Ad-hoc | 18 November 2005 07:30

Infineon Technologies AG: Results for fourth quarter of financial year 2005

Ad hoc announcement transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— Infineon reports fourth quarter as well as financial year 2005 results and provides outlook for the first quarter of financial year 2006 FOURTH QUARTER RESULTS 2005 (July 1 to September 30, 2005) In Euro million Q4 FY 2005 Q3 FY 2005 +/- Q4 FY 2004 +/- Revenues 1,731 1,606 +8% 1,993 -13% EBIT -43 -234 +++ 113 — Net income -100 -240 +++ 44 — Earnings per share (EUR) -0.14 -0.32 +56% 0.06 — Munich, Germany, November 18, 2005. Fourth quarter revenues were Euro 1.73 billion, up 8 percent sequentially, reflecting increased sales in all operating segments. EBIT loss improved significantly to Euro 43 million from Euro 234 million in the previous quarter, reflecting improved EBIT in all operating segments. The planned phase-out of production at the company’s Munich-Perlach facility and impairment charges in the Communication segment contributed to charges of Euro 64 million, included in the fourth quarter EBIT loss. In the third quarter, charges were Euro 81 million. Net loss was Euro 100 million compared to a net loss of Euro 240 million in the previous quarter. Loss per share was Euro 0.14, compared to a loss per share of Euro 0.32 in the previous quarter. FISCAL YEAR 2005 RESULTS (October 1, 2004 to September 30, 2005) In Euro million FY 2005 FY 2004 +/- Revenues 6,759 7,195 -6% EBIT -183 256 — Net income -312 61 — Earnings per share (EUR) -0.42 0.08 — 2005 financial year revenues were Euro 6.76 billion, down 6 percent year-on- year. EBIT loss was Euro 183 million, compared with positive Euro 256 million in the previous year. EBIT decreased year-on-year, reflecting lower EBIT in all operating segments. EBIT loss in the 2005 financial year included net charges of Euro 104 million. In the 2004 financial year, EBIT was negatively impacted by net charges aggregating Euro 332 million. Net loss amounted to Euro 312 million, compared to net income of Euro 61 million in the previous year. Free cash flow was negative Euro 281 million, a decrease from positive Euro 206 million in the previous year. OUTLOOK FOR THE FIRST QUARTER OF FINANCIAL YEAR 2006 Industry experts forecast mid-single-digit growth for the worldwide semiconductor market in the 2006 calendar year. For the 2006 financial year, Infineon expects to develop at least in line with the market. In its Automotive, Industrial and Multimarket segment, the company anticipates further growth due to increasing demand for electronics in cars, power conversion, and energy-saving technologies. In addition, Infineon expects further business opportunities in the Communication segment, mainly due to its capability in radio-frequency technologies. In its Memory Product segment, Infineon will continue to focus its portfolio on higher margin growth businesses. In the first quarter of the 2006 financial year, Infineon expects revenues to increase slightly compared to the fourth quarter of the 2005 financial year. The company will continue to phase out the production at Munich-Perlach, build the new production site in Kulim, Malaysia, and to ramp up the 300-millimeter production facility in Richmond. In the first quarter of the 2006 financial year, Infineon expects no significant charges. In addition, Infineon will begin to recognize stock-based compensation expense in its statements of operations. BUSINESS GROUPS’ OUTLOOK FOR THE FIRST QUARTER OF FINANCIAL YEAR 2006 Automotive, Industrial and Multimarket: Infineon expects revenues and EBIT to increase slightly in its automotive and industrial business in the first quarter of the 2006 financial year compared to the fourth quarter of the 2005 financial year, despite annual price reductions at major customers that take effect for the first time in the first quarter of the 2006 financial year. Infineon anticipates revenues and EBIT in the security and chip-card business to remain under pressure, but currently expects the trend to be reversed beginning with the second quarter of the 2006 financial year, due to the cost- reduction measures put in place. In the overall Automotive, Industrial and Multimarket segment, Infineon expects revenues to increase slightly and EBIT to remain stable compared to the fourth quarter of the 2005 financial year, despite the previously mentioned price reductions, the anticipated expenses in connection with the planned phase-out of production at Munich-Perlach and expenses for the new production site in Kulim, Malaysia. Communication: In the first quarter of the 2006 financial year, the company expects revenues of its Communication segment to remain stable compared to the fourth quarter of the 2005 financial year. The company expects the segment’s EBIT loss to stay in the range of the EBIT loss in the fourth quarter of the 2005 financial year. Memory Products: In the first quarter of the 2006 financial year, Infineon expects seasonal strength in demand for computers to drive bit growth in the DRAM market. On the supply side, capacity and productivity in the industry are expected to grow, offset only partially by capacity shifts to non-DRAM products by some of the company’s competitors. This, coupled with pricing pressure and uncertainties regarding chipset availability in the PC segment, makes price development difficult to predict. The company expects to further increase its bit production based on additional capacities at the company’s joint venture Inotera and its 300-millimeter production facility in Richmond. The company continues to focus its portfolio on higher margin growth businesses, including infrastructure, and high-end graphics, as well as consumer and mobile applications. Infineon Technologies AG St.-Martin-Str. 53 81669 München Deutschland ISIN: DE0006231004 (DAX) WKN: 623100 Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart; NYSE End of ad hoc announcement (c)DGAP 18.11.2005 Issuer’s information/explanatory remarks concerning this ad hoc announcement: DISCLAIMER This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments of the world semiconductor market, especially the market for memory products, Infineon’s future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the transitioning of our production processes to smaller structure sizes, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, and our ability to achieve our cost savings and growth targets. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, the outcome of antitrust investigations and litigation matters, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements. End of message (c)DGAP