitions over prior year
|
|
|
40
|
|
|
|
16
|
|
Percentage of net sales
|
|
|
0
|
%
|
|
|
0
|
%
|
In the 2007 fiscal year, net sales decreased by 3 percent
to 7,682 million, compared to
7,929 million in the 2006 fiscal year. In the 2007
fiscal year, net sales decreased primarily as a result of the
continued revenue decrease in the wireless business of the
Communication Solutions segment and by the approximate
29 percent decline in DRAM prices in the Qimonda segment.
These effects were only partially offset by volume growth,
particularly for automotive and industrial power applications.
The strength of the euro (primarily against the
U.S. dollar) during the 2007 fiscal year negatively
affected net sales, whereas net sales in the 2006 fiscal year
were positively affected by the effect of foreign exchange
rates. The effect of foreign exchange over the prior year is
calculated as the estimated change in current year sales if the
average exchange rate for the preceding year is applied as a
constant rate in the current year. The increase in net sales
from entities Infineon acquired since the beginning of the prior
year reflects primarily the inclusion of a full-year
consolidation of sales in the year after the initial
acquisition. Net sales for the 2007 fiscal year include the
effect of the TI DSL CPE acquisition starting August 1,
2007. The main effect in the 2006 fiscal year resulted from the
initial consolidation of ALTIS as of December 31, 2005.
Net Sales by
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Automotive, Industrial & Multimarket
|
|
|
2,839
|
|
|
|
36
|
%
|
|
|
3,017
|
|
|
|
39
|
%
|
Communication
Solutions(1)
|
|
|
1,205
|
|
|
|
15
|
|
|
|
1,051
|
|
|
|
14
|
|
Other Operating
Segments(2)
|
|
|
310
|
|
|
|
4
|
|
|
|
219
|
|
|
|
3
|
|
Corporate and
Eliminations(3)
|
|
|
(240
|
)
|
|
|
(3
|
)
|
|
|
(213
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
4,114
|
|
|
|
52
|
|
|
|
4,074
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
3,815
|
|
|
|
48
|
|
|
|
3,608
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,929
|
|
|
|
100
|
%
|
|
|
7,682
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
Includes inter-segment sales of
30 million for the 2007 fiscal year, and none in the
2006 fiscal year, from sales of wireless communication
applications to Qimonda.
|
|
(2) |
|
Includes inter-segment sales of
256 million and 189 million for the 2006
and 2007 fiscal years, respectively, from sales of wafers from
Infineons 200-millimeter facility in Dresden to Qimonda
under foundry agreements.
|
|
(3) |
|
Includes the elimination of
inter-segment sales of 256 million and
219 million for the 2006 and 2007 fiscal years,
respectively.
|
|
|
|
|
|
Automotive, Industrial & Multimarket
In the 2007 fiscal year, net sales in the
Automotive segment increased by 6 percent to
3,017 million, compared to 2,839 million
in the 2006 fiscal year. Infineon experienced strong pricing
pressure in the market for chipcard ICs throughout the 2006
fiscal year. Despite continued segment-wide pricing pressure,
Infineon was able to increase net sales in the 2007 fiscal year.
The sales growth was mainly driven by continuing strong demand
for high power products in industrial applications, an increase
of sales for energy efficient devices in industrial and
multimarket applications and increasing demand for government ID
applications.
|
|
|
|
Communication Solutions In the 2007
fiscal year, net sales in the Communication Solutions segment
decreased by 13 percent to 1,051 million,
compared to 1,205 million in the 2006 fiscal year.
The decline in net sales in the 2007 fiscal year was primarily
caused by a continued decrease in
|
120
|
|
|
|
|
revenues in the wireless business mainly driven by the
insolvency of BenQs German subsidiary as well as ongoing
pricing pressure that could not be compensated by increased
shipments of complete mobile phone platform solutions to leading
customers such as LG, Panasonic, and ZTE. In addition, revenues
in the wireline business declined mainly due to the phase-out of
Infineons fiber optics business during the 2006 fiscal
year.
|
|
|
|
|
|
Qimonda In the 2007 fiscal year, net
sales in Qimonda decreased by 5 percent to
3,608 million, compared to 3,815 million
in the 2006 fiscal year, primarily due to the approximately
29 percent decline in DRAM prices and the weakening in the
U.S. dollar/euro exchange rate. Offsetting these effects in
part were higher bit shipments, which increased by
44 percent. In the 2007 fiscal year, considerable progress
was made with Qimondas diversification strategy by
increasing the share of net sales of infrastructures, graphics,
mobile and consumer DRAMs, which generally command higher and
more stable prices than standard DRAMs. The share of net sales
from DRAMs for these products increased to 60 percent in
the 2007 fiscal year as compared to 51 percent in the 2006
fiscal year.
|
The 2007 fiscal year was characterized by steep price declines
for DRAM products. Although these prices remained stable through
the end of December 2006, prices declined significantly
thereafter. Infineon believes that a part of this price decline,
especially towards the end of March 2007, was driven by seasonal
demand weakness, the effects of an earlier
build-up of
inventories at OEMs ahead of the introduction of the new Windows
Vista computer operating system, and capacity conversions from
NAND to DRAM by some competitors. During the three months ended
June 30, 2007, the price decline continued and was
amplified by strong DRAM output growth across the industry,
which Infineon believes was driven mostly by capacity increases
and technology conversions to more efficient technologies. In
the three months ended September 30, 2007, prices initially
showed signs of improvement, but then resumed their decline and
were ultimately, as an average over the period, at the same low
level as during the previous three months.
|
|
|
|
|
Other Operating Segments In the 2007
fiscal year, net sales in other operating segments decreased by
29 percent to 219 million, compared to
310 million in the 2006 fiscal year. Net sales in the
2006 and 2007 fiscal years comprised mainly inter-segment sales
of wafers from Infineons 200-millimeter facility in
Dresden to Qimonda under a foundry agreement which are
eliminated in the Corporate and Eliminations segment.
|
Net Sales by
Region and Customer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Germany
|
|
|
1,327
|
|
|
|
17
|
%
|
|
|
1,164
|
|
|
|
15
|
%
|
Other Europe
|
|
|
1,360
|
|
|
|
17
|
%
|
|
|
1,218
|
|
|
|
16
|
%
|
North America
|
|
|
2,126
|
|
|
|
27
|
%
|
|
|
1,887
|
|
|
|
25
|
%
|
Asia/Pacific
|
|
|
2,498
|
|
|
|
31
|
%
|
|
|
2,632
|
|
|
|
34
|
%
|
Japan
|
|
|
461
|
|
|
|
6
|
%
|
|
|
661
|
|
|
|
9
|
%
|
Other
|
|
|
157
|
|
|
|
2
|
%
|
|
|
120
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,929
|
|
|
|
100
|
%
|
|
|
7,682
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the 2007 fiscal year, Infineon experienced a decrease of
3 percent in net sales to 7,682 million compared to
7,929 million in the 2006 fiscal year, primarily due
to general pricing pressure in the Communication Solutions and
Qimonda segments. The regional sales decrease in Germany was
primarily due to the insolvency of BenQs German subsidiary
and lower DRAM sales, while the sales increase in the
Asia/Pacific region was driven by higher sales volumes,
particularly in the Automotive, Industrial &
Multimarket and Communication Solutions segments.
The net sales in Infineons Automotive,
Industrial & Multimarket segment increased in all
regions, with a particularly strong increase in Asia/Pacific and
North America. The number of customers in this segment remained
stable in the 2007 fiscal year. The top 20 customers in this
segment accounted for approximately 62 percent of the
segments sales in the 2007 fiscal year.
121
In the Communication Solutions segment, Infineon has seen a
further shift of net sales from Europe and North America to the
Asia/Pacific region in the 2007 fiscal year. Infineons top
20 customers in this segment accounted for over 70 percent
of its net sales in the 2007 fiscal year.
In the 2007 fiscal year, net sales of Qimonda declined overall
due to lower average selling prices, which could not be offset
by higher bit shipments. Qimondas net sales increased in
Asia, due to OEM customers shifting their production to that
region, and increased particularly in Japan due to a growth in
sales of specialty memory products to consumer electronics and
graphics applications. Sales in North America declined
correspondingly. Qimondas top 20 customers accounted for
nearly 77 percent of its net sales in the 2007 fiscal year.
Cost of Goods
Sold and Gross Profit
Infineon included in cost of goods sold the cost of inventory
purchased from its joint ventures and other associated and
related companies. Infineon purchased from these associated and
related companies 575 million and
593 million in the 2006 and 2007 fiscal years
respectively, a decrease of 3 percent.
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Cost of goods sold
|
|
|
5,854
|
|
|
|
6,092
|
|
Changes
year-on-year
|
|
|
|
|
|
|
4
|
%
|
Percentage of net sales
|
|
|
74
|
%
|
|
|
79
|
%
|
Gross profit
|
|
|
26
|
%
|
|
|
21
|
%
|
In the 2007 fiscal year, Infineons gross profit decreased
to 21 percent, compared to 26 percent in the 2006
fiscal year, primarily as a result of a strong deterioration of
the gross profit in the Qimonda segment, resulting from exchange
rate effects, DRAM price development in the 2007 fiscal year,
and inventory devaluations. The gross profit in Infineons
other segments remained broadly unchanged from the 2006 fiscal
year.
|
|
|
|
|
Automotive, Industrial & Multimarket
The gross profit remained on the same level
in the 2007 fiscal year as compared to the 2006 fiscal year, as
pricing pressure and certain corporate overhead expenses that
resulted from the Qimonda carve out were compensated with
productivity measures. In the 2006 fiscal year, gross profit
increased mainly due to a reduction in idle capacity costs.
|
|
|
|
Communication Solutions In the 2007
fiscal year, the gross profit of this segment remained stable.
In the 2006 fiscal year, gross profit improved, mainly as a
result of lower idle capacity costs and the successful
implementation of productivity measures, which more than offset
the inventory write-downs resulting from the insolvency of
BenQs German subsidiary.
|
|
|
|
Qimonda The gross profit decreased to
6 percent in the 2007 fiscal year, compared to
20 percent in the 2006 fiscal year, primarily due to lower
average selling prices, the weakening of the U.S. dollar,
and inventory write downs of 85 million. These
negative effects could not be offset by lower production costs
per unit resulting from increased manufacturing productivity.
|
Research and
Development Expenses
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Research and development expenses
|
|
|
1,249
|
|
|
|
1,169
|
|
Changes
year-on-year
|
|
|
|
|
|
|
(6
|
)%
|
Percentage of net sales
|
|
|
16
|
%
|
|
|
15
|
%
|
Government subsidies
|
|
|
67
|
|
|
|
115
|
|
Percentage of net sales
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
|
|
|
Automotive, Industrial & Multimarket
In the 2007 fiscal year, R&D expenses
remained stable as a percentage of net sales and slightly
increased in absolute terms mainly driven by automotive and
industrial applications. In the 2006 fiscal year, R&D
expenses remained approximately at the
|
122
|
|
|
|
|
same level as in the 2005 fiscal year in absolute terms and
slightly decreased as a percentage of net sales.
|
|
|
|
|
|
Communication Solutions In the 2007
fiscal year, R&D expenses continued to decline in absolute
terms and remained stable as a percentage of net sales,
reflecting the implementation of cost reduction measures in
response to the insolvency of BenQs German subsidiary. In
the 2006 fiscal year, R&D expenses declined in absolute
terms but remained stable as a percentage of net sales as the
effect of previously implemented efficiency programs was
realized.
|
|
|
|
Qimonda In the 2007 fiscal year,
R&D expenses decreased due to the completion of R&D
work on 80-nanometer and 75-nanometer technology platforms
earlier in the 2007 fiscal year, and the focus on production
support research before development efforts on 58-nanometer
technology platform increased towards the end of the 2007 fiscal
year. Qimonda also initiated cost saving measures in order to
increase the productivity of development efforts. In the 2006
fiscal year, R&D expenses increased in absolute terms due
to Qimondas efforts to strengthen its development
capabilities with respect to next-generation memory technologies
and to further diversify its portfolio of memory products, but
decreased as a percentage of net sales due to the growth in net
sales.
|
Selling,
General and Administrative (SG&A) Expenses
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Selling, general and administrative expenses
|
|
|
751
|
|
|
|
700
|
|
Changes
year-on-year
|
|
|
|
|
|
|
(7
|
)%
|
Percentage of net sales
|
|
|
9
|
%
|
|
|
9
|
%
|
In the 2007 fiscal year, selling, general and administrative
expenses decreased in absolute terms by 7 percent to
700 million, as compared to 751 million in
the 2006 fiscal year, as a result of cost saving measures and
the non-recurrence of the non-recurring charges from the 2006
fiscal year, including 28 million incurred in
connection with the insolvency of BenQs German subsidiary
and 16 million related to the Qimonda formation. As a
percentage of net sales, selling, general and administrative
expenses remained unchanged in the 2007 fiscal year.
Other
Items Affecting Earnings
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Restructuring charges
|
|
|
23
|
|
|
|
45
|
|
Percentage of net sales
|
|
|
0
|
%
|
|
|
1
|
%
|
Other operating expense, net
|
|
|
108
|
|
|
|
46
|
|
Percentage of net sales
|
|
|
1
|
%
|
|
|
1
|
%
|
Equity in earnings of associated companies, net
|
|
|
78
|
|
|
|
117
|
|
Percentage of net sales
|
|
|
1
|
%
|
|
|
2
|
%
|
Gain on subsidiaries and associated company share issuance
|
|
|
19
|
|
|
|
|
|
Percentage of net sales
|
|
|
0
|
%
|
|
|
0
|
%
|
Other non-operating income (expense), net
|
|
|
(33
|
)
|
|
|
13
|
|
Percentage of net sales
|
|
|
(0
|
)%
|
|
|
0
|
%
|
Extraordinary loss, net of tax
|
|
|
|
|
|
|
(35
|
)
|
Percentage of net sales
|
|
|
0
|
%
|
|
|
0
|
%
|
Restructuring Charges. In the 2007
fiscal year, restructuring charges increased by 96 percent
to 45 million, compared to 23 million in
the 2006 fiscal year. During the 2006 fiscal year, Infineon
announced restructuring plans to downsize its workforce at ALTIS
and at its chip card back-end activities in order to maintain
competitiveness and reduce cost. As part of these restructuring
measures, Infineon agreed upon plans to terminate approximately
390 employees and recorded restructuring charges in the
2007 fiscal year. During the 2007 fiscal year, Infineon took
further restructuring measures, mainly in response to the
insolvency of one of its largest mobile phone customers, BenQ
Mobile GmbH & Co. OHG, and in order to further
streamline certain R&D locations. Approximately 280 jobs
were affected worldwide, thereof
123
approximately 120 in the German locations Munich, Salzgitter and
Nuremberg. A large portion of these restructuring measures were
completed during the 2007 fiscal year. The ICoRe was launched in
the first quarter of the 2007 fiscal year to reduce costs and
seek added efficiencies by optimizing process flows.
Other Operating Expense, net. In the
2007 fiscal year, other operating expense, net, decreased by
57 percent to 46 million, compared to
108 million in the 2006 fiscal year. In the 2006
fiscal year, other operating expense, net consisted mainly of
goodwill and intangible assets impairment charges of
38 million, antitrust related charges of
23 million, the settlement of litigation with Tessera
of 37 million, and a loss of 12 million in
connection with Infineons sale of Qimonda ADSs following
its initial public offering. In the 2007 fiscal year, other
operating expense, net, consisted primarily of gains from the
sale of the POF business of 17 million and from the
sale of the Sci-Worx business of 3 million, and
losses of 84 million from the sale of an additional
28.75 million Qimonda ADSs.
Equity in Earnings of Associated Companies,
net. During the 2006 and 2007 fiscal years,
Infineons principal associated company was Inotera.
Inotera is a DRAM manufacturer and Infineons equity in its
earnings has been sensitive to fluctuations in the price of DRAM
and is reflected in the results of Qimonda. In each of the 2006
and 2007 fiscal years, Inotera contributed the majority of
Infineons equity in earnings from associated companies,
reflecting the start of volume production by that joint venture
in the 2005 fiscal year. In the 2007 fiscal year, equity in
earnings of associated companies, net, were
117 million.
Gains on Subsidiaries and Associated Company Share
Issuance, net. In August 2006, Qimonda
successfully completed an initial public offering and listing on
the New York Stock Exchange of 42 million ADSs, together
with 6.3 million ADSs from Infineon in an over-allotment
option, at a price of US$13 per share. Infineon realized a
non-operating loss of 53 million from the dilution of
its interest in Qimonda in connection with its initial public
offering.
In March and May 2006, Inotera successfully completed an initial
public offering on the Taiwanese Stock Exchange of
200 million ordinary shares and a public offering and
listing on the Luxembourg Stock Exchange of 40 million
global depositary shares (representing 400 million ordinary
shares), each at an issuance price of NT$33 per ordinary share.
As a result of these transactions, Infineon recognized a
non-operating gain of 72 million.
Other Non-Operating Income (Expense),
net. In the 2007 fiscal year, other
non-operating income (expense), net, increased by
46 million to positive 13 million,
compared to negative 33 million in the 2006 fiscal
year. Other non-operating income and expense consisted of
various items in different periods not directly related to
Infineons principal operations, including gains and losses
on sales of marketable securities. In the 2006 fiscal year,
other non-operating expense, net consisted mainly of
31 million related to net losses from foreign
currency derivatives and foreign currency transactions and
investment-related impairment charges of 13 million.
In the 2007 fiscal year, other non-operating income, net
included primarily gains and losses from financial instruments
transactions.
Extraordinary Loss, net of tax. During
the quarter ended March 31, 2007, Infineon entered into
agreements with Molstanda and a financial institution. Molstanda
is the owner of a parcel of land located in the vicinity of its
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), Infineon
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 Infineon became its primary
beneficiary. Accordingly, Infineon consolidated the assets and
liabilities of Molstanda beginning in the second 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 Infineons cumulative loss
situation no tax benefit was provided on this loss. Infineon
subsequently acquired the majority of the outstanding capital of
Molstanda during the fourth quarter of the 2007 fiscal year.
124
Earnings
Before Interest and Taxes (EBIT)
Infineon defines EBIT as earnings (loss) before interest and
taxes. Infineons management used EBIT as a measure to
establish budgets and operational goals, to manage its business
and to evaluate its performance. EBIT was determined from the
consolidated statements of operations as follows:
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions)
|
|
|
Net loss
|
|
|
(268
|
)
|
|
|
(368
|
)
|
Add: Income tax expense
|
|
|
161
|
|
|
|
79
|
|
Interest expense, net
|
|
|
92
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
|
(15
|
)
|
|
|
(256
|
)
|
|
|
|
|
|
|
|
|
|
EBIT of its separate reporting segments were as follows:
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions)
|
|
|
Automotive, Industrial & Multimarket
|
|
|
246
|
|
|
|
300
|
|
Communication Solutions
|
|
|
(231
|
)
|
|
|
(160
|
)
|
Other Operating Segments
|
|
|
4
|
|
|
|
(12
|
)
|
Corporate and Eliminations
|
|
|
(236
|
)
|
|
|
(177
|
)
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
(217
|
)
|
|
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
202
|
|
|
|
(207
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(15
|
)
|
|
|
(256
|
)
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
EBIT of Qimonda for the period
following its IPO are reported net of minority interests
results.
|
EBIT reflects the combined effects of the following EBIT
developments of Infineons reporting segments:
|
|
|
|
|
Automotive, Industrial & Multimarket
In the 2007 fiscal year, EBIT further
improved by 22 percent to 300 million, compared
to 246 million in the 2006 fiscal year, due to an
increase in net sales and despite being negatively impacted by
additional corporate expense allocations subsequent to the
Qimonda carve out. In addition, a 17 million gain was
realized from the sale of Infineons POF business in June
2007 to Avago, which also had a positive impact on EBIT in the
2007 fiscal year.
|
|
|
|
Communication Solutions In the 2007
fiscal year, EBIT improved by 31 percent to negative
160 million, compared to negative
231 million in the 2006 fiscal year, despite a
further decline in net sales, as no significant charges were
recognized and further cost reduction measures were successfully
implemented.
|
|
|
|
Qimonda In the 2007 fiscal year, EBIT
decreased significantly by 409 million to negative
207 million, compared to positive
202 million in the 2006 fiscal year, primarily due to
deteriorating conditions in the DRAM market and inventory
write-downs resulting from negative DRAM price development and
the weakening of the U.S. dollar with respect to the euro.
|
|
|
|
Other Operating Segments In the 2007
fiscal year, EBIT was negatively affected by a downward
adjustment of transfer prices resulting from the 200-millimeter
wafer supply agreement between Infineon and Qimonda.
|
|
|
|
Corporate and Elimination In the 2007
fiscal year, EBIT of this segment was positively affected by a
reduction in idle production capacities at ALTIS compared to the
2006 fiscal year, a revision to accrued personnel costs of
22 million, and a decrease in stock option expenses
of 13 million. On the other hand, Infineon incurred a
loss of 84 million from the sale of an additional
28.75 million Qimonda ADSs in the 2007 fiscal year, which
was recorded in this segment. Also, restructuring expenses
increased by 22 million in the 2007 fiscal year in
comparison to the 2006 fiscal year.
|
125
Interest
Expense, Net
Infineon derived interest income primarily from cash and cash
equivalents and marketable securities. Interest expense was
primarily attributable to bank loans and
convertible/exchangeable notes, and was net of interest
capitalized on manufacturing facilities under construction.
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Interest expense, net
|
|
|
(92
|
)
|
|
|
(33
|
)
|
Percentage of net sales
|
|
|
(1
|
)%
|
|
|
0
|
%
|
Interest expense in the 2006 and 2007 fiscal years related
principally to the convertible subordinated notes that Infineon
issued in February 2002 and in June 2003. The increase in
interest expense, net in the 2006 fiscal year primarily
reflected the drawdown of US$345 million under
Infineons syndicated credit facility to finance the
expansion of Qimondas Richmond manufacturing facility and
a reduction in income from interest rate swaps resulting from
increased variable interest rates and, to a lesser extent,
interest on outstanding tax obligations and a reduction in
capitalized interest. In February 2007, Infineon redeemed the
remaining outstanding principal of the convertible subordinated
notes issued in 2002, which resulted in a decrease in interest
expense in the 2007 fiscal year of 64 percent to
33 million, compared to 92 million in the
2006 fiscal year.
Income
Taxes
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
(U.S. GAAP)
|
|
2006
|
|
|
2007
|
|
|
|
( in millions, except percentages)
|
|
|
Income tax expense
|
|
|
(161
|
)
|
|
|
(79
|
)
|
Percentage of net sales
|
|
|
(2
|
)%
|
|
|
(1
|
)%
|
Effective tax rate
|
|
|
(150
|
)%
|
|
|
(31
|
)%
|
Generally, deferred tax assets in tax jurisdictions that have a
three-year cumulative loss are subject to a valuation allowance
excluding the impact of forecasted future taxable income. In the
2006 and 2007 fiscal years Infineon continued to have a
three-year cumulative loss in certain tax jurisdictions and,
accordingly, it recorded increases to the valuation allowance of
292 million and 226 million in the 2006
and 2007 fiscal year, respectively. Infineon assesses its
deferred tax asset position on a regular basis. Infineons
ability to realize benefits from its deferred tax assets is
dependent on its ability to generate future taxable income
sufficient to utilize tax loss carry-forwards or tax credits
before expiration. Infineon expects to continue to recognize no
tax benefits in these jurisdictions until it has ceased to be in
a cumulative loss position for the preceding three-year period.
Net Loss (U.S.
GAAP)
In the 2007 fiscal year, net loss increased by 37 percent
to 368 million, compared to 268 million in
the 2006 fiscal year. In the 2006 fiscal year, the net loss
incurred was primarily due to charges resulting from allowances
recorded in response to the insolvency of BenQs German
subsidiary, losses recognized in connection with the initial
public offering of Qimonda, and the settlement of litigation. In
addition, in the 2006 fiscal year Infineon began to recognize
the fair value of employee stock options in earnings, which
further contributed to the net loss incurred. In the 2007 fiscal
year, the most significant factor contributing to the increase
in net loss was the significant deterioration in EBIT of
Qimonda, from positive 202 million in the 2006 fiscal
year to negative 207 million in the 2007 fiscal year,
which resulted from the deterioration in memory product prices
and a weaker U.S. dollar, and a consequent significant
decrease in Qimondas gross profit. Also contributing to
the net loss incurred in the 2007 fiscal year were the loss of
84 million resulting from the sale of an additional
28.75 million Qimonda ADSs, restructuring charges of
45 million, and the extraordinary loss of
35 million resulting from the consolidation of
Molstanda.
126
Financial
Condition
The following table shows selected data relating to
Infineons financial condition, prepared in accordance with
IFRS, for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
As of March
31,(1)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
from
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
September 30,
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
year-on-year
|
|
|
2009
|
|
|
2008
|
|
|
|
( in millions, except percentages)
|
|
|
Current assets
|
|
|
5,210
|
|
|
|
4,648
|
|
|
|
(11
|
)%
|
|
|
1,883
|
|
|
|
(59
|
)%
|
thereof assets classified as held for disposal
|
|
|
303
|
|
|
|
2,129
|
|
|
|
+++
|
%
|
|
|
6
|
|
|
|
(100
|
)%
|
Non-current assets
|
|
|
5,389
|
|
|
|
2,334
|
|
|
|
(57
|
)%
|
|
|
2,094
|
|
|
|
(10
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
10,599
|
|
|
|
6,982
|
|
|
|
(34
|
)%
|
|
|
3,977
|
|
|
|
(43
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
2,853
|
|
|
|
3,673
|
|
|
|
29
|
%
|
|
|
1,240
|
|
|
|
(66
|
)%
|
thereof: liabilities associated with assets classified as held
for disposal
|
|
|
129
|
|
|
|
2,123
|
|
|
|
+++
|
%
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
1,742
|
|
|
|
1,148
|
|
|
|
(34
|
)%
|
|
|
1,034
|
|
|
|
(10
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,595
|
|
|
|
4,821
|
|
|
|
5
|
%
|
|
|
2,274
|
|
|
|
(53
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority Interests
|
|
|
960
|
|
|
|
70
|
|
|
|
(93
|
)%
|
|
|
55
|
|
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity attributable to shareholders of Infineon
Technologies AG
|
|
|
5,044
|
|
|
|
2,091
|
|
|
|
(59
|
)%
|
|
|
1,648
|
|
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
6,004
|
|
|
|
2,161
|
|
|
|
(64
|
)%
|
|
|
1,703
|
|
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(1) |
|
During the 2008 fiscal year,
Infineon committed to a plan to dispose of Qimonda. As a
consequence, the assets and liabilities of Qimonda have been
reclassified as held for disposal in the balance sheets as of
March 31, 2009 and as of September 30, 2008. On
January 23, 2009, Qimonda and its wholly owned subsidiary
Qimonda Dresden GmbH & Co. oHG filed an application at
the Munich Local Court to commence insolvency proceedings. As a
result of this application, Infineon deconsolidated Qimonda
during the second quarter of the 2009 fiscal year. On
April 1, 2009, the insolvency proceedings formally opened.
|
|
(2) |
|
Unaudited.
|
The following table shows selected data relating to
Infineons financial condition, prepared in accordance with
U.S. GAAP, for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
(U.S. GAAP)
|
|
2006
|
|
|
|
2007
|
|
|
|
year-on-year
|
|
|
|
|
( in millions, except percentages)
|
|
|
|
Current assets
|
|
|
5,681
|
|
|
|
|
5,278
|
|
|
|
|
(7
|
)
|
%
|
Non-current assets
|
|
|
5,504
|
|
|
|
|
5,401
|
|
|
|
|
(2
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
11,185
|
|
|
|
|
10,679
|
|
|
|
|
(5
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
3,305
|
|
|
|
|
2,847
|
|
|
|
|
(14
|
)
|
%
|
Non-current liabilities
|
|
|
1,725
|
|
|
|
|
1,885
|
|
|
|
|
9
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
5,030
|
|
|
|
|
4,732
|
|
|
|
|
(6
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority Interests
|
|
|
840
|
|
|
|
|
1,033
|
|
|
|
|
23
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
5,315
|
|
|
|
|
4,914
|
|
|
|
|
(8
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009 Compared to September 30, 2008,
based on the Unaudited Condensed Consolidated Financial
Statements (IFRS) as of and for the Three and Six Months ended
March 31, 2009
As of March 31, 2009, Infineons current assets
decreased by 59 percent to 1,883 million,
compared to 4,648 million as of September 30,
2008, primarily due to the decrease in assets held for disposal
of 2,123 million due to the deconsolidation of
Qimonda. The remaining decrease in current assets primarily
related to a decrease of 281 million in trade and
other receivables, a 218 million decrease in
Infineons gross cash position, consisting of cash and cash
equivalents and
available-for-sale
financial assets, and a decrease in inventories of
122 million. Trade and other receivables decreased
primarily as a result of
127
lower revenues during the first half of the 2009 fiscal year.
Furthermore, the receipt of 95 million from The
Deposit Protection Fund of the German Private Commercial Banks
in the second quarter of the 2009 fiscal year and increased
allowances for doubtful accounts following Qimondas
application to commence insolvency proceedings contributed to
the decrease in trade and other receivables. Infineons
gross cash position decreased as of March 31, 2009 compared
to September 30, 2008, primarily due to the repayments of
long-term debt of 182 million which mainly relates to
the repurchase of nominal amounts of 22 million and
130 million of Infineons Convertible Notes due
2010 and Exchangeable Notes due 2010, respectively, and
41 million of Infineons syndicated loan.
Additionally, payments of termination benefits and purchases of
intangible assets and property, plant and equipment contributed
to the decrease of Infineons gross cash position, which
was partly offset by the receipt of 95 million from
The Deposit Protection Fund of the German Private Commercial
Banks and the contingent consideration of 13 million
refunded from TI due to the failure to achieve the revenue
targets of the CPE business.
As of March 31, 2009, non-current assets decreased by
10 percent to 2,094 million, compared to
2,334 million as of September 30, 2008. This
decrease primarily results from a 195 million
decrease in property, plant and equipment, net, as capital
expenditures during the six months ended March, 31, 2009 were
lower than depreciation. Furthermore, the sale of the SensoNor
business contributed to the decrease in property, plant and
equipment. Additionally, goodwill and other intangible assets
decreased by 18 million mainly due to the reduction
of goodwill relating to the acquisition of the CPE business from
TI as a result of the contingent consideration of
13 million received from TI. Other financial assets
decreased by 25 million.
As of March 31, 2009, current liabilities decreased by
66 percent to 1,240 million, compared to
3,673 million as of September 30, 2008, mainly
due to the deconsolidation of Qimonda, resulting in a decrease
of liabilities associated with assets classified as held for
disposal of 2,123 million. Furthermore, trade and
other payables decreased as of March 31, 2009 by
204 million compared to September 30, 2008,
mainly resulting from lower trade accounts payables due to lower
purchased services and lower capital expenditures. Also, other
current liabilities decreased by 80 million,
resulting from the decrease of employee related liabilities,
mainly due to payments of termination benefits from
Infineons IFX10+ cost-reduction program and the reduction
of liabilities for bonus payments. Finally, short-term debt and
current maturities of long-term debt decreased by
37 million, mainly as a result of repayments, while
other current financial liabilities increased by
10 million due to accrued interest on financial
liabilities.
As of March 31, 2009, non-current liabilities decreased by
10 percent to 1,034 million, compared to
1,148 million as of September 30, 2008,
primarily due to a decrease of long-term debt of
147 million, which mainly relates to the repurchase
of nominal amounts of 22 million and
130 million of Infineons Convertible Notes due
2010 and Exchangeable Notes due 2010, respectively. This
decrease was partly offset by a 63 million increase
in long-term provisions, primarily for potential liabilities
resulting from Qimondas insolvency.
September 30, 2008 Compared to September 30, 2007,
based on the Consolidated Financial Statements (IFRS) as of and
for the Fiscal Year ended September 30, 2008
As of September 30, 2008, Infineons total assets
decreased by 34 percent to 6,982 million,
compared to 10,599 million as of September 30,
2007. This decrease was mainly due to the decrease in assets
held for disposal from Qimonda and the write-down recorded to
reduce Qimondas net assets to their estimated current fair
value less costs to sell. Excluding assets held for disposal,
total assets also decreased as of September 30, 2008,
compared to September 30, 2007. This decrease was mainly
due to the decrease in current assets as cash and cash
equivalents and available for sale financial assets decreased,
as a result of cash used in investing activities from continuing
operations and cash used in financing activities being higher
than cash provided by operating activities from continuing
operations. In addition, cash and cash equivalents and
available-for-sale
financial assets in the amount of 121 million were
reclassified to trade and other receivables as of
September 30, 2008. This decrease in current assets was
partly offset by increases of non-current assets as of
September 30, 2008. This increase primarily related to the
increase in goodwill and other intangible assets resulting from
the acquisition of the mobility business from LSI and the
digital power business from Primarion. The increase in goodwill
and other intangible assets was partly offset by a decrease in
property, plant and equipment as capital expenditures were more
than offset by depreciation, amortization, and impairment
charges during the 2008 fiscal year.
Total liabilities increased by 5 percent to
4,821 million as of September 30, 2008, compared
to 4,595 million as of September 30, 2007. This
increase was primarily caused by an increase in Qimondas
total liabilities, which are classified as liabilities
associated with assets held for disposal as of
128
September 30, 2008. The increase in Qimondas total
liabilities is mainly due to increased short and long-term debt
of Qimonda, partly offset by a decrease in trade accounts
payable. Excluding liabilities associated with assets held for
disposal, total liabilities decreases compared to
September 30, 2007, primarily due to a decrease in short
and long-term debt and trade accounts payable.
Total equity decreased by 64 percent to
2,161 million as of September 30, 2008, compared
to 6,004 million as of September 30, 2007,
primarily as a result of the net loss incurred in the 2008
fiscal year.
September 30, 2007 Compared to September 30, 2006,
based on the Consolidated Financial Statements (U.S. GAAP)
as of and for the Fiscal Year ended September 30, 2007
As of September 30, 2007, Infineons total assets
decreased by 5 percent to 10,679 million,
compared to 11,185 million as of September 30,
2006, and current assets decreased by seven percent to
5,278 million, compared to 5,681 million
as of September 30, 2006, primarily due to decreased trade
accounts receivable and decreased cash and cash equivalents.
Trade accounts receivable decreased primarily as a result of the
decrease in fourth quarter sales by 452 million to
1,838 million compared with the fourth quarter of the
2006 fiscal year. The decrease of cash and cash equivalents
resulted primarily from the redemption during the 2007 fiscal
year of convertible subordinated notes due 2007 in the nominal
outstanding amount of 640 million.
Non-current assets decreased slightly by two percent to
5,401 million as of September 30, 2007, compared
to 5,504 million as of September 30, 2006, as
capital expenditures were more than offset by depreciation,
amortization, and impairment charges during the 2007 fiscal year.
As of September 30, 2007, total liabilities decreased by
6 percent to 4,732 million, compared to
5,030 million as of September 30, 2006, and
current liabilities decreased by 14 percent to
2,847 million, compared to 3,305 million
as of September 30, 2006, mainly due to the redemption of
convertible subordinated notes due 2007 in the principal
outstanding amount of 640 million. The increase in
non-current liabilities of 9 percent to
1,885 million as of September 30, 2007, compared
to 1,725 million as of September 30, 2006, was
primarily due to the issuance during the 2007 fiscal year of
subordinated notes exchangeable for Qimonda ADSs in the nominal
amount of 215 million. The increase in minority
interests resulted primarily from the sale of an additional
28.75 million Qimonda ADSs, for net proceeds of
216 million.
Liquidity
Cash
Flow
Infineons consolidated statements of cash flows show the
sources and uses of cash and cash equivalents during the
reported periods. They are of key importance for the evaluation
of Infineons financial position.
Cash flows from investing and financing activities are both
indirectly determined based on payments and receipts. Cash flows
from operating activities are determined indirectly from net
loss. The changes in balance sheet items have been adjusted for
the effects of foreign currency exchange fluctuations and for
changes in the scope of consolidation. Therefore, they do not
conform to the corresponding changes in the
129
respective balance sheet line items. The following table shows
selected data from Infineons consolidated statements of
cash flows, prepared in accordance with IFRS, for the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
|
|
|
For the six months ended
|
|
|
|
September
30,(1)
|
|
|
March
31,(1)(2)
|
|
(IFRS)
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Net cash provided by (used in) operating activities from
continuing operations
|
|
|
256
|
|
|
|
580
|
|
|
|
149
|
|
|
|
(65
|
)
|
Net cash provided by (used in) operating activities from
discontinued operations
|
|
|
995
|
|
|
|
(664
|
)
|
|
|
(270
|
)
|
|
|
(398
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
1,251
|
|
|
|
(84
|
)
|
|
|
(121
|
)
|
|
|
(463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities from
continuing operations
|
|
|
(48
|
)
|
|
|
(665
|
)
|
|
|
(894
|
)
|
|
|
31
|
|
Net cash provided by (used in) in investing activities from
discontinued operations
|
|
|
(869
|
)
|
|
|
3
|
|
|
|
(127
|
)
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(917
|
)
|
|
|
(662
|
)
|
|
|
(1.021
|
)
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities from continuing operations
|
|
|
(214
|
)
|
|
|
(230
|
)
|
|
|
(97
|
)
|
|
|
(180
|
)
|
Net cash provided by (used in) financing activities from
discontinued operations
|
|
|
(311
|
)
|
|
|
343
|
|
|
|
200
|
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) provided by financing activities
|
|
|
(525
|
)
|
|
|
113
|
|
|
|
103
|
|
|
|
(220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(191
|
)
|
|
|
(633
|
)
|
|
|
(1,039
|
)
|
|
|
(631
|
)
|
Effect of foreign exchange rate changes on cash and cash
equivalents
|
|
|
(40
|
)
|
|
|
(6
|
)
|
|
|
(14
|
)
|
|
|
(7
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
2,040
|
|
|
|
1,809
|
|
|
|
1,809
|
|
|
|
1,170
|
|
Cash and cash equivalents at end of period
|
|
|
1,809
|
|
|
|
1,170
|
|
|
|
756
|
|
|
|
532
|
|
Less: Cash and cash equivalents at end of period from
discontinued operations
|
|
|
736
|
|
|
|
421
|
|
|
|
529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period from continuing
operations
|
|
|
1,073
|
|
|
|
749
|
|
|
|
227
|
|
|
|
532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
(1) |
|
During the 2008 fiscal year,
Infineon committed to a plan to dispose of Qimonda. As a
consequence, the cash flows of Qimonda are reported as net cash
provided by (used in) activities from discontinued operations in
the separate line below cash flows from continuing operations.
On January 23, 2009, Qimonda and its wholly owned
subsidiary Qimonda Dresden GmbH & Co. oHG filed an
application at the Munich Local Court to commence insolvency
proceedings. As a result of this application, Infineon
deconsolidated Qimonda during the second quarter of the 2009
fiscal year. On April 1, 2009, the insolvency proceedings
formally opened.
|
|
(2) |
|
Unaudited.
|
The following table shows selected data from Infineons
consolidated statements of cash flows, prepared in accordance
with U.S. GAAP, for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
(U.S. GAAP)
|
|
( in millions)
|
|
|
Net cash provided by operating activities
|
|
|
1,003
|
|
|
|
1,207
|
|
Net cash used in investing activities
|
|
|
(853
|
)
|
|
|
(867
|
)
|
Net cash (used in) provided by financing activities
|
|
|
762
|
|
|
|
(521
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
892
|
|
|
|
(221
|
)
|
Six Months ended March 31, 2009 Compared with six months
ended March 31, 2008 based on the Unaudited Condensed
Consolidated Financial Statements (IFRS) as of and for the Three
and Six months ended March 31, 2009
130
Net cash flow
from operating activities from continuing
operations
Net cash used in operating activities from continuing operations
was 65 million for the six months ended
March 31, 2009 and reflected mainly the loss from
continuing operations of 266 million less non-cash
charges for depreciation and amortization of
282 million and 16 million resulting from
the sale of the SensoNor business. Net cash used in operating
activities in the six months ended March 31, 2009 was
negatively impacted by changes in operating assets and
liabilities of 117 million and positively impacted by
income taxes received of 19 million.
Net cash flow
from investing activities from continuing
operations
Net cash provided by investing activities from continuing
operations was 31 million for the six months ended
March 31, 2009 and primarily resulted from the receipt of
95 million from the German bank deposit protection
fund in the second quarter of the 2009 fiscal year and the
refund of contingent consideration of 13 million from
TI due to the failure to achieve the revenue targets of the CPE
business. Furthermore, proceeds of 10 million from
the sale of available-for-sale financial assets and the
consideration received from the sale of the SensoNor business
contributed to cash provided by investing activities. Infineon
used 91 million for the purchases of property, plant
and equipment, and intangible assets.
Net cash flow
from financing activities from continuing
operations
Net cash used in financing activities from continuing operations
was 180 million during the six months ended March,
31, 2009, and reflected principal repayments of long-term debt
of 182 million, of which the majority related to the
repurchase of nominal amounts of 22 million and
130 million of Infineons Convertible Notes due
2010 and Exchangeable Notes due 2010, respectively for an amount
of 90 million in cash. Additional repayments of
long-term debt amounted to 92 million, mainly
41 million for Infineons syndicated loan.
Net cash flow
from discontinued operations
The net decrease in cash and cash equivalents from discontinued
operations of 417 million in the six months ended
March 31, 2009 consisted primarily of cash used in
operating and financing activities of Qimonda aggregating
398 million and 40 million, respectively.
The net cash provided by investing activities from discontinued
operations of 21 million consisted primarily of cash
received by Qimonda in connection with the sale of Inotera to
Micron in November 2008 for USD 400 million
(approximately 296 million), partially offset by the
cash and cash equivalents of Qimonda totaling
286 million as of January 23, 2009, the date
Qimonda filed an application to commence insolvency proceedings.
Year ended September 30, 2008 Compared with Year ended
September 30, 2007 based on the Consolidated Financial
Statements (IFRS) as of and for the Fiscal Year ended
September 30, 2008
Net cash flow
from operating activities from continuing
operations
Net cash provided by operating activities from continuing
operations was 580 million in the 2008 fiscal year,
and reflected mainly the loss from continuing operations of
188 million, which was net of non-cash charges for
depreciation and amortization of 571 million,
impairment charges of 137 million and a
14 million charge for in-process R&D acquired
from LSI. Also included in loss from continuing operations were
gains from sales of businesses of 80 million. Cash
provided by operating activities from continuing operations was
positively impacted by the changes in operating assets and
liabilities of 145 million.
Net cash flow
from investing activities from continuing
operations
Net cash used in investing activities from continuing operations
of 665 million in the 2008 fiscal year mainly
reflected capital expenditures of 353 million for the
acquisition of the mobility products business of LSI and the
digital power business from Primarion, and of
312 million for the purchase of property, plant and
equipment. These cash outflows were partially offset by proceeds
from the sale of businesses and interests in subsidiaries of
121 million, and by net proceeds from the sale and
purchase of marketable securities of 27 million.
Net cash flow
from financing activities from continuing
operations
Net cash used in financing activities from continuing operations
increased by 16 million to 230 million in
the 2008 fiscal year compared to 214 million in the
2007 fiscal year. During the 2008 fiscal year,
131
Infineon made repayments of short-term and long-term debt of
294 million, of which 97 million related
to the repurchase of a nominal amount of 100 million
of Convertible Notes due 2010. Infineon also made dividend
payments to minority interest holders of 80 million,
which were partly offset by proceeds from issuance of long-term
debt of 149 million.
Net cash flow
from discontinued operations
Net decrease in cash and cash equivalents from discontinued
operations was 318 million in the 2008 fiscal year
compared to 185 million in the 2007 fiscal year. The
net decrease in cash and cash equivalents from discontinued
operations was mainly due to Qimondas net cash used in
operating activities which was partly offset by Qimondas
net cash provided by financing activities. Qimondas cash
flow from operating activities decreased significantly from net
cash provided of 995 million in the 2007 fiscal year
to net cash used of 664 million in the 2008 fiscal
year. This was mainly caused by Qimondas net loss, which
was largely a result of lower revenues due to the strong decline
in average selling prices as compared to the prior year. This
negative impact on Qimondas cash flow from operating
activities was partly offset by working capital (current assets
less cash and cash equivalents, available-for-sale financial
assets, net assets held for disposal and short-term liabilities)
improvements resulting from a decrease in its inventories and
trade accounts receivable. Qimondas cash flow from
operating activities was also negatively impacted by a decrease
in trade accounts payable in the 2008 fiscal year compared to
the 2007 fiscal year. Qimondas net cash provided by
financing activities was 343 million in the 2008
fiscal year and referred mainly to Qimondas issuance of
US$248 million of convertible notes due 2013 from which
Qimonda raised 168 million. Furthermore, drawings
under several short-term and long-term loan agreements net of
repayments and partially offset by redemptions under capital
lease agreements contributed to Qimondas net cash provided
by financing activities.
Year ended September 30, 2007 Compared with Year ended
September 30, 2006 based on the Consolidated Financial
Statements (U.S. GAAP) as of and for the Fiscal Year ended
September 30, 2007
Net cash flow
from operating activities
Net cash provided by operating activities in the 2007 fiscal
year resulted mainly from the net loss of
368 million, which is net of non-cash charges for
depreciation and amortization of 1,276 million and
impairment charges of 40 million. Net cash provided
by operating activities was positively impacted by a decrease of
trade accounts receivable and other current assets of
386 million, and negatively impacted by an increase
in inventories and a decrease in other current liabilities
aggregating to 185 million.
Net cash flow
from investing activities
Net cash used in investing activities in the 2007 fiscal year
mainly reflected capital expenditures of
1,375 million, principally to expand and equip
Infineons manufacturing facilities in Kulim, Malacca,
Batam, Villach and Regensburg in the logic segments and the DRAM
manufacturing facilities in Richmond, Dresden and Porto, as well
as net proceeds from net sales of marketable securities of
133 million, proceeds from sale of business
activities and interests in subsidiaries of
273 million, and cash inflows of
156 million from a sale and leaseback transaction of
200-millimeter equipment that Qimonda entered into in September
2007.
Net cash flow
from financing activities
Net cash used in financing activities in the 2007 fiscal year
principally related to the redemption of convertible
subordinated notes due 2007 in the nominal outstanding amount of
640 million, which was in part offset by the proceeds
of the issuance of 215 million in Exchangeable Notes
due 2010.
132
Net Cash
Position
The following table presents Infineons gross and net cash
positions and the maturity of debt. It is not intended to be a
forecast of cash available in future periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
|
|
|
|
|
Less than
|
|
|
1-2
|
|
|
2-3
|
|
|
3-4
|
|
|
4-5
|
|
|
After
|
|
|
|
Total
|
|
|
1 year
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
5 years
|
|
|
|
( in millions)
|
|
|
As of March 31,
2009(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
532
|
|
|
|
532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale financial assets
|
|
|
133
|
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross cash position
|
|
|
665
|
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
816
|
|
|
|
|
|
|
|
670
|
|
|
|
79
|
|
|
|
53
|
|
|
|
14
|
|
|
|
|
|
Short-term debt and current maturities
|
|
|
170
|
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial debt
|
|
|
986
|
|
|
|
170
|
|
|
|
670
|
|
|
|
79
|
|
|
|
53
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash position
|
|
|
(321
|
)
|
|
|
495
|
|
|
|
(670
|
)
|
|
|
(79
|
)
|
|
|
(53
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
Infineons gross cash position as of March 31, 2009,
representing cash and cash equivalents and available-for-sale
financial assets, decreased by 25 percent to
665 million from 883 million as of
September 30, 2008, primarily reflecting the cash used in
operating and financing activities from continuing operations.
Infineons gross cash position was 883 million
at September 30, 2008, compared with 2,226 million at
September 30, 2007. Prior year gross cash position included
Qimondas gross cash position which as of
September 30, 2008 was included in assets classified as
held for disposal. Furthermore, the decrease was due to the cash
outflow from operating and investing activities, net of sale
(purchases) of available for-sale financial assets of
112 million, the repurchase of Convertible Notes due
2010 in the nominal amount of 100 million for
97 million cash, and the reclassification of cash and
cash equivalents and available-for-sale financial assets in the
amount of 121 million into trade and other
receivables as of September 30, 2008.
Long-term debt principally consists of convertible and
exchangeable subordinated notes that were issued in order to
strengthen Infineons liquidity position and allows it more
financial flexibility in conducting its business operations. The
total nominal amount of outstanding convertible and exchangeable
notes as of September 30, 2008 and March 31, 2009
amounted to 815 million and 663 million,
respectively.
On June 5, 2003, Infineon issued 700 million in
Convertible Notes due 2010 at par in an underwritten offering to
institutional investors in Europe. The notes are unsecured and
accrue interest at 5 percent per year. The notes are
convertible, at the option of the noteholders, into a maximum of
68.4 million ordinary shares of Infineons company, at
a conversion price of 10.23 per share through maturity.
During the third quarter of the 2008 fiscal year and the first
quarter of the 2009 fiscal year, Infineon repurchased a nominal
amount of 122 million of Convertible Notes due 2010.
The repurchase was made out of available cash. These notes were
subsequently cancelled.
On September 26, 2007, Infineon issued
215 million in exchangeable subordinated notes due
2010 at par in an underwritten offering to institutional
investors in Europe. The notes are unsecured and accrue interest
at 1.375 percent per year. The notes are exchangeable for a
maximum of 20.5 million Qimonda ADSs, at an exchange price
of 10.48 per ADS at any time during the exchange period
through maturity. During the six months ended March, 31, 2009,
Infineon repurchased nominal amounts of 130 million
of Infineons exchangeable subordinated notes due 2010.
Subsequent to March 31, 2009, Infineon repurchased an
additional 38 million in nominal amount of its
Exchangeable Notes due 2010 for 27 million in cash
and 56 million in nominal amount of its Convertible
Notes due 2010 for 44 million in cash. The
repurchases were made out of available cash.
133
On May 26, 2009, Infineon issued an aggregate nominal
amount of 196 million of its New Convertible Notes
due 2014 for aggregate gross proceeds of 182 million.
See Measures Taken to Date to Improve
Infineons Financial Condition Issuance of New
Notes.
Infineons net cash position as of March 31, 2009,
defined as gross cash position less short and long-term debt was
negative 321 million, a decrease of
34 million from September 30, 2008 with negative
287 million, mainly reflecting cash used in operating
activities, which was only partly offset by the effect on
Infineons net cash position of the repurchase of
Exchangeable Notes due 2010 and Convertible Notes due 2010,
respectively, net of accretion for the Exchangeable Notes due
2010 and Convertible Notes due 2010.
Infineons net cash position decreased by
950 million to negative 287 million at
September 30, 2008, compared with positive
663 million at September 30, 2007, primarily
because prior year amounts also included Qimondas net cash
position. Additionally, net cash position decreased principally
due to cash outflow from operating and investing activities, net
of sale (purchases) of available-for-sale financial assets of
112 million from continuing operation and dividend
payments to minority interest holders.
To secure Infineons cash position and to keep flexibility
with regards to liquidity, Infineon has implemented a policy
with risk limits for the amounts deposited with respect to the
counterparty, credit rating, sector, duration, credit support
and type of instrument.
Capital
Requirements
Infineon requires capital to:
|
|
|
|
|
finance Infineons operations;
|
|
|
|
make scheduled debt payments;
|
|
|
|
settle contingencies if they occur; and
|
|
|
|
make planned capital expenditures.
|
Infineon expects to meet these requirements through:
|
|
|
|
|
cash flows generated from operations;
|
|
|
|
cash on hand and securities Infineon can sell;
|
|
|
|
available credit facilities; and
|
|
|
|
other initiatives as described in this Prospectus.
|
Statement on
Working Capital
Infineon can provide no assurance that, without additional
equity or debt capital or other inflow of funds, it will have
sufficient working capital during the next 12 months due to
the Convertible Notes due 2010 outstanding in the nominal amount
of 522 million and Exchangeable Notes due 2010
outstanding in the nominal amount of 48 million
falling due in 2010 (together, the Bonds Due in
2010). Working capital is defined in the CESRs
recommendations for the consistent implementation of the
European Commissions Regulation on Prospectuses
n°809/2004 (CESR/05-054b) as an issuers ability to
access cash and other available liquid resources in order to
meet its liabilities as they fall due.
Infineon believes that it will continue to be able to fund its
normal business operations out of cash flow from operations.
However, in an effort to obtain sufficient funds to repay the
Bonds Due in 2010 and to solidify its balance sheet structure,
Infineon commenced the Offering which is the subject matter of
this Prospectus. This Offering relates to up to 337,000,000 New
Shares that Infineon is offering to its shareholders for
subscription. The Backstop Investor has, subject to receiving a
minimum allocation conveying a stake of at least 15 percent
of the increased share capital, agreed with Infineon to
subscribe for up to 326,022,625 New Shares at the Subscription
Price. If persons exercising Subscription Rights subscribe to
purchase 173,988,688 or more New Shares, the Backstop Investor
would not receive this minimum allocation and the backstop would
not take effect unless the Backstop Investor waives the minimum
allocation condition. If the backstop would not take effect (and
assuming the Backstop Investor does not waive the condition),
Infineon would receive gross issue proceeds of at least
374 million. If all 337,000,000 New Shares are placed at
the Subscription Price, the gross issue proceeds will be
approximately 725 million. See The
Offering Backstop Arrangement.
134
Assuming that 337,000,000 New Shares are placed at the
Subscription Price, Infineon expects to have sufficient funds to
repay the Bonds Due in 2010 and to solidify its balance sheet
structure.
However, it is possible that Infineon may only be able to place
173,988,688 New Shares for the above minimum gross proceeds of
374 million in the Offering for reasons beyond its
control, including among others, that the Backstop Investor does
not achieve its minimum threshold and does not waive this
requirement and that the Backstop Investor terminates the
Backstop Arrangement in accordance with its terms. See
Risk Factors Risks Relating to the Company
and the Market The financial resources available to
Infineon, including the proceeds of the Offering, may be
insufficient to meet Infineons capital needs as
well as The Offering Backstop
Arrangement.
If Infineon places the minimum number of 173,988,688 New Shares,
it will still be able to use part of its available cash to repay
a portion of the outstanding nominal amount of, and accrued
interest on, the Bonds Due in 2010, but may need to find
alternative sources of funds to repay the remaining amounts due.
These alternatives may include: new debt financing instruments
such as loans provided or guaranteed by the governments of
jurisdictions in which Infineon operates manufacturing
facilities; portfolio measures, including asset sales; further
internal cost and cash savings; and other corporate
restructuring measures.
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due/expirations by period
|
|
|
|
|
|
|
Less than
|
|
|
1-2
|
|
|
2-3
|
|
|
3-4
|
|
|
4-5
|
|
|
After
|
|
|
|
Total
|
|
|
1 year
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
years
|
|
|
5 years
|
|
|
|
( in millions)
|
|
|
As of March 31,
2009(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease payments
|
|
|
752
|
|
|
|
70
|
|
|
|
65
|
|
|
|
58
|
|
|
|
56
|
|
|
|
56
|
|
|
|
447
|
|
Unconditional purchase commitments
|
|
|
487
|
|
|
|
381
|
|
|
|
60
|
|
|
|
27
|
|
|
|
13
|
|
|
|
4
|
|
|
|
2
|
|
Future interest payments
|
|
|
83
|
|
|
|
40
|
|
|
|
36
|
|
|
|
4
|
|
|
|
2
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commitments
|
|
|
1,322
|
|
|
|
491
|
|
|
|
161
|
|
|
|
89
|
|
|
|
71
|
|
|
|
60
|
|
|
|
450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other contingencies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees(2)
|
|
|
76
|
|
|
|
10
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
3
|
|
|
|
57
|
|
Contingent government
grants(3)
|
|
|
36
|
|
|
|
16
|
|
|
|
6
|
|
|
|
5
|
|
|
|
5
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contingencies
|
|
|
112
|
|
|
|
26
|
|
|
|
11
|
|
|
|
6
|
|
|
|
5
|
|
|
|
7
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain payments of obligations or
expiration of commitments that are based on the achievement of
milestones or other events that are not date-certain are
included for purposes of this table, based on Infineons
estimate of the reasonably likely timing of payments or
expirations in each particular case. Actual outcomes could
differ from those estimates.
|
|
(2) |
|
Guarantees are mainly issued for
the payment of import duties, rentals of buildings and
contingent obligations related to government grants received.
|
|
(3) |
|
Contingent government grants refer
to amounts previously received, related to the construction and
financing of certain production facilities, which are not
guaranteed otherwise and could be refundable if the total
project requirements are not met.
|
Off-Balance
Sheet Arrangements
Infineon issues guarantees in the normal course of business,
mainly for the payment of import duties, rentals of buildings
and contingent obligations related to government grants
received. As of March 31, 2009, the undiscounted amount of
potential future payments for guarantees was
78 million.
135
Capital
Expenditures (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended
|
|
|
|
For the years ended September 30,
|
|
|
March
31,(1)(2)
|
|
|
|
2006
|
|
|
2007
|
|
|
2007(1)
|
|
|
2008(1)
|
|
|
2008
|
|
|
2009
|
|
|
|
(U.S. GAAP)
|
|
|
(U.S. GAAP)
|
|
|
(IFRS)
|
|
|
(IFRS)
|
|
|
(IFRS)
|
|
|
(IFRS)
|
|
|
|
( in millions)
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
1,253
|
|
|
|
1,375
|
|
|
|
498
|
|
|
|
312
|
|
|
|
170
|
|
|
|
69
|
|
Notes
|
|
|
(1) |
|
During the 2008 fiscal year,
Infineon committed to a plan to dispose of Qimonda. As a
consequence, the cash flows of Qimonda are reported as net cash
provided by (used in) activities from discontinued operations in
the consolidated statements of cash flow for all periods
presented. On January 23, 2009, Qimonda and its wholly
owned subsidiary Qimonda Dresden GmbH & Co. oHG filed
an application at the Munich Local Court to commence insolvency
proceedings. As a result of this application, Infineon
deconsolidated Qimonda during the second quarter of the 2009
fiscal year. On April 1, 2009, the insolvency proceedings
formally opened.
|
|
(2) |
|
Unaudited.
|
Depending on market developments and its business situation,
Infineon currently expects to invest approximately
130 million in capital expenditures for property,
plant and equipment in the 2009 fiscal year. Assuming a
successful completion of the Offering, Infineon will seek to
continue to improve its productivity and upgrade technology at
existing facilities. Infineon believes that it will be able to
finance these capital expenditures using net cash flow from
operating activities from continuing operations.
The principal items relating to Infineons capital
expenditures in the six months ended March 31, 2009
included 69 million for Infineons front-end
facilities in Kulim and Dresden, and Infineons back-end
facilities in Malacca. In addition to those capital
expenditures, Infineon invested 22 million in
intangible assets and received 13 million for the
refund of contingent consideration from TI due to the failure to
achieve the revenue targets of the CPE business.
The principal items relating to Infineons capital
expenditures in the 2008 fiscal year included
184 million mainly for capacity expansion of
Infineons front-end facilities in Europe and the
ramp-up of
the Kulim facility, and 77 million mainly for
capacity expansion of Infineons back-end facilities in
Batam, Regensburg and Malacca. In addition to those capital
expenditures, Infineon invested 58 million in
intangible assets and spent 353 million for the
acquisitions of the mobility products business from LSI and the
digital power business of Primarion.
The principal items relating to Infineons capital
expenditures in the 2007 fiscal year included
879 million at Qimonda, 279 million mainly
for capacity expansion of Infineons front-end facilities
in Kulim and Villach, and 160 million mainly for
capacity expansion of Infineons back-end facilities. In
addition to those capital expenditures, Infineon invested
40 million in intangible assets and spent
45 million for the acquisition of the CPE business
from TI.
The principal items relating to Infineons capital
expenditures in the 2006 fiscal year included
686 million at Qimonda, 392 million mainly
for capacity expansion at Infineons front-end facility in
Kulim, Malaysia, and 108 million mainly for capacity
expansion of Infineons back-end facilities. In addition to
those capital expenditures, Infineon invested
44 million in intangible assets.
136
Credit
Facilities
Infineon has established both short- and long-term credit
facilities with a number of different financial institutions in
order to meet its anticipated funding requirements. These
facilities, which aggregate 913 million, of which
536 million remained available at March 31,
2009, comprise the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of financial
|
|
|
|
As of March 31, 2009
|
|
|
|
institution
|
|
|
|
Aggregate
|
|
|
|
|
|
|
|
Term
|
|
commitment
|
|
Purpose/ intended use
|
|
facility
|
|
|
Drawn
|
|
|
Available
|
|
|
|
( in millions)
|
|
|
|
|
|
|
|
|
Short-term
|
|
firm commitment
|
|
working capital guarantees
|
|
|
508
|
|
|
|
117
|
|
|
|
391
|
|
Short-term
|
|
no firm commitment
|
|
working capital, cash management
|
|
|
145
|
|
|
|
|
|
|
|
145
|
|
Long-term(1)
|
|
firm commitment
|
|
project finance
|
|
|
260
|
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
913
|
|
|
|
377
|
|
|
|
536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
(1) |
|
Including current maturities.
|
In September 2004, Infineon executed a
US$400/400 million syndicated credit facility with a
five-year term, which was subsequently reduced to
US$345/300 million in August 2006. The facility
consists of two tranches. Tranche A is a term loan
originally intended to finance the expansion of the Richmond,
Virginia, manufacturing facility. In January 2006, Infineon drew
US$345 million under Tranche A, on the basis of a
repayment schedule that foresees equal installments falling due
in March and September each year. At March 31, 2009
US$70 million was outstanding under Tranche A.
Tranche B, which is a multicurrency revolving facility to
be used for general corporate purposes, remained undrawn at
March 31, 2009. The facility has customary financial
covenants, and drawings bear interest at market-related rates
that are linked to financial performance. The lenders of this
credit facility have been granted a negative pledge relating to
the future financial indebtedness of the Company with certain
permitted encumbrances.
In May 2009, the Company and Infineon Technologies Holding BV
(as original borrowers and original guarantors, respectively)
executed a 100 million revolving credit facility to
be utilized by way of drawings of loans in Euro and any optional
currency with an availability period until and including the
date falling one month prior to March 15, 2010. The credit
facility is available for general corporate purposes and
currently undrawn. It is unsecured with customary financial
covenants, and drawings bear interest at market-related rates
that are linked to the interest period of each loan plus a
margin.
At March 31, 2009, Infineon was in compliance with its debt
covenants under the relevant facilities.
Pension Plan
Funding
Infineons defined pension benefit obligation, which takes
into account future compensation increases, amounted to
376 million at September 30, 2008, compared to
475 million at September 30, 2007. The fair
value of plan assets as of September 30, 2008 was
333 million, compared to 409 million as of
September 30, 2007.
The actual return on plan assets between the last measurement
dates amounted to negative 11.1 percent, or negative
41 million, for domestic (German) plans and negative
8.0 percent, or negative 2 million, for foreign
plans, compared to the expected return on plan assets for that
period of 6.5 percent for domestic plans and
7.0 percent for foreign plans. Infineon has estimated the
return on plan assets for the next fiscal year to be
7.1 percent, or 21 million, for domestic plans
and 7.2 percent, or 3 million, for foreign plans.
At September 30, 2007 and 2008, the combined funding status
of Infineons pension plans reflected an under-funding of
66 million and 43 million, respectively.
Infineons investment approach with respect to the pension
plans involves employing a sufficient level of flexibility to
capture investment opportunities as they occur, while
maintaining reasonable parameters to ensure that prudence and
care are exercised in the execution of the investment program.
The pension plans assets are invested with several
investment managers. The plans employ a mix of active and
passive investment management programs. Considering the duration
of the underlying liabilities, a portfolio of investments of
plan assets in equity securities, debt securities and other
assets is targeted to maximize the long-term return on plan
assets for a given level of risk. Investment risk is monitored
on an
137
ongoing basis through periodic portfolio reviews, meetings with
investment managers and liability measurements. Investment
policies and strategies are periodically reviewed to ensure the
objectives of the plans are met considering any changes in
benefit plan design, market conditions or other material items.
Infineons asset allocation targets for pension plan assets
are based on its assessment of business and financial
conditions, demographic and actuarial data, funding
characteristics, related risk factors, market sensitivity
analyses and other relevant factors. The overall allocation is
expected to help protect the plans level of funding while
generating sufficiently stable real returns (that is, net of
inflation) to meet current and future benefit payment needs. Due
to active portfolio management, the asset allocation may differ
from the target allocation up to certain limits. As a matter of
policy, Infineons pension plans do not invest in the
Companys shares.
Financial
Instruments
Infineon 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 Infineons foreign currency denominated net
future cash flows. Infineon does not enter into derivatives for
trading or speculative purposes.
Employees
The following table indicates the composition of Infineons
workforce by function and region at the end of the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
As of March 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2009(1)
|
|
|
Function:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
20,528
|
|
|
|
20,376
|
|
|
|
19,358
|
|
|
|
19,677
|
|
|
|
17,080
|
|
Research & Development
|
|
|
5,989
|
|
|
|
5,833
|
|
|
|
6,273
|
|
|
|
6,313
|
|
|
|
6,019
|
|
Sales & Marketing
|
|
|
1,781
|
|
|
|
1,832
|
|
|
|
1,905
|
|
|
|
1,955
|
|
|
|
1,742
|
|
Administrative
|
|
|
1,551
|
|
|
|
1,557
|
|
|
|
1,583
|
|
|
|
1,594
|
|
|
|
1,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon
|
|
|
29,849
|
|
|
|
29,598
|
|
|
|
29,119
|
|
|
|
29,539
|
|
|
|
26,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
11,802
|
|
|
|
13,481
|
|
|
|
12,224
|
|
|
|
13,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
41,651
|
|
|
|
43,079
|
|
|
|
41,343
|
|
|
|
42,837
|
|
|
|
26,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
11,052
|
|
|
|
10,151
|
|
|
|
10,053
|
|
|
|
10,115
|
|
|
|
9,361
|
|
Europe
|
|
|
5,578
|
|
|
|
5,564
|
|
|
|
5,192
|
|
|
|
5,333
|
|
|
|
4,610
|
|
North America
|
|
|
532
|
|
|
|
581
|
|
|
|
821
|
|
|
|
847
|
|
|
|
745
|
|
Asia/Pacific
|
|
|
12,497
|
|
|
|
13,145
|
|
|
|
12,897
|
|
|
|
13,082
|
|
|
|
11,501
|
|
Japan
|
|
|
149
|
|
|
|
157
|
|
|
|
156
|
|
|
|
162
|
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon
|
|
|
29,849
|
|
|
|
29,598
|
|
|
|
29,119
|
|
|
|
29,539
|
|
|
|
26,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
11,802
|
|
|
|
13,481
|
|
|
|
12,224
|
|
|
|
13,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
41,651
|
|
|
|
43,079
|
|
|
|
41,343
|
|
|
|
42,837
|
|
|
|
26,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
|
(1) |
|
On January 23, 2009, Qimonda
and its wholly owned subsidiary Qimonda Dresden GmbH &
Co. oHG filed an application at the Munich Local Court to
commence insolvency proceedings. As a result of this
application, Infineon deconsolidated Qimonda during the second
quarter of the 2009 fiscal year. Subsequent to the
deconsolidation, the employees of Qimonda are no longer
reported. On April 1, 2009, the insolvency proceedings
formally opened.
|
During the first half of Infineons 2009 fiscal year,
workforce decreased in all functions and regions primarily as a
result of its IFX10+ cost-reduction program, as well as a result
of the sale of the SensoNor business.
During the 2008 fiscal year, the number of employees in
Infineons logic business decreased slightly, primarily due
to the deconsolidation of its Bipolar business, and further
decreases in the number of
138
production employees primarily in Asia/Pacific. These decreases
were partly offset by employees that joined the company as a
result of the acquisitions Infineon made during the year.
In the 2007 fiscal year, the number of employees in
Infineons logic business decreased in Germany primarily as
a result of the phase out of manufacturing at Munich-Perlach,
and the restructuring program initiated following the insolvency
of BenQs German subsidiary, but increased in the
Asia/Pacific region due to expansion of production in Kulim,
Malaysia, and R&D in Malaysia and China.
Critical
Accounting Policies
Infineons results of operations and financial condition
are dependent upon accounting methods, assumptions and estimates
that it uses as a basis for the preparation of its consolidated
financial statements. Infineon has identified the following
critical accounting policies and related assumptions, estimates
and uncertainties, which it believes are essential to
understanding the underlying financial reporting risks and the
impact that these accounting methods, assumptions, estimates and
uncertainties have on its reported financial results.
Revenue
Recognition
Infineon generally markets its products to a wide variety of
customers and a network of distributors. Infineons policy
is to record revenue when persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered,
the risks and rewards of ownership have been transferred to the
customer, the amount of revenue can be measured reliably, and
collection of the related receivable is reasonably assured.
Infineon records reductions to revenue for estimated product
returns and allowances for discounts and price protection, based
on actual historical experience, at the time the related revenue
is recognized. Infineon establishes reserves for sales
discounts, price protection allowances and product returns based
upon its evaluation of a variety of factors, including industry
demand. This process requires the exercise of substantial
judgments in evaluating the above- mentioned factors and
requires material estimates, including forecasted demand,
returns and industry pricing assumptions.
In future periods, Infineon may be required to accrue additional
provisions due to (1) deterioration in the semiconductor
pricing environment, (2) reductions in anticipated demand
for semiconductor products or (3) lack of market acceptance
for new products. If these or other factors result in a
significant adjustment to sales discount and price protection
allowances, they could significantly impact Infineons
future operating results.
Infineon has entered into licensing agreements for its
technology in the past, and anticipate that Infineon will
increase its efforts to monetize the value of its technology in
the future. As with certain of Infineons existing
licensing agreements, any new licensing arrangements may include
capacity reservation agreements with the licensee. The process
of determining the appropriate revenue recognition in such
transactions is highly complex and requires significant
judgment, which includes evaluating material estimates in the
determination of fair value and the level of Infineons
continuing involvement.
Recoverability
of Non-Financial Assets
Infineons business is extremely capital-intensive, and
requires a significant investment in property, plant and
equipment. Due to rapid technological change in the
semiconductor industry, Infineon anticipates the level of
capital expenditures to be significant in future periods. During
the 2008 fiscal year and the six months ended March 31,
2009, Infineon spent 312 million and
69 million on purchases of property, plant and
equipment, respectively. At September 30, 2008 and
March 31, 2009, the carrying value of Infineons
property, plant and equipment was 1,310 million and
1,115 million, respectively. Infineon has acquired
other businesses, which resulted in the generation of
significant amounts of long-lived intangible assets, including
goodwill. At September 30, 2008 and March 31, 2009,
Infineon had long-lived intangible assets of
443 million and 425 million, respectively.
In accordance with the provisions of IAS 36, Impairment of
Assets, Infineon tests goodwill and indefinite life
intangible assets for impairment at least once a year.
Infineon also reviews long-lived assets, including intangible
assets, for impairment when events or changes in circumstances
indicate that the carrying value of an asset may not be
recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying value of an asset to
the recoverable amount, which is the higher of the assets
value in use and its fair value less costs to sell. If
139
such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying value
of the assets exceeds their recoverable amount.
The Company determines its cash generating units
(CGU) based on the smallest group of assets
which are grouped and generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets
or groups thereof. At the Company, CGUs are represented by one
or a group of individual product lines. The Company determines
the recoverable amount of a GCU based on discounted cash flow
calculations. The Company believes that this is the most
meaningful method, in order to reflect the cyclicality of the
industry and to determine the recoverable amount of the CGUs.
The material assumptions underlying our discounted cash flow
model for all our cash generating units include the weighted
average cost of capital as well as the terminal growth rate of
the CGUs. The calculation of the discount rate is based on a
market participants view of the asset or CGU. In
accordance with IAS 36, the Company determines the appropriate
WACC for the CGUs based market information, including the peer
groups beta factors and leverage, and other market
borrowing rates. The assumption and methodologies used since the
2007 fiscal year have not been changed, only the parameters have
been updated.
The terminal value growth rate has been taken from available
market studies from market research institutes.
In addition, the individual impairment tests include sensitivity
analysis taken into account the above mentioned material
assumptions. As part of the sensitivity analysis for each
impairment test for the CGU, these parameters were also
subsequently revised to reflect further slowdown of the
worldwide economic conditions during the 2008 fiscal year and
until the filing of the audited financial statements.
During the 2008 fiscal year and the six months ended
March 31, 2009, impairment charges of
130 million and 1 million, respectively,
were recognized on long-lived assets, including intangible
assets.
Infineon did not recognize any goodwill impairment charges in
the 2008 fiscal year and the six months ended March 31,
2009.
Given the fact that Infineons market capitalization has
been less than its book value, Infineon has performed an interim
goodwill impairment test as of March 31, 2009. The
assumptions underlying Infineons discounted cash flow
model for all its cash generating units were revised to reflect
further slowdown of the worldwide economic conditions. Based on
Infineons impairment analysis, Infineon concluded that
goodwill was not impaired as of March 31, 2009. Further,
Infineon evaluated qualitatively the reasonableness of its
estimated fair values of the cash generating units as compared
to Infineons overall market capitalization.
Infineons market capitalization during the period was
below the aggregate fair value of its cash generating units.
Infineon believes the substantial decrease in its market value
during the period was largely due to factors which do not impact
the fair value of its cash generating units to the same extent.
These factors include liquidity and credit concerns in the
overall market and uncertainties in the capital markets
regarding Infineons liquidity and financing needs.
Infineon believes that the aggregate fair value of its cash
generating units based on the discounted cash flow model
represents the best estimate of Infineons future
performance and therefore, is a more accurate fair value.
Valuation of
Inventory
Historically, the semiconductor industry has experienced periods
of extreme volatility in product demand and in industry
capacity, resulting in significant price fluctuations. Since
semiconductor demand is concentrated in such highly-volatile
industries as wireless communications, wireline communications
and the computer industry, this volatility can be extreme. This
volatility has also resulted in significant fluctuations in
price within relatively short time-frames.
As a matter of policy, Infineon values inventory at the lower of
acquisition or production cost or net realizable value. Infineon
reviews the recoverability of inventory based on regular
monitoring of the size and composition of inventory positions,
current economic events and market conditions, projected future
product demand, and the pricing environment. This evaluation is
inherently judgmental and requires material estimates, including
both forecasted product demand and pricing environment, both of
which may be susceptible to significant change. At
September 30, 2008 and March 31, 2009, total inventory
was 665 million and 543 million,
respectively.
In future periods, write-downs of inventory may be necessary due
to (1) reduced semiconductor demand in the industries
Infineon serves, including the computer industry and the
wireless and wireline
140
communications industries, (2) technological obsolescence
due to rapid developments of new products and technological
improvements, or (3) changes in economic or other events
and conditions that impact the market price for Infineons
products. These factors could result in adjustments to the
valuation of inventory in future periods, and significantly
impact Infineons future operating results.
Realization of
Deferred Tax Assets
At September 30, 2008, total net deferred tax assets were
381 million. Included in this amount are the tax
benefits of net operating loss and credit carry-forwards of
approximately 367 million, net of the valuation
allowance. These tax loss and credit carry-forwards generally do
not expire under current law.
Infineon evaluates its deferred tax asset position and the need
for a valuation allowance on a regular basis. The assessment
requires the exercise of judgment on the part of Infineons
management with respect to, among other things, benefits that
could be realized from available tax strategies and future
taxable income, as well as other positive and negative factors.
The ultimate realization of deferred tax assets is dependent
upon Infineons ability to generate the appropriate
character of future taxable income sufficient to utilize loss
carry-forwards or tax credits before their expiration. Since
Infineon has incurred a cumulative loss in certain tax
jurisdictions over the three-year period ended
September 30, 2008, the impact of forecasted future taxable
income is excluded from such an assessment. For these tax
jurisdictions, the assessment was therefore based only on the
benefits that could be realized from available tax strategies
and the reversal of temporary differences in future periods.
As a result of this assessment, Infineon increased the deferred
tax asset valuation allowance in the 2007 and 2008 fiscal years
by 31 million and 181 million,
respectively, in order to reduce the deferred tax asset to an
amount that is probable to be realized in the future. Infineon
expects to continue to recognize low levels of deferred tax
benefits in the 2009 fiscal year, until such time as taxable
income is generated in tax jurisdictions that would enable
Infineon to utilize its tax loss carry-forwards in those
jurisdictions.
The recorded amount of total deferred tax assets could be
reduced if Infineons estimates of projected future taxable
income and benefits from available tax strategies are lowered,
or if changes in current tax regulations are enacted that impose
restrictions on the timing or extent of Infineons ability
to utilize tax loss and credit carry-forwards in the future.
Purchase
Accounting
Infineon has acquired businesses in the 2008 fiscal year,
including the mobility products business from LSI and the
digital power business of Primarion. Both acquisitions resulted
in long-term intangible assets and goodwill. Based on discounted
estimated future cash flows over the respective estimated useful
life, an amount of 14 million was allocated to
purchased in-process R&D from the acquisition of the
mobility products business from LSI and expensed as other
operating expense during the 2008 fiscal year because no future
economic benefit from its use or disposal was expected.
Accounting for business combinations requires the allocation of
the purchase price to identifiable tangible and intangible
assets and liabilities based upon their fair value. The
allocation of purchase price is highly judgmental, and requires
the extensive use of estimates and fair value assumptions, which
can have a significant impact on operating results.
Provisions
Infineon is subject to various legal actions and claims,
including intellectual property matters, which arise in and
outside the normal course of business. Current proceedings are
described under the heading Business Legal
Matters.
Infineon regularly assess the likelihood of any adverse outcome
or judgments related to these matters, as well as estimating the
range of possible losses and recoveries. Liabilities, including
accruals for significant litigation costs, related to legal
proceedings are recorded when it is probable that a liability
has been incurred and the associated amount of the loss 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 mid-point in the
range is accrued. Accordingly, Infineon has accrued a liability
and charged operating income in the accompanying consolidated
financial statements related to certain asserted and unasserted
claims existing as of each balance sheet date. As additional
information becomes available, any potential liability related
to these actions is assessed and the estimates are revised, if
necessary. These accrued liabilities would be subject to change
in the future based on new
141
developments in each matter, or changes in circumstances, which
could have a material impact on Infineons results of
operations, financial position and cash flows.
Provisions at September 30, 2008 and March 31, 2009
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
Personnel costs
|
|
|
347
|
|
|
|
208
|
|
Warranties and licenses
|
|
|
32
|
|
|
|
49
|
|
Asset retirement obligations
|
|
|
13
|
|
|
|
9
|
|
Post-retirement benefits
|
|
|
3
|
|
|
|
3
|
|
Other
|
|
|
56
|
|
|
|
239
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
451
|
|
|
|
508
|
|
|
|
|
|
|
|
|
|
|
Provisions for personnel costs relate to employee-related
obligations and include, among others, costs of incentive and
bonus payments, holiday and vacation payments, termination
benefits, early retirement, service anniversary awards, other
personnel costs and related social security payments.
Provisions for warranties and licenses mainly represent the
estimated future cost of fulfilling contractual requirements
associated with products sold.
Provisions for asset retirement obligations relate to certain
items of property, plant and equipment. Such asset retirement
obligations may arise due to attributable environmental
clean-up
costs and to costs primarily associated with the removal of
leasehold improvements at the end of the lease term.
Other provisions comprise provisions for outstanding expenses,
penalties for default or delay on contracts, conservation, and
waste management, and for miscellaneous other liabilities. As of
March 31, 2009, other provisions also include additional
provisions resulting from the insolvency of Qimonda (see
note 4 of Infineons condensed consolidated financial
statements for the three and six months ended March 31,
2009). See Risk Factors Risks Related to
the Companys Business and the Market Infineon may
face significant liabilities as a result of the insolvency of
Qimonda.
For an amount of 424 million and
418 million of the total provisions as of
September 30, 2008 and March 31, 2009, respectively,
the outflow of economic benefit is expected to occur within one
year.
Risk and
Opportunity Management System
The Company-wide risk and opportunity management system
(RMS) is based on a risk policy which defines
risk as the potential negative deviation from the financial
forecast and which is not limited to the detection of
developments that endanger Infineons future. A substantial
element of the RMS is the underlying risk management process,
which consists of risk identification, risk analysis, risk
steering and risk control. The systematic implementation of the
risk management process improves Infineons planning
forecast accuracy, enhances transparency in decisions under
uncertainty and supports its overall risk awareness.
The risk management organization consists of the central risk
management department, which is assigned to the Companys
chief financial officer, and so-called risk officers, who are
responsible for the implementation of the risk management
process in their respective organizational units. One of the
most important tasks of a risk officer is to collect and to
document substantial risks and opportunities. They build the
interface to the central risk management department, which is
mainly in charge of the risk management process itself and
methods for its implementation, as well as the presentation of
risks and opportunities at the company group level.
The all-encompassing risk reporting approach uses a risk and
opportunity catalogue which is checked for completeness and
whose content is assessed once a year. The quarterly risk and
opportunity assessments are based on estimates of the
probability of a risk event and the corresponding impact on
results of operations. Additionally, risk mitigation measures
are defined and the related implementation status is documented.
All risks and opportunities above a defined threshold are rated
as important and have to be reported in the quarterly risk
report. During a quarter, risks and opportunities have to be
reported if their impact on Infineons results of
operations would materially affect Infineons share price.
142
The summarized risk reports of the organizational units are
aggregated by the central risk management department while
dependencies are being validated. The aggregated risk report
contains information on all critical risks and opportunities and
is provided to the Management Board once a quarter.
The risk and opportunity management system is comprehensively
documented and published on Infineons intranet. Thus all
employees have access to the details of the risk management
system. It is periodically controlled to ensure its legal
compliance and correctness. These controls are performed by the
internal corporate audit department.
Infineons independent auditor reviews the risk management
system as part of their year-end-audit. They confirm that the
Management Board has established an early warning system which
is compliant with Section 91(2) of the German Stock
Corporation Act and which is explicitly able to detect early on
risks which could endanger Infineons future.
Quantitative and
Qualitative Disclosures about Market Risks
The following discussion should be read in conjunction with
note 38 to Infineons consolidated financial
statements for the fiscal year ended September 30, 2008,
and note 18 to Infineons unaudited condensed
consolidated financial statements for the six months ended
March 31, 2009.
Market risk is the risk of loss related to adverse changes in
market prices of financial instruments, including those related
to commodity prices, foreign exchange rates and interest rates.
Infineon is exposed to various financial market risks in the
ordinary course of business transactions, primarily resulting
from changes in commodity prices, foreign exchange rates and
interest rates. Infineon enters into diverse financial
transactions with multiple counterparties to limit such risks.
Derivative instruments are used only for hedging purposes and
not for trading or speculative purposes.
Commodity
Price Risk
Infineon is exposed to commodity price risks with respect to raw
materials used in the manufacture of its products. Infineon
seeks to minimize these risks through its sourcing policies
(including the use of multiple sources, where possible) and its
operating procedures. Infineon does not use derivative financial
instruments to manage any exposure to fluctuations in commodity
prices remaining after these operating measures.
Foreign
Exchange and Interest Risk
Although Infineon prepares its consolidated financial statements
in euro, major portions of its sales volumes as well as costs
relating to the design, production and manufacturing of products
are denominated in U.S. dollars. As a multinational
company, Infineons activities in markets around the world
create cash flows in a number of different currencies. Exchange
rate fluctuations may have substantial effects on
Infineons sales, its costs and its overall results of
operations.
Although the Company prepares the consolidated financial
statements in euro, major portions of its sales volumes as well
as costs relating to the design, development, manufacturing and
marketing of products are denominated in currencies other than
the euro, primarily the U.S. dollar. Fluctuations in the
exchange rates of these currencies to the euro had an effect on
profitability in the 2007 and 2008 fiscal years.
Management has established a policy to require the
Companys individual legal entities to manage their foreign
exchange risk against their functional currency. The legal
entities are required to internally hedge their entire foreign
exchange risk exposure with the Companys Finance and
Treasury department. To manage their foreign exchange risk
arising from future commercial transactions and recognized
assets and liabilities, the individual entities use forward
contracts, transacted with the Companys Finance and
Treasury department.
The Companys policy with respect to limiting short-term
foreign currency exposure generally is to economically hedge at
least 75 percent of its estimated net exposure for the
initial two-month period, at least 50 percent of its
estimated net exposure for the third month and, depending on the
nature of the underlying transactions, a significant portion for
the periods thereafter. Part of the foreign currency exposure
cannot be mitigated due to differences between actual and
forecasted amounts. The Company calculates this net exposure on
a cash-flow basis considering balance sheet items, actual orders
received or made and all other planned revenues and expenses.
143
See Audited consolidated financial statements (prepared
in accordance with IFRS) of Infineon Technologies AG as of and
for the fiscal year ended September 30, 2008 (with
comparative figures as of and for the fiscal year ended
September 30, 2007) Note 39.
The table below provides information about Infineons
derivative financial instruments that are sensitive to changes
in foreign currency exchange and interest rates as of the six
months ended March 31, 2009. For foreign currency exchange
forward contracts related to certain sale and purchase
transactions and debt service payments denominated in foreign
currencies, the table presents the notional amounts and the
weighted average contractual foreign exchange rates. At
March 31, 2009, Infineons foreign currency forward
contracts mainly had terms up to one year. Infineons
interest rate swaps expire in 2010. Infineon does not enter into
derivatives for trading or speculative purposes.
Derivative
Financial Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average contractual
|
|
|
|
|
|
|
Contract amount
|
|
|
forward exchange
|
|
|
Fair value March 31,
|
|
|
|
buy/(sell)
|
|
|
rate
|
|
|
2009
|
|
|
Foreign currency forward contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
96
|
|
|
|
1.31225
|
|
|
|
(1
|
)
|
U.S. dollar
|
|
|
(265
|
)
|
|
|
1.28105
|
|
|
|
7
|
|
Japanese yen
|
|
|
15
|
|
|
|
125.83767
|
|
|
|
|
|
Japanese yen
|
|
|
(14
|
)
|
|
|
128.65204
|
|
|
|
|
|
Singapore dollar
|
|
|
22
|
|
|
|
1.97823
|
|
|
|
|
|
Great Britain pound
|
|
|
3
|
|
|
|
0.88738
|
|
|
|
|
|
Malaysian ringgit
|
|
|
35
|
|
|
|
4.67917
|
|
|
|
(1
|
)
|
Malaysian ringgit
|
|
|
(1
|
)
|
|
|
4.72230
|
|
|
|
|
|
Norwegian krone
|
|
|
2
|
|
|
|
8.79750
|
|
|
|
|
|
Norwegian krone
|
|
|
(2
|
)
|
|
|
8.96182
|
|
|
|
|
|
Interest rate swaps
|
|
|
500
|
|
|
|
n/a
|
|
|
|
28
|
|
Other
|
|
|
78
|
|
|
|
n/a
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value, net
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineons policy with respect to limiting short-term
foreign currency exposure generally is to economically hedge at
least 75 percent of its estimated net exposure for the
initial two-month period, at least 50 percent of its
estimated net exposure for the third month and, depending on the
nature of the underlying transactions, a significant portion for
the periods thereafter. Part of Infineons foreign currency
exposure cannot be mitigated due to differences between actual
and forecasted amounts. Infineon calculates this net exposure on
a cash-flow basis considering balance sheet items, actual orders
received or made and all other planned revenues and expenses.
Infineon records its derivative instruments according to the
provisions of IAS 32, Financial Instruments:
Presentation. IAS 32 requires all derivative instruments
to be recorded on the balance sheet at their fair value. Gains
and losses resulting from changes in the fair values of those
derivatives are accounted for depending on the use of the
derivative instrument and whether it qualifies for hedge
accounting. During the six months ended March 31, 2009,
Infineon 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.
Infineon did not record any ineffectiveness for these hedges for
the six months ended March 31, 2009. However, Infineon
excluded differences between spot and forward rates and the time
value from the assessment of hedge effectiveness and included
this component of the financial instruments gain or loss
as a part of cost of goods sold. Infineon estimates that
4 million of net gains recognized directly in other
components of equity as of March 31, 2009 will be
reclassified into earnings during the 2009 fiscal year. All
foreign exchange derivatives designated as cash flow hedges held
as of March 31, 2009 have maturities of six months or less.
Foreign exchange derivatives entered into 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 six months ended March 31, 2008 and 2009, no gains
or losses were reclassified from
144
accumulated other comprehensive income as a result of the
discontinuance of foreign exchanges cash flow hedges resulting
from a determination that it was probable that the original
forecasted transaction would not occur.
In the six months ended March 31, 2009, foreign exchange
transaction gains were 5 million and were offset by
losses from Infineons economic hedge transactions of
34 million, resulting in net foreign exchange losses
of 29 million. This compares to foreign exchange
losses of 0 million, which were offset by losses from
Infineons economic hedge transactions of
3 million, resulting in net foreign exchange losses
of 3 million in the six months ended March 31,
2008. A large portion of Infineons manufacturing, selling
and marketing, general and administrative, and R&D expenses
are incurred in currencies other than the euro, primarily the
U.S. dollar and Japanese yen. Fluctuations in the exchange
rates of these currencies to the euro had an effect on
profitability in the six months ended March 31, 2008 and
2009.
Interest Rate
Risk
Infineon is exposed to interest rate risk through its debt
instruments, fixed-term deposits and loans. During the 2003
fiscal year, Infineon issued convertible subordinated notes and
in the 2007 fiscal year Infineon issued subordinated notes
exchangeable for Qimonda ADSs. Due to the high volatility of
Infineons main business and to maintain high operational
flexibility, Infineon keeps a substantial amount of cash and
marketable securities. These assets are mainly invested in
instruments with contractual maturities ranging from three to
twelve months, bearing interest at short-term rates. To reduce
the risk caused by changes in market interest rates, Infineon
attempts to align the duration of the interest rates of its
debts and current assets by the use of interest rate derivatives.
Fluctuating interest rates have an impact on parts of each of
Infineons marketable securities, debt obligations and
standby lines of credit. Infineon makes use of derivative
instruments such as interest rate swaps to hedge against adverse
interest rate developments. Infineon has entered into interest
rate swap agreements that primarily convert the fixed interest
rate on its Convertible Notes due 2010 to a variable interest
rate based on the relevant European Interbank Offering Rate
(EURIBOR).
145
BUSINESS
Business
Infineon is one of the worlds leading semiconductor
suppliers by revenue. Infineon has been at the forefront of the
development, manufacture and marketing of semiconductors for
more than 50 years, first as the Siemens Semiconductor
Group and then, from 1999, as an independent group. Infineon
Technologies AG has been a publicly traded company since March
2000. According to the market research company iSuppli (June
2009), Infineon (excluding Qimonda) was ranked the number 10
semiconductor company in the world by revenue in the 2008
calendar year.
Infineon designs, develops, manufactures and markets a broad
range of semiconductors and complete system solutions used in a
wide variety of applications for energy efficiency, security and
communications. Infineons main business is currently
conducted through its five operating segments: Automotive,
Industrial & Multimarket, Chip Card &
Security, Wireless Solutions and Wireline Communications. On
July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, and such
sale is expected to close in the fall of 2009.
In the 2009 fiscal year, Infineon is taking significant
measures, in particular through its cost-reduction program
IFX10+, with the aim of cutting costs, reducing
debt, preserving cash and otherwise improving its financial
condition. See Managements Discussion and
Analysis of Financial Condition and Results of
Operations Measures Taken to Date to Improve
Infineons Financial Condition Cost Reduction
Measures. The efforts continue at present. Infineon
believes that due to the positive impact of its overall cost
reduction and cash preservation measures to retain liquidity it
will be able to finance its normal business operations out of
cash flows from continuing operations despite the sharp decline
in revenue levels.
The address of Infineons principal executive offices is Am
Campeon 1-12, 85579, Neubiberg, Germany, and Infineons
main telephone number is +49-89-234-0.
Industry
Background
Semiconductors power, control and enable an increasing variety
of electronic products and systems. Improvements in
semiconductor process and design technologies continue to result
in ever more powerful, complex and reliable devices at a lower
cost per function. As their performance has increased and size
and costs have decreased, semiconductors have become common
components in an ever increasing number of products used in
everyday life, including personal computers, telecommunications
systems, wireless handheld devices, automotive products,
industrial automation and control systems, digital cameras,
digital audio devices, digital TVs, chip cards, security
applications and game consoles. According to iSuppli (May 2009),
the global market for semiconductors in 2008 was
USD 258 billion. Approximately 31 percent of this
sales volume is attributed to general purpose microprocessor
(MPU) and memory ICs, which Infineon does not target. The
remaining 70 percent of the market consists of a variety of
product categories including sensors, discretes and digital and
analog integrated circuits and Infineon targets a diverse set of
sub-categories
therein. Like Infineon, most semiconductor companies choose to
operate in only one of the two mentioned major market categories
as they require fundamentally different business models.
In addition to the adverse effects of the global economic
downturn and financial crisis on the entire semiconductor
industry, the semiconductor market, and hence Infineons
business, is characterized by a number of distinct factors.
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Volatility: The market for
semiconductors has historically been volatile. Supply and demand
have fluctuated cyclically and have caused pronounced
fluctuations in prices and margins. According to iSuppli (May
2009), the overall market growth compared to the previous year
was 10 percent in 2006 and four percent in 2007, before
shrinking by five percent in 2008. iSuppli (May
2009) predicts that the overall market will contract by
approximately 24 percent in the 2009 calendar year.
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Cyclicality: The industrys
cyclicality results from a complex set of factors, including, in
particular, fluctuations in demand for the end products that use
semiconductors and fluctuations in the manufacturing capacity
available to produce semiconductors. Infineon attempts to
mitigate the impact of cyclicality by investing in manufacturing
capacities throughout the cycle and entering into alliances and
foundry manufacturing arrangements that provide flexibility in
responding to changes in the cycle.
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Seasonality: Infineons sales are
affected by seasonal and cyclical influences, with sales
historically strongest in its fourth fiscal quarter.
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Product Life Cycles: Infineons
business is affected by the product life cycles determined by
its customers as a response to innovative technical solutions,
which incorporate Infineon products. The product life cycle
prior to the start of volume production can range from several
months to more than one year, or even several years for
automotive products. Due to this lengthy cycle, Infineon may
experience significant delays from the time it incurs expenses
for R&D, marketing efforts, and investments in inventory,
to the time Infineon generates corresponding revenue, if any.
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Substantial Capital and R&D
Expenditures: Semiconductor manufacturing is
very capital-intensive. The manufacturing capacities that are
essential to maintain a competitive cost position require large
capital investments. A high percentage of the cost of operating
a fab is fixed; therefore, increases or decreases in capacity
utilization can have a significant effect on profitability. To
reduce total costs, Infineon intends to share the costs of its
R&D and manufacturing facilities with third parties, either
by establishing alliances or through the use of foundry
facilities for manufacturing.
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Price Declines and
Competition: Infineons products
generally have a certain degree of application specification.
Sales prices per unit are volatile and generally decline over
time due to technological developments and competitive pressure.
Infineon aims to offset the effects of declining unit sales
prices on total net sales by optimizing product mix, by
increasing unit sales volume and by continually reducing
per-unit
production costs.
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See Managements Discussion and Analysis of
Financial Condition and Results of Operations The
Semiconductor Industry and Factors that Impact Infineons
Business.
Core
Strengths
Infineon believes that its core strengths are based on a variety
of factors, including its technical competencies, its strong
position in a broad set of markets, its deep customer
relationships and its capabilities in semiconductor design and
manufacturing.
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Infineon believes it has deep technical core competencies in the
design and manufacturing of semiconductors. These competencies
are based in part on over 50 years of industry experience
by the Company and its predecessors. Four core competencies are
of particular importance, namely: Radio Frequency
(RF), embedded control, analog/mixed signal,
and high power.
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Radio frequency competency: The ability
to produce
best-in-class RF
transceivers (and integrate RF transceivers with standard logic
circuitry) is a key differentiator of cellular modem solutions.
The increasing complexity of transceiver products has forced
most competitors out of this market and led to the current
(2008) situation with four suppliers generating almost
85 percent of revenues; Infineon ranked second with over
22 percent market share (Strategy Analytics, May 2009).
Infineon believes that its RF competency was the main
facilitator of recent years remarkable recovery of its
Wireless business and that it will help it gain further market
share in the overall Wireless market in the future.
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Embedded control competency: In
contrast to general purpose computing platforms, embedded
systems are designed for particular applications. Today,
embedded systems designers demand microcontrollers that are
specifically tailored to their needs. Infineons 32-bit
Tricore microcontroller family is a typical example. It combines
the real-time capability of a microcontroller, the computational
power of a DSP, and high performance features of RISC
architectures. In automotive applications, these
microcontrollers enable outstanding engine performance at lower
fuel consumption, meeting the highest emission standards,
including EURO5 and US-LEV2. Infineon believes that due to its
exceptional embedded control competency, it could further extend
its current leading market position in the automotive
semiconductor market, and that it will benefit from significant
growth rates in market segments like engine control/power train.
According to Strategy Analytics (January 2009), worldwide
revenues with semiconductors for automotive power train
applications are expected to grow at a compound annual growth
rate of over 14 percent from 2009 to 2012, the fastest
growth of all automotive applications.
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Analog/Mixed signal
competency: According to iSuppli (June 2009),
Infineon ranks among the top three analog/mixed signal
semiconductor companies worldwide measured by revenues generated
with analog ICs, discretes and sensors. Infineon believes that
analog and mixed signal markets generally offer particularly
attractive revenue growth opportunities. For example, iSuppli
(May 2009) views semiconductor sensors, typically Analog
semiconductors, as one of the fastest growing semiconductor
categories, with a compound annual growth rate of
13 percent from 2009 through 2012. Another example is
on-chip integration of RF transceivers and cellular baseband
processors. Infineon believes that it is the largest supplier by
units shipped of such single chip RF/baseband products for
cellular phones. Strategy Analytics (December 2008) expects
revenues with single chip products to grow at a compound annual
growth rate of over 70 percent from 2009 to 2013 and that
the share of single chip products will rise from 6 percent
of all baseband units in 2009 to 22 percent in 2013.
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High power competency: Only a few
semiconductor suppliers offer high power semiconductor devices
and modules. According to IMS Research (August 2008), the top 5
power module suppliers generate over 80 percent of the
worldwide revenues, with Infineon the worldwide market leader in
power semiconductors with particularly strong positions in high
power semiconductors and modules. Infineon believes that the
market outlook for high power semiconductor modules is
particularly promising. According to IMS Research (February
2009), the expected compound annual growth rate for power
modules is 10 percent in the period from 2009 to 2012.
Infineon believes that its high power competency will enable it
to participate in this growing market.
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Infineon has a large and diversified business that covers a
broad range of endmarkets and spans multiple product categories.
With the exception of memory ICs and microprocessors, Infineon
provides products of all major product categories such as
Discretes, Sensors, Analog & Logic ICs and ICs in Chip
Card applications. After the closing of the sale of the Wireline
Communications business, Infineon will focus on the target
markets automotive, industrial and multimarket, chip
card & security and wireless communications. According
to the external market research cited below, Infineon holds a
leading position by revenue in the four target markets.
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A leader in the automotive chip
industry. According to Strategy Analytics
(May 2009), Infineon has been the number two chip manufacturer
for the automotive industry worldwide by revenue for the past
five years. In the 2008 calendar year, Infineons total
revenue from the automotive industry amounted to
USD 1,742 million, which according to the same
Strategy Analytics report was USD 2 million behind the
number one chip manufacturer. Infineon is the number one chip
manufacturer for the automotive industry by revenue in Europe
and holds the following market positions based on total revenue:
number two in Rest of World (excluding Japan), number three in
North America and number six in Japan. Infineon has increased
its market share continuously over the course of the past
fourteen years from 3.9 percent in 1994 to 9.5 percent
in 2008. The main core competencies that helped drive such
growth are embedded control and power semiconductors. In
addition, Infineon attributes this growth to its goal of
delivering zero-defect products. Infineon believes that in-house
manufacturing capabilities are a competitive advantage due to
the high quality standards demanded by automotive customers.
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Leader in design and production of control electronics for
energy efficiency and the miniaturization of such electronics in
industrial and multimarket
applications. Efficient generation and
transmission and reliable distribution of electricity energy are
vital for an environmental-friendly electricity supply. Infineon
believes that it is the only company to offer power
semiconductors and power modules for the entire electrical
generation, transmission and consumption chain. According to IMS
Research (November 2002, August 2008), Infineons revenues
with Power Discretes and Power Modules grew by more than
145 percent from 2001 to 2007. With such growth, Infineon
outperformed the competition and improved its market revenue
ranking position from fourth place to number one in that period,
with Infineons share of the global power semiconductor
market increasing from 6.6 percent to 9.7 percent in
such period. In the industrial market, according to the market
research firm Semicast (June 2008), Infineon has outperformed
competing semiconductor suppliers. Infineon ranked second in
2006 by revenue with a global market share of 6.4 percent.
Within one year, Infineon increased revenues by more than
30 percent and rose to the number one position in 2007.
While there is no external market research data available yet
for 2008, Infineon believes it has solidified its market leading
position in 2008.
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Infineons extensive know-how in its core competency of
power semiconductors was the main driver for this growth.
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Market leader in chips for card
applications. Each year from 1997 to 2008,
Infineon was the global market leader in chips for card
applications according to iSuppli (2009) and
Frost & Sullivan
(1998-2008).
In addition, Infineon is the worlds leading supplier of
Smart Card ICs, according to Frost & Sullivan
(September 2008). These chips are mainly used for credit cards,
debit cards, access cards, government identification
applications, personal and object identification, and platform
security applications Infineons strategic focus is on
these security-critical fields where it can make the most of its
experience in high-security applications. Infineon believes that
it has the industrys largest portfolio of chips and
interfaces to meet the relevant security requirements in these
areas. Due to Infineons strategic shift from high-volume
markets to security-driven applications, Infineon was able to
significantly improve its profitability. The main core
competencies driving Infineons success in this market are
embedded control and RF (the latter for contactless cards only).
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A market leader in wireless
solutions. Infineon not only manufactures
traditional components such as baseband processors, RF
transceivers and power management chips, but also offers
complete platforms including software solutions, customized
modifications and interoperability tests. Many mobile phone
manufacturers rely increasingly on these third-party complete
platforms and reduce their in-house chipset production
accordingly. Infineon has become the fourth-largest supplier for
these platforms (iSuppli, March 2009). A key component of mobile
phone platforms is the RF transceiver where Infineon has built
on the success of its CMOS technology based products. The
insolvency of BenQ in September 2006 had a negative effect on
Infineon. BenQ generated approximately 80 percent of
Infineons wireless platform business. As a result of
restructuring efforts and new customer design wins, Infineon
believes that it will be able to successfully turn around this
business, which is underscored by the positive Segment Result
generated by Infineons Wireless business in the three
months ended June 30, 2009. The main core competencies
employed in Infineons wireless business are RF,
analog/mixed-signal and embedded control technologies.
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Infineon believes it has strong and long lasting customer
relationships:
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Infineon believes it has strong customer relationships. For
example, Infineon is often the sole supplier to a customer due
to a high specific development investment on the part of the
customer to integrate Infineons products into the
customers application.
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Infineon believes many of its customer relationships are
longlasting. In many cases, the customers development may
take one to three years, with development input requiring up to
100 person years for one product. In addition, tests,
validation, and if appropriate certification of the customer
product with the integrated Infineon product may take six months
to three years. For some applications, such as automotive,
contract terms of up to 15 years are common.
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Infineon believes that its manufacturing competences and assets
for specialty manufacturing processes are an important
competitive advantage, including among others:
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Infineons proprietary process technologies, which allow it
to manufacture ultrathin wafers for power semiconductors, enable
great advances in energy efficiency;
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Infineon developed an embedded Wafer-Level Ball Grid Array
(eWLB) technology for semiconductor packages
which achieves a 30 percent reduction of dimension compared
to conventional (lead-frame laminate) packages, offers improved
electrical performance and better cost; and
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Infineons new power-logic plant in Kulim, Malaysia, which
will allow Infineon to further expand its presence in the
growing Asian market, as well as to strengthen its cost and
competitive positions.
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Strategy
Infineon strives to achieve profitable growth by maintaining and
expanding its leadership position in semiconductor solutions in
the four target markets automotive, industrial and multimarket,
chip card & security and wireless solutions. Infineon
will exit the wireline communications market upon the sale of
its
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Wireline Communications business and focus on these four target
markets. Infineon is leveraging key market trends towards energy
efficiency, security, and communications and seeks to:
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Build on its leadership position in key markets, in
particular by helping to improve energy
efficiency. Infineon believes that its
success to date has been based on a deep understanding of a wide
range of applications for the automotive and industrial sectors
as well as for personal computers and other consumer devices.
Infineons leading position in these areas is built on
high-performance products, superior process technologies and
optimized in-house manufacturing capabilities. Infineon sees
significant growth potential for its power business, in
particular, driven by high energy costs, a shift towards
renewable energy generation, and the need for ever longer
battery life in mobile devices.
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Strengthen Infineons leadership position in security
solutions. Infineon seeks to benefit from
growth in electronic and mobile communication and the growing
desire to access data anywhere and at any time, which drives
demand for data protection and data integrity such as secure
authentication and identification of users. Infineon intends to
leverage its know-how to address applications in new areas, and
believes it is well positioned to benefit from future trends,
such as the transition to
e-Passports,
e-Health
cards and RFID ICs in logistics.
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Provide the technology to be connected every day and
everywhere. Infineon seeks to continue to
profit from its key strengths in areas such as RF and mixed
signal technologies employed, in particular, in its wireless
business. In order to benefit from the ever-increasing need for
mobility and communication in all aspects of
day-to-day
life, Infineon intends to grow its broad customer base and to
focus on the most promising solutions for future profitable
growth, such as cellular phone platforms. In the wireless
market, these include, in particular, highly integrated, cost
efficient single-chip solutions and highly integrated cellular
phone platforms for wireless high speed data transfer in
HSPA-enabled phones and smart phones.
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In addition, it is part of Infineons manufacturing
strategy to carefully manage the mix of in-house versus
outsourced manufacturing capacity and process technology
development. Infineon intends to continue to invest in those
process technologies that provide it with a competitive
advantage. This is the case in particular for Infineons
power process technologies and in manufacturing capacity that
can meet the very strict quality requirements of automotive
customers. At the same time, in standard CMOS below the
90-nanometer node, Infineon will continue to share risks and
expand its access to leading-edge technology through long-term
strategic partnerships with other leading industry participants.
Infineon does not intend to invest in in-house capacity for
standard CMOS processes below the 90-nanometer node, and will
make use of outsourced manufacturing capacity at silicon
foundries instead.
Infineon believes that ongoing cost control and projects to
continually improve productivity are important elements to
support the successful implementation of Infineons
profitable growth strategy. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations Measures Taken to Date to Improve
Infineons Financial Condition Cost Reduction
Measures.
Products and
Applications
Principal
Products, Applications and Customers
The following summary provides an overview of some of
Infineons more significant products and applications and
of the largest direct customers of each of Infineons five
reportable segments, which were effective as of October 1,
2008.
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Largest
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Customers
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in the First
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Half of the
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2009 Fiscal
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Segment
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Principal
Products(2)
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Principal Applications
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Year
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Automotive
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Power semiconductors (discretes, ICs and modules), sensors and
microcontrollers (8-bit, 16-bit, 32-bit) with and without
embedded memory, silicon discretes
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Powertrain (engine control, transmission control, hybrid), body
and convenience (comfort electronics, air conditioning), safety
and vehicle dynamics (ABS, airbag, stability control),
connectivity (wireless communication, telematics/navigation)
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Avnet, Bosch, Continental (including Siemens VDO that merged
into Continental in December 2007), Arrow
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Largest
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Customers
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in the First
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Half of the
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2009 Fiscal
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Segment
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Principal
Products(2)
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Principal Applications
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Industrial &
Multimarket
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Power semiconductors (discretes, ICs and modules), silicon
discretes, ASIC solutions including secure ASICs
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Power management & supplies, lighting, drives, renewable
energy, power generation and distribution, industrial control,
discrete products for multimarket applications, ASICs (for
example, for game consoles, hearing aids, computer peripherals)
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Avnet, Delta, Siemens, WPG Holdings
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Chip Card &
Security
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Chip card and security ICs, Trusted Platform Modules
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Security memory ICs and security microcontroller ICs for
identification documents, payment cards, SIM cards, prepaid
telecom cards, access and transportation cards, Pay TV and
platform security products for computers and networks (for
example, Trusted Platform Modules), RFID ICs for object
identification
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Gemalto, Giesecke & Devrient, Oberthur Card Systems, U.S.
Government Printing Office
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Wireless Solutions
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Baseband ICs, RF transceivers, power management ICs, single chip
ICs integrating these components, mobile phone platform
solutions including software, tuner ICs, RF-power transistors
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Mobile telephone systems for major standards (GSM, GPRS, EDGE,
UMTS, HSPA, LTE), RF connectivity solutions (for example,
Bluetooth, GPS), cellular base stations
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Hon Hai Precision, LG Electronics, Nokia, Samsung
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Wireline
Communications(1)
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ICs for voice access and core access (for example, CODECs,
SLICs, ISDN, T/E), broadband access ICs for xDSL CO/CPE, VoIP,
Ethernet switch and PHY, system solutions for DSL-modems,
home-gateways
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Voice access and core access, broadband access solutions for
central office, broadband customer premises equipment
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Arrow, AVM, Huawei, Nokia Siemens Networks
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Notes
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(1)
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On July 7, 2009, the Company
entered into the Asset Purchase Agreement to sell the Wireline
Communications business, and such sale is expected to close in
the fall of 2009.
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(2)
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Other than such products and
services described herein, there have not been any new products
or services introduced that were significant to Infineon during
the past three years.
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Automotive
The Automotive segment designs, develops, manufactures and
markets semiconductors and complete system solutions for use in
automotive applications. Infineons Automotive segment
focuses on microcontrollers and power semiconductors (which
handle higher voltage and higher current than standard
semiconductors), discrete semiconductors, modules and sensors.
According to Strategy Analytics (May 2009), Infineon has been
the number two chip manufacturer for the automotive industry by
revenue for the past five years, with more than nine percent of
the worldwide market, and the largest in Europe.
The market for semiconductors for automotive applications has
grown substantially in recent years, reflecting increased
electronic content in automotive applications in the areas of
safety, powertrain, body and convenience systems. This growth
also reflects increasing substitution of mechanical devices,
such as relays, by semiconductors, in order to meet more
demanding reliability, space, weight, and power reduction
requirements. However, starting in the second half of 2008 the
market for semiconductors for automotive applications has
contracted due to the current economic downturn.
Infineons automotive division offers semiconductors and
complete system solutions in the engine management, safety and
chassis, body and convenience, and infotainment markets, in some
cases including software. Infineons principal automotive
products include:
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semiconductors for powertrain applications, which perform, for
example, engine and transmission control and enable hybrid
powertrains;
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semiconductors for safety management, which manage tasks such as
the operation of airbags, anti-lock braking systems, electronic
stability systems, power steering systems and tire pressure
monitoring systems;
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semiconductors for body and convenience systems, which include
light modules, heating, ventilation and air conditioning
systems, door modules (power windows, door locks, mirror
control) and electrical power distribution systems; and
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semiconductors for connectivity, such as those used for wireless
communication and navigation/telematics.
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According to Strategy Analytics (January 2009), the safety,
chassis and security segment comprises the largest portion of
the market, followed by powertrain applications, such as
transmission, engine and exhaust control, then body
applications, and finally in-car entertainment and driver
information.
Infineons automotive products include power
semiconductors, microcontrollers, discrete semiconductors and
silicon sensors, along with related technologies and packaging.
To take advantage of expected growth in the market for
green vehicles, Infineons power competencies
across all of its business divisions are bundled in order to
better enable Infineon to provide semiconductor and power module
solutions for hybrid vehicles.
Time periods between design and sale of Infineons
automotive products are relatively prolonged (three to four
years) because of the long periods required for the development
of new automotive platforms, many of which may be in different
stages of development at any time. This is one of the reasons
why automotive products tend to have relatively long life-cycles
compared to Infineons other products. The nature of this
market, together with the need to meet demanding quality and
reliability requirements designed to ensure safe automobile
operation, makes it relatively difficult for new suppliers to
enter.
In order to strengthen Infineons position in all areas of
automotive electronics, Infineon seeks to further develop its
strong relationships with world-wide leading car manufacturers
and their suppliers, with a particular focus on those at the
forefront in using electronic components in cars. Infineon
believes that its ability to offer complete semiconductor
solutions integrating power, analog and mixed-signal ICs and
sensor technology is an important differentiating factor among
companies in the automotive market.
Infineon strongly emphasizes high quality in its products.
Infineon has implemented a program called Automotive Excellence,
through which Infineon aims for the goal of zero
defects in its automotive semiconductors and solutions.
Industrial &
Multimarket
The Industrial & Multimarket segment designs,
develops, manufactures and markets semiconductors and complete
system solutions primarily for use in industrial and multimarket
applications, in addition to applications with customer-specific
product requirements. Within the fragmented market for
industrial semiconductor applications, Infineon focuses on power
management and supply, as well as drives and power generation
and distribution. IMS Research (August 2008) reported that
Infineon was the number one supplier worldwide for power
semiconductors by total revenue in 2007 with a market share of
more than 9 percent. Infineon has a broad portfolio
addressing consumer, computing and communication applications.
The market for semiconductors for industrial applications is
highly fragmented in terms of both suppliers and customers. It
is characterized by large numbers of both standardized and
application-specific
products employed in a large number of diverse applications in
industries such as transportation, factory automation and power
supplies.
Within the industrial business, Infineon focuses on two major
applications: power management & supply and power
conversion. Infineon provides differentiated products combining
diverse technologies to meet Infineons customers
specific needs. With global energy demand continuing to rise,
supplies generally tightening and concerns over the
environmental impact of power generation rising, power
semiconductors can make a major contribution by addressing the
increasing need for energy savings.
Infineon has a strong position in power applications. According
to the annual market reports of IMS Research (August 2008),
Infineon has been the global market leader for power
semiconductors for the past five years, with a 9.7 percent
market share in 2007.
Infineons broad portfolio comprises power modules, small
signal and discrete power semiconductors and power management
ICs. Infineons industrial products are used in a wide
range of applications, such as:
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power supplies (AC/DC), divided into two main categories:
uninterruptible power supplies, such as power backbones for
Internet servers; and switched-mode power supplies for PCs,
servers and
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consumer electronics such as televisions and gaming consoles, as
well as battery chargers for mobile phones, notebook computers
and other handheld devices;
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DC/DC power converters for computing and communication
applications such as motherboards, telecommunications equipment
and graphic cards;
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lighting (electronic lamp ballast and control and LED drivers);
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drives for machine tools, motor controls, pumps, fans and
heating, ventilation, consumer appliances (such as washing
machines), air-conditioning systems and transportation as well
as power supplies for additional consumer appliances such as
inductive cooking;
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industrial automation and metering systems;
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power generation, especially in the fields of renewable energy
and power distribution systems; and
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other industrial applications such as medical equipment.
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Infineons portfolio of semiconductor discretes includes:
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audio frequency (AF) discretes (general purpose diodes and
transistors, switching diodes, digital transistors);
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radio frequency (RF) devices (diodes, transistors, Monolithic
Microwave Integrated Circuits (MMICs), CMOS based RF switches,
Small Scale Integrated Circuits (SSICs));
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protection devices such as Transient Voltage Suppressor diodes
(TVS diodes) and High Performance Active and Passive Integration
(HIPAC) devices offering Electro Static Discharge/Electro
Magnetic Interference (ESD/EMI) protection and high integration
in advanced applications (for example, in mobile communication
devices);
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High Reliability Discretes (bipolar transistors and diodes) for
use in space and avionic applications; and
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Silicon MEMS Microphone (SMM): acoustical sensors based on
Micro-Electro-Mechanical System (MEMS) semiconductor technology
(for use in mobile phone applications, for example).
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Within Infineons ASIC activities, Infineon focuses on
customer-specific products integrating intellectual property
from Infineons customers with Infineons own IP.
These products are used in a variety of markets, with a special
focus on industrial usage, mobility, and security. The main
products of this business unit include:
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products for computer and gaming peripherals;
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secure ASICs and ASSPs for authentication or copy protection
applications, taking advantage of Infineons security
know-how; and
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customer designs manufactured by Infineon on a foundry basis.
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Most of these products are tailored to customer specifications
and are often provided by Infineon on a sole-source basis. As a
result, Infineon is often able to establish long-term
relationships with customers in this area, in some cases
actively supporting the customers product roadmap.
Chip
Card & Security
Infineons Chip Card & Security segment designs,
develops, manufactures and markets a wide range of security
controllers and security memories for chip card and security
applications. According to Frost & Sullivan (September
2008), Infineon remained the market leader in ICs for smart card
applications in the 2007 calendar year for the eleventh
consecutive year, with a market share of 26.7 percent.
The markets for Infineons security products are
characterized by an increasing emphasis on high-security
applications, such as identification and payment, and by trends
towards lower prices and higher demand for embedded non-volatile
memory in SIM cards.
Within Infineons Chip Card & Security business,
Infineon focuses on products making use of Infineons core
competencies in security, contactless ICs and embedded control.
Infineons products are used in a variety of markets, with
a special focus on communication, payment, government
153
identification, personal and object identification, and platform
security. The main products of this segment include:
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contact-based and contactless security microcontroller ICs for
identification documents (for example, passports, national
identification cards and health cards), payment cards, SIM cards
and pay TV applications;
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security memory ICs in prepaid telecom cards, access and
transportation cards;
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Trusted Platform Module (TPM) products
(hardware-based security for trusted computing) in computers and
networks; and
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RFID ICs for object identification (for example, in logistics).
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Wireless
Solutions
Infineons Wireless Solutions segment designs, develops,
manufactures and markets a wide range of ICs, other
semiconductors and complete system solutions for wireless
communication applications. Infineon is among the leading
players in the markets for semiconductor solutions for mobile
phones.
In the Wireless Solutions segment, Infineons principal
products include baseband ICs, RF transceivers and single-chip
ICs for the major air interface standards (GSM, GPRS, EDGE, UMTS
and HSPA), power management ICs, radio-frequency products such
as Bluetooth ICs, GPS ICs, and tuner ICs, as well as
RF-power
components for wireless infrastructure (base stations).
Infineons principal solutions include hardware system
design and software solutions for mobile telephone systems
(addressing primarily the GSM, GPRS, EDGE, UMTS and HSPA
standards).
According to iSuppli (June 2009), in the 2008 calendar year
Infineon held the number four position in wireless ASSPs with a
worldwide market share of 6 percent.
The markets for products in which Infineons cellular
communication ICs and systems are utilized are characterized by
trends towards lower cost, increasingly rapid succession of
product generations, increased system integration, and market
consolidation. According to Strategy Analytics (May 2009),
approximately 1.2 billion cellular handsets were produced
in the 2008 calendar year, compared with approximately
1.1 billion devices in 2007. This growth was to a large
extent driven by a strong demand in emerging markets. Increasing
demand for connectivity and multimedia capability is expected to
increase the IC content of mobile phones. However, despite such
increased demand, the average selling prices for cellular phone
ICs have declined in recent years. Infineon expects that a
further price decline of entry-level handset models, often
referred to as Ultra Low Cost telephones, will
generate additional demand in emerging markets. Infineon expects
these trends to create both opportunities and threats for
suppliers of cellular communication semiconductors and systems.
In recent years, however, the market for semiconductors for
wireless solutions has contracted due to the current economic
downturn.
Infineon offers products and solutions to customers in the
following principal application areas:
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Global System for Mobile Communication (GSM),
which is the de facto wireless telephone standard in Europe and
available in more than 120 countries. GSM is a wireless mobile
telecommunication standard that includes General Packet Radio
Service (GPRS), Enhanced Data rate for GSM
Evolution (EDGE), and Universal Mobile
Telecommunications System (UMTS). Infineon
offers products and solutions such as baseband ICs, RF
transceivers, power management ICs, single-chip ICs integrating
these components, mobile software, and reference designs
addressing all of these wireless communication standards;
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UMTS, a GSM-based standard for third-generation
(3G) broadband, packet-based transmission of
text, digitized voice, video, and multimedia at data rates up to
2 megabits per second (Mbps). Infineon offers
complete multimedia mobile phone platforms, RF transceivers and
mobile software for UMTS and also for the High-Speed Packet
Access standard (HSPA) that supports data
rates of up to 7.2 Mbps;
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Digital Video Broadcasting (DVB) and other
digital and analog television standards. Infineon offers tuner
ICs for stationary, portable and mobile television receivers for
the analog (PAL, NTSC, SECAM) and digital (DVB-C/T/H, ISDB-T,
ATSC, DAB, T-DMB, CMMB) TV standards;
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the Global Positioning System (GPS) is a
location system based on a network of satellites. GPS is widely
used in automotive, wireless, mobile computing and consumer
applications. Together with
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a development partner, Infineon has introduced XPOSYS,
Infineons next generation of single-chip Assisted Global
Positioning System (A-GPS) receiver for
mobile telephones, smart phones and PDAs with competitive
superiority in terms of sensitivity, power consumption and
footprint;
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Bluetooth, a computing and telecommunications industry
specification that allows mobile phones, computers and PDAs to
connect with each other and with home and business phones and
computers using a short-range wireless connection. Infineon
offers BlueMoon UniCellular, a fast and energy-efficient
Bluetooth-chip which supports the Bluetooth enhanced data rate
(EDR) protocol; and
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Satellite Digital Audio Radio Service (SDARS), a satellite-based
radio communication service through which audio programming is
digitally transmitted by space-based satellites and terrestrial
repeaters to fixed, mobile,
and/or
portable subscription consumer radios.
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Wireline
Communications
On July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, and such
sale is expected to close in the fall of 2009. Infineons
Wireline Communications segment designs, develops, manufactures
and markets a wide range of ICs, other semiconductors and
complete system solutions focused on wireline access
applications. Infineons solutions are deployed at major
service providers worldwide. According to Gartner Dataquest
(June 2008), Infineon held the number one position by revenue in
the wireline access network IC market (excluding cable modem
transceiver ICs, which Infineon does not address) in 2007, with
a market share of 22 percent.
The market for Infineons wireline communications products
is currently characterized by the launch of high-speed data and
video broadband services (for example, IPTV) from service
providers around the world, the convergence of voice and data
networks into a single
IP-based
Next-Generation Network (NGN) infrastructure,
market consolidation, and strong pricing pressure.
Infineons broad portfolio in wireline communication
includes semiconductors for voice access and core access, xDSL
transceivers for central office (CO) and CPE,
VoIP ICs, Ethernet switches and PHYs, DECT ICs and system
solutions for DSL modems and home gateways. This comprehensive
product portfolio allows complete,
end-to-end
access solutions that enable the triple play of
voice, data, and video applications.
The primary applications for Infineons wireline
communication products include:
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broadband CPE equipment such as xDSL-modems and home gateways;
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broadband access solutions for the central office, such as xDSL
line cards; and
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voice access, core access and enterprise applications, for
example, analog line cards, ISDN, T/E, ATM and PBX.
|
During the fourth quarter of the 2007 fiscal year, Infineon
acquired the DSL CPE business of Texas Instruments, Inc. This
acquisition has enabled Infineon to combine its innovative
broadband CPE roadmap with Texas Instruments Inc.s large
deployed DSL CPE base at major carriers worldwide.
Customers, Sales
and Marketing
Customers
Infineon sells its products to customers located mainly in
Europe, the United States, the Asia/Pacific region and Japan.
Infineon targets its sales and marketing efforts on creating
demand at approximately 500 direct customers worldwide.
No customer accounted for more than 10 percent of
Infineons sales in the 2008 fiscal year, and
Infineons top 20 customers accounted for approximately
56 percent of Infineons sales. No customer accounted
for more than 10 percent of Infineons sales in the
six months ended March 31, 2009, and Infineons top 20
customers accounted for approximately 62 percent of
Infineons sales.
Infineon focuses its sales efforts on semiconductors customized
to meet its customers needs. Infineon therefore seeks to
design its products and solutions in cooperation with its
customers so as to
155
become their preferred supplier. Infineon also seeks to create
relationships with its major customers that are leaders in their
market segments and have the most demanding technological
requirements in order to obtain the system expertise necessary
to compete in the semiconductor markets.
Infineon has sales offices throughout the world. Infineon
believes that this global presence enables it not only to
respond promptly to Infineons customers needs, but
also to be involved in Infineons customers product
development processes and thereby be in a better position to
design customized ICs and solutions for their new products.
Infineon believes that cooperation with customers that are
leaders in their respective fields provides Infineon with a
special insight into these customers concerns and future
development of the market. Contacts to Infineons
customers customers and market studies about the end
consumer also position Infineon to be an effective partner for
its customers.
Infineon believes that a key element of Infineons success
is its ability to offer a broad portfolio of technological
capabilities and competitive services to support its customers
in providing innovative and competitive products to their
customers and markets. This ability permits Infineon to balance
variations in demand in different markets and, in
Infineons view, is a significant factor in differentiating
Infineon from many of Infineons competitors.
Customers by
principal segment
Automotive
In the Automotive segment, which includes sales of
microcontrollers, power devices and sensors, Infineons
customer base includes most of the worlds major automotive
suppliers. Infineons two largest customers in the 2008
fiscal year were Bosch and Siemens VDO (which as of December
2007 merged into Continental). Sales of automotive products are
made primarily in Europe and, to an increasing extent, in the
United States, China, Korea and Japan. A significant portion of
Infineons automotive sales came from the distribution
channel with Avnet accounting for the highest revenues among
Infineons distribution partners.
Industrial &
Multimarket
In the Industrial & Multimarket segment, the Siemens
group is the largest OEM customer. The bulk of Infineons
sales of industrial products are made in small volumes to
customers that are either served directly or through third-party
distributors such as Arrow, Avnet and WPG Holdings.
Infineons sales of industrial products vary by type of
product, with devices for drive and power conversion
applications sold primarily in Europe and the United States, and
devices for power management and supply sold primarily in Asia
(other than Japan) and Europe. Infineons wide variety of
discrete products is targeted at customers in all major fields
of applications, including automotive, consumer, computing and
communication.
With Infineons broad and complementary IP portfolio,
system integration skills, and manufacturing expertise, Infineon
seeks to leverage Infineons IP in ASIC-based system
solutions. Infineon concentrates on customized designs for
customers such as Siemens and Microsoft Corporation.
Chip
Card & Security
Infineons Chip Card & Security segment derives a
large portion of its revenues from large-scale projects like
ePassport projects. Within the chip card business, three card
manufacturers Gemalto, Giesecke & Devrient
and Oberthur Card Systems currently account for a
significant portion of sales. Other than the card manufacturers,
Infineons customer base includes secure printers, such as
the U.S. Government Printing Office, and customers served
through distribution channels.
Wireless
Solutions
In Infineons Wireless Solutions segment, Infineon sells a
variety of products addressing applications such as cellular
phones, ICs for A-GPS and wireless infrastructure to most of the
worlds leading wireless device and equipment suppliers. In
cellular phone applications, customers purchase products that
range from ASSPs and customized ASSPs that Infineon produces to
customer design and specifications to complete system solutions
including mobile software. With complete system solutions,
Infineon targets OEMs as well as design houses and ODMs.
Infineons largest announced cellular phone customers
include LG Electronics, Nokia and Samsung. Infineon supplies
RF-power products to wireless infrastructure customers such as
Ericsson.
156
Wireline
Communications
On July 7, 2009, the Company entered into an asset purchase
agreement to sell the Wireline Communications business, and such
sale is expected to close in the fall of 2009. Infineons
Wireline Communications segment sells IC products for
telecommunication and data communication applications to a
world-wide customer base, targeted at system providers of
broadband communication applications. Infineons product
portfolio includes ICs for voice and core access solutions (for
example, CODECs, SLICs, ISDN, T/E), broadband access system
solutions for xDSL and VoIP, as well as system solutions for
broadband CPE.
The largest customers of Infineons Wireline Communications
segment include leading telecommunications and data
communications customers such as Alcatel-Lucent, Arcadyan, AVM,
Ericsson, Huawei and Nokia Siemens Networks. Infineon delivers
its semiconductor solutions to its customers either directly,
via distributors such as Avnet, or via system manufacturers such
as Flextronics.
Sales and
Marketing
As of June 30, 2009, Infineon had 1,695 sales and marketing
employees worldwide.
Infineon creates and fulfills its product sales either directly
or through its network of distribution partners.
A team of Corporate Account Executives is assigned to develop
business relationships with Infineons most important
strategic customers. Dedicated Account Managers foster
Infineons relationships with all other important direct
customers. Regional sales units offer additional support for
global accounts based in their regions, as well as local
accounts that are key players in specific markets. In three
smaller markets, Infineon has contractual arrangements with the
Siemens and Epcos sales organizations to provide defined sales
support.
To serve the broader market and expand Infineons indirect
sales, a dedicated organization develops, maintains and
interacts with a strong network of distribution partners. This
optimized network includes globally active distributors, strong
regional partners and committed niche specialists. In addition,
third-party sales representatives help to identify and create
business, particularly in the United States.
A number of Infineons important direct customers
increasingly outsource activities ranging from product design
and procurement to manufacturing and logistics to global
Electronics Manufacturing Services (EMS). To
meet the specific requirements of the EMS industry, Infineon has
a dedicated EMS sales team. Focusing on the EMS market leaders,
these account managers follow up on manufacturing transfers from
OEM to EMS and conclude strategic partnerships for design and
technology to increase Infineons market share within the
EMS channel.
Within each of Infineons business divisions, Infineon has
product- and application-oriented marketing employees. These
employees investigate market trends and the needs of their
respective segments to grow Infineons market share. They
define, develop, optimize and position new products and provide
product support from market introduction up to the
end-of-life
stage.
Finally, Infineon utilizes advertising campaigns, mainly in the
trade press, to establish and strengthen Infineons
identity as a major semiconductor provider. Furthermore,
Infineon actively participates in trade shows, conferences and
events to strengthen its brand recognition and industry presence.
Backlog
Standard
Products
Industry cyclicality makes it undesirable for many customers to
enter into long-term, fixed-price contracts to purchase standard
(that is, non-customized) semiconductor products. As a result,
the market prices of Infineons standard semiconductor
products, and Infineons revenues from sales of these
products, fluctuate very significantly from period to period.
Most of Infineons standard non-memory products are priced,
and orders are accepted, with an understanding that the price
and other contract terms may be adjusted to reflect market
conditions at the delivery date. It is a common industry
practice to permit major customers to change the date on which
products are delivered or to cancel existing orders. For these
reasons, Infineon believes that the backlog at any time of
standard products is not a reliable indicator of future sales.
157
Non-Standard
Products
For more customized products, orders are generally made well in
advance of delivery. Quantities and prices of such products may
nevertheless change between the times they are ordered and when
they are delivered, reflecting changes in customer needs and
industry conditions. During periods of industry overcapacity and
falling sales prices, customer orders are generally not made as
far in advance of the scheduled shipment date as during periods
of capacity constraints, and more customers request logistics
agreements based on rolling forecasts. The resulting lower
levels of backlog reduce Infineons managements
ability to forecast optimum production levels and future
revenues. As a result, Infineon does not rely solely on backlog
to manage its business and does not use it to evaluate
performance.
Competition
The markets for many of Infineons products are intensely
competitive, and Infineon faces significant competition in each
of its product lines. Infineon competes with other major
international semiconductor companies, some of which have
substantially greater financial and other resources with which
to pursue research, development, manufacturing, marketing and
distribution of their products. Smaller niche companies are also
becoming increasingly important players in the semiconductor
market, and semiconductor foundry companies have expanded
significantly. Competitors include manufacturers of standard
semiconductors, application-specific ICs and fully customized
ICs, including both chip and board-level products, as well as
customers that develop their own integrated circuit products and
foundry operations. Infineon also cooperates in some areas with
companies that are Infineons competitors in other areas.
The following table shows key competitors for each of
Infineons principal operating segments in alphabetical
order:
Key Competitors
by Segment
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Automotive
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Freescale, International Rectifier, Mitsubishi, ON
Semiconductor, NEC, NXP, Renesas, STMicroelectronics, Texas
Instruments
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Industrial & Multimarket
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Fairchild, Fuji Electric, International Rectifier, Mitsubishi,
NXP, ON Semiconductor, Renesas, STMicroelectronics, Texas
Instruments, Toshiba, Vishay
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Chip Card & Security
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Atmel, NXP, Renesas, Samsung, STMicroelectronics, Texas
Instruments
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Wireless Solutions
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Broadcom, Mediatek, Qualcomm, ST-Ericsson, Texas Instruments
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Wireline
Communications(1)
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Broadcom, Conexant, Ikanos, PMC-Sierra, Zarlink
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(1) |
On July 7, 2009, the Company entered into the Asset
Purchase Agreement to sell the Wireline Communications business,
and such sale is expected to close in the fall of 2009.
|
Infineon competes in different product lines to various degrees
on the basis of product design, technical performance, price,
production capacity, product features, product system
compatibility, delivery times, quality and level of support.
Innovation and quality are competitive factors for all segments.
Production capacity as well as the ability to deliver products
reliably and within a very short period of time play
particularly important roles.
Infineons ability to compete successfully depends on
elements both within and outside of Infineons control,
including:
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successful and timely development of new products, services and
manufacturing processes;
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product performance and quality;
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manufacturing costs, yields and product availability;
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pricing;
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Infineons ability to meet changes in its customers
demands by altering production at Infineons facilities;
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Infineons ability to provide solutions that meet its
customers specific needs;
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the competence and agility of Infineons sales, technical
support and marketing organizations; and
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158
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the resilience of Infineons supply chain for services that
Infineon outsources and the delivery of products, raw materials
and services by third-party providers needed for Infineons
manufacturing capabilities.
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Manufacturing
Infineons production of semiconductors is generally
divided into two steps, referred to as the front-end process and
the back-end process.
Front-end
In the first step, the front-end process, electronic circuits
are produced on raw silicon wafers through a series of
patterning, etching, deposition and implantation processes. At
the end of the front-end process, Infineon tests the chips for
functionality.
The structure size of Infineons current products is as
small as 65-nanometers, the 65-nanometer technology being
qualified at multiple manufacturing sites of external partners.
Infineon believes that it achieves substantial differentiation
at its customers due to its power semiconductor process
technology and its world-wide network of manufacturing sites
that combine the highest quality standards and flexibility.
Back-end
In the second step of semiconductor production, the back-end
process (also known as the packaging, assembly and test phase),
the processed wafers are ground and mounted on a synthetic foil,
which is fixed in a wafer frame. Mounted on this foil, the wafer
is diced into small silicon chips, each one containing a
complete integrated circuit. One or multiple individual chips
are removed from the foil and fixed onto a substrate or
lead-frame base, which will enable the physical connection of
the product to the electronic board. The next step is creating
electrical links between the chip and the base by soldering or
wiring. Subsequently, the chips and electrical links are molded
with plastic compounds for stabilization and protection.
Depending on the package type, the molded chips undergo a
separation and pin bending process. Finally, the semiconductor
is subject to functional tests.
Infineons back-end facilities are equipped with
state-of-the-art
equipment and highly automated manufacturing technology,
enabling Infineon to perform assembly and test on a
cost-effective basis. Infineon has improved its cost position by
moving significant production volumes to lower-cost countries
such as Malaysia and China. Infineons back-end facilities
also provide Infineon with the flexibility needed to customize
products according to individual customer specifications (giving
Infineon System in Package capabilities). Infineon
is continuing the process of converting its packages to comply
with new international environmental requirements for lead-
and/or
halogen-free green packages.
Manufacturing
Facilities
Infineon operates manufacturing facilities around the world,
including through joint ventures in which Infineon participates.
There are no material encumbrances on Infineons
manufacturing facilities. The
159
following table shows selected key information with respect to
Infineons current major manufacturing facilities:
Manufacturing
Facilities
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Year of
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commencement
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of first
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production line
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Principal products or functions
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Front-end facilities wafer fabrication plants
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Dresden, Germany
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1996
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ASICs and MCUs with embedded flash memory, logic ICs
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Essonnes,
France(1)
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1963
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(2)
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Logic ICs and ASICs with embedded flash memory
|
Kulim, Malaysia
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2006
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Power, smart power, ASICs and MCUs with embedded flash memory
|
Regensburg, Germany
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1986
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Power, smart power, sensors, mixed signal
|
Villach, Austria
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1979
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Power, smart power and discretes
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Warstein, Germany
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1965
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(2)
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High power
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Back-end facilities assembly and final testing
plants
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Batam, Indonesia
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1996
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Leaded power and non-power ICs
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Cegléd, Hungary
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1997
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High power
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Morgan Hill, California
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2002
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RF-power
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Regensburg, Germany
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2000
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Chip card modules, sensors and pilot lines
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Singapore
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1970
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Leadless non-power ICs, wafer test
|
Warstein, Germany
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1965
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(2)
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High power
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Wuxi, China
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1996
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Discretes, chip card modules
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Malacca, Malaysia
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1973
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Discretes, power packages, sensors, leaded and non-leaded logic
IC
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(1)
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ALTIS, Infineons joint venture with IBM.
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(2)
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The current main production line began operations in 1991.
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Strategic
Alliances and Other Collaborations
As a part of Infineons long-term strategy, Infineon has
entered into a number of strategic alliances with other leaders
in the semiconductor industry, primarily in the areas of
R&D for manufacturing process technologies and joint
manufacturing facilities as well as cooperative product design
and development.
In addition to Infineons own manufacturing capacity,
Infineon has entered into a number of alliances and joint
ventures, and has relationships with several foundry partners,
which give Infineon access to substantial additional
manufacturing capacity, allowing Infineon to more flexibly meet
variable demand for products over market cycles. These
arrangements are described below under
Manufacturing joint ventures; Foundries.
Front-end
Infineons front-end facilities currently have a capacity
of approximately 240,000 200-millimeter equivalent wafer starts
per month (excluding short term IFX10+ capacity reductions). In
implementing Infineons fab-light strategy,
Infineon has begun to shift the focus of its in-house
manufacturing toward power logic products and to shift
manufacturing of advanced CMOS logic products to foundries.
Currently, in-house production of advanced logic wafers (with
structure sizes of 250-nanometers or less) is carried out at
Infineons 200-millimeter wafer manufacturing facility in
Dresden and at its ALTIS joint-venture with IBM in Essonnes,
France, while in-house production of power logic wafers (with
structure sizes of more than 250-nanometers) is largely carried
out at Infineons front-end manufacturing facilities in
Kulim, Regensburg, and Villach.
160
Generally, Infineon uses foundries to provide flexibility in
meeting demand, as well as managing investment expenditures. In
recent years, Infineon has enhanced its manufacturing
cooperation with UMC and TSMC, particularly with respect to
leading-edge CMOS products for wireless communications.
Infineon has entered into a joint development agreement with
IBM, Chartered Semiconductor and Samsung (the ICIS
Alliance) as well as Freescale to accelerate the move
to 65-nanometer and below. Infineon started to deliver first
65-nanometer products to customers in the current fiscal year
and has begun to develop products based on 40-nanometer
technology, which will be manufactured at one of Infineons
manufacturing partners. The agreement with Freescale may be
terminated at the discretion of either party upon 90 days
prior written notice.
Infineon is continuing its ongoing development agreements with
IBM and its development and manufacturing partners to the
32-nanometer generation. Infineons current agreement
builds on the success of earlier joint development and
manufacturing agreements. Starting with 65-nanometer technology,
Infineons advanced logic front-end manufacturing will be
solely sourced from manufacturing partners, optimizing capital
investment and business flexibility.
Infineon is continuing the ramp up of its new power-logic plant
in the Kulim Hi-Tech Park in the north of Malaysia and plans to
further increase its production capacity at that site. This will
allow Infineon to further expand its presence in the growing
Asian market, as well as to strengthen its cost and competitive
positions. Infineon expects that maximum capacity could reach
approximately 100,000 wafer starts per month when the facility
is fully ramped up, as and when market demand dictates.
Back-end
Infineon has a number of back-end facilities, located primarily
in Asia. Infineon also uses assembly and test subcontractors to
provide Infineon with flexibility in meeting demand, as well as
managing investment expenditures. For assembly services,
Infineon has further intensified its partnership with AMKOR
Technology on leadless and flip-chip technologies.
Infineon and Advanced Semiconductor Engineering Inc.,
(ASE) announced in November 2007 a
partnership to introduce semiconductor packages with a higher
integration level of package size, the Wafer-Level Ball
Grid Array technology, which achieves a 30 percent
reduction of dimension compared to conventional (lead-frame
laminate) packages. This partnership unites the technology
developed by Infineon with the packaging know-how of ASE in a
license model.
In August 2008, Infineon, STMicroelectronics and STATS ChipPAC
announced an agreement to jointly develop the next-generation of
eWLB technology, based on Infineons first-generation
technology, for use in manufacturing future-generation
semiconductor packages. This will build on Infineons
existing eWLB packaging technology, which Infineon has licensed
to its development partners. The R&D effort, for which the
resulting IP will be jointly owned by the three companies,
focuses on using both sides of a reconstituted wafer to provide
solutions for semiconductor devices with a higher integration
level and a greater number of contact elements.
Manufacturing
joint ventures; Foundries
Joint Venture
with IBM (ALTIS)
In 1991, Infineon entered into an arrangement with IBM, under
which IBM manufactured DRAM products in its facility in
Essonnes, France and Infineon received a share of the
production. Later Infineon agreed with IBM to convert the
Essonnes facility to the production of logic devices and to
convert the existing production cooperation arrangement into a
joint venture called ALTIS. See Material
Contracts Joint Venture with IBM (ALTIS)
for a further description of the ALTIS joint venture agreement.
Infineon currently owns 50 percent of the joint
ventures shares plus one share and IBM owns the rest.
Infineons allocated percentage of the output of ALTIS is
currently 100 percent.
During the year ended September 30, 2003, the Company and
IBM amended the original shareholders agreement. Pursuant to the
amendment, the Company agreed to ratably increase its capacity
reservation in the production output of ALTIS from
50 percent to 100 percent during fiscal years 2004
through 2007.
In December 2005, Infineon further amended its agreements with
IBM in respect of ALTIS, and extended its product purchase
agreement with ALTIS through 2009. Under the December 2005
amendment, Infineon and IBM agreed to a number of administrative
matters regarding the
161
governance and management of ALTIS, as well as related
cost-allocation and accounting matters. The Company evaluated
the amendment in accordance with FIN 46R and concluded that
it held an interest in a variable interest entity in which the
Company is determined to be the primary beneficiary.
Accordingly, the Company began to fully consolidate ALTIS
following the December 19, 2005 amendment whereby
IBMs 50 percent less one vote ownership interest has
been reflected as a minority interest. In June 2009, Infineon
further amended its agreements with IBM in respect of ALTIS, and
extended its product purchase agreement with Altis through
February 2010 with a substantially reduced purchase volume.
Manufacturing
Agreement with UMC and TSMC
The Company has established relationships with semiconductor
foundry partners particularly in Asia, including UMC and TSMC to
increase Infineons manufacturing capacities, and therefore
its potential revenues, without investing in additional
manufacturing assets. The Company outsources production to these
foundries, which manufacture the semiconductors that the Company
designs. Foundry partnerships provide the Company with a number
of important benefits, including the sharing of risks and costs,
reductions in the Companys own capital requirements, and
access to additional production capacities. The Company seeks to
make optimal use of third-party foundries when strategically
appropriate. Also see Material
Contracts Relationship with UMC and TSMC
for a description of the manufacturing agreement with UMC and
TSMC.
Joint Venture
with Siemens (Bipolar)
On September 28, 2007, the Company entered into a long-term
joint venture agreement with Siemens, whereby the Company
contributed all assets and liabilities of its high power bipolar
business (including licenses, patents, front-end and back-end
production assets) into a newly formed legal entity called
Bipolar and Siemens subsequently acquired a 40 percent
interest in Bipolar for 37 million. The Company
contributed all assets and liabilities of its high power bipolar
business into Bipolar with economic effect as of
September 30, 2007. The joint venture agreement grants
Siemens certain contractual participating rights which will
inhibit the Company from exercising control over the newly
formed entity. Accordingly, the Company accounts for its
60 percent interest in Bipolar under the equity method of
accounting. The transaction closed on November 30, 2007.
Other
collaborations
During the 2008 fiscal year, Infineon also announced a number of
collaborations and partnerships, including the following:
With respect to Infineons core competence in the security
and chip card business, Infineon entered into new collaborations
with Intel. One agreement concerns the development of optimized
chip solutions for high-density SIM cards in the 4- to
64-megabit memory capacity range, for which Infineon is
contributing its expertise in security hardware. Pursuant to a
second agreement, Infineon is providing its Trusted Platform
Module professional package software to fully support
Intels TPM1.2 hardware solutions. This package, fully
compliant with TCGs Trusted Software Stack Work Group
Specifications, will enable PC designers to take advantage of a
cost effective, flexible and reliable security solution for
Intel vPro technology, Intel Centrino processor technology and
other fundamental business platforms.
Infineon also entered into a collaboration agreement with PGP
Corporation to increase and enhance security options and to use
certain of the other partys trademarks. Together, Infineon
will initially provide a combined solution towards Trusted
Platform Module provisioning and management in conjunction with
PGP Whole Disk Encryption.
Infineon signed a license agreement for Differential Power
Analysis Countermeasures with Cryptography Research.
Based on Infineons background in confidential data
storage, smart cards and security controllers, Infineon expanded
its cooperation with the German Federal Ministry of the Interior
on certification and identity documents.
In the USA Infineon entered a cooperation with IBM on the
technology and manufacturing of security solutions for the USA
government, specifically USA passports.
Infineon expanded its cooperation with IMEC on innovative
design technology interfaces in future technology
nodes.
162
Infineon signed a memorandum of understanding with the European
Commission on its automotive safety initiative. This move adds
momentum to eCall, an integrated, automatic accident alert
system for automobiles. The system collects data from key safety
components and transmits this data to an emergency call center
along with location information supplied by a GPS navigation
module.
Infineons subsidiaries Comneon and Sonus Networks joined
forces in developing, testing and provisioning advanced
consumer-ready mobile services, including
IP-voice for
mobile networks and Voice Call Continuity
(VCC), a service that allows seamless roaming
between operator controlled mobile and open WiFi networks.
In order to strengthen Infineons MEMS based business,
Infineon entered a cooperation with Hosiden on the development
of silicon-based microphones. Hosiden is contributing its
competence in electro-mechanics and acoustics as well as its
market expertise, while Infineon is providing its rugged
microphone MEMS technology.
With respect to Infineons CPE business, Infineon entered
into a cooperation with Jungo Ltd. to deliver production-ready
carrier-grade reference designs for the multi-service
residential gateway market. The partnership, currently based
upon Infineons ADSL2/2+ and VDSL solutions, enables
customers to offer complete solutions for operator-specific
products based on a pre-integrated, carrier-ready software
platform from Jungo.
Research and
Development
R&D is critical to Infineons continuing success, and
Infineon is committed to maintaining high levels of R&D
over the long term. The table below sets forth information with
respect to Infineons R&D expenditures for the periods
shown:
Research and
Development Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30,
|
|
|
For the six months ended March
31,(2)
|
|
|
|
2006
|
|
|
2007
|
|
|
|
2007(1)
|
|
|
2008(1)
|
|
|
2008(1)
|
|
|
2009(1)
|
|
|
|
(U.S. GAAP)
|
|
|
(U.S. GAAP)
|
|
|
|
(IFRS)
|
|
|
(IFRS)
|
|
|
(IFRS)
|
|
|
(IFRS)
|
|
|
|
(In millions, except per share data)
|
|
Expenditures (net of subsidies received)
|
|
|
1,249
|
|
|
|
1,169
|
|
|
|
|
743
|
|
|
|
694
|
|
|
|
351
|
|
|
|
271
|
|
As a percentage of net sales/revenue
|
|
|
16
|
%
|
|
|
15
|
%
|
|
|
|
18
|
%
|
|
|
16
|
%
|
|
|
16
|
%
|
|
|
17
|
%
|
|
|
(1)
|
During the 2008 fiscal year, Infineon committed to a plan to
dispose of Qimonda. As a consequence, the results of Qimonda are
reported as discontinued operations in the consolidated
statements of operations for the fiscal years ended
September 30, 2007 and 2008 and for the six months ended
March 31, 2008 and 2009. On January 23, 2009, Qimonda
and its wholly owned subsidiary Qimonda Dresden GmbH &
Co. oHG filed an application at the Munich Local Court to
commence insolvency proceedings. As a result of this
application, Infineon deconsolidated Qimonda during the second
quarter of the 2009 fiscal year. On April 1, 2009, the
insolvency proceedings were formally opened.
|
|
(2)
|
Unaudited.
|
Infineons R&D activities are concentrated in the
areas of semiconductor based product and system development, as
well as process technology. Major R&D activities range from
the development of leading edge RF, analog and power circuits,
complex digital
system-on-chip
solutions, high and low power discretes, sensors, reusable
IP-blocks,
software blocks, CAD flow and libraries, and packaging
technology to complex mobile phone system integration.
Infineons ICs generally utilize complex
system-on-chip
designs and require a wide variety of intellectual property and
sophisticated design methodologies, to combine high performance
with low power consumption. Infineon believes that its range of
intellectual property and methodologies for logic ICs, in
particular its capability to integrate various ICs and complex
software products, will enable Infineon to continue to
strengthen its position in the logic IC market. Infineon views
expertise in analog/mixed-signal devices and RF design as a
particular competitive strength.
Infineons power ICs and discrete power transistors utilize
a sophisticated co-design of circuits and technology procedures
to optimize parameters like on-resistance, switching speed and
reliability. Infineon believes its expertise in all fields of
power applications up to the highest voltage and current levels
will
163
enable it to retain a leading development position and help it
to remain a leading supplier for power semiconductors.
Process technologies are another important focus of
Infineons R&D activities. Infineon continuously
develops its power technologies in order to support its number
one position in the power market. Requirements for automotive
and industrial applications, such as high-temperature, high
switching power and reliability, allow for differentiation
through in-house R&D. For advanced logic technologies
Infineon is following a strategy of alliances with several
partners and consortia to maintain a competitive technology
roadmap at an affordable cost level. Infineons process
technologies benefit from many modular characteristics,
including special low-power variants, analog options and
high-voltage capabilities.
Locations
Infineons R&D activities are conducted at locations
throughout the world. The following table shows Infineons
major R&D locations and their respective areas of
competence:
Principal
Research and Development
Locations(1)
|
|
|
Location
|
|
Areas of Competence
|
|
Allentown, Pennsylvania, U.S.A.
|
|
IC, software and system development for wireless products
|
Bangalore, India
|
|
IC, software and system development for wireless, wireline,
automotive and industrial products, CAD flow and library
development
|
Bucharest, Romania
|
|
Power mixed-signal semiconductors, chip card ICs, RF IC
development for wireless products
|
Dresden, Germany
|
|
Advanced technology development
|
Duisburg, Germany
|
|
IC and system development for wireless products, RF IC
development, customer support for wireline products
|
Graz, Austria
|
|
Contactless systems, automotive power systems, sensor products
|
Linz, Austria
|
|
RF IC and software development for wireless and sensor products
|
Morgan Hill, California, U.S.A.
|
|
RF IC development for high power applications
|
Munich, Germany
|
|
Main product development site. Technology integration, CAD flow,
library development, IC, software and system development for
wireline products, microcontrollers, ASICs with embedded DRAM,
chip card ICs, automotive power and industrial products, process
technology development
|
Nuremberg, Germany
|
|
Software and system development for wireless products
|
Regensburg, Germany
|
|
Package development, process technology development
|
Shanghai, China
|
|
System development for wireless products
|
Singapore
|
|
IC, software and system development for wireline, wireless and
industrial products, package development
|
Sophia Antipolis, France
|
|
IC development for wireless products, library development, CAD
flow
|
Villach, Austria
|
|
IC development for power semiconductor products, mixed signal IC
development for automotive and communication products
|
Xian, China
|
|
IC development for automotive and communication products
|
Note
|
|
|
|
|
(1)
|
On July 7, 2009, the Company
entered into the Asset Purchase Agreement to sell the Wireline
Communications business, and such sale is expected to close in
the fall of 2009. The sale will affect engineers in the
principal research and development locations of Bangalore,
India, Duisburg, Germany, Munich, Germany, Singapore and
Villach, Austria, who will be transferred to Wireline Holdings
but will continue using the respective facilities under lease
and sub-lease agreements.
|
As of June 30, 2009, Infineons R&D staff
consisted of 5,947 employees working in Infineons
R&D units throughout the world. Infineon has given
particular emphasis in recent years to the expansion of
Infineons R&D resources in cost-attractive locations
with good access to lead markets and lead customers. Infineon
believes that appropriate utilization of skilled R&D
personnel in lower-cost locations will improve Infineons
ability to maintain its technical position while controlling
expenses.
164
Intellectual
Property
Infineons intellectual property rights include patents,
copyrights, trade secrets, trademarks, utility models and
designs. The subjects of Infineons patents primarily
relate to IC designs and process technologies. Infineon believes
that its intellectual property is a valuable asset not only to
protect its investment in technology but also a vital
prerequisite for cross licensing agreements with third-parties.
As of March 31, 2009, Infineon owned more than 20,250
patent applications and patents (both referred to as
patents below) in over 40 countries throughout the
world. These patents belong to approximately 8,100 patent
families (each patent family containing all patents
originating from the same invention).
National and regional patent offices examine whether
Infineons patent applications meet the necessary
requirements. Owing to the complex nature of Infineons
patent applications this examination process typically takes
several years until grant of a patent.
It is common industry practice for semiconductor companies to
enter into patent cross licensing agreements with each other.
These agreements enable each company to utilize the patents of
the other on specified conditions. In some cases, these
agreements provide for payments to be made by one party to the
other. Infineon is a party to a number of patent cross licensing
agreements, including agreements with other major semiconductor
companies. Infineon believes that its own substantial patent
portfolio enables Infineon to enter into patent cross licensing
agreements on favorable terms and conditions. Infineon is in
ongoing patent cross licensing negotiations with other industry
participants. Depending on new developments, new products or
other business necessities, Infineon may initiate additional
patent cross licensing agreements in the future.
Infineons success depends in part on its ability to obtain
patents, licenses and other intellectual property rights
covering its products and their design and manufacturing
processes. To that end, Infineon has obtained many patents and
patent licenses and intends to continue to seek patents on its
developments. The process of seeking patent protection can be
lengthy and expensive, and there can be no assurance that
patents will be issued from currently pending or future
applications or that, if patents are issued, they will be of
sufficient scope or strength to provide Infineon with meaningful
protection or a commercial advantage, or that they will not be
revoked upon a third-party challenge. In addition, effective
copyright, trademark and trade secret protection may be limited
in some countries or even unavailable. In many jurisdictions,
including Germany, when a licensee or licensor becomes insolvent
or bankrupt, the license may be subject to limitation,
termination or other impairment. Thus, insolvency and bankruptcy
issues concerning Infineons intra-group or extra-group
licensing counterparties could have a material adverse effect on
Infineons business, including, but not limited to,
competitors benefiting from license arrangements, or termination
of cross-licenses, that could leave Infineon with insufficient
intellectual property rights to continue its business as
intended or at all.
Infineons competitors also seek to protect their
technology by obtaining patents and asserting other forms of
intellectual property rights. Third-party technology that is
protected by patents and other intellectual property rights may
be unavailable to Infineon or available only on unfavorable
terms and conditions. Third parties may also claim that
Infineons technology infringes their patents or other
intellectual property rights, and they may bring suit against
Infineon to protect their intellectual property rights. From
time to time, it may also be necessary for Infineon to initiate
legal action to enforce its own intellectual property rights.
Litigation can be very expensive and can divert financial
resources and management attention from other important uses. It
is difficult or impossible to predict the outcome of most
litigation matters, and an adverse outcome can result in
significant financial costs that can have a material adverse
effect on the losing party. For a description of ongoing
disputes, see Legal Matters.
165
Acquisitions,
Dispositions and Discontinued Operations
Reflecting the Companys commitment to achieve
profitability, the Company continued to dispose of non-core
assets in the 2008 fiscal year. In addition, the Company also
continued to strengthen its businesses through selective
acquisitions. The principal transactions completed since the
beginning of the 2006 fiscal year were as follows:
Liquidation of
StarCore joint venture with Agere Systems Inc. and Motorola
Inc.
On October 1, 2002, the Company, Agere Systems Inc. and
Motorola Inc. incorporated StarCore, LLC
(StarCore), based in Austin, Texas. StarCore
focused on developing, standardizing and promoting Digital
Signal Processor (DSP) core technology. In
the 2006 fiscal year the shareholders decided by consensus to
pursue their objectives in DSP core technology individually and
to liquidate StarCore. As a consequence, the Company recorded an
impairment of 13 million during the 2006 fiscal year.
Liquidation of
ParoLink joint venture with United Epitaxy Company,
Ltd.
In November 2003, the Company, together with United Epitaxy
Company, Ltd, Hsinchu, Taiwan, founded a joint venture company
ParoLink. During January 2006, the joint venture partners
decided to dissolve and liquidate ParoLink. The liquidation was
completed in the 2007 fiscal year.
Sale of
Polymer Optical Fiber business
In March 2007, the Company agreed to sell its Polymer Optical
Fiber business, based in Regensburg, Germany, to Avago and other
related companies of the Avago group of companies for
approximately $27 million in cash. The Polymer Optical
Fiber 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 during the 2007 fiscal year.
Acquisition of
Mobility Products Business of LSI
On October 24, 2007, the Company completed the acquisition
of the mobility products business from LSI for cash
consideration of $450 million plus transaction costs and a
contingent performance-based payment of up to $50 million
in order to further strengthen its activities in the field of
communications. The contingent performance-based payment was
based on the relevant revenues in the measurement period
following the completion of the transaction and ending
December 31, 2008. Due to the lower revenues during the
measurement period, no performance-based payment has been made.
The mobility products business designs semiconductors and
software for cellular telephone handsets. The business acquired
consists mainly of mobile radio baseband processors and
platforms that complement the Companys existing portfolio.
The underlying Asset Purchase Agreement is governed by the Laws
of the state of New York and the New York courts have exclusive
jurisdiction.
Acquisition of
Texas Instruments Inc.s (TI) DSL CPE
business
During the 2007 fiscal year, the Company acquired TIs CPE
business for a cash consideration of $53 million. The
purchase price was subject to an upward or downward contingent
consideration adjustment of up to $16 million, based on
negotiated revenue targets of the CPE business. Due to the
failure to achieve the negotiated revenue targets of the CPE
business, TI reimbursed an amount of 13 million
during the first quarter of the 2009 fiscal year. The
reimbursement resulted in a respective decrease of goodwill. The
underlying Asset Purchase Agreement is governed by the Laws of
the state of New York and the New York courts in the Borough of
Manhattan have exclusive jurisdiction.
Sale of
40 percent of High Power Bipolar business
On September 28, 2007, the Company entered into a long-term
joint venture agreement with Siemens. See
Material Contracts Joint venture with Siemens
(Bipolar) and Strategic Alliances and
other Collaborations Manufacturing joint ventures;
Foundries Joint venture with Siemens
(Bipolar). With economic effect as of
September 30, 2007, the Company contributed all assets and
liabilities of its high power bipolar business (including
licenses, patents, front-end and back-end production assets) to
a newly formed legal entity called 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
32 million which was
166
recorded in other operating expense (income), net during the
2008 fiscal year. The joint venture agreement grants Siemens
certain contractual participating rights which inhibit the
Company from exercising control over Bipolar. Accordingly, the
Company accounts for the retained interest in Bipolar under the
equity method of accounting.
Sale of HDD IC
business
In March 2008, the Company and LSI entered into an agreement
pursuant to which LSI acquired the Companys HDD business
for cash consideration of $95 million. The HDD business
designs, manufactures and markets semiconductors for HDD
devices. The Company transferred its entire HDD activities,
including customer relationships as well as know-how to LSI, and
granted LSI a license for intellectual property. The Company
agreed to provide certain services in a transition period to LSI
with respect to the HDD business and agreed to supply LSI with
wafers for a transition period. 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 39 million which was recorded in
other operating expense (income), net during the 2008 fiscal
year. The transaction closed on April 25, 2008.
Acquisition of
Primarion, Inc.
In April 2008, the Company acquired Primarion, Inc.
(Primarion) for cash consideration of
$50 million plus a contingent performance-based payment of
up to $30 million. The contingent performance-based payment
is based on the revenues in the period from July 1, 2008 to
June 30, 2009. Primarion designs, manufactures and markets
digital power ICs for computing, graphics and communication
applications. The companys power architecture addresses
the need for adaptive local intelligent control over power
delivery to optimize performance and minimize power consumption.
Combining power conversion and power management on a single chip
simplifies system design and reduces costs. With this
acquisition, the Company strives to broaden its product
portfolio in the area of digital power management ICs and to
become a leader in this market. The underlying merger agreement
is governed by the laws of the state of Delaware and the Los
Angeles County Court has exclusive jurisdiction.
Sale of Bulk
Acoustic Wave (BAW) Filter business
On June 25, 2008, the Company entered into a definitive
agreement with Avago Technologies GmbH
(Avago) and other related companies of the
Avago group of companies to sell its bulk acoustic wave filter
business for approximately 21 million in cash. The
Company realized a gain before tax of 9 million which
was recorded in other operating income, net during the 2008
fiscal year, and deferred 6 million which will be
realized over the term of the supply agreement. BAW develops
bulk acoustic wave filters for cellular duplexers and GPS
applications. The transaction closed on August 11, 2008. At
this time, the Company also entered into a supply agreement with
Avago Technologies Trading Ltd. through December 2009.
Sale of
Infineon Technologies SensoNor AS
On March 4, 2009, the Company sold the business of its
wholly-owned subsidiary Infineon Technologies SensoNor AS
(SensoNor), including property, plant and
equipment, inventories, and pension liabilities, and transferred
employees to a newly formed company called SensoNor Technologies
AS for cash consideration of 4 million. In addition,
the Company granted a license for intellectual property and
entered into a supply agreement through December 2011. As a
result of this transaction, the Company realized losses before
tax of 16 million which were recorded in other
operating expense for the three and six months ended
March 31, 2009. The Company has entered into business
agreements with the new company to ensure both a continued
supply of the components for the Companys tire pressure
monitoring systems while the Company transfers production to its
Villach site and the smooth transition of all services and
functions to the new company.
Status of
Qimonda
The Company currently holds a 77.5 percent interest in the
memory products company Qimonda, which was carved out from
Infineon in 2006. In connection with the formation of Qimonda as
a separate legal entity, Infineon and Qimonda entered into a
number of agreements governing the carve-out of the memory
products business, the licensing of intellectual property, the
use of Infineons 200-millimeter fabrication facility in
Dresden, and support services in the areas of general support,
IT services and R&D services. On January 23, 2009,
Qimonda and its wholly owned subsidiary Qimonda Dresden
GmbH & Co.
167
oHG filed an application to commence insolvency proceedings, and
formal insolvency proceedings were opened in the local registry
court in Munich on April 1, 2009. The Company reports the
results of Qimonda as discontinued operations in its
consolidated financial statements and deconsolidated Qimonda
during the second quarter of the 2009 fiscal year. The future of
Qimonda remains highly uncertain. See Risk
Factors Risks Relating to the Company and the
Market Infineon may face significant liabilities as
a result of the insolvency of Qimonda.
During the 2008 fiscal year, the Company committed to a plan to
dispose of Qimonda. As a result, the results of Qimonda are
reported as discontinued operations in the Companys
consolidated statements of operations for all periods presented,
and the assets and liabilities of Qimonda have been reclassified
as held for disposal in the consolidated balance sheets for all
periods presented. In addition, the Company recorded after-tax
write-downs totaling 1,475 million, in order to
remeasure Qimonda to its estimated current fair value less costs
to sell. Pursuant to IFRS 5 Non-current Assets Held for
Sale and Discontinued Operations, the recognition of
depreciation expense ceased as of March 31, 2008. In the
second quarter of the 2009 fiscal year, Infineon deconsolidated
Qimonda. See Risk Factors Risks Relating to
the Company and the Market Infineon may face
significant liabilities as a result of the insolvency of
Qimonda.
On March 16, 2009, the New York Stock Exchange (NYSE)
removed Qimondas ADSs from listing and registration on the
NYSE due to Qimondas and Qimonda Dresden GmbH &
Co. OHGs application with the local court in Munich to
commence insolvency proceedings. In addition, Qimonda was not in
compliance with the NYSEs continued listing standards for
average share price over a consecutive 30 trading day period of
not less than USD 1.00 and average global market
capitalization over a consecutive 30 trading day period of not
less than USD 100 million.
Status of
ALTIS
Infineon and its joint venture partner IBM are currently
involved in ongoing negotiations with strategic and financial
partners regarding a divestiture of their respective shares in
ALTIS, the manufacturing joint venture in France. The outcome of
these negotiations cannot be predicted at this stage. In the
event of a failure to reach an agreement with the potential
buyers, Infineon and IBM may well have to resort to the closure
of the ALTIS manufacturing facility. In June 2009, Infineon
further amended its agreements with IBM in respect of ALTIS, and
extended its product purchase agreement with ALTIS through
February 2010 with a substantially reduced purchase volume.
Either the sale or the closure of the facility may result in the
Company incurring material additional costs and charges. See
Risk Factors Risks Relating to the Company
and the Market A sale or closure of the ALTIS
facility may result in the Company incurring material additional
costs.
Divestiture of
the Wireline Communications Business
On July 7, 2009, the Company entered into the Asset
Purchase Agreement to sell the Wireline Communications business
for a cash consideration of 250 million. The majority
of the purchase price is payable at closing, which is expected
to occur in the fall of 2009, with 20 million of the
purchase price being payable 9 months after the closing
date. The closing is subject to the receipt of required
antitrust approvals. Furthermore, under German labor law, the
separation of the Wireline Communications business qualifies as
a measure requiring the prior conclusion of the negotiations
with Infineons competent works councils
(Betriebsräte) with respect to the balancing of
interest (Interessenausgleich) procedures. Successful
termination of the negotiations is a condition precedent for the
closing of the transaction. Negotiations will commence in July
and the Company expects them to last for several weeks. Infineon
will transfer its entire Wireline Communications business,
including certain contracts, property, plant and equipment,
inventories, intellectual property and certain employment
liabilities, as well as know-how to Wireline Holdings, and has
granted Wireline Holdings a license for certain intellectual
property. In addition, Infineon has agreed to provide certain
services in a transition period to Wireline Holdings with
respect to the Wireline Communications business against payment
and to supply Wireline Holdings with wafers and backend services.
Employees
Infineon employed a total of 26,362 employees as of
March 31, 2009 and 26,108 employees as of June 30,
2009. For a further description of the Companys workforce
by location and function over the past two years, see
Managements Discussion and Analysis of Financial
Condition and Results of Operations
Employees. In connection with the sale of the Wireline
Communications business,
168
approximately 900 employees will be transferred to Wireline
Holdings, of which 600 employees are from the Wireline
Communications division and 300 employees are currently
working in central functions mainly for the Wireline
Communications segment.
A significant percentage of the Companys employees,
especially in Germany, are covered by collective bargaining
agreements determining remuneration, working hours and other
conditions of employment. On November 12, 2008, Infineon
Technologies AG terminated its membership of the Association of
the Bavarian Electrical and Metalworking Industries. However,
according to the German Collective Bargaining Agreements Act
(Tarifvertragsgesetz), the relevant collective bargaining
agreements that have been concluded by this employers
association remain binding in the form that is effective on the
date of membership termination. In addition, the collective
bargaining agreements will continue to be binding for the
Company until they (i) expire or (ii) are amended or
terminated.
A significant percentage of the Companys employees are
also represented by works councils and other employee
representative bodies. Works councils are employee-elected
bodies established at each location in Germany and also on
company level, i.e. company works council at Infineon
Technologies AG. Furthermore, works councils exist at the
Companys subsidiaries in Austria and France (including
ALTIS, the Companys joint venture with IBM). In Germany,
works councils have extensive rights to notification and of
co-determination/participation in personnel, social and economic
matters. Under the German Works Constitution Act
(Betriebsverfassungsgesetz), the works councils must be
notified in advance of any proposed employee termination, they
must approve hiring and relocation and similar matters, and they
have a right to codetermine social matters such as work
schedules and rules of conduct. It may also be required to
involve the relevant German works council prior to and in the
context with restructuring measures. Management believes that it
has a positive relationship with the works councils. The members
of the senior management of Infineon Technologies AG are
represented by a senior management committee
(Sprecherausschuss).
During the last two fiscal years, the Company has not
experienced any labor disputes resulting in significant strikes.
As part of Infineons IFX10+ cost-reduction program,
approximately 10 percent of the Companys worldwide
workforce has been reduced over the past 12 months. Since
the primary objective is to avoid redundancies for operational
reasons, and as a first step towards improving business results
as quickly as possible, Infineon has offered a limited-term,
voluntary severance bonus based on a voluntary severance
agreement for German locations except Dresden. At the same time,
Infineon has entered into negotiations with the company works
council with regards to an agreement on the implementation of
the restructuring program (Interessenausgleich) and the
conclusion of a social plan (Sozialplan). The
Interessenausgleich has been concluded at the end of
April 2009.
Furthermore, in light of the present crisis in the financial
markets, and in particular in the Companys sales markets,
and under consideration of the associated decline in demand in
the automotive, industrial, security and communication sectors,
the Company implemented, on a company-wide level, reduced work
hours arrangements and income-reduction measures at the
beginning of 2009. In Germany and Austria, reduced work hours
arrangements, which involve reduced renumeration of the affected
employees (Kurzarbeit), have been introduced for
non-exempt and exempt employees on a nationwide basis. Under the
current agreement with the works council, the term of the
reduced hours programs is, in general, set until
September 30, 2009. With certain exceptions, all other
employees involved (e.g. senior employees) participate in Unpaid
Leave Programs on a group company basis in accordance with the
applicable national laws.
Legal
Matters
Litigation and
Investigations
The Company and Qimonda are the subject of a number of
governmental investigations and civil lawsuits which are
described below:
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 during certain periods of time 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
169
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 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 Corp. (IF North America) and other
DRAM suppliers by direct customers, indirect customers and
various U.S. state attorneys general, 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 for the class of
direct U.S. purchasers of DRAM (granting an opportunity for
individual class members to opt out of the settlement). In
November 2006, court approved the settlement agreement and
entered final judgment and dismissed the claims with prejudice.
Six entities chose to opt out of the class action settlement of
the direct customers and pursue individual lawsuits against the
Company. Of these, Honeywell has settled.
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. All defendants have filed joint
motions for summary judgment and to exclude plaintiffs
principal expert in the Unisys case. On March 31, 2009, the
court issued an order denying these motions with respect to a
related case filed by Sun Microsystems against DRAM suppliers
other than the Company and IF North America, but no ruling has
yet been issued with respect to the Unisys case. On
October 29, 2008 the Company and IF North America filed a
motion to disqualify counsel for plaintiffs for Unisys
Corporation, and the other opt-out plaintiffs (other
than DRAM Claims Liquidation Trust) as described below. On
December 18, 2008, the court issued an order disqualifying
counsel for those plaintiffs from prosecuting those cases
against the Company and IF North America, and ordered that new
counsel be substituted. New counsel has been substituted. No
trial date has been scheduled in the Unisys case.
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.
All defendants have filed joint motions for summary judgment and
to exclude plaintiffs principal expert in all of these
cases. On March 31, 2009, the court issued an order denying
these motions with respect to a related case filed by Sun
Microsystems against DRAM suppliers other than the Company and
IF North America, but no ruling has yet been issued with respect
to these opt-out cases. On December 18, 2008, the court
issued an order disqualifying counsel for those plaintiffs
(other than DRAM Claims Liquidation Trust), as described above.
New counsel has been substituted.
Sixty-four 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 appealed to the Ninth Circuit Court of
Appeals. On August 14, 2008, the Ninth Circuit issued its
decision affirming the dismissal of this action. Twenty-three of
the state and federal court cases were subsequently ordered
transferred to the U.S. District Court for the Northern
170
District of California for coordinated and consolidated pretrial
proceedings as part of the MDL proceeding described above.
Nineteen 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. No hearing date has
yet been scheduled in the appeal. The plaintiffs in the indirect
purchaser cases outside California agreed to stay 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 indirect
purchaser 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 MDL indirect
purchaser cases until the appeal is complete. Plaintiffs in
various state court indirect purchaser actions outside of the
MDL have moved to lift the stays that were previously in place.
On March 3, 2009, the judge in the Arizona state court
indirect purchaser action issued an order denying
plaintiffs motion to lift the stay. A hearing on
plaintiffs motion to lift the stay in the Minnesota state
court indirect purchaser action was held on May 6, 2009.
Plaintiffs also moved to lift the stay in the Wisconsin state
court indirect purchaser action, but no ruling has yet been
issued. Plaintiffs in the Arkansas state court indirect
purchaser action have also filed a motion to lift the stay, and
that motion has been scheduled for hearing on September 11,
2009. On July 9, 2009, a hearing was held, after which the
Court entered an order lifting the stay on the Wisconsin state
case, and ordered the parties to submit a proposed schedule for
further proceedings by August 7, 2009. Before the initial
stay order was entered, Infineon earlier filed a motion to
dismiss the Wisconsin case against it based on lack of personal
jurisdiction. That motion has not yet been heard, and the
Company and IF North America, along with its co-defendants,
filed an opposition on April 13, 2009.
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 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. On May 13,
2008, the Company answered the complaint by the State of New
York and the multistate complaint. On September 15, 2008,
the Company filed an amended answer to the multistate complaint.
Between June 25, 2007 and December 31, 2008, the state
attorneys general of eight states, Alaska, Delaware, Ohio, New
Hampshire, Texas, Vermont, Kentucky and the Northern Mariana
Islands filed requests for dismissal of their claims. Plaintiffs
California and New Mexico filed a joint motion for class
certification seeking to certify classes of all public entities
within both states. On September 5, 2008, the Court entered
an order denying both states motions for class
certification. On September 15, 2008, the New York State
Attorney General filed a motion for judgment on the pleadings
regarding certain defendants affirmative defenses to New
Yorks amended complaint. On January 5, 2009, the
court denied the New York State Attorney Generals motion
for
171
judgment on the pleadings, but in the alternative granted New
Yorks request to reopen discovery concerning certain of
defendants affirmative defenses.
On October 3, 2008, approximately 95 California schools,
political subdivisions and public agencies that were previously
putative class members of the multistate attorney general
complaint described above filed suit in California Superior
Court against the Company, IF North America, and several other
DRAM manufacturers alleging DRAM price-fixing and artificial
price inflation in violation of California state antitrust and
consumer protection laws arising out of the alleged practices
described above. The plaintiffs seek recovery of actual and
treble damages in unspecified amounts, restitution, costs
(including attorneys fees) and injunctive and other
equitable relief. On June 16, 2009, the California Superior
Court entered an order overruling defendants demurrer to
the California state court complaint, and granting in part and
denying in part defendants motion to strike portions of
the complaint.
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. Since February 2009, the Company is subject to
formal proceedings from the Commission. The Company is fully
cooperating with the Commission in its investigation. Qimonda is
obligated to indemnify Infineon for any fines ultimately imposed
by the Commission in connection with these proceedings. Due to
Qimondas recent insolvency filing, however, it is unlikely
that Qimonda will be able to indemnify Infineon against any such
potential liabilities. The exact amount of potential fines
cannot be predicted with certainty and, therefore, it is
possible that any fine actually imposed on the Company by the
Commission may be materially higher than the provision recorded
therefor.
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 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. 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. Securities
Exchange Act of 1934 and dismissed the claim under
§ 20A of the act with prejudice. On August 13,
2008 the court denied a motion for summary judgment brought by
the Company based on the statute of limitations. On
August 25, 2008, the Company filed a motion for judgment on
the pleadings, or in the alternative, motion to dismiss for lack
of subject matter jurisdiction, against foreign purchasers, that
is, proposed class members who are neither residents nor
citizens of the United States who bought securities of the
Company on an exchange outside the United States. On
August 25, 2008, plaintiffs filed a motion for class
certification. On March 6, 2009, the court denied the
Companys motion to dismiss the claims asserted by the
foreign purchasers, and granted plaintiffs motion to
certify a class of persons who acquired the Companys
securities between March 13, 2000 and July 19, 2004,
including foreign purchasers, who sold their securities after
June 18, 2002. On March 19, 2009, the Company filed a
petition with the Court of Appeals for the Ninth Circuit,
requesting
172
permission to immediately appeal the courts March 6,
2009 order granting class certification; the Ninth Circuit
granted the petition on April 29, 2009. On May 14,
2009 the court issued an order staying the case pending
resolution of the Companys appeal by the Ninth Circuit.
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.
On October 31, 2007,
Wi-LAN Inc.
filed suit in the U.S. District Court for the Eastern
District of Texas against Westell Technologies, 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 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. On
May 7,
Wi-LAN and
the Company settled their patent litigation pending in the U.S.
District Court for the Eastern District of Texas by concluding
license and patent acquisition agreements; on May 18,
Wi-LAN, IF
North America and the Company filed an unopposed joint motion to
dismiss with prejudice any and all claims and counterclaims in
this action against one another.
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 as to the facts established and
certain estoppels. Since the end of 2007, various suppliers also
gave third-party notice to their respective suppliers, including
Infineon. 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. 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. 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. In March 2009, CIF filed its replies both with the
Civil Court of Duesseldorf and the Federal Patent Court in
Munich. DTAG and the parties who joined the lawsuit on the side
of DTAG have responded by the end of May 2009 for Munich and
must respond by September 28, 2009 for Duesseldorf. Oral
arguments at the Civil Court of Duesseldorf are scheduled for
December 1, 2009 regarding the one surviving patent; the
court hearing for the three expired patents have been suspended
and no new schedules have been set with respect thereto. In
October 2008, CIF also filed suit in the Civil Court of
Düsseldorf, Germany against Arcor GmbH &Co KG,
(Arcor), Hansenet Telekommunikation GmbH,
United Internet AG (United Internet) (all
three, New Defendants) alleging infringement
of the same four European patents. Oral arguments at the Civil
Court of Duesseldorf for the suits against all New Defendants
for the one surviving patent have also been scheduled for
December 1, 2009. The New Defendants have partly given
third-party notice to their suppliers. Alcatel has given
Infineon third-party notice in the lawsuit against Arcor and AVM
Computersysteme Vertriebs GmbH has given third-party notice in
the lawsuit against United Internet.
On October 22, 2008, the Company learned that the European
Commission had commenced an investigation involving the
Companys Chip Card & Security business for
alleged violations of antitrust laws. The investigation is in
its very early stages, and the Company is assessing the facts
and monitoring the situation carefully.
On November 12, 2008, Volterra Semiconductor Corporation
filed suit against Primarion, Inc., the Company and IF North
America in the U.S. District Court for the Northern
District of California for alleged infringement of five
U.S. patents by certain products offered by Primarion. On
December 18, 2008 the Company, IF North America and
Primarion filed an answer to the complaint denying any
infringement and filed a counterclaim against Volterra
Semiconductor Corporation alleging fraud on the U.S. Patent
and Trademark Office and certain antitrust violations.
Primarion, the Company and IF North America also counterclaimed
that the patents underlying Volterras patent infringement
claims are invalid. In February and March 2009 IF North America
filed requests for re-examination at the US Patent and Trademark
Office
173
for all five patents asserted by Volterra. On May 12, 2009,
Volterra, Primarion, IF North America and the Company consented
to have U.S. Magistrate Judge Joseph C. Spero to conduct
further proceedings in the case and on May 13, 2009, the
case has been reassigned to Honorable Joseph C. Spero for all
further proceedings. In March and June, the U.S. Patent and
Trademark Office ordered the re-examination of all five Volterra
patents asserted, and subsequently, on June 12, the court
stayed the case on two of the patents pending re-examination.
On November 25, 2008, the Company, Infineon Technologies
Austria AG and IF North America filed suit in the
U.S. District Court for the District of Delaware against
Fairchild Semiconductor International, Inc. and Fairchild
Semiconductor Corporation regarding (1) a complaint for
patent infringement by certain products of Fairchild and
(2) a complaint for declaratory judgment of
non-infringement and invalidity of certain patents of Fairchild
against the allegation of infringement of those patents by
certain products of Infineon. Fairchild has filed a counterclaim
in Delaware for a declaratory judgment on (1) infringement
by Infineon of those patents which are subject of
Infineons complaint for declaratory judgment and
(2) non-infringement and invalidity of those patents which
are the subject of Infineons complaint for infringement.
Fairchild Semiconductor Corporation has further filed another
patent infringement suit against the Company and IF North
America in the U.S. District Court for the District of
Maine alleging that certain products of Infineon infringe on two
more patents of Fairchild Semiconductor Corporation which are
not part of the Delaware lawsuit. On January 22, 2009, IF
North America answered the complaint filed by Fairchild
Semiconductor Corporation with the District Court in Maine
denying the claims of infringement and counterclaiming that the
patents underlying Fairchild Semiconductor Corporations
patent infringement claims are invalid.
On April 24, 2009, former employees of Qimondas
subsidiaries in the United States filed a complaint in the
U.S. Federal District Court in Delaware against the
Company, IF North America and Qimonda AG, individually and on
behalf of several putative classes of plaintiffs. The suit
relates to the termination of the plaintiffs employment in
connection with Qimondas insolvency and the payment of
severance and other benefits allegedly due by Qimonda. The
complaint seeks to pierce the corporate veil and to
impose liability on the Company and IF North America under
several theories. The Company is currently reviewing the
complaint. The Company and IF North America have received an
extension of time to answer the complaint (to mid-July) in
exchange for the agreement to accept service of process.
On April 24, 2009, Optimum Processing Solutions LLC
(OPS), a Georgia limited liability company,
filed a claim in the U.S. Federal District Court for the
Northern District of Georgia against IF North America, Advanced
Micro Devices, Inc., Freescale Semiconductor, Inc., Intel
Corporation, International Business Machines Corporation,
STMicroelectronics, Inc., Sun Microsystems, Inc. and Texas
Instruments, Inc. The complaint alleges that certain microchips
manufactured, used or offered for sale by IF North America and
the other defendants infringe U.S. patent no. 5,117,497,
allegedly held by the plaintiff. On July 10, 2009,
IF North America and OPS settled the patent litigation
claim. OPS will file an unopposed motion to dismiss with
prejudice any and all claims in this action against IF North
America.
On May 14, 2009, Gregory Bender, filed suit in the
U.S. District Court for the Northern District of
California, against four companies, including IF North America.
The complaint alleges infringement of one U.S. Patent by
certain electronic products having a buffered transconductance
amplifier. The complaint has not yet been served on IF North
America.
Infineon is involved in a dispute with Dr. Ulrich
Schumacher, the Companys former CEO. In March 2006,
Dr. Schumacher filed a lawsuit against the Company alleging
that three statements made by the chairman of the Companys
Supervisory Board in the media were incorrect and applied for a
declaratory judgment that Dr. Schumacher was entitled to
damages. This lawsuit is still pending.
Provisions and
the Potential Effects of these Lawsuits
Provisions 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 average
amount is accrued. 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. Due to Qimondas recent insolvency, however, it is
very unlikely that Qimonda will be able to indemnify Infineon
against any
174
such potential liabilities. As of March 31, 2009,
provisions totaling 96 million were recorded by the
Company in connection with the European antitrust investigation,
the securities class action complaints, and the direct and
indirect purchaser litigation 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.
Real
Estate
Infineon owns approximately 1.3 million square meters of
land at Cegled (Hungary), Dresden, Neubiberg, Regensburg and
Warstein (Germany), Essonnes (France) and Villach (Austria).
Furthermore, Infineon owns approximately 715,700 square
meters of building space at Batam (Indonesia), Cegled (Hungary),
Dresden, Regensburg and Warstein (Germany), Essonne (France),
Kulim and Malacca (Malaysia), Singapore (Singapore), Villach
(Austria) and Wuxi (PR China).
In addition, Infineon has long-term rental and lease
arrangements covering approximately 932,400 square meters
of land at Batam (Indonesia), Kulim and Malacca (Malaysia),
Neubiberg and Duisburg (Germany), Singapore (Singapore) and Wuxi
(PR China).
Furthermore Infineon has long-term rental and lease arrangements
covering approximately 341,500 square meters of building
space in various locations in Asia Pacific, Europe and North
America. Infineon believes that these properties are rented or
leased on ordinary market terms and conditions.
There are no material encumbrances on the property owned or
leased by Infineon.
175
Organizational
Structure
Infineon Technologies AG is the parent company of the Infineon
group, with subsidiaries incorporated in jurisdictions
throughout Europe and Asia, as well as in the United States.
Infineons most significant subsidiaries are set out below.
Unless otherwise indicated, all of the subsidiaries in the
Infineon group directly or indirectly wholly owned by Infineon
Technologies AG as of March 31, 2009.
Principal Subsidiaries as of March 31, 2009
|
|
|
|
|
Corporate name
|
|
Registered office
|
|
Principal activity
|
|
ALTIS Semiconductor
S.N.C(1)
|
|
Essonnes, France
|
|
Production
|
Infineon Technologies Asia Pacific Pte. Ltd.
|
|
Singapore
|
|
Production, distribution
|
Infineon Technologies Austria AG
|
|
Villach, Austria
|
|
Production and development
|
Infineon Technologies Bipolar GmbH & Co.
KG(2)
|
|
Warstein, Germany
|
|
Production and development
|
Infineon Technologies China Co. Ltd.
|
|
Shanghai, China
|
|
Holding
|
Infineon Technologies Dresden GmbH
|
|
Dresden, Germany
|
|
Production
|
Infineon Technologies Finance GmbH
|
|
Neubiberg, Germany
|
|
Financial services
|
Infineon Technologies France S.A.S.
|
|
Saint Denis, France
|
|
Distribution
|
Infineon Technologies Holding B.V.
|
|
Rotterdam,
The Netherlands
|
|
Holding
|
Infineon Technologies Investment B.V.
|
|
Rotterdam,
The Netherlands
|
|
Holding
|
Infineon Technologies Japan K.K.
|
|
Tokyo, Japan
|
|
Distribution
|
Infineon Technologies North America Corp.
|
|
Delaware, U.S.A.
|
|
Research, development and distribution
|
Infineon Technologies (Advanced Logic) Sdn. Bhd.
|
|
Malacca, Malaysia
|
|
Production
|
Infineon Technologies (Kulim) Sdn. Bhd.
|
|
Kulim, Malaysia
|
|
Production
|
Infineon Technologies (Malaysia) Sdn. Bhd.
|
|
Malacca, Malaysia
|
|
Production
|
Primarion Inc.
|
|
Torrance, California
|
|
Research and development
|
|
|
(1)
|
50 percent interest plus one share held by Infineon.
|
|
(2)
|
60 percent held by Infineon.
|
In addition, Infineon currently holds a 77.5 percent
interest in the memory products company Qimonda, which filed an
application to commence insolvency proceedings on
January 23, 2009. Formal insolvency proceedings were opened
in the local registry court in Munich on April 1, 2009.
Exchange
Controls and Limitations Affecting Shareholders
Germany does not currently restrict the movement of capital
between Germany and other countries, except for prohibitions on
the provision of financial aid or capital to certain individuals
and in connection with banned weapons-related transactions to
Belarus, Burma/Myanmar, Iran, Ivory Coast, Democratic Republic
of the Congo, Lebanon, Liberia, Democratic Peoples
Republic of Korea, Somalia, Sudan, Uzbekistan and Zimbabwe.
Germany also imposes certain restrictions on the movement of
capital to Iraq, as well as the provision of financial aid or
capital to the Taliban and Al Qaeda. Similar provisions have
been imposed with regard to certain individuals in order to
support the mandate of the International Criminal Tribunal for
the Former Yugoslavia. Further information can be found in
German at
http://www.bundesbank.de/finanzsanktionen/finanzsanktionen.php.
For statistical purposes, with some exceptions, every
corporation or individual residing in Germany must report to the
German Central Bank any payment received from or made to a
non-resident corporation or individual if the payment exceeds
12,500 (or the equivalent in a foreign currency).
Additionally, corporations and individuals residing in Germany
must report to the German Central Bank any claims of a resident
corporation or individual against, or liabilities payable to, a
non-resident corporation or individual exceeding an aggregate of
5.0 million (or the equivalent in a foreign currency)
at the end of any calendar month.
Neither German law nor the Articles of Association restrict the
right of non-resident or foreign owners of shares to hold or
vote the shares.
176
Material
Contracts
This section provides a summary of material contracts not in the
ordinary course of business to which the Company is a party and
that have been entered into during the two immediately preceding
fiscal years. The Companys joint venture and strategic
alliance agreements set out under the headings
Manufacturing ventures; Foundries and
Strategic Alliances and Other Collaborations contain
additional information regarding the Companys material
contracts. In addition, please see Related Party
Transactions for a summary of material contracts with
certain of the Companys related parties.
Joint Venture
with Siemens (Bipolar)
On September 28, 2007, Infineon entered into a joint
venture agreement with Siemens, whereby the Company contributed
its high power bipolar business to the newly formed legal entity
Bipolar GmbH & Co. KG, and Siemens subsequently
acquired a 40 percent interest in Bipolar GmbH &
Co. KG. The joint venture agreement grants Siemens certain
contractual participating rights which inhibit the Company from
exercising control over Bipolar GmbH & Co. KG.
Accordingly, the Company accounted for the retained interest in
Bipolar GmbH & Co. KG of 60 percent under the
equity method of accounting, see Acquisitions,
Dispositions and Discontinued Operations Sale of
40 percent of High Power Bipolar business; and
Strategic Alliances and other
Collaborations Manufacturing joint ventures;
Foundries Joint venture with Siemens
(Bipolar).
Strategic
Alliance with Hyundai
In March 2007, the Company announced a strategic cooperation
with Hyundai for the development of automotive electronics. The
Company and Hyundai also opened a joint innovation center with
the goal of developing automotive electronic system solutions
for Hyundai and Kia vehicles. The cooperation includes the
development of automotive electronics system architecture and
related semiconductors, along with enhancements of
Hyundais current automotive electronic systems, based on
the synergy of Hyundais automotive electronics technology
and Infineons semiconductor know-how. The agreement can be
terminated by either party upon six months notice by either
party.
Joint Venture
with IBM (ALTIS)
In 1991, the Company entered into an arrangement with IBM, under
which IBM manufactured DRAM products in its facility in
Essonnes, France and the Company received a share of the
production. During the fiscal year 2003, the Company and IBM
amended the original shareholders agreement. Pursuant to the
amendment, the Company agreed to ratably increase its capacity
reservation in the production output of ALTIS from
50 percent to 100 percent during fiscal years 2004
through 2007. In June 2009, Infineon further amended its
agreements with IBM in respect of ALTIS, and extended its
product purchase agreement with ALTIS through February 2010 with
a substantially reduced purchase volume. See
Manufacturing joint ventures; Foundries Joint
Venture with IBM (ALTIS).
Joint
Development Agreement with IBM, Chartered Semiconductor, Samsung
(ICIS Alliance) and Freescale
On December 15, 2006, Infineon entered into a joint
development agreement with IBM, Chartered Semiconductor and
Samsung to establish 32-nanometer bulk-industry standard
semiconductor process technology. The agreement was later
amended to add Freescale Semiconductor, Inc. See
Strategic Alliances and Other Collaborations
Front-end.
Joint
Development Agreement with STMicroelectronics and STATS
ChipPAC
On August 12, 2008, Infineon, STMicroelectronics and STATS
ChipPAC announced an agreement to jointly develop the
next-generation of eWLB technology. See
Strategic Alliances and Other Collaborations
Back-end.
Partnership
with AMKOR Technology
On September 29, 2003, Infineon entered into a framework
agreement with AMKOR Technology, Inc. for the backend processing
of semiconductor devices. See Strategic
Alliances and Other Collaborations
Back-end.
177
Relationship
with UMC and TSMC
In 1994, Siemens Aktiengesellschaft and TSMC entered into an
agreement for wafer production and testing. In December 1999,
UMC and the Company entered into an agreement for wafer
production and testing. See Strategic
Alliances and Other Collaborations
Front-end and Manufacturing joint
ventures; Foundries Manufacturing Agreement with UMC
and TSMC.
Asset Purchase
Agreement with LSI
On August 20, 2007, the Company entered into an asset
purchase agreement with LSI to purchase its mobility products
business. See Acquisitions, Dispositions and
Discontinued Operations Acquisition of Mobility
Products Business of LSI.
Real Estate
Leasing Contract with MoTo Object CAMPEON GmbH & Co.
KG
On December 23, 2003, the Company entered into a long-term
operating lease agreement with MoTo Objekt Campeon
GmbH & Co. KG (MoTo) to lease an
office complex constructed by MoTo south of Munich, Germany. The
office complex, called Campeon, enables the Company to
centralize the majority of its Munich-area employees in one
central physical working environment. MoTo was responsible for
the construction, which was completed in the second half of
2005. The Company has no obligations with respect to financing
MoTo and has provided no guarantees related to the construction.
The Company occupied Campeon under an operating lease
arrangement in October 2005 and completed the gradual move of
its employees to this new location in the 2006 fiscal year. The
complex was leased for a period of 20 years. After year 15,
the Company has a non-bargain purchase option to acquire the
complex or otherwise continue the lease for the remaining period
of five years. Pursuant to the agreement, the Company placed a
rental deposit of 75 million in escrow, which was
included in restricted cash as part of the Other Financial
Assets line item on the Companys balance sheet as of
September 30, 2008. Lease payments are subject to limited
adjustment based on specified financial ratios related to the
Company. The agreement was accounted for as an operating lease,
in accordance with IAS 17 Leases, with monthly lease
payments expensed on a straight-line basis over the lease term.
Backstop
Arrangement
On July 10, 2009, the Company and the Backstop Investor
entered into a Backstop Arrangement pursuant to which the
Backstop Investor has agreed to subscribe for all Investment
Shares at the Subscription Price, but not more than the Maximum
Investment Amount, subject to the Minimum Threshold being met.
For the purpose of safeguarding the Backstop Investors
obligation to subscribe for all Investment Shares up to the
Maximum Investment Amount, the Backstop Investor will issue a
binding and irrevocable subscription guarantee
(Festbezugserklärung) to the Company, conditional
only upon (i) satisfaction or waiver of the conditions
precedent as set forth in the Backstop Arrangement and
(ii) the Minimum Threshold being met unless waived by the
Backstop Investor.
The obligation of the Backstop Investor to acquire any
Investment Shares is subject to certain conditions precedent
being met or waived by the Backstop Investor, including, but not
limited to, applicable merger clearances, clearance by the
German Ministry of Economy and Technology (Bundesministerium
für Wirtschaft und Technologie) pursuant to the German
Foreign Trade Act (Außenwirtschaftsgesetz), and the
appointment of one representative of the Backstop Investor,
Mr. Manfred Puffer, by the competent court to the
Supervisory Board, the resignation of Mr. Max Dietrich
Kley, the current chairman of the Supervisory Board, as of
September 30, 2009, the election of Mr. Manfred Puffer
as chairman of the Supervisory Board as of October 1, 2009,
and the nomination of another representative of the Backstop
Investor, Mr. Gernot Löhr, as member of the Supervisory
Board to be appointed by the competent court subject to the
resignation of the current chairman as member of the Supervisory
Board taking effect.
The Backstop Investor will have no obligation, but will be
entitled, to subscribe for Investment Shares if the number of
Investment Shares does not exceed the Minimum Threshold. If the
Backstop Investor wishes to subscribe for the Investment Shares
despite the Minimum Threshold not being met, the Investor has to
declare a waiver to the Company on the business day following
the end of the Subscription Period. The Backstop Investor may
declare to the Company its unconditional commitment in the
waiver notice to acquire other than through the Investment Share
Placement, within 30 days following the satisfaction or
waiver of the conditions precedent, such amount of the
Companys shares that following the acquisition the
Backstop Investors shareholding will equal or exceed
15 percent. In this case, the obligation of the Backstop
Investor to acquire Investment Shares is subject to the
condition precedent that (a) Mr. Manfred
178
Puffer having been appointed by the competent court to
Supervisory Board, (b) Mr. Max Dietrich Kley, the
current chairman of the Supervisory Board, having submitted
(i) a letter to the Backstop Investor in which he commits
to resign as of September 30, 2009 and (ii) a
resignation letter to the Management Board and the co-chairman
of the Supervisory Board, resigning as chairman and Supervisory
Board member as of September 30, 2009, subject to the
Backstop Investor by that date holding a shareholding in the
Company of 15 percent or more, or as of October 15, 2009,
if only by that date the Investor holds a respective
shareholding in the Company, in each case evidenced by a
corresponding notice to the Company according to Section 21
(1) German Securities Trading Act (WpHG),
(c) Mr. Manfred Puffer has been elected as chairman of
the Supervisory Board as of October 1, 2009 subject to the
resignation of the current chairman having taken effect, and
(d) the nomination committee of the Supervisory Board has
nominated Mr. Gernot Löhr as member of the Supervisory
Board to be appointed by the competent court subject to the
resignation of the current chairman as member of the Supervisory
Board having taken effect.
As long as the applicable merger clearances and/or clearance by
the German Ministry of Economy and Technology pursuant to the
German Foreign Trade Act remains outstanding, the Backstop
Investor will only be allowed to acquire or subscribe for
Investment Shares that lead to a shareholding of the Backstop
Investor in the Company of 25 percent minus one share.
After the applicable merger clearances and/or clearance by the
German Ministry of Economy and Technology pursuant to the German
Foreign Trade Act have been obtained, the Backstop Investor may,
at its sole discretion, also subscribe for the Investment Shares
that are in excess of a shareholding of the Backstop Investor of
25 percent up to the Maximum Investment Amount. The capital
increase and the listing with regard to these shares will be
implemented as soon as reasonably possible.
Should the Backstop Investor not purchase any New Shares in the
Offering for any reason, the Company has to pay the Backstop
Investor a lump sum of 21 million. If the Backstop
Investor acquires a shareholding in the equity capital and
voting rights of the Company of 25 percent or less, the
Company has to pay the Backstop Investor an amount equal to the
sum of (i) 5.5 million plus (ii) an amount of
0.057 per share by which the shareholding quota of the
Backstop Investor falls short of 25 percent plus one share.
See The Offering Backstop
Arrangements.
For as long as the Investor holds at least 15 percent of
the shares and voting rights in the Company, the Backstop
Investor will be entitled to recommend two individuals and for
as long as the Backstop Investor holds at least 10 percent
of the shares and voting rights in the Company, one individual,
to be elected to the Supervisory Board.
The Management Board will, to the extent legally permissible,
use its best efforts to support a nomination of the Backstop
Investors nominees to be elected to the Supervisory Board
by the Companys general meeting, or will apply for the
appointment of the Backstop Investors nominees by the
competent court (gerichtliche Bestellung) to the
Supervisory Board as shareholder representatives, as the case
may be. The Management Board will use its best efforts to
procure that the nomination committee nominates Mr. Manfred
Puffer as Supervisory Board member to be appointed by the
competent court following the resignation of Mr. Max
Dietrich Kley as member of the Supervisory Board taking effect
and, following such nomination, undertakes to apply for the
appointment of Mr. Gernot Löhr by the competent court
to the Supervisory Board as shareholders representative,
and the Management Board will use its best efforts to have one
of the Backstop Investors nominees (as recommended by the
Backstop Investor) elected as chairman of the Supervisory Board.
The Backstop Investors right to recommend nominees shall
not be affected by the intended reduction of the Supervisory
Board members from 16 to 12 persons. The Management Board
will, to the extent legally permissible, use its best efforts to
ensure that Mr. Manfred Puffer and Mr. Gernot
Löhr will remain members of the Supervisory Board after
such reduction.
As of July 10, 2009 until the day of payment of the
Subscription Price for the subscribed Investment Shares by the
Backstop Investor (or the day of the termination of the Backstop
Arrangement, as the case may be), the Company will procure, to
the extent legally permissible, that certain measures regarding
corporate reorganisation and corporate finance by the Company
will not occur or be committed without the prior written consent
of a Backstop Investors representative.
The Backstop Investor is supportive of the Management Board and
its efforts to execute the growth strategy and perpetuation of a
successful market appearance and brand identity of the Company
and its subsidiaries. By accordingly exercising its voting
rights in general meetings, the Backstop Investor undertakes to
support the establishment of an authorized capital
(genehmigtes Kapital) amounting to up to 90,000,000
no par value shares and providing for an exclusion of
subscription rights only in case of a capital increase against a
contribution in kind and to approve an authorization to issue
bonds with warrants
179
and convertible bonds (without subscription rights) in an
aggregate nominal amount of up to 600,000,000 as well a
respective conditional capital (bedingtes Kapital)
amounting up to 120,000,000 no par value shares, in each
case only for a period of two years.
Provided that the Backstop Investor acquired a stake of at least
15 percent of the shares and voting rights in the Company,
the Backstop Investor undertakes not to sell, transfer, pledge,
encumber or otherwise dispose of (verfügen
über) (including the granting of any option over or the
creation of any form of trust relationship in respect of) any
Investment Shares, not to enter into any agreement or
transaction in respect of any voting rights or other rights
attached to Investment Shares, or enter into any transaction
(including derivative transactions) and not to carry out any
other action that would be the economic equivalent of any of the
above for a period of 12 months following the date of
acquisition of the Investment Shares, without the consent of the
Companys management board (the Backstop Investor
Lock-up).
This undertaking does not apply to the sale
and/or
transfer of Investment Shares (i) to an affiliated company
of the Backstop Investor pursuant to sections 15 et seq. of
the German Stock Corporation Act, (ii) of up to
10 percent of the Investment Shares to co-investors until
October 31, 2009, (iii) in connection with a mandatory
public takeover offer (Pflichtangebot) of a third party
under the German Act on the Acquisition of Securities and on
Takeovers (WpÜG), (iv) in connection with a
voluntary public takeover offer of a third party under the
German Act on the Acquisition of Securities and on Takeovers,
(v) in connection with a merger or other business
combination of the Company with a third party, (vi) in
connection with a share buy-back by the Company, and
(vii) in such quantity to be able to self-fund (net of
transaction fees and expenses) the issuance price resulting from
the exercise of subscription rights in connection with a rights
offering for shares by the Company. The Backstop Investor will
consult with the management board of the Company before
transferring any Investment Shares in connection with any public
takeover offer. Subject to the condition that the Backstop
Investor acquired a stake of at least 15 percent of the
shares and voting rights in the Company, the Backstop Investor
undertakes that for the entire term of the Backstop Investor
Lock-Up its
stock of Investment Shares subscribed for will be booked in a
blocked security deposit (Sperrdepot).
The Backstop Investor may not, until the end of the Subscription
Period, buy shares of the Company or other instruments that lead
to an attribution of voting rights pursuant to the rules of the
German Securities Trading Act. In addition, after expiry of the
Subscription Period until the settlement of the Investment
Shares, if any, the Backstop Investor may not establish a
participation in the equity capital or voting rights of the
Company if such acquisition, together with the Investment Shares
finally subscribed for by the Investor, would, pursuant to the
rules of the German Securities Trading Act, result in the
Investors participation exceeding the Maximum Investment
Amount. Furthermore, provided that Backstop Investor has
acquired a share of at least 15 percent of the shares and
rating rights in the Company, the Backstop Investor undertakes:
(i) not to establish a shareholding above 30 percent
minus one share of the share capital and voting rights of the
Company, post execution of the Offering, for a period of
12 months following the date of acquisition of the
Investment Shares without the consent of the Management Board;
and (ii) that neither the Backstop Investor nor any persons
conjointly acting with it will take, initiate
and/or
support any measures resulting in an exceeding of the Maximum
Investment Amount through (x) a direct or indirect
acquisition of any shares of the Company, including the
acquisition of shareholders rights
(Aktionärsrechte), other securities
and/or
derivates within the meaning of Section 2 (1) and (2) of
the German Securities Trade Act (WpHG), (y) or the
implementation of a public or non-public tender
(öffentliches oder nicht öffentliches Angebot)
for the acquisition of any shares of the Company, or other
securities
and/or
derivates, (z) or actions entailing structural measures
(Strukturmaßnahmen) with respect to the Company
and/or
actions aiming at an exchange of shares (Anteilstausch),
but only if and to the extent such measures result in the direct
or indirect attribution of voting rights in the Company to the
Investor in accordance with the rules of the German Securities
Trading Act (the Standstill Agreement).
During the Backstop Investor
Lock-Up the
Company will not, neither directly nor indirectly, solicit,
initiate, encourage or assist any third party in the acquisition
of a stake of 10 percent or more of the shares or voting
rights in the Company. The Company will, however, for the
avoidance of doubt have no restrictions in engaging in road show
activities in the ordinary course of business. Following the
expiry of the Backstop Investor-Lock Up, the Company will
adequately cooperate with and support the Backstop Investor in
connection with any sale of shares of the Company made via a
secondary rights offering or a private placement.
The Backstop Investors obligation with regard to the
creation of an authorized capital, the Backstop Investor
Lock-up and
the Standstill Agreement will automatically terminate if, during
the period of
180
12 months following the date of acquisition of the
Investment Shares, any of the following occurs: (i) at any
time a person other than a person proposed by the Investor
becomes the chairman of the Supervisory Board, or
(ii) Mr. Gernot Löhr is not appointed as member
of the Supervisory Board by the competent court within 10
business days after the date on which such filing had to be
made, or (iii) at any time not at least two persons
proposed by the Backstop Investor are members of the Supervisory
Board, provided that, in each case, the situation has not been
remedied within 30 days after the later of the occurrence
of the relevant event or receipt by the Company from the
Backstop Investor of a nomination of alternative eligible
Backstop Investors nominee(s).
The Backstop Investors obligation with regard to the
creation of an authorized capital and the Backstop Investor
Lock-up will
further automatically terminate if any of the following occurs:
(i) the reduction of the maximum number of Supervisory
Board members from sixteen to twelve persons has not become
effective by the date of the next ordinary shareholders
meeting relating to the 2009 fiscal year in 2010; or
(ii) not all governmental or regulatory clearances which
are required for an acquisition by the Backstop Investor of the
Maximum Investment Amount have been granted by October 1,
2009. See also Riskfactors Sales of a large
volume of shares in the Company by major shareholders could
cause significant downward pressure on the Companys share
price.
AIF VII Euro Holdings, L.P., a company which currently directly
owns the Backstop Investor, has issued a binding and irrevocable
commitment letter in favor of the Backstop Investor and the
Company to fund the full Subscription Price with regard to the
subscribed Investment Shares by the Backstop Investor up to the
Maximum Investment Amount when due, conditional only upon
(i) satisfaction or waiver of the conditions precedent as
set forth in the Backstop Arrangement and (ii) the Minimum
Threshold being met unless waived by the Backstop Investor.
The Backstop Arrangement is concluded for a fixed term of five
years except for (i) the entitlement of the Backstop
Investor to recommend individuals to the Supervisory Board of
the Company, which will remain effective as long as the Investor
holds at least 10 percent of the Companys equity
capital and voting rights and (ii) the Companys
obligation to cooperate with and support the Backstop Investor
in connection with any sale of any shares of the Company made
via a secondary rights offering or a private placement, which
will remain effective as long as the Backstop Investor holds at
least 3 percent of the Companys equity capital and
voting rights, or shares with a market value of at least
100,000,000.
Divestiture of
Wireline Communications Business
On July 7, 2009, the Company entered into the Asset
Purchase Agreement to sell the Wireline Communications business.
See Acquisitions, Dispositions and
Discontinues Operations Sale of Wireline
Communications business.
Service and
Consulting Agreement with Backstop Investor
It is intended that following or concurrently with closing of
the transaction with the Backstop Investor, the Company and an
affiliate of the Backstop Investor conclude a services and
consulting agreement pursuant to which such affiliate will
render strategic and corporate finance advice to the Company.
Negotiations of such agreement will however only commence after
such closing. See also Related Parties
Transactions Service and Consulting Agreement with
Backstop Investor.
181
REGULATION,
ENVIRONMENTAL PROTECTION AND SUSTAINABLE MANAGEMENT
In each country in which Infineon operates, it is subject to the
relevant laws and regulations applicable to its business
operations. In general, activities which are potentially
environmentally harmful are subject to stringent regulatory
requirements and oversight mechanisms. These include regulations
on technical safety and environmental protection.
The Infineon Integrated Management Program for Environment,
Safety and Health (IMPRES) is a framework
integrating Infineons safety, health, and environmental
protection processes, strategy, and objectives, using high
standards globally. IMPRES is certified according to OHSAS 18001
and EN ISO 14001. The integration of both standards enables
synergies throughout Infineons business. IMPRES is
designed to minimize or eliminate the possible impact of
Infineons manufacturing processes on the environment,
Infineons employees and third parties.
Hazardous substances or materials are to a certain extent
necessary in the production of semiconductors. However, most of
Infineons processes are carried out in closed loops and
systems that eliminate the impact of hazardous substances or
materials on the health of Infineons employees and on the
environment. Infineon regularly tests and monitors employees
whose work may expose them to hazardous substances or materials,
in order to detect any potential health risks and to take
appropriate remedial measures by an early diagnosis. As part of
IMPRES, Infineon trains its employees in the proper handling of
hazardous substances. Infineon has introduced a harmonized
process for risk assessment at the relevant sites.
Where Infineon is not able to eliminate entirely adverse
environmental impact, Infineon aims to minimize such impact. For
example, Infineon must utilize perfluorinated compounds
(PFCs) as etching agents in the production of
semiconductors. As early as 1992, Infineon started to install
exhaust air filter systems to reduce PFC emissions. Infineon is
signatory to the Memorandum of Agreement, a voluntary commitment
by the European Semiconductor Industry which has the goal of
reducing, by 2010, overall PFC emissions by approximately
10 percent from the emission level of 1995, calculated in
CO2
equivalents. Infineon has signed a similar commitment for
Germany, with a normalized target of 8 percent emission
reduction on the basis of
CO2
equivalents, which is on track. In respect of Infineons
European sites, Infineon achieved its European reduction target
by the end of calendar year 2007.
Infineon believes that it is in substantial compliance with
environmental as well as health and safety laws and regulations.
There is, nevertheless, a risk that Infineon may become the
subject of environmental, health or safety liabilities or
litigation. Environmental, health, and safety claims or the
failure to comply with current or future regulations could
result in the assessment of damages or imposition of fines
against Infineon, suspension of production or a cessation of
operations. Significant financial reserves or additional
compliance expenditures could be required in the future due to
changes in law or new information regarding environmental
conditions or other events, and those expenditures could
adversely affect Infineons business or financial
condition. See Risk Factors Risks Related
to the Company and the Market Environmental laws and
regulations may expose Infineon to liability and increase
Infineons costs.
National legislation enacted pursuant to EU Directive 2002/96/EC
creates significant obligations regarding the collection,
recovery and disposal of waste electrical and electronic
equipment. This directive obligates manufacturers to finance the
collection, recovery and disposal of such products at the end of
their life cycle. The end-of-life obligations may affect
Infineon as supplier to electrical and electronic equipment
producers and as producer of electronic equipment. Because the
directive is currently under revision, and because a number of
statutory definitions and interpretations remain unclear and are
still pending, the consequences for Infineon cannot currently be
determined in detail. As a result, Infineon is not able as of
the date hereof to estimate the amount of additional costs that
it may incur in connection with this legislation in the future.
Since July 1, 2006, another relevant EU Directive,
2002/95/EC, has restricted the use of lead and other hazardous
substances in electrical and electronic equipment. Because of
this directive, ongoing compliance expenditures could be
required in the future. This EU Directive is currently under
revision, which could result in additional adverse impacts on
Infineons business.
182
A further EU Directive, 2000/53/EC, restricts the use of
hazardous substances in vehicles. The directive has been changed
and further revision is foreseen. The future impact on Infineon
cannot currently be determined in detail.
EU Directive 2005/32/EC on the eco-design of energy-using
products concerns the ecologically sound development of
electrical and electronic devices. It also provides for the
possibility that manufacturers of components and sub-assemblies
may be subject to specific information requirements regarding
environmentally relevant product characteristics. Implementing
measures and possible market requirements are not yet fully
defined. As a result, Infineon is not able at this time to
estimate the amount of additional costs that Infineon may incur
in connection with this legislation in the future.
EU Regulation 1907/2006, called REACH, dealing with the
registration, evaluation, authorization and restriction of
chemicals, became effective on June 1, 2007. Subsequent
obligations will become effective in stages over the next few
years. This regulation could have a considerable impact not only
on producers and importers of chemical substances, but also on
downstream users like the semiconductor industry. The
availability of chemical substances could be significantly
reduced in the European Union, which could have a negative
impact on Infineons production as well as research and
development activities. Infineon is in close contact with its
suppliers and considers itself prepared according to the current
status of REACH obligations. However, Infineon cannot exclude
the possibility of significant future costs in connection with
this regulation.
According to EU Directive 2004/35/EC on environmental liability
with regard to the prevention and remedying of environmental
damage, Infineon could face increased environmental liability,
which may result in higher costs and potential damage claims.
However, Infineon believes that it is adequately insured against
liability potentially arising from this legislation.
The European Commission is considering further restrictions on
the use of PFOS (Perfluorooctane sulfonate) in the EU. PFOS is
an important constituent of key chemicals used in the
semiconductor industry. Any restriction affecting its use may
adversely impact Infineons production and cost position.
The Chinese government restricts the use of lead and other
hazardous substances in electronic products. Because neither all
implementing measures nor the key product catalog are in place,
the consequences to Infineon cannot currently be determined. As
a result, Infineon is not able to estimate the impact, including
the additional costs, in connection with these regulations.
Similar regulations on substance bans are being established in
various countries of the world. Infineon is not able at this
time to estimate the impact, including the amount of additional
costs that Infineon may incur, in connection with these possible
regulations.
Because some of Infineons facilities, including some of
those of Infineons joint ventures, are located close to or
shared with those of other companies, Infineon may be subject to
certain claims and certain liabilities relating to environmental
issues, such as contamination, not entirely originating from
Infineons own operations.
Because the damage and loss caused by fire, natural hazards,
supply shortage, or other disturbance at a semiconductor
facility or within Infineons supply chain at
customers as well as at suppliers can be severe,
Infineon has constructed and operates its facilities in ways
that minimize the specific risks and that enable a quick
response if such an event should occur. Infineon expects to
continue to invest in prevention and response measures at its
facilities.
183
PRINCIPAL
SHAREHOLDERS
To the Companys knowledge and based on the information the
Company has received pursuant to the German Securities Trading
Act (Wertpapierhandelsgesetz), most recently on
July 15, 2009, the following shareholders had material
shareholding prior to the capital increase. See General
Information on the Company Disclosure Requirements
for Shareholders, Mandatory Offer.
|
|
|
|
|
|
|
|
|
|
|
Infineon shares prior to
|
|
Name
|
|
the Capital Increase
|
|
Shareholders
|
|
Number
|
|
|
Percentage
|
|
|
Dodge & Cox International Stock
Fund(1)
|
|
|
75,227,800
|
|
|
|
10.03
|
%
|
Merrill Lynch
International(2)
|
|
|
39,347,562
|
|
|
|
5.25
|
%
|
Capital Group International,
Inc(3)
|
|
|
36,995,392
|
|
|
|
4.93
|
%
|
Templeton Investment Counsel,
LLC(4)
|
|
|
36,691,854
|
|
|
|
4.89
|
%
|
Platinum International
Fund(5)
|
|
|
26,139,825
|
|
|
|
3.49
|
%
|
Odey Asset Management
LLP(6)
|
|
|
23,687,180
|
|
|
|
3.16
|
%
|
Platinum Investment Management
Limited(7)
|
|
|
23,422,387
|
|
|
|
3.12
|
%
|
Brandes Investment Partners, L.
P.(8)
|
|
|
23,073,601
|
|
|
|
3.08
|
%
|
Other shareholders (stake < 3%)
|
|
|
465,156,484
|
|
|
|
62.04
|
%
|
Management Board and Supervisory Board of Infineon:
|
|
|
|
|
|
|
|
|
Management Board, as a group
|
|
|
*
|
|
|
|
*
|
%
|
Supervisory Board, as a group
|
|
|
*
|
|
|
|
*
|
%
|
Total
|
|
|
749,742,085
|
|
|
|
100
|
%
|
Notes
|
|
|
*
|
|
Represents less than one percent of
the Companys outstanding share capital.
|
|
(1) |
|
Based solely on a notification to
Infineon by the Dodge & Cox Investment Managers on
March 11, 2008 pursuant to the requirements of the German
Securities Trading Act. The business address of the shareholder
is 555 California Street, 40th Floor, San Francisco,
California 94104, U.S.A.
|
|
(2) |
|
Based solely on a notification to
Infineon by the shareholder on February 15, 2008 pursuant
to the requirements of the German Securities Trading Act. The
business address of the shareholder is Merrill Lynch Financial
Centre, 2 King Edward Street, London ECA1HQ, United Kingdom.
|
|
(3) |
|
Based solely on a notification to
Infineon by the shareholder on June 14, 2006 pursuant to
the requirements of the German Securities Trading Act. As of
October 10, 2006, according to a statement of beneficial
ownership on
Schedule 13-G
filed with the SEC, Capital Group International, Inc.
beneficially owned 31,060,840 ordinary shares, representing
approximately 4.1 percent of Infineons outstanding
shares, and Capital Group International Limited beneficially
owned 18,783,610, representing approximately 2.5 percent of
Infineons outstanding shares. The business address of the
shareholder is 333 South Hope Street, Los Angeles, CA
90071-1406, U.S.A.
|
|
(4) |
|
Based solely on a notification to
Infineon by the shareholder on December 2, 2008 pursuant to
the requirements of the German Securities Trading Act. As of
December 31, 2008, according to its statement of beneficial
ownership on
Schedule 13-G
filed with the SEC, Franklin Resources, Inc. beneficially owned
an aggregate of 89,026,600 ordinary shares, representing
approximately 11.9 percent of Infineons outstanding
shares, which includes 32,053,684 shares held by Templeton
Investment Counsel, LLC and attributed to Franklin Resources,
Inc. The business address of the shareholder is 500 East Broward
Blvd., Suite 21,00, Fort Lauderdale, FL 33394,
U.S.A.
|
|
(5) |
|
Based solely on a notification to
Infineon by the shareholder on January 12, 2009 pursuant to
the requirements of the German Securities Trading Act. The
business address of the shareholder is Level 8, 7 Macquarie
Place, Sydney, NSW 2000, Australia.
|
|
(6) |
|
Based solely on a notification to
Infineon by the shareholder on May 6, 2009 pursuant to the
requirements of the German Securities Trading Act. The business
address of the shareholder is 12 Upper Grosvenor Street, London
W1K 2ND, UK.
|
|
(7) |
|
Based solely on a notification to
Infineon by the shareholder on January 15, 2009 pursuant to
the requirements of the German Securities Trading Act. The
business address of the shareholder is Level 8, 7 Macquarie
Place, Sydney, NSW 2000, Australia.
|
|
(8) |
|
Based solely on a notification to
Infineon by the shareholder on February 12, 2008 pursuant
to the requirements of the German Securities Trading Act. As of
December 31, 2008, according to its statement of beneficial
ownership on
Schedule 13-G
filed with the SEC, Brandes Investment Partners, L.P.
beneficially owned an aggregate of 11,866,031 ADR shares and
27,643,608 ordinary shares representing approximately
1.58 percent and 3.69 percent, respectively, of
Infineons outstanding shares. The business address of the
shareholder is 11988 El Camino Real, Suite 500,
San Diego, California 92130, U.S.A.
|
Other than as disclosed above, the Company has not been notified
by any party holding three percent (3 percent) or more of
the Companys shares as of May 22, 2009.
Significant changes in the percentage ownership held of record
by major shareholders in the last three fiscal years were as
follows: On April 3, 2006, Siemens AG sold the remaining
shares (approximately 18.23 percent) in Infineon held
by it.
If the Minimum Threshold is met or waived, the Backstop Investor
has agreed to acquire the Investment Shares at the Subscription
Price, but not more than the Maximum Investment Amount. See
BusinessMaterial ContractsBackstop
Arrangement.
184
MANAGEMENT
Overview
The corporate bodies of the Company are the Management Board
(Vorstand), the Supervisory Board (Aufsichtsrat)
and the general shareholders meeting
(Hauptversammlung). The powers vested in these bodies are
governed by the German Stock Corporation Act, the Articles of
Association (Satzung), and the respective rules of
procedure (Geschäftsordnungen) of the Management
Board and Supervisory Board.
The Management Board is responsible for managing the Company in
accordance with the laws of Germany, the provisions of the
Articles of Association, and the rules of procedure of the
Management Board, taking into account the resolutions adopted by
the general shareholders meeting. The Management Board
represents the Company in its dealings with third parties. The
Management Board is required to ensure the establishment and
operation by the Company of an appropriate risk management and
internal monitoring system facilitating the timely
identification of developments that might jeopardize the
continued existence of the Company. The Management Board is
required to report to the Supervisory Board. In particular, the
Management Board is obligated to inform the Supervisory Board on
a regular, timely and comprehensive basis about all issues of
relevance to the Company with respect to planning, the course of
business, risks and risk management, as well as strategic
measures. In this regard, the Management Board is also required
to describe and explain any deviations in the course of business
from plans and targets that have been set. Furthermore, the
chairman of the Supervisory Board must be informed of any other
important developments. In addition, the Supervisory Board may
request a report concerning the affairs of the Company at any
time. The Management Board must obtain the consent of the
Supervisory Board for certain transactions to be determined by
the Supervisory Board.
Members of the Management Board are appointed by the Supervisory
Board and can be dismissed for good cause. The Supervisory Board
is required to supervise and advise the Management Board in its
management of the Company. Generally, a member of the
Supervisory Board cannot simultaneously serve as a member of its
Management Board. For a limited period of time set in advance
and not exceeding one year, the Supervisory Board can appoint
members of the Supervisory Board to act in place of members of
the Management Board who are absent or incapacitated. While
serving in lieu of Management Board members, Supervisory Board
members are not permitted to perform any function as a
Supervisory Board member. Under German stock corporation law,
management tasks may not be assigned to the Supervisory Board.
The members of the Management Board and the Supervisory Board
have a duty of care and loyalty to the Company. A broad spectrum
of interests, especially those of the Company, its shareholders,
employees, creditors, and the general public, must be taken into
account when discharging these duties. The Management Board must
take particular account of the rights of shareholders to equal
treatment and equal information. The Management Board and
Supervisory Board members are jointly and severally liable
versus the Company for breaches of their duties if, as a result,
the Company suffers damages.
Management
Board
Introduction
The Supervisory Board determines the number of Management Board
members. According to Section 5 of the Articles of
Association, the Management Board must consist of at least two
members. In accordance with the rules of procedure for the
Management Board, the Supervisory Board may appoint one
Management Board member as the chairman or the speaker of the
Management Board. The Management Board currently comprises four
members: Peter Bauer, Dr. Marco Schröter, Prof.
Dr. Hermann Eul and Dr. Reinhard Ploss. Peter Bauer
has been appointed CEO.
Management Board members are appointed by the Supervisory Board
in accordance with the provisions of the German Stock
Corporation Act and the German Codetermination Act
(Mitbestimmungsgesetz) for a maximum term of five years.
Reappointment or extension of the term for up to five years in
each case is permissible. The Supervisory Board may revoke the
appointment of a member of the Management Board prior to the
expiry of his term of office for good cause, such as for gross
violation of duties or a vote of no confidence in the board
member by the general shareholders meeting, unless the
vote of no confidence was made on blatantly subjective grounds.
The Supervisory Board is also responsible for entering into,
amending and terminating employment agreements with the members
of the Management Board.
185
In accordance with Section 5(2) of the Articles of
Association, the Company is represented by two members of the
Management Board or by one Management Board member acting
jointly with an authorized signatory (Prokurist).
Resolutions of the Management Board are passed at meetings that
usually require the personal attendance of the board members. In
addition, Management Board meetings may also be held in the form
of video or telephone conferences, thus enabling individual
board members to participate in meetings where attendance in
person is required. At the order of the chairman of the
Management Board, resolutions of the Management Board may also
be passed outside of meetings by submitting votes to the
chairman of the Management Board in writing, by telephone,
facsimile or telex or by other means of telecommunication,
expressly including
e-mail. The
members of the Management Board are expected to meet at regular
intervals. The meetings are convened by the chairman of the
Management Board.
Resolutions of the Management Board require a simple majority.
The Articles of Association and rules of procedure for the
Management Board set out that the chairman shall determine in
accordance with the framework of these rules of procedure and
the schedule of responsibilities in which areas and in which way
the cooperative efforts of Management Board members shall be
conducted. He shall manage the cooperative efforts of the
Management Board members, especially with respect to overlapping
responsibilities. The members of the Management Board bear joint
responsibility for the overall management of the Company.
Pursuant to the rules of procedure for the Management Board, the
following matters may be undertaken by the Management Board only
with the approval of the Supervisory Board plenum:
|
|
|
|
(1)
|
finance and investment planning, including the budget and the
establishment of limits on indebtedness;
|
|
|
(2)
|
asset investments, participations and financial investments, as
well as divestments, insofar as any single project exceeds
10 percent of the current total investment budget; and
|
|
|
(3)
|
the granting of sureties, guarantees and loans to third parties
outside the group, if the amount exceeds 5 percent of the
share capital of the company.
|
Members of the
Management Board
The table below shows the name, age (as of June 1, 2009),
other offices held on administrative, management, and
supervisory boards outside the Company during the last five
years and other information regarding each current member of the
Management Board.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term
|
|
|
|
|
|
Name
|
|
Age
|
|
|
expires
|
|
|
Position
|
|
Current and former memberships of Management and Supervisory
Boards and comparable governing bodies
|
|
Peter Bauer
|
|
|
49
|
|
|
|
September 30, 2011
|
|
|
Spokesman of the Management Board,
Chief Executive Officer (since June 1, 2008)
|
|
Current Member of the Board of Directors of:
Infineon Technologies China Co., Ltd., Shanghai, Peoples
Republic of China
(since June 1, 2008)
Infineon Technologies Asia Pacific Pte., Ltd., Singapore
(since June 1, 2008)
Infineon Technologies North America Corp., Wilmington,
Delaware, U.S.A.
(since June 1, 2008)
Infineon Technologies Japan K.K., Tokyo, Japan (since
June 12, 2008)
Former Member of the Supervisory Board of Siemens VDO AG
(2001 2007)
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term
|
|
|
|
|
|
Name
|
|
Age
|
|
|
expires
|
|
|
Position
|
|
Current and former memberships of Management and Supervisory
Boards and comparable governing bodies
|
|
Dr. Marco Schröter
|
|
|
45
|
|
|
|
March 31, 2013
|
|
|
Member of the Management Board,
Executive Vice President and Chief Financial Officer, Labor
Director
|
|
Current member of the Supervisory Board of:
Infineon Technologies Austria AG, Villach, Austria (since May
5, 2008)
Current member of the Board of Directors of (each since
April 1, 2008):
Infineon Technologies Asia Pacific Pte., Ltd., Singapore
Infineon Technologies China Co., Ltd., Shanghai, Peoples
Republic of China
Infineon Technologies North America Corp., Wilmington, Delaware,
U.S.A.
Former member of the Supervisory Board of:
LogCap-IR Grundverwertungs GmbH, Austria Schenker & Co AG,
Austria
Schenker East AB, Finland
Schenker S.A., France
Schenker Deutschland AG, Germany
Former Member of the Management Board of:
Schenker (BAX) Europe Holding GmbH, Germany
Schenker (BAX) Holding Asia Limited, Hong Kong
Schenker North AB, Sweden
Schenker International AB, Sweden (chairman)
BTL AB, Sweden
BAX Global Inc., USA
Schenker, Inc., USA
Schenker International AG, Germany
Former Member of the Administrative Board of:
Schenker Schweiz AG, Switzerland Hangartner AG, Switzerland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prof. Dr. Hermann Eul
|
|
|
50
|
|
|
|
August 31, 2012
|
|
|
Member of the Management Board
and Executive Vice President
|
|
Current member of the Supervisory Board of:
7 Layers AG, Ratingen, Germany
Infineon Technologies Austria AG, Villach, Austria
(since July 18, 2008)
Former Member of the Board of Directors of:
Ocean Semiconductor GmbH, Munich (resigned September 10,
2004)
BITKOM Servicegesellschaft mbH, Berlin
Senior Advisor of:
Investcorp Technology Investment, London
Limited Partner of:
SDS GmbH & Co. KG, Hanover
Member of:
BDI/BDA Ausschuss für Forschungs-, Innovations- und
Technologiepolitik
|
187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term
|
|
|
|
|
|
Name
|
|
Age
|
|
|
expires
|
|
|
Position
|
|
Current and former memberships of Management and Supervisory
Boards and comparable governing bodies
|
|
Dr. Reinhard Ploss
|
|
|
53
|
|
|
|
May 31, 2012
|
|
|
Member of the Management Board
and Executive Vice President
|
|
Current member of the Supervisory Board of:
Infineon Technologies Austria AG, Villach, Austria (chairman)
Qimonda AG, Munich, Germany (since August 19, 2008)
Current member of the Board of Directors of:
Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
(chairman)
Current Member of Board of Trustees of: Fraunhofer Gesellschaft
Erlangen IISB
|
Peter Bauer was appointed Infineons Chief Executive
Officer effective June 1, 2008. From 2005 to 2008,
Mr. Bauer served as head of Infineons Automotive,
Industrial & Multimarket Business Group and was
responsible for the Central Sales Functions. From the formation
of Infineon in 1999 until 2005, he served as Infineons
Executive Vice President and Chief Sales and Marketing Officer.
He was President and Chief Executive Officer of Siemens
Microelectronics, Inc. from 1998 to April 1999. From 1997 to
1999, Mr. Bauer was President of Sales and Solution Centers
for the Siemens Semiconductor Group. He began his career with
the Siemens Semiconductor Group in 1986 as a development
engineer. Mr. Bauer holds a degree in electrical
engineering from the Munich Technical University.
Dr. Marco Schröter was appointed as a Member of
the Management Board, Chief Financial Officer and Labor Director
effective April 1, 2008. He was previously Chief Financial
Officer at Schenker AG, Essen, where he was responsible for
accounting, finance, controlling, risk management and
purchasing. From 1994 to 2002, he held several positions,
including Head of Central Controlling, at Stinnes AG, Muehlheim.
Dr. Schröter holds a degree in business administration
and received his Ph.D. from Saarland University in 1994.
Prof. Dr. Hermann Eul was appointed Deputy Executive
Vice President of Infineons Management Board as of August
2005 and subsequently Executive Vice President as of
December 1, 2006. Until 1999 he was General Manager of the
Digital TeleCom and Data Com ICs operations at Siemens. When
Infineon was formed, he took over the Wireless Baseband and
Systems Business Group as Vice President and General Manager.
From 2001 to 2002, he was responsible for Security &
Chip Card ICs operations as Chief Executive Officer. In 2003, he
was appointed as full Professor and Faculty Chair for
RF-Technology and Radio-Systems at Hanover University. In 2004
he returned to Infineon where he first co-managed the Wireline
Communications segment as Senior Vice President and then,
following a reorganization, became Executive Vice President and
General Manager of the Communication Solutions segment.
Professor Eul studied electrical engineering and has a doctorate
in engineering and is an avocational professor at the University
of Hanover.
Dr. Reinhard Ploss was appointed Executive Vice
President and Head of Operations effective June 1, 2007.
Dr. Ploss joined Siemens in 1986 as a process engineer. In
1996 he took over the Power Semiconductor business unit,
focusing on development and manufacturing. In 1999, he was
appointed President of eupec GmbH Co. KG. In 2000,
Dr. Ploss became head of the Automotive &
Industrial segment at Infineon, which at the time consisted of
power semiconductors, electric drives, automotive applications
and the microcontroller business unit. In 2005, he assumed
responsibility for manufacturing, development and operational
management in the Automotive, Industrial & Multimarket
segment. Dr. Ploss studied chemical engineering and has a
doctorate in engineering.
The business address of each of the members of Infineons
Management Board is Infineon Technologies AG, Am Campeon 1-12,
85579 Neubiberg, Germany.
188
Remuneration,
Other Benefits
Compensation
of the Management Board
Compensation
structure
The executive committee of the Supervisory Board (the
Executive Committee), which includes the
chairman of the Supervisory Board Max Dietrich Kley, the deputy
chairman of the Supervisory Board Gerd Schmidt, and
Supervisory Board member Prof. Dr. Klaus Wucherer, is
responsible for determining the compensation of the Management
Board within the scope of the compensation structure approved by
the Supervisory Board. The compensation of the members of the
Management Board is intended to reflect the Companys size
and global presence, its economic condition and performance, and
the level and structure of the compensation paid to management
boards of comparable companies within Germany and abroad.
Additional factors taken into account are the duties,
responsibilities and contributions of each member of the
Management Board. Their compensation complies with the
stipulations of Section 87 of the German Stock Corporation
Act and is calculated to be competitive both nationally and
internationally and thus to provide an incentive for dedicated
and successful work within a dynamic environment. The level of
compensation is re-evaluated every two years, taking into
account an analysis of the income paid to executives of
comparable companies.
The compensation of the Management Board comprises the following
elements:
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Fixed annual base salary. The
non-performance-related annual base salary is contractually
fixed. It is partly paid in 12 equal monthly installments, and
partly paid as a lump sum at the end of each fiscal year,
referred to below as the Annual Lump Sum.
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Performance-related compensation. The
annual bonus is dependent on the return on assets, which the
Company defines as earnings before interest and taxes (EBIT)
adjusted for exceptional effects, in proportion to capital
employed. This ensures that a bonus is earned only if the
business develops positively. The annual bonus is determined by
the Executive Committee in a two-phase process. In a first step,
a target bonus amount is determined from a table agreed in the
service agreements on the basis of the return on assets. The
Executive Committee subsequently evaluates the personal
performance of each individual board member over the past fiscal
year, and then determines the actual bonus amount. In addition
to the bonus dependent on the return on assets, Management Board
contracts provide for a possible special bonus awarded in
recognition of special business achievements.
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Infineon stock options. Management
Board members are eligible to receive stock options under the
2006 Stock Option Plan approved by the Infineon
Shareholders Annual General Meeting (the Annual
General Meeting) on February 16, 2006, as a
variable compensation element with a long-term incentive effect
and a risk character. Each stock option guarantees the right to
acquire one share at a fixed exercise price. The options are
valid for six years and may be exercised only after an initial
waiting period of three years and not during specified black-out
periods. The exercise price at which a share may be acquired
upon exercise of an option is equal to 120 percent of the
average Infineon opening prices on the Frankfurt Stock Exchange
as reported by Xetra over the five trading days preceding the
date that the option is granted. The exercise of the options is
dependent on the attainment of absolute and relative performance
targets. The precondition for the exercise of the option rights
is that the Infineon share price on the Frankfurt Stock Exchange
as reported by Xetra equals or exceeds the exercise price on at
least one trading day during the option life. Furthermore, the
options can only be exercised if the Infineon share price
exceeds the performance of the comparative index Philadelphia
Semiconductor Index for three consecutive days on at least one
occasion during the life of the option. These absolute and
relative performance targets serve to ensure that the options
are only exercised if the value of the Company significantly
increases. The Supervisory Board is responsible for all
decisions on granting options to members of the Management
Board. In the 2008 fiscal year, no options were granted to
members of the Management Board. The main provisions of the
Companys 2006 stock option plan are described in
note 34 to the Groups consolidated financial
statements for the year ended September 30, 2008 (see
page F-49).
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Compensation
of the Management Board in the 2008 fiscal year
In the 2008 fiscal year, the current members of the Management
Board received total compensation of 3,309,687. No
performance-related bonuses were paid for the 2008 fiscal year.
189
The current members of the Management Board received the
following annual compensation (gross without statutory
deductions) in the 2008 fiscal
year(1):
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Cash
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Stock-based
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compensation
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compensation
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Total compensation
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Management Board member
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Fiscal year
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in
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in
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in
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Peter Bauer
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2008
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1,089,614
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1,089,614
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Prof. Dr. Hermann Eul
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2008
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914,457
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914,457
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Dr. Reinhard Ploss
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2008
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720,859
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720,859
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Dr. Marco Schröter (as of April 1, 2008)
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2008
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584,757
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584,757
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Total
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2008
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3,309,687
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3,309,687
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Note
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(1) |
Each in accordance with the duration of membership on the
Management Board during the 2008 fiscal year.
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Cash
compensation
The cash compensation listed in the overview above comprises the
following elements (in ):
Non-performance-related
compensation
Annual Base
Salary(1)
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Amount paid in
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monthly
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Total cash
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Management Board member
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Fiscal year
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installments
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Annual Lump Sum
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Other(2)
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compensation
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Peter Bauer
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2008
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533,333
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533,333
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22,948
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1,089,614
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Prof. Dr. Hermann Eul
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2008
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450,000
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450,000
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14,457
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914,457
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Dr. Reinhard Ploss
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2008
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350,000
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350,000
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20,859
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720,859
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Dr. Marco Schröter (as of April 1, 2008)
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2008
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250,000
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250,000
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84,757
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584,757
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Total
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2008
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1,583,333
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1,583,333
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143,021
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3,309,687
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Notes
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(1)
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Each in accordance with the duration of membership on the
Management Board during the 2008 fiscal year.
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(2)
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The compensation included under Other comprises
primarily the monetary value of the provision of a company car
and insurance contributions, and, in the case of
Dr. Schröter, the reimbursement of expenses for the
maintenance of double residences.
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In view of the current economic situation, the members of the
Management Board have decided to voluntarily forego part of
their fixed salaries for the remainder of the current 2009
fiscal year (the CEO will forego 20 percent, the other
members of the Management Board will forego 10 percent).
Stock-based
compensation
In the 2008 fiscal year, no stock options were granted to
members of the Management Board (in the previous year, 550,000
stock options with a fair value at the grant date totaling
1,116,500 were granted to the members of the Management
Board). In the 2008 fiscal year, no member of the Management
Board exercised stock options.
Commitments to
the Management Board upon termination of
employment
Allowances and
pension entitlements in the 2008 fiscal year
The members of the Management Board are contractually entitled
to a fixed pension payment, which increases by 5,000 (and
in the case of Mr. Bauer by 10,000) annually until a
maximum amount is attained. In accordance with IFRS, a total of
2,995,045 was added to pension reserves in the 2008 fiscal
year (previous year: 3,061,340). Upon termination of
membership on the Management Board, pension entitlements
normally begin from age 60 but may be paid earlier in
exceptional circumstances, such as departures from the board for
health reasons and surviving dependents pensions. The
Companys agreement with Mr. Bauer deviates from this
model, and he is entitled to a pension before age 60 if his
contract is not renewed, provided that there is no good cause
for a revocation of the appointment in accordance with
Section 84(3) of the German Stock Corporation Act. In any
case of pension payment
190
before age 60, however, the income from other employment
and self-employed activities would be set off against up to
50 percent of the respective pension entitlements.
The following overview represents the annual pension
entitlements, as of the beginning of retirement, for Management
Board members currently active on the basis of the entitlements
vested through September 30, 2008.
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Transfer to pension reserves in fiscal
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Management Board member
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Pension entitlements (annual) as of beginning of pension
period in
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Maximum amount in
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year 2008 (IFRS) in
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Peter Bauer
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280,000
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(1)
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400,000
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176,756
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Prof. Dr. Hermann Eul
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200,000
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270,000
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186,983
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Dr. Reinhard Ploss
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170,000
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210,000
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170,536
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Dr. Marco Schröter
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250,000
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350,000
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Total
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900,000
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534,275
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Note
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(1) |
Mr. Bauers pension entitlement was increased
effective October 1, 2008 to 280,000.
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The contract of Mr. Bauer, furthermore, provides for a
one-time transitional allowance upon termination of his
employment. This transitional allowance is equivalent to one
years income, composed of the last 12 basic monthly
installments, and a sum amounting to the average of the bonus
sums received over the last three fiscal years prior to
termination. The transitional allowance will not be paid in the
event of termination by a member of the Management Board without
good reason, or if the Company has good cause for the
termination.
Early
termination of employment
The contracts with the members of the Management Board include
change of control clauses: A change-of-control within the
meaning of these clauses occurs when a third party, individually
or in cooperation with another party, holds 30 percent of
voting rights in Infineon as stipulated by Section 30 of
the German Securities Acquisition and Takeover Act
(Wertpapiererwerbs- und Übernahmegesetz). The
Management Board members have the right to resign and terminate
their contracts within a period of 12 months after the
announcement of such change of control if the exercise of their
office and the fulfillment of their contract become
unacceptable, due, for example, to considerable restrictions in
their areas of responsibility. In such an event, board members
are entitled to a continuation of their annual target income for
the full remaining duration of their contracts and a minimum of
two years. This amount is based on the annual target income
applicable to the resigning member at the time of his
resignation and the variable components assuming a
6 percent return on the companys assets. In the event
of a termination by Infineon of the contracts of the Management
Board members within 12 months after the announcement of a
change of control, the Management Board members are entitled to
a continuation of their annual target income for the full
remaining duration of their contracts and a minimum of three
years. The Management Board members pension entitlements
remain unaffected. These rights in the event of a change of
control, however, do only exist if there is no serious breach of
duty by the respective Management Board member.
Furthermore, the contract of Dr. Schröter provides for a
transitional allowance equivalent to 30 percent of his
annual base salary. This transitional allowance is paid until
the beginning of the pension payments if Dr. Schröter
leaves the Company except for (i) resignation by Dr.
Schröter or (ii) the Company having good cause for a
revocation of the appointment in accordance with
Section 84(3) of the German Stock Corporation Act. His
income from other employment and self-employed activities,
however, would be set off against the transitional allowance.
Other than described above, the Management Board contracts do
not generally provide for severance payments in the event of
their early termination.
Fringe
benefits and other awards in the 2008 fiscal year
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The members of the Management Board received no fringe benefits
besides the elements listed under Other in the
compensation table.
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191
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The Company does not provide loans to the members of the
Management Board.
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The members of the Management Board received no compensation or
promise of compensation with regard to their activities on the
Management Board from third-parties in the 2008 fiscal year.
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The Company maintains directors and officers group
liability insurance (D&O insurance). The
D&O insurance policy covers the personal liability risk in
the event of claims made against members of the Management Board
for indemnification of losses incurred in the exercise of their
duties. Each member of the Management Board has agreed to an
adequate deductible (which constitutes a deductible as defined
by the German Corporate Governance Code (the
Code), Section 3.8(2).
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The Company entered into restitution agreements with each member
of the Management Board. According to the restitution
agreements, the Company covers all costs incurred in connection
with legal proceedings against members of the Management Board
due to the exercise of their duties, as far as legally
permitted. The Agreement does not cover, in particular, any
restitution of costs incurred due to an infringement of their
duties as management board members pursuant to
Section 93(2) of the German Stock Corporation Act.
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Payments to
former members of the Management Board in the 2008 fiscal
year
Former members of the Management Board received total payments
of 916,896 (severance and pension payments) in the 2008
fiscal year. This includes the pension payments to
Mr. Fischl as of April 2008 in the amount of
175,000 and the compensation paid to Dr. Ziebart as
of June 2008 in the amount of 624,396 as stipulated
under his employment contract. Furthermore, Dr. Ziebart is
entitled to a one-off transitional allowance, equivalent to one
years income, composed of the final 12 basic monthly
installments, and a sum amounting to the average of the bonus
sums received over the final three fiscal years prior to
termination, which is payable on August 31, 2009.
The pension agreement with Dr. Ziebart provided for a
monthly pension payment, equal to 70 percent of his last
monthly base salary, which will commence as of September 1,
2009. His income from other employment and self-employed
activities will be set off against up to 50 percent of his
pension entitlements.
According to IFRS, a total of 1,234,455 was added to
pension reserves during the 2008 fiscal year for current
pensions and entitlements to pensions by former Management Board
members. Furthermore, pension reserves for current members of
the Management Board in the amount of 13,591,553 were
reclassified as pension reserves for former members of the
Management Board; as of September 30, 2008, these pension
reserves amount to 26,566,664.
Supervisory
Board
Introduction
According to the German Stock Corporation Act, the German
Codetermination Act and the Articles of Association of the
Company, the Supervisory Board shall consist of 16 members.
Eight members are elected by shareholders at the annual general
shareholders meeting and eight members are elected by the
employees. However, due to the resignation of the former
Supervisory Board member Professor Johannes Feldmayer, the
Supervisory Board currently consists only of 15 members (seven
shareholders representatives and eight employee
representatives). Any member of the Supervisory Board elected by
shareholders may be removed by a majority of the votes cast at a
general meeting of shareholders. Any member of the Supervisory
Board elected by employees may be removed by three quarters of
the votes cast by the electoral delegates representing the
employees and any member of the Supervisory Board elected by
unions may be removed by the union that nominated the member.
According to Article 6(1) of the Articles of Association,
the Supervisory Board shall be composed of the minimum number of
members required by law. In Germany, the Company currently
employs more than 10,000 employees. The Supervisory Board
therefore currently consists of 16 members (including eight
employee representatives) pursuant to Section 7(1) Sentence
1 No. 2 of the German Co-Determination Act
(Mitbestimmungsgesetz). If the number of employees
working for Infineon or any of Infineons domestic group
companies in Germany falls below 10,000, the Management Board
will have to institute certain statutory proceedings
(Statusverfahren) in order to reduce the size of the
Supervisory Board to 12 seats. To this effect both the
employees and the shareholders will finally have to elect new
192
representatives to the Supervisory Board, six for each group.
The Company expects such proceedings to start in July or August
2009 and to be finalized with the regular Annual General Meeting
in early 2010.
The Supervisory Board elects a chairman and a deputy chairman
from among its members. If no candidate is elected by a vote of
two-thirds of the members of the Supervisory Board, the
representatives of the shareholders have the right to elect the
chairman and the representatives of the employees have the right
to elect the deputy chairman. Should the chairman or the deputy
chairman leave office prior to the expiry of his or her term,
the Supervisory Board must without delay elect a successor to
fill the remaining term of the departing chairman or deputy
chairman.
Under German corporate law, the maximum permissible term of
office for members of a Supervisory Board is approximately five
years. If appointed for the maximum permissible term, a
members term expires at the end of the annual general
shareholders meeting after the fourth fiscal year
following the year in which the Supervisory Board member was
elected. Supervisory Board members may be re-elected.
Supervisory Board members elected by the general
shareholders meeting may be removed by a resolution of the
general shareholders meeting if such resolution is
approved by a majority of three-quarters of the votes cast or by
a different majority rule, if the Articles of Association thus
provide. In addition, the Articles of Association provide that
all members of the Supervisory Board may resign at any time,
with or without good cause, by providing four weeks prior
written notice to the Supervisory Board chairman.
The German Accounting Law Modernization Act
(Bilanzrechtsmodernisierungsgesetz) provides that at
least one independent member of the Supervisory Board of
publicly traded companies must have expertise in the fields of
accounting or auditing, that is be an independent financial
expert. On the Supervisory Board, Max Dietrich Kley and
Dr. Siegfried Luther have the required financial expertise
and independence.
Under mandatory statutory provisions and the Articles of
Association, the Supervisory Board issues rules of procedure for
itself. The Supervisory Boards rules of procedure are
dated April 30, 2008.
The Supervisory Board is authorized to make amendments to the
Articles of Association that affect only their wording.
The Supervisory Board must hold at least one meeting once every
calendar quarter. The meetings may also be held in the form of a
telephone or video conference and individual members may
participate in the meeting by way of telephone or video
communication.
Supervisory Board meetings are convened in writing by the
chairman of the Supervisory Board (or if he or she is
incapacitated by the deputy chairman) giving at least
14 days advance notice. The day on which the
notification is mailed and the day of the meeting is not
included in the calculation of this period. Meetings may
regularly be convened in writing, through telefax or by
electronic media. In urgent cases, the chairman may shorten the
notice period to a minimum of three days. The Supervisory Board
has reached a quorum if at least half of its total members
participates in voting. Any member who is present but abstains
from voting is deemed to have participated in the vote. Absent
members may participate in the casting of votes through delivery
of written votes by other members of the Supervisory Board. The
chairman, or in his absence, the Deputy chairman may also
arrange for the voting on a resolution of the Supervisory Board
to be carried out in writing, by telephone, facsimile or telex,
or using other means of telecommunication including
e-mail. The
chairman shall determine the details of the procedure. Unless
otherwise required by law or by the Articles of Association,
Supervisory Board resolutions are passed with a simple majority
of votes cast. This applies also to election and deselection
processes (except for the election of the chairman and the
Deputy chairman which require a two-thirds majority). In the
event of an equality of votes, a new vote will be held in which
the chairman of the Supervisory Board shall have two votes.
Members of the
Supervisory Board
The following table shows the name, age (as of June 16,
2009), principal occupation, other offices held on
administrative, management, and supervisory boards outside the
Company during the last five years and other information
regarding each current member of the Supervisory Board. Pursuant
to an Investment Agreement and subject to the condition
precedent that the Backstop Investor will acquire shareholding
quota of 15 percent or more in the Company, the Management
Board will use its best efforts to procure the appointment of
two representatives of the Backstop Investor by the competent
court to the Supervisory Board and the resignation of
Mr. Max Dietrich Kley, the current chairman of the
Supervisory
193
Board, as of September 30, 2009 and the election of one
representative of the Backstop Investor, Mr. Manfred
Puffer, as chairman of the supervisory board as of
October 1, 2009. See Business Material
Contracts Backstop Arrangement.
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Term
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Name
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Age
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expires
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Position
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Current and former memberships of Management and Supervisory
Boards and comparable governing bodies
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Max Dietrich Kley chairman
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69
|
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2010
|
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Lawyer
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|
Current member of the Supervisory Board of:
SGL Carbon AG, Wiesbaden (chairman)
BASF SE, Ludwigshafen
Heidelberg Cement AG, Heidelberg
Schott AG, Mainz
Former member of the Board of Administration of:
UniCredit S.p.A., Milan, Italy (until April 29, 2009)
President of the Deutsches Aktieninstitut e.V.,
Frankfurt
chairman of the Börsensachverständigenkommission
(BSK)
Member of the Board of Trustees of International Accounting
Standards Committee Foundation (IASCF) (until December 31,
2008)
|
Gerd
Schmidt(1)
Deputy chairman
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55
|
|
2014
|
|
chairman of the Infineon Central Works Council
chairman of the Infineon Works Council, Regensburg
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|
none
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Wigand
Cramer(1)
|
|
56
|
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2014
|
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Labor union clerk IG Metall, Berlin
|
|
none
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Arnaud de Weert
|
|
45
|
|
2010
|
|
Self-employed
|
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Former member of the Supervisory Board of:
Alunorf GmbH (chairman)
Novelis Deutschland GmbH (chairman)
Former Director of:
Novelis Inc., Canada
Novelis Europe Holdings Ltd.
Novelis UK Ltd.
Novelis Technology AG
Former Member of the Board of Directors of:
Novelis Europe, Novelis AG (President)
Ontex International, Belgium (chairman)
|
Alfred
Eibl(1)
|
|
60
|
|
2014
|
|
chairman of the Infineon Works Council, Munich-Campeon
|
|
none
|
|
|
|
|
|
|
|
|
|
Peter
Gruber(1)
Representative of Senior Management
|
|
48
|
|
2014
|
|
Senior Vice President Operations Finance
|
|
Current member of the Supervisory Board of:
Infineon Dresden GmbH
Current member of the Partner Delegation of:
Comneon GmbH
COMNEON Electronic Technology GmbH
Current member of the Board of Directors of:
Ventures Beteiligungs-Treuhand GmbH (CEO)
Infineon Savan Ltd. (dormant)
ALTIS Semiconductor S.N.C.
Infineon Technologies (Kulim) Sdn Bhd
|
Gerhard
Hobbach(1)
|
|
46
|
|
2014
|
|
Deputy chairman of the Infineon Works Council, Munich-Campeon
|
|
none
|
|
|
|
|
|
|
|
|
|
Prof. Dr. Renate Köcher
|
|
56
|
|
2010
|
|
Managing Director of Institut für Demoskopie Allensbach
GmbH, Allensbach
|
|
Current member of the Supervisory Board of:
Allianz SE, Munich
MAN AG, Munich
BMW AG, Munich (since May 8, 2008)
Former Member of the Supervisory Board of:
BASF AG, Ludwigshafen (until January 13, 2008)
|
194
|
|
|
|
|
|
|
|
|
|
|
|
|
Term
|
|
|
|
|
Name
|
|
Age
|
|
expires
|
|
Position
|
|
Current and former memberships of Management and Supervisory
Boards and comparable governing bodies
|
|
Dr. Siegfried Luther
|
|
64
|
|
2010
|
|
Managing Director of Reinhard Mohn Verwaltungs GmbH,
Gütersloh
|
|
Current member of the Supervisory Board of:
WestLB AG, Duesseldorf/Muenster
Wintershall Holding AG, Kassel
EVONIK Industries AG, Essen
Current member of the Board of Administration of:
RTL Group S.A., Luxembourg (chairman)
Compagnie Nationale à Portefeuille S.A.,
Loverval, Belgium
Former CFO and assistant chairman of the Board of:
Bertelsmann AG, Gütersloh (until December 31, 2005)
Former Member of the Supervisory Board of:
Gruner & Jahr AG, Hamburg (until August 31, 2007)
|
|
|
|
|
|
|
|
|
|
Prof. Dr. rer. Nat. Doris
Schmitt-Landsiedel
|
|
56
|
|
2010
|
|
Professor at the Munich Technical University, Munich
|
|
none
|
|
|
|
|
|
|
|
|
|
Horst
Schuler(1)
|
|
57
|
|
2014
|
|
Deputy chairman of the Infineon Works Council; Deputy chairman
of the Infineon Central Works Council
|
|
none
|
|
|
|
|
|
|
|
|
|
Kerstin
Schulzendorf(1)
|
|
47
|
|
2014
|
|
Member of the Works Council, Infineon-Dresden
|
|
none
|
|
|
|
|
|
|
|
|
|
Dr. Eckart Sünner
|
|
65
|
|
2010
|
|
President, Chief Compliance Officer BASF SE, Ludwigshafen
|
|
Current member of the Supervisory Board of:
K+S AG, Kassel
Former Member of the Supervisory Board of:
BASF Schwarzheide GmbH
|
|
|
|
|
|
|
|
|
|
Alexander
Trüby(1)
|
|
39
|
|
2014
|
|
Member of the Works Council Infineon Dresden
|
|
Current Member of the Supervisory Board of:
Infineon Technologies Dresden GmbH
|
|
|
|
|
|
|
|
|
|
Prof. Dr.-Ing. E.h. Klaus Wucherer
|
|
64
|
|
2010
|
|
Management Consultant (since January 1, 2008)
|
|
Current member of the Supervisory Board of:
Leoni AG, Nuremberg
SAP AG, Walldorf
Former chairman of the Board of Administration of:
Siemens Ltd., Beijing, Peoples Republic of China (until
May 19, 2008)
Siemens S.A., Lisbon, Portugal (until April 28, 2008)
Siemens Ltd., Mumbai, India (until March 31, 2008)
Siemens Ltd., Seoul, Korea, (until January 31, 2009)
Siemens Energy and Automation, USA (until December 7,
2004)
Former Member of the Supervisory Board of:
Deutsche Messe AG, Hanover (until December 31, 2008)
BSH Bosch und Siemens Hausgeräte GmbH, Munich
(until April 30, 2008)
Member of the Siemens AG Corporate Executive Committee
(until December 31, 2007)
|
Note
|
|
(1) |
Employee representative.
|
The business address of each of the members of the Supervisory
Board is Infineon Technologies AG, Am Campeon 1-12, 85579
Neubiberg, Germany.
Committees
The Supervisory Board may form committees from among its members
and charge them with the performance of specific tasks. The
committees tasks, authorizations and processes are
determined by
195
the Supervisory Board. Where permissible by law, important
powers of the Supervisory Board may also be transferred to the
committees. The Supervisory Board has established and maintains
the following committees responsible for audit, nomination and
compensation matters:
|
|
|
Committee
|
|
Members
|
|
Executive Committee
|
|
Max Dietrich Kley; Gerd Schmidt; Prof. Dr. Klaus Wucherer
|
Investment, Finance and Audit Committee
|
|
Max Dietrich Kley; Dr. Siegfried Luther; Gerd Schmidt
|
Mediation Committee
|
|
Max Dietrich Kley: Alfred Eibl; Gerd Schmidt;
Prof. Dr. Klaus Wucherer
|
Nomination Committee
|
|
Max Dietrich Kley; Prof. Dr. Renate Köcher;
Dr. Siegfried Luther; Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel; Dr. Eckart Sünner; Arnaud de
Weert; Prof. Dr.-Ing. E.h. Klaus Wucherer
|
Strategy and Technology Committee
|
|
Wigand Cramer; Alfred Eibl; Gerhard Hobbach; Prof. Dr. rer.
nat. Doris Schmitt-Landsiedel; Arnaud de Weert; Prof. Dr.-Ing.
E.h. Klaus Wucherer
|
The Executive Committee is responsible for deciding the terms of
the service contracts and other contractual arrangements between
the Company and members of the Management Board. In particular,
the Executive Committee determines salaries and incentive
compensation for the individual board members within the scope
of the compensation system approved by the Supervisory Board.
The Executive Committee did not meet during the 2008 fiscal
year. For reasons of expedience, committee members convened
mostly by telephone and post resolutions subsequently by
circulating written proposals.
The investment, finance and audit committee (Investitions-,
Finanz- und Prüfungsausschuss) (IFA
Committee) according to German law nominates
independent auditors and the Supervisory Board recommends their
appointment to the annual general shareholders meeting.
After the shareholders appoint the independent auditors, the IFA
Committee formally engages them, determines their compensation
and reviews the scope of the external audit. The IFA Committee
also reviews the annual, half-year and quarterly reports and
financial statements, taking into account the results of any
audits or reviews performed by the independent auditors. The
committee also maintains procedures for dealing with complaints
regarding accounting, internal controls and auditing matters and
for the confidential and anonymous submission of communications
from company employees concerning questionable accounting and
auditing matters. The IFA Committee held four meetings in the
2008 fiscal year.
The mediation committee (Mediation Committee)
submits proposals to the Supervisory Board in the event that the
Supervisory Board cannot reach the two-thirds majority required
to appoint a Management Board member. The Mediation Committee
was not convened in the 2008 fiscal year.
In 2007, the Supervisory Board established a nomination
committee (Nomination Committee)
(Nominierungsausschuss) in accordance with the
requirements of the Code. The Nomination Committee, which
consists exclusively of shareholder representatives of the
Supervisory Board, recommends candidates as future shareholder
representatives of the Supervisory Board. The nomination
committee did not meet during the 2008 fiscal year.
The strategy and technology committee (Strategy and
Technology Committee) deals with topics concerning the
business strategy of the Company. In the fiscal year 2008, the
Strategy and Technology Committee held four meetings and
concentrated on the following topics: the business strategy of
the various business areas; the Companys strategy with
respect to the planned commercial introduction of TDSCDMA mobile
communication technology in China; innovation management along
the value chain and DRAM technology development at Qimonda.
Remuneration,
Other benefits
Compensation
structure
The compensation of the Supervisory Board is determined in the
Articles of Association. It is intended to reflect the
Companys size, the duties and responsibilities of the
members of the Supervisory Board, and
196
the Companys economic condition and performance. The
compensation of the Supervisory Board is governed by
Section 11 of the Articles of Association and comprises two
elements:
|
|
|
|
|
Fixed compensation of 25,000 per year and member.
|
|
|
|
A variable element in the form of 1,500 stock appreciation
rights per annum, which are granted and may be exercised on the
same terms as provided for by the Infineon Stock Option Plan
2006 approved by the Annual General Meeting. The basic
principles of the Companys 2006 Stock Option Plan are
described in note 34 to the consolidated financial
statements for the year ended September 30, 2008 (see
page F-49).
See Long Term Incentive Plans.
|
Additional compensation is paid for certain functions on the
Supervisory Board. The chairman of the Supervisory Board
receives an additional 100 percent of the fixed
compensation. Furthermore, each Vice-chairman and each other
member of a Supervisory Board committee, with the exception of
the Nomination Committee and the Mediation Committee, receives
an additional 50 percent of their fixed compensation.
Members of the Supervisory Board, moreover, are reimbursed for
all expenses incurred in connection with their duties, as well
as the value-added tax (VAT), apportioned to
their compensation, to the extent that they can charge for VAT
separately and do so.
Compensation
of the Supervisory Board in the 2008 fiscal year
In the 2008 fiscal year, the members of the Supervisory Board
waived their share appreciation rights. The Supervisory Board
compensation otherwise remained unchanged from the previous
year. The individual current members of the Supervisory Board
received the following cash compensation (excluding
19 percent VAT), in the 2008 fiscal year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
compensation for
|
|
|
|
|
|
|
Base compensation
|
|
|
special functions
|
|
|
|
|
Supervisory Board member
|
|
in
|
|
|
in
|
|
|
Total payment in
|
|
|
Max Dietrich Kley
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
50,000
|
|
Wigand Cramer
|
|
|
25,000
|
|
|
|
|
|
|
|
25,000
|
|
Arnaud de
Weert(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Alfred Eibl
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
37,500
|
|
Peter
Gruber(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerhard Hobbach
|
|
|
25,000
|
|
|
|
|
|
|
|
25,000
|
|
Prof. Dr. Renate Köcher
|
|
|
25,000
|
|
|
|
|
|
|
|
25,000
|
|
Dr. Siegfried Luther
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
37,500
|
|
Gerd Schmidt
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
37,500
|
|
Prof. Dr. Doris
Schmitt-Landsiedel
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
37,500
|
|
Horst
Schuler(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Kerstin Schulzendorf
|
|
|
25,000
|
|
|
|
|
|
|
|
25,000
|
|
Dr. Eckart Sünner
|
|
|
25,000
|
|
|
|
|
|
|
|
25,000
|
|
Alexander Trüby
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
37,500
|
|
Prof. Dr.-Ing. Klaus Wucherer
|
|
|
25,000
|
|
|
|
12,500
|
|
|
|
37,500
|
|
Total
|
|
|
300,000
|
|
|
|
100,000
|
|
|
|
400,000
|
|
Note
|
|
(1) |
Joined the Supervisory Board during the 2009 fiscal year.
|
Other
The Company does not provide loans to the members of the
Supervisory Board.
The Company maintains D&O insurance. The insurance covers
the personal liability risk in the event of claims made against
members of the Supervisory Board for indemnification of losses
incurred in the exercise of their duties. Each member of the
Supervisory Board has agreed to an adequate deductible (which
constitutes a deductible as defined by Section 3.8(2) of
the Code).
197
Long-Term
Incentive Plans
2006 Stock Option Plan. In February
2006, Infineon adopted and Infineons shareholders approved
the Infineon Technologies AG 2006 Stock Option Plan (the
2006 plan). As of March 31, 2009,
options to purchase an aggregate of 2,123,500 shares were
outstanding under the 2006 plan, of which options to purchase
222,500 shares were held by the current members of the
Management Board. Additionally, up to 2,645,000 options have
been granted on June 3, 2009. For a further description of
the terms and conditions of the 2006 plan, see
Description of Share Capital and applicable Legal
Provisions Management and Employee Participation
Plans.
2001 International Long-Term Incentive
Plan. In April 2001, Infineon adopted the
Infineon Technologies AG 2001 International Long-Term Incentive
Plan (the 2001 plan). As of March 31,
2009, options to purchase an aggregate of 22.9 million
shares were outstanding under the 2001 plan, of which options to
purchase 632,200 shares were held by the current members of
the Management Board. For a further description of the terms and
conditions of the 2001 plan, see Description of Share
Capital and applicable Legal Provisions Management
and Employee Participation Plans.
Specific
Information on the Members of the Management Board and
Supervisory Board
None of the members of the Management Board or Supervisory Board
have been convicted of criminal acts of fraud in the last five
years. Likewise, no public accusations
and/or
sanctions have been imposed by statutory or regulatory
authorities (including professional associations) on members of
the Management Board or Supervisory Board. No member of the
Management Board or Supervisory Board has in the last five years
been involved in insolvencies, receivership or liquidation
proceedings in their capacity as a member of an administrative,
management or supervisory body or as a founder of an issuer,
except for member of the Management Board Dr. Reinhard
Ploss in his function as member of the supervisory board of
Qimonda AG. During the last five years, no public accusations
and/or
sanctions have been imposed by statutory or regulatory
authorities on members of the Management Board or Supervisory
Board, no member of the Management Board or Supervisory Board
has been convicted of criminal acts of fraud and no court of law
has ever held any member of the Management Board or Supervisory
Board to be unfit for membership in an administrative,
management or supervisory body of an enterprise or for serving
in management or for managing the business of an issuer.
There are no other significant transactions, legal relationships
or other conflicts of interest between the Company, the members
of the Management Board and the Supervisory Board or their
spouses and immediate family members. The members of the
Management Board and Supervisory Board are not related to one
another in any way.
Other Conflicts
of Interest
The Company is not aware of any existing or potential conflicts
of interest between the duties of the members of the Management
Board or Supervisory Board to the Company and their personal
interests or other duties.
No member of the Management Board or the Supervisory Board has
entered into any service contract with any company of the Group
providing for special benefits upon termination of the service
relationship.
General
Shareholders Meeting
The general shareholders meeting is held within the first
eight months of each fiscal year either at the Companys
registered office or in a German city where a stock exchange is
located and, as far as legally permissible, at other places
where a stock exchange on which the Companys shares are
admitted to trading is located. The general shareholders
meeting can be convened by the Management Board, the Supervisory
Board or, under certain circumstances, by shareholders whose
holdings together make up 5 percent of the share capital.
The Supervisory Board must convene a general shareholders
meeting if this is deemed necessary for the well-being of the
Company. Unless a shorter period is permissible by law, the
general shareholders meeting must be convened at least
30 days before the day by which shareholders must register
for the meeting and be announced in the electronic Federal
Gazette (elektronischer Bundesanzeiger), stating the
agenda.
198
Shareholders are entitled to participate in the general
shareholders meeting and to exercise their voting rights
if they are entered in the Companys share register and
have given notification of attendance which must be received at
least six days prior to the meeting. If this day falls on a
Saturday, Sunday or public holiday recognized at the location of
the registered office, this day is replaced by the preceding
business day.
Voting rights may be exercised by proxies. If neither a bank nor
a shareholders association is named as proxy, authority to
attend and vote by proxy must be granted (i) in textual
form (Textform) in accordance with Section 126b
German Civil Code or via the Internet or (ii) directly to
the proxy in textual form (Textform) in accordance with
Section 126b German Civil Code. If a proxy is instructed
directly, the proxy will be required to produce documentation of
its authority at the general meeting.
Under the currently applicable German Stock Corporation Act,
resolutions of fundamental importance require, in addition to
the majority of votes cast, a majority of at least
three-quarters of the share capital represented at the voting on
the resolution. Resolutions of fundamental importance include,
in particular:
|
|
|
|
|
changing the objects and purposes provision in the Articles of
Association;
|
|
|
|
approving authorized and conditional capital increases;
|
|
|
|
excluding preemptive rights of shareholders to subscribe for new
shares;
|
|
|
|
dissolving the company;
|
|
|
|
merging into, or consolidating with, another stock corporation;
|
|
|
|
transferring all or virtually all of the Companys
assets; and
|
|
|
|
changing the Companys corporate form.
|
Neither German law nor the Articles of Association restricts the
right of non-resident or foreign shareholders to hold shares or
any voting rights attached to the shares.
Corporate
Governance
Compliance
with the German Corporate Governance Code
The Code, which was passed in February 2002 and last amended on
June 6, 2008, contains recommendations and suggestions for
the management and supervision of German listed companies in
relation to shareholders and the general shareholders
meeting, the management board and supervisory board,
transparency, accounting, and auditing of financial statements.
The purpose of the Code is to make the German system of
corporate governance more transparent, clarify the rights of
shareholders, and improve cooperation between the management
board and the supervisory board, internal reporting and the
independence of auditors Companies are under no obligation to
comply with the recommendations or suggestions in the Code.
However, German stock corporation law requires the management
board and supervisory board of a listed company to declare
annually either that the recommendations of the Code were and
are complied with, or to declare which recommendations were and
are not applied. This declaration is to be made accessible to
shareholders on a permanent basis. However, it is permissible to
deviate from the suggestions in the Code without having to
disclose this. The German Accounting Law Modernization Act
(Bilanzrechtsmodernisierungsgesetz) also provides for the
future introduction of mandatory substantiation for
recommendations that were not applied.
The main recommendations of the Code in the version of
June 6, 2008 include the following:
|
|
|
|
|
The supervisory board must specify in detail the obligations of
the management board to report and provide information.
|
|
|
|
The remuneration of members of the management board should
contain a fixed component and a component based on economic
performance, and a cap should be specified and individual
information should be provided in the notes to the consolidated
financial statements in reference to remuneration of the
individual members of the management board.
|
|
|
|
The members of the management board should disclose any
conflicts of interest to the supervisory board.
|
199
|
|
|
|
|
The remuneration of members of the supervisory board should, in
addition to a fixed component, also contain a
performance-related component, and the remuneration should be
shown in the corporate governance report, broken down by
component.
|
|
|
|
The supervisory board should form committees; in particular, an
audit committee should be set up to deal with issues of
accounting and risk management, the necessary independence of
the auditor, and the awarding of audit engagements to auditors,
as well as the determination of the special areas emphasized in
the audit and the agreement on fees.
|
|
|
|
The number of former members of the management board on the
supervisory board should be limited, and service on governing
entities of major competitors of the Company and advisory
activities for major competitors of the Company by members of
the supervisory board should be restricted.
|
|
|
|
Transparency in dealings with shareholders should be ensured;
this includes the use of appropriate communication media such as
the Internet and publication of the most important dates for
regularly recurring announcements to shareholders with
sufficient advance notice, additional use of the English
language on Web sites, and the issuance of interim reports.
|
|
|
|
Financial statements should be published in a timely fashion.
|
|
|
|
Transactions with related parties should be disclosed in the
notes to the financial statements.
|
|
|
|
A declaration of independence concerning business, financial,
personal, or other relationships between the auditor and the
company should be obtained before engaging the auditors, and
regular reports should be made concerning the independence of
the auditors.
|
|
|
|
The auditors should report to the audit committee; the audit
report should also indicate whether an incorrect statement has
been made with respect to the Code by the management board and
supervisory board.
|
According to the 2008 Declaration of Compliance with the Code
and in accordance with Section 161 of the German Stock
Corporation Act, Infineon will comply with all recommendations
of the Code (in the version of June 6, 2008) with the
following exception:
Payments promised in the event of premature termination of a
Management Board members contract due to a change of
control may exceed 150 percent of the severance payment cap
(divergence from section 4.2.3). In the 2007 fiscal year,
all Management Board contracts have been modified to include
change-of-control clauses according to which members of the
Management Board, if they retire within the scope of a change of
control, shall be entitled to a continuation of their annual
target income for the full remaining duration of their service
contract; in particular cases, this may exceed the limit of
three years as stipulated in the Code. The Company considers
this provision adequate because it shall ensure that, in the
event of a takeover situation, the Management Board members
shall act in the best interest of the company. Furthermore, the
rights in the event of a change of control only exist if there
is no serious breach of duty.
200
GENERAL
INFORMATION ON THE COMPANY
Company
Formation, Name, Registered Office and Fiscal Year
Infineon Technologies AG is a stock corporation
(Aktiengesellschaft) organized under German law. It has
been a publicly traded company since March 2000. It has been at
the forefront of the development, manufacture and marketing of
semiconductors for more than fifty years, first as the Siemens
Semiconductor Group and, from 1999, as an independent company.
It was established under the name Infineon Technologies AG on
March 7, 1999. The Companys registered office is in
Neubiberg, Germany. The Companys headquarters are located
at Am Campeon 1-12, 85579 Neubiberg, Germany (telephone:
+49-89-234-0). The Company is registered in the Commercial
Register of the local court in Munich under docket number
HRB 126492.
The Companys fiscal year runs from October 1 until
September 30th of the following year.
As a German stock corporation, the Company is governed by German
corporate law.
Duration and
Dissolution
The Company has an indefinite term. However, except in the event
of insolvency, it can be dissolved by a resolution of the
Companys general shareholders meeting with a
three-quarters majority of the share capital represented. If
that were to happen, any Company assets remaining after the
adjustment of liabilities according to the requirements of the
German Stock Corporation Act would be distributed among the
Companys shareholders on a proportional basis based on the
numbers of shares held by each.
Corporate
Purpose
Pursuant to Section 2 of the Articles of Association, the
Companys corporate purpose is to engage, directly or
indirectly, in the business of researching, developing,
producing and selling products of electronic devices, electronic
systems and software as well as providing corresponding services.
The Company is authorized to take all actions and measures which
are directly or indirectly incidental to the accomplishment of
the Companys purposes. This includes the establishment of
subsidiaries and branches in Germany and abroad, and the
participation in other enterprises. The Company is authorized to
buy or sell enterprises, combine them under single management
and conclude enterprise agreements with such enterprises or
restrict itself to managing its participation. It is authorized
to spin off operations, in whole or part, into affiliated
enterprises.
Primary
Affiliated Companies
Unless otherwise indicated, the table below contains information
about the Companys primary affiliated companies as of
September 30, 2008 (figures are in thousands, in the
respective local currency as of September 30, 2008, if not
otherwise stated):
|
|
|
ALTIS Semiconductor S.N.C*
|
|
|
|
Registered office
|
|
Essonnes, France
|
Corporate purpose
|
|
Production
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
50% + 1 share
|
Subscribed capital
|
|
109,098.2
|
Reserves
|
|
14,073.3
|
Net profit for the year ended December 31, 2008
|
|
17,261.8
|
Note
|
|
|
*
|
|
As of December 31, 2008
(preliminary)
|
201
|
|
|
Infineon Technologies Asia Pacific Pte. Ltd.
|
|
|
|
Registered office
|
|
Singapore
|
Corporate purpose
|
|
Production, distribution
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
51,947.0
|
Reserves
|
|
101,375.0
|
Net profit
|
|
36,097.0
|
|
|
|
Infineon Technologies Austria AG
|
|
|
|
Registered office
|
|
Villach, Austria
|
Corporate purpose
|
|
Production and development
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
17,228.0
|
Reserves
|
|
521,512.8
|
Net profit
|
|
64,333.1
|
|
|
|
Infineon Technologies China Co. Ltd.*
|
|
|
|
Registered office
|
|
Shanghai, China
|
Corporate purpose
|
|
Holding
|
Currency
|
|
CNY
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
248,313.5
|
Reserves
|
|
173,217.7
|
Net profit for the year ended December 31, 2008
|
|
32,619.7
|
Note
|
|
|
*
|
|
As of December 31, 2008
|
|
|
|
Infineon Technologies Dresden GmbH
|
|
|
|
Registered office
|
|
Dresden, Germany
|
Corporate purpose
|
|
Production
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
406,000.0
|
Reserves
|
|
0.0
|
Net profit
|
|
13,903.9
|
|
|
|
Infineon Technologies Finance GmbH
|
|
|
|
Registered office
|
|
Neubiberg, Germany
|
Corporate purpose
|
|
Financial Services
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
2,000.0
|
Reserves
|
|
367,893.1
|
Net profit
|
|
0.0
|
202
|
|
|
|
|
Infineon Technologies France S.A.S.
|
|
|
|
|
Registered office
|
|
|
Saint Denis, France
|
|
Corporate purpose
|
|
|
Distribution
|
|
Currency
|
|
|
EUR
|
|
Company share of subscribed capital
|
|
|
100%
|
|
Subscribed capital
|
|
|
149,934.0
|
|
Reserves
|
|
|
27,721.7
|
|
Net profit
|
|
|
18,549.1
|
|
|
|
|
Infineon Technologies Holding B.V.
|
|
|
|
Registered office
|
|
Rotterdam, The Netherlands
|
Corporate purpose
|
|
Holding
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
1,004.0
|
Reserves
|
|
4,017,376.0
|
Net profit
|
|
(1,442,240.0)
|
|
|
|
Infineon Technologies Investment B.V.
|
|
|
|
Registered office
|
|
Rotterdam, The Netherlands
|
Corporate purpose
|
|
Holding
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
69.0
|
Reserves
|
|
1,618,347.0
|
Net profit
|
|
(1,595,551.0)
|
|
|
|
Infineon Technologies Japan K.K.
|
|
|
|
Registered office
|
|
Tokyo, Japan
|
Corporate purpose
|
|
Distribution
|
Currency
|
|
JPY
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
120,000.0
|
Reserves
|
|
303,645.4
|
Net profit
|
|
283,678.3
|
|
|
|
Infineon Technologies North America Corp.
|
|
|
|
Registered office
|
|
Delaware, U.S.A.
|
Corporate purpose
|
|
Research, development and distribution
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
1.0
|
Reserves
|
|
99,532.0
|
Net profit
|
|
17,635.0
|
203
|
|
|
Infineon Technologies (Advanced Logic) Sdn. Bhd.
|
|
|
|
Registered office
|
|
Malacca, Malaysia
|
Corporate purpose
|
|
Production
|
Currency
|
|
MYR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
30,000.0
|
Reserves
|
|
38,121.0
|
Net profit
|
|
11,434.0
|
|
|
|
Infineon Technologies (Kulim) Sdn. Bhd.
|
|
|
|
Registered office
|
|
Kulim, Malaysia
|
Corporate purpose
|
|
Production
|
Currency
|
|
MYR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
30,000.0
|
Reserves
|
|
(36,267.0)
|
Net profit
|
|
(4,253.0)
|
|
|
|
Infineon Technologies (Malaysia) Sdn. Bhd.
|
|
|
|
Registered office
|
|
Malacca, Malaysia
|
Corporate purpose
|
|
Production
|
Currency
|
|
MYR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
203,601.0
|
Reserves
|
|
131,180.0
|
Net profit
|
|
53,984.0
|
|
|
|
Primarion Inc.
|
|
|
|
Registered office
|
|
Torrance, California
|
Corporate purpose
|
|
Research and development
|
Currency
|
|
EUR
|
Company share of subscribed capital
|
|
100%
|
Subscribed capital
|
|
0.0
|
Reserves
|
|
28,656.0
|
Net profit
|
|
(6,168.0)
|
Independent
Auditors
The independent auditor of the Companys annual financial
statements, prepared in accordance with IFRS or U.S. GAAP,
as applicable, for the fiscal years ended September 30,
2008, 2007 and 2006, and for the condensed financial statements
for the six months ended March 31, 2009, was KPMG AG
Wirtschaftsprüfungsgesellschaft (formerly KPMG Deutsche
Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft) (KPMG),
Ganghoferstrasse 29, 80339 Munich. The general shareholders
meeting on February 12, 2009 appointed KPMG as auditor for
its annual financial statements for the 2009 fiscal year and for
the review of interim financial reports. KPMG is a member of the
German Chamber of Auditors (Wirtschaftsprüferkammer).
Disclosure
Requirements for Shareholders, Mandatory Offer
As the Companys shares are admitted to official trading on
the Frankfurt Stock Exchange, the Company as a listed company is
subject to the provisions of the German Securities Trading Act
governing disclosure requirements for shareholdings. See
Information on the Offered New Shares
ISIN/German Securities Code (WKN)/Common Code/Trading
Symbol. The German Securities Trading Act requires, in
Section 21, that anyone who, due to an acquisition, sale or
other event, obtains, exceeds, or no longer
204
holds 3 percent, 5 percent, 10 percent,
15 percent, 20 percent, 25 percent,
30 percent, 50 percent or 75 percent of the
voting rights in an issuer whose country of origin is Germany
must promptly, and within no later than four trading days,
notify the issuer and concurrently the BaFin. Starting with the
entering into force on May 31, 2009 of the introduction to
Section 27a of the German Securities Trading Act through
the German Risk Limitation Act (Risikobegrenzungsgesetz),
any party required to make disclosures within the meaning of
Sections 21 and 22 of the German Securities Trading Act
whose volume of voting rights from shares meets or exceeds the
10 percent threshold or a higher threshold must notify the
issuer whose country of origin is Germany, within twenty trading
days, of its intentions with respect to the acquisition as well
as identify the source of the funds used to make the acquisition
and, in the process, make certain disclosures stipulated in the
German Securities Trading Act.
In connection with the notice requirements, the German
Securities Trading Act contains various provisions designed to
ensure that shareholdings in listed companies are attributed to
the person who actually controls the voting rights associated
with such shares. For example, shares owned by a third party are
attributed to a party who is subject to the notice requirement
if such party controls the third party. The same applies to
shares held by a third party for the account of the party who is
subject to the notice requirement or of a company controlled by
such party. Likewise, if one company holds shares on behalf of
another company or on behalf of a company controlled by that
other company, the shares are attributed to such other company.
Furthermore, coordinated conduct between shareholders can lead
to the attribution of voting rights. Since the entry into force
on August 19, 2008 of the German Risk Limitation Act, any
kind of cooperation among shareholders that is designed to
effect a permanent and material change in the business strategy
of the Company can result in an attribution of voting rights,
namely, the cooperation does not have to be specifically about
the exercise of voting rights. Coordination in individual cases
will not trigger the attribution of voting rights.
Failure to give notice results in the disqualification of the
rights (including voting rights and dividend rights) attaching
to the shares that belong to the notifying party or to shares
whose voting rights are attributable to the said party for the
duration of the failure and, in certain cases involving the
willful or grossly negligent breach of disclosure obligations,
for an additional six months thereafter. In addition, a fine may
be imposed for failure to comply with the notice requirement.
Moreover, anyone who directly or indirectly holds financial
instruments that grant the holder the right to unilaterally
acquire, under a legally binding agreement, previously issued
voting shares of an issuer whose country of origin is Germany
must promptly upon obtaining, exceeding, or no longer holding
five percent, 10 percent, 15 percent, 20 percent,
25 percent, 30 percent, 50 percent or
75 percent, and within no later than four trading days,
provide notice thereof to the issuer and to the BaFin. Until
recently, the disclosure obligation under Sections 21 and
22 of the German Securities Trading Act for voting rights from
shares, both held and attributed, was independent of the
disclosure obligation in respect of other financial instruments
under Section 25 of that Act. Starting on March 1,
2009 with the entry into force of the revised Section 25 of
the German Securities Trading Act through the German Risk
Limitation Act, the voting rights from shares and voting rights
obtainable through other financial instruments will be
aggregated. In instances where a disclosure pursuant to
Sections 21 and 22 of the German Securities Trading Act is
or was made, an additional disclosure pursuant to
Section 25 of the Act will not be necessary unless the
aggregate amount of voting rights from or relating to all
securities meets, exceeds or falls below a further threshold
mentioned in Section 21(1) Sentence 1 of the German
Securities Trading Act.
A domestic issuer must publish such notices promptly, though no
later than three trading days after receiving the notice,
through an electronically operated information dissemination
system, a news agency, a news provider, a print medium, and a
website for the financial markets (jointly known as a media
bundle). In that regard, at least one of those media must allow
an active dissemination throughout Europe. Furthermore, the
domestic issuer must promptly, though not prior to publication,
transmit the notice to the company register
(Unternehmensregister) for storage. At the same time, the
issuer must notify the BaFin of the publication.
Moreover, under the German Securities Acquisition and Takeover
Act, any person whose voting rights reach or exceed
30 percent of the Companys voting shares after the
stock exchange listing of the shares must immediately, but no
later than within seven calendar days, publish this fact and the
percentage of voting rights held on the Internet and by means of
an electronically operated information dissemination system for
financial information and must subsequently submit a mandatory
tender offer addressed to all holders of ordinary shares of the
Company, unless released from this obligation. When calculating
the number of voting rights, any concerted action among
shareholders with respect to how to exercise their
205
voting rights or other kind of cooperation that is designed to
effect a permanent and significant change in the business
strategy of the Company will result in the attribution of voting
rights. Here, again, coordination in individual cases will not
trigger an attribution of voting rights.
Directors
Dealings
The German Securities Trading Act requires individuals with
management responsibilities (the Officers) of
a publicly traded company to inform the stock corporation and
the BaFin about their own transactions involving shares of the
company or financial instruments related to them, particularly
derivatives within five business days. This also applies to the
Officers spouse and certain of the Officers family
members. The company is required to publish this notification
immediately after receiving it and at the same time to inform
the BaFin regarding its publication. The company must also
immediately forward it to the Company Register, although not
prior to its publication. This notification obligation does not
apply as long as the aggregate amount of the transactions of an
Officer and the Officers spouse and family members does
not reach 5,000 in a single calendar year. Negligent or
willful non-compliance with these disclosure requirements may
result in the imposition of a fine on the relevant Officer,
Officers spouse or family member.
206
DESCRIPTION OF
SHARE CAPITAL AND APPLICABLE LEGAL PROVISIONS
Issued Share
Capital
The Companys issued share capital as of the date of this
Prospectus amounts to 1,499,484,170, divided into
749,742,085 registered shares. The shares are issued as no par
value shares. The share capital has been fully paid.
Voting
Rights
Each of the Companys shares entitles the holder to one
vote at the Companys general shareholders meeting.
There are no voting rights restrictions. The Companys
major shareholders do not have different voting rights.
Certification and
Transferability of Shares
Infineon Technologies AGs shares are evidenced by several
global certificates deposited with Clearstream Banking AG, Neue
Börsenstrasse 1, 60487 Frankfurt am Main
(Clearstream). A claim of the Shareholders
for individual certification of their shares and their dividend
rights is excluded, whereas the Company is entitled to issue
share certificates which represent no par value shares (single
share certificates) or several shares (collective shares),
according to Section 4(4) of the Articles of Association.
Pursuant to Section 4(3) of the Articles of Association the
Management Board with the consent of the Supervisory Board
determines the form and content of share certificates and of any
eventual dividend coupons and renewal coupons. There are no
restrictions on the transferability of the Companys shares.
Development of
the Share Capital
The Companys issued share capital changed as follows in
the past three fiscal years:
As of October 1, 2005, the Companys share capital
amounted to 1,495,138,718.
Between October 1, 2005 and September 30, 2006, the
Company issued 39,935 registered no par value shares of together
79,870 resulting from the conditional capital resolved on
October 18, 1999 (Conditional Capital I) and thereby
increased the Companys share capital to
1,495,218,588. This capital increase was recorded in the
Commercial Register on October 30, 2006.
Between October 1, 2006 and September 30, 2007, the
Company issued 2,119,341 registered no par value shares of
together 4,238,682 resulting from the conditional capital
resolved on October 18, 1999 (Conditional Capital I)
and thereby increased the Companys share capital to
1,499,457,270. This capital increase was recorded in the
Commercial Register on November 3, 2007.
Between October 1, 2007 and September 30, 2008, the
Company issued 13,450 registered no par value shares of together
26,900 resulting from the conditional capital resolved on
October 18, 1999 (Conditional Capital I) and thereby
increased the Companys share capital to
1,499,484,170. This capital increase was recorded in the
Commercial Register on February 2, 2009.
Following the implementation of the capital increase relating to
this Offering, the Companys issued share capital will
amount to up to 2,173,484,170, divided into up to
1,086,742,085 shares. See Capital
Increase for the New Shares.
General
Information on Capital Measures
According to Section 182(1) of the German Stock Corporation
Act, a resolution of the Companys general
shareholders meeting with a majority of at least
three-quarters of the share capital represented when the vote is
taken is required to increase the Companys issued share
capital, unless the Articles of Association call for a different
majority. Infineon Technologies AG has exercised its right to
stipulate a smaller majority of shares. In accordance with
Section 17 of the Articles of Association the
Companys general shareholders meeting adopts its
resolutions with a simple majority of the votes cast and, in so
far as a capital majority is necessary, with a simple majority
of the represented share capital, unless a higher majority is
required by compulsory statutory provisions or by the Articles
of Association (which is not the case with respect to ordinary
share capital increases).
207
A resolution of the Companys general shareholders
meeting may also authorize the Management Board to increase the
issued share capital with the approval of the Supervisory Board
within a specified period not exceeding five years (authorized
capital). A majority of three-quarters of the share capital
represented is needed for such vote. The articles of association
may specify a greater majority shareholding and additional
requirements. The Articles of Association do not contain such
specification. The nominal amount of the authorized capital may
in the aggregate not exceed half of the issued share capital
existing at the time the resolution of the Companys
general shareholders meeting is registered.
The Companys shareholders may also resolve to create
conditional capital, but only for specific purposes, such as
granting conversion rights or options to holders of convertible
bonds and certain similar instruments, with the aim of preparing
for a merger with another company or granting subscription
rights to employees or members of the management of the Company
or an affiliated company. This requires a majority of
three-quarters of the share capital represented when the vote is
taken. In no event may the nominal amount of the conditional
capital in the aggregate exceed half of the issued share capital
existing at the time of the resolution on the conditional
capital increase. The nominal amount of the conditional capital
for granting subscription rights to employees and members of
management of the Company or an affiliated company may also not
exceed 10 percent of the issued share capital existing at
the time of the resolution on the conditional capital increase.
A resolution to reduce the issued share capital requires a
majority of three quarters of the issued share capital
represented at the meeting where the vote is taken. The articles
of association may specify a higher majority and additional
requirements. The Articles of Association do not contain such
specifications.
General
Provisions Governing Statutory Subscription Rights
The German Stock Corporation Act provides that all shareholders
generally have subscription rights with respect to newly issued
shares (as well as to newly issued convertible bonds, bonds with
warrants, income bonds and profit participation certificates).
No subscription rights exist with respect to shares resulting
from conditional capital. Subscription rights are generally
freely transferable and may be traded on the German stock
exchanges during a specific period prior to the expiration of
the subscription period. The Companys general
shareholders meeting may exclude subscription rights by a
majority of at least three-quarters of the issued share capital
represented at the meeting approving the resolution. The
articles of association may specify a higher majority and
additional requirements. The Articles of Association do not
contain such specifications. The exclusion of subscription
rights further requires a justification. The exclusion is
justified if the Companys interest in excluding
subscription rights outweighs the interest of shareholders in
the subscription rights being granted. Without such a
justification, subscription rights for the issuance of new
shares may only be excluded if the share capital is being
increased for cash consideration, the amount of the capital
increase does not exceed 10 percent of the Companys
existing share capital and the issue price of the new shares is
not substantially lower than the market price of the
Companys shares. In each case, the decision requires a
report by the Management Board that sets forth the justification
or the meeting of the requirements for the 10 percent
exclusion, respectively.
General
Provisions Governing the Liquidation of the Company
Except in the cases of a liquidation based on insolvency
proceedings or judicial decree, the Company may only be
liquidated by a resolution of the general shareholders
meeting, which under the German Stock Corporation Act requires a
majority of at least three-quarters of the share capital
represented when the vote is taken. The Articles of Association
may specify a higher majority and additional requirements. The
articles of association do not contain such specifications. In
this case, the assets remaining after all the liabilities of the
Company have been settled will be distributed among the
shareholders proportionally to their holdings of the share
capital, as provided by the German Stock Corporation Act.
Certain requirements for the protection of creditors must be
complied with in this process.
Exclusion of
Minority Shareholders
Sections 327a et seq. of the German Stock Corporation Act
concerning squeeze-outs provide that a shareholder who owns
95 percent of the issued share capital (principal
shareholder) may request that the general shareholders
meeting of a German stock corporation resolves to transfer the
shares of the minority shareholders to the principal shareholder
in return for an adequate cash compensation. The amount of this
cash compensation to be paid to the minority shareholders must
take account of the stock
208
corporations financial condition at the time the
resolution is passed. The full value of the stock corporation,
which is normally calculated using the capitalization of
earnings method (Ertragswertmethode), is decisive for
determining the compensation amount.
In addition, the provisions of Sections 39a and 39b of the
German Securities Acquisition and Takeover Act regarding a
squeeze-out, require that after a takeover bid or mandatory
offer, the remaining voting shares must, at the bidders
request, be transferred to the bidder who owns at least
95 percent of the voting share capital of the target
company in exchange for an appropriate settlement payment
ordered by a court. The consideration offered in connection with
the takeover bid or mandatory offer is deemed an appropriate
settlement if the bidder, based on the offer, has acquired
shares equal to at least 90 percent of the share capital
subject to the offer. Furthermore, after a takeover bid or
mandatory offer, the shareholders of a target company who did
not accept the offer may accept it within three months following
the expiration of the acceptance period (so called sell-out) if
the bidder is entitled to request the transfer of the
outstanding voting shares under Section 39a
(Section 39c of the German Securities Acquisition and
Takeover Act).
In addition to the provisions on the squeezing out of minority
shareholders, Sections 319 et seq. of the German Stock
Corporation Act provide for the integration
(Eingliederung) of stock corporations. Under these
provisions, the general shareholders meetings of stock
corporations (i.e. of the principal company and of the
integrated company) may resolve to integrate a company if
95 percent of the shares of such company are held by the
future principal company. The shareholders excluded from the
integrated company are entitled to an adequate compensation that
must generally be granted in the form of shares of the principal
company; in some cases the compensation has to be paid in cash.
The amount of the compensation must be calculated using what is
known as the merger value ratio between the two companies, in
other words the exchange ratio that would be adequate were the
two companies to merge. In contrast to the squeeze-out of
minority shareholders, integration is only possible when the
future principal company is a stock corporation with a stated
domicile in Germany.
Capital Increase
for the New Shares
The New Shares offered hereby, which are governed by the laws of
Germany, will be issued by utilizing up to all of the
Companys Authorized Capital 2007 and 2009/I in accordance
with Section 4(2 and 10) of the Articles of Association.
The Authorized Capital 2007 was approved by resolution of the
Companys general shareholders meeting on
February 15, 2007, and entered in the Commercial Register
on March 28, 2007 (see Authorized
Capital Authorized Capital 2007). The
Authorized Capital 2009/I was approved by resolution of the
Companys general shareholders meeting on
February 12, 2009, and entered in the Commercial Register
on April 28, 2009 (see Authorized
Capital Authorized Capital 2009/I). On
July 9, 2009, the Management Board resolved, with the
approval of the Supervisory Board on July 9, 2009, to make
use of these authorizations and issue for the Offering of up to
337,000,000 New Shares, each such share with a notional value of
2.00 (no par value shares). Once the implementation of the
capital increase has been entered in the Commercial Register the
Companys issued share capital will amount to up to
2,173,484,170.
Authorized
Capital
The Companys authorized capital as of the date of this
Prospectus (prior to registration of the implementation of the
capital increase in the Commercial Register) amounts to
1,499,484,170 and was created by two separate
authorization resolutions.
Authorized
Capital 2007
On February 15, 2007 the Companys general
shareholders meeting resolved to authorize the Management
Board to increase the Companys share capital until
February 14, 2012, with the approval of the Supervisory
Board, by up to 224,000,000 through the issuance of new,
registered no par value shares against contributions in cash or
in kind; in one lump sum or by several partial amounts at
different times (Authorized Capital 2007). In the event of a
capital increase in cash shareholders are to be granted
subscription rights. The shares may also be subscribed to by a
bank or syndicate of banks subject to the condition that they be
offered for purchase to the existing shareholders. The
Management Board, however, is authorized with the approval of
the Supervisory Board to exclude shareholders subscription
rights for residual or fractional amounts. The Management Board
is also authorized with the approval of the Supervisory Board to
exclude shareholders subscription rights if this is
necessary to grant subscription rights to holders of warrants or
holders of convertible bonds or notes previously issued or to be
issued in the future by the Company or its subsidiaries in the
amounts to which such holders would be entitled upon
209
the exercise of their warrants or conversion rights or upon
fulfillment of their conversion obligations. Furthermore, the
Management Board is authorized with the approval of the
Supervisory Board to exclude shareholders subscription
rights if the issue price of the new shares is not significantly
lower than the stock market price. However, this authorization
applies only if the value of the shares issued with the
exclusion of subscription rights pursuant to Section 186(3)
sentence 4 of the German Stock Corporation Act does not exceed
10 percent of the Companys share capital, neither at
the time when this authorization takes effect, nor when it is
exercised. The shares issued or to be issued by way of honoring
bonds with conversion
and/or
warrant rights are also to be included in this limit of
10 percent of the Companys share capital if the bonds
were issued with the exclusion of subscription rights after
February 15, 2007 due to an authorization in lieu of
Section 186(3) sentence 4 of German Stock Corporation Act.
Furthermore, the sale of own shares is to be included in this
limit of 10 percent of the share capital if it takes place
with the exclusion of subscription rights due to an
authorization to sell own shares pursuant to Sections 71(1)
No. 8 sentence 5, 186(3) sentence 4 of the German Stock
Corporation Act. Finally, the Management Board is authorized,
with the approval of the Supervisory Board, to exclude
shareholders subscription rights for capital increases
against contribution in kind. The Management Board is
authorized, with the approval of the Supervisory Board, to
stipulate the other details of the shares rights and the
conditions for issuing those shares.
Authorized
Capital 2009/I
On February 12, 2009 the Companys general
shareholders meeting resolved to authorize the Management
Board to increase the Companys share capital until
February 11, 2014, with the approval of the Supervisory
Board, by up to 450,000,000 by issuing new registered no
par value shares, carrying full dividend rights as of the
beginning of the fiscal year in which they are issued, against
contributions in cash
and/or
contributions in kind (the authorized capital was resolved on as
Authorized Capital 2009/II in the Annual General
Meeting of February 12, 2009, but according to a resolution
by the Supervisory Board registered in the Commercial Register
as Authorized Capital 2009/I). Shareholders have a
general subscription right in relation to theses shares. The
shares may be subscribed to by a bank or syndicate of banks
subject to the condition that they be offered for purchase to
the existing shareholders. The Management Board, however, is
authorized with the approval of the Supervisory Board to exclude
fractional amounts from the subscription right and to exclude
the subscription right in relation to capital increases against
contributions in kind. The Management Board is also authorized
with the approval of the Supervisory Board to determine the
further content of the rights attached to the shares and the
terms of the share issue.
Conditional
Capital
The Companys conditional capital recorded in the
Commercial Register amounts to 665,335,548 as of the date
of this Prospectus. It has been created through six conditional
capital increases.
Conditional
Capital I
Section 4(5) of the Articles of Association provides that
the share capital of the Company is conditionally increased by
an amount not to exceed 34,635,548 (Conditional Capital I,
this conditional capital is registered in the Commercial
Register as Conditional Capital 1999/I). The
conditional capital increase shall be effected by issuing up to
17,317,774 new registered no par value shares and carrying full
dividend rights as of the beginning of the fiscal year in which
they are issued only to the extent that the holders of
subscription rights issued under the Infineon Technologies
AG 2001 International Long Term Incentive Plan based on
the authorization granted on April 6, 2001 choose to
exercise their subscription rights.
Conditional
Capital 2007
Section 4(6) of the Articles of Association provides that
the share capital is conditionally increased by up to
149,900,000 by issuing up to 74,950,000 new no par value
registered shares and carrying full dividend rights as of the
beginning of the fiscal year in which they are issued
(Conditional Capital 2007, this conditional capital is
registered in the Commercial Register as Conditional
Capital 2007/I). The conditional capital increase serves
the purpose of granting shares to the holders or creditors of
bonds with warrants
and/or
convertible bonds issued by the Company or a subordinated group
company on the basis of the authorization of the Annual General
Meeting of February 15, 2007. The conditional capital
increase is to be effected only insofar as option
and/or
conversion rights relating to the bonds are exercised or any
conversion obligations under these bonds are fulfilled and
insofar as no cash settlement is granted and no
210
own shares are used for servicing. The Management Board is
authorized to determine the further details of implementation of
the conditional capital increase.
Conditional
Capital III
Section 4(7) of the Articles of Association provides that
the share capital is conditionally increased by up to
29,000,000 (Conditional Capital III, this conditional
capital is registered in the Commercial Register as
Conditional Capital 2001/I). The conditional capital
increase will be carried out by the issue of up to 14,500,000
new registered no par value shares and carrying full dividend
rights as of the beginning of the fiscal year in which they are
issued, although only to the extent that the holders of
subscription rights granted under the Infineon
Technologies AG 2001 International Long Term Incentive
Plan on the basis of the authorization issued on
April 6, 2001, or the holders of subscription rights
granted under the Infineon Technologies AG Share Option
Plan 2006 on the basis of the authorization issued on
16th February 2006, exercise their subscription rights.
Conditional
Capital 2002
Section 4(8) of the Articles of Association provides that
the share capital is conditionally increased by up to
152,000,000 by issuing up to 76,000,000 new no par value
registered shares and carrying full dividend rights as of the
beginning of the fiscal year in which they are issued
(Conditional Capital 2002, this conditional capital is
registered in the Commercial Register as Conditional
Capital 2007/II). The conditional capital increase serves
the purpose of granting shares to the holders of the Convertible
Notes due 2010, which are guaranteed by the Company. The
conditional capital increase is effected only insofar as
conversion rights from the Convertible Notes due 2010 are
exercised or any conversion obligations under these notes are
fulfilled. The Management Board is authorized to determine the
further details of implementation of the conditional capital
increase.
Conditional
Capital 2008
Section 4(9) of the Articles of Association provides that
the share capital is conditionally increased by up to
149,900,000 by issuing up to 74,950,000 new no par value
registered shares and carrying full dividend rights as of the
beginning of the fiscal year in which they are issued
(Conditional Capital 2008, this conditional capital is
registered in the Commercial Register as Conditional
Capital 2008/I). The conditional capital increase serves
the purpose of granting shares to the holders or creditors of
bonds with warrants
and/or
convertible bonds issued by the Company or a subordinated group
company against payment in cash on the basis of the
authorization of the Annual General Meeting of February 14,
2008. The conditional capital increase is to be effected only
insofar as option
and/or
conversion rights relating to the bonds are exercised or any
conversion obligations under these bonds are fulfilled and
insofar as no cash settlement is granted and no own shares are
used for servicing. The Management Board is authorized to
determine the further details of implementation of the
conditional capital increase.
Conditional
Capital 2009/I
Section 4(11) of the Articles of Association provides that
the share capital is conditionally increased by up to
149,900,000 by issuing up to 74,950,000 new no par value
registered shares and carrying full dividend rights as of the
beginning of the fiscal year in which they are issued (the
conditional capital was resolved on as Conditional Capital
2009/II in the Annual General Meeting of February 12,
2009, but according to a resolution by the Supervisory Board
registered in the Commercial Register as Conditional
Capital 2009/I). The conditional capital increase serves
the purpose of granting shares to the holders or creditors of
bonds with warrants
and/or
convertible bonds issued by the Company or a subordinated group
company against payment in cash on the basis of the
authorization of the Annual General Meeting of February 12,
2009, such as for any conversions made of the New Convertible
Notes due 2014. The conditional capital increase is to be
effected only insofar as option
and/or
conversion rights relating to the bonds are exercised or any
conversion obligations under these bonds are fulfilled and
insofar as no cash settlement is granted and no own shares are
used for servicing. The Management Board is authorized to
determine the further details of implementation of the
conditional capital increase.
On May 26, 2009, Infineon Technologies Holding B.V.,
Rotterdam, issued guaranteed subordinated convertible notes with
a notional amount of 195,600,000 maturing on May 26,
2014 with the right to conversion into shares of the Company to
institutional investors. The New Convertible Notes due 2014 are
backed by a guarantee from the Company on an unsubordinated
basis regarding all coupon payments and
211
on a subordinated basis regarding the principal amount. From the
90th day after May 26, 2009 until the 10th day
prior to May 26, 2014 (both dates inclusive) each
bondholder has the right to convert each bond in whole, but not
in part, into new shares of the Company to be issued from this
Conditional Capital 2009/I. The New Convertible Notes due 2014
were issued at an issue price of 92.80 percent of par.
Aside from a coupon rate of 7.50 percent, the key terms of
the New Convertible Notes due 2014 include a reference share
price of 2.0893, a conversion premium of 25 percent
and a conversion price of 2.61 per share.
Repurchase of Own
Shares; Treasury Shares
As of the date of this Prospectus, the Company does not hold any
of its own shares.
Management and
Employee Participation Plans
As of the date of this Prospectus, the current members of the
Supervisory Board and the Management Board, as a group, owned
55,567 of the Companys ordinary shares (less than one
percent of all outstanding shares) and had the right to acquire
854,700 ordinary shares pursuant to options granted under the
plans described below.
With resolution dated April 6, 2001, the Annual General
Meeting adopted the 2001 plan. The plan permitted
non-transferable stock options to be issued to members of the
Management Board, members of the senior management of group
companies and other managers and employees in key positions at
Infineon and its group companies. The term of the plan ended in
2006, stock options granted under this plan can still be
exercised. Infineon issued five annual grants and various
monthly grants between September 1, 2001 and March 1,
2006 amounting to a total grant of 43,635,141 option rights. As
of March 31, 2009, options to purchase an aggregate of
22.9 million shares were outstanding under the 2001 plan,
of which options to purchase 632,200 shares were held by
the current members of the Management Board. No further options
can be granted under the 2001 plan.
The exercise price of the options granted under the 2001 plan is
105 percent of the average closing share price of the
Companys shares on the Frankfurt Stock Exchange as
reported by Xetra over the five trading days preceding the date
of grant. Options granted under the 2001 plan have a term of
seven years from the date of grant and may be exercised
successively at the earliest after the second anniversary of the
date of grant, but only if the share price of the Company has
reached the exercise price on at least one trading day during
the option life. In addition, holders may not exercise an option
within fixed time periods prior to and following the publication
of the Companys quarterly or annual results. Any option
under the 2001 plan forfeits without compensation once its term
of 7 years has been exceeded.
The 2001 plan was replaced in 2006 by the 2006 plan which was
authorized by the Annual General Meeting on February 16,
2006. This stock option plan provides for an aggregate amount of
up to 13,000,000 non-transferable stock options for ordinary
shares of Infineon to be issued to members of the Management
Board of Infineon (up to 1,625,000), to members of senior
management at group companies of Infineon (up to 1,300,000 stock
options) and to other managers and other key personnel at
Infineon and its group companies (up to 10,075,000 stock
options) over a three-year period ending September 30,
2009. No more than 40 percent of the options available for
grant to one of those three groups may be issued during a single
fiscal year, and Infineon may not grant options under the 2006
plan covering more than 13 million shares in the aggregate.
As of March 31, 2009, options to purchase an aggregate of
2,123,500 shares were outstanding under the 2006 plan, of
which options to purchase 222,500 shares are held by the
current members of the Management Board. Additionally, 2,645,000
options have been granted on June 3, 2009, however, none of
them to members of the Management Board. Options to purchase
550,000 shares were granted to members of Infineons
Management Board during their membership on the Management
Board. No further options can be granted under the 2006 plan.
The exercise price of the options granted under the 2006 plan is
120 percent of the average opening share price of
Infineons shares on the Frankfurt Stock Exchange as
reported by Xetra over the five trading days preceding the date
of grant. Options granted under the 2006 plan have a term of six
years after the date of grant and may be exercised after the
third anniversary of the date of grant, at the earliest. Any
option under the 2006 plan expires without compensation if it
has not been exercised prior to the end of its 6 year term.
In addition, options may be exercised only if both (a) the
Infineon share price has reached the exercise price on at least
one trading day during the option life, and (b) the
Infineon share price has exceeded for at least three consecutive
days, on at least one occasion since the date of grant, the
212
performance of the Philadelphia Semiconductor Stock Index, a
comparative index of the share price of companies in a similar
sector to Infineon. If the Philadelphia Semiconductor Index is
discontinued or is fundamentally altered so as not to provide an
appropriate means for comparison, then the Management Board will
either select another index comparable to the Philadelphia
Semiconductor Stock Index to serve as a comparative index or use
a new index including as many as possible of the individual
prices previously tracked by the Philadelphia Semiconductor
Stock Index. In addition, holders may not exercise an option
within a fixed time period prior to and following the
publication of the Companys quarterly or annual results.
Under the 2006 plan, the Supervisory Board decides annually how
many options to grant to the Management Board. The Supervisory
Board must make such decision within a period of 45 days
after publication of the results for the fiscal year then ended,
or up to 45 days after the publication of the results of
the first or second quarter of a fiscal year but in each case no
later than two weeks before the end of the quarter. During that
same period the Management Board may grant options to eligible
persons.
The terms and conditions of both plans, the 2001 plan and the
2006 plan, provide for an option adjustment regulation in the
event of a share capital increase or in case of a merger of
Infineon with another company or in case of any other comparable
event with an impact on the value of the options. In such event
the Company may adjust the terms and conditions of the plan, in
particular with regard to the exercise price of the option
rights or with regard to the number of shares that the
participant is entitled to acquire. If such adjustment is made
the economic value of the option right shall be approximately
the same as immediately prior to the event.
Listing
The Companys Existing Shares have been admitted to the
regulated market segment (regulierter Markt) of the Frankfurt
Stock Exchange and to the
sub-segment
with additional post-admission obligations (Prime Standard) of
the Frankfurt Stock Exchange. Further Infineon Technologies
AGs American Depositary Shares (ADS)
are listed on the OTCQX International Premier market, the
highest
over-the-counter
market tier, under the ticker symbol IFNNY. Each ADS
represents one ordinary registered share of Infineon
Technologies AG.
On April 3, 2009, the Company announced its application to
voluntarily delist from the New York Stock Exchange (NYSE). The
delisting took effect on April 24, 2009, and consequently,
the Companys American Depositary Shares are no longer
traded on the NYSE.
213
RELATED PARTY
TRANSACTIONS
For periods prior to October 1, 2008, Infineon prepared its
financial statements in accordance with U.S. GAAP. For the
2008 fiscal year, Infineon prepared consolidated financial
statements in accordance with U.S. GAAP since
U.S. GAAP were considered the primary accounting principles
for that period. Additionally, Infineon prepared consolidated
financial statements in accordance with IFRS for the 2008 fiscal
year. Commencing in the 2009 fiscal year, the Company will
prepare its consolidated financial statements exclusively on the
basis of IFRS. See General Information
Presentation of Financial Information.
In accordance with U.S. GAAP, the Company reported related
party transactions and transactions in the normal course of
business with associated and related companies in accordance
with Statement of Financial Accounting Standards No. 57. In
accordance with IFRS, the Company reports related party
transactions as transactions in the normal course of business
with associated companies in which the investor has the ability
to exercise significant influence over the investees operations
and financial policies (Equity Method
Investments) and related persons such as Management
and Supervisory Board members in accordance with the
International Accounting Standard No. 24.
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 costs plus a
mark-up.
Companies in which the Company has the ability to exercise
significant influence over operating and financial policies,
generally through an ownership interest of 20 percent or
more and that are not controlled by the Company are called
associated companies (Associated Companies).
Other equity investments called related companies
(Related Companies) generally refer to
companies in which the Company has an ownership interest of less
than 20 percent.
Related party receivables consist primarily of trade, financial,
and other receivables from Equity Method Investments and Related
Companies, and totaled 18 and 84 million as of
September 30, 2006 and 2007 based on the Companys
consolidated financial statements (U.S. GAAP). Related
party payables consist primarily of trade, financial, and other
payables from Equity Method Investments and Related Companies,
and totaled 89 million and 169 million as
of September 30, 2006 and 2007 based on the Companys
consolidated financial statements (U.S. GAAP).
Related party receivables consist primarily of trade, financial,
and other receivables from Equity Method Investments, and
totaled 80 million and 78 million as of
September 30, 2007 and 2008 based on the Companys
consolidated financial statements (IFRS) and
7 million based on the Companys condensed
consolidated financial statements (IFRS) as of March 31,
2009. Related party payables consist primarily of trade,
financial, and other payables from Equity Method Investments,
and totaled 176 million and 21 million as
of September 30, 2007 and 2008 based on the Companys
consolidated financial statements (IFRS) and
21 million as of March 31, 2009 based on the
Companys condensed consolidated financial statements
(IFRS).
Sales to related parties and Related Companies totaled
383 million and 57 million for the years
ended September 30, 2006 and 2007 based on the
Companys consolidated financial statements
(U.S. GAAP). Purchases from related parties and Related
Companies totaled 648 and 593 million for the
years ended September 30, 2006 and 2007 based on the
Companys consolidated financial statements
(U.S. GAAP).
Sales to related parties totaled 57 million and
1 million for the years ended September 30, 2007
and 2008 based on the Companys consolidated financial
statements (IFRS) and 0 million and
2 million for the six months ended March 31,
2008 and 2009 based on the Companys condensed consolidated
financial statements (IFRS).
Purchases from related parties totaled 47 million and
148 million for the years ended September 30,
2007 and 2008 based on the Companys consolidated financial
statements (IFRS) and 269 million and
59 million for the six months ended March 31,
2008 and 2009 based on the Companys condensed consolidated
financial statements (IFRS).
Additional information regarding specific related party
transactions is provided below.
Qimonda
In connection with the formation of Qimonda as a separate legal
entity, Infineon and Qimonda entered into a number of agreements
in 2006 governing the carve-out of the memory products business,
the licensing of intellectual property, the use of
Infineons 200-millimeter fabrication facility in Dresden,
and support services in the areas of general support, IT
services and R&D services.
214
Carve-out and
Control
Qimonda was carved out as a wholly-owned subsidiary of Infineon
effective May 1, 2006. Pursuant to the contribution
agreements Infineon and Qimonda entered into in connection with
the carve-out, Infineon contributed substantially all of the
assets, liabilities, operations and activities, as well as the
employees, of its memory products business to Qimonda. In
addition, Infineon and Qimonda entered into arrangements with
respect to various relationships between the two groups.
Infineon is currently Qimondas largest shareholder, with a
direct and indirect shareholding of 77.5 percent. During
the 2008 fiscal year Infineon has committed to a plan to dispose
of Infineons stake in Qimonda. Infineons majority
ownership permits Qimonda to use the entire intellectual
property umbrella as well as other benefits from contracts
between Infineon and third-parties. Infineon is a party to
certain intellectual property cross-licensing and other
contractual relationships with third-parties for Qimondas
benefit.
On January 23, 2009, Qimonda and its wholly owned
subsidiary Qimonda Dresden GmbH & Co. oHG filed an
application at the Munich Local Court to commence insolvency
proceedings. As a result of this application, Infineon
deconsolidated Qimonda during the second quarter of the 2009
fiscal year, Qimonda ceased being a related party in accordance
with IFRS and subsequent transactions between the Company and
Qimonda are no longer reflected as related party transactions.
On April 1, 2009, the insolvency proceedings formally
opened. Transactions between Infineon and Qimonda subsequent to
the deconsolidation are no longer reflected as related party
transactions.
For as long as Infineon, directly or indirectly, owns a majority
of Qimondas shares, Infineon will also have the majority
of votes in Qimondas shareholders general meeting
and will therefore be in a position to elect all of the
shareholder-elected members of Qimondas supervisory board.
All of the agreements relating to Qimondas carve-out from
Infineon, including those governing Qimondas ongoing
relationship with Infineon, were concluded in the context of a
parent-subsidiary relationship and in the overall context of
Qimondas carve-out from Infineon. The terms of these
agreements may be less favorable to Infineon than had they been
negotiated with unaffiliated third-parties.
Arrangements
relating to AMTC and BAC
Infineons partnership interests in the Advanced Mask
Technology Center (AMTC) and the Maskhouse
Building Administration Company (BAC) in
Dresden were transferred to Qimonda pursuant to an agreement
dated December 10, 2007 with Qimonda, Advanced Micro
Devices, Toppan Photomask, AMTC and BAC.
Arrangement
concerning the Licensing of Intellectual Property
In connection with the transfer of intellectual property to
Qimonda, Infineon and Qimonda have entered into certain
cross-licensing arrangements. Qimonda will own any patents that
have been or will be applied for in Qimondas name after
the carve-out. As part of the contribution agreement, Qimonda
agreed to the following terms with respect to patents applied
for by either party and its subsidiaries within five years of
the effective date of the carve-out or as long as Infineon owns
a majority of the shares of Qimonda, whichever period is longer:
Infineon will receive royalty-free licenses, for the lifetimes
of the patents or until a change of control of Infineon occurs,
to use Qimonda patents outside of the stand-alone memory field.
Even if a change of control occurred, the licenses would
continue if Qimonda received corresponding licenses for the
memory products field from the third party then controlling
Infineon.
Indemnification
The contribution agreement includes provisions pursuant to which
Qimonda agreed to indemnify Infineon against any claim
(including any related expenses) arising in connection with the
liabilities, contracts, offers, uncompleted transactions,
continuing obligations, risks, encumbrances and other matters
relating to the memory products business that were transferred
to Qimonda in the carve-out. Qimonda also agreed to indemnify
Infineon against any losses it may suffer under several
guarantee and financing arrangements that relate to
Qimondas business but that cannot be transferred to
Qimonda for legal, technical or practical reasons. In addition,
the contribution agreement provides for indemnification of
Infineon with respect to certain existing and future legal
claims. With the exception of the securities and certain patent
infringement and antitrust claims identified in
Legal Matters, for which
different arrangements apply as described in that section,
Qimonda is obligated to indemnify Infineon against any liability
arising in connection with claims related to the memory products
business described in that section. Finally, the contribution
agreement in principle provides for Qimonda to bear
60 percent of the total license fee payments payable by
Infineon and Qimonda to which Infineon and Qimonda may agree in
215
connection with two cases in which negotiations relating to
licensing and cross-licensing were ongoing at the time of the
carve-out, one of which is still ongoing. These payments could
be substantial and could remain in effect for lengthy periods.
The contribution agreement does not limit the aggregate
liability Qimonda may incur as a result of its indemnification
obligations, nor does it restrict the obligations to a certain
time period after the carve-out as long as the events giving
rise to them occurred prior to the carve-out. Due to
Qimondas insolvency, however, it is very unlikely that
Qimonda will be able to indemnify Infineon against any such
potential liabilities.
Ongoing Services
Relationships
Prior to Qimondas carve-out, most of the administrative,
financial, risk management, information technology and other
services relating to the memory product business were provided
centrally by Infineon. After the carve-out, Infineon has
continued to provide some of these services under certain
services agreements to Qimonda. The terms of these agreements
may be less favorable to Infineon than they might have been had
they been negotiated with unaffiliated third-parties.
Siemens
Sales to Siemens group companies include sales to the Siemens
group sales organizations for resale to third-parties of
21 million for the year ended September 30,
2006. Purchases from Siemens group companies primarily include
purchases of fixed assets, inventory, IT services, and
administrative services. On April 3, 2006, Siemens disposed
of its remaining shareholding in the Company. Transactions
between the Company and Siemens subsequent to this date are no
longer reflected as related party transactions.
Sales to Siemens group companies include sales to the Siemens
group sales organizations for resale to third-parties of
21 million for the year ended September 30,
2006. Purchases from Siemens group companies primarily include
purchases of fixed assets, inventory, IT services, and
administrative services. On April 3, 2006, Siemens disposed
of its remaining shareholding in the Company. Transactions
between the Company and Siemens subsequent to this date are no
longer reflected as related party transactions.
Sales to Siemens group companies totaling 316 million
in the 2006 fiscal year and purchases from Siemens group
companies totaling 74 million in the 2006 fiscal year.
The Siemens group was the Companys largest customer in the
2006 financial year, representing 7% of the Companys net
sales. The Company believes that these transactions were on
terms no less favorable to the Company than the Company could
obtain from third-parties.
In the 2006 fiscal year, the Siemens group provided Infineon
with some administrative, financial, information technology and
other services. The IT framework agreements specify the general
framework conditions for the separation of IT/voice networks and
resources, the joint running of a firewall system and the
security requirements for access to purchased services. Each of
these services (including travel management, export control, and
library services) are then purchased on the basis of individual
service agreements. The Company believes all services from the
Siemens group companies are purchased at market prices and on
arms length terms and conditions.
During the 2006 fiscal year, the Company purchased services from
Siemens group companies, including information technology
services, of 44 million, facility rental of
20 million, and administrative services of
53 million. The Company also purchased raw materials,
products and fixed and other assets aggregating
18 million during the 2006 fiscal year.
ALTIS joint
venture with IBM
ALTIS is a joint venture between the Company and IBM to
manufacture logic products. See Business
Manufacturing joint ventures; Foundries Joint
venture with IBM (ALTIS). Transactions between the
Company and ALTIS subsequent to the consolidation of ALTIS
during the first quarter of the 2006 fiscal year are no longer
reflected as related party transactions. At September 30,
2007, current financial and other receivables from Associated
and Related Companies included a revolving term loan of
52 million due from ALTIS.
Service and
Consulting Agreement with Backstop Investor
It is intended that following or concurrently with closing of
the transaction with the Backstop Investor, the Company and an
affiliate of the Backstop Investor conclude a services and
consulting agreement pursuant to which such affiliate will
render strategic and corporate finance advice to the Company.
Negotiations of such agreement will however only commence after
such closing.
216
TAXATION IN THE
FEDERAL REPUBLIC OF GERMANY
The following section contains a short summary of certain German
key tax principles that may be relevant in the context of the
Offering with respect to the acquisition, holding, or transfer
of shares and subscription rights. Church tax that may be
imposed on individual shareholders in Germany is not covered in
this section. This summary does not purport to be a
comprehensive or exhaustive description of all German tax
considerations that may be relevant to shareholders. It is based
upon domestic German tax laws in effect at the time of
preparation of this Prospectus and the provisions of typical
double taxation treaties currently in force between Germany and
other countries. It is important to note that the legal
situation may change, possibly with retroactive effect.
The tax information presented in this Prospectus is not a
substitute for tax advice. Therefore, it is strongly recommended
that any prospective investor consult with a tax advisor
concerning the tax consequences of acquiring, holding, selling
and gifting or bequeathing shares and subscription rights. The
same applies with respect to the rules governing the refund of
any withholding tax (Kapitalertragsteuer) withheld. Only
an individual tax consultation can appropriately account for the
particular tax situation of each prospective investor.
Taxation of the
Company
Corporate Income
Tax and Solidarity Surcharge
The Companys taxable income, whether distributed or
retained, is generally subject to corporate income tax
(Körperschaftsteuer) at a uniform rate of
15 percent plus solidarity surcharge
(Solidaritätszuschlag) of 5.5 percent thereon,
resulting in a total tax liability of 15.825 percent.
Profit distributions (Gewinnanteile) and other
compensation received by the Company from domestic or foreign
corporations are exempt from corporate income tax; however, five
percent of such revenues are considered non-deductible business
expenses and, as such, are subject to corporate income tax plus
solidarity surcharge. Ultimately, therefore, 95 percent of
the amount of profit distributions and other compensation that
the Company receives from corporations is exempt from corporate
income tax. The same applies to profits earned by the Company
from the sale of shares in another domestic or foreign
corporation. Losses incurred from the sale of such shares are
not deductible for tax purposes.
Trade
Tax
In addition, the Company is subject to trade tax
(Gewerbesteuer) with respect to its taxable trade profit
(Gewerbeertrag) from permanent establishments in Germany
(inländische Betriebsstätten). When determining
the amount on which to assess the trade tax, one key difference
to corporate income tax is that (inter alia)
25 percent of the interest expense on debt, as well as
25 percent of the interest portion of rent, lease payments
and royalties, are added back to the amount of profits from
permanent establishments in Germany determined for corporate
income tax purposes; this applies to the extent these expenses
cumulatively exceed 100,000. Trade tax is no longer
deductible as a business expense at the level of the Company. In
other words, the trade tax owed does not reduce the income
subject to corporate income tax nor does it reduce the income
subject to the trade tax itself. The base rate for trade tax
amounts to 3.5 percent.
The ultimate amount of the trade tax depends on the trade tax
multiplier (Gewerbesteuerhebesatz) set by the local
municipalities in which the Company maintains its permanent
establishments. The trade tax rate generally ranges between
approximately seven percent and 17 percent, depending on
the local trade tax multiplier applicable.
Profit distributions received from other corporations and
capital gains from the sale of shares in other corporations are
treated in principle in the same manner for trade tax purposes
as for corporate income tax purposes. However, profit
distributions received from domestic corporations are
95 percent exempt from trade tax only if the Company held
at least 15 percent of the registered share capital
(Grundkapital or Stammkapital) of the distributing
corporation at the beginning of the relevant tax assessment
period. In the case of dividends from qualified shareholdings
(Schachtelbeteiligungen) in corporations domiciled in
another member state of the European Union within the meaning of
Article 2 of the Parent-Subsidiary Directive (EC Directive
90/435/EEC of the Council dated July 23, 1990, as amended),
the relevant threshold is 10 percent at the beginning of
the relevant tax assessment period. Subject to additional
requirements, the 95 percent exemption from trade tax may
also become applicable with respect to profit
217
distributions received from foreign corporations, if the Company
has held 15 percent of the registered share capital of such
corporation without interruption since the beginning of the
relevant tax assessment period.
Tax
losses
Available current year tax losses can be used to set off current
year gains without limitation. Tax losses of an amount of
511,500 can be carried back one year. As a rule, unused
tax losses may be carried forward indefinitely. Such tax loss
carry-forwards can be used in subsequent assessment periods to
fully offset taxable income for corporate income tax and trade
tax purposes up to an amount of 1 million. Insofar
the taxable profit subject to corporate income tax and trade tax
for the year exceeds this threshold, only up to 60 percent
of the amount exceeding the threshold may be offset by tax loss
carry-forwards. The remaining 40 percent is subject to tax
(minimum taxation (Mindestbesteuerung)).
However, unused tax loss carry-forwards are eliminated in full
if within five years more than 50 percent of the subscribed
capital, membership interests, equity interests or voting rights
are transferred, whether directly or indirectly, to an acquiring
party or affiliated individuals/entities, or a similar change of
ownership occurs (harmful acquisition (schädlicher
Beteiligungserwerb)). A group of acquirors with aligned
interests is also considered an acquiring party for these
purposes. In addition, any current year losses incurred prior to
the harmful acquisition are generally not deductible. For
harmful acquisition in the above sense of more than
25 percent up to 50 percent of the capital or
interests, the ability to use tax loss carry-forwards decreases
proportionately to the acquired percentage of capital or
interests transferred. Generally, the same applies to current
year tax losses incurred prior to the harmful acquisition. In
light of the current financial downturn exemptions from these
loss restriction rules are discussed by the legislator.
Interest
Barrier
The deduction of interest expenses is subject to the so called
interest barrier (Zinsschranke). Generally speaking, the
Company is allowed to deduct interest expense exceeding the
amount of interest income (that is, net interest expense) only
up to 30 percent of the Companys taxable EBITDA, if
its net interest expense is 1 million or higher and
the so-called escape clause does not apply. According to draft
legislation the 1 million threshold may be extended
to 3 million for the years
2008-2010.
Special rules apply in the case of shareholder loans.
Interest expense that is not deductible in a given year can
generally be carried forward to subsequent fiscal years of the
Company (interest carry-forward). Interest carry-forward can be
deducted within the limits of the interest barrier rules. The
principles of the loss restriction rules discussed above apply
analogously to interest carry-forward when equity interests in
the Company are transferred.
Taxation of
Shareholders
Shareholders are taxed in connection with the holding of shares
(taxation of dividend income), the sale of shares and
subscription rights (taxation of capital gains) and the
gratuitous transfer of shares and subscription rights
(inheritance and gift tax).
Taxation of
Dividend Income
Withholding
Tax
Generally, the Company must withhold and remit to the German tax
authorities a withholding tax in the amount of 25 percent
on dividends it distributes plus solidarity surcharge of
5.5 percent on the amount of the withholding tax (a total
of 26.375 percent). The basis for the withholding tax is
the dividend approved for distribution by the Companys
general shareholders meeting.
Withholding tax is, in principle, withheld regardless of whether
and, if so, to what extent the shareholder must report the
dividend for tax purposes and regardless of whether or not the
shareholder is a resident of Germany.
Where dividends are distributed to a company domiciled in
another member state of the European Union within the meaning of
Article 3(1)(a) of the Parent-Subsidiary Directive (EC
Directive 90/435/EEC of the Council dated July 23, 1990, as
amended), the withholding of the withholding tax is waived, or
its amount refunded, upon application, provided that the company
holds at least 10 percent of the registered share capital
(Grundkapital or Stammkapital) of the distributing
corporation and additional requirements
218
are met. This also applies to dividends distributed to a
permanent establishment located in another European Union member
state of such a parent company or of a parent company that is
tax resident in Germany if the stake in the dividend-paying
company is part of the respective permanent establishments
business assets. The same applies to other (taxable)
non-resident corporations holding at least 10 percent of
the registered share capital in the Company and being entitled
to a full reduction of German withholding tax pursuant to the
applicable double taxation treaty between Germany and their
state of residence. The reduction in the withholding tax is
generally obtained by applying to the German Federal Central
Office of Taxation (Bundeszentralamt für Steuern,
Hauptdienstsitz Bonn-Beuel, An der Küppe 1, 53225 Bonn,
Germany) for a waiver or a refund of German withholding tax to
be withheld by the Company. Forms for the waiver/refund
procedures may be obtained from the Federal Central Office of
Taxation
(http://www.bzst.bund.de),
as well as from German embassies and consulates.
The withholding tax rate for dividends paid to other
non-resident shareholders may be reduced in accordance with the
applicable double taxation treaty, if any, between Germany and
the shareholders country of residence, provided that the
shares are not held as part of the business assets of a
permanent establishment or fixed base (feste Einrichtung)
in Germany or as part of business assets for which a permanent
representative in Germany has been appointed. The reduction in
the withholding tax is generally obtained by applying to the
German Federal Central Office of Taxation (see above) for a
refund of the difference between the withholding tax withheld,
including solidarity surcharge, and the amount of withholding
tax actually owed under the applicable double taxation treaty,
which is usually 15 percent. Forms for the refund procedure
may be obtained from the Federal Central Office of Taxation
(http://www.bzst.bund.de),
as well as from German embassies and consulates.
In the case of dividends received by corporations that are
subject to non-resident taxation in Germany and do not have
their registered office or place of management in Germany,
two-fifths of the withholding tax withheld and remitted to the
tax authorities can be refunded, without providing evidence that
all conditions giving rise to a refund under the
Parent-Subsidiary Directive or under double taxation treaties be
satisfied and without prejudice to any further reduction the
Parent-Subsidiary Directive or double taxation treaties may
provide.
In case of dividends received by foreign corporations any
reduction (by way of waiver or refund) of German withholding tax
requires that the foreign company meets a substance
test pursuant to the German anti-treaty/parent subsidiary
directive shopping rules. According to this test, the foreign
company is not entitled to the refund if and to the extent
(i) its shareholders would not have been entitled to those
benefits if they had received the dividends directly and
(ii) either (x) there is no business or other non-tax
reason for the interposition of the foreign company or
(y) the foreign company does not have adequate economic
substance to engage in its commercial activities or (z) the
foreign company does not generate more than 10 percent of
its gross income from own business activities. Certain
exemptions apply if the foreign company qualifies as foreign
investment vehicle comparable to a German regulated investment
stock corporation or is a foreign stock corporation which shares
are regularly traded at a stock exchange.
According to draft legislation aiming to combat harmful tax
practices and tax evasion a reduction of withholding tax may be
denied (irrespective of a compliance with the above substance
test) if a foreign corporation being shareholder of the Company
is seated in certain jurisdictions and does not disclose
relevant information regarding its individual shareholders
holding (directly or indirectly) more than 10 percent in
the registered share capital of the Company.
Taxation of
Resident Shareholders
Shares held as
Private Assets
Dividend payments in respect of shares held as private assets
are subject to personal income tax as income derived from
capital investment; however, the personal income tax of the
shareholder will deemed to be settled by the (final flat) tax
(Abgeltungsteuer) already withheld (see
Taxation of Shareholders
Taxation of Dividend Income Withholding
Tax) and the dividend will no longer have to be
reported in the shareholders annual tax return.
Upon application of a shareholder, the dividend may be taxed in
accordance with the general rules on determining an
individuals tax bracket, rather than under the final flat
tax provisions, if this would result in a lower tax burden. In
this case, the shareholder will be taxed on gross personal
investment income, less the savers allowance of 801
(or, for married couples filing jointly, 1,602), without
deduction of income-related expenses actually incurred. If tax
is initially withheld, it will be credited against the amount of
personal income tax assessed against the shareholder. If the
amount of withholding tax withheld and
219
remitted exceeds the personal income tax liability under the
credit regime, the overpayment is refunded. The same rules apply
to the solidarity surcharge.
As of January 1, 2009 dividend income which is subject to
the final flat tax can only be offset by ongoing losses from
investment income (capital losses suffered from the sale of
shares are excluded from this set off possibility). It cannot be
offset by grandfathered losses suffered from private sales
transactions realized before January 1, 2009 or by losses
incurred in connection with a trade or business or other
activities. If a shareholders overall income tax rate is
below the final flat tax rate (see above), dividend income is
(upon application) taxed in accordance with the general rules
and can be offset by losses incurred in connection with a trade
or business or other activities.
Shares Held
As Business Assets
If shares form part of a shareholders business assets,
taxation depends on whether the shareholder is a corporation,
sole proprietor or partnership (co-entrepreneurship
(Mitunternehmerschaft)):
(i) Corporations: For
corporations, dividends are generally exempt from corporate
income tax. However, five percent of this tax-exempt income is
considered as expense that may not be deducted as business
expense and is thus effectively subject to corporate income tax
(plus solidarity surcharge). On the other hand, business
expenses actually incurred in connection with the dividends may
be deducted to the full amount. Dividends are, however, fully
subject to trade tax (after deduction of business expenses
related to the dividend), unless a shareholder holds at least
15 percent of the registered share capital of the Company
at the beginning of the tax assessment period. In the latter
case, the 95 percent corporate income tax exemption for
dividends applies analogously to trade tax.
(ii) Sole proprietors
(individuals): 60 percent of dividends
made to sole proprietors are taxed (partial income method
(Teileinkünfteverfahren)) with the personal income
tax rate (plus solidarity surcharge). Correspondingly, only
60 percent of business expenses related to the dividends
are tax-deductible. If shares are held as business assets of a
commercial permanent establishment located in Germany, dividends
are fully subject to trade tax, unless the shareholder holds at
least 15 percent of the Companys registered share
capital at the beginning of the tax assessment period. However,
all or part of the trade tax is generally credited as a lump sum
against the shareholders personal income taxes.
(iii) Partnerships: If
shares are held by a partnership, personal income or corporate
income tax will be levied only at the level of the partners. The
taxation of each partner depends upon whether the partner is a
corporation or an individual. If the partner is a corporation,
the dividend income is generally 95 percent tax-exempt (see
subsection (i) above). If the partner is an individual,
only 60 percent of the dividend income is subject to income
tax plus solidarity surcharge thereon (see subsection (ii)
above). If shares are held as business assets of a commercial
permanent establishment located in Germany, dividends are fully
subject to trade tax at the level of the partnership. If the
partnership held at least 15 percent of the Companys
registered share capital at the beginning of the relevant tax
assessment period, the dividends are not subject to trade tax.
In case the partners are corporations, five percent of the
dividend income considered to be non-deductible business
expenses will be subject to trade tax. To the extent trade tax
becomes applicable, all or part of the trade tax the partnership
pays in proportion to the shareholders interest in the
partnerships income is generally credited as a lump-sum
against the individual partners personal income tax
liability in case the partner is an individual.
Special rules apply to shareholder companies active in the
financial and insurance sectors and to pension funds. See below.
For shareholders (individuals or corporations) that are tax
residents of Germany (that is, as a rule, a person or
corporation whose residence, habitual abode, registered office
or place of management is located in Germany) and holding the
shares as business assets, any withholding tax withheld and
remitted to the German tax authorities by the Company is
credited against the respective shareholders personal
income or corporate income tax liability. If the amount of
withholding tax withheld and remitted exceeds the personal
income or corporate income tax liability under the credit
regime, the overpayment is refunded. The same rules apply to the
solidarity surcharge.
Taxation of
Non-Resident Shareholders
If a shareholder (individual or corporation) who is subject to
non-resident taxation in Germany holds shares as part of the
business assets of a permanent establishment or fixed base in
Germany or as part of business assets for which a permanent
representative in Germany has been appointed, withholding tax
220
withheld and remitted to the German tax authorities by the
Company is credited against the respective shareholders
personal income tax or corporate income tax liability. If the
amount withheld exceeds the personal or corporate income tax
liability, the difference is refunded. The same applies to the
solidarity surcharge. These shareholders are generally subject
to the same rules as applicable for resident shareholders
discussed above. In all other cases, the withholding of
withholding tax settles any tax liability of the shareholder in
Germany. A refund or exemption is granted only as discussed in
the section on withholding tax above. See
Taxation of Shareholders Taxation of Dividend
Income Withholding Tax.
Taxation of
Capital Gains
Withholding
Tax
Capital gains are generally subject to withholding tax at a rate
of 25 percent and a solidarity surcharge thereon at a rate
of 5.5 percent (total rate of 26.375 percent).
Withholding requires a German resident disbursing agent (German
financial institution, German financial services provider,
German branch of a foreign financial institution or foreign
financial services provider, German brokerage or the German
investment bank that acts as the custodian for or administers
the shares and distributes the dividends on them) that has
custody of or administers the shares or that sells the shares
and disburses or credits shareholders for their capital gains.
The amount of tax withheld is generally based on the difference
between the proceeds from the sale, after deducting expenses
that stand in direct relation to the sale, and the book value or
acquisition costs (as the case may be) of the shares and
subscription rights. Under certain circumstances, the
withholding tax may be applied to just 30 percent of the
proceeds from the sale. This is the case, for example, when the
respective securities account is moved from a disbursing agent
that is situated outside of an EU or EEA member state.
Withholding tax is not withheld with respect to capital gains
from shares held as business assets by corporations subject to
unlimited tax liability. The same applies under certain
circumstances to shares held as business assets by individuals
or partnerships.
Resident
Shareholders
Shares/Subscription
Rights Held as Private Assets
Capital gains earned on the sale of shares and subscription
rights (acquired after December 31, 2008) by an
individual who held the shares/subscription rights as private
assets will generally be subject to tax, irrespective of the
length of time the shares are held. The tax liability is usually
covered by the final flat tax (Abgeltungsteuer) withheld
(withholding tax of 25 percent plus solidarity surcharge of
5.5 percent thereon) see Taxation of
Shareholders Taxation of Capital Gains
Withholding Tax.
Shareholders can apply to have their capital gains assessed in
accordance with the general rules on determining an
individuals tax bracket (i.e. at the shareholders
personal income tax rate) if this would result in a lower tax
burden. Any tax already withheld will be credited against the
income tax so determined or, as the case may be, refunded in the
amount of any overpayment.
When determining the income from capital investments, only a
savers allowance in the amount of 801 (1,602
for married couples filing jointly) can be deducted as expenses
related to investment income (Werbungskosten). Expenses
actually incurred to generate the income will not be deducted.
As of January 1, 2009 capital gains earned and capital
losses suffered from the sale of shares and subscription rights
(acquired after December 31, 2008) are ring-fenced:
Capital gains resulting from the sale of shares can only be
offset by (ongoing or carried forward) capital losses suffered
from the sale of shares (acquired after December 31, 2008).
Capital gains resulting from the sale in subscription rights can
only be off-set by certain types of losses in the following
order: (i) current capital losses from investment assets
(except for capital losses from the sale of shares) in
securities deposit accounts with the same account bank,
(ii) grandfathered losses suffered from private sales
transactions realized before January 1, 2009 and
(iii) other current capital losses from investment assets
(except for capital losses from the sale of shares). Capital
losses suffered from the disposal of subscription rights can
only be offset against capital gains from investment assets
(except for capital gains from the sale of shares).
Notwithstanding the foregoing, if a shareholder, or in the case
of a gratuitous acquisition, the shareholders legal
predecessor directly or indirectly held at least one percent of
the share capital of the Company at any time during the five
years preceding the sale, 60 percent of any capital gain
resulting from the sale is taxable (with the applicable income
tax rate, plus the solidarity surcharge). Likewise, no
221
more than 60 percent of any capital loss can be claimed for
tax purposes (subject to general restrictions on tax deductions,
if applicable).
Shares/Subscription
Rights Held as Business Assets
If the shares form part of a shareholders business assets,
then taxation of the capital gains realized depends upon whether
the shareholder is a corporation, sole proprietor or partnership:
(i) Corporations: Generally
speaking, capital gains earned on the sale of shares by
corporations are exempt from corporate income tax and trade tax.
However, five percent are considered non-deductible business
expenses and, as such, are subject to corporate income tax (plus
solidarity surcharge) and trade tax. Generally, all actually
incurred business expenses relating to the capital gains are
fully tax deductible. Losses from the sale of shares and any
other profit reductions related to such sale are not tax
deductible. The same should generally apply to capital gains and
losses from the sale of subscription rights by corporations
resident in Germany. However, please note that according to a
view taken by the German tax authorities capital gains from the
sale of subscription rights should be fully subject to corporate
and trade tax. As a consequence, losses from the sale of
subscription rights and other reductions economically related to
the sale of the subscription rights should generally be
deductible as business expenses.
(ii) Sole Proprietors
(individuals): If the shares are held by sole
proprietors, 60 percent of the capital gains from the sale
of shares are taxable with the personal income tax rate (plus
solidarity surcharge). Similarly, only 60 percent of the
business expenses related to such a gain and only
60 percent of any capital loss are tax deductible. If the
shares are attributable to a commercial permanent establishment
maintained in Germany, 60 percent of the capital gains are
also subject to trade tax. However, all or part of the trade tax
is credited as a lump sum against the shareholders
personal income tax liability. For capital gains realized from
the sale of subscription rights that form part of the business
assets of a sole proprietor there is a risk that, as with gains
realized by a corporation (see (i) above), the full amount
of these gains will be subject to income tax (plus solidarity
surcharge) and, if applicable, to (fully or partly creditable)
trade tax.
(iii) Partnerships: If the
shareholder is a partnership, personal income tax or corporate
income tax, as the case may be, is assessed at the level of each
partner rather than at the level of the partnership. The
taxation of each partner depends on whether the partner is
subject to personal income tax or corporate income tax. If the
partner pays corporate income tax, capital gains from the sale
of shares are in general effectively 95 percent tax exempt
(see subsection (i) above). Again, the tax authorities seem
to take up an adverse stance with respect to the sale of
subscription rights and require the full taxation of the capital
gains realized from the sale. If the partners pay personal
income tax, 60 percent of the capital gains from the sale
of shares are taxable (see subsection (ii) above). In
addition, if the shares are attributable to a commercial
permanent establishment in Germany, any capital gain from their
sale is generally subject to trade tax at the level of the
partnership, with 60 percent of the gain being subject to
trade tax if the partners are individuals and five percent if
the partners are corporations. In case of a sale of subscription
rights please consider that there is a risk that the full amount
of the gains may be subject to corporate or personal income tax
(plus solidarity surcharge) and, if applicable, to trade tax
(see above). Losses reduce the amount subject to trade tax only
if the partners are individuals, with the reduction capped at
60 percent of the loss; all or part of the trade tax
imposed is credited as a lump sum against their personal income
tax liability. With respect to the deductibility of business
expenses related to the capital gains and the deductibility of
capital losses, the principles outlined in subsection (i)
apply to partners paying corporate income tax, and those
outlined in subsection (ii) apply to partners paying
personal income tax. To the extent that the sale of subscription
rights is allocated to a corporation as partner capital losses
and other reductions in profit related to the disposed
subscription rights should be deductible to the extent the
approach taken by the German tax authorities on subscription
rights is applicable.
Special rules apply to capital gains realized by companies
active in the financial and insurance sectors, as well as by
pension funds. See below.
Non-Resident
Shareholders
Capital gains on the sale of shares/subscription rights will be
subject to the 25 percent withholding tax (plus
5.5 percent solidarity surcharge thereon) if there is a
German disbursing agent. The tax will not be withheld if the
non-resident shareholder is not subject to limited German
taxation on its capital gains pursuant to the German Income Tax
Act. See Taxation of Capital
Gains Withholding Tax above.
222
Capital gains realized by non-resident shareholders who do not
hold the shares through a permanent establishment or fixed base
in Germany or as part of business assets for which a permanent
representative in Germany has been appointed are taxable in
Germany only if the seller or, in the case of a gratuitous
transfer, any of the sellers legal predecessors held,
directly or indirectly, at least one percent of the
Companys registered share capital at any time during the
five years preceding the sale. If in this case the shareholder
is a corporation only five percent of the gains are subject to
corporate income tax plus solidarity surcharge; if the
shareholder is an individual 60 percent of the capital
gains are taxable. Notwithstanding the foregoing, some of the
double taxation treaties executed with Germany provide for an
exemption from German taxes in these cases.
For capital gains realized on the sale of shares/subscription
rights that are held through a permanent establishment or fixed
base in Germany or as part of business assets for which a
permanent representative in Germany has been appointed, the
provisions discussed above with respect to resident shareholders
apply accordingly.
Special Treatment
of Companies in the Financial and Insurance Sectors and Pension
Funds
If financial institutions (Kreditinstitute) or financial
services providers (Finanzdienstleistungsinstitute) hold
or sell shares that are allocable to their trading book
(Handelsbuch) pursuant to Section 1a of the German
Banking Act (Gesetz über das Kreditwesen), they will
not benefit from the 40 percent exemption under the
partial-income method or enjoy the 95 percent exemption
from corporate income tax plus solidarity surcharge and from any
applicable trade tax. Thus, dividend income and capital gains
are fully taxable. The same applies to shares that are acquired
by a financial enterprise (Finanzunternehmen) within the
meaning of the German Banking Act for purposes of realizing
short-term gains from proprietary trading and to shares held
through a permanent establishment in Germany by financial
institutions, financial services providers and financial
companies with their registered office in another member state
of the European Union or another contracting state to the EEA
Agreement. Likewise, the tax exemption described earlier
afforded to corporations for dividend income and capital gains
from the sale of shares/subscription rights does not apply to
shares/subscription rights that qualify as a capital investment
in the case of life insurance and health insurance companies or
which are held by pension funds. Corporate-income-tax-paying
shareholders that have their registered office in another member
state of the European Union may benefit from certain exceptions
if the Parent-Subsidiary Directive (EC Directive 90/435/EEC of
the Council dated July 23, 1990, as amended) applies to
them.
Inheritance and
Gift Tax
The transfer of shares to another person by inheritance or gift
is generally subject to German inheritance and gift tax if
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(i)
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the decedent, donor, heir, beneficiary or other transferee
maintained his or her residence or a habitual abode in Germany
or had its place of management or registered office in Germany
at the time of the transfer, or is a German citizen who has
spent no more than five consecutive years outside Germany
without maintaining a residence in Germany (special rules apply
to certain former German citizens who neither maintain a
residence nor have their habitual abode in Germany),
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(ii)
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at the time of the transfer the shares are held by the decedent
or donor as part of business assets for which a permanent
establishment is maintained in Germany or for which a permanent
representative in Germany has been appointed, or
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(iii)
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the decedent or donor, either individually or collectively with
related parties, held, directly or indirectly, at least
10 percent of the Companys registered share capital
at the time of the transfer.
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The few German treaties for the avoidance of double taxation
regarding inheritance and gift tax currently in force usually
provide that any foreign inheritance or gift tax paid can be
credited against the German inheritance or gift tax.
Other
Taxes
No German transfer tax, value-added tax, stamp duty or similar
taxes are assessed on the purchase, sale or other transfer of
shares/subscription rights. Provided that certain requirements
are met, business owners may, however, opt for the payment of
value-added tax on transactions that are otherwise tax-exempt.
No net wealth tax is currently imposed in Germany.
223
TAXATION IN
LUXEMBOURG
Luxembourg
Taxation of Shares of a Non Resident Company
The following information is of a general nature only and is
based on the laws in force in Luxembourg as of the date of this
Prospectus. It does not purport to be a comprehensive
description of all of the tax considerations that might be
relevant to an investment decision. It is included herein solely
for preliminary information purposes. It is not intended to be,
nor should it be construed to be, legal or tax advice. It is a
description of the essential material Luxembourg tax
consequences with respect to the Offering and may not include
tax considerations that arise from rules of general application
or that are generally assumed to be known to shareholders. This
summary is based on the laws in force in Luxembourg law on the
date of this Prospectus and is subject to any change in law that
may take effect after such date. Prospective shareholders should
consult their professional advisors with respect to particular
circumstances, the effects of state, local or foreign laws to
which they may be subject and as to their tax position.
Please be aware that the residence concept used under the
respective headings applies for Luxembourg income tax assessment
purposes only. Any reference in the present section to a tax,
duty, levy impost or other charge or withholding of a similar
nature refers to Luxembourg tax law
and/or
concepts only. Also, please note that a reference to Luxembourg
income tax encompasses corporate income tax (impôt sur le
revenu des collectivités), municipal business tax
(impôt commercial communal), a solidarity surcharge
(contribution au fonds pour lemploi), as well as personal
income tax (impôt sur le revenu) generally. Corporate
shareholders may further be subject to net wealth tax
(impôt sur la fortune) as well as other duties, levies or
taxes. Corporate income tax, municipal business tax as well as
the solidarity surcharge invariably apply to most corporate
taxpayers resident of Luxembourg for tax purposes. Individual
taxpayers are generally subject to personal income tax and the
solidarity surcharge. Under certain circumstances, where an
individual taxpayer acts in the course of the management of a
professional or business undertaking, municipal business tax may
apply as well.
Income
Tax
Withholding
Taxes
Dividend payments made to shareholders by a non-resident
company, such as the Company, as well as liquidation proceeds
and capital gains derived therefrom are not subject to a
withholding tax in Luxembourg.
Taxation of
Income Derived From, and Capital Gains Realized On
Shares/Subscription Rights by Luxembourg Residents
Luxembourg
resident individuals
Dividends and other payments derived from shares by resident
individual shareholders, who act in the course of the management
of either their private wealth or their professional/business
activity, are subject to income tax at the progressive ordinary
rate (with a current top effective marginal rate of
38.95 percent). A tax credit may be granted for foreign
withholding taxes, provided it does not exceed the corresponding
Luxembourg tax. Under current Luxembourg tax laws,
50 percent of the gross amount of dividends received by
resident individuals from (i) a Luxembourg resident
fully-taxable company limited by share capital, or (ii) a
company limited by share capital resident in a country with
which Luxembourg has concluded a double tax treaty and liable to
a tax corresponding to Luxembourgs corporate income tax,
or (iii) a company resident in an EU Member State and
covered by Article 2 of the amended EU
Parent-Subsidiary
Directive is exempt from income tax.
Capital gains realized on the disposal of shares/Subscription
Rights by resident individual shareholders, who act in the
course of the management of their private wealth, are not
subject to income tax, unless said capital gains qualify either
as speculative gains or as gains on a substantial participation.
Capital gains are deemed to be speculative and are subject to
income tax at ordinary rates if
shares/Subscription
Rights are disposed of within 6 months after their
acquisition or if their disposal precedes their acquisition. A
participation is deemed to be substantial where a resident
individual shareholder holds, either alone or together with his
spouse or partner
and/or minor
children, directly or indirectly at any time within the five
years preceding the disposal, more than 10 percent of the
share capital of the Company. The same regime applies to
Subscription Rights if a holder of Subscription Rights holds
also a substantial participation of shares in the Company. A
shareholder is also deemed to transfer a
224
substantial participation if he acquired free of charge, within
the five years preceding the transfer, a participation that was
constituting a substantial participation in the hands of the
transferors (or the transferors in case of successive transfers
free of charge within the same five-year period). Capital gains
realized on a substantial participation more than six months
after the acquisition thereof are subject to income tax
according to the half-global rate method, (i.e. the average rate
applicable to the total income is calculated according to
progressive income tax rates and half of the average rate is
applied to the capital gains realized on a substantial
participation). A disposal may include a sale, an exchange, a
contribution or any other kind of alienation of
shares/Subscription Rights.
Capital gains realized on the disposal of shares/Subscription
Rights by resident individual shareholders, who act in the
course of their professional/business activity, are subject to
income tax at ordinary rates. Taxable gains are determined as
being the difference between the price for which the
shares/Subscription Rights have been disposed of and the lower
of their cost or book value.
Luxembourg
corporate residents
Dividends and other payments derived from shares and paid to a
Luxembourg resident fully taxable company are subject to income
taxes, unless the conditions of the participation exemption
regime, as described below, are satisfied. If these conditions
are not met, under current Luxembourg tax laws, 50 percent
of the gross amount of dividends received from (i) a
Luxembourg resident fully-taxable company limited by share
capital, or (ii) a company limited by share capital
resident in a country with which Luxembourg has concluded a
double tax treaty and liable to a tax corresponding to
Luxembourgs corporate income tax, or (iii) a company
resident in a EU Member State and covered by Article 2 of
the amended EU Parent-Subsidiary Directive is exempt from income
tax. A tax credit may further be granted for foreign withholding
taxes, provided it does not exceed the corresponding Luxembourg
tax.
Under the participation exemption regime, dividends derived from
shares may be exempt from income tax at the level of the
shareholder if cumulatively, (i) the shareholder is
(a) a Luxembourg resident fully-taxable company, (b) a
Luxembourg permanent establishment of a company covered by
Article 2 of the amended EU Parent-Subsidiary Directive,
(c) a Luxembourg permanent establishment of a company
limited by share capital resident in a country having a tax
treaty with Luxembourg, or (d) a Luxembourg permanent
establishment of a company limited by share capital or a
cooperative company resident in the European Economic Area other
than an EU Member State, (ii) the Company is either
(a) an entity covered by Article 2 of the amended EU
Parent-Subsidiary Directive, or (b) a Luxembourg resident
fully taxable company limited by share capital, or (c) a
non-resident company limited by share capital liable to a tax
corresponding to Luxembourg corporate income tax, (iii) the
shareholder has held or commits itself to hold the shares for an
uninterrupted period of at least 12 months,
(iv) during this uninterrupted period of 12 months the
shares represent a participation of at least 10% in the share
capital of the Company or a participation of an acquisition
price of at least 1.2 million and, (v) the
dividend is put at its disposal within such period. Liquidation
proceeds are deemed to be a received dividend and may be exempt
under the same conditions. Shares held through a tax transparent
entity are considered as being a direct participation
proportionally to the percentage held in the net assets of the
transparent entity.
Capital gains realized by a Luxembourg fully taxable resident
company on shares/Subscription Rights are subject to income tax
at ordinary rates, unless the conditions of the participation
exemption regime, as described below, are satisfied.
Under the participation exemption regime, capital gains realized
on shares may be exempt from income tax if cumulatively,
(i) the shareholder is either (a) a Luxembourg
resident fully-taxable company, (b) a Luxembourg permanent
establishment of a company covered by Article 2 of the
amended EU
Parent-Subsidiary
Directive, (c) a Luxembourg permanent establishment of a
company limited by share capital resident in a country having a
tax treaty with Luxembourg, or (d) a Luxembourg permanent
establishment of a company limited by share capital or a
cooperative company resident in the European Economic Area other
than an EU Member State, (ii) the Company is either
(a) an entity covered by Article 2 of the amended EU
Parent-Subsidiary Directive, or (b) a Luxembourg resident
fully-taxable company limited by share capital, or (c) a
non-resident company limited by share capital liable to a tax
corresponding to Luxembourg corporate income tax, (iii) the
shareholder has held or commits itself to hold the shares for an
uninterrupted period of at least 12 months,
(iv) during this uninterrupted period of 12 months the
shares represent a participation of at least 10 percent in
the share capital of the Company or a participation of an
acquisition price of at least 6 million. Under
Luxembourg tax law it is debatable to what extent the
Subscription Rights are eligible for the participation exemption
regime although recent case law supports
225
such argumentation in certain circumstances. Shares/Subscription
Rights held through a tax transparent entity are considered as
being a direct participation proportionally to the percentage
held in the net assets of the transparent entity.
Taxable gains are determined as being the difference between the
price for which the
shares/Subscription
Right have been disposed of and the lower of their cost or book
value.
Luxembourg
corporate residents benefiting from a special tax
regime
Shareholders who are (i) holding companies subject to the
amended law of 31 July 1929, or (ii) undertakings for
collective investment governed by the amended law of
20 December 2002, or (iii) specialized investment
funds governed by the law of 13 February 2007, or
(iv) family wealth management companies governed by the law
of 11 May 2007 are exempt from income tax in Luxembourg.
Dividends derived from, and capital gains realized on,
shares/Subscription Rights are thus not subject to income tax in
their hands.
Net Wealth
Tax
Shares/Subscription Rights held by a Luxembourg fully-taxable
resident company are subject to Luxembourg net wealth tax,
unless one of the exceptions mentioned below are satisfied.
Luxembourg net wealth tax will not be levied on the shares in
the hands of a shareholder unless (i) such shareholder is a
corporate entity resident in Luxembourg other than a holding
company governed by the amended law of 31 July 1929, an
undertaking for collective investment governed by the amended
law of 20 December 2002, a securitization company governed
by the law of 22 March 2004, a specialized investment fund
governed by the law of 13 February 2007, or a family wealth
management company governed by the law of 11 May 2007, or
(ii) the shares are attributable to an enterprise or part
thereof which is carried on through a permanent establishment or
a permanent representative in Luxembourg of a corporate entity.
Further, in case of (i) a Luxembourg fully-taxable
corporate entity, (ii) a Luxembourg permanent establishment
of a company covered by Article 2 of the amended EU
Parent-Subsidiary Directive or of a company resident in a
country having a tax treaty with Luxembourg, or of a company
resident in the European Economic Area other than an EU Member
State, the shares may be exempt for a given year, if the shares
represent at the end of the previous year a participation of at
least 10 percent in the share capital of the Company or a
participation of an acquisition price of at least
1.2 million. Under Luxembourg tax law it is debatable
to what extent Subscription Rights are eligible for the
participation exemption regime although recent case law supports
such argumentation in certain circumstances.
Other
Taxes
Under Luxembourg tax law, where an individual shareholder is a
resident of Luxembourg for inheritance tax purposes at the time
of his/her
death, shares/Subscription Rights are included in his or her
taxable basis for inheritance tax purposes.
Gift tax may be due on a gift or donation of shares/Subscription
Rights, if the gift is recorded in a Luxembourg notarial deed or
otherwise registered in Luxembourg.
226
GLOSSARY
|
|
|
200-millimeter manufacturing, 300-millimeter manufacturing |
|
The size refers to the diameter of the wafers being processed in
a front-end fab. |
|
3G |
|
See UMTS. |
|
ADS |
|
American depositary shares. |
|
A-GPS |
|
Assisted Global Positioning System. |
|
Analog |
|
A continuous representation of phenomena in terms of points
along a scale, each point merging imperceptibly into the next.
Analog signals vary continuously over a range of values. Real
world phenomena, such as heat and pressure, are analog. See also
Digital. |
|
ASIC |
|
Application Specific Integrated Circuit. A logic or mixed-signal
circuit designed for a specific use and for a specific customer. |
|
ASSP |
|
Application Specific Standard Product. A logic or mixed-signal
circuit designed for a specific application market, and sold to
more than one customer, and thus, standard. |
|
Back-end |
|
The packaging, assembly and testing stages of the semiconductor
manufacturing process, which take place after electronic
circuits are imprinted on silicon wafers in the front-end
process. |
|
Baseband IC |
|
The baseband IC is an essential part of a cell phone. It
includes a digital signal processor, a microcontroller, some
on-chip memory, interfaces to several external devices, and
mixed-signal functionality like coder/decoder for speaker and
microphone. |
|
Bipolar transistor |
|
A device constructed of semiconductor material often used in
radio frequency applications. |
|
Bit |
|
A unit of information; a computational quantity (binary pulse)
that can take one of two values, such as true and false or 0 and
1; also the smallest unit of storage sufficient to hold one bit. |
|
Broadband |
|
Any network technology that combines and sorts multiple,
independent network frequencies onto a single cable. Commonly
used to refer to high-bandwidth copper or fiber cables with a
bandwidth of 1 Mbit per second and above. |
|
Chip cards |
|
Cards that contain an IC. Frequently used for telephone cards,
debit cards, SIM cards, social cards, identification cards and
PayTV cards. |
|
CGU |
|
Cash generating units. |
|
CMOS |
|
Complementary Metal Oxide Substrate technology. A process
technology that uses complementary MOS transistors (NMOS and
PMOS) to make a chip that will consume relatively low power and
permit a high level of integration. |
|
CO |
|
Central Office. A common carrier switching office in which
users lines terminate. The nerve center of a telephone
system. |
|
CODEC |
|
Coder/Decoder. Hardware used to code and decode digital signals. |
|
CPE |
|
Customer Premises Equipment. CPE is telephone or other service
provider equipment, that is located on the customers
premises (physical location) rather than on the providers
premises or in between. |
|
DECT |
|
Digital Enhanced Cordless Telecommunications. A standard used
for pan-European digital cordless telephones. |
|
Digital |
|
The representation of data by a series of bits or discrete
values such as 0 and 1. See also Analog. |
227
|
|
|
Discrete semiconductors |
|
Semiconductor devices that involve only a single device like a
transistor or a diode. |
|
DOJ |
|
U.S. Department of Justice. |
|
DSP |
|
Digital Signal Processor. |
|
DRAM |
|
Dynamic Random Access Memory. The most common type of solid
state memory. Each bit of information is stored as an amount of
electrical charge in a storage cell consisting of a capacitor
and a transistor. The capacitor discharges gradually due to
leakage and the memory cell loses the information stored. To
preserve the information, the memory has to be refreshed
periodically and is therefore referred to as
dynamic. DRAM is a widespread memory technology
because of its high packing density and consequently low price. |
|
DVB-C, DVB-H, DVB-S, DVB-T |
|
Digital Video Broadcasting. There are different standards
available: |
|
|
DVB-C = Digital Video Broadcasting Cable; |
|
|
DVB-H = Digital Video Broadcasting Handheld; |
|
|
DVB-S = Digital Video Broadcasting Satellite; |
|
|
DVB-T = Digital Video Broadcasting Terrestrial. |
|
EBIT |
|
Earnings before interest and taxes. |
|
EDGE |
|
Enhanced Data rate for GSM Evolution. Also referred to as 2.75G,
where GSM is 2G, GPRS is 2.5G and UMTS is 3G. |
|
Embedded DRAM, Embedded flash |
|
A process technology that combines DRAM or flash, respectively,
and logic functions on a single chip. |
|
EMS |
|
Electronics Manufacturing Services. |
|
Ethernet |
|
A protocol for high speed communications, principally used for
LAN networks. |
|
eWLB |
|
Embedded Wafer-Level Ball Grid Array. |
|
Fab |
|
A semiconductor fabrication facility, in which the front-end
manufacturing process takes place. (see also
Front-end.) |
|
FASB |
|
Financial Accounting Standards Board. |
|
FIN 46R |
|
FASB Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest
Entitiesan
Interpretation of ARB No. 51. |
|
Flash memory |
|
A type of non-volatile memory that can be erased and
reprogrammed. |
|
Front-end |
|
The wafer processing stage of the semiconductor manufacturing
process, in which electronic circuits are imprinted onto raw
silicon wafers. This is followed by the packaging, assembly and
testing stages, which comprise the back-end process. |
|
FSMA |
|
Financial Services and Markets Act 2000. |
|
Foundry |
|
A semiconductor manufacturer that makes chips for third parties. |
|
GPRS |
|
General Packet Radio Services. A packet based wireless
communication service that promises data rates from 56 up to
114 Kbps and continuous connection to the Internet for
mobile phone and computer users. GPRS is based on GSM
communication. |
|
GPS |
|
Global positioning system. |
|
GSM |
|
Global System for Mobile communication. A digital mobile
telephone system that is the de facto wireless telephone
standard in Europe and widely used in other parts of the world.
GSM digitizes and compresses data, then sends it down a channel
with two other streams of user |
228
|
|
|
|
|
data, each in its own time slot. It operates at either the
900 MHz or 1800 MHz frequency band. |
|
HDD |
|
Hard disk drive. |
|
HSDPA, HSPA, HSxPA |
|
High-Speed Downlink Packet Access. A 3G (third generation)
mobile telephony communications protocol in the High-Speed
Packet Access (HSPA) which allows networks based on Universal
Mobile Telecommunications System (see also UMTS) to
have higher data transfer speeds and capacity. |
|
IAS |
|
International Accounting Standard. |
|
IASB |
|
International Accounting Standards Board. |
|
IC |
|
Integrated Circuit. A semiconductor device consisting of many
interconnected transistors and other components like resistors,
capacitors and diodes. |
|
IFRS |
|
International Financial Accounting Standards. |
|
IMPRES |
|
Infineon Integrated Management Program for Environment, Safety
and Health. |
|
IP |
|
Intellectual property. |
|
ISDN |
|
Integrated Services Digital Network. A type of online connection
that speeds up data transmission by handling information in a
digital form. Traditional modem communications translate a
computers digital data into an analog wave form and send
the signal, which then must be converted back to an analog
signal. ISDN can be thought of as a direct digital connection. |
|
ISIN |
|
International Securities Identification Number. |
|
ISO |
|
International Standards Organization. The international
organization responsible for developing and maintaining
worldwide standards for manufacturing, environmental protection,
computers, data communications, and many other fields. |
|
Mbps |
|
Megabits per second. |
|
MDL |
|
Multi District Litigation. |
|
Megabit (Mbit) |
|
Approximately one million bits; precisely, 2 to the power of 20
bits. |
|
Memory |
|
Any device that can store data in machine-readable format. |
|
Microcontroller |
|
A microprocessor combined with memory and interfaces integrated
on a single circuit and intended to operate as an embedded
system. |
|
Mixed-signal IC |
|
An integrated circuit that includes both analog and digital
signal processing circuitry on a single semiconductor die.
Typically, mixed-signal chips perform some whole function of
sub-function
in a larger assembly such as the radio subsystem of a cell
phone. They often contain an entire
system-on-a-chip. |
|
Nanometer (nm) |
|
A metric unit of linear measure which equals one billionth of a
meter. There are 1000 nanometers in 1 micron. |
|
NGN |
|
Next-Generation Network. |
|
Non-volatile memory |
|
A memory storage device whose contents are preserved when its
power is off. Most common types are NAND flash and NOR flash. |
|
OEMs |
|
Original equipment manufacturers. |
|
ODM |
|
Original Device Manufacturer. A company which manufactures a
product which ultimately will be branded by another firm for
sale. |
229
|
|
|
OHSAS |
|
Occupational Health and Safety Assessment Series. The discipline
concerned with protecting the safety, health and welfare of
employees, organizations, and others affected by the work they
undertake (such as customers, suppliers, and members of the
public). |
|
PBX |
|
Private Branch eXchange. A telephone exchange that is owned by a
private business, as opposed to one owned by a common carrier or
by a telephone company. |
|
PDA |
|
Personal Digital Assistant. A term used to refer to any small
mobile hand-held device that provides computing and information
storage and retrieval capabilities for personal or business use,
often for keeping schedule calendars and address book
information handy. |
|
PFC |
|
Perfluorinated Compounds. Compounds derived from hydrocarbons by
replacement of hydrogen atoms by fluorine atoms. |
|
PHY |
|
Physical Layer. A part of the electrical or mechanical interface
to the physical medium. For example, the PHY determines how to
put a stream of bits from the upper (data link) layer on to the
pins for a parallel printer interface or network line card. |
|
R&D |
|
Research and development. |
|
REACH |
|
Registration, Evaluation and Authorization of Chemicals. A
framework for regulation of chemicals in the European Union. |
|
RF |
|
Radio frequency. |
|
RF transceiver |
|
Radio-frequency transceiver. A high-frequency used in mobile
telecommunications. The term radio frequency refers to
electromagnetic waves having characteristics such that, if the
current is input to an antenna, an electromagnetic field is
generated suitable for wireless broadcasting and/or
communications. |
|
RFID |
|
Radio frequency identification. Systems that read or write data
to RF tags that are present in a radio frequency field projected
from RF reading/writing equipment. Data may be contained in one
or more bits for the purpose of providing identification and
other information relevant to the object to which the tag is
attached. It incorporates the use of electromagnetic, or
electrostatic coupling in the radio frequency portion of the
spectrum to communicate to or from a tag through a variety of
modulation schemes. |
|
RMS |
|
Risk and opportunity management system. |
|
Semiconductor |
|
Generic name for devices, such as transistors and integrated
circuits, that control the flow of electrical signals. More
generally a material, typically crystalline, that can be altered
to allow electrical current to flow or not flow in a pattern.
The most common semiconductor material for use in integrated
circuits is silicon. |
|
Server |
|
A computer that provides some service for other computers
connected to it via a network. The most common example is a file
server which has a local disk and services requests from remote
clients to read and write files on that disk. |
|
SFAS |
|
Statement of Financial Accounting Standards. |
|
Silicon |
|
A type of semiconducting material used to make a wafer. Silicon
is the most widely used semiconductor material in the
semiconductor industry (other than germanium) as a base material. |
|
SIM card |
|
Subscriber identification module card. Used in mobile handsets
for subscriber authentication. |
230
|
|
|
SLIC |
|
Subscriber line interface circuit. A circuit in a telephone
company switch to which a customers telephone line is
connected. |
|
Structure size |
|
A measurement (generally in micron or nanometer) of the width of
the smallest patterned feature on a semiconductor chip. |
|
T/E |
|
T1/E1, T3/E3. A data transmission technology based on copper
wires. Various speed classes are available: T1: 1,544 Mbit/s;
E1: 2,048 Mbit/s; T3: 44,736 Mbit/s; E3: 34,368 Mbit/s. The T
standards are prevalent in NAFTA. The E standards are European
standards. |
|
Telematics |
|
The combination of telecommunications and data processing. |
|
TPM |
|
Trusted Platform Module. |
|
UMTS |
|
Universal Mobile Telecommunications Service. A so-called
third-generation (3G), broadband, packet based
transmission of text, digitized voice, video, and multimedia at
data rates up to two megabits per second (Mbps), that is based
on the GSM communication standard. UMTS aims to offer a
consistent set of services to mobile computer and phone users no
matter where they are located in the world. |
|
U.S. GAAP |
|
Accounting principles generally accepted in the United States. |
|
VAT |
|
Value-added tax. |
|
VoIP |
|
Voice Over Internet Protocol. The routing of voice conversations
over the Internet or any other
IP-based
network. |
|
WACC |
|
Weighted average cost of capital. |
|
Wafer |
|
A disk made of a semiconducting material such as silicon,
currently usually either 150-millimeters or 200-millimeters or
300-millimeters in diameter, used to form the substrate of a
chip. A finished wafer may contain several thousand chips. |
|
VCC |
|
Voice Call Continuity. |
|
WKN |
|
German Securities Code. |
|
xDSL |
|
Digital Subscriber Line (where x represents the type
of technology, e.g. ADSL, VDSL, SHDSL). A family of digital
telecommunications protocols designed to allow high speed data
communication over existing copper telephone lines between
end-users and the telephone company. |
|
Yield |
|
When used in connection with manufacturing, the ratio of the
number of usable products to the total number of produced
products. |
231
FINANCIAL
INFORMATION
|
|
|
|
|
|
|
Page
|
|
Audited consolidated financial statements (prepared in
accordance with IFRS) of Infineon Technologies AG as of and for
the fiscal year ended September 30, 2008 (with comparative
figures as of and for the fiscal year ended September 30,
2007):
|
|
|
|
|
|
|
|
F-4
|
|
|
|
|
F-5
|
|
|
|
|
F-6
|
|
|
|
|
F-7
|
|
|
|
|
F-8
|
|
|
|
|
F-9
|
|
|
|
|
F-86
|
|
|
|
|
|
|
Audited consolidated financial statements (prepared in
accordance with U.S. GAAP) of Infineon Technologies AG as of and
for the fiscal year ended September 30, 2007 (with
comparative figures as of and for the fiscal years ended
September 30, 2005 and 2006):
|
|
|
|
|
|
|
|
F-88
|
|
|
|
|
F-89
|
|
|
|
|
F-90
|
|
|
|
|
F-91
|
|
|
|
|
F-93
|
|
|
|
|
F-159
|
|
|
|
|
|
|
Audited consolidated financial statements (prepared in
accordance with U.S. GAAP) of Infineon Technologies AG as of and
for the fiscal year ended September 30, 2006 (with
comparative figures as of and for the fiscal years ended
September 30, 2004 and 2005):
|
|
|
|
|
|
|
|
F-161
|
|
|
|
|
F-162
|
|
|
|
|
F-163
|
|
|
|
|
F-164
|
|
|
|
|
F-165
|
|
|
|
|
F-231
|
|
F-1
|
|
|
|
|
|
|
Page
|
|
Condensed consolidated financial statements (prepared in
accordance with IFRS) (Unaudited) of Infineon Technologies AG as
of and for the three months and six months ended March 31,
2009 (with comparative figures as of and for the three months
and the six months ended March 31, 2008):
|
|
|
|
|
|
|
|
F-233
|
|
|
|
|
F-234
|
|
|
|
|
F-235
|
|
|
|
|
F-236
|
|
|
|
|
F-237
|
|
|
|
|
F-238
|
|
|
|
|
F-239
|
|
|
|
|
F-264
|
|
|
|
|
|
|
Annual financial statements (prepared in accordance with HGB)
of Infineon Technologies AG as of and for the fiscal year ended
September 30, 2008
|
|
|
|
|
|
|
|
F-266
|
|
|
|
|
F-267
|
|
|
|
|
F-268
|
|
|
|
|
F-294
|
|
F-2
AUDITED
CONSOLIDATED FINANCIAL STATEMENTS
(PREPARED IN ACCORDANCE WITH IFRS)
AS OF AND FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2008
INFINEON
TECHNOLOGIES AG,
NEUBIBERG
F-3
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Operations
For the years ended September 30, 2007 and 2008
(in millions, except for share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
|
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Revenue
|
|
|
|
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
6,084
|
|
Cost of goods sold
|
|
|
|
|
|
|
(2,716
|
)
|
|
|
(2,843
|
)
|
|
|
(4,003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
1,358
|
|
|
|
1,478
|
|
|
|
2,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
|
|
|
|
(743
|
)
|
|
|
(694
|
)
|
|
|
(977
|
)
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
(504
|
)
|
|
|
(565
|
)
|
|
|
(796
|
)
|
Other operating income
|
|
|
9
|
|
|
|
38
|
|
|
|
120
|
|
|
|
169
|
|
Other operating expense
|
|
|
9
|
|
|
|
(57
|
)
|
|
|
(366
|
)
|
|
|
(515
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
92
|
|
|
|
(27
|
)
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
11
|
|
|
|
107
|
|
|
|
58
|
|
|
|
82
|
|
Financial expense
|
|
|
12
|
|
|
|
(243
|
)
|
|
|
(182
|
)
|
|
|
(257
|
)
|
Income from investments accounted for using the equity method,
net
|
|
|
21
|
|
|
|
|
|
|
|
4
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
|
|
|
|
(44
|
)
|
|
|
(147
|
)
|
|
|
(207
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (expense)
|
|
|
13
|
|
|
|
1
|
|
|
|
(41
|
)
|
|
|
(58
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
|
|
|
|
(43
|
)
|
|
|
(188
|
)
|
|
|
(265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
6
|
|
|
|
(327
|
)
|
|
|
(3,559
|
)
|
|
|
(5,011
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
(370
|
)
|
|
|
(3,747
|
)
|
|
|
(5,276
|
)
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
|
|
|
|
(23
|
)
|
|
|
(812
|
)
|
|
|
(1,143
|
)
|
Shareholders of Infineon Technologies AG
|
|
|
|
|
|
|
(347
|
)
|
|
|
(2,935
|
)
|
|
|
(4,133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share from continuing operations
|
|
|
14
|
|
|
|
(0.08
|
)
|
|
|
(0.33
|
)
|
|
|
(0.46
|
)
|
|
|
Basic and diluted loss per share from discontinued operations
|
|
|
14
|
|
|
|
(0.38
|
)
|
|
|
(3.58
|
)
|
|
|
(5.04
|
)
|
|
|
Basic and diluted loss per share
|
|
|
14
|
|
|
|
(0.46
|
)
|
|
|
(3.91
|
)
|
|
|
(5.50
|
)
|
|
|
See accompanying notes to the consolidated financial statements.
F-4
Infineon
Technologies AG and Subsidiaries
Consolidated Balance Sheets
September 30, 2007 and 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
|
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
1,809
|
|
|
|
749
|
|
|
|
1,055
|
|
Available-for-sale
financial assets
|
|
|
15
|
|
|
|
417
|
|
|
|
134
|
|
|
|
189
|
|
Trade and other receivables
|
|
|
16
|
|
|
|
1,138
|
|
|
|
799
|
|
|
|
1,125
|
|
Inventories
|
|
|
17
|
|
|
|
1,206
|
|
|
|
665
|
|
|
|
936
|
|
Income tax receivable
|
|
|
|
|
|
|
56
|
|
|
|
29
|
|
|
|
41
|
|
Other current financial assets
|
|
|
18
|
|
|
|
78
|
|
|
|
19
|
|
|
|
27
|
|
Other current assets
|
|
|
19
|
|
|
|
203
|
|
|
|
124
|
|
|
|
174
|
|
Assets classified as held for disposal
|
|
|
6
|
|
|
|
303
|
|
|
|
2,129
|
|
|
|
2,998
|
|
|
|
Total current assets
|
|
|
|
|
|
|
5,210
|
|
|
|
4,648
|
|
|
|
6,545
|
|
|
|
Property, plant and equipment
|
|
|
20
|
|
|
|
3,645
|
|
|
|
1,310
|
|
|
|
1,845
|
|
Goodwill and other intangible assets
|
|
|
24
|
|
|
|
334
|
|
|
|
443
|
|
|
|
624
|
|
Investments accounted for using the equity method
|
|
|
21
|
|
|
|
627
|
|
|
|
20
|
|
|
|
28
|
|
Deferred tax assets
|
|
|
13
|
|
|
|
588
|
|
|
|
400
|
|
|
|
563
|
|
Other financial assets
|
|
|
22
|
|
|
|
162
|
|
|
|
133
|
|
|
|
187
|
|
Other assets
|
|
|
23
|
|
|
|
33
|
|
|
|
28
|
|
|
|
39
|
|
|
|
Total assets
|
|
|
|
|
|
|
10,599
|
|
|
|
6,982
|
|
|
|
9,831
|
|
|
|
Liabilities and equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
29
|
|
|
|
336
|
|
|
|
207
|
|
|
|
291
|
|
Trade and other payables
|
|
|
25
|
|
|
|
1,347
|
|
|
|
506
|
|
|
|
712
|
|
Current provisions
|
|
|
26
|
|
|
|
533
|
|
|
|
424
|
|
|
|
597
|
|
Income tax payable
|
|
|
|
|
|
|
97
|
|
|
|
87
|
|
|
|
123
|
|
Other current financial liabilities
|
|
|
27
|
|
|
|
78
|
|
|
|
63
|
|
|
|
89
|
|
Other current liabilities
|
|
|
28
|
|
|
|
333
|
|
|
|
263
|
|
|
|
370
|
|
Liabilities associated with assets classified as held for
disposal
|
|
|
6
|
|
|
|
129
|
|
|
|
2,123
|
|
|
|
2,989
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
2,853
|
|
|
|
3,673
|
|
|
|
5,171
|
|
|
|
Long-term debt
|
|
|
29
|
|
|
|
1,227
|
|
|
|
963
|
|
|
|
1,356
|
|
Pension plans and similar commitments
|
|
|
37
|
|
|
|
63
|
|
|
|
43
|
|
|
|
61
|
|
Deferred tax liabilities
|
|
|
13
|
|
|
|
81
|
|
|
|
19
|
|
|
|
27
|
|
Long-term provisions
|
|
|
26
|
|
|
|
44
|
|
|
|
27
|
|
|
|
38
|
|
Other financial liabilities
|
|
|
30
|
|
|
|
134
|
|
|
|
20
|
|
|
|
28
|
|
|
|
Other liabilities
|
|
|
31
|
|
|
|
193
|
|
|
|
76
|
|
|
|
107
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
4,595
|
|
|
|
4,821
|
|
|
|
6,788
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity:
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share capital
|
|
|
|
|
|
|
1,499
|
|
|
|
1,499
|
|
|
|
2,111
|
|
Additional paid-in capital
|
|
|
|
|
|
|
6,002
|
|
|
|
6,008
|
|
|
|
8,459
|
|
Accumulated deficit
|
|
|
|
|
|
|
(2,328
|
)
|
|
|
(5,252
|
)
|
|
|
(7,395
|
)
|
Other components of equity
|
|
|
|
|
|
|
(129
|
)
|
|
|
(164
|
)
|
|
|
(231
|
)
|
|
|
Total equity attributable to shareholders of Infineon
Technologies AG
|
|
|
|
|
|
|
5,044
|
|
|
|
2,091
|
|
|
|
2,944
|
|
|
|
Minority interests
|
|
|
|
|
|
|
960
|
|
|
|
70
|
|
|
|
99
|
|
|
|
Total equity
|
|
|
|
|
|
|
6,004
|
|
|
|
2,161
|
|
|
|
3,043
|
|
|
|
Total liabilities and equity
|
|
|
|
|
|
|
10,599
|
|
|
|
6,982
|
|
|
|
9,831
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-5
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended September 30, 2007 and 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
|
Net loss
|
|
|
(370
|
)
|
|
|
(3,747
|
)
|
|
|
(5,276
|
)
|
Less: net loss from discontinued operations
|
|
|
327
|
|
|
|
3,559
|
|
|
|
5,011
|
|
|
|
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
632
|
|
|
|
571
|
|
|
|
804
|
|
Provision for (recovery of) doubtful Accounts
|
|
|
(13
|
)
|
|
|
3
|
|
|
|
4
|
|
Losses (gains) on sales of current
available-for-sale
financial assets
|
|
|
(7
|
)
|
|
|
1
|
|
|
|
1
|
|
Losses (gains) on sales of businesses and interests in
subsidiaries
|
|
|
(19
|
)
|
|
|
(80
|
)
|
|
|
(112
|
)
|
Losses (gains) on disposals of property, plant, and equipment
|
|
|
(8
|
)
|
|
|
10
|
|
|
|
14
|
|
Income from investments accounted for using the equity method
|
|
|
|
|
|
|
(4
|
)
|
|
|
(6
|
)
|
Impairment charges
|
|
|
42
|
|
|
|
137
|
|
|
|
193
|
|
Stock-based compensation
|
|
|
12
|
|
|
|
5
|
|
|
|
7
|
|
Deferred income taxes
|
|
|
(30
|
)
|
|
|
19
|
|
|
|
27
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivable
|
|
|
(46
|
)
|
|
|
38
|
|
|
|
54
|
|
Inventories
|
|
|
(59
|
)
|
|
|
(47
|
)
|
|
|
(66
|
)
|
Other current assets
|
|
|
(62
|
)
|
|
|
(9
|
)
|
|
|
(13
|
)
|
Trade and other payable
|
|
|
(95
|
)
|
|
|
(77
|
)
|
|
|
(108
|
)
|
Provisions
|
|
|
20
|
|
|
|
52
|
|
|
|
73
|
|
Other current liabilities
|
|
|
60
|
|
|
|
99
|
|
|
|
139
|
|
Other assets and liabilities
|
|
|
6
|
|
|
|
89
|
|
|
|
125
|
|
Interest received
|
|
|
39
|
|
|
|
39
|
|
|
|
55
|
|
Interest paid
|
|
|
(93
|
)
|
|
|
(62
|
)
|
|
|
(87
|
)
|
Income tax paid
|
|
|
(80
|
)
|
|
|
(16
|
)
|
|
|
(22
|
)
|
|
|
Net cash provided by operating activities from continuing
operations
|
|
|
256
|
|
|
|
580
|
|
|
|
817
|
|
|
|
Net cash provided by (used in) operating activities from
discontinued operations
|
|
|
995
|
|
|
|
(664
|
)
|
|
|
(935
|
)
|
|
|
Net cash provided by (used in) operating activities
|
|
|
1,251
|
|
|
|
(84
|
)
|
|
|
(118
|
)
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of
available-for-sale
financial assets
|
|
|
(75
|
)
|
|
|
(574
|
)
|
|
|
(808
|
)
|
Proceeds from sales of
available-for-sale
financial assets
|
|
|
341
|
|
|
|
601
|
|
|
|
846
|
|
Proceeds from sales of businesses and interests in subsidiaries
|
|
|
243
|
|
|
|
121
|
|
|
|
170
|
|
Business acquisitions, net of cash acquired
|
|
|
(45
|
)
|
|
|
(353
|
)
|
|
|
(497
|
)
|
Purchases of intangible assets, and other assets
|
|
|
(40
|
)
|
|
|
(158
|
)
|
|
|
(222
|
)
|
Purchases of property, plant and equipment
|
|
|
(498
|
)
|
|
|
(312
|
)
|
|
|
(439
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
26
|
|
|
|
10
|
|
|
|
14
|
|
|
|
Net cash used in investing activities from continuing operations
|
|
|
(48
|
)
|
|
|
(665
|
)
|
|
|
(936
|
)
|
|
|
Net cash used in investing activities from discontinued
operations
|
|
|
(869
|
)
|
|
|
3
|
|
|
|
4
|
|
|
|
Net cash used in investing activities
|
|
|
(917
|
)
|
|
|
(662
|
)
|
|
|
(932
|
)
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in short-term debt
|
|
|
|
|
|
|
(68
|
)
|
|
|
(96
|
)
|
Net change in related party financial receivables and payables
|
|
|
347
|
|
|
|
(5
|
)
|
|
|
(7
|
)
|
Proceeds from issuance of long-term debt
|
|
|
245
|
|
|
|
149
|
|
|
|
210
|
|
Principal repayments of long-term debt
|
|
|
(744
|
)
|
|
|
(226
|
)
|
|
|
(318
|
)
|
Change in restricted cash
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of ordinary shares
|
|
|
23
|
|
|
|
|
|
|
|
|
|
Dividend payments to minority interests
|
|
|
(71
|
)
|
|
|
(80
|
)
|
|
|
(113
|
)
|
Capital contribution
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities from continuing operations
|
|
|
(214
|
)
|
|
|
(230
|
)
|
|
|
(324
|
)
|
|
|
Net cash (used in) provided by financing activities from
discontinued operations
|
|
|
(311
|
)
|
|
|
343
|
|
|
|
483
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(525
|
)
|
|
|
113
|
|
|
|
159
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(191
|
)
|
|
|
(633
|
)
|
|
|
(891
|
)
|
|
|
Effect of foreign exchange rate changes on cash and cash
equivalents
|
|
|
(40
|
)
|
|
|
(6
|
)
|
|
|
(8
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
2,040
|
|
|
|
1,809
|
|
|
|
2,547
|
|
Cash and cash equivalents at end of period
|
|
|
1,809
|
|
|
|
1,170
|
|
|
|
1,648
|
|
Less: Cash and cash equivalents at end of year from discontinued
operations
|
|
|
736
|
|
|
|
421
|
|
|
|
593
|
|
|
|
Cash and cash equivalents at end of year from continuing
operations
|
|
|
1,073
|
|
|
|
749
|
|
|
|
1,055
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-7
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Consolidated Changes in Equity
For the years ended September 30, 2007 and 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
Unrealized
|
|
|
gain (loss)
|
|
|
Total equity
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
Additional
|
|
|
|
|
|
currency
|
|
|
gain (loss)
|
|
|
on
|
|
|
attributable to
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
paid-in
|
|
|
Accumulated
|
|
|
translation
|
|
|
on
|
|
|
cash flow
|
|
|
shareholders
|
|
|
Minority
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
deficit
|
|
|
adjustment
|
|
|
securities
|
|
|
hedge
|
|
|
of Infineon AG
|
|
|
Interests
|
|
|
Equity
|
|
|
|
|
|
|
Balance as of October 1, 2006
|
|
|
747,609,294
|
|
|
|
1,495
|
|
|
|
5,947
|
|
|
|
(2,095
|
)
|
|
|
|
|
|
|
5
|
|
|
|
(20
|
)
|
|
|
5,332
|
|
|
|
764
|
|
|
|
6,096
|
|
|
|
Total income and expense recognized in Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(233
|
)
|
|
|
(106
|
)
|
|
|
(11
|
)
|
|
|
3
|
|
|
|
(347
|
)
|
|
|
(40
|
)
|
|
|
(387
|
)
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
2,119,341
|
|
|
|
4
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
19
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
17
|
|
Deferred compensation, net
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
Other changes in equity
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
236
|
|
|
|
255
|
|
|
|
Balance as of September 30, 2007
|
|
|
749,728,635
|
|
|
|
1,499
|
|
|
|
6,002
|
|
|
|
(2,328
|
)
|
|
|
(106
|
)
|
|
|
(6
|
)
|
|
|
(17
|
)
|
|
|
5,044
|
|
|
|
960
|
|
|
|
6,004
|
|
|
|
Total income and expense recognized in Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,924
|
)
|
|
|
(36
|
)
|
|
|
3
|
|
|
|
(2
|
)
|
|
|
(2,959
|
)
|
|
|
(820
|
)
|
|
|
(3,779
|
)
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
13,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
8
|
|
Deferred compensation, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other changes in equity
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
(70
|
)
|
|
|
(72
|
)
|
|
|
Balance as of September 30, 2008
|
|
|
749,742,085
|
|
|
|
1,499
|
|
|
|
6,008
|
|
|
|
(5,252
|
)
|
|
|
(142
|
)
|
|
|
(3
|
)
|
|
|
(19
|
)
|
|
|
2,091
|
|
|
|
70
|
|
|
|
2,161
|
|
|
|
F-8
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
1.
|
Description of
Business and General Information
|
Description of
Business
Infineon Technologies AG and its subsidiaries (collectively,
Infineon or the Company) design,
develop, manufacture and market a broad range of semiconductors
and complete systems solutions used in a wide variety of
microelectronic applications, including computer systems,
telecommunications systems, consumer goods, automotive products,
industrial automation and control systems, and chip card
applications. The Companys products include standard
commodity components, full-custom devices, semi-custom devices
and application-specific components for memory, analog, digital
and mixed-signal applications. The Company has operations,
investments and customers located mainly in Europe, Asia and
North America. Effective May 1, 2006, substantially all of
the memory products-related assets and liabilities, operations
and activities of the Company were contributed to Qimonda AG
(Qimonda), a stand-alone legal company (the
Formation). References in these consolidated
financial statements to Infineon Logic refer to the
Company excluding Qimonda.
Basis of
Presentation
The accompanying consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) issued by the International
Accounting Standards Board (IASB), as adopted by the
European Union (EU) and additionally with
requirements as set forth in section 315a paragraph 1
of the German Commercial Code
(Handelsgesetzbuch or HGB). The
fiscal year-end for the Company is September 30.
According to article 4 of
Regulation No. 1606/2002 of the European Parliament
and the European Council of July 19, 2002, all companies
domiciled in an EU member state that issue securities admitted
to a regulated market of a member state are required to prepare
their consolidated financial statements in accordance with IFRS.
The regulation generally requires companies to adopt IFRS with
effect from their first fiscal year to commence on or after
January 1, 2005, with an exception granted by the EU
allowing companies to defer the adoption until 2007 if they
already apply internationally accepted accounting standards
because their securities are admitted to a stock exchange
outside the EU. IFRS require disclosure of prior year figures
for comparison purposes. Accordingly, our effective date for the
transition from accounting principles generally accepted in the
United States of America (U.S. GAAP) to IFRS is
October 1, 2006.
In addition to the IFRS consolidated financial statements, the
Company issued consolidated financial statements under
U.S. GAAP for the fiscal year ended as of
September 30, 2008 since U.S. GAAP were considered the
primary accounting principles for that period. Beginning with
the first quarter of the 2009 fiscal year IFRS serves as the
Companys primary accounting principles. Commencing fiscal
year 2009 the Company prepares consolidated financial statements
exclusively on basis of IFRS.
The board of management of the company approved the consolidated
financial statements of the company on December 22, 2008,
for submission to the companys supervisory board.
All standards and interpretations issued by the IASB and applied
by the Company in preparing its consolidated financial
statements have been adopted for use in the EU as of the date of
application. These consolidated financial statements also comply
with IFRS as published by the IASB. For preparation of the
consolidated financial statements there are no differences
between IFRS as adopted by the EU and IFRS as published by the
IASB. IFRS as endorsed by the EU and IFRS as published by the
IASB are referred to, collectively, as IFRS in these
consolidated financial statements.
All amounts herein are shown in Euro (or )
except where otherwise stated. The accompanying consolidated
balance sheet as of September 30, 2008, and the
consolidated statements of operations and cash flows for the
year then ended are also presented in U.S. dollars
($), solely for the convenience of the reader, at
the rate of 1 = $1.4081, the Federal Reserve noon buying
rate on September 30, 2008. The U.S. dollar
convenience translation amounts have not been audited.
For purposes of preparing the accompanying consolidated
financial statements, the Company adopted IFRS for the first
time as of October 1, 2006 (the Transition
Date) and applied IFRS 1, First-time adoption of
International Financial Reporting Standards.
F-9
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The Company applied all standards and interpretations issued by
the IASB that were effective as of September 30, 2008. In
addition, the Company early adopted IFRS 8, Operating
Segments effective October 1, 2006. IFRS 8 sets
out the requirements for the disclosure of information about an
entitys operating segments. IFRS 8 replaces International
Accounting Standard (IAS) 14, Segment
Reporting, and aligns segment reporting with the
requirements of Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards
(SFAS) 131, Disclosures about Segments of
an Enterprise and Related Information, except for some
minor differences. IFRS 8 requires an entity to report financial
and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of
operating segments that meet specified criteria. Operating
segments are components of an entity for which separate
financial information is available that is evaluated regularly
by the entitys Chief Operating Decision Maker
(CODM) in making decisions about how to allocate
resources and in assessing performance. Generally, financial
information is required to be reported on the same basis as it
is used internally for evaluating operating segment performance
and deciding how to allocate resources to operating segments.
See note 41 for further information on segment results.
|
|
2.
|
Summary of
Significant Accounting Policies
|
The following is a summary of significant accounting policies
followed in the preparation of the accompanying consolidated
financial statements.
Basis of
Consolidation
The Infineon group, including entities held for disposal,
consists of the following numbers of entities :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
|
accounted for
|
|
|
|
|
|
|
Consolidated
|
|
|
using the
|
|
|
|
|
|
|
entities
|
|
|
equity method
|
|
|
Total
|
|
|
September 30, 2007
|
|
|
68
|
|
|
|
6
|
|
|
|
74
|
|
Additions
|
|
|
6
|
|
|
|
4
|
|
|
|
10
|
|
Disposals
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2008
|
|
|
73
|
|
|
|
9
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Subsidiaries
The accompanying consolidated financial statements include the
accounts of Infineon Technologies AG and its subsidiaries that
are directly or indirectly controlled on a consolidated basis.
Control is the power to govern the financial and operating
policies of an entity so as to obtain benefits from its
activities and is generally conveyed by ownership of the
majority of voting rights. The existence and effect of potential
voting rights that are currently exercisable or convertible are
considered when assessing whether the Company controls another
entity. Additionally, the Company consolidates special purpose
entities (SPEs) pursuant to the Standing
Interpretations Committee (SIC) Interpretation SIC
12, Consolidation Special Purpose
Entities, where the substance of the relationship
indicates that the Company controls the SPE. The effects of all
significant intercompany transactions are eliminated.
Equity Method
Investments
The Company uses the equity method to account for its investment
in Associated Companies and Joint Ventures (as defined below)
(collectively, Equity Method Investments see
note 21):
An Associated Company is an entity in which the
Company has significant influence, but not a controlling
interest, over the operating and financial management policy
decisions of the entity. Associated Companies are accounted for
using the equity method. Significant influence is generally
presumed when the Company holds between 20 percent and
50 percent of the voting rights.
F-10
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
A Joint Venture is a contractual arrangement whereby
two or more parties undertake an economic activity that is
subject to joint control. Interests in jointly controlled
entities are accounted for using the equity method.
Under the equity method of accounting, the Companys
investments in Associated Companies and joint ventures are
initially recorded at cost, and subsequently increased (or
decreased) to reflect both the Companys pro-rata share of
the post-acquisition net income (or loss) of the Equity Method
Investment and other movements included directly in the Equity
Method Investments equity. Goodwill arising from the
acquisition of an Equity Method Investment is included in its
carrying value (net of any accumulated impairment loss). Equity
method losses in excess of the Companys carrying value of
the investment in the entity are charged against other assets
held by the Company related to the investee. If those assets are
written down to zero, a determination is made whether to report
additional losses based on the Companys obligation to fund
such losses.
The effects of all significant transactions between the Company
and its Equity Method Investments are eliminated to the extent
of the Companys interest in the Equity Method Investments.
When Equity Method Investments fiscal year-ends differ by
not more than three months from the Companys fiscal
year-end, the Companys share of the profit or loss of the
Equity Method Investment is recorded on a lag.
Gains or losses arising from the issuances of shares by Equity
Method Investments, due to changes in the Companys
proportionate share of the value of the issuers equity,
are recognized in profit and loss.
Other equity investments, in which the Company has an ownership
interest of less than 20 percent, are recorded at cost if a
fair value cannot be reliably measured.
Reporting and
Foreign Currency
The currency of the primary economic environment in which the
Company operates, that is its functional currency, is the Euro.
The accompanying consolidated financial statements are presented
in Euro, which is the Companys reporting currency.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the
consolidated statements of operations.
The assets and liabilities of foreign subsidiaries with
functional currencies other than the Euro are translated using
period-end exchange rates. The revenues and expenses of such
subsidiaries are translated using average exchange rates during
the period in cases where exchange rates do not fluctuate
significantly. Exchange differences arising from the translation
of assets and liabilities in comparison with the translations
reported in the previous periods are included in income and
expense recognized in equity and reported as a separate
component of equity.
The exchange rates of the primary currencies (1.00 quoted
into currencies specified below) used in the preparation of the
accompanying consolidated financial statements are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate
|
|
|
Annual average
|
|
|
|
September 28,
|
|
|
September 29,
|
|
|
exchange rate
|
|
Currency:
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
U.S. dollar
|
|
|
1.4180
|
|
|
|
1.4349
|
|
|
|
1.3339
|
|
|
|
1.5052
|
|
Japanese yen
|
|
|
163.2900
|
|
|
|
152.3000
|
|
|
|
158.7997
|
|
|
|
161.6773
|
|
Segment
Reporting
Reporting of operating segments is based on those segments
reported internally to the entitys chief operating
decision-maker for purposes of allocating resources and
assessing performance. Each of the
F-11
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
segments has a segment manager reporting directly to the
Companys Management Board, who has been identified as the
relevant CODM (see note 41).
Revenue
Recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary
course of the Companys activities.
Revenue
Revenues from products sold are recognized in accordance with
IAS 18, Revenue, when persuasive evidence of
an arrangement exists, delivery has occurred or services have
been rendered, the risks and rewards of ownership have been
transferred to the customer, the amount of revenue can be
measured reliably, and collection of the related receivable is
reasonably assured. The Company records reductions to revenue
for estimated product returns and allowances for discounts,
volume rebates and price protection, based on historical
experience, at the time the related revenue is recognized. In
general, returns are permitted only for quality-related reasons
within the applicable warranty period. The Company records a
provision for warranty costs as a charge to cost of sales, based
on historical experience of warranty costs incurred as a
percentage of net sales, because the Companys management
believes that this is a reasonable estimate of potential losses
to be incurred within the warranty period.
In accordance with business practice in the semiconductor
industry, distributors can, in certain cases, apply for price
protection. Price protection programs allow distributors to
apply for a price protection credit on unsold inventory in the
event the Company reduces the standard list price of the
products included in such inventory. The authorization of the
distributors refund remains fully within the control of
the Company. The Company calculates the provision for price
protection in the same period the related revenue is recorded
based on historical price trends and sales rebates, analysis of
credit memo data, specific information contained in the price
protection agreement, and other factors known at the time. The
historical price trend represents the difference between the
invoiced price and the standard list price to the distributor.
The short outstanding inventory period, the visibility into the
standard inventory pricing for standard products, and the long
distributor pricing history have enabled the Company to reliably
estimate price protection provisions at the end of the period.
In addition, distributors can, in certain cases, also apply for
stock rotation and scrap allowances. Allowances for stock
rotation returns are accrued based on expected stock rotation as
per the contractual agreement. Distributor scrap allowances are
accrued based on the contractual agreement and, upon
authorization of the claim, reimbursed up to a certain maximum
of the average inventory value. In some cases, rebate programs
are offered to specific customers or distributors whereby the
customer or distributor may apply for a rebate upon achievement
of a defined sales volume. Distributors are also partially
compensated for commonly defined cooperative advertising on a
case-by-case
basis.
License
Income
License income is recognized when earned and realizable (see
note 7). Lump sum payments are generally non-refundable and
are deferred where applicable and recognized over the period in
which the Company is obliged to provide additional service. In
accordance with IAS 18, revenues from contracts with multiple
elements are recognized as each element is earned based on the
relative fair value of each element and when there are no
undelivered elements that are essential to the functionality of
the delivered elements and when the amount is not contingent
upon delivery of the undelivered elements. Royalties are
recognized as earned.
Product-related
Expenses and Losses from Onerous Contracts
Shipping and handling costs associated with product sales are
included in cost of sales. Expenditures for advertising, sales
promotion and other sales-related activities are expensed as
incurred. Provisions for estimated costs related to product
warranties are generally made at the time the related sale is
recorded, based on estimated failure rates and claim history.
Expected losses from onerous contracts are recognized in the
period when the current estimate of total contract costs exceeds
contract revenue.
F-12
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Research and
Development Costs
Costs of research activities undertaken with the prospect of
gaining new scientific or technical knowledge and understanding
are expensed as incurred.
Costs for development activities, the results of which are
applied to a plan or design for the production of new or
substantially improved products and processes, are capitalized
if development costs can be measured reliably, the product or
process is technically and commercially feasible, future
economic benefits are probable, and the Company intends, and has
sufficient resources, to complete development and use or sell
the asset. The costs capitalized include the cost of materials,
direct labor and directly attributable general overhead
expenditure that serves to prepare the asset for use. Such
capitalized costs are included as internally generated
intangible assets within goodwill and other intangible assets
(see note 24). Development costs which do not fulfill the
criteria for capitalization are expensed as incurred.
Capitalized development costs are stated at cost less
accumulated amortization and, if applicable, impairment charges.
Internally generated intangible assets are amortized as part of
cost of sales over a period of three to five years.
Grants
Grants for capital expenditures include both tax-free government
grants and taxable grants for investments in property, plant and
equipment. The recognition of the grant starts when it is
reasonably assured that the Company will comply with the
conditions attached to the grant and when it is reasonably
assured that the grant will be received. Tax-free government
grants are deferred and recognized over the remaining useful
life of the related asset. Taxable grants are deducted from the
acquisition costs of the related asset and thereby reduce
depreciation expense in future periods. Certain taxable grants
reduce the related expense.
Grants that are related to items in profit or loss are presented
as a reduction of the related expense in the consolidated
statements of operations.
Share-based
Compensation
The Company has equity-settled share-based compensation plans.
The fair value of the employee services received in exchange for
share option awards is recognized as an expense. The total
amount to be expensed over the vesting period is determined by
reference to the fair value of the share option awards granted,
excluding the impact of any non-market vesting conditions.
Non-market vesting conditions are included in assumptions about
the number of share option awards that are expected to vest. At
each balance sheet date, the Company revises its estimate of the
number of share option awards that are expected to vest. The
Company recognizes the impact of the revision to original
estimates in the consolidated statement of operations, with a
corresponding adjustment to equity.
The proceeds received net of any directly attributable
transaction costs are credited to ordinary share capital and
additional paid-in capital when the share options are exercised.
Financial
Instruments
According to IAS 32, Financial Instruments:
Presentation, a financial instrument is defined as any
contract that gives rise to a financial asset of one entity and
a financial liability or equity instrument of another entity.
Financial instruments are initially recognized at fair value.
Transaction costs directly attributable to the acquisition or
issuance of financial instruments are only recognized in
determining the carrying amount, if the financial instruments
are not measured at fair value through profit or loss. Financial
assets are derecognized when the rights to receive cash flows
from the investments have expired or have been transferred and
the Company has transferred substantially all risks and rewards
of ownership. Financial liabilities are derecognized when they
are extinguished, that is when the obligation specified in the
respective contract is discharged, cancelled, or expired.
F-13
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Financial
Assets
The Company classifies its financial assets in the following
categories: at fair value through profit or loss, loans and
receivables, and
available-for-sale.
The classification depends on the purpose for which the
financial instruments were acquired. Management determines the
classification of its financial instruments at initial
recognition.
Financial assets at fair value through profit or loss are
financial assets held for trading or designated upon initial
recognition. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short
term.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for
maturities greater than 12 months after the balance sheet
date. These are classified as non-current assets. The
Companys loans and receivables comprise cash and cash
equivalents and trade and other receivables in the consolidated
balance sheet. Loans and receivables are carried at amortized
cost using the effective interest method.
Cash and cash equivalents represent cash, deposits and liquid
short-term investments with original maturities of three months
or less.
Trade and other receivables are measured at fair value at
initial recognition. Trade and other receivables are subject to
impairment testing. They are considered impaired when there is
objective evidence that the Company will not be able to collect
all amounts due according to the original terms of the
receivables.
Available-for-sale
financial assets are non-derivative financial instruments that
are designated in this category or not classified in any of the
other categories. They are included in non-current assets unless
management intends to dispose of the investment within
12 months of the balance sheet date. The Companys
available-for-sale
financial assets comprise mainly marketable securities.
Available-for-sale
financial assets and financial assets at fair value through
profit or loss are subsequently carried at fair value.
Gains or losses arising from changes in the fair value of
available-for-sale
financial assets are recognized directly in equity with the
exception of impairment losses, which are recognized in profit
or loss. When financial assets classified as
available-for-sale
are sold or impaired, the accumulated fair value adjustments
recognized in equity are included in profit or loss.
The Company assesses declines in fair value at each balance
sheet date to determine whether there is objective evidence that
a financial asset or group of financial assets is impaired. In
the case of
available-for-sale
financial assets, a significant or prolonged decline in the fair
value of the financial asset below its cost is considered as an
indicator that the assets are impaired. If any such evidence
exists for
available-for-sale
financial assets, the cumulative loss that had been recognized
directly in equity measured as the difference
between the acquisition cost and the current fair value, less
any impairment loss on that financial asset previously
recognized in profit or loss is removed from equity
and recognized in profit or loss.
Regular purchases and sales of financial assets are recognized
on the settlement date. The settlement date is the date that an
asset is delivered to or by the Company.
Financial
Liabilities
Generally, the Company classifies its financial liabilities into
two categories: at fair value through profit and loss and other
financial liabilities.
Financial liabilities at fair value through profit or loss are
financial liabilities held for trading or designated upon
initial recognition. The Companys only financial
liabilities that are measured at fair value through profit or
loss are derivative financial instruments with a negative fair
value as of the balance sheet date.
All other financial liabilities, including trade and other
payables and debt instruments, are measured at amortized cost
using the effective interest method.
F-14
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Derivative
financial instruments
The Company operates internationally, giving rise to exposure to
changes in foreign currency exchange rates. The Company uses
financial instruments, including derivatives such as foreign
currency forward and option contracts as well as interest rate
swap agreements, to reduce this risk based on the net exposure
to the respective currency.
Derivative financial instruments are categorized as held for
trading and measured at fair value unless they are designated as
hedges. The Company designates certain derivative financial
instruments as hedges of a foreign currency risk associated with
highly probable forecast transactions (cash flow hedges).
Derivative financial instruments are recorded at their fair
value and included in other current financial assets or other
current financial liabilities. Changes in fair value of
undesignated derivative financial instruments that relate to
operations are recorded as part of cost of sales, while
undesignated derivative financial instruments relating to
financing activities are recorded in financial income or
financial expense.
The effective portion of changes in the fair value of derivative
financial instruments that are designated and qualify as cash
flow hedges is recognized in equity. The gain or loss relating
to the ineffective portion is recognized immediately in profit
or loss. Amounts accumulated in equity are recycled in profit or
loss in the periods when the hedged item affects profit or loss
(that is when the forecasted transaction that is hedged takes
place).
When a hedging instrument expires or is sold, or when a hedge no
longer meets the criteria for hedge accounting, any cumulative
gain or loss existing in equity at that time remains in equity
and is recognized when the forecasted transaction is ultimately
recognized in profit or loss. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to profit or loss.
Inventories
Inventories are valued at the lower of acquisition or production
cost or net realizable value, cost being generally determined on
the basis of an average cost method. Production cost consists of
purchased component costs and manufacturing costs, which
comprise direct material and labor and applicable manufacturing
overheads, including depreciation charges. Net realizable value
is the estimated selling price in the ordinary course of
business less the estimated costs of completion and estimated
costs necessary to make the sale.
Current and
Deferred Income Taxes
The current income tax charge is calculated on the basis of the
tax laws enacted at the balance sheet date in the countries in
which the Company operates and generates taxable income.
Deferred taxes are determined in accordance with IAS 12,
Income Taxes, according to which future tax
benefits and liabilities are recognized for temporary
differences between the carrying amounts of assets or
liabilities in the consolidated financial statements and their
tax base. However, the deferred income tax is not accounted for
if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax assets and liabilities are
measured using tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected
to apply when the related deferred income tax asset is realized
or the deferred income tax liability is settled.
Anticipated tax savings from the use of tax loss carry-forwards
expected to be recoverable in future periods are capitalized.
Deferred tax assets in respect of deductible temporary
differences and tax loss carry-forwards exceeding the deferred
tax liabilities in respect of taxable temporary differences are
recognized only to the extent that it is probable that taxable
profit will be available against which the deductible temporary
differences can be utilized. Deferred tax assets and liabilities
are not discounted.
Deferred tax assets and deferred tax liabilities are netted if
these income tax assets and liabilities concern the same tax
authority and refer to the same tax subject or a group of
different tax subjects that are jointly assessed for income tax
purposes.
F-15
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Discontinued
Operations
Discontinued operations are reported when a component of an
entity either has been disposed of, or is classified as held for
sale, and (a) represents a separate major line of business
or geographical area of operations, (b) is part of a single
coordinated plan to dispose of a separate major line of business
or geographical area of operations or (c) is a subsidiary
acquired exclusively with a view to resale. Discontinued
operations are presented as a single amount in the accompanying
consolidated statements of operations and consolidated
statements of cash flows, respectively. These statements have
been restated for prior periods so that the disclosures relate
to all operations that have been discontinued as of
September 30, 2008.
Property,
Plant and Equipment
Property, plant and equipment are valued at cost less
accumulated depreciation and impairment. Spare parts,
maintenance and repairs are expensed as incurred. Construction
in progress includes advance payments for construction of fixed
assets. Land and construction in progress are not depreciated.
The cost of construction of certain long-term assets includes
capitalized interest, which is amortized over the estimated
useful life of the related asset. During each of the fiscal
years ended September 30, 2007 and 2008, capitalized
interest was 0. The estimated useful lives of assets are
as follows:
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Years
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Buildings
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10-25
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Technical equipment and machinery
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3-10
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Other plant and office equipment
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1-10
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Leases
The Company is a lessee of property, plant and equipment. All
leases where the Company is lessee that meet certain specified
criteria intended to represent situations where the substantive
risks and rewards of ownership have been transferred to the
lessee are accounted for as finance leases pursuant to IAS 17,
Leases. All other leases are accounted for as
operating leases.
Goodwill and
Other Intangible Assets
Goodwill is the excess of the cost of a business combination
over the acquirers interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities of
the acquiree at the date of acquisition. Goodwill arising from
acquisitions of subsidiaries is included in goodwill and other
intangible assets in the accompanying consolidated balance
sheets. Goodwill arising from acquisitions of Associated
Companies is included in investments accounted for using the
equity method and is tested for impairment as part of the
overall balance. Intangible assets acquired in a purchase method
business combination are recognized and reported apart from
goodwill.
Goodwill is not amortized, but instead tested for impairment
annually as well as whenever there are events or changes in
circumstances (triggering events) which suggest that
the carrying amount may not be recoverable. Goodwill is carried
at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business
combination is allocated to cash-generating units
(CGUs) that are expected to benefit from the
synergies of the combination. At the Company, CGUs are
represented by its individual product lines. The Company tests
goodwill annually for impairment in the fourth quarter of the
fiscal year whereby if the carrying amount of the product line
to which the goodwill is allocated exceeds its recoverable
amount, goodwill allocated to this product line must be reduced
accordingly. The recoverable amount is the higher of the product
lines fair value less costs to sell and its value in use.
The Company generally determines the recoverable amount of a
product line based on its fair value less costs to sell. These
values are generally determined based on discounted cash flow
calculations. An impairment loss recognized for goodwill is not
reversed in a subsequent period. The determination of fair value
of the CGUs requires considerable judgment by management.
Other intangible assets consist primarily of purchased
intangible assets, such as licenses and purchased technology,
which are recorded initially at acquisition cost, as well as
capitalized development
F-16
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
costs. These intangible assets have finite useful lives ranging
from 3 to 10 years and are carried at cost less accumulated
amortization using the straight-line method.
Recoverability
of Non-Financial Assets
The Company reviews all other long-lived assets, including
property, plant and equipment and intangible assets subject to
amortization, for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of the asset
to the recoverable amount, which is the higher of the
assets value in use and its fair value less costs to sell.
Estimated value in use is generally based on either appraised
value or measured by discounted estimated future cash flows.
Considerable management judgment is necessary to estimate
discounted future cash flows.
If such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying value
of the assets exceeds their recoverable amount.
Pension Plans
and Similar Commitments
The Company operates various pension plans. The plans are
generally funded through payments to trustee-administered funds,
determined by periodic actuarial calculations. The Company has
both defined benefit and defined contribution plans. A defined
contribution plan is a pension plan under which the Company pays
fixed contributions into a separate entity (a fund). The Company
therefore has no legal or constructive obligations to pay
further contributions if one of its defined contribution plans
does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and prior
periods.
A defined benefit plan is a pension plan that is not a defined
contribution plan. The liability recognized in the balance sheet
in respect of defined benefit pension plans is the present value
of the defined benefit obligation at the balance sheet date less
the fair value of the plan assets, together with adjustments for
past service costs. The defined benefit obligation is calculated
annually by independent actuaries using the projected unit
credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future
cash outflows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits
will be paid and that have terms to maturity approximating the
terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are recognized outside
profit or loss in the Consolidated Statement of Income and
Expense Recognized in Equity in the period in which they occur
(SoRIE approach).
Past-service costs are recognized immediately in profit or loss,
unless the changes to the pension plan are conditional on the
employees remaining in service for a specified period of time
(the vesting period). In this case, the past-service costs are
amortized on a straight-line basis over the vesting period.
The Company pays contributions to publicly or privately
administered pension insurance plans. The Company has no further
payment obligations once the contributions have been paid. The
contributions are recognized as employee benefit expense when
they are due. The Company records a liability for amounts
payable under the provisions of its various defined contribution
plans. Prepaid contributions are recognized as an asset to the
extent that a cash refund or a reduction in the future payments
is available.
Provisions
A provision is recognized in the balance sheet when the Company
has a present legal or constructive obligation as a result of a
past event, it is probable that an outflow of economic benefits
will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. If the
effect of the time value of money is material, provisions are
recognized at present value by discounting the expected future
cash outflows at a pretax rate that reflects current market
assessments of the time value of money and the risks specific to
the liability. Provisions for onerous contracts are measured at
the lower of the expected cost of fulfilling the contract and
the expected cost of terminating the contract. Additions to
provisions are generally recognized in profit or loss.
F-17
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Standards and
Interpretations Issued but Not Yet Adopted
In September 2007, the IASB issued an amendment to IAS 1,
Presentation of Financial Statements. The
revision is aimed at improving users ability to analyze
and compare the information given in financial statements. IAS 1
sets overall requirements for the presentation of financial
statements, guidelines for their structure and minimum
requirements for their content. The revised IAS 1 resulted in
consequential amendments to other statements and
interpretations. The revision of IAS 1 will be effective for
fiscal years beginning on or after January 1, 2009, with
early adoption permitted. The EU has not yet endorsed the
amendment to IAS 1. The Company is currently evaluating the
potential effects of IAS 1.
In January 2008, the IASB published the amended standards IFRS
3, Business Combinations, (IFRS 3
(2008)) and IAS 27, Consolidated and Separate
Financial Statements (IAS 27 (2008)).
Neither standard has been endorsed by the EU yet.
IFRS 3 (2008) reconsiders the application of acquisition
accounting for business combinations. Major changes relate to
the measurement of non-controlling interests, the accounting for
business combinations achieved in stages as well as the
treatment of contingent consideration and acquisition-related
costs. Based on the new standard, non-controlling interests may
be measured at their fair value (full-goodwill-methodology) or
at the proportional fair value of assets acquired and
liabilities assumed. In business combinations achieved in
stages, any previously held equity interest in the acquiree is
remeasured to its acquisition date fair value. Any changes to
contingent consideration classified as a liability at the
acquisition date are recognized in profit and loss.
Acquisition-related costs are expensed in the period incurred.
Major changes in relation to IAS 27 (2008) relate to the
accounting for transactions which do not result in a change of
control as well as for those leading to a loss of control. If
there is no loss of control, transactions with non-controlling
interests are accounted for as equity transactions not affecting
profit and loss. At the date control is lost, any retained
equity interests are remeasured to fair value. Based on the
amended standard, non-controlling interests may show a deficit
balance since both profits and losses are allocated to the
shareholders based on their equity interests.
The amended standards are effective for business combinations in
annual periods beginning on or after July 1, 2009. The
Company is currently evaluating the potential effects of IFRS 3
(2008) and IAS 27 (2008).
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3.
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Management
Estimates and Judgments
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Certain accounting policies require critical accounting
estimates that involve complex and subjective judgments and the
use of assumptions, some of which may be for matters that are
inherently uncertain and susceptible to change. Such critical
accounting estimates could change from period to period and have
a material impact on financial condition or results of
operations. Critical accounting estimates could also involve
estimates where management reasonably could have used a
different estimate in the current accounting period. Management
cautions that future events often vary from forecasts and that
estimates routinely require adjustment.
Revenue
Recognition
Infineon generally markets its products to a wide variety of
customers and distributors. Revenue is recognized when
persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the risks and rewards
of ownership have been transferred to the customer, the amount
of revenue can be measured reliably, and collection of the
related receivable is reasonably assured. Reductions to revenue
for estimated product returns and allowances for discounts,
volume rebates and price protection are recorded, based on
historical experience, at the time the related revenue is
recognized. This process requires the exercise of substantial
judgment in evaluating the above-mentioned factors and requires
material estimates, including forecasted demand, returns and
industry pricing assumptions.
In future periods, the Company may be required to accrue
additional provisions due to (1) deterioration in the
semiconductor pricing environment, (2) reductions in
anticipated demand for semiconductor products or (3) lack
of market acceptance for new products. If these or other factors
result in a significant
F-18
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
adjustment to sales discount and price protection allowances,
they could significantly impact the Companys future
operating results.
The Company has entered into licensing agreements for its
technology in the past, and anticipates that it will increase
its efforts to monetize the value of its technology in the
future. As with certain of the Companys existing licensing
agreements, any new licensing arrangements may include capacity
reservation agreements with the licensee. Such transactions
could represent multiple element arrangements. The process of
determining the appropriate revenue recognition in such
transactions is highly complex and requires significant
judgment, which includes evaluating material estimates in the
determination of fair value and the level of the Companys
continuing involvement.
Recoverability
of Non-Financial Assets
The Company reviews long-lived assets, including intangible
assets, for impairment when events or changes in circumstances
indicate that the carrying value of an asset may not be
recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying value of the asset to
the recoverable amount, which is the higher of the assets
value in use and its fair value less costs to sell. If such
assets are considered to be impaired, the impairment recognized
is measured by the amount by which the carrying value of the
assets exceeds their recoverable amount.
Goodwill is tested for impairment at least once a year. For the
purpose of impairment testing, goodwill is allocated to the
respective CGU that is expected to benefit from the goodwill.
The recoverable amounts of CGUs are determined based on value in
use calculations. Considerable management judgment is necessary
to estimate value in use and discounted future cash flows.
Valuation of
Inventory
Inventories are valued at the lower of cost or net realizable
value. The Company reviews the recoverability of inventory based
on regular monitoring of the size and composition of inventory
positions, current economic events and market conditions,
projected future product demand, and the pricing environment.
This evaluation is inherently judgmental and requires material
estimates, including both forecasted product demand and pricing
environment, both of which may be susceptible to significant
change.
Adjustments to the valuation and write-downs of inventory could
be necessary in future periods due to reduced semiconductor
demand in the industries that the Company serves, technological
obsolescence due to rapid developments of new products and
technological improvements, or changes in economic or other
events and conditions that impact the market price for the
Companys products which may have a significant impact on
the results of operations.
Recoverability
of Equity Method Investments
The Company has entered into investments in companies that are
principally engaged in the research and development, design, and
manufacture of semiconductors and related products and that are
accounted for using the equity method.
An impairment of Equity Method Investments is recognized when
the carrying amount exceeds the recoverable amount. To allow
management to determine whether a loss event has occurred all
significant information and events related to the Equity Method
Investment are reviewed periodically. This assessment is made by
considering available evidence including changes in general
market conditions, specific industry and investee data.
The high cyclicality in the semiconductor industry could
adversely impact the operations of these investments and their
ability to generate future net cash flows. Furthermore, to the
extent that these investments are not publicly traded, further
judgments and estimates are required to determine their fair
value. Any potential impairment charges to write-down such
investments to fair value could adversely affect the
Companys future operating results.
F-19
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Realization of
Deferred Tax Assets
The Company evaluates the deferred tax asset position and the
need for a valuation allowance on a regular basis. The
assessment requires the exercise of judgment on the part of the
Companys management with respect to benefits that could be
realized from available tax strategies and future taxable
income, as well as other positive and negative factors. The
ultimate realization of deferred tax assets is dependent upon
the ability to generate the appropriate character of future
taxable income sufficient to utilize loss carry-forwards or tax
credits before their expiration. Since Infineon has incurred a
cumulative loss in certain tax jurisdictions over the three-year
period ended September 30, 2008, the impact of forecasted
future taxable income is excluded from such an assessment. For
these tax jurisdictions, the assessment was therefore based only
on the benefits that could be realized from available tax
strategies and the reversal of temporary differences in future
periods.
The recorded amount of total deferred tax assets could be
reduced if the estimates of projected future taxable income and
benefits from available tax strategies are lowered, or if
changes in current tax regulations are enacted that impose
restrictions on the timing or extent of the ability to utilize
tax loss and credit carry-forwards in the future.
Purchase
Accounting
Accounting for business combinations requires the allocation of
the purchase price to identifiable tangible and intangible
assets and liabilities based upon their fair value. The
allocation of purchase price is highly judgmental, and requires
the extensive use of estimates and fair value assumptions, which
can have a significant impact on operating results.
Pension Plan
Accounting
The Companys pension benefit costs are determined in
accordance with actuarial computations using the
projected-unit-credit
method, which rely on assumptions including discount rates and
expected return on plan assets. Discount rates are established
based on prevailing market rates for high-quality fixed-income
instruments that, if the pension benefit obligation were settled
at the measurement date, would provide the necessary future cash
flows to pay the benefit obligation when due. The expected
return on plan assets assumption is determined on a uniform
basis, considering long-term historical returns, asset
allocation, and future estimates of long-term investment
returns. Other key assumptions for the pension costs are based
on current market conditions. A significant variation in one or
more of these underlying assumptions could have a material
effect on the measurement of the long-term obligation.
Provisions
The Company is subject to various legal actions and claims,
including intellectual property matters that arise in and
outside the normal course of business.
The Company regularly assesses the likelihood of any adverse
outcome or judgments related to these matters, as well as
estimating the range of possible losses and recoveries.
Liabilities, including accruals for significant litigation
costs, related to legal proceedings are recorded when it is
probable that a liability has been incurred and the associated
amount of the loss can be reasonably estimated. Accordingly, the
Company has recorded a provision and charged operating income in
the accompanying consolidated financial statements related to
certain asserted and unasserted claims existing as of each
balance sheet date. As additional information becomes available,
any potential liability related to these actions is assessed and
the estimates are revised, if necessary. These provisions would
be subject to change in the future based on new developments in
each matter, or changes in circumstances, which could have a
material impact on our results of operations, financial position
and cash flows.
Trade and
Other Receivables
The allowance for doubtful accounts involves significant
management judgment and review of individual receivables based
on individual customer creditworthiness, current economic trends
and analysis of historical bad debts on a portfolio basis. For
the determination of the country-specific component of the
individual allowance, we also consider country credit ratings,
which are centrally
F-20
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
determined, based on information from external rating agencies.
Regarding the determination of the valuation allowance derived
from a portfolio-based analysis of historical bad debts, a
decline of receivables in volume results in a corresponding
reduction of such provisions and vice versa.
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4.
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Explanation of
Transition to IFRS
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Exemptions
Applied as of the Transition Date
In accordance with IFRS 1, the Company prepared an IFRS
consolidated balance sheet as of the Transition Date. IFRS 1
requires that all IFRS standards and interpretations that are
effective for the first IFRS consolidated financial statements
for the year ended September 30, 2008, be applied
consistently and retrospectively for all fiscal years presented.
However, IFRS 1 offers certain exemptions and exceptions to this
general requirement in specific cases. The Company applied the
exemptions provided by IFRS 1 as described below:
Employee
Benefits
At the Transition Date the Company applied IAS 19,
Employee Benefits, in measuring employee
benefit assets and liabilities and recognized all cumulative
actuarial gains or losses from the inception of the plan through
October 1, 2006.
Business
Combinations
Business combinations that occurred before October 1, 2006,
were not restated retrospectively in accordance with IFRS 3.
Within the limits imposed by IFRS 1, the carrying amounts of
assets acquired and liabilities assumed as part of past business
combinations, as well as the amounts of goodwill that arose from
such transactions, as determined under U.S. GAAP are
considered to be their deemed cost under IFRS at the Transition
Date.
Currency
Translation Differences
Cumulative translation differences as of October 1, 2006,
arising from translation into Euro of the financial statements
of foreign operations whose functional currency is other than
Euro, were reset to zero. Accordingly, the cumulative
translation differences were included in accumulated deficit in
the IFRS opening balance sheet. In the case of subsequent
disposal of an entity concerned, no amount of currency
translation difference relating to the time prior to the
Transition Date will be included in the determination of the
gain or loss on disposal of such entity.
Share-based
Compensation
As permitted under IFRS 1, IFRS 2, Share-based
Payment, has not been retrospectively applied to all
share-based payment awards. This exemption has been applied for
all equity instruments which were granted prior to
November 7, 2002, as well as those equity instruments that
were granted after November 7, 2002, which vested before
October 1, 2006. Share-based payment awards granted after
November 7, 2002, and not vested at October 1, 2006,
are recognized in accordance with IFRS 2.
Designation of
Previously Recognized Financial Instruments
Certain financial assets with an aggregate fair value of
90 million at the Transition Date were designated as
financial assets accounted for at fair value through profit and
loss (fair value option).
Changes in
Presentation of the Consolidated Financial Statements
The presentation of the consolidated financial statements has
been modified to comply with the requirements of IAS 1. Under
IFRS minority interests are presented within equity. As a result
of applying the new option provided by IAS 19 to recognize
actuarial gains and losses directly in equity, Consolidated
Statements of Income and Expense Recognized in Equity have been
added.
F-21
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Reconciliation
of Equity and Net Loss from U.S. GAAP to IFRS
The following reconciliation presents the effect of major
differences between U.S. GAAP and IFRS on
shareholders equity as of October 1, 2006 (Transition
Date), September 30, 2007, and September 30, 2008,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transition
|
|
|
|
|
|
|
|
|
|
date
|
|
|
|
|
|
|
|
|
|
Explanatory
|
|
|
October 1,
|
|
|
September 30,
|
|
|
|
note
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
( in millions)
|
|
|
|
|
|
Shareholders equity under U.S. GAAP
|
|
|
|
|
|
|
5,315
|
|
|
|
4,914
|
|
|
|
1,764
|
|
Changes in presentation of minority interest
|
|
|
(a
|
)
|
|
|
761
|
|
|
|
950
|
|
|
|
374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity under U.S. GAAP, including minority
interest
|
|
|
|
|
|
|
6,076
|
|
|
|
5,864
|
|
|
|
2,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compound financial instruments
|
|
|
(b
|
)
|
|
|
168
|
|
|
|
142
|
|
|
|
85
|
|
Capitalization of development costs
|
|
|
(c
|
)
|
|
|
101
|
|
|
|
103
|
|
|
|
84
|
|
Pensions and other post-employment benefits
|
|
|
(d
|
)
|
|
|
(93
|
)
|
|
|
(10
|
)
|
|
|
(9
|
)
|
Deferred taxes
|
|
|
(e
|
)
|
|
|
(142
|
)
|
|
|
(88
|
)
|
|
|
(39
|
)
|
Qimonda held for sale adjustment
|
|
|
(f
|
)
|
|
|
|
|
|
|
|
|
|
|
(172
|
)
|
Adjustment at equity investment Qimonda
|
|
|
(g
|
)
|
|
|
|
|
|
|
|
|
|
|
77
|
|
Other
|
|
|
|
|
|
|
(15
|
)
|
|
|
(7
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
|
|
|
|
19
|
|
|
|
140
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity under IFRS
|
|
|
|
|
|
|
6,095
|
|
|
|
6,004
|
|
|
|
2,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following reconciliation presents the effect of major
differences between U.S. GAAP and IFRS on the
Companys net loss for the years ended September 30,
2007 and 2008, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
|
|
|
September 30,
|
|
|
|
note
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net loss under U.S. GAAP
|
|
|
|
|
|
|
(368
|
)
|
|
|
(3,122
|
)
|
Change in presentation of minority interest
|
|
|
(a
|
)
|
|
|
(25
|
)
|
|
|
(498
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss under U.S. GAAP, including minority interest
|
|
|
|
|
|
|
(393
|
)
|
|
|
(3,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compound financial instruments
|
|
|
(b
|
)
|
|
|
(52
|
)
|
|
|
(55
|
)
|
Capitalization of development costs
|
|
|
(c
|
)
|
|
|
(1
|
)
|
|
|
12
|
|
Pensions and other post-employment benefits
|
|
|
(d
|
)
|
|
|
7
|
|
|
|
1
|
|
Deferred taxes
|
|
|
(e
|
)
|
|
|
60
|
|
|
|
13
|
|
Other
|
|
|
(f,g
|
)
|
|
|
9
|
|
|
|
(98
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
|
|
|
|
23
|
|
|
|
(127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss under IFRS
|
|
|
|
|
|
|
(370
|
)
|
|
|
(3,747
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Change in
Presentation of Minority Interest
|
Under IFRS, minority interest is reported as a separate item
within shareholders equity, whereas U.S. GAAP
requires minority interest to be presented separately from
shareholders equity. Consistent with the balance sheet
presentation, under IFRS the minorities share of net loss
is presented as an allocation of net income or loss, whereas
under U.S. GAAP the minorities share is deducted in
determining net loss.
In addition, the reclassification of Qimonda as held for
disposal results in differences between U.S. GAAP and
IFRS mainly due to accounting treatment of minorities. Under
IFRS, the Qimonda disposal group is comprised of
100 percent of the assets and liabilities of Qimonda, and
accordingly 100 percent of the net assets of Qimonda are
written down to their estimated current fair value less costs to
sell. Under U.S. GAAP, the Qimonda disposal group is
comprised of the 77.5 percent of the assets and liabilities
of
F-22
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Qimonda held by the Company, and accordingly 77.5 percent
of the net assets of Qimonda are written down to their estimated
current fair value less costs to sell.
|
|
(b)
|
Compound
Financial Instruments
|
Compound Financial Instruments are accounted for differently
under U.S. GAAP and IFRS. Under U.S. GAAP, the
conversion feature in the Companys debt instruments
convertible into shares of the issuer are not separated
(bifurcated) from the debt instrument and accounted for
separately at fair value. The instrument is recorded in its
entirety as debt and accreted to face value through maturity.
Under IFRS, a compound financial instrument with terms and
conditions that grant the issuer the right to settle the option
in cash upon conversion is divided into separate liability
components at inception. The conversion right component is
considered a derivative financial instrument and measured at
fair value through profit or loss. A residual liability
component representing the debt obligation is measured at fair
value at inception and is subsequently measured at amortized
cost using the effective interest method. On September 29,
2006, Infineon waived the cash settlement option of its
convertible bonds and, as a result, the conversion right
component is deemed to be an equity component (additional
paid-in capital) as of the Transition Date. As of
October 1, 2006, shareholders equity was increased by
168 million compared to U.S. GAAP mainly due to
the equity classification of the conversion right component of
the convertible bonds payable at the Transition Date. In
addition, upon issuance of the exchangeable bonds payable during
the 2007 fiscal year, equity was increased by
19 million under IFRS compared to U.S. GAAP due
to equity classification of the conversion right component. Net
loss decreased by 52 million and
55 million in the 2007 and 2008 fiscal years,
respectively, due to bond accretion.
|
|
(c)
|
Capitalization of
Development Costs
|
Under IFRS, development costs are capitalized as intangible
assets if specified criteria are met, while under U.S. GAAP
they are generally expensed as part of research and development
expenses. The additional capitalization of product and
technology development costs (less related amortization) under
IFRS increased equity as of October 1, 2006 and
September 30, 2007 and 2008, respectively. Income from
continuing operations is impacted by (1) million and
12 million in the 2007 and 2008 fiscal years.
|
|
(d)
|
Pensions and
Other Post-employment Benefits
|
Under IFRS, actuarial gains and losses resulting from changes in
actuarial assumptions used to measure pension plan obligations
are recognized directly in equity in the period in which they
occur based on the so called SoRIE approach (Statement of
Recognized Income and Expense) under IAS 19 requirements
for accounting for pension and other post employment benefits.
As of October 1, 2006 all cumulative actuarial gains and
losses and vested the portion of service costs previously not
recognized under U.S. GAAP were recorded in retained
earnings. Prior to the implementation of SFAS No. 158,
Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans an amendment of FASB
Statements No. 87, 88, 106, and 132(R) as of
September 30, 2007, under U.S. GAAP, unrecognized
actuarial gains or losses exceeding a defined corridor were
amortized over the average remaining service period of the
active plan participants. Primarily due to the recognition of
cumulative actuarial gains and losses in retained earnings as of
October 1, 2006, shareholders equity decreased by
93 million.
SFAS No. 158 requires an employer to recognize the
overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to
recognize changes in that funded status in the year in which the
changes occur through comprehensive income of a business entity
(Recognition Provision). The Company adopted the
Recognition Provision of SFAS No. 158 as of the end of
the fiscal year ended September 30, 2007. Actuarial gains
and losses and unrecognized prior service cost are to be
recognized as a component of other comprehensive income, net of
tax. The measurement date for the funded status of the
companys plans is June 30.
Under the SoRIE approach, the funded status of defined benefit
plans is recognized in the consolidated balance sheets, and
actuarial gains and losses are recorded in the Consolidated
Statement of Income and Expense Recognized in Equity. Unlike
U.S. GAAP, under the IFRS application of the SoRIE approach
there is no recycling of actuarial gains and losses previously
recorded in the statement of other
F-23
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
comprehensive income (loss) through the consolidated statements
of operations in subsequent periods. Furthermore, under IFRS the
measurement date is the balance sheet date and IFRS has stricter
rules for the recognition of prepaid pension assets (asset
ceiling).
The overall impact associated with these differences was a
decrease in equity of 93 million,
10 million and 9 million and as of
October 1, 2006 and September 30, 2007 and 2008,
respectively. Net loss from continuing operations increased
slightly by 7 million and 1 million in the
2007 and 2008 fiscal years respectively.
The adjustments as described above resulted in additional
differences between the carrying amount of assets and
liabilities in the consolidated financial statements and their
tax basis. Deferred taxes on temporary differences were adjusted
accordingly, with differences in pension accounting between
U.S. GAAP and IFRS having the most significant impact.
This reconciling item also includes tax effects resulting from
differences in accounting for income taxes between
U.S. GAAP and IFRS. For the Company, such effects mainly
result from calculating deferred taxes on elimination of
intragroup profits. According to IFRS, deferred taxes on
intragroup profit elimination are calculated with reference to
the tax rate of the acquiring company, whereas, under
U.S. GAAP, the tax rate in the sellers or
manufacturers jurisdiction is used.
|
|
(f)
|
Qimonda held for
sale adjustment
|
In addition, U.S. GAAP requires that the cumulative
translation adjustment (CTA) be added to the
disposal group when calculating the write-down to reduce the
Qimonda disposal group to its estimated current fair value less
costs to sell. This is not the case under IFRS, which does not
allow CTA to be added to the disposal group when calculating the
write-down to reduce a disposal group to its estimated current
fair value less costs to sell. The accumulated CTA is released
through profit and loss on the date of disposal.
As a result of these differences, the write-down of the Qimonda
disposal group is 172 million higher under IFRS than
under U.S. GAAP.
|
|
(g)
|
Adjustment
At-Equity investment Qimonda
|
The adjustment of an investment accounted for by Qimonda using
the equity method to its fair value less cost to sell resulted
in Infineons equity according to IFRS being increased by
77 million in the 2008 fiscal year. As described in
(f), according to U.S. GAAP the CTA is added to the
carrying value of an investments net assets in order to
determine the necessary impairment. Therefore, the write-down of
Qimondas investment in the 2008 fiscal year was lower by
77 million.
Impact on the
Consolidated Statements of Cash Flows
The adjustments made to the consolidated statements of cash
flows changed the allocation of cash flows between operating,
investing and financing activities.
As described above in (c), under IFRS, certain development cost
are capitalized as intangible assets in addition to the
intangible assets already capitalized under U.S. GAAP. The
corresponding cash outflows are presented within cash flows from
investing activities as additions to intangible assets.
Therefore, cash used in investing activities from continuing
operations as of September 30, 2007 and 2008 increased by
28 and 45, respectively, under IFRS compared to
U.S. GAAP with a corresponding increase in cash provided by
operating activities from continuing operations.
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 SIC 12 Consolidation Special
Purpose Entities, the Company determined that
Molstanda meets the criteria of
F-24
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
a Special Purpose Entity (SPE) and, as a result of
the agreements that the Company controls it. Accordingly, the
Company consolidated the assets and liabilities of Molstanda
beginning in the 2007 fiscal year. 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 a financial expense 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.
On July 31, 2007, the Company acquired Texas Instruments
Inc.s (TI) DSL Customer Premises Equipment
(CPE) business for cash consideration of
45 million. The purchase price is subject to an
upward or downward contingent consideration adjustment of up to
$16 million, based on revenue targets of the CPE business
during the nine months following the acquisition date. The
Company plans to continue supporting the acquired product
portfolio and existing customer designs while leveraging the
acquired experience in future product generations. The results
of operations of the CPE business have been included in the
consolidated financial statements starting August 1, 2007.
On October 24, 2007, the Company completed the acquisition
of the mobility products business of LSI Corporation
(LSI) for cash consideration of
316 million ($450 million) plus transaction
costs and a contingent performance-based payment of up to
$50 million, in order to further strengthen its activities
in the field of 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 develops
semiconductors and software for mobile phone platform solutions.
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
integrated circuits (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 June 30,
2009. 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.
F-25
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The following table summarizes the Companys business
acquisitions during the years ended September 30, 2007 and
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
|
CPE
|
|
|
LSI
|
|
|
Primarion
|
|
Acquisition Date
|
|
July 2007
|
|
|
October 2007
|
|
|
April 2008
|
|
|
|
|
|
|
|
|
|
Automotive,
|
|
|
|
Communication
|
|
|
Communication
|
|
|
Industrial &
|
|
Segment
|
|
Solutions
|
|
|
Solutions
|
|
|
Multimarket
|
|
|
|
( in millions)
|
|
|
Other current assets
|
|
|
6
|
|
|
|
19
|
|
|
|
1
|
|
Property, plant and equipment
|
|
|
1
|
|
|
|
8
|
|
|
|
1
|
|
Intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology
|
|
|
|
|
|
|
42
|
|
|
|
13
|
|
Customer relationships
|
|
|
|
|
|
|
73
|
|
|
|
|
|
Other
|
|
|
7
|
|
|
|
6
|
|
|
|
|
|
Goodwill
|
|
|
31
|
|
|
|
160
|
|
|
|
11
|
|
Other non-current assets
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
45
|
|
|
|
308
|
|
|
|
33
|
|
Current liabilities
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
45
|
|
|
|
307
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process research & development
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid (purchase consideration)
|
|
|
45
|
|
|
|
321
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The 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 other operating expense
during the 2008 fiscal year because no future economic benefit
from its use or disposal was expected. The acquired intangible
assets consist of technology assets of 55 million and
customer relationship assets of 73 million, each with
a weighted average estimated useful life of six years, and other
intangible assets of 13 million with a weighted
average estimated useful life of less than one year. The
goodwill amounts are expected to be deductible for tax purposes.
Pro forma financial information relating to these acquisitions
is not material either individually or in the aggregate to the
results of operations and financial position of the Company and
has been omitted.
|
|
6.
|
Disposals 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. (Avago). 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 during the 2007 fiscal year.
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) to 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 32 million
which was recorded in other operating income during the fiscal
year ended September 30, 2008. The joint venture agreement
grants Siemens certain contractual participating rights
F-26
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
which inhibit the Company from exercising control over Bipolar.
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 entire 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 39 million
which was recorded in other operating income during the 2008
fiscal year.
BAW
Business
On August 11, 2008, the Company sold its bulk acoustic wave
filter business (BAW) to Avago for cash
consideration of 21 million and entered into a supply
agreement through December 2009. The BAW business designs,
manufactures and markets cellular duplexers for N-CDMA and
W-CDMA applications and filters for GPS. The total consideration
received was allocated to the elements of the transaction on a
relative fair value basis. As a result, the Company realized a
gain before tax of 9 million which was recorded in
other operating income, and deferred 6 million which
will be realized over the term of the supply agreement.
Qimonda
In conjunction with the Formation, Infineon Logic entered into
contribution agreements and various other service agreements
with Qimonda. In cases where physical contribution (ownership
transfer) of assets and liabilities was not feasible or cost
effective, the monetary value was transferred in the form of
cash or debt. The contribution agreements include provisions
pursuant to which Qimonda agreed to indemnify Infineon Logic
against any claim (including any related expenses) arising in
connection with the liabilities, contracts, offers, incomplete
transactions, continuing obligations, risks, encumbrances,
guarantees and other matters relating to the memory products
business that were transferred to it as part of the Formation.
In addition, the contribution agreements provide for
indemnification of Infineon Logic with respect to certain
existing and future legal claims and potential restructuring
costs. With the exception of the securities and certain patent
infringement and antitrust claims identified in note 40,
Qimonda is obligated to indemnify Infineon Logic against any
liability arising in connection with claims relating to the
memory products business described in that section. Liabilities
and risks relating to the securities class action litigation,
including court costs, will be equally shared by Infineon Logic
and Qimonda, but only with respect to the amount by which the
total amount payable exceeds the amount of the corresponding
accrual that Infineon Logic transferred to Qimonda at Formation.
On August 9, 2006 Qimonda completed its IPO on the New York
Stock Exchange through the issuance of 42 million ordinary
shares which are traded as American Depositary Shares
(ADSs) under the symbol QI.
Subsequently, Infineon sold 6.3 million Qimonda ADSs upon
exercise of the underwriters over-allotment option. As a
result, the Companys ownership interest in Qimonda
decreased to 85.9 percent. On September 25, 2007,
Infineon sold an additional 28.75 million Qimonda ADSs,
which further reduced the Companys ownership interest in
Qimonda to 77.5 percent.
On September 26, 2007, Infineon Technologies Investment
B.V., a wholly owned subsidiary of Infineon Technologies AG,
issued notes exchangeable into ADSs of Qimonda in the amount of
215 million. The coupon of the three-year
exchangeable note is 1.375 percent per year. The exchange
price is 10.48 for each Qimonda ADS, corresponding to an
exchange premium of 35 percent. If all noteholders exercise
their exchange rights, Infineon would deliver 20.5 million
Qimonda ADSs, equivalent to approximately 6.0 percent of
Qimondas share capital (see notes 29 and 32).
During the 2008 fiscal year, the Company committed to a plan to
dispose of Qimonda. As a result, the results of Qimonda are
reported as discontinued operations in the Companys
consolidated statements of operations for all periods presented,
and the assets and liabilities of Qimonda have been reclassified
as held for disposal in the consolidated balance sheet as of
September 30, 2008. In addition, the Company recorded
after-tax write-downs totaling 1,475 million, in
order to remeasure Qimonda to its estimated
F-27
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
current fair value less costs to sell. Pursuant to IFRS 5,
Non-current Assets Held for Sale and Discontinued
Operations, the recognition of depreciation expense
ceased as March 31, 2008.
Market prices for DRAM have experienced extremely significant
declines since the beginning of the 2007 calendar year. As a
result of this intense pricing pressure, Qimonda continued to
incur significant losses during the 2008 fiscal year, which are
reflected in loss from discontinued operations, net of
income tax in the Companys consolidated statements
of operations. During the 2008 fiscal year, the Company also
recorded material write-downs to the carrying value of
Qimondas assets to reflect them at current fair value less
costs to sell. Infineon does not intend to make any further
capital contributions to Qimonda and has repeatedly announced
that it is seeking to dispose of its remaining 77.5 percent
interest in that company.
In order to address the ongoing adverse market conditions in the
memory products industry and to better enable it to meet its
current obligations in the short term, Qimonda has intensively
explored operational and strategic alternatives to raise and
conserve cash. In furtherance of these goals, on
October 13, 2008, Qimonda announced a global restructuring
and cost-reduction program that is intended to reposition
Qimonda in the market and substantially increase its
efficiencies through a wide-ranging realignment of its business.
As a part of this program, Qimonda also announced that it had
agreed to sell its 35.6 percent interest in Inotera
Memories Inc. to Micron Technology, Inc. for US$400 million
(approximately 296 million) in cash. This transaction
closed in November 2008.
The net book value of the Qimonda disposal group in the
Companys consolidated balance sheet as of
September 30, 2008 has been recorded at the estimated fair
value less costs to sell of Qimonda. Upon disposal of its
interest in Qimonda, the Company would also realize losses
related to unrecognized currency translation effects for the
Qimonda disposal group which are recorded in equity. As of
September 30, 2008, the amount of such losses recorded in
shareholders equity totaled 187 million.
On December 21, 2008, the Company, the German Free State of
Saxony, and Qimonda jointly announced a financing package for
Qimonda. The package includes a 150 million loan from
the German Free State of Saxony, a 100 million loan
from a state bank in Portugal and a 75 million loan
from Infineon Logic. In addition to this financing package,
Qimonda has announced that it expects to receive guarantees
totaling 280 million from the Federal Government of
Germany and the Free State of Saxony. Based on such guarantees,
Qimonda has announced that it is already in advanced
negotiations regarding the financing of 150 million.
The availability of the total financing package is contingent
upon successful completion of the relevant state, federal and
European Commission approval procedures as well as final
agreement on the detailed terms and conditions of the
transaction.
There can be no assurance that the operational, strategic and
financial measures described above will enable Qimonda to
continue to meet its obligations, or that Qimonda will be
successful in implementing any further operational or strategic
initiatives to adequately address its financial condition. There
can also be no assurance that Infineon will be successful in
disposing of its remaining interest in Qimonda. In the event
that Qimondas ongoing operational and strategic efforts
fail to generate adequate cash or to result in desired
operational efficiencies and resulting cash savings, Qimonda may
have difficulty meeting its obligations as they come due. In
such a case, the financial condition and results of operations
of the Company would be materially adversely affected.
In the event that Qimonda were to be unable to meet its
obligations, Infineon may be exposed to certain significant
liabilities related to the Qimonda business, including pending
antitrust and securities law claims, the potential repayment of
governmental subsidies received, and employee-related
contingencies. Qimonda has accrued approximately
70 million in connection with the antitrust matters
and anticipated defense costs in connection with the securities
law matters. Given the uncertainty of the timing, nature, scope
or success of any specific claim, Infineon is unable to
meaningfully quantify its total potential exposure in respect of
these matters, but Infineon is aware that such exposure, were it
to arise, is likely to be material.
On November 7, 2008, the New York Stock Exchange
(NYSE) notified Qimonda that it was not in
compliance with the NYSEs continued listing standards
because the average closing price of its ADSs had been below
US$1.00 over a consecutive
30-day
trading period. Over the
12-month
period ended November 19, 2008, Qimondas share price
fell 98 percent, from US$8.62 to US$0.11. Qimonda has
F-28
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
notified the NYSE that it intends to regain compliance with this
listing standard. If Qimonda cannot do so by May 7, 2009,
however, the NYSE has indicated that it will commence suspension
and delisting procedures against Qimonda.
ALTIS
ALTIS Semiconductor S.N.C., Essonnes, France (ALTIS)
is a joint venture between the Company and International
Business Machines Corporation, New York, USA (IBM),
with each having equal voting representation. The Company fully
consolidates ALTIS in accordance with IAS 27,
Consolidated and Separate Financial
Statements. In August 2007, the Company and IBM signed
an agreement in principle to divest their respective shares in
ALTIS via a sale to Advanced Electronic Systems AG
(AES). Pursuant to IFRS 5, the assets and
liabilities of ALTIS were classified as held for disposal in the
consolidated balance sheet as of September 30, 2007, and
the recognition of depreciation expense ceased as of
August 1, 2007. As of September 30, 2008, negotiations
with AES have not progressed as previously anticipated and could
not be completed. Despite the fact that negotiations are ongoing
with additional parties, the outcome of these negotiations is
uncertain. As a result, the Company reclassified the disposal
groups assets and liabilities previously classified as
held for sale into held and used in the consolidated balance
sheet as of September 30, 2008. Upon reclassification, an
adjustment of 104 million was recorded in income from
continuing operations, resulting from the measurement of the
disposal group at the lower of its carrying amount before being
classified as held for sale, adjusted for any depreciation and
amortization expense that would have been recognized had the
disposal group been continuously classified as held and used,
and its recoverable amount at the date of the reclassification.
F-29
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
At September 30, 2007 and 2008, the carrying amounts of the
major classes of assets and liabilities classified as held for
disposal were as follows:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
421
|
|
Trade accounts receivable, net
|
|
|
64
|
|
|
|
255
|
|
Inventories
|
|
|
59
|
|
|
|
289
|
|
Other current assets
|
|
|
7
|
|
|
|
376
|
|
Property, plant and equipment, net
|
|
|
166
|
|
|
|
2,059
|
|
Goodwill and other intangibles
|
|
|
5
|
|
|
|
76
|
|
Investments accounted for using the equity method
|
|
|
|
|
|
|
14
|
|
Deferred tax asset
|
|
|
|
|
|
|
59
|
|
Other assets
|
|
|
2
|
|
|
|
55
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
303
|
|
|
|
3,604
|
|
|
|
|
|
|
|
|
|
|
Write-down
|
|
|
|
|
|
|
(1,475
|
)
|
|
|
|
|
|
|
|
|
|
Total assets classified as held for disposal
|
|
|
303
|
|
|
|
2,129
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
52
|
|
|
|
346
|
|
Trade accounts payable
|
|
|
47
|
|
|
|
592
|
|
Current Provisions
|
|
|
3
|
|
|
|
220
|
|
Other current liabilities
|
|
|
16
|
|
|
|
300
|
|
Long-term debt
|
|
|
|
|
|
|
427
|
|
Pension plans and similar commitments
|
|
|
4
|
|
|
|
22
|
|
Deferred tax liabilities
|
|
|
7
|
|
|
|
16
|
|
Long-term provisions
|
|
|
|
|
|
|
25
|
|
Other liabilities
|
|
|
|
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
Total liabilities associated with assets held for disposal
|
|
|
129
|
|
|
|
2,123
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized directly in equity relating to assets and
liabilities classified as held for disposal
|
|
|
|
|
|
|
(158
|
)
|
|
|
|
|
|
|
|
|
|
The results of Qimonda presented in the consolidated statements
of operations as discontinued operations for the years ended
September 30, 2007 and 2008, consist of the following
components:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net sales
|
|
|
3,608
|
|
|
|
1,785
|
|
Costs and expenses
|
|
|
(3,956
|
)
|
|
|
(3,773
|
)
|
Loss on measurement to fair value less costs to sell
|
|
|
|
|
|
|
(1,475
|
)
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, before tax
|
|
|
(348
|
)
|
|
|
(3,463
|
)
|
|
|
|
|
|
|
|
|
|
Income tax benefits (expense)
|
|
|
21
|
|
|
|
(96
|
)
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(327
|
)
|
|
|
(3,559
|
)
|
|
|
|
|
|
|
|
|
|
F-30
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
During the years ended September 30, 2007 and 2008, the
Company recognized revenues related to license and technology
transfer fees of 20 million and
54 million, respectively, which are included in
revenues in the accompanying consolidated statements of
operations. Included in these amounts are previously deferred
license fees of 1 million and 1 million,
which were recognized as revenue pursuant to IAS 18 in the years
ended September 30, 2007 and 2008, respectively, since the
Company had fulfilled all of its obligations and the amounts
were realized.
The Company has received economic development funding from
various governmental entities, including grants for the
construction of manufacturing facilities, as well as grants to
subsidize research and development activities and employee
training. Grants and subsidies included in the accompanying
consolidated financial statements during the fiscal years ended
September 30, 2007 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Included in the consolidated statements of operations:
|
|
|
|
|
|
|
Research and development
|
|
|
91
|
|
|
65
|
Cost of sales
|
|
|
19
|
|
|
19
|
|
|
|
|
|
|
|
Total
|
|
|
110
|
|
|
84
|
|
|
|
|
|
|
|
Deferred government grants amounted to 120 million
and 22 million as of September 30, 2007 and
2008, respectively. The amounts of grants receivable as of
September 30, 2007 and 2008 were 109 million and
28 million, respectively.
|
|
9.
|
Supplemental
Operating Cost Information
|
The costs of services and materials are as follows for the years
ended September 30:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Raw materials, supplies and purchased goods
|
|
|
791
|
|
|
813
|
Purchased services
|
|
|
765
|
|
|
769
|
|
|
|
|
|
|
|
Total
|
|
|
1,556
|
|
|
1,582
|
|
|
|
|
|
|
|
Personnel expenses are as follows for the years ended September
30:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Wages and salaries
|
|
|
1,317
|
|
|
1,447
|
Social levies
|
|
|
237
|
|
|
241
|
Pension expense
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,565
|
|
|
1,688
|
|
|
|
|
|
|
|
Other operating income was as follows for the years ended
September 30:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Gains from sales of businesses and interests in subsidiaries
|
|
|
19
|
|
|
80
|
Other
|
|
|
19
|
|
|
40
|
|
|
|
|
|
|
|
Total
|
|
|
38
|
|
|
120
|
|
|
|
|
|
|
|
F-31
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Other operating expense was as follows for the years ended
September 30:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Goodwill and intangible assets impairment charges
|
|
|
5
|
|
|
8
|
Long-lived asset impairment charges
|
|
|
4
|
|
|
122
|
Restructuring (note 10)
|
|
|
45
|
|
|
188
|
Other
|
|
|
3
|
|
|
48
|
|
|
|
|
|
|
|
Total
|
|
|
57
|
|
|
366
|
|
|
|
|
|
|
|
Total rental expenses under operating leases amounted to
115 million and 98 million for the years
ended September 30, 2007 and 2008, respectively.
The average number of employees by geographic region was as
follows for the years ended September 30:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
Germany
|
|
|
10,553
|
|
|
10,085
|
Other Europe
|
|
|
5,604
|
|
|
5,280
|
North America
|
|
|
540
|
|
|
845
|
Asia/Pacific
|
|
|
12,905
|
|
|
13,094
|
Japan
|
|
|
151
|
|
|
161
|
Other
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
Infineon
|
|
|
29,774
|
|
|
29,465
|
|
|
|
|
|
|
|
Qimonda
|
|
|
12,775
|
|
|
12,990
|
|
|
|
|
|
|
|
Total
|
|
|
42,549
|
|
|
42,455
|
|
|
|
|
|
|
|
During the 2006 fiscal year, restructuring plans were announced
to downsize the workforce at ALTIS and the Companys chip
card back-end activities in order to maintain competitiveness
and reduce cost. As part of these restructuring measures, the
Company agreed upon plans to terminate approximately
390 employees and recorded restructuring charges in the
2007 fiscal year.
During the 2007 fiscal year, further 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 of Munich, Salzgitter and Nuremberg.
To address rising risks in the current market environment,
adverse currency trends and below benchmark margins, the Company
implemented the IFX10+ cost-reduction program in the third
quarter of the 2008 fiscal year. The IFX10+ program includes
measured target areas including product portfolio management,
manufacturing costs reduction, value chain optimization, process
efficiency, reorganization of the Companys structure along
its target markets, and reductions in workforce. Approximately
10 percent of Infineon Logics worldwide workforce is
expected to be impacted by IFX10+.
During the years ended September 30, 2007 and 2008, charges
of 45 million and 188 million,
respectively, were recognized as a result of the above-mentioned
restructuring initiatives.
F-32
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The development of the restructuring liability, respectively,
during the fiscal year ended September 30, 2008, was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
Restructuring
|
|
|
|
|
|
2008
|
|
|
|
Liability
|
|
|
Charges, net
|
|
|
Payments
|
|
|
Liability
|
|
|
|
( in millions)
|
|
|
Employee terminations
|
|
|
38
|
|
|
|
177
|
|
|
|
(36
|
)
|
|
|
179
|
|
Other exit costs
|
|
|
6
|
|
|
|
11
|
|
|
|
(7
|
)
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
44
|
|
|
|
188
|
|
|
|
(43
|
)
|
|
|
189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amount of financial income is as follows for the years ended
September 30, 2007 and 2008, respectively:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Interest income
|
|
|
47
|
|
|
56
|
Valuation changes and gains on sales
|
|
|
60
|
|
|
2
|
|
|
|
|
|
|
|
Total
|
|
|
107
|
|
|
58
|
|
|
|
|
|
|
|
The amount of financial expense is as follows for the years
ended September 30, 2007 and 2008:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Interest expense
|
|
|
148
|
|
|
151
|
Impairment of
available-for-sale
financial assets
|
|
|
|
|
|
3
|
Valuation changes and losses on sales of
available-for-sale
financial assets
|
|
|
54
|
|
|
23
|
Other financial expense
|
|
|
41
|
|
|
5
|
|
|
|
|
|
|
|
Total
|
|
|
243
|
|
|
182
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes is
attributable to the following geographic locations for the years
ended September 30, 2007 and 2008 as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Germany
|
|
|
(242
|
)
|
|
|
(259
|
)
|
Foreign
|
|
|
198
|
|
|
|
112
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(44
|
)
|
|
|
(147
|
)
|
|
|
|
|
|
|
|
|
|
F-33
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Income tax expense (benefit) from continuing operations for the
years ended September 30, 2007 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Current taxes:
|
|
|
|
|
|
|
|
|
Germany
|
|
|
24
|
|
|
|
3
|
|
Foreign
|
|
|
5
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes:
|
|
|
|
|
|
|
|
|
Germany
|
|
|
(39
|
)
|
|
|
54
|
|
Foreign
|
|
|
9
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(30
|
)
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense
|
|
|
(1
|
)
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
Current tax expense attributable to prior years is
12 million and 10 million for the years
ended September 30, 2007 and 2008, respectively.
In 2007, the Companys corporate statutory tax rate in
Germany is 25 percent plus a solidarity surcharge of
5.5 percent. Additionally, a trade tax of 11 percent
is levied, which result in a combined statutory tax rate of
37 percent in 2007.
On August 17, 2007 the Business Tax Reform Act 2008 was
enacted in Germany including several changes to the taxation of
German business activities, including a reduction of the
Companys combined statutory corporate and trade tax rate
in Germany to 28 percent, which comprises corporate tax of
15 percent plus a solidarity surcharge of 5.5 percent
and trade tax of 12 percent. Most of the changes came into
effect for the Company in its 2008 fiscal year. Pursuant to IAS
12, the Company recorded a deferred tax charge of
25 million as of September 30, 2007, reflecting
the reduction in value of the Companys deferred tax assets
in Germany upon enactment.
A reconciliation of income taxes for the fiscal years ended
September 30, 2007 and 2008, determined using the German
corporate tax rate plus trade taxes, net of federal benefit, for
a combined statutory rate of 37 percent for 2007 and
28 percent for 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Expected benefit for income taxes
|
|
|
(16
|
)
|
|
|
(41
|
)
|
Increase in available tax credits
|
|
|
(5
|
)
|
|
|
(103
|
)
|
Non-taxable investment income
|
|
|
(3
|
)
|
|
|
|
|
Tax rate differential
|
|
|
(56
|
)
|
|
|
(8
|
)
|
Non deductible expenses
|
|
|
14
|
|
|
|
8
|
|
Change in German tax rate
|
|
|
25
|
|
|
|
|
|
Increase in valuation allowance
|
|
|
31
|
|
|
|
181
|
|
Other
|
|
|
9
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Actual provision for income taxes
|
|
|
(1
|
)
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets and liabilities presented in the
accompanying consolidated balance sheets as of
September 30, 2007 and 2008, are as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Deferred tax assets
|
|
|
588
|
|
|
|
400
|
|
Deferred tax liabilities
|
|
|
(81
|
)
|
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
507
|
|
|
|
381
|
|
|
|
|
|
|
|
|
|
|
F-34
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The movement in deferred tax assets, net is as follows:
|
|
|
|
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Deferred tax assets, net as of September 30, 2007
|
|
|
507
|
|
Reclassification to held for disposal
|
|
|
(117
|
)
|
Changes in companies consolidated
|
|
|
8
|
|
Deferred tax expense
|
|
|
(19
|
)
|
Deferred tax recorded directly in equity
|
|
|
2
|
|
|
|
|
|
|
Deferred tax assets, net as of September 30, 2008
|
|
|
381
|
|
|
|
|
|
|
Deferred tax assets and liabilities as of September 30,
2007 and 2008 relate to the following:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
102
|
|
|
|
38
|
|
Property, plant and equipment
|
|
|
197
|
|
|
|
152
|
|
Deferred income
|
|
|
8
|
|
|
|
4
|
|
Net operating loss and tax credit carry-forwards
|
|
|
1,319
|
|
|
|
1,199
|
|
Other items
|
|
|
292
|
|
|
|
224
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
1,918
|
|
|
|
1,617
|
|
Valuation allowance
|
|
|
(1,068
|
)
|
|
|
(1,027
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
850
|
|
|
|
590
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
(30
|
)
|
|
|
(23
|
)
|
Property, plant and equipment
|
|
|
(76
|
)
|
|
|
(24
|
)
|
Accounts receivable
|
|
|
(43
|
)
|
|
|
(23
|
)
|
Accrued liabilities and pensions
|
|
|
(154
|
)
|
|
|
(126
|
)
|
Other items
|
|
|
(40
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
(343
|
)
|
|
|
(209
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
507
|
|
|
|
381
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2008, the Company had in Germany tax loss
carry-forwards of 3,029 million (relating to both
trade and corporate tax, plus an additional loss carry-forward
applicable only to trade tax of 1,231 million). In
connection with the Formation of Qimonda, the net operating
losses related to the memory products segment have been retained
by Infineon Technologies AG. In other jurisdictions the Company
had tax loss carry-forwards of 102 million and tax
effected credit carry-forwards of 175 million. Such
tax loss carry-forwards and tax effected credit carry-forwards
are generally limited to use by the particular entity that
generated the loss or credit and do not expire under current
law. The benefit for tax credits is accounted for on the
flow-through method when the individual legal entity is entitled
to the claim.
The Company has assessed its deferred tax asset and the need for
a valuation allowance. Such an assessment considers whether it
is probable or not that some portion or all of the deferred tax
assets may not be realized. The assessment requires considerable
judgment on the part of management, with respect to, among other
factors, benefits that could be realized from available tax
strategies and future taxable income, as well as other positive
and negative factors. The ultimate realization of deferred tax
assets is dependent upon the Companys ability to generate
the appropriate character of future taxable income sufficient to
utilize loss carry-forwards or tax credits before their
expiration. Since the Company had incurred a cumulative loss in
certain tax jurisdictions over a three-year period as of
September 30, 2008, which is significant evidence that the
more likely than not criterion is not met, the impact of
forecasted future taxable income is excluded from such an
assessment. For these tax jurisdictions, the assessment was
therefore only based on the benefits that could be realized from
available tax strategies and the reversal of temporary
differences in future periods. As a result of this assessment,
the Company increased the deferred tax asset valuation allowance
as of September 30, 2007 and 2008 by 31 million,
and
F-35
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
181 million, respectively, to reduce the deferred tax
asset to an amount that is more likely than not expected to be
realized in future.
The Company did not provide for income taxes or foreign
withholding taxes on cumulative earnings of foreign subsidiaries
as of September 30, 2007 and 2008, as these earnings are
intended to be indefinitely reinvested in those operations. It
is not practicable to estimate the amount of unrecognized
deferred tax liabilities for these undistributed foreign
earnings.
|
|
14.
|
Earnings (Loss)
Per Share
|
Basic earnings (loss) per share (EPS) is calculated
by dividing net loss by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is calculated by
dividing net income by the sum of the weighted average number of
ordinary shares outstanding plus all additional 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 for the years ended
September 30, 2007 and 2008, is as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
Numerator ( in millions):
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to shareholders of
Infineon Technologies AG
|
|
|
(58
|
)
|
|
|
(249
|
)
|
Loss from discontinued operations, net of tax attributable to
shareholders of Infineon Technologies AG
|
|
|
(289
|
)
|
|
|
(2,686
|
)
|
|
|
|
|
|
|
|
|
|
Net loss attributable to shareholders of Infineon Technologies AG
|
|
|
(347
|
)
|
|
|
(2,935
|
)
|
|
|
|
|
|
|
|
|
|
Denominator (shares in millions):
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding basic and diluted
|
|
|
748.6
|
|
|
|
749.7
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share (in ):
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to shareholders of
Infineon Technologies AG
|
|
|
(0.08
|
)
|
|
|
(0.33
|
)
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax attributable to
shareholders of Infineon Technologies AG
|
|
|
(0.38
|
)
|
|
|
(3.58
|
)
|
|
|
|
|
|
|
|
|
|
Net loss attributable to shareholders of Infineon Technologies AG
|
|
|
(0.46
|
)
|
|
|
(3.91
|
)
|
|
|
|
|
|
|
|
|
|
The weighted average of potentially dilutive instruments that
were excluded from the diluted 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 41.2 million and 34.3 million
shares underlying employee stock options for the years ended
September 30, 2007 and 2008, respectively. Additionally,
74.7 million and 65.0 million ordinary shares issuable
upon the conversion of the convertible subordinated notes for
the years ended September 30, 2007 and 2008, respectively,
were not included in the computation of diluted earnings (loss)
per share as their impact would have been antidilutive.
|
|
15.
|
Available-for-sale
Financial Assets
|
Marketable securities are classified as
available-for-sale
financial instruments and therefore recorded at fair value at
each balance sheet date with unrealized gains and losses that
are not considered
other-than-temporary
impairments recognized in equity until realized.
F-36
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Marketable securities at September 30, 2007 and 2008
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
Cost
|
|
|
value
|
|
|
gains
|
|
|
losses
|
|
|
Cost
|
|
|
value
|
|
|
gains
|
|
|
losses
|
|
|
|
( in millions)
|
|
|
Foreign government securities
|
|
|
9
|
|
|
|
11
|
|
|
|
2
|
|
|
|
|
|
|
|
5
|
|
|
|
7
|
|
|
|
2
|
|
|
|
|
|
Fixed term securities
|
|
|
297
|
|
|
|
288
|
|
|
|
1
|
|
|
|
(10
|
)
|
|
|
144
|
|
|
|
140
|
|
|
|
1
|
|
|
|
(5
|
)
|
Other debt securities
|
|
|
151
|
|
|
|
152
|
|
|
|
4
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
457
|
|
|
|
451
|
|
|
|
7
|
|
|
|
(13
|
)
|
|
|
149
|
|
|
|
147
|
|
|
|
3
|
|
|
|
(5
|
)
|
Equity securities
|
|
|
5
|
|
|
|
6
|
|
|
|
1
|
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
|
462
|
|
|
|
457
|
|
|
|
8
|
|
|
|
(13
|
)
|
|
|
151
|
|
|
|
149
|
|
|
|
3
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reflected as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial assets
|
|
|
430
|
|
|
|
417
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
139
|
|
|
|
134
|
|
|
|
|
|
|
|
(5
|
)
|
Other financial assets (note 22)
|
|
|
32
|
|
|
|
40
|
|
|
|
8
|
|
|
|
|
|
|
|
12
|
|
|
|
15
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
|
462
|
|
|
|
457
|
|
|
|
8
|
|
|
|
(13
|
)
|
|
|
151
|
|
|
|
149
|
|
|
|
3
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses relating to securities held for more than
12 months as of September 30, 2007 and 2008, were
12 million and 5 million, respectively.
Realized gains and losses are reflected as financial income
(expense) and were as follows for the fiscal years ended
September 30:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Realized gains
|
|
|
7
|
|
|
|
1
|
|
Realized losses
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Realized gains, net
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2008, there were no significant fixed
term deposits with contractual maturities between three and
12 months.
Debt securities as of September 30, 2008 had the following
remaining contractual maturities:
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
|
( in millions)
|
|
|
Less than 1 year
|
|
|
5
|
|
|
|
6
|
|
Between 1 and 5 years
|
|
|
79
|
|
|
|
74
|
|
More than 5 years
|
|
|
65
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
149
|
|
|
|
147
|
|
|
|
|
|
|
|
|
|
|
Actual maturities may differ due to call or prepayment rights.
F-37
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
16.
|
Trade and Other
Receivables
|
Trade accounts and other receivables at September 30, 2007
and 2008 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Third party trade
|
|
|
916
|
|
|
|
590
|
|
Related parties trade
|
|
|
16
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, gross
|
|
|
932
|
|
|
|
618
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
(38
|
)
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
894
|
|
|
|
589
|
|
|
|
|
|
|
|
|
|
|
Grants receivable (note 8)
|
|
|
109
|
|
|
|
28
|
|
License fees receivable
|
|
|
13
|
|
|
|
10
|
|
Third party financial and other receivables
|
|
|
53
|
|
|
|
17
|
|
Receivables from German banks deposit protection fund
|
|
|
|
|
|
|
121
|
|
Related parties financial and other receivables
|
|
|
56
|
|
|
|
22
|
|
Employee receivables
|
|
|
8
|
|
|
|
8
|
|
Other receivables
|
|
|
5
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,138
|
|
|
|
799
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and
available-for-sale
financial assets in the amount of 121 million were
reclassified to amounts receivable from the German banks
deposit protection fund as of September 30, 2008.
Activity in the allowance for doubtful accounts for the years
ended September 30, 2007 and 2008 was as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Allowance for doubtful accounts at beginning of year
|
|
|
67
|
|
|
|
38
|
|
Recovery of bad debt, net
|
|
|
(14
|
)
|
|
|
(2
|
)
|
Reclassification in held for disposal
|
|
|
(15
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts at end of year
|
|
|
38
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
The following table provides separate disclosure on the age of
trade accounts receivables that are past due at the reporting
date, but not impaired.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereof
|
|
Of which not impaired
|
|
|
|
|
neither
|
|
but past due as of reporting date
|
|
|
|
|
impaired
|
|
Past due
|
|
Past due
|
|
Past due
|
|
Past due
|
|
Past due
|
|
|
Carrying
|
|
nor past
|
|
0-30
|
|
31-60
|
|
61-180
|
|
181-360
|
|
> 360
|
|
|
amount
|
|
due
|
|
days
|
|
days
|
|
days
|
|
days
|
|
days
|
|
|
( in millions)
|
|
Third party trade, net of allowances as of
September 30, 2007
|
|
|
878
|
|
|
544
|
|
|
188
|
|
|
73
|
|
|
|
|
|
|
|
|
|
Third party trade, net of allowances as of
September 30, 2008
|
|
|
561
|
|
|
536
|
|
|
22
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Based on historic default rates, the Company believes that no
impairment is necessary in respect of trade receivables that are
not past due or past due by up to 60 days.
F-38
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Inventories at September 30, 2007 and 2008 consist of the
following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Raw materials and supplies
|
|
|
117
|
|
|
59
|
Work-in-process
|
|
|
657
|
|
|
372
|
Finished goods
|
|
|
432
|
|
|
234
|
|
|
|
|
|
|
|
Total Inventories
|
|
|
1,206
|
|
|
665
|
|
|
|
|
|
|
|
|
|
18.
|
Other Current
Financial Assets
|
Other current financial assets at September 30, 2007 and
2008 consisted of financial instruments in an amount of
78 million and 19 million, respectively.
Other current assets at September 30, 2007 and 2008 consist
of the following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
VAT and other tax receivables
|
|
|
114
|
|
|
67
|
Prepaid expenses
|
|
|
42
|
|
|
43
|
Other
|
|
|
47
|
|
|
14
|
|
|
|
|
|
|
|
Total other current assets
|
|
|
203
|
|
|
124
|
|
|
|
|
|
|
|
|
|
20.
|
Property, Plant
and Equipment, net
|
A summary of activity for property, plant and equipment for the
years ended September 30, 2007 and 2008, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical
|
|
|
plant and
|
|
|
|
|
|
|
|
|
|
Land and
|
|
|
equipment
|
|
|
office
|
|
|
Construction
|
|
|
|
|
|
|
buildings
|
|
|
and machinery
|
|
|
equipment
|
|
|
in progress
|
|
|
Total
|
|
|
|
( in millions)
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
1,524
|
|
|
|
9,190
|
|
|
|
2,305
|
|
|
|
218
|
|
|
|
13,237
|
|
Additions
|
|
|
20
|
|
|
|
618
|
|
|
|
104
|
|
|
|
646
|
|
|
|
1,388
|
|
Acquisitions through business combinations
|
|
|
41
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
42
|
|
Disposals
|
|
|
(15
|
)
|
|
|
(162
|
)
|
|
|
(180
|
)
|
|
|
(4
|
)
|
|
|
(361
|
)
|
Reclassifications
|
|
|
13
|
|
|
|
424
|
|
|
|
25
|
|
|
|
(462
|
)
|
|
|
|
|
Transfers(1)
|
|
|
(101
|
)
|
|
|
(992
|
)
|
|
|
(26
|
)
|
|
|
(7
|
)
|
|
|
(1,126
|
)
|
Foreign currency effects
|
|
|
(56
|
)
|
|
|
(224
|
)
|
|
|
(20
|
)
|
|
|
(9
|
)
|
|
|
(309
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
1,426
|
|
|
|
8,854
|
|
|
|
2,209
|
|
|
|
382
|
|
|
|
12,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
19
|
|
|
|
188
|
|
|
|
55
|
|
|
|
50
|
|
|
|
312
|
|
Acquisitions through business combinations
|
|
|
|
|
|
|
1
|
|
|
|
8
|
|
|
|
|
|
|
|
9
|
|
Disposals
|
|
|
(19
|
)
|
|
|
(136
|
)
|
|
|
(107
|
)
|
|
|
(1
|
)
|
|
|
(263
|
)
|
Reclassifications
|
|
|
7
|
|
|
|
115
|
|
|
|
13
|
|
|
|
(135
|
)
|
|
|
|
|
Transfers(1)
|
|
|
(673
|
)
|
|
|
(4,202
|
)
|
|
|
(792
|
)
|
|
|
(232
|
)
|
|
|
(5,899
|
)
|
Foreign currency effects
|
|
|
1
|
|
|
|
6
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2008
|
|
|
761
|
|
|
|
4,826
|
|
|
|
1,384
|
|
|
|
64
|
|
|
|
7,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-39
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical
|
|
|
plant and
|
|
|
|
|
|
|
|
|
|
Land and
|
|
|
equipment
|
|
|
office
|
|
|
Construction
|
|
|
|
|
|
|
buildings
|
|
|
and machinery
|
|
|
equipment
|
|
|
in progress
|
|
|
Total
|
|
|
|
( in millions)
|
|
|
Accumulated depreciation and impairment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
(732
|
)
|
|
|
(6,727
|
)
|
|
|
(2,011
|
)
|
|
|
|
|
|
|
(9,470
|
)
|
Depreciation
|
|
|
(103
|
)
|
|
|
(933
|
)
|
|
|
(187
|
)
|
|
|
|
|
|
|
(1,223
|
)
|
Disposals
|
|
|
7
|
|
|
|
155
|
|
|
|
175
|
|
|
|
|
|
|
|
337
|
|
Reclassifications
|
|
|
|
|
|
|
(5
|
)
|
|
|
5
|
|
|
|
|
|
|
|
|
|
Transfers(1)
|
|
|
41
|
|
|
|
900
|
|
|
|
20
|
|
|
|
|
|
|
|
961
|
|
Impairments
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
Reversals of impairment
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Foreign currency effects
|
|
|
18
|
|
|
|
135
|
|
|
|
17
|
|
|
|
|
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
(767
|
)
|
|
|
(6,478
|
)
|
|
|
(1,981
|
)
|
|
|
|
|
|
|
(9,226
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(28
|
)
|
|
|
(365
|
)
|
|
|
(103
|
)
|
|
|
|
|
|
|
(496
|
)
|
Disposals
|
|
|
19
|
|
|
|
126
|
|
|
|
104
|
|
|
|
|
|
|
|
249
|
|
Reclassifications
|
|
|
|
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Transfers(1)
|
|
|
276
|
|
|
|
2,786
|
|
|
|
716
|
|
|
|
|
|
|
|
3,778
|
|
Impairments
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
(23
|
)
|
Foreign currency effects
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2008
|
|
|
(500
|
)
|
|
|
(3,963
|
)
|
|
|
(1,262
|
)
|
|
|
|
|
|
|
(5,725
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value at September 30, 2007
|
|
|
659
|
|
|
|
2,376
|
|
|
|
228
|
|
|
|
382
|
|
|
|
3,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value at September 30, 2008
|
|
|
261
|
|
|
|
863
|
|
|
|
122
|
|
|
|
64
|
|
|
|
1,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts shown as transfers in the
year ended September 30, 2007 relate primarily to assets of
the Bipolar and ALTIS disposal groups that were classified as
held for sale. In the year ended September 30, 2008,
transfers relate primarily to assets of the Qimonda disposal
group that were classified as held for sale, and assets of the
ALTIS disposal group that were reclassified into held and used.
|
|
|
21.
|
Investments
Accounted for Using the Equity Method
|
Investments accounted for using the equity method principally
relate to investment activities aimed at strengthening the
Companys future intellectual property potential.
A summary of activity for investments accounted for using the
equity method for the years ended September 30, 2007 and
2008, is as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Balance at beginning of year
|
|
|
635
|
|
|
627
|
Additions
|
|
|
|
|
|
23
|
Disposals
|
|
|
(25)
|
|
|
(7)
|
Dividends received
|
|
|
(61)
|
|
|
|
Equity in earnings
|
|
|
117
|
|
|
4
|
Reclassifications
|
|
|
(13)
|
|
|
|
Reclassification
to held for
disposal((1))
|
|
|
|
|
|
(627)
|
Foreign currency effects
|
|
|
(26)
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
|
627
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reclassification relate to the
investment in Inotera Memories Inc., which was reclassified in
held for disposal.
|
On September 28, 2007, Infineon entered into a joint
venture agreement with Siemens, whereby the Company contributed
its high power bipolar business to the newly formed legal entity
Bipolar, and Siemens subsequently acquired a 40 percent
interest in Bipolar. The joint venture agreement grants Siemens
certain contractual participating rights which inhibit the
Company from exercising control over Bipolar.
F-40
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Accordingly, the Company accounted for the retained interest in
Bipolar of 60 percent under the equity method of accounting
(see note 6).
There was no goodwill included in the amount of long-term
investments at September 30, 2007 and 2008, respectively.
For the equity method investments as of September 30, 2008,
the aggregate summarized financial information for the years
ended September 30, 2007 and 2008, respectively, is as
follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Revenue
|
|
|
6
|
|
|
95
|
Gross profit
|
|
|
3
|
|
|
20
|
Net income
|
|
|
1
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Current assets
|
|
|
|
|
|
|
58
|
|
Non-current assets
|
|
|
5
|
|
|
|
11
|
|
Current liabilities
|
|
|
|
|
|
|
(28
|
)
|
Non-current liabilities
|
|
|
(3
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
22.
|
Other Financial
Assets
|
Other non-current financial assets at September 30, 2007
and 2008 consist of the following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Available-for-sale
financial assets (note 15)
|
|
|
40
|
|
|
15
|
Long-term receivables
|
|
|
14
|
|
|
6
|
Investments in other equity investments
|
|
|
25
|
|
|
15
|
Related parties financial and other receivables
|
|
|
|
|
|
20
|
Restricted cash
|
|
|
77
|
|
|
77
|
Other
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
162
|
|
|
133
|
|
|
|
|
|
|
|
The Company recognized impairment charges related to certain
investments for which the carrying value exceeded the fair value
on an
other-than-temporary
basis of 2 million and 2 million during
the years ended September 30, 2007 and 2008, respectively.
Other non-current assets at September 30, 2007 and 2008
consist of the following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Prepaid expenses
|
|
|
12
|
|
|
14
|
Deferred compensation
|
|
|
18
|
|
|
11
|
Other
|
|
|
3
|
|
|
3
|
|
|
|
|
|
|
|
Total
|
|
|
33
|
|
|
28
|
|
|
|
|
|
|
|
F-41
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
24.
|
Goodwill and
Other Intangible Assets
|
A summary of activity for intangible assets for the years ended
September 30, 2007 and 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internally
|
|
|
|
|
|
|
|
|
|
|
|
|
developed
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
intangible
|
|
|
Intangible
|
|
|
|
|
|
|
Goodwill
|
|
|
assets
|
|
|
assets
|
|
|
Total
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
101
|
|
|
|
165
|
|
|
|
446
|
|
|
|
712
|
|
Additions internally developed
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
50
|
|
Additions from business combinations
|
|
|
31
|
|
|
|
|
|
|
|
7
|
|
|
|
38
|
|
Additions other
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
38
|
|
Impairment charges
|
|
|
|
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
(5
|
)
|
Disposals
|
|
|
(6
|
)
|
|
|
|
|
|
|
(46
|
)
|
|
|
(52
|
)
|
Foreign currency effects
|
|
|
(9
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
117
|
|
|
|
212
|
|
|
|
439
|
|
|
|
768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions internally developed
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
44
|
|
Additions from business combinations
|
|
|
171
|
|
|
|
|
|
|
|
148
|
|
|
|
319
|
|
Additions other
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
14
|
|
Impairment charges
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
In-process R&D
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
(14
|
)
|
Disposals
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
(11
|
)
|
Transfers(1)
|
|
|
(64
|
)
|
|
|
(76
|
)
|
|
|
(114
|
)
|
|
|
(254
|
)
|
Foreign currency effects
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2008
|
|
|
225
|
|
|
|
169
|
|
|
|
469
|
|
|
|
863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
|
|
|
|
(65
|
)
|
|
|
(317
|
)
|
|
|
(382
|
)
|
Amortization
|
|
|
|
|
|
|
(45
|
)
|
|
|
(52
|
)
|
|
|
(97
|
)
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|
|
42
|
|
Foreign currency effects
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
|
|
|
|
(110
|
)
|
|
|
(324
|
)
|
|
|
(434
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
(29
|
)
|
|
|
(46
|
)
|
|
|
(75
|
)
|
Disposals
|
|
|
|
|
|
|
8
|
|
|
|
2
|
|
|
|
10
|
|
Transfers(1)
|
|
|
|
|
|
|
45
|
|
|
|
34
|
|
|
|
79
|
|
Foreign currency effects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2008
|
|
|
|
|
|
|
(86
|
)
|
|
|
(334
|
)
|
|
|
(420
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value as of September 30, 2007
|
|
|
117
|
|
|
|
102
|
|
|
|
115
|
|
|
|
334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value as of September 30, 2008
|
|
|
225
|
|
|
|
83
|
|
|
|
135
|
|
|
|
443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts shown as transfers relate
primarily to assets of the Qimonda disposal group that were
classified as held for disposal, and assets of the ALTIS
disposal group that were reclassified into held and used.
|
The estimated aggregate amortization expense relating to other
intangible assets for each of the five succeeding fiscal years
is as follows: 2009 61 million; 2010
53 million; 2011 44 million; 2012
32 million; and 2013 24 million.
F-42
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
25.
|
Trade and Other
Payables
|
Trade and other payables at September 30, 2007 and 2008
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Third party trade
|
|
|
1,125
|
|
|
|
473
|
|
Related parties trade
|
|
|
164
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
1,289
|
|
|
|
488
|
|
|
|
|
|
|
|
|
|
|
Related parties financial and other payables
|
|
|
12
|
|
|
|
6
|
|
Other
|
|
|
46
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,347
|
|
|
|
506
|
|
|
|
|
|
|
|
|
|
|
Provisions at September 30, 2007 and 2008 consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Personnel costs
|
|
|
393
|
|
|
|
347
|
|
Warranties and licenses
|
|
|
43
|
|
|
|
32
|
|
Settlement for antitrust related matters (note 40)
|
|
|
38
|
|
|
|
|
|
Asset retirement obligations
|
|
|
32
|
|
|
|
13
|
|
Post-retirement benefits
|
|
|
3
|
|
|
|
3
|
|
Other
|
|
|
68
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
577
|
|
|
|
451
|
|
|
|
|
|
|
|
|
|
|
A summary of activity for provisions for the fiscal year ended
September 30, 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warranties
|
|
|
|
|
|
Asset
|
|
|
Post-
|
|
|
|
|
|
|
|
|
|
Personnel
|
|
|
and
|
|
|
Antitrust
|
|
|
retirement
|
|
|
retirement
|
|
|
|
|
|
|
|
|
|
costs
|
|
|
licenses
|
|
|
settlement
|
|
|
obligations
|
|
|
benefits
|
|
|
Other
|
|
|
Total
|
|
|
|
( in millions)
|
|
|
Balance as of September 30, 2007
|
|
|
393
|
|
|
|
43
|
|
|
|
38
|
|
|
|
32
|
|
|
|
3
|
|
|
|
68
|
|
|
|
577
|
|
Additions
|
|
|
405
|
|
|
|
19
|
|
|
|
|
|
|
|
3
|
|
|
|
1
|
|
|
|
58
|
|
|
|
486
|
|
Reclassification to held for disposal
|
|
|
(176
|
)
|
|
|
|
|
|
|
(38
|
)
|
|
|
(19
|
)
|
|
|
(1
|
)
|
|
|
(12
|
)
|
|
|
(246
|
)
|
Usage
|
|
|
(227
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
(32
|
)
|
|
|
(268
|
)
|
Reversals
|
|
|
(48
|
)
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25
|
)
|
|
|
(97
|
)
|
Translation differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2008
|
|
|
347
|
|
|
|
32
|
|
|
|
|
|
|
|
13
|
|
|
|
3
|
|
|
|
56
|
|
|
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total amounts of provisions are reflected in the
consolidated balance sheets as of September 30, 2007 and
2008, respectively, as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Current
|
|
|
533
|
|
|
424
|
Non-current
|
|
|
44
|
|
|
27
|
|
|
|
|
|
|
|
Total
|
|
|
577
|
|
|
451
|
|
|
|
|
|
|
|
F-43
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
27.
|
Other Current
Financial Liabilities
|
Other current financial liabilities at September 30, 2007
and 2008 consist of the following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Financial instruments (note 38)
|
|
|
38
|
|
|
25
|
Interest
|
|
|
20
|
|
|
16
|
Settlement for anti-trust related matters (note 40)
|
|
|
20
|
|
|
20
|
Other
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
Total
|
|
|
78
|
|
|
63
|
|
|
|
|
|
|
|
|
|
28.
|
Other Current
Liabilities
|
Other current liabilities at September 30, 2007 and 2008
consist of the following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Deferred income
|
|
|
123
|
|
|
26
|
VAT and other taxes payable
|
|
|
11
|
|
|
13
|
Payroll obligations to employees
|
|
|
125
|
|
|
198
|
Deferred government grants (note 8)
|
|
|
60
|
|
|
13
|
Current portion of pension obligations (note 37)
|
|
|
5
|
|
|
1
|
Other
|
|
|
9
|
|
|
12
|
|
|
|
|
|
|
|
Total
|
|
|
333
|
|
|
263
|
|
|
|
|
|
|
|
Other deferred income includes amounts relating to license
income (see note 7) and deferred revenue. The
non-current portion is included in other liabilities (see
note 37).
Debt at September 30, 2007 and 2008 consists of the
following:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Short-term debt and current maturities:
|
|
|
|
|
|
|
|
|
Loans payable to banks, weighted average rate 5.1%
|
|
|
155
|
|
|
|
139
|
|
Current portion of long-term debt
|
|
|
153
|
|
|
|
68
|
|
Capital lease obligation
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term debt and current maturities
|
|
|
336
|
|
|
|
207
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
Exchangeable subordinated notes, 1,375%, due 2010
|
|
|
183
|
|
|
|
193
|
|
Convertible subordinated notes, 5,0%, due 2010
|
|
|
578
|
|
|
|
531
|
|
Loans payable to banks:
|
|
|
|
|
|
|
|
|
Unsecured term loans, weighted average rate 4.82%, due
2009-2013
|
|
|
318
|
|
|
|
217
|
|
Secured term loans, weighted average rate 2.45%, due 2013
|
|
|
4
|
|
|
|
2
|
|
Notes payable to governmental entity, due 2010
|
|
|
44
|
|
|
|
20
|
|
Capital lease obligation
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
1,227
|
|
|
|
963
|
|
|
|
|
|
|
|
|
|
|
Short-term loans payable to banks consist primarily of
borrowings under the terms of short-term borrowing arrangements.
On September 26, 2007, the Company (as guarantor), through
its subsidiary Infineon Technologies Investment B.V. (as
issuer), issued 215 million in exchangeable
subordinated notes due 2010 at par in an underwritten offering
to institutional investors in Europe. The notes accrue interest
at 1.375 percent per
F-44
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
year. The notes are exchangeable into a maximum of
20.5 million Qimonda ADSs, at an exchange price of
10.48 per ADS any time during the exchange period, as
defined, through maturity, corresponding to an exchange premium
of 35 percent. The notes are unsecured and rank pari passu
with all present and future unsecured subordinated obligations
of the issuer. The noteholders have a negative pledge relating
to future capital market indebtedness, as defined, and an early
redemption option in the event of a change of control, as
defined. The Company may, at its option, redeem the outstanding
notes in whole, but not in part, at the principal amount thereof
together with accrued interest to the date of redemption, if the
issuer has determined that, as a result of a publicly announced
transaction, there is a substantial likelihood that the
aggregate ownership of the share capital of Qimonda by the
issuer, the guarantor and any of their respective subsidiaries
will be less than 50 percent plus one share. In addition,
the Company may, at its option, redeem the outstanding notes in
whole, but not in part, at their principal amount together with
interest accrued to the date of redemption, if the share price
of the ADSs on each of 15 trading days during a period of 30
consecutive trading days commencing on or after August 31,
2009, exceeds 130 percent of the exchange price. The
exchangeable notes are listed on the Frankfurt Stock Exchange.
At September 30, 2008, unamortized debt issuance costs
amounted to 4 million. Concurrently with this
transaction, the Company loaned an affiliate of J.P. Morgan
Securities Inc. 3.6 million Qimonda ADSs ancillary to the
placement of the exchangeable subordinated notes. The affiliate
of J.P. Morgan Securities Inc. sold these ADSs as part of
the Qimonda ADSs sale on September 25, 2007. On
October 25, 2007, 1.3 million Qimonda ADSs that had
been borrowed were returned to the Company and the remaining
2.3 million Qimonda ADSs were returned to the Company on
January 4, 2008.
On June 5, 2003, the Company (as guarantor), through its
subsidiary Infineon Technologies Holding B.V. (as issuer) issued
700 million in convertible subordinated notes due
2010 at par in an underwritten offering to institutional
investors in Europe. The notes are convertible, at the option of
the holders of the notes, into a maximum of 68.4 million
ordinary shares of the Company, at a conversion price of
10.23 per share through maturity. The notes accrue
interest at 5.0 percent per year. The notes are unsecured
and pari passu with all present and future unsecured
subordinated obligations of the issuer. The noteholders have a
negative pledge relating to future capital market indebtedness,
as defined. The noteholders have an early redemption option in
the event of a change of control, as defined. A corporate
reorganization resulting in a substitution of the guarantor
shall not be regarded as a change of control, as defined. The
Company may redeem the convertible notes after three years at
their principal amount plus interest accrued thereon, if the
Companys share price exceeds 125 percent of the
conversion price on 15 trading days during a period of 30
consecutive trading days. The convertible notes are listed on
the Luxembourg Stock Exchange. On September 29, 2006 the
Company (through the issuer) irrevocably waived its option to
pay a cash amount in lieu of the delivery of shares upon
conversion. During the 2008 fiscal year, the Company repurchased
a notional amount of 100 million of its convertible
subordinated notes due 2010. The transaction resulted in a loss
of 8 million before tax, which was recognized in
interest expense. The repurchase was made out of available cash.
At September 30, 2008, the outstanding notional amount was
600 million and unamortized debt issuance costs
amounted to 3 million.
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 ADSs ancillary to the placement of the
convertible notes, which remained outstanding as of
September 30, 2008.
In September 2004, the Company executed a
$400/400 million syndicated credit facility with a
five-year term, which was subsequently reduced to
$345/300 million in August 2006. The facility
consists of two tranches. Tranche A is a term loan
originally intended to finance the expansion of the Richmond,
Virginia, manufacturing facility. In January 2006, the Company
drew $345 million under Tranche A, on the basis of a
repayment schedule that foresees equal installments falling due
in March and September each year. At September 30, 2008,
$125 million was outstanding under Tranche A.
Tranche B, which is a multicurrency revolving facility to
be used for general corporate purposes, remained undrawn at
September 30, 2008. The facility has customary financial
covenants, and drawings bear interest at market-related rates
that are linked to financial performance. The lenders of this
credit facility have been granted a negative pledge relating to
the future financial indebtedness of the Company with certain
permitted encumbrances.
F-45
Infineon
Technologies AG and Subsidiaries
Notes to
the 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 various
funding purposes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of financial
|
|
|
|
As of September 30, 2008
|
|
|
|
institution
|
|
Purpose/intended
|
|
Aggregate
|
|
|
|
|
|
|
|
Term
|
|
commitment
|
|
use
|
|
facility
|
|
|
Drawn
|
|
|
Available
|
|
|
|
( in millions)
|
|
|
Short-term
|
|
firm commitment
|
|
general corporate purposes, working capital,
guarantees
|
|
|
504
|
|
|
|
139
|
|
|
|
365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
|
|
no firm commitment
|
|
working capital, cash management
|
|
|
176
|
|
|
|
|
|
|
|
176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term((1))
|
|
firm commitment
|
|
project finance
|
|
|
307
|
|
|
|
307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
987
|
|
|
|
446
|
|
|
|
541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Including current maturities.
|
At September 30, 2008, the Company was in compliance with
its debt covenants under the relevant facilities.
Interest expense for the years ended September 30, 2007 and
2008 was 129 million and 138 million,
respectively.
Aggregate amounts of debt maturing subsequent to
September 30, 2008 are as follows:
|
|
|
|
|
Fiscal year ending September 30,
|
|
Amount
|
|
|
|
( in millions)
|
|
|
2009
|
|
|
207
|
|
2010
|
|
|
773
|
|
2011
|
|
|
82
|
|
2012
|
|
|
68
|
|
2013
|
|
|
40
|
|
|
|
|
|
|
Total
|
|
|
1,170
|
|
|
|
|
|
|
|
|
30.
|
Other Financial
Liabilities
|
Other non-current financial liabilities at September 30,
2007 and 2008 consist of the following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Redeemable interest
|
|
|
64
|
|
|
|
Settlement for antitrust related matters (note 40)
|
|
|
37
|
|
|
17
|
License fees payable
|
|
|
27
|
|
|
|
Other
|
|
|
6
|
|
|
3
|
|
|
|
|
|
|
|
Total
|
|
|
134
|
|
|
20
|
|
|
|
|
|
|
|
Other non-current liabilities at September 30, 2007 and
2008 consist of the following:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
( in millions)
|
|
Deferred income
|
|
|
114
|
|
|
43
|
Deferred government grants (note 8)
|
|
|
60
|
|
|
9
|
Deferred compensation
|
|
|
13
|
|
|
11
|
Other
|
|
|
6
|
|
|
13
|
|
|
|
|
|
|
|
Total
|
|
|
193
|
|
|
76
|
|
|
|
|
|
|
|
F-46
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Ordinary Share
Capital
As of September 30, 2008 the Company had 749,742,085
registered ordinary shares, notional value of 2.00 per
share, outstanding. During the years ended September 30,
2007 and 2008 the Company increased its share capital by
4 million and 0 million, respectively, by
issuing 2,119,341 and 13,450 ordinary shares, respectively, in
connection with the Companys Long-Term Incentive Plans.
Authorized and
Conditional Share Capital
In addition to the issued share capital, the Companys
Articles of Association authorize the Management Board to
increase the ordinary share capital with the Supervisory
Boards consent by issuing new shares. As of
September 30, 2008, the Management Board may use these
authorizations to issue new shares as follows:
|
|
|
|
|
Through January 19, 2009, Authorized Share Capital
II/2004 in an aggregate nominal amount of up to
30 million to issue shares to employees (in which
case the pre-emptive rights of existing shareholders are
excluded).
|
|
|
|
Through February 14, 2012, Authorized Share Capital
2007 in an aggregate nominal amount of up to
224 million to issue shares for cash, where the
pre-emptive rights of shareholders may be partially excluded, or
in connection with business combinations (contributions in
kind), where the pre-emptive rights of shareholders may be
excluded for all shares.
|
The Company has conditional capital of up to an aggregate
nominal amount of 92 million (Conditional Share
Capital I), of up to an aggregate nominal amount of
29 million (Conditional Share Capital III) and
up to an aggregate nominal amount of 24.5 million
(Conditional Share Capital IV/2006) that may be used to issue up
to 72.6 million new registered shares in connection with
the Companys long-term incentive plans (see note 34).
These shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
The Company has conditional capital of up to an aggregate
nominal amount of 152 million (Conditional Share
Capital 2002) that may be used to issue up to
76 million new registered shares upon conversion of debt
securities, issued in June 2003 and which may be converted at
any time until May 22, 2010 (see note 29). These
shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
The Company has further conditional capital of up to an
aggregate nominal amount of 248 million (Conditional
Share Capital 2007) that may be used to issue up to
124 million new registered shares upon conversion of debt
securities which may be issued before February 14, 2012.
These shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
The Company has further conditional capital of up to an
aggregate nominal amount of 150 million (Conditional
Share Capital 2008) that may be used to issue up to
75 million new registered shares upon conversion of debt
securities which may be issued before February 13, 2013.
These shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
F-47
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Other
Components of Equity
The changes in other components of equity for the fiscal years
ended September 30, 2007 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
|
( in millions)
|
|
|
Unrealized (losses) gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
Reclassification adjustment for losses (gains) included in net
income or loss
|
|
|
(7
|
)
|
|
|
|
|
|
|
(7
|
)
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized (losses) gains
|
|
|
(11
|
)
|
|
|
|
|
|
|
(11
|
)
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
(2
|
)
|
Foreign currency translation adjustment
|
|
|
(106
|
)
|
|
|
|
|
|
|
(106
|
)
|
|
|
(36
|
)
|
|
|
|
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other components of equity
|
|
|
(114
|
)
|
|
|
|
|
|
|
(114
|
)
|
|
|
(35
|
)
|
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
Under the German Stock Corporation Act (Aktiengesetz),
the amount of dividends available for distribution to
shareholders is based on the level of earnings
(Bilanzgewinn) of the ultimate parent, as determined in
accordance with the HGB. All dividends must be approved by
shareholders.
The ordinary shareholders meeting held in February 2008 did not
authorize a dividend for the 2007 fiscal year. No earnings are
available for distribution as a dividend for the 2008 fiscal
year, since Infineon Technologies AG on a stand-alone basis as
the ultimate parent incurred a cumulative loss
(Bilanzverlust) as of September 30, 2008.
Subject to market conditions, Infineon intends to retain future
earnings for investment in the development and expansion of its
business.
Minority
Interests
ALTIS is a joint venture between the Company and IBM, with each
having equal voting representation. In December 2005, the
Company further amended its agreements with IBM in respect of
the ALTIS joint venture and began to fully consolidate ALTIS,
whereby IBMs 50 percent ownership interest is
reflected as minority interest (see note 6).
Effective May 1, 2006, the Company contributed
substantially all of the operations of its memory products
segment, including the assets and liabilities that were used
exclusively for these operations, to Qimonda, a stand-alone
legal company. On August 9, 2006, Qimonda completed an
initial public offering on the New York Stock Exchange through
the issuance of 42 million ADSs which are traded as ADSs
under the symbol QI, for an offering price of $13
per ADS. In addition, the Company sold 6.3 million Qimonda
ADSs upon exercise of the underwriters over-allotment
option. As a result of these transactions, the Company reduced
its shareholding in Qimonda to 85.9 percent. During the
fourth quarter of the 2007 fiscal year, Infineon sold an
additional 28.75 million Qimonda ADSs (including
underwriters over-allotment option), further reducing its
ownership interest in Qimonda to 77.5 percent. The minority
investors ownership interest in Qimonda of
22.5 percent as of September 30, 2007 and 2008 is
reflected as minority interest (see note 6).
F-48
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The key objective of the Companys capital management is to
ensure financial flexibility on the basis of a sound capital
structure. In line with peer companies in the industry, there is
a strong emphasis on liquidity in order to finance operations
and make planned capital expenditures throughout business
cycles. The sources of liquidity are cash flows generated from
operations, cash on hand; and available credit facilities as
well as the issuance and sale of securities on the capital
markets.
The Company is not subject to any statutory capital
requirements. Furthermore, its capital management during the
years ended September 30, 2007 and 2008 was supported by
U.S. GAAP financial results, since these were the primary
accounting standards used by the Company during those periods.
Starting October 1, 2009, with the implementation of IFRS
as primary accounting standards, the Companys capital
management will be based exclusively on IFRS.
In addition, effective May 1, 2006 substantially all of the
memory products-related assets and liabilities, operations and
activities of the Company were contributed to Qimonda, a
stand-alone legal company (see note 6). Therefore, since
its Formation, Qimonda has had a capital management policy that
is independent from that of the remainder of the Company.
Consequently, the capital management discussion in the remainder
of this section is based on U.S. GAAP financial balances
and results of Infineon excluding Qimonda, for the respective
periods.
Infineon considers net debt, defined as the sum of short-term
and long-term debt less gross liquidity, as the principal
indication of its liquidity position. Gross liquidity is defined
as the sum of cash, cash equivalents and marketable securities.
Infineons capital structure is primarily managed by the
ratio of gross
debt-to-EBITDA
and the relation of gross liquidity to sales. Infineon defines
EBIT as earnings (loss) before income (loss) from discontinued
operations, interest, and taxes. EBITDA is defined as EBIT plus
depreciation and amortization. The specified targets are the
maintenance of a
debt-to-EBITDA
ratio of approximately 2, and a ratio of gross liquidity to
sales of approximately 20 percent to 25 percent.
For the years ended September 30, 2007 and 2008, on a
U.S. GAAP basis, the
debt-to-EBITDA
ratios of Infineon excluding Qimonda were 2.4 and 2.6,
respectively. The slight increase was mainly due to the negative
development of the EBITDA results during the financial year. The
ratios of gross liquidity to sales on a U.S. GAAP basis
amounted to 25 percent and 20 percent, respectively,
for the years ended September 30, 2007 and 2008. The
decrease was principally due to the fact that Infineons
gross liquidity as of September 30, 2007 reflected the
proceeds of both the sale of shares in Qimonda as well as the
issuance of exchangeable subordinated notes effected in that
month. Subsequently, these proceeds were used among others to
fund the acquisition of the mobile products division of LSI in
October 2007.
|
|
34.
|
Share-based
Compensation
|
In 1999, the Companys shareholders approved a long-term
incentive plan, which provided for the granting of
non-transferable options to acquire ordinary shares over a
future period. Under the terms of the LTI 1999 Plan, the Company
could grant up to 48 million options over a five-year
period. The exercise price of each option equals
120 percent of the average closing price of the
Companys stock during the five trading days prior to the
grant date. Granted options vest at the latter of two years from
the grant date or the date on which the Companys stock
reaches the exercise price for at least one trading day. Options
expire seven years from the grant date.
In 2001, the Companys shareholders approved the
International Long-Term Incentive Plan (LTI 2001
Plan) which replaced the LTI 1999 Plan. Options previously
issued under the LTI 1999 Plan remain unaffected as to terms and
conditions; however, no additional options may be issued under
the LTI 1999 Plan. Under the terms of the LTI 2001 Plan, the
Company could grant up to 51.5 million options over a
five-year period. The exercise price of each option equals
105 percent of the average closing price of the
Companys stock during the five trading days prior to the
grant date. Granted options have a vesting period of between two
and four years, subject to the Companys stock reaching the
exercise price on at least one trading day, and expire seven
years from the grant date.
Under the LTI 2001 Plan, the Companys Supervisory Board
decided annually within 45 days after publication of the
financial results how many options to grant to the Management
Board. The Management Board, within the same period, decided how
many options to grant to eligible employees.
F-49
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
In 2006, the Companys shareholders approved the Stock
Option Plan 2006 (SOP 2006) which replaced the
LTI 2001 Plan. Under the terms of SOP 2006, the Company can
grant up to 13 million options over a three-year period.
The exercise price of each option equals 120 percent of the
average closing price of the Companys stock during the
five trading days prior to the grant date. Granted options are
only exercisable if the price of a share exceeds the trend of
the comparative index Philadelphia Semiconductor Index
(SOX) for at least three consecutive days on at
least one occasion during the life of the option. Granted
options have a vesting period of three years, subject to the
Companys stock reaching the exercise price on at least one
trading day, and expire six years from the grant date.
Under the SOP 2006, the Supervisory Board will decide
annually within a period of 45 days after publication of
the annual results or the results of the first or second
quarters of a fiscal year, but no later than two weeks before
the end of the quarter, how many options to grant to the
Management Board. During that same period the Management Board
may grant options to other eligible employees.
At the discretion of the Company, exercised options of the LTI
2001 Plan and SOP 2006 can be satisfied with shares either
by issuing shares from the Conditional Share Capital
I and Conditional Share Capital III for the
LTI 2001 Plan or from the Conditional Share Capital
III and Conditional Share Capital IV/2006 for
the SOP 2006 or by transferring own shares held by the
Company.
A summary of the status of the LTI 1999 Plan, the LTI 2001 Plan,
and the SOP 2006 as of September 30, 2007 and 2008,
respectively, and changes during the fiscal years then ended are
presented below (options in millions, exercise price in Euro,
intrinsic value in millions of Euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
average
|
|
|
|
|
|
|
Number of
|
|
|
average
|
|
|
remaining life
|
|
|
Aggregated
|
|
|
|
options
|
|
|
exercise price
|
|
|
(in years)
|
|
|
intrinsic value
|
|
|
Outstanding at September 30, 2006
|
|
|
44.8
|
|
|
|
18.12
|
|
|
|
3.54
|
|
|
|
14
|
|
Granted
|
|
|
2.3
|
|
|
|
13.30
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(2.1
|
)
|
|
|
8.91
|
|
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
(5.6
|
)
|
|
|
33.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2007
|
|
|
39.4
|
|
|
|
16.17
|
|
|
|
2.99
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest, net of estimated forfeitures at
September 30, 2007
|
|
|
39.1
|
|
|
|
16.20
|
|
|
|
2.97
|
|
|
|
66
|
|
Exercisable at September 30, 2007
|
|
|
25.8
|
|
|
|
19.52
|
|
|
|
2.06
|
|
|
|
31
|
|
Outstanding at September 30, 2007
|
|
|
39.4
|
|
|
|
16.17
|
|
|
|
2.99
|
|
|
|
66
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
(6.2
|
)
|
|
|
37.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2008
|
|
|
33.2
|
|
|
|
12.30
|
|
|
|
2.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest, net of estimated forfeitures at
September 30, 2008
|
|
|
30.6
|
|
|
|
12.32
|
|
|
|
2.28
|
|
|
|
|
|
Exercisable at September 30, 2008
|
|
|
26.5
|
|
|
|
12.89
|
|
|
|
1.83
|
|
|
|
|
|
The weighted average share price of exercised options during the
2007 fiscal year was 11.56.
F-50
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The following table summarizes information about stock options
outstanding and exercisable as of September 30, 2008
(options in millions, exercise prices in Euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
Exercisable
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
Weighted-
|
|
|
|
|
average
|
|
average
|
|
|
|
average
|
|
|
Number of
|
|
remaining life
|
|
exercise
|
|
Number of
|
|
exercise
|
Range of exercise prices
|
|
options
|
|
(in years)
|
|
price
|
|
options
|
|
price
|
|
5 - 10
|
|
|
18.3
|
|
|
2.78
|
|
|
8.73
|
|
|
13.8
|
|
|
8.82
|
10 - 15
|
|
|
9.3
|
|
|
2.54
|
|
|
12.62
|
|
|
7.1
|
|
|
12.42
|
15 - 20
|
|
|
0.2
|
|
|
0.83
|
|
|
15.75
|
|
|
0.2
|
|
|
15.75
|
20 - 25
|
|
|
5.4
|
|
|
0.18
|
|
|
23.70
|
|
|
5.4
|
|
|
23.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
33.2
|
|
|
2.28
|
|
|
12.30
|
|
|
26.5
|
|
|
12.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options with an aggregate fair value of 32 million
and 26 million vested during the fiscal years ended
September 30, 2007 and 2008, respectively. Options with a
total intrinsic value of 6 million and 0 were
exercised during the fiscal years ended September 30, 2007
and 2008, respectively.
Changes in the Companys unvested options for the fiscal
years ended September 30, 2007 and 2008 are summarized as
follows (options in millions, fair values in Euro, intrinsic
value in millions of Euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
average
|
|
|
|
|
|
|
Number of
|
|
|
average grant
|
|
|
remaining life
|
|
|
Aggregated
|
|
|
|
options
|
|
|
date fair value
|
|
|
(in years)
|
|
|
intrinsic value
|
|
|
Unvested at September 30, 2006
|
|
|
19.2
|
|
|
|
4.11
|
|
|
|
5.11
|
|
|
|
11
|
|
Granted
|
|
|
2.3
|
|
|
|
2.03
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(7.0
|
)
|
|
|
4.63
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(0.9
|
)
|
|
|
3.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at September 30, 2007
|
|
|
13.6
|
|
|
|
3.50
|
|
|
|
4.77
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested options expected to vest
|
|
|
13.2
|
|
|
|
3.53
|
|
|
|
4.81
|
|
|
|
34
|
|
Unvested at September 30, 2007
|
|
|
13.6
|
|
|
|
3.50
|
|
|
|
4.77
|
|
|
|
35
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(6.5
|
)
|
|
|
4.04
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(0.4
|
)
|
|
|
3.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at September 30, 2008
|
|
|
6.7
|
|
|
|
2.96
|
|
|
|
4.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested options expected to vest
|
|
|
4.1
|
|
|
|
3.30
|
|
|
|
4.03
|
|
|
|
|
|
The fair value of each option grant issued pursuant to the 1999
and 2001 Long-Term Incentive Plans was estimated on the grant
date using the Black-Scholes option-pricing model. For options
granted prior to October 1, 2005, Infineon relied on
historical volatility measures when estimating the fair value of
stock options granted to employees. For options granted after
October 1, 2005, Infineon uses a combination of implied
volatilities from traded options on Infineons ordinary
shares and historical volatility when estimating the fair value
of stock options granted to employees, as it believes that this
methodology better reflects the expected future volatility of
its stock. The expected life of options granted was estimated
based on historical experience.
The fair value of each option grant issued pursuant to the Stock
Option Plan 2006 was estimated on the grant date using a Monte
Carlo simulation model. This model takes into account vesting
conditions relating to the performance of the SOX and its impact
on stock option fair value. The Company uses a combination of
implied volatilities from traded options on Infineons
ordinary shares and historical volatility when estimating the
fair value of stock options granted to employees, as it believes
that this methodology better reflects the expected future
volatility of its stock. The expected life of options granted
was estimated using the Monte Carlo simulation model.
For options granted after October 1, 2005, forfeitures are
estimated based on historical experience; prior to that date,
forfeitures were recorded as they occurred. The risk-free rate
is based on treasury note
F-51
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
yields at the time of grant for the estimated life of the
option. Infineon has not made any dividend payments during the
fiscal year ended September 30, 2008.
The following weighted-average assumptions were used in the fair
value calculation during the fiscal year ended
September 30, 2007:
|
|
|
|
|
|
|
2007
|
|
|
Weighted-average assumptions:
|
|
|
|
|
Risk-free interest rate
|
|
|
3.91
|
%
|
Expected volatility, underlying shares
|
|
|
40
|
%
|
Expected volatility, SOX index
|
|
|
36
|
%
|
Forfeiture rate, per year
|
|
|
3.40
|
%
|
Dividend yield
|
|
|
0
|
%
|
Expected life in years
|
|
|
3.09
|
|
Weighted-average fair value per option at grant date in
|
|
|
2.03
|
|
|
|
|
|
|
As of September 30, 2008, there was a total of
4 million in unrecognized compensation expense
related to unvested stock options of Infineon, which is expected
to be recognized over a weighted-average period of less than one
year.
Share-Based
Compensation Expense
Share-based compensation expense was allocated as follows for
the fiscal years ended September 30, 2007 and 2008:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Compensation expense recognized:
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
2
|
|
|
|
1
|
|
Selling, general and administrative expenses
|
|
|
6
|
|
|
|
3
|
|
Research and development expenses
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total share-based compensation expense
|
|
|
12
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation effect on basic and diluted loss per
shares in
|
|
|
(0.02
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Cash received from stock option exercises was
19 million and 0 during the fiscal years ended
September 30, 2007 and 2008, respectively. The amount of
share-based compensation expense which was capitalized and
remained in inventories for the fiscal years ended
September 30, 2007 and 2008 was immaterial. Share-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.
|
|
35.
|
Supplemental Cash
Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
|
93
|
|
|
|
62
|
|
Income taxes
|
|
|
80
|
|
|
|
16
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
Molstanda (note 5)
|
|
|
(41
|
)
|
|
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
Molstanda (note 5)
|
|
|
76
|
|
|
|
|
|
The Company has transactions in the normal course of business
with Equity Method Investments and related persons such as
Management and Supervisory Board (collectively, 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.
F-52
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Related Party receivables consist primarily of trade, financial,
and other receivables from Equity Method Investments and Related
Companies, and totaled 80 million and
78 million as of September 30, 2007 and 2008,
respectively. At September 30, 2007, current financial and
other receivables from Equity Method Investments and Related
Companies included a revolving term loan of
52 million due from ALTIS.
Related Party payables consist primarily of trade, financial,
and other payables from Equity Method Investments, and totaled
176 million and 21 million as of
September 30, 2007 and 2008, respectively.
Related Party receivables and payables as of September 30,
2007 and 2008 have been segregated first between amounts owed by
or to companies in which the Company has an ownership interest,
and second based on the underlying nature of the transactions.
Trade receivables and payables include amounts for the purchase
and sale of products and services. Financial and other
receivables and payables represent amounts owed relating to
loans and advances and accrue interest at interbank rates.
Sales to Related Parties totaled 57 million and
1 million in the 2007 and 2008 fiscal years,
respectively, whereas purchases from Related Parties totaled
47 million and 148 million in the 2007 and
2008 fiscal years, respectively.
Remuneration
of Management
In the 2008 fiscal year, the active members of the Management
Board received total compensation of 4.9 million. In
the 2007 fiscal year the members of the Management Board active
in this year received total compensation of
6.5 million, including 550,000 stock options with a
fair value of 1.1 million (determined in accordance
with the Monte Carlo simulation model). In the 2008 fiscal year,
no stock options were granted to members of the Management
Board. No performance-related bonuses were paid for the 2007 and
2008 fiscal years. The total cash compensation in the 2008
fiscal year amounts to 4.9 million (previous year:
5.3 million).
The total aggregate cash compensation of the members of the
Supervisory Board in the 2008 fiscal year amounted to
0.5 million (previous year: 0.6 million).
In addition, according to the Articles of Association each
member of the Supervisory Board received in the 2007 fiscal year
1,500 share appreciation rights with a fair value of
2.03 (determined in accordance with the Monte Carlo
simulation model). In the 2008 fiscal year, the members of the
Supervisory Board waived their share appreciations rights.
Former members of the Management Board received total payments
of 0.9 million (severance and pension payments) in
the 2008 fiscal year. This includes the compensation paid to
Dr. Ziebart from June 2008 onward in the amount of
0.6 million.
As required by IFRS, during the 2008 fiscal year a total of
1.2 million was added to pension reserves for current
pensions and entitlements of former Management Board members; as
of September 30, 2008, these pension reserves amount to
26.6 million.
Neither Infineon nor any of its subsidiaries have granted loans
to any member of our Supervisory or Management Boards.
Regarding the required information on the individual
remuneration of the members of our Supervisory or Management
Boards pursuant to HGB section 314 par. 1 No. 6
subsection a, sentence 5 to 9, reference is made to the
Compensation Report which is part of the Operating and Financial
Review.
Pension benefits provided by the Company are currently organized
primarily through defined benefit pension plans which cover a
significant portion of the Companys employees. Plan
benefits are principally based upon years of service. Certain
pension plans are based on salary earned in the last year or
last five years of employment, while others are fixed plans
depending on ranking (both salary level and position). The
measurement date for the Companys pension plans is
September 30.
In February 2007, the Company transferred the majority of its
existing domestic (German) pension plans into a new Infineon
pension plan with effect from October 1, 2006. Under the
new plan, employee benefits are predominantly based on
contributions made by the Company, although defined benefit
provisions are retained. The plan qualifies as a defined benefit
plan and, accordingly, the change from the
F-53
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
previous defined benefit plans is treated as a plan amendment
pursuant to IAS 19. In comparison to the existing domestic
pension obligation, the additional impact on defined benefit
obligation consists of past service cost of approximately
4 million which were immediately recognized in profit
and loss.
Information with respect to the Companys pension plans for
the years ended September 30, 2007 and 2008 is presented
for German (Domestic) plans and non-German
(Foreign) plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
Domestic
|
|
Foreign
|
|
|
Domestic
|
|
Foreign
|
|
|
|
plans
|
|
plans
|
|
|
plans
|
|
plans
|
|
|
|
( in millions)
|
|
|
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of defined benefit obligation beginning of year
|
|
|
(477)
|
|
|
(81
|
)
|
|
|
(398)
|
|
|
(77
|
)
|
Current service cost
|
|
|
(28)
|
|
|
(4
|
)
|
|
|
(16)
|
|
|
(3
|
)
|
Interest cost
|
|
|
(21)
|
|
|
(4
|
)
|
|
|
(18)
|
|
|
(4
|
)
|
Actuarial gains (losses)
|
|
|
121
|
|
|
5
|
|
|
|
69
|
|
|
(1
|
)
|
Divestitures
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
New plan created and plan amendments
|
|
|
(4)
|
|
|
|
|
|
|
1
|
|
|
(1
|
)
|
Curtailments
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
5
|
|
|
3
|
|
|
|
5
|
|
|
2
|
|
Plan transfers to Qimonda
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
Present value of defined benefit obligation reclassified as held
for disposal
|
|
|
4
|
|
|
|
|
|
|
53
|
|
|
2
|
|
Foreign currency effects
|
|
|
|
|
|
3
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value of defined benefit obligation end of year
|
|
|
(398)
|
|
|
(77
|
)
|
|
|
(297)
|
|
|
(79
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at beginning of year
|
|
|
306
|
|
|
40
|
|
|
|
368
|
|
|
41
|
|
Expected return on plan assets
|
|
|
19
|
|
|
3
|
|
|
|
22
|
|
|
3
|
|
Actuarial losses
|
|
|
(2)
|
|
|
|
|
|
|
(63)
|
|
|
(5
|
)
|
Contributions
|
|
|
50
|
|
|
5
|
|
|
|
10
|
|
|
3
|
|
Benefits paid
|
|
|
(5)
|
|
|
(3
|
)
|
|
|
(5)
|
|
|
(2
|
)
|
Plan transfers to Qimonda
|
|
|
|
|
|
|
|
|
|
(7)
|
|
|
|
|
Fair value plan assets reclassified as held for disposal
|
|
|
|
|
|
|
|
|
|
(27)
|
|
|
(1
|
)
|
Foreign currency effects
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
368
|
|
|
41
|
|
|
|
298
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of the funded status of the Companys
pension plans to the amounts recognized in the consolidated
balance sheets is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
Domestic
|
|
Foreign
|
|
|
Domestic
|
|
Foreign
|
|
|
|
plans
|
|
plans
|
|
|
plans
|
|
plans
|
|
|
|
( in millions)
|
|
|
Present value of funded obligations
|
|
|
(398)
|
|
|
(77
|
)
|
|
|
(297)
|
|
|
(79
|
)
|
Fair value of plan assets
|
|
|
368
|
|
|
41
|
|
|
|
298
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
|
(30)
|
|
|
(36
|
)
|
|
|
1
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset ceiling
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset (liability) recognized
|
|
|
(30)
|
|
|
(38
|
)
|
|
|
1
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-54
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Amounts recognized in the consolidated balance sheets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
Domestic
|
|
Foreign
|
|
|
Domestic
|
|
Foreign
|
|
|
|
plans
|
|
plans
|
|
|
plans
|
|
plans
|
|
|
|
( in millions)
|
|
|
Pension assets
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
Current portion pension liabilities (note 28)
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
Pension liabilities
|
|
|
(25)
|
|
|
(38
|
)
|
|
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset (liability) recognized
|
|
|
(30)
|
|
|
(38
|
)
|
|
|
1
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The experience adjustments, meaning differences between changes
in assets and obligations expected on the basis of actuarial
assumptions and actual changes in those assets and obligations,
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Differences between expected and actual developments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of fair value of the obligation
|
|
|
13
|
|
|
|
2
|
|
|
|
4
|
|
|
|
(1
|
)
|
of fair value of plan assets
|
|
|
(2
|
)
|
|
|
|
|
|
|
(63
|
)
|
|
|
(5
|
)
|
The actual return on plan assets was 20 and (43) in
the years ended September 30, 2007 and 2008, respectively.
The weighted-average assumptions used in calculating the
actuarial values for the pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Discount rate
|
|
|
5.5
|
%
|
|
|
5.6
|
%
|
|
|
6.8
|
%
|
|
|
6.1
|
%
|
Rate of salary increase
|
|
|
2.5
|
%
|
|
|
2.2
|
%
|
|
|
2.5
|
%
|
|
|
2.8
|
%
|
Projected future pension increases
|
|
|
1.8
|
%
|
|
|
2.7
|
%
|
|
|
2.0
|
%
|
|
|
2.9
|
%
|
Expected return on plan assets
|
|
|
6.1
|
%
|
|
|
6.9
|
%
|
|
|
6.5
|
%
|
|
|
7.0
|
%
|
Discount rates are established based on prevailing market rates
for high-quality fixed-income instruments that, if the pension
benefit obligation were settled at the measurement date, would
provide the necessary future cash flows to pay the benefit
obligation when due. The Company believes short-term changes in
interest rates should not affect the measurement of the
Companys long-term obligation.
Investment
Strategies
The investment approach of the Companys pension plans
involves employing a sufficient level of flexibility to capture
investment opportunities as they occur, while maintaining
reasonable parameters to ensure that prudence and care are
exercised in the execution of the investment program. The
Companys pension plans assets are invested with
several investment managers. The plans employ a mix of active
and passive investment management programs. Considering the
duration of the underlying liabilities, a portfolio of
investments of plan assets in equity securities, debt securities
and other assets is targeted to maximize the long-term return on
assets for a given level of risk. Investment risk is monitored
on an ongoing basis through periodic portfolio reviews, meetings
with investment managers and annual liability measurements.
Investment policies and strategies are periodically reviewed to
ensure the objectives of the plans are met considering any
changes in benefit plan design, market conditions or other
material items.
Expected
Long-term Rate of Return on Plan Assets
Establishing the expected rate of return on pension assets
requires judgment. The Companys approach in determining
the long-term rate of return for plan assets is based upon
historical financial market relationships that have existed over
time, the types of investment classes in which pension plan
F-55
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
assets are invested, long-term investment strategies, as well as
the expected compounded return the Company can reasonably expect
the portfolio to earn over appropriate time periods.
The Company reviews the expected long-term rate of return
annually and revises it as appropriate. Also, the Company
periodically commissions detailed asset/liability studies to be
performed by third-party professional investment advisors and
actuaries.
Plan Asset
Allocation
As of September 30, 2007 and 2008 the percentage of plan
assets invested and the targeted allocation in major asset
categories are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
Targeted allocation
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Equity securities
|
|
|
37%
|
|
|
|
60%
|
|
|
|
30%
|
|
|
|
47%
|
|
|
|
36%
|
|
|
|
47%
|
|
Debt securities
|
|
|
34%
|
|
|
|
22%
|
|
|
|
36%
|
|
|
|
16%
|
|
|
|
31%
|
|
|
|
17%
|
|
Other
|
|
|
29%
|
|
|
|
18%
|
|
|
|
34%
|
|
|
|
37%
|
|
|
|
33%
|
|
|
|
36%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100%
|
|
|
|
100%
|
|
|
|
100%
|
|
|
|
100%
|
|
|
|
100%
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys asset allocation targets for its pension plan
assets are based on its assessment of business and financial
conditions, demographic and actuarial data, funding
characteristics, related risk factors, market sensitivity
analysis and other relevant factors. The overall allocation is
expected to help protect the plans funded status while
generating sufficiently stable real returns (i.e., net of
inflation) to meet current and future benefit payment needs. Due
to active portfolio management, the asset allocation may differ
from the target allocation up to certain limits for different
classes. As a matter of policy, the Companys pension plans
do not invest in shares of Infineon.
The components of net periodic pension cost for the years ended
September 30, 2007 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
|
( in millions)
|
|
|
Service cost
|
|
|
(22
|
)
|
|
|
(4
|
)
|
|
|
(16
|
)
|
|
|
(3
|
)
|
Interest cost
|
|
|
(19
|
)
|
|
|
(4
|
)
|
|
|
(18
|
)
|
|
|
(4
|
)
|
Expected return on plan assets
|
|
|
17
|
|
|
|
3
|
|
|
|
22
|
|
|
|
3
|
|
Amortization of unrecognized prior service (cost) benefit
|
|
|
(1
|
)
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Curtailment gain recognized
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
|
(25
|
)
|
|
|
(4
|
)
|
|
|
(11
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The past service costs relating to the pension plans are
amortized in equal amounts over the average period until the
benefits become vested.
Actuarial gains of 124 million and
10 million have been recognized in the statement of
recognized income and expense for the years ended
September 30, 2007 and 2008 respectively.
It is not planned nor anticipated that any plan assets will be
returned to any business entity during the next fiscal year.
The effect of employee terminations in connection with the
Companys restructuring plans (see note 10) on
the Companys pension obligation is reflected as a
curtailment in the years ended September 30, 2007 and 2008
pursuant to the provisions of IAS 19.
The remaining net periodic pension cost is mainly attributed to
cost of sales and R&D expenses.
The interest cost due to the increase in the present value of
the defined benefit obligation during a period and the interest
income from the plan assets are shown as interest expense or
interest income.
F-56
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The company recognized 108 million and
105 million as an expense for defined contribution
plans in the financial years ended September 30, 2007 and
2008.
|
|
38.
|
Additional
Disclosures on Financial Instruments
|
The following table presents the carrying amounts and the fair
values by class of financial instruments and reconciliation from
the classes of financial instruments to the IAS 39 categories of
financial instruments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Categories of financial assets
|
|
|
|
|
|
|
|
|
|
At fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
through
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
profit or
|
|
|
Available
|
|
|
Loans and
|
|
|
|
|
Financial assets:
|
|
amount
|
|
|
loss
|
|
|
for sale
|
|
|
receivables
|
|
|
Fair value
|
|
|
|
( in millions)
|
|
|
|
|
|
Balance September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
1,809
|
|
|
|
|
|
|
|
|
|
|
|
1,809
|
|
|
|
1,809
|
|
Available-for-sale
financial assets
|
|
|
417
|
|
|
|
|
|
|
|
417
|
|
|
|
|
|
|
|
417
|
|
Trade and other receivables
|
|
|
1,138
|
|
|
|
|
|
|
|
|
|
|
|
1,138
|
|
|
|
1,138
|
|
Other current financial assets
|
|
|
78
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
78
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial assets
|
|
|
162
|
|
|
|
|
|
|
|
66
|
|
|
|
96
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,604
|
|
|
|
78
|
|
|
|
483
|
|
|
|
3,043
|
|
|
|
3,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
749
|
|
|
|
|
|
|
|
|
|
|
|
749
|
|
|
|
749
|
|
Available-for-sale
financial assets
|
|
|
134
|
|
|
|
|
|
|
|
134
|
|
|
|
|
|
|
|
134
|
|
Trade and other receivables
|
|
|
799
|
|
|
|
|
|
|
|
|
|
|
|
799
|
|
|
|
799
|
|
Other current financial assets
|
|
|
19
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial assets
|
|
|
133
|
|
|
|
|
|
|
|
29
|
|
|
|
104
|
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,834
|
|
|
|
19
|
|
|
|
163
|
|
|
|
1,652
|
|
|
|
1,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-57
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Categories of financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
value
|
|
|
Designated
|
|
|
financial
|
|
|
|
|
|
|
|
|
|
|
|
|
through
|
|
|
cash flow
|
|
|
liabilities
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
profit or
|
|
|
hedges at
|
|
|
(amortized
|
|
|
Lease
|
|
|
|
|
Financial liabilities:
|
|
amount
|
|
|
loss
|
|
|
fair value
|
|
|
cost)
|
|
|
liabilities
|
|
|
Fair value
|
|
|
|
( in millions)
|
|
|
Balance September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
336
|
|
|
|
|
|
|
|
|
|
|
|
308
|
|
|
|
28
|
|
|
|
333
|
|
Trade and other payables
|
|
|
1,347
|
|
|
|
|
|
|
|
|
|
|
|
1,347
|
|
|
|
|
|
|
|
1,347
|
|
Other current financial liabilities
|
|
|
78
|
|
|
|
38
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
78
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
1,227
|
|
|
|
|
|
|
|
|
|
|
|
1,127
|
|
|
|
100
|
|
|
|
1,333
|
|
Other financial liabilities
|
|
|
134
|
|
|
|
|
|
|
|
|
|
|
|
134
|
|
|
|
|
|
|
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,122
|
|
|
|
38
|
|
|
|
|
|
|
|
2,956
|
|
|
|
128
|
|
|
|
3,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
207
|
|
|
|
|
|
|
|
|
|
|
|
207
|
|
|
|
|
|
|
|
207
|
|
Trade and other payables
|
|
|
507
|
|
|
|
|
|
|
|
|
|
|
|
507
|
|
|
|
|
|
|
|
507
|
|
Other current financial liabilities
|
|
|
63
|
|
|
|
20
|
|
|
|
5
|
|
|
|
38
|
|
|
|
|
|
|
|
63
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
963
|
|
|
|
|
|
|
|
|
|
|
|
963
|
|
|
|
|
|
|
|
967
|
|
Other financial liabilities
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,760
|
|
|
|
20
|
|
|
|
5
|
|
|
|
1,735
|
|
|
|
|
|
|
|
1,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-58
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The following table contains information about net gains
(losses) from continuing operations by category of financial
instruments for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at fair value through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Designated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-
|
|
|
|
|
|
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for-sale
|
|
|
|
|
|
through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) on
|
|
financial
|
|
|
Loans and
|
|
|
profit or
|
|
|
Held for
|
|
|
Other
|
|
|
Cash flow
|
|
|
|
|
financial instruments
|
|
assets
|
|
|
receivables
|
|
|
loss
|
|
|
trading
|
|
|
liabilities
|
|
|
hedges
|
|
|
Total
|
|
|
|
( in millions)
|
|
|
Fiscal year 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total removed from equity and recognized in profit or loss
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
(5
|
)
|
Fair value gain (loss) recognized directly in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) recognized in equity
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest revenue
|
|
|
9
|
|
|
|
36
|
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
(143
|
)
|
|
|
(2
|
)
|
|
|
(99
|
)
|
Net foreign exchange gain (loss)
|
|
|
|
|
|
|
(96
|
)
|
|
|
|
|
|
|
16
|
|
|
|
83
|
|
|
|
|
|
|
|
3
|
|
Fair value gain (loss)
|
|
|
7
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
Impairment loss (reversal)
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in profit or loss
|
|
|
16
|
|
|
|
(49
|
)
|
|
|
1
|
|
|
|
16
|
|
|
|
(60
|
)
|
|
|
(2
|
)
|
|
|
(78
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net gain (loss)
|
|
|
9
|
|
|
|
(49
|
)
|
|
|
1
|
|
|
|
16
|
|
|
|
(60
|
)
|
|
|
|
|
|
|
(83
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total removed from equity and recognized in profit or loss
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
(4
|
)
|
Fair value gain (loss) recognized directly in equity
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) recognized in equity
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest revenue
|
|
|
9
|
|
|
|
46
|
|
|
|
2
|
|
|
|
|
|
|
|
(147
|
)
|
|
|
(2
|
)
|
|
|
(92
|
)
|
Net foreign exchange gain (loss)
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
15
|
|
|
|
10
|
|
|
|
|
|
|
|
15
|
|
Fair value gain (loss)
|
|
|
(3
|
)
|
|
|
|
|
|
|
(10
|
)
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
(25
|
)
|
Impairment loss (reversal)
|
|
|
(6
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in profit or loss
|
|
|
|
|
|
|
33
|
|
|
|
(8
|
)
|
|
|
3
|
|
|
|
(137
|
)
|
|
|
(2
|
)
|
|
|
(111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net gain (loss)
|
|
|
(1
|
)
|
|
|
33
|
|
|
|
(8
|
)
|
|
|
3
|
|
|
|
(137
|
)
|
|
|
(4
|
)
|
|
|
(114
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
Financial Instruments and Hedging Activities
The Company periodically enters into derivative financial
instruments, 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.
F-59
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The Euro equivalent notional amounts in millions and fair values
of the Companys derivative instruments as of
September 30, 2007 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
Notional
|
|
Fair
|
|
|
Notional
|
|
Fair
|
|
|
|
amount
|
|
value
|
|
|
amount
|
|
value
|
|
|
|
( in millions)
|
|
|
Forward contracts sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
735
|
|
|
25
|
|
|
|
213
|
|
|
(5
|
)
|
Japanese yen
|
|
|
17
|
|
|
|
|
|
|
5
|
|
|
|
|
Singapore dollar
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
Malaysian ringgit
|
|
|
3
|
|
|
|
|
|
|
3
|
|
|
|
|
Norwegian krone
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
356
|
|
|
(20
|
)
|
|
|
157
|
|
|
(4
|
)
|
Japanese yen
|
|
|
73
|
|
|
(2
|
)
|
|
|
1
|
|
|
|
|
Singapore dollar
|
|
|
24
|
|
|
|
|
|
|
29
|
|
|
|
|
Great Britain pound
|
|
|
6
|
|
|
|
|
|
|
9
|
|
|
|
|
Malaysian ringgit
|
|
|
83
|
|
|
(2
|
)
|
|
|
52
|
|
|
|
|
Norwegian krone
|
|
|
7
|
|
|
|
|
|
|
2
|
|
|
|
|
Other currencies
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Currency Options sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
|
|
|
|
|
|
|
177
|
|
|
(5
|
)
|
Currency Options purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
|
|
|
|
|
|
|
163
|
|
|
1
|
|
Interest rate swaps
|
|
|
700
|
|
|
(10
|
)
|
|
|
500
|
|
|
(1
|
)
|
Other
|
|
|
231
|
|
|
20
|
|
|
|
77
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value, net
|
|
|
|
|
|
11
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company enters into derivative instruments, primarily
foreign exchange forward contracts, to hedge significant
anticipated U.S. dollar cash flows from operations. During
the fiscal year ended September 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 fiscal year ended September 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
4 million of the net losses recognized directly in
other components of equity as of September 30, 2008 will be
reclassified into earnings during the 2009 fiscal year. All
foreign exchange derivatives designated as cash flow hedges held
as of September 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 fiscal year ended
September 30, 2007 and 2008, no gains or losses were
reclassified from other components of equity 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.
Fair
Value
Fair values of financial instruments are determined using quoted
market prices or discounted cash flows. The fair value of the
Companys unsecured term loans and interest-bearing notes
payable approximate their carrying values as their interest
rates approximate those which could be obtained currently. At
September 30, 2008, the subordinated convertible and
exchangeable notes, both due 2010, were trading at a
12.07 percent and a 12.34 percent discount to par,
respectively, based on quoted market values. The fair values of
the Companys cash and cash equivalents, receivables and
payables, as well as related-party receivables and payables and
other financial instruments approximated their carrying values
due to their short-term nature. Available for sale financial
assets are recorded at fair value (see note 15).
F-60
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
39.
|
Financial Risk
Management
|
The Companys activities expose it to a variety of
financial risks: market risk (including foreign exchange risk,
interest rate risk and price risk), credit risk and liquidity
risk. The Companys overall risk management program focuses
on the unpredictability of financial markets and seeks to
minimize potential adverse effects on its financial performance.
The Company uses derivative financial instruments to hedge
certain risk exposures. Risk management is carried out by a
central Finance and Treasury (FT) department under
policies approved by the management board. The FT department
identifies, evaluates and hedges financial risks in close
co-operation with the Companys operating units. The FT
departments policy contains written principles for overall
risk management, as well as written policies covering specific
areas, such as foreign exchange risk, interest rate risk, credit
risk, use of derivative financial instruments and non-derivative
financial instruments, and investment of excess liquidity.
Market
Risk
Market risk is defined as the risk of loss related to adverse
changes in market prices of financial instruments, including
those related to foreign exchange rates and interest rates.
The Company is exposed to various financial market risks in the
ordinary course of business transactions, primarily resulting
from changes in foreign exchange rates and interest rates. The
Company enters into diverse derivative financial transactions
with several counterparties to limit such risks. Derivative
instruments are used only for hedging purposes and not for
trading or speculative purposes.
Foreign Exchange
Risk
Foreign exchange risk is the risk that the fair value of future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
Although the Company prepares the consolidated financial
statements in Euro, major portions of its sales volumes as well
as costs relating to the design, development, manufacturing and
marketing of products are denominated in currencies other than
the Euro, primarily the U.S. dollar. Fluctuations in the
exchange rates of these currencies to the Euro had an effect on
profitability in the 2007 and 2008 fiscal years.
Management has established a policy to require the
Companys individual legal entities to manage their foreign
exchange risk against their functional currency. The legal
entities are required to internally hedge their entire foreign
exchange risk exposure with the Companys FT department. To
manage their foreign exchange risk arising from future
commercial transactions and recognized assets and liabilities,
the individual entities use forward contracts, transacted with
the Companys FT department.
The Companys policy with respect to limiting short-term
foreign currency exposure generally is to economically hedge at
least 75 percent of its estimated net exposure for the
initial two-month period, at least 50 percent of its
estimated net exposure for the third month and, depending on the
nature of the underlying transactions, a significant portion for
the periods thereafter. Part of the foreign currency exposure
cannot be mitigated due to differences between actual and
forecasted amounts. The Company calculates this net exposure on
a cash-flow basis considering balance sheet items, actual orders
received or made and all other planned revenues and expenses.
For the fiscal years ended September 30, 2007 and 2008, net
gains (losses) related to foreign currency derivatives and
foreign currency transactions included in determining net income
(loss) amounted to 3 million and
15 million, respectively.
F-61
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The following table shows the net exposure for continuing
operations by major foreign currencies and the potential effects
on a 10 percent shift of the currency exchange rates to be
applied as of September 30, 2007 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit or Loss
|
|
|
Equity
|
|
September 30, 2007
|
|
+10%
|
|
|
-10%
|
|
|
+10%
|
|
|
-10%
|
|
|
|
( in millions)
|
|
|
EUR/USD
|
|
|
(8
|
)
|
|
|
9
|
|
|
|
|
|
|
|
|
|
EUR/MYR
|
|
|
(6
|
)
|
|
|
7
|
|
|
|
|
|
|
|
|
|
EUR/YEN
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
EUR/SGD
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit or Loss
|
|
|
Equity
|
|
September 30, 2008
|
|
+10%
|
|
|
-10%
|
|
|
+10%
|
|
|
-10%
|
|
|
|
( in millions)
|
|
|
EUR/USD
|
|
|
2
|
|
|
|
(3
|
)
|
|
|
11
|
|
|
|
(15
|
)
|
EUR/MYR
|
|
|
(5
|
)
|
|
|
6
|
|
|
|
|
|
|
|
|
|
EUR/YEN
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
EUR/SGD
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Interest Rate
Risk
In accordance with IFRS 7 interest rate risk is defined as the
risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest
rates.
The Company is exposed to interest rate risk through its debt
instruments, fixed-term deposits and loans. During the 2003
fiscal year, the Company issued a convertible bond and in 2007
fiscal year the Company issued an exchangeable bond on Qimonda
shares. Due to the high volatility of its core business and to
maintain high operational flexibility, the Company keeps a
substantial amount of cash and marketable securities. These
assets are mainly invested in instruments with contractual
maturities ranging from one to 12 months, bearing interest
at short-term rates. To reduce the risk caused by changes in
market interest rates, the Company attempts to align the
duration of the interest rates of its debts and current assets
by the use of interest rate derivatives.
Fluctuating interest rates have an impact on parts of each of
the Companys marketable securities, debt obligations and
standby lines of credit. The Company makes use of derivative
instruments such as interest rate swaps to hedge against adverse
interest rate developments. The Company entered into interest
rate swap agreements that primarily convert the fixed interest
rate on its convertible bond to a floating interest rate based
on the relevant European Interbank Offering Rate
(EURIBOR).
IFRS 7 requires a sensitivity analysis showing the effect of
possible changes in market interests on profit or loss and
equity. The Company does not hold any fixed-rate financial
assets and liabilities categorized as at fair value through
profit or loss and does not apply hedge accounting for interest
rate risk. Therefore a change in the interest rate would not
affect profit or loss. In respect to fixed-rate
available-for-sale
financial assets a change of 100 basis points in interest
rates would have increased or decreased equity by
3 million and by 1 million as of
September 30, 2007 and 2008, respectively.
Changes in market interest rates affect interest income and
interest expense on floating interest financial instruments. A
change of +/- 100 basis points in interest rates at the
reporting date would have increased or decreased profit or loss
by 2 million and by 4 million in the 2007
and 2008 fiscal year.
Changes in interest rates affect the fair value and cash flows
of interest rate derivatives. Under the assumption the market
interest rate would change by 100 basis points profit or
loss would decrease or increase by 14 million and by
12 million in the 2007 and 2008 fiscal year.
Other Price
Risk
According to IFRS 7 other price risk is defined as the risk that
the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market prices (other than
those arising from interest rate risk or currency risk), whether
those changes are caused by factors specific to the individual
financial instrument or its issuer, or factors affecting all
similar financial instruments traded in the market.
F-62
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Infineon holds financial instruments which are exposed to market
price risks. A potential change of in the relevant market prices
of 5 percent would increase or decrease profit or loss by
8 million and 4 million for the fiscal
years ended September 30, 2007 and 2008.
Additionally, the Company is exposed to price risks with respect
to raw materials used in the manufacture of its products. The
Company seeks to minimize these risks through its sourcing
policies (including the use of multiple sources, where possible)
and its operating procedures. The Company does not use
derivative financial instruments to manage any exposure to
fluctuations in commodity prices remaining after the operating
measures described above.
Credit
Risk
Credit risk is the risk that one party to a financial instrument
will cause a financial loss for the other party by failing to
discharge an obligation.
Financial instruments that expose the Company to credit risk
consist primarily of trade receivables, cash equivalents,
marketable securities and financial derivatives. Concentrations
of credit risks with respect to trade receivables are limited by
the large number of geographically diverse customers that make
up the Companys customer base. The Company controls credit
risk through credit approvals, credit limits and monitoring
procedures, as well as comprehensive credit evaluations for all
customers. The credit risk with respect to cash equivalents,
marketable securities and financial derivatives is limited by
transactions with a number of large international financial
institutions, with pre-established limits. The Company does not
believe that there is significant risk of non-performance by
these counterparties because the Company monitors their credit
risk and limits the financial exposure and the amounts of
agreements entered into with any one financial institution. The
credit worthiness of the counterparties is checked regularly in
order to keep the risk of default as low as possible. However,
the Company cannot fully exclude the possibility of any loss
arising from the default of one of the counterparties.
Liquidity
Risk
Liquidity risk is the risk that an entity will encounter
difficulty in meeting obligations associated with financial
liabilities.
Liquidity risk could arise from the Companys potential
inability to meet matured financial obligations. The
Companys liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability of
funding through an adequate amount of committed credit
facilities and the ability to close out market positions. Due to
the dynamic nature of the underlying businesses, the
Companys FT department maintains flexibility in funding by
maintaining availability under committed credit lines.
The following table discloses a maturity analysis for
non-derivative financial liabilities and a cash flow analysis
for derivative financial instruments with negative fair values.
The table shows the undiscounted contractually agreed cash flows
which result from the respective financial liability. Cash flows
are recognized at trade date when the Company becomes a party to
the contractual provision of the financial instrument. Amounts
in foreign currencies are translated using the closing rate at
the reporting date. Financial instruments with variable interest
payments are determined using the interest rate from the last
interest fixing before September 30, 2008. The cash
outflows of financial liabilities that can be paid off at any
time are assigned to the time band where the earliest redemption
is possible.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash flows
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
Thereafter
|
|
|
|
( in millions)
|
|
|
Non derivative financial liabilities
|
|
|
1,943
|
|
|
|
805
|
|
|
|
928
|
|
|
|
93
|
|
|
|
72
|
|
|
|
42
|
|
|
|
3
|
|
Derivative financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash outflow
|
|
|
492
|
|
|
|
412
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
inflow((1))
|
|
|
(474
|
)
|
|
|
(401
|
)
|
|
|
(73
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,961
|
|
|
|
816
|
|
|
|
935
|
|
|
|
93
|
|
|
|
72
|
|
|
|
42
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Cash inflows of derivates financial
liabilities are also included when the instruments is gross
settled in order to show all contractual cash flows.
|
F-63
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
40.
|
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 for the class of direct U.S. purchasers of DRAM
(granting an opportunity for individual class members to opt out
of the settlement). In November 2006, court approved the
settlement agreement and entered final judgment and dismissed
the claims with prejudice.
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.
All defendants have filed joint motions for summary judgment and
to exclude plaintiffs principal expert in all of these
cases, which have been scheduled for hearing on
December 17, 2008.
Sixty-four 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. On August 14, 2008, the Ninth Circuit issued its
decision affirming the dismissal of this action. 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
F-64
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
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
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 and the parties submitted a
stipulation and proposed order to that effect. The district
court stayed proceedings pending the Court of Appeals
decision whether to accept the appeal and scheduled a hearing
for October 30, 2008 to decide whether the stay should
remain in place until the appeal is decided.
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 attorney
generals 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 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 attorney generals case
partly dismissed and partly granted the motion. On May 13,
2008, the Company answered the complaint by the State of New
York and the multistate complaint. On September 15, 2008,
the Company filed an amended answer to the multistate complaint.
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. Plaintiffs California and New Mexico filed a joint
motion for class certification seeking to certify classes of all
public entities within both states. On September 5, 2008,
the Court entered an order denying both states motions for
class certification. On September 15, 2008, the New York
State Attorney General filed a motion for judgment on the
pleadings regarding certain defendants affirmative
defenses to New Yorks amended complaint. A hearing for the
motion was scheduled for December 17, 2008.
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
F-65
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
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 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. Securities
Exchange Act of 1934 and dismissed the claim under
§ 20A of the act with prejudice. On August 13,
2008 the court denied a motion of the Company for summary
judgment based on the statute of limitations. On August 25,
2008, the Company filed a motion for judgment on the pleadings
against foreign purchasers, i.e., proposed class members who are
neither residents nor citizens of the United States who bought
securities of the Company on an exchange outside the United
States. On August 25, 2008, the plaintiffs also filed a
motion to certify the class. A hearing on both motions is
scheduled for December 15, 2008.
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 Technologies, 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. On
July 29, 2008, the court determined the trial
F-66
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
date and the date for the Markman-Hearing on the
construction of essential terms of the asserted patents. The
trial date is January 4, 2011; the Markman-Hearing is
scheduled for September 1, 2010.
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. 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. 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. Concerning the lawsuit in Düsseldorf, CIF must
reply by March 9, 2009 and DTAG and the parties who joined
the lawsuit on the side of DTAG must respond by
September 28, 2009. A court is scheduled for November and
December 2009.
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
CoolMOS. On May 20, 2008, Third Dimension
Semiconductor Inc. filed an amended complaint adding one more
U.S. patent to the lawsuit. On September 19, 2008, the
Company and IF North America filed an answer and counterclaim.
On April 18, 2008, LSI filed a complaint with the
U.S. 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 four 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 (see
note 42).
Liabilities
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 September 30, 2008, Infineon Logic
had accrued liabilities in the amount of 37 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 September 30, 2008, Qimonda had 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
F-67
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
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.
Contractual
Commitments
The following table summarizes the Companys commitments
with respect to external parties as of September 30,
2008(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
|
After
|
|
|
Total
|
|
1 year
|
|
1-2 years
|
|
2-3 years
|
|
3-4 years
|
|
4-5 years
|
|
5 years
|
|
|
( in millions)
|
|
Operating lease payments
|
|
|
776
|
|
|
75
|
|
|
63
|
|
|
59
|
|
|
58
|
|
|
56
|
|
|
465
|
Unconditional purchase commitments tangible assets
|
|
|
44
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconditional purchase commitments other
|
|
|
590
|
|
|
550
|
|
|
18
|
|
|
11
|
|
|
3
|
|
|
4
|
|
|
4
|
Future interest payments
|
|
|
111
|
|
|
53
|
|
|
43
|
|
|
8
|
|
|
4
|
|
|
1
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Commitments
|
|
|
1,521
|
|
|
722
|
|
|
124
|
|
|
78
|
|
|
65
|
|
|
61
|
|
|
471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain payments of obligations or
expirations of commitments that are based on the achievement of
milestones or other events that are not date-certain are
included for purposes of this table based on estimates of the
reasonably likely timing of payments or expirations in the
particular case. Actual outcomes could differ from those
estimates.
|
The Company has capacity reservation agreements with certain
Associated Companies and external foundry suppliers for the
manufacturing and testing of semiconductor products. These
agreements generally are greater than one year in duration and
are renewable. Under the terms of these agreements, the Company
has agreed to purchase a portion of their production output
based, in part, on market prices.
Purchases under these agreements are recorded as incurred in the
normal course of business. The Company assesses its anticipated
purchase requirements on a regular basis to meet customer demand
for its products. An assessment of losses under these agreements
is made on a regular basis in the event that either budgeted
purchase quantities fall below the specified quantities or
market prices for these products fall below the specified prices.
Other
Contingencies
The following table summarizes the Companys contingencies
with respect to external parties, other than those related to
litigation, as of September 30,
2007(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expirations by period
|
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
|
After
|
|
|
Total
|
|
1 year
|
|
1-2 years
|
|
2-3 years
|
|
3-4 years
|
|
4-5 years
|
|
5 years
|
|
|
( in millions)
|
|
Maximum potential future payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees(2)
|
|
|
97
|
|
|
11
|
|
|
|
|
|
5
|
|
|
14
|
|
|
3
|
|
|
64
|
Contingent government
grants(3)
|
|
|
47
|
|
|
20
|
|
|
12
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contingencies
|
|
|
144
|
|
|
31
|
|
|
12
|
|
|
9
|
|
|
19
|
|
|
9
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Certain expirations of contingencies that are based on the
achievement of milestones or other events that are not
date-certain are included for purposes of this table based on
estimates of the reasonably likely timing of expirations in the
particular case. Actual outcomes could differ from those
estimates.
|
F-68
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
(2)
|
Guarantees are mainly issued for the payment of import duties,
rentals of buildings, and contingent obligations related to
government grants received.
|
|
(3)
|
Contingent government grants refer to amounts previously
received, related to the construction and financing of certain
production facilities, which are not otherwise guaranteed and
could be refundable if the total project requirements are not
met.
|
On a group-wide basis the Company has guarantees outstanding to
external parties of 199 million as of
September 30, 2008 (of which 97 million are
guarantees of Infineon Logic, and 102 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 consolidated financial
statements by virtue of consolidation. As of September 30,
2008, such guarantees, principally relating to certain
consolidated subsidiaries third-party debt, totaled
1,578 million, of which 1,062 million are
guarantees of Infineon Logic and 516 million are
guarantees of Qimonda. Of these guarantees,
988 million relates to convertible and exchangeable
notes issued, of which 815 million relate to
convertible and exchangeable notes issued by Infineon Logic and
173 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 September 30, 2008, a maximum of
330 million of these subsidies could be refundable
(of which 283 million relate to Qimonda).
On December 23, 2003, the Company entered into a long-term
operating lease agreement with MoTo Objekt Campeon
GmbH & Co. KG (MoTo) to lease an office
complex constructed by MoTo south of Munich, Germany. The office
complex, called Campeon, enables the Company to centralize the
majority of its Munich-area employees in one central physical
working environment. MoTo was responsible for the construction,
which was completed in the second half of 2005. The Company has
no obligations with respect to financing MoTo and has provided
no guarantees related to the construction. The Company occupied
Campeon under an operating lease arrangement in October 2005 and
completed the gradual move of its employees to this new location
in the 2006 fiscal year. The complex was leased for a period of
20 years. After year 15, the Company has a non-bargain
purchase option to acquire the complex or otherwise continue the
lease for the remaining period of five years. Pursuant to the
agreement, the Company placed a rental deposit of
75 million in escrow, which was included in
restricted cash as of September 30, 2008. Lease payments
are subject to limited adjustment based on specified financial
ratios related to the Company. The agreement was accounted for
as an operating lease, in accordance with IAS 17, with monthly
lease payments expensed on a straight-line basis over the lease
term.
The Company through certain of its sales and other agreements
may, in the normal course of business, be obligated to indemnify
its counterparties under certain conditions for warranties,
patent infringement or other matters. The maximum amount of
potential future payments under these types of agreements is not
predictable with any degree of certainty, since the potential
obligation is contingent on conditions that may or may not occur
in future, and depends on specific facts and circumstances
related to each agreement. Historically, payments made by the
Company under these types of agreements have not had a material
adverse effect on the Companys business, results of
operations or financial condition. A tabular reconciliation of
the changes in the aggregate product warranty liability for the
year ended September 30, 2008 is presented in note 26.
|
|
41.
|
Operating Segment
and Geographic Information
|
The Company has reported its operating segment and geographic
information in accordance with IFRS 8.
The Companys reported organizational structure became
effective on May 1, 2006, following the legal separation of
its memory products business into the stand-alone legal entity,
Qimonda. Furthermore, effective March 31, 2008, the results
of Qimonda are reported as discontinued operations in the
Companys consolidated statements of operations for all
periods presented, while the assets and liabilities of Qimonda
are classified as held for disposal in the September 30,
2008 consolidated balance sheet.
F-69
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
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 IFRS 8 definition of an operating segment, but do not meet
the requirements of a reportable segment as specified in IFRS 8.
Accordingly, these segments are combined and disclosed in the
Other Operating Segments category.
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 includes net sales and
earnings that Infineon Logics 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.
The Companys Management Board has been collectively
identified as the CODM. The CODM makes decisions about resources
to be allocated to the segments and assesses their performance
using revenues and EBIT. The CODM does not review asset
information by segment nor does he evaluate the segments on
these criteria on a regular basis, except that the CODM is
provided with information regarding certain inventories on an
operating segment basis. The Company does, however, allocate
depreciation and amortization expense to the operating segments
based on production volume and product mix using standard costs.
The accounting policies applied for segment reporting purposes
are based on U.S. GAAP and may differ from those described
in Note 2 which are based on IFRS. Significant differences
in the accounting policies are discussed in Note 4.
Information with respect to the Companys operating
segments follows whereby the net difference between IFRS and
U.S. GAAP financial information is presented in a single
line in order to reconcile to measures on the basis of IFRS:
Automotive,
Industrial & Multimarket
The Automotive, Industrial & Multimarket segment
designs, develops, manufactures and markets semiconductors and
complete system solutions primarily for use in automotive,
industrial and security applications, and applications with
customer-specific product requirements.
Communication
Solutions
The Communication Solutions segment designs, develops,
manufactures and markets a wide range of ICs, other
semiconductors and complete system solutions for wireline and
wireless communication applications.
Other Operating
Segments
Remaining activities for certain product lines that have been
disposed of, as well as other business activities, are included
in the Other Operating Segments.
F-70
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Selected segment data for the years ended September 30,
2007 and 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
3,017
|
|
|
|
2,963
|
|
Communication
Solutions(1)
|
|
|
1,051
|
|
|
|
1,360
|
|
Other Operating
Segments(2)
|
|
|
219
|
|
|
|
100
|
|
Corporate and
Eliminations(3)
|
|
|
(213
|
)
|
|
|
(102
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes inter-segment sales of 30 million and
10 million for the fiscal years ended
September 30, 2007 and 2008, respectively, from sales of
wireless communication applications to Qimonda.
|
|
(2)
|
Includes inter-segment sales of 189 million and
79 million for the fiscal years ended
September 30, 2007 and 2008, respectively, from sales of
wafers from Infineon Logics 200-millimeter facility in
Dresden to Qimonda under a foundry agreement.
|
|
(3)
|
Includes the elimination of inter-segment sales of
219 million and 89 million for the fiscal
years ended September 30, 2007 and 2008, respectively,
since these sales are not expected to be part of the Qimonda
disposal plan.
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
291
|
|
|
|
315
|
|
Communication Solutions
|
|
|
(165
|
)
|
|
|
(73
|
)
|
Other Operating Segments
|
|
|
(12
|
)
|
|
|
(3
|
)
|
Corporate and Eliminations
|
|
|
(77
|
)
|
|
|
(287
|
)
|
|
|
|
|
|
|
|
|
|
Total U.S. GAAP
|
|
|
37
|
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
|
IFRS reconciliation differences
|
|
|
20
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
Total IFRS
|
|
|
57
|
|
|
|
(52
|
)
|
|
|
|
|
|
|
|
|
|
Adjust: Interest income
|
|
|
47
|
|
|
|
56
|
|
Interest expense
|
|
|
(148
|
)
|
|
|
(151
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
(44
|
)
|
|
|
(147
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
401
|
|
|
|
341
|
|
Communication Solutions
|
|
|
186
|
|
|
|
186
|
|
Other Operating Segments
|
|
|
22
|
|
|
|
15
|
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. GAAP
|
|
|
609
|
|
|
|
542
|
|
|
|
|
|
|
|
|
|
|
IFRS reconciliation differences
|
|
|
23
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
Total IFRS
|
|
|
632
|
|
|
|
571
|
|
|
|
|
|
|
|
|
|
|
F-71
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Income from investments accounted for using the equity method in
the amount of 0 and 4 million was realized in
the Automotive, Industrial and Multimarket segment during the
years ended September 30, 2007 and 2008, respectively. None
of the remaining reportable segments had income from investments
accounted for using the equity method during any of the periods
presented.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
307
|
|
|
|
335
|
|
Communication Solutions
|
|
|
128
|
|
|
|
166
|
|
Other Operating Segments
|
|
|
|
|
|
|
|
|
Corporate and Eliminations
|
|
|
163
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
598
|
|
|
|
663
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. GAAP
|
|
|
1,217
|
|
|
|
663
|
|
|
|
|
|
|
|
|
|
|
IFRS reconciliation differences
|
|
|
(11
|
)
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total IFRS
|
|
|
1,206
|
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2007 and 2008, all inventories were
attributed to the respective operating segment, since they were
under the direct control and responsibility of the respective
operating segment managers.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
13
|
|
Communication Solutions
|
|
|
52
|
|
|
|
211
|
|
Other Operating Segments
|
|
|
|
|
|
|
|
|
Corporate and Eliminations
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
53
|
|
|
|
225
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. GAAP
|
|
|
117
|
|
|
|
225
|
|
|
|
|
|
|
|
|
|
|
IFRS reconciliation differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IFRS
|
|
|
117
|
|
|
|
225
|
|
|
|
|
|
|
|
|
|
|
F-72
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Consistent with the Companys internal management
reporting, certain items are included in Corporate and
Eliminations and not allocated to the logic segments. 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 logic 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. The Company allocates excess
capacity costs based on a foundry model, whereby such
allocations are reduced based upon the lead time of order
cancellation or modification. Any unabsorbed excess capacity
costs are included in Corporate and Eliminations. Significant
components of Corporate and Eliminations EBIT for the
years ended September 30, 2007 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Corporate and Eliminations:
|
|
|
|
|
|
|
|
|
Unabsorbed excess capacity costs
|
|
|
(7
|
)
|
|
|
(21
|
)
|
Restructuring charges (note 10)
|
|
|
(45
|
)
|
|
|
(188
|
)
|
Share-based compensation expense (note 34)
|
|
|
(12
|
)
|
|
|
(5
|
)
|
Impairment charges
|
|
|
|
|
|
|
(59
|
)
|
Other, net
|
|
|
(13
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(77
|
)
|
|
|
(287
|
)
|
|
|
|
|
|
|
|
|
|
The following is a summary of net sales and of non-current
assets by geographic area for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Germany
|
|
|
907
|
|
|
|
924
|
|
Other Europe
|
|
|
888
|
|
|
|
818
|
|
North America
|
|
|
564
|
|
|
|
503
|
|
Asia/Pacific
|
|
|
1,450
|
|
|
|
1,800
|
|
Japan
|
|
|
213
|
|
|
|
198
|
|
Other
|
|
|
52
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,074
|
|
|
|
4,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
( in millions)
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
Germany
|
|
|
458
|
|
|
|
754
|
|
Other Europe
|
|
|
449
|
|
|
|
322
|
|
North America
|
|
|
8
|
|
|
|
35
|
|
Asia/Pacific
|
|
|
633
|
|
|
|
560
|
|
Japan
|
|
|
3
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Infineon
|
|
|
1,551
|
|
|
|
1,673
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
2,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. GAAP
|
|
|
3,880
|
|
|
|
1,673
|
|
|
|
|
|
|
|
|
|
|
IFRS reconciliation differences
|
|
|
99
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
Total IFRS
|
|
|
3,979
|
|
|
|
1,753
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers are based on the
customers billing location. Regional employment data is
provided in note 9.
No single customer accounted for more than 10 percent of
the Companys sales during the fiscal years ended
September 30, 2007 or 2008.
F-73
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The Company defines EBIT as earnings (loss) before income (loss)
from discontinued operations, interest and taxes. The
Companys management uses EBIT, among other measures, to
establish budgets and operational goals, to manage the
Companys business and to evaluate its performance. The
Company reports 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.
|
|
42.
|
Events after the
Balance Sheet Date
|
Various
Matters
Subsequent to September 30, 2008, the Company repurchased
notional amounts of 95 million and
22 million of its exchangeable subordinated notes due
2010 and its convertible subordinated notes due 2010,
respectively. The repurchases were made out of available cash.
Effective October 1, 2008, the Company is organized into
the following five operating segments: Automotive, Chip
Card & Security, Industrial & Multimarket,
Wireline Communications and Wireless Solutions.
On October 3, 2008, approximately 95 California schools,
political subdivisions and public agencies that were previously
putative class members of the multistate attorney general
complaint described in note 40 filed suit in California
Superior Court against the Company, IF North America, and
several other DRAM manufacturers alleging DRAM price-fixing and
artificial price inflation in violation of California state
antitrust and consumer protection laws arising out of the
alleged practices described in note 40. The plaintiffs seek
recovery of actual and treble damages in unspecified amounts,
restitution, costs (including attorneys fees) and
injunctive and other equitable relief. The Company and Infineon
Technologies North America have agreed to accept service of
process as of November 19, 2008 in exchange for an extended
period of time to respond to the complaint. The current response
date is February 12, 2009.
On October 7, 2008 the Company and Third Dimension
Semiconductor Inc. signed a Settlement and License Agreement and
on October 21, 2008 filed a joint motion to dismiss the
patent infringement case brought against the Company.
On October 13, 2008, Qimonda announced that it had entered
into a share purchase agreement to sell its 35.6 percent
stake in Inotera Memories, Inc, to Micron Technology, Inc, for
cash proceeds of $400 million. The sale of the Inotera
stake occurred in two equal tranches, on October 20, 2008
and November 26, 2008.
In the litigation led by LSI (see note 40), the court in
the Eastern District of Texas stayed the case on June 20,
2998 while the ITC Case is pending. On October 17, 2008,
Qimonda became a party to the ITC Case.
On October 21, 2008, the Company learned that the European
Commission had commenced an investigation involving the
Companys Chip Card & Security Division for
alleged violations of antitrust laws. The investigation is in
its very early stages, and the Company is assessing the facts
and monitoring the situation carefully.
On October 30, 2008, the district court in the MDL
proceedings entered an order staying the indirect purchaser
proceedings in the Northern District of California during the
period that the Ninth Circuit Court of Appeals considers the
appeal on the decision of the district court to dismiss certain
claims of the plaintiffs.
On November 12, 2008, Volterra Semiconductor Corporation
filed suit against Primarion, Inc., Infineon Technologies North
America Corporation and Infineon Technologies AG in the United
States District Court for the Northern District of California
for alleged infringement of five U.S. patents by certain
products offered by Primarion.
F-74
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
On November 25, 2008, Infineon Technologies AG, Infineon
Technologies Austria AG and Infineon Technologies North America
Corp. have filed suit in the United States District Court for
the District of Delaware against Fairchild Semiconductor
International, Inc. and Fairchild Semiconductor Corporation
(collectively Fairchild) regarding (1) a
complaint for patent infringement by certain products of
Fairchild and (2) a complaint for declaratory judgment of
non-infringement and invalidity of certain patents of Fairchild
against the allegation of infringement of those patents by
certain products of Infineon. Fairchild has filed a counterclaim
in Delaware for a declaratory judgment on (1) infringement
by Infineon of those patents which are the subject of
Infineons complaint for declaratory judgment and
(2) non-infringement and invalidity of those patents which
are the subject of Infineons complaint for infringement.
Fairchild has further filed another patent infringement suit
against Infineon Technologies AG and Infineon Technologies North
America Corp. in the United States District Court for the
District of Maine alleging that certain products of Infineon
infringe on two other patents of Fairchild which are not part of
the Delaware lawsuit.
On December 5, 2008, the Company received a request for
information from the European Commission regarding DRAM turnover
data for its 2001 fiscal year.
Qimonda
On December 21, 2008, the Company, the German Free State of
Saxony, and Qimonda jointly announced a financing package for
Qimonda (see note 6).
Additional
Information to the IFRS consolidated financial
statements
Application of
Exception Regulations
Pursuant to HGB section 264a, partnerships, where unlimited
liability is not held by a natural person, or another
partnership with a natural person as the unlimited liability
partner, or any other relationships of these kinds, are required
to prepare financial statements similar to a limited liability
corporation.
For Infineon Technologies Dresden GmbH & Co. OHG,
effective December 15, 2008, reorganized into Infineon
Technologies Dresden GmbH, Dresden, the Company intends to
utilize the exception pursuant to HGB Section 264b,
exempting these partnerships from the requirement to prepare and
disclose separate financial statements, because they are
included in the consolidated financial statements of the holding
company and such consolidated financial statements are
registered with the trade register of the particular partnership.
Pursuant to HGB section 264 paragraph 3, the Company
also intends to utilize the exception from preparing and
disclosing separate financial statements due to a
profit-or-loss-transfer
agreement between Infineon Technologies AG and the following
companies:
|
|
|
|
|
COMNEON GmbH, Nuremberg,
|
|
|
|
Infineon Technologies Finance GmbH, Munich, and
|
|
|
|
Infineon Technologies Wireless Solutions GmbH, Neubiberg.
|
Pursuant to HGB Section 291 paragraph 1, the Company
also intends to utilize the exception from preparing separate
consolidated financial statements of Qimonda AG, Munich, due to
the fact that it is a subsidiary of an entity which prepares
separate financial statements.
Information
pursuant to Section 160 Section 1 No. 2 Corporate
Act (AktG)
The Company did not make use of the authorization to repurchase
and use its own shares, as granted by the general
shareholders meeting on February 14, 2008, and the
Company did not repurchase any of its own shares in the 2008
fiscal year. As of September 30, 2008, the Company did not
hold any of its own shares.
Information
pursuant to Section 160 Section 1 No. 8 Corporate
Act (AktG)
The German Securities Trading Act
(Wertpapierhandelsgesetz, WpHG) requires each
shareholder whose voting rights reaches, exceeds or, after
exceeding, falls below the 3, 5, 10, 15, 20, 25, 30, 50 or
75 percent thresholds of a listed corporation to notify
such corporation and the German Federal
F-75
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Supervisory Authority for Financial Services (Bundesanstalt
für Finanzdienstleistungaufsicht) immediately, but no
later than four trading days after such shareholder has reached,
exceeded or fallen below such a threshold. The Company has been
notified of the changes in voting rights set forth below. The
number of shares stated below is taken from the most recent
shareholder notification and may therefore be outdated.
|
|
|
|
|
On June 8, 2006, the Capital Group Companies, Inc., Los
Angeles, USA has informed the Company according to WpHG
Section 21, paragraph 1 and Section 22 that via
shares its voting rights on Infineon Technologies AG, Neubiberg,
Germany have fallen below the threshold of 5 percent on
June 7, 2006 and amount on that date to 4.949 percent
(corresponding to 36,995,392 voting rights). All of these voting
rights are to be attributed according to WpHG Section 22,
paragraph 1, sentence 1, No. 6 and sentences 2 and 3.
|
|
|
|
On June 14, 2006, Capital Group International, Inc., Los
Angeles, USA has informed the Company according to WpHG
Section 21, paragraph 1 and Section 22 that via
shares its voting rights on Infineon Technologies AG, Neubiberg,
Germany have fallen below the threshold of 5 percent on
June 7, 2006 and amount on that date to 4.949 percent
(corresponding to 36,995,392 voting rights). All of these voting
rights are to be attributed according to WpHG Section 22,
paragraph 1, sentence 1, No. 6 and sentences 2 and 3.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has informed the Company according to WpHG
Section 21, paragraph 1 and Section 23 that on
February 7, 2008 its voting rights in Infineon Technologies
AG, Neubiberg, Germany have exceeded the thresholds of
3 percent and 5 percent and now amount to
5.25 percent (corresponding to 39,347,562 voting rights).
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7,
2008 the voting rights of ML UK Capital Holdings, London, United
Kingdom, in Infineon Technologies AG, Neubiberg, Germany, have
exceeded the thresholds of 3 percent and 5 percent and
now amount to 5.25 percent (corresponding to 39,347,562
voting rights). All of these voting rights were attributed to ML
UK Capital Holdings in accordance with WpHG Section 22,
paragraph 1, sentence 1, No. 1. The chain of
controlled undertakings through which the voting rights are held
is: Merrill Lynch International, which is controlled by ML UK
Capital Holdings.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG section 21 paragraph 1 WpHG that, on
February 7, 2008 the voting rights of Merrill Lynch
Holdings Limited, London, United Kingdom, in Infineon
Technologies AG, Neubiberg, Germany, have exceeded the
thresholds of 3 percent and 5 percent and now amount
to 5.25 percent (corresponding to 39,347,562 voting
rights). All of these voting rights were attributed to Merrill
Lynch Holdings Limited in accordance with WpHG Section 22,
paragraph 1, sentence 1, No. 1. The chain of
controlled undertakings through which the voting rights are held
is: Merrill Lynch International, which is controlled by ML UK
Capital Holdings, which is controlled by Merrill Lynch Holdings
Limited.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7,
2008 the voting rights of Merrill Lynch Europe Intermediate
Holdings, London, United Kingdom, in Infineon Technologies AG,
Neubiberg, Germany, have exceeded the thresholds of
3 percent and 5 percent and now amount to
5.25 percent (corresponding to 39,347,562 voting rights).
All of these voting rights were attributed to Merrill Lynch
Europe Intermediate Holdings in accordance with WpHG
Section 22, paragraph 1, sentence 1, No. 1. The
chain of controlled undertakings through with the voting rights
are held is: Merrill Lynch International, which is controlled by
ML UK Capital Holdings, which is controlled by Merrill Lynch
Holdings Limited, which is controlled by Merrill Lynch Europe
Intermediate Holdings.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7,
2008 the voting rights of Merrill Lynch Europe PLC, London,
England, in Infineon Technologies AG, Neubiberg,
|
F-76
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch Europe PLC in accordance
with WpHG Section 22, paragraph 1, sentence 1,
No. 1. The chain of controlled undertakings through which
the voting rights are held is: Merrill Lynch International,
which is controlled by ML UK Capital Holdings, which is
controlled by Merrill Lynch Holdings Limited, which is
controlled by Merrill Lynch Europe Intermediate Holdings, which
is controlled by Merrill Lynch Europe PLC.
|
|
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7,
2008 the voting rights of Merrill Lynch International Holdings
Inc., Wilmington, USA, in Infineon Technologies AG, Neubiberg,
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch International Holdings
Inc. in accordance with WpHG Section 22, paragraph 1,
sentence 1 No. 1. The chain of controlled undertakings
through with the voting rights are held is: Merrill Lynch
International, which is controlled by ML UK Capital Holdings,
which is controlled by Merrill Lynch Holdings Limited, which is
controlled by Merrill Lynch Europe Intermediate Holdings, which
is controlled by Merrill Lynch Europe PLC, which is controlled
by Merrill Lynch International Holdings Inc.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7,
2008 the voting rights of Merrill Lynch International Inc.,
Wilmington, USA, in Infineon Technologies AG, Neubiberg,
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch International Inc. in
accordance with WpHG Section 22, paragraph 1, sentence
1, No. 1. The chain of controlled undertakings through with
the voting rights are held is: Merrill Lynch International,
which is controlled by ML UK Capital Holdings, which is
controlled by Merrill Lynch Holdings Limited, which is
controlled by Merrill Lynch Europe Intermediate Holdings, which
is controlled by Merrill Lynch Europe PLC, which is controlled
by Merrill Lynch International Holdings Inc., which is
controlled by Merrill Lynch International Inc.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7,
2008 the voting rights of Merrill Lynch & Co Inc.,
Wilmington, USA, in Infineon Technologies AG, Neubiberg,
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch & Co Inc. in
accordance with WpHG Section 22, paragraph 1, sentence
1, No. 1. The chain of controlled undertakings through with
the voting rights are held is: Merrill Lynch International,
which is controlled by ML UK Capital Holdings, which is
controlled by Merrill Lynch Holdings Limited, which is
controlled by Merrill Lynch Europe Intermediate Holdings, which
is controlled by Merrill Lynch Europe PLC, which is controlled
by Merrill Lynch International Holdings Inc., which is
controlled by Merrill Lynch International Inc, which is
controlled by Merrill Lynch & Co Inc.
|
|
|
|
On March 5, 2008, Brandes Investment Partners L.P.
San Diego, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that, via shares its voting
rights on Infineon Technologies AG, Neubiberg, Deutschland, have
exceeded the threshold of 3 percent on February 12,
2008 and now amount to 3.08 percent (this corresponds to
23,073,601 voting rights). According to WpHG Section 22,
paragraph 1, sentence 1, No. 6, 3.08 percent of
the voting rights is to be attributed to the company.
|
|
|
|
On March 11, 2008, Dodge & Cox,
San Francisco, USA, has informed the Company according to
WpHG Section 21, paragraph 1 that, via shares the
voting rights of Dodge & Cox International Stock Fund,
San Francisco, USA, on Infineon Technologies AG, Neubiberg,
Deutschland, have exceeded the threshold of 10 percent on
March 7, 2008 and now amount to 10.03 percent (this
corresponds to 75,227,800 voting rights).
|
|
|
|
On March 11, 2008, Dodge & Cox,
San Francisco, USA, has informed the Company according to
WpHG Section 21, paragraph 1 that via shares its
voting rights on Infineon Technologies AG,
|
F-77
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
Neubiberg, Germany, have exceeded the threshold of
10 percent on March 7, 2008 and now amount to
10.03 percent (this corresponds to 75,227,800 voting
rights). According to WpHG Section 22, paragraph 1,
sentence 1, No. 6, 10.03 percent of the voting rights
(this corresponds to 75,227,800 voting rights) is to be
attributed to the company from Dodge & Cox
International Stock Fund, which holds directly more than
10 percent on Infineon Technologies AG (10.03 percent).
|
|
|
|
|
|
On December 2, 2008, Templeton Investment Counsel, LLC,
Fort Lauderdale, Florida, USA, has informed the Company
according to WpHG Section 21, paragraph 1 that via
shares its voting rights on Infineon Technologies AG, Neubiberg,
Germany, have fallen below the 5 percent limit on
December 1, 2008 and amounted to 4.89 percent
(corresponding to 36,691,854 Voting Rights). According to WpHG
Section 22, paragraph 1, sentence 1, No. 6,
4.89 percent of the voting rights (corresponding to
36,691,854 Voting Rights) are to be attributed to the company.
|
|
|
|
On December 12, 2008, AllianceBernstein L.P., New York,
USA, has informed the Company according to WpHG Section 21,
paragraph 1 that on December 9, 2008 its voting rights
on Infineon Technologies AG, Neubiberg, Germany, have fallen
below the threshold of 3 percent and amounted to
2.63 percent (corresponding to 19,686,346 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6.
|
|
|
|
On December 12, 2008, AllianceBernstein Corporation, New
York, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that on December 9, 2008,
its voting rights on Infineon Technologies AG, Neubiberg,
Germany, have fallen below the threshold of 3 percent and
amounted to 2.63 percent (corresponding to 19,686,346
voting rights). All of these voting rights are to be attributed
according to WpHG Section 22, paragraph 1, sentence 1,
No. 6 and sentence 2.
|
|
|
|
On December 12, 2008, Equitable Holdings LLC, New York,
USA, has informed the Company according to WpHG Section 21,
paragraph 1 that on December 9, 2008, its voting
rights on Infineon Technologies AG, Neubiberg, Germany, have
fallen below the threshold of 3 percent and amounted to
2.63 percent (corresponding to 19,686,346 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6 and
sentence 2.
|
|
|
|
On December 12, 2008, AXA Equitable Life Insurance Company,
New York, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that on December 9, 2008,
its voting rights on Infineon Technologies AG, Neubiberg,
Germany, have fallen below the threshold of 3 percent and
amounted to 2.63 percent (corresponding to 19,686,346
voting rights). All of these voting rights are to be attributed
according to WpHG Section 22, paragraph 1, sentence 1,
No. 6 and sentence 2.
|
|
|
|
On December 12, 2008, AXA Equitable Financial Services,
LLC, New York, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that on December 9, 2008,
its voting rights on Infineon Technologies AG, Neubiberg,
Germany, have fallen below the threshold of 3 percent and
amounted to 2.63 percent (corresponding to 19,686,346
voting rights). All of these voting rights are to be attributed
according to WpHG Section 22, paragraph 1, sentence 1,
No. 6 and sentence 2.
|
|
|
|
On December 12, 2008, AXA Financial, Inc., New York, USA,
has informed the Company according to WpHG Section 21,
paragraph 1 that on December 9, 2008, its voting
rights on Infineon Technologies AG, Neubiberg, Germany, have
fallen below the threshold of 3 percent and amounted to
2.63 percent (corresponding to 19,686,346 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6
and sentence 2.
|
|
|
|
On December 12, 2008, AXA S.A., Paris, France, has informed
the Company according to WpHG Section 21, paragraph 1
that on December 9, 2008, its voting rights on Infineon
Technologies AG, Neubiberg, Germany, have fallen below the
thresholds of 3 percent and 5 percent and amounted to
2.68 percent (corresponding to 20,078,742 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6
and sentence 2.
|
|
|
|
On December 17, 2008, Templeton Global Advisors Limited,
Nassau, Bahamas, has informed the Company according to WpHG
Section 21, paragraph 1 that via shares its voting
rights on Infineon Technologies AG, Neubiberg, Germany, have
fallen below the 3 percent threshold on December 15,
2008 and amounted to 2.86 percent (corresponding to
21,412,923 Voting Rights). According to
|
F-78
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
WpHG Section 22, paragraph 1, sentence 1, No. 6,
2.86 percent of the voting rights (corresponding to
21,412,923 voting rights) is to be attributed.
|
Information
pursuant to Section 161 German Corporate Act
(AktG)
The compliance declaration prescribed by Section 161 AktG
was executed by the Management Board and the Supervisory Board
and made available to the shareholders on a continuous basis via
the internet.
Accounting
fees pursuant section 314 paragraph 1 No. 9
HGB
Year-end Audit
Fees
In the 2008 fiscal year, the audit fees charged by KPMG AG
Wirtschaftsprüfungsgesellschaft previously known as KPMG
Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft (KPMG), the
Companys independent auditors, amounted to
4.6 million (thereof 2.8 million charged
by the auditor engaged to audit the consolidated financial
statements) in connection with professional services rendered
for the annual audit of the Companys consolidated
financial statements, including the audit of internal control
over financial reporting as required for the 2008 fiscal year,
as well as services normally provided by them in connection with
statutory and regulatory filings or other compliance engagements.
Other Audit
Fees
In addition to the amounts described above, KPMG charged the
Company an aggregate of 1.0 million (thereof
0.6 million charged by the auditor engaged to audit
the consolidated financial statements) in the 2008 fiscal year
for other audit services. These services consisted mainly for
the quarterly reviews.
Tax
Fees
In addition to the amounts described above, KPMG charged the
Company an aggregate of 0 (thereof 0 charged by the
auditor engaged to audit the consolidated financial statements)
in the 2008 fiscal year for professional services related
primarily to tax compliance.
Other
Fees
Fees of 0.9 million (of which 0.7 million
related to the audit of the consolidated financial statements)
were charged by KPMG in the 2008 fiscal year for other services.
These services consisted of transaction and accounting advisory
services, and IT system audits.
Management
Board and Supervisory Board
Management
Compensation in Fiscal Year 2008
Regarding the required information on the individual
remuneration of the members of our Supervisory or Management
Boards pursuant to HGB Section 314 par. 1 No. 6
subsection a, sentence 5 to 9, reference is made to the
Compensation Report which is part of the Operating and Financial
Review.
F-79
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Management
Board
The current members of our Management Board, their positions and
their ages are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memberships of Supervisory Boards
|
|
|
|
|
|
|
|
|
and comparable governing bodies of
|
|
|
|
|
Term
|
|
|
|
domestic and foreign companies during
|
Name
|
|
Age
|
|
expires
|
|
Position
|
|
the fiscal year ended September 30, 2008
|
|
Peter Bauer
|
|
|
48
|
|
|
September 30,
2011
|
|
Spokesman of the Management
Board,
Chief Executive Officer
(since June 1, 2008)
|
|
Member of the Board of Directors of: Infineon Technologies China
Co., Ltd.,
Shanghai, Peoples Republic of China
(since June 1, 2008)
Infineon Technologies Asia Pacific Pte.,
Ltd.,
Singapore (since June 1, 2008)
Infineon Technologies North
America Corp.,
Wilmington, Delaware, USA
(since June 1, 2008)
Infineon Technologies Japan K.K.,
Tokyo,
Japan (since June 12, 2008)
|
Prof. Dr. Hermann Eul
|
|
|
49
|
|
|
August 31,
2012
|
|
Member of the Management
Board and
Executive Vice President
|
|
Member of the Supervisory Board of:
7Layers AG, Ratingen
|
Dr. Reinhard Ploss
|
|
|
52
|
|
|
May 31,
2012
|
|
Member of the Management
Board and
Executive Vice President
|
|
chairman of the Supervisory Board
of:
Infineon Technologies Austria AG,
Villach,
Austria
Member of the Board of Directors of:
Infineon Technologies (Kulim) Sdn.
Bhd.,
Kulim, Malaysia
Member of the Supervisory Board of:
Qimonda AG, Munich
(since August 19, 2008)
|
Dr. Marco Schröter (since April 1, 2008)
|
|
|
45
|
|
|
March 31,
2013
|
|
Member of the Management
Board, Executive Vice President and
Chief
Financial Officer
|
|
Member of the Supervisory Board of:
Infineon Technologies Austria AG,
Villach,
Austria (since May 5, 2008)
Member of the Board of Directors of
(each since April 1, 2008):
Infineon Technologies Asia Pacific
Pte., Ltd.,
Singapore
Infineon Technologies China Co.,
Ltd.,
Shanghai, Peoples Republic of China
Infineon Technologies North
America Corp.,
Wilmington, Delaware, USA
|
F-80
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memberships of Supervisory Boards
|
|
|
|
|
|
|
|
|
and comparable governing bodies of
|
|
|
|
|
Term
|
|
|
|
domestic and foreign companies during
|
Name
|
|
Age
|
|
expires
|
|
Position
|
|
the fiscal year ended September 30, 2008
|
|
Resigned Members of the Management Board
|
|
|
|
|
|
|
|
|
|
|
Dr. Wolfgang Ziebart (resigned as of May 31,
2008)
|
|
|
58
|
|
|
|
|
chairman of the Management
Board
President and Chief
Executive Officer
|
|
Member of the Board of Directors of
(each until May 31, 2008):
Infineon Technologies China Co.,
Ltd.,
Shanghai, Peoples Republic of China
Infineon Technologies Asia Pacific
Pte.,
Ltd.,
Singapore
Infineon Technologies Japan K.K.,
Tokyo, Japan
Infineon Technologies North
America Corp.,
Wilmington, Delaware, USA
|
Peter J. Fischl
(retired as of March 31, 2008)
|
|
|
62
|
|
|
|
|
Member of the
Management Board
Executive Vice President and
Chief Financial Officer
|
|
chairman of the Supervisory Board
of:
Qimonda AG, Munich
Infineon Technologies Austria AG,
Villach,
Austria (since December 5, 2007
until
March 31, 2008)
Member of the Board of Directors of
(each until March 31, 2008):
Infineon Technologies Asia Pacific
Pte., Ltd.,
Singapore
Infineon Technologies China Co.,
Ltd.,
Shanghai, Peoples Republic of China
Infineon Technologies North
America Corp.,
Wilmington, Delaware, USA
|
Supervisory Board
Members
The current members of our Supervisory Board, the Supervisory
Board position held by them, their occupation, their principal
external positions and their ages are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Membership of other Supervisory
|
|
|
|
|
|
|
|
|
Boards and comparable governing
|
|
|
|
|
|
|
|
|
bodies of domestic and foreign
|
|
|
|
|
Term
|
|
|
|
companies during the fiscal year
|
Name
|
|
Age
|
|
expires
|
|
Occupation
|
|
ended September 30, 2008
|
|
Max Dietrich Kley
chairman
|
|
|
68
|
|
|
|
2010
|
|
|
Lawyer
|
|
chairman of the Supervisory Board of:
SGL Carbon AG, Wiesbaden
Member of the Supervisory Board of:
BASF SE, Ludwigshafen
HeidelbergCement AG, Heidelberg
Schott AG, Mainz
Member of the Board of Directors of:
UniCredit S.p.A., Milan, Italy
|
Gerd
Schmidt(1)
Deputy chairman
|
|
|
54
|
|
|
|
2009
|
|
|
chairman of the Infineon
Central Works Council
chairman of the Infineon
Works Council, Regensburg
|
|
|
Wigand
Cramer(1)
|
|
|
55
|
|
|
|
2009
|
|
|
Labor union clerk IG Metall, Berlin
|
|
|
Alfred
Eibl(1)
|
|
|
59
|
|
|
|
2009
|
|
|
chairman of the Infineon Works
Council,
Munich-Campeon
|
|
|
F-81
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Membership of other Supervisory
|
|
|
|
|
|
|
|
|
Boards and comparable governing
|
|
|
|
|
|
|
|
|
bodies of domestic and foreign
|
|
|
|
|
Term
|
|
|
|
companies during the fiscal year
|
Name
|
|
Age
|
|
expires
|
|
Occupation
|
|
ended September 30, 2008
|
|
Prof. Johannes Feldmayer
|
|
|
51
|
|
|
|
2010
|
|
|
Management Consultant
|
|
|
Jakob
Hauser(1)
|
|
|
56
|
|
|
|
2009
|
|
|
chairman of the Works Council,
Qimonda
AG, Munich
|
|
|
Gerhard
Hobbach(1)
|
|
|
46
|
|
|
|
2009
|
|
|
Deputy chairman of the Infineon Works
Council, Munich-Campeon
|
|
|
Prof. Dr. Renate Köcher
|
|
|
56
|
|
|
|
2010
|
|
|
Managing Director of
Institut für Demoskopie
Allensbach GmbH,
Allensbach
|
|
Member of the Supervisory Board of:
Allianz SE, Munich
BASF SE, Ludwigshafen
(until January 14, 2008)
MAN AG, Munich
BMW AG, Munich (since May 8, 2008)
|
Dr. Siegfried Luther
|
|
|
64
|
|
|
|
2010
|
|
|
Managing Director of
Reinhard Mohn
Verwaltungs GmbH,
Gütersloh
|
|
Member of the Supervisory Board of:
WestLB AG, Duesseldorf/Muenster
Wintershall Holding AG, Kassel
EVONIK Industries AG, Essen
(since December 3, 2007)
chairman of the Board of
Administration
of:
RTL Group S.A., Luxembourg
Member of the Board of Administration
of:
Compagnie Nationale à Portefeuille
S.A.,
Loverval, Belgium
|
Michael
Ruth(1)
Representative of Senior
Management
|
|
|
48
|
|
|
|
2009
|
|
|
Corporate Vice President
Reporting and Planning, Infineon
Technologies AG
|
|
|
Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel
|
|
|
55
|
|
|
|
2010
|
|
|
Professor at the Munich Technical
University, Munich
|
|
|
Kerstin
Schulzendorf(1)
|
|
|
46
|
|
|
|
2009
|
|
|
Member of the Works Council,
Infineon Dresden
|
|
|
Dr. Eckart Sünner
|
|
|
64
|
|
|
|
2010
|
|
|
President Legal, Taxes & Insurance BASF
SE, Ludwigshafen (until December 31, 2007)
President, Chief Compliance
Officer BASF
SE, Ludwigshafen (since January 1, 2008)
|
|
Member of the Supervisory Board of:
K+S AG, Kassel
|
Alexander
Trüby(1)
|
|
|
38
|
|
|
|
2009
|
|
|
Member of the Works Council
Infineon Dresden
|
|
|
Prof. Dr. rer. nat. Martin
Winterkorn
|
|
|
61
|
|
|
|
2010
|
|
|
chairman of the Management Board Volkswagen AG, Wolfsburg
|
|
chairman of the Supervisory Board of:
Audi AG, Ingolstadt
Member of the Supervisory Board
of:
Salzgitter AG, Salzgitter
FC Bayern München AG, Munich
TÜV Süddeutschland Holding AG,
Munich
Member of the Board of Administration
of:
SEAT S.A., Barcelona, Spain
chairman of the Board of Directors of:
Scania AB, Södertälje, Sweden
(since May 3, 2007)
|
F-82
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Membership of other Supervisory
|
|
|
|
|
|
|
|
|
Boards and comparable governing
|
|
|
|
|
|
|
|
|
bodies of domestic and foreign
|
|
|
|
|
Term
|
|
|
|
companies during the fiscal year
|
Name
|
|
Age
|
|
expires
|
|
Occupation
|
|
ended September 30, 2008
|
|
Prof. Dr.-Ing. Dr.-Ing.
E.h. Klaus
Wucherer
|
|
|
64
|
|
|
|
2010
|
|
|
Member of the Corporate Executive
Committee (until December 31, 2007)
Management Consultant (since January 1, 2008)
Siemens AG, Munich
|
|
Member of the Supervisory Board of:
Deutsche Messe AG,
Hanover BSH Bosch und
Siemens Hausgeräte GmbH, Munich
(until April 30, 2008)
Leoni AG, Nuremberg
SAP AG, Walldorf
chairman of the Board of
Administration
of:
Siemens Ltd., Beijing,
Peoples Republic
of
China (until May 19, 2008)
Siemens S.A., Lisbon, Portugal
(until April 28, 2008)
Siemens Ltd., Mumbai, India
(until March 31, 2008)
Siemens Ltd., Seoul, Korea
(since May 1, 2007)
|
|
|
|
(1) |
|
Employee representative.
|
The Supervisory Board maintains the following principal
committees:
|
|
|
Committee
|
|
Members
|
|
Executive Committee
|
|
Max Dietrich Kley
Gerd Schmidt
Prof. Dr. rer. nat. Martin Winterkorn
|
Investment, Finance and Audit Committee
|
|
Max Dietrich Kley
Dr. Siegfried Luther
Gerd Schmidt
|
Mediation Committee
|
|
Max Dietrich Kley
Gerd Schmidt
Alexander Trüby
Prof. Dr. rer. nat. Martin Winterkorn
|
Nomination Committee
|
|
Max Dietrich Kley
Prof. Johannes Feldmayer
Prof. Dr. Renate Köcher
Dr. Siegfried Luther
Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel
Dr. Eckart Sünner
Prof. Dr. rer. nat. Martin Winterkorn
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus
Wucherer
|
Strategy and Technology Committee
|
|
Alfred Eibl
Jakob Hauser
Alexander Trüby
Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel
Prof. Dr. rer. nat. Martin Winterkorn
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus
Wucherer
|
Qimonda Committee
|
|
Alfred Eibl
Prof. Johannes Feldmayer
Dr. Siegfried Luther
Gerd Schmidt
|
The members of our Supervisory Board, individually or in the
aggregate, do not own, directly or indirectly, more than
1 percent of our companys outstanding share capital.
F-83
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
The business address of each of the members of our Supervisory
Board is Infineon Technologies AG, Am Campeon 1-12, D-85579
Neubiberg, Germany.
Significant
Subsidiaries and Associated Companies
|
|
|
|
|
Name and location of company
|
|
Share in capital
|
|
|
Infineon Group:
|
|
|
|
|
Infineon Technologies Asia Pacific Pte. Ltd., Singapore
|
|
|
100
|
%
|
Infineon Technologies Austria AG, Villach, Austria
|
|
|
100
|
%
|
Infineon Technologies China Co. Ltd., Shanghai, China
|
|
|
100
|
%
|
Infineon Technologies Dresden GmbH & Co. OHG, Dresden,
Germany(1)
|
|
|
100
|
%
|
Infineon Technologies Finance GmbH, Neubiberg, Germany
|
|
|
100
|
%
|
Infineon Technologies France S.A.S., Saint Denis, France
|
|
|
100
|
%
|
Infineon Technologies Holding B.V., Rotterdam, The Netherlands
|
|
|
100
|
%
|
Infineon Technologies Investment B.V., Rotterdam, The Netherlands
|
|
|
100
|
%
|
Infineon Technologies Japan K.K., Tokyo, Japan
|
|
|
100
|
%
|
Infineon Technologies North America Corp., Wilmington, Delaware,
USA
|
|
|
100
|
%
|
Infineon Technologies SensoNor AS, Horten, Norway
|
|
|
100
|
%
|
Infineon Technologies (Advanced Logic) Sdn. Bhd., Malacca,
Malaysia
|
|
|
100
|
%
|
Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
|
|
|
100
|
%
|
Infineon Technologies (Malaysia) Sdn. Bhd., Malacca, Malaysia
|
|
|
100
|
%
|
Infineon Technologies Wireless Solution GmbH, Neubiberg, Germany
|
|
|
100
|
%
|
Primarion Inc., Torrance, California, USA
|
|
|
100
|
%
|
Infineon Technologies Bipolar GmbH & Co. KG, Warstein,
Germany
|
|
|
60
|
%
|
ALTIS Semiconductor S.N.C., Essonnes, France
|
|
|
50
|
%
|
Qimonda
Group(2):
|
|
|
|
|
Qimonda AG, Munich, Germany
|
|
|
78
|
%
|
Qimonda Asia Pacific Pte. Ltd., Singapore
|
|
|
78
|
%
|
Qimonda Dresden GmbH & Co. OHG, Dresden, Germany
|
|
|
78
|
%
|
Qimonda Europe GmbH, Munich, Germany
|
|
|
78
|
%
|
Qimonda Holding B.V., Rotterdam, The Netherlands
|
|
|
78
|
%
|
Qimonda Investment B.V., Rotterdam, The Netherlands
|
|
|
78
|
%
|
Qimonda Japan K.K., Tokyo, Japan
|
|
|
78
|
%
|
Qimonda Malaysia Sdn. Bhd., Malacca, Malaysia
|
|
|
78
|
%
|
Qimonda Module (Suzhou) Co., Ltd., Suzhou, China
|
|
|
78
|
%
|
Qimonda North America Corp., Wilmington, Delaware, USA
|
|
|
78
|
%
|
Qimonda Portugal S.A., Vila do Conde, Portugal
|
|
|
78
|
%
|
Qimonda Richmond, LLC, Wilmington, Delaware, USA
|
|
|
78
|
%
|
Qimonda Technologies (Suzhou) Co., Ltd., Suzhou, China
|
|
|
49
|
%
|
Inotera Memories Inc., Taoyuan,
Taiwan(3)
|
|
|
28
|
%
|
|
|
(1)
|
Effective December 15, 2008, reorganized into Infineon
Technologies Dresden GmbH.
|
|
(2)
|
Ownership percentages are net of Qimondas minority
interest.
|
|
(3)
|
On October 13, 2008, Qimonda announced that they entered
into a share purchase agreement to sell its 35.6 percent
stake in Inotera Memories, Inc, to Micron Technology, Inc, for
cash proceeds of US$400 million. The sale of the Inotera
stake occurred in two equal tranches, on October 20, 2008
and November 26, 2008, respectively.
|
Neubiberg
December 22, 2008
Infineon Technologies AG
Management Board
F-84
Infineon
Technologies AG and Subsidiaries
Notes to
the Consolidated Financial Statements
Responsibility
Statement by the Management Board
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the group, and the
operating and financial review includes a fair review of the
development and performance of the business and the position of
the group, together with a description of the principal
opportunities and risks associated with the expected development
of the group.
|
|
|
Neubiberg,
December 22, 2008
|
|
|
|
|
|
Peter Bauer
|
|
Prof. Dr. Hermann Eul
|
Dr. Reinhard Ploss
|
|
Dr. Marco Schröter
|
F-85
The following auditors report, prepared in accordance with
§ 322 HGB [Handelgesetzbuch: German
Commercial Code], refers to the complete consolidated
financial statements, comprising the balance sheet, the
statement of operations, income and expense recognized in equity
and cash flows and the notes to the consolidated financial
statements, together with the group management report for the
business year from October 1, 2007 to September 30,
2008. The group management report is not included in this
prospectus.
INDEPENDENT
AUDITORS REPORT
We have audited the consolidated financial statements prepared
by Infineon Technologies AG, Neubiberg, comprising the balance
sheet, the statements of operations, income and expense
recognized in equity and cash flows and the notes to the
consolidated financial statements, together with the group
management report for the business year from October 1,
2007 to September 30, 2008. The preparation of the
consolidated financial statements and the group management
report in accordance with IFRSs as adopted by the EU, and the
additional requirements of German commercial law pursuant to
§ 315a Abs. 1 HGB (Handelsgesetzbuch German
Commercial Code) are the responsibility of the Managing
Board of the Company. Our responsibility is to express an
opinion on the consolidated financial statements and on the
group management report based on our audit.
We conducted our audit of the consolidated financial statements
in accordance with § 317 HGB and German generally
accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer (IDW).
Those standards require that we plan and perform the audit such
that misstatements materially affecting the presentation of the
net assets, financial position and results of operations in the
consolidated financial statements in accordance with the
applicable financial reporting framework and in the group
management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal
environment of the Group and expectations as to possible
misstatements are taken into account in the determination of
audit procedures. The effectiveness of the accounting-related
internal control system and the evidence supporting the
disclosures in the consolidated financial statements and the
group management report are examined primarily on a test basis
within the framework of the audit. The audit includes assessing
the annual financial statements of those entities included in
consolidation, the determination of entities to be included in
consolidation, the accounting and consolidation principles used
and significant estimates made by the Managing Board, as well as
evaluating the overall presentation of the consolidated
financial statements and the group management report. We believe
that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with IFRSs as adopted
by the EU, the additional requirements of German commercial law
pursuant to § 315a Abs. 1 HGB and give a true and fair
view of the net assets, financial position and results of
operations of the Group in accordance with these requirements.
The group management report is consistent with the consolidated
financial statements and as a whole provides a suitable view of
the Groups position and suitably presents the
opportunities and risks of future development.
Without qualifying our opinion, we refer to the Companys
description in the management report and group management report
(section risk report) with respect to the business development,
the financial position and the results of operations as well as
the outlook and risks related to the Companys subsidiary
Qimonda AG, Munich. There it is stated, that there can be no
assurance at this time that the operational and strategic
measures planned by Qimonda as well as the pledged financing to
be provided by the Free State of Saxony, a Portuguese financial
institution and Infineon Technologies AG will enable it to
continue to meet its financial obligations. At the time of the
preparation of the consolidated financial statements and group
management report of Infineon Technologies AG, the situation at
Qimonda AG can not be finally assessed due to ongoing
negotiations with potential investors.
Munich, December 23, 2008
KPMG AG
Wirtschaftsprüfungsgesellschaft
(formerly
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft)
Kozikowski Kempf
Wirtschaftsprüfer Wirtschaftsprüfer
F-86
AUDITED
CONSOLIDATED FINANCIAL STATEMENTS
(PREPARED IN ACCORDANCE WITH U.S. GAAP)
AS OF AND FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2007
INFINEON TECHNOLOGIES
AG,
NEUBIBERG
F-87
Infineon
Technologies AG and Subsidiaries
Consolidated Financial Statements
For the years ended September 30, 2005, 2006 and 2007
in millions, except as indicated & except
for share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third parties
|
|
|
|
|
|
|
5,843
|
|
|
|
7,546
|
|
|
|
7,625
|
|
|
|
10,842
|
|
Related parties
|
|
|
31
|
|
|
|
916
|
|
|
|
383
|
|
|
|
57
|
|
|
|
81
|
|
Total net sales
|
|
|
|
|
|
|
6,759
|
|
|
|
7,929
|
|
|
|
7,682
|
|
|
|
10,923
|
|
Cost of goods sold
|
|
|
8
|
|
|
|
4,909
|
|
|
|
5,854
|
|
|
|
6,092
|
|
|
|
8,662
|
|
|
|
Gross Profit
|
|
|
|
|
|
|
1,850
|
|
|
|
2,075
|
|
|
|
1,590
|
|
|
|
2,261
|
|
|
|
Research and development expenses
|
|
|
|
|
|
|
1,293
|
|
|
|
1,249
|
|
|
|
1,169
|
|
|
|
1,662
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
655
|
|
|
|
751
|
|
|
|
700
|
|
|
|
995
|
|
Restructuring charges
|
|
|
9
|
|
|
|
78
|
|
|
|
23
|
|
|
|
45
|
|
|
|
64
|
|
Other operating expense, net
|
|
|
8
|
|
|
|
92
|
|
|
|
108
|
|
|
|
46
|
|
|
|
66
|
|
|
|
Operating loss
|
|
|
|
|
|
|
(268
|
)
|
|
|
(56
|
)
|
|
|
(370
|
)
|
|
|
(526
|
)
|
|
|
Interest expense, net
|
|
|
|
|
|
|
(9
|
)
|
|
|
(92
|
)
|
|
|
(33
|
)
|
|
|
(46
|
)
|
|
|
Equity in earnings of associated companies, net
|
|
|
17
|
|
|
|
57
|
|
|
|
78
|
|
|
|
117
|
|
|
|
166
|
|
|
|
Gain on subsidiaries and associated company share issuance, net
|
|
|
17
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
Other non-operating income (expense), net
|
|
|
|
|
|
|
26
|
|
|
|
(33
|
)
|
|
|
13
|
|
|
|
18
|
|
Minority interests
|
|
|
26
|
|
|
|
2
|
|
|
|
(23
|
)
|
|
|
19
|
|
|
|
27
|
|
|
|
Loss before income taxes
|
|
|
|
|
|
|
(192
|
)
|
|
|
(107
|
)
|
|
|
(254
|
)
|
|
|
(361
|
)
|
|
|
Income tax expense
|
|
|
10
|
|
|
|
(120
|
)
|
|
|
(161
|
)
|
|
|
(79
|
)
|
|
|
(112
|
)
|
|
|
Loss before extraordinary loss
|
|
|
|
|
|
|
(312
|
)
|
|
|
(268
|
)
|
|
|
(333
|
)
|
|
|
(473
|
)
|
|
|
Extraordinary loss, net of tax
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
(35
|
)
|
|
|
(50
|
)
|
|
|
Net loss
|
|
|
|
|
|
|
(312
|
)
|
|
|
(268
|
)
|
|
|
(368
|
)
|
|
|
(523
|
)
|
|
|
Basic and diluted loss per share before extraordinary loss
|
|
|
|
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
(0.45
|
)
|
|
|
(0.64
|
)
|
|
|
Basic and diluted loss per share
|
|
|
11
|
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
(0.49
|
)
|
|
|
(0.70
|
)
|
|
|
See accompanying notes to the consolidated financial statements.
F-88
Infineon
Technologies AG and Subsidiaries
Consolidated Balance Sheets
September 30, 2006 and 2007
in millions, except as indicated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2006
|
|
|
2007
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
2,040
|
|
|
|
1,819
|
|
|
|
2,586
|
|
Marketable securities
|
|
|
12
|
|
|
|
615
|
|
|
|
475
|
|
|
|
675
|
|
Trade accounts receivable, net
|
|
|
13
|
|
|
|
1,245
|
|
|
|
894
|
|
|
|
1,271
|
|
Inventories
|
|
|
14
|
|
|
|
1,202
|
|
|
|
1,217
|
|
|
|
1,731
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
97
|
|
|
|
66
|
|
|
|
94
|
|
|
|
Other current assets
|
|
|
15
|
|
|
|
482
|
|
|
|
807
|
|
|
|
1,148
|
|
|
|
Total current assets
|
|
|
|
|
|
|
5,681
|
|
|
|
5,278
|
|
|
|
7,505
|
|
|
|
Property, plant and equipment, net
|
|
|
16
|
|
|
|
3,764
|
|
|
|
3,647
|
|
|
|
5,186
|
|
Intangible assets, net
|
|
|
19
|
|
|
|
230
|
|
|
|
232
|
|
|
|
330
|
|
Long-Term investments
|
|
|
17
|
|
|
|
659
|
|
|
|
652
|
|
|
|
927
|
|
Restricted cash
|
|
|
|
|
|
|
78
|
|
|
|
77
|
|
|
|
109
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
627
|
|
|
|
593
|
|
|
|
843
|
|
Pension assets
|
|
|
32
|
|
|
|
|
|
|
|
60
|
|
|
|
85
|
|
Other assets
|
|
|
18
|
|
|
|
146
|
|
|
|
140
|
|
|
|
199
|
|
|
|
Total assets
|
|
|
|
|
|
|
11,185
|
|
|
|
10,679
|
|
|
|
15,184
|
|
|
|
Liabilities and shareholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities
|
|
|
23
|
|
|
|
797
|
|
|
|
336
|
|
|
|
478
|
|
Trade accounts payable
|
|
|
20
|
|
|
|
1,245
|
|
|
|
1,285
|
|
|
|
1,827
|
|
Accrued liabilities
|
|
|
21
|
|
|
|
525
|
|
|
|
526
|
|
|
|
748
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
26
|
|
|
|
15
|
|
|
|
21
|
|
Short-term pension liabilities
|
|
|
32
|
|
|
|
|
|
|
|
5
|
|
|
|
7
|
|
Other current liabilities
|
|
|
22
|
|
|
|
712
|
|
|
|
680
|
|
|
|
967
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
3,305
|
|
|
|
2,847
|
|
|
|
4,048
|
|
|
|
Long-term debt
|
|
|
23
|
|
|
|
1,208
|
|
|
|
1,376
|
|
|
|
1,957
|
|
Pension liabilities
|
|
|
32
|
|
|
|
134
|
|
|
|
111
|
|
|
|
158
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
60
|
|
|
|
46
|
|
|
|
65
|
|
Long-term accrued liabilities
|
|
|
24
|
|
|
|
46
|
|
|
|
36
|
|
|
|
51
|
|
Other liabilities
|
|
|
25
|
|
|
|
277
|
|
|
|
316
|
|
|
|
449
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
5,030
|
|
|
|
4,732
|
|
|
|
6,728
|
|
|
|
Minority interests
|
|
|
26
|
|
|
|
840
|
|
|
|
1,033
|
|
|
|
1,469
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share capital
|
|
|
27
|
|
|
|
1,495
|
|
|
|
1,499
|
|
|
|
2,131
|
|
Additional paid-in capital
|
|
|
|
|
|
|
5,828
|
|
|
|
5,864
|
|
|
|
8,338
|
|
Accumulated deficit
|
|
|
|
|
|
|
(1,780
|
)
|
|
|
(2,148
|
)
|
|
|
(3,054
|
)
|
Accumulated other comprehensive loss
|
|
|
29
|
|
|
|
(228
|
)
|
|
|
(301
|
)
|
|
|
(428
|
)
|
|
|
Total shareholders equity
|
|
|
|
|
|
|
5,315
|
|
|
|
4,914
|
|
|
|
6,987
|
|
|
|
Total liabilities and shareholders equity
|
|
|
|
|
|
|
11,185
|
|
|
|
10,679
|
|
|
|
15,184
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-89
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Shareholders Equity
For the years ended September 30, 2005, 2006 and 2007
in millions, except for share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
minimum
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
Additional
|
|
|
|
|
|
currency
|
|
|
pension
|
|
|
Unrealized
|
|
|
gain (loss)
|
|
|
|
|
|
|
|
|
|
Ordinary Shares
|
|
|
paid-in
|
|
|
Accumulated
|
|
|
translation
|
|
|
liability/defined
|
|
|
gain (loss)
|
|
|
cash flow
|
|
|
|
|
|
|
Notes
|
|
|
(Shares)
|
|
|
(Amount)
|
|
|
capital
|
|
|
deficit
|
|
|
adjustment
|
|
|
benefit plans
|
|
|
on securities
|
|
|
hedge
|
|
|
Total
|
|
|
|
|
Balance as of October 1, 2004
|
|
|
|
|
|
|
747,559,859
|
|
|
|
1,495
|
|
|
|
5,800
|
|
|
|
(1,200
|
)
|
|
|
(122
|
)
|
|
|
|
|
|
|
4
|
|
|
|
1
|
|
|
|
5,978
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(312
|
)
|
Other comprehensive income (loss)
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64
|
|
|
|
(84
|
)
|
|
|
8
|
|
|
|
(25
|
)
|
|
|
(37
|
)
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(349
|
)
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
27
|
|
|
|
9,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2005
|
|
|
|
|
|
|
747,569,359
|
|
|
|
1,495
|
|
|
|
5,800
|
|
|
|
(1,512
|
)
|
|
|
(58
|
)
|
|
|
(84
|
)
|
|
|
12
|
|
|
|
(24
|
)
|
|
|
5,629
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(268
|
)
|
Other comprehensive income (loss)
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(69
|
)
|
|
|
(3
|
)
|
|
|
(7
|
)
|
|
|
5
|
|
|
|
(74
|
)
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(342
|
)
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
27
|
|
|
|
39,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
Balance as of September 30, 2006
|
|
|
|
|
|
|
747,609,294
|
|
|
|
1,495
|
|
|
|
5,828
|
|
|
|
(1,780
|
)
|
|
|
(127
|
)
|
|
|
(87
|
)
|
|
|
5
|
|
|
|
(19
|
)
|
|
|
5,315
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(368
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(368
|
)
|
Other comprehensive (loss) income
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(105
|
)
|
|
|
90
|
|
|
|
(12
|
)
|
|
|
2
|
|
|
|
(25
|
)
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(393
|
)
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
27
|
|
|
|
2,119,341
|
|
|
|
4
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
Stock-based compensation
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
Deferred compensation, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Adjustment to initially apply SFAS No. 158, net of tax
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
Balance as of September 30, 2007
|
|
|
|
|
|
|
749,728,635
|
|
|
|
1,499
|
|
|
|
5,864
|
|
|
|
(2,148
|
)
|
|
|
(232
|
)
|
|
|
(45
|
)
|
|
|
(7
|
)
|
|
|
(17
|
)
|
|
|
4,914
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-90
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended September 30, 2005, 2006 and 2007
in millions, except as indicated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
|
Net loss
|
|
|
(312
|
)
|
|
|
(268
|
)
|
|
|
(368
|
)
|
Adjustments to reconcile net loss to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,316
|
|
|
|
1,405
|
|
|
|
1,276
|
|
Provision for (recovery of) doubtful accounts
|
|
|
3
|
|
|
|
23
|
|
|
|
(19
|
)
|
Gains on sales of marketable securities
|
|
|
(8
|
)
|
|
|
(3
|
)
|
|
|
(8
|
)
|
Losses (gains) on sales of businesses and interests in
subsidiaries
|
|
|
(39
|
)
|
|
|
10
|
|
|
|
63
|
|
Gains on disposals of property, plant, and equipment
|
|
|
(8
|
)
|
|
|
(9
|
)
|
|
|
(13
|
)
|
Equity in earnings of associated companies, net
|
|
|
(57
|
)
|
|
|
(78
|
)
|
|
|
(117
|
)
|
Dividends received from associated companies
|
|
|
51
|
|
|
|
29
|
|
|
|
61
|
|
Gain on subsidiaries and associated company share issuance, net
|
|
|
|
|
|
|
(19
|
)
|
|
|
|
|
Minority interests
|
|
|
(2
|
)
|
|
|
23
|
|
|
|
(19
|
)
|
Impairment charges
|
|
|
134
|
|
|
|
57
|
|
|
|
40
|
|
Stock-based compensation
|
|
|
|
|
|
|
28
|
|
|
|
17
|
|
Deferred income taxes
|
|
|
88
|
|
|
|
(6
|
)
|
|
|
58
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
119
|
|
|
|
(334
|
)
|
|
|
331
|
|
Inventories
|
|
|
(25
|
)
|
|
|
(145
|
)
|
|
|
(76
|
)
|
Other current assets
|
|
|
(2
|
)
|
|
|
31
|
|
|
|
55
|
|
Trade accounts payable
|
|
|
(52
|
)
|
|
|
222
|
|
|
|
29
|
|
Accrued liabilities
|
|
|
(115
|
)
|
|
|
85
|
|
|
|
4
|
|
Other current liabilities
|
|
|
1
|
|
|
|
52
|
|
|
|
(109
|
)
|
Other assets and liabilities
|
|
|
(2
|
)
|
|
|
(100
|
)
|
|
|
2
|
|
|
|
Net cash Provided by operating activities
|
|
|
1,090
|
|
|
|
1,003
|
|
|
|
1,207
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-91
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended September 30, 2005, 2006 and 2007
in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of marketable securities available for sale
|
|
|
(2,228
|
)
|
|
|
(492
|
)
|
|
|
(224
|
)
|
Proceeds from sales of marketable securities available for sale
|
|
|
3,310
|
|
|
|
730
|
|
|
|
357
|
|
Proceeds from sales of businesses and interests in subsidiaries
|
|
|
101
|
|
|
|
72
|
|
|
|
273
|
|
Business acquisitions, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
(45
|
)
|
Investment in associated and related companies
|
|
|
(135
|
)
|
|
|
(6
|
)
|
|
|
(2
|
)
|
Cash increase from initial consolidation of ALTIS
|
|
|
|
|
|
|
119
|
|
|
|
|
|
Purchases of intangible assets
|
|
|
(27
|
)
|
|
|
(44
|
)
|
|
|
(39
|
)
|
Purchases of property, plant and equipment
|
|
|
(1,368
|
)
|
|
|
(1,253
|
)
|
|
|
(1,375
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
58
|
|
|
|
21
|
|
|
|
188
|
|
|
|
Net cash used in investing activities
|
|
|
(289
|
)
|
|
|
(853
|
)
|
|
|
(867
|
)
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in short-term debt
|
|
|
(20
|
)
|
|
|
|
|
|
|
30
|
|
Net change in related party financial receivables and payables
|
|
|
18
|
|
|
|
7
|
|
|
|
(3
|
)
|
Proceeds from issuance of long-term debt
|
|
|
192
|
|
|
|
400
|
|
|
|
245
|
|
Principal repayments of long-term debt
|
|
|
(500
|
)
|
|
|
(56
|
)
|
|
|
(744
|
)
|
Change in restricted cash
|
|
|
21
|
|
|
|
10
|
|
|
|
1
|
|
Proceeds from issuance of ordinary shares
|
|
|
|
|
|
|
|
|
|
|
23
|
|
Proceeds from issuance of shares to minority interest
|
|
|
23
|
|
|
|
|
|
|
|
4
|
|
Proceeds from issuance of shares of Qimonda
|
|
|
|
|
|
|
406
|
|
|
|
|
|
Dividend payments to minority interests
|
|
|
|
|
|
|
(5
|
)
|
|
|
(77
|
)
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(266
|
)
|
|
|
762
|
|
|
|
(521
|
)
|
|
|
Effect of foreign exchange rate changes on cash and cash
equivalents
|
|
|
5
|
|
|
|
(20
|
)
|
|
|
(40
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
540
|
|
|
|
892
|
|
|
|
(221
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
608
|
|
|
|
1,148
|
|
|
|
2,040
|
|
|
|
Cash and cash equivalents at end of year
|
|
|
1,148
|
|
|
|
2,040
|
|
|
|
1,819
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-92
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
1.
|
Description of
Business and Basis of Presentation
|
Description of
Business
Infineon Technologies AG and its subsidiaries (collectively, the
Company) design, develop, manufacture and market a
broad range of semiconductors and complete systems solutions
used in a wide variety of microelectronic applications,
including computer systems, telecommunications systems, consumer
goods, automotive products, industrial automation and control
systems, and chip card applications. The Companys products
include standard commodity components, full-custom devices,
semi-custom devices and application-specific components for
memory, analog, digital and mixed-signal applications. The
Company has operations, investments and customers located mainly
in Europe, Asia and North America. The fiscal year-end for the
Company is September 30.
Basis of
Presentation
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America
(U.S. GAAP). Infineon Technologies AG is
incorporated in Germany. The German Commercial Code
(Handelsgesetzbuch or HGB) requires the
Company to prepare consolidated financial statements in
accordance with the HGB accounting principles and regulations
(German GAAP). Pursuant to the German Commercial
Code Implementation Act (Einführungsgesetz zum
HGB-EGHGB), Article 58, paragraph 5, the Company
is exempt from this requirement, if consolidated financial
statements are prepared and issued in accordance with a body of
internationally accepted accounting principles (such as
U.S. GAAP). Accordingly, the Company presents the
U.S. GAAP consolidated financial statements contained
herein.
All amounts herein are shown in Euro (or )
except where otherwise stated. The accompanying consolidated
balance sheet as of September 30, 2007, and the
consolidated statements of operations and cash flows for the
year then ended are also presented in U.S. dollars
($), solely for the convenience of the reader, at
the rate of 1 = $1.4219, the Federal Reserve noon
buying rate on September 28, 2007. The U.S. dollar
convenience translation amounts have not been audited.
Certain amounts in prior year consolidated financial statements
and notes have been reclassified to conform to the current year
presentation. Dividends received from Associated Companies (as
defined below), previously reported as part of cash flows from
investing activities in the consolidated statements of cash
flows, have been reclassified to cash flows from operating
activities. The Companys consolidated results of
operations and overall cash flows have not been affected by
these reclassifications.
|
|
2.
|
Summary of
Significant Accounting Policies
|
The following is a summary of significant accounting policies
followed in the preparation of the accompanying consolidated
financial statements.
Basis of
Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its significant subsidiaries that
are directly or indirectly controlled on a consolidated basis.
Control is generally conveyed by ownership of the majority of
voting rights. Additionally, the Company evaluates its
relationships with entities to identify whether they are
variable interest entities (VIEs), and to
assess whether it is the primary beneficiary of such entities.
If the determination is made that the Company is the primary
beneficiary, then that entity is included in the consolidated
financial statements. VIEs are entities for which either
the equity investment at risk is not sufficient to permit the
entity to finance its activities without additional subordinated
financial support, the investors lack an essential
characteristic of a controlling financial interest, or the
investors economic interests are disproportionate to the
attached voting rights and substantially all of the
entitys activities involve or are conducted for an
investor with disproportionately few voting rights.
Investments in companies in which the Company has the ability to
exercise significant influence over operating and financial
policies, generally through an ownership interest of
20 percent or more and that are not controlled by the
Company (Associated Companies) are accounted for
using the equity method of accounting (see note 17). The
equity in earnings of Associated Companies with fiscal year ends
that differ
F-93
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
by not more than three months from the Companys fiscal
year end are recorded on a three month lag. Other equity
investments (Related Companies), generally in which
the Company has an ownership interest of less than
20 percent, are recorded at cost. The effects of all
significant intercompany transactions are eliminated.
The Company group consists of the following numbers of entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
Associated
|
|
|
|
|
|
|
subsidiaries
|
|
|
companies
|
|
|
Total
|
|
|
September 30, 2006
|
|
|
66
|
|
|
|
7
|
|
|
|
73
|
|
Additions
|
|
|
8
|
|
|
|
|
|
|
|
8
|
|
Disposals
|
|
|
(5
|
)
|
|
|
(2
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
69
|
|
|
|
5
|
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reporting and
Foreign Currency
The Companys reporting currency is the euro, and therefore
the accompanying consolidated financial statements are presented
in euro.
The assets and liabilities of foreign subsidiaries with
functional currencies other than the euro are translated using
period-end exchange rates, while the revenues and expenses of
such subsidiaries are translated using average exchange rates
during the period. Differences arising from the translation of
assets and liabilities in comparison with the translations
reported in the previous periods are included in other
comprehensive income (loss) and reported as a separate component
of shareholders equity.
The exchange rates of the primary currencies used in the
preparation of the accompanying consolidated financial
statements are as follows in Euro:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
September 29,
|
|
|
September 28,
|
|
|
Annual average exchange rate
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
U.S. dollar
|
|
1$
|
|
|
|
|
0.7899
|
|
|
|
0.7052
|
|
|
|
0.8117
|
|
|
|
0.7497
|
|
Japanese yen
|
|
|
100 JPY
|
|
|
|
0.6696
|
|
|
|
0.6124
|
|
|
|
0.6978
|
|
|
|
0.6297
|
|
Great Britain pound
|
|
|
1 GBP
|
|
|
|
1.4756
|
|
|
|
1.4300
|
|
|
|
1.4595
|
|
|
|
1.4806
|
|
Singapore dollar
|
|
|
1 SGD
|
|
|
|
0.4981
|
|
|
|
0.4728
|
|
|
|
0.5016
|
|
|
|
0.4904
|
|
Revenue
Recognition
Sales
Revenue from products sold to customers is recognized, pursuant
to U.S. Securities and Exchange Commission
(SEC) Staff Accounting Bulletin (SAB)
104, Revenue Recognition, when persuasive evidence
of an arrangement exists, the price is fixed or determinable,
shipment is made and collectibility is reasonably assured. The
Company records reductions to revenue for estimated product
returns and allowances for discounts, volume rebates and price
protection, based on actual historical experience, at the time
the related revenue is recognized. In general, returns are
permitted only for quality-related reasons within the applicable
warranty period. Distributors can, in certain cases, apply for
stock rotation or scrap allowances and price protection.
Allowances for stock rotation returns are accrued based on
expected stock rotation as per the contractual agreement.
Distributor scrap allowances are accrued based on the
contractual agreement and, upon authorization of the claim,
reimbursed up to a certain maximum of the average inventory
value. Price protection programs allow distributors to apply for
a price protection credit on unsold inventory in the event the
Company reduces the standard list price of the products included
in such inventory. In some cases, rebate programs are offered to
specific customers or distributors whereby the customer or
distributor may apply for a rebate upon achievement of a defined
sales volume. Distributors are also partially compensated for
commonly defined cooperative advertising on a
case-by-case
basis.
F-94
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
License
Income
License income is recognized when earned and realizable (see
note 6). Lump sum payments are generally non-refundable and
are deferred where applicable and recognized over the period in
which the Company is obliged to provide additional service.
Pursuant to Emerging Issues Task Force (EITF) Issue
No. 00 21, Revenue Arrangements with
Multiple Deliverables, revenues from contracts with
multiple elements are recognized as each element is earned based
on the relative fair value of each element and when there are no
undelivered elements that are essential to the functionality of
the delivered elements and when the amount is not contingent
upon delivery of the undelivered elements. Royalties are
recognized as earned.
Grants
Grants for capital expenditures include both tax-free government
grants (Investitionszulage) and taxable grants for investments
in property, plant and equipment (Investitionszuschüsse).
Grants receivable are established when a legal right for the
grant exists and the criteria for receiving the grant have been
met. Tax-free government grants are deferred and recognized over
the remaining useful life of the related asset. Taxable grants
are deducted from the acquisition costs of the related asset and
thereby reduce depreciation expense in future periods. Other
taxable grants reduce the related expense (see notes 7, 22
and 25).
Product-related
Expenses
Shipping and handling costs associated with product sales are
included in cost of sales. Expenditures for advertising, sales
promotion and other sales-related activities are expensed as
incurred. Provisions for estimated costs related to product
warranties are generally made at the time the related sale is
recorded, based on estimated failure rates and claim history.
Research and development costs are expensed as incurred.
Income
Taxes
Income taxes are accounted for under the asset and liability
method pursuant to FASB Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for
Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Valuation allowances are recorded to reduce deferred tax assets
to an amount that is more-likely-than-not to be realized in the
future. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. Investment tax
credits are accounted for under the flow-through method.
Stock-based
Compensation
Prior to the adoption of SFAS No. 123 (revised
2004) Share-Based Payment, the Company
accounted for stock-based compensation using the intrinsic value
method pursuant to Accounting Principles Board (APB)
Opinion 25, Accounting for Stock Issued to
Employees, recognized compensation cost over the pro rata
vesting period, and adopted the disclosure-only provisions of
SFAS No. 123, Accounting for Stock-Based
Compensation as amended by SFAS No. 148
Accounting for Stock-Based Compensation
Transition and Disclosure, an Amendment of FASB Statement
No. 123.
Effective October 1, 2005, the Company adopted
SFAS No. 123 (revised 2004) under the modified
prospective application method. Under this application, the
Company records stock-based compensation expense for all awards
granted on or after the date of adoption and for the portion of
previously granted awards that remained unvested at the date of
adoption. Stock-based compensation cost is measured at the grant
date, based on the fair value of the award, and is recognized as
expense over the period during which the employee is required to
provide service in exchange for the award.
SFAS No. 123 (revised 2004) eliminates the
alternative method of accounting for employee share-based
payments previously
F-95
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
available under APB No. 25. Periods prior to
October 1, 2005 have not been restated and do not reflect
the recognition of stock-based compensation (see note 28).
Issuance of
Shares by Subsidiaries or Associated
Companies
Gains or losses arising from the issuances of shares by
subsidiaries or Associated Companies, due to changes in the
Companys proportionate share of the value of the
issuers equity, are recognized in earnings pursuant to
SAB Topic 5:H, Accounting for Sales of Stock by a
Subsidiary (see notes 3 and 17).
Cash and Cash
Equivalents
Cash and cash equivalents represent cash, deposits and liquid
short-term investments with original maturities of three months
or less. Cash equivalents as of September 30, 2006 and 2007
were 1,926 million
and 1,653 million, respectively, and consisted
mainly of bank term deposits and fixed income securities with
original maturities of three months or less.
Restricted
Cash
Restricted cash includes collateral deposits used as security
under arrangements for deferred compensation, business
acquisitions, construction projects, leases and financing (see
note 35).
Marketable
Securities and Investments
The Companys marketable securities are classified as
available-for-sale
and are stated at fair value as determined by the most recently
traded price of each security at the balance sheet date.
Unrealized gains and losses are included in accumulated other
comprehensive income, net of applicable income taxes. Realized
gains or losses and declines in value, if any, judged to be
other-than-temporary
on
available-for-sale
securities are reported in other non-operating income or
expense. For the purpose of determining realized gains and
losses, the cost of securities sold is based on specific
identification.
The Company assesses declines in the value of marketable
securities and investments to determine whether such decline is
other-than-temporary,
thereby rendering the marketable security or investment
impaired. This assessment is made by considering available
evidence including changes in general market conditions,
specific industry and investee data, the length of time and the
extent to which the fair value has been less than cost, and the
Companys intent and ability to hold the marketable
security or investment for a period of time sufficient to allow
for any anticipated recovery in fair value.
Inventories
Inventories are valued at the lower of cost or market, cost
being generally determined on the basis of an average method.
Cost consists of purchased component costs and manufacturing
costs, which comprise direct material and labor costs and
applicable indirect costs.
Property,
Plant and Equipment
Property, plant and equipment are stated at cost less
accumulated depreciation. Spare parts, maintenance and repairs
are expensed as incurred. Depreciation expense is recognized
using the straight-line method. Construction in progress
includes advance payments for construction of fixed assets. Land
and construction in progress are not depreciated. The cost of
construction of certain long-term assets includes capitalized
interest, which is amortized over the estimated useful life of
the related asset. During the years ended September 30,
2006 and 2007 capitalized interest was less
than 1 million. The estimated useful lives of
assets are as follows:
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Years
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Buildings
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10-25
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Technical equipment and machinery
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3-10
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Other plant and office equipment
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1-10
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F-96
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Leases
The Company is a lessee of property, plant and equipment. All
leases where the Company is lessee that meet certain specified
criteria intended to represent situations where the substantive
risks and rewards of ownership have been transferred to the
lessee are accounted for as capital leases pursuant to
SFAS No. 13, Accounting for Leases, and
related interpretations. All other leases are accounted for as
operating leases.
Goodwill and
Other Intangible Assets
The Company accounts for business combinations using the
purchase method of accounting pursuant to
SFAS No. 141, Business Combinations.
Intangible assets acquired in a purchase method business
combination are recognized and reported apart from goodwill,
pursuant to the criteria specified by SFAS No. 141.
Intangible assets consist primarily of purchased intangible
assets, such as licenses and purchased technology, which are
recorded at acquisition cost, and goodwill resulting from
business acquisitions, representing the excess of purchase price
over fair value of net assets acquired. Intangible assets other
than goodwill are amortized on a straight-line basis over the
estimated useful lives of the assets ranging from 3 to
10 years. Pursuant to SFAS No. 142,
Goodwill and Other Intangible Assets, goodwill is
not amortized, but instead tested for impairment at least
annually in accordance with the provisions of
SFAS No. 142. The Company tests goodwill annually for
impairment in the fourth quarter of the fiscal year, whereby if
the carrying amount of a reporting unit with goodwill exceeds
its fair value, the amount of impairment is determined as the
excess of recorded goodwill over the fair value of goodwill. The
determination of fair value of the reporting units and related
goodwill requires considerable judgment by management.
Impairment of
Long-lived Assets
The Company reviews long-lived assets, including property, plant
and equipment and intangible assets subject to amortization, for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Estimated fair
value is generally based on either market value, appraised value
or discounted estimated future cash flows. Considerable
management judgment is necessary to estimate discounted future
cash flows.
Financial
Instruments
The Company operates internationally, giving rise to exposure to
changes in foreign currency exchange rates. The Company uses
financial instruments, including derivatives such as foreign
currency forward and option contracts as well as interest rate
swap agreements, to reduce this exposure based on the net
exposure to the respective currency. The Company applies
SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, which
provides guidance on accounting for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities. Derivative financial
instruments are recorded at their fair value and included in
other current assets or other current liabilities. Generally the
Company does not designate its derivative instruments as hedge
transactions. Changes in fair value of undesignated derivatives
that relate to operations are recorded as part of cost of sales,
while undesignated derivatives relating to financing activities
are recorded in other non-operating expense, net. Changes in
fair value of derivatives designated as fair value hedges and
the related changes in the hedged item are reflected in
earnings. Changes in the fair value of derivatives designated as
cash flow hedges are, to the extent effective, deferred in
accumulated other comprehensive income and subsequently
reclassified to earnings when the hedging transaction is
reflected in earnings and, to the extent ineffective, included
in earnings immediately. The fair value of derivative and other
financial instruments is discussed in note 33.
F-97
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Pension
Plans
The measurement of pension-benefit liabilities is based on
actuarial computations using the
projected-unit-credit
method in accordance with SFAS No. 87,
Employers Accounting for Pensions. The
assumptions used to calculate pension liabilities and costs are
shown in note 32. Prior to the adoption of the recognition
provision of SFAS No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement
Plans an amendment of FASB Statements No. 87,
88, 106, and 132(R), changes in the amount of the
projected benefit obligation or plan assets resulting from
experience different from that assumed and from changes in
assumptions could result in gains or losses not yet recognized
in the Companys consolidated financial statements.
Amortization of an unrecognized net gain or loss is included as
a component of the Companys net periodic benefit plan cost
for a year if, as of the beginning of the year, that
unrecognized net gain or loss exceeds 10 percent of the
greater of the projected benefit obligation or the fair value of
that plans assets. In that case, the amount of
amortization recognized by the Company is the resulting excess
divided by the average remaining service period of the active
employees expected to receive benefits under the plan.
Effective September 30, 2007, the Company adopted the
recognition provision of SFAS No. 158, whereby the
Company recognizes the overfunded or underfunded status of its
defined benefit postretirement plans as an asset or liability in
its statement of financial position. Changes in funded status
will be recognized in the year in which the changes occur
through other comprehensive income. The incremental effects of
the adoption of the recognition provision on the individual line
items of the September 30, 2007 consolidated balance sheet
are shown in note 32. See also Recent Accounting Pronouncements
below.
The Company also records a liability for amounts payable under
the provisions of its various defined contribution plans.
Use of
Estimates
The preparation of the accompanying 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 period. Actual amounts could
differ materially from such estimates made by management.
Recent
Accounting Pronouncements
In May 2005, the FASB issued SFAS No. 154,
Accounting Changes and Error Corrections.
SFAS No. 154 replaces APB Opinion No. 20,
Accounting Changes, and SFAS No. 3,
Reporting Accounting Changes in Interim Financial
Statements, and changes the requirements for the
accounting and reporting of a change in accounting principle.
The Company adopted SFAS No. 154 on October 1, 2006.
The adoption of SFAS No. 154 did not have a
significant impact on the Companys consolidated financial
position or results of operations.
In June 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes an
Interpretation of FASB Statement 109
(FIN 48), which defines the threshold for
recognizing the benefits of tax return positions in the
financial statements as more-likely-than-not to be
sustained by the taxing authority. The recently issued
literature also provides guidance on the derecognition,
measurement and classification of income tax uncertainties,
along with any related interest and penalties. FIN 48 also
includes guidance concerning accounting for income tax
uncertainties in interim periods and increases the level of
disclosures associated with any recorded income tax uncertainty.
FIN 48 is effective for fiscal years beginning after
December 15, 2006. The difference between the amounts
recognized in the statements of financial position prior to the
adoption of FIN 48 and the amounts reported after adoption
will be accounted for as a cumulative-effect adjustment recorded
to the beginning balance of retained earnings. The provisions of
FIN 48 are effective for the Company as of October 1,
2007. The Company is in the process of determining the impact,
if any, that the adoption of FIN 48 will have on its
consolidated financial position and results of operations.
In September 2006, the FASB released SFAS No. 157,
Fair Value Measurements, which provides guidance for
using fair value to measure assets and liabilities.
SFAS No. 157 defines fair value, establishes
F-98
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value
measurements. The standard also responds to investors
requests for more information about the extent to which
companies measure assets and liabilities at fair value, the
information used to measure fair value, and the effect that fair
value measurements have on earnings. SFAS No. 157 will
apply whenever another standard requires (or permits) assets or
liabilities to be measured at fair value. The standard does not
expand the use of fair value to any new circumstances.
SFAS No. 157 is effective for the Company in the
fiscal year beginning on October 1, 2008, and interim
periods within that fiscal year. The Company will adopt
SFAS No. 157 on October 1, 2008 on a prospective
basis.
In September 2006, the FASB issued SFAS No. 158,
Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans an amendment of FASB
Statements No. 87, 88, 106, and 132(R), which
requires an employer to recognize the overfunded or underfunded
status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded
status in the year in which the changes occur through
comprehensive income of a business entity or changes in
unrestricted net assets of a
not-for-profit
organization (Recognition Provision). The Company
adopted the Recognition Provision of SFAS No. 158 as
of the end of the fiscal year ended September 30, 2007. The
incremental effects of the implementation of the Recognition
Provision on the individual line items in the September 30,
2007 consolidated balance sheet are shown in note 32.
SFAS No. 158 also requires an employer to measure the
funded status of a plan as of the date of its year-end statement
of financial position, with limited exceptions
(Measurement Date Provision). The Company currently
measures the funded status of its plans annually on
June 30. The Measurement Date Provision is effective for
the Company as of the end of the fiscal year ending September
30, 2009. The Company does not expect the change in the annual
measurement date to September 30 to have a significant impact on
its consolidated financial position and results of operations.
In September 2006, the SEC issued SAB No. 108,
Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial
Statements. SAB No. 108 provides interpretive
guidance on how the effects of prior-year uncorrected
misstatements should be considered when quantifying
misstatements in the current year financial statements.
SAB No. 108 requires registrants to quantify
misstatements using both an income statement
(rollover) and balance sheet (iron
curtain) approach and evaluate whether either approach
results in a misstatement that, when all relevant quantitative
and qualitative factors are considered, is material. If prior
year errors that had been previously considered immaterial are
now considered material based on either approach, no restatement
is required so long as management properly applied its previous
approach and all relevant facts and circumstances were
considered. If prior years are not restated, the cumulative
effect adjustment is recorded in opening accumulated earnings
(deficit) as of the beginning of the year of adoption.
SAB No. 108 is effective for fiscal years ending on or
after November 15, 2006. The Company adopted
SAB No. 108 during the fourth quarter of the fiscal
year ended September 30, 2007. The adoption of
SAB No. 108 did not have an impact on the
Companys consolidated financial position or results of
operations.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities including an amendment of FASB Statement
No. 115. SFAS No. 159 permits entities to
choose to measure certain financial assets and liabilities and
other eligible items at fair value, which are not otherwise
currently required to be measured at fair value. Under
SFAS No. 159, the decision to measure items at fair
value is made at specified election dates on an irrevocable
instrument-by-instrument
basis. Entities electing the fair value option would be required
to recognize changes in fair value in earnings and to expense
upfront costs and fees associated with the item for which the
fair value option is elected. Entities electing the fair value
option are required to distinguish on the face of the statement
of financial position the fair value of assets and liabilities
for which the fair value option has been elected and similar
assets and liabilities measured using another measurement
attribute. If elected, SFAS No. 159 is effective as of
the beginning of the first fiscal year that begins after
November 15, 2007, with earlier adoption permitted as of
the beginning of a fiscal year provided that the entity also
early adopts all of the requirements of SFAS No. 157.
The Company is currently evaluating whether to elect the option
provided for in this standard.
F-99
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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3.
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Separation of
Memory Products Business
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Effective May 1, 2006, substantially all of the memory
products-related assets and liabilities, operations and
activities of Infineon were contributed to Qimonda AG
(Qimonda), a stand-alone legal company (the
Formation). In conjunction with the Formation, the
Company entered into contribution agreements and various other
service agreements with Qimonda. In cases where physical
contribution (ownership transfer) of assets and liabilities was
not feasible or cost effective, the monetary value was
transferred in the form of cash or debt. At the Formation,
Qimondas operations in Japan and Korea were initially held
in trust for Qimondas benefit by Infineon until the legal
transfer to Qimonda could take place. Qimondas Korea
operations were legally transferred to Qimonda in October 2006.
Infineon legally transferred the Japanese operations to Qimonda
during the year ended September 30, 2007. Qimondas
investment in Inotera Memories Inc. (Inotera),
previously held in trust by Infineon, was transferred to Qimonda
in March 2007 (see note 17). The Companys investment
in Advanced Mask Technology Center GmbH & Co. KG
(AMTC) is intended to be transferred to Qimonda
after approval by the other shareholders in the venture (see
note 17).
The contribution agreements include provisions pursuant to which
Qimonda agreed to indemnify Infineon against any claim
(including any related expenses) arising in connection with the
liabilities, contracts, offers, incomplete transactions,
continuing obligations, risks, encumbrances, guarantees and
other matters relating to the memory products business that were
transferred to it as part of the Formation. In addition, the
contribution agreements provide for indemnification of Infineon
with respect to certain existing and future legal claims and
potential restructuring costs incurred in connection with the
potential rampdown of production in one module of Infineon
Technologies Dresden GmbH & Co. OHG. Although no
restructuring has been established for the respective module of
Infineon Technologies Dresden GmbH & Co. OHG, these
costs could be material and could adversely impact the financial
condition and results of operations of Qimonda and of the
Company. With the exception of the securities and certain patent
infringement and antitrust claims identified in note 35,
Qimonda is obligated to indemnify Infineon against any liability
arising in connection with claims relating to the memory
products business described in that section. Liabilities and
risks relating to the securities class action litigation,
including court costs, will be equally shared by Infineon and
Qimonda, but only with respect to the amount by which the total
amount payable exceeds the amount of the corresponding accrual
that Infineon transferred to Qimonda at Formation. Qimonda has
agreed to indemnify Infineon for 60 percent of any license
fee payments to which Infineon may agree in connection with
ongoing negotiations relating to licensing and cross-licensing
arrangements with a third party. These payments could be
substantial and could remain in effect for lengthy periods.
Qimonda fully repaid its short-term loan from Infineon of
344 million during the 2007 fiscal year.
On August 9, 2006 Qimonda completed its IPO on the New York
Stock Exchange through the issuance of 42 million ordinary
shares which are traded as American Depositary Shares
(ADSs) under the symbol QI, for an
offering price of $13.00 per ADS. As a result, the
Companys ownership interest in Qimonda was diluted to
87.7 percent and its proportional share of Qimondas
equity decreased by 53 million, which loss the
Company reflected as part of non-operating expenses under gain
on subsidiaries and associated company share issuance, net
during the year ended September 30, 2006. The net offering
proceeds amounted to 406 million (before tax
benefits available to Qimonda of 9 million) and
were classified as proceeds from issuance of shares of Qimonda
within cash flows from financing activities in the accompanying
consolidated statement of cash flows for the year ended
September 30, 2006. In addition, Infineon sold
6.3 million Qimonda ADSs upon exercise of the
underwriters over-allotment option. As a result, the
Companys ownership interest in Qimonda decreased to
85.9 percent and the Company recognized a loss
of 12 million, which was reflected as part of
other operating expenses, net during the year ended
September 30, 2006. The net over-allotment proceeds
amounted to 58 million and were classified as
proceeds from sale of businesses and interests in subsidiaries
within cash flows from investing activities in the accompanying
consolidated statement of cash flows for the year ended
September 30, 2006. Qimonda used the offering proceeds to
finance investments in its manufacturing facilities and for
research and development.
On September 25, 2007, Infineon sold an additional
28.75 million Qimonda ADSs (including the
underwriters over-allotment option) for an offering price
of $10.92 per ADS. As a result, the Companys
F-100
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
ownership interest in Qimonda decreased to 77.5 percent and
the Company recognized a loss on sale
of 84 million, which is reflected in other
operating expenses, net during the year ended September 30,
2007. The net proceeds from this transaction amounted
to 216 million and are classified as proceeds
from sale of businesses and interests in subsidiaries within
cash flows from investing activities in the accompanying
consolidated statement of cash flows for the year ended
September 30, 2007.
In addition, on September 26, 2007, Infineon Technologies
Investment B.V., a wholly owned subsidiary of Infineon
Technologies AG, issued notes exchangeable into ADSs of Qimonda
in the amount of 215 million (including the
underwriters over-allotment option). The coupon of the
three-year exchangeable note is 1.375 percent per year. The
exchange price is 10.48 for each Qimonda ADS,
corresponding to an exchange premium of 35 percent. If all
noteholders exercise their exchange rights, Infineon will
deliver 20.5 million Qimonda ADSs, equivalent to
approximately 6.0 percent of Qimondas share capital
(see notes 23 and 26).
On January 26, 2007 Infineon and Qimonda extended their
agreement for the production of wafers in Infineon Technologies
Dresden GmbH & Co. OHG production facility through
September 30, 2009.
On April 25, 2007, Qimonda and SanDisk Corporation
(SanDisk) entered into an agreement to jointly
develop and manufacture multichip packages (MCPs)
utilizing SanDisks NAND flash and controllers and
Qimondas low power mobile DRAM. The jointly owned company,
SanQi Solutions Lda., based in Portugal, targets the need for
high capacity, integrated memory solutions for data-intensive
mobile applications.
On April 25, 2007, Qimonda announced plans to construct a
fully-owned 300-millimeter front-end manufacturing facility in
Singapore. Depending on the growth and development of the world
semiconductor market, Qimonda plans to invest
approximately 2 billion in the site over the
next 5 years. Qimonda expects to finance the initial
capital expenditures for the construction with a combination of
its own cash flows and project-based financing.
During December 2004, Saifun Semiconductors Ltd.
(Saifun) and the Company modified their existing
flash memory cooperation agreement. As a consequence, the
Company consummated the acquisition of Saifuns remaining
30 percent share in the Infineon Technologies Flash joint
venture in January 2005 and was granted a license for the use of
Saifuns
NROM®
technologies, in exchange for $95 million (subsequently
reduced to $46 million) to be paid in quarterly
installments over 10 years and additional purchase
consideration primarily in the form of net liabilities assumed
aggregating 7 million (see note 6). The
assets acquired and liabilities assumed were recorded in the
accompanying consolidated balance sheet based upon their
estimated fair values as of the date of the acquisition. The
excess of the purchase price over the estimated fair values of
the underlying assets acquired and liabilities assumed amounted
to 7 million and was allocated to goodwill.
Qimonda has sole ownership and responsibility for the business
and started to account for its entire financial results in the
three months ended March 31, 2005. In light of the weak
market conditions for commodity NAND flash memories in the three
months ended September 30, 2006, Qimonda decided to ramp
down its flash production and stop the development of NAND
compatible flash memory products based on Saifuns
technology. Qimonda and Saifun amended the above license
agreement to terminate the payment of quarterly installments as
of December 31, 2006. As a result, Qimonda reduced
payables, goodwill and other intangible assets, and recognized
an impairment charge of 9 million related to
license and fixed assets that were not considered to be
recoverable as of September 30, 2006.
On July 31, 2007, the Company acquired Texas Instruments
Inc.s (TI) DSL Customer Premises Equipment
(CPE) business for cash consideration
of 45 million. The purchase price is subject to
an upward or downward contingent consideration adjustment of up
to $16 million, based on revenue targets of the CPE
business during the nine months following the acquisition date.
The Company plans to continue supporting the acquired product
portfolio and existing customer designs while leveraging the
acquired experience in future product generations. The results
of operations of the CPE business have been included in the
consolidated financial statements starting August 1, 2007.
F-101
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
On August 20, 2007, the Company announced that it plans to
acquire the mobility products business of LSI Corporation
(LSI) for a price of $450 million plus a
contingent performance-based payment of up to $50 million
in order to further strengthen its activities in the field of
communications. The mobility products business designs
semiconductors and software for cellular telephone handsets. The
assets and liabilities to be acquired consist primarily of
customer relationships, goodwill, fixed assets and current
assets and liabilities. The Company is in the process of
obtaining an appraisal of the estimated fair value of the assets
and liabilities of the business to be acquired, the exact amount
of which is not currently determinable. Pending the approval of
the corresponding authorities, the transaction is expected to
close in the first quarter of the 2008 fiscal year (see
note 37).
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 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 beginning in the second
quarter of the 2007 fiscal year (see note 30). Due to the
Companys cumulative loss situation described in
note 10 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 (see note 37).
The following table summarizes the Companys business
acquisitions during the years ended September 30, 2005 and
2007 (there were no significant business acquisitions during the
2006 fiscal year) ( in millions):
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2007
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2005
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CPE
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Flash
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July 2007
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Acquisition Date
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January 2005
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Communication
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Segment
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Qimonda
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Solutions
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Cash
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1
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Other current assets
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16
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6
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Property, plant and equipment
|
|
|
4
|
|
|
|
1
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
Core technology
|
|
|
58
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
7
|
|
Goodwill
|
|
|
7
|
|
|
|
31
|
|
Other non-current assets
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
89
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
(45
|
)
|
|
|
|
|
Non-current liabilities
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
(47
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
42
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
Cash paid (purchase consideration)
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
The above acquisitions have been accounted for by the purchase
method of accounting and, accordingly, the consolidated
statements of operations include the results of the acquired
companies from their respective acquisition dates. For each
significant acquisition the Company engaged an independent third
party to assist in the valuation of net assets acquired.
F-102
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Pro forma financial information relating to these acquisitions
is not material either individually or in the aggregate to the
results of operations and financial position of the Company and
has been omitted.
On December 23, 2004, the Company agreed to sell its
venture capital activities, reflected in the Other Operating
Segments, to Cipio Partners, a venture capital company. Under
the terms of the agreement, the Company sold its interest in
Infineon Ventures GmbH including the majority of the venture
investments held therein. The transaction closed on
February 23, 2005. As a result of the sale, the Company
realized a gain before tax of 13 million which
was recorded in other non-operating expense, net in the 2005
fiscal year.
On January 25, 2005, Finisar Corporation
(Finisar) and the Company entered into an agreement
under which Finisar acquired certain assets of the
Companys fiber optics business. Under the terms of the
agreement, the Company received 34 million shares of
Finisars common stock valued at 40 million
as consideration for the sale of inventory, fixed assets and
intellectual property associated with the design and manufacture
of fiber optic transceivers. The Company also committed to
provide Finisar with contract manufacturing services under
separate supply agreements for up to one year following the
closing. The transaction did not require shareholder or
regulatory approval and closed on January 31, 2005. As a
result of the transaction, the Company realized a gain before
tax of 21 million which was recorded in other
operating expense, net in the 2005 fiscal year.
On April 8, 2005, the Company sold to VantagePoint Venture
Partners its entire share interest in Finisars common
stock. As a result of the sale, the Company recorded an
other-than-temporary
impairment of 8 million in other non-operating
expense during the second quarter of the 2005 fiscal year, to
reduce the investments carrying value to the net sale
proceeds.
The Company retained ownership of its remaining fiber optics
businesses consisting of Bi-Directional Fiber Transmission
(BIDI) components for
Fiber-To-The-Home
(FTTH) applications, Parallel Optical Components
(PAROLI) and Polymer Optical Fiber (POF)
components that are used in automotive applications, which were
reclassified from held for sale to held and used during the
second quarter of the 2005 fiscal year, and were restructured.
The reclassification of the retained fiber optic businesses into
the held and used category was measured at the lower of their
carrying amount before they were classified as held for sale,
adjusted for depreciation expense that would have been
recognized had the retained fiber optic businesses been
continuously classified as held and used, or the fair value of
the assets on January 25, 2005. Accordingly, the Company
recognized an impairment charge of 34 million in
other operating expenses during the second quarter of the 2005
fiscal year.
On August 2, 2005, the Company sold the long-term assets
utilized in the design and manufacture of BIDI components to
EZConn Corporation (EZConn) for cash consideration
of 3 million. The Company also committed to
provide EZConn with contract manufacturing services through
March 2006. As a result of the transaction, the Company realized
a gain before tax of 2 million, which was
recorded in other operating income in the 2005 fiscal year, and
deferred 1 million which was realized over the
term of the contract manufacturing agreement until June 2006.
On April 7, 2005, the Company and Exar Corporation
(Exar) entered into an agreement whereby the Company
sold to Exar a significant portion of its optical networking
business unit for $11 million cash. The sale included
assets relating to multi-rate TDM framer products, Fiber Channel
over SONET/SDH, Resilient Packet Ring (RPR), as well
as certain intellectual property for Data Over SONET products.
As a result of the sale, the Company reclassified related
non-current assets into assets held for sale during the second
quarter of the 2005 fiscal year and recorded an impairment
of 3 million to reduce their carrying value to
the net sale proceeds. The sale of the assets was consummated
during the 2005 fiscal year.
On June 29, 2007, the Company sold its 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 expense, net during the 2007 fiscal year.
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
F-103
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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. The agreement is subject to governmental and
regulatory approval and works council consultation. As a result
of the agreement, the Company reclassified related non-current
assets and liabilities into assets and liabilities held for sale
during the fourth quarter of the 2007 fiscal year.
At September 30, 2007, other current assets included assets
held for sale relating to ALTIS (see note 15). These assets
include land, buildings and equipment, and current assets
associated with the production facility located in Essonnes,
France. Related liabilities are included in other current
liabilities (see note 22). Pursuant to SFAS 144,
Accounting for Impairment or Disposal of Long-lived
Assets, the recognition of depreciation expense ceased as
of August 1, 2007. The Company performed an impairment
assessment and concluded that no impairment was necessary.
Summarized balance sheet information for ALTIS is set forth
below ( in millions):
|
|
|
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
Current assets
|
|
|
103
|
|
Non-current assets
|
|
|
169
|
|
|
|
|
|
|
Total assets held for sale (note 15)
|
|
|
272
|
|
|
|
|
|
|
Current liabilities
|
|
|
110
|
|
Non-current liabilities
|
|
|
7
|
|
|
|
|
|
|
Total liabilities related to assets held for sale (note 22)
|
|
|
117
|
|
|
|
|
|
|
Summary financial information for the divested businesses
(through the date of divestiture) for the years ended
September 30, 2005, 2006 and 2007, are as follows (
in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Optics
|
|
|
23
|
|
|
|
|
|
|
|
|
|
BIDI
|
|
|
6
|
|
|
|
|
|
|
|
|
|
POF
|
|
|
28
|
|
|
|
26
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
57
|
|
|
|
26
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Ventures GmbH
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
Fiber Optics
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
BIDI
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
POF
|
|
|
(7
|
)
|
|
|
(1
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(57
|
)
|
|
|
(1
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale before tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Ventures GmbH
|
|
|
13
|
|
|
|
|
|
|
|
|
|
Fiber Optics
|
|
|
21
|
|
|
|
|
|
|
|
|
|
BIDI
|
|
|
2
|
|
|
|
|
|
|
|
|
|
POF
|
|
|
|
|
|
|
|
|
|
|
17
|
|
Other
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
39
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On September 28, 2007, the Company entered into a joint
venture agreement with Siemens AG (Siemens), whereby
the Company would contribute 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 would
acquire a 40 percent interest in Bipolar
for 37 million. The Company contributed all
assets and liabilities of its high power bipolar business into
Bipolar effective September 30, 2007. The joint venture
agreement will grant
F-104
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Siemens certain contractual participating rights which will
inhibit the Company from exercising control over the newly
formed entity. Accordingly, the Company will account for its
60 percent interest in Bipolar under the equity method of
accounting and will recognize the excess of the consideration
received over the carrying value of the interests sold as other
operating income. Pending the approval of the applicable
authorities, the transaction is expected to close in the first
quarter of the 2008 fiscal year.
During the years ended September 30, 2005, 2006 and 2007,
the Company recognized revenues related to license and
technology transfer fees
of 175 million, 29 million
and 28 million, respectively, which are included
in net sales in the accompanying statements of operations.
Included in these amounts are previously deferred license fees
of 33 million, 12 million
and 8 million, which were recognized as revenue
pursuant to SAB 104 in the years ended September 30,
2005, 2006 and 2007, respectively, since the Company had
fulfilled all of its obligations and the amounts were realized.
On November 10, 2004, the Company and ProMOS Technology
Inc. (ProMOS) reached an agreement regarding
ProMOS license of the Companys previously
transferred technologies, pursuant to which ProMOS may continue
to produce and sell products using those technologies and to
develop its own processes and products. The Company has no
continuing involvement with the licensing of these products to
ProMOS. As full consideration, ProMOS agreed to pay the Company
$156 million in four installments through April 30,
2006, against which the Companys accrued liability for
DRAM products from ProMOS of $36 million was offset. The
parties agreed to withdraw their respective claims, including
arbitration. The present value of the settlement amounted
to 118 million and was recognized as license
income during the 2005 fiscal year.
In connection with its joint technology development with Nanya
Technology Corporation (Nanya), in 2003 the Company
granted Nanya a license to use its 110-nanometer technology and
to do joint development on the 90-nanometer and 70-nanometer
technologies. On September 29, 2005, the Company and Nanya
signed an agreement to expand their development cooperation with
respect to the joint development of advanced 58-nanometer
production technologies for 300-millimeter wafers (see
note 17). On September 24, 2007, Qimonda and Nanya
entered into an agreement for further know-how transfer from
Qimonda to Nanya. License income related to the technology is
recognized over the estimated life of the technology.
In connection with a capacity reservation agreement with Winbond
Electronics Corp. (Winbond) in August 2004, the
Company granted Winbond a license to use its 110-nanometer
technology and for the production and sale of
Winbonds proprietary Specialty DRAM products to third
parties. In August 2006, Qimonda entered into an agreement with
Winbond whereby Qimonda transferred its 80-nanometer DRAM
technology to Winbond to manufacture DRAM using this technology
exclusively for Qimonda. On June 27, 2007, Qimonda signed
agreements with Winbond to expand their existing cooperation and
capacity reservation. Under the terms of the agreements, Qimonda
agreed to transfer its 75-nanometer and
58-nanometer
DRAM trench technologies to Winbond. I n return, Winbond will
manufacture DRAM using these technologies exclusively for
Qimonda. Winbond will also use the 58-nanometer technology to
develop and sell proprietary Specialty DRAM products to third
parties, for which Qimonda would receive license fees and
royalties.
On March 18, 2005 the Company and Rambus Inc.
(Rambus) reached an agreement settling all claims
between them and licensing the Rambus patent portfolio for use
in current and future Company products. Rambus granted to the
Company a worldwide license to existing and future Rambus
patents and patent applications for use in the Companys
memory products. In exchange for this worldwide license, the
Company agreed to pay $50 million in quarterly installments
of $6 million between November 15, 2005 and
November 15, 2007. As of March 31, 2005, the Company
recorded a license and corresponding liability in the amount
of 37 million, representing the estimated
present value of the minimum future license payments. After
November 15, 2007, and only if Rambus enters into
additional specified licensing agreements with certain other
DRAM manufacturers, Qimonda would make additional quarterly
payments which may accumulate up to a maximum of an additional
$100 million. Because Rambus ability to conclude the
agreements is not within the Companys control, the Company
is not able to estimate whether additional payment obligations
may arise. The agreement also provides the Company an option for
F-105
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
acquiring certain other licenses. All licenses provide for the
Company to be treated as a most-favored customer of
Rambus. The Company simultaneously granted to Rambus a
fully-paid perpetual license for memory interfaces. In addition
to the licenses, the two companies agreed to the immediate
dismissal of all pending litigation and released each other from
all existing legal claims. The license
of 37 million is being amortized over the
expected useful life of the related technologies of ten years
(see note 19).
In January 2005, the Company was granted a license for the use
of Saifuns
NROM®
technologies. The estimated fair value of the license and
minimum future license payments of 58 million
were recorded as an asset and liability, respectively. The
Company retained the option to terminate the entire license, or
parts thereof, at any time without penalty. During the three
months ended June 30, 2005, the Company exercised its
termination option and cancelled the portion of the license
encompassing
NROM®
Code Flash products. As a result of the partial termination, the
license asset and related liability were reduced
to 28 million and 29 million,
respectively. Effective September 30, 2006, the Company and
Saifun amended the license agreement (see note 4). As a
result of the amendment, the related liability was reduced
to 3 million as of September 30, 2006.
On June 14, 2006, Infineon and Qimonda reached agreements
with MOSAID Technologies Inc. (MOSAID) settling all
claims between them and licensing the MOSAID patent portfolio
for use in current and future Company products. MOSAID granted
to Infineon and Qimonda a six-year license to use any MOSAID
patents in the manufacturing and sale of semiconductor products,
as well as a lives of the patents license to certain
MOSAID patent families. In exchange for these licenses, the
Company and Qimonda agreed to make license payments commencing
on July 1, 2006 over a six-year term (see note 19).
On August 1, 2006, Infineon and Qimonda entered into
settlement agreements with Tessera Inc. (Tessera) in
respect of all of Tesseras patent infringement and
antitrust claims and all counterclaims and other claims Infineon
and Qimonda had raised against Tessera. As part of the
settlement, Infineon and Qimonda entered into license agreements
with Tessera, effective July 1, 2006, that provide the
companies world-wide, nonexclusive, non-transferable and
non-sublicensable licenses to use a portfolio of Tessera patents
relating to packaging for integrated circuits in Infineons
and Qimondas production. The license agreements have a
six-year term and can be extended. Under the license agreements,
Infineon and Qimonda agreed to pay Tessera an initial upfront
fee and additional royalty payments over a six year period based
on the volume of components they sell that are subject to the
license. The Company recognized the litigation settlement
portion of 37 million as other operating expense
during the year ended September 30, 2006. The remaining
license portion is being amortized over the term of the
agreement and the royalty payments are recognized as the related
sales are made.
The Company has received economic development funding from
various governmental entities, including grants for the
construction of manufacturing facilities, as well as grants to
subsidize research and development activities and employee
training. Grants and subsidies included in the accompanying
consolidated financial statements during the fiscal years ended
September 30, 2005, 2006 and 2007, are as follows (
in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Included in the consolidated statements
|
|
|
|
|
|
|
|
|
|
|
|
|
of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
50
|
|
|
|
67
|
|
|
|
115
|
|
Cost of sales
|
|
|
121
|
|
|
|
86
|
|
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
171
|
|
|
|
153
|
|
|
|
248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction grants deducted from the cost of fixed assets
(note 30)
|
|
|
|
|
|
|
49
|
|
|
|
1
|
|
Deferred government grants amounted to 212 million
and 182 million as of September 30, 2006 and
2007, respectively. The amounts of grants receivable as of
September 30, 2006 and 2007 were 138 million and
104 million, respectively.
F-106
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
8.
|
Supplemental
Operating Cost Information
|
The costs of services and materials are as follows for the years
ended September 30 ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
2006
|
|
2007
|
|
Raw materials, supplies and purchased goods
|
|
|
1,867
|
|
|
2,244
|
|
|
2,382
|
Purchased services
|
|
|
1,166
|
|
|
1,330
|
|
|
1,352
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,033
|
|
|
3,574
|
|
|
3,734
|
|
|
|
|
|
|
|
|
|
|
Personnel expenses are as follows for the years ended September
30 ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
2006
|
|
2007
|
|
Wages and salaries
|
|
|
1,664
|
|
|
1,827
|
|
|
1,880
|
Social levies
|
|
|
285
|
|
|
319
|
|
|
341
|
Pension expense (note 32)
|
|
|
28
|
|
|
37
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,977
|
|
|
2,183
|
|
|
2,262
|
|
|
|
|
|
|
|
|
|
|
Other operating expense, net is as follows for the years ended
September 30 ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Gains (losses) from sales of businesses and interests in
subsidiaries
|
|
|
39
|
|
|
|
(10
|
)
|
|
|
(63
|
)
|
Goodwill and intangible assets impairment charges (note 19)
|
|
|
(57
|
)
|
|
|
(38
|
)
|
|
|
(2
|
)
|
Long-lived asset impairment charges
|
|
|
(39
|
)
|
|
|
(6
|
)
|
|
|
(4
|
)
|
Litigation settlement charges, net of recoveries (note 35)
|
|
|
(20
|
)
|
|
|
(60
|
)
|
|
|
9
|
|
Other
|
|
|
(15
|
)
|
|
|
6
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expense, net
|
|
|
(92
|
)
|
|
|
(108
|
)
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlement charges refer to the settlement of an
antitrust investigation by the U.S. Department of Justice
and related settlements with customers (see note 21), as
well as, during the year ended September 30, 2006, the
settlement of the Tessera litigation (see note 6).
Total rental expenses under operating leases amounted
to 125 million, 151 million
and 134 million for the years ended
September 30, 2005, 2006 and 2007, respectively.
The average number of employees by geographic region is as
follows for the years ended September 30 ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
2006
|
|
2007
|
|
Germany
|
|
|
16,334
|
|
|
15,822
|
|
|
15,449
|
Other Europe
|
|
|
5,606
|
|
|
7,455
|
|
|
7,479
|
North America
|
|
|
3,108
|
|
|
3,283
|
|
|
3,433
|
Asia/Pacific
|
|
|
10,919
|
|
|
14,285
|
|
|
15,964
|
Japan
|
|
|
147
|
|
|
180
|
|
|
202
|
Other
|
|
|
44
|
|
|
41
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
36,158
|
|
|
41,066
|
|
|
42,549
|
|
|
|
|
|
|
|
|
|
|
Of the total average number of employees listed above, 10,332,
11,003 and 12,775 for the years ended September 30, 2005,
2006 and 2007, respectively, were employees of Qimonda.
During the 2005 fiscal year, the Company announced restructuring
measures aimed at reducing costs, down-sizing certain portions
of its workforce, and consolidating certain functions and
operations. As part of the restructuring measures, the Company
agreed upon plans to terminate approximately 350 employees.
The terminations were primarily the result of the close down of
fiber optics operations in Germany and the United States, and
were completed in the 2006 fiscal year. In addition, the Company
F-107
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
took measures to restructure its chip manufacturing within the
manufacturing cluster Munich-Perlach, Regensburg and Villach.
Production from Munich-Perlach was transferred primarily to
Regensburg and to a lesser extent to Villach. Manufacturing at
Munich-Perlach was phased out in March 2007. As part of the
restructuring, the Company reduced its workforce by
approximately 600 employees.
During the 2006 fiscal year, restructuring plans were announced
to downsize the workforce at ALTIS and the Companys chip
card back-end activities in order to maintain competitiveness
and reduce cost. As part of these restructuring measures, the
Company agreed upon plans to terminate approximately
390 employees and recorded restructuring charges in the
2007 fiscal year.
During the 2007 fiscal year, further 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 are affected worldwide, thereof approximately 120 in the
German locations Munich, Salzgitter and Nuremberg. A large
portion of these restructuring measures have been completed
during the 2007 fiscal year.
During the years ended September 30, 2005, 2006 and 2007,
charges
of 78 million, 23 million
and 45 million, respectively, were recognized as
a result of the above mentioned restructuring initiatives.
The development of the restructuring liability during the year
ended September 30, 2007 is as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
September 30,
|
|
|
|
September 30, 2006
|
|
|
Restructuring
|
|
|
2007
|
|
|
2007
|
|
|
|
Liabilities
|
|
|
Charges
|
|
|
Payments
|
|
|
Liabilities
|
|
|
Employee terminations
|
|
|
57
|
|
|
|
39
|
|
|
|
(58
|
)
|
|
|
38
|
|
Other exit costs
|
|
|
6
|
|
|
|
6
|
|
|
|
(6
|
)
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
63
|
|
|
|
45
|
|
|
|
(64
|
)
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and minority interest is
attributable to the following geographic locations for the years
ended September 30, 2005, 2006 and 2007 ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Germany
|
|
|
(298
|
)
|
|
|
(378
|
)
|
|
|
(453
|
)
|
Foreign
|
|
|
104
|
|
|
|
294
|
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(194
|
)
|
|
|
(84
|
)
|
|
|
(273
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) for the years ended September 30,
2005, 2006 and 2007 are as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Current taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
31
|
|
|
|
126
|
|
|
|
14
|
|
Foreign
|
|
|
1
|
|
|
|
41
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
167
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
66
|
|
|
|
(21
|
)
|
|
|
88
|
|
Foreign
|
|
|
22
|
|
|
|
15
|
|
|
|
(30
|
)
|
|
|
|
88
|
|
|
|
(6
|
)
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
120
|
|
|
|
161
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-108
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Total income taxes for the years ended September 30, 2005,
2006 and 2007 were allocated as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Income tax expense
|
|
|
120
|
|
|
|
161
|
|
|
|
79
|
|
Goodwill and intangible assets, for initial recognition of
acquired tax benefits that were previously included in the
valuation allowance
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
Shareholders equity, for other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90
|
|
|
|
161
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys corporate statutory tax rate in Germany is
25 percent in the 2005, 2006 and 2007 fiscal years.
Additionally, a solidarity surcharge of 5.5 percent is
levied. The trade tax decreased in respect of Infineon
Technologies AG from 13 percent in 2005 to 11 percent
in 2006 due to the move of the Companys headquarters in
2006. Therefore, the combined statutory tax rate is
39 percent in 2005, and 37 percent in 2006 and 2007,
respectively.
On August 17, 2007 the Business Tax Reform Act 2008 was
enacted in Germany including several changes to the taxation of
German business activities, including a reduction of the
Companys combined statutory corporate and trade tax rate
in Germany from 37 percent to 28 percent. Most of the
changes will come into effect for the Company in its 2008 fiscal
year. Pursuant to SFAS No. 109, the Company recorded a
deferred tax charge of 53 million as of
September 30, 2007, reflecting the reduction in value of
the Companys deferred tax assets in Germany upon enactment.
A reconciliation of income taxes for the fiscal years ended
September 30, 2005, 2006 and 2007, determined using the
German corporate tax rate plus trade taxes, net of federal
benefit, for a combined statutory rate of 39 percent for
2005 and 37 percent for 2006 and 2007 is as follows (
in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Expected expense (benefit) for income taxes
|
|
|
(76
|
)
|
|
|
(31
|
)
|
|
|
(101
|
)
|
Increase in available tax credits
|
|
|
(5
|
)
|
|
|
(36
|
)
|
|
|
(35
|
)
|
Non-taxable investment (income) loss
|
|
|
(26
|
)
|
|
|
(31
|
)
|
|
|
4
|
|
Tax rate differential
|
|
|
(18
|
)
|
|
|
(50
|
)
|
|
|
(107
|
)
|
Non deductible expenses
|
|
|
29
|
|
|
|
13
|
|
|
|
28
|
|
Change in German tax rate
|
|
|
|
|
|
|
3
|
|
|
|
53
|
|
Increase in valuation allowance
|
|
|
192
|
|
|
|
292
|
|
|
|
226
|
|
Other
|
|
|
24
|
|
|
|
1
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual provision for income taxes
|
|
|
120
|
|
|
|
161
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has operations in a jurisdiction which grants a tax
holiday from the 2005 fiscal year onwards, which has a remaining
term of two years. Compared to ordinary taxation in this
jurisdiction, this resulted in tax savings
of 0, 16 million
and 6 million for the years ended
September 30, 2005, 2006 and 2007, respectively, which are
reflected in the tax rate differential.
In the 2006 fiscal year, the Company reached an agreement with
German tax authorities on certain tax matters relating to prior
years. As a result, the timing of the deductibility of certain
temporary differences was revised, which led to an increase in
the valuation allowance for the 2006 fiscal year in the amount
of 50 million.
F-109
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Deferred income tax assets and liabilities as of September 30,
2006 and 2007 relate to the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
95
|
|
|
|
62
|
|
Property, plant and equipment
|
|
|
264
|
|
|
|
197
|
|
Deferred income
|
|
|
94
|
|
|
|
57
|
|
Net operating loss and tax credit carry-forwards
|
|
|
1,350
|
|
|
|
1,319
|
|
Other items
|
|
|
179
|
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
1,982
|
|
|
|
1,907
|
|
Valuation allowance
|
|
|
(1,091
|
)
|
|
|
(1,050
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
891
|
|
|
|
857
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
4
|
|
|
|
|
|
Property, plant and equipment
|
|
|
103
|
|
|
|
75
|
|
Accounts receivable
|
|
|
17
|
|
|
|
43
|
|
Accrued liabilities and pensions
|
|
|
118
|
|
|
|
113
|
|
Other items
|
|
|
11
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
253
|
|
|
|
259
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
638
|
|
|
|
598
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax assets and liabilities presented in the
accompanying consolidated balance sheets as of September 30,
2006 and 2007, are as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Current
|
|
|
97
|
|
|
|
66
|
|
Non-current
|
|
|
627
|
|
|
|
593
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Current
|
|
|
(26
|
)
|
|
|
(15
|
)
|
Non-current
|
|
|
(60
|
)
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
638
|
|
|
|
598
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2007, the Company had in Germany tax loss
carry-forwards of 3,295 million (relating to
both trade and corporate tax, plus an additional loss
carry-forward applicable only to trade tax
of 1,375 million); in other jurisdictions the
Company had tax loss carry-forwards
of 220 million and tax effected credit
carry-forwards of 149 million. Such tax loss
carry-forwards and tax effected credit carry-forwards are
generally limited to use by the particular entity that generated
the loss or credit and do not expire under current law. The
benefit for tax credits is accounted for on the flow-through
method when the individual legal entity is entitled to the
claim. In connection with the formation of Qimonda, the net
operating losses related to the memory products segment have
been retained by Infineon Technologies AG.
Pursuant to SFAS No. 109, the Company has assessed its
deferred tax asset and the need for a valuation allowance. Such
an assessment considers whether it is more likely than not that
some portion or all of the deferred tax assets may not be
realized. The assessment requires considerable judgment on the
part of management, with respect to, among other factors,
benefits that could be realized from available tax strategies
and future taxable income, as well as other positive and
negative factors. The ultimate realization of deferred tax
assets is dependent upon the Companys ability to generate
the appropriate character of future taxable income sufficient to
utilize loss carry-forwards or tax credits before their
expiration. Since the Company had incurred a cumulative loss in
certain tax jurisdictions over a three-year period as of
September 30, 2007, which is significant evidence that the
more likely than not criterion is not met pursuant to the
provisions of SFAS No. 109, the impact of forecasted
future taxable income is excluded from such an assessment. For
these tax jurisdictions, the assessment was therefore only based
on the benefits that could be realized from available tax
strategies and the reversal of temporary differences in
F-110
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
future periods. As a result of this assessment, the Company
increased the deferred tax asset valuation allowance as of
September 30, 2005, 2006 and 2007
by 192 million, 292 million,
and 226 million, respectively, to reduce the
deferred tax asset to an amount that is more likely than not
expected to be realized in future.
The changes in valuation allowance for deferred tax assets
during the years ended September 30, 2005, 2006 and 2007
were as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Balance, beginning of the year
|
|
|
567
|
|
|
|
740
|
|
|
|
1,091
|
|
Applicable to continuing operations
|
|
|
192
|
|
|
|
292
|
|
|
|
226
|
|
Purchase accounting adjustments
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
Change in tax rate
|
|
|
|
|
|
|
|
|
|
|
(298
|
)
|
Adjustment in corresponding net operating loss
carry-forward
|
|
|
11
|
|
|
|
59
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of the year
|
|
|
740
|
|
|
|
1,091
|
|
|
|
1,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the 2006 and 2007 fiscal years, the Company recorded
adjustments to certain net operating loss carry-forwards mainly
as a result of final tax assessment reconciliations. As the
adjustments were made in jurisdictions in which the Company is
in cumulative loss positions, such adjustments were recorded
directly to the valuation allowance and
approximated 11 million, 59 million
and 31 million in the 2005, 2006 and 2007 fiscal
years, respectively.
The Company did not provide for income taxes or foreign
withholding taxes on cumulative earnings of foreign subsidiaries
as of September 30, 2006 and 2007, as these earnings are
intended to be indefinitely reinvested in those operations. It
is not practicable to estimate the amount of unrecognized
deferred tax liabilities for these undistributed foreign
earnings.
The Company reorganized certain businesses in different tax
jurisdictions which resulted in deferred intercompany
transactions. As of September 30, 2006 and 2007, deferred
tax charges related to these transactions amounted
to 63 million and 56 million,
respectively, of which 56 million
and 50 million, respectively are non-current
(see note 18).
|
|
11.
|
Earnings (Loss)
Per Share
|
Basic earnings (loss) per share (EPS) is calculated
by dividing net loss by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is calculated by
dividing net income by the sum of the weighted average number of
ordinary shares outstanding plus all additional 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 for the years ended
September 30, 2005, 2006 and 2007, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Numerator ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before extraordinary loss
|
|
|
(312
|
)
|
|
|
(268
|
)
|
|
|
(333
|
)
|
Extraordinary loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(312
|
)
|
|
|
(268
|
)
|
|
|
(368
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator (shares in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding basic
|
|
|
747.6
|
|
|
|
747.6
|
|
|
|
748.6
|
|
Effect of dilutive instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding diluted
|
|
|
747.6
|
|
|
|
747.6
|
|
|
|
748.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share in :
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before extraordinary loss
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
(0.45
|
)
|
Extraordinary loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-111
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The weighted average of potentially dilutive instruments that
were excluded from the diluted 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 39.4 million, 46.7 million and
41.2 million shares underlying employee stock options for
the years ended September 30, 2005, 2006 and 2007,
respectively. Additionally, 86.5 million, 86.5 million
and 74.7 million ordinary shares issuable upon the
conversion of the convertible subordinated notes for the years
ended September 30, 2005, 2006 and 2007, respectively, were
not included in the computation of diluted earnings (loss) per
share as their impact would have been antidilutive.
|
|
12.
|
Marketable
Securities
|
Marketable securities at September 30, 2006 and 2007
consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
Cost
|
|
|
Value
|
|
|
Gains
|
|
|
Losses
|
|
|
Cost
|
|
|
Value
|
|
|
Gains
|
|
|
Losses
|
|
|
Foreign government securities
|
|
|
9
|
|
|
|
11
|
|
|
|
2
|
|
|
|
|
|
|
|
9
|
|
|
|
11
|
|
|
|
2
|
|
|
|
|
|
Floating rate notes
|
|
|
156
|
|
|
|
162
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed term securities
|
|
|
460
|
|
|
|
453
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
491
|
|
|
|
477
|
|
|
|
1
|
|
|
|
(15
|
)
|
Other debt securities
|
|
|
14
|
|
|
|
18
|
|
|
|
4
|
|
|
|
|
|
|
|
18
|
|
|
|
22
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
639
|
|
|
|
644
|
|
|
|
12
|
|
|
|
(7
|
)
|
|
|
518
|
|
|
|
510
|
|
|
|
7
|
|
|
|
(15
|
)
|
Equity securities
|
|
|
4
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
5
|
|
|
|
6
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
|
643
|
|
|
|
649
|
|
|
|
13
|
|
|
|
(7
|
)
|
|
|
523
|
|
|
|
516
|
|
|
|
8
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reflected as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
616
|
|
|
|
615
|
|
|
|
6
|
|
|
|
(7
|
)
|
|
|
490
|
|
|
|
475
|
|
|
|
|
|
|
|
(15
|
)
|
Non-current assets (note 18)
|
|
|
27
|
|
|
|
34
|
|
|
|
7
|
|
|
|
|
|
|
|
33
|
|
|
|
41
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
|
643
|
|
|
|
649
|
|
|
|
13
|
|
|
|
(7
|
)
|
|
|
523
|
|
|
|
516
|
|
|
|
8
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses relating to securities held for more than
12 months as of September 30, 2006 and 2007,
were 7 million and 8 million,
respectively.
Realized (losses) gains, net are reflected as other
non-operating income (expense), net and were as follows for the
years ended September 30 ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Realized gains
|
|
|
8
|
|
|
|
3
|
|
|
|
7
|
|
Realized losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains, net
|
|
|
8
|
|
|
|
3
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2007, there were no significant fixed
term deposits with contractual maturities between three and
twelve months.
Debt securities as of September 30, 2007 had the following
remaining contractual maturities ( in millions):
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
Less than 1 year
|
|
|
160
|
|
|
|
152
|
|
Between 1 and 5 years
|
|
|
133
|
|
|
|
130
|
|
More than 5 years
|
|
|
225
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
518
|
|
|
|
510
|
|
|
|
|
|
|
|
|
|
|
Actual maturities may differ due to call or prepayment rights.
F-112
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
13.
|
Trade Accounts
Receivable, net
|
Trade accounts receivable at September 30, 2006 and 2007
consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Third party trade
|
|
|
1,304
|
|
|
|
916
|
|
Associated and Related Companies trade (note 31)
|
|
|
8
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, gross
|
|
|
1,312
|
|
|
|
932
|
|
Allowance for doubtful accounts
|
|
|
(67
|
)
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
1,245
|
|
|
|
894
|
|
|
|
|
|
|
|
|
|
|
Activity in the allowance for doubtful accounts for the years
ended September 30, 2006 and 2007 is as follows ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Allowance for doubtful accounts at beginning of year
|
|
|
44
|
|
|
|
67
|
|
Provision for (recovery of) bad debt, net
|
|
|
23
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts at end of year
|
|
|
67
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
Inventories at September 30, 2006 and 2007 consist of the
following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Raw materials and supplies
|
|
|
125
|
|
|
|
123
|
|
Work-in-process
|
|
|
777
|
|
|
|
665
|
|
Finished goods
|
|
|
300
|
|
|
|
429
|
|
|
|
|
|
|
|
|
|
|
Total Inventories
|
|
|
1,202
|
|
|
|
1,217
|
|
|
|
|
|
|
|
|
|
|
Other current assets at September 30, 2006 and 2007 consist
of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Assets held for sale (note 5)
|
|
|
|
|
|
|
272
|
|
VAT and other tax receivables
|
|
|
189
|
|
|
|
174
|
|
Grants receivable (note 7)
|
|
|
125
|
|
|
|
104
|
|
Associated and Related Companies financial and other
receivables (note 31)
|
|
|
1
|
|
|
|
59
|
|
Third party financial and other receivables
|
|
|
61
|
|
|
|
57
|
|
Financial instruments (note 33)
|
|
|
22
|
|
|
|
49
|
|
Prepaid expenses
|
|
|
36
|
|
|
|
42
|
|
License fees receivable
|
|
|
14
|
|
|
|
13
|
|
Employee receivables (note 31)
|
|
|
7
|
|
|
|
8
|
|
Intangible pension asset (note 32)
|
|
|
13
|
|
|
|
|
|
Other
|
|
|
14
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
Total other current assets
|
|
|
482
|
|
|
|
807
|
|
|
|
|
|
|
|
|
|
|
F-113
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
16.
|
Property, Plant
and Equipment, net
|
A summary of activity for property, plant and equipment for the
years ended September 30, 2006 and 2007 is as follows
( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equipment
|
|
|
Other plant
|
|
|
|
|
|
|
|
|
|
Land and
|
|
|
and
|
|
|
and office
|
|
|
Construction
|
|
|
|
|
|
|
buildings
|
|
|
machinery
|
|
|
equipment
|
|
|
in progress
|
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
1,554
|
|
|
|
9,173
|
|
|
|
2,309
|
|
|
|
218
|
|
|
|
13,254
|
|
Additions
|
|
|
61
|
|
|
|
618
|
|
|
|
105
|
|
|
|
646
|
|
|
|
1,430
|
|
Impairments
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
Disposals
|
|
|
(15
|
)
|
|
|
(162
|
)
|
|
|
(180
|
)
|
|
|
(4
|
)
|
|
|
(361
|
)
|
Reclassifications
|
|
|
13
|
|
|
|
424
|
|
|
|
25
|
|
|
|
(462
|
)
|
|
|
|
|
Transfers
|
|
|
(101
|
)
|
|
|
(971
|
)
|
|
|
(24
|
)
|
|
|
(7
|
)
|
|
|
(1,103
|
)
|
Foreign currency effects
|
|
|
(56
|
)
|
|
|
(224
|
)
|
|
|
(20
|
)
|
|
|
(9
|
)
|
|
|
(309
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
1,456
|
|
|
|
8,855
|
|
|
|
2,215
|
|
|
|
382
|
|
|
|
12,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation September 30, 2006
|
|
|
(732
|
)
|
|
|
(6,749
|
)
|
|
|
(2,009
|
)
|
|
|
|
|
|
|
(9,490
|
)
|
Depreciation
|
|
|
(103
|
)
|
|
|
(933
|
)
|
|
|
(187
|
)
|
|
|
|
|
|
|
(1,223
|
)
|
Disposals
|
|
|
9
|
|
|
|
155
|
|
|
|
175
|
|
|
|
|
|
|
|
339
|
|
Reclassifications
|
|
|
|
|
|
|
(5
|
)
|
|
|
5
|
|
|
|
|
|
|
|
|
|
Transfers
|
|
|
41
|
|
|
|
880
|
|
|
|
18
|
|
|
|
|
|
|
|
939
|
|
Foreign currency effects
|
|
|
18
|
|
|
|
139
|
|
|
|
17
|
|
|
|
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
(767
|
)
|
|
|
(6,513
|
)
|
|
|
(1,981
|
)
|
|
|
|
|
|
|
(9,261
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value September 30, 2006
|
|
|
822
|
|
|
|
2,424
|
|
|
|
300
|
|
|
|
218
|
|
|
|
3,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value September 30, 2007
|
|
|
689
|
|
|
|
2,342
|
|
|
|
234
|
|
|
|
382
|
|
|
|
3,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On December 8, 2004, the Company announced plans to build a
new front-end production plant in Kulim High Tech Park,
Malaysia. The facility mainly produces power and logic chips
used in automotive and industrial power applications. The
construction started in early 2005 and production started in
September 2006. At full capacity, the facility is expected to
employ more than 1,500 people. Maximum capacity will be
about 100,000 wafer starts per month using 200-millimeter
wafers. As of September 30, 2007, the Company had invested
a total of 379 million in this production plant.
F-114
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
17.
|
Long-Term
Investments
|
A summary of activity for long-term investments for the years
ended September 30, 2006 and 2007, is as follows ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in
|
|
|
Investment in
|
|
|
|
|
|
|
Associated
|
|
|
Related
|
|
|
|
|
|
|
Companies
|
|
|
Companies
|
|
|
Total
|
|
|
Balance at September 30, 2005
|
|
|
758
|
|
|
|
21
|
|
|
|
779
|
|
Additions
|
|
|
5
|
|
|
|
1
|
|
|
|
6
|
|
Disposals
|
|
|
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Dividend payments
|
|
|
(29
|
)
|
|
|
|
|
|
|
(29
|
)
|
Capitalized interest
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Impairments
|
|
|
(13
|
)
|
|
|
|
|
|
|
(13
|
)
|
Equity in earnings
|
|
|
78
|
|
|
|
|
|
|
|
78
|
|
Consolidation of ALTIS
|
|
|
(202
|
)
|
|
|
4
|
|
|
|
(198
|
)
|
Gain on share issuance
|
|
|
72
|
|
|
|
|
|
|
|
72
|
|
Reclassifications
|
|
|
10
|
|
|
|
1
|
|
|
|
11
|
|
Foreign currency effects
|
|
|
(43
|
)
|
|
|
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2006
|
|
|
635
|
|
|
|
24
|
|
|
|
659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
Disposals
|
|
|
(25
|
)
|
|
|
(3
|
)
|
|
|
(28
|
)
|
Dividend payments
|
|
|
(61
|
)
|
|
|
|
|
|
|
(61
|
)
|
Capitalized interest
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Impairments
|
|
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Equity in earnings
|
|
|
117
|
|
|
|
|
|
|
|
117
|
|
Reclassifications
|
|
|
(12
|
)
|
|
|
4
|
|
|
|
(8
|
)
|
Foreign currency effects
|
|
|
(26
|
)
|
|
|
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2007
|
|
|
627
|
|
|
|
25
|
|
|
|
652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in Related Companies principally relate to
investment activities aimed at strengthening the Companys
future intellectual property potential.
The following Associated Companies as of September 30, 2007
are accounted for using the equity method of accounting:
|
|
|
|
|
|
|
Direct and indirect
|
|
Name of the Associated Company
|
|
ownership in
%(1)
|
|
|
Advanced Mask Technology Center GmbH & Co. KG, Dresden
(AMTC)
|
|
|
25.8
|
|
|
|
|
|
|
Inotera Memories Inc., Taoyuan, Taiwan (Inotera)
|
|
|
27.6
|
|
|
|
|
|
|
|
|
|
(1) |
|
Direct and indirect ownership
percentages are net of Qimondas minority interest.
|
The Company has accounted for these investments under the equity
method of accounting due to the lack of unilateral control (see
note 2). The above companies are principally engaged in the
research and development, design and manufacture of
semiconductors and related products.
On May 16, 2002, the Company entered into the AMTC joint
venture with its partners Advanced Micro Devices Inc., USA
(AMD), and DuPont Photomasks Inc., USA
(DuPont), with the purpose of developing and
manufacturing advanced photo masks. In addition, the Company
agreed to sell specified photomask equipment to DuPont, and
entered into a long-term purchase agreement through 2011.
Accordingly, as of September 30,
2007, 12 million was deferred which is being
recognized over the term of the purchase agreement. Toppan
Printing Co., Ltd. acquired DuPont in April 2005 which led to a
name change; former DuPont is now named Toppan Photomasks Inc.,
Ltd.
On November 13, 2002, the Company entered into agreements
with Nanya relating to a strategic cooperation in the
development of DRAM products and the foundation of a joint
venture (Inotera) to construct and operate a 300-millimeter
manufacturing facility in Taiwan. Pursuant to several
agreements, the Company and Nanya developed advanced
90-nanometer and have been developing 75-and 58-
F-115
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
nanometer technology. The 300-millimeter fabrication facility,
which employs the technology developed under the aforementioned
agreements to manufacture DRAM products, was completed in the
2006 fiscal year and was funded by Inotera. The
ramp-up of
the second manufacturing module at Inotera was completed and the
total capacity in both manufacturing modules reached 120,000
wafer starts per month in September 2007. The second module was
also fully funded by Inotera. The joint venture partners are
obliged to each purchase one-half of the facilitys
production based, in part, on market prices.
On March 17, 2006, Inotera successfully completed an IPO on
the Taiwanese stock exchange of 200 million ordinary
shares, representing 7.97 percent of its outstanding share
capital before IPO, for an issuance price of NT$33 per share. As
a result, the Companys ownership interest was diluted to
41.4 percent while its proportional share of Inoteras
equity increased by approximately 30 million,
which gain the Company recognized as part of non-operating
income during the third quarter of the 2006 fiscal year.
On May 10, 2006, Inotera successfully completed a public
offering on the Luxembourg Stock Exchange of 40 million
global depositary shares (representing 400,000,000 ordinary
shares) which are traded on the Euro MTF market and represent
14.8 percent of its outstanding share capital before the
offering, for an issuance price of NT$33 per ordinary share. As
a result, the Companys ownership interest was diluted to
36.0 percent (30.9 percent net of Qimondas
minority interest) while its proportional share of
Inoteras equity increased by 42 million,
which gain the Company reflected as part of non-operating income
during the fourth quarter of the 2006 fiscal year.
The agreement governing the joint venture with Nanya allowed
Infineon to transfer its shares in Inotera to Qimonda. However,
under Taiwanese law, Infineons shares in Inotera are
subject to a compulsory restriction on transfer
(lock-up) as
a result of Inoteras IPO. Infineon may only transfer these
shares to Qimonda gradually over the four years following
Inoteras IPO. The Company sought an exemption from this
restriction that would permit the immediate transfer of all of
these shares to Qimonda. In connection with the Formation,
Infineon and Qimonda entered into a trust agreement under which
Infineon held its Inotera shares in trust for Qimonda until the
shares could be transferred. This trust agreement provided for
Infineon to transfer the shares to Qimonda as and when the
transfer restrictions expire or Qimonda received the exemption
from the
lock-up. In
March 2007, the Inotera shares (except for the portion
representing less than 1 percent of the total shares) were
transferred to Qimonda. The Inotera shares remain subject to
Taiwanese
lock-up
provisions related to the Inotera IPO through January 2008,
after which the remaining shares are to be transferred to
Qimonda.
ALTIS is a joint venture between the Company and IBM, with each
having equal voting representation. During the year ended
September 30, 2003, the Company and IBM amended the
original shareholders agreement. Pursuant to the amendment, the
Company agreed to ratably increase its capacity reservation in
the production output of ALTIS from 50 percent to
100 percent during fiscal years 2004 through 2007.
In December 2005, the Company further amended its agreements
with IBM in respect of ALTIS, and extended its product purchase
agreement with ALTIS through 2009. Pursuant to the December 2005
amendment, the Company granted to IBM an option to require the
Company to acquire four-fifths of IBMs 50 percent
interest in the joint venture (or a total of 40 percent of
the outstanding shares of ALTIS) at any time after April 1,
2006 and prior to January 1, 2009. In connection with the
exercise of such option, IBM would be required to make a payment
to the Company to settle the respective interests of the
parties. In addition, the Company granted to IBM a second option
to require the Company to acquire up to four-fifths of
IBMs 50 percent interest in the joint venture (or a
total of 40 percent of the outstanding shares of ALTIS) in
increments of 10 percent after April 1, 2006 and prior
to January 1, 2009. The amendment also permits IBM to sell
its interest in ALTIS to a third party meeting certain specified
criteria.
Under the December 2005 amendment, the Company and IBM also
agreed a number of administrative matters regarding the
governance and management of ALTIS, as well as related
cost-allocation and accounting matters. The Company evaluated
the amendment in accordance with FIN 46R and concluded that
it held an interest in a variable interest entity in which the
Company is determined to be the primary beneficiary.
Accordingly, the Company began to fully consolidate ALTIS
following the December 19, 2005 amendment whereby
IBMs 50 percent ownership interest has been reflected
as a minority interest.
F-116
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The following table summarizes the elimination of the investment
in ALTIS as previously accounted for under the equity method of
accounting, and the Companys initial consolidation of
ALTIS during first quarter of the 2006 fiscal year ( in
millions) (see note 5):
|
|
|
|
|
|
|
ALTIS
|
|
|
|
December 2005
|
|
Consolidation Date
|
|
Communication
|
|
Segment
|
|
Solutions
|
|
|
Cash
|
|
|
119
|
|
Inventories
|
|
|
45
|
|
Other current assets
|
|
|
10
|
|
Property, plant and equipment
|
|
|
212
|
|
Long-term investment
|
|
|
(202
|
)
|
Other non-current assets
|
|
|
(47
|
)
|
|
|
|
|
|
Total assets consolidated
|
|
|
137
|
|
|
|
|
|
|
Current liabilities
|
|
|
(79
|
)
|
Non-current liabilities (including debt)
|
|
|
6
|
|
Deferred tax liabilities
|
|
|
3
|
|
Minority Interests
|
|
|
207
|
|
|
|
|
|
|
Total liabilities consolidated
|
|
|
137
|
|
|
|
|
|
|
Net assets consolidated
|
|
|
|
|
|
|
|
|
|
Cash paid
|
|
|
|
|
|
|
|
|
|
In November 2003, the Company, together with United Epitaxy
Company, Ltd. (UEC), Hsinchu, Taiwan, founded a
joint venture company, ParoLink. The Company initially
invested 6 million, held a 56 percent
ownership interest in ParoLink and accounted for its investment
in ParoLink using the equity method, since substantive
participating minority rights prevented the exercise of
unilateral control. In connection with the Companys
disposal of its fiber optics business (see note 5), the
Company acquired the minority interest in ParoLink, terminated
the joint venture with UEC and recorded an impairment to reduce
the investment to its estimated fair value
of 3 million. During January 2006, the joint
venture partners decided to dissolve and liquidate ParoLink. The
liquidation was completed in the 2007 fiscal year.
On October 1, 2002, the Company, Agere Systems Inc. and
Motorola Inc. incorporated StarCore, LLC (StarCore),
based in Austin, Texas. StarCore focused on developing,
standardizing and promoting Digital Signal Processor
(DSP) core technology. In the 2006 fiscal year the
shareholders decided by consensus to pursue their objectives in
DSP core technology individually and to liquidate StarCore. As a
consequence the Company recorded an impairment
of 13 million during the 2006 fiscal year.
On November 13, 2006 Qimonda sold its investment in Ramtron
International Corp., Colorado, USA (Ramtron) through
a private placement. As a result of the sale, Qimonda recorded a
gain of 2 million as part of other non-operating
income during the 2006 fiscal year.
The Company recognized impairment charges related to certain
investments for which the carrying value exceeded the fair value
on an other-than-temporary basis
of 29 million, 13 million
and 2 million during the years ended
September 30, 2005, 2006 and 2007, respectively.
There was no goodwill included in the amount of long-term
investments at September 30, 2006 and 2007, respectively.
For the Associated Companies as of September 30, 2007, the
aggregate summarized financial information for the fiscal years
2005, 2006 and 2007, is as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Sales
|
|
|
439
|
|
|
|
894
|
|
|
|
1,122
|
|
Gross profit
|
|
|
137
|
|
|
|
312
|
|
|
|
381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
72
|
|
|
|
208
|
|
|
|
277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-117
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Current assets
|
|
|
520
|
|
|
|
1,084
|
|
|
|
714
|
|
Non-current assets
|
|
|
1,883
|
|
|
|
1,811
|
|
|
|
2,810
|
|
Current liabilities
|
|
|
(334
|
)
|
|
|
(524
|
)
|
|
|
(661
|
)
|
Non-current liabilities
|
|
|
(891
|
)
|
|
|
(637
|
)
|
|
|
(1,133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
1,178
|
|
|
|
1,734
|
|
|
|
1,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current assets at September 30, 2006 and 2007
consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Deferred tax charges (note 10)
|
|
|
56
|
|
|
|
50
|
|
Marketable securities (note 12)
|
|
|
34
|
|
|
|
41
|
|
Long-term receivables
|
|
|
20
|
|
|
|
27
|
|
Employee receivables (note 31)
|
|
|
2
|
|
|
|
1
|
|
Grants receivable (note 7)
|
|
|
13
|
|
|
|
|
|
Other
|
|
|
21
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
146
|
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
A summary of activity for intangible assets for the years ended
September 30, 2006 and 2007 is as follows ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Goodwill
|
|
|
Intangibles
|
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005
|
|
|
125
|
|
|
|
448
|
|
|
|
573
|
|
Additions
|
|
|
|
|
|
|
56
|
|
|
|
56
|
|
Impairment charges (note 8)
|
|
|
(7
|
)
|
|
|
(31
|
)
|
|
|
(38
|
)
|
Disposals
|
|
|
(11
|
)
|
|
|
(26
|
)
|
|
|
(37
|
)
|
Foreign currency effects
|
|
|
(6
|
)
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
101
|
|
|
|
446
|
|
|
|
547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
31
|
|
|
|
45
|
|
|
|
76
|
|
Impairment charges (note 8)
|
|
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Disposals
|
|
|
(6
|
)
|
|
|
(46
|
)
|
|
|
(52
|
)
|
Foreign currency effects
|
|
|
(9
|
)
|
|
|
(4
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
117
|
|
|
|
439
|
|
|
|
556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005
|
|
|
|
|
|
|
(258
|
)
|
|
|
(258
|
)
|
Amortization
|
|
|
|
|
|
|
(67
|
)
|
|
|
(67
|
)
|
Disposals
|
|
|
|
|
|
|
5
|
|
|
|
5
|
|
Foreign currency effects
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
|
|
|
|
(317
|
)
|
|
|
(317
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
(52
|
)
|
|
|
(52
|
)
|
Disposals
|
|
|
|
|
|
|
42
|
|
|
|
42
|
|
Foreign currency effects
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
|
|
|
|
(324
|
)
|
|
|
(324
|
)
|
Carrying value September 30, 2005
|
|
|
125
|
|
|
|
190
|
|
|
|
315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value September 30, 2006
|
|
|
101
|
|
|
|
129
|
|
|
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value September 30, 2007
|
|
|
117
|
|
|
|
115
|
|
|
|
232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-118
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The estimated aggregate amortization expense relating to other
intangible assets for each of the five succeeding fiscal years
is as follows: 2008 37 million;
2009 22 million;
2010 17 million;
2011 16 million; 2012 11 million.
In connection with the acquisition of Saifuns remaining
30 percent share in the Infineon Technologies Flash joint
venture, the Company was granted a license for the use of
Saifuns
NROM®
technologies (see note 4). During the three months ended
March 31, 2005 the Company recorded the license
of 58 million and a corresponding liability in
the amount of 58 million, representing the
estimated fair value of the license and minimum future license
payments, respectively. The Company retained the option to
terminate the entire license, or parts thereof, at any time
without penalty. During the three months ended June 30,
2005, the Company exercised its termination option and cancelled
the portion of the license encompassing
NROM®
Code Flash products. Effective September 30, 2006, the
Company and Saifun amended the license agreement (see
note 4). As a result of the amendment, the related
liability was reduced to 3 million as of
September 30, 2006.
In March 2005, the Company and Rambus reached an agreement
settling all claims between them and licensing the Rambus patent
portfolio. The license of 37 million is being
amortized over the expected useful life of the related
technologies of ten years (see note 6).
On June 14, 2006, Infineon and Qimonda reached agreements
with MOSAID settling all claims between them and licensing the
MOSAID patent portfolio for use in current and future Company
products. The license of 32 million is being
amortized over the expected useful life of the related
technologies of six years (see note 6).
During the years ended September 30, 2005, 2006 and 2007,
the Company recognized intangible assets impairment charges
of 57 million, 38 million
and 2 million, respectively.
During the year ended September 30, 2005, the Company
concluded that sufficient indicators existed to require an
assessment of whether the carrying values of goodwill and
certain other intangible assets in the Customer Premises
Equipment, Wireless Infrastructure, Short Range Wireless, RF
Engine and Optical Networking reporting units within the
Communication Solutions segment might not be recoverable.
Recoverability of these intangible assets was measured by a
comparison of the carrying amount of the assets to the future
net cash flows expected to be generated by the assets.
Impairments of 57 million were recognized in
other operating expenses, representing the amount by which the
carrying amount of the assets exceeded their fair value.
During the year ended September 30, 2006, partially as a
result of the insolvency of one of the Companys largest
mobile phone customers, BenQ Mobile GmbH & Co. OHG,
the Company concluded that sufficient indicators existed to
require an assessment of whether the carrying values of goodwill
and certain other intangible assets principally in reporting
units within the Communication Solutions segment might not be
recoverable. Recoverability of these intangible assets was
measured by a comparison of the carrying amount of the assets to
the future net cash flows expected to be generated by the
assets. Impairments of 38 million were
recognized in other operating expenses, representing the amount
by which the carrying amount of the assets exceeded their fair
value.
During the year ended September 30, 2007, the Company did
not recognize any impairments of goodwill.
|
|
20.
|
Trade Accounts
Payable
|
Trade accounts payable at September 30, 2006 and 2007
consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Third party trade
|
|
|
1.165
|
|
|
|
1.128
|
|
Associated and Related Companies trade (note 31)
|
|
|
80
|
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1.245
|
|
|
|
1.285
|
|
|
|
|
|
|
|
|
|
|
F-119
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Accrued liabilities at September 30, 2006 and 2007 consist
of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Personnel costs
|
|
|
353
|
|
|
|
381
|
|
Warranties and licenses
|
|
|
54
|
|
|
|
44
|
|
Settlement for antitrust related matters (note 35)
|
|
|
53
|
|
|
|
38
|
|
Other
|
|
|
65
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
525
|
|
|
|
526
|
|
|
|
|
|
|
|
|
|
|
On September 15, 2004 the Company entered into a plea
agreement with the United States Department of Justice in
connection with its antitrust investigation (see
note 35) and agreed to pay a fine aggregating
$160 million over a five-year period. The related amount
due within one year is included in accrued liabilities and other
current liabilities, and the long-term portion is reflected as
other non-current liabilities (see note 25). As a result of
this agreement and other antitrust related investigations and
customer settlements (see note 35), the Company recorded
other operating (expenses) income with an aggregate of
(20) million, (23) million
and 9 million during the years ended
September 30, 2005, 2006 and 2007, respectively (see
note 8).
A tabular reconciliation of the changes in the aggregate product
warranty liability for the year ended September 30, 2007 is as
follows ( in millions):
|
|
|
|
|
|
|
2007
|
|
|
Balance as of September 30, 2006
|
|
|
51
|
|
Accrued during the year, net
|
|
|
29
|
|
Settled during the year
|
|
|
(36
|
)
|
|
|
|
|
|
Balance as of September 30, 2007
|
|
|
44
|
|
|
|
|
|
|
|
|
22.
|
Other Current
Liabilities
|
Other current liabilities at September 30, 2006 and 2007
consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Deferred income
|
|
|
62
|
|
|
|
124
|
|
VAT and other taxes payable
|
|
|
212
|
|
|
|
109
|
|
Liabilities related to asset held for sale (note 5)
|
|
|
|
|
|
|
117
|
|
Payroll obligations to employees
|
|
|
128
|
|
|
|
88
|
|
Deferred government grants (note 7)
|
|
|
95
|
|
|
|
69
|
|
Restructuring (note 9)
|
|
|
63
|
|
|
|
44
|
|
Financial instruments (note 33)
|
|
|
11
|
|
|
|
38
|
|
Interest
|
|
|
37
|
|
|
|
20
|
|
Settlement for anti-trust related matters (note 35)
|
|
|
24
|
|
|
|
20
|
|
Associated and Related Companies financial and other
payables (note 31)
|
|
|
9
|
|
|
|
12
|
|
Other
|
|
|
71
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
712
|
|
|
|
680
|
|
|
|
|
|
|
|
|
|
|
Other deferred income includes amounts relating to license
income (see note 6) and deferred revenue. The
non-current portion is included in other liabilities (see
note 25).
F-120
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Debt at September 30, 2006 and 2007 consists of the
following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Short-term debt:
|
|
|
|
|
|
|
|
|
Loans payable to banks, weighted average rate 4.55%
|
|
|
51
|
|
|
|
155
|
|
Convertible subordinated notes, 4.25%, due 2007
|
|
|
638
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
108
|
|
|
|
153
|
|
Capital lease obligation
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
Total short-term debt and current maturities
|
|
|
797
|
|
|
|
336
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
Exchangeable subordinated notes, 1.375%, due 2010
|
|
|
|
|
|
|
215
|
|
Convertible subordinated notes, 5.0%, due 2010
|
|
|
692
|
|
|
|
695
|
|
Loans payable to banks:
|
|
|
|
|
|
|
|
|
Unsecured term loans, weighted average rate 4.82%, due 2009
2013
|
|
|
458
|
|
|
|
318
|
|
Secured term loans, weighted average rate 1.99%, due 2013
|
|
|
7
|
|
|
|
4
|
|
Other loans payable, weighted average rate 4.35%, due 2011
|
|
|
3
|
|
|
|
|
|
Notes payable to governmental entity, rate 2.02%, due
2010 2027
|
|
|
48
|
|
|
|
44
|
|
Capital lease obligation
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
1,208
|
|
|
|
1,376
|
|
|
|
|
|
|
|
|
|
|
Short-term loans payable to banks consist primarily of
borrowings under the terms of short-term borrowing arrangements.
On September 26, 2007, the Company (as guarantor), through
its subsidiary Infineon Technologies Investment B.V. (as
issuer), issued 215 million in exchangeable
subordinated notes due 2010 at par in an underwritten offering
to institutional investors in Europe. The notes accrue interest
at 1.375 percent per year. The notes are exchangeable into
a maximum of 20.5 million Qimonda ADSs, at an exchange
price of 10.48 per ADS any time during the exchange
period, as defined, through maturity, corresponding to an
exchange premium of 35 percent. The notes are unsecured and
rank pari passu with all present and future unsecured
subordinated obligations of the issuer. The noteholders have a
negative pledge relating to future capital market indebtedness,
as defined, and an early redemption option in the event of a
change of control, as defined. The Company may, at its option,
redeem the outstanding notes in whole, but not in part, at the
principal amount thereof together with accrued interest to the
date of redemption, if the issuer has determined that, as a
result of a publicly announced transaction, there is a
substantial likelihood that the aggregate ownership of the share
capital of Qimonda AG by the issuer, the guarantor and any of
their respective subsidiaries will be less than 50 percent
plus one share. In addition, the Company may, at its option,
redeem the outstanding notes in whole, but not in part, at their
principal amount together with interest accrued to the date of
redemption, if the share price of the ADSs on each of 15 trading
days during a period of 30 consecutive trading days commencing
on or after August 31, 2009, exceeds 130 percent of
the exchange price. The exchangeable notes are listed on the
Frankfurt Stock Exchange. At September 30, 2007,
unamortized debt issuance costs amount
to 6 million. Concurrently with this
transaction, the Company loaned an affiliate of J.P. Morgan
Securities Inc. 3.6 million Qimonda ADSs ancillary to the
placement of the exchangeable subordinated notes. The affiliate
of J.P. Morgan Securities Inc. sold these ADSs as part of
the Qimonda ADSs sale on September 25, 2007 (see
note 3).
On June 5, 2003, the Company (as guarantor), through its
subsidiary Infineon Technologies Holding B.V. (as issuer),
issued 700 million in convertible subordinated
notes due 2010 at par in an underwritten offering to
institutional investors in Europe. The notes are convertible, at
the option of the holders of the notes, into a maximum of
68.4 million ordinary shares of the Company, at a
conversion price of 10.23 per share through maturity.
The notes accrue interest at 5.0 percent per year. The
notes are unsecured and rank pari passu with all present and
future unsecured subordinated obligations of the issuer. The
noteholders have a negative pledge relating to future capital
market indebtedness, as defined. The note holders have an early
redemption option in the event of a change of control, as
defined. A corporate reorganization resulting in a substitution
of the guarantor shall not be regarded as a change of control,
as
F-121
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
defined. The Company may redeem the convertible notes after
three years at their principal amount plus interest accrued
thereon, if the Companys share price exceeds
125 percent of the conversion price on 15 trading days
during a period of 30 consecutive trading days. The convertible
notes are listed on the Luxembourg Stock Exchange. On
September 29, 2006 the Company (through the issuer)
irrevocably waived its option to pay a cash amount in lieu of
the delivery of shares upon conversion. At September 30,
2007, unamortized debt issuance costs amount
to 5 million.
On February 6, 2007, the Company (as guarantor), through
its subsidiary Infineon Technologies Holding B.V. (as issuer),
fully redeemed its convertible subordinated notes due 2007 at
the principal outstanding amount of 640 million.
In September 2004, the Company executed a
$400/400 million syndicated credit facility with a
five-year
term, which was subsequently reduced to
$345/300 million in August 2006. The facility
consists of two tranches. Tranche A is a term loan to
finance the expansion of the Richmond, Virginia, manufacturing
facility. In January 2006, the Company drew $345 million
under Tranche A, on the basis of a repayment schedule that
foresees equal installments falling due in March and September
each year. At September 30, 2007, $235 million was
outstanding under Tranche A. Tranche B, which is
a 300 million multicurrency revolving facility
to be used for general corporate purposes, remained available
and undrawn at September 30, 2007. The facility has
customary financial covenants, and drawings bear interest at
market-related rates that are linked to financial performance.
The lenders of this credit facility have been granted a negative
pledge relating to the future financial indebtedness of the
Company with certain permitted encumbrances. In September 2007,
the Company extended its credit lines
by 300 million in additional short-term
bilateral commitments from lenders of the facility described
above under the same terms and conditions applicable to
Tranche B.
In September 2007, Qimonda entered into a sale and leaseback
transaction of 200-millimeter equipment. The four-year lease is
accounted for as a capital lease, whereby the present value of
the lease payments is reflected as a capital lease obligation.
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 ( in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of financial
|
|
|
|
As of September 30, 2007
|
|
|
|
Institution
|
|
Purpose/intended
|
|
Aggregate
|
|
|
|
|
|
|
|
Term
|
|
Commitment
|
|
use
|
|
facility
|
|
|
Drawn
|
|
|
Available
|
|
|
Short-term
|
|
Firm commitment
|
|
Working capital, guarantees
|
|
|
164
|
|
|
|
127
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
|
|
No firm commitment
|
|
Working capital, cash management
|
|
|
336
|
|
|
|
28
|
|
|
|
308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term(1)
|
|
Firm commitment
|
|
General corporate purposes
|
|
|
766
|
|
|
|
165
|
|
|
|
601
|
|
Long-term(1)
|
|
Firm commitment
|
|
Project finance
|
|
|
354
|
|
|
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
1,620
|
|
|
|
674
|
|
|
|
946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Including current maturities.
|
At September 30, 2007, the Company was in compliance with
its debt covenants under the relevant facilities.
Interest expense for the years ended September 30, 2005,
2006 and 2007 was 83 million, 109 million
and 89 million, respectively.
F-122
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Aggregate amounts of debt maturing subsequent to
September 30, 2007 are as follows ( in millions):
|
|
|
|
|
Fiscal year ending September 30
|
|
Amount
|
|
|
2008
|
|
|
336
|
|
2009
|
|
|
207
|
|
2010
|
|
|
1,002
|
|
2011
|
|
|
95
|
|
2012
|
|
|
26
|
|
Thereafter
|
|
|
46
|
|
|
|
|
|
|
Total
|
|
|
1,712
|
|
|
|
|
|
|
|
|
24.
|
Long-Term Accrued
Liabilities
|
Long-term accrued liabilities at September 30, 2006 and
2007 consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Asset retirement obligations
|
|
|
33
|
|
|
|
24
|
|
Post-retirement benefits
|
|
|
4
|
|
|
|
3
|
|
Personnel costs
|
|
|
6
|
|
|
|
6
|
|
Other
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
46
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
Other non-current liabilities at September 30, 2006 and
2007 consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Deferred income
|
|
|
40
|
|
|
|
114
|
|
Deferred government grants (note 7)
|
|
|
117
|
|
|
|
113
|
|
Settlement for antitrust related matters (note 35)
|
|
|
62
|
|
|
|
37
|
|
License fees payable
|
|
|
41
|
|
|
|
27
|
|
Deferred Compensation
|
|
|
|
|
|
|
13
|
|
Other
|
|
|
17
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
277
|
|
|
|
316
|
|
|
|
|
|
|
|
|
|
|
On July 28, 2003, the Company entered into a joint venture
agreement with China-Singapore Suzhou Industrial Park Venture
Company (CSVC) for the construction of a back-end
manufacturing facility in the Peoples Republic of China.
Pursuant the joint venture agreement, the capital invested by
CSVC earns an annual return and has a liquidation preference,
while all accumulated earnings and dividend rights accrue to the
benefit of the Company. Accordingly, the Company has fully
consolidated the joint venture from inception, and the capital
invested and annual return of the minority investor is reflected
as minority interest.
ALTIS is a joint venture between the Company and IBM, with each
having equal voting representation. In December 2005, the
Company further amended its agreements with IBM in respect of
the ALTIS joint venture and began to fully consolidate ALTIS,
whereby IBMs 50 percent ownership interest is
reflected as minority interest (see note 5 and 17).
Effective May 1, 2006, the Company contributed
substantially all of the operations of its memory products
segment, including the assets and liabilities that were used
exclusively for these operations, to Qimonda, a stand-alone
legal company. On August 9, 2006, Qimonda completed an
initial public offering on the New York Stock Exchange through
the issuance of 42 million ADSs which are traded under the
symbol QI, for an offering price of $13 per ADS. In
addition, the Company sold 6.3 million Qimonda ADSs upon
exercise of the underwriters over-allotment option. As a
result of these transactions, the Company
F-123
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
reduced its shareholding in Qimonda to 85.9 percent. During
the fourth quarter of the 2007 fiscal year, Infineon sold an
additional 28.75 million Qimonda ADSs (including
underwriters over-allotment option), further reducing its
ownership interest in Qimonda to 77.5 percent. The minority
investors ownership interest in Qimonda of
14.1 percent and 22.5 percent as of September 30,
2006 and 2007, respectively, is reflected as minority interest
(see note 3).
|
|
27.
|
Ordinary Share
Capital
|
As of September 30, 2007 the Company had 749,728,635
registered ordinary shares, notional value of 2.00 per
share, outstanding. During the years ended September 30,
2006 and 2007 the Company increased its share capital by
0.08 million and 4 million, respectively,
by issuing 39,935 and 2,119,341 ordinary shares, respectively,
in connection with the Companys Long-Term Incentive Plans.
Authorized and
Conditional Share Capital
In addition to the issued share capital, the Companys
Articles of Association authorize the Management Board to
increase the ordinary share capital with the Supervisory
Boards consent by issuing new shares. As of
September 30, 2007, the Management Board may use these
authorizations to issue new shares as follows:
|
|
|
|
|
Through January 19, 2009, Authorized Share Capital
II/2004 in an aggregate nominal amount of up to
30 million to issue shares to employees (in which
case the pre-emptive rights of existing shareholders are
excluded).
|
|
|
|
Through February 14, 2012, Authorized Share Capital
2007 in an aggregate nominal amount of up to
224 million to issue shares for cash, where the
pre-emptive rights of shareholders may be partially excluded, or
in connection with business combinations (contributions in
kind), where the pre-emptive rights of shareholders may be
excluded for all shares.
|
The Company has conditional capital of up to an aggregate
nominal amount of 92 million (Conditional Share
Capital I), of up to an aggregate nominal amount of
29 million (Conditional Share Capital III) and
up to an aggregate nominal amount of 24.5 million
(Conditional Share Capital IV/2006) that may be used to issue up
to 72.6 million new registered shares in connection with
the Companys long-term incentive plans (see note 28).
These shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
The Company has conditional capital of up to an aggregate
nominal amount of 152 million (Conditional Share
Capital 2002) that may be used to issue up to
76 million new registered shares upon conversion of debt
securities, issued in June 2003 and which may be converted at
any time until May 22, 2010 (see note 23). These
shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
The Company has further conditional capital of up to an
aggregate nominal amount of 248 million (Conditional
Share Capital 2007) that may be used to issue up to
124 million new registered shares upon conversion of debt
securities which may be issued before February 14, 2012.
These shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
Dividends
Under the German Stock Corporation Act (Aktiengesetz), the
amount of dividends available for distribution to shareholders
is based on the level of earnings (Bilanzgewinn) of the ultimate
parent, as determined in accordance with the HGB. All dividends
must be approved by shareholders.
The ordinary shareholders meeting held in February 2007 did not
authorize a dividend. No earnings are available for distribution
as a dividend for the 2007 fiscal year, since Infineon
Technologies AG on a stand-alone basis as the ultimate parent
incurred a cumulative loss (Bilanzverlust) as of
September 30, 2007.
F-124
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
28.
|
Stock-Based
Compensation
|
Effective October 1, 2005, the Company adopted
SFAS No. 123 (revised 2004) under the modified
prospective application method. Under this application, the
Company records stock-based compensation expense for all awards
granted on or after the date of adoption and for the portion of
previously granted awards that remained unvested at the date of
adoption. Stock-based compensation cost is measured at the grant
date, based on the fair value of the award, and is recognized as
expense over the period during which the employee is required to
provide service in exchange for the award. Amounts in periods
prior to the adoption of SFAS No. 123 (revised
2004) have not been restated and do not reflect the
recognition of stock-based compensation.
Infineon Stock
Option Plan
In 1999, the shareholders approved a long-term incentive plan
(LTI 1999 Plan), which provided for the granting of
non-transferable options to acquire ordinary shares over a
future period. Under the terms of the LTI 1999 Plan, the Company
could grant up to 48 million options over a five-year
period. The exercise price of each option equals
120 percent of the average closing price of the
Companys stock during the five trading days prior to the
grant date. Granted options vest at the latter of two years from
the grant date or the date on which the Companys stock
reaches the exercise price for at least one trading day. Options
expire seven years from the grant date.
In 2001, the Companys shareholders approved the
International Long-Term Incentive Plan (LTI 2001
Plan) which replaced the LTI 1999 Plan. Options previously
issued under the LTI 1999 Plan remain unaffected as to terms and
conditions; however, no additional options may be issued under
the LTI 1999 Plan. Under the terms of the LTI 2001 Plan, the
Company could grant up to 51.5 million options over a
five-year period. The exercise price of each option equals
105 percent of the average closing price of the
Companys stock during the five trading days prior to the
grant date. Granted options have a vesting period of between two
and four years, subject to the Companys stock reaching the
exercise price on at least one trading day, and expire seven
years from the grant date.
Under the LTI 2001 Plan, the Companys Supervisory Board
decided annually within 45 days after publication of the
financial results how many options to grant to the Management
Board. The Management Board, within the same period, decided how
many options to grant to eligible employees.
In 2006, the Companys shareholders approved the Stock
Option Plan 2006 (SOP 2006) which replaced the
LTI 2001 Plan. Under the terms of SOP 2006, the Company can
grant up to 13 million options over a three-year period.
The exercise price of each option equals 120 percent of the
average closing price of the Companys stock during the
five trading days prior to the grant date. Granted options are
only exercisable if the price of a share exceeds the trend of
the comparative index Philadelphia Semiconductor Index
(SOX) for at least three consecutive days on at
least one occasion during the life of the option. Granted
options have a vesting period of three years, subject to the
Companys stock reaching the exercise price on at least one
trading day, and expire six years from the grant date.
Under the SOP 2006, the Supervisory Board will deside
annually within a period of 45 days after publication of
the annual results or the results of the first or second
quarters of a fiscal year, but not later then two weeks before
the end of the quarter, how many options to grant to the
Management Board. During the same period the Management Board
may grant options to other eligible employees.
F-125
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
A summary of the status of the LTI 1999 Plan, the LTI 2001 Plan,
and the SOP 2006 as of September 30, 2007, and changes
during the fiscal year then ended is presented below (options in
millions, exercise price 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, 2006
|
|
|
44.8
|
|
|
|
18.12
|
|
|
|
3.54
|
|
|
|
14
|
|
Granted
|
|
|
2.3
|
|
|
|
13.30
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(2.1
|
)
|
|
|
8.91
|
|
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
(5.6
|
)
|
|
|
33.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2007
|
|
|
39.4
|
|
|
|
16.17
|
|
|
|
2.99
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest, net of estimated forfeitures at
September 30, 2007
|
|
|
39.1
|
|
|
|
16.20
|
|
|
|
2.97
|
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2007
|
|
|
25.8
|
|
|
|
19.52
|
|
|
|
2.06
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options with an aggregate fair value of 42 million,
51 million and 32 million vested during
the fiscal years ended September 30, 2005, 2006 and 2007,
respectively. Options with a total intrinsic value of 0,
0 and 6 million were exercised during the
fiscal years ended September 30, 2005, 2006 and 2007,
respectively.
Changes in the Companys unvested options for the fiscal
year ended September 30, 2007 are summarized as follows
(options in million, fair values in euro, intrinsic value in
millions of euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
average
|
|
|
average
|
|
|
|
|
|
|
Number of
|
|
|
grant date
|
|
|
remaining life
|
|
|
Aggregated
|
|
|
|
options
|
|
|
fair value
|
|
|
(in years)
|
|
|
Intrinsic Value
|
|
|
Unvested at September 30, 2006
|
|
|
19.2
|
|
|
|
4.11
|
|
|
|
5.11
|
|
|
|
11
|
|
Granted
|
|
|
2.3
|
|
|
|
2.03
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(7.0
|
)
|
|
|
4.63
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(0.9
|
)
|
|
|
3.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at September 30, 2007
|
|
|
13.6
|
|
|
|
3.50
|
|
|
|
4.77
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested options expected to vest
|
|
|
13.2
|
|
|
|
3.53
|
|
|
|
4.81
|
|
|
|
34
|
|
The fair value of each option grant issued pursuant to the 1999
and 2001 Long-Term Incentive Plans was estimated on the grant
date using the Black-Scholes option-pricing model. Prior to the
adoption of SFAS No. 123 (revised 2004), Infineon
relied on historical volatility measures when estimating the
fair value of stock options granted to employees. Following the
implementation of SFAS No. 123 (revised 2004),
Infineon uses a combination of implied volatilities from traded
options on Infineons ordinary shares and historical
volatility when estimating the fair value of stock options
granted to employees, as it believes that this methodology
better reflects the expected future volatility of its stock. The
expected life of options granted was estimated based on
historical experience.
The fair value of each option grant issued pursuant to the Stock
Option Plan 2006 was estimated on the grant date using a Monte
Carlo simulation model. This model takes into account vesting
conditions relating to the performance of the SOX and its impact
on stock option fair value. The Company uses a combination of
implied volatilities from traded options on Infineons
ordinary shares and historical volatility when estimating the
fair value of stock options granted to employees, as it believes
that this methodology better reflects the expected future
volatility of its stock. The expected life of options granted
was estimated using the Monte Carlo simulation model.
Beginning on the date of adoption of SFAS No. 123
(revised 2004), forfeitures are estimated based on historical
experience; prior to the date of adoption, forfeitures were
recorded as they occurred. The risk-free rate is based on
treasury note yields at the time of grant for the estimated life
of the option. Infineon has not made any dividend payments
during the fiscal year ended September 30, 2007.
F-126
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The following weighted-average assumptions were used in the fair
value calculation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate in %
|
|
|
3.02
|
|
|
|
3.08
|
|
|
|
3.91
|
|
Expected volatility, underlying shares in %
|
|
|
58
|
|
|
|
43
|
|
|
|
40
|
|
Expected volatility, SOX index in%
|
|
|
|
|
|
|
|
|
|
|
36
|
|
Forfeiture rate, per year in %
|
|
|
|
|
|
|
|
|
|
|
3.40
|
|
Dividend yield in %
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Expected life in years
|
|
|
4.50
|
|
|
|
5.07
|
|
|
|
3.09
|
|
Weighted-average fair value per option at grant date in
|
|
|
4.03
|
|
|
|
3.19
|
|
|
|
2.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2007, there was a total of
12 million in unrecognized compensation expense
related to un-vested stock options of Infineon, which is
expected to be recognized over a weighted-average period of
1 year.
Qimondas
Stock Option Plan
Qimonda shareholders approved a stock option plan (Qimonda
2006 SOP) during the 2006 fiscal year. Under the terms of
the Qimonda 2006 SOP, Qimonda can grant up to 6 million
non-transferable option rights over a three-year period which
grant the holder the right to receive ordinary shares issued by
Qimonda. The exercise price of each option equals
100 percent of the average closing price of Qimondas
ADSs on the New York Stock Exchange during the five trading days
prior to the grant date. Granted options are only exercisable if
the price of Qimonda ADSs as quoted on the New York Stock
Exchange exceeds the trend of the comparative index SOX for at
least three consecutive days on at least one occasion during the
life of the option. Granted options have a vesting period of
three years, subject to Qimondas ADSs reaching the
exercise price on at least one trading day, and expire six years
from the grant date. On November 24, 2006, Qimonda granted
1.9 million stock options to its employees under the
Qimonda 2006 SOP.
A summary of the status of the Qimonda 2006 SOP as of
September 30, 2007, and changes during the fiscal year then
ended, is presented below (options in millions, exercise prices
in U.S. dollar, fair value in euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted average
|
|
|
|
|
|
|
|
|
|
average
|
|
|
remaining
|
|
|
Aggregated
|
|
|
|
Number of
|
|
|
exercise
|
|
|
life
|
|
|
Intrinsic
|
|
|
|
options
|
|
|
price
|
|
|
(in years)
|
|
|
Value
|
|
|
Outstanding at September 30, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1.9
|
|
|
|
15.97
|
|
|
|
6.00
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2007
|
|
|
1.9
|
|
|
|
15.97
|
|
|
|
5.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected to vest, net of estimated forfeitures, at
September 30, 2007
|
|
|
1.7
|
|
|
|
15.97
|
|
|
|
5.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-127
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Changes of the Qimonda 2006 SOP unvested options for the fiscal
year ended September 30, 2007 are summarized as follows
(options in million, fair values in euro, intrinsic value in
millions of euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
average
|
|
|
average
|
|
|
|
|
|
|
|
|
|
grant
|
|
|
remaining
|
|
|
Aggregated
|
|
|
|
Number
|
|
|
date fair
|
|
|
life
|
|
|
Intrinsic
|
|
|
|
of options
|
|
|
value
|
|
|
(in years)
|
|
|
Value
|
|
|
Unvested at September 30, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1.9
|
|
|
|
3.23
|
|
|
|
6.00
|
|
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at September 30, 2007
|
|
|
1.9
|
|
|
|
3.23
|
|
|
|
5.16
|
|
|
|
|
|
Unvested options expected to vest
|
|
|
1.7
|
|
|
|
3.23
|
|
|
|
5.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of each option grant issued pursuant to the
Qimonda 2006 SOP was estimated on the grant date using a Monte
Carlo simulation model. This model takes into account vesting
conditions relating to the performance of the SOX and its impact
on stock option fair value. Following the implementation of
SFAS No. 123 (revised 2004), Qimonda uses a
combination of implied and historical volatilities from traded
options on Qimondas peer group when estimating the fair
value of stock options granted to employees, as it believes that
this methodology better reflects the expected future volatility
of its stock. The peer group is a group of publicly listed
companies deemed to reflect the fundamentals of Qimondas
stock. Forfeitures are estimated based on historical experience.
The expected life of options granted was estimated using the
Monte Carlo simulation model. The risk-free rate is based on
treasury note yields at the time of grant for the estimated life
of the option. Qimonda has not made any dividend payments during
the fiscal year ended September 30, 2007.
The following weighted average assumptions were used in the fair
value calculation:
|
|
|
|
|
|
|
2007
|
|
|
Weighted-average assumptions:
|
|
|
|
|
Risk-free interest rate in %
|
|
|
4.62
|
|
Expected volatility, underlying ADS in %
|
|
|
45
|
|
Expected volatility, SOX in %
|
|
|
29
|
|
Forfeiture rate, per year in %
|
|
|
3.40
|
|
Dividend yield in %
|
|
|
0
|
|
Expected life in years
|
|
|
4.62
|
|
Weighted-average fair value per option at grant date in
|
|
|
3.23
|
|
|
|
|
|
|
As of September 30, 2007, there was a total of
4 million in unrecognized compensation expense
related to un-vested stock options of Qimonda 2006 SOP, which is
expected to be recognized over a weighted average period of
2.27 years.
Stock-Based
Compensation Expense
Stock-based compensation expense was allocated as follows for
the fiscal years ended September 30, 2006 and 2007 (
in millions, except for share data):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Compensation expense recognized:
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
7
|
|
|
|
4
|
|
Selling, general and administrative expenses
|
|
|
12
|
|
|
|
7
|
|
Research and development expenses
|
|
|
9
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
|
28
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation effect on basic and diluted loss per
share in
|
|
|
(0.04
|
)
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
F-128
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Cash received from stock option exercises was 0 and
19 million during the fiscal years ended
September 30, 2006 and 2007, respectively. The amount of
stock-based compensation expense which was capitalized and
remained in inventories for the fiscal years ended September 30,
2005, 2006 and 2007 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.
Prior to the 2006 fiscal year, the Company applied the
provisions of APB No. 25, as permitted under
SFAS No. 148.
If the Company had accounted for stock option grants and
employee stock purchases under its plans according to the fair
value method of SFAS No. 123, and thereby recognized
compensation expense based on the above fair values over the
respective option vesting periods, net loss and loss per share
would have been increased to the pro forma amounts indicated
below, pursuant to the provisions of SFAS No. 148
( in millions, except for share data):
|
|
|
|
|
|
|
2005
|
|
|
Net loss:
|
|
|
|
|
As reported
|
|
|
(312
|
)
|
Deduct: Stock-based employee compensation expense included in
reported net loss, net of related tax effects
|
|
|
|
|
Add: Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax
effects
|
|
|
(39
|
)
|
Pro forma
|
|
|
(351
|
)
|
Basic and diluted loss per share in :
|
|
|
|
|
As reported
|
|
|
(0,42
|
)
|
|
|
|
|
|
Pro forma
|
|
|
(0,47
|
)
|
|
|
|
|
|
|
|
29.
|
Other
Comprehensive Loss
|
The changes in the components of other comprehensive loss for
the years ended September 30, 2005, 2006 and 2007 are as
follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
Unrealized (losses) gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains
|
|
|
13
|
|
|
|
(1
|
)
|
|
|
12
|
|
|
|
6
|
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(7
|
)
|
Reclassification adjustment for losses (gains) included in net
income or loss
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
(13
|
)
|
|
|
1
|
|
|
|
(12
|
)
|
|
|
(6
|
)
|
|
|
1
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized (losses) gains, net
|
|
|
9
|
|
|
|
(1
|
)
|
|
|
8
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(7
|
)
|
|
|
(13
|
)
|
|
|
1
|
|
|
|
(12
|
)
|
Unrealized gains (losses) on cash flow hedges
|
|
|
(25
|
)
|
|
|
|
|
|
|
(25
|
)
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
Additional minimum pension liability/Defined benefit plans
|
|
|
(85
|
)
|
|
|
1
|
|
|
|
(84
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
(3
|
)
|
|
|
95
|
|
|
|
(5
|
)
|
|
|
90
|
|
Foreign currency translation adjustment
|
|
|
64
|
|
|
|
|
|
|
|
64
|
|
|
|
(69
|
)
|
|
|
|
|
|
|
(69
|
)
|
|
|
(105
|
)
|
|
|
|
|
|
|
(105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
|
(37
|
)
|
|
|
|
|
|
|
(37
|
)
|
|
|
(74
|
)
|
|
|
|
|
|
|
(74
|
)
|
|
|
(21
|
)
|
|
|
(4
|
)
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-129
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
30.
|
Supplemental Cash
Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
( in millions)
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
91
|
|
|
|
116
|
|
|
|
100
|
|
Income taxes
|
|
|
79
|
|
|
|
117
|
|
|
|
134
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction grants deducted from cost of fixed assets
(note 7)
|
|
|
|
|
|
|
49
|
|
|
|
1
|
|
Molstanda (note 4)
|
|
|
|
|
|
|
|
|
|
|
(41
|
)
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Molstanda (note 4)
|
|
|
|
|
|
|
|
|
|
|
76
|
|
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.
Transactions between the Company and ALTIS subsequent to the
consolidation of ALTIS during the first quarter of the 2006
fiscal year are no longer reflected as Related Party
transactions (see notes 5 and 17).
On April 3, 2006, Siemens disposed of its remaining
shareholding in the Company. Transactions between the Company
and Siemens subsequent to this date are no longer reflected as
Related Party transactions.
Related Party receivables at September 30, 2006 and 2007
consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Associated and Related Companies trade (note 13)
|
|
|
8
|
|
|
|
16
|
|
Associated and Related Companies financial and other
receivables (note 15)
|
|
|
1
|
|
|
|
59
|
|
Employee receivables (note 15)
|
|
|
7
|
|
|
|
8
|
|
|
|
|
16
|
|
|
|
83
|
|
Non-current:
|
|
|
|
|
|
|
|
|
Employee receivables (note 18)
|
|
|
2
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total Related Party receivables
|
|
|
18
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
Related Party payables at September 30, 2006 and 2007
consist of the following ( in millions):
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Associated and Related Companies trade (note 20)
|
|
|
80
|
|
|
|
157
|
|
Associated and Related Companies financial and other
payables (note 22)
|
|
|
9
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Total Related Party payables
|
|
|
89
|
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
Related Party receivables and payables as of September 30,
2007, have been segregated first between amounts owed by or to
companies in which the Company has an ownership interest, and
second based on the underlying nature of the transactions. Trade
receivables and payables include amounts for the purchase and
sale of products and services. Financial and other receivables
and payables represent amounts owed relating to loans and
advances and accrue interest at interbank rates.
At September 30, 2007, current Associated and Related
Companies financial and other receivables included a
revolving term loan of 52 million due from ALTIS.
F-130
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Transactions with Related Parties during the years ended
September 30, 2005, 2006 and 2007, include the following
( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Sales to Related Parties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Siemens group companies
|
|
|
861
|
|
|
|
322
|
|
|
|
|
|
Associated and Related Companies
|
|
|
55
|
|
|
|
61
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales to Related Parties
|
|
|
916
|
|
|
|
383
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases from Related Parties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Siemens group companies
|
|
|
226
|
|
|
|
73
|
|
|
|
|
|
Associated and Related
Companies(1)
|
|
|
615
|
|
|
|
575
|
|
|
|
593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchases from Related Parties
|
|
|
841
|
|
|
|
648
|
|
|
|
593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The decrease during the fiscal year
ended September 30, 2006 is primarily related to the
initial consolidation of ALTIS.
|
Purchases from Associated and Related Companies during the years
ended September 30, 2005, 2006 and 2007 are principally
related to products purchased from Inotera.
Sales to Siemens group companies include sales to the Siemens
group sales organizations for resale to third parties of
38 million and 21 million for the years
ended September 30, 2005 and 2006, respectively. Purchases
from Siemens group companies primarily include purchases of
fixed assets, inventory, IT services, and administrative
services.
Pension benefits provided by the Company are currently organized
primarily through defined benefit pension plans which cover a
significant portion of the Companys employees. Plan
benefits are principally based upon years of service. Certain
pension plans are based on salary earned in the last year or
last five years of employment, while others are fixed plans
depending on ranking (both salary level and position). The
measurement date for the Companys pension plans is
June 30.
In February 2007, the Company transferred the majority of its
existing domestic (German) pension plans into a new Infineon
pension plan with effect from October 1, 2006. Under the
new plan, employee benefits are predominantly based on
contributions made by the Company, although defined benefit
provisions are retained. The plan qualifies as a defined benefit
plan and, accordingly, the change from the previous defined
benefit plans is treated as a plan amendment pursuant to
SFAS No. 87. In comparison to the existing domestic
pension obligation, the additional impact on projected benefit
obligation consists of unrecognized prior service cost about
4 million and is reflected as a separate component of
accumulated other comprehensive income (see note 29), which
will be amortized as part of net periodic pension cost over the
expected years of future service.
As a result of the adoption of SFAS No. 158 as of the
end of the fiscal year ending September 30, 2007, the
Company must recognize the overfunded or under-funded status of
a defined benefit postretirement plan as an asset or liability
in its consolidated balance sheet and recognize the change in
that funded status in the year in which the changes occur
through comprehensive income (Recognition
Provision). Actuarial gains and losses and unrecognized
prior service costs are to be recognized as a component of other
comprehensive income, net of tax.
F-131
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The following table summarizes the incremental effect as of
September 30, 2007 resulting from the initial adoption of
SFAS No. 158 ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
|
|
|
|
|
|
|
Before Adoption of
|
|
|
initially apply
|
|
|
After Adoption of
|
|
|
|
SFAS No. 158
|
|
|
SFAS No. 158
|
|
|
SFAS No. 158
|
|
|
Prepaid pension costs
|
|
|
108
|
|
|
|
(108
|
)
|
|
|
|
|
Current deferred income taxes
|
|
|
2
|
|
|
|
(5
|
)
|
|
|
(3
|
)
|
Intangible asset
|
|
|
4
|
|
|
|
(4
|
)
|
|
|
|
|
Non-current pension asset
|
|
|
|
|
|
|
60
|
|
|
|
60
|
|
Short-term pension liability
|
|
|
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
Pension liabilities
|
|
|
(125
|
)
|
|
|
14
|
|
|
|
(111
|
)
|
Accumulated other comprehensive loss, net of tax
|
|
|
(3
|
)
|
|
|
48
|
|
|
|
45
|
|
Information with respect to the Companys pension plans for
the years ended September 30, 2005, 2006 and 2007 is
presented for German (Domestic) plans and non-German
(Foreign) plans ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Accumulated benefit obligations end of year
|
|
|
(337
|
)
|
|
|
(64
|
)
|
|
|
(378
|
)
|
|
|
(61
|
)
|
|
|
(372
|
)
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in projected benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligations beginning of year
|
|
|
(271
|
)
|
|
|
(78
|
)
|
|
|
(392
|
)
|
|
|
(85
|
)
|
|
|
(443
|
)
|
|
|
(75
|
)
|
Service cost
|
|
|
(16
|
)
|
|
|
(7
|
)
|
|
|
(24
|
)
|
|
|
(5
|
)
|
|
|
(26
|
)
|
|
|
(3
|
)
|
Interest cost
|
|
|
(15
|
)
|
|
|
(4
|
)
|
|
|
(17
|
)
|
|
|
(4
|
)
|
|
|
(21
|
)
|
|
|
(4
|
)
|
Actuarial gains (losses)
|
|
|
(89
|
)
|
|
|
(2
|
)
|
|
|
(13
|
)
|
|
|
8
|
|
|
|
94
|
|
|
|
(1
|
)
|
Divestitures
|
|
|
1
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Plan amendments
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
Benefits paid
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
2
|
|
|
|
5
|
|
|
|
3
|
|
Curtailment gain
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
1
|
|
Foreign currency effects
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligations end of year
|
|
|
(392
|
)
|
|
|
(85
|
)
|
|
|
(443
|
)
|
|
|
(75
|
)
|
|
|
(393
|
)
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at beginning of year
|
|
|
174
|
|
|
|
30
|
|
|
|
208
|
|
|
|
35
|
|
|
|
282
|
|
|
|
38
|
|
Contributions and transfers
|
|
|
17
|
|
|
|
4
|
|
|
|
63
|
|
|
|
4
|
|
|
|
65
|
|
|
|
5
|
|
Actual return on plan assets
|
|
|
19
|
|
|
|
2
|
|
|
|
14
|
|
|
|
2
|
|
|
|
27
|
|
|
|
4
|
|
Benefits paid
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
(3
|
)
|
Foreign currency effects
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at end of year
|
|
|
208
|
|
|
|
35
|
|
|
|
282
|
|
|
|
38
|
|
|
|
369
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
|
(184
|
)
|
|
|
(50
|
)
|
|
|
(161
|
)
|
|
|
(37
|
)
|
|
|
(24
|
)
|
|
|
(33
|
)
|
Unrecognized actuarial (gains) losses
|
|
|
138
|
|
|
|
4
|
|
|
|
144
|
|
|
|
(8
|
)
|
|
|
33
|
|
|
|
(7
|
)
|
Unrecognized prior service cost (benefit)
|
|
|
14
|
|
|
|
(2
|
)
|
|
|
13
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
Post measurement date contributions
|
|
|
16
|
|
|
|
1
|
|
|
|
16
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset (liability) recognized
|
|
|
(16
|
)
|
|
|
(47
|
)
|
|
|
12
|
|
|
|
(44
|
)
|
|
|
26
|
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-132
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The above amounts are recognized as follows in the accompanying
consolidated balance sheets as of September 30 ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Prepaid pension cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Intangible asset (note 15)
|
|
|
14
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current pension asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
|
|
|
|
3
|
|
Current pension liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
Pension liabilities
|
|
|
(115
|
)
|
|
|
(47
|
)
|
|
|
(89
|
)
|
|
|
(45
|
)
|
|
|
(75
|
)
|
|
|
(36
|
)
|
Accumulated other comprehensive income
|
|
|
85
|
|
|
|
|
|
|
|
88
|
|
|
|
|
|
|
|
49
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset (liability) recognized
|
|
|
(16
|
)
|
|
|
(47
|
)
|
|
|
12
|
|
|
|
(44
|
)
|
|
|
26
|
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amounts in accumulated other comprehensive income that are
expected to be recognized as components of the net periodic
benefit cost in the 2008 fiscal year are actuarial losses in an
amount of less than 1 million and prior service cost
in an amount of 1 million.
Information for pension plans with projected benefit obligations
and accumulated benefit obligations in excess of plan assets are
as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Projected benefit obligation
|
|
|
392
|
|
|
|
85
|
|
|
|
443
|
|
|
|
64
|
|
|
|
108
|
|
|
|
63
|
|
Fair value of plan assets
|
|
|
208
|
|
|
|
35
|
|
|
|
282
|
|
|
|
26
|
|
|
|
27
|
|
|
|
26
|
|
Accumulated benefit obligations
|
|
|
337
|
|
|
|
57
|
|
|
|
378
|
|
|
|
54
|
|
|
|
99
|
|
|
|
47
|
|
Fair value of plan assets
|
|
|
208
|
|
|
|
26
|
|
|
|
282
|
|
|
|
26
|
|
|
|
27
|
|
|
|
19
|
|
The weighted-average assumptions used in calculating the
actuarial values for the pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
2006
|
|
2007
|
|
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
|
Domestic
|
|
Foreign
|
|
|
plans
|
|
plans
|
|
plans
|
|
plans
|
|
plans
|
|
plans
|
|
Discount rate in %
|
|
|
4.5
|
|
|
4.8
|
|
|
4.8
|
|
|
5.3
|
|
|
5.5
|
|
|
5.6
|
Rate of compensation increase in %
|
|
|
2.5
|
|
|
3.1
|
|
|
2.5
|
|
|
1.8
|
|
|
2.5
|
|
|
2.2
|
Projected future pension increases in %
|
|
|
1.3
|
|
|
2.2
|
|
|
1.8
|
|
|
2.2
|
|
|
1.8
|
|
|
2.7
|
Expected return on plan assets in %
|
|
|
7.3
|
|
|
6.9
|
|
|
6.5
|
|
|
6.9
|
|
|
6.1
|
|
|
6.9
|
Discount rates are established based on prevailing market rates
for high-quality fixed-income instruments that, if the pension
benefit obligation were settled at the measurement date, would
provide the necessary future cash flows to pay the benefit
obligation when due. The Company believes short-term changes in
interest rates should not affect the measurement of the
Companys long-term obligation.
Investment
Strategies
The investment approach of the Companys pension plans
involves employing a sufficient level of flexibility to capture
investment opportunities as they occur, while maintaining
reasonable parameters to ensure that prudence and care are
exercised in the execution of the investment program. The
Companys pension plans assets are invested with
several investment managers. The plans employ a mix of active
and passive investment management programs. Considering the
duration of the underlying liabilities, a portfolio of
investments of plan assets in equity securities, debt securities
and other assets is targeted to maximize the long-term return on
assets for a given level of risk. Investment risk is monitored
on an ongoing basis through periodic portfolio reviews, meetings
with investment managers and annual liability measurements.
Investment policies and strategies are periodically reviewed to
ensure the objectives of the plans are met considering any
changes in benefit plan design, market conditions or other
material items.
F-133
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Expected
Long-Term Rate of Return on Plan Assets
Establishing the expected rate of return on pension assets
requires judgment. The Companys approach in determining
the long-term rate of return for plan assets is based upon
historical financial market relationships that have existed over
time, the types of investment classes in which pension plan
assets are invested, long-term investment strategies, as well as
the expected compounded return the Company can reasonably expect
the portfolio to earn over appropriate time periods.
The Company reviews the expected long-term rate of return
annually and revises it as appropriate. Also, the Company
periodically commissions detailed asset/liability studies to be
performed by third-party professional investment advisors and
actuaries.
Plan Asset
Allocation
As of September 30, 2006 and 2007 the percentage of plan
assets invested and the targeted allocation in major asset
categories are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Targeted Allocation
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Equity securities in %
|
|
|
33
|
|
|
|
59
|
|
|
|
38
|
|
|
|
58
|
|
|
|
52
|
|
|
|
57
|
|
Debt securities in %
|
|
|
33
|
|
|
|
26
|
|
|
|
35
|
|
|
|
24
|
|
|
|
21
|
|
|
|
22
|
|
Other in %
|
|
|
34
|
|
|
|
15
|
|
|
|
27
|
|
|
|
18
|
|
|
|
27
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total in %
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys asset allocation targets for its pension plan
assets are based on its assessment of business and financial
conditions, demographic and actuarial data, funding
characteristics, related risk factors, market sensitivity
analysis and other relevant factors. The overall allocation is
expected to help protect the plans funded status while
generating sufficiently stable real returns (i.e., net of
inflation) to meet current and future benefit payment needs. Due
to active portfolio management, the asset allocation may differ
from the target allocation up to certain limits for different
classes. As a matter of policy, the Companys pension plans
do not invest in shares of Infineon or Qimonda.
The components of net periodic pension cost for the years ended
September 30, 2005, 2006 and 2007 are as follows ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Service cost
|
|
|
(16
|
)
|
|
|
(7
|
)
|
|
|
(24
|
)
|
|
|
(5
|
)
|
|
|
(26
|
)
|
|
|
(3
|
)
|
Interest cost
|
|
|
(15
|
)
|
|
|
(4
|
)
|
|
|
(17
|
)
|
|
|
(4
|
)
|
|
|
(21
|
)
|
|
|
(4
|
)
|
Expected return on plan assets
|
|
|
13
|
|
|
|
2
|
|
|
|
13
|
|
|
|
3
|
|
|
|
17
|
|
|
|
3
|
|
Amortization of unrecognized prior service (cost) benefits
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
|
|
Amortization of unrecognized actuarial gains (losses)
|
|
|
(3
|
)
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(8
|
)
|
|
|
1
|
|
Curtailment gain recognized
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost (note 8)
|
|
|
(20
|
)
|
|
|
(8
|
)
|
|
|
(36
|
)
|
|
|
(1
|
)
|
|
|
(39
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The prior service costs relating to the pension plans are
amortized in equal amounts over the expected years of future
service of each active employee who is expected to receive
benefits from the pension plans.
Unrecognized gains or losses are included in the net pension
cost for the year, if as of the beginning of the year, the
unrecognized net gains or losses exceed 10 percent of the
greater of the projected benefit obligation or the market value
of the plan assets. The amortization is the excess divided by
the average remaining service period of active employees
expected to receive benefits under the plan.
Actuarial gains (losses) amounted to (91) million,
(5) million and 93 million for the fiscal
years ended September 30, 2005, 2006 and 2007,
respectively. The decrease in actuarial losses in the 2006
fiscal year was primarily the result of the increase in the
discount rate used to determine the benefit
F-134
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
obligation. The increase in actuarial gains in the 2007 fiscal
year was primarily the result of the increase in the discount
rates used to determine the benefit obligation.
It is not planned nor anticipated that any plan assets will be
returned to any business entity during the next fiscal year.
In September 2006, Qimonda established a separate pension trust
for the purpose of funding future pension benefit payments for
its employees in Germany. A portion of the Companys
pension plan assets have been allocated to Qimonda for periods
prior to its formation based on the proportion of Qimondas
projected benefit obligation to the total Companys
projected benefit obligation. Accordingly, the Company
transferred 26 million in cash from its Pension Trust
into the Qimonda pension trust.
The effect of employee terminations, in connection with the
Companys restructuring plans (see note 9), on the
Companys pension obligation is reflected as a curtailment
in the years ended September 30, 2005, 2006 and 2007
pursuant to the provisions of SFAS No. 88
Employers Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits.
The future benefit payments, which reflect future service, as
appropriate, that are expected to be paid from the
Companys pension plan for the next five fiscal years and
thereafter are as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
Years ending September 30,
|
|
plans
|
|
|
plans
|
|
|
2008
|
|
|
19
|
|
|
|
1
|
|
2009
|
|
|
17
|
|
|
|
2
|
|
2010
|
|
|
23
|
|
|
|
2
|
|
2011
|
|
|
26
|
|
|
|
2
|
|
2012
|
|
|
20
|
|
|
|
2
|
|
2013 - 2017
|
|
|
135
|
|
|
|
18
|
|
During the year ended September 30, 2002, the Company
established a deferred savings plan for its employees in
Germany, whereby a portion of the employees salary is
invested for a lump sum benefit payment including interest upon
retirement. The liability for such future payments of 17
million and 26 million as of September 30, 2006 and
2007, respectively, is actuarially determined and accounted for
on the same basis as the Companys other pension plans.
|
|
33.
|
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).
F-135
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The euro equivalent notional amounts in millions and fair values
of the Companys derivative instruments as of
September 30, 2006 and 2007 are as follows ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
|
Notional
|
|
Fair
|
|
|
Notional
|
|
Fair
|
|
|
|
amount
|
|
value
|
|
|
amount
|
|
value
|
|
|
Forward contracts sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
682
|
|
|
1
|
|
|
|
735
|
|
|
25
|
|
Japanese yen
|
|
|
30
|
|
|
|
|
|
|
17
|
|
|
|
|
Great Britain pound
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Malaysian ringgit
|
|
|
6
|
|
|
|
|
|
|
3
|
|
|
|
|
Norwegian krone
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
Forward contracts purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
209
|
|
|
(1
|
)
|
|
|
356
|
|
|
(20
|
)
|
Japanese yen
|
|
|
24
|
|
|
|
|
|
|
73
|
|
|
(2
|
)
|
Singapore dollar
|
|
|
27
|
|
|
|
|
|
|
24
|
|
|
|
|
Great Britain pound
|
|
|
7
|
|
|
|
|
|
|
6
|
|
|
|
|
Malaysian ringgit
|
|
|
35
|
|
|
|
|
|
|
83
|
|
|
(2
|
)
|
Norwegian krone
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
Other currencies
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
Currency Options sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
259
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
Currency Options purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
252
|
|
|
2
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
1,200
|
|
|
5
|
|
|
|
700
|
|
|
(10
|
)
|
Other
|
|
|
218
|
|
|
9
|
|
|
|
231
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value, net
|
|
|
|
|
|
11
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company entered into interest rate swap agreements with
independent financial institutions during the year ended
September 30, 2004, which were designated as a cash flow
hedge of interest rate fluctuations on forecasted future lease
payments during the first 10 years of the Campeon lease
agreement (see note 35). The ineffective portion of the
cash flow hedge was 0 for the years ended
September 30, 2005, 2006, and 2007. The effective portion
of (22) million was deferred in other comprehensive
income until the commencement of the lease in the first quarter
of the 2006 fiscal year, and is being amortized ratably into
lease expense over the lease term of 15 years.
Fair values of financial instruments are determined using quoted
market prices or discounted cash flows. The fair value of the
Companys unsecured term loans and interest-bearing notes
payable approximate their carrying values as their interest
rates approximate those which could be obtained currently. At
September 30, 2007, the subordinated convertible and
exchangeable notes, both due 2010, were trading at a
22.1 percent and a 2.5 percent premium to par,
respectively, based on quoted market values. The fair values of
the Companys cash and cash equivalents, receivables and
payables, as well as related-party receivables and payables and
other financial instruments approximated their carrying values
due to their short-term nature. Marketable securities are
recorded at fair value (see note 12).
Financial instruments that expose the Company to credit risk
consist primarily of trade receivables, cash equivalents,
marketable securities and financial derivatives. Concentrations
of credit risks with respect to trade receivables are limited by
the large number of geographically diverse customers that make
up the Companys customer base. The Company controls credit
risk through credit approvals, credit limits and monitoring
procedures, as well as comprehensive credit evaluations for all
customers. Related Parties account for a considerable portion of
sales and trade receivables. The credit risk with respect to
cash equivalents, marketable securities and financial
derivatives is limited by transactions with a number of large
international financial institutions, with pre-established
limits. The Company does not believe that there is significant
risk of non-performance by these counterparties because the
Company monitors their credit risk and limits the financial
exposure and the amounts of agreements entered into with any one
financial institution.
F-136
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
In order to remain competitive, the Company must continue to
make substantial investments in process technology and research
and development. Portions of these investments might not be
recoverable if these research and development efforts fail to
gain market acceptance or if markets significantly deteriorate.
Due to the high-technology nature of the Companys
operations, intellectual property is an integral part of the
Companys business. The Company has intellectual property
which it has self-developed, purchased or licensed from third
parties. The Company is exposed to infringements by others of
such intellectual property rights. Conversely, the Company is
exposed to assertions by others of infringement by the Company
of their intellectual property rights.
The Company, through its use of third-party foundry and joint
venture arrangements, uses a significant portion of
manufacturing capacity that is outside of its direct control. As
a result, the Company is reliant upon such other parties for the
timely and uninterrupted supply of products and is exposed, to a
certain extent, to fluctuations in product procurement cost.
The Company has established policies and procedures which serve
as business conduct guidelines for its employees. Should these
guidelines not be adhered to, the Company could be exposed to
risks relating to wrongful actions by its employees.
Approximately 8,600 of the Companys employees are covered
by collective bargaining agreements. The collective bargaining
agreements pertain primarily to certain of the Companys
non-management employees in Germany (affecting approximately
4,900 employees), Austria (affecting approximately
2,500 employees) and France (affecting approximately
1,200 employees, including ALTIS). The agreement in Germany
is perpetual, but can be terminated by the trade union with a
notice of two months prior to October 31, 2008. The
agreement in Austria expires on May 1, 2008. The minimum
salaries stipulated in the agreement in France are subject to
yearly revision coming into effect on January 1 each year. The
provisions of these agreements generally remain in effect until
replaced by a subsequent agreement. Agreements for periods after
expiration are to be negotiated with the respective trade unions
through a process of collective negotiations.
|
|
35.
|
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.
Sixteen cases were filed between June and September 2002 in
several U.S. federal district courts, purporting to be on
behalf of a class of individuals and entities who purchased DRAM
directly from the various DRAM suppliers during a specified time
period (the Direct U.S. Purchaser Class), 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).
F-137
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
In September 2005, the Company and IF North America entered into
a definitive settlement agreement with counsel to the Direct
U.S. Purchaser Class (subject to approval by the
U.S. District Court and to an opportunity for individual
class members to opt out of the settlement). The settlement was
approved on November 1, 2006. The court entered final
judgment and dismissed the class action claims with prejudice in
November 2006. Under the terms of the settlement agreement the
Company agreed to pay approximately $21 million. In
addition to this settlement payment, the Company agreed to pay
an additional amount if it is proven that sales of DRAM products
to the settlement class (after opt-outs) during the settlement
period exceeded $208.1 million. The additional amount
payable would be calculated by multiplying by 10.53 percent
the amount by which those sales exceed $208.1 million. The
Company does not currently expect to pay any additional amount
to the class.
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. On May 5, 2006, Honeywell International,
Inc. (Honeywell) filed a complaint against the
Company and IF North America, among other DRAM suppliers,
alleging a claim for price fixing under federal law, and seeking
recovery as a direct purchaser of DRAM. Both Unisys and
Honeywell opted out of the Direct U.S. Purchaser Class and
settlement, so their claims are not barred by the settlement
with the Direct U.S. Purchaser Class. Both of these
complaints were filed in the Northern District of California and
have been related to the MDL described above. In April 2007 the
court dismissed the initial complaint with leave to amend.
Unisys filed a First Amended Complaint in May 2007. The Company,
IF North America, and the other defendants again filed a motion
to dismiss certain portions of the Unisys First Amended
Complaint in June 2007. After Honeywell had filed a stipulation
of dismissal without prejudice of its lawsuit against Infineon,
the court entered the dismissal order in April 2007.
In February and March 2007 four more opt-out 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.
As with Unisys, the claims of these plaintiffs are not barred by
the settlement with the Direct U.S. Purchaser Class, since
they opted out of the Direct U.S. Purchaser Class and
settlement.
Based upon the courts order dismissing portions of the
initial Unisys complaint described above, the plaintiffs in all
four of these opt-out cases filed amended complaints in May
2007. In June 2007, Infineon and IF North America answered the
amended complaints filed by All American Semiconductor, Inc.,
Edge Electronics, Inc., and Jaco Electronics, Inc. and along
with its co-defendants filed a joint motion to dismiss certain
portions of the DRAM Claims Liquidation Trust amended complaint
(see note 37).
Sixty-four additional cases were filed between August and
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, which was subsequently
dismissed with prejudice and as to which the plaintiffs have
filed notice of appeal) 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.
Twenty-three 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 multi-district
litigation described above. Nineteen of the twenty-three
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 proceedings in those
cases in favor of proceedings on the indirect purchaser cases
pending as part of the MDL pre-trial proceedings. The defendants
have filed
F-138
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
two motions for judgment on the pleadings directed at several of
the claims. Hearing on those motions took place in December 2006.
The court entered an order in June 2007 granting in part and
denying in part the defendants motions for judgment on the
pleadings. The order dismissed a large percentage of the
indirect purchaser plaintiffs claims, and granted leave to
amend with regard to claims under three specific state statutes.
The court ruled that the indirect purchaser plaintiffs must file
a motion for leave to amend the complaint with regard to any of
the other dismissed claims. In June 2007, the indirect purchaser
plaintiffs filed both a First Amended Complaint and a motion for
leave to file a Second Amended Complaint that attempts to
resurrect some of the claims that were dismissed. On
August 17, 2007, the court entered an order granting the
motion to file the Second Amended Complaint, which re-pleaded
part of the previously dismissed claims.
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. I n 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, Washing-ton, 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 Infineon
joined the other defendants in filing motions to dismiss several
of the claims alleged in these two actions. On August 31,
2007, the court entered orders granting the motions in part and
denying the motions in part. The courts order dismissed
the claims on behalf of consumers, businesses and governmental
entities in a number of states, and dismissed certain other
claims with leave to amend, with any amended complaints to be
filed by October 1, 2007. Between June 25 and
August 15, 2007, the state attorneys general of four
states, Alaska, Ohio, New Hampshire and Texas, 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 Québec,
and one was filed in each of Ontario and British Columbia
against the Company, IF North America and other DRAM
manufacturers on behalf of all direct and indirect purchasers
F-139
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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 is scheduled for
November 19, 2007.
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.
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 September 30, 2007, the Company
had accrued liabilities in the amount of 95 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.
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 its
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
F-140
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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.
Contractual
Commitments
The following table summarizes the Companys commitments
with respect to external parties as of September 30, 2007
( in
millions)(1),(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
Less than
|
|
1-2
|
|
2-3
|
|
3-4
|
|
4-5
|
|
After
|
|
|
Total
|
|
1 year
|
|
years
|
|
years
|
|
years
|
|
years
|
|
5 years
|
|
Contractual commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease payments
|
|
|
870
|
|
|
90
|
|
|
78
|
|
|
65
|
|
|
62
|
|
|
57
|
|
|
518
|
Unconditional purchase commitments
|
|
|
1,212
|
|
|
1,161
|
|
|
29
|
|
|
11
|
|
|
6
|
|
|
1
|
|
|
4
|
Other long-term commitments
|
|
|
77
|
|
|
71
|
|
|
2
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Commitments
|
|
|
2,159
|
|
|
1,322
|
|
|
109
|
|
|
78
|
|
|
69
|
|
|
59
|
|
|
522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain payments of obligations or
expirations of commitments that are based on the achievement of
milestones or other events that are not date-certain are
included for purposes of this table based on estimates of the
reasonably likely timing of payments or expirations in the
particular case. Actual outcomes could differ from those
estimates.
|
|
(2) |
|
Product purchase commitments
associated with continuing capacity reservation agreements are
not included in this table, since the purchase prices are based,
in part, on future market prices, and are accordingly not
accurately quantifiable at September 30, 2007. Purchases
under such arrangements aggregated 1,165 million for
the year ended September 30, 2007.
|
The Company has capacity reservation agreements with certain
Associated Companies and external foundry suppliers for the
manufacturing and testing of semiconductor products. These
agreements generally are greater than one year in duration and
are renewable. Under the terms of these agreements, the Company
has agreed to purchase a portion of their production output
based, in part, on market prices.
Purchases under these agreements are recorded as incurred in the
normal course of business. The Company assesses its anticipated
purchase requirements on a regular basis to meet customer demand
for its products. An assessment of losses under these agreements
is made on a regular basis in the event that either budgeted
purchase quantities fall below the specified quantities or
market prices for these products fall below the specified prices.
Other
Contingencies
The following table summarizes the Companys contingencies
with respect to external parties, other than those related to
litigation, as of September 30, 2007 ( in
millions)(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expirations by Period
|
|
|
|
|
Less than
|
|
1-2
|
|
2-3
|
|
3-4
|
|
4-5
|
|
After
|
|
|
Total
|
|
1 year
|
|
years
|
|
years
|
|
years
|
|
years
|
|
5 years
|
|
Maximum potential future payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees(2)
|
|
|
209
|
|
|
25
|
|
|
22
|
|
|
1
|
|
|
14
|
|
|
30
|
|
|
117
|
Contingent government
grants(3)
|
|
|
462
|
|
|
125
|
|
|
40
|
|
|
56
|
|
|
171
|
|
|
30
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contingencies
|
|
|
671
|
|
|
150
|
|
|
62
|
|
|
57
|
|
|
185
|
|
|
60
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain expirations of
contingencies that are based on the achievement of milestones or
other events that are not date-certain are included for purposes
of this table based on estimates of the reasonably likely timing
of expirations in the particular case. Actual outcomes could
differ from those estimates.
|
|
(2) |
|
Guarantees are mainly issued for
the payment of import duties, rentals of buildings, and
contingent obligations related to government grants received.
|
|
(3) |
|
Contingent government grants refer
to amounts previously received, related to the construction and
financing of certain production facilities, which are not
otherwise guaranteed and could be refundable if the total
project requirements are not met.
|
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
F-141
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
committed to maintaining these requirements. Nevertheless,
should such requirements not be met, as of September 30,
2007, a maximum of 462 million of these subsidies
could be refundable.
On December 23, 2003, the Company entered into a long-term
operating lease agreement with MoTo Objekt Campeon
GmbH & Co. KG (MoTo) to lease an office
complex constructed by MoTo south of Munich, Germany. The office
complex, called Campeon, enables the Company to centralize the
majority of its Munich-area employees in one central physical
working environment. MoTo was responsible for the construction,
which was completed in the second half of 2005. The Company has
no obligations with respect to financing MoTo and has provided
no guarantees related to the construction. The Company occupied
Campeon under an operating lease arrangement in October 2005 and
completed the gradual move of its employees to this new location
in the 2006 fiscal year. The complex was leased for a period of
20 years. After year 15, the Company has a non-bargain
purchase option to acquire the complex or otherwise continue the
lease for the remaining period of five years. Pursuant to the
agreement, the Company placed a rental deposit of
75 million in escrow, which was included in
restricted cash as of September 30, 2007. Lease payments
are subject to limited adjustment based on specified financial
ratios related to the Company. The agreement was accounted for
as an operating lease, in accordance with SFAS No. 13,
with monthly lease payments expensed on a straight-line basis
over the lease term.
The Company through certain of its sales and other agreements
may, in the normal course of business, be obligated to indemnify
its counterparties under certain conditions for warranties,
patent infringement or other matters. The maximum amount of
potential future payments under these types of agreements is not
predictable with any degree of certainty, since the potential
obligation is contingent on conditions that may or may not occur
in future, and depends on specific facts and circumstances
related to each agreement. Historically, payments made by the
Company under these types of agreements have not had a material
adverse effect on the Companys business, results of
operations or financial condition. A tabular reconciliation of
the changes in the aggregate product warranty liability for the
year ended September 30, 2007 is presented in note 21.
|
|
36.
|
Operating Segment
and Geographic Information
|
The Company has reported 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. The results of prior periods have been reclassified
to conform to the current period presentation, as well as to
facilitate analysis of current and future operating segment
information. As a result of the reorganization, certain
corporate overhead expenses are no longer apportioned to Qimonda
and are instead allocated to Infineons logic segments.
The Company operates primarily in three major operating
segments, two of which are application focused: Automotive,
Industrial & Multimarket, and Communication Solutions;
and one of which is product focused: Qimonda. 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 the Other
Operating Segments for the 2005, 2006 and 2007 fiscal years
include net sales and earnings that Infineons
200-millimeter production facility in Dresden records from the
sale of wafers to Qimonda under foundry agreements. The
Corporate and Eliminations segment reflects the elimination of
these intra-group net sales and earnings.
The accounting policies of the segments are substantially the
same as described in the summary of significant accounting
policies (see note 2). Each of the segments has a segment
manager reporting directly to the Chief Executive Officer and
Chief Financial Officer, who have been collectively identified
as the Chief Operating Decision Maker (CODM). The
CODM makes decisions about resources to be allocated to the
segments and assesses their performance using revenues and EBIT.
The CODM does not review asset information by segment nor does
he evaluate the segments on these criteria on a regular
F-142
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
basis, except that the CODM is provided information regarding
certain inventories on an operating segment basis. The Company
does, however, allocate depreciation expense to the operating
segments based on production volume and product mix using
standard costs. Information with respect to the Companys
operating segments follows:
Automotive,
Industrial & Multimarket
The Automotive, Industrial & Multimarket segment
designs, develops, manufactures and markets semiconductors and
complete system solutions primarily for use in automotive,
industrial and security applications, and applications with
customer-specific product requirements.
Communication
Solutions
The Communication Solutions segment designs, develops,
manufactures and markets a wide range of ICs, other
semiconductors and complete system solutions for wire-line and
wireless communication applications.
Qimonda
Qimonda designs memory technologies and develops, manufactures,
and markets a large variety of memory products on a module,
component and chip level.
Other Operating
Segments
Remaining activities for certain product lines that have been
disposed of, as well as other business activities, are included
in the Other Operating Segments.
Selected segment data for the years ended September 30, 2005,
2006 and 2007 is as follows ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
2,516
|
|
|
|
2,839
|
|
|
|
3,017
|
|
Communication
Solutions(1)
|
|
|
1,391
|
|
|
|
1,205
|
|
|
|
1,051
|
|
Other
Operating
Segments(2)
|
|
|
285
|
|
|
|
310
|
|
|
|
219
|
|
Corporate and
Eliminations(3)
|
|
|
(258
|
)
|
|
|
(240
|
)
|
|
|
(213
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
3,934
|
|
|
|
4,114
|
|
|
|
4,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
2,825
|
|
|
|
3,815
|
|
|
|
3,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
6,759
|
|
|
|
7,929
|
|
|
|
7,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes inter-segment sales of 30 million for fiscal
year ended September 30, 2007, none in fiscal years 2005
and 2006, respectively, from sales of wireless communication
applications to Qimonda.
|
|
(2)
|
Includes inter-segment sales of 273 million,
256 million and 189 million for fiscal
years ended September 30, 2005, 2006 and 2007,
respectively, from sales of wafers from Infineons
200-millimeter facility in Dresden to Qimonda under foundry
agreements.
|
|
(3)
|
Includes the elimination of inter-segment sales of
273 million, 256 million and
219 million for fiscal years ended September 30,
2005, 2006 and 2007, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
134
|
|
|
|
246
|
|
|
|
300
|
|
Communication Solutions
|
|
|
(295
|
)
|
|
|
(231
|
)
|
|
|
(160
|
)
|
Other Operating Segments
|
|
|
4
|
|
|
|
4
|
|
|
|
(12
|
)
|
Corporate and Eliminations
|
|
|
(137
|
)
|
|
|
(236
|
)
|
|
|
(177
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
(294
|
)
|
|
|
(217
|
)
|
|
|
(49
|
)
|
Qimonda(1)
|
|
|
111
|
|
|
|
202
|
|
|
|
(207
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
(183
|
)
|
|
|
(15
|
)
|
|
|
(256
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
EBIT results of Qimonda for the period following its IPO are
reported net of minority interest results.
|
F-143
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Depreciation and Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
431
|
|
|
|
411
|
|
|
|
401
|
|
Communication Solutions
|
|
|
309
|
|
|
|
246
|
|
|
|
186
|
|
Other Operating Segments
|
|
|
48
|
|
|
|
45
|
|
|
|
22
|
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
788
|
|
|
|
702
|
|
|
|
609
|
|
Qimonda
|
|
|
528
|
|
|
|
703
|
|
|
|
667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
1,316
|
|
|
|
1,405
|
|
|
|
1,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Equity in earnings (losses) of Associated Companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
|
|
|
|
|
|
Communication Solutions
|
|
|
4
|
|
|
|
(2
|
)
|
|
|
|
|
Other Operating Segments
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Eliminations
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
12
|
|
|
|
(2
|
)
|
|
|
|
|
Qimonda
|
|
|
45
|
|
|
|
80
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
57
|
|
|
|
78
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
336
|
|
|
|
365
|
|
|
|
402
|
|
Communication Solutions
|
|
|
201
|
|
|
|
214
|
|
|
|
243
|
|
Other Operating Segments
|
|
|
1
|
|
|
|
1
|
|
|
|
(47
|
)
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
538
|
|
|
|
580
|
|
|
|
598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
484
|
|
|
|
622
|
|
|
|
619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
1,022
|
|
|
|
1,202
|
|
|
|
1,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2005, 2006 and 2007, all inventories
were attributed to the respective operating segment, since they
were under the direct control and responsibility of the
respective operating segment managers.
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
|
|
Communication Solutions
|
|
|
22
|
|
|
|
52
|
|
Other Operating Segments
|
|
|
6
|
|
|
|
|
|
Corporate and Eliminations
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
29
|
|
|
|
53
|
|
Qimonda
|
|
|
72
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
101
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
Certain items are included in Corporate and Eliminations and are
not allocated to the logic 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 logic 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. The Company allocates excess
capacity costs based on a foundry model, whereby such
allocations are reduced based upon the lead time of order
cancellation or
F-144
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
modification. Any unabsorbed excess capacity costs are included
in Corporate and Eliminations. Significant components of
Corporate and Eliminations EBIT for the years ended
September 30, 2005, 2006 and 2007 are as follows ( in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Corporate and Eliminations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unabsorbed excess capacity costs
|
|
|
(12
|
)
|
|
|
(33
|
)
|
|
|
(7
|
)
|
Restructuring charges (note 9)
|
|
|
(78
|
)
|
|
|
(23
|
)
|
|
|
(45
|
)
|
Stock-based compensation expense
|
|
|
|
|
|
|
(25
|
)
|
|
|
(12
|
)
|
Other,
net(1)
|
|
|
(47
|
)
|
|
|
(155
|
)
|
|
|
(113
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(137
|
)
|
|
|
(236
|
)
|
|
|
(177
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes aggregate charges of approximately
80 million and 84 million in the 2006 and
2007 fiscal years, respectively, incurred primarily in
connection with the issuance and/or sale of Qimonda ADSs.
|
The following is a summary of net sales and of property, plant
and equipment by geographic area for the years ended September
30 ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
1,354
|
|
|
|
1,327
|
|
|
|
1,164
|
|
Other Europe
|
|
|
1,210
|
|
|
|
1,360
|
|
|
|
1,218
|
|
North America
|
|
|
1,504
|
|
|
|
2,126
|
|
|
|
1,887
|
|
Asia/Pacific
|
|
|
2,223
|
|
|
|
2,498
|
|
|
|
2,632
|
|
Japan
|
|
|
332
|
|
|
|
461
|
|
|
|
661
|
|
Other
|
|
|
136
|
|
|
|
157
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,759
|
|
|
|
7,929
|
|
|
|
7,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
1,625
|
|
|
|
1,279
|
|
|
|
1,067
|
|
Other Europe
|
|
|
516
|
|
|
|
638
|
|
|
|
639
|
|
North America
|
|
|
1,093
|
|
|
|
1,105
|
|
|
|
1,100
|
|
Asia/Pacific
|
|
|
515
|
|
|
|
737
|
|
|
|
838
|
|
Japan
|
|
|
2
|
|
|
|
4
|
|
|
|
3
|
|
Other
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,751
|
|
|
|
3,764
|
|
|
|
3,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers are based on the
customers billing location. Regional employment data is
provided in note 8.
Except for sales to Siemens, which are discussed in
note 31, no single customer accounted for more than
10 percent of the Companys sales during the fiscal
year ended September 30, 2005. Sales to Siemens were made
primarily by the logic segments. No single customer accounted
for more than 10 percent of the Companys sales during
the fiscal years ended September 30, 2006 and 2007.
The Company defines EBIT as earnings (loss) before interest and
taxes. The Companys management uses EBIT, among other
measures, to establish budgets and operational goals, to manage
the Companys business and to evaluate its performance. The
Company reports EBIT information because it believes that it
provides investors with meaningful information about the
operating performance of the Company and especially about the
performance of its separate 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.
F-145
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended September 30, 2005, 2006 and
2007, EBIT is determined as follows from the consolidated
statements of operations ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
Net loss
|
|
|
(312
|
)
|
|
|
(268
|
)
|
|
|
(368
|
)
|
Adjust:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
120
|
|
|
|
161
|
|
|
|
79
|
|
Interest expense, net
|
|
|
9
|
|
|
|
92
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
|
(183
|
)
|
|
|
(15
|
)
|
|
|
(256
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On October 2, 2007, Sony Corporation and Qimonda announced
that they had signed an agreement to found the joint venture
Qreatic Design. The scope of the joint venture is the design of
high-performance, low power, embedded and customer specific
DRAMs for consumer and graphic applications. According to the
agreement, the 50:50 joint venture is intended to start with up
to 30 specialists from Sony and Qimonda, bringing together their
engineering expertise for the mutual benefit of both companies.
Qreatic Design, which will be located in Tokyo, Japan, is
planned to start operations by the end of calendar year 2007,
subject to regulatory approvals and other closing conditions,
and to substantially expand its capacities by hiring additional
designers.
On October 8, 2007, Qimonda entered into a rental agreement
for a new headquarters office south of Munich, Germany. The
agreement provides for the construction of a building by a
third-party developer-lessor, and includes a 15 year
non-cancelable lease term, which is expected to start in early
2010. Qimonda has an option to extend the lease for two
5 year periods at similar lease terms to the initial
non-cancelable lease term. The minimum rental payments aggregate
96 million over the initial lease term. The lease
provides for rent escalation in line with market-based increases
in rent. The agreement will be accounted for as an operating
lease with monthly lease payments expensed on a straight-line
basis over the lease term (see note 4).
On October 15, 2007, the court entered an order denying the
motions to dismiss in the Unisys and the DRAM Claims Liquidation
Trust cases with prejudice. On October 29, 2007, the
Company answered the Unisys complaint, denying liability and
asserting a number of affirmative defenses. On November 1,
2007, the Company answered the DRAM Claims Liquidation Trust
complaint, denying liability and asserting a number of
affirmative defenses (see note 35).
On October 24, 2007, the Company completed its acquisition
of the mobility products business of LSI (see note 4).
On October 25, 2007, 1.25 million Qimonda ADSs that
had been borrowed by an affiliate of J.P. Morgan Securities
Inc. in connection with the exchangeable subordinated notes due
2010 described in note 23 were returned to the Company.
On October 31, 2007,
Wi-LAN Inc.
filed suit in the U.S. District Court for the Eastern
District of Texas against Westell Technologies, Inc. and 16
other defendants, including Infineon Technologies AG and
Infineon Technologies North America Corp. The complaint alleges
infringement of 3 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.
Additional
Information
ADDITIONAL INFORMATION TO THE U.S. GAAP CONSOLIDATED
FINANCIAL STATEMENTS PURSUANT TO THE GERMAN COMMERCIAL CODE
IMPLEMENTATION ACT (EINFÜHRUNGSGESETZ ZUM
HGB-EGHGB), ARTICLE 58, PARAGRAPH 5
The Company has prepared consolidated financial statements and a
group management report for the fiscal year ended
September 30, 2007 in accordance with the German Commercial
Code (the Statutory Report). The Company has elected
to prepare its financial information on the basis of
U.S. GAAP in compliance with the requirements of the German
Commercial Code. The Statutory Report
F-146
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
includes the Consolidated Financial Statements and Notes to the
Consolidated Financial Statements, Supplemental Disclosures, and
Group Management Report.
Significant
Differences Between German GAAP and U.S. GAAP
Introduction
Infineon Technologies AG, as a German parent company, is subject
to the German Commercial Code (Handels-gesetzbuch,
or HGB), which principally requires the Company to
prepare consolidated financial statements in accordance with the
HGB accounting principles and regulations (German
GAAP). Pursuant to the German Commercial Code
Implementation Act (Einführungs-gesetz zum
HGB-EGHGB), Article 58, paragraph 5, the Company
is exempt from this requirement, if consolidated financial
statements are prepared and issued in accordance with a body of
internationally accepted accounting principles (such as
U.S. GAAP). Accordingly, the Company presents the
U.S. GAAP consolidated financial statements contained
herein. The following is a description of the significant
differences between German GAAP and U.S. GAAP.
Additionally, as a U.S. listed entity, the Company must
adhere to certain accounting and reporting requirements as
prescribed by the U.S. Securities and Exchange Commission
(SEC).
Fundamental
Differences
German GAAP and U.S. GAAP are based on different conceptual
frameworks. The emphasis of U.S. GAAP is to provide all
relevant information to investors in order to facilitate future
investment decisions. German GAAP is oriented towards the
protection of creditors placing emphasis on the prudence concept.
Basis of
Consolidation
Under German GAAP as well as under U.S. GAAP, investments
in companies in which an ownership interest of 20 percent
or more is held and that are not controlled are accounted for
using the equity method of accounting. Other equity investments
in which an ownership interest of less than 20 percent is
held are recorded at cost. The effects of all significant
intercompany transactions are eliminated. In addition, under
U.S. GAAP, as opposed to German GAAP, companies are
required to evaluate relationships with entities to identify
whether they are variable interest entities as defined by
Financial Accounting Standards Board Interpretation No. 46
(revised December 2003), Consolidation of Variable
Interest Entities an interpretation of ARB
No. 51, and to assess whether they are the primary
beneficiary of such entities. If the determination is made that
a company is the primary beneficiary, then that entity is
included in the consolidated financial statements of the company
for U.S. GAAP purposes.
Financial
Statement Presentation
The balance sheet presentation under U.S. GAAP is based on
the planned realization of assets and the maturity of
liabilities in the normal course of business. The balance sheet
presentation under German GAAP is principally defined in HGB
section 266, and is based on the enterprises planned
holding time for the respective asset, liability or equity.
Revenue
Recognition
Revenue recognition is generally the same under German GAAP and
U.S. GAAP, whereby revenue is recognized when realized and
earned. Differences in the timing of recognition can exist in
transactions when the Company retains on-going financial,
operational or performance commitments or the contractual
amounts are not objectively verifiable.
Marketable
Securities
Under German GAAP, marketable debt and equity securities are
valued at the lower of acquisition cost or fair market value as
of the balance sheet date. Under U.S. GAAP, the
Companys marketable securities are classified as available
for sale and valued at fair market value as of the balance sheet
date. Unrealized gains and losses are reported in other
comprehensive income net of deferred taxes.
F-147
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Inventories
Inventory valuation is based on manufacturing costs under both
German GAAP and U.S. GAAP. Manufacturing costs under
U.S. GAAP are defined as production costs on a full
absorption basis, whereby manufacturing overhead is included
together with material and other direct manufacturing costs.
Under German GAAP certain overhead costs can be excluded from
the valuation of inventory.
Goodwill
Under U.S. GAAP, pursuant to SFAS No. 141,
Business Combinations, in connection with
SFAS No. 142, Goodwill and other Intangible
Assets, goodwill arising from business combinations
accounted for as a purchase after June 30, 2001 is no
longer amortized, but rather tested for impairment at the
reporting unit level at least annually. Under German GAAP, such
goodwill is amortized over four years or its estimated useful
life.
In-process
Research and Development
Under German GAAP, in-process research and development projects
acquired in a business combination are not specifically
identified but rather included as part of goodwill. Under
U.S. GAAP, acquired in-process research and development is
specifically identified, valued and charged to expense at the
date of acquisition.
Derivative
Financial Instruments
Under German GAAP, derivative financial instruments are not
recorded on the balance sheet. Unrealized gains are not
recognized whereas unrealized losses are accrued for. Under
U.S. GAAP derivative financial instruments are recorded on
the balance sheet at their fair value. Changes in fair value are
recorded in results of operations or other comprehensive income,
depending on whether the derivative financial instrument is
designated as part of a hedge transaction and on the type of
hedge transaction.
Deferred
Taxes
The main difference in accounting for deferred taxes relates to
the fact that under German GAAP, deferred tax assets are not
recorded for net operating losses. Under U.S. GAAP,
deferred tax assets are recorded for net operating losses and a
valuation allowance is established when it is deemed more
likely than not that the deferred tax asset will not be
realized.
Pension and other
post-retirement Obligations
Under U.S. GAAP, pension obligations are recognized based
on the projected benefit obligation using the projected unit
credit method. This is also permitted under German GAAP.
Furthermore different interest rates are used for the evaluation
of accrued liabilities.
Under U.S. GAAP, establishing and funding a trust, independent
of the Company, results under certain conditions in a
corresponding reduction in pension obligations from the balance
sheet. Under German GAAP, pension assets and obligations are
recorded gross on the balance sheet until such obligations are
legally settled.
Stock-based
Compensation
Through October 1, 2005, the Company recorded stock-based
compensation expense under German GAAP for the excess of the
trading price of the Companys stock and the exercise price
of the stock-option instrument. Effective October 1, 2005,
the Company adopted SFAS No. 123 (revised
2004) Share-based Payment. Accordingly, for
U.S. GAAP purposes stock-based compensation cost is
measured at the grant date, based on the fair value of the
award, and is recognized as expense over the period during which
the employee is required to provide service in exchange for the
award. Under German GAAP, in accordance with section 272
paragraph 2 No. 2 HGB, the fair value of the awards as
determined under SFAS No. 123 (revised 2004) is
recorded at date of grant within additional paid-in capital, and
F-148
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
compensation cost is recognized as expense over the period
during which the employee is required to provide service in
exchange for the award.
Equity Offering
Costs
Under German GAAP, direct costs incurred in connection with
equity offerings are expensed, while under U.S. GAAP such
costs are recorded as a reduction of additional paid in capital.
Accrued
Liabilities
Under German GAAP, certain costs can be accrued for anticipated
future events under certain circumstances. Under U.S. GAAP,
recognition of an accrued liability represents an existing
obligation to third parties and must meet very specific
recognition criteria.
Foreign Currency
Translation
Under German GAAP, foreign currency denominated assets and
liabilities are recorded at the spot rate on the transaction
date, with only unrealized losses reflected in results of
operations at the balance sheet date. Under U.S. GAAP
foreign currency denominated assets and liabilities are
translated at the spot rate at the balance sheet date, with both
unrealized gains and losses reflected in results of operations.
Grants
Subsidies
Under German GAAP, non-taxable investment subsidies and interest
subsidies can be recognized in results of operations when
received. Under U.S. GAAP, these amounts are deferred and
recognized in results of operations during the periods over
which the related expense is incurred.
Depreciation on Property, Plant and Equipment Under
U.S. GAAP, depreciation on property, plant and equipment is
based on the estimated economic useful life of the asset. Under
German GAAP, depreciation on property, plant and equipment is
predominantly based on the depreciation rate used for tax
purposes.
Equity Method
Accounting
Under German GAAP, consolidated financial statements could
include the equity in earnings of associated companies accounted
for pursuant to local accounting principles. Under
U.S. GAAP, equity in earnings is determined pursuant to
U.S. GAAP.
Gain on Associated Company Share Issuance Under German GAAP, a
capital increase of an associated company which increases the
proportional valuation of the Companys investment is
reflected in results of operations. Under U.S. GAAP and
specific SEC regulations, statement of operations recognition is
subject to additional criteria, which, if not met, requires
recognition as an adjustment to shareholders equity.
Minority
Interest
Under German GAAP, the consideration of minority interest within
the first consolidation and the allocation of the
investors share of the results of operations of the
investee, is based on the legal ownership percentage. Under
U.S. GAAP the consolidation of minority interest is based
on economic interests in the investee and therefore the
accounting for minority interest can differ under German GAAP
from U.S. GAAP.
Application of
Exception Regulations
Pursuant to HGB section 264a, partnerships, where unlimited
liability is not held by a natural person, or another
partnership with a natural person as the unlimited liability
partner, are required to prepare financial statements similar to
a limited liability corporation.
For the following companies
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Infineon Technologies Dresden GmbH & Co. OHG, Dresden,
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Infineon Technologies Bipolar GmbH & Co. KG,
Warstein, and
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F-149
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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Qimonda Dresden GmbH & Co. OHG, Dresden, the Company
utilizes the exception pursuant to HGB section 264b,
exempting these partnerships from the requirement to prepare
separate financial statements, because they are included in the
consolidated financial statements of the holding company and
such consolidated financial statements are registered with the
trade register of the respective partnership.
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Pursuant to HGB section 264 paragraph 3, the Company
also utilizes the exception from preparing separate financial
statements due to a profit-transfer agreement of the following
companies:
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COMNEON GmbH, Nuremberg,
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Infineon Technologies Finance GmbH, Munich,
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Qimonda Europe GmbH, Munich, and
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Qimonda Flash GmbH, Dresden.
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Pursuant to HGB section 291 paragraph 1, the Company
also utilizes the exception from preparing separate financial
statements of Qimonda AG, Munich, due to the fact that it is a
subsidiary of an entity which prepares separate financial
statements.
Information
Pursuant to Section 160 Section 1 No. 2 Corporate
Act (AktG)
The Company did not make use of the authorization to acquire and
to use own shares as granted by the general shareholders
meeting on February 15, 2007, and did not acquire any own
shares in the 2007 fiscal year. As of September 30, 2007,
the Company did not hold any own shares.
Information
Pursuant to Section 160 Section 1 No. 8 Corporate
Act (AktG)
On February 23, 2007, Franklin Resources, Inc.,
San Mateo, CA, USA, notified the Company on behalf of
Templeton Global Advisors Limited, Templeton Building, Lyford
Cay, P.O . Box N7759, Nassau, Bahamas, pursuant to
section 21, paragraph 1, WpHG that the share of the
total voting rights of Templeton Global Advisors Limited in
Infineon exceeded the threshold of 5 percent on February 7,
2007, and amounted on that date to 5.17 percent
(representing 38,674,360 voting rights). All of these voting
rights were attributable to Templeton Global Advisors Limited
pursuant to section 22, paragraph 1, sentence 1,
No. 6 WpHG.
On August 21, 2007, Templeton Funds, Inc.,
500 E. Broward Blvd., Suite 2100,
Fort Lauderdale, Florida, FL
33394-3091,
United States, notified the Company pursuant to Section 21,
paragraph 1, WpHG that its share of the total voting rights
in Infineon exceeded the threshold of 3 percent on
May 18, 2007, and amounted to 3.003 percent
(representing 22,503,490 voting rights).
On August 30, 2007, Fidelity notified the Company on behalf
of, and as attorneys-in-fact for, Fidelity
Management & Research Company, 82 Devonshire Street,
Boston, Massachusetts 02109, USA, pursuant to section 21,
paragraph 1, WpHG that the proportion of voting rights of
Fidelity Management & Research Company in Infineon
fell below the threshold of 3 percent on August 28,
2007, and amounted to 2.78 percent (representing 20,803,500
voting rights). The voting rights are attributed to Fidelity
Management & Research Company according to
section 22, paragraph 1, sentence 1, No. 6 WpHG.
On September 4, 2007, Fidelity notified the Company on
behalf of FMR Corp., 82 Devonshire Street, Boston, Massachusetts
02109, USA pursuant to section 21, paragraph 1, WpHG
that the proportion of voting rights of FMR Corp., 82 Devonshire
Street, Boston, Massachusetts 02109, USA, in Infineon exceeded
the threshold of 3 percent on August 31, 2007, and
amounted to 3.05 percent (representing 22.881.790 voting
rights). The voting rights are attributed to FMR Corp. pursuant
to section 22, paragraph 1, sentence 1, No. 6
WpHG.
On November 1, 2007, Fidelity notified the Company that as
a result of an internal merger reorganisation effective from
October 1, 2007, FMR LLC. with its principal place of
business in Boston, USA, as successor entity to FMR Corp.
assumed all its rights and obligations and thus the proportion
of voting rights of FMR LLC. in Infineon exceeded the threshold
of 3 percent on October 1, 2007, and amounted to
3.49 percent (representing 26,158,004 voting rights). The
voting rights are attributed to FMR LLC. according to
section 22, paragraph 1, sentence 1, No. 6 and
sentence 2 WpHG.
F-150
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
On November 9, 2007, FMR LLC Boston, Massachusetts, USA,
notified the Company according to section 21,
paragraph 1, WpHG that the proportion of voting rights in
Infineon fell below the threshold of 3 percent on November
7, 2007, and amounted to 2.96 percent (representing
22,210,421 voting rights). The voring rights are attributed to
FMR LLC according to section 22.
Information
Pursuant Section 6.6 German Corporate
Governance
On March 1, 2007, Prof. Dr. Hermann Eul, member of the
management board of the Company, sold 1,000 shares of the
Company at a price of 11.28 per share upon the exercise of
stock options.
As of September 30, 2007, the entire holdings of shares in
Infineon Technologies AG of all members of the management board
and supervisory board did not exceed 1 percent of the
shares issued by the company.
Information
Pursuant to Section 161 German Corporate Act
(AktG)
The compliance declaration prescribed by section 161 AktG
was made available to the shareholders on a continuous basis via
the internet.
Accounting
Fees Pursuant Section 314 Paragraph 1 No. 9
HGB
Year-end Audit
Fees
In the 2007 fiscal year, the audit fees charged by KPMG Deutsche
Treuhand-Gesellschaft Aktiengesellschaft (KPMG), the
Companys independent auditors, amounted to
4.3 million (thereof 2.7 million charged
by the auditor engaged to audit the consolidated financial
statements) in connection with professional services rendered
for the annual audit of the Companys consolidated
financial statements, including the audit of internal control
over financial reporting as required for the 2007 fiscal year,
as well as services normally provided by them in connection with
statutory and regulatory filings or other compliance engagements.
Other Audit
Fees
In addition to the amounts described above, KPMG charged the
Company an aggregate of 1.5 million (thereof
1.3 million charged by the auditor engaged to audit
the consolidated financial statements) in the 2007 fiscal year
for other audit services. These services consisted of the
carve-out audit of Qimonda and quarterly reviews.
Tax
Fees
In addition to the amounts described above, KPMG charged the
Company an aggregate of 0 (thereof 0 charged by the
auditor engaged to audit the consolidated financial statements)
in the 2007 fiscal year for professional services related
primarily to tax compliance.
Other
Fees
Fees of 0.7 million (thereof 0.4 million
charged by the auditor engaged to audit the consolidated
financial statements) were charged by KPMG in the 2007 fiscal
year for other services. These services consisted of transaction
and accounting advisory services, IT system audits, and services
related to the transition to IFRS.
Management
Board and Supervisory Board
Management
Compensation in Fiscal Year 2007
In the 2007 fiscal year, the active members of the Management
Board received total compensation of 6.5 million.
This includes 550,000 stock options with a fair value of
1.1 million (determined in accordance with the Monte
Carlo simulation model). No performance-related bonuses were
paid for the 2007 fiscal year.
F-151
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The total aggregate cash compensation of the members of the
Supervisory Board was 0.6 million in the 2007 fiscal
year. In addition, each member of the Supervisory Board received
1,500 share appreciation rights with a fair value of
2.03 each (determined in accordance with the Monte Carlo
simulation model).
Regarding the required information pursuant to HGB
section 314 par. 1 No. 6 subsection a, sentence 5
to 9, reference is made to the Compensation Report which is part
of the Operating and Financial Review.
Former members of the Management Board received total payments
of 1.3 million (severance and pension payments) in
the 2007 fiscal year. This includes a severance payment of
1.2 million to Mr. Günther.
As required by U.S. GAAP, a total of 1.4 million
was added to pension reserves for current pensions and
entitlements of former Management Board members; as of
September 30, 2007, these pension reserves amount to
13.6 million.
Management
Board and Supervisory Board Members
Members of our Management Board and Supervisory Board as of
September 30, 2007 are as follows:
Management
Board
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Memberships of Supervisory Boards and comparable
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governing bodies of domestic and foreign companies
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Name
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Age
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Term expires
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Position
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during the fiscal year ended September 30, 2007
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Dr. Wolfgang Ziebart
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57
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August 31, 2009
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chairman of the Management Board, President and Chief Executive
Officer
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Member of the Board of Directors of
Infineon Technologies China Co., Ltd., Shanghai,
Peoples Republic of China
Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore
Infineon Technologies Japan K.K., Tokyo, Japan
Infineon Technologies North America Corp.,
Wilmington, Delaware, USA
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Peter Bauer
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47
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September 30, 2008
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Member of the Management Board and Executive Vice President
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Member of the Supervisory Board of
Infineon Technologies Austria AG, Villach, Austria
(from April 30, 2007 until June 1, 2007, chairman)
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Prof. Dr. Hermann Eul
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48
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August 31, 2012
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Member of the Management Board and Executive Vice President
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Member of the Supervisory Board of
7Layers AG, Ratingen
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Peter J. Fischl (resigned April 30, 2007; reappointed as of
August 7, 2007)
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61
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March 31, 2008
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Member of the Management Board, Executive Vice President and
Chief Financial Officer
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chairman of the Supervisory Board of
Qimonda AG, Munich
Infineon Technologies Austria AG, Villach,
Austria
(until April 30, 2007)
Member of the Board of Directors of
Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore (until May 1, 2007; reappointed September 10, 2007)
Infineon Technologies China Co., Ltd., Shanghai,
Peoples Republic of China (until May 1, 2007; reappointed
August 22, 2007)
Infineon Technologies North America Corp.,
Wilmington, Delaware, USA (until May 1, 2007; reappointed August
6, 2007)
Infineon Technologies Japan K.K., Tokyo, Japan
(until May 1, 2007)
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Dr. Reinhard Ploss (since June 1, 2007)
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51
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May 31, 2012
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Member of the Management Board and Executive Vice President
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chairman of the Supervisory Board of
Infineon Technologies Austria AG, Villach,
Austria
(since June 1, 2007)
Member of the Board of Directors of
Infineon Technologies (Kulim) Sdn. Bhd., Kulim,
Malaysia
chairman of the Executive Board of
Infineon Technologies Austria AG, Villach,
Austria
(until May 31, 2007)
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F-152
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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Memberships of Supervisory Boards and comparable
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governing bodies of domestic and foreign companies
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Name
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Age
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Term expires
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Position
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during the fiscal year ended September 30, 2007
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Resigned Members of the Management Board
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Rüdiger Andreas Günther (from April 1, 2007 until
August 6, 2007)
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49
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Member of the Management Board, Executive Vice President (from
May 1, 2007 until August 6, 2007 Chief Financial Officer)
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Member of the Supervisory Board of
Infineon Technologies Austria AG, Villach,
Austria
(from May 16, 2007 until August 22, 2007)
Member of the Board of Directors of
Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore (from May 22, 2007 until August 23, 2007)
Infineon Technologies China Co., Ltd., Shanghai,
Peoples Republic of China (from May 18, 2007 until August
22, 2007)
Infineon Technologies North America Corp.,
Wilmington, Delaware, USA (from May 1, 2007 until August 6,
2007)
Infineon Technologies Japan K.K., Tokyo, Japan
(from May 15, 2007 until August 27, 2007)
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Supervisory
Board
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Membership of other Supervisory Boards and comparable
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governing bodies of domestic and foreign companies during
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Name
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Age
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Term expires
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Occupation
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the fiscal year ended September 30, 2007
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Max Dietrich Kley
chairman
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67
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2010
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Lawyer
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chairman of the Supervisory Board of
SGL Carbon AG, Wiesbaden
Member of the Supervisory Board of
BASF AG, Ludwigshafen
HeidelbergCement AG, Heidelberg
Schott AG, Mainz
Member of the Board of Directors of
UniCredito Italiano S.p.A., Milan, Italy
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Gerd
Schmidt(1)
Deputy chairman
(since February 15, 2007)
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53
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2009
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chairman of
Infineon Central Works Council
Infineon Works Council, Regensburg
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Wigand
Cramer(1)
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54
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2009
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Labor union clerk IG Metall, Berlin
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Alfred
Eibl(1)
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58
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2009
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chairman of the Infineon Works Council
Munich-Campeon (since November 8, 2006)
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F-153
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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Membership of other Supervisory Boards and comparable
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governing bodies of domestic and foreign companies during
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Name
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Age
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Occupation
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the fiscal year ended September 30, 2007
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Prof. Johannes Feldmayer
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51
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2010
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Member of the Corporate Executive Committee of
Siemens AG, Munich
(until September 30, 2007)
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Member of the Supervisory Board of
Exxon Mobil Central Europe Holding GmbH, Hamburg
Until May 24, 2007:
chairman of the Board of Administration of
Siemens A.E., Athens, Greece
chairman of the Supervisory Board of
Siemens Rt., Budapest, Hungary
Siemens Sp. zo.o., Warsaw, Poland
chairman of shareholders representatives committee of
Siemens s.r.o., Prague, Czech Republic
Deputy chairman of the Board of Administration of
Siemens S.A., Madrid, Spain
Siemens S.p.A., Milan, Italy
Siemens Schweiz AG, Zurich, Switzerland
Member of the Board of Administration of
Siemens France S.A., Saint-Denis, France
Siemens A.S., Istanbul, Turkey
Siemens A.S., Copenhagen, Denmark
Siemens A.S., Oslo, Norway
(from October 1, 2006)
Member of the Supervisory Board of
Siemens Holdings plc, Bracknell, Great Britain
Siemens AB, Stockholm, Sweden
Siemens AG, Vienna, Austria
Siemens Nederland N.V., Den Haag,
The Netherlands (from October 1, 2006)
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Jakob
Hauser(1)
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55
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2009
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chairman of the Works Council
Qimonda AG, Munich
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Gerhard
Hobbach(1)
(since February 15, 2007)
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45
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2009
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Deputy chairman of the Works Council
Infineon Munich-Campeon
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Prof. Dr. Renate Köcher
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55
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2010
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Managing Director of
Institut für Demoskopie Allensbach GmbH,
Allensbach
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Member of the Supervisory Board of
Allianz SE, Munich
BASF AG, Ludwigshafen
MAN AG, Munich
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Dr. Siegfried Luther
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63
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2010
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Managing Director of
Reinhard Mohn Verwaltungs GmbH, Gütersloh
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Member of the Supervisory Board of
Druck- und Verlagshaus Gruner & Jahr AG,
Hamburg (until August 28, 2007)
WestLB AG, Duesseldorf/Muenster
Wintershall Holding AG, Kassel
(since November 21, 2006)
chairman of the Board of Administration of
RTL Group S.A., Luxembourg
Member of the Board of Administration of
Compagnie Nationale à Portefeuille S.A.
Loverval, Belgium (since April 19, 2007)
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F-154
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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Membership of other Supervisory Boards and comparable
governing bodies of
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domestic and foreign companies during
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Name
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Age
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Term expires
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Occupation
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the fiscal year ended September 30, 2007
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Michael
Ruth(1)
Representative of Senior Management
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47
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2009
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Corporate Vice President Reporting, Planning and Controlling
Infineon Technologies AG
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Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel
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54
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2010
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Professor
Munich Technical University, Munich
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Kerstin
Schulzendorf(1)
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45
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2009
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Member of the Works Council
Infineon Dresden
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Dr. Eckart Sünner
(since August 2, 2007)
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63
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2010
|
|
|
President Legal, Taxes & Insurance
BASF AG, Ludwigshafen
|
|
chairman of the Supervisory Board of
Lucura Rückversicherungs AG, Ludwigshafen
Member of the Supervisory Board of
K +S AG, Kassel
Member of the Board of Directors of
BASF Corporation, Florham Park, New Jersey, USA
|
Alexander
Trüby(1)
|
|
|
37
|
|
|
|
2009
|
|
|
Member of the Works Council
Infineon Dresden
|
|
|
Prof. Dr. rer. nat
Martin Winterkorn
|
|
|
60
|
|
|
|
2010
|
|
|
chairman of the Management Board of
Audi AG, Ingolstadt (until December 31, 2006)
Volkswagen AG, Wolfsburg (since January 1, 2007)
|
|
chairman of the Supervisory Board of
Audi AG, Ingolstadt (since January 1, 2007)
Member of the Supervisory Board of
Salzgitter AG, Salzgitter
FC Bayern München AG, Munich
TÜ V Süddeutschland Holding AG, Munich
chairman of the Board of Administration of
SEAT S.A., Barcelona, Spain (until June 14, 2007)
Automobili Lamborghini Holding S.p.A.,
SantAgata Bolognese, Bologna, Italy (until February 12,
2007)
Member of the Board of Administration of
SEAT S.A., Barcelona, Spain
(since June 14, 2007)
|
F-155
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Membership of other Supervisory Boards and comparable
governing bodies of
|
|
|
|
|
|
|
|
|
|
|
domestic and foreign companies during
|
Name
|
|
Age
|
|
|
Term expires
|
|
|
Occupation
|
|
the fiscal year ended September 30, 2007
|
|
Prof. Dr.-Ing. Dr.-Ing. E.h
Klaus Wucherer
|
|
|
63
|
|
|
|
2010
|
|
|
Member of the Corporate Executive Committee of
Siemens AG, Munich
|
|
Member of the Supervisory Board of
Deutsche Messe AG, Hanover
BSH Bosch und Siemens Hausgeräte GmbH,
Munich
Leoni AG, Nuremberg (since May 3, 2007)
SAP AG, Walldorf (since May 10, 2007)
chairman of the Board of Administration of
Siemens Ltd., Beijing, Peoples Republic of
China
Siemens K.K., Tokyo, Japan (until February 26,
2007)
Siemens S.A., Lisbon, Portugal
Siemens Ltd., Mumbai, India
|
Resigned Members
|
|
|
|
|
|
|
|
|
|
|
|
|
Klaus
Luschtinetz(1)
Deputy chairman
(resigned February 15, 2007)
|
|
|
64
|
|
|
|
2007
|
|
|
Employee of
Infineon Technologies AG
|
|
|
Dr. Stefan Jentzsch
(resigned August 2, 2007)
|
|
|
46
|
|
|
|
2007
|
|
|
Member of the Management Board of
Dresdner Bank AG, Frankfurt
|
|
Member of the Supervisory Board of
Premiere AG, Munich
|
|
|
(1) |
Employee representative
|
F-156
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The Supervisory
Board Maintains the Following Principal Committees
|
|
|
|
|
Executive Committee
|
|
|
|
|
Max Dietrich Kley
|
|
|
|
|
Klaus Luschtinetz (resigned February 15, 2007)
|
|
|
|
|
Gerd Schmidt (since February 15, 2007)
|
|
|
|
|
Prof. Dr. rer. nat. Martin Winterkorn
|
|
|
|
|
|
|
|
|
|
Investment, Finance and Audit Committee
|
|
|
|
|
Max Dietrich Kley
|
|
|
|
|
Dr. Siegfried Luther
|
|
|
|
|
Klaus Luschtinetz (resigned February 15, 2007)
|
|
|
|
|
Gerd Schmidt (since February 15, 2007)
|
|
|
|
|
|
|
|
|
|
Mediation Committee
|
|
|
|
|
Max Dietrich Kley
|
|
|
|
|
Klaus Luschtinetz (resigned February 15, 2007)
|
|
|
|
|
Gerd Schmidt (since February 15, 2007)
|
|
|
|
|
Alexander Trüby
|
|
|
|
|
Prof. Dr. rer. nat. Martin Winterkorn
|
|
|
|
|
|
|
|
|
|
Strategy and Technology Committee
|
|
|
|
|
Alfred Eibl
|
|
|
|
|
Jakob Hauser
|
|
|
|
|
Alexander Trüby
|
|
|
|
|
Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel
|
|
|
|
|
Prof. Dr. rer. nat. Martin Winterkorn
|
|
|
|
|
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
|
|
|
|
|
F-157
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Significant
Subsidiaries and Associated Companies as of September 30,
2007
|
|
|
|
|
Name and location of company
|
|
Share in Capital
|
|
|
Infineon Group:
|
|
|
|
|
Infineon Technologies Asia Pacific Pte. Ltd., Singapore
|
|
|
100
|
%
|
Infineon Technologies Austria AG, Villach, Austria
|
|
|
100
|
%
|
Infineon Technologies Bipolar GmbH & Co. KG, Warstein,
Germany
|
|
|
100
|
%
|
Infineon Technologies China Co. Ltd., Shanghai, China
|
|
|
100
|
%
|
Infineon Technologies Dresden GmbH & Co. OHG, Dresden,
Germany
|
|
|
100
|
%
|
Infineon Technologies Finance GmbH, Neubiberg, Germany
|
|
|
100
|
%
|
Infineon Technologies France S.A.S., Saint Denis, France
|
|
|
100
|
%
|
Infineon Technologies Holding B.V., Rotterdam, The Netherlands
|
|
|
100
|
%
|
Infineon Technologies Investment B.V., Rotterdam, The Netherlands
|
|
|
100
|
%
|
Infineon Technologies Japan K.K., Tokyo, Japan
|
|
|
100
|
%
|
Infineon Technologies North America Corp., Wilmington, Delaware,
USA
|
|
|
100
|
%
|
Infineon Technologies SensoNor AS, Horten, Norway
|
|
|
100
|
%
|
Infineon Technologies (Advanced Logic) Sdn. Bhd., Malacca,
Malaysia
|
|
|
100
|
%
|
Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
|
|
|
100
|
%
|
Infineon Technologies (Malaysia) Sdn. Bhd., Malacca, Malaysia
|
|
|
100
|
%
|
ALTIS Semiconductor S.N.C., Essonnes, France
|
|
|
50
|
%
|
Qimonda
Group(1)
|
|
|
|
|
Qimonda AG, Munich, Germany
|
|
|
78
|
%
|
Qimonda Asia Pacific Pte. Ltd., Singapore
|
|
|
78
|
%
|
Qimonda Dresden GmbH & Co. OHG, Dresden, Germany
|
|
|
78
|
%
|
Qimonda Europe GmbH, Munich, Germany
|
|
|
78
|
%
|
Qimonda Holding B.V., Rotterdam, The Netherlands
|
|
|
78
|
%
|
Qimonda Investment B.V., Rotterdam, The Netherlands
|
|
|
78
|
%
|
Qimonda Japan K.K., Tokyo, Japan
|
|
|
78
|
%
|
Qimonda Malaysia Sdn. Bhd., Malacca, Malaysia
|
|
|
78
|
%
|
Qimonda Module (Suzhou) Co., Ltd., Suzhou, China
|
|
|
78
|
%
|
Qimonda North America Corp., Wilmington, Delaware, USA
|
|
|
78
|
%
|
Qimonda Portugal S.A., Vila do Conde, Portugal
|
|
|
78
|
%
|
Qimonda Richmond, LLC, Wilmington, Delaware, USA
|
|
|
78
|
%
|
Qimonda Technologies (Suzhou) Co., Ltd., Suzhou, China
|
|
|
49
|
%
|
Inotera Memories Inc., Taoyuan, Taiwan
|
|
|
28
|
%
|
|
|
(1) |
Ownership percentages are net of Qimondas minority
interest.
|
Neubiberg, November 12, 2007
Infineon Technologies AG
The Management Board
F-158
The following auditors report, prepared in accordance with
§322 HGB [Handelgesetzbuch: German
Commercial Code], refers to the complete consolidated
financial statements, comprising the consolidated balance sheet,
the consolidated statement of operations, the consolidated
statement of shareholders equity, and the consolidated
statement of cash flows and the related notes to the
consolidated financial statements, together with the group
management report for the business year from October 1,
2006 to September 30, 2007. The group management report is
not included in this prospectus.
AUDITORS
REPORT
We have audited the consolidated financial statements prepared
by Infineon Technologies AG, Neubiberg, comprising the
consolidated balance sheet, the consolidated statement of
operations, the consolidated statement of shareholders
equity, the consolidated statement of cash flows, and the
related notes to the consolidated financial statements, together
with the group management report for the business year from
October 1, 2006 to September 30, 2007. The preparation
of the consolidated financial statements in accordance with
accounting principles generally accepted in the United States of
America (US-GAAP) and the group management report in accordance
with the requirements of German commercial law are the
responsibility of the Companys management. Our
responsibility is to express an opinion on the consolidated
financial statements based on our audit.
We conducted our audit of the consolidated financial statements
in accordance with § 317 HGB and German generally
accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer
[Institute of Public Auditors in Germany] (IDW). Those standards
require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net
assets, financial position and results of operations in the
consolidated financial statements in accordance with the
applicable financial reporting framework and in the group
management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal
environment of the Group and expectations as to possible
misstatements are taken into account in the determination of
audit procedures. The effectiveness of the accounting-related
internal control system and the evidence supporting the
disclosures in the consolidated financial statements and the
group management report are examined primarily on a test basis
within the framework of the audit. The audit includes assessing
the annual financial statements of those entities included in
consolidation, the determination of entities to be included in
consolidation, the accounting and consolidation principles used
and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated
financial statements and the group management report. We believe
that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with accounting
principles generally accepted in the United States of America
and give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance
with these requirements. The group management report is
consistent with the consolidated financial statements and as a
whole provides a suitable view of the Groups position and
suitably presents the opportunities and risks of future
development.
In addition, we confirm that the consolidated financial
statements and the group management report for the business year
from October 1, 2006 to September 30, 2007 satisfy the
conditions required for the Companys exemption from its
duty to prepare consolidated financial statements in accordance
with German law and the group management report.
Munich, Germany, November 13, 2007
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
|
|
|
Hoyos
Wirtschaftsprüfer
|
|
Dittmann
Wirtschaftsprüfer
|
F-159
AUDITED
CONSOLIDATED FINANCIAL STATEMENTS
(PREPARED IN ACCORDANCE WITH U.S. GAAP)
AS OF AND FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2006
INFINEON TECHNOLOGIES
AG,
NEUBIBERG
F-160
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Operations
For the years ended September 30, 2004, 2005 and 2006
in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third parties
|
|
|
6
|
|
|
|
6,169
|
|
|
|
5,843
|
|
|
|
7,546
|
|
Related parties
|
|
|
29
|
|
|
|
1,026
|
|
|
|
916
|
|
|
|
383
|
|
|
|
Total net sales
|
|
|
|
|
|
|
7,195
|
|
|
|
6,759
|
|
|
|
7,929
|
|
|
|
Cost of goods sold
|
|
|
8
|
|
|
|
4,670
|
|
|
|
4,909
|
|
|
|
5,854
|
|
|
|
Gross profit
|
|
|
|
|
|
|
2,525
|
|
|
|
1,850
|
|
|
|
2,075
|
|
|
|
Research and development expenses
|
|
|
|
|
|
|
1,219
|
|
|
|
1,293
|
|
|
|
1,249
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
718
|
|
|
|
655
|
|
|
|
751
|
|
Restructuring charges
|
|
|
9
|
|
|
|
17
|
|
|
|
78
|
|
|
|
23
|
|
Other operating expense, net
|
|
|
8
|
|
|
|
257
|
|
|
|
92
|
|
|
|
108
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
|
314
|
|
|
|
(268
|
)
|
|
|
(56
|
)
|
|
|
Interest expense, net
|
|
|
|
|
|
|
(41
|
)
|
|
|
(9
|
)
|
|
|
(92
|
)
|
Equity in earnings (losses) of associated companies, net
|
|
|
17
|
|
|
|
(14
|
)
|
|
|
57
|
|
|
|
78
|
|
Gain on subsidiaries and associated company share issuance, net
|
|
|
17
|
|
|
|
2
|
|
|
|
|
|
|
|
19
|
|
Other non-operating (expense) income, net
|
|
|
|
|
|
|
(64
|
)
|
|
|
26
|
|
|
|
(33
|
)
|
Minority interests
|
|
|
24
|
|
|
|
18
|
|
|
|
2
|
|
|
|
(23
|
)
|
|
|
Income (loss) before income taxes
|
|
|
|
|
|
|
215
|
|
|
|
(192
|
)
|
|
|
(107
|
)
|
|
|
Income tax expense
|
|
|
10
|
|
|
|
(154
|
)
|
|
|
(120
|
)
|
|
|
(161
|
)
|
|
|
Net income (loss)
|
|
|
|
|
|
|
61
|
|
|
|
(312
|
)
|
|
|
(268
|
)
|
|
|
Basic and diluted income (loss) per share in
|
|
|
11
|
|
|
|
0.08
|
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
See accompanying notes to the consolidated financial statements.
F-161
Infineon
Technologies AG and Subsidiaries
Consolidated Balance Sheets
September 30, 2005 and 2006
( in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2005
|
|
|
2006
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
1,148
|
|
|
|
2,040
|
|
Marketable securities
|
|
|
12
|
|
|
|
858
|
|
|
|
615
|
|
Trade accounts receivable, net
|
|
|
13
|
|
|
|
952
|
|
|
|
1,245
|
|
Inventories
|
|
|
14
|
|
|
|
1,022
|
|
|
|
1,202
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
125
|
|
|
|
97
|
|
Other current assets
|
|
|
15
|
|
|
|
469
|
|
|
|
482
|
|
|
|
Total current assets
|
|
|
|
|
|
|
4,574
|
|
|
|
5,681
|
|
|
|
Property, plant and equipment, net
|
|
|
16
|
|
|
|
3,751
|
|
|
|
3,764
|
|
Long-term investments
|
|
|
17
|
|
|
|
779
|
|
|
|
659
|
|
Restricted cash
|
|
|
|
|
|
|
88
|
|
|
|
78
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
550
|
|
|
|
627
|
|
Other assets
|
|
|
18
|
|
|
|
542
|
|
|
|
376
|
|
|
|
Total assets
|
|
|
|
|
|
|
10,284
|
|
|
|
11,185
|
|
|
|
Liabilities and shareholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities
|
|
|
22
|
|
|
|
99
|
|
|
|
797
|
|
Trade accounts payable
|
|
|
19
|
|
|
|
1,069
|
|
|
|
1,245
|
|
Accrued liabilities
|
|
|
20
|
|
|
|
497
|
|
|
|
562
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
17
|
|
|
|
26
|
|
Other current liabilities
|
|
|
21
|
|
|
|
700
|
|
|
|
675
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
2,382
|
|
|
|
3,305
|
|
|
|
Long-term debt
|
|
|
22
|
|
|
|
1,566
|
|
|
|
1,208
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
65
|
|
|
|
60
|
|
Other liabilities
|
|
|
23
|
|
|
|
561
|
|
|
|
457
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
4,574
|
|
|
|
5,030
|
|
|
|
Minority interests
|
|
|
24
|
|
|
|
81
|
|
|
|
840
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share capital
|
|
|
25
|
|
|
|
1,495
|
|
|
|
1,495
|
|
Additional paid-in capital
|
|
|
|
|
|
|
5,800
|
|
|
|
5,828
|
|
Accumulated deficit
|
|
|
|
|
|
|
(1,512
|
)
|
|
|
(1,780
|
)
|
Accumulated other comprehensive loss
|
|
|
27
|
|
|
|
(154
|
)
|
|
|
(228
|
)
|
|
|
Total shareholders equity
|
|
|
|
|
|
|
5,629
|
|
|
|
5,315
|
|
|
|
Total liabilities and shareholders equity
|
|
|
|
|
|
|
10,284
|
|
|
|
11,185
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-162
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Shareholders Equity
For the years ended September 30, 2004, 2005 and 2006
in millions, except for share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
Additional
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
Issued
|
|
|
Additional
|
|
|
|
|
|
currency
|
|
|
minimum
|
|
|
gain (loss)
|
|
|
gain (loss) on
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
Ordinary shares
|
|
|
paid-in
|
|
|
Accumulated
|
|
|
translation
|
|
|
pension
|
|
|
on
|
|
|
cash flow
|
|
|
|
|
|
|
Notes
|
|
|
in shares
|
|
|
amount
|
|
|
capital
|
|
|
deficit
|
|
|
adjustment
|
|
|
liability
|
|
|
securities
|
|
|
hedge
|
|
|
Total
|
|
|
|
|
|
|
Balance as of October 1, 2003
|
|
|
|
|
|
|
720,880,604
|
|
|
|
1,442
|
|
|
|
5,573
|
|
|
|
(1,261
|
)
|
|
|
(81
|
)
|
|
|
(18
|
)
|
|
|
11
|
|
|
|
|
|
|
|
5,666
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
|
|
Other comprehensive income (loss)
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(41
|
)
|
|
|
18
|
|
|
|
(7
|
)
|
|
|
1
|
|
|
|
(29
|
)
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of redeemable interest
|
|
|
|
|
|
|
26,679,255
|
|
|
|
53
|
|
|
|
225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
278
|
|
Deferred compensation, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
Balance as of September 30, 2004
|
|
|
|
|
|
|
747,559,859
|
|
|
|
1,495
|
|
|
|
5,800
|
|
|
|
(1,200
|
)
|
|
|
(122
|
)
|
|
|
|
|
|
|
4
|
|
|
|
1
|
|
|
|
5,978
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(312
|
)
|
Other comprehensive income (loss)
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64
|
|
|
|
(84
|
)
|
|
|
8
|
|
|
|
(25
|
)
|
|
|
(37
|
)
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(349
|
)
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
26
|
|
|
|
9,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2005
|
|
|
|
|
|
|
747,569,359
|
|
|
|
1,495
|
|
|
|
5,800
|
|
|
|
(1,512
|
)
|
|
|
(58
|
)
|
|
|
(84
|
)
|
|
|
12
|
|
|
|
(24
|
)
|
|
|
5,629
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(268
|
)
|
Other comprehensive income (loss)
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(69
|
)
|
|
|
(3
|
)
|
|
|
(7
|
)
|
|
|
5
|
|
|
|
(74
|
)
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(342
|
)
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
26
|
|
|
|
39,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
Balance as of September 30, 2006
|
|
|
|
|
|
|
747,609,294
|
|
|
|
1,495
|
|
|
|
5,828
|
|
|
|
(1,780
|
)
|
|
|
(127
|
)
|
|
|
(87
|
)
|
|
|
5
|
|
|
|
(19
|
)
|
|
|
5,315
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-163
Infineon
Technologies AG and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended September 30, 2004, 2005 and 2006
( in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
61
|
|
|
|
(312
|
)
|
|
|
(268
|
)
|
Adjustments to reconcile net income (loss) to cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
16/18
|
|
|
|
1,320
|
|
|
|
1,316
|
|
|
|
1,405
|
|
Acquired in-process research and development
|
|
|
4
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
Deferred compensation
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Provision for doubtful accounts
|
|
|
13
|
|
|
|
15
|
|
|
|
3
|
|
|
|
23
|
|
Gain on sale of marketable securities
|
|
|
12
|
|
|
|
(9
|
)
|
|
|
(8
|
)
|
|
|
(3
|
)
|
Loss (gain) on sale of businesses and interests in subsidiaries
|
|
|
5
|
|
|
|
2
|
|
|
|
(39
|
)
|
|
|
10
|
|
Gain on disposal of property, plant, and equipment
|
|
|
|
|
|
|
(5
|
)
|
|
|
(8
|
)
|
|
|
(9
|
)
|
Equity in losses (earnings) of associated companies, net
|
|
|
17
|
|
|
|
14
|
|
|
|
(57
|
)
|
|
|
(78
|
)
|
Gain on subsidiaries and associated company share issuance, net
|
|
|
17
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
(19
|
)
|
Minority interests
|
|
|
24
|
|
|
|
(18
|
)
|
|
|
(2
|
)
|
|
|
23
|
|
Impairment charges
|
|
|
16/17/18
|
|
|
|
136
|
|
|
|
134
|
|
|
|
57
|
|
Stock-based compensation
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
96
|
|
|
|
88
|
|
|
|
(6
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
13
|
|
|
|
(219
|
)
|
|
|
119
|
|
|
|
(334
|
)
|
Inventories
|
|
|
14
|
|
|
|
(40
|
)
|
|
|
(25
|
)
|
|
|
(145
|
)
|
Other current assets
|
|
|
15
|
|
|
|
154
|
|
|
|
(2
|
)
|
|
|
31
|
|
Trade accounts payable
|
|
|
19
|
|
|
|
228
|
|
|
|
(52
|
)
|
|
|
222
|
|
Accrued liabilities
|
|
|
20
|
|
|
|
92
|
|
|
|
(114
|
)
|
|
|
89
|
|
Other current liabilities
|
|
|
21
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
48
|
|
Other assets and liabilities
|
|
|
18/23
|
|
|
|
43
|
|
|
|
(2
|
)
|
|
|
(100
|
)
|
|
|
Net cash provided by operating activities
|
|
|
|
|
|
|
1,857
|
|
|
|
1,039
|
|
|
|
974
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of marketable securities available for sale
|
|
|
|
|
|
|
(2,678
|
)
|
|
|
(2,228
|
)
|
|
|
(492
|
)
|
Proceeds from sale of marketable securities available for sale
|
|
|
|
|
|
|
2,520
|
|
|
|
3,310
|
|
|
|
730
|
|
Proceeds from sale of businesses and interests in subsidiaries
|
|
|
|
|
|
|
9
|
|
|
|
101
|
|
|
|
72
|
|
Business interests, net of cash acquired
|
|
|
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
|
|
Investment in associated and related companies
|
|
|
17
|
|
|
|
(386
|
)
|
|
|
(135
|
)
|
|
|
(6
|
)
|
Cash increase from initial consolidation of ALTIS
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
119
|
|
Dividends received from equity investments
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
29
|
|
Purchases of intangible assets
|
|
|
18
|
|
|
|
(125
|
)
|
|
|
(27
|
)
|
|
|
(44
|
)
|
Purchases of property, plant and equipment
|
|
|
16
|
|
|
|
(1,163
|
)
|
|
|
(1,368
|
)
|
|
|
(1,253
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
16
|
|
|
|
43
|
|
|
|
58
|
|
|
|
21
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(1,809
|
)
|
|
|
(238
|
)
|
|
|
(824
|
)
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in short-term debt
|
|
|
22
|
|
|
|
62
|
|
|
|
(20
|
)
|
|
|
|
|
Net change in related party financial receivables and payables
|
|
|
29
|
|
|
|
75
|
|
|
|
18
|
|
|
|
7
|
|
Proceeds from issuance of long-term debt
|
|
|
22
|
|
|
|
|
|
|
|
192
|
|
|
|
400
|
|
Principal repayments of long-term debt
|
|
|
22
|
|
|
|
(549
|
)
|
|
|
(500
|
)
|
|
|
(56
|
)
|
Change in restricted cash
|
|
|
|
|
|
|
(43
|
)
|
|
|
21
|
|
|
|
10
|
|
Proceeds from issuance of shares to minority interest
|
|
|
|
|
|
|
53
|
|
|
|
23
|
|
|
|
|
|
Proceeds from issuance of shares of Qimonda
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
406
|
|
Capital distributions to minority interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
Net cash (used in) provided by financing activities
|
|
|
|
|
|
|
(402
|
)
|
|
|
(266
|
)
|
|
|
762
|
|
|
|
Effect of foreign exchange rate changes on cash and cash
equivalents
|
|
|
|
|
|
|
(7
|
)
|
|
|
5
|
|
|
|
(20
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
|
(361
|
)
|
|
|
540
|
|
|
|
892
|
|
Cash and cash equivalents at beginning of year
|
|
|
|
|
|
|
969
|
|
|
|
608
|
|
|
|
1,148
|
|
|
|
Cash and cash equivalents at end of year
|
|
|
|
|
|
|
608
|
|
|
|
1,148
|
|
|
|
2,040
|
|
|
|
See accompanying notes to the consolidated financial statements.
F-164
Infineon
Technologies AG and Subsidiaries
|
|
1.
|
Description of
Business, Formation and Basis of Presentation
|
Description of
Business
Infineon Technologies AG and its subsidiaries (collectively, the
Company) design, develop, manufacture and market a
broad range of semiconductors and complete systems solutions
used in a wide variety of microelectronic applications,
including computer systems, telecommunications systems, consumer
goods, automotive products, industrial automation and control
systems, and chip card applications. The Companys products
include standard commodity components, full-custom devices,
semi-custom devices and application-specific components for
memory, analog, digital and mixed-signal applications. The
Company has operations, investments and customers located mainly
in Europe, Asia and North America. The financial year-end
for the Company is September 30.
Formation
Infineon Technologies AG was formed as a legal entity as of
April 1, 1999 through the contribution by Siemens
Aktiengesellschaft (Siemens) of substantially all of
its semiconductor-related investments, operations and
activities. The Company had its initial public offering
(IPO) on March 13, 2000, is listed on the New
York Stock Exchange under the symbol IFX, and is one of the Dax
30 companies on the Frankfurt Stock Exchange.
Basis of
Presentation
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America
(U.S. GAAP). Infineon Technologies AG is
incorporated in Germany. The German Commercial Code
(Handelsgesetzbuch or HGB) requires the
Company to prepare consolidated financial statements in
accordance with the HGB accounting principles and regulations
(German GAAP). Pursuant to the German Commercial
Code Implementation Act (Einführungsgesetz zum
HGB-EGHGB), Article 58, paragraph 5, the Company
is exempt from this requirement, if consolidated financial
statements are prepared and issued in accordance with a body of
internationally accepted accounting principles (such as
U.S. GAAP). Accordingly, the Company presents the
U.S. GAAP consolidated financial statements contained
herein.
All amounts herein are shown in millions of euro (or
) except where otherwise stated. The
accompanying consolidated balance sheet as of September 30,
2006, and the consolidated statements of operations and cash
flows for the year then ended are also presented in
U.S. dollars ($), solely for the convenience of
the reader, at the rate of 1 = $1.2687, the Federal
Reserve noon buying rate on September 29, 2006. The
U.S. dollar convenience translation amounts have not been
audited.
Certain amounts in prior year consolidated financial statements
and notes have been reclassified to conform to the current year
presentation. Results of operations have not been affected by
these reclassifications.
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2.
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Summary of
Significant Accounting Policies
|
The following is a summary of significant accounting policies
followed in the preparation of the accompanying consolidated
financial statements.
Basis of
Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its significant subsidiaries on a
consolidated basis. Investments in companies in which the
Company has an ownership interest of 20% or more and that are
not controlled by the Company (Associated Companies)
are accounted for using the equity method of accounting (see
note 17). The equity in earnings of Associated Companies
with financial year ends that differ by not more than three
months from the Companys financial year are recorded on a
three month lag. Other equity investments (Related
Companies), in which the Company has an ownership interest
of less than 20% are recorded at cost. The effects of all
significant intercompany transactions are eliminated. In
addition, the Company evaluates its relationships with entities
to identify whether they are variable interest entities as
defined by Financial Accounting Standards Board
(FASB) Interpretation No. 46 (revised December
2003), Consolidation of
F-165
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Variable Interest Entities an interpretation of ARB
No. 51, and to assess whether it is the primary
beneficiary of such entities. If the determination is made that
the Company is the primary beneficiary, then that entity is
included in the consolidated financial statements.
The Company group consists of the following numbers of entities:
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Consolidated
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Associated
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subsidiaries
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companies
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Total
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September 30, 2005
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56
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11
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67
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Additions
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14
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14
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Disposals
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(4
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)
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(4
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)
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(8
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)
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September 30, 2006
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66
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7
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|
73
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|
|
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Reporting and
Foreign Currency
The Companys reporting currency is the euro, and therefore
the accompanying consolidated financial statements are presented
in euro.
The assets and liabilities of foreign subsidiaries with
functional currencies other than the euro are translated using
period-end exchange rates, while the revenues and expenses of
such subsidiaries are translated using average exchange rates
during the period. Differences arising from the translation of
assets and liabilities in comparison with the translation of the
previous periods are included in other comprehensive income
(loss) and reported as a separate component of
shareholders equity.
The exchange rates of the primary currencies used in the
preparation of the accompanying consolidated financial
statements are as follows:
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Exchange rate
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Annual average
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September 30
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exchange rate
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Currency in
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2005
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2006
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2005
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2006
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U.S. dollar
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1 $
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|
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0.8290
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0.7899
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0.7869
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0.8117
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Japanese yen
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100JPY
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0.7357
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0.6696
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0.7331
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0.6978
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Great Britain pound
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1 GBP
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1.4650
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1.4756
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1.4507
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1.4595
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Singapore dollar
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1 SGD
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|
|
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0.4911
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|
|
|
0.4981
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|
|
|
0.4749
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|
|
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0.5016
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Revenue
Recognition
Sales
Revenue from products sold to customers is recognized, pursuant
to U.S. Securities and Exchange Commission
(SEC) Staff Accounting Bulletin (SAB)
104, Revenue Recognition, when persuasive evidence
of an arrangement exists, the price is fixed or determinable,
shipment is made and collectibility is reason-ably assured. The
Company records reductions to revenue for estimated product
returns and allowances for discounts, volume rebates and price
protection, based on actual historical experience, at the time
the related revenue is recognized. In general, returns are
permitted only for quality related reasons within the applicable
warranty period, which is typically 12 months. Distributors
can, in certain cases, apply for stock rotation or scrap
al-lowances and price protection. Allowances for stock rotation
returns are accrued based on expected stock rotation as per the
contractual agreement. Distributor scrap allowances are accrued
based on the contractual agreement and, upon authorization of
the claim, reimbursed up to a certain maximum of the average
inventory value. Price protection programs allow distributors to
apply for a price protection credit on unsold inventory in the
event the Company reduces the standard list price of the
products included in such inventory. In some cases, rebate
programs are offered to specific customers or distributors
whereby the customer or distributor may apply for a rebate upon
achievement of a defined sales volume. Distributors are also
partially compensated for commonly defined cooperative
advertising on a case-by-case basis.
F-166
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
License
Income
License income is recognized when earned and realizable (see
note 6). Lump sum payments are generally non-refundable and
are deferred where applicable and recognized over the period in
which the Company is obliged to provide additional service.
Pursuant to Emerging Issues Task Force (EITF) Issue
No. 00-21,
Revenue Arrangements with Multiple Deliverables,
revenues from contracts with multiple elements are recognized as
each element is earned based on the relative fair value of each
element and when there are no undelivered elements that are
essential to the functionality of the delivered elements and
when the amount is not contingent upon delivery of the
undelivered elements. Royalties are recognized as earned.
Grants
Grants for capital expenditures include both tax-free government
grants (Investitionszulage) and taxable grants for investments
in property, plant and equipment (Investitionszuschüsse).
Grants receivable are established when a legal right for the
grant exists and the criteria for receiving the grant have been
met. Tax-free government grants are deferred and recognized over
the remaining useful life of the related asset. Taxable grants
are deducted from the acquisition costs of the related asset and
thereby reduce depreciation expense in future periods. Other
taxable grants reduce the related expense (see notes 7, 21
and 23).
Product-related
Expenses
Shipping and handling costs associated with product sales are
included in cost of sales. Expenditures for advertising, sales
promotion and other sales-related activities are expensed as
incurred. Provisions for estimated costs related to product
warranties are generally made at the time the related sale is
recorded, based on estimated failure rates and claim history.
Research and development costs are expensed as incurred.
Income
Taxes
Income taxes are accounted for under the asset and liability
method pursuant to FASB Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for
Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that
includes the enactment date. Investment tax credits are
accounted for under the flow-through method.
Stock-based
Compensation
Prior to the adoption of SFAS No. 123 (revised
2004) Share-Based Payment, the Company
accounted for stock-based compensation using the intrinsic value
method pursuant to Accounting Principles Board (APB)
Opinion 25, Accounting for Stock Issued to
Employees, recognized compensation cost over the pro rata
vesting period, and adopted the disclosure-only provisions of
SFAS No. 123, Accounting for Stock-Based
Compensation as amended by SFAS No. 148
Accounting for Stock-Based Compensation
Transition and Disclosure, an Amendment of FASB Statement
No. 123.
Effective October 1, 2005, the Company adopted
SFAS No. 123 (revised 2004) under the modified
prospective application method. Under this application, the
Company records stock-based compensation expense for all awards
granted on or after the date of adoption and for the portion of
previously granted awards that remained unvested at the date of
adoption. Stock-based compensation cost is measured at the grant
date, based on the fair value of the award, and is recognized as
expense over the period during which the employee is required to
provide service in exchange for the award.
SFAS No. 123 (revised 2004) eliminates the
alternative method of accounting for employee share-based
payments previously available under APB No. 25. Prior
period amounts have not been restated and do not reflect the
recognition of stock-based compensation (see note 26).
F-167
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Issuance of
shares by Subsidiaries or Associated Companies
Gains or losses arising from the issuances of shares by
subsidiaries or Associated Companies, due to changes in the
Companys proportionate share of the value of the
issuers equity, are recognized in earnings pursuant to
SAB Topic 5:H, Accounting for Sales of Stock by a
Subsidiary (see notes 3 and 17).
Cash and Cash
Equivalents
Cash and cash equivalents represent cash, deposits and liquid
short-term investments with original maturities of three months
or less. Cash equivalents as of September 30, 2005 and 2006
were 1,093 and 1,926, respectively, and consisted
mainly of bank term deposits and fixed income securities with
original maturities of three months or less.
Restricted
Cash
Restricted cash includes collateral deposits used as security
under arrangements for deferred compensation, business
acquisitions, construction projects, leases and financing (see
note 33).
Marketable
Securities
The Companys marketable securities are classified as
available-for-sale
and are stated at fair value as determined by the most recently
traded price of each security at the balance sheet date.
Unrealized gains and losses are included in accumulated other
comprehensive income, net of applicable income taxes. Realized
gains or losses and declines in value, if any, judged to be
other-than-temporary
on
available-for-sale
securities, are reported in other non-operating income or
expense. For the purpose of determining realized gains and
losses, the cost of securities sold is based on specific
identification.
Inventories
Inventories are valued at the lower of cost or market, cost
being generally determined on the basis of an average method.
Cost consists of purchased component costs and manufacturing
costs, which comprise direct material and labor costs and
applicable indirect costs.
Property,
Plant and Equipment
Property, plant and equipment are valued at cost less
accumulated depreciation. Spare parts, maintenance and repairs
are expensed as incurred. Depreciation expense is recognized
using the straight-line method. Construction in progress
includes advance payments for construction of fixed assets. Land
and construction in progress are not depreciated. The cost of
construction of certain long-term assets includes capitalized
interest, which is amortized over the estimated useful life of
the related asset. During the years ended September 30,
2005 and 2006 capitalized interest was 9 and 0,
respectively. The estimated useful lives of assets are as
follows:
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Years
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Buildings
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10-25
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Technical equipment and machinery
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3-10
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Other plant and office equipment
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1-10
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Leases
The Company is a lessee of property, plant and equipment. All
leases where the Company is lessee that meet certain specified
criteria intended to represent situations where the substantive
risks and rewards of ownership have been transferred to the
lessee are accounted for as capital leases pursuant to
SFAS No. 13, Accounting for Leases, and
related interpretations. All other leases are accounted for as
operating leases.
Goodwill and
Other Intangible Assets
The Company accounts for business combinations using the
purchase method of accounting pursuant to
SFAS No. 141, Business Combinations.
Intangible assets acquired in a purchase method
F-168
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
business combination are recognized and reported apart from
goodwill, pursuant to the criteria specified by
SFAS No. 141.
Intangible assets consist primarily of purchased intangible
assets, such as licenses and purchased technology, which are
recorded at acquisition cost, and goodwill resulting from
business acquisitions, representing the excess of purchase price
over fair value of net assets acquired. Intangible assets other
than goodwill are amortized on a straight-line basis over the
estimated useful lives of the assets ranging from 3 to
10 years. Pursuant to SFAS No. 142 Goodwill
and Other Intangible Assets, goodwill is not amortized,
but instead tested for impairment at least annually in
accordance with the provisions of SFAS No. 142. The
Company tests goodwill annually for impairment in the fourth
quarter of the financial year, whereby if the carrying amount of
a reporting unit with goodwill exceeds its fair value, the
amount of impairment is determined as the excess of recorded
goodwill over the fair value of goodwill. The determination of
fair value of the reporting units and related goodwill requires
considerable judgment by management.
Impairment of
Long-lived Assets
The Company reviews long-lived assets, including property, plant
and equipment and intangible assets subject to amortization, for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash
flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Estimated fair
value is generally based on either appraised value or discounted
estimated future cash flows. Considerable management judgment is
necessary to estimate discounted future cash flows.
Long-term
Investments
The Company assesses declines in the value of investments
accounted for under the equity and cost methods to determine
whether such decline is
other-than-temporary,
thereby rendering the investment impaired. This assessment is
made by considering available evidence including changes in
general market conditions, specific industry and individual
company data, the length of time and the extent to which the
market value has been less than cost, the financial condition
and near-term prospects of the individual company, and the
Companys intent and ability to hold the investment for a
period of time sufficient to allow for any anticipated recovery
in market value.
Financial
Instruments
The Company operates internationally, giving rise to exposure to
changes in foreign currency exchange rates. The Company uses
financial instruments, including derivatives such as foreign
currency forward and option contracts as well as interest rate
swap agreements, to reduce this exposure based on the net
exposure to the respective currency. The Company applies
SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by
SFAS No. 137, SFAS No. 138 and
SFAS No. 149, which provides guidance on accounting
for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging
activities. Derivative financial instruments are recorded at
their fair value and included in other current assets or other
current liabilities. Generally the Company does not designate
its derivative instruments as hedge transactions. Changes in
fair value of undesignated derivatives that relate to operations
are recorded as part of cost of sales, while undesignated
derivatives relating to financing activities are recorded in
other non-operating expense, net. Changes in fair value of
derivatives designated as fair value hedges and the related
hedged items are reflected in earnings. Changes in the fair
value of derivatives designated as cash flow hedges are, to the
extent effective, deferred in accumulated other comprehensive
income and subsequently reclassified to earnings when the
hedging transaction is reflected in earnings and, to the extent
ineffective, included in earnings immediately. The fair value of
derivative and other financial instruments is discussed in
note 31.
F-169
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Pension
Plans
The measurement of pension-benefit liabilities is based on
actuarial computations using the
projected-unit-credit
method in accordance with SFAS No. 87,
Employers Accounting for Pensions. The
assumptions used to calculate pension liabilities and costs are
shown in Note 30. Changes in the amount of the projected
benefit obligation or plan assets resulting from experience
different from that assumed and from changes in assumptions can
result in gains or losses not yet recognized in the
Companys consolidated financial statements. Amortization
of an unrecognized net gain or loss is included as a component
of the Companys net periodic benefit plan cost for a year
if, as of the beginning of the year, that unrecognized net gain
or loss exceeds 10% of the greater of the projected benefit
obligation or the fair value of that plans assets. In that
case, the amount of amortization recognized by the Company is
the resulting excess divided by the average remaining service
period of the active employees expected to receive benefits
under the plan. The Company also records a liability for amounts
payable under the provisions of its various defined contribution
plans.
Use of
Estimates
The preparation of the accompanying 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 period. Actual amounts could
differ materially from such estimates made by management.
Recent
Accounting Pronouncements
In November 2004, the FASB issued SFAS No. 151,
Inventory Costs an amendment of ARB
No. 43, Chapter 4, which clarifies the
accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage),
requiring that such costs be recognized as current period
charges and requiring the allocation of fixed production
overheads to inventory based on the normal capacity of the
production facilities. The Company adopted
SFAS No. 151 with effect from October 1, 2005,
which did not have a significant impact on its consolidated
financial position or results of operations.
In December 2004, the FASB issued SFAS No. 153,
Exchanges of Nonmonetary Assets an Amendment
of APB Opinion No. 29, which eliminates the exception
for nonmonetary exchanges of similar productive assets and
replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. The
Company adopted SFAS No. 153 for nonmonetary asset
exchanges occurring on or after July 1, 2005. The adoption
SFAS No. 153 did not have a significant impact on the
Companys consolidated financial position or results of
operations.
In March 2005, the FASB issued Interpretation No. 47,
Accounting for Conditional Asset Retirement
Obligations, which clarifies that an entity is required to
recognize a liability for the fair value of a conditional asset
retirement obligation if the fair value can be reasonably
estimated even though uncertainty exists about the timing and
(or) method of settlement. The Company adopted Interpretation
No. 47 during the 2006 financial year, which did not have a
significant impact on its consolidated financial position or
results of operations.
In May 2005, the FASB issued SFAS No. 154,
Accounting Changes and Error Corrections.
SFAS No. 154 replaces APB Opinion No. 20,
Accounting Changes, and SFAS No. 3,
Reporting Accounting Changes in Interim Financial
Statements, and changes the requirements for the
accounting and reporting of a change in accounting principle.
The Company is required to adopt SFAS No. 154 for
accounting changes and error corrections that occur after
September 30, 2006. The Companys results of
operations and financial condition will only be impacted
following the adoption of SFAS No. 154 if it
implements changes in accounting principle that are addressed by
the standard or corrects accounting errors in future periods.
In July 2006, the FASB issued Interpretation No. 48,
Accounting for Income Tax Uncertainties, which
defines the threshold for recognizing the benefits of tax return
positions in the financial statements as
more-likely-than-not to be sustained by the taxing
authority. The recently issued literature also provides guidance
on the derecognition, measurement and classification of income
tax uncertainties, along with
F-170
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
any related interest and penalties. Interpretation No. 48
also includes guidance concerning accounting for income tax
uncertainties in interim periods and increases the level of
disclosures associated with any recorded income tax
uncertainties. Interpretation No. 48 is effective for
fiscal years beginning after December 15, 2006. The
differences between the amounts recognized in the statements of
financial position prior to the adoption of Interpretation
No. 48 and the amounts reported after adoption will be
accounted for as a cumulative-effect adjustment recorded to the
beginning balance of retained earnings. The Company is in the
process of determining the impact, if any, that the adoption of
Interpretation No. 48 will have on its consolidated
financial position and results of operations.
In September 2006, the FASB released SFAS No. 157,
Fair Value Measurements, which provides guidance for
using fair value to measure assets and liabilities.
SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value
measurements. The standard also responds to investors
requests for more information about the extent to which
companies measure assets and liabilities at fair value, the
information used to measure fair value, and the effect that fair
value measurements have on earnings. SFAS No. 157 will
apply whenever another standard requires (or permits) assets or
liabilities to be measured at fair value. The standard does not
expand the use of fair value to any new circumstances.
SFAS No. 157 is effective for financial statements
issued for financial years beginning after November 15,
2007, and interim periods within those financial years.
SFAS No. 157 is effective for the Company for
financial years beginning after October 1, 2008, and
interim periods within those financial years. The Company is in
the process of evaluating the impact that the adoption of
SFAS No. 157 will have on its consolidated financial
position and results of operations.
In September 2006, the FASB issued SFAS No. 158
Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans an amendment of FASB
Statements No. 87, 88, 106, and 132(R), which
requires an employer to recognize the overfunded or underfunded
status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded
status in the year in which the changes occur through
comprehensive income of a business entity or changes in
unrestricted net assets of a
not-for-profit
organization (Recognition Provision).
SFAS No. 158 also requires an employer to measure the
funded status of a plan as of the date of its year-end statement
of financial position, with limited exceptions
(Measurement Date Provision). The Company currently
measures the funded status of its plans annually on
June 30. The Recognition Provision of
SFAS No. 158 is effective for the Company as of the
end of the financial year ending September 30, 2007, and
the Measurement Date Provision is effective for the Company as
of the end of the financial year ending September 30, 2009.
The Company does not expect the change in the annual measurement
date to September 30 to have a significant impact on its
consolidated financial position and results of operations. As of
September 30, 2006 the application of the Recognition
Provision of SFAS No. 158 would have resulted in an
increase in other long-term liabilities of 66, a
recognized pension asset of 2, and an increase in
accumulated other comprehensive loss of 60.
In September 2006, the SEC issued Staff Accounting
Bulletin No. 108, Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements. SAB No. 108
provides interpretive guidance on how the effects of prior-year
uncorrected misstatements should be considered when quantifying
misstatements in the current year financial statements.
SAB No. 108 requires registrants to quantify
misstatements using both an income statement
(rollover) and balance sheet (iron
curtain) approach and evaluate whether either approach
results in a misstatement that, when all relevant quantitative
and qualitative factors are considered, is material. If prior
year errors that had been previously considered immaterial are
now considered material based on either approach, no restatement
is required so long as management properly applied its previous
approach and all relevant facts and circumstances were
considered. If prior years are not restated, the cumulative
effect adjustment is recorded in opening accumulated earnings
(deficit) as of the beginning of the year of adoption.
SAB No. 108 is effective for fiscal years ending on or
after November 15, 2006, with earlier adoption encouraged.
The Company does not expect that the adoption of
SAB No. 108 will have a significant impact on its
consolidated financial position and results of operations.
F-171
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
3.
|
Separation of
Memory Products Business
|
Effective May 1, 2006, substantially all the memory
products-related assets and liabilities, operations and
activities of Infineon were contributed to Qimonda AG
(Qimonda), a stand-alone legal company (the
Formation). In conjunction with the Formation, the
Company entered into contribution agreements and various other
service agreements with Qimonda. In cases where physical
contribution (ownership transfer) of assets and liabilities was
not feasible or cost effective, the monetary value was
transferred in the form of cash or debt. The Companys
operations in Japan and Korea are expected to be legally
transferred to Qimonda during the 2007 financial year, and are
to be held for Qimondas benefit until such transfer
occurs. The Companys investment in Inotera Memories Inc.
(Inotera) is held in trust by Infineon subject to
the expiration or release of applicable lockup provisions under
Taiwan securities law (see note 17 and 35). The
Companys investment in Advanced Mask Technology Center
GmbH & Co. (AMTC) is intended to be
transferred to Qimonda after approval by the other shareholders
in the venture. The Company completed an initial public offering
of the ordinary shares of Qimonda during the three months ended
September 30, 2006 (see note 24).
The contribution agreements include provisions pursuant to which
Qimonda agreed to indemnify Infineon against any claim
(including any related expenses) arising in connection with the
liabilities, contracts, offers, incomplete transactions,
continuing obligations, risks, encumbrances, guarantees and
other matters relating to the memory products business that were
transferred to it as part of the Formation. In addition, the
contribution agreements provide for indemnification of Infineon
with respect to certain existing and future legal claims and
potential restructuring costs incurred in connection with the
rampdown of production in one module of Infineon Technologies
Dresden GmbH & Co. OHG. With the exception of the
securities and certain patent infringement and antitrust claims
identified in note 33, Qimonda is obligated to indemnify
Infineon against any liability arising in connection with the
claims relating to the memory products business described in
that section. Liabilities and risks relating to the securities
class action litigation, including court costs, will be equally
shared by Infineon and Qimonda, but only with respect to the
amount by which the total amount payable exceeds the amount of
the corresponding accrual that Infineon transferred to Qimonda
at the formation. Qimonda has agreed to indemnify Infineon for
60% of any license fee payments to which Infineon may agree in
connection with ongoing negotiations relating to licensing and
cross-licensing arrangements with a third party. These payments
could be substantial and could remain in effect for lengthy
periods.
On July 18, 2006, under the Companys Master Loan
Agreement with Qimonda, Qimonda extended the terms of its loans
due to Infineon with an aggregate principal amount outstanding
of $565 million at that date, with original maturities in
July and August 2007. In this agreement, Qimonda agreed not to
draw further amounts under the agreement, and to repay all
outstanding amounts by no later than two years after the date of
its IPO. An amount of 107 was repaid during the quarter
ended September 30, 2006.
On August 9, 2006 Qimonda completed its IPO on the New York
Stock Exchange through the issuance of 42 million ordinary
shares which are traded as American Depositary Shares (ADSs)
under the symbol QI, for an offering price of $13
per ADS. As a result, the Companys ownership interest in
Qimonda was diluted to 87.7% and its proportional share of
Qimondas equity decreased by 53, which loss the
Company reflected as part of non-operating expenses under gain
on subsidiaries and associated company share issuance, net
during the quarter ended September 30, 2006. The net
offering proceeds amounted to 406 (before tax benefits
available to Qimonda of 9) and are classified as proceeds
from issuance of shares from subsidiaries within cash flows from
financing activities in the accompanying consolidated statement
of cash flows for the year ended September 30, 2006.
Qimonda intends to use the offering proceeds to finance
investments in its manufacturing facilities and for research and
development.
In addition, Infineon sold 6.3 million shares upon exercise
of the underwriters over-allotment option. As a result,
the Companys ownership interest in Qimonda decreased to
85.9% and the Company recognized a loss of 12, which was
reflected as part of other operating expenses, net during the
quarter ended September 30, 2006. The net over-allotment
proceeds amounted to 58 and are classified as proceeds
from sale of businesses and interests in subsidiaries within
cash flows from investing activities in the accompanying
consolidated statement of cash flows for the year ended
September 30, 2006.
F-172
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
During December 2004, Saifun Semiconductors Ltd.
(Saifun) and the Company modified their existing
flash memory cooperation agreement. As a consequence, the
Company consummated the acquisition of Saifuns remaining
30% share in the Infineon Technologies Flash joint venture in
January 2005 and was granted a license for the use of Saifun
NROM®
technologies, in exchange for $95 million (subsequently
reduced to $46 million) to be paid in quarterly
installments over 10 years and additional purchase
consideration primarily in the form of net liabilities assumed
aggregating 7 (see note 6). The assets acquired and
liabilities assumed were recorded in the accompanying
consolidated balance sheet based upon their estimated fair
values as of the date of the acquisition. The excess of the
purchase price over the estimated fair values of the underlying
assets acquired and liabilities assumed amounted to 7 and
was allocated to goodwill. Qimonda has sole ownership and
responsibility for the business and started to account for its
entire financial results in the three months ended
March 31, 2005. In light of the weak market conditions for
commodity NAND Flash memories in the three months ended
September 30, 2006, Qimonda decided to ramp down its Flash
production and stop the current development of NAND compatible
flash memory products based on Saifuns proprietory
NROM®
technology. Qimonda and Saifun amended the above license
agreement to terminate the payment of quarterly installments as
of December 31, 2006. As a result of the above, Qimonda
reduced payables, goodwill and other intangible assets, and
recognized an impairment charge of 9 related to license
and fixed assets that were not considered to be recoverable as
of September 30, 2006.
On April 30, 2004, the Company completed its acquisition of
100% of ADMtek Inc., Hsinchu, Taiwan (ADMtek) in
exchange for 75 in cash (of which 6 was held in
escrow subject to the accuracy of the sellers
representations and warranties). Payment of an additional
28, held in escrow and reflected as restricted cash, was
contingent upon employee retention and the achievement of
certain performance and development milestones over a two-year
period, and was to be recognized as the milestones were
achieved. As of September 30, 2006, 10 has been paid
to former shareholders or employees of ADMtek and 22 was
released to the Company since certain performance and
development milestones were not achieved. The remaining balance
held in escrow amounted to 2 as of September 30,
2006. This acquisition was designed to enable access to the
Home-Gateway-Systems market for the wireline communications
business.
The Company acquired 92.5% of the outstanding shares of SensoNor
AS (SensoNor) on June 18, 2003, following a
public tender offer, and acquired the remaining 7.5% by
June 30, 2003, for total cash consideration of 34. In
addition, the Company contributed capital of 13 in
connection with the consummation of the transaction. SensoNor
develops, produces and markets tire pressure and acceleration
sensors. With this acquisition the Company aimed to strengthen
its position in semiconductor sensors for the automotive
business. During the year ended September 30, 2004,
following the restructuring of the SensoNor business, the
Company recorded a purchase accounting adjustment reducing the
previously established deferred tax asset valuation allowance by
8 and decreasing goodwill correspondingly. During the year
ended September 30, 2005, the Company increased its share
capital of SensoNor and recorded a purchase accounting
adjustment reducing the previously established deferred tax
asset valuation allowance by 30 and decreasing goodwill
and other intangible assets by 14 and 16,
respectively.
On April 1, 2003, the Company completed the acquisition of
the net assets of MorphICs Technology Inc.
(MorphICs), a developer of digital baseband circuits
of third generation wireless communications for 6 in cash.
The acquisition agreement provided for the payment of contingent
purchase consideration of 9 upon the achievement of
specified events. As of September 30, 2006, all contingent
purchase consideration was forfeited since certain performance
criteria were not achieved.
F-173
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The following table summarizes the Companys acquisitions
during the years ended September 30, 2004, and 2005 (there
were no significant acquisitions during the 2006 financial year):
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
|
|
|
ADMtek
|
|
|
2005
|
|
|
|
April 2004
|
|
|
Flash
|
|
Acquisition Date
|
|
Communication
|
|
|
January 2005
|
|
Segment
|
|
Solutions
|
|
|
Qimonda
|
|
|
Cash
|
|
|
18
|
|
|
|
1
|
|
Other current assets
|
|
|
10
|
|
|
|
16
|
|
Property, plant and equipment
|
|
|
2
|
|
|
|
4
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
Current product technology
|
|
|
14
|
|
|
|
|
|
Core technology
|
|
|
5
|
|
|
|
58
|
|
Patents (Customer Relationship)
|
|
|
2
|
|
|
|
|
|
In process R&D
|
|
|
9
|
|
|
|
|
|
Goodwill
|
|
|
23
|
|
|
|
7
|
|
Other non-current assets
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
84
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
(8
|
)
|
|
|
(45
|
)
|
Non-current liabilities (including debt)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
(9
|
)
|
|
|
(47
|
)
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
75
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
Cash paid (Purchase Consideration)
|
|
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above acquisitions have been accounted for by the purchase
method of accounting and, accordingly, the consolidated
statements of operations include the results of the acquired
companies from their respective acquisition dates.
For each significant acquisition the Company engaged an
independent third party to assist in the valuation of net assets
acquired. As a result of these valuations, amounts allocated to
purchased in-process research and development of 9 were
expensed as research and development in the year ended
September 30, 2004, because the technological feasibility
of products under development had not been established and no
future alternative uses existed.
Pro forma financial information relating to these acquisitions
is not material either individually or in the aggregate to the
results of operations and financial position of the Company and
has been omitted.
On December 23, 2004, the Company agreed to sell its
venture capital activities, reflected in the Other Operating
Segments, to Cipio Partners, a venture capital company. Under
the terms of the agreement, the Company sold its interest in
Infineon Ventures GmbH including the majority of the venture
investments held therein. The transaction closed on
February 23, 2005. As a result of the sale, the Company
realized a gain before tax of 13 which was recorded in
other non-operating income in the 2005 financial year.
On January 25, 2005, Finisar Corporation
(Finisar) and the Company entered into an agreement
under which Finisar acquired certain assets of the
Companys fiber optics business. Under the terms of the
agreement, the Company received 34 million shares of
Finisars common stock valued at 40 as consideration
for the sale of inventory, fixed assets and intellectual
property associated with the design and manufacture of fiber
optic transceivers. The Company also committed to provide
Finisar with contract manufacturing services under separate
supply agreements for up to one year following the closing. The
transaction did not require shareholder or regulatory approval
and closed on January 31, 2005. As a result of the
transaction, the Company realized a gain before tax of 21
which was recorded in other operating income in the 2005
financial year.
F-174
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
On April 8, 2005, the Company sold to VantagePoint Venture
Partners its entire share interest in Finisars common
stock. As a result of the sale, the Company recorded an
other-than-tempo-rary
impairment of 8 in other non-operating expense during the
second quarter of the 2005 financial year, to reduce the
investments carrying value to the net sale proceeds.
The Company retained ownership of its remaining fiber optics
businesses consisting of bi-directional fiber transmission
(BIDI) components for
Fiber-To-The-Home
(FTTH) applications, parallel optical components (PAROLI) and
plastic optical fiber (POF) components that are used in
automotive applications, which were reclassified from held for
sale to held and used during the second quarter of the 2005
financial year, and were restructured. The reclassification of
the retained fiber optic businesses into the held and used
category was measured at the lower of their carrying amount
before they were classified as held for sale, adjusted for
depreciation expense that would have been recognized had the
retained fiber optic businesses been continuously classified as
held and used, or the fair value of the assets on
January 25, 2005. Accordingly, the Company recognized an
impairment charge of 34 in other operating expenses during
the second quarter of the 2005 financial year.
On August 2, 2005, the Company sold the long-term assets
utilized in the design and manufacture of BIDI components to
EZConn Corporation (EZConn) for cash consideration
of 3. The Company also committed to provide EZConn with
contract manufacturing services through March 2006. As a result
of the transaction, the Company realized a gain before tax of
2, which was recorded in other operating income in the
2005 financial year, and deferred 1 which was realized
over the term of the contract manufacturing agreement.
On April 7, 2005, the Company and Exar Corporation
(Exar) entered into an agreement whereby Exar
acquired for $11 million cash a significant portion of the
Companys optical networking business unit. The acquisition
included assets relating to multi-rate TDM framer products,
Fiber Channel over SONET/SDH, Resilent Packet Ring (RPR), as
well as certain intellectual property for Data Over SONET
products. As a result of the sale, the Company reclassified
related non-current assets into assets held for sale during the
second quarter of the 2005 financial year and reduced their
carrying value to the net sale proceeds. The sale of the assets
was consummated during the third quarter of the 2005 financial
year. Summary financial information for the divested businesses
(through the date of divestiture) for the years ended
September 30, 2004, 2005 and 2006, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiber Optics
|
|
|
35
|
|
|
|
23
|
|
|
|
|
|
BIDI
|
|
|
10
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
45
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Ventures GmbH
|
|
|
(52
|
)
|
|
|
(3
|
)
|
|
|
|
|
Fiber Optics
|
|
|
(33
|
)
|
|
|
(27
|
)
|
|
|
|
|
BIDI
|
|
|
(28
|
)
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(113
|
)
|
|
|
(50
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale before tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Ventures GmbH
|
|
|
|
|
|
|
13
|
|
|
|
|
|
Fiber Optics
|
|
|
|
|
|
|
21
|
|
|
|
|
|
BIDI
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Other
|
|
|
(2
|
)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (note 8)
|
|
|
(2
|
)
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the years ended September 30, 2004, 2005 and 2006,
the Company recognized revenues related to license and
technology transfer fees of 76, 175 and 29,
respectively, which are included in net
F-175
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
sales in the accompanying statements of operations. Included in
these amounts are previously deferred license fees of 48,
33 and 12, which were recognized as revenue pursuant
to SAB 104, in the years ended September 30, 2004,
2005 and 2006, respectively, since the Company had fulfilled all
of its obligations and all such amounts were realized.
On November 10, 2004, the Company and ProMOS reached an
agreement regarding ProMOS license of the Companys
previously transferred technologies, pursuant to which ProMOS
may continue to produce and sell products using those
technologies and to develop its own processes and products. The
Company has no continuing involvement with the licensing of
these products to ProMOS. As full consideration, ProMOS agreed
to pay the Company $156 million in four installments
through April 30, 2006, against which the Companys
accrued payable for DRAM products from ProMOS of
$36 million was offset. The parties agreed to withdraw
their respective claims, including arbitration. The present
value of the settlement amounted to 118 and was recognized
as license income during the first quarter of the 2005 financial
year.
In connection with its joint technology development with Nanya
Technology Corporation (Nanya), in 2003 the Company
granted Nanya a license to use its 110-nanometer technology in
Nanyas existing operations. On September 29, 2005,
the Company and Nanya signed an agreement to expand their
development cooperation with respect to the joint development of
advanced 58-nanometer production technologies for 300-millimeter
wafers (see note 17). License income related to the
technology is recognized over the estimated life of the
technology.
In connection with the extension of a capacity reservation
agreement with Winbond Electronics Corp., Hsinchu, Taiwan
(Winbond) in August 2004, the Company granted
Winbond a license to use its 110-nanometer technology in
Winbonds production process for the manufacture of
products for the Company. On August 29, 2006, Qimonda
signed agreements with Winbond to expand their existing
cooperation and capacity reservation. Under the terms of the
agreements, Qimonda will transfer its 80-nanometer DRAM trench
technology to Winbonds 300-millimeter wafer facility. In
return, Winbond will manufacture DRAMs for computing
applications using this technology exclusively for Qimonda. The
license income was deferred and is being recognized over the
life of the capacity reservation agreements.
On March 18, 2005 the Company and Rambus Inc.
(Rambus) reached an agreement settling all claims
between them and licensing the Rambus patent portfolio for use
in current and future Company products. Rambus granted to the
Company a worldwide license to existing and future Rambus
patents and patent applications for use in the Companys
memory products. In exchange for this worldwide license, the
Company agreed to pay $50 million in quarterly installments
of $6 million between November 15, 2005 and
November 15, 2007. As of March 31, 2005, the Company
recorded a license and corresponding liability in the amount of
37, representing the estimated present value of the
minimum future license payments. After November 15, 2007,
and only if Rambus enters into additional specified licensing
agreements with certain other DRAM manufacturers, Qimonda would
make additional quarterly payments which may accumulate up to a
maximum of an additional $100 million.
Because Rambus ability to conclude the agreements is not
within the Companys control, the Company is not able to
estimate whether additional payment obligations may arise. The
agreement also provides the Company an option for acquiring
certain other licenses. All licenses provide for the Company to
be treated as a most-favored customer of Rambus. The
Company simultaneously granted to Rambus a fully-paid perpetual
license for memory interfaces. In addition to the licenses, the
two companies agreed to the immediate dismissal of all pending
litigation and released each other from all existing legal
claims.
In connection with the acquisition of Saifuns remaining
30% share in the Infineon Technologies Flash joint venture
during January 2005, the Company was granted a license for the
use of Saifun
NROM®
technologies (see note 4). During the three months ended
March 31, 2005, the Company recorded the license of
58 and a corresponding liability in the amount of
58, representing the estimated fair value of the license
and minimum future license payments, respectively. The Company
retained the option to terminate the entire license, or parts
thereof, at any time without penalty. During the three months
ended June 30, 2005, the Company exercised its termination
option and cancelled the portion of the license encompassing
NROM®
Code Flash products. As a result of the partial termination, the
license asset and related liability were reduced to 28 and
29, respectively, as of June 30, 2005. Effective
September 30,
F-176
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
2006, the Company and Saifun amended the license agreement (see
note 4). As a result of the amendment, the related
liability was reduced to 3 as of September 30, 2006.
On June 14, 2006, Infineon and Qimonda reached agreements
with MOSAID Technologies Inc. (MOSAID) settling all
claims between them and licensing the MOSAID patent portfolio
for use in current and future Company products. MOSAID purchased
fifty patents from Infineon and Qimonda, including patents
related to a range of technologies such as DRAM memory, power
management ICs, semiconductor process technology and digital
radio applications. Under the terms of the settlement
agreements, Infineon and Qimonda retain royalty-free lives
of the patents licenses to use these patents in the
manufacturing and sale of any products. In addition, MOSAID
granted to Infineon and Qimonda a six-year license to use any
MOSAID patents in the manufacturing and sale of semiconductor
products, as well as a lives of the patents license
to those MOSAID patent families that had been in dispute. In
exchange for these licenses, the Company and Qimonda agreed to
make license payments commencing on July 1, 2006 over a
six-year term (see note 18).
On August 1, 2006, Infineon and Qimonda entered into
settlement agreements with Tessera Inc. (Tessera) in
respect of all of Tesseras patent infringement and
antitrust claims and all counterclaims and other claims Infineon
and Qimonda raised against Tessera. As part of the settlement,
Infineon and Qimonda have entered into license agreements with
Tessera, effective July 1, 2006, that provide the companies
world-wide, nonexclusive, non-transferable and non-sublicensable
licenses to use a portfolio of Tessera patents relating to
packaging for integrated circuits in Infineons and
Qimondas production. The license agreements have a
six-year term and can be extended. Under the license agreement,
Infineon and Qimonda agreed to pay Tessera an initial upfront
fee and additional royalty payments over a six year period based
on the volume of components it sells that are subject to the
license. The Company recognized the litigation settlement
portion of 37 as other operating expense during the year
ended September 30, 2006. The remaining license portion is
amortized over the term of the agreement and the royalty
payments are recognized as the related sales are made.
The Company has received economic development funding from
various governmental entities, including grants for the
construction of manufacturing facilities, as well as grants to
subsidize research and development activities and employee
training. Grants and subsidies included in the accompanying
consolidated financial statements during the years ended
September 30, 2004, 2005 and 2006, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Included in the consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
74
|
|
|
|
50
|
|
|
|
67
|
|
Cost of sales
|
|
|
86
|
|
|
|
121
|
|
|
|
86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160
|
|
|
|
171
|
|
|
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction grants deducted from the cost of fixed assets
(note 28)
|
|
|
49
|
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred government grants amounted to 288 and 212
as of September 30, 2005 and 2006, respectively. The
amounts of grants receivable as of September 30, 2005 and
2006 were 122 and 125, respectively.
|
|
8.
|
Supplemental
Operating Cost Information
|
The cost of services and materials are as follows for the years
ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Raw materials, supplies and purchased goods
|
|
|
1,621
|
|
|
|
1,867
|
|
|
|
2,244
|
|
Purchased services
|
|
|
1,232
|
|
|
|
1,166
|
|
|
|
1,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,853
|
|
|
|
3,033
|
|
|
|
3,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-177
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Personnel expenses are as follows for the years ended September
30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Wages and salaries
|
|
|
1,532
|
|
|
|
1,664
|
|
|
|
1,827
|
|
Social levies
|
|
|
280
|
|
|
|
285
|
|
|
|
319
|
|
Pension expense (note 30)
|
|
|
28
|
|
|
|
28
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,840
|
|
|
|
1,977
|
|
|
|
2,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expense, net is as follows for the years ended
September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Gain (loss) from sale of businesses
|
|
|
(2
|
)
|
|
|
39
|
|
|
|
|
|
Goodwill and intangible assets impairment charges (note 18)
|
|
|
(71
|
)
|
|
|
(57
|
)
|
|
|
(38
|
)
|
Long-lived asset impairment charges
|
|
|
|
|
|
|
(39
|
)
|
|
|
(6
|
)
|
Litigation settlement charges (note 33)
|
|
|
(194
|
)
|
|
|
(20
|
)
|
|
|
(60
|
)
|
Amortization of debt issuance costs
|
|
|
(8
|
)
|
|
|
(4
|
)
|
|
|
(3
|
)
|
Other
|
|
|
18
|
|
|
|
(11
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expense, net
|
|
|
(257
|
)
|
|
|
(92
|
)
|
|
|
(108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlement charges refer to the settlement of an
antitrust investigation by the U.S. Department of Justice
and related settlements with customers (see note 20), as
well as, during the year ended September 30, 2006, the
settlement of Tessera litigation (see notes 6 and 18).
Total rental expenses under operating leases amounted to
126, 125 and 151 for the years ended
September 30, 2004, 2005 and 2006, respectively.
The average number of employees by geographic region is as
follows for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Germany
|
|
|
16,340
|
|
|
|
16,334
|
|
|
|
15,822
|
|
Other Europe
|
|
|
5,507
|
|
|
|
5,606
|
|
|
|
7,455
|
|
North America
|
|
|
2,822
|
|
|
|
3,108
|
|
|
|
3,283
|
|
Asia-Pacific
|
|
|
9,220
|
|
|
|
10,919
|
|
|
|
14,285
|
|
Japan
|
|
|
126
|
|
|
|
147
|
|
|
|
180
|
|
Other
|
|
|
112
|
|
|
|
44
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,127
|
|
|
|
36,158
|
|
|
|
41,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Of the total average number of employees listed above, 10,309,
10,332 and 11,003 for the years ended September 30, 2004,
2005 and 2006, respectively, were employees of Qimonda.
In 2004, the Company announced restructuring measures aimed at
reducing costs, including downsizing its workforce, outsourcing
and decentralizing certain functions and operations. As part of
the restructuring, the Company announced plans to terminate
approximately 325 employees. The 2004 terminations were
primarily the result of relocating operations from Regensburg
and Munich to Dresden and the downsizing of design centers in
England, Ireland, Sweden and the United States. These plans were
completed in the 2005 financial year.
During the 2005 financial year, the Company agreed upon
additional restructuring measures aimed at reducing costs,
downsizing its workforce, and consolidating certain functions
and operations. As part of the restructuring, the Company agreed
upon plans to terminate approximately 350 employees. The
terminations were primarily the result of the close down of
fiber optics operations in Germany and the United States. The
terminations were completed in the 2006 financial year. In
addition, the Company took measures to restructure its chip
manufacturing within the manufacturing cluster Perlach,
Regensburg and Villach. Production from Munich-Perlach will be
transferred primarily to Regensburg and to a lesser extent to
Villach. Manufacturing at Munich-Perlach is expected to be
phased out by early 2007 as numerous products complete their
production life span. As part of the restructuring, the Company
agreed upon plans
F-178
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
to terminate approximately 600 employees. It is expected
that the terminations will be completed in the 2007 financial
year.
During the 2006 financial year, restructuring plans were
announced to downsize the workforce at ALTIS Semiconductor
S.N.C., Essonnes, France (ALTIS) and the
Companys chip card back-end activities in order to
maintain competitiveness and reduce cost. As of
September 30, 2006, the Companys expectation is that
a total of 450 employees would be terminated. The exact
amount of the restructuring charges can not be estimated at this
time due to ongoing negotiations with works councils.
During the years ended September 30, 2004, 2005 and 2006,
charges of 17, 78 and 23, respectively, were
recognized as a result of the above mentioned restructuring
initiatives undertaken by the Company.
The development of the restructuring liability during the year
ended September 30, 2006 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
|
|
|
|
September 30
|
|
|
|
|
|
|
2005
|
|
|
Restructuring
|
|
|
2006
|
|
|
|
|
|
|
Liabilities
|
|
|
Charges
|
|
|
Payments
|
|
|
Liabilities
|
|
|
Employee terminations
|
|
|
64
|
|
|
|
22
|
|
|
|
(29
|
)
|
|
|
57
|
|
Other exit costs
|
|
|
8
|
|
|
|
1
|
|
|
|
(3
|
)
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
72
|
|
|
|
23
|
|
|
|
(32
|
)
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and minority interest is
attributable to the following geographic locations for the years
ended September 30, 2004, 2005 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Germany
|
|
|
153
|
|
|
|
(298
|
)
|
|
|
(378
|
)
|
Foreign
|
|
|
44
|
|
|
|
104
|
|
|
|
294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
197
|
|
|
|
(194
|
)
|
|
|
(84
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) for the years ended
September 30, 2004, 2005 and 2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Current taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
53
|
|
|
|
31
|
|
|
|
126
|
|
Foreign
|
|
|
5
|
|
|
|
1
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58
|
|
|
|
32
|
|
|
|
167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
129
|
|
|
|
66
|
|
|
|
(21
|
)
|
Foreign
|
|
|
(33
|
)
|
|
|
22
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
|
|
|
|
88
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
154
|
|
|
|
120
|
|
|
|
161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income taxes for the years ended September 30, 2004,
2005 and 2006 were allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Income taxes
|
|
|
154
|
|
|
|
120
|
|
|
|
161
|
|
Goodwill and intangible assets, for initial recognition of
acquired tax benefits that previously were included in the
valuation allowance (note 4)
|
|
|
(8
|
)
|
|
|
(30
|
)
|
|
|
|
|
Shareholders equity, for unrealized holding gains
(losses), unrealized gains (losses) on cash flow hedges and
additional minimum pension liabilities
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136
|
|
|
|
90
|
|
|
|
161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-179
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The Companys statutory tax rate in Germany is 25%.
Additionally, a solidarity surcharge of 5.5% is levied. The
trade tax decreased in respect of Infineon Technologies AG from
13% in 2004 and 2005 to 11% in 2006 due to the move of the
Companys headquarters in 2006. Therefore, the combined
statutory tax rate was 39% in 2004 and 2005 and 37% in 2006.
A reconciliation of income taxes for the financial years ended
September 30, 2004, 2005 and 2006, determined using the
German corporate tax rate plus trade taxes, net of federal
benefit, for a combined statutory rate of 39% for 2004 and 2005,
and 37% for 2006, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Expected expense (benefit) for income taxes
|
|
|
77
|
|
|
|
(76
|
)
|
|
|
(31
|
)
|
Increase in available tax credits
|
|
|
(26
|
)
|
|
|
(5
|
)
|
|
|
(36
|
)
|
Non-taxable investment (income) loss
|
|
|
6
|
|
|
|
(26
|
)
|
|
|
(31
|
)
|
Foreign tax rate differential
|
|
|
(51
|
)
|
|
|
(18
|
)
|
|
|
(50
|
)
|
Non deductible expenses
|
|
|
69
|
|
|
|
29
|
|
|
|
13
|
|
Change in German tax rate effect on opening balance
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Increase in valuation allowance
|
|
|
54
|
|
|
|
192
|
|
|
|
292
|
|
In-process research and development
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
22
|
|
|
|
24
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual provision for income taxes
|
|
|
154
|
|
|
|
120
|
|
|
|
161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has set up operations in a jurisdiction which grants
a tax holiday from the 2005 financial year onwards, which has a
remaining term of three years. Compared to ordinary taxation in
the country of residence, this resulted in tax savings of
0 and 16 for the years ended September 30, 2005
and 2006, respectively, which are reflected in the foreign tax
rate differential.
In the 2006 financial year, the Company reached an agreement
with German tax authorities on certain tax matters relating to
prior years. As a result, the timing of the deductibility of
certain temporary differences was revised, which led to an
increase in the valuation allowance for the 2006 financial year
in the amount of 50.
Deferred income tax assets and liabilities as of
September 30, 2005 and 2006 relate to the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
26
|
|
|
|
95
|
|
Property, plant and equipment
|
|
|
203
|
|
|
|
264
|
|
Deferred income
|
|
|
111
|
|
|
|
94
|
|
Net operating loss and tax credit carry-forwards
|
|
|
1,065
|
|
|
|
1,350
|
|
Other items
|
|
|
169
|
|
|
|
179
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
1,574
|
|
|
|
1,982
|
|
Valuation allowance
|
|
|
(740
|
)
|
|
|
(1,091
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
834
|
|
|
|
891
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
11
|
|
|
|
4
|
|
Property, plant and equipment
|
|
|
81
|
|
|
|
103
|
|
Accounts receivable
|
|
|
36
|
|
|
|
17
|
|
Accrued liabilities and pensions
|
|
|
72
|
|
|
|
118
|
|
Other items
|
|
|
41
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
241
|
|
|
|
253
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
593
|
|
|
|
638
|
|
|
|
|
|
|
|
|
|
|
F-180
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Net deferred income tax assets and liabilities are presented in
the accompanying consolidated balance sheets as of
September 30, 2005 and 2006 as follows:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Current
|
|
|
125
|
|
|
|
97
|
|
Non-current
|
|
|
550
|
|
|
|
627
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Current
|
|
|
(17
|
)
|
|
|
(26
|
)
|
Non-current
|
|
|
(65
|
)
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net
|
|
|
593
|
|
|
|
638
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2006, the Company had in Germany tax loss
carry-forwards of 2,733 (relating to both trade and
corporate tax, plus an additional loss carry-forward applicable
only to trade tax of 1,449); in other jurisdictions the
Company had tax loss carry-forwards of 246 and tax
effected credit carry-forwards of 128. Such tax loss
carry-forwards and tax effected credit carryforwards are
generally limited to use by the particular entity that generated
the loss or credit and do not expire under current law. The
benefit for tax credits is accounted for on the flow-through
method when the individual legal entity is entitled to the
claim. In connection with the Formation of Qimonda, the net
operating losses related to the memory products segment have
been retained by Infineon Technologies AG.
Pursuant to SFAS No. 109, the Company has assessed its
deferred tax asset and the need for a valuation allowance. Such
an assessment considers whether it is more likely than not that
some portion or all of the deferred tax assets may not be
realized. The assessment requires considerable judgment on the
part of management, with respect to, among other factors,
benefits that could be realized from available tax strategies
and future taxable income, as well as other positive and
negative factors. The ultimate realization of deferred tax
assets is dependent upon the Companys ability to generate
the appropriate character of future taxable income sufficient to
utilize loss carry-forwards or tax credits before their
expiration. Since the Company had incurred a cumulative loss in
certain tax jurisdictions over a three-year period as of
September 30, 2006, the impact of forecasted future taxable
income is excluded from such an assessment, pursuant to the
provisions of SFAS No. 109. For these tax
jurisdictions, the assessment was therefore only based on the
benefits that could be realized from available tax strategies
and the reversal of temporary differences in future periods. As
a result of this assessment, the Company increased the deferred
tax asset valuation allowance as of September 30, 2004,
2005 and 2006 by 54, 192, and 292,
respectively, to reduce the deferred tax asset to an amount that
is more likely than not expected to be realized in future.
On December 27, 2003, the German government enacted new tax
legislation which limits the application of a German
corporations tax loss carry-forwards to 60% of the annual
taxable income of the corporation in any given year. The new
legislation did not limit the length of the carry-forward
period, which is unlimited. For the Company, the new tax law was
effective starting in the 2004 financial year.
The changes in valuation allowance for deferred tax assets
during the years ended September 30, 2004, 2005 and 2006
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Balance, beginning of the year
|
|
|
521
|
|
|
|
567
|
|
|
|
740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applicable to continuing operations
|
|
|
54
|
|
|
|
192
|
|
|
|
292
|
|
Purchase accounting adjustments (note 4)
|
|
|
(8
|
)
|
|
|
(30
|
)
|
|
|
|
|
Adjustment in corresponding net operating loss
carry-forward
|
|
|
|
|
|
|
11
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of the year
|
|
|
567
|
|
|
|
740
|
|
|
|
1,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the 2005 and 2006 financial years, the Company recorded
adjustments to certain net operating loss carry-forwards mainly
as a result of final tax assessment reconciliations. As the
adjustments were made in jurisdictions in which the Company is
in cumulative loss positions, such adjustments were recorded
directly
F-181
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
to the valuation allowance and approximated 11 and
59 in the 2005 and 2006 financial years, respectively.
The Company did not provide for income taxes or foreign
withholding taxes on cumulative earnings of foreign subsidiaries
as of September 30, 2005 and 2006, as these earnings are
intended to be indefinitely reinvested in those operations. It
is not practicable to estimate the amount of unrecognized
deferred tax liabilities for these undistributed foreign
earnings.
The Company reorganized certain businesses in different tax
jurisdictions which resulted in deferred intercompany
transactions. Therefore, tax expenses for the years ended
September 30, 2005 and 2006 of 85 and 63,
respectively, have been deferred of which 71 and 56,
respectively, are non-current (see note 18).
|
|
11.
|
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 year. Diluted EPS is
calculated by dividing net income by the sum of the weighted
average number of ordinary shares outstanding plus all
additional 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 for the years ended
September 30, 2004, 2005 and 2006, is as follows (shares in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
61
|
|
|
|
(312
|
)
|
|
|
(268
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding-basic
|
|
|
734.7
|
|
|
|
747.6
|
|
|
|
747.6
|
|
Effect of dilutive instruments
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding-diluted
|
|
|
736.6
|
|
|
|
747.6
|
|
|
|
747.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share in :
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
0.08
|
|
|
|
(0.42
|
)
|
|
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, include 24.1 million,
39.4 million and 46.7 million shares underlying
employee stock options for the years ended 2004, 2005 and 2006,
respectively. Additionally, 86.5 million ordinary shares
issuable upon the conversion of the subordinated convertible
notes at September 30, 2004, 2005 and 2006, respectively,
were not included in the computation of diluted earnings (loss)
per share as their impact would have been antidilutive.
F-182
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
12.
|
Marketable
Securities
|
Marketable securities at September 30, 2005 and 2006
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
|
Cost
|
|
|
Value
|
|
|
Gains
|
|
|
Losses
|
|
|
Cost
|
|
|
Wert
|
|
|
Gains
|
|
|
Losses
|
|
|
Foreign government securities
|
|
|
9
|
|
|
|
11
|
|
|
|
2
|
|
|
|
|
|
|
|
9
|
|
|
|
11
|
|
|
|
2
|
|
|
|
|
|
Floating rate notes
|
|
|
260
|
|
|
|
268
|
|
|
|
8
|
|
|
|
|
|
|
|
156
|
|
|
|
162
|
|
|
|
6
|
|
|
|
|
|
Other debt securities
|
|
|
16
|
|
|
|
18
|
|
|
|
2
|
|
|
|
|
|
|
|
14
|
|
|
|
18
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
285
|
|
|
|
297
|
|
|
|
12
|
|
|
|
|
|
|
|
179
|
|
|
|
191
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
4
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
4
|
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
Fixed term deposits
|
|
|
590
|
|
|
|
590
|
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
460
|
|
|
|
453
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
|
879
|
|
|
|
892
|
|
|
|
15
|
|
|
|
(2
|
)
|
|
|
643
|
|
|
|
649
|
|
|
|
13
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reflected as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
850
|
|
|
|
858
|
|
|
|
10
|
|
|
|
(2
|
)
|
|
|
616
|
|
|
|
615
|
|
|
|
6
|
|
|
|
(7
|
)
|
Non-current assets (note 18)
|
|
|
29
|
|
|
|
34
|
|
|
|
5
|
|
|
|
|
|
|
|
27
|
|
|
|
34
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total marketable securities
|
|
|
879
|
|
|
|
892
|
|
|
|
15
|
|
|
|
(2
|
)
|
|
|
643
|
|
|
|
649
|
|
|
|
13
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses relating to securities held for more than
12 months as of September 30, 2005 and 2006, were
0 and 7, respectively.
Realized (losses) gains, net are reflected as other
non-operating income (expense), net and were as follows for the
years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Realized gains
|
|
|
10
|
|
|
|
8
|
|
|
|
3
|
|
Realized losses
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains, net
|
|
|
9
|
|
|
|
8
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2006, fixed term deposits of 51
had contractual maturities between three and twelve months.
Debt securities as of September 30, 2006 had the following
remaining contractual maturities:
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
Less than 1 year
|
|
|
2
|
|
|
|
2
|
|
Between 1 and 5 years
|
|
|
159
|
|
|
|
167
|
|
More than 5 years
|
|
|
18
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
179
|
|
|
|
191
|
|
|
|
|
|
|
|
|
|
|
Actual maturities may differ due to call or prepayment rights.
F-183
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
13.
|
Trade Accounts
Receivable, net
|
Trade accounts receivable at September 30, 2005 and 2006
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Third party trade
|
|
|
839
|
|
|
|
1,304
|
|
Siemens group trade (note 29)
|
|
|
145
|
|
|
|
|
|
Associated and Related Companies -trade (note 29)
|
|
|
12
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, gross
|
|
|
996
|
|
|
|
1,312
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
(44
|
)
|
|
|
(67
|
)
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
952
|
|
|
|
1,245
|
|
|
|
|
|
|
|
|
|
|
Activity in the allowance for doubtful accounts for the years
ended September 30, 2005 and 2006 is as follows:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Allowance for doubtful accounts at beginning of year
|
|
|
41
|
|
|
|
44
|
|
Provision for bad debt, net
|
|
|
3
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts at end of year
|
|
|
44
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
Inventories at September 30, 2005 and 2006 consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Raw materials and supplies
|
|
|
87
|
|
|
|
125
|
|
Work-in-process
|
|
|
569
|
|
|
|
777
|
|
Finished goods
|
|
|
366
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
Total Inventories
|
|
|
1,022
|
|
|
|
1,202
|
|
|
|
|
|
|
|
|
|
|
Other current assets at September 30, 2005 and 2006 consist
of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Financial instruments (note 31)
|
|
|
73
|
|
|
|
22
|
|
Grants receivable (note 7)
|
|
|
122
|
|
|
|
125
|
|
VAT and other tax receivables
|
|
|
84
|
|
|
|
189
|
|
License fees receivable
|
|
|
19
|
|
|
|
14
|
|
Associated and Related Companies financial and other
receivables (note 29)
|
|
|
5
|
|
|
|
1
|
|
Third party financial and other receivables
|
|
|
68
|
|
|
|
61
|
|
Siemens group financial and other receivables
(note 29)
|
|
|
18
|
|
|
|
|
|
Prepaid expenses
|
|
|
26
|
|
|
|
36
|
|
Employee receivables (note 29)
|
|
|
8
|
|
|
|
7
|
|
Intangible pension asset (note 30)
|
|
|
14
|
|
|
|
13
|
|
Other
|
|
|
32
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
Total other current assets
|
|
|
469
|
|
|
|
482
|
|
|
|
|
|
|
|
|
|
|
|
|
16.
|
Property, Plant
and Equipment, net
|
On December 8, 2004, the Company announced plans to build a
new front-end production plant in Kulim High Tech Park,
Malaysia. The facility will mainly produce power and logic chips
used in automotive and industrial power applications. The
Company plans to invest in total approximately $1 billion.
The construction started in early 2005 and production started in
September 2006. On September 12, 2006 the Company announced
the opening of the facility. At full capacity, the facility will
employ about 1,700 people.
F-184
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Maximum capacity will be about 100,000 wafer starts per month
using wafers with a diameter of
200-millimeter.
As of September 30, 2006, the Company had invested a total
of 269 in this new
front-end
production plant.
A summary of activity for property, plant and equipment for the
year ended September 30, 2006 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technical
|
|
|
|
|
|
|
|
|
|
|
equipment
|
|
Other plant
|
|
|
|
|
|
|
Land and
|
|
and
|
|
and office
|
|
Construction
|
|
|
|
|
buildings
|
|
machinery
|
|
equipment
|
|
in progress
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005
|
|
|
1,427
|
|
|
7,549
|
|
|
2,232
|
|
|
253
|
|
|
11,461
|
Additions
|
|
|
57
|
|
|
561
|
|
|
130
|
|
|
462
|
|
|
1,210
|
Impairments
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
(6)
|
Disposals
|
|
|
(20)
|
|
|
(253)
|
|
|
(126)
|
|
|
(2)
|
|
|
(401)
|
Reclassifications
|
|
|
15
|
|
|
458
|
|
|
58
|
|
|
(513)
|
|
|
18
|
Transfers(1)
|
|
|
101
|
|
|
951
|
|
|
24
|
|
|
20
|
|
|
1,096
|
Foreign currency effects
|
|
|
(26)
|
|
|
(87)
|
|
|
(9)
|
|
|
(2)
|
|
|
(124)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
1,554
|
|
|
9,173
|
|
|
2,309
|
|
|
218
|
|
|
13,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005
|
|
|
(622)
|
|
|
(5,175)
|
|
|
(1,913)
|
|
|
|
|
|
(7,710)
|
Depreciation
|
|
|
(103)
|
|
|
(1,015)
|
|
|
(220)
|
|
|
|
|
|
(1,338)
|
Disposals
|
|
|
19
|
|
|
202
|
|
|
126
|
|
|
|
|
|
347
|
Reclassifications
|
|
|
|
|
|
(23)
|
|
|
5
|
|
|
|
|
|
(18)
|
Transfers(1)
|
|
|
(32)
|
|
|
(790)
|
|
|
(14)
|
|
|
|
|
|
(836)
|
Foreign currency effects
|
|
|
6
|
|
|
52
|
|
|
7
|
|
|
|
|
|
65
|
September 30, 2006
|
|
|
(732)
|
|
|
(6,749)
|
|
|
(2,009)
|
|
|
|
|
|
(9,490)
|
Book value September 30, 2005
|
|
|
805
|
|
|
2,374
|
|
|
319
|
|
|
253
|
|
|
3,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value September 30, 2006
|
|
|
822
|
|
|
2,424
|
|
|
300
|
|
|
218
|
|
|
3,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Transfers during the financial year
ended September 30, 2006 are primarily related to the
initial consolidation of ALTIS.
|
F-185
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
17.
|
Long-term
Investments
|
A summary of activity for long-term investments for the years
ended September 30, 2005 and 2006, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in
|
|
|
|
|
|
|
|
|
|
Associated
|
|
|
Investment in
|
|
|
|
|
|
|
Companies
|
|
|
Related Companies
|
|
|
Total
|
|
|
Balance at September 30, 2004
|
|
|
664
|
|
|
|
44
|
|
|
|
708
|
|
Additions
|
|
|
87
|
|
|
|
48
|
|
|
|
135
|
|
Disposals
|
|
|
|
|
|
|
(71
|
)
|
|
|
(71
|
)
|
Dividend payments
|
|
|
(51
|
)
|
|
|
|
|
|
|
(51
|
)
|
Capitalized interest
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Impairments
|
|
|
(26
|
)
|
|
|
(3
|
)
|
|
|
(29
|
)
|
Equity in earnings
|
|
|
57
|
|
|
|
|
|
|
|
57
|
|
Reclassifications
|
|
|
(16
|
)
|
|
|
3
|
|
|
|
(13
|
)
|
Foreign currency effects
|
|
|
44
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2005
|
|
|
758
|
|
|
|
21
|
|
|
|
779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
5
|
|
|
|
1
|
|
|
|
6
|
|
Disposals
|
|
|
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Dividend payments
|
|
|
(29
|
)
|
|
|
|
|
|
|
(29
|
)
|
Capitalized interest
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Impairments
|
|
|
(13
|
)
|
|
|
|
|
|
|
(13
|
)
|
Equity in earnings
|
|
|
78
|
|
|
|
|
|
|
|
78
|
|
Consolidation of ALTIS
|
|
|
(202
|
)
|
|
|
4
|
|
|
|
(198
|
)
|
Gain on share issuance
|
|
|
72
|
|
|
|
|
|
|
|
72
|
|
Reclassifications
|
|
|
10
|
|
|
|
1
|
|
|
|
11
|
|
Foreign currency effects
|
|
|
(43
|
)
|
|
|
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2006
|
|
|
635
|
|
|
|
24
|
|
|
|
659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in Related Companies principally relate to
investment activities aimed at strengthening the Companys
future intellectual property potential.
The following significant Associated Companies as of
September 30, 2006 are accounted for using the equity
method of accounting:
|
|
|
|
|
|
|
Direct and Indirect
|
|
Name of the Associated Company
|
|
Ownership in
%(1)
|
|
|
Advanced Mask Technology Center GmbH & Co. KG,
Dresden, Germany (AMTC)
|
|
|
28.6
|
|
Hwa-Keng Investment Inc., Taipei, Taiwan (Hwa-Keng)
|
|
|
43.0
|
|
Inotera Memories Inc., Taoyuan, Taiwan (Inotera)
|
|
|
30.9
|
|
Ramtron International Corp., Colorado Springs, Colorado, USA
(Ramtron)
|
|
|
15.5
|
|
|
|
|
(1) |
|
Direct and indirect ownership
percentages are net of Qimondas minority interest.
|
The Company has accounted for these investments under the equity
method of accounting due to the lack of unilateral control (see
note 2). The above companies are principally engaged in the
research and development, design and manufacture of
semiconductors and related products.
On May 16, 2002, the Company entered into the AMTC joint
venture with its partners Advanced Micro Devices Inc., USA
(AMD), and DuPont Photomasks Inc., USA
(DuPont), with the purpose of developing and
manufacturing advanced photo masks. In addition, the Company
agreed to sell specified photomask equipment to DuPont, and
entered into a long-term purchase agreement through 2011.
Accordingly, as of September 30, 2006, 15 was
deferred which is being recognized over the term of the purchase
agreement. Toppan Printing Co., Ltd. acquired DuPont in April
2005 which led to a name change; former DuPont is now named
Toppan Photomasks Inc., Ltd.
F-186
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
On November 13, 2002, the Company entered into agreements
with Nanya relating to a strategic cooperation in the
development of DRAM products and the foundation of a joint
venture (Inotera, held directly and indirectly through the
Companys investment in Hwa-Keng Investment Inc.) to
construct and operate a 300-millimeter manufacturing facility in
Taiwan. Pursuant to several agreements, the Company and Nanya
had developed advanced 90-nanometer and have been developing
75- and
58-nanometer technology. The new 300-millimeter manufacturing
facility is funded by Inotera and employs the technology
developed under the aforementioned agreements to manufacture
DRAM products and its capacity is anticipated to be completed in
three phases. During the year ended September 30, 2004,
Inotera completed the construction and started mass production.
The third and last phase was completed in the 2006 financial
year. In May 2005 the groundbreaking for the second
manufacturing module took place. The manufacturing ramp is
expected to take place through calendar year 2007. The second
module is fully funded by Inotera. The joint venture partners
are obliged to each purchase one-half of the facilitys
production based, in part, on market prices.
The Company invested 342 and 83 in Inotera during
the years ended September 30, 2004 and 2005, respectively.
The investment includes interest capitalization of 7 and
6 during the years ended September 30, 2004 and 2005,
respectively. During the year ended September 30, 2004,
Inotera issued shares to employees which diluted the
Companys shareholding at that time while increasing its
proportional share of Inotera shareholders equity by
2. No further investments were made during the year ended
September 30, 2006.
On March 17, 2006 Inotera successfully completed an IPO on
the Taiwanese stock exchange of 200 million ordinary
shares, representing 7.97% of its outstanding share capital
before IPO, for an issuance price of NT$33 per share. As a
result, the Companys ownership interest was diluted to
41.4% while its proportional share of Inoteras equity
increased by approximately 30, which gain the Company
recognized as part of non-operating income during the three
months ended June 30, 2006.
On May 10, 2006, Inotera successfully completed a public
offering on the Luxembourg Stock Exchange of 40 million
global depositary shares (representing 400,000,000 ordinary
shares) which are traded on the Euro MTF market and represent
14.8% of its outstanding share capital before the offering, for
an issuance price of NT$33 per ordinary share. As a result, the
Companys ownership interest was diluted to 36.0% (30.9%
net of Qimondas minority interest) while its proportional
share of Inoteras equity increased by 42, which gain
the Company reflected as part of non-operating income during the
three months ending September 30, 2006.
The agreement governing the joint venture with Nanya allows
Infineon to transfer its shares in Inotera to Qimonda. However,
under Taiwanese law, Infineons shares in Inotera are
subject to a compulsory restriction on transfer
(lock-up) as
a result of Inoteras IPO. Infineon may only transfer these
shares to Qimonda gradually over the four years following
Inoteras IPO. The Company has sought an exemption from
this restriction that would permit the immediate transfer of all
of these shares to Qimonda. In connection with the Formation,
Infineon and Qimonda entered into a trust agreement under which
Infineon holds its Inotera shares in trust for Qimonda until the
shares can be transferred. This trust agreement provides for
Infineon to transfer the shares to Qimonda as and when the
transfer restrictions expire or Qimonda receives the exemption
from the
lock-up (see
note 35).
Hwa-Keng, a Taiwanese company, was formed for the purpose of
facilitating the distribution of Inotera shares to
Inoteras employees. Hwa-Keng is in the process of being
dissolved since its business purpose has been fulfilled with the
Inotera IPO. The dissolution will not cause any loss for the
Company.
ALTIS is a joint venture between the Company and International
Business Machines Corporation (IBM), with each
having equal voting representation. During the year ended
September 30, 2003, the Company and IBM amended the
original shareholders agreement. Pursuant to the amendment, the
Company will ratably increase its capacity reservation in the
production output of ALTIS from 50% to 100% during financial
years 2004 through 2007. IBM and the Company agreed that they
will decide the future business model of ALTIS not later than
January 1, 2007. Additionally, the Company was granted an
option through July 1, 2007 to acquire IBMs interest
in ALTIS.
In December 2005, the Company further amended its agreements
with IBM in respect of ALTIS, and extended its product purchase
agreement with ALTIS through 2009. Pursuant to the December 2005
F-187
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
amendment, the Company granted to IBM an option to require the
Company to acquire four-fifths of IBMs 50% interest in the
joint venture (or a total of 40% of the outstanding shares of
ALTIS) at any time after April 1, 2006 and prior to
January 1, 2009. In connection with the exercise of such
option, IBM would be required to make a payment to the Company
to settle the respective interests of the parties. In addition,
the Company granted to IBM a second option to require the
Company to acquire up to four-fifths of IBMs 50% interest
in the joint venture (or a total of 40% of the outstanding
shares of ALTIS) at any time after April 1, 2006 and prior to
January 1, 2009. In connection with the exercise of such option,
IBM would be required to make a payment to the Company to settle
the respective interests of the parties. In addition, the
Company granted to IBM a second option to require the Company to
acquire up to
four-fifths
of IBMs 50% interest in the joint venture (or a total of
40% of the outstanding shares of ALTIS) in increments of 10%
after April 1, 2006 and prior to January 1, 2009. The
amendment also permits IBM to sell its interest in ALTIS to a
third party meeting certain specified criteria.
Under the December 2005 amendment, the Company and IBM also
agreed a number of administrative matters regarding the
governance and management of ALTIS, as well as related
cost-allocation and accounting matters. The Company and IBM
continue to evaluate the future business model of ALTIS, and
have agreed that they will reach a decision on this matter no
later than January 1, 2009. As previously agreed, the
Company will increase the percentage of the output of ALTIS that
it purchases from 87.5% in 2006 to 100% in 2007 and beyond.
The Company evaluated the amendment in accordance with FASB
Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities an
interpretation of ARB No. 51 and concluded that it
held an interest in a variable interest entity in which the
Company is determined to be the primary beneficiary.
Accordingly, the Company began to fully consolidate ALTIS
following the December 19, 2005 amendment whereby
IBMs 50% ownership interest has been reflected as a
minority interest.
The following table summarizes the elimination of the investment
in ALTIS as previously accounted for under the equity method of
accounting, and the Companys initial consolidation of
ALTIS during first quarter of the 2006 financial year:
|
|
|
|
|
|
|
ALTIS
|
|
|
|
December 2005
|
|
Consolidation date
|
|
Communication
|
|
Segment
|
|
Solutions
|
|
|
Cash
|
|
|
119
|
|
Inventories
|
|
|
45
|
|
Other current assets
|
|
|
10
|
|
Property, plant and equipment
|
|
|
212
|
|
Long-term investment
|
|
|
(202
|
)
|
Other non-current assets
|
|
|
(47
|
)
|
|
|
|
|
|
Total assets consolidated
|
|
|
137
|
|
|
|
|
|
|
Current liabilities
|
|
|
(79
|
)
|
Non-current liabilities (including debt)
|
|
|
6
|
|
Deferred tax liabilities
|
|
|
3
|
|
Minority Interests
|
|
|
207
|
|
|
|
|
|
|
Total liabilities consolidated
|
|
|
137
|
|
|
|
|
|
|
Net assets consolidated
|
|
|
|
|
Cash paid
|
|
|
|
|
|
|
|
|
|
Ramtron develops specialty semiconductor memory products, and is
based in Colorado Springs, Colorado. Since the acquisition in
2001 the investment in Ramtron has been accounted for under the
equity method of accounting. The Company has two representatives
on the board of directors of Ramtron and the ability to exercise
significant influence over operating and financial policies of
Ramtron (see note 35).
In November 2003, the Company, together with United Epitaxy
Company, Ltd. (UEC), Hsinchu, Taiwan, founded a
joint venture company ParoLink. The Company initially invested
6, held a 56% ownership interest in ParoLink and accounted
for its investment in ParoLink using the equity method, since
F-188
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
substantive participating minority rights prevented the exercise
of unilateral control. In connection with the Companys
disposal of its fiber optics business (see note 5), the
Company acquired the minority interest in ParoLink, terminated
the joint venture with UEC and recorded an impairment to reduce
the investment to its estimated fair value of 3. During
January 2006, the joint venture partners decided to dissolve and
liquidate ParoLink. The liquidation is expected to be completed
in the 2007 financial year.
On October 1, 2002, the Company, Agere Systems Inc. and
Motorola Inc. incorporated StarCore LLC. (StarCore),
based in Austin, Texas. StarCore focuses on developing,
standardizing and promoting Digital Signal Processor (DSP) core
technology. In the 2006 financial year the shareholders decided
by consensus to pursue their objectives in DSP core technology
individually and to liquidate StarCore. As a consequence the
Company recorded an impairment of 13.
The Company recognized impairment charges related to certain
investments for which the carrying value exceeded the fair value
on an
other-than-temporary
basis of 65, 29 and 13 for the years ended
September 30, 2004, 2005 and 2006, respectively. In
connection with the termination of the Companys venture
capital activities, an impairment charge of 28 was
recognized in the 2004 financial year, to reduce the carrying
value of the Companys venture investment portfolio to the
expected realizable value (see note 5).
Goodwill of 15 and 0 is included in the amount of
long-term investments at September 30, 2005 and 2006,
respectively.
For the Associated Companies as of September 30, 2006, the
aggregate summarized financial information for the financial
years 2004, 2005 and 2006, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Sales
|
|
|
60
|
|
|
|
482
|
|
|
|
918
|
|
Gross profit
|
|
|
(2
|
)
|
|
|
158
|
|
|
|
328
|
|
Net income (loss)
|
|
|
(43
|
)
|
|
|
74
|
|
|
|
215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Current assets
|
|
|
236
|
|
|
|
535
|
|
|
|
1,128
|
|
Non-current assets
|
|
|
1,013
|
|
|
|
1,924
|
|
|
|
1,827
|
|
Current liabilities
|
|
|
(211
|
)
|
|
|
(341
|
)
|
|
|
(530
|
)
|
Non-current liabilities
|
|
|
(328
|
)
|
|
|
(898
|
)
|
|
|
(645
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
710
|
|
|
|
1,220
|
|
|
|
1,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Intangible assets, net
|
|
|
315
|
|
|
|
230
|
|
Grants receivable
|
|
|
|
|
|
|
13
|
|
Deferred tax expense (note 10)
|
|
|
71
|
|
|
|
56
|
|
Long-term receivables
|
|
|
23
|
|
|
|
20
|
|
Marketable securities (note 12)
|
|
|
34
|
|
|
|
34
|
|
Associated and Related Companies financial and
other(1)
(note 29)
|
|
|
67
|
|
|
|
|
|
Employee receivables (note 29)
|
|
|
2
|
|
|
|
2
|
|
Other
|
|
|
30
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
542
|
|
|
|
376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The decrease during the financial
year ended September 30, 2006 is primarily related to the
initial consolidation of ALTIS.
|
F-189
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
A summary of activity for intangible assets for the years ended
September 30, 2005 and 2006 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Goodwill
|
|
|
Intangibles
|
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2004
|
|
|
172
|
|
|
|
414
|
|
|
|
586
|
|
Additions
|
|
|
|
|
|
|
64
|
|
|
|
64
|
|
Impairment charges (note 8)
|
|
|
(18
|
)
|
|
|
( 39
|
)
|
|
|
(57
|
)
|
Disposals
|
|
|
(6
|
)
|
|
|
( 36
|
)
|
|
|
( 42
|
)
|
Acquisitions (note 4)
|
|
|
7
|
|
|
|
58
|
|
|
|
65
|
|
Purchase accounting adjustments (note 4)
|
|
|
(14
|
)
|
|
|
( 16
|
)
|
|
|
(30
|
)
|
Foreign currency effects
|
|
|
2
|
|
|
|
3
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005
|
|
|
143
|
|
|
|
448
|
|
|
|
591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
56
|
|
|
|
56
|
|
Impairment charges (note 8)
|
|
|
(7
|
)
|
|
|
(31
|
)
|
|
|
(38
|
)
|
Disposals
|
|
|
(11
|
)
|
|
|
( 26
|
)
|
|
|
(37
|
)
|
Foreign currency effects
|
|
|
(7
|
)
|
|
|
(1
|
)
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
118
|
|
|
|
446
|
|
|
|
564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2004
|
|
|
(21
|
)
|
|
|
( 167
|
)
|
|
|
(188
|
)
|
Amortization
|
|
|
|
|
|
|
( 96
|
)
|
|
|
(96
|
)
|
Disposals
|
|
|
|
|
|
|
5
|
|
|
|
5
|
|
Foreign currency effects
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005
|
|
|
(18
|
)
|
|
|
( 258
|
)
|
|
|
(276
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
( 67
|
)
|
|
|
(67
|
)
|
Disposals and reductions
|
|
|
|
|
|
|
5
|
|
|
|
5
|
|
Foreign currency effects
|
|
|
1
|
|
|
|
3
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
(17
|
)
|
|
|
( 317
|
)
|
|
|
(334
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value September 30, 2004
|
|
|
151
|
|
|
|
247
|
|
|
|
398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005
|
|
|
125
|
|
|
|
190
|
|
|
|
315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value September 30, 2006
|
|
|
101
|
|
|
|
129
|
|
|
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-current assets at September 30, 2005 and 2006
consist of the following:
The estimated aggregate amortization expense relating to other
intangible assets for each of the five succeeding financial
years is as follows: 2007 46; 2008 34; 2009
17; 2010 12; 2011 10.
In connection with the acquisition of Saifuns remaining
30% share in the Infineon Technologies Flash joint venture, the
Company was granted a license for the use of Saifun
NROM®
technologies (see note 4). During the three months ended
March 31, 2005 the Company recorded the license of 58
and a corresponding liability in the amount of 58,
representing the estimated fair value of the license and minimum
future license payments, respectively. The Company retained the
option to terminate the entire license, or parts thereof, at any
time without penalty. During the three months ended
June 30, 2005, the Company exercised its termination option
and cancelled the portion of the license encompassing
NROM®
Code Flash products. Effective September 30, 2006, the
Company and Saifun amended the license agreement (see
note 4). As a result of the amendment, the related
liability was reduced to 3 as of September 30, 2006.
In March 2005, the Company and Rambus reached an agreement
settling all claims between them and licensing the Rambus patent
portfolio. The license of 37 is being amortized over the
expected useful life of the related technologies of ten years
(see note 6).
F-190
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
On June 14, 2006, Infineon and Qimonda reached agreements
with MOSAID settling all claims between them and licensing the
MOSAID patent portfolio for use in current and future Company
products. The license of 32 is being amortized over the
expected useful life of the related technologies of six years
(see note 6).
During the years ended September 30, 2004, 2005 and 2006,
the Company recognized intangible assets impairment charges of
71, 57 and 38, respectively.
As part of the Companys annual goodwill impairment test
for the year ended September 30, 2004, the Company
recognized an impairment charge of 71 to reduce the
Optical Networking reporting units goodwill to its
estimated fair value, principally as a result of a decline in
revenue and lowered market development expectations during the
2004 financial year.
During the year ended September 30, 2005, the Company
concluded that sufficient indicators existed to require an
assessment of whether the carrying values of goodwill and
certain other intangible assets in the Customer Premises
Equipment, Wireless Infrastructure, Short Range Wireless, RF
Engine and Optical Networking reporting units within the
Communication Solutions segment might not be recoverable.
Recoverability of these intangible assets was measured by a
comparison of the carrying amount of the assets to the future
net cash flows expected to be generated by the assets.
Impairments of 57 were recognized in other operating
expenses, representing the amount by which the carrying amount
of the assets exceeded their fair value.
During the year ended September 30, 2006, partially as a
result of the insolvency of one of the Companys largest
mobile phone customers, BenQ Mobile GmbH & Co OHG, the
Company concluded that sufficient indicators existed to require
an assessment of whether the carrying values of goodwill and
certain other intangible assets principally in reporting units
within the Communication Solutions segment might not be
recoverable. Recoverability of these intangible assets was
measured by a comparison of the carrying amount of the assets to
the future net cash flows expected to be generated by the
assets. Impairments of 38 were recognized in other
operating expenses, representing the amount by which the
carrying amount of the assets exceeded their fair value.
|
|
19.
|
Trade Accounts
Payable
|
Trade accounts payable at September 30, 2005 and 2006
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Third party trade
|
|
|
868
|
|
|
|
1,165
|
|
Siemens group trade (note 29)
|
|
|
61
|
|
|
|
|
|
Associated and Related Companies
trade(1)
(note 29)
|
|
|
140
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,069
|
|
|
|
1,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The decrease during the financial
year ended September 30, 2006 is primarily related to the
initial consolidation of ALTIS.
|
Accrued liabilities at September 30, 2005 and 2006 consist
of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Personnel costs
|
|
|
274
|
|
|
|
353
|
|
Warranties and licenses
|
|
|
53
|
|
|
|
54
|
|
Settlement for antitrust related matters (note 33)
|
|
|
31
|
|
|
|
53
|
|
Interest
|
|
|
34
|
|
|
|
37
|
|
Other
|
|
|
105
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
497
|
|
|
|
562
|
|
|
|
|
|
|
|
|
|
|
On September 15, 2004 the Company entered into a plea
agreement with the United States Department of Justice in
connection with its antitrust investigation (see
note 33) and agreed to pay a fine aggregating
$160 million over a five-year period. The related amount
due within one year is included in accrued and other current
liabilities, and the long-term portion is reflected as other
non-current liabilities
F-191
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
(see note 23). As a result of this agreement and other
antitrust related investigations and customer settlements (see
note 33), the Company recorded other operating expenses
with an aggregate of 194, 20 and 23 during the
years ended September 30, 2004, 2005 and 2006,
respectively
(see note 8).
|
|
21.
|
Other Current
Liabilities
|
Other current liabilities at September 30, 2005 and 2006
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
VAT and other taxes payable
|
|
|
202
|
|
|
|
212
|
|
Payroll obligations to employees
|
|
|
130
|
|
|
|
128
|
|
Deferred government grants (note 7)
|
|
|
106
|
|
|
|
95
|
|
Other deferred income
|
|
|
22
|
|
|
|
62
|
|
Restructuring (note 9)
|
|
|
72
|
|
|
|
63
|
|
Financial instruments (note 31)
|
|
|
74
|
|
|
|
11
|
|
Associated and Related Companies financial and
other (note 29)
|
|
|
4
|
|
|
|
9
|
|
Settlement for anti-trust related matters (note 33)
|
|
|
31
|
|
|
|
24
|
|
Other
|
|
|
59
|
|
|
|
71
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
700
|
|
|
|
675
|
|
|
|
|
|
|
|
|
|
|
Other deferred income includes amounts relating to license
income (see note 6) and deferred revenue. The
non-current portion is included in other liabilities (see
note 23).
Debt at September 30, 2005 and 2006 consists of the
following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Short-term debt:
|
|
|
|
|
|
|
|
|
Loans payable to banks, weighted average rate 2.46%
|
|
|
51
|
|
|
|
51
|
|
Convertible subordinated notes, 4.25%, due 2007
|
|
|
|
|
|
|
638
|
|
Current portion of long-term debt
|
|
|
48
|
|
|
|
108
|
|
|
|
|
|
|
|
|
|
|
Total short-term debt and current maturities
|
|
|
99
|
|
|
|
797
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
Convertible subordinated notes, 4.25%, due 2007
|
|
|
633
|
|
|
|
|
|
Convertible subordinated notes, 5.0%, due 2010
|
|
|
690
|
|
|
|
692
|
|
Loans payable to banks:
|
|
|
|
|
|
|
|
|
Unsecured term loans, weighted average rate 4.62%,
due 2008-2013
|
|
|
206
|
|
|
|
458
|
|
Secured term loans, weighted average rate 1.57%, due 2013
|
|
|
9
|
|
|
|
7
|
|
Other loans payable, weighted average rate 4.35%, due 2011
|
|
|
|
|
|
|
3
|
|
Notes payable to governmental entity, rate 2.52%, due
2010-2027
|
|
|
28
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
1,566
|
|
|
|
1,208
|
|
|
|
|
|
|
|
|
|
|
Short-term loans payable to banks consist primarily of
borrowings under the terms of short-term borrowing arrangements.
On June 5, 2003, the Company (as guarantor), through its
subsidiary Infineon Technologies Holding B.V. (as issuer),
issued 700 in subordinated convertible notes due 2010 at
par in an underwritten offering to institutional investors in
Europe. The notes are convertible, at the option of the holders
of the notes, into a maximum of 68.4 million ordinary
shares of the Company, at a conversion price of euro 10.23
per share through maturity. The notes accrue interest at 5.0%
per year. The notes are unsecured and pari passu with all
present and future unsecured subordinated obligations of the
issuer. The note holders have a negative
F-192
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
pledge relating to future capital market indebtedness, as
defined. The note holders have an early redemption option in the
event of a change of control, as defined. A corporate
reorganization resulting in a substitution of the guarantor
shall not be regarded as a change of control, as defined. The
Company may redeem the convertible notes after three years at
their principal amount plus interest accrued thereon, if the
Companys share price exceeds 125% of the conversion price
on 15 trading days during a period of 30 consecutive trading
days. The convertible notes are listed on the Luxembourg Stock
Exchange. On September 29, 2006 the Company (through the
issuer) irrevocably waived its option to pay a cash amount in
lieu of the delivery of shares upon conversion. At
September 30, 2006, unamortized debt issuance costs were
8.
On February 6, 2002, the Company (as guarantor), through
its subsidiary Infineon Technologies Holding B.V. (as issuer),
issued 1,000 in subordinated convertible notes due 2007 at
par in an underwritten offering to institutional investors in
Europe. The notes are convertible, at the option of the holders
of the notes, into a maximum of 28.2 million of the
Companys ordinary shares at a conversion price of
euro 35.43 per share through maturity. The convertible
notes accrue interest at 4.25% per year. The notes are unsecured
and pari passu with all present and future unsecured
subordinated obligations of the issuer. The note holders have a
negative pledge relating to any future capital market
indebtedness, as defined. The note holders have an early
redemption option in the event of a change of control, as
defined. The Company may redeem the convertible notes after
three years at their principal amount plus interest accrued
thereon, if the Companys share price exceeds 115% of the
conversion price on 15 trading days during a period of 30
consecutive trading days. The convertible notes are listed on
the Luxembourg Stock Exchange. During the financial year ended
September 30, 2004, the Company redeemed a notional amount
of 360 of the convertible subordinated notes due 2007,
which resulted in a net gain of 6 before tax. On
September 29, 2006, the Company (through the issuer)
irrevocably waived its option to pay a cash amount in lieu of
the delivery of shares upon conversion. These convertible notes
are due on the February 6, 2007, and the Company expects to
redeem the notes at their principal outstanding amount using
available cash to the extent that they have not previously been
redeemed, converted or purchased and cancelled. On
September 30, 2006, the outstanding notional amount was
640 and unamortized debt issuance costs were 2.
In September 2004 the Company executed a
$400/400 million syndicated credit facility with a
five-year term. The facility consisted of two tranches:
Tranche A was a $400 million term loan intended to
finance the expansion of the Richmond, Virginia, manufacturing
facility. In January 2006, the Company drew $345 million
under this Tranche A, the amount being equal to the maximum
outstanding amount permitted as of September 30, 2006. The
loan will decrease on the basis of a repayment schedule that
foresees equal installments, falling due in March and September
each year. Tranche B was a 400 multicurrency
revolving facility to be used for general corporate purposes. In
connection with the arrangement of the Qimonda credit facility
described below, the Company voluntarily cancelled an amount of
100 in August 2006, so that 300 remains available.
At September 30, 2006, no amounts were outstanding under
Tranche B. The facility has customary financial covenants,
and drawings bear interest at market-related rates that are
linked to financial performance. The lenders of this credit
facility have been granted a negative pledge relating to the
future financial indebtedness of the Company with certain
permitted encumbrances.
In August 2006, Qimonda entered into a multicurrency revolving
loan facility in an aggregate principal amount of 250. The
facility matures three years from the date of the Qimondas
initial public offering, and may be extended for one additional
year at the option of the lenders at the end of the
facilitys first year of operation. Qimonda entered into
this facility primarily as a source of backup liquidity. Loans
made under the facility, which may be used for working capital
requirements
and/or
general corporate purposes, may have various maturities, ranging
from one to twelve months, or longer as agreed by the parties.
The facility contains several covenants, agreements and
financial ratios customary for such transactions including
negative pledge, limitation on indebtedness, restriction on
asset dispositions; limitations on mergers and reorganizations,
required maintenance of minimum liquidity levels and financial
ratios; and limitation on dividend payments. Qimonda was in
compliance with these covenants as of September 30, 2006.
As of September 30, 2006, no amounts were outstanding under
this facility.
A 124 non-recourse project financing facility for the
expansion of the Qimonda Portugal manufacturing facility was
fully drawn as of September 30, 2006.
F-193
Infineon
Technologies AG and Subsidiaries
Notes to the 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of financial
|
|
|
|
As of September 30, 2006
|
|
Term
|
|
Institution Commitment
|
|
Purpose/intended use
|
|
Aggregate facility
|
|
|
Drawn
|
|
|
Available
|
|
|
short-term
|
|
firm commitment
|
|
working capital, guarantees
|
|
|
95
|
|
|
|
51
|
|
|
|
44
|
|
short-term
|
|
no firm commitment
|
|
working capital, cash management
|
|
|
309
|
|
|
|
|
|
|
|
309
|
|
long-term
|
|
firm commitment
|
|
working capital
|
|
|
823
|
|
|
|
273
|
|
|
|
550
|
|
long-term(1)
|
|
firm commitment
|
|
project finance
|
|
|
351
|
|
|
|
351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
1,578
|
|
|
|
675
|
|
|
|
903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Including current maturities.
|
At September 30, 2006, the Company was in compliance with
its debt covenants under the relevant facilities.
Interest expense for the years ended September 30, 2004,
2005 and 2006 was 126, 83 and 109,
respectively.
Aggregate amounts of debt maturing subsequent to
September 30, 2006 are as follows:
|
|
|
|
|
Year ending September 30
|
|
Amount
|
|
|
2007
|
|
|
797
|
|
2008
|
|
|
157
|
|
2009
|
|
|
181
|
|
2010
|
|
|
744
|
|
2011
|
|
|
55
|
|
Thereafter
|
|
|
71
|
|
|
|
|
|
|
Total
|
|
|
2,005
|
|
|
|
|
|
|
Other non-current liabilities at September 30, 2005 and
2006 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Deferred government grants (note 7)
|
|
|
182
|
|
|
|
117
|
|
Settlement for antitrust related matters (note 33)
|
|
|
88
|
|
|
|
62
|
|
Pension liabilities (note 30)
|
|
|
162
|
|
|
|
134
|
|
Deferred income (note 6)
|
|
|
38
|
|
|
|
40
|
|
Post-retirement benefits (note 30)
|
|
|
5
|
|
|
|
4
|
|
License fees payable
|
|
|
54
|
|
|
|
41
|
|
Other
|
|
|
32
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
561
|
|
|
|
457
|
|
|
|
|
|
|
|
|
|
|
On July 28, 2003, the Company entered into a joint venture
agreement with China-Singapore Suzhou Industrial Park Venture
Company (CSVC) for the construction of a back-end
manufacturing facility in the Peoples Republic of China.
Pursuant the joint venture agreement, the capital invested by
CSVC earns an annual return and has a liquidation preference,
while all accumulated earnings and dividend rights accrue to the
benefit of the Company. Accordingly, the Company has
consolidated 100% of the results of
F-194
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
operations of the joint venture from inception, and the capital
invested and annual return of the minority investor is reflected
as minority interest.
ALTIS is a joint venture between the Company and IBM, with each
having equal voting representation. In December 2005, the
Company further amended its agreements with IBM in respect of
the ALTIS joint venture and began to fully consolidate ALTIS,
whereby IBMs 50% ownership interest is reflected as
minority interest (see note 17).
Effective May 1, 2006, the Company contributed
substantially all of the operations of its Memory Products
segment, including the assets and liabilities that were used
exclusively for these operations, to Qimonda, a stand-alone
legal company. On August 9, 2006, Qimonda completed an
initial public offering on the New York Stock Exchange through
the issuance of 42 million ordinary shares which are traded
as ADSs under the symbol QI, for an offering price
of $13 per ADS. In addition, the Company sold 6.3 million
Qimonda shares upon exercise of the underwriters
over-allotment option, which reduced its shareholding in Qimonda
to 85.9%. The minority investors 14.1% ownership interest
is reflected as minority interest (see note 3).
|
|
25.
|
Ordinary Share
Capital
|
As of September 30, 2006 the Company had 747,609,294
registered ordinary shares, notional value of euro 2.00 per
share, outstanding. During the year ended September 30,
2006 the Company increased its share capital by 0.08 by
issuing 39,935 shares in connection with the Companys
Long-Term Incentive Plan. During the year ended
September 30, 2004 the Company increased its share capital
by 53 by issuing 26,679,255 shares valued at
278 in connection with the acquisition of the remaining
interests of other investors in SC300 GmbH & Co. KG
(SC300).
Authorized and
Conditional Share Capital
In addition to the issued share capital, the Companys
Articles of Association authorize the Management Board to
increase the ordinary share capital with the Supervisory
Boards consent by issuing new shares. As of
September 30, 2006, the Management Board may use these
authorizations to issue new shares as follows:
|
|
|
|
|
Through January 21, 2007, Authorized Share Capital I/2002
-in an aggregate nominal amount of up to 297 to issue
shares for cash, where the pre-emptive rights of shareholders
may be partially excluded, or in connection with business
combinations (contributions in kind), where the pre-emptive
rights of shareholders may be excluded for all shares.
|
|
|
|
Through January 19, 2009, Authorized Share Capital II/2004
-in an aggregate nominal amount of up to 30 to issue
shares to employees (in which case the pre-emptive rights of
existing shareholders are excluded).
|
The Company has conditional capital of up to an aggregate
nominal amount of 96 (Conditional Share Capital I), of up
to an aggregate nominal amount of 29 (Conditional Share
Capital III) and up to an aggregate nominal amount of
24.5 (Conditional Share Capital IV/2006) that may be used
to issue up to 74.7 million new registered shares in
connection with the Companys long-term incentive plans
(see note 26). These shares will have dividend rights from
the beginning of the financial year in which they are issued.
The Company has conditional capital of up to an aggregate
nominal amount of 50 (Conditional Share Capital
II) that may be used to issue up to 25 million new
registered shares upon conversion of debt securities, issued in
February 2002 and which may be converted at any time until
January 23, 2007 (see note 22). These shares will have
dividend rights from the beginning of the financial year in
which they are issued.
The Company has conditional capital of up to an aggregate
nominal amount of 136.8 (Conditional Share Capital
II/2002) that may be used to issue up to 68.4 million new
registered shares upon conversion of debt securities, issued in
June 2003 and which may be converted at any time until
May 22, 2010 (see note 22). These shares will have
dividend rights from the beginning of the financial year in
which they are issued.
F-195
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The Company has further conditional capital of up to an
aggregate nominal amount of 213.2 (Conditional Share
Capital II/2002) that may be used to issue up to
106.6 million new registered shares upon conversion of debt
securities which may be issued before January 21, 2007.
These shares will have dividend rights from the beginning of the
financial year in which they are issued.
Dividends
Under the German Stock Corporation Act (Aktiengesetz), the
amount of dividends available for distribution to shareholders
is based on the level of earnings (Bilanzgewinn) of the ultimate
parent, as determined in accordance with the HGB. All dividends
must be approved by shareholders.
The ordinary shareholders meeting held in February 2006 did not
authorize a dividend. No earnings are available for distribution
as a dividend for the 2006 financial year, since Infineon
Technologies AG on a stand-alone basis as the ultimate parent
incurred a cumulative loss (Bilanzverlust) as of
September 30, 2006.
|
|
26.
|
Stock-based
Compensation
|
Fixed Stock
Option Plans
In 1999, the shareholders approved a share option plan
(LTI 1999 Plan), which provided for the granting of
non-transferable options to acquire ordinary shares over a
future period. Under the terms of the LTI 1999 Plan, the Company
could grant up to 48 million options over a five-year
period. The exercise price of each option equals 120% of the
average closing price of the Companys stock during the
five trading days prior to the grant date. Granted options vest
at the latter of two years from the grant date or the date on
which the Companys stock reaches the exercise price for at
least one trading day. Options expire seven years from the grant
date.
In 2001, the Companys shareholders approved the
International Long-Term Incentive Plan (LTI 2001
Plan) which replaced the LTI 1999 Plan. Options previously
issued under the LTI 1999 Plan remain unaffected as to terms and
conditions; however, no additional options may be issued under
the LTI 1999 Plan. Under the terms of the LTI 2001 Plan, the
Company could grant up to 51.5 million options over a
five-year period. The exercise price of each option equals 105%
of the average closing price of the Companys stock during
the five trading days prior to the grant date. Granted options
have a vesting period of between two and four years, subject to
the Companys stock reaching the exercise price on at least
one trading day, and expire seven years from the grant date.
Under the LTI 2001 Plan, the Companys Supervisory Board
decided annually within three months after publication of the
financial results how many options to grant to the Management
Board. The Management Board, within the same three-month period,
decided how many options to grant to eligible employees.
In 2006, the Companys shareholders approved the Stock
Option Plan 2006 (SOP 2006) which replaced the
LTI 2001 Plan. Under the terms of SOP 2006, the Company can
grant up to 13 million options over a three-year period.
The exercise price of each option equals 120% of the average
closing price of the Companys stock during the five
trading days prior to the grant date. Granted options are only
exercisable if the price of a share exceeds the trend of the
comparative index Philadelphia Semiconductor Index
for at least three consecutive days on at least one occasion
during the life of the option. Granted options have a vesting
period of three years, subject to the Companys stock
reaching the exercise price on at least one trading day, and
expire six years from the grant date. During the 2006 financial
year, no options were granted under the SOP 2006.
In 2006, the Qimonda shareholders approved a stock option plan
(the Qimonda 2006 SOP). Under the terms of the
Qimonda 2006 SOP, Qimonda can grant up to 6 million
non-transferable option rights over a three-year period which
grant the holder the right to receive ordinary shares issued by
Qimonda. The exercise price of each option equals 100% of the
average closing price of Qimondas ADSs on the New York
Stock Exchange during the five trading days prior to the grant
date. Granted options are only exercisable if the price of
Qimonda ADSs as quoted on the New York Stock Exchange exceeds
the trend of the comparative index Philadelphia
Semiconductor Index for at least three consecutive days on
at least one occasion during the life of the option. Granted
options have a vesting period of three years, subject to
F-196
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Qimondas ADSs reaching the exercise price on at least one
trading day, and expire six years from the grant date. During
the 2006 financial year, no options were granted under the
Qimonda 2006 SOP.
Effective October 1, 2005, the Company adopted
SFAS No. 123 (revised 2004) under the modified
prospective application method. Under this application, the
Company records stock-based compensation expense for all awards
granted on or after the date of adoption and for the portion of
previously granted awards that remained unvested at the date of
adoption. Stock-based compensation cost is measured at the grant
date, based on the fair value of the award, and is recognized as
expense over the period during which the employee is required to
provide service in exchange for the award. Prior period amounts
have not been restated and do not reflect the recognition of
stock-based compensation.
A summary of the status of the LTI 1999 Plan and the LTI 2001
Plan as of September 30, 2006, and changes during the three
years then ended is presented below (options in millions,
exercise price 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 beginning of year
|
|
|
40.9
|
|
|
|
20.33
|
|
|
|
4.02
|
|
|
|
|
|
Granted
|
|
|
7.5
|
|
|
|
8.20
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
(3.6
|
)
|
|
|
22.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year
|
|
|
44.8
|
|
|
|
18.12
|
|
|
|
3.54
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest, net of estimated forfeitures at end
of year
|
|
|
44.4
|
|
|
|
18.21
|
|
|
|
3.52
|
|
|
|
13
|
|
Exercisable at end of year
|
|
|
25.6
|
|
|
|
24.68
|
|
|
|
2.37
|
|
|
|
3
|
|
Options with an aggregated fair value of 51 completed
vesting during the financial year ended September 30, 2006.
Changes in the Companys unvested options for the financial
year ended September 30, 2006 are summarized as follows
(options in millions, fair values in euro, intrinsic value in
millions of euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
|
|
|
Aggregated
|
|
|
|
Number of
|
|
|
Weighted-average
|
|
|
remaining life
|
|
|
Intrinsic
|
|
|
|
options
|
|
|
exercise price
|
|
|
(in years)
|
|
|
Value
|
|
|
Unvested at beginning of year
|
|
|
21.2
|
|
|
|
5.28
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
7.5
|
|
|
|
3.19
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(8.2
|
)
|
|
|
6.22
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(1.3
|
)
|
|
|
4.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at end of year
|
|
|
19.2
|
|
|
|
4.11
|
|
|
|
1.72
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested options expected to vest
|
|
|
18.8
|
|
|
|
4.13
|
|
|
|
1.72
|
|
|
|
11
|
|
Fair value
disclosures
The fair value of each option grant is estimated on the grant
date using the Black-Scholes option-pricing model. Prior to the
adoption of SFAS No. 123 (revised 2004), the Company
relied on historical volatility measures when estimating the
fair value of stock options granted to employees. Following the
implementation of SFAS No. 123 (revised 2004), the
Company uses a combination of implied volatilities from traded
options on the Companys stock and historical volatility
when estimating the fair value of stock options granted to
employees, as it believes that this methodology better reflects
the expected future volatility of its stock. The expected life
of options granted is estimated based on historical experience.
Beginning on the date of adoption of SFAS No. 123
(revised 2004), forfeitures are estimated based on historical
experience; prior to the date of adoption, forfeitures were
recorded as they occurred. The risk-free rate is based on
treasury note yields at the time of grant for the estimated life
of the option. The
F-197
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Company has not made any dividend payments during the financial
year ended September 30, 2006 nor does it have plans to pay
dividends in the foreseeable future.
The following weighted-average assumptions were used in the
Black-Scholes option-pricing model:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate in %
|
|
|
3.68
|
|
|
|
3.02
|
|
|
|
3.08
|
|
Expected volatility in %
|
|
|
59
|
|
|
|
58
|
|
|
|
43
|
|
Dividend yield in %
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Expected life in years
|
|
|
4.50
|
|
|
|
4.50
|
|
|
|
5.07
|
|
Weighted-average fair value per option at grant date in euro in
|
|
|
5.88
|
|
|
|
4.03
|
|
|
|
3.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Compensation Expense
Stock-based compensation expense was allocated as follows for
the financial year ended September 30, 2006:
|
|
|
|
|
|
|
2006
|
|
|
Compensation expense recognized:
|
|
|
|
|
Cost of sales
|
|
|
7
|
|
Selling, general and administrative expenses
|
|
|
12
|
|
Research and development expenses
|
|
|
9
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
|
28
|
|
|
|
|
|
|
Stock-based compensation effect on basic and diluted loss per
share
|
|
|
(0.04
|
)
|
|
|
|
|
|
The amount of stock-based compensation cost which was
capitalized and remained in inventories during the financial
year ended September 30, 2006 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. In addition,
stock-based compensation expense did not have a significant cash
flow effect during the financial year ended September 30,
2006, since no material exercises of stock options occurred
during the period. As of September 30, 2006, there was a
total of 26 in unrecognized compensation expense related
to unvested stock options which is expected to be recognized
over a weighted-average period of 1.72 years.
Prior to the 2006 financial year, the Company applied the
provisions of APB No. 25, as permitted under
SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure an amendment
of SFAS No. 123.
F-198
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
If the Company had accounted for stock option grants and
employee stock purchases under its plans according to the fair
value method of SFAS No. 123, Accounting for
Stock-Based Compensation, and thereby recognized
compensation expense based on the above fair values over the
respective option vesting periods, net income (loss) and
earnings (loss) per share would have been reduced (increased) to
the pro forma amounts indicated below, pursuant to the provision
of SFAS No. 148:
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
As reported
|
|
|
61
|
|
|
|
(312
|
)
|
Deduct:
|
|
|
|
|
|
|
|
|
Stock-based employee compensation expense included in reported
net (loss) income, net of related tax effects
|
|
|
2
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
Total stock-based employee compensation expense determined under
fair value based method for all awards, net of related tax
effects
|
|
|
(37
|
)
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
Pro forma
|
|
|
26
|
|
|
|
(351
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
As reported
|
|
|
0.08
|
|
|
(
|
0.42
|
)
|
Pro forma
|
|
|
0.03
|
|
|
(
|
0.47
|
)
|
|
|
|
|
|
|
|
|
|
|
|
27.
|
Other
Comprehensive Income (Loss)
|
The changes in the components of other comprehensive income
(loss) for the years ended September 30, 2004, 2005 and
2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
|
|
Tax
|
|
|
|
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
Pretax
|
|
|
effect
|
|
|
Net
|
|
|
Unrealized (losses) gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
|
|
13
|
|
|
|
(1
|
)
|
|
|
12
|
|
|
|
6
|
|
|
|
(1
|
)
|
|
|
5
|
|
Reclassification adjustment for losses (gains) included in net
income (loss)
|
|
|
(11
|
)
|
|
|
|
|
|
|
(11
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
(13
|
)
|
|
|
1
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized (losses) gains
|
|
|
(7
|
)
|
|
|
|
|
|
|
(7
|
)
|
|
|
9
|
|
|
|
(1
|
)
|
|
|
8
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(7
|
)
|
Unrealized gains (losses) on cash flow hedges
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
(25
|
)
|
|
|
|
|
|
|
(25
|
)
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
Additional minimum pension liability
|
|
|
28
|
|
|
|
(10
|
)
|
|
|
18
|
|
|
|
(85
|
)
|
|
|
1
|
|
|
|
(84
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
(3
|
)
|
Foreign currency translation adjustment
|
|
|
(41
|
)
|
|
|
|
|
|
|
(41
|
)
|
|
|
64
|
|
|
|
|
|
|
|
64
|
|
|
|
(69
|
)
|
|
|
|
|
|
|
(69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income
|
|
|
(19
|
)
|
|
|
(10
|
)
|
|
|
(29
|
)
|
|
|
(37
|
)
|
|
|
|
|
|
|
(37
|
)
|
|
|
(74
|
)
|
|
|
|
|
|
|
(74
|
)
|
Accumulated other comprehensive income (loss)
beginning of year
|
|
|
(98
|
)
|
|
|
10
|
|
|
|
(88
|
)
|
|
|
(117
|
)
|
|
|
|
|
|
|
(117
|
)
|
|
|
(154
|
)
|
|
|
|
|
|
|
(154
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
(loss) end of year
|
|
|
(117
|
)
|
|
|
|
|
|
|
(117
|
)
|
|
|
(154
|
)
|
|
|
|
|
|
|
(154
|
)
|
|
|
(228
|
)
|
|
|
|
|
|
|
(228
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.
|
Supplemental Cash
Flow Information
|
The Company issued shares to redeem the redeemable interest of
278 related to the SC300 venture during the year ended
September 30, 2004 (see note 25).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
144
|
|
|
|
91
|
|
|
|
116
|
|
Income taxes
|
|
|
59
|
|
|
|
79
|
|
|
|
117
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction grants deducted from cost of fixed assets
(note 7)
|
|
|
49
|
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-199
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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.
Transactions between the Company and ALTIS subsequent to the
consolidation of ALTIS during the first quarter of the 2006
financial year are no longer reflected as Related Party
transactions (see note 17).
On April 3, 2006, Siemens disposed of its remaining
shareholding in the Company. Transactions between the Company
and Siemens subsequent to this date are no longer reflected as
Related Party transactions.
Related Party receivables at September 30, 2005 and 2006
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Siemens group trade (note 13)
|
|
|
145
|
|
|
|
|
|
Associated and Related Companies trade (note 13)
|
|
|
12
|
|
|
|
8
|
|
Siemens group financial and other (note 15)
|
|
|
18
|
|
|
|
|
|
Associated and Related Companies financial and other
(note 15)
|
|
|
5
|
|
|
|
1
|
|
Employee receivables (note 15)
|
|
|
8
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
188
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
Non-current:
|
|
|
|
|
|
|
|
|
Associated and Related Companies financial and
other(1)(note 18)
|
|
|
67
|
|
|
|
|
|
Employee receivables (note 18)
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total Related Party receivables
|
|
|
257
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The decrease during the financial
year ended September 30, 2006 is primarily related to the
initial consolidation of ALTIS.
|
Related Party payables at September 30, 2005 and 2006
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Siemens group trade (note 19)
|
|
|
61
|
|
|
|
|
|
Associated and Related Companies
trade(1)(note 19)
|
|
|
140
|
|
|
|
80
|
|
Associated and Related Companies financial and other
(note 21)
|
|
|
4
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Total Related Party payables
|
|
|
205
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The decrease during the financial
year ended September 30, 2006 is primarily related to the
initial consolidation of ALTIS.
|
Related Party receivables and payables as of September 30,
2006, have been segregated first between amounts owed by or to
Siemens group companies and companies in which the Company has
an ownership interest, and second based on the underlying nature
of the transactions. Trade receivables and payables include
amounts for the purchase and sale of products and services.
Financial and other receivables and payables represent amounts
owed relating to loans and advances and accrue interest at
inter-bank rates.
F-200
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Transactions with Related Parties during the years ended
September 30, 2004, 2005 and 2006, include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Sales to Related Parties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Siemens group companies
|
|
|
957
|
|
|
|
861
|
|
|
|
322
|
|
Associated and Related Companies
|
|
|
69
|
|
|
|
55
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales to Related Parties
|
|
|
1,026
|
|
|
|
916
|
|
|
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases from Related Parties:
|
|
|
|
|
|
|
|
|
|
|
|
|
Siemens group companies
|
|
|
264
|
|
|
|
226
|
|
|
|
73
|
|
Associated and Related
Companies(1)
|
|
|
357
|
|
|
|
615
|
|
|
|
575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchases from Related Parties
|
|
|
621
|
|
|
|
841
|
|
|
|
648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The decrease during the financial
year ended September 30, 2006 is primarily related to the
initial consolidation of ALTIS.
|
Purchases from Associated and Related Companies during the years
ended September 30, 2005 and 2006 are principally related
to products purchased from Inotera.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Interest income from (expense to) Related Parties
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income from Related Parties
|
|
|
2
|
|
|
|
2
|
|
|
|
1
|
|
Interest expense to Related Parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2
|
|
|
|
2
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales to Siemens group companies include sales to the Siemens
group sales organizations for resale to third parties of
23, 38 and 21 for the years ended
September 30, 2004, 2005 and 2006, respectively. Sales are
principally conducted through the Companys own independent
sales organization directly to third parties. Where the Company
has not established its own independent sales organization in a
certain country, a commission is paid to the Siemens group sales
organizations where they assist in making sales directly to
third parties.
Purchases from Siemens group companies primarily include
purchases of fixed assets, inventory, IT services, and
administrative services.
In February 2004, the Company completed the purchase of assets,
including certain liabilities, of the Protocol Software
operations of Siemens AG, in exchange for 13 and the
employment of approximately 145 of Siemens mobile
communication software engineers.
Pension benefits provided by the Company are currently organized
primarily through defined benefit pension plans which cover a
significant portion of the Companys employees. Plan
benefits are principally based upon years of service. Certain
pension plans are based on salary earned in the last year or
last five years of employment, while others are fixed plans
depending on ranking (both salary level and position). The
measurement date for the Companys pension plans is
June 30.
F-201
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Information with respect to the Companys pension plans for
the years ended September 30, 2004, 2005 and 2006 is
presented for German (Domestic) plans and non-German
(Foreign) plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Accumulated benefit obligations end of year
|
|
|
(226
|
)
|
|
|
(56
|
)
|
|
|
(337
|
)
|
|
|
(64
|
)
|
|
|
(378
|
)
|
|
|
(61
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in projected benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligations beginning of year
|
|
|
(243
|
)
|
|
|
(70
|
)
|
|
|
(271
|
)
|
|
|
(78
|
)
|
|
|
(392
|
)
|
|
|
(85
|
)
|
Service cost
|
|
|
(14
|
)
|
|
|
(7
|
)
|
|
|
(16
|
)
|
|
|
(7
|
)
|
|
|
(24
|
)
|
|
|
(5
|
)
|
Interest cost
|
|
|
(13
|
)
|
|
|
(4
|
)
|
|
|
(15
|
)
|
|
|
(4
|
)
|
|
|
(17
|
)
|
|
|
(4
|
)
|
Actuarial gains (losses)
|
|
|
|
|
|
|
3
|
|
|
|
(89
|
)
|
|
|
(2
|
)
|
|
|
(13
|
)
|
|
|
8
|
|
Business combinations
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
New plan created
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan amendments
|
|
|
(3
|
)
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
2
|
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
2
|
|
Curtailment gain
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
1
|
|
|
|
|
|
|
|
7
|
|
Foreign currency effects
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligations end of year
|
|
|
(271
|
)
|
|
|
(78
|
)
|
|
|
(392
|
)
|
|
|
(85
|
)
|
|
|
(443
|
)
|
|
|
(75
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at beginning of year
|
|
|
143
|
|
|
|
27
|
|
|
|
174
|
|
|
|
30
|
|
|
|
208
|
|
|
|
35
|
|
Contributions and transfers
|
|
|
19
|
|
|
|
2
|
|
|
|
17
|
|
|
|
4
|
|
|
|
63
|
|
|
|
4
|
|
Actual return on plan assets
|
|
|
14
|
|
|
|
3
|
|
|
|
19
|
|
|
|
2
|
|
|
|
14
|
|
|
|
2
|
|
Benefits paid
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(2
|
)
|
Foreign currency effects
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at end of year
|
|
|
174
|
|
|
|
30
|
|
|
|
208
|
|
|
|
35
|
|
|
|
282
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
|
(97
|
)
|
|
|
(48
|
)
|
|
|
(184
|
)
|
|
|
(50
|
)
|
|
|
(161
|
)
|
|
|
(37
|
)
|
Unrecognized actuarial (gains) losses
|
|
|
59
|
|
|
|
2
|
|
|
|
138
|
|
|
|
4
|
|
|
|
144
|
|
|
|
(8
|
)
|
Unrecognized prior service cost (benefit)
|
|
|
7
|
|
|
|
(2
|
)
|
|
|
14
|
|
|
|
(2
|
)
|
|
|
13
|
|
|
|
|
|
Post measurement date contributions
|
|
|
1
|
|
|
|
1
|
|
|
|
16
|
|
|
|
1
|
|
|
|
16
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset (liability) recognized
|
|
|
(30
|
)
|
|
|
(47
|
)
|
|
|
(16
|
)
|
|
|
(47
|
)
|
|
|
12
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The above net liability is recognized as follows in the
accompanying consolidated balance sheets as of September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Prepaid pension cost
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Intangible asset (note 15)
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
85
|
|
|
|
|
|
|
|
88
|
|
|
|
|
|
Accrued pension liabilities (note 23)
|
|
|
(51
|
)
|
|
|
(47
|
)
|
|
|
(115
|
)
|
|
|
(47
|
)
|
|
|
(89
|
)
|
|
|
(45
|
)
|
Other current liabilities
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liability recognized
|
|
|
(30
|
)
|
|
|
(47
|
)
|
|
|
(16
|
)
|
|
|
(47
|
)
|
|
|
12
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities of 6 at September 30, 2004
related to pension liabilities of the fiber optic business which
was held for sale.
F-202
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Information for pension plans with projected benefit obligations
and accumulated benefit obligations in excess of plan assets are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Foreign plans
|
|
|
plans
|
|
|
plans
|
|
|
Projected benefit obligation
|
|
|
271
|
|
|
|
78
|
|
|
|
392
|
|
|
|
85
|
|
|
|
443
|
|
|
|
64
|
|
Fair value of plan assets
|
|
|
174
|
|
|
|
30
|
|
|
|
208
|
|
|
|
35
|
|
|
|
282
|
|
|
|
26
|
|
Accumulated benefit obligations
|
|
|
53
|
|
|
|
51
|
|
|
|
337
|
|
|
|
57
|
|
|
|
378
|
|
|
|
54
|
|
Fair value of plan assets
|
|
|
|
|
|
|
23
|
|
|
|
208
|
|
|
|
26
|
|
|
|
282
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average assumptions used in calculating the
actuarial values for the pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Discount rate in %
|
|
|
5.8
|
|
|
|
5.6
|
|
|
|
4.5
|
|
|
|
4.8
|
|
|
|
4.8
|
|
|
|
5.3
|
|
Rate of compensation increase in %
|
|
|
3.0
|
|
|
|
3.7
|
|
|
|
2.5
|
|
|
|
3.1
|
|
|
|
2.5
|
|
|
|
1.8
|
|
Projected future pension increases in %
|
|
|
1.3
|
|
|
|
2.6
|
|
|
|
1.3
|
|
|
|
2.2
|
|
|
|
1.8
|
|
|
|
2.2
|
|
Expected return on plan assets in %
|
|
|
6.8
|
|
|
|
7.0
|
|
|
|
7.3
|
|
|
|
6.9
|
|
|
|
6.5
|
|
|
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rates are established based on prevailing market rates
for high-quality fixed-income instruments that, if the pension
benefit obligation were settled at the measurement date, would
provide the necessary future cash flows to pay the benefit
obligation when due. The Company believes short-term changes in
interest rates should not affect the measurement of the
Companys long-term obligation.
Investment
strategies
The investment approach of the Companys pension plans
involves employing a sufficient level of flexibility to capture
investment opportunities as they occur, while maintaining
reasonable parameters to ensure that prudence and care are
exercised in the execution of the investment program. The
Companys pension plans assets are invested with
several investment managers. The plans employ a mix of active
and passive investment management programs. Considering the
duration of the underlying liabilities, a portfolio of
investments of plan assets in equity securities, debt securities
and other assets is targeted to maximize the long-term return on
assets for a given level of risk. Investment risk is monitored
on an ongoing basis through periodic portfolio reviews, meetings
with investment managers and annual liability measurements.
Investment policies and strategies are periodically reviewed to
ensure the objectives of the plans are met considering any
changes in benefit plan design, market conditions or other
material items.
Expected
long-term rate of return on plan assets
Establishing the expected rate of return on pension assets
requires judgment. The Companys approach in determining
the long-term rate of return for plan assets is based upon
historical financial market relationships that have existed over
time, the types of investment classes in which pension plan
assets are invested, long-term investment strategies, as well as
the expected compounded return the Company can reasonably expect
the portfolio to earn over appropriate time periods.
The Company reviews the expected long-term rate of return
annually and revises it as appropriate. Also, the Company
periodically commissions detailed asset/liability studies to be
performed by third-party professional investment advisors and
actuaries.
F-203
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Plan asset
allocation
As of September 30, 2005 and 2006 the percentage of plan
assets invested and the targeted allocation in major asset
categories are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Targeted allocation
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Equity securities in %
|
|
|
44
|
|
|
|
57
|
|
|
|
33
|
|
|
|
59
|
|
|
|
52
|
|
|
|
59
|
|
Debt securities in %
|
|
|
51
|
|
|
|
35
|
|
|
|
33
|
|
|
|
26
|
|
|
|
18
|
|
|
|
26
|
|
Other in %
|
|
|
5
|
|
|
|
8
|
|
|
|
34
|
|
|
|
15
|
|
|
|
30
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total in %
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys asset allocation targets for its pension plan
assets are based on its assessment of business and financial
conditions, demographic and actuarial data, funding
characteristics, related risk factors, market sensitivity
analysis and other relevant factors. The overall allocation is
expected to help protect the plans funded status while
generating sufficiently stable real returns (i.e., net of
inflation) to meet current and future benefit payment needs. Due
to active portfolio management, the asset allocation may differ
from the target allocation up to certain limits for different
classes. As a matter of policy, the Companys pension plans
do not invest in shares of Infineon or Qimonda.
The components of net periodic pension cost for the years ended
September 30, 2004, 2005 and 2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
Service cost
|
|
|
(14
|
)
|
|
|
(7
|
)
|
|
|
(16
|
)
|
|
|
(7
|
)
|
|
|
(24
|
)
|
|
|
(5
|
)
|
Interest cost
|
|
|
(13
|
)
|
|
|
(4
|
)
|
|
|
(15
|
)
|
|
|
(4
|
)
|
|
|
(17
|
)
|
|
|
(4
|
)
|
Expected return on plan assets
|
|
|
11
|
|
|
|
2
|
|
|
|
13
|
|
|
|
2
|
|
|
|
13
|
|
|
|
3
|
|
Amortization of unrecognized prior service cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
2
|
|
Amortization of unrecognized losses
|
|
|
(3
|
)
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
Curtailment gain recognized
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost (note 8)
|
|
|
(19
|
)
|
|
|
(9
|
)
|
|
|
(20
|
)
|
|
|
(8
|
)
|
|
|
(36
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The prior service costs relating to the pension plans are
amortized in equal amounts over the expected years of future
service of each active employee who is expected to receive
benefits from the pension plans.
Unrecognized gains or losses are included in the net pension
cost for the year, if as of the beginning of the year, the
unrecognized net gains or losses exceed 10% of the greater of
the projected benefit obligation or the market value of the plan
assets. The amortization is the excess divided by the average
remaining service period of active employees expected to receive
benefits under the plan.
Actuarial gains (losses) amounted to 3, (91) and
(5) for the financial years ended September 30, 2004,
2005 and 2006, respectively. The increase in actuarial losses in
the 2005 financial year was primarily the result of the
reduction of the discount rate used to determine the benefit
obligation and new mortality tables used in the actuarial
calculations for the domestic plans.
On September 25, 2000, the Company established the Infineon
Technologies Pension Trust e.V. (the Pension Trust)
for the purpose of funding future pension benefit payments for
employees in Germany in order to reduce the Companys
exposure to certain risks associated with defined benefit plans.
The Company contributed 155 of cash and marketable debt
and equity securities, which qualify as plan assets under
SFAS No. 87 Employers Accounting for
Pensions, to the Pension Trust for use in funding these
pension benefit obligations, thereby reducing accrued pension
liabilities.
F-204
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
In September 2006, Qimonda established a pension trust for the
purpose of funding future pension benefit payments for its
employees in Germany. A portion of the Companys pension
plan assets have been allocated to Qimonda for periods prior to
its formation based on the proportion of Qimondas
projected benefit obligation to the total Companys
projected benefit obligation. Accordingly, the Company
transferred 26 in cash from its Pension Trust into the
Qimonda pension trust.
The effect of employee terminations, in connection with the
Companys restructuring plans (see note 9), on the
Companys pension obligation is reflected as a curtailment
in the years ended September 30, 2005 and 2006 pursuant to
the provisions of SFAS No. 88 Employers
Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits.
The future benefit payments, which reflect future service, as
appropriate, that are expected to be paid from the
Companys pension plan for the next five financial years
and thereafter are as follows:
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
Foreign
|
|
Years ending September 30
|
|
plans
|
|
|
plans
|
|
|
2007
|
|
|
10
|
|
|
|
2
|
|
2008
|
|
|
8
|
|
|
|
2
|
|
2009
|
|
|
9
|
|
|
|
2
|
|
2010
|
|
|
12
|
|
|
|
2
|
|
2011
|
|
|
13
|
|
|
|
2
|
|
2012-2016
|
|
|
80
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
During the year ended September 30, 2002, the Company
established a deferred savings plan for its employees in
Germany, whereby a portion of the employees salary is
invested for a lump sum benefit payment including interest upon
retirement. The liability for such future payments of 14
and 17 as of September 30, 2005 and 2006,
respectively, is actuarially determined and accounted for on the
same basis as the Companys other pension plans.
The Company provides post-retirement health care benefits to
eligible employees in the United States. The Company recognized
net periodic benefit cost of less than 1 for each of the
years ended September 30, 2004, 2005 and 2006. The net
liability recognized in the accompanying balance sheet was
5 and 4 as of September 30, 2005 and 2006,
respectively.
|
|
31.
|
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.
F-205
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The euro equivalent notional amounts in millions and fair values
of the Companys derivative instruments as of
September 30, 2005 and 2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
|
Notional
|
|
|
Fair
|
|
|
Notional
|
|
|
Fair
|
|
|
|
amount
|
|
|
value
|
|
|
amount
|
|
|
value
|
|
|
Forward contracts sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
838
|
|
|
|
(20
|
)
|
|
|
682
|
|
|
|
1
|
|
Japanese yen
|
|
|
9
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
Singapore dollar
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Britain pound
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Malaysian Ringgit
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
Forward contracts purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
195
|
|
|
|
4
|
|
|
|
209
|
|
|
|
(1
|
)
|
Japanese yen
|
|
|
42
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
Singapore dollar
|
|
|
23
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
Great Britain pound
|
|
|
5
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
Czech Koruna
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malaysian Ringgit
|
|
|
32
|
|
|
|
1
|
|
|
|
35
|
|
|
|
|
|
Other currencies
|
|
|
23
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
Currency Options sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
527
|
|
|
|
(21
|
)
|
|
|
259
|
|
|
|
(5
|
)
|
Currency Options purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
522
|
|
|
|
3
|
|
|
|
252
|
|
|
|
2
|
|
Cross currency interest rate swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
389
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
1,442
|
|
|
|
14
|
|
|
|
1,200
|
|
|
|
5
|
|
Other
|
|
|
259
|
|
|
|
(2
|
)
|
|
|
218
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value, net
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended September 30, 2004, the Company
designated two interest rate swap agreements with a total
notional amount of 500, as fair value hedges of a
corresponding principal amount of its convertible notes due
2007. The change in fair value of these hedges during the years
ended September 30, 2004 and 2005 were 1 and
(5), respectively, and was reflected as part of interest
expense. During the fourth quarter of the 2005 financial year
the Company de-designated those fair value hedges. The change in
fair value since inception of the hedge of (4) is being
amortized into interest expense over the remaining term of the
convertible notes.
The Company entered into interest rate swap agreements with
independent financial institutions during the year ended
September 30, 2004, which were designated as a cash flow
hedge of interest rate fluctuations on forecasted future lease
payments during the first 10 years of the Campeon lease
agreement (see note 33). The ineffective portion of the
cash flow hedge was 0 for the years ended
September 30, 2004, 2005, and 2006. The effective portion
of (22) was deferred in other comprehensive income until
the commencement of the lease in the first quarter of the 2006
financial year, and is being amortized ratably into lease
expense over the lease term of 15 years.
Interest expense, net was partially offset by gains resulting
from interest rate swap agreements in the amount of 22 and
21 for the financial years ended September 30, 2004
and 2005, respectively, and was impacted by a loss of 34
for the financial year ended September 30, 2006.
F-206
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Gains and losses on derivative financial instruments included in
determining net income (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), were as follows for the years ended September 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Gains (losses) from foreign currency derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
44
|
|
|
|
(14
|
)
|
|
|
50
|
|
Other non-operating (expense) income
|
|
|
3
|
|
|
|
(10
|
)
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
|
|
(24
|
)
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) from foreign currency transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
(50
|
)
|
|
|
(5
|
)
|
|
|
(19
|
)
|
Other non-operating (expense) income
|
|
|
(12
|
)
|
|
|
50
|
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(62
|
)
|
|
|
45
|
|
|
|
(65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net losses from foreign currency derivatives and transactions
|
|
|
(15
|
)
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair values of financial instruments are determined using quoted
market prices or discounted cash flows. The fair value of the
Companys unsecured term loans and interest-bearing notes
payable approximate their carrying values as their interest
rates approximate those which could be obtained currently. At
September 30, 2006 the convertible notes due 2007 and the
convertible notes due 2010 were trading at a 0.2% and a 12.5%
premium to par, respectively, based on quoted market values. The
fair values of the Companys cash and cash equivalents,
receivables and payables, as well as related-party receivables
and payables and other financial instruments approximated their
carrying values due to their short-term nature. Marketable
securities are recorded at fair value (see note 12).
Financial instruments that expose the Company to credit risk
consist primarily of trade receivables, cash equivalents,
marketable securities and financial derivatives. Concentrations
of credit risks with respect to trade receivables are limited by
the large number of geographically diverse customers that make
up the Companys customer base. The Company controls credit
risk through credit approvals, credit limits and monitoring
procedures, as well as comprehensive credit evaluations for all
customers. Related Parties account for a considerable portion of
sales and trade receivables. The credit risk with respect to
cash equivalents, marketable securities and financial
derivatives is limited by transactions with a number of large
international financial institutions, with pre-established
limits. The Company does not believe that there is significant
risk of non-performance by these counterparties because the
Company monitors their credit risk and limits the financial
exposure and the amounts of agreements entered into with any one
financial institution.
In order to remain competitive, the Company must continue to
make substantial investments in process technology and research
and development. Portions of these investments might not be
recoverable if these research and development efforts fail to
gain market acceptance or if markets significantly deteriorate.
Due to the high-technology nature of the Companys
operations, intellectual property is an integral part of the
Companys business. The Company has intellectual property
which it has self-developed, purchased or licensed from third
parties. The Company is exposed to infringements by others of
such intellectual property rights. Conversely, the Company is
exposed to assertions by others of infringement by the Company
of their intellectual property rights.
The Company, through its use of third-party foundry and joint
venture arrangements, uses a significant portion of
manufacturing capacity that is outside of its direct control. As
a result, the Company is reliant upon such other parties for the
timely and uninterrupted supply of products and is exposed, to a
certain extent, to fluctuations in product procurement cost.
The Company has established policies and procedures which serve
as business conduct guidelines for its employees. Should these
guidelines not be adhered to, the Company could be exposed to
risks relating to wrongful actions by its employees.
F-207
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Approximately 9,000 of the Companys employees are covered
by collective bargaining agreements. The collective bargaining
agreements pertain primarily to certain of the Companys
non-management employees in Germany (affecting approximately
4,700 employees), Austria (affecting approximately
2,300 employees) and France (affecting approximately
2,000 employees including ALTIS). The agreement in Germany
is perpetual, but can be terminated by the trade union with a
notice of one month prior to March 31, 2007. The agreement
in Austria expires on May 1, 2007. The minimum salaries
stipulated in the agreement in France are subject to yearly
revision coming into effect on January 1st each year.
The provisions of these agreements generally remain in effect
until replaced by a subsequent agreement. Agreements for periods
after expiration are to be negotiated with the respective trade
unions through a process of collective negotiations.
|
|
33.
|
Commitments and
Contingencies
|
Litigation
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 ongoing 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.
Subsequent to the commencement of the DOJ investigation, a
number of putative class action lawsuits were filed against the
Company, its principal U.S. subsidiary and other DRAM
suppliers.
Sixteen cases were filed between June and September 2002 in
several U.S. federal district courts, purporting to be on
behalf of a class of individuals and entities who purchased DRAM
directly from the various DRAM suppliers during a specified time
period (the Direct U.S. Purchaser Class), 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 pretrial proceedings as part of
a Multi District Litigation (MDL).
In September 2005, the Company and its principal
U.S. subsidiary entered into a definitive settlement
agreement with counsel to the Direct U.S. Purchaser Class
(subject to approval by the U.S. District Court and to an
opportunity for individual class members to opt out of the
settlement). Under the terms of the settlement agreement the
Company agreed to pay approximately $21 million. In
addition to this settlement payment, the Company agreed to pay
an additional amount if it is proven that sales of DRAM products
to the settlement class (after opt-outs) during the settlement
period exceeded $208.1 million. The additional amount
payable would be calculated by multiplying the amount by which
these sales exceed $208.1 million by 10.53%. The Company
does not currently expect that any such additional amount will
have a material adverse effect on its financial condition or
results of operations. The settlement was provisionally approved
on May 10, 2006, and the final hearing for approval of the
settlement was scheduled for November 1, 2006. As of
September 30, 2006, the Company had secured individual
settlements with eight direct customers in addition to those
OEMs identified by the DOJ (see note 35).
On April 28, 2006, Unisys Corporation filed a complaint
against the Company and its principal U.S. subsidiary,
among other DRAM suppliers, alleging state and federal claims
for price fixing and seeking recovery as both a direct and
indirect purchaser of DRAM. On May 5, 2006, Honeywell
International Inc. filed a complaint against the Company and its
principal U.S. subsidiary, among other DRAM suppliers,
alleging a claim for price fixing under federal law, and seeking
recovery as a direct purchaser of DRAM. Both of these complaints
were filed in the Northern District of California, and have been
related to the MDL
F-208
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
described above. Both Unisys and Honeywell opted out of the
direct purchaser class and settlement, so their claims are not
barred by the Companys settlement with the Direct
U.S. Purchaser Class.
Sixty-four additional cases were filed between August and
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, which was subsequently
dismissed with prejudice) 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 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.
Twenty-three 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 described
above. Nineteen 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 pretrial proceedings. The plaintiffs
in the indirect purchaser cases outside California agreed to
stay proceedings in those cases in favor of proceedings on the
indirect purchaser cases pending as part of the MDL pretrial
proceedings. The defendants have filed two motions for judgment
on the pleadings directed at several of the claims; these
motions are pending. After these have been decided the indirect
purchaser plaintiffs in the MDL proceedings will have the
opportunity to file any motion for class certification. No trial
date has yet been scheduled in the MDL. The Company intends to
vigorously defend against the indirect purchaser cases.
On July 13, 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, its principal
U.S. subsidiary 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. On July 14, 2006, the attorneys
general of California, Alaska, Arizona, Arkansas, 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, its principal
U.S. subsidiary 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. On September 8, 2006, the complaint was
amended to add claims by the attorneys general of Ken-tucky,
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. The Company intends to vigorously defend against both of
these actions.
In April 2003, the Company received a request for information
from the European Commission in connection with its
investigation of practices in the European market for DRAM ICs.
The Company is fully cooperating with the Commission in its
investigation.
In May 2004, the Canadian Competition Bureau advised the
Companys U.S. subsidiary 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. 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 provinces of Quebec, and
one was filed in each of Ontario and British Columbia against
the Company, its principal U.S. subsidiary 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
F-209
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
costs. Plaintiffs primarily allege conspiracy to unduly restrain
competition and to illegally fix the price of DRAM. In the
British Columbia action, the certification motion has been
scheduled for May 2007. In one Quebec class action preliminary
motions are to be scheduled early in 2007; the other Quebec
action has been stayed pending developments in the one that is
going forward. The Company intends to vigorously defend against
these proceedings.
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 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 (see note 35).
The Company believes these claims are without merit and is
vigorously defending itself in this action. Because this action
is in its early stages, the Company is unable to provide an
estimate of the likelihood of an unfavorable outcome to the
Company or of the amount or range of potential loss arising from
the action. If the outcome of this action is unfavorable, or if
the Company incurs substantial legal fees in defending this
action regardless of outcome, it may have a material adverse
effect on the Companys financial condition and results of
operations. The Companys directors and
officers insurance carriers have denied coverage in the
class action and the Company filed suit against the carriers in
December 2005 and August 2006.
In late 2002, MOSAID filed suit alleging that the Company was
violating eleven of its DRAM-related U.S. patents.
Subsequently, the Company sought a declaratory judgment that it
did not violate these patents, MOSAID filed certain
counterclaims, the Company won summary judgment with respect to
most of these patents, and MOSAID alleged infringement of
additional patents.
On June 14, 2006, the parties announced that they had
settled all pending litigation and appeals, and the outstanding
suit was subsequently dismissed with prejudice. As part of the
settlement, Infineon and Qimonda have taken a worldwide license
to the MOSAID patent portfolio (note 6).
Tessera Inc. filed a lawsuit in March 2005 alleging that some of
the Companys products were infringing five Tessera
patents, and later amended its complaint to allege that the
Company had violated U.S. antitrust law, Texas unfair
competition law, and Texas business tort law by conspiring to
harm the sale of Rambus DRAM (RDRAM) chips, thereby
injuring Tesseras ability to license chip packaging
technology for RDRAM chips.
On August 1, 2006, Infineon and Qimonda entered into
settlement agreements with Tessera Inc. in respect of all of
Tesseras patent infringement and antitrust claims and all
counterclaims and other claims Infineon and Qimonda raised
against Tessera. As part of the settlement, Infineon and Qimonda
have entered into license agreements with Tessera, effective
July 1, 2006, that provide the companies world-wide,
nonexclusive, non-transferable and non-sublicensable licenses to
use a portfolio of Tessera patents relating to packaging for
integrated circuits in Infineon and Qimondas production.
The license agreements will be effective until May 2012, when
they will automatically expire unless the companies notify
Tessera by November 2011 that they elect to extend the
agreements for an additional five years until May 2017. Upon
expiration of the extended term, if any, the companies
licenses to use the patents covered by the licenses will become
fully
paid-up and
perpetual.
Under the license agreements, Infineon and Qimonda paid Tessera
$10 million and $40 million in license fees in August
2006, respectively, and will pay additional royalty payments
over a six-year period based on the volume of components
Infineon and Qimonda sell that are subject to the licenses. In
the event the companies elect to extend the agreements past
their initial term, they will continue to pay royalties at 50%
of the rates agreed to for the initial term of the license
agreements. Pursuant to the contribution agreement Qimonda
entered into with Infineon, Qimonda is required to indemnify
Infineon with respect to 80% of the court costs and legal fees
that Infineon faces in respect of the Tessera suits
(note 6).
F-210
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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 or the range
cannot be estimated, the minimum amount is accrued. As of
September 30, 2006, the Company had accrued liabilities in
the amount of 139 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.
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 antitrust investigations or
related civil claims or the securities class action 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. 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 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 year
of settlement.
Contractual
Commitments
The following table summarizes the Companys commitments
with respect to external parties as of September 30,
2006(1),(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
Less than
|
|
1-2
|
|
2-3
|
|
3-4
|
|
4-5
|
|
After
|
|
|
Total
|
|
1 year
|
|
years
|
|
years
|
|
years
|
|
years
|
|
5 years
|
|
Contractual commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease payments
|
|
|
959
|
|
|
104
|
|
|
91
|
|
|
85
|
|
|
66
|
|
|
64
|
|
|
549
|
Unconditional purchase commitments
|
|
|
1,396
|
|
|
1,171
|
|
|
153
|
|
|
25
|
|
|
15
|
|
|
11
|
|
|
21
|
Other long-term commitments
|
|
|
132
|
|
|
66
|
|
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Commitments
|
|
|
2,487
|
|
|
1,341
|
|
|
310
|
|
|
110
|
|
|
81
|
|
|
75
|
|
|
570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain payments of obligations or
expirations of commitments that are based on the achievement of
milestones or other events that are not date-certain are
included for purposes of this table based on estimates of the
reasonably likely timing of payments or expirations in the
particular case. Actual outcomes could differ from those
estimates.
|
|
(2) |
|
Product purchase commitments
associated with continuing capacity reservation agreements are
not included in this table, since the purchase prices are based,
in part, on future market prices, and are accordingly not
accurately quantifiable at September 30, 2006. Purchases
under these arrangements aggregated 1,204 for the year
ended September 30, 2006.
|
In December 2002, the Company and Semiconductor Manufacturing
International Corporation (SMIC) entered into a
technology transfer and capacity reservation agreement. In
exchange for the technology transfer, SMIC will reserve
specified capacity over a five-year period, with product
purchases based on a market price formula. In 2004 the parties
amended their agreement to include next generation technology.
On July 28, 2003, the Company entered into a joint venture
agreement with China-Singapore Suzhou Industrial Park Venture
Company (CSVC) for the construction of a back-end
manufacturing facility in the Peoples Republic of China.
The capital invested by CSVC earns an annual return and has a
liquidation
F-211
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
preference. All accumulated earnings and dividend rights accrue
to the benefit of the Company. Accordingly, the Company has
consolidated 100% of the results of operations of the joint
venture from inception.
The Company has capacity reservation agreements with certain
Associated Companies and external foundry suppliers for the
manufacturing and testing of semiconductor products. These
agreements generally are greater than one year in duration and
are renewable. Under the terms of these agreements, the Company
has agreed to purchase a portion of their production output
based, in part, on market prices.
Purchases under these agreements are recorded as incurred in the
normal course of business. The Company assesses its anticipated
purchase requirements on a regular basis to meet customer demand
for its products. An assessment of losses under these agreements
is made on a regular basis in the event that either budgeted
purchase quantities fall below the specified quantities or
market prices for these products fall below the specified prices.
Other
Contingencies
The following table summarizes the Companys contingencies
with respect to external parties, other than those related to
litigation, as of September 30,
2006(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expirations by Period
|
|
|
|
|
Less than
|
|
1-2
|
|
2-3
|
|
3-4
|
|
4-5
|
|
After
|
|
|
Total
|
|
1 year
|
|
years
|
|
years
|
|
years
|
|
years
|
|
5 years
|
|
Maximum potential future payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees(2)
|
|
|
198
|
|
|
6
|
|
|
20
|
|
|
12
|
|
|
|
|
|
14
|
|
|
146
|
Contingent government
grants(3)
|
|
|
548
|
|
|
156
|
|
|
129
|
|
|
36
|
|
|
55
|
|
|
27
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contingencies
|
|
|
746
|
|
|
162
|
|
|
149
|
|
|
48
|
|
|
55
|
|
|
41
|
|
|
291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain expirations of
contingencies that are based on the achievement of milestones or
other events that are not date-certain are included for purposes
of this table based on estimates of the reasonably likely timing
of expirations in the particular case. Actual outcomes could
differ from those estimates.
|
|
(2) |
|
Guarantees are mainly issued for
the payment of import duties, rentals of buildings, and
contingent obligations related to government grants received.
|
|
(3) |
|
Contingent government grants refer
to amounts previously received, related to the construction and
financing of certain production facilities, which are not
otherwise guaranteed and could be refundable if the total
project requirements are not met.
|
The Company has guarantees outstanding to external parties of
198 as of September 30, 2006. 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 obligations are reflected as liabilities in the
consolidated financial statements by virtue of consolidation. As
of September 30, 2006, such inter-company guarantees,
principally relating to certain consolidated subsidiaries
third-party debt, aggregated 1,503, of which 1,340
relates to convertible notes issued.
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 September 30, 2006, a maximum of 548 of these
subsidies could be refundable.
On December 23, 2003, the Company entered into a long-term
operating lease agreement with MoTo Objekt Campeon
GmbH & Co. KG (MoTo) to lease an office
complex constructed by MoTo south of Munich, Germany. The office
complex, called Campeon, enables the Company to centralize the
majority of its Munich-area employees in one central physical
working environment. MoTo was responsible for the construction,
which was completed in the second half of 2005. The Company has
no obligations with respect to financing MoTo and has provided
no guarantees related to the construction. The Company occupied
Campeon under an operating lease arrangement in October 2005 and
completed the gradual move of its employees to this new location
in the 2006 financial year. The complex was leased for a period
of 20 years. After year 15, the Company has a non-bargain
purchase option to acquire the complex or otherwise continue the
lease for the remaining period of five years. Pursuant to the
agreement, the Company placed a rental deposit of 75 in
escrow, which was included in restricted cash as of
F-212
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
September 30, 2006. Lease payments are subject to limited
adjustment based on specified financial ratios related to the
Company. The agreement was accounted for as an operating lease,
in accordance with SFAS No. 13, with monthly lease
payments expensed on a straight-line basis over the lease term.
The Company through certain of its sales and other agreements
may, in the normal course of business, be obligated to indemnify
its counterparties under certain conditions for warranties,
patent infringement or other matters. The maximum amount of
potential future payments under these types of agreements is not
predictable with any degree of certainty, since the potential
obligation is contingent on conditions that may or may not occur
in future, and depends on specific facts and circumstances
related to each agreement. Historically, payments made by the
Company under these types of agreements have not had a material
adverse effect on the Companys business, results of
operations or financial condition.
A tabular reconciliation of the changes in the aggregate product
warranty liability for the year ended September 30, 2006 is
as follows:
|
|
|
|
|
|
2006
|
|
Balance as of September 30, 2005
|
|
|
50
|
Accrued during the year, net
|
|
|
39
|
Settled during the year
|
|
|
(38)
|
|
|
|
|
Balance as of September 30, 2006
|
|
|
51
|
|
|
|
|
|
|
34.
|
Operating Segment
and Geographic Information
|
The Company has reported its operating segment and geographic
information in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related
Information.
The Companys new organizational structure became effective
on May 1, 2006, following the legal separation of its
memory products business into a stand-alone legal company called
Qimonda AG. The results of prior periods have been reclassified
to conform to the current period presentation, as well as to
facilitate analysis of current and future operating segment
information. As a result of the reorganization, certain
corporate overhead expenses are no longer apportioned to Qimonda
and are instead allocated to Infineons logic segments.
The Company operates primarily in three major operating
segments, two of which are application focused: Automotive,
Industrial & Multimarket, and Communication Solutions;
and one of which is product focused: Qimonda. 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 the Other
Operating Segments for the 2005 and 2006 financial years include
net sales that Infineons 200-millimeter production
facility in Dresden records from the sale of wafers to Qimonda
under foundry agreements. The Corporate and Eliminations segment
reflects the elimination of these intra-group net sales. For the
2004 financial year, the Infineon 200-millimeter production
facility in Dresden was part of the Qimonda organization.
The accounting policies of the segments are substantially the
same as described in the summary of significant accounting
policies (see note 2). Each of the segments has a segment
manager reporting directly to the Chief Executive Officer and
Chief Financial Officer, who have been collectively identified
as the Chief Operating Decision Maker (CODM). The
CODM makes decisions about resources to be allocated to the
segments and assesses their performance using revenues and EBIT.
The CODM does not review asset information by segment nor does
he evaluate the segments on these criteria on a regular basis,
except that the CODM is provided information regarding certain
inventories on an operating segment basis. The Company does,
however, allocate depreciation expense to the operating segments
F-213
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
based on production volume and product mix using standard costs.
Information with respect to the Companys operating
segments follows:
Automotive,
Industrial & Multimarket
The Automotive, Industrial & Multimarket segment
designs, develops, manufactures and markets semiconductors and
complete system solutions primarily for use in automotive,
industrial and security applications, and applications with
customer-specific product requirements.
Communication
Solutions
The Communication Solutions segment designs, develops,
manufactures and markets a wide range of ICs, other
semiconductors and complete system solutions for wireline and
wireless communication applications.
Qimonda
Qimonda designs memory technologies and develops, manufactures,
markets and sells a large variety of memory products on a
module, component and chip level.
Other Operating
Segments
Remaining activities for certain product lines that have been
disposed of, as well as other business activities, are included
in the Other Operating Segments.
Selected segment data for the years ended September 30,
2004, 2005 and 2006 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
2,540
|
|
|
|
2,516
|
|
|
|
2,839
|
|
Communication Solutions
|
|
|
1,689
|
|
|
|
1,391
|
|
|
|
1,205
|
|
Other Operating
Segments(1)
|
|
|
16
|
|
|
|
285
|
|
|
|
310
|
|
Corporate and
Eliminations(2)
|
|
|
(58
|
)
|
|
|
(258
|
)
|
|
|
(240
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
4,187
|
|
|
|
3,934
|
|
|
|
4,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
3,008
|
|
|
|
2,825
|
|
|
|
3,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
7,195
|
|
|
|
6,759
|
|
|
|
7,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes inter-segment sales of
273 and 256 for financial years ended
September 30, 2005 and 2006, respectively, from sales of
wafers from Infineons 200-millimeter facility in Dresden
to Qimonda under foundry agreements.
|
|
(2) |
|
Includes the elimination of
inter-segment sales of 273 and 256 for financial
years ended September 30, 2005 and 2006, respectively, from
sales of wafers from Infineons 200-millimeter facility in
Dresden to Qimonda under foundry agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
252
|
|
|
|
134
|
|
|
|
246
|
|
Communication Solutions
|
|
|
(44
|
)
|
|
|
(295
|
)
|
|
|
(231
|
)
|
Other Operating Segments
|
|
|
(75
|
)
|
|
|
4
|
|
|
|
4
|
|
Corporate and Eliminations
|
|
|
(39
|
)
|
|
|
(137
|
)
|
|
|
(236
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
94
|
|
|
|
(294
|
)
|
|
|
(217
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda(1)
|
|
|
162
|
|
|
|
111
|
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
256
|
|
|
|
(183
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
EBIT results of Qimonda for the
period following its IPO are reported net of minority interest
results.
|
F-214
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Depreciation and Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial &
|
|
|
|
|
|
|
|
|
|
|
|
|
Multimarket
|
|
|
370
|
|
|
|
431
|
|
|
|
411
|
|
Communication Solutions
|
|
|
192
|
|
|
|
309
|
|
|
|
246
|
|
Other Operating Segments
|
|
|
6
|
|
|
|
48
|
|
|
|
45
|
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
568
|
|
|
|
788
|
|
|
|
702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
752
|
|
|
|
528
|
|
|
|
703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
1,320
|
|
|
|
1,316
|
|
|
|
1,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Equity in earnings (losses) of Associated Companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
|
|
|
|
|
|
Communication Solutions
|
|
|
5
|
|
|
|
4
|
|
|
|
(2
|
)
|
Other Operating Segments
|
|
|
(4
|
)
|
|
|
(2
|
)
|
|
|
|
|
Corporate and Eliminations
|
|
|
1
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
2
|
|
|
|
12
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
(16
|
)
|
|
|
45
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
(14
|
)
|
|
|
57
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
359
|
|
|
|
336
|
|
|
|
365
|
|
Communication Solutions
|
|
|
232
|
|
|
|
201
|
|
|
|
214
|
|
Other Operating Segments
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
Corporate and Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
592
|
|
|
|
538
|
|
|
|
580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
368
|
|
|
|
484
|
|
|
|
622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
960
|
|
|
|
1,022
|
|
|
|
1,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2006
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
Automotive, Industrial & Multimarket
|
|
|
|
|
|
|
|
|
Communication Solutions
|
|
|
27
|
|
|
|
22
|
|
Other Operating Segments
|
|
|
8
|
|
|
|
6
|
|
Corporate and Eliminations
|
|
|
2
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
37
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
Qimonda
|
|
|
88
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
Infineon Group
|
|
|
125
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2004, raw material and
work-in-process
of certain common logic production front-end facilities, and
work-in-process
of the common back-end facilities, were not under the direct
control or responsibility of any of the operating segment
managers, but rather of the site management. The site management
was responsible for the execution of the production schedule,
volume and units. Accordingly, this inventory was not attributed
to any operating segment, but was included in the corporate and
eliminations segment. Only unstarted wafers of the back-end
facilities (chip stock) and finished goods were
attributable to the operating segments and included in the
segment information reported to the CODM. As of
September 30, 2005 and 2006, all inventories were
attributed to the respective operating segment, since they were
under the direct control and responsibility of the respective
operating segment managers. Prior periods have been reclassified
to conform to the current year presentation.
F-215
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Certain items are included in corporate and eliminations and are
not allocated to the logic 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 logic 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. The Company allocates excess
capacity costs based on a foundry model, whereby such
allocations are reduced based upon the lead time of order
cancellation or modification. Any unabsorbed excess capacity
costs are included in corporate and eliminations. Significant
components of corporate and elimination EBIT for the years ended
September 30, 2004, 2005 and 2006 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Corporate and Eliminations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unabsorbed excess capacity costs
|
|
|
(35
|
)
|
|
|
(12
|
)
|
|
|
(33
|
)
|
Restructuring charges
|
|
|
(17
|
)
|
|
|
(78
|
)
|
|
|
(23
|
)
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
(25
|
)
|
Other,
net(1)
|
|
|
13
|
|
|
|
(47
|
)
|
|
|
(155
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(39
|
)
|
|
|
(137
|
)
|
|
|
(236
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes aggregate charges of
approximately 80 in the 2006 financial year incurred
primarily in connection with the formation of Qimonda, the
dilution of the Companys interest in Qimonda following its
IPO, as well as the Companys sale of Qimonda shares upon
exercise of the underwriters over-allotment option.
|
The following is a summary of net sales and of property, plant
and equipment by geographic area for the years ended September
30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
1,675
|
|
|
|
1,354
|
|
|
|
1,327
|
|
Other Europe
|
|
|
1,263
|
|
|
|
1,210
|
|
|
|
1,360
|
|
North America
|
|
|
1,524
|
|
|
|
1,504
|
|
|
|
2,126
|
|
Asia-Pacific
|
|
|
2,263
|
|
|
|
2,223
|
|
|
|
2,498
|
|
Japan
|
|
|
364
|
|
|
|
332
|
|
|
|
461
|
|
Other
|
|
|
106
|
|
|
|
136
|
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,195
|
|
|
|
6,759
|
|
|
|
7,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
1,962
|
|
|
|
1,625
|
|
|
|
1,279
|
|
Other Europe
|
|
|
514
|
|
|
|
516
|
|
|
|
638
|
|
North America
|
|
|
619
|
|
|
|
1,093
|
|
|
|
1,105
|
|
Asia-Pacific
|
|
|
490
|
|
|
|
515
|
|
|
|
737
|
|
Japan
|
|
|
1
|
|
|
|
2
|
|
|
|
4
|
|
Other
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,587
|
|
|
|
3,751
|
|
|
|
3,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers are based on the
customers billing location. Regional employment data is
provided in note 8.
Except for sales to Siemens, which are discussed in
note 29, no single customer accounted for more than 10% of
the Companys sales during the financial years ended
September 30, 2004 and 2005. Sales to Siemens were made
primarily by the logic segments. No single customer accounted
for more than 10% of the Companys sales during the
financial year ended September 30, 2006.
F-216
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The Company defines EBIT as earnings (loss) before interest and
taxes. The Companys management uses EBIT, among other
measures, to establish budgets and operational goals, to manage
the Companys business and to evaluate its performance. The
Company reports EBIT information because it believes that it
provides investors with meaningful information about the
operating performance of the Company and especially about the
performance of its separate operating segments.
For the financial years ended September 30, 2004, 2005 and
2006, EBIT is determined as follows from the consolidated
statements of operations, without adjustment to the
U.S. GAAP amounts presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ending September 30
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Net (loss) income
|
|
|
61
|
|
|
|
(312
|
)
|
|
|
(268
|
)
|
Adjust: Income tax expense
|
|
|
154
|
|
|
|
120
|
|
|
|
161
|
|
Interest expense, net
|
|
|
41
|
|
|
|
9
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
|
256
|
|
|
|
(183
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During October 2006, following the insolvency of one of the
Companys largest mobile phone customers, BenQ Mobile
GmbH & Co OHG, Infineon announced restructuring plans
to downsize its workforce. As part of the restructuring, it is
expected that a total of approximately 400 employees will
be terminated worldwide, thereof almost 200 employees in
the German locations of Munich, Salzgitter and Nuremberg. The
Company anticipates that the planned restructuring will result
in charges of approximately 30 during the first quarter of
the 2007 financial year, although the exact amount of the
restructuring charges can not be estimated at this time due to
the early stage of the negotiations with works councils.
In connection with the Formation, Infineon and Qimonda entered
into a trust agreement under which Infineon holds shares in
Inotera in trust for Qimonda until the shares can legally be
transferred. This trust agreement provides for Infineon to
transfer the shares to Qimonda as and when Infineon receives an
exemption from the statutory
lock-up.
During October 2006, the Taiwanese authorities granted an
exemption to the Company to transfer the shares, which is
expected to be finalized during the three months ending
December 31, 2006.
On October 11, 2006, the plaintiffs filed a second amended
complaint in the U.S. securities class action litigation in
the Northern District of California. The Companys claim
against one D&O insurance carrier was dismissed on
November 13, 2006. The Company intends to file an appeal
against this decision (see note 33).
On October 23, 2006, the action filed on July 13, 2006
by the New York state attorney general in the U.S. District
Court for the Southern District of New York case was made part
of the MDL proceeding pending in the Northern District of
California (see note 33).
The settlement agreement with counsel to the Direct
U.S. Purchaser Class was approved by the U.S. District
Court for the Northern District of California in the hearing
held on November 1, 2006 (see note 33).
In November 2006, Qimonda sold its investment in Ramtron through
a private placement. As a result of the sale, Qimonda expects to
record a gain of 3 during the three months ending
December 31, 2006.
Additional
Information
Additional
Information to the U.S. GAAP consolidated financial statements
pursuant to the German Commercial Code Implementation Act
(Einführungsgesetz zum HGB-EGHGB),
Article 58, paragraph 5
The Company has prepared consolidated financial statements and a
group management report for the financial year ended
September 30, 2006 in accordance with the German Commercial
Code (the Statutory Report). The Company has elected
to prepare its financial information on the basis of
U.S. GAAP in compliance with the requirements of the German
Commercial Code. The Statutory Report includes the Consolidated
Financial Statements and Notes to the Consolidated Financial
Statements, Supplemental Disclosures, and Group Management
Report.
F-217
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Significant
Differences between German GAAP and U.S. GAAP
Introduction
Infineon Technologies AG, as a German parent company, is subject
to the German Commercial Code (Handelsgesetzbuch, or
HGB), which principally requires the Company to
prepare consolidated financial statements in accordance with the
HGB accounting principles and regulations (German
GAAP). The German Commercial Code
(Handelsgesetzbuch or HGB) requires the
Company to prepare consolidated financial statements in
accordance with the HGB accounting principles and regulations
(German GAAP). Pursuant to the German Commercial
Code Implementation Act (Einführungsgesetz zum
HGB-EGHGB), Article 58, paragraph 5, the Company
is exempt from this requirement, if consolidated financial
statements are prepared and issued in accordance with a body of
internationally accepted accounting principles (such as
U.S. GAAP). Accordingly, the Company presents the
U.S. GAAP consolidated financial statements contained
herein. The following is a description of the significant
differences between German GAAP and U.S. GAAP.
Additionally, as a U.S. listed entity, the Company must
adhere to certain accounting and reporting requirements as
prescribed by the U.S. Securities and Exchange Commission
(SEC).
Fundamental
Differences
The fundamental difference between German GAAP and
U.S. GAAP is that they are based on different concepts. The
emphasis of U.S. GAAP is to provide all relevant
information to investors in order to facilitate future
investment decisions. German GAAP is oriented towards the
protection of creditors placing emphasis on the prudence concept.
Basis of
Consolidation
Under German GAAP as well as under U.S. GAAP, investments
in companies in which an ownership interest of 20% or more is
held and that are not controlled are accounted for using the
equity method of accounting. Other equity investments in which
an ownership interest of less than 20% is held are recorded at
cost. The effects of all significant intercompany transactions
are eliminated. In addition, under U.S. GAAP, as opposed to
German GAAP, companies are required to evaluate relationships
with entities to identify whether they are variable interest
entities as defined by Financial Accounting Standards Board
Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities an
interpretation of ARB No. 51, and to assess whether
they the primary beneficiary of such entities. If the
determination is made that a company is the primary beneficiary,
then that entity is included in the consolidated financial
statements of the company for U.S. GAAP purposes.
Financial
Statement Presentation
The balance sheet presentation under U.S. GAAP is based on
the planned realization of assets and the maturity of
liabilities in the normal course of business. The balance sheet
presentation under German GAAP is principally defined in HGB
section 266, and is based on the enterprises planned
holding time for the respective asset, liability or equity.
Revenue
Recognition
Revenue recognition is generally the same under German and
U.S. GAAP, whereby revenue is recognized when realized and
earned. Differences in the timing of recognition can exist in
transactions when the Company retains on-going financial,
operational or performance commitments or the contractual
amounts are not objectively verifiable.
Marketable
Securities
Under German GAAP, marketable debt and equity securities are
valued at the lower of acquisition cost or fair market value as
of the balance sheet date. Under U.S. GAAP, the
Companys marketable securities are classified as available
for sale and valued at fair market value as of the balance sheet
date. Unrealized gains and losses are reported in other
comprehensive income net of deferred taxes.
F-218
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Inventories
Inventory valuation is based on manufacturing costs under both
German and U.S. GAAP. Manufacturing costs under
U.S. GAAP are defined as production costs on a full
absorption basis, whereby manufacturing overhead is included
together with material and other direct manufacturing costs.
Under German GAAP certain overhead costs can be excluded from
the valuation of inventory.
Goodwill
Under U.S. GAAP, pursuant to SFAS No. 141,
Business Combinations, in connection with
SFAS No. 142, Goodwill and other Intangible
Assets, goodwill arising from business combinations
accounted for as a purchase after June 30, 2001 is no
longer amortized, but rather tested for impairment at the
reporting unit level at least annually. Under German GAAP, such
goodwill is amortized over four years or its estimated useful
life, whichever is shorter.
In-process
Research and Development
Under German GAAP, in-process research and development projects
acquired in a business combination are not specifically
identified but rather included as part of goodwill. Under
U.S. GAAP, acquired in-process research and development is
specifically identified, valued and charged to expense at the
date of acquisition.
Derivative
Financial Instruments
Under German GAAP, derivative financial instruments are not
recorded on the balance sheet. Unrealized gains are not
recognized whereas unrealized losses are accrued for. Under
U.S. GAAP derivative financial instruments are recorded on
the balance sheet at their fair value. Changes in fair value are
recorded in results of operations or other comprehensive income,
depending on whether the derivative financial instrument is
designated as part of a hedge transaction and on the type of
hedge transaction.
Deferred
Taxes
The main difference in accounting for deferred taxes relates to
the fact that under German GAAP, deferred tax assets are not
recorded for net operating losses. Under U.S. GAAP,
deferred tax assets are recorded for net operating losses and a
valuation allowance is established when it is deemed more
likely than not that the deferred tax asset will not be
realized.
Pension and
other post-retirement Obligations
Under U.S. GAAP, pension obligations are recognized based
on the projected benefit obligation using the projected unit
credit method. This is also permitted under German GAAP.
Furthermore different interest rates are used for the evaluation
of accrued liabilities.
Under U.S. GAAP, establishing and funding a trust,
independent of the Company, results under certain conditions in
a corresponding reduction in pension obligations from the
balance sheet. Under German GAAP, pension assets and obligations
are recorded gross on the balance sheet until such obligations
are legally settled.
Stock-based
Compensation
Through October 1, 2005, the Company recorded stock-based
compensation expense under German GAAP for the excess of the
trading price of the Companys stock and the exercise price
of the stock-option instrument. Effective October 1, 2005,
the Company adopted SFAS No. 123 (revised
2004) Share-based Payment. Accordingly, for
U.S. GAAP purposes stock-based compensation cost is
measured at the grant date, based on the fair value of the
award, and is recognized as expense over the period during which
the employee is required to provide service in exchange for the
award. Under German GAAP, in accordance with section 272
paragraph 2 No. 2 HGB, the fair value of the awards as
determined under SFAS 123 (revised 2004) is recorded
at date of grant within additional paid-in capital, and
compensation
F-219
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
cost is recognized as expense over the period during which the
employee is required to provide service in exchange for the
award.
Equity
Offering Costs
Under German GAAP, direct costs incurred in connection with
equity offerings are expensed, while under U.S. GAAP such
costs are recorded as additional paid in capital.
Accrued
Liabilities
Under German GAAP, certain costs can be accrued for anticipated
future events under certain circumstances. Under U.S. GAAP,
recognition of an accrued liability represents an existing
obligation to third parties and must meet very specific
recognition criteria.
Foreign
Currency Translation
Under German GAAP, foreign currency denominated assets and
liabilities are recorded at the spot rate on the transaction
date, with only unrealized losses reflected in results of
operations at the balance sheet date. Under U.S. GAAP
foreign currency denominated assets and liabilities are
translated at the spot rate at the balance sheet date, with both
unrealized gains and losses reflected in results of operations.
As of September 30, 2005 and 2006, the Company has also
denominated current positions at the balance sheet using the
spot rate for German GAAP purposes.
Grants
Subsidies
Under German GAAP, non-taxable investment subsidies and interest
subsidies can be recognized in results of operations when
received. Under U.S. GAAP, these amounts are deferred and
recognized in results of operations during the periods over
which the related expense is incurred.
Depreciation
on Property, Plant and Equipment
Under US GAAP, depreciation on property, plant and equipment is
based on the estimated economic useful life of the asset. Under
German GAAP, depreciation on property, plant and equipment is
predominantly based on the depreciation rate used for tax
purposes.
Equity Method
Accounting
Under German GAAP, consolidated financial statements could
include the equity in earnings of associated companies accounted
for pursuant to local accounting principles. Under
U.S. GAAP, equity in earnings is determined pursuant to
U.S. GAAP.
Gain on
Associated Company Share Issuance
Under German GAAP, a capital increase of an associated company
which increases the proportional valuation of the Companys
investment is reflected in results of operations. Under
U.S. GAAP and specific SEC regulations, statement of
operations recognition is subject to additional criteria, which,
if not met, requires recognition as an adjustment to
shareholders equity.
Minority
Interest
Under German GAAP, the consideration of minority interest within
the first consolidation and the allocation of the
investors share of the results of operations of the
investee, is based on the legal ownership percentage. Under
U.S. GAAP the consolidation of minority interest is based
on economic interests in the investee and therefore the
accounting for minority interest can differ under German GAAP
from U.S. GAAP.
F-220
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Application of
Exception Regulations
Pursuant to HGB section 264a, partnerships, where unlimited
liability is not held by a natural person, or another
partnership with a natural person as the unlimited liability
partner, are required to prepare financial statements similar to
a limited liability corporation.
For the following companies:
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Qimonda Dresden GmbH & Co. OHG, Dresden
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Infineon Technologies Dresden GmbH & Co. OHG,
Dresden, and
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Infineon Technologies Immobilien Regensburg GmbH & Co.
KG, Regensburg
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The Company utilizes the exception pursuant to HGB
section 264b, requiring these partnerships to prepare
separate financial statements, because they are included in the
consolidated financial statements of the holding company and
such consolidated financial statements are registered with the
trade register of the respective partnership.
Pursuant to HGB section 264 par. 3, the Company also
utilizes the exception from preparing separate financial
statements due to a profit-transfer agreement of the following
companies:
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COMNEON GmbH, Nuremberg
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Infineon Technologies Finance GmbH, Munich
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Pursuant to HGB section 291 par. 1, the Company also
utilizes the exception from preparing separate consolidated
financial statements of Qimonda AG, Munich, due to the fact,
that it is a subsidiary of parent company, which prepares
separate financial statements.
Information
pursuant to Section 160 Section 1 No. 8 Corporate
Act (AktG)
Brandes Investment Partners L.P. informed the Company, by letter
dated March 9, 2006, that its share of the voting rights of
Infineon Technologies AG exceeded the 5% threshold on
March 7, 2006. Its interest in voting rights amounted to
5.13%, equalling 24,103,296 American Depositary Receipts and
14,268,400 ordinary shares of the Company. All voting rights are
imputable to Brandes Investment Partners L.P. according to WpHG
section 22 par. 1 sentence 1 No. 6.
Dodge & Cox Investment Managers informed the Company,
by letter dated April 11, 2006, that the share of the
voting rights of Infineon Technologies AG held by
Dodge & Cox International Stock Fund, a Delaware
statutory trust and an investment company registered under the
U.S. Investment Company Act of 1940, exceeded the 5%
threshold on April 10, 2006. The interest in voting rights
amounted to 5.07%, equalling 37,927,800 shares representing
the same number of voting rights. All voting rights are
imputable to Dodge & Cox Investment Managers according
to WpHG section 22 par. 1 sentence 1 No. 6.
Dodge & Cox Investment Managers informed the Company,
by letter dated April 24, 2006, that their share of the
voting rights of Infineon Technologies AG exceeded the 5%
threshold on April 10, 2006. The interest in voting rights
amounted to 5.07%, equalling 37,927,800 shares representing
the same number of voting rights. All voting rights are
imputable to Dodge & Cox Investment Managers according
to WpHG section 22 par. 1 sentence 1 No. 6.
Siemens AG, Berlin and Munich, Germany, informed the Company, by
letter dated April 4, 2006, that their share of the voting
rights of Infineon Technologies AG fell below the thresholds of
5% and 10% on April 3, 2006. Their new interest in voting
rights would amount to 0.00%, equalling 0 shares
representing the same number of voting rights.
The Capital Group International Inc., Los Angeles, USA, informed
the Company, by letter dated June 14, 2006, that their
share of the voting rights of Infineon Technologies AG fell
below the threshold of 5% on June 7, 2006. Their new
interest in voting rights amounted to 4.949%, representing
36,995,392 shares. The voting rights were attributable to
the Capital Group International Inc. pursuant section 22
(1) 1 No. 6 in connection with section 22
(1) 2 and 3 WpHG.
F-221
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
The Capital Group Companies Inc., Los Angeles, USA, informed the
Company, by letter dated June 8, 2006, that their share of
the voting rights of Infineon Technologies AG fell below the
threshold of 5% on June 7, 2006. Their new interest in
voting rights amounted to 4.949%, representing
36,995,392 shares. The voting rights were attributable to
the Capital Group Companies Inc. pursuant section 22
(1) 1 No. 6 in connection with section 22
(1) 2 and 3 WpHG.
Information
pursuant Section 6.6 German Corporate Governance
On August 14, 2006, Dr. Wolfgang Ziebart, chairman of
the management board of the Company, purchased
20,000 shares of the Company at a price of 8.39 per
share.
Information
pursuant to Section 161 Corporate Act (AktG)
The compliance declaration prescribed by section 161 AktG
was submitted on November 17, 2005 and made available to
the shareholders on a continuous basis via the internet.
Accounting fees
pursuant section 314 paragraph 1 No. 9
HGB
Principal
Accountant Fees and Services
Year-end Audit Fees. In the 2006 financial year, the audit fees
charged by KPMG, the Companys independent auditors,
amounted to 4.0 million (thereof
2.3 million charged by the auditor engaged to audit
the consolidated financial statements) in connection with
professional services rendered for the annual audit of the
Companys consolidated financial statements, including the
audit of internal control over financial reporting as required
for the 2006 financial year, as well as services normally
provided by them in connection with statutory and regulatory
filings or other compliance engagements.
Other Audit
Fees
In addition to the amounts described above, KPMG charged the
Company an aggregate of 2.9 million (thereof
2.2 million charged by the auditor engaged to audit
the consolidated financial statements) in the 2006 financial
year for other audit services. These services consisted of the
carve-out audit of Qimonda and quarterly reviews.
Tax
Fees
In addition to the amounts described above, KPMG charged the
Company an aggregate of 0.1 million (thereof
0.0 million charged by the auditor engaged to audit
the consolidated financial statements) in the 2006 financial
year for professional services related primarily to tax
compliance.
Other
Fees
Fees of 1.4 million (thereof 0.9 million
charged by the auditor engaged to audit the consolidated
financial statements) were charged by KPMG in the 2006 financial
year for other services. These services consisted of transaction
and accounting advisory services, IT system audits, the review
of internal controls over financial reporting for the 2005
financial year and services related to the transition to IFRS.
Management
Board and Supervisory Board
The Executive Committee of the Supervisory Board is responsible
for determining the compensation of members of our Management
Board. Such compensation reflects our companys size and
global orientation, its financial position, and the level and
structure of management compensation at comparable companies in
and outside Germany. In addition, the compensation reflects each
members responsibilities and contributions. In particular,
this compensation consists of the following principal components:
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An annual base salary, which is paid out partly in
12 monthly installments and partly at the beginning of the
following financial year, net of statutory deductions.
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F-222
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
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An annual variable bonus, which is based on several success
related measures. In the 2006 financial year, this was linked to
the return on capital employed, which we define as
earnings after taxes, adjusted for non-ordinary items, divided
by capital employed. By this means we seek to assure that
bonuses are only payable in the event of positive business
progress. The bonus is paid out after the financial year end. In
addition to this bonus, the employment agreements of the members
of the Management Board provide for the award of extraordinary
bonuses for special services rendered. Wolfgang Ziebart and Kin
Wah Loh each received an extraordinary bonus of 100,000 in
the 2006 financial year for special services rendered in the
2005 financial year.
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Stock options, which were granted under the terms of our 2001
plan (prior to the adoption of our new 2006 plan by our
shareholders in February 2006), and which serve as a form of
long-term incentive compensation with a risk component. Half of
the options granted vest after two years, 25% after three years
and 25% after four years. The options are exercisable until
December 12, 2012 at an exercise price of 8.20 per
share. The fair value of the options on the date of grant was
3.19 per share, based on the Black-Scholes valuation model.
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The following table outlines the gross cash compensation of the
members of our Management Board for the 2006 financial year:
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Base Compensation in
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Base Salary
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Incentive Compensation
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Amount paid
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Amount paid
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Additional
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in monthly
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after fiscal
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Compen
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Total
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Member
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installments
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year end
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sation(1)
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Bonus(2)
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compensation
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Dr. Wolfgang Ziebart
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800,000
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800,000
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35,563
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100,000
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1,735,563
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Peter Bauer
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360,000
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540,000
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16,438
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916,438
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Prof. Dr. Hermann Eul
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350,000
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58,333
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(3)
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9,058
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417,391
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Peter J. Fischl
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400,000
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600,000
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30,379
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1,030,379
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Kin Wah Loh
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243,750
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(4)
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450,000
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(5)
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111,769
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(6)
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100,000
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905,519
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Total
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2,153,750
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2,448,333
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203,207
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200,000
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5,005,290
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(1) |
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Generally consists of perquisites,
including the provision of company cars and payment of insurance
premiums.
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(2) |
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During the 2005 financial year, our
company established a provision for variable bonuses of the
Management Board of 0.5 million, of which
0.3 million was released and 0.2 million
was paid during the 2006 financial year. During the 2006
financial year, our company established a provision for variable
bonuses of the Management Board of 0.8 million.
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(3) |
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This amount includes the one time
payment paid-out in the 2006 financial year for the 2005
financial year.
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(4) |
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This amount includes prorated
monthly installments until 15 April, 2006, the day on which
Mr. Loh resigned from the Management Board.
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(5) |
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This amount includes the one time
payment paid-out in the 2006 financial year for the 2005
financial year and the prorated one time payment for the 2006
financial year.
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(6) |
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One time payment to Mr. Loh in
compensation for higher personal income tax rates caused by the
length of his stay in Germany as compared to tax rates in
Singapore where Mr. Loh is resident.
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The following option grants were made to members of the
Management Board during the 2006 financial year:
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Number of Shares
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Member
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subject to options
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Dr. Wolfgang Ziebart
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160,000
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Peter Bauer
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80,000
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Prof. Dr. Hermann Eul
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80,000
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Peter J. Fischl
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80,000
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Kin Wah Loh
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80,000
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Total
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480,000
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A total of 100,000 was paid to former members of the
Management Board during the 2006 financial year. As of
September 30, 2006, accrued pension liabilities for former
members of the Management Board amounted to
16.0 million.
F-223
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Supervisory
Board
The compensation of the Supervisory Board is set out at
Article 11 of our Articles of Association (Satzung), and
consists of a base retainer of 25,000 per year (with the
chairman receiving 200% of this amount and the deputy chairmen
and each member of certain committees (excluding those required
by law) receiving 150% of this amount). The aggregate cash
compensation of the members of our Supervisory Board for the
2006 financial year was 0.6 million. The individual
cash compensation of each member of the Supervisory Board is
provided in the table of Supervisory Board members, below. In
addition, the members of the Supervisory Board received a
variable component consisting of the grant of 1,500 share
appreciation rights per year, which are granted and may be
exercised for cash under the same conditions as options granted
under our then current long-term incentive plan. These share
appreciation rights may only be settled in cash, not through the
issuance of shares. Half of the rights vest after two years, 25%
after three years and 25% after four years. The fair value of
the rights on the date of grant was 3.19 per share, based
on the Black-Scholes valuation model.
The members of our Management Board and Supervisory Board, as of
September 30, 2006 are as follows:
MANAGEMENT
BOARD
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Name
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Age
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Term expires
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Position on the Management Board and other positions during
the year ended September 30, 2006
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Dr. Wolfgang Ziebart
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56
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August 31, 2009
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chairman, President and Chief Executive Officer
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Member of the Board of Directors of
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> Infineon
Technologies China Co., Ltd., Shanghai, Peoples Republic
of China
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> Infineon
Technologies Asia Pacific Pte, Ltd., Singapore
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> Infineon
Technologies Japan K.K., Tokyo, Japan
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> Infineon
Technologies North America Corp., Wilmington, Delaware, USA
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Peter Bauer
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46
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September 30, 2008
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Executive Vice President
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Member of the Supervisory Board of
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> Siemens
VDO Automotive AG, Munich (until March 15, 2006)
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> Infineon
Technologies Austria AG, Villach, Austria
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Deputy chairman of the Board of Directors of
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> Infineon
Technologies Japan K.K., Tokyo, Japan (until
May 18, 2006)
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Member of the Board of Directors of
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> Infineon
Technologies Asia Pacific Pte., Ltd., Singapore (until May 8,
2006)
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> Infineon
Technologies China Co., Ltd., Shanghai, Peoples Republic
of China (until May 8, 2006)
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> Infineon
Technologies North America Corp., Wilmington, Delaware, USA
(until March 31, 2006)
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> Infineon
Technologies Savan Ltd., Netanya, Israel (until February 15,
2006)
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Prof. Dr. Hermann Eul
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47
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July 31, 2008
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Executive Vice President
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Member of the Supervisory Board of
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> 7Layers
AG, Ratingen
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Member of the Board of Directors of
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> Infineon
Technologies Asia Pacific Pte., Ltd., Singapore (until May 8,
2006)
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> Infineon
Technologies China Co., Ltd., Shanghai, Peoples Republic
of China (until May 8, 2006)
|
Peter J. Fischl
|
|
|
60
|
|
|
|
May 31, 2008
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
chairman of the Supervisory Board of
|
|
|
|
|
|
|
|
|
|
|
> Qimonda
AG, Munich
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies Austria AG, Villach, Austria
|
|
|
|
|
|
|
|
|
|
|
Member of the Board of Directors of
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies Asia Pacific Pte., Ltd., Singapore
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies China Co., Ltd., Shanghai, Peoples Republic
of China
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies North America Corp., Wilmington, Delaware, USA
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies Japan K.K., Tokyo, Japan
|
F-224
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
|
Term expires
|
|
|
Position on the Management Board and other positions during
the year ended September 30, 2006
|
|
Resigned Members of the Management Board:
|
|
|
|
|
|
|
|
|
|
|
Kin Wah Loh
|
|
|
51
|
|
|
|
|
|
|
Executive Vice President until April 15, 2006
(resigned April 15, 2006)
|
|
|
|
|
|
|
|
|
|
|
chairman of the Management Board of Qimonda AG
(since April 15, 2006)
|
|
|
|
|
|
|
|
|
|
|
Member of the Board of Directors of
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies Asia Pacific Pte, Ltd. Singapore (until May 8, 2006)
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies China Co, Ltd., Shanghai, Peoples Republic of
China (until May 8, 2006)
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies Japan K.K., Tokyo, Japan
|
|
|
|
|
|
|
|
|
|
|
Director of
|
|
|
|
|
|
|
|
|
|
|
> Accton
Technologies Corp., Hsinchu, Taiwan, Republic of China (until
June 8, 2006)
|
F-225
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
SUPERVISORY
BOARD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External positions during the year ended
|
Name
|
|
Age
|
|
|
Term expires
|
|
|
Compensation(2)
|
|
|
September 30, 2006
|
|
Max Dietrich Kley
|
|
|
66
|
|
|
|
2010
|
|
|
|
59,500
|
|
|
chairman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> BASF
AG, Ludwigshafen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
>
SGL Carbon AG, Wiesbaden
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Schott
AG, Mainz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
>
HeidelbergCement AG, Heidelberg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Bayerische
Hypo- und Vereinsbank AG, Munich (until November 28, 2005)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Board of Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> UniCredit
S.p.A., Milan, Italy
(since January 11, 2006)
|
Klaus
Luschtinetz(1)
|
|
|
63
|
|
|
|
2007
|
|
|
|
44,625
|
|
|
Deputy chairman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of the Infineon central Works Council
(until June 30, 2006)
|
Wigand
Cramer(1)
(since April 20,2006)
|
|
|
53
|
|
|
|
2009
|
|
|
|
12,396
|
|
|
Labor union clerk of IG Metall, Berlin
|
Alfred
Eibl(1)
|
|
|
57
|
|
|
|
2009
|
|
|
|
35,948
|
|
|
Member of the Infineon Works Council, Munich
|
Prof. Johannes Feldmayer
|
|
|
50
|
|
|
|
2009
|
|
|
|
29,750
|
|
|
Member of the Corporate Executive Committee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
AG, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of the Board of Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
A.E., Athens, Greece
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
Rt. Budapest, Hungary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
Sp. zo.o., Warsaw, Poland (since October 1, 2005)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of shareholders representatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
s.r.o., Prague, Czech Republic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deputy chairman of the Board of Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
S.A., Madrid, Spain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
S.p.A., Milan, Italy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
Schweiz AG, Zurich, Switzerland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Board of Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
France S.A., Saint-Denis, France
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
A.S., Istanbul, Turkey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
A.S., Copenhagen, Denmark
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
Holdings plc, Bracknell, Great Britain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
AB, Stockholm, Sweden
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
AG, Vienna, Austria
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Exxon
Mobil Central Europe Holding GmbH, Hamburg
|
Jakob
Hauser(1)
|
|
|
54
|
|
|
|
2009
|
|
|
|
35,948
|
|
|
chairman of the Works Council Qimonda AG
|
Dr. Stefan Jentzsch
|
|
|
45
|
|
|
|
2009
|
|
|
|
29,750
|
|
|
Member of the Management Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Bayerische
Hypo- und Vereinsbank AG, Munich (until November 18, 2005)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Dresdner
Bank AG, Frankfurt
(since November 24, 2005)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Premiere
AG, Munich
|
F-226
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External positions during the year ended
|
Name
|
|
Age
|
|
|
Term expires
|
|
|
Compensation(2)
|
|
|
September 30, 2006
|
|
Prof. Dr. Renate Köcher
|
|
|
54
|
|
|
|
2009
|
|
|
|
29,750
|
|
|
Managing Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Institut
für Demoskopie Allensbach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Allianz
AG, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> BASF
AG, Ludwigshafen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> MAN
AG, Munich
|
Dr. Siegfried Luther (since February 16, 2006)
|
|
|
62
|
|
|
|
2010
|
|
|
|
29,750
|
|
|
Managing Director
> Reinhard
Mohn Verwaltungs GmbH, Guetersloh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Druck-
und Verlagshaus Gruner & Jahr AG, Hamburg
> WestLB
AG, Duesseldorf/Muenster
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of the Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> RTL
Group S.A., Luxembourg
|
Michael
Ruth(1)
|
|
|
46
|
|
|
|
2009
|
|
|
|
29,750
|
|
|
Corporate Vice President Planning and Controlling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Infineon
Technologies AG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Representative of Senior Management
|
Gerd
Schmidt(1)
|
|
|
52
|
|
|
|
2009
|
|
|
|
29,750
|
|
|
chairman of the Infineon Works Council
(since June 30, 2006)
chairman of the Infineon Works Council, Regensburg
|
Prof. Dr. rer. nat
|
|
|
53
|
|
|
|
2009
|
|
|
|
35,948
|
|
|
Professor at the Technical University Munich
|
Doris
Schmitt-Landsiedel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kerstin
Schulzendorf(1)
|
|
|
44
|
|
|
|
2009
|
|
|
|
29,750
|
|
|
Member of the Infineon Works Council, Dresden
|
Alexander
Trüby(1)
|
|
|
36
|
|
|
|
2009
|
|
|
|
35,948
|
|
|
Member of the Infineon Works Council, Dresden
|
Prof. Dr. rer. nat. Martin Winterkorn
|
|
|
59
|
|
|
|
2009
|
|
|
|
44,625
|
|
|
chairman of the Management Board
> Audi
AG, Ingolstadt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Management Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Volkswagen
AG, Wolfsburg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Boards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Salzgitter
AG, Salzgitter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> FC
Bayern München AG, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> TÜV
Süddeutschland Holding AG, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Board of Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> SEAT
S.A., Barcelona, Spain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Automobili
Lamborghini Holding S.p.A., SantAgata Bolognese, Bologna,
Italy
|
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
|
|
|
62
|
|
|
|
2009
|
|
|
|
35,948
|
|
|
Member of the Corporate Executive Committee
> Siemens
AG, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Deutsche
Messe AG, Hanover
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> BSH
Bosch und Siemens Hausgeräte GmbH, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of the Board of Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
Ltd., Beijing, Peoples Republic of China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
K.K., Tokyo, Japan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
S.A., Lisbon, Portugal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Siemens
Ltd., Mumbai, India
|
F-227
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External positions during the year ended
|
Name
|
|
Age
|
|
|
Term expires
|
|
|
Compensation(2)
|
|
|
September 30, 2006
|
|
Resigned members of the Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Joachim Faber (resigned February 16, 2006)
|
|
|
|
|
|
|
|
|
|
|
18,594
|
|
|
Member of the Management Board
> Allianz
AG, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
chairman of Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Allianz
Dresdner Global Investor Deutschland GmbH, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> DIT
Deutscher Investment Trust Gesellschaft für
Wertpapieranlagen mbH, Frankfurt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Member of Supervisory Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> Bayerische
Börse AG, Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> AGF
Assecurances Generales de France, Paris, France
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> ART
Allianz Risk Transfer, Zurich, Switzerland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
> RAS
Riunione Adriatica Sicurta S.p.A., Milan, Italy
|
Diplom-Physiker Dieter
Scheitor(1)
(resigned February 28, 2006)
|
|
|
|
|
|
|
|
|
|
|
12,396
|
|
|
Head of the Electrical and Electronics Group of IG Metall,
Frankfurt
|
|
|
(1) |
Employee representative 2 Includes VAT
|
F-228
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
THE SUPERVISORY
BOARD MAINTAINS THE FOLLOWING PRINCIPAL COMMITTEES
Executive
Committee
Max Dietrich Kley
Klaus Luschtinetz
Prof. Dr. rer. nat. Martin Winterkorn
Investment,
Finance and Audit Committee
Max Dietrich Kley
Dr. Joachim Faber (resigned February 16, 2006)
Dr. Siegfried Luther (since February 16, 2006)
Klaus Luschtinetz
Mediation
Committee
Max Dietrich Kley
Klaus Luschtinetz
Alexander Trüby
Prof. Dr. rer. nat. Martin Winterkorn (since
November 17, 2005)
Strategy and
Technology Committee
Alfred Eibl
Jakob Hauser
Alexander Trüby
Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel
Prof. Dr. rer. nat. Martin Winterkorn
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
F-229
Infineon
Technologies AG and Subsidiaries
Notes to the Consolidated Financial Statements
Significant
Subsidiaries and Associated Companies
|
|
|
|
Name and location of company
|
|
Share in Capital
|
|
|
Infineon Group
|
|
|
Infineon Technologies Asia Pacific Pte. Ltd., Singapore
|
|
100%
|
Infineon Technologies Austria AG, Villach, Austria
|
|
100%
|
Infineon Technologies China Co. Ltd., Shanghai, Peoples
Republic of China
|
|
100%
|
Infineon Technologies Dresden GmbH & Co. OHG, Dresden,
Germany
|
|
100%
|
Infineon Technologies Finance GmbH, Munich, Germany
|
|
100%
|
Infineon Technologies France S.A.S., Saint Denis, France
|
|
100%
|
Infineon Technologies Holding B.V., Rotterdam, The Netherlands
|
|
100%
|
Infineon Technologies Holding North America Inc., Wilmington,
Delaware, USA
|
|
100%
|
Infineon Technologies Investment B.V., Rotterdam, The Netherlands
|
|
100%
|
Infineon Technologies Japan K.K., Tokyo, Japan
|
|
100%
|
Infineon Technologies North America Corp., Wilmington, Delaware,
USA
|
|
100%
|
Infineon Technologies SensoNor AS, Horten, Norway
|
|
100%
|
Infineon Technologies (Advanced Logic) Sdn. Bhd., Malacca,
Malaysia
|
|
100%
|
Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
|
|
100%
|
Infineon Technologies (Malaysia) Sdn. Bhd., Malacca, Malaysia
|
|
100%
|
ALTIS Semiconductor S.N.C., Essones, France
|
|
50%
|
|
|
|
Qimonda
Group(1)
|
|
|
Qimonda AG, Munich, Germany
|
|
86%
|
Qimonda (Melaka) Sdn. Bhd., Malacca, Malaysia
|
|
86%
|
Qimonda Asia Pacific Pte. Ltd., Singapore
|
|
86%
|
Qimonda Dresden GmbH & Co. OHG, Dresden, Germany
|
|
86%
|
Qimonda Flash GmbH, Dresden, Germany
|
|
86%
|
Qimonda Holding B.V., Rotterdam, The Netherlands
|
|
86%
|
Qimonda North America Corp., Wilmington, Delaware, USA
|
|
86%
|
Qimonda Portugal S.A., Vila do Conde, Portugal
|
|
86%
|
Qimonda Richmond, LLC, Wilmington, Delaware, USA
|
|
86%
|
Qimonda Technologies (Suzhou) Co., Ltd., Suzhou, Peoples
Republic of China
|
|
39%
|
Inotera Memories Inc., Taoyan, Taiwan
|
|
31%
|
|
|
|
|
(1) |
|
Ownership percentages are net of
Qimondas minority interest.
|
F-230
The following auditors report, prepared in accordance with
§ 322 HGB [Handelgesetzbuch:
German Commercial Code], refers to the complete
consolidated financial statements, comprising the consolidated
balance sheet, the consolidated statement of operations, the
consolidated statement of shareholders equity, and the
consolidated statement of cash flows and the related notes to
the consolidated financial statements, together with the group
management report for the business year from October 1,
2005 to September 30, 2006. The group management report is
not included in this prospectus.
REPORT OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Supervisory Board of Infineon Technologies
We have audited the consolidated financial statements prepared
by Infineon Technologies AG, Munich, comprising the consolidated
balance sheet, the consolidated statement of operations, the
consolidated statement of shareholders equity, the
consolidated statement of cash flows, and the related notes to
the consolidated financial statements, together with the group
management report for the business year from October 1,
2005 to September 30, 2006. The preparation of the
consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America
(US-GAAP) and the group management report in accordance with the
requirements of German commercial law are the responsibility of
the Companys management. Our responsibility is to express
an opinion on the consolidated financial statements based on our
audit.
We conducted our audit of the consolidated financial statements
in accordance with § 317 HGB and German generally
accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer
[Institute of Public Auditors in Germany] (IDW). Those standards
require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net
assets, financial position and results of operations in the
consolidated financial statements in accordance with the
applicable financial reporting framework and in the group
management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal
environment of the Group and expectations as to possible
misstatements are taken into account in the determination of
audit procedures. The effectiveness of the accounting-related
internal control system and the evidence supporting the
disclosures in the consolidated financial statements and the
group management report are examined primarily on a test basis
within the framework of the audit. The audit includes assessing
the annual financial statements of those entities included in
consolidation, the determination of entities to be included in
consolidation, the accounting and consolidation principles used
and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated
financial statements and the group management report. We believe
that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with accounting
principles generally accepted in the United States of America
and give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance
with these requirements. The group management report is
consistent with the consolidated financial statements and as a
whole provides a suitable view of the Groups position and
suitably presents the opportunities and risks of future
development.
In addition, we confirm that the consolidated financial
statements and the group management report for the business year
from October 1, 2005 to September 30, 2006 satisfy the
conditions required for the Companys exemption from its
duty to prepare consolidated financial statements in accordance
with German law and the group management report.
Munich, Germany, November 15, 2006
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Hoyos Feege
Wirtschaftsprüfer Wirtschaftsprüfer
F-231
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(PREPARED IN ACCORDANCE WITH IFRS)
AS OF AND FOR THE THREE AND SIX MONTHS
ENDED MARCH 31, 2009
INFINEON
TECHNOLOGIES AG,
NEUBIBERG
F-232
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
For the three months ended March 31, 2008 and 2009
(in millions, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Revenue
|
|
|
1,049
|
|
|
|
747
|
|
|
|
994
|
|
Cost of goods sold
|
|
|
(685
|
)
|
|
|
(634
|
)
|
|
|
(844
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
364
|
|
|
|
113
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
(170
|
)
|
|
|
(122
|
)
|
|
|
(162
|
)
|
Selling, general and administrative expenses
|
|
|
(134
|
)
|
|
|
(110
|
)
|
|
|
(146
|
)
|
Other operating income
|
|
|
15
|
|
|
|
15
|
|
|
|
20
|
|
Other operating expense
|
|
|
(20
|
)
|
|
|
(39
|
)
|
|
|
(52
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
55
|
|
|
|
(143
|
)
|
|
|
(190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
13
|
|
|
|
21
|
|
|
|
28
|
|
Financial expense
|
|
|
(48
|
)
|
|
|
(32
|
)
|
|
|
(43
|
)
|
Income from investments accounted for using the equity method,
net
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
22
|
|
|
|
(152
|
)
|
|
|
(202
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (expense) benefit
|
|
|
(11
|
)
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
11
|
|
|
|
(150
|
)
|
|
|
(199
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
(1,966
|
)
|
|
|
(108
|
)
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,955
|
)
|
|
|
(258
|
)
|
|
|
(343
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
(432
|
)
|
|
|
(19
|
)
|
|
|
(25
|
)
|
Shareholders of Infineon Technologies AG
|
|
|
(1,523
|
)
|
|
|
(239
|
)
|
|
|
(318
|
)
|
Basic and diluted earnings (loss) per share attributable to
shareholders of Infineon Technologies AG (in Euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per share from continuing
operations
|
|
|
0.01
|
|
|
|
(0.20
|
)
|
|
|
(0.27
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share from discontinued operations
|
|
|
(2.04
|
)
|
|
|
(0.12
|
)
|
|
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(2.03
|
)
|
|
|
(0.32
|
)
|
|
|
(0.43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
F-233
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
For the six months ended March 31, 2008 and 2009
(in millions, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Revenue
|
|
|
2,139
|
|
|
|
1,577
|
|
|
|
2,099
|
|
Cost of goods sold
|
|
|
(1,390
|
)
|
|
|
(1,312
|
)
|
|
|
(1,746
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
749
|
|
|
|
265
|
|
|
|
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
|
(351
|
)
|
|
|
(271
|
)
|
|
|
(361
|
)
|
Selling, general and administrative expenses
|
|
|
(270
|
)
|
|
|
(222
|
)
|
|
|
(295
|
)
|
Other operating income
|
|
|
48
|
|
|
|
18
|
|
|
|
24
|
|
Other operating expense
|
|
|
(39
|
)
|
|
|
(50
|
)
|
|
|
(67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
137
|
|
|
|
(260
|
)
|
|
|
(346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
31
|
|
|
|
81
|
|
|
|
108
|
|
Financial expense
|
|
|
(88
|
)
|
|
|
(88
|
)
|
|
|
(117
|
)
|
Income from investments accounted for using the equity method,
net
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
82
|
|
|
|
(264
|
)
|
|
|
(351
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(23
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
59
|
|
|
|
(266
|
)
|
|
|
(354
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
(2,543
|
)
|
|
|
(396
|
)
|
|
|
(527
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(2,484
|
)
|
|
|
(662
|
)
|
|
|
(881
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
(552
|
)
|
|
|
(49
|
)
|
|
|
(65
|
)
|
Shareholders of Infineon Technologies AG
|
|
|
(1,932
|
)
|
|
|
(613
|
)
|
|
|
(816
|
)
|
Basic and diluted earnings (loss) per share attributable to
shareholders of Infineon Technologies AG (in Euro):
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per share from continuing
operations
|
|
|
0.06
|
|
|
|
(0.36
|
)
|
|
|
(0.48
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share from discontinued operations
|
|
|
(2.64
|
)
|
|
|
(0.46
|
)
|
|
|
(0.61
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
|
(2.58
|
)
|
|
|
(0.82
|
)
|
|
|
(1.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements
F-234
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
September 30, 2008 and March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
749
|
|
|
|
532
|
|
|
|
708
|
|
Available-for-sale financial assets
|
|
|
134
|
|
|
|
133
|
|
|
|
177
|
|
Trade and other receivables
|
|
|
799
|
|
|
|
518
|
|
|
|
689
|
|
Inventories
|
|
|
665
|
|
|
|
543
|
|
|
|
723
|
|
Income tax receivable
|
|
|
29
|
|
|
|
12
|
|
|
|
16
|
|
Other current financial assets
|
|
|
19
|
|
|
|
38
|
|
|
|
51
|
|
Other current assets
|
|
|
124
|
|
|
|
101
|
|
|
|
134
|
|
Assets classified as held for disposal
|
|
|
2,129
|
|
|
|
6
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
4,648
|
|
|
|
1,883
|
|
|
|
2,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
1,310
|
|
|
|
1,115
|
|
|
|
1,484
|
|
Goodwill and other intangible assets
|
|
|
443
|
|
|
|
425
|
|
|
|
565
|
|
Investments accounted for using the equity method
|
|
|
20
|
|
|
|
23
|
|
|
|
31
|
|
Deferred tax assets
|
|
|
400
|
|
|
|
403
|
|
|
|
536
|
|
Other financial assets
|
|
|
133
|
|
|
|
108
|
|
|
|
144
|
|
Other assets
|
|
|
28
|
|
|
|
20
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
6,982
|
|
|
|
3,977
|
|
|
|
5,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
207
|
|
|
|
170
|
|
|
|
226
|
|
Trade and other payables
|
|
|
506
|
|
|
|
302
|
|
|
|
402
|
|
Current provisions
|
|
|
424
|
|
|
|
418
|
|
|
|
556
|
|
Income tax payable
|
|
|
87
|
|
|
|
94
|
|
|
|
125
|
|
Other current financial liabilities
|
|
|
63
|
|
|
|
73
|
|
|
|
97
|
|
Other current liabilities
|
|
|
263
|
|
|
|
183
|
|
|
|
244
|
|
Liabilities associated with assets classified as held for diposal
|
|
|
2,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
3,673
|
|
|
|
1,240
|
|
|
|
1,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
963
|
|
|
|
816
|
|
|
|
1,086
|
|
Pension plans and similar commitments
|
|
|
43
|
|
|
|
37
|
|
|
|
49
|
|
Deferred tax liabilities
|
|
|
19
|
|
|
|
15
|
|
|
|
20
|
|
Long-term provisions
|
|
|
27
|
|
|
|
90
|
|
|
|
120
|
|
Other financial liabilities
|
|
|
20
|
|
|
|
3
|
|
|
|
4
|
|
Other liabilities
|
|
|
76
|
|
|
|
73
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,821
|
|
|
|
2,274
|
|
|
|
3,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary share capital
|
|
|
1,499
|
|
|
|
1,499
|
|
|
|
1,995
|
|
Additional paid-in capital
|
|
|
6,008
|
|
|
|
6,009
|
|
|
|
7,997
|
|
Accumulated deficit
|
|
|
(5,252
|
)
|
|
|
(5,865
|
)
|
|
|
(7,805
|
)
|
Other components of equity
|
|
|
(164
|
)
|
|
|
5
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity attributable to shareholders of Infineon
Technologies AG
|
|
|
2,091
|
|
|
|
1,648
|
|
|
|
2,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests
|
|
|
70
|
|
|
|
55
|
|
|
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
2,161
|
|
|
|
1,703
|
|
|
|
2,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
6,982
|
|
|
|
3,977
|
|
|
|
5,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
F-235
Infineon
Technologies AG and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the six months ended March 31, 2008 and 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
|
( millions)
|
|
|
( millions)
|
|
|
($ millions)
|
|
Net loss
|
|
|
(2,484
|
)
|
|
|
(662
|
)
|
|
|
(881
|
)
|
Less: net loss from discontinued operations
|
|
|
2,543
|
|
|
|
396
|
|
|
|
527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
287
|
|
|
|
282
|
|
|
|
375
|
|
Provision for doubtful accounts
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Losses (gains) on sales of businesses and interests in
subsidiaries
|
|
|
(28
|
)
|
|
|
16
|
|
|
|
21
|
|
Losses on disposals of property, plant, and equipment
|
|
|
14
|
|
|
|
|
|
|
|
|
|
Income from investments accounted for using the equity method
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(4
|
)
|
Impairment charges
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Stock-based compensation
|
|
|
3
|
|
|
|
1
|
|
|
|
1
|
|
Deferred income taxes
|
|
|
7
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
9
|
|
|
|
161
|
|
|
|
214
|
|
Inventories
|
|
|
(31
|
)
|
|
|
124
|
|
|
|
165
|
|
Other current assets
|
|
|
(28
|
)
|
|
|
(21
|
)
|
|
|
(28
|
)
|
Trade and other payables
|
|
|
(123
|
)
|
|
|
(196
|
)
|
|
|
(261
|
)
|
Provisions
|
|
|
(56
|
)
|
|
|
(113
|
)
|
|
|
(150
|
)
|
Other current liabilities
|
|
|
6
|
|
|
|
(68
|
)
|
|
|
(90
|
)
|
Other assets and liabilities
|
|
|
28
|
|
|
|
(4
|
)
|
|
|
(5
|
)
|
Interest received
|
|
|
14
|
|
|
|
15
|
|
|
|
20
|
|
Interest paid
|
|
|
(13
|
)
|
|
|
(11
|
)
|
|
|
(15
|
)
|
Income tax received
|
|
|
4
|
|
|
|
19
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities from
continuing operations
|
|
|
149
|
|
|
|
(65
|
)
|
|
|
(87
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities from discontinued
operations
|
|
|
(270
|
)
|
|
|
(398
|
)
|
|
|
(530
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(121
|
)
|
|
|
(463
|
)
|
|
|
(617
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of available-for-sale financial assets
|
|
|
(497
|
)
|
|
|
|
|
|
|
|
|
Proceeds from sales of available-for-sale financial assets
|
|
|
80
|
|
|
|
10
|
|
|
|
13
|
|
Proceeds from sales of businesses and interests in subsidiaries
|
|
|
36
|
|
|
|
4
|
|
|
|
5
|
|
Business acquisitions, net of cash acquired
|
|
|
(321
|
)
|
|
|
13
|
|
|
|
17
|
|
Purchases of intangible assets, and other assets
|
|
|
(26
|
)
|
|
|
(22
|
)
|
|
|
(29
|
)
|
Purchases of property, plant and equipment
|
|
|
(170
|
)
|
|
|
(69
|
)
|
|
|
(92
|
)
|
Proceeds from sales of property, plant and equipment, and other
assets
|
|
|
4
|
|
|
|
95
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities from
continuing operations
|
|
|
(894
|
)
|
|
|
31
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities from
discontinued operations
|
|
|
(127
|
)
|
|
|
21
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(1,021
|
)
|
|
|
52
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in short-term debt
|
|
|
(68
|
)
|
|
|
13
|
|
|
|
17
|
|
Net change in related party financial receivables and payables
|
|
|
(8
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Proceeds from issuance of long-term debt
|
|
|
107
|
|
|
|
1
|
|
|
|
1
|
|
Principal repayments of long-term debt
|
|
|
(52
|
)
|
|
|
(182
|
)
|
|
|
(241
|
)
|
Dividend payments to minority interests
|
|
|
(76
|
)
|
|
|
(6
|
)
|
|
|
(8
|
)
|
Capital contribution
|
|
|
|
|
|
|
(5
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities from continuing operations
|
|
|
(97
|
)
|
|
|
(180
|
)
|
|
|
(239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities from
discontinued operations
|
|
|
200
|
|
|
|
(40
|
)
|
|
|
(53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
103
|
|
|
|
(220
|
)
|
|
|
(292
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(1,039
|
)
|
|
|
(631
|
)
|
|
|
(840
|
)
|
Effect of foreign exchange rate changes on cash and cash
equivalents
|
|
|
(14
|
)
|
|
|
(7
|
)
|
|
|
(9
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
1,809
|
|
|
|
1,170
|
|
|
|
1,557
|
|
Cash and cash equivalents at end of period
|
|
|
756
|
|
|
|
532
|
|
|
|
708
|
|
Less: Cash and cash equivalents at end of period from
discontinued operations
|
|
|
529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period from continuing
operations
|
|
|
227
|
|
|
|
532
|
|
|
|
708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements.
F-237
Infineon
Technologies AG and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
Condensed Consolidated Changes in Equity (Unaudited)
For the six months ended March 31, 2008 and 2009
(in millions of euro, except for share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Total equity
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
Additional
|
|
|
|
|
|
currency
|
|
|
gain (loss)
|
|
|
gain (loss) on
|
|
|
attributable to
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
paid-in
|
|
|
Accumulated
|
|
|
translation
|
|
|
on
|
|
|
cash flow
|
|
|
shareholders of
|
|
|
Minority
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
deficit
|
|
|
adjustment
|
|
|
securities
|
|
|
hedge
|
|
|
Infineon AG
|
|
|
interests
|
|
|
equity
|
|
Balance as of October 1, 2007
|
|
|
749,728,635
|
|
|
|
1,499
|
|
|
|
6,002
|
|
|
|
(2,328
|
)
|
|
|
(106
|
)
|
|
|
(6
|
)
|
|
|
(17
|
)
|
|
|
5,044
|
|
|
|
960
|
|
|
|
6,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income and expense recognized in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,932
|
)
|
|
|
(87
|
)
|
|
|
(9
|
)
|
|
|
25
|
|
|
|
(2,003
|
)
|
|
|
(576
|
)
|
|
|
(2,579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of ordinary shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
13,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
Other changes in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(76
|
)
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2008
|
|
|
749,742,085
|
|
|
|
1,499
|
|
|
|
6,006
|
|
|
|
(4,260
|
)
|
|
|
(193
|
)
|
|
|
(15
|
)
|
|
|
8
|
|
|
|
3,045
|
|
|
|
308
|
|
|
|
3,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of October 1, 2008
|
|
|
749,742,085
|
|
|
|
1,499
|
|
|
|
6,008
|
|
|
|
(5,252
|
)
|
|
|
(142
|
)
|
|
|
(3
|
)
|
|
|
(19
|
)
|
|
|
2,091
|
|
|
|
70
|
|
|
|
2,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income and expense recognized in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(613
|
)
|
|
|
157
|
|
|
|
2
|
|
|
|
10
|
|
|
|
(444
|
)
|
|
|
(10
|
)
|
|
|
(454
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
Other changes in equity
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2009
|
|
|
749,742,085
|
|
|
|
1,499
|
|
|
|
6,009
|
|
|
|
(5,865
|
)
|
|
|
15
|
|
|
|
(1
|
)
|
|
|
(9
|
)
|
|
|
1,648
|
|
|
|
55
|
|
|
|
1,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-238
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
1. Basis
of Presentation
The accompanying condensed consolidated financial statements of
Infineon Technologies AG and its subsidiaries
(Infineon or the Company) as of and for
the three and six months ended March 31, 2008 and 2009,
have been prepared in accordance with International Financial
Reporting Standards (IFRS) and its interpretations
issued by the International Accounting Standards Board
(IASB), as adopted by the European Union
(EU). The accompanying condensed consolidated
financial statements also comply with IFRS as issued by the
IASB. The accompanying condensed consolidated financial
statements have been prepared in compliance with IAS 34
Interim financial reporting. 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, 2008 was derived from audited financial
statements, it does not include all disclosures required by
IFRS. The accompanying condensed consolidated financial
statements should be read in conjunction with the audited
consolidated financial statements prepared in accordance with
IFRS, as adopted by the EU as of and for the period ended
September 30, 2008. The accounting policies applied in
preparing the accompanying condensed consolidated financial
statements are consistent with those for the year ended
September 30, 2008 (see note 2).
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 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 March 31, 2009, and the
condensed consolidated statements of operations for the three
and six months then ended, and the condensed consolidated
statements of income and expense recognized in equity for the
six months then ended, as well as the condensed consolidated
statement of cash flows for the six months then ended are also
presented in U.S. dollars ($), solely for the
convenience of the reader, at the rate of 1 = $1.3308, the
European Central Bank reference rate on March 31, 2009.
Certain amounts in the prior period condensed consolidated
financial statements and notes have been reclassified to conform
to the current period presentation. Effective October 1,
2008, the Company reorganized its core business into five
operating segments: Automotive, Industrial &
Multimarket, Chip Card & Security, Wireless Solutions,
and Wireline Communications.
|
|
2.
|
Standards and
Interpretations Issued but Not Yet Adopted
|
In September 2007, the IASB issued an amendment to IAS 1,
Presentation of Financial Statements. The
revision is aimed at improving users ability to analyze
and compare the information given in financial statements. IAS 1
sets overall requirements for the presentation of financial
statements, guidelines for their structure and minimum
requirements for their content. The revised IAS 1 resulted in
consequential amendments to other statements and
interpretations. The revision of IAS 1 will be effective for the
Company for the fiscal year beginning October 1, 2009, with
early adoption permitted. The EU has endorsed the amendment to
IAS 1. The Company is currently evaluating the potential effects
of IAS 1.
In January 2008, the IASB published the amended standards IFRS
3, Business Combinations, (IFRS 3
(2008)) and IAS 27, Consolidated and Separate
Financial Statements (IAS 27 (2008)).
Neither standard has been endorsed by the EU yet.
IFRS 3 (2008) reconsiders the application of acquisition
accounting for business combinations. Major changes relate to
the measurement of non-controlling interests, the accounting for
business combinations achieved in stages as well as the
treatment of contingent consideration and acquisition-related
costs. Based on the new standard, non-controlling interests may
be measured at their fair value (full-goodwill-
F-239
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
methodology) or at the proportional fair value of assets
acquired and liabilities assumed. In business combinations
achieved in stages, any previously held equity interest in the
acquiree is remeasured to its acquisition date fair value. Any
changes to contingent consideration classified as a liability at
the acquisition date are recognized in profit and loss.
Acquisition-related costs are expensed in the period incurred.
Major changes in relation to IAS 27 (2008) relate to the
accounting for transactions which do not result in a change of
control as well as for those leading to a loss of control. If
there is no loss of control, transactions with non-controlling
interests are accounted for as equity transactions not affecting
profit and loss. At the date control is lost, any retained
equity interests are remeasured to fair value. Based on the
amended standard, non-controlling interests may show a deficit
balance since both profits and losses are allocated to the
shareholders based on their equity interests.
The amended standards are effective for business combinations
for the Company for the fiscal year beginning October 1,
2009. The Company is currently evaluating the potential effects
of IFRS 3 (2008) and IAS 27 (2008).
On July 31, 2007, the Company acquired Texas Instruments
Inc.s (TI) DSL Customer Premises Equipment
(CPE) business for cash consideration of
45 million. The purchase price was subject to an
upward or downward contingent consideration adjustment of up to
$16 million, based on negotiated revenue targets of the CPE
business. Due to the failure to achieve the negotiated revenue
targets of the CPE business during the nine months following the
acquisition date, the cash consideration has been adjusted
downward by an amount of 13 million, and the amount
of 13 million was reimbursed by TI. Accordingly, the
Company allocated the adjustment of the purchase price to
goodwill.
On October 24, 2007, the Company completed the acquisition
of the mobility products business of LSI Corporation
(LSI) for cash consideration of
316 million ($450 million) plus transaction
costs. As part of the acquisition, an amount of
14 million was allocated to purchased in-process
research and development based on discounted estimated future
cash flows over the respective estimated useful life. During the
three months ended December 31, 2007, this amount was
expensed as other operating expense, because there was no future
economic benefit from its use or disposal. The purchase price
was subject to a contingent performance-based payment of up to
$50 million based on the relevant revenues in the
measurement period following the completion of the transaction
and ending December 31, 2008. Due to the lower revenues
during the measurement period, no performance-based payment has
been paid.
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.
The assets acquired and liabilities assumed were recorded at
their estimated fair values as of the date of acquisition. As a
result of a lawsuit filed against Primarion subsequent to the
acquisition, the Company reassessed the estimated fair value of
the liabilities assumed. The adjustment resulted in a decrease
of the net assets acquired by 4 million with a
corresponding increase in goodwill.
4. Divestitures
and Discontinued Operations
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) to 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 32 million
which was recorded in other operating income during the fiscal
year ended September 30, 2008. The joint venture agreement
grants Siemens certain contractual participating rights which
inhibit the Company from exercising control over Bipolar.
Accordingly, the Company accounts for the retained interest in
Bipolar under the equity method of accounting.
F-240
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Qimonda
During the 2008 fiscal year, the Company committed to a plan to
dispose of Qimonda. As a consequence, the assets and liabilities
of Qimonda have been reclassified as held for disposal in the
condensed consolidated balance sheet as of September 30,
2008. The results of Qimonda are reported as discontinued
operations in the Companys condensed consolidated
statements of operations for all periods presented. In addition,
the Company recorded after tax write-downs totaling
1,475 million during the 2008 fiscal year. Pursuant
to IFRS 5, Non- current Assets Held for Sale and
Discontinued Operations, the recognition of
depreciation and amortization expense and impairments of
long-lived asset recorded by Qimonda ceased as March 31,
2008.
On January 23, 2009, Qimonda and its wholly owned
subsidiary Qimonda Dresden GmbH & Co. oHG filed an
application at the Munich Local Court to commence insolvency
proceedings. As a result of this application, the Company
deconsolidated Qimonda in accordance with IAS 27
Consolidated and Separate Financial
Statements during the second quarter of the 2009
fiscal year. On April 1, 2009, the insolvency proceedings
formally opened.
The results presented for Qimonda until deconsolidation are
based on preliminary results provided by Qimonda prior to the
filing by Qimonda and Qimonda Dresden GmbH & Co. oHG
for insolvency protection in the Munich Local Court on
January 23, 2009, and were prepared on a going concern
basis. Liquidation basis financial statements that would be
required when the going concern assumption is not assured are
not available from Qimonda. There can be no assurance that
individually the assets and liabilities held for disposal would
not be materially different if presented on a liquidation basis;
however, as the net assets of Qimonda that are held for disposal
are valued at the fair value less costs to sell, the net value
presented in these condensed consolidated financial statements
would not be impacted.
As a result of the deconsolidation, the Company recognized
accumulated losses related to unrecognized currency translation
effects related to Qimonda which are recorded in the
Companys shareholders equity in an amount of
100 million. The recognition of these accumulated
losses has no impact on Infineons shareholders
equity. As a result of the deconsolidation, the Company
accounted for the retained interest in Qimonda of
77.5 percent as a financial asset, classified as an asset
held for disposal.
Loss from discontinued operations, net of income taxes, for the
six months ended March 31, 2008, includes the results of
Qimonda and the recorded after tax write-downs totaling
1,442 million, in order to remeasure Qimonda to its
estimated fair value less costs to sell as of March 31,
2008. Loss from discontinued operations, net of income taxes
recognized during the six months ended March 31, 2009,
includes the realization of currency translation effects, not
included in the disposal group, from Qimondas sale of its
interest in Inotera Memories Inc. (Inotera) to
Micron Technology, Inc. (Micron) of
88 million, the realization of accumulated losses
related to unrecognized currency translation effects related to
the deconsolidation of Qimonda in an amount of
100 million, and provisions and allowances of
203 million in connection with Qimondas
insolvency. While these amounts relate to the Qimonda business
they are not included in the assets and liabilities classified
as held for disposal. The operating losses of Qimonda until
deconsolidation, exclusive of depreciation, amortization and
impairment of long-lived assets, in the first quarter of the
2009 fiscal year were offset by a partial reversal of
460 million of the write-downs recorded in the 2008
fiscal year to reduce the net assets of Qimonda to fair value
less costs to sell. Such reversal was recorded due to the fact
that Infineon has neither the obligation nor the intention to
provide additional equity capital to fund the operating losses
of Qimonda.
The commencement of insolvency proceedings by Qimonda exposed
Infineon to potential liabilities and allowances arising in
connection with the Qimonda business. Potential liabilities in
connection with Qimondas insolvency filing include, among
others, pending antitrust and securities law claims, potential
claims for repayment of governmental subsidies received, and
employee-related contingencies. The Company recorded additional
provisions and allowances of 195 million as of
December 31, 2008 in this regard. In the three months ended
March 31, 2009, the Company adjusted its initial recorded
provisions and allowances by an additional 8 million.
The recorded additional provisions and allowances as of
March 31, 2009, relate to those issues which management
believes are probable of occurring and can be estimated with
reasonable accuracy at this time. These additional provisions
and allowances were recognized in loss from discontinued
operations, net of income taxes in the three and six months
ended
F-241
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
March 31, 2009. There can be no assurance that such
provisions and allowances recorded will be sufficient to cover
all liabilities that may ultimately be incurred in relation to
these matters.
The results of Qimonda presented in the condensed consolidated
statements of operations as discontinued operations consist of
the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009(1)
|
|
|
2008
|
|
|
2009(1)
|
|
|
|
( in millions)
|
|
|
Revenue
|
|
|
412
|
|
|
|
|
|
|
|
925
|
|
|
|
314
|
|
Costs and expenses
|
|
|
(932
|
)
|
|
|
|
|
|
|
(2,014
|
)
|
|
|
(867
|
)
|
Reversal (write-down) of measurement to fair value less costs to
sell
|
|
|
(1,442
|
)
|
|
|
|
|
|
|
(1,442
|
)
|
|
|
460
|
|
Expenses resulting from Qimondas application to open
insolvency proceedings
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
(203
|
)
|
Losses resulting from the realization from accumulated losses
related to unrecognized currency translation effects upon
deconsolidation
|
|
|
|
|
|
|
(100
|
)
|
|
|
|
|
|
|
(100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, before income taxes
|
|
|
(1,962
|
)
|
|
|
(108
|
)
|
|
|
(2,531
|
)
|
|
|
(396
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(4
|
)
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
(1,966
|
)
|
|
|
(108
|
)
|
|
|
(2,543
|
)
|
|
|
(396
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
No further information concerning
Qimondas condensed consolidated statements of operations
has been available for the period from January 1, 2009 to
January 23, 2009, the date of the application to commence
insolvency proceedings. Such information, however, would not
have any impact on the Companys condensed consolidated
financial statements of operations.
|
F-242
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Assets and liabilities held for disposal as of
September 30, 2008, are primarily composed of the book
values of Qimondas assets and liabilities. At
September 30, 2008, and March 31, 2009, the carrying
amounts of the major classes of assets and liabilities
classified as held for disposal were as follows:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Cash and cash equivalents
|
|
|
421
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
255
|
|
|
|
|
|
Inventories
|
|
|
289
|
|
|
|
3
|
|
Other current assets
|
|
|
376
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
2,059
|
|
|
|
3
|
|
Goodwill and other intangibles
|
|
|
76
|
|
|
|
|
|
Investments accounted for using the equity method
|
|
|
14
|
|
|
|
|
|
Deferred tax assets
|
|
|
59
|
|
|
|
|
|
Other assets
|
|
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
3,604
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Write-down
|
|
|
(1,475
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets classified as held for disposal
|
|
|
2,129
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Short-term debt and current maturities of long-term debt
|
|
|
346
|
|
|
|
|
|
Trade accounts payable
|
|
|
592
|
|
|
|
|
|
Current provisions
|
|
|
220
|
|
|
|
|
|
Other current liabilities
|
|
|
300
|
|
|
|
|
|
Long-term debt
|
|
|
427
|
|
|
|
|
|
Pension plans and similar commitments
|
|
|
22
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
16
|
|
|
|
|
|
Long-term provisions
|
|
|
25
|
|
|
|
|
|
Other liabilities
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities associated with assets held for disposal
|
|
|
2,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized directly in equity relating to assets and
liabilities classified as held for disposal
|
|
|
(158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SensoNor
Business
During the 2003 fiscal year the Company acquired SensoNor AS
(SensoNor) for total cash consideration of
34 million. SensoNor develops, produces and markets
tire pressure and acceleration sensors. On March 4, 2009,
the Company sold the business, including property, plant and
equipment, inventories, and pension liabilities, and transferred
employees to a newly formed company called SensoNor Technologies
AS for cash consideration of 4 million and
1 share. In addition, the Company granted a license for
intellectual property and entered into a supply agreement
through December 2011. The total consideration received was
allocated to the elements of the transaction on a relative fair
value basis. As a result, the Company realized losses before tax
of 16 million which was recorded in other operating
expense, including a provision of 8 million which
will be recognized over the term of the supply agreement. The
Company has business agreements with the new company to ensure a
continued supply of the components to the Companys tire
pressure monitoring systems while the Company transfers
production to its Villach site.
F-243
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
To address rising risks in the current market environment,
adverse currency trends and below benchmark margins, the Company
implemented the IFX10+ cost-reduction program in the third
quarter of the 2008 fiscal year. The IFX10+ program includes
measured target areas including product portfolio management,
manufacturing costs reduction, value chain optimization, process
efficiency, reorganization of the Companys structure along
its target markets, and reductions in workforce. Approximately
10 percent of Infineon worldwide workforce is expected to
be impacted by IFX10+. During the first quarter of the 2009
fiscal year, and in light of continuing adverse developments in
general economic conditions and in the industry, the Company
identified significant further cost savings in addition to those
originally anticipated.
During the six months ended March 31, 2008 and 2009,
charges of 9 million and 6 million,
respectively, were recognized.
The development of the restructuring liability during the six
months ended March 31, 2009, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
September 30, 2008
|
|
|
Restructuring
|
|
|
|
|
|
2009
|
|
|
|
Liability
|
|
|
Charges, net
|
|
|
Payments
|
|
|
Liability
|
|
|
|
( in millions)
|
|
|
Employee terminations
|
|
|
179
|
|
|
|
6
|
|
|
|
(85
|
)
|
|
|
100
|
|
Other exit costs
|
|
|
10
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
189
|
|
|
|
6
|
|
|
|
(94
|
)
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amount of financial income is as follows for the three and
six months ended March 31, 2008 and 2009, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Interest income
|
|
|
13
|
|
|
|
17
|
|
|
|
28
|
|
|
|
66
|
|
Valuation changes and gains on sales
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
Other financial income
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13
|
|
|
|
21
|
|
|
|
31
|
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income for the three and six months ended
March 31, 2009, includes a net gain before tax of
12 million and 48 million, respectively,
as a result of the repurchased notional amounts of the
subordinated exchangeable notes due 2010 and convertible
subordinated notes due 2010 (see note 13).
The amount of financial expense is as follows for the three and
six months ended March 31, 2008 and 2009, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Interest expense
|
|
|
38
|
|
|
|
29
|
|
|
|
74
|
|
|
|
64
|
|
Valuation changes and losses on sales
|
|
|
10
|
|
|
|
3
|
|
|
|
13
|
|
|
|
24
|
|
Other financial expense
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
48
|
|
|
|
32
|
|
|
|
88
|
|
|
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-244
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Income (loss) from continuing operations before income taxes and
income tax expense (benefit) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions, except percentages)
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
22
|
|
|
|
(152
|
)
|
|
|
82
|
|
|
|
(264
|
)
|
Income tax expense (benefit)
|
|
|
11
|
|
|
|
(2
|
)
|
|
|
23
|
|
|
|
2
|
|
Effective tax rate
|
|
|
47%
|
|
|
|
1%
|
|
|
|
28%
|
|
|
|
|
|
In the three and six months ended March 31, 2008 and 2009,
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.
F-245
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
|
|
9.
|
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 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
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
Numerator ( in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
11
|
|
|
|
(150
|
)
|
|
|
59
|
|
|
|
(266
|
)
|
Less: Portion attributable to minority interests
|
|
|
(6
|
)
|
|
|
(1
|
)
|
|
|
(17
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to
shareholders of Infineon Technologies AG
|
|
|
5
|
|
|
|
(151
|
)
|
|
|
42
|
|
|
|
(265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
(1,966
|
)
|
|
|
(108
|
)
|
|
|
(2,543
|
)
|
|
|
(396
|
)
|
Less: Portion attributable to minority interests
|
|
|
438
|
|
|
|
20
|
|
|
|
569
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
attributable to shareholders of Infineon Technologies AG
|
|
|
(1,528
|
)
|
|
|
(88
|
)
|
|
|
(1,974
|
)
|
|
|
(348
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to shareholders of Infineon Technologies AG
|
|
|
(1,523
|
)
|
|
|
(239
|
)
|
|
|
(1,932
|
)
|
|
|
(613
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator (shares in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding basic and diluted
|
|
|
749.7
|
|
|
|
749.7
|
|
|
|
749.7
|
|
|
|
749.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) per share (in
)(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to
shareholders of Infineon Technologies AG
|
|
|
0.01
|
|
|
|
(0.20
|
)
|
|
|
0.06
|
|
|
|
(0.36
|
)
|
Loss from discontinued operations, net of tax attributable to
shareholders of Infineon Technologies AG
|
|
|
(2.04
|
)
|
|
|
(0.12
|
)
|
|
|
(2.64
|
)
|
|
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to shareholders of Infineon Technologies AG
|
|
|
(2.03
|
)
|
|
|
(0.32
|
)
|
|
|
(2.58
|
)
|
|
|
(0.82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 34.9 million and
25.9 million shares underlying employee stock options for
the three months ended March 31, 2008 and 2009,
respectively, and 36.4 million and 28.4 million shares
underlying employee stock options for the six months ended
March 31, 2008 and 2009, respectively. Additionally,
68.4 million and 56.5 million ordinary shares issuable
upon conversion of outstanding convertible subordinated notes
during the three months ended March 31, 2008 and 2009,
respectively, and 68.4 million and 57.4 million
ordinary shares issuable upon conversion of outstanding
convertible subordinated notes during the six months ended
March 31, 2008 and 2009, respectively, were not included in
the computation of diluted earnings (loss) per share as their
impact was not dilutive.
F-246
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
|
|
10.
|
Trade and Other
Receivables, net
|
Trade accounts and other receivables consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Third party trade
|
|
|
590
|
|
|
|
481
|
|
Associated and Related Companies
|
|
|
28
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, gross
|
|
|
618
|
|
|
|
485
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
(29
|
)
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
589
|
|
|
|
421
|
|
|
|
|
|
|
|
|
|
|
Grants receivable
|
|
|
28
|
|
|
|
28
|
|
License fees receivable
|
|
|
10
|
|
|
|
5
|
|
Third party financial and other receivables
|
|
|
17
|
|
|
|
31
|
|
Receivables from German banks deposit protection fund
|
|
|
121
|
|
|
|
26
|
|
Associated and related companies financial and other receivables
|
|
|
22
|
|
|
|
1
|
|
Employee receivables
|
|
|
8
|
|
|
|
2
|
|
Other receivables
|
|
|
4
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
799
|
|
|
|
518
|
|
|
|
|
|
|
|
|
|
|
In February 2009, the Company received a partial payment of
95 million from the amounts classified as
Receivables from German banks deposit protection
fund. The remainder is expected to be paid in the 2009
fiscal year.
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Raw materials and supplies
|
|
|
59
|
|
|
|
58
|
|
Work-in-process
|
|
|
372
|
|
|
|
293
|
|
Finished goods
|
|
|
234
|
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
Total inventories
|
|
|
665
|
|
|
|
543
|
|
|
|
|
|
|
|
|
|
|
|
|
12.
|
Trade and Other
Payables
|
Trade and other payables consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Third party trade
|
|
|
473
|
|
|
|
276
|
|
Related parties trade
|
|
|
15
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
488
|
|
|
|
293
|
|
|
|
|
|
|
|
|
|
|
Related parties financial and other payables
|
|
|
6
|
|
|
|
4
|
|
Other
|
|
|
12
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
506
|
|
|
|
302
|
|
|
|
|
|
|
|
|
|
|
F-247
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
Debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Short-term debt:
|
|
|
|
|
|
|
|
|
Loans payable to banks, weighted average rate 2.65%
|
|
|
139
|
|
|
|
117
|
|
Current portion of long-term debt
|
|
|
68
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
Total short-term debt and current maturities
|
|
|
207
|
|
|
|
170
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
Exchangeable subordinated notes, 1.375%, due 2010
|
|
|
193
|
|
|
|
79
|
|
Convertible subordinated notes, 5.0%, due 2010
|
|
|
531
|
|
|
|
530
|
|
Loans payable to banks:
|
|
|
|
|
|
|
|
|
Unsecured term loans, weighted average rate 3.02%, due
2010 2013
|
|
|
217
|
|
|
|
185
|
|
Secured term loans, weighted average rate 2.45%, due 2010
|
|
|
2
|
|
|
|
1
|
|
Notes payable to governmental entity, due 2010
|
|
|
20
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
963
|
|
|
|
816
|
|
|
|
|
|
|
|
|
|
|
During the three and six months ended March 31, 2009, the
Company repurchased notional amounts of 35 million
and 130 million of its exchangeable subordinated
notes due 2010 and during the six months ended March 31,
2009, 22 million of its convertible subordinated
notes due 2010. The transactions resulted in net gains of
12 million and 48 million before tax,
which was recognized in interest income during the three and six
months ended March 31, 2009, respectively. The repurchases
were 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 March 31, 2009.
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 March 31, 2009
|
|
|
|
Institution
|
|
Purpose/
|
|
Aggregate
|
|
|
|
|
|
|
|
Term
|
|
Commitment
|
|
intended use
|
|
facility
|
|
|
Drawn
|
|
|
Available
|
|
|
|
|
|
|
|
( in millions)
|
|
|
Short-term
|
|
firm commitment
|
|
working capital, guarantees
|
|
|
508
|
|
|
|
117
|
|
|
|
391
|
|
Short-term
|
|
no firm commitment
|
|
working capital, cash management
|
|
|
145
|
|
|
|
|
|
|
|
145
|
|
Long-term(1)
|
|
firm commitment
|
|
project finance
|
|
|
260
|
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
913
|
|
|
|
377
|
|
|
|
536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Including current maturities.
|
F-248
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
|
|
14.
|
Share-based
Compensation
|
A summary of the status of the Infineon stock option plans as of
March 31, 2009, and changes during the six 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, 2008
|
|
|
33.2
|
|
|
|
12.30
|
|
|
|
2.28
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
(8.2
|
)
|
|
|
18.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2009
|
|
|
25.0
|
|
|
|
10.07
|
|
|
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest, net of estimated forfeitures at
March 31, 2009
|
|
|
24.6
|
|
|
|
10.06
|
|
|
|
2.20
|
|
|
|
|
|
Exercisable at March 31, 2009
|
|
|
21.3
|
|
|
|
9.89
|
|
|
|
1.96
|
|
|
|
|
|
Options with an aggregate fair value of 26 million
and 10 million vested during the six months ended
March 31, 2008 and 2009, respectively. Options with a total
intrinsic value of 0 were exercised during the six months
ended March 31, 2008 and 2009.
Changes in the Companys unvested options during the six
months ended March 31, 2009, 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, 2008
|
|
|
6.7
|
|
|
|
2.96
|
|
|
|
4.05
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(2.9
|
)
|
|
|
3.54
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(0.1
|
)
|
|
|
3.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at March 31, 2009
|
|
|
3.7
|
|
|
|
2.49
|
|
|
|
3.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested options expected to vest
|
|
|
3.3
|
|
|
|
2.48
|
|
|
|
3.79
|
|
|
|
|
|
As of March 31, 2009, there was a total of
2 million in unrecognized compensation expense
related to unvested stock options of Infineon, which is expected
to be recognized over a weighted-average period of
0.79 years.
Share-Based
Compensation Expense
Share-based compensation expense was allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Compensation expense recognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
1
|
|
Research and development expenses
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total share-based compensation expense
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation effect on basic and diluted loss per
share in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-249
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
No cash has been received from stock option exercises during the
six months ended March 31, 2008 and 2009. The amount of
share-based compensation expense which was capitalized and
remained in inventories for the six months ended March 31,
2008 and 2009, was immaterial. Share-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.
The changes in other components of equity for the six months
ended March 31, 2008 and 2009, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
Pretax
|
|
|
Tax Effect
|
|
|
Net
|
|
|
Pretax
|
|
|
Tax Effect
|
|
|
Net
|
|
|
|
( in millions)
|
|
|
Unrealized (losses) gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains
|
|
|
(9
|
)
|
|
|
|
|
|
|
(9
|
)
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
Reclassification adjustment for losses (gains) included in net
income or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized (losses) gains
|
|
|
(9
|
)
|
|
|
|
|
|
|
(9
|
)
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on cash flow hedges
|
|
|
25
|
|
|
|
|
|
|
|
25
|
|
|
|
10
|
|
|
|
|
|
|
|
10
|
|
Foreign currency translation adjustment
|
|
|
(87
|
)
|
|
|
|
|
|
|
(87
|
)
|
|
|
157
|
|
|
|
|
|
|
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other components of equity
|
|
|
(71
|
)
|
|
|
|
|
|
|
(71
|
)
|
|
|
169
|
|
|
|
|
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has transactions in the normal course of business
with Equity Method Investments and related persons such as
Management and Supervisory Board members (collectively,
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 costs plus a
mark-up.
Related Party receivables consist primarily of trade, financial,
and other receivables from Equity Method Investments and related
companies, and totaled 78 million and
7 million as of September 30, 2008 and
March 31, 2009, respectively.
Related Party payables consist primarily of trade, financial,
and other payables from Equity Method Investments, and totaled
21 million and 21 million as of
September 30, 2008 and March 31, 2009, respectively.
Related Party receivables and payables as of September 30,
2008 and March 31, 2009, have been segregated first between
amounts owed by or to companies in which the Company has an
ownership interest, and second based on the underlying nature of
the transactions. Trade receivables and payables include amounts
for the purchase and sale of products and services. Financial
and other receivables and payables represent amounts owed
relating to loans and advances and accrue interest at interbank
rates.
In the three months ended March 31, 2008 and 2009, sales to
Related Parties totaled (1) million and
1 million, respectively, whereas purchases from
Related Parties totaled 154 million and
19 million, respectively. In the six months ended
March 31, 2008 and 2009, sales to Related Parties totaled
0 million and 2 million, respectively,
whereas purchases from Related Parties totaled
269 million and 59 million, respectively.
F-250
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
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
|
|
|
|
March 31, 2008
|
|
|
March 31, 2009
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
|
( in millions)
|
|
|
Service cost
|
|
|
(4
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(1
|
)
|
Interest cost
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(1
|
)
|
Expected return on plan assets
|
|
|
6
|
|
|
|
1
|
|
|
|
5
|
|
|
|
|
|
Curtailment gain recognized
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
|
|
|
Six months ended
|
|
|
|
March 31, 2008
|
|
|
March 31, 2009
|
|
|
|
Domestic
|
|
|
Foreign
|
|
|
Domestic
|
|
|
Foreign
|
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
plans
|
|
|
|
( in millions)
|
|
|
Service cost
|
|
|
(8
|
)
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
(2
|
)
|
Interest cost
|
|
|
(10
|
)
|
|
|
(2
|
)
|
|
|
(9
|
)
|
|
|
(2
|
)
|
Expected return on plan assets
|
|
|
11
|
|
|
|
2
|
|
|
|
10
|
|
|
|
1
|
|
Curtailment gain recognized
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
|
(7
|
)
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18.
|
Additional
Disclosure on 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).
F-251
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, 2008
|
|
|
March 31, 2009
|
|
|
|
Notional
|
|
|
|
|
|
Notional
|
|
|
|
|
|
|
amount
|
|
|
Fair value
|
|
|
amount
|
|
|
Fair value
|
|
|
|
( in millions)
|
|
|
Forward contracts sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
213
|
|
|
|
(5
|
)
|
|
|
265
|
|
|
|
7
|
|
Japanese yen
|
|
|
5
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
Singapore dollar
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malaysian ringgit
|
|
|
3
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Norwegian krone
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Forward contracts purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
157
|
|
|
|
(4
|
)
|
|
|
96
|
|
|
|
(1
|
)
|
Japanese yen
|
|
|
1
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
Singapore dollar
|
|
|
29
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
Great Britain pound
|
|
|
9
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
Malaysian ringgit
|
|
|
52
|
|
|
|
|
|
|
|
35
|
|
|
|
(1
|
)
|
Norwegian krone
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
Currency Options sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
177
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
Currency Options purchased:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
163
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
500
|
|
|
|
(1
|
)
|
|
|
500
|
|
|
|
28
|
|
Other
|
|
|
77
|
|
|
|
(1
|
)
|
|
|
78
|
|
|
|
(21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value, net
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2008 and March 31, 2009, all
derivative financial instruments are recorded at fair value.
Foreign exchange gains (losses), net included gains of
1 million and 4 million for the three
months ended March 31, 2008 and 2009, respectively, related
to gains from foreign exchange transactions. Foreign exchange
gains (losses), net included losses of 3 million and
29 million for the six months ended March 31,
2008 and 2009, respectively, related to losses from foreign
exchange transactions on operating business and on hedging
transactions.
The Company enters into derivative instruments, primarily
foreign exchange forward contracts, to hedge significant
anticipated U.S. dollar cash flows from operations. During
the six months ended March 31, 2009, 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 six
months ended March 31, 2009. 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 4 million of
the net gains recognized directly in other components of equity
as of March 31, 2009, will be reclassified into earnings
during the 2009 fiscal year. All foreign exchange derivatives
designated as cash flow hedges held as of March 31, 2009,
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 six months ended March 31, 2008 and 2009, no gains
or losses were reclassified from other components of equity 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.
F-252
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
|
|
19.
|
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 Corp. (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 for the class of direct U.S. purchasers of DRAM
(granting an opportunity for individual class members to opt out
of the settlement). In November 2006, court approved the
settlement agreement and entered final judgment and dismissed
the claims with prejudice.
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. All defendants have filed joint
motions for summary judgment and to exclude plaintiffs
principal expert in the Unisys case. On March 31, 2009, the
court issued an order denying these motions with respect to a
related case filed by Sun Microsystems against DRAM suppliers
other than the Company and IF North America, but no ruling has
yet been issued with respect to the Unisys case. On
October 29, 2008 the Company and IF North America filed a
motion to disqualify counsel for plaintiffs for Unisys
Corporation, and the other opt-out plaintiffs (other
than DRAM Claims Liquidation Trust) as described below. On
December 18, 2008, the court issued an order disqualifying
counsel for those plaintiffs from prosecuting those cases
against the Company and IF North America, and ordered that new
counsel be substituted. New counsel has been substituted. No
trial date has been scheduled in the Unisys case.
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.
All defendants have filed joint motions for summary judgment and
to exclude plaintiffs principal expert in all of these
cases. On March 31, 2009, the court issued an order denying
these motions with respect to a related case filed by Sun
Microsystems against DRAM suppliers other than the Company and
IF North America, but no ruling has yet been issued with respect
to these opt-out cases. On December 18, 2008, the court
issued an order disqualifying counsel for those plaintiffs
(other than DRAM Claims Liquidation Trust), as described above.
New counsel has been substituted.
Sixty-four 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
F-253
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
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 appealed to the Ninth Circuit Court of
Appeals. On August 14, 2008, the Ninth Circuit issued its
decision affirming the dismissal of this action. 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 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 indirect
purchaser 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 MDL indirect
purchaser cases until the appeal is complete. Plaintiffs in
various state court indirect purchaser actions outside of the
MDL have moved to lift the stays that were previously in place.
On March 3, 2009, the judge in the Arizona state court
indirect purchaser action issued an order denying
plaintiffs motion to lift the stay. A hearing on
plaintiffs motion to lift the stay in the Minnesota state
court indirect purchaser action will be held on May 6,
2009. Plaintiffs also moved to lift the stay in the Wisconsin
state court indirect purchaser action, and the Company and IF
North America, along with its codefendants, filed an opposition
on April 13, 2009.
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 attorney
generals 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 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 attorney generals case
partly dismissed and partly granted the motion. On May 13,
2008, the Company answered the complaint by the State of New
York and the multistate complaint. On September 15, 2008,
the Company filed an amended answer to the multistate complaint.
Between June 25, 2007 and December 31,
F-254
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
2008, the state attorneys general of eight states, Alaska,
Delaware, Ohio, New Hampshire, Texas, Vermont, Kentucky and the
Northern Mariana Islands filed requests for dismissal of their
claims. Plaintiffs California and New Mexico filed a joint
motion for class certification seeking to certify classes of all
public entities within both states. On September 5, 2008,
the Court entered an order denying both states motions for
class certification. On September 15, 2008, the New York
State Attorney General filed a motion for judgment on the
pleadings regarding certain defendants affirmative
defenses to New Yorks amended complaint. On
January 5, 2009, the court denied the New York State
Attorney Generals motion for judgment on the pleadings,
but in the alternative granted New Yorks request to reopen
discovery concerning certain of defendants affirmative
defenses.
On October 3, 2008, approximately 95 California schools,
political subdivisions and public agencies that were previously
putative class members of the multistate attorney general
complaint described above filed suit in California Superior
Court against the Company, IF North America, and several other
DRAM manufacturers alleging DRAM price-fixing and artificial
price inflation in violation of California state antitrust and
consumer protection laws arising out of the alleged practices
described above. The plaintiffs seek recovery of actual and
treble damages in unspecified amounts, restitution, costs
(including attorneys fees) and injunctive and other
equitable relief.
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. On December 5, 2008, the Company received a
request for information from the Commission regarding DRAM
turnover data for its 2001 fiscal year. In January 2009, the
European Commission indicated that it will open formal
proceedings against the Company and other DRAM producers in
connection with its request for information regarding DRAM
turnover data for the Companys 2001 fiscal year. The
Commission invited the Company and the other producers that are
parties to the proceedings to consider a settlement of the case.
Infineon has agreed to participate in settlement proceedings. A
settlement would result in a 10% reduction of any possible fine
assessed by the Commission. The Commission has decided to
include Siemens AG and IF North America in the proceedings, on
the basis of the same charge as that against the Company.
Qimonda is obligated to indemnify Infineon for any fines
ultimately imposed by the Commission in connection with these
proceedings. Due to Qimondas recent insolvency filing,
however, it is unlikely that Qimonda will be able to indemnify
Infineon against any such potential liabilities. Infineon may be
obligated to indemnify Siemens AG in respect of any fines
imposed by the Commission. In light of these recent
developments, the Company increased the provision for such
potential fines in the three months ended December 31,
2008. The exact amount of such potential fines cannot be
predicted with certainty and, therefore, it is possible that any
fine actually imposed on the Company by the Commission may be
materially higher than the provision recorded. 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 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
F-255
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
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. 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. Securities
Exchange Act of 1934 and dismissed the claim under
§ 20A of the act with prejudice. On August 13,
2008 the court denied a motion for summary judgment brought by
the Company based on the statute of limitations. On
August 25, 2008, the Company filed a motion for judgment on
the pleadings, or in the alternative, motion to dismiss for lack
of subject matter jurisdiction, against foreign purchasers,
i.e., proposed class members who are neither residents nor
citizens of the United States who bought securities of the
Company on an exchange outside the United States. On
August 25, 2008, plaintiffs filed a motion for class
certification. On March 6, 2009, the court denied the
Companys motion to dismiss the claims asserted by the
foreign purchasers, and granted plaintiffs motion to
certify a class of persons who acquired the Companys
securities between March 13, 2000 and July 19, 2004,
including foreign purchasers, who sold their securities after
June 18, 2002. On March 19, 2009, the Company filed a
petition with the Court of Appeals for the Ninth Circuit,
requesting permission to immediately appeal the courts
March 6, 2009 order granting class certification; the Ninth
Circuit granted the petition on April 29, 2009.
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.
On October 31, 2007,
Wi-LAN Inc.
filed suit in the U.S. District Court for the Eastern
District of Texas against Westell Technologies, 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 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. On
July 29, 2008, the court scheduled the trial date for
January 4, 2011 and the date for the
Markman-Hearing on the construction of essential
terms of the asserted patents for September 1, 2010 (see
note 21).
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. 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. 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. In March 2009, CIF filed its replies both with the
Civil Court of Duesseldorf and the Federal Patent Court in
Munich. DTAG and the parties who joined the lawsuit on the side
of DTAG must respond by September 28, 2009 for Duesseldorf
and by May 29, 2009, for Munich. Oral arguments at the
Civil Court of Duesseldorf are scheduled for December 1,
2009 regarding the one surviving patent; the court hearing for
the three expired patents have been suspended and no new
schedules have been set with respect thereto. In October 2008,
CIF also filed suit in the Civil Court of Düsseldorf,
Germany against Arcor GmbH &Co KG,
(Arcor), Hansenet Telekommunikation GmbH
(Hansenet), United Internet AG (United
Internet) (all
F-256
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
three, New Defendants) alleging infringement of the
same four European patents. The New Defendants have partly given
third-party notice to their suppliers. Alcatel has given
Infineon third-party notice in the lawsuit against Arcor and AVM
Computersysteme Vertriebs GmbH has given third-party notice in
the lawsuit against United Internet.
On April 18, 2008, LSI filed a complaint with the
U.S. 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 four 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. On
June 20, 2008, the court in the Eastern District of Texas
stayed the case while the ITC Case is pending. On
October 17, 2008, Qimonda became a party to the ITC Case.
On October 21, 2008, the Company learned that the European
Commission had commenced an investigation involving the
Companys Chip Card & Security business for
alleged violations of antitrust laws. The investigation is in
its very early stages, and the Company is assessing the facts
and monitoring the situation carefully.
On November 12, 2008, Volterra Semiconductor Corporation
filed suit against Primarion, Inc., the Company and IF North
America in the U.S District Court for the Northern District of
California for alleged infringement of five U.S. patents by
certain products offered by Primarion. On December 18, 2008
the Company, IF North America and Primarion filed an answer to
the complaint denying any infringement and filed a counterclaim
against Volterra Semiconductor Corporation alleging fraud on the
U.S. Patent and Trademark Office and certain antitrust
violations. Primarion, the Company and IF North America also
counterclaimed that the patents underlying Volterras
patent infringement claims are invalid. In February and March
2009 IF North America filed requests for re-examination at the
US Patent and Trademark Office for all 5 patents asserted by
Volterra.
On November 25, 2008, the Company, Infineon Technologies
Austria AG and IF North America filed suit in the
U.S. District Court for the District of Delaware against
Fairchild Semiconductor International, Inc. and Fairchild
Semiconductor Corporation regarding (1) a complaint for
patent infringement by certain products of Fairchild and
(2) a complaint for declaratory judgment of
non-infringement and invalidity of certain patents of Fairchild
against the allegation of infringement of those patents by
certain products of Infineon. Fairchild has filed a counterclaim
in Delaware for a declaratory judgment on (1) infringement
by Infineon of those patents which are subject of
Infineons complaint for declaratory judgment and
(2) non-infringement and invalidity of those patents which
are the subject of Infineons complaint for infringement.
Fairchild Semiconductor Corporation has further filed another
patent infringement suit against the Company and IF North
America in the U.S. District Court for the District of
Maine alleging that certain products of Infineon infringe on two
more patents of Fairchild Semiconductor Corporation which are
not part of the Delaware lawsuit. On January 22, 2009, IF
North America answered the complaint filed by Fairchild
Semiconductor Corporation with the District Court in Maine
denying the claims of infringement and counterclaiming that the
patents underlying Fairchild Semiconductor Corporations
patent infringement claims are invalid. The Company has not yet
been served process.
Liabilities
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 average
amount is accrued. 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. Due to Qimondas recent insolvency filing, however,
it is unlikely that Qimonda will be able to indemnify Infineon
against any such potential liabilities.
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
F-257
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
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 78 million as of March 31,
2009. 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 March 31, 2009, such
guarantees, principally relating to certain consolidated
subsidiaries third-party debt, aggregated
888 million, of which 663 million relates
to convertible and exchangeable notes issued.
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 March 31, 2009, a maximum of 37 million of
these subsidies could be refundable. Such amount does not
include any potential liabilities for Qimonda related subsidies
(see note 4).
|
|
20.
|
Operating Segment
and Geographic Information
|
The Company has reported its operating segment and geographic
information in accordance with IFRS 8 Operating
Segments.
Effective October 1, 2008, to better align the
Companys business with its target markets, the Company
reorganized its core business into five operating segments:
Automotive, Industrial & Multimarket, Chip
Card & Security, Wireless Solutions, and Wireline
Communications. 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 meet the IFRS 8
definition of an operating segment, but do not meet the
requirements of a reportable segment as specified in IFRS 8.
Accordingly, these segments are combined and disclosed in the
Other Operating Segments category.
Other Operating Segments includes revenue and earnings that
Infineons 200-millimeter production facility in Dresden
recorded from the sale of wafers to Qimonda under a foundry
agreement, which was cancelled during the 2008 fiscal year. The
Corporate and Eliminations segment reflects the elimination of
these revenue and earnings.
F-258
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
The segments results of operations of prior periods have
been reclassified to be consistent with the current reporting
structure and presentation, as well as to facilitate analysis of
current and future operating segment information.
Each of the segments has two or three segment managers reporting
directly to the Management Board, which has been collectively
identified as the Chief Operating Decision Maker
(CODM). The CODM makes decisions about resources to
be allocated to the segments and assesses their performance
using revenues and, effective October 1, 2008, Segment
Result. The Company defines Segment Result as operating income
(loss) excluding asset impairments, net of reversals,
restructuring and other related closure costs, share-based
compensation expense, acquisition-related amortization and gains
(losses), gains (losses) on sales of assets, businesses, or
interests in subsidiaries, and other income (expense), including
litigation settlement costs. Gains (losses) on sales of assets,
businesses, or interests in subsidiaries, include, among others,
gains or losses that may be realized from potential sales of
investments and activities. The Companys management uses
Segment Result, to establish budgets and operational goals,
manage the Companys business and evaluate its performance.
The Company reports Segment Profit 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.
Information with respect to the Companys operating
segments follows:
Automotive
The Automotive segment designs, develops, manufactures and
markets semiconductors for use in automotive applications.
Together with its product portfolio, Infineon offers
corresponding system know-how and support to its customers.
Industrial &
Multimarket
The Industrial & Multimarket segment designs,
develops, manufactures and markets semiconductors and complete
system solutions primarily for use in industrial applications
and in applications with customer-specific product requirements.
Chip
Card & Security
The Chip Card & Security segment designs, develops,
manufactures and markets semiconductors and complete system
solutions primarily for use in chip card and security
applications.
Wireless
Solutions
The Wireless Solutions segment designs, develops, manufactures
and markets a wide range of ICs, other semiconductors and
complete system solutions for wireless communication
applications.
Wireline
Communications
The Wireline Communications segment designs, develops,
manufactures and markets a wide range of ICs, other
semiconductors and complete system solutions focused on wireline
access applications.
F-259
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
The following tables present selected segment data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive
|
|
|
324
|
|
|
|
189
|
|
|
|
634
|
|
|
|
395
|
|
Industrial & Multimarket
|
|
|
276
|
|
|
|
193
|
|
|
|
567
|
|
|
|
427
|
|
Chip Card & Security
|
|
|
121
|
|
|
|
80
|
|
|
|
237
|
|
|
|
171
|
|
Wireless
Solutions(1)
|
|
|
197
|
|
|
|
204
|
|
|
|
450
|
|
|
|
401
|
|
Wireline Communications
|
|
|
105
|
|
|
|
79
|
|
|
|
208
|
|
|
|
167
|
|
Other Operating
Segments(2)
|
|
|
59
|
|
|
|
2
|
|
|
|
123
|
|
|
|
10
|
|
Corporate and
Eliminations(3)
|
|
|
(33
|
)
|
|
|
|
|
|
|
(80
|
)
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,049
|
|
|
|
747
|
|
|
|
2,139
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes revenues of
1 million for the three months ended March 31,
2008 and 8 million and 1 million for the
six months ended March 31, 2008 and 2009, respectively,
from sales of wireless communication applications to Qimonda.
|
|
(2) |
|
Includes revenues of
34 million for the three months ended March 31,
2008 and 70 million for the six months ended
March 31, 2008 from sales of wafers from Infineons
200-millimeter facility in Dresden to Qimonda under a foundry
agreement.
|
|
(3) |
|
Includes the elimination of
revenues of 35 million for the three months ended
March 31, 2008 and 78 million and
1 million for the six months ended March 31,
2008 and 2009, respectively, since these sales were not part of
the Qimonda disposal plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Segment Result:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive
|
|
|
25
|
|
|
|
(65
|
)
|
|
|
48
|
|
|
|
(121
|
)
|
Industrial & Multimarket
|
|
|
23
|
|
|
|
(7
|
)
|
|
|
49
|
|
|
|
(5
|
)
|
Chip Card & Security
|
|
|
19
|
|
|
|
(8
|
)
|
|
|
36
|
|
|
|
(9
|
)
|
Wireless Solutions
|
|
|
(16
|
)
|
|
|
(29
|
)
|
|
|
2
|
|
|
|
(73
|
)
|
Wireline Communications
|
|
|
3
|
|
|
|
1
|
|
|
|
7
|
|
|
|
3
|
|
Other Operating Segments
|
|
|
5
|
|
|
|
(3
|
)
|
|
|
7
|
|
|
|
(4
|
)
|
Corporate and Eliminations
|
|
|
8
|
|
|
|
1
|
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
67
|
|
|
|
(110
|
)
|
|
|
147
|
|
|
|
(212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a summary of revenue by geographic area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
240
|
|
|
|
150
|
|
|
|
460
|
|
|
|
315
|
|
Other Europe
|
|
|
215
|
|
|
|
141
|
|
|
|
409
|
|
|
|
286
|
|
North America
|
|
|
137
|
|
|
|
69
|
|
|
|
282
|
|
|
|
164
|
|
Asia/Pacific
|
|
|
389
|
|
|
|
351
|
|
|
|
848
|
|
|
|
720
|
|
Japan
|
|
|
50
|
|
|
|
27
|
|
|
|
104
|
|
|
|
72
|
|
Other
|
|
|
18
|
|
|
|
9
|
|
|
|
36
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,049
|
|
|
|
747
|
|
|
|
2,139
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 or six months ended March 31, 2008 or 2009.
F-260
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
The following table provides the reconciliation of Segment
Result to the Companys loss before tax and discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
( in millions)
|
|
|
Total Segment Result
|
|
|
67
|
|
|
|
(110
|
)
|
|
|
147
|
|
|
|
(212
|
)
|
Adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments, net of reversals
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
(1
|
)
|
Restructuring and other related closure cost
|
|
|
(6
|
)
|
|
|
(3
|
)
|
|
|
(9
|
)
|
|
|
(6
|
)
|
Share-based compensation expense
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(3
|
)
|
|
|
(1
|
)
|
Acquisition-related amortization and losses
|
|
|
(5
|
)
|
|
|
(6
|
)
|
|
|
(14
|
)
|
|
|
(12
|
)
|
Gains (losses) on sales of assets, businesses, or interests in
subsidiaries
|
|
|
(1
|
)
|
|
|
(16
|
)
|
|
|
14
|
|
|
|
(17
|
)
|
Other expense, net
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
55
|
|
|
|
(143
|
)
|
|
|
137
|
|
|
|
(260
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Income
|
|
|
13
|
|
|
|
21
|
|
|
|
31
|
|
|
|
81
|
|
Financial Expense
|
|
|
(48
|
)
|
|
|
(32
|
)
|
|
|
(88
|
)
|
|
|
(88
|
)
|
Income from investment accounted for using the equity method, net
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income tax
|
|
|
22
|
|
|
|
(152
|
)
|
|
|
82
|
|
|
|
(264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent to March 31, 2009, the Company repurchased
notional amounts of 19 million of its exchangeable
subordinated notes due 2010. The purchase was made out of
available cash.
On April 1, 2009, the local court in Munich formally opened
insolvency proceedings for Qimonda AG and Qimonda Dresden
GmbH & Co. oHG (see note 4).
On April 3, 2009, the Company announced its application to
voluntarily delist from the New York Stock Exchange. The
delisting took effect on April 24, 2009, and consequently,
the American Depositary Shares are no longer traded on the New
York Stock Exchange. The Companys American Depositary
Shares have been listed on the
over-the-counter
market OTCQX International under the ticker symbol
IFNNY since April 24, 2009.
On April 24, 2009, former employees of Qimondas
subsidiaries in the United States filed a complaint in the
U.S. Federal District Court in Delaware against the
Company, IF North America and Qimonda AG, individually and on
behalf of several putative classes of plaintiffs. The suit
relates to the termination of the plaintiffs employment in
connection with Qimondas insolvency and the payment of
severance and other benefits allegedly due by Qimonda. The
complaint seeks to pierce the corporate veil and to
impose liability on the Company and IF North America under
several theories. The Company is currently reviewing the
complaint. The Company and IF North America have not served
yet.
On April 24, 2009, Optimum Processing Solutions LLC, a
Georgia limited liability company, filed a claim in the
U.S. Federal District Court for the Northern District of
Georgia against IF North America, Advanced Micro Devices, Inc.,
Freescale Semiconductor, Inc., Intel Corporation, International
Business Machines Corporation, STMicroelectronics, Inc., Sun
Microsystems, Inc. and Texas Instruments, Inc. The complaint
alleges that certain microchips manufactured, used or offered
for sale by IF North America and the other defendants infringe
U.S. patent no. 5,117,497, allegedly held by the
plaintiff. The Company is currently reviewing the complaint. The
Company and IF North America have not served yet.
F-261
Infineon
Technologies AG and Subsidiaries
Notes to
the Unaudited Condensed Consolidated Financial Statements
On May 5, 2009, the Company announced the launch of a cash
tender offer in order to reduce its debt by purchasing
outstanding subordinated convertible and exchangeable notes. The
Company intends to use up to 150 million for the
purchase of these notes, with the maximum purchase price for the
exchangeable and the convertible notes being 75 percent of
the nominal amount. The Company will determine the final
purchase prices upon receipt of offers pursuant to a modified
Dutch auction process, so that all offers submitted at or below
the final purchase prices will be accepted up to the aggregate
of 150 million.
On May 7, Wi-LAN and the Company settled their patent
litigation pending in the U.S. District Court for the Eastern
District of Texas by concluding license and patent acquisition
agreements.
F-262
Responsibility
Statement by the Management Board
To the best of our knowledge, and in accordance with the
applicable reporting principles for interim financial reporting,
the interim consolidated financial statements give a true and
fair view of the assets, liabilities, financial position and
profit or loss of the group, and the interim management report
of the group includes a fair review of the development and
performance of the business and the position of the group,
together with a description of the principal opportunities and
risks associated with the expected development of the group for
the remaining months of the financial year.
|
|
|
Neubiberg, May 11, 2009
|
|
|
|
|
|
Peter Bauer
|
|
Prof. Dr. Hermann Eul
|
|
|
|
Dr. Reinhard Ploss
|
|
Dr. Marco Schröter
|
F-263
The following review report, prepared in accordance with the
German generally accepted standards for the review of financial
statements (IDW AuS 900) promulgated by the Institute der
Wirtschaftsprüfer (IDW) and under additional consideration
of International Standards of Review Engagements 2410:
Review of Interim Financial Information Performed by the
Independent Auditor of the Entity, refers to the complete
condensed interim consolidated financial statements, comprising
the balance sheet, the income statement, income and expense
recognized in equity, and the consolidated statement of cash
flows and selected explanatory notes, together with the interim
group management report for the period from October 1, 2008
to March 31, 2009. The interim group management report is
not included in this prospectus.
REVIEW
REPORT
To the Supervisory Board of Infineon Technologies AG, Neubiberg:
We have reviewed the condensed interim consolidated financial
statements comprising the balance sheet, the income
statement, income and expenses recognized in equity, cash flow
statement and selected explanatory notes together
with the interim group management report of Infineon
Technologies AG, for the period from October 1, 2008 to
March 31, 2009 that are part of the semi annual financial
report according to § 37 w WpHG
(Wertpapierhandelsgesetz: German Securities
Trading Act). The preparation of the condensed interim
consolidated financial statements in accordance with those IFRS
applicable to interim financial reporting as adopted by the EU,
and in accordance with the IFRS for interim financial reporting
as issued by the International Accounting Standards Board
(IASB), and of the interim group management report in accordance
with the requirements of the WpHG applicable to interim group
management reports, is the responsibility of the Companys
management. Our responsibility is to issue a report on the
condensed interim consolidated financial statements and on the
interim group management report based on our review.
We performed our review of the condensed interim consolidated
financial statements and the interim group management report in
accordance with the German generally accepted standards for the
review of financial statements promulgated by the Institut der
Wirtschaftsprüfer (IDW) under additional consideration of
International Standards on Review Engagements 2410: Review
of Interim Financial Information Performed by the Independent
Auditor of the Entity. Those standards require that we
plan and perform the review so that we can preclude through
critical evaluation, with a certain level of assurance, that the
condensed interim consolidated financial statements have not
been prepared, in material aspects, in accordance with the IFRS
applicable to interim financial reporting as adopted by the EU,
and in accordance with the IFRS for interim financial reporting
as issued by the IASB, and that the interim group management
report has not been prepared, in material aspects, in accordance
with the requirements of the WpHG applicable to interim group
management reports. A review is limited primarily to inquiries
of company employees and analytical assessments and therefore
does not provide the assurance attainable in a financial
statement audit. Since, in accordance with our engagement, we
have not performed a financial statement audit, we cannot issue
an auditors report.
Based on our review, no matters have come to our attention that
cause us to presume that the condensed interim consolidated
financial statements have not been prepared, in material
respects, in accordance with the IFRS applicable to interim
financial reporting as adopted by the EU, and in accordance with
the IFRS for interim financial reporting as issued by the IASB,
or that the interim group management report has not been
prepared, in material respects, in accordance with the
requirements of the WpHG applicable to interim group management
reports.
Munich, May 11, 2009
KPMG AG
Wirtschaftsprüfungsgesellschaft
|
|
|
Kozikowski
|
|
Kempf
|
Wirtschaftsprüfer
|
|
Wirtschaftsprüfer
|
F-264
ANNUAL FINANCIAL
STATEMENTS
(PREPARED IN ACCORDANCE WITH HGB)
AS OF AND FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2008
INFINEON
TECHNOLOGIES AG,
NEUBIBERG
F-265
Infineon
Technologies AG
Statements of
Operations
For the years ended September 30, 2007 and 2008
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Revenue
|
|
|
1
|
|
|
|
5,003
|
|
|
|
5,365
|
|
Cost of goods sold
|
|
|
2
|
|
|
|
(4,231
|
)
|
|
|
(4,425
|
)
|
|
|
Gross Profit
|
|
|
|
|
|
|
772
|
|
|
|
940
|
|
Research and development expenses
|
|
|
2
|
|
|
|
(680
|
)
|
|
|
(654
|
)
|
Selling expenses
|
|
|
2
|
|
|
|
(149
|
)
|
|
|
(154
|
)
|
General and administrative expenses
|
|
|
2
|
|
|
|
(157
|
)
|
|
|
(175
|
)
|
Other operating income
|
|
|
3
|
|
|
|
32
|
|
|
|
134
|
|
Other operating expense
|
|
|
4
|
|
|
|
(15
|
)
|
|
|
(193
|
)
|
|
|
Income (expense) from investments
|
|
|
5
|
|
|
|
(174
|
)
|
|
|
(2,555
|
)
|
Interest income (expense)
|
|
|
6
|
|
|
|
(102
|
)
|
|
|
(44
|
)
|
Other financial income (expense)
|
|
|
7
|
|
|
|
8
|
|
|
|
(39
|
)
|
|
|
Income (loss) from ordinary operations
|
|
|
|
|
|
|
(465
|
)
|
|
|
(2,740
|
)
|
|
|
Extraordinary loss
|
|
|
|
|
|
|
(34
|
)
|
|
|
(0
|
)
|
|
|
Extraordinary income (loss)
|
|
|
|
|
|
|
(34
|
)
|
|
|
(0
|
)
|
|
|
Income tax benefit (expense)
|
|
|
8
|
|
|
|
(6
|
)
|
|
|
(0
|
)
|
|
|
Net loss
|
|
|
9
|
|
|
|
(505
|
)
|
|
|
(2,740
|
)
|
Accumulated deficit of prior years
|
|
|
9
|
|
|
|
(2,103
|
)
|
|
|
(2,608
|
)
|
|
|
Accumulated deficit
|
|
|
9
|
|
|
|
(2,608
|
)
|
|
|
(5,348
|
)
|
|
|
Negative amounts are shown in brackets.
F-266
Infineon
Technologies AG
Balance
Sheets
September 30, 2007 and 2008
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
11
|
|
|
|
267
|
|
|
|
491
|
|
Property, plant, and equipment
|
|
|
12
|
|
|
|
434
|
|
|
|
396
|
|
Financial assets
|
|
|
13
|
|
|
|
6,846
|
|
|
|
3,873
|
|
|
|
|
|
|
|
|
|
|
7,547
|
|
|
|
4,760
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
14
|
|
|
|
318
|
|
|
|
405
|
|
Trade accounts receivables
|
|
|
15
|
|
|
|
299
|
|
|
|
279
|
|
Receivables from affiliated companies
|
|
|
16
|
|
|
|
436
|
|
|
|
517
|
|
Receivables from associated companies
|
|
|
17
|
|
|
|
2
|
|
|
|
6
|
|
Other assets
|
|
|
18
|
|
|
|
60
|
|
|
|
174
|
|
Cash
|
|
|
19
|
|
|
|
938
|
|
|
|
722
|
|
|
|
|
|
|
|
|
|
|
2,053
|
|
|
|
2,103
|
|
Deferred expenses
|
|
|
20
|
|
|
|
12
|
|
|
|
9
|
|
|
|
Total assets
|
|
|
|
|
|
|
9,612
|
|
|
|
6,872
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
21
|
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
21a
|
|
|
|
1,499
|
|
|
|
1,499
|
|
Additional paid-in capital
|
|
|
21b
|
|
|
|
6,923
|
|
|
|
6,930
|
|
Retained earnings
|
|
|
21c
|
|
|
|
32
|
|
|
|
32
|
|
Accumulated deficit
|
|
|
|
|
|
|
(2,608
|
)
|
|
|
(5,348
|
)
|
|
|
|
|
|
|
|
|
|
5,846
|
|
|
|
3,113
|
|
Special reserve with equity portion
|
|
|
22
|
|
|
|
2
|
|
|
|
1
|
|
Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions for pensions
|
|
|
23
|
|
|
|
322
|
|
|
|
284
|
|
Provisions for taxes
|
|
|
24
|
|
|
|
17
|
|
|
|
13
|
|
Other provisions
|
|
|
25
|
|
|
|
424
|
|
|
|
347
|
|
|
|
|
|
|
|
|
|
|
763
|
|
|
|
644
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities to banks
|
|
|
26
|
|
|
|
0
|
|
|
|
8
|
|
Trade payables
|
|
|
26
|
|
|
|
209
|
|
|
|
183
|
|
Payables to affiliated companies
|
|
|
26
|
|
|
|
2,665
|
|
|
|
2,716
|
|
Payables to associated companies
|
|
|
26
|
|
|
|
0
|
|
|
|
8
|
|
Other liabilities
|
|
|
26
|
|
|
|
98
|
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
2,972
|
|
|
|
3,070
|
|
Deferred income
|
|
|
27
|
|
|
|
29
|
|
|
|
44
|
|
|
|
Total liabilities and equity
|
|
|
|
|
|
|
9,612
|
|
|
|
6,872
|
|
|
|
F-267
Infineon
Technologies AG
For the fiscal year ended September 30, 2008
Basis of
Presentation
The financial statements of Infineon Technologies AG (IF
AG) have been prepared in accordance with accounting
regulations in terms of the German commercial law and
additionally with requirements as set forth in the Corporate
Act. All amounts herein are shown in million Euro
() with comparable figures as of
September 30, 2007. The condensed items of the balance
sheets and statements of operations are separately mentioned and
explained in the notes.
The statements of operations are prepared in accordance with the
cost of sales accounting. To optimize the presentation of
financial activities, the classification scheme has been
modified pursuant to section 275, paragraph 3 of the
German Commercial Code. Different to last year, financial
activities are displayed as Income (expense) from
Investments, Interest income (expense) and
Other financial income (expense). The amounts in the
prior period have been reclassified to conform to the current
period presentation.
As of March 17, 2008, Infineon Technologies Mantel 17 GmbH,
Neubiberg, has been merged into IF AG. There has been no impact
on prior period numbers.
Negative amounts are shown in brackets.
Summary of
Significant Accounting Policies
Long-term
Assets
Intangible assets are valued at cost less accumulated
depreciation, which on calculated in a straight-line basis. The
depreciation period is the estimated useful life of 7 years
or the contractual term. The recognized goodwill is depreciated
over 15 years, the estimated useful life according to tax
requirements. Impairments are recognized when the carrying
amount of the assets exceeds the recoverable amount.
Property, plant and equipment are valued at cost less
accumulated depreciation. Principally the assets are depreciated
based on the maximum depreciation rates permitted for tax
purposes. The depreciation method changes from the declining
balance method to the straight-line method when the
straight-line depreciation of the carrying amount over the
remaining estimated useful life results in higher amount of
depreciation. Impairments are recognized when the carrying
amount of the assets exceeds the recoverable amount.
Low value fixed assets were depreciated immediately through
December 31, 2007. Effective January 1, 2008,
purchased or self-developed low value fixed assets are required
to be capitalized according to tax requirements. The amounts
capitalized must be depreciated over 5 years.
The estimated useful lives, as a basis for the accumulated
depreciation, are as follows:
|
|
|
|
|
|
|
Years
|
|
|
Manufacturing and office buildings
|
|
|
20-50
|
|
Other buildings
|
|
|
5-10
|
|
Technical equipment and machinery
|
|
|
5-10
|
|
Other plant and office equipment
|
|
|
3-8
|
|
Special and standard tools
|
|
|
1
|
|
Advances received and cost incurred for construction in process
are not depreciated
Shares in affiliated companies, investments in other companies
and other financial assets are measured at acquisition cost, or,
if there is an indication of permanent impairment, at fair value.
To give a better overview the summary of fixed assets has been
extended by special items, including the pension contribution
plan, post-employment program with specific features
(Altersteilzeit Trust), shares in a retirement fund contributed
by employees and Deferred Compensation Trust (DC Trust).
F-268
Infineon
Technologies AG
Notes to the Financial Statements
Current
Assets
Within inventories, raw materials and supplies are valued at
acquisition cost or the net realizable value. Goods in process,
finished goods and services are measured at cost of production.
Interest on borrowed capital is not included in the costs of
production. Devaluation for risks, especially obsolescence,
regarding stock is included accordingly. The principle for
loss-free valuation is applied.
Receivables and other assets are recorded at cost, and if the do
not bear interest they are discounted to balance sheet date if
the remaining life is exceeds one year. Allowances on trade
receivables and receivables from associated companies are
assessed based on the probability of the failure to collect
outstanding amounts. The percentages applied for the general
allowance for doubtful accounts relating to receivables
denominated in foreign currency from foreign companies is
2 percent and for receivables denominated in euro from
foreign companies is 1 percent. The percentage applied for
domestic receivables is 1 percent. There is no general
allowance for receivables from affiliated companies.
Available-for-sale
financial assets and cash are valued at acquisition costs or the
fair value at the balance sheet date.
Provisions and
Liabilities
The measurement of pension obligations is based on actuarial
computation using the projected unit credit method in accordance
with United States Generally Accepted Accounting Principles
(U.S. GAAP). This method results in higher obligations than
calculated pursuant to section 6a of the Income Tax Act of
Germany. Under the projected unit credit method, the obligation
is measured on the valuation date, taken into consideration
probable increases of future salaries and pensions benefits.
Provisions for tax liabilities are measured based on a true and
fair assessment by the company.
In measuring other provisions, all identifiable risks,
contingent liabilities as well as anticipated losses from
uncompleted transactions are included in such assessments.
Provisions for obligations arising from post employment program
with specific features (ATZ) include expenses for wages and
salaries at the point of the beginning of the inactive period,
as well as expected increases in services provided and other
contingencies for participants. Provisions have been calculated
according to the applicable IDW-statement from November 18,
1998. Anticipated amounts payable are calculated based on
actuarial principles and measured at their present value.
Provisions for obligations for the retirement fund that is
financed by employees are calculated according to the projected
unit credit method in accordance with U.S. GAAP using a
discount rate of 6.5 percent.
Liabilities are measured using the expected redemption amount.
Revenues,
costs and expenses
Revenues are realized when shipments and services are performed
and when the transfer of title has passed.
Research and development costs are recorded as expenses and are
measured as the full costs less grants received.
Share-based payments are included in additional paid-in capital
according to section 272, paragraph 2, No. 2 of
the German Commercial Code. Outstanding options are assessed in
a manner consistent with that required by SFAS 123 R, in
accordance with U.S. GAAP in which additional paid-in
capital is gradually increased over the term during which the
employees provide services in exchange for the option.
Currency
Translation
Short-term receivables or payables denominated in foreign
currencies are translated using the balance sheet date exchange
rate. Long-term receivables and payables denominated in foreign
F-269
Infineon
Technologies AG
Notes to the Financial Statements
currencies are translated using the rate at the date of the
transaction or the respective lower or higher rate at the
balance sheet date.
Currency and
Interest Risks
The company enters into foreign currency forward and option
contracts, as well as interest rate swap agreements to reduce
the impact of interest rate and exchange rate fluctuations.
Derivative financial instruments are entered into for hedging
purposes only.
Derivative financial instruments are recorded as liability when
the fair value is negative, while those with positive fair
values are not assessed.
Notes to the
Statements of Operations
Revenues are shown on a per segment basis as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
in millions
|
|
Automotive-, Industrial & Multimarket
|
|
|
3,300
|
|
|
3,375
|
Communication Solutions
|
|
|
1,509
|
|
|
1,850
|
Other Operating Segments
|
|
|
194
|
|
|
140
|
|
|
|
|
|
|
|
Total
|
|
|
5,003
|
|
|
5,365
|
|
|
|
|
|
|
|
Revenues according to customer category are as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
in millions
|
|
Revenues with consolidated Infineon-entities
|
|
|
2,066
|
|
|
3,306
|
Revenues with third parties and non-consolidated entities
|
|
|
2,937
|
|
|
2,059
|
Total
|
|
|
5,003
|
|
|
5,365
|
Revenues according to regions are as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
in millions
|
|
Germany
|
|
|
1,130
|
|
|
1,089
|
Other Europe
|
|
|
990
|
|
|
903
|
Asia/Pacific
|
|
|
2,430
|
|
|
2,867
|
North America
|
|
|
401
|
|
|
438
|
Other regions
|
|
|
52
|
|
|
68
|
Total
|
|
|
5,003
|
|
|
5,365
|
|
|
|
|
|
|
|
Revenues include income from royalties amounting to
23 million (prior year: 13 million).
Functional costs are classified as cost of goods sold, research
and development expenses, and selling, general and
administrative expenses within the statements of operations.
Cost of goods sold encompasses manufacturing costs necessary to
achieve revenues. Mainly these are expenses for production
material, services received, personnel expenses, depreciation
and amortization as well as lease expenses for production
facilities. Effective October 1, 2007, the results from
hedging and currency translation effects for operating
activities have been included in cost of goods sold. In the
prior year, gains from hedging and currency translation effects
amounting to 10 million were reported in the other
financial income (expense).
Research and development expenses comprise mainly personnel
expenses, material expenses, amortization and depreciation, and
maintenance expenses relating to laboratory equipment, as well
as
F-270
Infineon
Technologies AG
Notes to the Financial Statements
costs from contractually agreed development of technology.
Grants that are related to research and development expenses are
presented as a reduction of those expenses and amount to
21 million (prior year: 21 million).
Selling expenses include personnel expenses for marketing and
selling employees, costs for samples, expenses related to proto
types, sales promotions and marketing expenses.
General and administrative expenses include personnel expenses
for administrative staff, non-production related overhead costs,
consultancy fees, attorneys fees, and other fees for
external service providers as well as recruiting and training
expenses.
Furthermore the following audit fees are included in
administrative expenses of IF AG:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
in millions
|
|
Year-end Audit
|
|
|
1.3
|
|
|
1.4
|
Audit Fees
|
|
|
0.4
|
|
|
0.4
|
Tax Fees
|
|
|
0.0
|
|
|
0.0
|
Other Fees
|
|
|
0.3
|
|
|
0.4
|
|
|
|
|
|
|
|
Total
|
|
|
2.0
|
|
|
2.2
|
|
|
|
|
|
|
|
Other taxes and customs duties are included in functional costs
amounting 2 million (prior year:
2 million).
Share-based
compensation expense
Share-based compensation expense is as follows:
|
|
|
|
|
|
|
|
|
2007
|
|
2008
|
|
|
in millions
|
|
Compensation expense recognized:
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
4
|
|
|
2
|
Research and development expenses
|
|
|
5
|
|
|
2
|
Selling, general and administrative expenses
|
|
|
8
|
|
|
3
|
|
|
|
|
|
|
|
Total share-based compensation expense
|
|
|
17
|
|
|
7
|
|
|
|
|
|
|
|
|
|
(3)
|
Other operating
income
|
Operating income includes 134 million, primarily
relating to income from the reversal of provisions amounting to
72 million, a gain on the sale of Hard Disk Drive
business from IF AG to LSI Corporation, Milpitas, USA, amounting
to 39 million, a gain on the sale of
Bulk-Acoustic-Wave-Filter activities amounting to
8 million, a gain on the sale of property amounting
to 4 million, as well as rental income amounting to
8 million.
|
|
(4)
|
Other operating
expense
|
Other operating expense includes 193 million,
primarily relating to restructuring expenses amounting to
172 million, leasing costs amounting to
7 million as well as impairment charges for
intangible assets and property, plant, and equipment according
to section 253, paragraph 2, sentence no. 3 of
the German Commercial Code amounting to 6 million.
Other operating expenses amounting to 5 million
relate to other periods.
F-271
Infineon
Technologies AG
Notes to the Financial Statements
|
|
(5)
|
Income (expense)
from investments
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Income from profit transfer
|
|
|
9
|
|
|
|
18
|
|
thereof:
|
|
|
|
|
|
|
|
|
Comneon GmbH, Nuremberg
|
|
|
0
|
|
|
|
13
|
|
Infineon Technologies Finance GmbH, Neubiberg
|
|
|
9
|
|
|
|
5
|
|
Infineon Technologies Wireless Solutions GmbH, Neubiberg
|
|
|
0
|
|
|
|
0
|
|
Expenses for transfer of losses
|
|
|
(7
|
)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
thereof:
|
|
|
|
|
|
|
|
|
Comneon GmbH, Nuremberg
|
|
|
(7
|
)
|
|
|
(0
|
)
|
Income from profit receipt
|
|
|
46
|
|
|
|
47
|
|
thereof:
|
|
|
|
|
|
|
|
|
Infineon Technologies Dresden GmbH & Co. OHG,
Dresden
|
|
|
35
|
|
|
|
14
|
|
Infineon Technologies SensoNor AS, Horten, Norway
|
|
|
10
|
|
|
|
31
|
|
Infineon Technologies Bipolar GmbH & Co. KG,
Warstein
|
|
|
0
|
|
|
|
2
|
|
Depreciation of affiliated companies and investments
|
|
|
(108
|
)
|
|
|
(2,636
|
)
|
thereof:
|
|
|
|
|
|
|
|
|
Infineon Technologies Holding B.V., Rotterdam, Netherlands
|
|
|
0
|
|
|
|
(1,613
|
)
|
Qimonda AG, Munich
|
|
|
(107
|
)
|
|
|
(1,021
|
)
|
Axiom Microdevices Inc., Irvine, USA
|
|
|
0
|
|
|
|
(2
|
)
|
Income from sales of interests in affiliated companies and
investments
|
|
|
4
|
|
|
|
16
|
|
thereof:
|
|
|
|
|
|
|
|
|
Infineon Technologies Bipolar GmbH & Co. KG,
Warstein
|
|
|
0
|
|
|
|
16
|
|
SciWorx GmbH, Hanover
|
|
|
4
|
|
|
|
0
|
|
Losses from sales of interests in affiliated companies and
investments
|
|
|
(118
|
)
|
|
|
(0
|
)
|
thereof:
|
|
|
|
|
|
|
|
|
Qimonda AG, Munich
|
|
|
(118
|
)
|
|
|
(0
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(174
|
)
|
|
|
(2,555
|
)
|
|
|
|
|
|
|
|
|
|
Profit transfer agreements exist with Comneon GmbH, Nuremberg,
Infineon Technologies Finance GmbH, Neubiberg, as well as
Infineon Technologies Wireless Solutions GmbH, Neubiberg, as of
September 30, 2008.
|
|
(6)
|
Interest income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Other interest and related income
|
|
|
89
|
|
|
|
83
|
|
Thereof from affiliated companies
|
|
|
5
|
|
|
|
4
|
|
Interest and related expenses
|
|
|
(198
|
)
|
|
|
(137
|
)
|
Thereof to affiliated companies
|
|
|
(96
|
)
|
|
|
(98
|
)
|
Other interest and related income from pension trust
|
|
|
7
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(102
|
)
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
F-272
Infineon
Technologies AG
Notes to the Financial Statements
|
|
(7)
|
Other financial
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Other financial income
|
|
|
23
|
|
|
|
0
|
|
Other financial expense
|
|
|
(15
|
)
|
|
|
(5
|
)
|
Depreciation of financial assets pension trust
|
|
|
0
|
|
|
|
(24
|
)
|
Depreciation of non-current securities
|
|
|
0
|
|
|
|
(8
|
)
|
Depreciation of financial assets Deferred Compensation Trust
|
|
|
0
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8
|
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
Included in other financial income and expense are gains
(losses) from sales of non-current securities and
available-for-sale
financial assets, income (loss) from interest and foreign
currency derivatives, as well as income (loss) from currency
translation effects. In the prior year, gains from hedging and
currency translation effects from operating activities amounted
to 10 million and are included in other financial
income. Gains (losses) from hedging and currency translation
effects from operating activities are recorded in cost of goods
sold during the current fiscal year for the first time.
The financial assets in the pension trust, the non-current
securities and the financial assets in the Deferred Compensation
Trust (DC Trust) had to be impaired due to other than temporary
deterioration in value.
IF AG is subject to taxes in respect of its own operating
profits and losses and is also a taxpayer with respect to the
management and profit sharing agreements executed with its
affiliated companies.
Net loss for the fiscal year amounts to
2,740 million. Together with the accumulated deficit
of prior years of 2,608 million, IF AG recorded an
accumulated deficit of 5,348 million.
F-273
Infineon
Technologies AG
Notes to the Financial Statements
Additional
information to the Balance Sheet
Classification and development of fixed assets included in the
Balance Sheet are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition or production costs
|
|
|
|
|
|
Accumulated Depreciation and Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
carried
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
carried
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
forward
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
forward
|
|
|
|
|
|
|
|
|
As of
|
|
|
Book value
|
|
|
|
01.10.
|
|
|
|
|
|
|
|
|
|
|
|
30.09.
|
|
|
01.10.
|
|
|
Current
|
|
|
|
|
|
30.09.
|
|
|
30.09.
|
|
|
30.09.
|
|
|
|
2007
|
|
|
Addition
|
|
|
Reclassification
|
|
|
Reduction
|
|
|
2008
|
|
|
2007
|
|
|
year
|
|
|
Reduction
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concessions, industrial property rights and other rights, and
related rights and values as well as licenses for such rights
and values
|
|
|
172
|
|
|
|
54
|
|
|
|
0
|
|
|
|
(5
|
)
|
|
|
221
|
|
|
|
(118
|
)
|
|
|
(28
|
)
|
|
|
1
|
|
|
|
(145
|
)
|
|
|
54
|
|
|
|
76
|
|
Goodwill
|
|
|
319
|
|
|
|
246
|
|
|
|
0
|
|
|
|
0
|
|
|
|
565
|
|
|
|
(106
|
)
|
|
|
(44
|
)
|
|
|
0
|
|
|
|
(150
|
)
|
|
|
213
|
|
|
|
415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
491
|
|
|
|
300
|
|
|
|
0
|
|
|
|
(5
|
)
|
|
|
786
|
|
|
|
(224
|
)
|
|
|
(72
|
)
|
|
|
1
|
|
|
|
(295
|
)
|
|
|
267
|
|
|
|
491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, similar land rights and buildings including those on
external property
|
|
|
185
|
|
|
|
1
|
|
|
|
0
|
|
|
|
(18
|
)
|
|
|
168
|
|
|
|
(142
|
)
|
|
|
(6
|
)
|
|
|
17
|
|
|
|
(131
|
)
|
|
|
43
|
|
|
|
37
|
|
Technical equipment and machines
|
|
|
844
|
|
|
|
40
|
|
|
|
25
|
|
|
|
(90
|
)
|
|
|
819
|
|
|
|
(628
|
)
|
|
|
(48
|
)
|
|
|
77
|
|
|
|
(599
|
)
|
|
|
216
|
|
|
|
220
|
|
Other equipment, other plant and office equipment
|
|
|
521
|
|
|
|
22
|
|
|
|
7
|
|
|
|
(66
|
)
|
|
|
484
|
|
|
|
(385
|
)
|
|
|
(39
|
)
|
|
|
59
|
|
|
|
(365
|
)
|
|
|
136
|
|
|
|
119
|
|
Down payment made and construction in progress
|
|
|
39
|
|
|
|
17
|
|
|
|
(32
|
)
|
|
|
(4
|
)
|
|
|
20
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
39
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,589
|
|
|
|
80
|
|
|
|
0
|
|
|
|
(178
|
)
|
|
|
1,491
|
|
|
|
(1,155
|
)
|
|
|
(93
|
)
|
|
|
153
|
|
|
|
(1,095
|
)
|
|
|
434
|
|
|
|
396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares on affiliated companies
|
|
|
6,601
|
|
|
|
0
|
|
|
|
(29
|
)
|
|
|
(1,387
|
)
|
|
|
5,185
|
|
|
|
(243
|
)
|
|
|
(1,613
|
)
|
|
|
107
|
|
|
|
(1,749
|
)
|
|
|
6,358
|
|
|
|
3,436
|
|
Investments
|
|
|
35
|
|
|
|
0
|
|
|
|
29
|
|
|
|
(15
|
)
|
|
|
49
|
|
|
|
(26
|
)
|
|
|
(2
|
)
|
|
|
15
|
|
|
|
(13
|
)
|
|
|
9
|
|
|
|
36
|
|
Securities
|
|
|
143
|
|
|
|
0
|
|
|
|
0
|
|
|
|
(60
|
)
|
|
|
83
|
|
|
|
(1
|
)
|
|
|
(8
|
)
|
|
|
0
|
|
|
|
(9
|
)
|
|
|
142
|
|
|
|
74
|
|
Shares in a retirement fund financed by employees
|
|
|
15
|
|
|
|
4
|
|
|
|
(19
|
)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15
|
|
|
|
0
|
|
DC Trust
|
|
|
0
|
|
|
|
2
|
|
|
|
19
|
|
|
|
0
|
|
|
|
21
|
|
|
|
0
|
|
|
|
(2
|
)
|
|
|
0
|
|
|
|
(2
|
)
|
|
|
0
|
|
|
|
19
|
|
Pension Trust
|
|
|
312
|
|
|
|
47
|
|
|
|
0
|
|
|
|
(39
|
)
|
|
|
320
|
|
|
|
0
|
|
|
|
(24
|
)
|
|
|
0
|
|
|
|
(24
|
)
|
|
|
312
|
|
|
|
296
|
|
ATZ Trust
|
|
|
10
|
|
|
|
2
|
|
|
|
0
|
|
|
|
0
|
|
|
|
12
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,116
|
|
|
|
55
|
|
|
|
0
|
|
|
|
(1,501
|
)
|
|
|
5,670
|
|
|
|
(270
|
)
|
|
|
(1,649
|
)
|
|
|
122
|
|
|
|
(1,797
|
)
|
|
|
6,846
|
|
|
|
3,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,196
|
|
|
|
435
|
|
|
|
0
|
|
|
|
(1,684
|
)
|
|
|
7,947
|
|
|
|
(1,649
|
)
|
|
|
(1,814
|
)
|
|
|
276
|
|
|
|
(3,187
|
)
|
|
|
7,547
|
|
|
|
4,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charges amounting to 1,655 million were
recorded pursuant to section 253, paragraph 2,
sentence no. 3 of the German Commercial Code. Thereof,
4 million is allotted to intangible assets,
2 million to property, plant, and equipment and
1,649 million to financial assets.
The increase in goodwill of 246 million mainly
results from the acquisition of the mobility products business
of LSI Corporation (LSI), Milpitas, USA.
The scheduled depreciation and amortization amounted to
68 million, while the impairment charges amounted to
4 million.
|
|
(12)
|
Property, plant,
and equipment
|
Scheduled depreciation was carried out and amounted to
91 million, while impairment charges amounted to
2 million.
F-274
Infineon
Technologies AG
Notes to the Financial Statements
The interest in affiliated companies decreased by
2,922 million from 6,358 million to
3,436 million during the reporting period.
The decrease mainly resulted from:
|
|
|
|
|
Depreciation of interests in Infineon Technologies Holding B.V.,
Rotterdam Netherlands
|
|
(
|
1,613 million
|
)
|
Reclassification of shares from Qimonda AG, Munich, in the
position securities
|
|
(
|
1,021 million
|
)
|
Capital decrease of Infineon Technologies Holding B.V.,
Rotterdam, Netherlands
|
|
(
|
185 million
|
)
|
Capital decrease of Infineon Technologies Dresden
GmbH & Co. KG, Dresden
|
|
(
|
54 million
|
)
|
Reclassification of shares from Infineon Technologies Bipolar
GmbH & Co. KG, Warstein, in the position
investments
|
|
(
|
29 million
|
)
|
Sale of interest in Infineon Bipolar GmbH & Co. KG,
Warstein
|
|
(
|
19 million
|
)
|
The reclassification of shares from Qimonda AG, Munich, from
fixed assets to current assets was performed due to the existing
disposal plan. The valuation of shares held was assessed with
fair value of 0 at the balance sheet date. This results in
impairment charges of 1,021 million in the current
fiscal year.
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 ADSs ancillary to the placement of the
convertible notes, which remained outstanding as of
September 30, 2008.
Affiliated companies according to section 285, no. 11
of the German Commercial Code are listed in material
affiliated / associated companies.
Investments increased by 27 million from
9 million to 36 million during the
reporting period.
This increase mainly resulted from:
|
|
|
|
|
Reclassification of shares from Infineon Technologies Bipolar
GmbH & Co. KG, Warstein, from the position
Shares from affiliated companies
|
|
|
29 million
|
|
Depreciation of shares from Axiom Microdevices Inc., Irvine, USA
|
|
(
|
2 million
|
)
|
Infineon Technologies Mantel 17 GmbH, Neubiberg, was merged with
IF AG effective March 17, 2008, resulting in a gain
amounting to 0.051 million.
Securities include shares of investment funds, as well as bonds
that serve as capital investments. Impairments of securities
amounting to 8 million were required to be recorded
during the reporting period.
The Deferred Compensation Trust (DC Trust) amounts to
19 million and comprises shares assigned in trust in
investment funds in connection with retirement funds contributed
by employees that were transferred to the Infineon Technologies
Deferred Compensation Trust e.V. during the fiscal year. These
assets are solely used for the purpose of fulfilling the
companys obligations. In the 2008 fiscal year,
2 million were recognized as impairment of securities
of the DC Trust.
Furthermore, investment funds in the amount of
296 million are classified as Infineon Pension Trust
e.V. and assigned in trust. These assets and the return on these
assets are designated for the companys retirement plan. In
the 2008 fiscal year, impairment charges for securities of the
Pension Trust in the amount of 24 million were
recognized.
The securities of the Infineon Altersteilzeit Trust e.V. in the
amount of 12 million are designated for the legal
obligations under post employment program with specific features
(ATZ).
The development of fixed assets are shown in the fixed asset
roll forward.
F-275
Infineon
Technologies AG
Notes to the Financial Statements
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Raw materials and supplies
|
|
|
71
|
|
|
|
120
|
|
Goods in process
|
|
|
100
|
|
|
|
106
|
|
Finished goods
|
|
|
150
|
|
|
|
180
|
|
Down payment received
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
318
|
|
|
|
405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Accounts receivable
|
|
|
299
|
|
|
|
279
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
299
|
|
|
|
279
|
|
|
|
|
|
|
|
|
|
|
Thereof remaining period of more than one year
|
|
|
0
|
|
|
|
0
|
|
|
|
(16)
|
Receivables from
affiliated companies
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Deliveries and services
|
|
|
236
|
|
|
|
342
|
|
Intercompany clearing
|
|
|
200
|
|
|
|
175
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
436
|
|
|
|
517
|
|
|
|
|
|
|
|
|
|
|
Thereof remaining period of more than one year
|
|
|
9
|
|
|
|
61
|
|
|
|
(17)
|
Receivables from
associated companies
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Deliveries and services
|
|
|
0
|
|
|
|
3
|
|
Intercompany clearing
|
|
|
2
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
Thereof remaining period of more than one year
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Other assets
|
|
|
60
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
60
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
Thereof remaining period of more than one year
|
|
|
9
|
|
|
|
2
|
|
Other assets mainly include receivables from the German
banks deposit protection fund (120 million),
license fees receivables, claims for tax refund
(9 million) as well as supplier credit
(8 million).
Cash amounts to 722 million (prior year:
938 million) and consists solely of bank balances.
Included in this balance is a deposit in a trust account in the
amount of 75 million made by IF AG as security for
rent.
F-276
Infineon
Technologies AG
Notes to the Financial Statements
Deferred expenses amounted to 9 million (prior year:
12 million) and includes prepayments for the use of
licenses, prepayments for the maintenance of IT-infrastructure,
as well as an asset for the holiday allowance already paid to
employees for the remaining calendar year.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Capital stock
|
|
|
1,499
|
|
|
|
1,499
|
|
Additional paid-in capital
|
|
|
6,923
|
|
|
|
6,930
|
|
Thereof from agio amounts
|
|
|
3,098
|
|
|
|
3,098
|
|
Thereof from other additional payment
|
|
|
3,766
|
|
|
|
3,766
|
|
Thereof from stock options according to section 272,
paragraph 2, no. 2 of the German Commercial Code
|
|
|
59
|
|
|
|
66
|
|
Retained earnings
|
|
|
32
|
|
|
|
32
|
|
Accumulated deficit
|
|
|
(2,103
|
)
|
|
|
(2,608
|
)
|
Annual deficit
|
|
|
(505
|
)
|
|
|
(2,740
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,846
|
|
|
|
3,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Capital stock
|
|
|
|
|
|
|
|
|
As of October 1,
|
|
|
1,495
|
|
|
|
1,499
|
|
Additional amounts paid-in for stock option exercises
|
|
|
4
|
|
|
|
0
|
|
As of September 30,
|
|
|
1,499
|
|
|
|
1,499
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
Options
|
|
|
|
|
|
|
|
|
As of October 1,
|
|
|
747,609,294
|
|
|
|
749,728,635
|
|
Exercised options
|
|
|
2,119,341
|
|
|
|
13,450
|
|
As of September 30,
|
|
|
749,728,635
|
|
|
|
749,742,085
|
|
As of September 30, 2008, the company had 749,742,085
registered ordinary shares outstanding with a notional value of
2.00 per share. During the years ended September 30,
2007 and 2008, the company increased its share capital by
4 million and 0 million, respectively, by
issuing 2,119,341 and 13,450 ordinary shares, respectively, in
connection with the companys Long-Term Incentive Plans.
The capital stock has been fully paid-in by the shareholders.
Shares outstanding as of September 30, 2008, have dividend
rights from the beginning of the fiscal year.
Authorized
capital
The Articles of Association of IF AG authorize the Management
Board to increase the ordinary share capital with the
Supervisory Boards consent by issuing new shares. As of
September 30, 2008, the Management Board may use these
authorizations to issue new shares as follows:
|
|
|
|
|
Through January 19, 2009, Authorized Share Capital
II/2004 in an aggregate nominal amount of up to
30 million to issue shares to employees (in which
case the pre-emptive rights of existing shareholders are
excluded).
|
|
|
|
Through February 14, 2012, Authorized Share Capital
2007 in an aggregate nominal amount of up to
224 million to issue shares for cash, where the
pre-emptive rights of shareholders may be partially excluded, or
in connection with business combinations (contributions in
kind), where the pre-emptive rights of shareholders may be
excluded for all shares.
|
F-277
Infineon
Technologies AG
Notes to the Financial Statements
Stock options
for employees, debt securities, and others
On September 26, 2007, IF AG (as guarantor), through
Infineon Technologies Investment B.V.(IF BV)
(as issuer), issued 215 million in exchangeable
subordinated notes due 2010 at par in an underwritten offering
to institutional investors in Europe. The notes accrue interest
at 1.375 percent per year. The notes are exchangeable into
a maximum of 20.5 million Qimonda ADSs, at an exchange
price of 10.48 per ADS any time during the exchange
period, as defined, through maturity, corresponding to an
exchange premium of 35 percent. The notes are unsecured and
rank pari passu with all present and future unsecured
subordinated obligations of IF AG. The noteholders have a
negative pledge relating to future capital market indebtedness,
as defined, and an early redemption option in the event of a
change of control, as defined. IF BV may, at its option, redeem
the outstanding notes in whole, but not in part, at the
principal amount thereof together with accrued interest to the
date of redemption, if IF AG has determined that, as a result of
a publicly announced transaction, there is a substantial
likelihood that the aggregate ownership of the share capital of
Qimonda by the issuer, the guarantor and any of their respective
subsidiaries will be less than 50 percent plus one share.
In addition, IF BV may, at its option, redeem the outstanding
notes in whole, but not in part, at their principal amount
together with interest accrued to the date of redemption, if the
share price of the ADSs on each of 15 trading days during a
period of 30 consecutive trading days commencing on or after
August 31, 2009, exceeds 130 percent of the exchange
price. The exchangeable notes are listed on the Frankfurt Stock
Exchange. Concurrently with this transaction, IF AG loaned an
affiliate of J.P. Morgan Securities Inc. 3.6 million
Qimonda ADSs ancillary to the placement of the exchangeable
subordinated notes. The affiliate of J.P. Morgan Securities
Inc. sold these ADSs as part of the Qimonda ADSs sale on
September 25, 2007. On October 25, 2007,
1.3 million Qimonda ADSs that had been borrowed were
returned to IFA G and the remaining 2.3 million Qimonda
ADSs were returned to IF AG on January 4, 2008.
On June 5, 2003, IF AG (as guarantor), through Infineon
Technologies Holding B.V. (as issuer) issued
700 million in convertible subordinated notes due
2010 at par in an underwritten offering to institutional
investors in Europe. The notes are convertible, at the option of
the holders of the notes, into a maximum of 68.4 million
ordinary shares of IF AG, at a conversion price of 10.23
per share through maturity. The notes accrue interest at
5.0 percent per year. The notes are unsecured and pari
passu with all present and future unsecured subordinated
obligations of IF AG. The noteholders have a negative pledge
relating to future capital market indebtedness, as defined. The
noteholders have an early redemption option in the event of a
change of control, as defined. A corporate reorganization
resulting in a substitution of the guarantor shall not be
regarded as a change of control, as defined. IF AG may redeem
the convertible notes after three years at their principal
amount plus interest accrued thereon, if IF AGs share
price exceeds 125 percent of the conversion price on 15
trading days during a period of 30 consecutive trading days. The
convertible notes are listed on the Luxembourg Stock Exchange.
On September 29, 2006 IF AG (through the issuer)
irrevocably waived its option to pay a cash amount in lieu of
the delivery of shares upon conversion. During the 2008 fiscal
year, IF AG repurchased a notional amount of
100 million of its convertible subordinated notes due
2010. The repurchase was made out of available cash. At
September 30, 2008, the outstanding notional amount was
600 million.
Under the long-term incentive plans 1999 and 2001, as well as
the Stock Option Plan 2006, the management board of the IF AG
granted to IF AG management and employees and the executive
management and employees of affiliated companies an aggregate of
57.3 million options to acquire one share per option. Of
these options granted, 2.1 million options have been
exercised and 21.9 million options forfeitured or expired.
As of September 30, 2009, 33.3 million options are
outstanding.
In 2006, IF AGs shareholders approved the Stock Option
Plan 2006 (SOP 2006) which replaced the LTI
2001 Plan. Under the terms of SOP 2006, IF AG can grant up
to 13 million options over a three-year period. The
exercise price of each option equals 120 percent of the
average closing price of the stock during the five trading days
prior to the grant date. Granted options are only exercisable if
the price of a share exceeds the trend of the comparative index
Philadelphia Semiconductor Index (SOX) for at least
three consecutive days on at least one occasion during the life
of the option. Granted options have a vesting period of three
years, subject to the Companys stock reaching the exercise
price on at least one trading day, and expire six years from the
grant date.
F-278
Infineon
Technologies AG
Notes to the Financial Statements
|
|
(21b)
|
Additional
paid-in capital
|
The IF AG structured the additional paid-in capital in
accordance with its origination.
The additional paid-in capital includes the share premium,
resulting from the issuance of shares at prices above the
nominal amount and other paid-in surplus of shareholders.
The additional paid-in capital increased by 7 million
from 6,923 million to 6,930 million. The
increased resulted from the exercise of stock options under
Infineon Technologies AG 2001 International Long Term Incentive
Plan, which led to additional surpluses paid-in.
Conditional
share capital
IF AG has conditional capital of up to an aggregate nominal
amount of 92 million (Conditional Share Capital I),
of up to an aggregate nominal amount of 29 million
(Conditional Share Capital III) and up to an aggregate
nominal amount of 24.5 million (Conditional Share
Capital IV/2006) that may be used to issue up to
72.6 million new registered shares in connection with IF
AGs long-term incentive plans. These shares will have
dividend rights from the beginning of the fiscal year in which
they are issued.
IF AG has conditional capital of up to an aggregate nominal
amount of 152 million (Conditional Share Capital
2002) that may be used to issue up to 76 million new
registered shares upon conversion of debt securities, issued in
June 2003 and which may be converted at any time until
May 22, 2010. These shares will have dividend rights from
the beginning of the fiscal year in which they are issued.
IF AG has further conditional capital of up to an aggregate
nominal amount of 248 million (Conditional Share
Capital 2007) that may be used to issue up to
124 million new registered shares upon conversion of debt
securities which may be issued before February 14, 2012.
These shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
IF AG has further conditional capital of up to an aggregate
nominal amount of 150 million (Conditional Share
Capital 2008) that may be used to issue up to
75 million new registered shares upon conversion of debt
securities which may be issued before February 13, 2013.
These shares will have dividend rights from the beginning of the
fiscal year in which they are issued.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Retained earnings according to §150 section 1 Corporate Act
|
|
|
32
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
32
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
(22)
|
Special reserves
with equity portion (Sonderposten mit
Rücklageanteil)
|
Special reserves with equity portion includes
1 million recognized outside profit or loss in
accordance to § 4 of the Development Area Law
(Fördergebietsgesetze). This amount will be recognized over
the estimated useful life of the assets. The amount of
1 million has been recognized in other operating
income in the statement of operations.
|
|
(23)
|
Provisions for
pensions
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Provisions for pensions
|
|
|
322
|
|
|
|
284
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
322
|
|
|
|
284
|
|
|
|
|
|
|
|
|
|
|
Provisions for pensions were measured based on the
projected unit credit method in accordance with
SFAS 87. The actuarial present value of the Projected
Benefit Obligation (PBO) at the measurement date is calculated
by independent actuaries using a discount rate of
6.5 percent per year, an expected rate of salary increase
of 2.5 percent per year, and a projected future pension
increase rate of 2.0 percent per year. The assumptions
regarding the probabilities for mortality and disability were
based on the
F-279
Infineon
Technologies AG
Notes to the Financial Statements
Richttafeln 2005 G of Prof. Dr. Klaus Heubeck.
Assumptions regarding the employee turnover were also considered.
|
|
(24)
|
Provisions for
taxes
|
Provisions for taxes of 13 million primarily reflect
income taxes for years for which the tax assessments were not
finalized.
Other provisions of 347 million (prior year:
424 million) relate to accrued personnel and social
costs, warranties, unrealized losses from foreign currency
forward contracts, restructuring expenses, other risks, and
other provisions occurring from the ordinary course of business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as of
|
|
|
as of
|
|
|
Thereof maturing
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
between one and
|
|
|
after more than
|
|
|
|
2007
|
|
|
2008
|
|
|
within one year
|
|
|
five years
|
|
|
five years
|
|
|
|
in millions
|
|
|
in millions
|
|
|
in millions
|
|
|
in millions
|
|
|
in millions
|
|
|
Liabilities to banks
|
|
|
0
|
|
|
|
8
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8
|
|
Trade payables
|
|
|
209
|
|
|
|
183
|
|
|
|
181
|
|
|
|
2
|
|
|
|
0
|
|
Payables to affiliated companies
|
|
|
2,665
|
|
|
|
2,716
|
|
|
|
2,116
|
|
|
|
600
|
|
|
|
0
|
|
Payables to associated companies
|
|
|
0
|
|
|
|
8
|
|
|
|
8
|
|
|
|
0
|
|
|
|
0
|
|
Other liabilities
|
|
|
98
|
|
|
|
155
|
|
|
|
134
|
|
|
|
21
|
|
|
|
0
|
|
Thereof from taxes
|
|
|
11
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereof for social security
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,972
|
|
|
|
3,070
|
|
|
|
2,439
|
|
|
|
623
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables to affiliated companies primarily reflect payables to
domestic and foreign subsidiaries from intercompany transfers
with respect to the central finance and liquidity management
(2.342 million, prior
year: 2.485 million) and trade payables to
domestic and foreign subsidiaries (374 million, prior
year: 180 million).
Payables to associated companies primarily reflect trade
payables (8 million, prior
year: 0 million).
Other payables included primarily payroll obligations to
employees, payroll tax obligations
and 42 million (prior
year: 61 million) relating to the plea agreement
with the U.S. Department of Justice to settle alleged
antitrust violations. The payable was charged to Qimonda AG and
the respective receivable is included in receivables from
affiliated companies.
F-280
Infineon
Technologies AG
Notes to the Financial Statements
Deferred income amounts to 44 million (prior
year: 29 million) and includes primarily compensatory
payments and prepayments for future services of IF AG with
respect to licence and development agreements.
Other
disclosures
Personnel
expenses/Employees
Personnel expenses included in the statements of operations are
as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Wages and salaries
|
|
|
634
|
|
|
|
739
|
|
Social levies
|
|
|
85
|
|
|
|
81
|
|
Pension expenses
|
|
|
(33
|
)
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
686
|
|
|
|
789
|
|
|
|
|
|
|
|
|
|
|
Wages and salaries include among others direct labor, salaries,
termination benefits, in particular restructuring measures
(172 million), vacation allowances, special
allowances, and changes in employee related provisions.
Social levies primarily reflect the employers share of
social security.
Pension expenses include amounts resulting from changes in
provisions for pensions.
The average number and structure of employees of IF AG is shown
in the tables below.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
Neubiberg
|
|
|
4,106
|
|
|
|
4,151
|
|
Regensburg
|
|
|
2,443
|
|
|
|
2,432
|
|
Warstein
|
|
|
997
|
|
|
|
769
|
|
Other
|
|
|
431
|
|
|
|
438
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,977
|
|
|
|
7,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
Executive salaried employees
|
|
|
256
|
|
|
|
280
|
|
Non-tariff salaried employees
|
|
|
2,713
|
|
|
|
2,755
|
|
Tariff salaried employees
|
|
|
3,094
|
|
|
|
3,040
|
|
Total salaried employees
|
|
|
6,063
|
|
|
|
6,075
|
|
Hourly employees
|
|
|
1,914
|
|
|
|
1,715
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,977
|
|
|
|
7,790
|
|
|
|
|
|
|
|
|
|
|
Costs of
services and materials
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Raw materials, supplies and purchased goods
|
|
|
3,334
|
|
|
|
3,546
|
|
Purchased services
|
|
|
1,143
|
|
|
|
958
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,477
|
|
|
|
4,504
|
|
|
|
|
|
|
|
|
|
|
Derivative
financial instruments
IF AG enters into derivative financial instruments including
interest rate swap agreements and foreign currency forwards and
option contracts. The objective of these transactions is to
reduce the impact of
F-281
Infineon
Technologies AG
Notes to the Financial Statements
interest rate and exchange rate fluctuations on the foreign
currency denominated cash flows. IF AG does not enter into
derivatives for trading or speculative purposes.
The notional amounts and fair values of IF AG derivative
instruments as of September 30, 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
notional amount maturing
|
|
|
Fair value maturing
|
|
|
|
within
|
|
|
Within
|
|
|
After
|
|
|
|
|
|
within
|
|
|
Within
|
|
|
After
|
|
|
|
|
|
|
1 year
|
|
|
1 to 5 years
|
|
|
5 years
|
|
|
Total
|
|
|
1 year
|
|
|
1 to 5 years
|
|
|
5 years
|
|
|
Total
|
|
|
|
in millions
|
|
|
Interest rate instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
0
|
|
|
|
500
|
|
|
|
0
|
|
|
|
500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
500
|
|
|
|
0
|
|
|
|
500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Foreign currency instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency options
|
|
|
340
|
|
|
|
0
|
|
|
|
0
|
|
|
|
340
|
|
|
|
(3
|
)
|
|
|
0
|
|
|
|
0
|
|
|
|
(3
|
)
|
Forward contracts: Purchased EUR, Sold foreign currency
|
|
|
343
|
|
|
|
19
|
|
|
|
0
|
|
|
|
362
|
|
|
|
(12
|
)
|
|
|
2
|
|
|
|
0
|
|
|
|
(10
|
)
|
Forward contracts: Sold EUR, Purchase foreign currency
|
|
|
240
|
|
|
|
39
|
|
|
|
0
|
|
|
|
279
|
|
|
|
2
|
|
|
|
(4
|
)
|
|
|
0
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
923
|
|
|
|
58
|
|
|
|
0
|
|
|
|
981
|
|
|
|
(13
|
)
|
|
|
(2
|
)
|
|
|
0
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
923
|
|
|
|
558
|
|
|
|
0
|
|
|
|
1.481
|
|
|
|
(13
|
)
|
|
|
(2
|
)
|
|
|
0
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notional amounts of derivative financial instruments reflect
the gross amounts of all purchase and sale contracts. The fair
values of forward exchange transactions are determined on the
basis of current ECB reference rates, taking into consideration
the respective forward premium or discount. The fair values
(gains and losses) of foreign currency instruments are presented
on a net basis. Foreign currency swaps and interest rate swaps
are measured based on net present values. The fair values of
interest rate instruments are arrived at on the basis of the
discounted expected future cash flows; whereby the market
interest rates that are valid for the remaining terms of the
financial instruments are used.
The notional amounts for outstanding derivative financial
instruments denominated in a foreign currency were translated
into euro using period-end exchange rates. Fair values for
interest rate instruments are based on the Clean Price.
The following book values for derivative financial instruments
are included in other assets, other payables, and other
provisions.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
Foreign currency instruments
|
|
|
0
|
|
|
|
1
|
|
Interest rate instruments
|
|
|
1
|
|
|
|
0
|
|
Other payables and other provisions
|
|
|
|
|
|
|
|
|
Foreign currency instruments
|
|
|
(11
|
)
|
|
|
(15
|
)
|
Interest rate instruments
|
|
|
0
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
(10
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
F-282
Infineon
Technologies AG
Notes to the Financial Statements
Contingencies
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
in millions
|
|
|
Guarantees related to convertible and exchangeable bonds
|
|
|
915
|
|
|
|
815
|
|
Credit guarantees in favour of affiliated companies and
investments
|
|
|
179
|
|
|
|
261
|
|
Guarantees for leases
|
|
|
52
|
|
|
|
53
|
|
Credit guarantees related to grants
|
|
|
18
|
|
|
|
16
|
|
Other
|
|
|
9
|
|
|
|
2
|
|
Thereof to affiliated companies
|
|
|
1.172
|
|
|
|
1.146
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,173
|
|
|
|
1,147
|
|
|
|
|
|
|
|
|
|
|
Other
financial obligations
As of September 30, 2008, the company has off-balance sheet
arrangements for lease contracts for properties as well as
long-term lease contracts for fixed assets. According to the
terms of the contracts IF AG is not the economic owner of the
property. The expected future cash outflows for these lease
contracts amount to 50 million for the following
fiscal year, 190 million for the following 2 to
5 years, and 276 million for the period
thereafter.
As of September 30, 2008, the company has additional
off-balance sheet arrangements for unconditional long-term
purchase commitments. The expected future cash outflows for
these purchase commitments amount to 271 million
for the following fiscal year and 15 million for
the following 2 to 5 years.
The company is subject to various other claims and proceedings
related to the ordinary course of business, including deliveries
and services incidental to the business, patent infringements,
and claims for damages. The company has accrued liabilities for
the estimated legal cost of adjudication for various claims.
Although the results of those claims and proceedings cannot be
reliably estimated, an adverse final resolution of the
investigations or lawsuits could result in material adverse
effects on the companys results of operations, financial
conditions and cash flow. In addition IF AG is involved in
antitrust investigations regarding alleged violations of
antitrust lawsuits and civil law claims for which Qimonda AG is
obligated to indemnify IF AG.
The operating and financial review (including the risk report)
gives further detailed description of potential financial
obligations relating to Qimonda AG.
Other financial obligations are in the normal course of business.
Management
Board and Supervisory Board Compensation
Management
Compensation in the 2008 Fiscal Year
In the 2008 fiscal year, the active members of the Management
Board received total compensation
of 4.9 million. In the 2007 fiscal year the
members of the Management Board active in this year received
total compensation of 6.5 million, including
550,000 stock options with a fair value
of 1.1 million (determined in accordance with
the Monte Carlo simulation model). In the 2008 fiscal year, no
stock options were granted to members of the Management Board.
No performance-related bonuses were paid for the 2007 and 2008
fiscal years. The total cash compensation in the 2008 fiscal
year amounts to 4.9 million (previous
year: 5.3 million).
The total aggregate cash compensation of the members of the
Supervisory Board in the 2008 fiscal year amounted
to 0.5 million (previous
year: 0.6 million). In addition, according to
the Articles of Association each member of the Supervisory Board
received in the 2007 fiscal year 1,500 share appreciation
rights with a fair value of 2.03 (determined in
accordance with the Monte Carlo simulation model). In the 2008
fiscal year, the members of the Supervisory Board waived their
share appreciations rights.
F-283
Infineon
Technologies AG
Notes to the Financial Statements
Former members of the Management Board received total payments
of 0.9 million (severance and pension payments)
in the 2008 fiscal year. This includes the compensation paid to
Dr. Ziebart from June 2008 onward in the amount
of 0.6 million.
During the 2008 fiscal year a total
of 1.2 million was added to pension reserves for
current pensions and entitlements of former Management Board
members; as of September 30, 2008, these pension reserves
amount to 26.6 million.
Neither Infineon nor any of its subsidiaries have granted loans
to any member of our Supervisory or Management Boards.
Regarding the required information on the individual
remuneration of the members of our Supervisory or Management
Boards pursuant to HGB section 314 par. 1 No. 6
subsection a, sentence 5 to 9, reference is made to the
Compensation Report which is part of the Operating and Financial
Review.
Management
Board
The current members of our Management Board, their positions and
their ages are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memberships of Supervisory Boards
|
|
|
|
|
|
|
|
|
and comparable governing bodies of
|
|
|
|
|
Term
|
|
|
|
domestic and foreign companies during
|
Name
|
|
Age
|
|
expires
|
|
Position
|
|
the fiscal year ended September 30, 2008
|
|
Peter Bauer
|
|
|
48
|
|
|
September 30,
2011
|
|
Spokesman of the Management Board,
Chief Executive Officer
(since June 1, 2008)
|
|
Member of the Board of Directors of:
Infineon Technologies China Co., Ltd.,
Shanghai, Peoples Republic of China
(since June 1, 2008)
Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore (since June 1, 2008)
Infineon Technologies North America Corp.,
Wilmington, Delaware, USA
(since June 1, 2008)
Infineon Technologies Japan K.K., Tokyo,
Japan (since June 12, 2008)
|
Prof. Dr. Hermann Eul
|
|
|
49
|
|
|
August 31,
2012
|
|
Member of the Management Board and
Executive Vice President
|
|
Member of the Supervisory Board of:
7Layers AG, Ratingen
|
Dr. Reinhard Ploss
|
|
|
52
|
|
|
May 31,
2012
|
|
Member of the Management Board and
Executive Vice President
|
|
chairman of the Supervisory Board of:
Infineon Technologies Austria AG, Villach,
Austria
Member of the Board of Directors of:
Infineon Technologies (Kulim) Sdn. Bhd.,
Kulim, Malaysia
Member of the Supervisory Board of:
Qimonda AG, Munich
(since August 19, 2008)
|
Dr. Marco Schröter
(since April 1, 2008)
|
|
|
45
|
|
|
March 31,
2013
|
|
Member of the Management Board,
Executive Vice President and Chief
Financial Officer
|
|
Member of the Supervisory Board of:
Infineon Technologies Austria AG, Villach,
Austria (since May 5, 2008)
Member of the Board of Directors of
(each since April 1, 2008):
Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore
Infineon Technologies China Co., Ltd.,
Shanghai, Peoples Republic of China
Infineon Technologies North America Corp.,
Wilmington, Delaware, USA
|
F-284
Infineon
Technologies AG
Notes to the Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memberships of Supervisory Boards
|
|
|
|
|
|
|
|
|
and comparable governing bodies of
|
|
|
|
|
Term
|
|
|
|
domestic and foreign companies during
|
Name
|
|
Age
|
|
expires
|
|
Position
|
|
the fiscal year ended September 30, 2008
|
|
Resigned Members of the Management Board
|
|
|
|
|
|
|
|
|
|
|
Dr. Wolfgang Ziebart
(resigned as of May 31, 2008)
|
|
|
58
|
|
|
|
|
chairman of the Management Board
President and Chief
Executive Officer
|
|
Member of the Board of Directors of
(each until May 31, 2008):
Infineon Technologies China Co., Ltd.,
Shanghai, Peoples Republic of China
Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore
Infineon Technologies Japan K.K., Tokyo, Japan
Infineon Technologies North America Corp.,
Wilmington, Delaware, USA
|
Peter J. Fischl
(retired as of March 31, 2008)
|
|
|
62
|
|
|
|
|
Member of the
Management Board
Executive Vice President and Chief
Financial Officer
|
|
chairman of the Supervisory Board of:
Qimonda AG, Munich
Infineon Technologies Austria AG, Villach,
Austria (since December 5, 2007 until
March 31, 2008)
Member of the Board of Directors of
(each until March 31, 2008):
Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore
Infineon Technologies China Co., Ltd.,
Shanghai, Peoples Republic of China
Infineon Technologies North America Corp.,
Wilmington, Delaware, USA
|
Supervisory Board
Members
The current members of our Supervisory Board, the Supervisory
Board position held by them, their occupation, their principal
external positions and their ages are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Membership of other Supervisory Boards
|
|
|
|
|
|
|
|
|
and comparable governing bodies of
|
|
|
|
|
Term
|
|
|
|
domestic and foreign companies during
|
Name
|
|
Age
|
|
expires
|
|
Occupation
|
|
the fiscal year ended September 30, 2008
|
|
Max Dietrich Kley
chairman
|
|
|
68
|
|
|
|
2010
|
|
|
Lawyer
|
|
chairman of the Supervisory Board of:
SGL Carbon AG, Wiesbaden
Member of the Supervisory Board of:
BASF SE, Ludwigshafen
HeidelbergCement AG, Heidelberg
Schott AG, Mainz
Member of the Board of Directors of:
UniCredit S.p.A., Milan, Italy
|
Gerd
Schmidt(1)
Deputy chairman
|
|
|
54
|
|
|
|
2009
|
|
|
chairman of the Infineon
Central Works Council
chairman of the Infineon
Works Council, Regensburg
|
|
|
Wigand
Cramer(1)
|
|
|
55
|
|
|
|
2009
|
|
|
Labor union clerk IG Metall, Berlin
|
|
|
Alfred
Eibl(1)
|
|
|
59
|
|
|
|
2009
|
|
|
chairman of the Infineon Works Council,
Munich-Campeon
|
|
|
Prof. Johannes Feldmayer
|
|
|
51
|
|
|
|
2010
|
|
|
Management Consultant
|
|
|
Jakob
Hauser(1)
|
|
|
56
|
|
|
|
2009
|
|
|
chairman of the Works Council, Qimonda
AG, Munich
|
|
|
Gerhard
Hobbach(1)
|
|
|
46
|
|
|
|
2009
|
|
|
Deputy chairman of the Infineon Works
Council, Munich-Campeon
|
|
|
Prof. Dr. Renate Köcher
|
|
|
56
|
|
|
|
2010
|
|
|
Managing Director of
Institut für Demoskopie
Allensbach GmbH,
Allensbach
|
|
Member of the Supervisory Board of:
Allianz SE, Munich
BASF SE, Ludwigshafen
(until January 14, 2008)
MAN AG, Munich
BMW AG, Munich (since May 8, 2008)
|
F-285
Infineon
Technologies AG
Notes to the Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Membership of other Supervisory Boards
|
|
|
|
|
|
|
|
|
and comparable governing bodies of
|
|
|
|
|
Term
|
|
|
|
domestic and foreign companies during
|
Name
|
|
Age
|
|
expires
|
|
Occupation
|
|
the fiscal year ended September 30, 2008
|
|
Dr. Siegfried Luther
|
|
|
64
|
|
|
|
2010
|
|
|
Managing Director of
Reinhard Mohn
Verwaltungs GmbH,
Gütersloh
|
|
Member of the Supervisory Board of:
WestLB AG, Duesseldorf/Muenster
Wintershall Holding AG, Kassel
EVONIK Industries AG, Essen
(since December 3, 2007)
chairman of the Board of Administration of:
RTL Group S.A., Luxembourg
Member of the Board of Administration of:
Compagnie Nationale à Portefeuille S.A.,
Loverval, Belgium
|
Michael
Ruth(1)
Representative of Senior
Management
|
|
|
48
|
|
|
|
2009
|
|
|
Corporate Vice President
Reporting and Planning, Infineon Technologies AG
|
|
|
Prof. Dr. rer. nat. Doris
Schmitt-Landsiedel
|
|
|
55
|
|
|
|
2010
|
|
|
Professor at the Munich Technical University, Munich
|
|
|
Kerstin
Schulzendorf(1)
|
|
|
46
|
|
|
|
2009
|
|
|
Member of the Works Council, Infineon Dresden
|
|
|
Dr. Eckart Sünner
|
|
|
64
|
|
|
|
2010
|
|
|
President Legal, Taxes & Insurance BASF
SE, Ludwigshafen (until December 31, 2007)
President, Chief Compliance Officer
BASF SE, Ludwigshafen (since January 1, 2008)
|
|
Member of the Supervisory Board of:
K+S AG, Kassel
|
Alexander
Trüby(1)
|
|
|
38
|
|
|
|
2009
|
|
|
Member of the Works Council Infineon
Dresden
|
|
|
Prof. Dr. rer. nat. Martin
Winterkorn
|
|
|
61
|
|
|
|
2010
|
|
|
chairman of the Management Board
Volkswagen AG, Wolfsburg
|
|
chairman of the Supervisory Board of:
Audi AG, Ingolstadt
Member of the Supervisory Board of:
Salzgitter AG, Salzgitter
FC Bayern München AG, Munich
TÜV Süddeutschland Holding AG, Munich
Member of the Board of Administration of:
SEAT S.A., Barcelona, Spain
chairman of the Board of Directors of:
Scania AB, Södertälje, Sweden
(since May 3, 2007)
|
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
|
|
|
64
|
|
|
|
2010
|
|
|
Member of the Corporate Executive Committee (until December
31, 2007) Management Consultant (since January 1,
2008)
Siemens AG, Munich
|
|
Member of the Supervisory Board of:
Deutsche Messe AG,
Hanover BSH Bosch und
Siemens Hausgeräte GmbH, Munich
(until April 30, 2008)
Leoni AG, Nuremberg
SAP AG, Walldorf
chairman of the Board of Administration of:
Siemens Ltd., Beijing, Peoples Republic of
China (until May 19, 2008)
Siemens S.A., Lisbon, Portugal
(until April 28, 2008)
Siemens Ltd., Mumbai, India
(until March 31, 2008)
Siemens Ltd., Seoul, Korea
(since May 1, 2007)
|
|
|
|
(1) |
|
Employee representative.
|
F-286
Infineon
Technologies AG
Notes to the Financial Statements
The Supervisory Board maintains the following principal
committees:
|
|
|
Committee
|
|
Members
|
|
Executive Committee
|
|
Max Dietrich Kley
|
|
|
Gerd Schmidt
|
|
|
Prof. Dr. rer. nat. Martin Winterkorn
|
Investment, Finance and Audit Committee
|
|
Max Dietrich Kley
|
|
|
Dr. Siegfried Luther
|
|
|
Gerd Schmidt
|
Mediation Committee
|
|
Max Dietrich Kley
|
|
|
Gerd Schmidt
|
|
|
Alexander Trüby
|
|
|
Prof. Dr. rer. nat. Martin Winterkorn
|
Nomination Committee
|
|
Max Dietrich Kley
|
|
|
Prof. Johannes Feldmayer
|
|
|
Prof. Dr. Renate Köcher
|
|
|
Dr. Siegfried Luther
|
|
|
Prof. Dr. rer. nat. Doris
|
|
|
Schmitt-Landsiedel
|
|
|
Dr. Eckart Sünner
|
|
|
Prof. Dr. rer. nat. Martin Winterkorn
|
|
|
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus
|
|
|
Wucherer
|
Strategy and Technology Committee
|
|
Alfred Eibl
|
|
|
Jakob Hauser
|
|
|
Alexander Trüby
|
|
|
Prof. Dr. rer. nat. Doris
|
|
|
Schmitt-Landsiedel
|
|
|
Prof. Dr. rer. nat. Martin Winterkorn
|
|
|
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus
|
|
|
Wucherer
|
Qimonda Committee
|
|
Alfred Eibl
|
|
|
Prof. Johannes Feldmayer
|
|
|
Dr. Siegfried Luther
|
|
|
Gerd Schmidt
|
Information
pursuant to Section 160 Section 1 No. 2 Corporate
Act (AktG)
IF AG did not make use of the authorization to repurchase and
use its own shares, as granted by the general shareholders
meeting on February 14, 2008, and IF AG did not repurchase
any of its own shares in the 2008 fiscal year. As of
September 30, 2008, IF AG did not hold any of its own
shares.
Information
pursuant to Section 160 Section 1 No. 8 Corporate
Act (AktG)
The German Securities Trading Act
(Wertpapierhandelsgesetz, WpHG) requires each
shareholder whose voting rights reaches, exceeds or, after
exceeding, falls below the 3, 5, 10, 15, 20, 25, 30, 50 or
75 percent thresholds of a listed corporation to notify
such corporation and the German Federal Supervisory Authority
for Financial Services (Bundesanstalt für
Finanzdienstleistungaufsicht) immediately, but no later than
four trading days after such shareholder has reached, exceeded
or fallen below such a threshold. The Company has been notified
of the changes in voting rights set forth below. The number of
shares stated below is taken from the most recent shareholder
notification and may therefore be outdated.
F-287
Infineon
Technologies AG
Notes to the Financial Statements
|
|
|
|
|
On June 8, 2006, the Capital Group Companies, Inc., Los
Angeles, USA has informed the Company according to WpHG
Section 21, paragraph 1 and Section 22 that via
shares its voting rights on Infineon Technologies AG, Neubiberg,
Germany have fallen below the threshold of 5 percent on
June 7, 2006 and amount on that date to 4.949 percent
(corresponding to 36,995,392 voting rights). All of these voting
rights are to be attributed according to WpHG Section 22,
paragraph 1, sentence 1, No. 6 and sentences 2
and 3.
|
|
|
|
On June 14, 2006, Capital Group International, Inc., Los
Angeles, USA has informed the Company according to WpHG
Section 21, paragraph 1 and Section 22 that via
shares its voting rights on Infineon Technologies AG, Neubiberg,
Germany have fallen below the threshold of 5 percent on
June 7, 2006 and amount on that date to 4.949 percent
(corresponding to 36,995,392 voting rights). All of these voting
rights are to be attributed according to WpHG Section 22,
paragraph 1, sentence 1, No. 6 and sentences 2 and 3.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has informed the Company according to WpHG
Section 21, paragraph 1 and Section 23 that on
February 7, 2008 its voting rights in Infineon Technologies
AG, Neubiberg, Germany have exceeded the thresholds of
3 percent and 5 percent and now amount to
5.25 percent (corresponding to 39,347,562 voting rights).
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7, 2008
the voting rights of ML UK Capital Holdings, London, United
Kingdom, in Infineon Technologies AG, Neubiberg, Germany, have
exceeded the thresholds of 3 percent and 5 percent and
now amount to 5.25 percent (corresponding to 39,347,562
voting rights). All of these voting rights were attributed to ML
UK Capital Holdings in accordance with WpHG Section 22,
paragraph 1, sentence 1, No. 1. The chain of
controlled undertakings through which the voting rights are held
is: Merrill Lynch International, which is controlled by ML UK
Capital Holdings.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG section 21 paragraph 1 WpHG that, on
February 7, 2008 the voting rights of Merrill Lynch
Holdings Limited, London, United Kingdom, in Infineon
Technologies AG, Neubiberg, Germany, have exceeded the
thresholds of 3 percent and 5 percent and now amount
to 5.25 percent (corresponding to 39,347,562 voting
rights). All of these voting rights were attributed to Merrill
Lynch Holdings Limited in accordance with WpHG Section 22,
paragraph 1, sentence 1, No. 1. The chain of
controlled undertakings through which the voting rights are held
is: Merrill Lynch International, which is controlled by ML UK
Capital Holdings, which is controlled by Merrill Lynch Holdings
Limited.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7, 2008
the voting rights of Merrill Lynch Europe Intermediate Holdings,
London, United Kingdom, in Infineon Technologies AG, Neubiberg,
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch Europe Intermediate
Holdings in accordance with WpHG Section 22,
paragraph 1, sentence 1, No. 1. The chain of
controlled undertakings through with the voting rights are held
is: Merrill Lynch International, which is controlled by ML UK
Capital Holdings, which is controlled by Merrill Lynch Holdings
Limited, which is controlled by Merrill Lynch Europe
Intermediate Holdings.
|
|
|
|
On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7, 2008
the voting rights of Merrill Lynch Europe PLC, London, England,
in Infineon Technologies AG, Neubiberg, Germany, have exceeded
the thresholds of 3 percent and 5 percent and now
amount to 5.25 percent (corresponding to 39,347,562 voting
rights). All of these voting rights were attributed to Merrill
Lynch Europe PLC in accordance with WpHG Section 22,
paragraph 1, sentence 1, No. 1. The chain of
controlled undertakings through which the voting rights are held
is: Merrill Lynch International, which is controlled by ML UK
Capital Holdings, which is controlled by Merrill Lynch Holdings
Limited,
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F-288
Infineon
Technologies AG
Notes to the Financial Statements
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which is controlled by Merrill Lynch Europe Intermediate
Holdings, which is controlled by Merrill Lynch Europe PLC.
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On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7, 2008
the voting rights of Merrill Lynch International Holdings Inc.,
Wilmington, USA, in Infineon Technologies AG, Neubiberg,
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch International Holdings
Inc. in accordance with WpHG Section 22, paragraph 1,
sentence 1 No. 1. The chain of controlled undertakings
through with the voting rights are held is: Merrill Lynch
International, which is controlled by ML UK Capital Holdings,
which is controlled by Merrill Lynch Holdings Limited, which is
controlled by Merrill Lynch Europe Intermediate Holdings, which
is controlled by Merrill Lynch Europe PLC, which is controlled
by Merrill Lynch International Holdings Inc.
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On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7, 2008
the voting rights of Merrill Lynch International Inc.,
Wilmington, USA, in Infineon Technologies AG, Neubiberg,
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch International Inc. in
accordance with WpHG Section 22, paragraph 1, sentence 1,
No. 1. The chain of controlled undertakings through with
the voting rights are held is: Merrill Lynch International,
which is controlled by ML UK Capital Holdings, which is
controlled by Merrill Lynch Holdings Limited, which is
controlled by Merrill Lynch Europe Intermediate Holdings, which
is controlled by Merrill Lynch Europe PLC, which is controlled
by Merrill Lynch International Holdings Inc., which is
controlled by Merrill Lynch International Inc.
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On February 15, 2008, Merrill Lynch International, London,
United Kingdom, has further informed the Company according to
WpHG Section 21, paragraph 1 that, on February 7, 2008
the voting rights of Merrill Lynch & Co Inc.,
Wilmington, USA, in Infineon Technologies AG, Neubiberg,
Germany, have exceeded the thresholds of 3 percent and
5 percent and now amount to 5.25 percent
(corresponding to 39,347,562 voting rights). All of these voting
rights were attributed to Merrill Lynch & Co Inc. in
accordance with WpHG Section 22, paragraph 1, sentence
1, No. 1. The chain of controlled undertakings through with
the voting rights are held is: Merrill Lynch International,
which is controlled by ML UK Capital Holdings, which is
controlled by Merrill Lynch Holdings Limited, which is
controlled by Merrill Lynch Europe Intermediate Holdings, which
is controlled by Merrill Lynch Europe PLC, which is controlled
by Merrill Lynch International Holdings Inc., which is
controlled by Merrill Lynch International Inc, which is
controlled by Merrill Lynch & Co Inc.
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On March 5, 2008, Brandes Investment Partners L.P.
San Diego, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that, via shares its voting rights
on Infineon Technologies AG, Neubiberg, Deutschland, have
exceeded the threshold of 3 percent on February 12,
2008 and now amount to 3.08 percent (this corresponds to
23,073,601 voting rights). According to WpHG Section 22,
paragraph 1, sentence 1, No. 6, 3.08 percent of
the voting rights is to be attributed to the company.
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On March 11, 2008, Dodge & Cox,
San Francisco, USA, has informed the Company according to
WpHG Section 21, paragraph 1 that, via shares the
voting rights of Dodge & Cox International Stock Fund,
San Francisco, USA, on Infineon Technologies AG, Neubiberg,
Deutschland, have exceeded the threshold of 10 percent on
March 7, 2008 and now amount to 10.03 percent (this
corresponds to 75,227,800 voting rights).
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On March 11, 2008, Dodge & Cox,
San Francisco, USA, has informed the Company according to
WpHG Section 21, paragraph 1 that via shares its
voting rights on Infineon Technologies AG, Neubiberg, Germany,
have exceeded the threshold of 10 percent on March 7,
2008 and now amount to 10.03 percent (this corresponds to
75,227,800 voting rights). According to WpHG Section 22,
paragraph 1, sentence 1, No. 6, 10.03 percent of
the voting rights (this corresponds to 75,227,800 voting rights)
is to be attributed to the company from Dodge & Cox
International Stock Fund, which holds directly more than
10 percent on Infineon Technologies AG (10.03 percent).
|
F-289
Infineon
Technologies AG
Notes to the Financial Statements
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On December 2, 2008, Templeton Investment Counsel, LLC,
Fort Lauderdale, Florida, USA, has informed the Company
according to WpHG Section 21, paragraph 1 that via
shares its voting rights on Infineon Technologies AG, Neubiberg,
Germany, have fallen below the 5 percent limit on
December 1, 2008 and amounted to 4.89 percent
(corresponding to 36,691,854 Voting Rights). According to WpHG
Section 22, paragraph 1, sentence 1, No. 6,
4.89 percent of the voting rights (corresponding to
36,691,854 Voting Rights) are to be attributed to the company.
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On December 12, 2008, AllianceBernstein L.P., New York,
USA, has informed the Company according to WpHG Section 21,
paragraph 1 that on December 9, 2008 its voting rights
on Infineon Technologies AG, Neubiberg, Germany, have fallen
below the threshold of 3 percent and amounted to
2.63 percent (corresponding to 19,686,346 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6.
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On December 12, 2008, AllianceBernstein Corporation, New
York, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that on December 9, 2008, its
voting rights on Infineon Technologies AG, Neubiberg, Germany,
have fallen below the threshold of 3 percent and amounted
to 2.63 percent (corresponding to 19,686,346 voting
rights). All of these voting rights are to be attributed
according to WpHG Section 22, paragraph 1, sentence 1,
No. 6 and sentence 2.
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On December 12, 2008, Equitable Holdings LLC, New York,
USA, has informed the Company according to WpHG Section 21,
paragraph 1 that on December 9, 2008, its voting
rights on Infineon Technologies AG, Neubiberg, Germany, have
fallen below the threshold of 3 percent and amounted to
2.63 percent (corresponding to 19,686,346 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6
and sentence 2.
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On December 12, 2008, AXA Equitable Life Insurance Company,
New York, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that on December 9, 2008,
its voting rights on Infineon Technologies AG, Neubiberg,
Germany, have fallen below the threshold of 3 percent and
amounted to 2.63 percent (corresponding to 19,686,346
voting rights). All of these voting rights are to be attributed
according to WpHG Section 22, paragraph 1, sentence 1,
No. 6 and sentence 2.
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On December 12, 2008, AXA Equitable Financial Services,
LLC, New York, USA, has informed the Company according to WpHG
Section 21, paragraph 1 that on December 9, 2008,
its voting rights on Infineon Technologies AG, Neubiberg,
Germany, have fallen below the threshold of 3 percent and
amounted to 2.63 percent (corresponding to 19,686,346
voting rights). All of these voting rights are to be attributed
according to WpHG Section 22, paragraph 1, sentence 1,
No. 6 and sentence 2.
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On December 12, 2008, AXA Financial, Inc., New York, USA,
has informed the Company according to WpHG Section 21,
paragraph 1 that on December 9, 2008, its voting
rights on Infineon Technologies AG, Neubiberg, Germany, have
fallen below the threshold of 3 percent and amounted to
2.63 percent (corresponding to 19,686,346 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6
and sentence 2.
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On December 12, 2008, AXA S.A., Paris, France, has informed
the Company according to WpHG Section 21, paragraph 1
that on December 9, 2008, its voting rights on Infineon
Technologies AG, Neubiberg, Germany, have fallen below the
thresholds of 3 percent and 5 percent and amounted to
2.68 percent (corresponding to 20,078,742 voting rights).
All of these voting rights are to be attributed according to
WpHG Section 22, paragraph 1, sentence 1, No. 6
and sentence 2.
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On December 17, 2008, Templeton Global Advisors Limited,
Nassau, Bahamas, has informed the Company according to WpHG
Section 21, paragraph 1 that via shares its voting
rights on Infineon Technologies AG, Neubiberg, Germany, have
fallen below the 3 percent threshold on December 15,
2008 and amounted to 2.86 percent (corresponding to
21,412,923 Voting Rights). According to WpHG Section 22,
paragraph 1, sentence 1, No. 6, 2.86 percent of
the voting rights (corresponding to 21,412,923 voting rights) is
to be attributed.
|
Information
pursuant to Section 161 German Corporate Act
(AktG)
The compliance declaration prescribed by Section 161 AktG
was executed by the Management Board and the Supervisory Board
and made available to the shareholders on a continuous basis via
the internet.
F-290
Infineon
Technologies AG
Notes to the Financial Statements
Affiliated/associated
companies
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As of September 30, 2008
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Equity
|
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After tax
|
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Capital share
|
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|
in millions
|
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in %
|
|
|
I.
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|
Affiliated companies
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1.
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|
Affiliated companies/Domestic
|
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Infineon Technologies Dresden GmbH & Co. OHG, Dresden
|
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415
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14
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|
|
|
100
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%
|
|
|
Infineon Technologies Finance GmbH,
Neubiberg(2)
|
|
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370
|
|
|
|
0
|
|
|
|
100
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%
|
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|
Infineon Technologies Bipolar GmbH & Co. KG, Warstein
|
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53
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|
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4
|
|
|
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60
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%
|
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|
Infineon Technologies Wireless Solutions GmbH, Neubiberg
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|
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0
|
|
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0
|
|
|
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100
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%
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|
Comneon GmbH, Nuremberg
|
|
|
9
|
|
|
|
0
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|
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100
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%
|
|
|
Qimonda AG,
Munich(9)(11)
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|
|
4.483
|
|
|
|
(262
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)
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78
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%
|
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|
Qimonda Dresden GmbH & Co. OHG,
Dresden(3)(11)
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611
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(19
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)
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78
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%
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|
Qimonda Europe GmbH,
Munich(3)(11)
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3
|
|
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0
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78
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%
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2.
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|
Affiliated companies/Foreign
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Europe
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ALTIS Semiconductor S.N.C., Essonnes,
France(5)(10)
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131
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|
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16
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50
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%
|
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|
Infineon Technologies Austria AG, Villach,
Austria(1)
|
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603
|
|
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|
65
|
|
|
|
100
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%
|
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|
Infineon Technologies France S.A.S., Saint Denis,
France(1)
|
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|
196
|
|
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|
19
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|
|
|
100
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%
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|
Infineon Technologies Holding B.V., Rotterdam, Netherlands
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2.192
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|
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|
(1.442
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)
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100
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%
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Infineon Technologies Investment B.V., Rotterdam,
Netherlands(1)
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5
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(1.596
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)
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100
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%
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|
Infineon Technologies SensoNor AS, Horten, Norway
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537
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47
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|
|
100
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%
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|
Qimonda Holding B.V., Rotterdam,
Netherlands(3)(11)
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1.535
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|
57
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|
78
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%
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|
Qimonda Portugal S.A., Vila do Conde,
Portugal(4)(11)
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240
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|
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|
39
|
|
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|
78
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%
|
|
|
Qimonda Investment B.V., Rotterdam,
Netherlands(4)(11)
|
|
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0
|
|
|
|
0
|
|
|
|
78
|
%
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
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|
Infineon Technologies North America Corp., Wilmington, Delaware,
USA(1)
|
|
|
103
|
|
|
|
18
|
|
|
|
100
|
%
|
|
|
Infineon Technologies Industrial Power Inc., Wilmington,
Delaware,USA(1)
|
|
|
8
|
|
|
|
3
|
|
|
|
100
|
%
|
|
|
Primarion Inc., Torrance, California,
USA(1)
|
|
|
29
|
|
|
|
(6
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)
|
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|
100
|
%
|
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|
Qimonda Richmond, LLC, Wilmington, Delaware,
USA(6)
|
|
|
581
|
|
|
|
(133
|
)
|
|
|
78
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%
|
|
|
Qimonda North America Corp., Wilmington, Delaware,
USA(4)
|
|
|
758
|
|
|
|
76
|
|
|
|
78
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%
|
|
|
Asien
|
|
|
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|
|
|
|
|
|
|
|
|
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|
Infineon Technologies (Advanced Logic) Sdn. Bhd., Malacca,
Malaysia(1)
|
|
|
14
|
|
|
|
2
|
|
|
|
100
|
%
|
|
|
Infineon Technologies Asia Pacific Pte., Ltd,
Singapore(1)
|
|
|
75
|
|
|
|
18
|
|
|
|
100
|
%
|
|
|
Infineon Technologies China Co. Ltd., Shanghai,
China(1)(10)
|
|
|
40
|
|
|
|
2
|
|
|
|
100
|
%
|
|
|
Infineon Technologies Japan K.K., Tokio,
Japan(1)
|
|
|
3
|
|
|
|
2
|
|
|
|
100
|
%
|
|
|
Infineon Technologies (Kulim) Sdn. Bhd., Kulim,
Malaysia(7)
|
|
|
38
|
|
|
|
(1
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)
|
|
|
100
|
%
|
|
|
Infineon Technologies (Malaysia) Sdn. Bhd., Malacca,
Malaysia(1)
|
|
|
62
|
|
|
|
6
|
|
|
|
100
|
%
|
|
|
Qimonda Asia Pacific Pte. Ltd.,
Singapore(4)(11)
|
|
|
64
|
|
|
|
33
|
|
|
|
78
|
%
|
|
|
Qimonda Malaysia Sdn. Bhd., Malacca,
Malaysia(4)(11)
|
|
|
19
|
|
|
|
2
|
|
|
|
78
|
%
|
|
|
Qimonda Module (Suzhou) Co., Ltd., Suzhou,
China(4)(11)
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|
|
10
|
|
|
|
6
|
|
|
|
78
|
%
|
|
|
Qimonda Technologies (Suzhou) Co., Ltd., Suzhou,
China(4)(11)
|
|
|
200
|
|
|
|
73
|
|
|
|
57
|
%
|
II.
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|
Associated companies
|
|
|
|
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|
|
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|
Other investments/Foreign
|
|
|
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|
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|
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|
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|
|
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|
Inotera Memories Inc., Taoyuan,
Taiwan(8)(11)
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|
1.700
|
|
|
|
341
|
|
|
|
28
|
%
|
|
|
|
(1) |
|
Held by Infineon Technologies
Holding B.V.
|
|
(2) |
|
Partially held by Infineon
Technologies Holding B.V.
|
|
(3) |
|
Held by Qimonda AG
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|
(4) |
|
Held by Qimonda Holding BV.
|
|
(5) |
|
Held by Infineon Technologies
Holding France S.A.S
|
|
(6) |
|
Held by Qimonda North America Corp.
|
|
(7) |
|
Held by Infineon Technologies
Austria AG
|
|
(8) |
|
Held by Qimonda AG. On
October 13, 2008, Qimonda announced that they entered into
a share purchase agreement to sell its 35.6 percent stake
in Inotera memories, inc, to Micron Technology, Inc, for cash
proceeds of US$400 million. The sale of the Inotera stake
occurred in two equal tranches, on October 20, 2008 and
November 26, 2008, respectively.
|
|
(9) |
|
Partially held by Infineon
Investment B.V.
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|
(10) |
|
as of December 31, 2007
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|
(11) |
|
as of September 30, 2007.
Equity and income (loss) after tax as of September 30,
2008 may differ significantly from prior years
figures. The company refers to its Operating and Financial
Review (including the risk report).
|
F-291
Infineon
Technologies AG
Notes to the Financial Statements
Figures are according to financial statements considering
country-specific regulations are might partially be preliminary.
Equity and net income (loss) was converted as of
September 30, 2008 from local currency to Euro by using the
average exchange rate of foreign currencies.
Management
Neubiberg, Dezember 22, 2008
Infineon Technologies AG
|
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Peter Bauer
Dr. Reinhard Ploss
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|
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|
Prof. Dr. Hermann Eul
Dr. Marco Schroeter
|
|
F-292
Infineon
Technologies AG
Notes to the Financial Statements
Responsibility
Statement by the Management Board
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the group, and the
operating and financial review includes a fair review of the
development and performance of the business and the position of
the group, together with a description of the principal
opportunities and risks associated with the expected development
of the group.
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|
Neubiberg, December 22, 2008
Peter Bauer
Dr. Reinhard Ploss
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|
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|
Prof. Dr. Hermann Eul
Dr. Marco Schröter
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|
F-293
The following auditors report, prepared in accordance with
§322 HGB [Handelgesetzbuch: German
Commercial Code], refers to the complete financial
statements, comprising the balance sheet, the income statement
and the notes to the financial statements, together with the
bookkeeping system, and the management report for the business
year from October 1, 2007 to September 30, 2008. The
management report is not included in this prospectus.
AUDITORS
REPORT
We have audited the annual financial statements, comprising the
balance sheet, the income statement and the notes to the
financial statements, together with the bookkeeping system, and
the management report of Infineon Technologies AG, Neubiberg,
and the Infineon group for the business year from
October 1, 2007 to September 30, 2008. The maintenance
of the books and records and the preparation of the annual
financial statements and management report in accordance with
German commercial law are the responsibility of the
Companys management. Our responsibility is to express an
opinion on the annual financial statements, together with the
bookkeeping system, and the management report based on our audit.
We conducted our audit of the annual financial statements in
accordance with § 317 HGB
[Handelsgesetzbuch: German Commercial
Code] and German generally accepted standards for the
audit of financial statements promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany]
(IDW). Those standards require that we plan and perform the
audit such that misstatements materially affecting the
presentation of the net assets, financial position and results
of operations in the annual financial statements in accordance
with German principles of proper accounting and in the
management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal
environment of the Company and expectations as to possible
misstatements are taken into account in the determination of
audit procedures. The effectiveness of the accounting-related
internal control system and the evidence supporting the
disclosures in the books and records, the annual financial
statements and the management report are examined primarily on a
test basis within the framework of the audit. The audit includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the annual financial statements and management
report. We believe that our audit provides a reasonable basis
for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the annual
financial statements comply with the legal requirements and give
a true and fair view of the net assets, financial position and
results of operations of the Company in accordance with German
principles of proper accounting. The management report is
consistent with the annual financial statements and as a whole
provides a suitable view of the Companys position and
suitably presents the opportunities and risks of future
development.
Munich, December 23, 2008
KPMG AG
Wirtschftsprüfungsgesellschaft
(formerly KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprüfungsgesellschaft)
|
|
|
Kozikowski
Wirtschaftsprüfer
|
|
Kempf
Wirtschaftsprüfer
|
F-294
RECENT
DEVELOPMENTS AND OUTLOOK
Subsequent to March 31, 2009, Infineon repurchased
38 million in nominal amount of its Exchangeable
Notes due 2010 for 27 million in cash
and 56 million in nominal amount of its
Convertible Notes due 2010 for 44 million in
cash. The repurchases were made out of available cash.
On May 26, 2009, the Company, through its subsidiary
Infineon Technologies Holding B.V., issued a nominal amount
of 196 million in New Convertible Notes due 2014
at a discount of 7.2 percent in an offering to
institutional investors guaranteed by the Company. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations Measures Taken
to Date to Improve Infineons Financial
Condition Issuance of New Notes.
On July 7, 2009, the Company entered into an Asset Purchase
Agreement with Wireline Holdings, an entity affiliated with
Golden Gate Private Equity, to sell the Wireline Communications
business for a cash consideration of 250 million.
The majority of the purchase price is payable at closing, which
is expected to occur in the fall of 2009, with
20 million of the purchase price being payable
9 months after the closing date. Infineon is selling the
Wireline Communications business in order to focus on the
further development of its main business, its strategy and
strong position in the key areas of energy efficiency, security
and communications, while at the same time further improving its
balance sheet and strengthening its liquidity position. The sale
is expected to close in the fall of 2009. See
Business Material Contracts
Backstop Arrangement.
On July 10, 2009, the Company entered into an Investment
Agreement with the Backstop Investor, whereby the Backstop
Investor will subscribe to the Investment Shares at the
Subscription Price up to a number of Investment Shares that does
not lead to a shareholding in the Company exceeding
30 percent minus one share in the Companys share
capital and voting rights post execution of the Offering, and
subject to the Backstop Investor being able to establish a
participation in the equity capital and voting rights in the
Company of at least 15 percent post execution of the
Offering, unless such requirement is waived by the Backstop
Investor. See Business Acquisitions,
Dispositions and Discontinued Operations Divestiture
of the Wireline Communications Business.
Infineons revenues in the three months ended June 30,
2009 were 845 million compared to
747 million in the three months ended March 31,
2009 and 1,029 million in the three months ended
June 30, 2008. Revenues were up 13 percent
sequentially and down 18 percent year-over-year. In the
three months ended June 30, 2009, Automotive sales were
approximately 206 million, Industrial &
Multimarket sales were approximately 221 million,
Chip Card & Security sales were approximately
82 million, Wireless Solutions sales were
approximately 251 million, and Wireline
Communications sales were approximately 84 million.
Other Operating Segment and Corporate and Elimination sales were
approximately 1 million.
Segment Results for the three months ended June 30, 2009
were as follows: Automotive Segment Result was approximately
negative 17 million, Industrial &
Multimarket Segment Result was approximately
9 million, Chip Card & Security Segment
Result was approximately 4 million, Wireless
Solutions Segment Result was approximately
19 million, and Wireline Communications Segment
Result was approximately 7 million. Other Operating
Segment Result was approximately negative 1 million
and Corporate and Elimination Segment Result was approximately
negative 13 million.
Infineons gross cash position amounted to
871 million as of June 30, 2009 and total debt
at book values amounted to 1,022 million. Total debt
at nominal values amounted to 1,114 million as of
June 30, 2009. Infineons net debt position using
nominal values was 243 million as of June 30,
2009.
Infineon defines gross cash position from continuing operations
as cash and cash equivalents and available-for-sale financial
assets, and net debt position from continuing operations as
gross cash position less short-term debt and current maturities
of long-term debt, and long-term debt. Since Infineon holds a
portion of its available monetary resources in the form of
readily available-for-sale financial assets, which for IFRS
purposes are not considered cash, it reports its
gross cash and net debt positions to provide investors with an
understanding of the Companys overall liquidity.
As of June 30, 2009, inventories were
521 million compared to 543 million as of
March 31, 2009, trade and other receivables were
496 million compared to 518 million as of
March 31, 2009, and trade and other payables were
365 million compared to 302 million as of
March 31, 2009, respectively.
Capital expenditures, including capitalization of R&D
expenses in accordance with IFRS, for the three months ended
June 30, 2009 were approximately 26 million
compared to 51 million in the three months ended
March 31, 2009. Depreciation and amortization, including
amortization of capitalized R&D, was approximately
133 million for the three months ended June 30,
2009 compared to 137 million in the three months
ended March 31, 2009.
The Company expects its quarterly report for the three and nine
months ended June 30, 2009 to be published on or about July
29, 2009. The Company will publish on or about July 29, 2009 a
supplement to the Prospectus to reflect the recent developments
for the interim period up to and including June 30, 2009 in
the Prospectus.
G-1
Neubiberg, July 2009
Infineon
Technologies AG
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gez. Bauer
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gez. Dr. Schröter
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gez. Prof. Dr. Eul
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gez. Dr. Ploss
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Frankfurt/Main, July
2009
Credit Suisse
Securities (Europe) Limited
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gez. Grosse
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gez. Echterbecker
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Frankfurt/Main, July
2009
Deutsche Bank
AG
London, July 2009
Merrill Lynch
International
U-1
London, July 2009
Citigroup Global
Markets Ltd.
U-2