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Electronics Production | November 08, 2007

Qimonda's sales decline in Q4

Net sales were Euro 711 million in the fourth quarter of FY 2007, a decline of 4 percent from Euro 740 million in the third quarter of FY 2007 and a decline of 42 percent from Euro 1.23 billion in the fourth quarter of FY 2006.
Fourth quarter FY 2007 EBIT was a loss of Euro 258 million compared to an EBIT loss of Euro 323 million in the third
quarter of FY 2007 and positive EBIT of Euro 215 million in the fourth quarter of FY 2006. Net loss in the fourth quarter was Euro 265 million, or a loss per share (basic and diluted) of Euro 0.77, compared to a net loss of
Euro 218 million in the third quarter of FY 2007.

For FY 2007, Qimonda’s net sales were Euro 3.61 billion, a decrease of 5 percent compared to FY 2006. EBIT for FY 2007 was a loss of Euro 246 million compared to positive EBIT of Euro 213 million for FY 2006. Net loss in FY 2007 amounted to Euro 249 million, or loss per share (basic and diluted) of Euro 0.73, compared to a net income of Euro 74 million.

In the fourth quarter, Qimonda realized bit-shipment growth of 33 percent compared to the corresponding period one year earlier, but net sales decreased mainly due to a 53 percent decline in average selling prices compared with the prior year quarter as well as a weaker U.S. dollar. Compared with the third financial quarter, bit-shipments were stable, but net sales decreased due to a slight decline in average selling prices and a weaker U.S. dollar. In FY 2007, Qimonda increased bit-shipments by 44 percent compared to FY 2006, but net sales decreased mainly due to a 29 percent decline of average selling prices as well as a weaker U.S. dollar.

Gross margin improved quarter over quarter due to cost reductions and the absence of additional inventory write downs in the fourth quarter. Year over year, gross margins and net income for the fourth quarter decreased due to the significant decline in average selling prices and a weaker U.S. dollar, resulting in a net loss in the fourth quarter of FY 2007. Net loss increased quarter over quarter primarily due to a small tax expense in the fourth quarter compared to a tax benefit in the third quarter from a recovery of tax expense in prior quarters. The net loss in the fourth quarter includes a tax expense of Euro 25 million due to the revaluation of deferred tax assets following the German Business Tax Reform Act 2008 as well as additional valuation allowances that reduced recorded tax benefits resulting from incurred losses. For the full financial year, gross margin decreased and the net loss was mainly due to the decline in average selling prices as well as the weaker U.S. dollar. These effects could not be offset by higher bit-shipments year-over-year and improved manufacturing productivity.

At the end of FY 2007, the company’s gross cash position was Euro 1 billion and its net cash position was Euro 707 million. These figures reflect proceeds of Euro 156 million from a sale-leaseback transaction Qimonda closed in September 2007 involving 200mm equipment in its Richmond facility. For FY 2007, Qimonda recorded capital expenditures of Euro 879 million and achieved positive free cash flow of Euro 266 million.

In the fourth quarter of FY 2007, cash flow from operations increased to Euro 211 million compared to Euro 45 million in the third quarter FY 2007, mainly due to improvements in working capital. Capital expenditures were Euro 278 million, mainly for the further expansion of the Richmond 300mm wafer manufacturing facility and equipment upgrades for the further conversion to 75nm and smaller DRAM technologies. In the fourth quarter of FY 2007, Qimonda achieved positive free cash flow of Euro 90 million, including the effect of the sale-leaseback transaction.

In the fourth quarter of FY 2007, Qimonda generated 32 percent of its net sales in North America, 16 percent in Europe, 40 percent in Asia Pacific and 12 percent in Japan.

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