Interim Report 1st quarter 2009
Nordic Semiconductor ASA 1st quarter 2008 Revenue in the first quarter was 71.5, an increase of 12% over Q1 2008. EBITDA was 8.3 MNOK in the first quarter compared to 0.7 MNOK in Q1 2008. The global financial crises led to a generally difficult market in Q1, with a significant decline in consumer demand and inventory reductions by major customers A strong volume growth in wireless technology components for low cost mice and keyboard and continued conversion from 27MHz to 2.4 GHz led to a volume growth of 23% for Q1 year on year Key financial figures Operating revenue in the 1st quarter 2009 amounted to MNOK 71.5 which is 12% above the revenue for the same period in 2008 (MNOK 63.6). A substantial increase in sales volume of wireless components supported by a stronger USD exchange rate contributed to the growth. The gross margin for the 1st quarter was MNOK 42.6 with a gross margin ratio of 60% compared with MNOK 30.5 and 48% in the 1st quarter 2008. The positive margin development was caused by the customer mix and strong dollar movements in the preceding quarter. R&D expenses in the 1st quarter totaled MNOK 14.0, of which MNOK 12.7 was expensed and MNOK 1.3 was capitalized on the balance sheet. The corresponding figures for the 1st quarter 2008 were total R&D expenses of MNOK 11.8 with expensing and capitalization of MNOK 9.9 and MNOK 1.9 respectively. Other operating expenses in the 1st quarter 2009 totaled MNOK 21.6, compared with MNOK 19.9 for the corresponding period in 2008. The increased cost level is attributed to an increase in the number of employees from 107 Q1 2008 to 120 at the end of this quarter. EBITDA in the first quarter 2009 was MNOK 8.3 which is MNOK 7.6 above Q108 (0.7). After deductions for depreciation of MNOK 3.7, the operating profit in the first quarter 2009 was MNOK 4.6 compared with MNOK -2.4 in the same period of 2008. Net financial items for the first quarter of 2009 were MNOK -1.9, compared with MNOK -1.0 for the same period in 2008. Income before taxes in the 1st quarter 2009 was MNOK 2.7 versus MNOK -3.4 in Q1 2008. As of 31 March 2009, Nordic Semiconductor had a balance sheet totaling MNOK 307.9, which represents a reduction of MNOK 7.7 during the quarter. The company s cash and cash equivalents totaled MNOK 131.0 (43% of total assets) at the end of Q108. Equity as at 31 March 2009 totaled NOK 238.1, which represents an equity ratio of 77%. The company had no interest-bearing debt. Net cash flow was MNOK -4.3 in the 1st quarter 2009 corresponding to a cash flow of MNOK -9.0 in the same period in 2008. The component order back log was MNOK 50.7 at the end of the 1st quarter, on par with the corresponding period last year when the back log was MNOK 50.9. Component orders received during the quarter was MNOK 84.7 which is 52% above Q108 (MNOK 55.8) with a bookto-bill of 1.2. The Board believes that the company is financially well positioned for growth. Market segments Revenue per segment 1st quarter FY MNOK 2009 2008 2008 PC accessories 38.8 15.1 120.3 Game controllers 0.3 7.9 33.2 Intelligent sports equipm. 4.9 4.4 23.5 Audio devices 3.1 (0.1) 19.8 Industrial applications 12.7 22.7 64.4 Other 9.8 12.5 55.5 Total components 69.6 62.5 316.7 Consulting 1.9 1.1 2.6 Nordic Semiconductor 71.5 63.6 319.3 PC accessories Operating revenue totaled MNOK 38.8 for the quarter compared with MNOK 15.1 in the 1st quarter of 2008, an increase of 157%. The consumer markets in important regions like the US and Europe were very weak through the quarter. Nordic Semiconductor has performed well with sales to low cost products in the Chinese market. The volume increase in this market more than compensated volume loss in other markets. Game controllers The game controller segment had a slow first quarter with operating revenues totaling MNOK 0.3 compared with MNOK 7.9 in the same period in last year. The quarter is strongly affected by low consumer sales in important markets and inventory reductions by a few major customers. Intelligent sports equipment Operating revenue for the first quarter increased by MNOK 0.5, from MNOK 4.4 in Q108 to MNOK 4.9 in Q109. Following a slow start, shipments to two major customers picked up towards the end of the quarter. Audio equipment The sale of components for equipment in the Audio equipment segment was MNOK 3.1 in the 1st quarter 2009 compared with MNOK -0.1 in the same period last year. Increased sales to one customer contributed positively.
Industrial applications Operating revenue in the first quarter was MNOK 12.7 which is MNOK 10.0 lower than Q1 of last year. Lower end customer sales caused by the global financial crises have reduced Nordic Semiconductor sales. Other segments Revenue in the 4th quarter 2008 was MNOK 7.0 in Q1 2009 vs. MNOK 9.8 in 2007. The Lower sales to smaller customers with varying market positions in a soft consumer market affect Nordic Semiconductor s revenue in this quarter as in the fourth quarter. Geographical distribution of revenue Revenue per region 1st quarter FY MNOK 2009 2008 2008 Norway 2.2 5.8 17.8 Europe 13.4 15.1 48.4 USA/Canada 6.7 3.8 24.1 Apac 49.0 38.5 226.6 Other 0.2 0.4 2.4 Nordic Semiconductor 71.5 63.6 319.3 Share and shareholders Nordic Semiconductor s 10 largest shareholders at the end of the quarter: Shareholder No. of shares %of total DNB NOR Luxembourg SA 3 466 590 9.9 % Verdipapirfondet Odin Norge 3 252 010 9.3 % Folketrygdfondet 3 068 550 8.7 % Ferd AS Invest 1 834 800 5.2 % Orkla ASA 1 782 500 5.1 % INAK 2 AS 1 740 000 5.0 % Goldman Sachs Int. Equity 1 588 442 4.5 % KLP LK Aksjer 1 586 400 4.5 % Tore Engebretsen 1 507 500 4.3 % Nordic Semiconductor ASA 1 276 800 3.6 % 10 largest shareholders 21 103 592 60.1 % Other 14 030 528 39.9 % Total no. of shares 35 134 120 100.0 % Nordic Semiconductor purchased 74,500 own shares in the first quarter of 2008 through a stock broker at NOK 16.73 per share. Nordic Semiconductors held a total of 1,276,800 own shares at the end of the quarter. The transactions were completed in accordance with the power of attorneys given at the Annual General Meeting on 8 May, 2008. The Annual General Meeting for 2009 will be held in Nordic Semiconductor s offices in Otto Nielsens street 12, Trondheim, Thursday 7 May, 2009, at 12:00. Outlook The ongoing financial crisis has continued to affect Nordic Semiconductor s operation in the first quarter of 2009. The financial contraction has reduced consumer buying power and caused important customers to reduce inventories. The technology conversion (27 MHz to 2.4 GHz) and adaptation of wireless technology in consumer electronics have, however, continued. This trend is expected to persist and most of Nordic Semiconductor s leading customers continue to add new designs based on 2.4 GHz technology to their product range. Estimates for the semiconductor industry sales in 2009 vary greatly, but Nordic Semiconductor sees new business opportunities in the current market. In the first quarter, Nordic Semiconductor has produced an early version of the company s Bluetooth Low Energy component based on the current specification. Nordic Semiconductor has a leading position in Bluetooth Low Energy and is the first company globally to launch a single mode component in the market; Nordic Semiconductor μblue. Nordic Semiconductors μblue is designed for optimal use in peripherals and watches intended to communicate with mobile phones. This μblue Bluetooth radio will fully comply with the specifications and communicate with the Low Energy dual mode components in the mobile phone. μblue will have the market s lowest power consumption and use a button cell battery for power. The Bluetooth SIG expects to complete the specification work on Low Energy in the second half of 2009. The Board of Nordic Semiconductor expects this initiative to contribute significantly to the company s revenue growth when the market for this component is established. The company s turnover is affected by general seasonal fluctuations and follows the customers sales cycles. With a growing share of revenue from consumer products, this effect will increase. This interim report has been prepared in accordance with IFRS and Nordic Semiconductor's accounting policies, which are stated in the annual report for 2008. Oslo, 30 April 2009 The Board of Directors of Nordic Semiconductor ASA Tore Engebretsen (Chairman of the Board) Annfrid Standal Terje Rogne Kjell Bråthen Anne-Cecilie Fagerlie Jon Helge Nistad Lars Sundell Svenn-Tore Larsen (Chief Executive Officer)
Income Statements 1st quarter 1st quarter Amounts in NOK million (unaudited) 2009 2008 Year 2008 Orders received 85.9 56.7 303.4 Operating revenue 71.5 63.6 319.3 Operating revenue 71.5 63.6 319.3 Cost of materials -28.5-33.0-151.2 Direct project costs -0.4-0.1-0.3 Gross profit 42.6 30.5 167.8 Other operating expenses -21.6-19.9-89.2 Research and development -12.7-9.9-43.4 EBITDA 8.3 0.7 35.2 Depreciations -3.7-3.1-14.1 EBIT 4.6-2.4 21.1 Net financial items -1.9-1.0 35.0 Profit before tax 2.7-3.4 56.1 Taxes -0.8 1.0-15.3 Net profit 1.9-2.4 40.8 Earnings. pr share 0.06-0.07 1.18 Diluted earnings. pr share 0.06-0.07 1.18 Balance sheet Amounts in NOK million (unaudited) 31.03.2009 31.03.2008 31.12.2008 Intangible assets 27.9 15.0 28.7 Property, plant and equipment 16.1 18.0 16.3 Non-current assets 44.0 33.0 45.0 Inventories 51.4 29.1 58.0 Accounts receivables 63.1 57.5 59.2 Other short term receivables 18.4 29.7 18.1 Cash and cash equivalents 131.0 99.4 135.3 Current assets 263.9 215.7 270.6 TOTAL ASSETS 307.9 248.7 315.6 Shareholders' equity 238.1 210.7 237.3 Long-term liabilities 15.3 13.6 16.9 Tax payable 18.0 0.0 17.2 Other current liabilities 36.5 24.4 44.2 TOTAL EQUITY AND LIABILITIES 307.9 248.7 315.6 Change in equity Amounts in NOK million (unaudited) 31.03.2009 31.03.2008 31.12.2008 Equity as of 01.01. 237.3 214.2 214.2 Net income (loss) 1.9-2.4 40.8 Changes, Treasury stock -1.1-1.1-17.6 Translation differences 0.0 0.0-0.1 Equity as of end of period 238.1 210.7 237.3
Statements of cash flows Amounts in NOK million (unaudited) 1st quarter 2009 1st quarter 2008 Year 2008 Net income (loss) before tax 2.7-3.4 56.1 Taxes paid for the period 0.0 0.0 0.0 Depreciations 3.7 3.1 14.1 Gains from sales of property, plant and equipment 0.0 0.0 0.0 Change in inventories, trade receivables/payables and other -5.3-5.7-4.9 Other operational related adjustments -1.6 0.1 5.3 Net cash provided by (used in) operating activities -0.5-5.9 70.6 Capital expenditures -1.5-0.1-3.7 Proceeds from sales of property, plant and equipment 0.0 0.0 0.0 Capitalized intangible assets -1.2-1.9-22.3 Net cash provided by (used in) investing activities -2.7-2.0-26.0 Changes, Treasury stock -1.1-1.1-17.6 Net cash provided by (used in) financing activities -1.1-1.1-17.6 Effekt av valutakursendringer 0.0 0.0-0.1 Net change in cash and cash equivalents -4.3-9.0 26.9 Net change in cash and cash equivalents from discontinued operations 0.0 0.0 0.0 Cash and cash equivalents at beginning of period 135.3 108.4 108.4 Cash and cash equivalents at end of period 131.0 99.4 135.3 Quarterly key figures Amounts in NOK million (unaudited) Q1 09 Q4 08 Q3 08 Q2 08 Q1 08 Q4 07 * Q3 07 * Q2 07 * Orders received 85.9 21.4 95.6 129.7 56.7 58.4 50.9 97.9 Operating revenue 71.5 68.9 103.0 83.8 63.6 49.2 80.1 80.7 Contribution margin 42.6 36.3 57.2 43.9 30.5 20.3 40.1 40.9 Contribution margin ratio (%) 59.6 52.7 55.5 52.4 48.0 41.3 50.1 50.7 Operating income before R&D costs 17.3 5.8 31.7 19.4 7.5-5.6 19.1 15.7 Expensed research and development -12.7-12.2-12.1-9.3-9.9-8.1-7.9-7.5 Operating income (loss) 4.6-6.4 19.6 10.1-2.4-13.7 11.2 8.2 Operating margin (%) 6.4-9.3 19.0 12.1-3.8-27.8 14.0 10.2 Income (loss) before tax 2.7 17.2 31.1 11.1-3.4-12.3 6.2 7.0 Net margin (%) 3.8 25.0 30.2 13.2-5.3-25.0 7.7 8.7 Equity ratio (%) 77.3 75.2 75.5 78.7 84.7 83.7 82.9 85.6 Earnings pr. share (NOK) 0.06 0.38 0.65 0.23-0.07-0.25 0.13 0.14 Diluted earnings pr. share (NOK) 0.06 0.38 0.65 0.23-0.07-0.25 0.13 0.14 Cash flow pr. share (NOK) 0.19 0.61 1.01 0.43-0.01-0.26 0.27 0.29 *Adjusted for the sale of Data Converter assets
Notes to the interim report 1 st quarter 2009 Note 1 - General The condensed financial statements for the 1 st quarter of 2009 were approved for publication by the Board of Directors 29 April 2009. The Group is listed on the Oslo Stock Exchange and is a joint stock company registered in Norway. Note 2 Confirmation of the financial framework The Group accounts for Nordic Semiconductor ASA and its wholly-owned subsidiary, together called the Group have been prepared in accordance with IAS 34 Interim Financial Statements. The financial statements for the 1 st quarter of 2009 do not include all the information required for the full year financial statements and shall be read in conjunction with the Group annual accounts for 2008. Note 3 Important accounting principles The accounting principles for 2008 are described in the Group annual accounts for 2008. The group accounts for 2008 were prepared in accordance with International Financial Reporting Standards (IFRS) laid down by the EU, relevant interpretations of this, additional Norwegian disclosure requirements described in the Norwegian GAAP and the Norwegian Securities Trading Act that were used in the preparation of the annual accounts per 12.31.2008. Note 4 Use of estimates In the financial statements for the first quarter of 2009, evaluations, estimates and assumptions have been applied that may affect the use of accounting principles, book values of assets and liabilities, revenues and expenses. Actual values may differ from these estimates. The major assumptions applied in the financial statements for the first quarter of 2009 and the major sources of uncertainty in the statements are similar to those found in the annual accounts for 2008.