Ad-hoc | 26 April 2006 07:30

Infineon reports results for second quarter of 2006 financial year and provides outlook for third quarter

Ad hoc announcement transmitted by DGAP – a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. —————————————————————————— SECOND QUARTER 2006 RESULTS (January 1 to March 31, 2006) In Euro million Q2 FY06 Q1 FY06 +/- Q2 FY05 +/- Revenues 1,993 1,674 19% 1,606 24% EBIT 28 (122) +++ (117) +++ Net loss (26) (183) 86% (114) 77% Loss per share (in Euro) (0.03) (0.25) 88% (0.15) 80% Munich, Germany, April 26, 2006. Second quarter revenues increased strongly to Euro 1.99 billion, up 19 percent sequentially, reflecting significantly higher sales in the Memory Products and the Automotive, Industrial and Multimarket segments. As expected, revenues in the Communication Solutions segment decreased moderately compared to the prior quarter. Net loss in the second quarter was Euro 26 million compared to a net loss of Euro 183 million in the prior quarter. Loss per share was Euro 0.03, compared to a loss per share of Euro 0.25 in the previous quarter. Infineon achieved positive EBIT in the second quarter after four quarters of losses. EBIT increased significantly to Euro 28 million from an EBIT loss of Euro 122 million in the prior quarter, primarily due to a return to positive EBIT in the Memory Products segment and a very strong increased EBIT in the Automotive, Industrial and Multimarket segment. The Communication Solutions segment showed a small increase of the EBIT loss. HALF YEAR RESULTS (October 1, 2005, to March 31, 2006) Total revenues for the first half of the 2006 financial year were Euro 3.67 billion, up 7 percent from Euro 3.42 billion in the same period last year. EBIT in the first half of the 2006 financial year was negative Euro 94 million, a decrease from positive Euro 94 million in the same period last year. OUTLOOK FOR THE THIRD QUARTER OF THE 2006 FINANCIAL YEAR In the third quarter of the 2006 financial year, compared to the very high second quarter level especially in the Automotive, Industrial and Multimarket segment, Infineon expects revenues and EBIT in the two logic segments combined to decline. Infineon continues to expect the conclusion of the carve-out of its Memory Products segment on May 1, 2006. Effective May 1, 2006, Qimonda will start operations. Additional details concerning the outlook can be found in the respective segments’ sections. In the third quarter of the 2006 financial year, the company expects the EBIT loss of the Corporate and Reconciliation segment to increase compared to the second quarter, due to costs incurred in connection with the carve-out of the company’s Memory Products segment. The third quarter will also include the dilution gain of approximately Euro 30 million from the Inotera Initial Public Offering in March 2006 as part of non operating income within the Memory Products segment’s EBIT. In addition to the dilution gain, the company expects charges in the third quarter, mainly reflecting the already by ALTIS announced restructuring of the joint venture ALTIS as well as other items. Overall, the company does not expect a major impact on group results out of the above mentioned events. “Last quarter, we improved our performance significantly. After four quarters of EBIT losses, we are now EBIT positive again,” said Dr. Wolfgang Ziebart, CEO and President of Infineon Technologies AG. “The second quarter results demonstrate that both the Memory Products business and the logic business are well-positioned to operate successfully as separate companies in the future”. SEGMENTS’ OUTLOOK FOR THE THIRD QUARTER OF THE 2006 FINANCIAL YEAR Automotive, Industrial and Multimarket: With the last quarter being ahead of expectations and normal seasonality, Infineon anticipates revenues in the Automotive, Industrial and Multimarket segment to normalize in the third quarter of the 2006 financial year and stay within the range of the second quarter. The company expects revenues in its automotive and industrial businesses to reach the second quarter’s high levels. Sales in the security and chip-card business are anticipated to decline slightly to more normal levels compared to the second quarter. In line with more or less flat revenues, the company anticipates the segment’s EBIT to stay within the range of the prior quarter. The EBIT guidance is before taking into account the effect from corporate overhead expenses that will remain with the company’s two logic segments following the legal separation of its Memory Products segment. The exact amounts cannot be quantified at this stage. Communication Solutions: In the third quarter of the 2006 financial year, Infineon expects revenues of its Communication Solutions segment to decline compared to the second quarter. On the one hand, the company will no longer benefit from revenues of Fiber Optics products after the Fiber Optics divestiture. On the other hand, the company also expects a return to more normalized revenue levels in broadband access. With operating results driven predominantly by revenue development, the company anticipates the segment’s EBIT loss to increase in the third quarter. The EBIT guidance is before taking into account the effect from corporate overhead expenses that will remain with the company’s two logic segments following the legal separation of its Memory Products segment. The exact amounts cannot be quantified at this stage. Memory Products: In the third quarter of the 2006 financial year, Infineon expects to grow its bit production by approximately 10 percent. The third quarter EBIT will be influenced by benefits from corporate overhead expenses that will remain with the company’s two logic segments following the legal separation of its Memory Products segment, offset in part by the establishment of the Qimonda proprietary corporate infrastructure. The exact amounts cannot be quantified at this stage. D I S C L A I M E R This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments of the world semiconductor market, especially the market for memory products, Infineon’s future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the transitioning of our production processes to smaller structure sizes, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our cost savings and growth targets, and the impact of our planned carve-out of the Memory Product business and any further corporate reorganization measures in that regard. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, the outcome of antitrust investigations and litigation matters, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements. Infineon, the stylized Infineon Technologies design are trademarks and service marks of Infineon Technologies AG. All other trademarks are the property of their respective owners. Contact: Investor Relations, Tel.: +49 89 234-26655, Fax: +49 89 234-9552987 (c)DGAP 26.04.2006 —————————————————————————