News Article
Infineon drops Qimonda with little effect, so far!
The company prepares for disposal and deconsolidation of Qimonda, the investment is reclassified into “Assets Held for Sale“. Qimonda’s operations and balance sheet are unaffected by Infineon’s write down while remaining assets not impaired
Infineon Technologies announced that it takes the next step in preparation for the planned disposal and resulting deconsolidation of its investment in Qimonda. As of March 31, 2008, the assets and liabilities of Qimonda are being reclassified into “Assets Held for Sale” in the consolidated balance sheet of Infineon. Following this reclassification, and in contemplation of its planned deconsolidation, the carrying amount of the investment in Qimonda was reduced to its market value determined on a held for sale basis. The accounting by Infineon for its investment in Qimonda has no direct impact on Qimonda’s financial reporting. Independent of Infineon’s reclassification of its investment in Qimonda to “Assets Held for Sale”, Qimonda has, in accordance with the accounting principles applicable to it, assessed its own assets for recoverability of their carrying values.
This assessment is based on the expected future use of the company’s assets in its continuing operations and, among other factors, considers medium term developments and expectations in Qimonda’s business. Based on the analysis performed, Qimonda concluded that the carrying amount of its pre existing goodwill is impaired and determined that all of its tangible and remaining intangible assets are not impaired. As a result, Qimonda will write off goodwill and charge other operating expense in the total amount of Euro 61 million as of March 31, 2008.
The quarterly results of Infineon Technologies which is scheduled to be announced on April 23, 2008 will include this presentation. As a result of this presentation, the individual line items in the Consolidated Statement of Operations of Infineon will reflect the results of Infineon’s segments other than Qimonda. The results of operations of Qimonda will be reported in one line item titled “Income (Loss) from Discontinued Operations”. Going forward, earnings per share as well as the Statement of cash flows will differentiate between “continuing” and “discontinued” operations. Accordingly, the financial reports will now focus on the ongoing operations of the company while at the same time setting the foundation for the comparability of its performance. Following this reclassification, and in contemplation of its planned disposal and resulting deconsolidation, the investment in Qimonda was reduced to its current fair value.
The difference between the carrying value and the current fair value resulted in a write down of Euro 1 billion, which will be recorded in “Income (Loss) from discontinued operations in the second quarter of the current fiscal year. The existing guidance on Ebit development for Infineon excluding Qimonda for the second quarter of fiscal year 2008 and for the complete fiscal year 2008 remains unchanged. Infineon has repeatedly communicated its goal of reducing its investment in Qimonda below 50% by no later than the 2009 Annual Meeting of Shareholders and is currently evaluating its different alternatives. Infineon currently holds a 77.47% interest in Qimonda.
