Elcoteq SE's Interim Report January - September 2009 (Unaudited)
(Thomson Reuters ONE) - Elcoteq SEInterim ReportOctober 28, 2009, at 9.00 am (EET)Elcoteq's third-quarter net sales totaled 331.7 million euros (436.0million euros in April-June 2009). Operating income continued toimprove and totaled -3.3 million euros, and excluding restructuringcosts amounted to -1.6 million euros (-11.5 in April-June 2009). Cashflow after investing activities in July-September was positive at42.7 million euros (72.2 in April - June 2009 and -66.7July-September 2008). Interest bearing net debt decreased by 114.2million euros compared to July - September 2008. The equity projectproceeded, and Elcoteq signed a Letter of Intent with Videocon. Thecompany is also continuing to restructure its balance sheet.July - September- Net sales 331.7 million euros (740.5 in July - September 2008)- Operating loss -3.3 million euros (0.3), and excludingrestructuring costs -1.6 million euros (0.3)- Loss before taxes -7.5 million euros (-6.8)- Earnings per share (EPS) -0.19 euros (-0.35)- Cash flow after investing activities 42.7 million euros (-66.7)- Rolling 12-month return on capital employed (ROCE) -14.4% (-5.6%)- Gearing 2.6 (1.7)January - September- Net sales 1,237.7 million euros (2,554.1 in January - September2008)- Operating loss -53.1 million euros (-8.6), and excludingrestructuring costs -37.4 million euros (-8.6)- Loss before taxes -80.8 million euros (-27.7)- Earnings per share (EPS) -2.26 euros (-1.13)- Cash flow after investing activities 64.2 million euros (-146.3)- Interest-bearing net debt 173.2 million euros (287.4)This interim report has been prepared using IFRS recognition andmeasuring principles. Tables have been prepared in compliance withthe IAS 34 requirements approved by the EU. The comparative figuresgiven in the body text of this report are figures for thecorresponding period in the previous year, unless stated otherwise.July - SeptemberElcoteq recorded net sales of 331.7 million euros (740.5 in July -September 2008) between July and September. Operating loss continuedto decrease from the previous quarter, and totaled -3.3 millioneuros, excluding restructuring costs -1.6 million euros (0.3 in July- September 2008 and -11.5 in April-June 2009). The company hascontinued to adjust its operations to lower volumes, but it has atthe same time maintained its global platform to serve customers closeto their end markets. There are good business opportunities anddemand for the services Elcoteq provides, but customers have withheldtheir orders until the company's balance sheet has been restructuredand the existing credit facility is refinanced. In the light of thecurrent volatile market situation, the company will continue to seekfurther potential for cost base improvements.The Group's net financial expenses were 4.1 million euros (7.0). Lossbefore taxes was -7.5 million euros (-6.8) and net loss totaled -6.3million euros (-11.5). Earnings per share (EPS) were -0.19 euros(-0.35).The Group's gross capital expenditures on fixed assets between Julyand September were 1.1 million euros (17.2), or 0.3% of net sales.Depreciation amounted to 13.5 million euros (20.5). Investments havebeen reduced to a minimum to increase existing asset capacityutilization ratios.Cash flow after investing activities remained positive and was 42.7million euros (-66.7). Elcoteq had no sold accounts receivable atthe end of September (115.4). The company has continued actions tolower its working capital level, especially by optimizing materialflows.At the end of September 2009, Elcoteq had cash and unused butimmediately available credit lines totaling 231.0 million euros(187.0). These credit limits included a 230 million euro syndicated,committed credit facility. The refinancing of the existing 230million euro credit facility, the debenture conversion to equity andthe completion of the equity increase are seamlessly linked to eachother. Thus a new re-financing solution for the existing 230 millioneuro credit facility is now under negotiation.At the end of September, the Group's interest-bearing net debtamounted to 173.2 million euros (287.4). Net debt decreased by 20%from the second quarter of 2009. The solvency ratio was 9.7% (15.9%at the end of September 2008) and gearing was 2.6 (1.7). Rolling12-month return on capital employed (ROCE) was -14.4%(-5.6%).January - SeptemberNet sales in January - September decreased significantly compared tothe same period last year, standing at 1.237,7 million euros (2.554,1in January - September 2008). Operating loss was -53.1 million euros(-8.6), excluding restructuring costs -37.4 million euros. Lossbefore taxes was -80.8 million euros (-27.7). Earnings per share(EPS) were -2.26 euros (-1.13). Cash flow after investing activitiesimproved significantly from last year's comparable period and waspositive at 64.2 million euros (-146.3).Gross capital expenditures on fixed assets in January - Septemberamounted to 4.6 million euros (61.5), 0.3% of net sales. Depreciationtotaled 48.4 million euros (55.8).Strategic Business UnitsSince the beginning of 2008, Elcoteq's segment reporting has coveredthree Business Areas: Personal Communications, Home Communicationsand Communications Networks. During the third quarter of 2009 thecompany changed its organization and combined Personal Communicationsand Home Communications under one new segment. Elcoteq now has onlytwo Strategic Business Units (SBUs) as its segments: ConsumerElectronics and System Solutions. In the third quarter of 2009,Consumer Electronics contributed 73% (76%) and System Solutionscontributed 27% (24%) of the Group's net sales.Net sales of the Consumer Electronics SBU in the third quarter were243.5 million euros (564.2). The segment's operating income was -2.3million euros (1.0), and -0.8 million euros excluding restructuringcosts (1.0).Net sales of the System Solutions SBU were 88.2 million euros(176.3). The segment's operating income was 6.9 million euros (7.6).Net sales were affected by the divestment of Ericsson-relatedoperations in Estonia. At the same time, the segment has been able tofurther reduce costs to offset the volume decline. The segment'sprofitability was affected by a number of positive one-time itemsarising from restructuring.Elcoteq's third-quarter net sales were derived from the geographicalareas as follows: Europe 49% (49%), Asia-Pacific 18% (23%) andAmericas 33% (28%).PersonnelAt the end of September 2009, the Group employed 10,770 (21,404)people. The geographical distribution of the workforce was asfollows: Europe 4,068 (9,118), Asia-Pacific 3,347 (6,060) andAmericas 3,355 (6,226). The average number of employees on Elcoteq'sdirect payroll between January and September was 12,014 (17,598).Changes in the OrganizationSince the beginning of 2008, Elcoteq has had three Business Areas:Personal Communications, Home Communications and CommunicationsNetworks. They have been reported as separate segments. The PersonalCommunications and Home Communications Business Areas were combinedduring the third quarter, and the company now has only two StrategicBusiness Units (SBUs): Consumer Electronics and System Solutions.Both SBUs are responsible for managing and developing their existingcustomer relationships and applicable service offerings, while GroupOperations and Sourcing is responsible for supply chain andproduction.Consumer Electronics covers products such as mobile and wirelessphones, their parts and accessories, set-top boxes, flat panel TVsand other consumer products. System Solutions covers wireless andwireline infrastructure systems and modules, enterprise networkproducts and various other industrial segment products.By combining the Home Communications and Personal Communicationssegments under the Consumer Electronics SBU, the company can betterutilize the synergies between these businesses. The company also aimsto reduce costs further by streamlining and simplifying theorganization by removing organizational layers and overlapping roles.More emphasis is also put on new sales activities which are now undera separate global function, New Sales and Business Development. Thefunction focuses on identifying new business opportunities, acquiringnew customers and exploring new service segments for the company.As of August 27, 2009 the Management Team consists of the followingpersons:Mr. Jouni Hartikainen, President and CEOMr. Sándor Hajnal, Senior Vice President, Human ResourcesMr. Vesa Keränen, Senior Vice President, Consumer ElectronicsMr. Markus Kivimäki, Senior Vice President, Legal AffairsMr. Tommi Pettersson, Senior Vice President, System SolutionsMr. Mikko Puolakka, CFOMr. Tomi Saario, Senior Vice President, New Sales and BusinessDevelopmentMr. Roger Taylor, Senior Vice President, Group Operations andSourcingAs a result of streamlining the organization, the company hasimplemented personnel reductions in its Group and former BusinessArea functions.Equity ProjectEquity investment negotiations with Shenzhen Kaifa Technology CompanyLimited ended in September. On October 2, Elcoteq announced thesigning of a non-binding Letter of Intent with Videocon IndustriesLtd (Videocon). Elcoteq's Board of Directors has given authorizationto proceed with the due diligence and contract negotiations withVideocon. The parties are aiming at a rapid process to conclude thenegotiations and sign the definitive Agreement. The transaction isexpected to close by the end of the year. The signing of theAgreement is subject to successful senior and subordinate debtrestructuring and complete due diligence. The closing of thetransaction will be subject to all the requisite and applicableregulatory, statutory and corporate approvals of both Videocon andElcoteq.Elcoteq stated in July 2009 that it is the company's intention, inagreement with its relevant creditors, to restructure itsinterest-bearing debt as an integral part of the project tostrengthen its balance sheet. This planned restructuring willrequire, among other things, measures to be taken with respect to thecompany's outstanding debentures. The company held a meeting with itsdebenture holders on September 3, 2009 to amend the terms andconditions of its debentures. These amendments were made in order tobe able to carry out the needed actions.Pohjola Corporate Finance as the advisor of Elcoteq will approachdebenture holders with a concrete proposal whereby the debentureholders would be requested to make an irrevocable commitment to sellthe holder's debentures at a price of 25% of the nominal value plusthe accrued interest. Elcoteq is planning a structure in which apotential investor would buy the debentures and possibly subsequentlyconvert the debentures to shares in Elcoteq. According to the plan,Elcoteq shall retain the right to withdraw its proposal.Restructuring PlanElcoteq SE and Ericsson completed a transaction on July 31, 2009whereby the majority of the machinery, equipment and materials ofElcoteq's Tallinn manufacturing operations were sold to Ericsson.Cost-saving measures have continued at other factories as well.Incentive SchemesThe company has a share subscription plan from 2007 that allows thecompany to issue shares to key personnel on the basis of theimprovement of the profit before taxes for the full financial year2008. According to the plan, the actual number of new series A sharesto be transferred to the personnel on November 12, 2009 is 336,266.Elcoteq SE's Board of Directors has amended the 2009 ShareSubscription Plan. The amendments concern the issuance of shares incase of a public tender offer and secondly, a situation where thecompany's registered share capital value would increase at least 50%during the second half of 2009. If such situations occur, a maximumof 750,000 shares will be issued. Exact details about the ShareSubscription Plan can be found on the company's website.Shares and ShareholdersAt the end of September 2009, the company had 127,795,919 sharesdivided into 22,025,919 series A shares and 105,770,000 series KFounders' shares. All the series K Founders' shares are held by thecompany's three principal owners.Elcoteq had 10,306 shareholders on September 30, 2009. There were atotal of 5,225,083 foreign and nominee registered shares,representing 4.1% of the votes.Short-Term Risks and Uncertainty FactorsThe company's key short-term challenges are to conclude both theplanned debt restructuring, including the extension of the revolvingcredit facility, and the equity project as well as to ensure customersatisfaction and maximize sales. In the changing marketcircumstances, the company must continue to maintain the rightservice offering, optimized cost level and ability to react rapidlyto demand changes.ProspectsFourth-quarter net sales are expected to decline further compared tothe third quarter of 2009. Operating income is expected to benegative. Cash flow is expected to be positive.Securing the company's long-term financing in the future is expectedby the new and existing customers. This will speed up the signing ofseveral new programs that are under negotiations. Elcoteq's customersare giving continuous positive feedback as regards the company'soperational performance.Elcoteq plans its material purchases and capacity based on theforecasts received from customers and market analysis. Such forecastsmay fluctuate during the forecast period, causing uncertainty in thecompany's own forecasts.October 27, 2009Board of DirectorsFurther information:Jouni Hartikainen, President and CEO, +358 10 413 11Mikko Puolakka, CFO, tel. +358 10 413 1287Minna Aila, Director, Communications and Corporate Responsibility,tel. +358 10 413 1908Press Conference and WebcastElcoteq will arrange a combined press conference, conference call andaudio webcast for media and analysts on Wednesday, October 28, at2.30 pm (EET). The event will be held in English and it will behosted at the Scandic Hotel Simonkenttä, Bulsa-Freda room (Simonkatu9, Helsinki, Finland).To listen to the press conference either live or as an on-demandversion, please visit www.elcoteq.com. To participate via aconference call, please dial in 5-10 minutes before the beginning ofthe event: +44 (0)20 7162 0125 (Europe) or +1 334 323 6203 (USA).When dialing in, the participants should quote 848165 as theconference ID. The password is Elcoteq.Enclosures:1 Income statement2 Balance sheet3 Cash flow statement4 Statement of changes in shareholders' equity5 Formulas for the calculation of key figures6 Key figures7 Strategic Business Units8 Restructuring expenses9 Assets and liabilities classified as held for sale10 Impact of business combinations of the consolidated financialstatements11 Assets pledged and contingent liabilities12 Quarterly figuresThe Group adopted the following standards on January 1, 2009:- IFRS 8 Operating Segments. The adoption of the standard does nothave an impact on the Interim Report.- Revised IFRS 23 Borrowing Costs. The adaptation of the standardcauses a change in the accounting principles used in the consolidatedfinancial statements. The adoption of the standard does not have amaterial impact on the Group currently.- Revised IAS 1 Presentation of Financial Statements. The change ofthe standard has impact on the presentation of Income Statement andStatement of Changes in Shareholders' Equity.The following changes in the accounting principles do not have animpact on the consolidated financial statements:- IFRS 2 Share-based Payments- IFRS 1 First-Time adoption and IAS 27 Consolidated and SeparateFinancial Statements- IFRIC 15 Agreements for the Construction of RealEstateAPPENDIX 1INCOMESTATEMENT, Q3/ Q3/ Change, 1-9/ 1-9/ Change, 1-12/MEUR 2009 2008 % 2009 2008 % 2008NET SALES 331.7 740.5 -55.2 1,237.7 2,554.1 -51.5 3,443.2Change in work in progressand finishedgoods -8.2 -4.4 -34.5 -11.7 195.6 -35.5Otheroperatingincome 5.5 4.4 25.2 9.1 9.0 1.0 11.2Operatingexpenses -317.2 -719.7 -55.9 -1,201.3 -2,504.2 -52.0 -3,346.8Restructuringexpenses -1.7 - -15.7 - -13.5Depreciationandimpairment -13.5 -20.5 -34.1 -48.4 -55.8 -13.2 -78.9OPERATINGPROFIT/LOSS -3.3 0.3 -53.1 -8.6 519.3 -20.4% of netsales -1.0 0.0 -4.3 -0.3 1 178.0 -0.6Financialincome andexpenses -4.1 -7.0 -41.0 -27.6 -19.1 44.7 -32.4Share ofprofits andlosses ofassociates -0.1 -0.1 -0.1 - -0.1LOSS BEFORETAXES -7.5 -6.8 10.4 -80.8 -27.7 191.1 -52.9Income taxes 0.7 -4.0 6.0 -7.1 -184.3 -11.1NET LOSS -6.8 -10.7 -36.8 -74.8 -34.8 114.6 -64.0Other comprehensive incomeCash flowhedges 0.3 1.2 3.6 0.3 -2.5Net gain/losson hedges ofnetinvestmentsin foreignoperations 0.6 -4.7 3.8 -5.4 -6.4Foreigncurrencytranslationdifferencesfor foreignoperations -0.1 2.1 0.3 7.6 11.2Income taxrelating tocomponents ofothercomprehensiveincome -0.2 1.2 -1.4 1.4 0.4Othercomprehensiveincome forthe period,net of tax 0.6 -0.2 6.3 3.9 2.7TOTALCOMPREHENSIVELOSS FOR THEPERIOD -6.2 -10.9 -68.5 -30.9 -61.3LOSS FOR THE PERIOD ATTRIBUTABLE TO:Equityholders ofthe parentcompany * -6.3 -11.5 -73.7 -36.8 -65.9Minorityinterests -0.5 0.8 -1.1 2.0 1.9 -6.8 -10.7 -74.8 -34.8 -64.0TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO:Equityholders ofthe parentcompany * -5.9 -12.9 -66.9 -34.0 -64.8Minorityinterests -0.3 2.0 -1.6 3.1 3.5 -6.2 -10.9 -68.5 -30.9 -61.3Earnings pershare (EPS),A shares EUR -0.19 -0.35 -2.26 -1.13 -2.02Earnings pershare (EPS),K founders'shares EUR -0.02 -0.04 -0.23 -0.11 -0.20Income tax is the amount corresponding to the actual effective ratebased on year-to-date actual tax calculation.* The Group's reported net income for theperiod.APPENDIX 2 Sept. 30, Dec. 31,BALANCE SHEET, MEUR 2009 2008 Change, %ASSETSNon-current assets Intangible assets 25.9 27.6 -6.2 Tangible assets 110.3 167.8 -34.3 Investments 2.1 2.2 -6.5 Long-term receivables 46.8 46.4 0.9Non-current assets, total 185.1 244.0 -24.2Current assets Inventories 101.1 256.2 -60.5 Current receivables 193.4 336.3 -42.5 Cash and equivalents 201.0 95.1 111.4Current assets, total 495.5 687.5 -27.9Assets classified as held for sale 21.0 23.9 -12.2ASSETS, TOTAL 701.6 955.4 -26.6SHAREHOLDERS' EQUITY AND LIABILITIESEquity attributable to equity holders of the parent company Share capital* 13.0 13.0 Other shareholders' equity 43.5 109.4 -60.2Equity attributable to equity holders ofthe parent company, total 56.6 122.5 -53.8Minority interests 11.1 12.7 -12.4Total equity 67.7 135.2 -49.9Long-term liabilities Long-term loans 110.1 159.3 -30.9 Other long-term debt 2.8 5.6 -49.5Long-term liabilities, total 113.0 165.0 -31.5Current liabilities Current loans 263.8 173.9 51.7 Other current liabilities 250.2 473.9 -47.2 Provisions 6.9 7.5 -8.1Current liabilities, total 520.9 655.3 -20.5Liabilities classified as held for sale - - -SHAREHOLDERS' EQUITY AND LIABILITIES,TOTAL 701.6 955.4 -26.6* Share capital includes both A-shares listed in Nasdaq OMX HelsinkiExchange and K-founders' shares.APPENDIX 3CONSOLIDATED CASH FLOWSTATEMENT, MEUR 1-9/2009 1-9/2008 Change, % 1-12/2008Cash flow before change inworking capital -6.5 50.3 71.9Change in working capital * 76.3 -106.8 -60.2Financial items and taxes -14.7 -20.8 -29.4 -33.7Cash flow from operatingactivities 55.1 -77.3 -22.0Purchases of non-current assets -3.6 -57.4 -93.7 -61.9Acquisitions - -15.5 -23.9Disposals of non-current assets 12.7 3.9 225.8 8.1Cash flow before financingactivities 64.2 -146.3 -143.9 -99.7Change in current debt 44.4 110.8 -60.0 119.7Repayment of long-term debt - -0.2 -20.4Dividends paid - -1.0 -2.0Cash flow from financingactivities 44.4 109.6 -59.5 97.3Change in cash and equivalents 108.6 -36.7 -395.8 -2.5Cash and equivalents on January1 95.1 92.7 2.6 92.7Cash and equivalents classifiedas held for sale - - -Effect of exchange rate changeson cash held -2.6 3.5 4.9Cash and equivalents at the endof the period 201.0 59.5 237.9 95.1* The company had no sold accounts receivable at the end of September2009.APPENDIX 4STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY,MEUR Attributable to equity holders of the parent Addi- Mino tional Re- rity paid- Hed- Trans- tained inte- Total Share in Other ging lation Re- ear- rests equity serve ca- ca- reser- reser- diffe- for nings own pital pital ves ve rences shares TotalBALANCEAT JAN. -124.01, 2009 13.0 225.0 8.4 -3.1 3.2 -0.1 122.5 12.7 135.2Other comprehensiveincome 3.2 3.5 -73.7 -66.9 -1.6 -68.5Share-based payments 1.0 1.0 1.0BALANCEAT SEPT.30, 2009 13.0 225.0 8.4 0.1 6.8 -0.1 -196.6 56.6 11.1 67.7BALANCEAT JAN.1, 2008 13.0 225.0 8.4 -1.0 0.0 -0.1 -58.7 186.6 11.3 197.9Other comprehensiveincome 0.3 2.4 -36.8 -34.0 3.1 -30.9Share-based payments 0.2 0.2 0.2Dividends -1.0 -1.0BALANCEATSEPT.30,2008 13.0 225.0 8.4 -0.7 2.4 -0.1 -95.3 152.8 13.4 166.2*) The Group has applied hedge accounting to derivative instrumentsrelated to purchases from June 30,2007 and related to personnelexpenses from October 15,2008.APPENDIX 5FORMULAS FOR THE CALCULATION OF KEY FIGURESReturn on equity (ROE) =Net income x 100----------------------------------------------------------------Total equity, average of opening and closing balancesReturn on investments (ROI/ROCE) =(Income before taxes + interest and other financial expenses +income from discontinued operations before taxes andfinancial expenses) x 100--------------------------------------------------------------------------------------Total assets - non-interest bearing liabilities, average of openingand closing balancesReturn on investment (ROI/ROCE) for trailing 12 months =(Income before taxes + interest and other financial expenses + income from discontinued operations before taxes and financial expenses) x 100------------------------------------------------------------------------------------Total assets - non interest-bearing liabilities, average of openingand closing balancesCurrent ratio =Current assets + assets classified as held for sale--------------------------------------------------------------Current liabilities + liabilities classified as held for saleSolvency =Total equity x 100--------------------------------------------Total assets - advance payments receivedGearing =Interest-bearing liabilities - cash and equivalents-------------------------------------------------------------------Total equityEquity per share =Equity attributable to equity holders of the parent company--------------------------------------------------------------------------------Adjusted average number of A shares outstanding end of theperiod + (adjusted average number of K founders' sharesoutstanding end of the period/10)Earnings per share, A shares (EPS) =Net income attributable to equity holders of the parent, A shares-------------------------------------------------------------------------------------Adjusted average number of A shares outstanding during the periodEarnings per shares, K founders' shares (EPS) =Net income attributable to equity holders of the parent,K founders' shares--------------------------------------------------------------------------Adjusted average number of K founders' shares outstandingduring the periodAPPENDIX 6 1-9/ 1-9/ 1-12/KEY FIGURES 2009 2008 Change, % 2008Personnel on average during the period 12,014 17,598 -31.7 17,401Gross capital expenditures, MEUR 4.6 61.5 -92.6 71.4Return on equity (ROE), % -73.7 -19.1 -38.4Return on investment (ROI/ROCE), % -12.7 -0.7 -3.1From 12 preceding months:Return on equity (ROE), % -88.9 -34.8 -38.4Return on investment (ROI/ROCE), % -14.4 -5.6 -3.1Earnings per share (EPS), A-shares,EUR -2.26 -1.13 100.1 -2.02Earnings per share (EPS), K-founders'shares, EUR -0.23 -0.11 105.6 -0.20Current ratio 1.0 1.1 1.1Solvency, % 9.7 15.9 14.2Gearing 2.6 1.7 1.8Shareholders' equity per share,A-shares, EUR 1.74 4.69 3.76Shareholders' equity per share,K-founders' shares, EUR 0.17 0.47 0.38Interest-bearing liabilities, MEUR 387.6 346.9 11.7 333.6Interest-bearing net debt, MEUR 173.2 287.4 -39.7 238.5Non-interest-bearing liabilities, MEUR 384.0 529.5 -27.5 486.7APPENDIX 7STRATEGIC BUSINESS UNITSFrom 2009, Elcoteq has applied IFRS 8 Operating Segments in itssegment reporting. The transfer to IFRS 8 has not changed thepreviously reported information. The presented segment reporting isbased on the figures provided to the company's management.Since the beginning of 2008, Elcoteq has had three Business Areas:Personal Communications, Home Communications and CommunicationsNetworks. They have been reported as separate segments. PersonalCommunications and Home Communications Business Areas were combinedduring the third quarter under a new Strategic Business Unit,Consumer Electronics. Communications Networks business has beenincluded into a new Staregic Business Unit, System Solutions. Thecompany now only has two Strategic Business Units (SBUs): ConsumerElectronics and System Solutions. Both SBUs are responsible formanaging and developing their existing customer relationships andapplicable service offerings, while Group Operations and Sourcing isresponsible for supply chain and production.Strategic Business Unit Consumer Electronics covers products such asmobile and wireless phones, their parts and accessories, set-topboxes flat panel TVs and other consumer products.Strategic Business Unit System Solutions covers wireless and wireline infrastructure products like complete cellular base stations,further enterprise products like switches as well as infrastructureproducts like complexcontrollers.STRATEGIC BUSINESS UNITS, MEUR 1-9/2009 1-9/2008 1-12/2008Net sales Consumer Electronics 916.2 2,055.5 2,739.5 System Solutions 321.5 498.5 703.7Net sales, total 1,237.7 2,554.1 3,443.2Segment's operating income Consumer Electronics -27.0 12.3 15.0 System Solutions -1.9 6.7 1.6 Group's non-allocated expenses/income General & Administrative expenses -23.0 -27.6 -37.1 Other expenses -1.2 -0.1 0.2Operating income, total -53.1 -8.6 -20.4Group's financial income and expenses -27.6 -19.1 -32.4Share of profits and losses of associates -0.1 - -0.1Income before taxes -80.8 -27.7 -52.9Segments' operating income for January-September 2009 includesfollowing restructuring expenses: Consumer Electronics 8.7 millioneuros and System Solutions 6.2 million euros. Group's non-allocatedexpenses/income includes restructuring costs of 0.8 millioneuros.APPENDIX 8RESTRUCTURING EXPENSESDuring the first quarter of 2009, Elcoteq launched a restructuringplan that applies to whole Group. Some part of the costs relating tothe plan were recognized already in 2008. The plan targets to preparethe company for the exceptionally uncertain market situation andgeneral economic development. This plan is the next step in thecompany's drive to increase profitability, cost-efficiency andoperational excellence. The plan has contained several elements suchas the closure of the plants in Arad (Romania), Richardson (USA) andSt. Petersburg (Russia) as well as to consolidate the plant inShenzhen (China) to the plant in Beijing. Processes with the targetto reduce personnel at several plants globally have been carriedout.In addition the company has reduced other operativecosts.In August 2009, Elcoteq announced further organizational changes (seeAppendix 7). The target is to better utilize the synergies betweenbusinesses and to aim for further cost reductions. Consequentlypersonnel reductions have been and will be carried out at severalElcoteqsites.The Group's restructuring expenses 15,723 thousand euros, comprisethe following items:EUR 1, 000 2009Personnel expenses 9,437Impairments 2,829Production materials and services 1,124Other operating expenses 2,333Restructuring expenses, total 15,723Impairments of non-current assets:EUR 1, 000 2009Intangible rights -Goodwill -Buildings 1,231Machinery and equipment 1,598ADP software -Other financial assets -Impairments, total 2,829 Impairments of buildings as well as machinery and equipment areprimarily due to plant closures.APPENDIX 9ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALEAssets classified as held for sale amounting to 21.0 million eurosrelate to real estates on sale. The company did not have liabilitiesclassified as held for sale at the end of the reporting period.APPENDIX 10IMPACT OF BUSINESS COMBINATIONS OF THE CONSOLIDATED FINANCIALSTATEMENTSElcoteq SE signed in September 4, 2008 an agreement to purchasePhilips' flat panel TV (FTV) assembly operations in Juarez, Mexico.The deal includes a long-term cooperation agreement with Philips toprovide manufacturing services to Philips for its Latin American FTVbusiness and its Philips Business Services business in the Americas.The deal includes also a long term cooperation agreement with FunaiElectric Co., Ltd to provide manufacturing services to Funai's FTVbusiness in North America.The acquisition includes certain fixed assets and inventories ofPhilips' Juarez manufacturing operation and will be used in themanufacturing of products to be supplied to Philips. The assets andliabilities were acquired at fair value.The impact of acquisition tothe group's net profit in 2008, had the agreement been signed at thebeginning of 2008, cannot be reliably determined. Acquisition costinclude 0.5 million euros legal service fees.The assets and liabilities acquired in business combinations arevalued at their fair values.The final acquisition price was confirmed in 2009. Purchase priceallocation and the values of the acquired the assets and liabilitiesare asfollows:Assets and liabilities acquired in business combinationsin: 2008 2008EUR 1,000 Fair Value Book ValueNon-current assets Intangible assets 364 - Tangible assets 5,235 5 235Current assets Inventories 15,181 15,181 Current receivables 7,021 7,021 Cash and equivalents 406 406Assets, total 28,207 28,004Liabilities Current liabilities 5,033 5,033Acquisition cost 23,174 -Acquisition price paid in cash 24,094 -Cash and equivalents of acquired subsidiary -406 -Impact on cash flow 23,688 -The acquisition in 2008 was made in US dollars. The acquisition costwas translated into euros using the exchange rate of the acquisitiondate. The acquisition price paid in cash was translated into eurosusing the payment date's rate of the acquisition.APPENDIX 11ASSETS PLEDGED AND CONTINGENT Sept. 30, Sept. 30, Dec. 31,LIABILITIES, MEUR 2009 2008 Change, % 2008PLEDGED SALES RECEIVABLE 0.0 - 26.9PLEDGED LOAN RECEIVABLES 0.1 - 0.8ON BEHALF OF OTHERS Guarantees 1.0 1.0 1.0LEASING COMMITMENTS Operating leases. production machinery (excl. VAT) 2.4 14.2 -82.8 9.0 Rental commitments. real-estate (excl. VAT) 11.0 15.1 -27.1 15.4DERIVATIVE CONTRACTS Currency forward contracts, transaction risk, hedge accounting not applied Nominal value 218.3 116.1 88.0 118.3 Fair value 0.0 4.2 -99.1 -0.2 Currency forward contracts, transaction risk, hedge accounting applied Nominal value 7.6 97.1 -92.2 69.4 Fair value 0.1 -0.7 -118.1 -3.5 Currency option contracts, transaction risk, hedge accounting applied, bought options Nominal value - - 17.0 Fair value - - 0.3 Currency forward contracts, translation risk Nominal value 20.0 46.2 -56.8 20.2 Fair value 0.0 -1.2 -0.8 Currency forward contracts, financial risk Nominal value 109.5 228.5 -52.1 172.3 Fair value 0.1 -0.8 -3.1 Interest rate and foreign exchange swap contracts Nominal value - 1.5 1.5 Fair value - 0.2 0.2The derivative contracts have been valued using the market prices andthe exchange reference rates of the European Central Bank on thebalance sheet date. The figures also include closedpositions.APPENDIX 12QUARTERLY FIGURESINCOME STATEMENT, Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1MEUR 2009 2009 2009 2008 2008 2008 /2008NET SALES 331.7 436.0 470.0 889.1 740.5 904.8 908.7Change in work in progressand finished goods -8.2 -4.4 -21.9 -23.9 -4.4 -10.1 2.9Other operatingincome 5.5 1.4 2.3 2.2 4.4 3.1 1.6Operating expenses -317.2 -428.0 -456.1 -842.6 -719.7 -878.9 -905.6Restructuringexpenses -1.7 -0.4 -13.6 -13.5 - - -Depreciation andimpairments -13.5 -16.0 -18.9 -23.2 -20.5 -18.2 -17.1OPERATING INCOME -3.3 -11.5 -38.3 -11.8 0.3 0.6 -9.5% of net sales -1.0 -2.6 -8.2 -1.3 0.0 0.1 -1.0Financial income andexpenses -4.1 -11.9 -11.5 -13.3 -7.0 -6.1 -6.0Share of profits andlosses of associates -0.1 0.0 0.0 0.0 -0.1 - -INCOME BEFORE TAXES -7.5 -23.4 -49.9 -25.2 -6.8 -5.5 -15.4Income taxes 0.7 1.5 3.7 -4.0 -4.0 -7.3 4.2NETINCOMEFORTHEPERIOD -6.8 -21.8 -46.1 -29.2 -10.7 -12.8 -11.3ATTRIBUTABLE TO:Equity holders ofthe parent company -6.3 -21.8 -45.6 -29.1 -11.5 -13.7 -11.6Minority interests -0.5 0.0 -0.5 -0.1 0.8 0.9 0.3 -6.8 -21.8 -46.1 -29.2 -10.7 -12.8 -11.3 Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/BALANCE SHEET, MEUR 2009 2009 2009 2008 2008 2008 2008ASSETSNon-current assets Intangible assets 25.9 26.6 27.4 27.6 28.4 28.5 29.5 Tangible assets 110.3 129.8 149.7 167.8 190.0 184.0 182.0 Investments 2.1 2.2 2.3 2.2 2.2 2.1 2.1 Long-term receivables 46.8 45.8 53.0 46.4 49.2 48.5 47.3Non-current assets,total 185.1 204.3 232.4 244.0 269.8 263.2 260.9Current assets Inventories 101.1 113.7 174.2 256.2 358.2 322.5 321.7 Current receivables 193.4 221.4 221.9 336.3 326.4 320.0 271.7 Cash and equivalents 201.0 154.8 98.0 95.1 59.5 50.5 91.9Current assets,total 495.5 489.8 494.1 687.5 744.0 692.9 685.3Assets classified asheld for sale 21.0 41.0 20.7 23.9 28.7 30.5 30.2ASSETS, TOTAL 701.6 735.1 747.1 955.4 1,042.6 986.6 976.4SHAREHOLDERS' EQUITY AND LIABILITIESEquity attributable to equity holders of theparent company Share capital 13.0 13.0 13.0 13.0 13.0 13.0 13.0 Other shareholders' equity 43.5 48.7 64.5 109.4 139.7 152.4 162.8Equity attributable to equityholdersof the parentcompany, total 56.6 61.8 77.5 122.5 152.8 165.4 175.9Minority interests 11.1 12.0 12.8 12.7 13.4 12.5 11.3Total equity 67.7 73.7 90.3 135.2 166.2 177.9 187.2Long-termliabilities Long-term loans 110.1 159.6 158.9 159.3 159.4 159.3 159.4 Other long-term debt 2.8 5.7 6.7 5.6 5.5 5.2 5.0Long-termliabilities, total 113.0 165.2 165.6 165.0 164.9 164.5 164.4Current liabilities Current loans 263.8 210.7 225.4 173.9 187.2 111.2 75.7 Other current liabilities 250.2 279.0 257.4 473.9 519.9 526.8 544.7 Provisions 6.9 5.7 8.4 7.5 4.4 4.8 3.7Current liabilities,total 520.9 495.4 491.2 655.3 711.5 642.8 624.1Liabilitiesclassified as heldfor sale - 0.8 - - - 1.4 0.7SHAREHOLDERS' EQUITYAND LIABILITIES,TOTAL 701.6 735.1 747.1 955.4 1,042.6 986.6 976.4Personnel on averageduring the period 9,877 11,693 14,446 17,050 17,304 17,543 17,894Gross capitalexpenditures, MEUR 1.1 1.5 2.0 9.9 17.2 16.6 27.7ROI/ROCE from 12preceding months, % -14.4 -14.4 -11.3 -3.1 -5.6 -6.2 -10.7Earnings per share(EPS), A-shares, EUR -0.19 -0.67 -1.40 -0.89 -0.35 -0.42 -0.35Solvency, % 9.7 10.0 12.1 14.2 15.9 18.0 19.2CONSOLIDATED CASH Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/FLOW STATEMENT, MEUR 2009 2009 2009 2008 2008 2008 2008Cash flow beforechange in workingcapital 7.0 -6.4 -7.1 21.5 32.8 16.2 1.3Change in workingcapital 34.1 81.1 -38.8 46.6 -65.2 -66.3 24.7Financial items andtaxes -5.0 -3.9 -5.8 -13.0 -7.6 -5.6 -7.5Cash flow fromoperating activities 36.1 70.7 -51.7 55.2 -39.9 -55.8 18.4Purchases ofnon-current assets -1.1 -0.4 -2.1 -4.4 -12.8 -24.6 -20.0Acquisitions - - - -8.4 -15.5 - -Disposals ofnon-current assets 7.8 1.8 3.1 4.1 1.5 1.8 0.5Cash flow beforefinancing activities 42.7 72.2 -50.7 46.6 -66.7 -78.5 -1.1Change in currentdebt 5.2 -12.2 51.4 8.9 72.2 36.3 2.4Repayment oflong-term debt - - - -20.2 - -0.2 -Dividends paid - - - -1.0 -1.0 - -Cash flow fromfinancing activities 5.2 -12.2 51.4 -12.3 71.1 36.1 2.4Change in cash andequivalents 48.0 59.9 0.7 34.2 4.4 -42.4 1.3Cash and equivalentsat the beginning ofthe period 154.8 98.0 95.1 59.5 50.5 91.9 92.7Cash and cashequivalentsclassified as heldfor sale - - - - - 0.2 -0.2Effect of exchangerate changes on cashheld -1.7 -3.1 2.2 1.4 4.6 0.9 -1.9Cash and equivalentsat the end of period 201.0 154.8 98.0 95.1 59.5 50.5 91.9STRATEGIC BUSINESS Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/UNITS, MEUR 2009 2009 2009 2008 2008 2008 2008Netsales ConsumerElectronics 243.5 328.1 344.6 684.0 564.2 721.5 769.8 System Solutions 88.2 107.9 125.3 205.2 176.3 183.3 139.0Net sales, total 331.7 436.0 470.0 889.1 740.5 904.8 908.7Segment's operating income ConsumerElectronics -2.3 -4.6 -20.1 2.7 1.0 6.5 4.8 System Solutions 6.9 1.5 -10.3 -5.1 7.6 3.3 -4.2 Group's non-allocated expenses/income -7.6 -8.2 -7.2 -9.5 -8.3 -9.2 -10.1 -0.3 -0.1 -0.7 0.2 -0.1 - -Operating income,total -3.3 -11.5 -38.3 -11.8 0.3 0.6 -9.5Group's financialincome and expenses -4.1 -11.9 -11.5 -13.3 -7.0 -6.1 -6.0Share of profits andlosses of associates -0.1 0.0 0.0 0.0 -0.1 - -Income before taxes -7.5 -23.4 -49.9 -25.2 -6.8 -5.5 -15.4Restructuring expenses recognized in segment's operatingincome ConsumerElectronics -1.5 0.0 -7.2 -8.1 - - - System Solutions 0.0 -0.4 -5.8 -5.4 - - - Group'snon-allocatedexpenses/income -0.2 0.0 -0.6 - - - -Restructuringexpenses, total -1.7 -0.4 -13.6 -13.5 - - -http://hugin.info/3033/R/1350650/326043.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 28.10.2009 - 08:01 Uhr
Sprache: Deutsch
News-ID 7502
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