Annual Report • Feb 5, 2008
Annual Report
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A N N U A L R E P O R T J a h re s b er ichT 2008
INFICON provides world-class instruments for gas analysis, measurement and control.
These analysis, measurement and control products are essential for gas leak detection in air conditioning, refrigeration, and automotive manufacturing.
They are vital to equipment manufacturers and end-users in the complex fabrication of semiconductors and thin fi lm coatings for optics, fl at panel displays, solar cells and industrial vacuum coating applications.
Other users of vacuum based processes include the life sciences, research, aerospace, packaging, heat treatment, laser cutting and many other industrial processes.
We also leverage our expertise in vacuum technology to provide unique, toxic chemical analysis products for emergency response, security, and environmental monitoring.
INFICON verwirklicht Messgeräte der Spitzen klasse für die Analyse, Messung und Kontrolle von Gasen.
Unsere Analyse-, Mess- und Kontrollprodukte sind ein wesentlicher Erfolgsfaktor in der Gaslecksuche der Klimaund Kühlgeräte Herstellung, sowie für die Produktionsanlagenhersteller und Endverbraucher bei der komplexen Fabrikation von Halbleitern und Dünnfi lmbeschich tungen für optische Instrumente, Flachbildschirme, Solar zellen und industrielle Vakuumbeschichtungen.
Weitere Anwender der Vakuumtechnologie sind: Life Sciences, Forschung, Raumfahrt, Verpackungen, Wärmebehandlung, Laserschneiden und viele weitere indus trielle Prozessindustrien.
Der INFICON Geschäftsbericht umfasst Texte in Deutsch und Englisch; die englischen Texte sind verbindlich. Weitere Exemplare des Geschäftsberichts können im Bereich Investor Relations der INFICON Website www.infi con.com unter Financial Reports herunter geladen werden.
The INFICON Annual Report 2008 is presented for your convenience in English and German. The English language version is binding. Additional copies of this report may be downloaded from the Investor Relations section of our website, www.infi con.com, under Financial Reports.
Unsere Expertise in der Vakuumtechnologie kommt zudem in der Entwicklung von einzigartigen Geräten zur Analyse giftiger Gase in der Notfallhilfe, Sicherheitsüberwachung und Industriehygiene zum Einsatz.
According to U.S. GAAP (U.S. Dollars in Millions, except per share amounts)
| 2004 | 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|---|
| Net sales | 188.1 | 191.3 | 211.7 | 236.6 | 256.5 |
| Research and development | 20.2 | 18.7 | 18.3 | 20.3 | 22.2 |
| Selling, general and administrative | 52.7 | 50.1 | 52.9 | 57.0 | 60.1 |
| Operating income | 14.6 | 20.4 | 26.8 | 32.9 | 33.3 |
| in % of net sales | 7.8% | 10.7% | 12.7% | 13.9% | 13.0% |
| EBITDA | 20.8 | 24.6 | 32.2 | 39.0 | 40.2 |
| in % of net sales | 11.0% | 12.9% | 15.2% | 16.5% | 15.7% |
| Net income | 9.4 | 15.5 | 22.0 | 24.8 | 24.3 |
| Cash and short-term investments | 61.2 | 72.3 | 67.6 | 39.3 | 45.8 |
| Cash fl ow from operations | 23.1 | 17.9 | 21.0 | 30.2 | 31.3 |
| Capital expenditures | 3.7 | 4.0 | 7.0 | 5.7 | 6.0 |
| Total assets | 172.2 | 181.3 | 194.3 | 181.6 | 181.3 |
| Long term debt | — | — | — | — | — |
| Shareholders' equity | 142.3 | 147.1 | 155.8 | 138.3 | 138.9 |
| Equity ratio in % | 82.6% | 80.3% | 80.2% | 76.1% | 76.6% |
| Employees | 729 | 713 | 795 | 891 | 876 |
INFICON's business model generates sustainable sales and earnings year after year. INFICONs Geschäftsmodell generiert nachhaltige Umsätze und Erträge. Über Jahre.
| 2004 | 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|---|
| Ratios per Share | |||||
| Net income per share – diluted | 4.07 | 6.64 | 9.30 | 10.70 | 11.26 |
| Shareholders' equity per share – diluted | 61.00 | 62.90 | 65.70 | 59.70 | 64.32 |
| Free cash fl ow per share – diluted | 8.31 | 5.92 | 5.92 | 10.60 | 11.68 |
| Return on equity % | 6.6% | 10.5% | 14.2% | 17.9% | 17.5% |
| Dividend per share (CHF) | — | 5.00 | 6.00 | 8.00 | 6.00* |
| Share price (CHF) at December 31 | 86.95 | 174.00 | 192.00 | 182.50 | 87.80 |
| * As proposed to AGM |
|||||
| Direct sales by Geographic Region | |||||
| Europe | 83.1 | 81.3 | 94.4 | 104.8 | 117.9 |
| North America | 51.4 | 54.6 | 50.4 | 54.0 | 54.9 |
| Asia-Pacifi c | 51.8 | 53.7 | 64.0 | 73.4 | 80.3 |
| Other | 1.8 | 1.8 | 2.9 | 4.4 | 3.4 |
| Sales by End Market | |||||
| General Vacuum Processes | 82.7 | 86.4 | 94.1 | 99.1 | 114.1 |
| Semiconductor and Vacuum Coating | 58.8 | 53.5 | 70.2 | 81.6 | 78.4 |
| Refrigeration and Air Conditioning | 28.1 | 29.7 | 29.1 | 38.6 | 36.1 |
| Emergency Response and Security | 18.5 | 21.7 | 18.3 | 17.3 | 27.9 |
INFICON has a very strong balance sheet with no long-term debt.
INFICON verfügt über eine äusserst starke Bilanz ohne nennenswerte Schulden.
| General Vacuum Processes |
Semiconductor and Vacuum Coating |
Refrigeration and Air Conditioning |
Emergency Response and Security |
||
|---|---|---|---|---|---|
| MARKET POSITION | 1 | 1 and 2 | 1 | 1 | |
| MARKET | Vacuum technology applications such as aerospace, heat treating, analytical instrumentation, food packaging, and research reached through private-label partners who are global manufacturers of vacuum pumps |
In situ metrology and process control for semi conductor manufacturers, manufacturers of capital equipment for semiconduc tor devices (OEMs), and for thin fi lm coating applications including fl at panel displays (LCD and OLED), solar cells, data storage media, scientifi c and consumer optics, and architectural glass coatings |
Leak detection for quality control in the manufacture of commercial and consumer air conditioners and appli ances, automotive air condi tioners and air bags, wheel wells, and other components After-sale service for repair |
Toxic chemical analysis for global homeland security, emergency response, envi ronmental monitoring for air, soil, and water |
|
| GROWTH DRIVERS | Life Science R&D budgets Easier use of vacuum for industrial and research applications Higher quality standards Global GDP growth |
Increasing number of products with electronic components Fast growth of electronic consumer products in emerging markets Increasing complexity and manufacturing cost of products Drive toward "miniaturiza tion" for portability Increasing demand for solar/ photovoltaic energy |
Increased government regu lation to reduce environmen tal pollution and increase energy effi ciency Increased quality standards and technology/process control New CO2 technology for air conditioning General growth in demand for air conditioning |
Imminent threats to national and global political and economical stability Public opinion, driven by fear of terror, supports and drives governments to allocate resources to homeland security Restructuring process Government agencies (military, police, etc.) faced with more and new tasks for national emergencies Growing environmental concerns |
|
| PRODUCTS | |||||
| Industrial gas analyzers and process control sensors |
• | • | |||
| Vacuum gauges and components |
• | • | • | ||
| Leak detectors | • | • | • | ||
| Thin fi lm controllers | • | ||||
| Chemical identifi cation detectors |
• | • | • | ||
| Sensor integration software | • |
In a marketplace under increasing pressure to reduce costs, increase yields, and improve quality, INFICON provides the tools for exceptional, reliable results: critical sensor technologies and advanced process control software, gas analyzers, helium and refrigerant leak detectors, vacuum gauges,
For a complete list of products, visit our website
Die hochpräzisen und zuverlässigen Instrumente von INFICON ermöglichen in vielen Industrieprozessen signifi kante Kosteneinsparungen, tiefere Ausschussraten und eine höhere Qualität und entsprechen damit einem echten Marktbedürfnis. Das Produktspektrum umfasst unter anderem hochpräzise Sensoren und Prozesskontroll-Software, Gasmessgeräte, Helium- und Kühlmittel-Lecksucher, Vakuum-Messröhren sowie für die rasche Entscheidungsfi ndung vor Ort einsetzbare Geräte zur Aufspürung und Identifi kation toxischer Gase.
Für eine gesamte Produktliste besuchen Sie unsere Webseite auf www.infi con.com/productindex
INDUSTRIAL GAS ANALYZERS AND PROCESS CONTROL SENSORS
tools to aid process engineers in continuously monitoring the manufacturing process for the presence of contaminant gases and for verifying the presence of desired process gases.
INFICON residual gas analyzers (RGAs) are used as diagnostic
VACUUM GAUGES AND COMPONENTS
INFICON vacuum gauges offer superior accuracy and reliability in compact designs. SKY® Capacitance Diaphragm Gauges, with innovative ceramic technology, perform exceptionally well in harsh manufacturing environments.
LEAK DETECTORS INFICON helium, refrigerant, and multi-gas leak detectors set the
THIN FILM CONTROLLERS
standard for reliability and ease of operation – from pinpointing small leaks in high-vacuum systems to heavy-duty industrial quality control for sub-assembly, mid-production and fi nal test.
Market-leading INFICON thin fi lm deposition controllers, monitors and QCM measurement instruments control deposition rate and thickness of the most complex processes with unsurpassed measurement speed and precision.
CHEMICAL IDENTIFICATION SYSTEMS
HAPSITE® ER Chemical Identifi cation System, the only personportable gas chromatograph/mass spectrometer (GC/MS), provides immediate, on-site detection and analysis of volatile organic compounds, toxic industrial chemicals, and chemical warfare agents in air, water and soil.
SENSOR INTEGRATION SOFTWARE
FabGuard FDC combines on-line Fault Detection and Classifi cation (FDC) capabilities with powerful tools for fab engineers to readily analyze virtually any aspect of process and equipment behavior. No other system provides greater capability to guard against wafer loss, reduce unscheduled tool downtime and improve yield.
INFICON was formed in June 2000 from the instrumentation businesses of three well-known international vacuum technology companies offering was November 9, 2000. INFICON has major manufacturing facilities
Instrumentengeschäft dreier bekannter internationaler Firmen, Oerlikon (vormals Unaxis) zusammen geführt worden waren. Am 9. November 2000 gelangte INFICON als selb ständige Gesellschaft an die Börse.
INFICON verfügt über bedeutende Produktionsgesellschaften
| CORPORATE | – IPO on SWX and Nasdaq |
||||
|---|---|---|---|---|---|
| ACQUISITIONS | – HAPSITE Business | – New Vision Systems – Sentex Systems |
|||
| DIVESTMENTS | – Ultraclean Processing business – Diffusion Pump Product line |
||||
| TECHNOLOGY LEADERSHIP |
– Sensor integration and analysis system for semiconductor manufacturing |
– Compact process monitor for semiconductor manufacturing |
– Scanning-laser particle detector for semiconductor manufacturing |
– Thin fi lm deposition controller for fl at panel display manufacturing |
– Vacuum gauge combining three technologies for semiconductor manufacturing – HAPSITE Smart for military/security applications |
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| – Delist from Nasdaq – Photolithography product line (formerly New Vision Systems) |
– CHF 5.00 dividend payment per share – Par value repayment of CHF 5.00 per share – China factory opening – Electro Dynamics Crystal Corp. (EDC) |
– CHF 6.00 dividend payment per share – 10% share repurchase program completed – Maxtek Inc. – Sigma Instruments Inc. |
– CHF 8.00 dividend payment per share – Reduction of share capital following share buyback |
MAJOR EVENTS OF 2008 – FEB 12: INFICON announces 11.7% higher sales and 11.2% higher net income for the fi nancial year 2007 – APRIL 16: INFICON announces 19.1% higher sales and 7.4% higher net income for the fi rst quarter of 2008 – APRIL 24: INFICON shareholders |
|---|---|---|---|---|
| – Leak detector based on quartz membrane technology for refrigeration market |
– Vehicle-mounted chemical identifi cation and detection system for the security market – HAPSITE SituProbe for water monitoring – FabGuard fault detection and control software for semiconductor manufacturing |
– Sky® digital high-temp vacuum gauge for semiconductor manufacturing – FabGuard FDC for fab-wide semiconductor process improvements – Sion Plasma Arc Detector for semiconductor manufacturing – Compass Refrigerant Leak Dector for after-market service |
– HAPSITE ER for onsite chemical identifi cation and analysis – FabGuard 8.0 for semiconductor manufacturing – Guardian Co-Deposition Controller for thin fi lm processes – Transpector XPR3L for solar cell and process yield optimization |
approve the payout of a 33% higher dividend of CHF 8.00 per share for 2007 – JUNE 23: INFICON announces Matthias Tröndle as new CFO of the Group – JULY 15: INFICON announces signifi cant additional HAPSITE orders from China – JULY 23: INFICON completes the 2007 share buyback program cancelling 235,587 registered shares – JULY 24: INFICON announces all-time record results: 24.2% higher sales and 37.3% higher net income for the second quarter and 21.7% higher sales and 20.5% higher net income for the fi rst half-year – SEPTEMBER 25: INFICON publishes its half-year report |
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– OCTOBER 21: INFICON announces 4.8% higher sales and 11.5% higher net income for the third quarter of 2008 |
From left to right:
Board of Directors: Dr. Richard Fischer, Paul Otth, Gustav Wirz (Chairman), Mario Fontana, Dr. Thomas Staehelin.
Five years ago, we set a new goal for the profi tability of INFICON. Since then, the company has increased operating profi t every year. The fi rst three quarters of 2008 were again on track for another excellent result, but the fi nancial crisis and its repercussions on the global economy also left their mark on INFICON in the fourth quarter, resulting in an operating income level for 2008 just slightly above the prior year.
The whole INFICON team worked hard to make the best of the situation. The Board of Directors and Management rapidly took necessary measures to adjust the cost structure to the new market situation. Most of the cost saving actions will become effective in the fi rst quarter of 2009.
INFICON closed the fi scal year with a sales increase of 8.4% to USD 256.5 million and with a 1.4% higher operating income of USD 33.3 million. Cash fl ow increased slightly from USD 30.2 million the year before to USD 31.3 million.
Our very solid balance sheet shows a high equity ratio of over 76%. The Board of Directors will propose a dividend of CHF 6.00 per share to the Annual General Meeting of Shareholders on May 5, 2009.
Vor fünf Jahren haben wir uns ein neues Profi tabilitätsziel für INFICON gesetzt; seither hat die Firma das Ergebnis jedes Jahr erhöht. Im Geschäftsjahr 2008 waren die ersten drei Quartale wiederum geprägt von starkem Wachstum und höherem Gewinn, aber die Finanzkrise und ihre Auswirkungen auf die Weltwirtschaft haben dazu geführt, dass für das ganze 2008 nur eine leichte Erhöhung des Betriebsgewinns gegenüber dem Vorjahr resultierte.
Das ganze INFICON Team hat hart gearbeitet, um die Auswirkungen der Rezession zu mildern. Der Verwaltungsrat und das Management haben schnell reagiert und die Kostenstruktur der neuen Marktsituation angepasst. Die Auswirkungen der meisten Massnahmen werden im ersten Quartal 2009 greifen.
INFICON erzielte 2008 einen Umsatzzuwachs von 8.4% auf USD 256.5 Mio. und einen um 1.4% höheren Betriebsgewinn von USD 33.3 Mio. Mit USD 31.3 Mio. erhöhte sich der Cashfl ow leicht gegenüber USD 30.2 Mio. im Vorjahr.
Die Bilanz präsentiert sich mit einer hohen Eigenkapitalquote von über 76% solide. Der Verwaltungsrat schlägt der Generalversammlung vom 5. Mai 2009 die Ausschüttung einer Dividende von CHF 6.00 je Aktie vor.
An emerging technology in solar cell manufacturing, Guardian™ Co-Deposition Controller signifi cantly improves the reproducibility of thin fi lm quality during the fabrication of CIGS thin fi lms.
Der Guardian™ Co-Deposition Controller ist spezifi sch auf die sich in der Solarzellenherstellung neu durchsetzende CIGS-Dünnschicht-Technologie ausgerichtet und verbessert markant die Reproduzierbarkeit einer gleichbleibenden Dünn-
In December 2007, Peter Maier was promoted to the position of Vice President and General Manager Intelligent Sensor Solutions. Mr. Maier signifi cantly improved effi ciency at our facility in the United States. His background in engineering and his experience as former Vice President/Chief Financial Offi cer certainly help him in his new role. During the fi rst part of 2008, he also served as CFO of the Group and mastered this double work-load with excellence. On September 1, 2008, Matthias Tröndle joined INFICON as Vice President/Chief Financial Offi cer. We are very happy to welcome Mr. Tröndle in his new position and we are certain that INFICON will benefi t greatly from his broad experience in fi nance at an international industrial company.
We are proud to see how INFICON works together as a team in its endeavor to achieve excellence, uncompromising quality, and the highest level of customer satisfaction. This forms the basis of INFICON's long-term success. A clear strategic plan, reviewed every year and, if necessary, adapted to new market developments, enhances the team effort and positions INFICON as a market leader. Close contacts to our global customers provide us with the necessary information to create new products and enhance existing ones.
The integration of acquisitions is proceeding as planned and we are pleased to report that we are meeting our anticipated targets.
Im Dezember 2007 wurde Peter Maier zum Vice President/General Manager Intelligent Sensor Solutions befördert. Herr Maier hat dank seiner Ausbildung in Engineering und seiner Erfahrung als CFO der Gruppe die Effi zienz unserer Niederlassung in den USA verbessert. Bis zur Übernahme der CFO-Position durch seinen Nachfolger hat er auch diese Abteilung weitergeführt und die Doppelbelastung souverän gemeistert. Per 1. September 2008 stiess Herr Matthias Tröndle als Vice President, Chief Financial Offi cer neu zu INFICON. Wir freuen uns, dass sich Herr Tröndle für INFICON entschieden hat. Seine langjährige Finanzerfahrung in einem internationalen, industriellen Umfeld ist für INFICON nur von Vorteil.
Wir sind stolz zu sehen, wie sich das ganze Team engagiert und loyal einsetzt, um Spitzenleistungen, eine kompromisslose Qualität und höchste Kundenzufriedenheit zu erreichen. Dies verhilft INFICON zu anhaltendem Erfolg. Eine klar defi nierte Strategie, die jährlich überprüft und wenn nötig an die Marktgegebenheiten angepasst wird, verstärkt diese Teamleistung und positioniert INFICON als Marktführer. Die enge Zusammenarbeit mit unseren Kunden weltweit liefert uns die nötigen Informationen, um neue innovative Produkte zu entwickeln und bestehende Produkte zu verbessern.
Die Integration der akquirierten Firmen geht planmässig voran. Die erwarteten Ziele sind erreicht worden.
High-temperature, digital SKY ® CDG Capacitance Diaphragm Gauges provide exacting pressure measurement in a variety of industrial applications.
Die mit Keramik-Membranen ausgerüsteten SKY® CDG Kapazitätsmessröhren ermöglichen auch bei hohen Temperaturen exakteste Druckmessungen bei verschiedenen
INFICON's broad-based technology portfolio serves diverse markets worldwide, making the company less dependent on individual market developments. During the fi rst six months sales increased in all of INFICON's target markets – Semiconductor & Vacuum Coating, Refrigeration & Air Conditioning, Emergency Response & Security and General Vacuum Processes – and INFICON ended the fi rst half-year, reporting record high sales and earnings. For the full year 2008, sales only rose in the General Vacuum and Emergency Response & Security markets whereas revenues in the Semiconductor & Vacuum Coating and Refrigeration & Air Conditioning markets declined by single digit fi gures.
INFICON's key market in terms of revenue is the General Vacuum Process end market. Our instruments and components are used across a broad spectrum of industrial applications, which offers certain economic stability. In addition, we address this market through both our private-label customers – mostly global manufacturers of vacuum pumps – and direct sales, which help us to target new vacuum applications. The market showed a solid trend throughout the year, losing some momentum only in the last quarter. Sales for the full year rose to USD 114.1 million an increase of 15.5% compared with 2007.
INFICON bedient mit einem breit diversifi zierten Technologie-Portfolio weltweit unterschiedliche Märkte, was die Abhängigkeit von einzelnen Brachenentwicklungen etwas entschärft. In den ersten sechs Monaten konnte INFICON die Verkäufe in allen Zielmärkten – Halbleiter & Vakuumbeschichtungen, Kälte- & Klimatechnik, Notfallhilfe & Sicherheit sowie Allgemeine Vakuumanwendungen – steigern und das erste Halbjahr mit rekordhohen Umsatz- und Ertragszahlen abschliessen. Auf Jahresbasis stiegen die Umsätze in den Bereichen Allgemeine Vakuumprozesse sowie Notfallhilfe & Sicherheit. Demgegenüber sanken die Umsätze sowohl im Markt für Halbleiter & Vakuumbeschichtungen als auch im Markt für Kälte- & Klimatechnik im einstelligen Prozent-Bereich.
INFICONs umsatzstärkster Endmarkt ist jener der Allgemeinen Vakuumanwendungen. Die hier abgesetzten Geräte und Komponenten werden in einem äusserst breiten Industriespektrum für diverse Applikationen eingesetzt, was diesem Bereich eine konjunkturelle Grundstabilität verleiht. Wir gehen diesen Markt bewusst sowohl über unsere Private-Label-Kunden – vor allem globale Vakuumpumpen-Hersteller – als auch im Direktgeschäft an, wo wir nicht zuletzt auf neue Anwendungen abzielen. Über das ganze Jahr betrachtet hat sich dieser Markt sehr gut entwickelt und er hat auch im letzten Quartal nur wenig eingebüsst. Für das Geschäftsjahr 2008 betrug der Umsatz USD 114.1 Mio., ein Plus von 15.5% gegenüber 2007.
Next generation, person-portable HAPSITE® ER Chemical Identifi cation System combines new features and low consumables usage with easy-to-useoperation for environmental and emergency response markets worldwide.
Systemgeneration des bequem von einer Person tragbaren Geräts zur Identifi kation von Umweltgiften und chemischen Kampfstoffen vereint zusätzliche Eigenschaften mit einer verbrauchsarmen
Revenues in the Emergency Response & Security market continued to grow year round, including the fourth quarter. On a yearly basis, revenues increased by an impressive 58.5% to USD 27.9 million. HAPSITE systems proved to be a very important sales generator in 2008. We increased our production capacity in line with the rising demand for our person-portable chemical identifi cation systems and introduced an additional model called HAPSITE ER, which can be used easily, even when wearing heavy protection gear and gloves. Besides ongoing sales to U.S. government agencies and a growing business with police and army forces in Europe, we expanded our market position in the area of civil applications. We recorded the biggest success in the People's Republic of China where numerous HAPSITE systems were included in the security measures during the Beijing Olympic Games. Apart from this one-time event, our chemical analysis systems, which identify the presence and potential danger of toxic substances in air, water and soil, are increasingly used in environmental monitoring and emergency response. Only hours after the devastating earthquakes in the Sichuan Province, HAPSITE systems were used to monitor the quality of drinking water. Many provinces trust our analysis systems in their environmental and drinking water monitoring efforts.
Gesamthaft blieb die Umsatzentwicklung im Markt für Notfallhilfe & Sicherheit bis zum Ende des Jahres positiv. Auf Jahresbasis nahm der Umsatz um eindrückliche 58.5% auf USD 27.9 Mio. zu. Als besonders wichtiger Umsatzträger im Marktbereich Notfallhilfe & Sicherheit erwies sich 2008 die HAPSITE-Gerätefamilie. Im Berichtsjahr haben wir die Produktionskapazität für diese tragbaren Chemikalien-Identifi kationssysteme ausgebaut und HAPSITE ER lanciert, ein Modell, das selbst in voller Schutzbekleidung und groben Handschuhen einfach zu bedienen ist. Neben ansprechenden Verkäufen an US-Regierungsstellen und einem wachsenden Geschäft mit Polizei- und Armeeeinheiten in Europa, konnten wir in diesem Markt unsere Position vor allem auch im zivilen Einsatzbereich markant ausbauen. Den grössten Markterfolg erzielten wir in der Volksrepublik China, wo zahlreiche HAPSITE-Geräte zum Sicherheitsdispositiv der Olympischen Spiele von Peking zählten. Neben diesem einmaligen Einsatz werden die bequem von einer Person tragbaren und einfach zu bedienenden Analyselabors, die vor Ort sofort Aufschluss über das Vorhandensein und die Art von Giftstoffen in Luft, Wasser und Boden geben, vor allem zur Umweltüberwachung und zur Notfallhilfe verwendet. Bereits Stunden nach dem Erdbeben in der Provinz Sezchuan wurden HAPSITE-Geräte zur Überwachung der Trinkwasserqualität vor Ort eingesetzt. Zahlreiche weitere Provinzen verwenden unsere Analysegeräte im Umwelt-Monitoring und der Trinkwasseranalyse.
ACCELERATED SALES DECLINE IN SEMICONDUCTOR & VACUUM COATING IN THE FOURTH QUARTER
In the Semiconductor & Vacuum Coating market, sales to equipment manufacturers and chip makers started to slow down in spring. However, a very strong vacuum coating business for consumer electronics and photovoltaic solar panels was able to offset this negative trend in the third quarter. The credit crisis that evolved into a global economic recession massively hit the overall Semiconductor & Vacuum Coating market from November onwards.
Towards year-end, sales declined sharply, even in the solar panel market, resulting in signifi cantly fewer shipments of vacuum coating sensors and high precision thin fi lm deposition controllers. Our sales for optical and electronic applications such as fl at panel displays, including OLED screens, and hard disks, were more stable. Although the battle over the next-generation DVD standard was decided in favor of BlueRay technology, the Christmas 2008 sales boom many retailers had expected did not take place.
Thanks to the generally stable sales for precision optics and optical coatings, overall sales to this market declined only by 3.9% to USD 78.4 million.
Im Markt für Halbleiter & Vakuumbeschichtungen begann sich ab Frühjahr bei den Anlagenherstellern und Produzenten von Halbleiterprodukten eine Abkühlung abzuzeichnen. Im dritten Quartal konnte dies noch mit einem ausgesprochen starken Geschäft im Gebiet der Vakuumbeschichtungen für elektronische Verbrauchsgüter und Solarenergieanwendungen kompensiert werden. Ab November 2008 schlug die zu einer weltweiten Rezession ausgewachsene Kreditkrise auf voller Breite durch und der wohl stärkste Abschwung der Halbleiterbranche hat Chip-Produzenten, Anlagenhersteller und Komponentenlieferanten erfasst.
Gegen Jahresende hin brach zudem auch der Photovoltaik-Markt deutlich ein, so dass der Absatz unserer spezifi schen Prozess-Sensoren und der hochsensitiven Dünnschichtkontrollgeräte ebenfalls spürbar zurückging. Recht stabil blieb dagegen das Geschäft mit Herstellern von optischen Geräten, Flachbildschirmen – insbesondere OLED-Bildschirmen und Harddisks. Obwohl die Entscheidung über die nächste DVD-Generation zugunsten der BlueRay-Technologie ausfi el, blieb der vom Detailhandel für das Weihnachtsgeschäft 2008 erhoffte Boom aus.
Dank den weiterhin recht stabilen Umsätzen im Gebiet der Optikbeschichtung fi el der Marktumsatz im laufenden Geschäftsjahr gegenüber dem Vorjahr lediglich um 3.9% auf USD 78.4 Mio.
Transpector® XPR3L optimizes solar and LCD process yield by monitoring gas pressures, detecting contaminants and locating leaks.
Transpector® XPR3L optimiert Solar- und LCD-Prozesse durch die laufende Überwachung des Gasdruckes, das Aufspüren von Fremdstoffen und Lecks.
REFRIGERATION & AIR CONDITIONING IMPACTED BY DECLINING HOUSING MARKET
The market for Refrigeration & Air Conditioning applications started to show signs of weakness in summer. On a yearly basis, sales generated in this market declined from USD 38.6 million in 2007 to USD 36.1 million in 2008. We primarily supply a range of different leak detectors for tightness and quality controls. Beginning summer 2008, INFICON felt the effects from the declining housing markets in many countries. The signifi cantly lower consumer demand for new refrigerators and freezers as well as air conditioning systems impacted our business with component manufacturers, producers of household appliances and service companies.
The automotive business, also included in this market, continued positively. Here, our systems are used to prove that components like tanks, piping systems or airbags and car air conditioning systems are leak-tight.
INFICION is continuously developing new applications based on its core technology for various markets worldwide. Apart from developing the next HAPSITE model, we also focus our R&D efforts on other areas of applications. We see numerous new opportunities for vacuum control components and leak detectors in industries to which we have not yet supplied products. We want to
Im Markt für Kälte- & Klimatechnik wurde ab Sommer die wirtschaftliche Abkühlung ebenfalls spürbar. Der Umsatz in diesem Markt sank auf USD 36.1 Mio. für 2008, gegenüber USD 38.6 Mio. im Vorjahr. Wir beliefern diesen Markt vor allem mit einer Palette unterschiedlicher Lecksucher für die Dichtigkeits- und Qualitätskontrolle. INFICON bekam die schlechte Verfassung des Immobilienmarktes in vielen Ländern zu spüren. Die deutlich gesunkene Nachfrage der Konsumenten nach Kühl- und Gefrierschränken sowie Klimaanlagen verlangsamte sowohl das Geschäft mit Komponentenherstellern, mit Produzenten von Kühlgeräten als auch das Servicegeschäft.
Noch recht stabil blieb dafür das ebenfalls zu diesem Marktbereich gerechnete Automobilgeschäft. Hier werden unsere Geräte zu Dichtigkeits- und Qualitätsprüfungen von verschiedenen Komponenten wie Tanks, Leitungssystemen und Airbags sowie für die Klimaanlagen der Fahrzeuge eingesetzt.
INFICON entwickelt, basierend auf den Schlüsseltechnologien der Firma, dauernd neue Instrumente für Applikationen in verschiedenen Industrien. Neben den bereits erwähnten Arbeiten am nächsten HAPSITE-Modell treiben wir unsere Forschungs- und Entwicklungsanstrengungen auch auf anderen Gebieten voran. So sehen wir in bisher nicht bearbeiteten Industriebereichen neue Einsatzmög-
T-Guard Helium Leak Detector is the smallest leak detector on the market and is 100 times more sensitive than conventional testing. Der T-Guard Helium Leak Detector ist der kleinste Lecksucher auf dem Markt und dennoch 100mal sensibler als
tap into these markets with products designed specifi cally for new applications, opening up new niches with good potential for INFICON.
Also, the Semiconductor & Vacuum Coating market still holds many opportunities for us, despite the current downturn. Production processes are more complex in this industry than in any of our other target markets. We supply this demanding industry with a broad array of specifi c in situ sensors, delivering accurate process data for fault detection and process control in real time. The semiconductor industry still holds many opportunities for our expanding range of analysis instruments.
In 2008, INFICON invested some USD 6 million in fi xed assets, roughly in line with amortizations and depreciation, which was USD 6.9 million. In view of the current economic situation, we do not expect to expand our capacities this year. Yet, we will keep our infrastructure at a state-of-the-art level. We are convinced that this will expand our technological leadership and provide a solid base for future growth.
Operating profi t developed nicely until mid-year, growing over-proportionally to sales. In the third quarter, the operational performance started to lag behind sales and lichkeiten für unsere Vakuum-Komponenten und Lecksucher. Solche Chancen wollen wir mit spezifi sch für diese Applikationen entwickelten Geräten künftig angehen.
Auch der Halbleiter- und Vakuumbeschichtungsmarkt bleibt trotz der derzeitigen Baisse mittelfristig ein wichtiges Geschäftsfeld für INFICON. Die Herstellprozesse sind in dieser Industrie weitaus komplexer als in allen anderen von uns belieferten Branchen. Wir bieten am Markt schon jetzt ein breites Sortiment an spezifi schen, direkt in die Herstellprozesse integrierten Echtzeit-Sensoren zur frühzeitigen Fehlererkennung und zur Überwachung an. Die Halbleiterindustrie bietet weitere Einsatzmöglichkeiten für unsere Palette von Analyseinstrumenten, die wir weiter ausbauen.
Im Geschäftsjahr 2008 lagen unsere Sachinvestitionen mit rund USD 6 Mio. in ähnlicher Höhe wie die für Abschreibungen und Amortisationen aufgewendeten USD 6.9 Mio. Im laufenden Jahr erwarten wir angesichts der wirtschaftlichen Situation keine Erweiterungsinvestitionen. Wir wollen unsere Infrastruktur aber auf dem jeweils neusten Stand halten. Wir sind überzeugt, dass wir damit unsere technologische Führerschaft ausbauen und eine wertvolle Grundlage für unser zukünftiges Wachstum schaffen.
Der Betriebsgewinn hatte sich bis zur Jahresmitte äusserst zufriedenstellend entwickelt, legte er doch im Vergleich mit dem Umsatz überproportional zu. Im drit-
Making ease of use, leak detection effi ciency and mobility within the fab environment system priorities, the UL1000 Fab provides an extremely fast leak rate response across all measurement ranges.
In der Halbleitererstellung sind Bedienungskomfort, effi ziente Lecksuche und die Wendigkeit des Instrumentes vorrangig. Der UL 1000 Fab bietet eine extrem schnelle Leckaufspürrate über alle Messbereiche.
in the fourth quarter operational profi t declined with a decrease of 26%, which was twice as fast as sales.
INFICON ended 2008 with operating income of USD 33.3 million, just 1.4% above last year. After lower interest income, higher tax expense and lower other income refl ecting exchange rate losses experienced during the year, INFICON achieved a slightly lower net profi t of USD 24.3 million compared with USD 24.8 million the year before.
ten Quartal vermochte die Gewinn-Entwicklung aber bereits nicht mehr ganz mit dem Umsatz mitzuhalten, und im vierten Quartal ging der Betriebsgewinn mit über 26% doppelt so rasch zurück wie der Umsatz.
INFICON schloss daher das Jahr mit einem nur 1.4% über Vorjahr liegendem Betriebsgewinn von USD 33.3 Mio. ab. Nach tieferen Zinserträgen, höherem Steueraufwand und einem aufgrund erlittener Währungsverluste gegenüber 2007 tieferen übrigen Ertrag schloss INFICON das Jahr mit einem leicht rückläufi gen Nettogewinn von USD 24.3 Mio. nach USD 24.8 Mio. im Vorjahr ab.
INFICON rapidly took measures to counteract the global economic decline, which became clearly visible starting in November. We decreased spending wherever possible and aligned our capacities to the current market conditions. The combination of these measures will reduce our cost base by a clear double digit percentage fi gure this year.
Even in the weak last quarter of 2008, INFICON generated a strong cash fl ow from operations. For the full year, we recorded an operational cash fl ow of USD 31.3 million, just slightly higher than 2007 when cash fl ow stood at USD 30.2 million. Our ongoing strong and solid balance sheet without any long-term debt, showing an equity ratio of over 76%, and strong cash fl ow allow the payment of a dividend, even in these diffi cult economic times.
INFICON hat rasch auf die nachteilige Entwicklung reagiert und die Ausgaben überall nach Kräften zurückgefahren. Zu Beginn des neuen Jahres mussten daher auch die Kapazitäten weltweit angepasst werden. Die Kombination aller ergriffenen Massnahmen wird die Kostenstruktur um einen klar zweistelligen Prozentbereich senken und im laufenden Jahr eine spürbare Entlastung bringen.
Selbst im schwachen letzten Quartal generierte INFICON einen starken Cashfl ow aus operativer Geschäftstätigkeit. Für das ganze Geschäftsjahr resultierte ein gegenüber dem Vorjahr leicht höherer betrieblicher Cashfl ow von USD 31.3 Mio. nach USD 30.2 Mio. im Vorjahr. Bei einer unverändert sehr soliden Bilanz ohne langfristige Schulden und einer Eigenkapitalquote von über 76% erlaubt der hohe Cashfl ow auch in einem
Simple, low-cost TEK-Mate® Perc Detector locates leaks around valves and seals of dry cleaning equipment. Als einfaches und
kostengünstiges Gerät dient der TEK-Mate® Perc Detector zur Überprüfung von Ventilen und Dichtungen von Anlagen in Chemischen Reinigungen.
The Board of Directors proposes to the Annual General Meeting of Shareholders scheduled for May 5, 2009 the payment of a cash dividend of CHF 6.00 per share.
Board and Management are convinced that INFICON will master the economic challenges of 2009. The prospects for HAPSITE are very good, the investments in infrastructure announced by many governments should support our business also in the area of solar energy. Precision optics and optical coating have not been affected heavily by the downturn. The Semiconductor Industry has been in recession since the end of 2007, and it will likely be one of the fi rst industries to emerge from the recession. Its rapidly changing technology will drive demand for investments in new processes and plants and for equipment and instruments. Our strong global presence in many different markets will help us maintain a basic utilization of our production sites.
A broad and diversifi ed product and technology portfolio enables INFICON to service many different global markets and reduces the impact of the global fi nancial crisis on our Group. Our fl exible cost structure, the rapidly taken actions to align costs to the current market condition, a high level of liquidity, and our strong balance sheet, are all competitive advantages in the diffi cult economic climate. However, visibility remains very limited and the recovery depends heavily on the stabilization of the fi nancial system. We have therefore decided to defer providing fi nancial guidance for 2009.
schwierigen wirtschaftlichen Umfeld die Ausschüttung einer Dividende. Der Verwaltungsrat schlägt der Generalversammlung vom 5. Mai 2009 die Entrichtung einer Bardividende von CHF 6.00 pro Aktie vor.
Verwaltungsrat und Management sind überzeugt, dass INFICON die wirtschaftlichen Herausforderungen 2009 meistern wird. Die Aussichten für HAPSITE sind sehr gut, da die Investitionen verschiedener Länder in ihre Infrastruktur unser Solargeschäft stützen sollten. Optische Beschichtungen waren bisher noch wenig betroffen. Die Halbleiterindustrie ist seit mehr als einem Jahr in der Rezession, sie wird voraussichtlich eine der ersten Industrien sein, die einen Aufschwung sehen wird. Ihre sich extrem schnell entwickelnde Technologie wird dazu führen, dass die Nachfrage nach Geräten und Instrumenten sprunghaft ansteigen wird. Unsere starke weltweite Präsenz in verschiedenen Industrien wird uns eine Basisauslastung bringen.
Das breit diversifi zierte Produkte- und Technologieportfolio ermöglicht es INFICON, weltweit unterschiedliche Märkte zu bedienen. Dies entschärft die Auswirkungen der globalen Finanzkrise auf das Unternehmen. Die fl exible Kostenstruktur, die rasch ergriffenen Massnahmen zur Kostensenkung, die hohe Liquidität und eine solide Bilanz stellen im anspruchsvollen Wirtschaftsumfeld konkrete Wettbewerbsvorteile dar. Die Einschätzung der Marktentwicklung bleibt im Einzelnen jedoch schwierig und die Markt-Erholung hängt stark von der Stabilisierung der Finanzmärkte ab. Wir haben uns daher entschieden, mit der Veröffentlichung von fi nanziellen Zielsetzungen für 2009 vorerst zuzuwarten.
From left to right: CEO, Chairman, CFO: Lukas Winkler, Gustav Wirz, Matthias Tröndle
The current year will be a challenging one. Yet, we believe that we are well positioned in the mid- to long-term. We can expand our technological advantage further by our focused research and development efforts and will be ready to seize any new opportunities in our traditional markets as well as in new areas of applications.
We would like to thank all our business partners, customers and shareholders for their confi dence in 2008. We will do our best to guide INFICON through the diffi cult time in the current year. We would also like to thank our employees and colleagues for their daily commitment and their contributions to the success of INFICON.
Auch wenn wir wohl ein äusserst schwieriges Jahr vor uns haben, sind wir überzeugt, mittel- und langfristig gute Aussichten zu haben: Mit unseren strategisch ausgerichteten Forschungs- und Entwicklungsarbeiten bauen wir die technologische Führerschaft weiter aus, damit wir die sich neu bietenden Chancen in unseren angestammten Märkten sowie in neuen Applikationsbereichen rasch ergreifen können.
Wir danken all unseren Geschäftspartnern, Kunden und Aktionären für ihr Vertrauen im Jahr 2008. Wir setzen auch im laufenden Jahr alles daran, INFICON sicher durch die derzeit schwierigen Märkte zu führen. Unser Dank gilt auch allen Mitarbeitenden und Kollegen von INFICON weltweit, die mit ihrem täglichen Engagement Entscheidendes zum langfristigen Erfolg unserer Gesellschaft beitragen.
Sincerely, Mit freundlichen Grüssen
Lukas Winkler President and Chief Executive Offi cer Direktionspräsident und Chief Executive Offi cer
Gustav Wirz Chairman of the Board of Directors Präsident des Verwaltungsrates
| COMPANY CAPITAL | The share capital of INFICON Holding AG consists of 2,145,693 registered shares with a nominal value of CHF 5.00 each. |
|---|---|
| STOCK MARKET TRADING | The registered shares are listed on SIX Swiss Exchange under – The SIX Security Number 1102994 – ISIN CH0011029946 – The symbol IFCN |
| IMPORTANT DATES | April 17, 2009 First quarter results May 5, 2009 Annual General Meeting of Shareholders July 21, 2009 Second quarter results October 15, 2009 Third quarter results February 2010 Fourth quarter / Year-end results |
| INTERNET/E-MAIL ALERTS | E-mail Alerts: The latest fi nancial information from INFICON can automatically be sent via E-mail Alert; sign up is available in the Investor Relations section of the INFICON website www.infi con.com |
| 2004 | 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|---|
| Key fi gures per share | |||||
| Price at year end | 86.95 | 174.00 | 192.00 | 182.50 | 87.80 |
| Highest price | 138.50 | 193.00 | 199.00 | 231.50 | 184.50 |
| Date | 27. Feb | 04. Oct | 22. Dec | 19. Jul | 03. Jun |
| Lowest price | 67.75 | 82.00 | 121.10 | 175.00 | 80.05 |
| Date | 09. Nov | 03. Jan | 13. Jun | 25. Dec | 19. Dec |
| Earnings per share | 4.07 | 6.64 | 9.30 | 10.70 | 11.26 |
| Equity per share | 61.00 | 62.90 | 65.70 | 59.70 | 64.32 |
| Gross dividend | — | 5.00 | 6.00 | 8.00 | 6.00* |
| Taxable values of traded securities | 86.95 | 174.00 | 192.00 | 182.50 | 87.80 |
* As proposed to AGM
Executive Management
CEO Board of Directors Corporate Functions Committees: – Human Resources & Nominating Committee
| Board of Directors | Gustav Wirz Paul Otth Dr. Richard Fischer Mario Fontana Dr. Thomas Staehelin |
Chairman Vice Chairman Member Member Member |
Bottighofen, Switzerland Zurich, Switzerland Rankweil, Austria Herrliberg, Switzerland Riehen, Switzerland |
|
|---|---|---|---|---|
| Audit Committee | Dr. Thomas Staehelin Paul Otth Gustav Wirz |
Chair | ||
| Human Resources and Nominating Committee |
Dr. Richard Fischer Mario Fontana Dr. Thomas Staehelin |
Chair | ||
| Strategy Committee | Mario Fontana Dr. Richard Fischer Paul Otth |
Chair | ||
| Executive Management | Lukas Winkler Matthias Tröndle Peter Maier Dr. Ulrich Döbler Dr. Urs Wälchli |
President, Chief Executive Offi cer Vice President, Chief Financial Offi cer Vice President and General Manager, Intelligent Sensor Solutions Vice President and General Manager, Leak Detection Tools Vice President and General Manager, Vacuum Control |
||
| Investor Relations | Matthias Tröndle, Vice President and CFO INFICON HOLDING AG, Hintergasse 15 B, CH-7310 Bad Ragaz, Switzerland CEO/CFO Offi ce at INFICON AG, Alte Landstrasse 6, FL-9496 Balzers, Liechtenstein Tel. +423 388 3512 Fax +423 388 3890 E-mail: matthias.troendle@infi con.com |
|||
| Board and Executive Secretary |
Elisabeth Kühne, General Secretary to the Board of Directors INFICON, Alte Landstrasse 6, FL-9496 Balzers, Liechtenstein Tel: +423.388.3510 Fax: +423.388.3850 E-mail: elisabeth.kuehne@infi con.com |
* Added in 2008
This Corporate Governance Report explains the principles of management and control of INFICON Holding AG at the highest corporate level in accordance with the Directive on Information relating to Corporate Governance (the Corporate Governance Directive) issued by the SIX Swiss Exchange.
Corporate governance of INFICON Holding AG complies with the principles and recommendations of the "Corporate Governance – Swiss Code of Best Practice" dated March 25, 2002. The principles and rules of INFICON Holding AG on corporate governance are laid down in the Articles of Incorporation, Organizational Regulations and the Regulations of the board committees of INFICON Holding AG.
Furthermore, INFICON's internal guidelines regarding corporate governance are provided in its Articles of Incorporation, Organizational Regulations, Board Committee Charters, Code of Ethics, as well as internal policies.
The following Corporate Governance Report follows the SIX directive.
See page 20.
INFICON Holding AG is the parent company of the INFICON group which operates from 12 countries and consists of a parent company, seven manufacturing companies, eight sales and service subsidiaries, and a management company located in Bad Ragaz, Switzerland which performs administrative, inter-company fi nancing, and intellectual property management functions. The legal entity structure of the INFICON group is seen on page 21.
INFICON Holding AG is based in Bad Ragaz, Switzerland. It has share capital of TCHF 10,728 made up of 2,145,693 shares with a nominal value of CHF 5 each. Registered shares are listed on the Swiss Exchange under security number 1102994, ISIN CH0011029946 and symbol IFCN.
Market capitalization at December 31, 2008 was TCHF 188,392 based on shares outstanding.
Share capital and percentage of shares held by subsidiaries – See statutory fi nancial statements, Note 2: Investments in Subsidiaries.
Based on number of registered stockholders as of December 31, 2008.
| Number of shares | Number of stockholders |
|---|---|
| > 50,000 | 7 |
| 10,000–50,000 | 16 |
| 1–9,999 | 1,211 |
| Total | 1,234 |
Based upon number of registered stockholders as of December 31, 2008.
| Country | Number of stockholders |
|---|---|
| Switzerland | 1,016 |
| Germany | 72 |
| United States of America | 50 |
| Liechtenstein | 19 |
| Rest of Europe | 59 |
| Rest of World | 18 |
| Total | 1,234 |
See statutory fi nancial statements, Note 3 – Equity.
INFICON Holding AG has no cross-shareholdings.
Registered shares of CHF 5 each at December 31, 2008:
| Issued share capital | 2,145,693 | TCHF 10,728 |
|---|---|---|
| Conditional share capital | 212,794 | TCHF 1,064 |
The issued share capital comprises 2,145,693 registered shares of CHF 5 each. Each share entitles the registered owner to one vote at the general meeting of shareholders, as well as a share of dividends, if any, declared by the Company and proceeds from liquidation, corresponding to its nominal value as a percentage of the total nominal value of issued share capital.
The Board of Directors is currently not authorized to issue new registered shares.
The articles of incorporation provide for a conditional capital (according to Art. 653 of the Swiss Code of Obligations) of a maximum of TCHF 1,087 through the issuance of 217,312 registered shares of CHF 5 each by the exercise of option rights granted to employees and members of the Board of Directors of the Company. As of December 31, 2008, a total of 4,518 options have been exercised reducing the available conditional shares to 212,794 and the conditional share capital to TCHF 1,064.
Changes in stockholders' equity are presented in the consolidated statements of stockholders' equity section of the consolidated fi nancial statements for INFICON Holding AG for the years ended December 31, 2008 and 2007. For the year ended 2006, please refer to the 2006 Annual Report.
See 2.1. No participation certifi cates are issued.
The Company currently has no profi t sharing certifi cates.
The Articles of Incorporation contain no special regulations regarding limitations on transferability and nominee registrations.
In conjunction with the employee and director stock option programs, current and former employees, as well as current and former members of the Board of Directors held as of December 31, 2008 a total of 134,209 options. These options entitle holders to acquire a total of 134,209 registered shares of INFICON Holding AG. All shares resulting from the exercise of stock options are covered by shares that can be created from conditional capital resulting in an increase in share capital. The aggregate par value of shares purchasable by means of outstanding options amounts to TCHF 671. For a more detailed discussion of stock option plans, please see Notes to Consolidated Financial Statements, 19. Stock Option Plans.
The Company currently has no convertible bonds or bonds with warrants.
Our articles of incorporation provide that the Board of Directors may consist of one or more members at any time. Directors are elected and removed by shareholder resolution. Members of our Board of Directors serve three-year terms and may be re-elected upon completion of their term of offi ce. The shareholders may remove the directors without cause. Our fi ve directors currently in offi ce were elected by shareholder resolution.
All members of the Board of Directors are non-executive Board members.
According to the law, the Board of Directors is responsible for the ultimate direction and supervision of INFICON Holding AG. The Board of Directors has delegated the conduct of the day-to-day business operations to the Company's executive offi cers, who are headed by the Chief Executive Offi cer. The Chief Executive Offi cer is responsible for the management of INFICON Holding AG and for all other matters except for those reserved by law and the Articles of Incorporation. The Board of Directors is required to resolve all matters, which are not defi ned by the law, Articles of Incorporation, or management bylaws as being the responsibility of any other governing body. According to the Swiss Code of Obligations the following non-transferable and inalienable responsibilities are incumbent on the Board of Directors:
The Board of Directors, as of the date of this fi ling, has established an Audit Committee, a Strategy Committee, and a Human Resources and Nominating Committee. Each of these committees has regulations, which outline its duties and responsibilities. The Board of Directors elects the Chairman for each committee. The committees meet regularly carrying out preparatory work to provide the Board of Directors with updates and recommendations at its regular meetings. Their respective chairperson sets the agendas for the committee meetings. The length of the meetings range from an hour up to an entire day, depending on the agenda as decided by the chairman.
The Audit Committee consists of three non-executive members of the Board of Directors. Currently, the Audit Committee is comprised of the following members:
Dr. Thomas Staehelin, Chairman Paul Otth Gustav Wirz
The responsibilities of the Audit Committee include:
The Human Resources and Nominating Committee are to provide a general review of our compensation and benefi t plans to ensure they meet corporate fi nancial and strategic objectives, as well as to make recommendations to the board regarding appointment, dismissal and career development of senior management positions. The responsibilities of the Human Resources and Nominating Committee also include the administration of employee incentive plans. The Human Resources and Nominating Committee consists of three non-executive members of the Board of Directors. Currently, the Human Resources and Nominating Committee is comprised of the following members:
Dr. Richard Fischer, Chairman Mario Fontana Dr. Thomas Staehelin
This Committee is responsible for advising the board on the long term strategy and how to portray INFICON's strategy to shareholders and the investment community. The Strategy Committee consists of three non-executive members of the Board of Directors. Currently, the Strategy Committee is comprised of the following members:
Mario Fontana, Chairman Dr. Richard Fischer Paul Otth
The Board of Directors holds four or more meetings per year and additional ad hoc meetings and conference calls as necessary. The Audit Committee holds four meetings per year in addition to regular conference calls. The Strategy Committee and the Human Resources and Nominating Committee hold two or more meetings per year.
| Board of Directors |
Audit Committee |
Human Re sources and Nominating Committee |
Strategy Committee |
|---|---|---|---|
| 4 | 4 | 4 | 4 |
| 1.7 | 1.3 | 1.8 | 2.8 |
| 4 | 4 | 4 | 4 |
| 4 | 4 | 4 | 4 |
| 4 | 4 | 4 | 4 |
| 4 | 4 | 4 | 4 |
| 4 | 4 | 4 | 4 |
| 3 | 4 | 0 | 0 |
| 1.2 | 1.1 | ||
| 3 | 4 | ||
| 3 | 4 | ||
| 2 | 3 | ||
| 3 | 4 | ||
| 3 | 4 | ||
Chairman of the Board of Directors, Member Audit Committee
| 1966–1969 | Technical College in Biel, Switzerland – |
|---|---|
| Mechanical Engineer HTL |
| 1970–1974 | Kulicke & Soffa (Semiconductor Equip ment Manufacturer), Head of R&D, Divi sion Manager Clean Room Equipment |
|---|---|
| 1974–1979 | Seier AG, Switzerland, Semiconductor Assembly Equipment, Managing Director |
| 1979–1999 | Alphasem AG (Automatic Die Attach Systems) Founder, Owner and Managing Director |
| 1999 | Sold his shares of Alphasem AG (by then one of the worldwide leading companies of Automatic Die Attach Systems) to Dover Corporation |
| 1979–1999 | Alphasem AG (CH), Chairman |
|---|---|
| 1999–2004 | Alphasem AG (CH), Member |
| 1987–1998 | SEMI board, the worldwide Industry As |
| sociation of the Semiconductor Equip | |
| ment and Materials Industry (fi rst non-US | |
| Director) | |
| 2004–2007 | Exalos AG (CH), Chairman from 2005– |
|---|---|
| 2007 | |
| 2003–2007 | NetInvest Holding AG (CH), Member |
| Since 2002 | The Council of Technical Colleges of |
|---|---|
| Eastern Switzerland, Member | |
| Since 2003 | QCSolutions Inc. (USA), Member |
| Since 2002 | Best-Immo-Invest AG (CH), Chairman |
| Since 2008 | Best-Immo-Service AG (CH), Member |
| Since 2007 | Tec-Sem Group AG (CH), Chairman |
| Since 2004 | INFICON Holding AG (CH), Chairman |
| since 2005 |
Vice Chairman of the Board of Directors, Member Audit Committee, Member of Strategy Committee
1972 Swiss Certifi ed Public Accountant
| 1962–1965 | Elektrodenfabrik Oerlikon Bührle, Finan |
|---|---|
| cial and Cost Accounting | |
| 1965–1967 | Zürcher Kantonalbank, Traditional Bank |
| ing and Internal Audit | |
| 1968–1974 | Neutra Treuhand, Consulting and Auditing |
| 1974–1988 | Corange Group (Boehringer Mannheim): 1974–1977 and 1980–1982 International |
| Division, Head of Organization, Consult ing, Internal Audit |
|
| 1978–1979 Boehringer Mannheim France, | |
| Co-General Manager, Finance and Ad | |
| ministration | |
| 1982–1988 Corange Group, Head of Cor | |
| porate Controlling and Holding Treasurer | |
| 1988–1989 | Budliger Treuhand, Partner |
| 1989–1996 | Landis & Gyr |
| 1989–1994 | Division Building Control, Head of Finance and Controlling |
| 1994 | Landis & Gyr Europe, Head of Finance and Controlling and Informatics |
| 1994–1996 | CFO and member of the Group Executive Board |
| 1996–1998 | Elektrowatt Group, CFO and member of the Group Executive Board |
| 1998–2000 | Siemens Building Technologies, CFO and |
| 2000–2002 | member of the Group Executive Board Unaxis, CFO and member of the Group Executive Board |
| 1998–2008 | SBB, Swiss Railways, Board Member and |
|---|---|
| Chairman of the Audit Committee | |
| 2000–2001 | Elma, Board Member |
| 1999–2004 | Esec, Board Member |
| Since 1999 | EAO, Chairman |
|---|---|
| Since 2000 | INFICON Holding AG, Vice-Chairman |
| Since 2002 | Ascom, Vice-Chairman and Chairman of |
| the Audit Committee | |
| Since 2002 | Swissquote, Member of the Board and |
| Chairman of the Audit Committee |
Director, Chairman Human Resources and Nominating Committee, Member Strategy Committee
| 1973–1979 | Technical University of Vienna, Master |
|---|---|
| of Science in Electrical and Electronical | |
| Engineering | |
| 1979–1982 | Technical University of Vienna, Assistant |
| Professor, Ph.D. with excellence | |
| 1982–1984 | Gama, Access Systems, Austria, R&D |
|---|---|
| Manager and Technical Director Engi | |
| neering | |
| 1984–2004 | VAT Holding AG, Switzerland, Chief |
| Executive Offi cer | |
None
| Since 1997 | VAT Holding AG, Switzerland, Chairman |
|---|---|
| Since 1990 | ARS GmbH, Member |
| Since 2008 | Netservice AG, Chairman |
| Since 2003 | INFICON Holding AG, Member |
Director, Chairman Strategy Committee, Member Human Resources and Nominating Committee
| 1966–1969 | Swiss Federal Institute of Technology |
|---|---|
| (ETH), Zurich, Studies in Mechanical | |
| Engineering | |
| 1969–1970 | Georgia Tech, USA, Master of Science |
| Degree in Aerospace Engineering |
| 1970–1977 | IBM Switzerland, sales representative and |
|---|---|
| international account manager | |
| 1977–1980 | Brown Boveri Brazil, Chief of Staff and |
| CIO. Is today part of ABB. | |
| 1981–1983 | Storage Technology Switzerland, Country |
| General Manager | |
| 1984–1993 | Hewlett-Packard Switzerland, Country |
| General Manager |
| 1993–1995 | Hewlett-Packard Germany, General Man |
|---|---|
| ager Computer Business | |
| 1995–1997 | Hewlett-Packard Europe, General Man |
| ager Computer Business | |
| 1997–1999 | Hewlett-Packard USA, General Manager |
| Financial Services worldwide |
| 1993–2006 | Büro Fürrer, Board Member. Company |
|---|---|
| acquired by Lyreco, France | |
| 1998–2008 | SBB, Swiss Railways, Board Member |
| 1999–2004 | Bon appétit Group, Chairman. Company |
| acquired by REWE, Germany | |
| 2000–2005 | Leica Geosystems, Chairman. Company |
| acquired by Hexagon, Sweden | |
| 2000–2003 | AC Services, Germany, Board Member |
| 2002–2006 | Sulzer, Board Member |
| 2004–2006 | Amazys, Chairman. Company acquired |
| by X-Rite, USA | |
| 2006–2008 | X-Rite, USA, Board Member |
| Since 2001 | Swissquote, Chairman |
|---|---|
| Since 2003 | INFICON Holding AG, Board Member |
| Since 2005 | Dufry, Board Member |
| Since 2006 | Hexagon, Sweden, Board Member |
Director, Chairman Audit Committee, Member Human Resources and Nominating Committee
| 1967–1971 | University of Basel, lic. iur. (Master in Law) |
|---|---|
| 1972–1974 | Univeristy of Basel, Ph.D. in Law |
| 1973–1975 | Various traineeships |
| 1975 | Admission to the Bar |
| 1973 | Swiss Bank Corporation, London |
|---|---|
| 1974 | SG Warburg & Co., Ltd., London (Portfolio |
| Management, Corporate Finance) | |
| 1975–today | Fromer, Schultheiss & Staehelin, Swiss |
| Corporate and Tax Attorney, and Partner |
| 1990–2005 | Rothornbahn und Scalottas AG, Chairman |
|---|---|
| 1996–2008 | JRG Gunzenhauser AG, Vice-Chairman |
| 2005–2008 | Lenzerheide Bergbahnen AG, Vice |
| Chairman |
| Since 1978 | Kühne + Nagel International AG, Member |
|---|---|
| Since 1991 | Siegfried Holding AG, Vice-Chairman |
| (1991-1998 Chairman) | |
| Since 1993 | Lantal Textiles, Member |
| Since 2001 | INFICON Holding AG, Member |
Since 2002 Swissport International AG, Chairman Since 2005 Scobag Privatbank AG, Chairman
Since 2006 Stamm Bau AG, Chairman
| 1977–today | "Allgemeine Musikgesellschaft Basel", |
|---|---|
| President | |
| 1982–today | Swiss Association of Privately Held Com |
| panies, Chairman since 2008 | |
| 2001–today | Chamber of Commerce of Basle, Chairman |
| 2001–today | Member of the Board of Directors of |
| "economiesuisse" (Swiss Business | |
| Federation) | |
| 2006–today | Swiss Business Association Saudi Arabia |
| (SBASA), Chairman, and Saudi Swiss | |
| Business Council (SSBC), Co-Chairman |
See 3.1
According to the Articles of Incorporation, the members of the Board of Directors are elected for a term of three years. Election occurs at the general meeting of shareholders.
The members of the Board of Directors were elected individually as follows:
| Board of Directors | Date First Elected | Term Expires |
|---|---|---|
| Richard Fischer | May 2003 | May 2009 |
| Mario Fontana | May 2003 | May 2009 |
| Paul Otth | November 2000 | May 2009 |
| Thomas Staehelin | May 2001 | May 2010 |
| Gustav Wirz | May 2004 | May 2010 |
No members were subject to re-election in 2008.
See page 20.
The Board of Directors has delegated authority to the Company's executive offi cers to execute the Company's approved annual budget. INFICON Holding AG has a comprehensive fi nancial and enterprise reporting system to gather and report its fi nancial results. The quarterly fi nancial results are reviewed and approved by the Audit Committee prior to issuance to the public. Additionally, the Board of Directors provides oversight and approval for potential acquisitions or strategic partnerships.
Information regarding the current state of the business is provided continuously at the meetings of the Board of Directors in an appropriate format and is presented by the persons bearing responsibility for oversight of the fi nancial and operational aspects of the business.
The Board of Directors receives minutes of committee meetings, as well as monthly reports from the Senior Management.
Furthermore, the Audit Committee reviews the fi nancial performance and assesses the effectiveness of the internal and external audit processes as well as the internal risk management and processes.
Members of the Board of Directors and Senior Management attend the Audit Committee meetings.
The external auditors, PricewaterhouseCoopers AG conduct their audit in compliance with Swiss law and in accordance with Swiss Auditing Standards and with generally accepted accounting principles in the United States of America.
Our executive offi cers are responsible for our day-today management. The executive offi cers have individual responsibilities established by our Organizational Regulations and by the Board of Directors.
President and Chief Executive Offi cer (since January 2004)
| 1982–1986 | Swiss Federal Institute of Technology |
|---|---|
| (ETH), Zuerich, Dipl. Ing. ETH, BWI | |
| 1999–2001 | Syracuse University, NY, USA, Executive |
| MBA | |
1987–1989 General Motors Europe AG, Switzerland, Engineer
| 1989–1991 | Maschinenfabrik Rieter AG, Switzerland, | |
|---|---|---|
| Project-Manager | ||
| 1991–1992 | Maschinenfabrik Rieter AG, Switzerland, Department Head |
|
| 1993–1994 | UNAXIS-Balzers AG, Liechtenstein and Switzerland, Manager Logistics |
|
| 1995–1996 | UNAXIS-Balzers AG, Liechtenstein and Switzerland, Manager Production |
|
| 1996–2003 | Balzers and Leybold Instrumentation and INFICON AG, Liechtenstein, Vice President and General Manager |
|
| 2004–today | (member of the Executive Team) INFICON Holding AG, Bad Ragaz, Chief Executive Offi cer |
|
| tember 2008) | MATTHIAS TRÖNDLE, Citizen of Germany, 1960 Vice President and Chief Financial Offi cer (since Sep |
|
| Educational Background 1982–1985 |
University of Cooperative Education, Mannheim, Degree in Business Adminis tration (Diplom-Betriebswirt) |
|
| Executive Experience | ||
| 1985–1988 | Digital Equipment Corporation (DEC), Stuttgart, Financial Analyst Software Development and Sales |
|
| 1988–1995 | Hewlett Packard GmbH, Headquarters Germany, Senior Financial Analyst Headquarters Germany |
|
| Finance Manager of two subsidiaries in Germany and Switzerland Accounts Receivables and Credit Man |
||
| ager Accounting & Reporting Manager Leasing & Remarketing |
||
| Commercial Manager Leasing & Remar keting Division |
||
| 1995–2003 | Solectron GmbH, Germany, Director Finance Germany, |
|
| 2003–2003 | Solectron Romania SRL, Timisoara – Romania, Director Finance Eastern Europe (9 months) |
|
| 2003–2008 | Solectron Europe BV, Amsterdam, Senior Director Finance Europe |
|
| 2008–today | INFICON Holding AG, Bad Ragaz, Chief Financial Offi cer |
Vice President and General Manager, Intelligent Sensor Solutions (since December 2007)
| 1984–1990 | University of Karlsruhe, Master Degree in |
|---|---|
| business administration and engineering |
| 1991–1994 | Heidelberg Druckmaschinen AG, Ger |
|---|---|
| many, Controller | |
| 1994–1996 | Deloitte Consulting, Consulting Project |
| Manager for SAP Implementations | |
| 1996–1998 | Leybold Infi con, US, Director of Informa |
| tion Systems | |
| 1998–2000 | Leybold Infi con, US, Vice President of |
| Finance and Controller for the Instrumen | |
| tation Division | |
| 2000–2007 | INFICON Holding AG, Switzerland, Chief |
| Financial Offi cer | |
| 2007–today | INFICON Inc., US, General Manager of |
| Business Unit Intelligent Sensor Solutions |
Vice President and General Manager, Leak Detection Tools (July 2000)
| 1975–1986 | University of Cologne, Diploma in Physics, |
|---|---|
| Ph.D. in Experimental Physics |
| 1982–1986 | Assistant at the II. Institute of Physics, |
|---|---|
| University of Cologne | |
| 1986–1996 | Leybold AG, Germany, Manager Applica |
| tion Group, | |
| later: Manager of Mechanical Engineering | |
| 1997–2000 | Leybold AG, Germany, Marketing and |
| Engineering Manager of Leak Detection | |
| 2000–today | INFICON GmbH, Germany, General Man |
| ager of Business Unit Leak Detection | |
Vice President and General Manager, Vacuum Control (since March 2004)
| 1982–1987 | University of Bern, Master Degree, lic. |
|---|---|
| phil. nat. in Physics with Philosophy and | |
| Mathematics as BA's | |
| 1987–1991 | University of Bern, Doctoral Thesis, Ph.D. |
| in Experimental Physics | |
| 1999–2001 | Swiss Federal Institute of Technology |
| (ETH) Zürich, MIM (Master of Industrial | |
| Management) | |
| 1993–1994 | Balzers AG, Liechtenstein, R&D Physicist, |
|---|---|
| Project Manager | |
| 1995–1996 | Balzers AG, Liechtenstein, R&D Manager |
| of Product Group Leak Detector | |
| 1996–2000 | Balzers and Leybold Instrumentation, |
| Liechtenstein, R&D Manager Division | |
| Vacuum Measurement | |
| 2000–2003 | INFICON AG, Liechtenstein, R&D Man |
| ager | |
| 2004–today | INFICON AG, Liechtenstein, General Man |
| ager of Business Unit Vacuum Control | |
See 4.1 for any activities and vested interests.
INFICON Holding AG has not entered into any management contracts with third parties outside the Group.
The Content and method of determining the Compensation and share-ownership programs for the members of the Board of Directors and for the Senior Management are proposed by the Human Resources and Nominating Committee and approved by the Board of Directors once a year.
See Notes to Consolidated Financial Statements, 22. Additional Information required by Swiss law.
Each of our shares carries one vote at our shareholders' meetings. Voting rights may be exercised only after a shareholder has been recorded in our share register (Aktienbuch) as a shareholder with voting rights. We may enter into agreements with banks or fi nancial companies which hold shares for the account of other persons (nominees) regarding the exercise of the voting rights related to the shares. Registration with voting rights is subject to restrictions.
Our shares are cleared and settled through SIS Sega Inter Settle AG. The shares will not be physically represented by certifi cates but, will be managed collectively in book-entry form by SIS Sega Inter Settle AG. Shareholders are therefore not entitled to have their shares physically represented and delivered in certifi cate form (aufgehobener Titeldruck). They can, however, request a statement confi rming their ownership of the shares.
The Articles of Incorporation contain no quorums greater than that set out by the applicable legal provisions.
The Articles of Incorporation contain no rules on the convocation of the General Meeting of Shareholders that differ from applicable legal provisions.
Shareholders holding shares with a par value of at least TCHF 1,000 have the right to request in writing, at least 50 days prior to the day of the respective shareholders' meeting, that a specifi c proposal be discussed and voted upon at such shareholders' meeting.
Only those shareholders with voting rights whose names were recorded in the Company's register of shareholders on the respective closing date may attend the General Meeting of Shareholders and exercise their voting rights. The Board of Directors endeavors to set the closing date for registration as close as possible to the date of the General Meeting, i.e. not more than 3 to 4 weeks before the General Meeting. There are no exceptions to this rule regarding the closing date for registration.
The Company's Articles of Incorporation do not include "opting-out" or "opting-up" clauses and accordingly, under Article 32 of the Swiss Securities Exchanges and Securities Trading Act, a shareholder who acquires 331 ⁄3% or more of the Company's shares is obliged to submit a public offer for the remaining shares.
The Key Employee Stock Option plan contains a provision whereby all unvested outstanding options vest upon a change in control and the one year restriction on exercise of options for the Directors' Stock Option plan is released upon a change in control.
Our Chief Executive Offi cer, Lukas Winkler, has an agreement that in case of change of control his notice period will be extended from six to twelve months.
Statutory auditors pursuant to Art. 727 and 728, respectively, of the Swiss Code of Obligations is PricewaterhouseCoopers AG, Zurich, elected for one year. PricewaterhouseCoopers AG commenced its mandate as statutory auditors of INFICON Holding AG in June 2002. The lead engagement partner, Mr. Stephen Williams, has been responsible for the audits of the statutory and consolidated fi nancial statements of INFICON Holding AG since June 2002. The signifi cant subsidiaries of INFICON Holding AG are audited by member fi rms of PricewaterhouseCoopers.
Audit fees for the 2008 audit were approximately TUSD 492 (TCHF 519).
Fees paid to PricewaterhouseCoopers for non-audit services, consisting primarily of tax services, rendered during 2008 were approximately TUSD 107 (TCHF 113).
The Audit Committee of the Board initially proposed the appointment of PricewaterhouseCoopers AG following a review of offers received from 3 competing fi rms of independent accountants for the 2002 reporting year. The Audit Committee evaluates the performance, fees, and independence of the statutory auditors each year.
Typically the Audit Committee receives a summary of the scope of work planned by the auditors on an annual basis and meets with the auditors to review these audit plans. Following the audit work, the auditors submit a report on the results of their work including all communications required to be made to the Audit Committee in accordance with auditing standards generally accepted in the USA. The Audit Committee meets with the auditors to discuss and review their feedback. Based on this information, it determines changes and improvements as necessary.
INFICON Holding AG pursues an information policy which is based on truthfulness, timeliness, and continuity. Matters affecting the share price are published immediately as ad hoc announcements, in accordance with the obligation to publish on the SIX Swiss Exchange. Annual fi nancial reports are issued for the benefi t of shareholders and potential investors in April following the year end closing. Income statements and balance sheets are prepared on a quarterly basis. A 2008 half-year report was published in September 2008. Information available for investors can be found at www.infi con.com.
| 32 | Financial Review | Finanzrückblick |
|---|---|---|
| 34 | Consolidated Balance Sheet | Konsolidierte Bilanz |
| 35 | Consolidated Statement of Income | Konsolidierte Erfolgsrechnung |
| 36 | Consolidated Statement of Stockholders' Equity | Veränderung des konsolidierten Eigenkapitals |
| 37 | Consolidated Statement of Cash Flows | Konsolidierte Mittelfl ussrechnung |
| 38 | Notes to Consolidated Financial Statements | Anhang zum konsolidierten Jahresabschluss |
| 54 | Report of the Statutory Auditors | Bericht der Revisionsstelle zur Konzernrechnung |
Net Sales increased by 8.4% to MUSD 256.5 in 2008 from MUSD 236.6 in 2007, with changes in currency exchange rates representing 5.2% of the increase. The General Vacuum Processes market had the largest increase of MUSD 15.3, representing a 15.5% increase from 2007 due to market growth and new products that leveraged technology into new industrial applications. Sales to the Emergency Response and Security market showed the strongest relative growth with an increase of MUSD 10.3, representing a 58.5% increase from 2007. This signifi cant increase was fueled primarily by a rising civil and environmental demand for HAPSITE, as well as rising sales for security and safety applications into Europe and Asia. Sales to the Refrigeration and Air Conditioning (RAC) market decreased by MUSD 2.5 or 6.5% from 2007 as a result of lower demand from RAC manufacturers, mainly in Asia and Europe. Sales to the Semiconductor and Vacuum Coating market decreased MUSD 3.2 or 3.9% from 2007, driven by a sharp Q4 decrease of sales to semiconductor and equipment manufacturers, which were partially offset by growth in thin fi lm coating.
Gross profi t margin was 45.1% for 2008 versus 46.5% for 2007. Although the increased sales volumes allowed INFICON to realize cost synergies and better absorption of manufacturing overhead, changes in the product and customer mix, unfavorable foreign currency trends, as well as customer price pressure, impacted the margin.
Research and development costs increased to MUSD 22.2 from MUSD 20.3 in 2007, with changes in currency exchange rates representing MUSD 1.2 of the increase. The MUSD 0.7 increase at constant rates refl ects intensifi ed new product development efforts and the inclusion of Sigma operations since December 2007. The Company relatively maintained spending on research and development as a percentage of net sales at 8.7% in 2008 versus 8.6% in 2007.
SGA expenses increased to MUSD 60.1 in 2008 from MUSD 57.0 in 2007, with changes in currency exchange rates representing MUSD 2.4 of the increase. SGA spending as a percentage of net sales fell to 23.4% from 24.1% in 2007. The increased dollar amount refl ects investments in the expansion of sales force and infrastructure in Asia to support growth in target markets.
Other expense was MUSD 1.0 for 2008 as compared to other expense of MUSD 0.1 for 2007. Foreign currency losses accounted for MUSD 1.8 of the expense for 2008 versus 0.1 in 2007. This increased expense was partly offset by higher other income of MUSD 0.8 in 2008 which primarily consisted of earn-out payments from the sale of the Diffusion Pump business.
EBIT slightly decreased to MUSD 32.3 or 12.6% of net sales for 2008 from MUSD 32.7 or 13.8% of net sales for 2007. The Company considers the profi tability solid given the current market conditions.
Interest income dropped to MUSD 0.5 for 2008 versus 1.2 MUSD for 2007. The reduction is primarily due to a lower average monthly cash balance of MUSD 37 for 2008 compared to MUSD 58 in 2007, attributable mainly to share buyback, dividends and acquisitions. Additionally, interest rates were lower for most of the currencies held.
Provision for income taxes fell to MUSD 8.5, or 25.8% of income before taxes for 2008 from a provision of MUSD 9.2, or 27.1% of income before income taxes for 2007. This lower effective tax rate was driven by enacted tax rate reductions in Germany and the U.S. and a more favorable mix in earnings and tax rates among the Company's different tax jurisdictions.
Trade accounts receivable decreased by MUSD 6.1 to MUSD 26.8 at December 31, 2008 as compared to MUSD 32.9 at December 31, 2007. Days sales outstanding were nearly fl at at 49.8 days for 2008 versus 49.9 days for 2007 using a 4-point average of quarter-end balances.
Inventory increased by MUSD 0.5 to MUSD 30.8 at December 31, 2008 as compared to MUSD 30.3 at December 31, 2007. Inventory turns decreased slightly to 4.3 in 2008 from 4.4 in 2007 using a 4-point average of quarter-end inventory balances.
Accrued liabilities decreased by MUSD 3.2 to MUSD 22.0 at December 31, 2008. The decrease was driven primarily by lower salaries, bonus, and commission accruals.
Cash and short term investments at December 31, 2008 totaled MUSD 45.8, an increase of MUSD 6.5 when compared to December 31, 2007. The Company generated a strong cash fl ow from operating activities of MUSD 31.3 in 2008 versus 30.2 in 2007. Net cash used in fi nancing activities was signifi cantly lower in 2008 with MUSD (15.6) versus MUSD (50.2) in 2007. This is mainly due to the share repurchase program of MUSD 41.9 in 2007.
(U.S. Dollars in Thousands, except share and per share amounts)
| December 31, | December 31, | |
|---|---|---|
| ASSETS | 2008 | 2007 |
| Restated | ||
| Cash and cash equivalents | 45,842 | 28,982 |
| Short-term investments | — | 10,268 |
| Trade accounts receivable, net | 26,753 | 32,861 |
| Inventories, net | 30,788 | 30,304 |
| Deferred tax assets | 5,648 | 6,260 |
| Other current assets | 4,792 | 3,781 |
| Total current assets | 113,823 | 112,456 |
| Property, plant and equipment, net | 25,902 | 25,507 |
| Deferred tax assets | 24,276 | 25,765 |
| Goodwill | 13,442 | 11,035 |
| Intangible assets, net | 1,909 | 2,068 |
| Other non-current assets | 1,946 | 4,805 |
| Total non-current assets | 67,475 | 69,180 |
| Total assets | 181,298 | 181,636 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Trade accounts payable | 6,172 | 6,356 |
| Short-term borrowings | 4,740 | 4,269 |
| Accrued liabilities | 21,963 | 25,189 |
| Income taxes payable | 627 | 5,165 |
| Deferred tax liabilities | — | 1,116 |
| Total current liabilities | 33,502 | 42,095 |
| Deferred tax liabilities | 206 | 415 |
| Other non-current liabilities | 8,685 | 874 |
| Total non-current liabilities | 8,891 | 1,289 |
| Total liabilities | 42,393 | 43,384 |
| Common stock (2,145,693 in 2008 and 2,376,762 in 2007 shares | ||
| issued / 2,145,693 in 2008 and 2,141,175 in 2007 shares outstand | 6,009 | 5,996 |
| ing; par value CHF 5) | ||
| Additional paid-in capital | 65,048 | 63,488 |
| Retained earnings | 66,984 | 59,249 |
| Accumulated other comprehensive income | 864 | 9,519 |
| Total stockholders' equity | 138,905 | 138,252 |
| Total liabilities and stockholders' equity | 181,298 | 181,636 |
(U.S. Dollars in Thousands, except per share amounts)
| Year ended December 31, | 2008 | 2007 |
|---|---|---|
| Restated | ||
| Net sales | 256,489 | 236,557 |
| Cost of sales | 140,808 | 126,455 |
| Gross profi t | 115,681 | 110,102 |
| Research and development | 22,228 | 20,290 |
| Selling, general and administrative | 60,125 | 56,956 |
| Operating income | 33,328 | 32,856 |
| Interest expense (income), net | (475) | (1,209) |
| Other expense (income), net | 1,019 | 109 |
| Income before income taxes | 32,784 | 33,956 |
| Provision for income taxes | 8,473 | 9,191 |
| Net income | 24,311 | 24,765 |
| Earnings per share: | ||
| Basic: | 11.34 | 10.83 |
| Diluted: | 11.26 | 10.70 |
(U.S. Dollars in Thousands, except share and per share amounts)
| Additional | Note | Accumulated other |
Total | |||
|---|---|---|---|---|---|---|
| Common stock |
paid-in capital |
receivable from offi cers |
Retained earnings |
comprehensive income (loss) |
stockholders' equity |
|
| Balance at December 31, 2006 | 6,628 | 97,850 | (164) | 43,329 | 8,118 | 155,761 |
| Effect of change in accounting method | ||||||
| at January 1, 2007 | 2,782 | (2,782) | — | |||
| Net income | 24,765 | 24,765 | ||||
| Other comprehensive income: | ||||||
| Unrealized gain (loss) on foreign currency hedges, net of income taxes USD 30 |
(77) | (77) | ||||
| Unrecognized income related to pensions (net of tax of (USD 788)) |
1,586 | 1,586 | ||||
| Foreign currency translation adjustments | 2,674 | 2,674 | ||||
| Total comprehensive income | 28,948 | |||||
| Repayment of note receivable from offi cers | 164 | 164 | ||||
| Issuance of common stock from exercise of stock | ||||||
| options | 59 | 1,775 | 1,834 | |||
| Stock-based compensation | 1,083 | 1,083 | ||||
| Share repurchase | (691) | (35,657) | (36,348) | |||
| Dividends paid (CHF 6 per share) | (11,627) | (11,627) | ||||
| Adjustments to deferred taxes related | ||||||
| to Pre-IPO reorganization | (1,563) | (1,563) | ||||
| Balance at December 31, 2007 restated | 5,996 | 63,488 | — | 59,249 | 9,519 | 138,252 |
| Net income | 24,311 | 24,311 | ||||
| Other comprehensive income: | ||||||
| Unrealized gain (loss) on foreign currency hedges, net of income taxes USD (40) |
37 | 37 | ||||
| Unrecognized expense related to pensions (net of tax of (USD 3,482)) |
(9,688) | (9,688) | ||||
| Foreign currency translation adjustments | 996 | 996 | ||||
| Total comprehensive income | 15,656 | |||||
| Issuance of common stock from | ||||||
| exercise of stock options | 13 | 449 | 462 | |||
| Stock-based compensation | 1,111 | 1,111 | ||||
| Dividends paid (CHF 8 per share) | (16,576) | (16,576) | ||||
| Balance at December 31, 2008 | 6,009 | 65,048 | — | 66,984 | 864 | 138,905 |
(U.S. Dollars in Thousands, except per share amounts)
| Year ended December 31, | 2008 | 2007 |
|---|---|---|
| Restated | ||
| Cash fl ows from operating activities: | ||
| Net income | 24,311 | 24,765 |
| Adjustments to reconcile net income to net cash provided by | ||
| operating activities: | ||
| Depreciation | 6,210 | 5,714 |
| Amortization | 691 | 473 |
| Deferred taxes | 4,006 | 3,240 |
| Stock-based compensation | 1,111 | 1,083 |
| Changes in operating assets and liabilities, excluding effects from acquisition: |
||
| Trade accounts receivable | 7,662 | (373) |
| Inventories | 153 | (3,653) |
| Other assets | (1,182) | (1,849) |
| Trade accounts payable | (1,244) | (760) |
| Accrued liabilities | (539) | 1,077 |
| Income taxes payable | (4,529) | 1,527 |
| Other liabilities | (5,386) | (1,086) |
| Net cash provided by operating activities | 31,264 | 30,158 |
| Cash fl ows from investing activities: | ||
| Purchases of property, plant and equipment | (6,033) | (5,705) |
| Acquisitions of businesses net of cash acquired | (2,937) | (8,383) |
| Change in short-term investments | 10,205 | 49 |
| Net cash provided by (used in) investing activites | 1,235 | (14,039) |
| Cash fl ows from fi nancing activities: | ||
| Repayment of note receivable from offi cers | — | 164 |
| Cash dividend paid | (16,576) | (11,627) |
| Cash used for share repurchase | — | (41,948) |
| Increase in short-term borrowings net | 471 | 1,416 |
| Proceeds from exercise of stock options | 462 | 1,833 |
| Net cash used in fi nancing activities | (15,643) | (50,162) |
| Effect of exchange rate changes on cash and cash equivalents | 4 | 5,739 |
| Change in cash and cash equivalents | 16,860 | (28,304) |
| Cash and cash equivalents at beginning of period | 28,982 | 57,286 |
| Cash and cash equivalents at end of period | 45,842 | 28,982 |
(U.S. Dollars in Thousands, except share and per share amounts)
INFICON Holding AG (INFICON or the "Company") is domiciled in Bad Ragaz, Switzerland, as a corporation (Aktiengesellschaft) organized under the laws of Switzerland. INFICON's stock is traded on the SIX in Switzerland.
INFICON provides world-class instruments for gas analysis, measurement and control and our products are essential for gas leak detection in air conditioning, refrigeration, and automotive manufacturing.
They are vital to equipment manufacturer and end-users in the complex fabrication of semiconductors and thin fi lm coatings for optics, fl at panel displays, solar cells and industrial vacuum coating applications.
Other users of vacuum based processes include the life sciences, research, aerospace, packaging, heat treatment, laser cutting and many other industrial processes.
We also leverage our expertise in vacuum technology to provide unique, toxic chemical analysis products for emergency response, security, and environmental monitoring.
INFICON has world-class manufacturing facilities in the United States, Europe and China and operations in China, Germany, Finland, France, Hong Kong, Japan, Korea, Liechtenstein, Singapore, Switzerland, Taiwan, the United Kingdom, and the United States.
During 2008, INFICON AG, a subsidiary of the Company, changed its pension accounting to amortize actuarial gains and losses and prior service cost over the remaining service period (15 years) as well as to adopt the 10% corridor method for pension cost. Previously, all actuarial gains and losses and prior service costs had been amortized over a shorter but arbitrary period of 5 years. The change in method was made to more accurately match the pension expense with the benefi t of employee service using a method which was already utilized by other companies in the group.
This change is deemed to be a change in accounting method and according to FAS 154 "Accounting Changes and Error Corrections a replacement of APB Opinion No. 20 and FASB Statement No. 3," retrospective restatement is required. As a result, at January 1, 2007, retained earnings was increased by USD 2,782 and other comprehensive income was decreased by USD 2,782. Additionally, 2007 selling general and administrative expense was reduced by USD 285 and provision for income taxes was increased by USD 37. The 2007 restated net income increased by USD 248 and basic and diluted earnings per share increased from USD 10.73 to 10.83 and from USD 10.59 to 10.70 respectively. The impact of this change in accounting method on the consolidated fi nancial statements 2008 has been immaterial in all respects. See Footnote 17 "Employee Benefi t Plans" for further information.
The consolidated fi nancial statements include the accounts of the Company and its wholly-owned subsidiaries. All signifi cant inter-company accounts and transactions have been eliminated in consolidation.
The preparation of fi nancial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the fi nancial statements and the reported amounts of revenues and expenses. Management bases its estimates and judgments on historical experience and on various other factors believed to be reasonable under the circumstances that form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company considers all highly-liquid investments with an original maturity of three months or less on their acquisition date to be cash equivalents. The Company classifi es investments with an original maturity of more than three months on their acquisition date as shortterm investments. Short-term investments consist of certifi cates of deposit, time deposits, or money market mutual funds.
Trade accounts receivable are shown net of allowances for doubtful accounts of USD 592 and USD 565 at December 31, 2008 and 2007, respectively. The Company markets its products to a diverse customer base globally. Trade credit is extended based upon evaluation of each customer's ability to perform its obligations, these evaluations are updated periodically and the Company may require deposits on large orders but does not require collateral to support customer receivables. If the fi nancial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
The following table represents specifi c customer sales as a percentage of total Company sales:
| 2008 | 2007 | |
|---|---|---|
| Customer A | 16% | 15% |
| Customer B | 12% | 12% |
Inventories are stated at the lower of cost or market. Cost is determined on the fi rst-in, fi rst-out method. The reserve for estimated obsolescence or unmarketable inventory is equal to the difference between the cost of inventory and the estimated fair value based upon assumptions about future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required. The reserve for excess and obsolete inventories was USD 4,661 and USD 4,641 as of December 31, 2008 and 2007, respectively.
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the fi nancial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statement of Income in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not such assets will not be realized.
Effective January 1, 2007, the company adopted Financial Accounting Standards Board ("FASB") interpretation No. 48, "Accounting for Uncertainty in Income Taxes – an interpretation of FASB statement No. 109," ("FIN 48"). FIN 48 prescribes a comprehensive model for how a company should measure, recognize, present and disclose in its fi nancial statements uncertain tax positions that the company has taken or expects to take on a tax return. Under FIN 48, the Company may recognize the tax benefi t from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefi ts recognized in the fi nancial statements from such a position should be measured based on the largest benefi t that has a greater than 50% likelihood of being realized upon ultimate settlement. If applicable, the Company will accrue interest and/or penalties for any uncertain tax positions as a component of income tax expense. Refer to Income Taxes footnote for details on the adoption of FIN 48 during 2007.
Property, plant, and equipment are stated at cost, less accumulated depreciation. Expenditures for major renewals and betterments that extend the useful lives of property, plant and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in earnings. Depreciation is provided on the straight-line method over the estimated useful lives of 20 years for buildings and 3 to 10 years for machinery and equipment.
The Company reviews goodwill and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable, and also reviews goodwill annually. Goodwill and intangible assets deemed to have indefi nite lives are not subject to amortization, while all other identifi able intangibles are amortized over their estimated useful life. Intangible assets, such as purchased technology, customer relationships, contract backlog and non-competition/non-solicitation agreements, are generally recorded in connection with the acquisition of a business. The value assigned to intangible assets is
generally determined by or with assistance of an independent valuation fi rm based on estimates and judgments regarding expectations for the success and life cycle of customers, products and technology acquired. If actual results differ signifi cantly from the estimates, or other indications are present, the Company may be required to record an impairment charge to write down the asset to its realizable value. In addition, goodwill is tested annually using a two-step process. The fi rst step is to identify any potential impairment by comparing the carrying value of the reporting unit to its fair value. If a potential impairment is identifi ed, the second step is to compare the implied fair value of goodwill with its carrying amount to measure the impairment loss. A severe decline in fair value could result in an impairment charge to goodwill, which could have a material adverse effect on the Company's business, fi nancial condition and results of operations. The Company performs its annual impairment analysis during the fourth quarter.
The pension benefi t costs and credits are developed from actuarial valuations. Inherent in these valuations are key assumptions, including discount rates and expected return on plan assets. The Company considers current market conditions, including changes in interest rates, in selecting these assumptions. Changes in the related pension benefi t costs or credits may occur in the future in addition to changes resulting from fl uctuations in the Company's related headcount due to changes in the assumptions.
Revenue is recognized upon the transfer of title and risk of loss which is generally upon shipment. In some instances, the Company provides training and maintenance to customers after the product has been shipped. The Company allocates the revenue between the multiple elements based upon relative fair value and defers the revenue related to the undelivered elements until the training and maintenance is complete. Fair value is the price charged when the element is sold separately. When a customer's acceptance is required, revenue is not recognized until the customer's acceptance is received. The Company accrues for anticipated returns and warranty costs upon shipment.
Research and development costs are expensed as incurred.
Revenue and costs associated with shipping products to customers are included in sales and cost of sales, respectively.
The accrual for the estimated cost of product warranties is provided for at the time revenue is recognized. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of the Company's component suppliers, the Company's warranty obligation is affected by product failure rates, material usage, and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company's estimates, revisions to the estimated warranty liability may be required.
Advertising costs of USD 450 in 2008 and USD 446 in 2007 are expensed as incurred.
The Company uses the modifi ed prospective method since January 1, 2006, the date of adoption of Statement of Financial Accounting Standards ("SFAS") No. 123(R), Share-Based Payment. Under this method, awards that are granted, modifi ed, or settled after December 31, 2005, are measured and accounted for in accordance with SFAS No. 123(R). Also under this method, expense is recognized for unvested awards that were granted prior to January 1, 2006, based upon the fair value determined at the grant date under SFAS 123, Accounting for Stock-Based Compensation. Stock based compensation expense is recognized ratably over the requisite service period for all awards. See Stock Option Plans Footnote for further information.
The functional currency of the Company's foreign subsidiaries is the applicable local currency. For those subsidiaries, assets and liabilities are translated to U.S. Dollars at year-end exchange rates. Income and expense accounts are translated at the average monthly exchange rates in effect during the year. The effects of foreign currency translation adjustments are included in accumulated other comprehensive income (loss) as a component of stockholders' equity. Gains and losses from foreign currency transactions are reported in the statement of income under other expense (income), net.
The following foreign exchange rates versus the U.S. Dollar have been applied when translating the fi nancial statements of the Companies major subsidiaries:
| Period-end rates | Average rates | |||
|---|---|---|---|---|
| Currency | 2008 | 2007 | 2008 | 2007 |
| Swiss Francs | 0.9473 | 0.8884 | 0.9264 | 0.8342 |
| Euro | 1.4097 | 1.4729 | 1.4713 | 1.3707 |
| Japanese Yen | 0.0111 | 0.0089 | 0.0097 | 0.0085 |
| Hong Kong Dollar | 0.1290 | 0.1282 | 0.1284 | 0.1282 |
| Korean Won | 0.0008 | 0.0011 | 0.0009 | 0.0011 |
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", longlived assets to be held and used by an entity are to be reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If the sum of the expected future undiscounted cash fl ows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value to fair value.
The Company capitalizes internal-use software development costs in accordance with the provisions of SOP 98-1, "Accounting for Costs of Computer Software Developed or Obtained for Internal Use." The capitalized cost is amortized beginning when it is placed into service on a straight-line basis over its estimated life.
Certain reclassifi cations have been made to prior years' fi nancial statements to conform to the current year presentation.
Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements ("SFAS No. 157"). In February 2008, the Financial Accounting Standards Board ("FASB ") issued FASB Staff Position No. FAS 157–2, "Effective Date of FASB Statement No. 157", which provides a one year deferral of the effective date of SFAS 157 for non-fi nancial assets and non-fi nancial liabilities, except those that are recognized or disclosed in the fi nancial statements at fair value at least annually. Therefore, the Company has adopted the provisions of SFAS No. 157 with respect to its fi nancial assets and liabilities only. In accordance with SFAS No. 157, fair value is defi ned as the price that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 also establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. For the fair value measurement of its derivatives, the Company uses independent information supplied by Financial Institutions categorized as Level 2 in accordance with SFAF No. 157. The adoption of SFAS No. 157 did not have a material effect on the Company's fi nancial condition or results of operations.
On January 1, 2008, the Company adopted SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities." SFAS No. 159 permits companies to choose to measure certain fi nancial instruments and certain other items at fair value using an instrument-byinstrument election. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. Under SFAS No. 159, the Company did not elect the fair value option for any of its assets and liabilities. The adoption of SFAS No. 159 did not have an impact on the Company's consolidated fi nancial statements.
In December 2008 the FASB staff issued a position paper FSP No. 140-4 Disclosures by Public Enterprises about Transfers of Financial Assets and Interests in Variable Interest Entities ("FSP SFAS 140"). The FSP amends FASB Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No. 140"). The standard requires public entities to provide additional disclosures about transfers of fi nancial assets. It also amends FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities" (FIN 46(R)), to require public enterprises, including sponsors that have a variable interest in a variable interest entity, to provide additional disclosures about their involvement with variable interest entities. Additionally, this FSP requires certain disclosures to be provided by a public enterprise that is (a) a sponsor of a qualifying special purpose entity (SPE) that holds a variable interest in the qualifying SPE but was not the transferor (nontransferor) of fi nancial assets to the qualifying SPE and (b) a servicer of a qualifying SPE that holds a signifi cant variable interest in the qualifying SPE but was not the transferor (nontransferor) of fi nancial assets to the qualifying SPE. The disclosures required by this FSP are intended to provide greater transparency to fi nancial statement users about a transferor's continuing involvement with transferred fi nancial assets and an enterprise's involvement with variable interest entities and qualifying SPEs. SFAS No. 140 is effective for the Company's fi scal year, and interim periods within such year, ending after December 15, 2008. There has been no impact to the Company on the fi nancial statements from the adoption of this pronouncement.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51" ("SFAS No. 160"). SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifi cally, this statement requires the recognition of noncontrolling interests (minority interests) as equity in the consolidated fi nancial statements and separate from the parent's equity. The amount of net income attributable to noncontrolling interests will be included in consolidated net income on the face of the income statement. SFAS No. 160 is effective for the Company's fi scal year, and interim periods within such year, beginning January 1, 2009. At the current time the Company does not believe there will be an impact on the fi nancial statements from the adoption of this pronouncement.
FAS 141(R) signifi cantly changes the accounting for business combinations. Under FAS 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date at fair value with limited exceptions. FAS 141(R) further changes the accounting treatment for certain specifi c items, including: acquisition costs will be generally expensed as incurred; acquired contingent liabilities will be recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies; in-process research and development (IPRD) will be recorded at fair value as an indefi nite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will be generally expensed subsequent to the acquisition date; changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. FAS 141(R) also includes a substantial number of new disclosure requirements. FAS 141(R) applies prospectively to the Company's business combinations for which the acquisition date is on or after January 1, 2009.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities— an amendment of FASB Statement No. 133" ("SFAS No. 161"). The standard is intended to enhance required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how: (a) an entity uses derivative instruments; (b) derivative instruments and related hedged items are accounted for under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities; and (c) derivative instruments and related hedged items affect an entity's fi nancial position, fi nancial performance, and cash fl ows. SFAS 161 is effective for fi scal years and interim periods beginning after November 15, 2008. SFAS No. 161 is effective for the Company in the fi rst quarter of fi scal year 2009. The Company is currently evaluating the effect of adoption of SFAS 161, but does not presently believe that it will have a material effect on its consolidated fi nancial position or results of operations.
In April 2008, the FASB issued a position paper FSP SFAS No. 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP SFAS No. 142-3"). This FSP amends the factors that must be taken into account for renewal or extension assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets". It amends paragraph 11(d) of SFAS No. 142 to require an entity to consider its own assumptions about renewal or extension of the term of the arrangement, consistent with its expected use of the asset. In addition, the FSP requires incremental disclosures for renewable intangible assets such as the weightedaverage period prior to the next renewal or extension, the entity's accounting policy for the treatment of costs incurred to renew or extend the term of a recognized intangible asset. This FSP shall be effective for fi nancial statements for fi scal years beginning after December 15, 2008, and interim periods within those fi scal years. It should be applied prospectively to intangible assets acquired after the effective date, early adoption being prohibited. The Company will apply the provisions of this FSP to any intangible assets recognized on or after December 15, 2008, or acquired after December 15, 2008.
In December 2008, the FASB Staff issued a position paper FSP No. 132 (R)-1, "Employers Disclosures about Postretirement Benefi t Plan Assets" ("FSP SFAS 132 (R)- 1"). The FSP amends SFAS 132 (R) to require additional disclosures about assets held in an employer's defi ned benefi t pension or other postretirement plan. The FSP requires to disclose the fair value for each major class of assets as well as the signifi cant investment strategies of the funds, in which the plan assets are invested. It is effective for fi scal years ending after December 15, 2009, with an early application permitted. The Company is currently evaluating the potential impact of this position paper.
During 2007, the Company completed a share repurchase on a special second trading line on the SIX Swiss Exchange. The share repurchase program began on May 3, 2007 and ended on December 13, 2007, with 235,587 shares having been repurchased at an average price CHF 199.89, which equated to 10.0% of the registered share capital prior to the program's inception. At June 30, 2008, INFICON held 10.0% of the voting rights in the company pursuant to Article 20 of the Swiss Stock Exchange Act. On July 24, 2008, the 235,587 registered shares were cancelled as agreed on April 24, 2008, at the Annual General Meeting of Shareholders.
On February 28, 2006, the Company acquired the assets of Electro Dynamics Crystal Corp. (EDC), a premier manufacturer of quartz-based products. The acquisition provides INFICON a competitive advantage through vertical supply chain integration and improves the Company's position in the optical coating and display markets.
The purchase price was USD 6,000, less assumed liabil ities paid in cash at closing. As part of this asset purchase agreement, there is an earn-out to be paid for calendar years 2006, 2007 and 2008, if certain profi tability goals are achieved. This earn-out is targeted to pay USD 667 annually; however actual pay-outs may vary each calendar year. At December 31, 2008 the Company had paid USD 624 for the 2007 earn-out and had accrued USD 1,192 for the 2008 earn-out to be paid in 2009. The earn-outs paid and accrued have been recorded as an increase to goodwill. The Company expects that the goodwill and intangible assets will be amortized over a fi fteen year period for tax purposes.
The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.
| As of March 1, | 2006 |
|---|---|
| Inventory | 841 |
| Equipment | 678 |
| Goodwill | 3,527 |
| Intangible assets | 1,183 |
| Assets acquired | 6,229 |
| Accrued liabilities assumed | (306) |
| Net assets acquired | 5,923 |
The following table summarizes the acquired intangible assets and their respective weighted-average useful lives.
| Value | Weighted average life (years) |
|
|---|---|---|
| Unpatented technology/Trade secret | 650 | 5.0 |
| Customer relationships | 425 | 6.0 |
| Contract Backlog | 3 | 0.7 |
| Non-competition & non-solicitation | 105 | 4.0 |
| Intangible assets | 1,183 |
On May 31, 2007, the Company acquired the assets of Maxtek Inc. (Maxtek), a developer and manufacturer of thin fi lm deposition measurement and Quartz Crystal Microbalance (QCM) measurement instruments and accessories. The acquisition further strengthens the Company's leading position for measurement and control products in the optical coating market.
The purchase price was USD 5,000, less assumed liabilities and expenses, paid in cash at closing. As part of this asset purchase agreement, there was an earn-out of USD 667 to be paid upon the achievement of certain milestones and up to USD 1,334 to be paid upon the achievement of certain sales targets within 12 months following the consummation of the acquisition. The Company paid USD 667 and USD 1,224 in 2008 for milestones and sales targets achieved. The earn-outs paid have been recorded as an increase to goodwill. The Company expects that the goodwill and intangible assets will be amortized over a fi fteen year period for tax purposes.
During 2008, the Company paid termination benefi ts totaling approximately USD 285, which was recorded as an increase to goodwill at the time of acquisition. Also, the Company adjusted goodwill for additional considerations of USD 470 of which the Company paid USD 137 in 2008.
The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.
| As of May 31, | 2007 |
|---|---|
| Inventory | 1,073 |
| Equipment | 36 |
| Goodwill | 3,832 |
| Intangible assets | 900 |
| Assets acquired | 5,841 |
| Accrued liabilities assumed | (340) |
| Net assets acquired | 5,501 |
The following table summarizes the acquired intangible assets and their respective weighted-average useful lives.
| Value | Weighted average life (years) |
|
|---|---|---|
| Backlog | 60 | 0.8 |
| Non-competition agreements | 30 | 3.6 |
| Customer relationships | 610 | 6.0 |
| Technology | 200 | 10.0 |
| Intangible assets | 900 |
On December 10, 2007, the Company acquired the stock of Sigma Instruments Inc. (Sigma), a leading manufacturer of instrumentation for the measurement and control of thin fi lm processes. The acquisition further expands the Company's position in the thin fi lm controller market. It also increases opportunities for the Company in the emerging solar manufacturing market.
The purchase price was USD 2,600, less cash acquired at closing. Additionally, there is an earn-out of USD 400 to be paid based on sales growth over a two year period. As of December 31, 2008, the Company has not recognized a liability or additional goodwill for this earn-out.
The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.
| As of December 10, | 2007 |
|---|---|
| Inventory | 528 |
| Equipment | 275 |
| Goodwill | 1,555 |
| Intangible assets | 520 |
| Assets acquired | 2,918 |
| Accrued liabilities assumed | (318) |
| Net assets acquired | 2,600 |
The following table summarizes the acquired intangible assets and their respective weighted-average useful lives.
| Value | Weighted average life (years) |
|
|---|---|---|
| Technology – Thin film & instrumentation | 300 | 7.0 |
| Distributor/Customer relationships | 200 | 5.0 |
| Contract Backlog | 10 | 0.1 |
| Non-competition & non-solicitation | 10 | 3.6 |
| Intangible assets | 520 |
The results of these acquisitions were included in the Company's consolidated operations beginning on the date of acquisition. The pro forma consolidated statements refl ecting the operating results as if the acquisitions occurred at the beginning of the periods presented, would not differ materially from the operating results of the Company as reported for the twelve months ended December 31, 2008 and 2007, respectively.
The costs of identifi ed intangible assets, including completed technology, trade secrets, customer relationships, and non-competition/non-solicitation agreements are amortized on a straight-line basis over four to ten years. Amortization expense for the next fi ve years will approximate USD 430 per year.
The balance of the intangible assets was as follows:
| December 31, 2008 | December 31, 2007 | |||
|---|---|---|---|---|
| Gross carrying amount |
Accumulated amortization |
Gross carrying amount |
Accumulated amortization |
|
| Technology | 2,350 | (1,329) | 2,080 | (865) |
| Customer relationships | 1,235 | (402) | 1,035 | (190) |
| Other | 218 | (163) | 206 | (198) |
| Intangible assets, net | 3,803 | (1,894) | 3,321 | (1,253) |
Net inventories consist of the following at December 31:
| 2008 | 2007 | |
|---|---|---|
| Raw material | 21,525 | 22,437 |
| Work-in-process | 2,516 | 2,438 |
| Finished goods | 6,747 | 5,492 |
| Balance at December 31, | 30,788 | 30,304 |
The components of property, plant, and equipment consist of the following at December 31:
| 2008 | 2007 | |
|---|---|---|
| Land | 700 | 700 |
| Buildings and improvements | 33,261 | 31,763 |
| Machinery and equipment | 38,710 | 32,533 |
| 72,671 | 64,996 | |
| Less: accumulated depreciation | (46,769) | (39,489) |
| Balance at December 31, | 25,902 | 25,507 |
The activity of goodwill was as follows:
| Year ended December 31, | 2008 | 2007 |
|---|---|---|
| Balance, beginning of year | 11,035 | 4,227 |
| Transferred to intangible assets upon completion of the allocation of purchase price for the Sigma acquisition |
(538) | |
| Goodwill acquired during the year, including increases for contigent consideration |
2,945** | 6,808* |
| Balance, end of year | 13,442 | 11,035 |
* 2007 goodwill acquired changed in 2008 partly due to the completion of the allocation of purchase for the Sigma acquisition which was consummated late in 2007 and for which the allocation of purchase price had not been fi nalized at December 31, 2007.
** Additional goodwill acquired in 2008 due mainly to Maxtek and EDC earn-outs. For a more detailed discussion of payments, please see Notes to Consolidated Financial Statements, 5. Acquisitions.
The components of accrued liabilities are as follows at December 31:
| Year ended December 31, | 2008 | 2007 |
|---|---|---|
| Salaries, wages and related costs | 14,584 | 16,972 |
| Warranty | 2,882 | 2,879 |
| Deferred revenue | 367 | 226 |
| Professional fees | 952 | 1,241 |
| Other | 3,178 | 3,871 |
| Balance at December 31, | 21,963 | 25,189 |
The activity of the warranty reserve was as follows:
| 2008 | 2007 | |
|---|---|---|
| Balance at beginning of year | 2,879 | 2,855 |
| Add: warranty provision | 2,325 | 2,232 |
| Deduct: claims against reserve | 2,322 | 2,208 |
| Balance at end of year | 2,882 | 2,879 |
The Company has a USD 10,000 line of credit with Credit Suisse, which can be in the form of overdraft facility, fi xed advances, margin coverage for foreign exchange forward transactions and/or issuance of bank guarantees. The agreement can be terminated with a 30 day notice by either party. The Company had no outstanding amounts under the arrangement as of December 31, 2008.
Additionally, the Company has various facilities at its operating companies which can be in the form of overdraft facilities, fi xed advances, short-term loans and/ or margin coverage arrangement for foreign exchange forward transactions.
The following is a summary of these facilities and outstanding balances at December 31, 2008:
| 14,649 | 4,740 | |||
|---|---|---|---|---|
| F | 430 | Variable | Aug 10 | 0 |
| E | 705 | Variable | Mai 09 | 212 |
| D | 2,115 | 7.50% | Upon notice | 1,057 |
| C | 846 | Variable | Upon notice | 0 |
| B | 10,000 | Variable | Upon notice | 2,918 |
| A | 553 | Variable | Nov 09 | 553 |
| Bank | Total available (USD) |
Interest rate |
Expiration | Outstanding at December 31, 2008 (USD) |
The carrying amount of fi nancial instruments reported in the balance sheet approximates fair value.
The Company maintains a foreign currency exchange risk management strategy that uses derivative instruments, in the form of forward exchange contracts and swaps, to hedge against future movements in foreign exchange rates that affect certain foreign currency denominated sales and related purchase transactions, caused by currency exchange rate volatility. These contracts are designated as cash fl ow hedges and generally have durations of less than one year. The Company attempts to match the forward contracts with the underlying items being hedged in terms of currency, amount and maturity. The primary currencies in which the Company has exposure are the Japanese Yen, Swiss Franc, Euro, and U.S. Dollar. This exposure arises in certain locations from intercompany purchases and sales of inventory in foreign currency for resale in local currency, in addition to intercompany billings relating to research and development and management services. The Company's accounting policy, for derivative fi nancial instruments, is based on its designation of such instruments as hedging transactions. An instrument is designated as a hedge based in part on its effectiveness in risk reduction and one-to-one matching of derivative instruments to underlying transactions. The Company records all derivatives on the balance sheet at fair value. For derivative instruments that are designated and qualify as cash fl ow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income and reclassifi ed into earnings in the same period or periods during which the hedged transaction affects earnings. The gain or loss (ineffectiveness) on the derivative instrument in excess of the hedged item, if any, is recognized in current earnings during the period in which it occurs. The Company's unrealized net gains/ losses under foreign currency contracts at December 31, 2008 and 2007, are included in accumulated other comprehensive income, net of taxes. These unrealized net gains/losses are expected to be recognized into earnings over the next twelve months.
The Company had losses from all foreign currency transactions and foreign exchange contracts of USD 1,761 and USD 121 for the years 2008 and 2007, respectively, which are recorded in other expense (income), net.
| 2008 | 2007 | |
|---|---|---|
| Aggregate value of contracts for sale of U.S.Dollars |
1,217 | 4,802 |
| Aggregate value of contracts for exchange of all other currencies |
— | 1,394 |
A summary of contractual commitments and contingencies as of December 31, 2008 is as follows:
| Operating leases |
Purchase obligations |
Total | |
|---|---|---|---|
| 2009 | 5,204 | 4,254 | 9,458 |
| 2010 | 4,853 | 996 | 5,849 |
| 2011 | 4,620 | 3 | 4,623 |
| 2012 | 4,338 | 4,338 | |
| 2013 | 4,274 | 4,274 | |
| Therafter | 1,559 | 1,559 | |
| Total | 24,848 | 5,253 | 30,101 |
The Company leases some of its facilities and machinery and equipment under operating leases, expiring in years 2010 through 2019. Generally, the facility leases require the Company to pay maintenance, insurance and real estate taxes. Rental expense under operating leases totaled USD 5,888 and USD 4,826 for the years ended December 31, 2008 and 2007, respectively.
Purchase obligations include amounts committed under legally enforceable contracts or purchase orders for goods or services with defi ned terms as to price, quantity, delivery and termination liability.
Cash payments for the years ended December 31:
| 2008 | 2007 | |
|---|---|---|
| Income taxes, net | 6,403 | 3,339 |
| Interest | 1,344 | 681 |
Non-cash transactions for the years ended December 31:
| 2008 | 2007 | |
|---|---|---|
| Adjustment for SFAS 158 | (9,688) | 1,586 |
| Acquisition earn-out accrued | (2,416) | (1,292) |
| Adjustment to deferred taxes related to the pre-IPO reorganization |
— | (1,563) |
For fi nancial reporting purposes, income before income taxes included the following:
| Income before income taxes | 32,784 | 33,956 |
|---|---|---|
| Foreign | 27,401 | 28,514 |
| Switzerland | 5,383 | 5,442 |
| 2008 | 2007 |
Provision (benefi t) for income taxes included the following:
| 2008 | 2007 | |
|---|---|---|
| Current: | ||
| Switzerland | 6 | (9) |
| Foreign | 3,617 | 5,101 |
| 3,623 | 5,092 | |
| Deferred: | ||
| Switzerland | — | — |
| Foreign | 4,850 | 4,099 |
| 4,850 | 4,099 | |
| Provision for income taxes | 8,473 | 9,191 |
The differences between the Swiss statutory income tax rate and the Company's effective tax rate were as follows:
| 2008 | 2007 | |
|---|---|---|
| Swiss statutory tax rate | 19.5% | 19.5% |
| Effect of non-Swiss subsidiaries with different tax rates |
6.4% | 7.2% |
| Change in valuation allowance | (2.4%) | (3.1%) |
| Tax rate changes on deferred taxes | 0.0% | 6.4% |
| Effect of permanent differences & other | 2.3% | (2.9%) |
| Effective tax rate | 25.8% | 27.1% |
Deferred tax assets and (liabilities) were comprised of the following:
| 2008 | 2007 | |
|---|---|---|
| Intangible assets | 14,748 | 18,744 |
| Loss carryforwards and tax credits | 10,881 | 11,561 |
| Accrued liabilities | 4,294 | 2,206 |
| Inventory | 1,120 | (646) |
| Deferred revenue and other | 504 | 562 |
| Less: valuation allowances | (840) | (1,011) |
| Property, plant, and equipment | (989) | (922) |
| Net deferred tax asset | 29,718 | 30,494 |
| Presented as: | ||
| Current deferred tax asset | 5,648 | 6,260 |
| Current deferred tax asset | 5,648 | 6,260 |
|---|---|---|
| Long-term deferred tax asset | 24,276 | 25,765 |
| Current deferred tax liability | — | (1,116) |
| Long-term deferred tax liability | (206) | (415) |
| 29,718 | 30,494 |
During the year ended December 31, 2000, Unaxis Holding AG transferred the assets and liabilities of various INFICON subsidiaries to newly created legal entities that are wholly-owned by INFICON Holding AG. For income tax purposes, the asset transfer was considered a taxable transaction creating a new income tax basis of the assets and liabilities transferred. The transaction resulted in a basis difference of approximately USD 84,000 which is deductible for tax purposes over various periods, no longer than 15 years. As a result, a deferred tax asset of USD 35,822 related to the basis difference was recorded with a corresponding credit in stockholders' equity. In conjunction with the business transfers and taxable transaction described above, it was agreed that Unaxis would be responsible for the payment of taxes for the period up to the date of transfer. The tax liability for the period through the transfer date was estimated and recorded as part of the equity reclassifi cation upon reorganization of the Company.
As of December 31, 2008, the Company has net deferred tax assets of approximately USD 30,000, a majority of which is in the United States. In assessing the realization of the Company's deferred tax assets, the Company considers whether it is more likely than not the deferred tax assets will be realized. The Company evaluates the recoverability of its deferred tax assets based upon historical results and forecasted results over future years, considering tax planning strategies, and matches this forecast against the basis differences, deductions available in future years and the limitations allowed for net operating loss carryforwards to ensure there is adequate support for the realization of the deferred tax assets. While the Company has considered future operating results, in conjunction with ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company was to determine that the Company would not be able to realize all or part of the Company's net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged as a reduction to income in the period such determination was made. Likewise, should the Company determine that the Company would be able to realize future deferred tax assets in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made. Although realization is not assured, the Company believes it is more likely than not that the net deferred tax asset balance as of December 31, 2008 will be realized. In addition, the Company has recorded a valuation allowance of USD 840 in 2008 compared to USD 1,011 in 2007, which represents the tax benefi t for net operating losses and other timing differences incurred outside of the United States for which the Company is uncertain as to the amount, if any, of future tax benefi ts to be received for the future utilization of such assets.
Undistributed earnings of INFICON's subsidiaries are permanently reinvested. Distribution of earnings to the Company would generally be exempt from taxation in Switzerland in accordance with their participation exemption. The participation exemption, in most cases, exempts income such as dividends, interest, and capital gains from taxation in Switzerland if such income is derived from qualifying investments in subsidiaries. Upon distribution of those earnings in the form of dividends, withholding taxes ranging from 5% to 20% would be payable upon the remittance of all previous unremitted earnings.
Effective January 1, 2007, the Company adopted the provisions of FIN 48 which resulted in no adjustment to the Company's Balance Sheet or Statement of Income. The total amount of unrecognized tax benefi ts as of the date of adoption and at December 31, 2008 was USD 1,500, and if this amount was recognized in the future, the full amount would be included in the determination of net income following the Company's adoption of SFAS 141 (R) on January 1, 2009. The Company has not accrued interest or penalties as it relates to this position. The USD 1,500 is included as a reduction of long term deferred tax asset and relates to an uncertain tax position in the United States. The Company believes it is reasonably possible that the amount of unrecognized tax benefi ts would not signifi cantly change in the next twelve months as a result of tax authority audits.
INFICON and its subsidiaries are subject to various statutory and income tax jurisdictions. The following tax years, in the major tax jurisdictions noted, are open for assessment or refund: Switzerland: 2006 to 2008, U.S.A. 2000 to 2008, Liechtenstein: 2008, Germany: 2004 to 2008, Korea: 2004 to 2008, Japan: 2004 to 2008, Hong Kong: 2002 to 2008, and Taiwan: 2004 to 2008.
Certain INFICON employees (primarily United States, Liechtenstein, and Germany) participate in contributory and noncontributory defi ned benefi t plans. Benefi ts under the defi ned benefi t plans are generally based on years of service and average pay. The Company funds the pension plans in accordance with the requirements of the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code in the United States and in accordance with local regulations in the specifi ed countries.
As described in Note 2, during 2008 the Company changed its pension accounting in its INFICON AG subsidiary, which resulted in a retroactive restatement of 2007. Contained below is a reconciliation of all amounts which have been adjusted from the amounts that were previously reported.
| 2007 as | presented Adjustment | 2007 as restated |
|
|---|---|---|---|
| The pre-tax amounts recognized in accumulated other comprehensive income consist of: |
|||
| Net actuarial loss | 3,550 | 3,412 | 6,962 |
| Prior service (credit) cost | 305 | 73 | 378 |
| Transition obligation | 20 | — | 20 |
| Total (before tax effects) | 3,875 | 3,485 | 7,360 |
| Service cost | 2,244 | 2,244 | |
| Interest cost | 2,430 | 2,430 | |
| Expected return on plan assets |
(3,292) | (3,292) | |
| Amortization of prior service cost |
31 | (1) | 30 |
| Amortization of transition asset |
2 | 2 | |
| Net amortization and deferral of actuarial gains/(losses) |
529 | (284) | 245 |
| Net periodic benefit cost | 1,944 | (285) | 1,659 |
| Net actuarial (gain)/loss | (2,518) | (2,518) | |
| Amortization actuarial (gain)/loss |
(529) | 285 | (244) |
| Amortization of prior service (cost)/benefit |
(31) | (31) | |
| Recognized prior service (cost)/credit |
114 | 114 | |
| Amortization of transition (obligation)/asset |
(2) | (2) | |
| Total Recognized in other comprehensive income (before tax effects) |
(2,966) | 285 | (2,681) |
The following tables show reconciliations of defi ned benefi t pension plans as of December 31, 2008:
| 2008 | 2007 as restated |
|
|---|---|---|
| Change in benefit obligation | ||
| Benefit obligation, January 1 | 59,893 | 62,400 |
| Service cost | 2,253 | 2,244 |
| Interest cost | 2,802 | 2,430 |
| Actuarial losses (gains) | (2,201) | (4,897) |
| Benefits paid | (1,350) | (5,805) |
| Participant contributions | 1,068 | 897 |
| Plan amendments | — | 107 |
| Foreign currency translation adjustments | 3,632 | 2,517 |
| Benefit obligation, December 31 | 66,097 | 59,893 |
| 63,439 | 60,612 |
|---|---|
| (11,695) | 913 |
| 3,924 | 4,548 |
| 1,233 | 897 |
| (1,206) | (5,698) |
| 3,589 | 2,167 |
| 59,284 | 63,439 |
Net funded status (including under-funded and non-funded plans) at December 31
| Amounts recognized in the Consolidated | ||
|---|---|---|
| Balance Sheet: | ||
|---|---|---|
| Asset | 535 | 4,667 |
| Current liabilities | — | — |
| Non-current liabilities | (7,571) | (1,121) |
| Net funded status | (7,036) | 3,546 |
| Range of assumptions | ||
|---|---|---|
| Discount rate | 2.8%–6.3% 2.8%–6.3% | |
| Expected return on plan assets | 2.8%–8.0% 2.8%–8.0% | |
| Rate of compensation increase | 2.5%–5.0% 2.0%–5.0% |
The pre-tax amounts recognized in accumulated other comprehensive
| income consist of: | ||
|---|---|---|
| Net actuarial loss | 20,151 | 6,962 |
| Prior service (credit) cost | 361 | 378 |
| Transition obligation | 18 | 20 |
| Total (before tax effects) | 20,530 | 7,360 |
The accumulated benefi t obligation for all defi ned benefi t pension plans was USD 60,260 and USD 53,344 at December 31, 2008 and 2007, respectively.
Information for pension plans with an accumulated benefi t obligation in excess of plan assets is:
| 2008 | 2007 as restated |
|
|---|---|---|
| Aggregate projected benefit obligation | 49,567 | 43,578 |
| Aggregate accumulated benefit obligation | 46,626 | 41,383 |
| Aggregate fair value of plan assets | 42,094 | 42,456 |
The following table summarizes the components recognized in net periodic benefi t cost and other comprehensive income for the periods ended December 31:
| 2008 | 2007 as restated |
|
|---|---|---|
| Service cost | 2,253 | 2,244 |
| Interest cost | 2,802 | 2,430 |
| Expected return on plan assets | (3,684) | (3,292) |
| Amortization of prior service cost | 38 | 30 |
| Amortization of transition asset | 2 | 2 |
| Net amortization and deferral of actuarial gains / (losses) |
128 | 245 |
| Net periodic benefit cost | 1,539 | 1,659 |
| Net actuarial (gain)/loss | 13,177 | (2,518) |
| Amortization actuarial (gain)/loss | (127) | (244) |
| Amortization of prior service (cost)/benefit | (16) | (31) |
| Recognized prior service (cost)/credit | (22) | 114 |
| Amortization of transition (obligation)/ asset |
(2) | (2) |
| Total recognized in other comprehensive income (before tax effects) * |
13,010 | (2,681) |
| * excluding foreign currency effects | ||
| Total recognized in net benefit cost and other comprehensive income (before tax |
||
| effects) | 14,549 | (1,022) |
The asset allocation for the Company's US, Liechtenstein, and Germany pension plans for the years ended December 31, 2007 and the target allocation for 2008, by asset category, follows:
| 2008 | 2007 | |
|---|---|---|
| Equity – US | 0%–43% | 0%–42% |
| Equity – International | 0%–62% | 10%–62% |
| Equity – Emerging Markets | 0% | 0%–16% |
| Bonds | 0%–66% | 20%–66% |
| Fixed Income | 0%–29% | 0%–28% |
| Cash/Money Market | 5%–100% | 0%–38% |
| Real Estate | 0%–26% | 5%–26% |
| Derivative Instruments | 0%–10% | 0%–16% |
For 2007 and 2008 the Company's U.S., German and Liechtenstein pension plan assets were managed by outside investment managers. The Company's investment strategy with respect to pension assets is to maximize return while protecting principal. The investment manager will have the fl exibility to adjust the asset allocation and move funds to the asset class that offers the most opportunity for investment returns.
The Company's overall expected long-term rate of return on plan assets is based upon historical long-term returns of the investment performance adjusted to refl ect expectations of future long-term returns by asset class. It is anticipated the Company will make contributions of approximately USD 1,134 to the pension plans for the fi scal year ending December 31, 2009.
Estimated future benefi t payments, which refl ect expected future service, as appropriate, are expected to be paid as follows:
| 2009 | 1,764 |
|---|---|
| 2010 | 2,117 |
| 2011 | 1,983 |
| 2012 | 2,757 |
| 2013 | 3,115 |
| 2014-2018 | 21,238 |
The following table shows the amount in other comprehensive income expected to be recognized as components of Net Periodic Benefi t Cost in 2009.
| Transition obligation | 2 |
|---|---|
| Prior service cost | 38 |
| Net loss (gain) | 1,199 |
| 1,239 |
The Company also participates in U.S. and foreign defi ned contribution plans for certain locations. Expense related to these plans was USD 727 and USD 379 for the years ended December 31, 2008 and 2007, respectively.
Under the Swiss Code of Obligations, the shareholders may decide on an increase of the share capital in a specifi ed aggregate par value up to 50% of the existing share capital, in the form of authorized capital to be used at the discretion of the Board of Directors. The Board of Directors is currently not authorized to issue new registered shares. The General Meeting of Stockholders approved conditional capital in the amount of 260,000 shares, which shall be issued upon the exercise of option rights, which some employees and members of the Board of Directors will be granted pursuant to the Employee Incentive Plans. The Board of Directors will regulate the details of the issuances. As of December 31, 2008 and 2007, 212,794 and 217,312 shares of CHF 5 each, respectively, were available for issuance.
In connection with the Company's initial public offering in 2000, employees had the opportunity to participate in one of the two following equity purchase programs.
Leveraged Share Plan – The leveraged share plan was available to three tiers of employees: the Chief Executive Offi cer, other executive offi cers, and key employees.
Discounted Share Purchase Plan – The discounted share purchase plan was offered to employees who were not eligible to participate in the leveraged share plan. Under this plan, eligible persons were offered the opportunity to purchase shares on the closing of the offering at a 30% discount to the offer price. Each employee was entitled to purchase up to USD 8 worth of shares in the offering at a 30% discount. Employees who participated in the discounted share purchase plan purchased either ADRs or shares totaling 26,011 and 7,166, respectively. The 30% discount was treated as compensation.
The ADRs and shares issued under the leverage share plan and discounted share purchase plan were included in the 315,000 shares offered by the Company as part of the initial public offering.
In November 2000, certain offi cers and key employees purchased 16,480 shares of common stock and paid the exercise price by issuing cash plus full recourse promissory notes, denominated in U.S. Dollars, Swiss Francs, or Euro, to the Company totaling USD 1,371. At December 31, 2007 and 2008, there was no outstanding balance on the notes.
Leveraged Share Plan – The aggregate amount of shares that may be issued in the form of incentive stock options under the Leveraged Share Plan was 155,555 shares. All options are granted at prices equal to 100% of the market value of the common stock at the date of grant. The options are nontransferable and the plan includes specifi c requirements for employees who are terminated prior to exercising their options or prior to the options becoming vested. All of these options which were unexercised by November of 2007 expired as per terms of the plan.
Directors' Stock Option Plan – In fi scal year 2001, the Board of Directors approved the Directors' Stock Option Plan. The Directors' Stock Option Plan is solely for members of the Board, who are not employees of INFICON. The Company grants options to the eligible Directors, in May of each year and the options are nontransferable. All options are granted at prices equal to 100% of the market value of the common stock at the date of grant. The plan includes specifi c requirements for the Directors who are removed or resign from the Board.
Management & Key Employee Stock Option Plan – In fi scal year 2001, the Board of Directors approved the Key Employee Stock Option Plan. The purpose of the plan is to provide key employees of the Company with an opportunity to become shareholders, and in addition, to obtain options on shares and allow them to participate in the future success of the Company. It is intended that the plan will provide an additional incentive for key employees to maintain continued employment, contribute to the future success and prosperity, and enhance the value of the Company. Accordingly, the Company will, from time to time during the term of this plan, grant to such key employees options to purchase shares in such amounts as the Company shall determine, subject to the conditions provided in the plan. The plan shall remain in effect through May 15, 2011.
The options are granted in Swiss Francs.
Provisions of the Plans are as follows:
| IPO leveraged share plan (expired as of 11/9/2007) |
Director plan | Management plan & key employee plan |
|
|---|---|---|---|
| Vesting | 50% on each of second and third anniversary from date of grant |
Immediately at grant |
25% each year from the date of grant |
| Exercisable | 50% on each of second and third anniversary from date of grant |
One year from date of grant |
25% each year from the date of grant |
| Expiration | Seventh anniversary from date of grant |
Seventh anniversary from date of grant |
Seventh anniversary from date of grant |
Maximum remaining exercise periods (in months) after termination of employment are as follows:
| Reason for termination of employment |
IPO leveraged share plan (expired as of 11/9/2007) |
Director plan | Management plan & key employee plan |
|---|---|---|---|
| Resignation (voluntary) |
3 | 12 | 6 |
| Resignation (with adverse change) |
as if employed | 12 | 6 |
| Termination by company not for cause |
as if employed | 12 | 6 |
| Resignation or removal for cause |
0 | 0 | 0 |
| Retirement | normal vesting +12 |
12 | 24 |
| Disability | normal vesting +12 |
18 | 18 |
| Death | 12 | 12 | 12 |
The following is a summary of option transactions under the three Plans:
| Shares | Weighted average exercise price (CHF) |
|
|---|---|---|
| Outstanding December 31, 2006 | 186,378 | 167.06 |
| Granted | 28,100 | 213.80 |
| Forfeited | (80,814) | 221.92 |
| Exercised | (20,890) | 108.20 |
| Outstanding December 31, 2007 | 112,774 | 150.66 |
| Granted | 28,700 | 170.19 |
| Forfeited | (2,747) | 157.03 |
| Exercised | (4,518) | 105.39 |
| Outstanding December 31, 2008 | 134,209 | 156.20 |
| Exercisable at December 31, 2008 | 68,496 | 135.84 |
The following table summarizes information about stock options outstanding and exercisable at December 31, 2008.
| Exercise price (CHF) | Shares outstanding |
Outstanding options average price (CHF) |
Remaining term (years) |
Options exercisable |
Options exercisable average price (CHF) |
|---|---|---|---|---|---|
| 45.01–67.50 | 4,450 | 50.00 | 1.1 | 4,450 | 50.00 |
| 67.51–90.00 | 2,789 | 70.92 | 1.7 | 2,789 | 70.92 |
| 90.01–112.50 | 26,965 | 95.71 | 3.0 19,890 | 96.53 | |
| 112.51–135.00 | 12,450 | 116.75 | 2.2 12,450 | 116.75 | |
| 135.01–157.50 | 1,450 | 150.16 | 6.7 | — | — |
| 157.51–180.00 | 33,294 | 170.55 | 5.2 | 6,744 | 164.78 |
| 180.01–202.50 | 26,161 | 187.88 | 4.1 13,111 | 187.75 | |
| 202.51–225.00 | 26,650 | 213.80 | 5.3 | 9,062 | 213.80 |
| Totals | 134,209 | 156.20 | 68,496 | 135.84 |
The weighted average remaining contractual terms of outstanding and exercisable stock options at December 31, 2008 are 4.1 years and 2.9 years, respectively. The aggregate intrinsic value of outstanding and exercisable stock options at December 31, 2008 is USD 204 and 199, respectively. The aggregate intrinsic value of outstanding and exercisable stock options at December 31, 2007 is USD 4,066 and 2,567, respectively.
In accordance with the provisions of SFAS 123(R) during the year ended December 31, 2008, the Company recognized stock-based compensation expense related to stock options of USD 1,111, net of tax benefi t of USD 476. As a result of applying the provisions of SFAS 123(R) during the year ended December 31, 2007, the Company recognized stock-based compensation expense related to stock options of USD 1,083, net of tax benefi t of USD 186.
Management estimated the fair value of options granted using the Black-Scholes option-pricing model. This model was originally developed to estimate the fair value of exchange-traded equity options, which (unlike employee stock options) have no vesting period or transferability restrictions. As a result, the Black-Scholes model is not necessarily a precise indicator of the value of an option, but it is commonly used for this purpose. The Black-Scholes model requires several assumptions, which management developed based on historical trends and current market observations.
| 2008 | 2007 | |
|---|---|---|
| Risk free interest rate | 2.76% | 2.68% |
| Expected volatility factor of stock price | 37.57% | 36.87% |
| Dividend Yield | 5.14% | 3.22% |
| Expected life of stock options | 5.2 | 4.8 |
Expected volatilities are based upon historical volatility of the Company's stock and traded options. The expected life estimates are determined using the average expected term based on historically observed option lives. Unrecognized stock based compensation expense related to non-vested stock options totaled USD 1,914 at December 31, 2008, which will be recognized as expense over the next four years. The weighted average period over which this unrecognized expense is expected to be recognized is 1.24 years.
Shares authorized for stock option awards were 260,000. During 2008 and 2007, proceeds from stock option exercises totaled USD 462 and USD 1,834, respectively and 4,518 and 20,890 shares, respectively, were issued in connection with these stock option exercises. All shares issued were new shares issued from available conditional share capital. The total intrinsic value of options exercised during 2008 and 2007 was USD 259 and USD 2,045, respectively. The weighted average fair value for options granted during 2008 was 37.91 CHF per share. The weighted average fair value of options vested during 2008 was 66.09 CHF per share.
The Company is a global supplier of instrumentation for analysis, monitoring, and control in the general vacuum processes, semiconductor and vacuum coating, refrigeration and air conditioning, and emergency response and security markets. At the direction of the Company's chief operating decision maker, the President and Chief Executive Offi cer, the allocation of the Company's resources and assessment of performance is made for the Company as a whole. Since the Company operates in one segment, all information required by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," can be found in the consolidated fi nancial statements.
Information on the Company's sales by geographic location (determined by country of destination) was as follows:
| 2008 | 2007 | |
|---|---|---|
| Europe | 117,900 | 104,725 |
| North America | 54,900 | 54,044 |
| Asia-Pacific | 80,300 | 73,373 |
| Other | 3,389 | 4,415 |
| 256,489 | 236,557 |
The Company computes basic earnings per share, which is based on the weighted average number of common shares outstanding, and diluted earnings per share, which is based on the weighted average number of common shares outstanding and all dilutive common equivalent shares outstanding. The dilutive effect of options is determined under the treasury stock method using the average market price for the period.
The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31:
| 2008 | 2007 | |
|---|---|---|
| Numerator | ||
| Net income | 24,311 | 24,765 |
| Denominator | ||
| Weighted average shares outstanding | 2,144,579 2,285,745 | |
| Effect of dilutive stock options | 15,114 | 28,600 |
| Denominator for diluted earnings per share 2,159,693 2,314,345 | ||
| Earnings per share: | ||
| Basic: | 11.34 | 10.83 |
| Diluted: | 11.26 | 10.70 |
For the year ended December 31, 2007, the fully diluted earnings per share calculation excluded 26,900 options to purchase shares since these shares would have been anti-dilutive for 2007.
As required by article 663 paragraph 3 of the Swiss Code of Obligations, the following supplementary information is disclosed:
| 2008 | 2007 | |
|---|---|---|
| Total personnel costs | 71,087 | 67,214 |
| Depreciation of property, plant, and equipment |
6,210 | 5,714 |
| Amortization and impairment on intangible assets |
691 | 473 |
| Total amortization, impairment and depreciation |
6,901 | 6,187 |
The fi re insurance values of property, plant, and equipment at December 31:
| 56,637 | 51,744 | |
|---|---|---|
| Machinery and equipment | 36,449 | 32,348 |
| Buildings and improvements | 20,188 | 19,396 |
| 2008 | 2007 |
The compensation accrued for members of the Board of Directors and the aggregate for the Senior Management in accordance with art. 663bbis and art. 663c CO for the year ended December 31, 2008 is as follows:
| Base compen sation |
Variable compensation | Other compen |
Total 2008 |
|||
|---|---|---|---|---|---|---|
| cash TUSD |
Accrued bonus TUSD |
Share options granted* (number) |
TUSD | sation TUSD |
TUSD | |
| Board of Directors | ||||||
| Gustav Wirz | 138 | 0 | 950 | 31 | 0 | 169 |
| Paul Otth | 106 | 0 | 725 | 23 | 0 | 129 |
| Dr. Richard Fischer | 69 | 0 | 475 | 15 | 0 | 84 |
| Mario Fontana | 69 | 0 | 475 | 15 | 0 | 84 |
| Dr. Thomas Staehelin | 77 | 0 | 525 | 17 | 45 ** |
139 |
| Total | 459 | 0 | 3,150 | 101 | 45 | 605 |
| Senior Management | ||||||
| Lukas Winkler President & CEO |
459 | 180 | 2,000 | 64 | 18 | 721 |
| Total | 1,337 | 584 | 6,250 | 193 | 207 | 2,321 |
* Share options granted are valued according to the fair value of options granted using the Black-Scholes option-pricing model
** Compensation for assisting in the preparation of shareholder meetings and other corporate actions
The content and method of determining the compensation and share-ownership programs for the members of the Board of Directors and for the Senior Management are proposed by the Human Resources and Nominating Committee and approved by the Board of Directors once a year.
There was no compensation to former members of the Board of Directors.
The number of shares and options owned by the Board of Directors and Senior Management as of December 31, 2008:
| Shares owned |
Options owned |
|
|---|---|---|
| Board of Directors | ||
| Gustav Wirz | 15,797 | 1,900 |
| Paul Otth | 60 | 1,450 |
| Dr. Richard Fischer | 15,000 | 1,406 |
| Mario Fontana | 2,400 | 2,865 |
| Dr. Thomas Staehelin | 250 | 4,151 |
| Total Board of Directors | 33,507 | 11,772 |
| Lukas Winkler, President & CEO | 1,500 | 16,000 |
|---|---|---|
| Matthias Tröndle, Group CFO | 0 | 1,250 |
| Dr. Ulrich Döbler | 1,672 | 9,225 |
| Peter Maier | 1,510 | 6,600 |
| Dr. Urs Wälchli | 111 | 8,339 |
| Total Executive Management | 4,793 | 41,414 |
No reportable fees or remunerations were paid to members of the Board of Directors or members of Senior Management.
No loans were granted to current or former members of governing bodies during 2008. No such loans were outstanding as of December 31, 2008.
Effective risk assessment is an integral part of INFICON's Group-wide enterprise risk management. Based on guidelines received from the Board of Directors, the Executive Management Team and the Finance function oversee the risk management process, and report to the Board and the Audit Committee on a regular basis. Processes and organizational measures have been defi ned to ensure that risks are continuously and consistently identifi ed, assessed, mitigated and reported.
As an important element of the Group-wide enterprise risk management, INFICON established and maintains adequate internal controls over fi nancial reporting. These controls are designed to provide reasonable assurance regarding the reliability of fi nancial reporting and the preparation and fair presentation of its published consolidated fi nancial statements, to the Executive Management Team and the Board of Directors.
Report of the statutory auditors to the general meeting of INFICON Holding AG, Bad Ragaz
As statutory auditors, we have audited the consolidated fi nancial statements of INFICON Holding AG, which comprise the consolidated balance sheet, consolidated statement of income, consolidated statement of stockholders' equity, consolidated statement of cash fl ows and notes (pages 34 to 53) for the year ended December 31, 2008.
The Board of Directors is responsible for the preparation and fair presentation of the consolidated fi nancial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP) and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of consolidated fi nancial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conducted our audit in accordance with Swiss law, Swiss Auditing Standards and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity's preparation and fair presentation of the consolidated fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control system. An
audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated fi nancial statements for the year ended December 31, 2008 present fairly, in all material respects, the fi nancial position, the results of operations and the cash fl ows in accordance with accounting principles generally accepted in the United States of America (US GAAP) and comply with Swiss law.
We confi rm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confi rm that an internal control system exists, which has been designed for the preparation of consolidated fi nancial statements according to the instructions of the Board of Directors.
We recommend that the consolidated fi nancial statements submitted to you be approved.
Audit expert Audit expert Auditor in charge
Stephen W Williams Cornelia Ritz Bossicard
Zurich, March 12, 2009
| 56 | Balance Sheet | Bilanz |
|---|---|---|
| 57 | Statement of Income | Erfolgsrechnung |
| 58 | Notes | Anhang zur Jahresrechnung |
| 60 | Appropriation of Available Earnings | Antrag für die Gewinnverteilung |
| 61 | Report of the Statutory Auditors | Bericht der Revisionsstelle |
(CHF 1,000)
| December 31, | December 31, | |
|---|---|---|
| ASSETS | 2008 | 2007 |
| Cash and cash equivalents | 1,107 | 1,018 |
| Other receivables – third parties | 3 | 5 |
| Receivables – subsidiaries | 31 | 14 |
| Treasury stock (2008: 0 / 2007: 235,587 own shares) | — | 42,995 |
| Total current assets | 1,141 | 44,032 |
| Notes receivable – subsidiaries | 3,279 | 3,497 |
| Investments in subsidiaries | 294,440 | 294,440 |
| Total long-term assets | 297,719 | 297,937 |
| Total assets | 298,860 | 341,969 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Other payables – third parties | 14 | 16 |
| Accounts payable – subsidiaries | — | 9 |
| Accrued liabilities | 421 | 470 |
| Total current liabilities | 435 | 495 |
| Notes payable – subsidiaries | 31,622 | 36,122 |
| Total long-term liabilities | 31,622 | 36,122 |
| Total liabilities | 32,057 | 36,617 |
| Share capital; CHF 5 par value, 2,145,693 shares issued | 10,728 | 11,884 |
| (2007: 2,376,762 shares issued) | ||
| Legal reserves | ||
| General reserve | 220,274 | 214,411 |
| Reserve for own shares | — | 47,234 |
| Retained earnings | 35,801 | 31,823 |
| Total stockholders' equity | 266,803 | 305,352 |
| Total liabilities and stockholders' equity | 298,860 | 341,969 |
(CHF 1,000)
| Net income | 21,143 | 24,756 |
|---|---|---|
| Income tax expense | (4) | (10) |
| Income before income taxes | 21,147 | 24,766 |
| Other loss | (1,226) | (564) |
| Foreign currency exchange loss | (222) | (272) |
| Interest expense | (1,217) | (407) |
| Interest income | 213 | 115 |
| Income from operations | 22,373 | 25,330 |
| Provision for treasury shares | — | (4,239) |
| Administrative expenses | (1,825) | (1,731) |
| Income from investments in subsidiaries | 24,198 | 31,300 |
| Year ended December 31, | 2008 | 2007 |
The information contained in the INFICON Holding AG, Bad Ragaz fi nancial statements relates to the ultimate parent company alone, while the consolidated fi nancial statements refl ect the economic situation of INFICON Group as a whole. INFICON Holding AG, Bad Ragaz (the "Company") fi nancial statements are prepared in compliance with Swiss Corporate Law.
The investments in subsidiaries are carried in aggregate at the lower cost or their intrinsic value. The following subsidiaries were included in INFICON Holding AG's investment portfolio.
| December 31, | |||
|---|---|---|---|
| Company | Currency | 2008 | 2007 |
| INFICON Inc. Syracuse, USA |
(in 1,000) | (in 1,000) | |
| Share Capital | USD | * | * |
| Ownership | 100% | 100% | |
| Purpose: Manufacturing, Sales and Service | |||
| INFICON AG Balzers, Liechtenstein |
|||
| Share Capital | CHF | 6,000 | 6,000 |
| Ownership | 100% | 100% | |
| Purpose: Manufacturing, Sales and Service | |||
| INFICON GmbH Bad Ragaz, Switzerland |
|||
| Share Capital | CHF | 2,000 | 2,000 |
| Ownership | 100% | 100% | |
| Purpose: Management Company | |||
| INFICON GmbH Cologne, Germany |
|||
| Share Capital | EUR | 1,026 | 1,026 |
| Ownership** | 100% | 100% | |
| Purpose: Manufacturing, Sales and Service | |||
| INFICON Aaland Ab Mariehamn, Finland |
|||
| Share Capital | EUR | 60 | 60 |
| Ownership | 100% | 100% | |
| Purpose: Manufacturing | |||
| INFICON Ltd. London, United Kingdom |
|||
| Share Capital | GBP | 400 | 400 |
| Ownership | 100% | 100% |
| December 31, | |||
|---|---|---|---|
| Company | Currency | 2008 | 2007 |
| INFICON S.A.R.L. | (in 1,000) | (in 1,000) | |
| Courtaboeuf, France | |||
| Share Capital | EUR | 108 | 108 |
| Ownership | 100% | 100% | |
| Purpose: Sales | |||
| INFICON Co. Ltd. | |||
| Yokohama-Shi, Japan | |||
| Share Capital | JPY | 400,000 | 400,000 |
| Ownership | 100% | 100% | |
| Purpose: Sales | |||
| INFICON Ltd. Chubei City, Taiwan |
|||
| Share Capital | TWD | 52,853 | 52,853 |
| Ownership | 100% | 100% | |
| Purpose: Sales | |||
| INFICON Ltd. Bungdang-Ku, Korea |
|||
| Share Capital | KRW | 600,000 | 600,000 |
| Ownership | 100% | 100% | |
| Purpose: Sales | |||
| INFICON Pte. Ltd. Singapore |
|||
| Share Capital | SGD | 1,797 | 1,797 |
| Ownership | 100% | 100% | |
| Purpose: Sales | |||
| INFICON Ltd. Hong Kong |
|||
| Share Capital | HKD | 8,780 | 8,780 |
| Ownership | 100% | 100% | |
| Purpose: Sales | |||
| INFICON Guangzhou Service Centre Ltd. Guangzhou |
|||
| Share Capital | RMB | 9,837 | 9,837 |
| Ownership | 100% | 100% | |
| Purpose: Service | |||
| INFICON Instruments (Shanghai) Co., Ltd. Shanghai |
|||
| Share Capital | USD | 400 | 400 |
| Ownership | 100% | 100% | |
| Purpose: Manufacturing | |||
| INFICON EDC Inc. | |||
| Syracuse, USA | |||
| Share Capital | USD | * | * |
| Ownership** | 100% | 100% | |
| Purpose: Manufacturing, Sales and Service | |||
| Sigma Instruments Inc. Syracuse, USA |
|||
| Share Capital | USD | * | * |
| Ownership** | 100% | 100% | |
| Purpose: Manufacturing, Sales and Service |
* The Company was issued 100 shares of INFICON, Inc. which have a nominal value of USD 0.01 per share. ** Indirect participation
Purpose: Sales
See footnotes to the consolidated fi nancial statements for a description of the Company capital and the related stock plans.
The Company is aware of the following signifi cant stockholders entered in the share register.
The percentages are calculated using registered shares per December 31, 2008 and 2007 of 2,145,693 and 2,376,762 respectively.
| December 31, | 2008 | 2007 |
|---|---|---|
| Chase Nominees Ltd. | 10.49% | 12.27% |
| Sterling Strategic Value Limited | 8.09% | 6.83% |
| Corisol Holding AG | 8.06% | |
| UBS Fund Management (Schweiz) AG | 4.83% | 4.50% |
| Pictet Funds SA | 3.86% |
There were no other stockholders entered in the share register holding more than 3 percent of the voting rights at December 31, 2008.
The Company was notifi ed on April 24, 2008, that Polar Capital LLP held a shareholding of 3.20% in INFICON Holding AG and that this was reduced to 2.80% on February 24, 2009.
The Company was notifi ed on December 10, 2007, that Schroeder Investment Management Ltd. held a shareholding of 4.21% of INFICON Holding AG and that this was reduced to 2.72% on February 12, 2009.
Additionally, the Company was notifi ed on March 5, 2009, that Chase Nominees Ltd. reduced its shareholding to 9.81% of INFICON Holding AG
During 2008, employees of INFICON exercised stock options which resulted in 4,518 new shares being issued and increased nominal share capital by CHF 22,590. The share premium thereon of CHF 453,545 has been credited to the general legal reserve. At December 31, 2008, the number of issued INFICON Holding AG shares amounted to 2,145,693 (2007: 2,376,762) with a nominal value of CHF 5 each.
The articles of incorporation provide for a conditional capital of a maximum of CHF 1,086,560 through the issuance of 217,312 registered shares of CHF 5 each by the exercise of option rights granted to employees and members of the Board of Directors of the Company. In 2008,
employee stock options were exercised resulting in an increase in share capital of 4,518 shares. The remaining available balance of conditional share capital at December 31, 2008 is CHF 1,063,970 (2006: CHF 1,086,560).
On July 24, 2008, INFICON cancelled the 235,587 registered shares of INFICON Holding AG bought back under the share repurchase program ended on December 13, 2007 as agreed on April 24, 2008, at the Annual General Meeting of Shareholders.
The surplus arising on the cancellation of CHF 5,409,447 has been credited to the general legal reserve.
See the Consolidated Financial Statements for disclosure of Compensations for Acting members of Governing Bodies, Note 22.
| December 31, | ||
|---|---|---|
| In CHF 1,000 | 2008 | 2007 |
| Guarantees in favor | ||
| of affiliated companies | 13,086 | 11,587 |
See the Consolidated Financial Statements for Risk Assessment Disclosures, Note 22.
(Proposal of the Board of Directors)
| December 31, | ||
|---|---|---|
| In CHF 1,000 | 2008 | 2007 |
| Retained earnings at beginning of year | 31,823 | 28,484 |
| Transfer from general legal reserve | — | 40,000 |
| Dividend payment to shareholders | (17,165) | (14,183) |
| Reserve for own shares | — | (47,234) |
| Net income | 21,143 | 24,756 |
| Retained earnings | 35,801 | 31,823 |
| Gross dividend* (2008: CHF 6 / 2007: CHF 8 each share) |
(12,874) | (19,014) |
| Balance to be carried forward | 22,927 | 12,809 |
* Proposed dividend represents an estimated amount. This will be adjusted to take account of any new shares entitled to dividend which are issued subsequent to December 31 and prior to date of the dividend payment.
As statutory auditors, we have audited the fi nancial statements of INFICON Holding AG, which comprise the balance sheet, income statement and notes (pages 56 to 59) for the year ended December 31, 2008.
The Board of Directors is responsible for the preparation of the fi nancial statements in accordance with the requirements of Swiss law and the company's articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity's preparation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the fi nancial statements for the year ended December 31, 2008 comply with Swiss law and the company's articles of incorporation.
We confi rm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confi rm that an internal control system exists, which has been designed for the preparation of fi nancial statements according to the instructions of the Board of Directors.
We further confi rm that the proposed appropriation of available earnings complies with Swiss law and the company's articles of incorporation. We recommend that the fi nancial statements submitted to you be approved.
Audit expert Audit expert Auditor in charge
Stephen W Williams Cornelia Ritz Bossicard
Zurich, March 12, 2009
Certain statements contained in this Annual Report are forward-looking statements that do not relate solely to historical or current facts. Forward-looking statements can be identifi ed by the use of words such as "may", "believe", "will", "expect", "project", "assume", "estimate", "anticipate", "plan" or "continue." These forward-looking statements address, among other things, our strategic objectives, trends in vacuum technology and in the industries that employ vacuum instrumentation, such as the semiconductor and related industries and the anticipated effects of these trends on our business. These forward-looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could signifi cantly affect our current plans and expectations, as well as future results of operations and fi nancial condition. Some of these risks and uncertainties are discussed in the Company's Annual Report for fi scal 2008.
As a consequence, our current and anticipated plans and our future prospects, results of operations and fi nancial condition may differ from those expressed in any forward-looking statements made by or on behalf of our Company. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
2008 Annual Report /Jahresbericht
INFICON Holding AG Hintergasse 15B CH-7310 Bad Ragaz Switzerland
WWW.INFICON.COM ©2009 INFICON
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