Earnings Release • Oct 16, 2014
Earnings Release
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For further information, please contact: Svenn-Tore Larsen, CEO, mobile +47 982 85 476 Pål Elstad, CFO, mobile +47 99 166 293
| 3rd quarter | |||||
|---|---|---|---|---|---|
| Amounts in USD million (unaudited) | 2014 | 2013 | Change | ||
| Revenue | 49,0 | 35,4 | 38 % | ||
| Order inflow | 43,7 | 31,0 | 41 % | ||
| Gross Margin % | 51 % | 49 % | |||
| Operating Profit (EBIT) | 9,8 | 5,5 | 79 % | ||
| Operating Profit % (EBIT %) | 20 % | 16 % | |||
| Net profit after tax | 7,0 | 4,0 | 77 % | ||
| Cash flow from operations | 15,5 | 11,2 | N/A | ||
| Cash and cash equivalents | 24,4 | 28,5 |
Nordic Semiconductor reported strong revenue growth across all of its targeted market segments during the third quarter of 2014. Sales of Bluetooth Smart solutions continued to grow at a high rapid rate.
Total revenue in Q3 2014 was MUSD 49.0, compared with MUSD 35.4 in Q3 2013. Sales of Bluetooth Smart solutions increased to MUSD 18.4, or 37.6% of total revenue during Q3 2014, compared with MUSD 5.9, or 16.8% of revenue in Q3 2013.
Gross profit was MUSD 24.9, or 50.8% of revenue, compared with MUSD 17.2, or 48.7% of revenue during Q3 2013. Gross margin increased from previous quarters as a result of higher share of Bluetooth Smart and a mix in between Bluetooth Smart products.
Total operating expenses including depreciation were MUSD 15.1 in Q3 2014, compared with MUSD 11.7 in Q3 2013. Total operating expenses (excluding depreciation) before options and net capitalized R&D expenses were MUSD 12.1 in Q3 2014, compared with MUSD 10.3 in Q3 2013. The higher spending is explained by higher number of R&D employees (increased by 30).
Based on higher revenue, the company's Operating Profit (EBIT) grew to MUSD 9.8, compared with MUSD 5.5 in Q3 2013. Net financial items were a gain of approximately MUSD 0.4 in Q3 2014 and MUSD 0 in Q3 2013.
Profit before tax was MUSD 10.2, compared with MUSD 5.5 in Q3 2013. Income tax expense was MUSD 3.2, or 31% of pretax profit. The base tax rate for the group is 27%, but the actual rate will fluctuate based on the effect of net financial items, as these items are calculated differently in the parent company's financial reporting (calculated in USD) and its tax reporting (calculated in NOK).
Net profit after tax was MUSD 7.0 in Q3 2014, compared with MUSD 4.0 in Q3 2013. The company's basic earnings per share were USD 0.043 in Q3 2014, compared with USD 0.025 in Q3 2013.
| Market Segment | 3rd quarter | 01.01.-30.09 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in USD thousand | 2014 | 2013 | 2014 | 2013 | Year 2013 | |||||
| PC/tablet accessories | 21 512 | 43,9 % 19 143 | 54,1 % | 57 225 | 47,0 % 51 052 | 57,5 % | 68 509 | 55,1 % | ||
| Mobile/wearable devices | 18 974 | 38,8 % | 7 479 | 21,2 % | 40 726 | 33,4 % 15 674 | 17,7 % | 26 181 | 21,0 % | |
| Home electronic devices | 2 438 | 5,0 % | 1 885 | 5,3 % | 6 273 | 5,1 % | 4 300 | 4,8 % | 5 305 | 4,3 % |
| Installed Sensor networks | 3 325 | 6,8 % | 3 607 | 10,2 % | 10 219 | 8,4 % | 8 668 | 9,8 % | 12 259 | 9,9 % |
| Wireless Components | 46 250 | 94,5 % | 32 114 | 90,8 % | 114 443 | 93,9 % | 79 695 | 89,7 % | 112 255 | 90,2 % |
| ASIC components | 2 454 | 5,0 % | 3 233 | 9,1 % | 7 157 | 5,9 % | 7 479 | 8,4 % | 10 401 | 8,4 % |
| Consulting services | 248 | 0,5 % | 5 | 0,0 % | 267 | 0,2 % | 1 629 | 1,8 % | 1 734 | 1,4 % |
| Total | 48 952 | 100,0 % | 35 352 | 100,0 % | 121 867 | 100,0 % | 88 803 | 100,0 % | 124 390 | 100,0 % |
| Technology | 3rd quarter | 01.01.-30.09 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in USD thousand | 2014 | 2013 | 2014 | 2013 | Year 2013 | |||||
| Proprietary wireless | 27 823 | 56,8 % 26 174 | 74,0 % | 74 485 | 61,1 % 68 323 | 76,9 % | 91 110 | 73,2 % | ||
| Bluetooth Smart | 18 427 | 37,6 % | 5 939 | 16,8 % | 39 958 | 32,8 % 11 372 | 12,8 % | 21 145 | 17,0 % | |
| ASIC components | 2 454 | 5,0 % | 3 233 | 9,1 % | 7 157 | 5,9 % | 7 479 | 8,4 % | 10 401 | 8,4 % |
| Consulting services | 248 | 0,5 % | 5 | 0,0 % | 267 | 0,2 % | 1 629 | 1,8 % | 1 734 | 1,4 % |
| Total | 48 952 | 100,0 % | 35 352 | 100,0 % | 121 867 | 100,0 % | 88 803 | 100,0 % | 124 390 | 100,0 % |
Nordic Semiconductor's total revenue increased by 38% to MUSD 49.0 in Q3 2014, with strong performance across all targeted market segments and technologies.
Sales to the PC/tablet accessory segment (i.e., wireless mice / keyboards, presentation tools) were MUSD 21.5, compared with MUSD 19.1 in Q3 2013. The company has seen demand from PC accessories customers improving during the last two quarters reflecting returning growth in the PC market as well as shipping of the first large volumes of Bluetooth Smart solutions to the tablet accessories market.
Revenue from the mobile/wearable device segment (i.e., portable electronics such as sports / health monitoring devices, hearing aids, mobile phone accessories, proximity tags and smartwatches) was MUSD 19.0, an increase of 154% from last year. The segment has benefited greatly by growing demand for wearable electronics featuring Bluetooth Smart technology. The growth is a result of new customers with large volumes as well as one leading customer that has released new products.
Sales within Home electronic devices (i.e., wireless solutions for appliances such as TV's / set-top box remotes, game controllers, toys and charging units) was MUSD 2.4, compared with MUSD 1.9 last year. New product releases within Bluetooth Smart toys and home media devices have contributed to drive growth in this segment. Nordic had its first large shipment of more than 1million units per quarter to producers of interactive toys connected to the internet. In total close to 2 Million units where shipped in Q3.
Revenue from Installed sensor networks (i.e., RFID / security systems, industrial automation, automotive sensors) decreased by 7.8% to MUSD 3.3. This drop in revenue is explained by issues related to delays for one customer but Nordic has very positive expectations for this segment.
ASIC components and consulting revenue was MUSD 2.7, compared with MUSD 3.2 in the prior year. Nordic Semiconductor has made a strategic decision not to invest further in acquiring new customers within this segment, and is currently fulfilling demand from existing customers only. The level in Q3 is comparable to the last 24 months rolling average.
As of 30 September 2014, Nordic Semiconductor had total assets of MUSD 113, of which MUSD 88.9 were current assets. Total liabilities were MUSD 30.1, of which MUSD 20.9 were current liabilities. Total Shareholders' equity was MUSD 82.9, which represents an equity ratio of 73%.
Cash flow from operations was MUSD 15.5 in Q3 2014, compared with MUSD 11.2 in Q3 2013. The positive cash flow is explained by high profits and reduced working capital mainly as a result of record low inventories. Higher allocated production capacity at vendors has made Nordic able to reduce inventories despite increased revenues.
Cash flow from investments was an outflow of MUSD 1.6, compared with an outflow of MUSD 1.5 in Q3 2013. Capital expenditures were MUSD 1.3, driven by the acquisition of technology licenses. Capitalized development expenses were MUSD 0.2, compared with MUSD 0.8 last year, as the company shifted its R&D efforts from development of current product lines to research activities on future wireless solutions.
Cash flow from financing activities was a net outflow of MUSD 8.9. As a result of the positive cash development in Q3 the company repaid the MUSD 8.0 that was borrowed from its line of credit in Q2. The company has a line of credit agreement with its primary bank where it may borrow up to MUSD 20 at any time with a rate of LIBOR + 1.15%. This loan facility expires in September 2015. The company used MUSD 0.9 to repurchase 180,000 shares during the quarter through a share buyback program.
The company had a cash balance of MUSD 24.4 at the balance sheet date.
As of 30 September 2014, Nordic Semiconductor had 248 employees, compared to 208 at September 30, 2013. Of these, 173 work within Research and Development representing an increase of 30 compared to 30 September 2013.
Nordic Semiconductor will continue to strengthen its R&D team. On September 26, 2014, Nordic Semiconductor announced that it will open a R&D office in Oulu, Finland. Nordic will hire professionals that have been made redundant in connection with the layoffs recently announced by several large technology companies in Oulu. The size of the office will depend on the skill of the talents identified in Oulu. The team in Oulu will work closely with R&D teams in Trondheim and Krakow to ensure Nordic's leadership position as a "Connectivity Company".
Nordic Semiconductor is a pioneer and market leader within ultra-low power wireless technology, with 200 million IC units sold last year. Nordic's Bluetooth Smart and proprietary 2.4 GHz RF solutions enable wireless accessories (e.g., sensors and controls) to operate for up to years of battery life with an ordinary AA, AAA or coin cell battery pack as power source.
The company expects the market for its ultra-low power technology to grow at a high rate in the coming years, as wireless connectivity becomes a standard feature in a growing range of electronic devices. Collectively, this growth in connected devices is known as the "internet of things" and is widely recognized as one of the most important new trends in consumer electronics.
The company believes that Bluetooth Smart (aka Bluetooth low energy) will be a core technology for connecting the "internet of things". Bluetooth Smart is a new protocol for ultra-low power wireless communication which is part of the new Bluetooth 4.0 wireless standard, and which Nordic has been closely involved in developing. Bluetooth Smart can enable small, battery-powered sensors and accessories to communicate with traditional Bluetooth devices (e.g., mobile phones / PC's / home media centers labeled Bluetooth Smart Ready), while minimizing power consumption.
Bluetooth Smart Ready was first released in smartphones in late-2011, and has since been sold in over one billion PC's, handsets and tablets. By 2015, over two billion mobile phones, PC's, tablets, and home media centers are expected to be sold each year with Bluetooth Smart Ready solutions (source: ABI research). As the ecosystem of these Bluetooth Smart Ready mobile phones, PC's and home media centers expands, this creates a major market opportunity for new wireless accessories to connect with these devices using Nordic's Bluetooth Smart technology.
Nordic Semiconductor has been actively involved in the development of the Bluetooth Smart wireless standard since its origin as a Nokia initiative in 2006, and has released a Bluetooth Smart solution with industry-leading specifications.
In June 2011, Nordic's contribution to the Bluetooth organization was recognized with an appointment to its Board, where it now participates with Apple, Intel, Motorola, Lenovo, Nokia, Microsoft, Ericsson AB, Toshiba, LG and CSR on the Board of Directors. In December 2012, Nordic's Chief Technology Officer Svein-Egil Nielsen was elected Chairman of the Bluetooth SIG Board.
The Board and Chairman positions present an excellent opportunity for Nordic Semiconductor to help drive the development of the Bluetooth standard and to profile the company as it markets its Bluetooth Smart technology to new customers.
Based on its Bluetooth Smart and proprietary 2.4 GHz wireless solutions, the company expects the following growth opportunities to emerge across its key market segments:
PC/tablet accessories: Nordic continues to view the market for PC accessories as a business opportunity, as wireless accessories grow in popularity. The company estimates that only approximately 20-25% of PC buyers are purchasing a wireless mouse/keyboard with a new PC (including aftermarket purchases), leaving a large unaddressed market for wireless accessories among PC users.
In addition to PC accessories, Bluetooth Smart technology also creates new opportunities for Nordic to address the tablet accessory market. As tablets implement Bluetooth Smart Ready technology, these devices are now able to connect with ultra-low power Bluetooth Smart keyboards and other accessories. Bluetooth Smart offers much longer battery lifetime for tablet keyboards than traditional Bluetooth technology, and will enable tablets to be used more effectively for productivity applications in addition to casual use.
The tablet accessory market has just begun to convert from traditional Bluetooth technology to Bluetooth Smart technology. Nordic Semiconductor had its first large shipments on Bluetooth Smart components to the tablet accessory market in the second quarter of 2014.
Mobile/wearable devices (includes wearable electronics such as sports / health monitoring devices and hearing aids, and portable electronics such as mobile phone accessories, and proximity sensors):
Nordic considers the market for mobile/wearable technology to be its largest business opportunity during the next few years based on the explosive growth of smartphones and related applications. The smartphone is an ideal device to connect with wireless accessories due to its huge market volumes, portability, compatibility with wireless standards, highly functional screen and touch interface, and ease of downloading new software ("apps") for interacting with a wireless device.
As smartphones adopt Bluetooth Smart Ready technology, many new Bluetooth Smart wireless accessories are being released to connect with this growing installed base of compatible devices. The potential applications for these Bluetooth Smart mobile accessories ("app-cessories") are nearly endless, as they encompass any sensor which can transmit data to the smartphone, or any device which the smartphone can control.
For example, the healthcare industry is promoting medical devices with Bluetooth Smart technology to enable cost-effective monitoring of a growing elderly population as well as patients with chronic illness. With these devices, patients with conditions such as high blood pressure, diabetes or heart ailments can monitor their condition through a body-worn health sensor connected wirelessly to a mobile handset. The handset can also transfer medical data further (via web services) to a healthcare provider to follow up on the patient's condition.
In addition to health sensors, many other new low-power wireless applications are currently being developed to connect mobile handsets to watches, ID/security tags, fitness and gaming accessories, to name only a few applications.
Home electronics devices (includes wireless solutions for appliances such as TV's / set-top boxes, gaming, toys and wireless charging units): Wireless solutions are currently being implemented in a broad range of home electronic appliances to enable users to interact with these devices via a smartphone or other remote control unit. Bluetooth Smart is an ideal wireless solution for many of these embedded applications.
For example, new generations of home media centers (called Connected TV's) are increasingly providing internet-based services and software apps in addition to the television offering, and will require remote controls with advanced navigation functionality similar to a mouse/keyboard/motion control device to search for content. Bluetooth Smart technology
provides an excellent remote control solution for Connected TV's, enabling advanced navigation functionality with high performance and ultra-low power consumption.
In addition to next generation remote controls, Bluetooth Smart will allow many other appliances throughout the home to wirelessly connect with users and with each other. Examples include new generations of wireless toys, game controllers and home automation solutions for common household items.
Even battery charging units are now implementing wireless technology. Recently, the Alliance for Wireless Power consortium (A4WP) has developed a standard for a small charging appliance which can wirelessly recharge batteries on a broad range of electronic devices. This standard (called Rezence™) relies on Bluetooth Smart technology to wirelessly transfer critical information such as battery type and charge status from the electronic device to the charger. This enables the charger to manage the charge session between the charger and the device. Nordic Semiconductor is an active member of the A4WP consortium, along with mobile phone industry giants such as Samsung, LG and HTC.
Installed sensor networks (i.e., RFID / security systems, building sensors, industrial automation, and automotive sensors): Installed sensor networks were Nordic's fastest growth area during 2013, and represent the largest and most diverse market opportunity in the longer term.
Wireless sensor networks are increasingly being utilized for identifying people and products, and for managing the efficient use of resources and public goods. Examples of such applications include access control, indoor mapping and location services, logistics, and energy management systems for homes and offices.
In addition, sensor networks can provide information about a device's internal operations and its external environment to ensure that problems are quickly identified. Wireless sensors for autos and home appliances, and sensors to manage factory processes are all emerging examples of such applications.
Wireless sensor networks are sometimes referred to as "machine-to-machine" (or "M-to-M") technologies, as they often collect and distribute information from objects rather than people. While this market is still in its earliest stages of development, the potential applications are so numerous that they are impossible to quantify. Bluetooth Smart provides a very attractive standard for building these wireless sensor networks, based on its compatibility with a huge existing installed base of smartphones and other devices.
One example of a Bluetooth Smart-based sensor network which has gained recent attention is the location beacon (frequently called "iBeacon"). Location beacons featuring Bluetooth Smart technology can detect when a user's smartphone is in range and activate information both on the user's smartphone and at the location which has installed the beacons.
For example, location beacons positioned at a retail store can enable customers to upload targeted information on their smartphone such as product information, promotions, and an indoor positioning map when they approach the beacon. In return, the retailer can capture information regarding its customers and their shopping patterns. Finally, information gathered by location beacons can be used to handle mobile payments between the customer's smartphone and the retail location.
In 2012, Nordic released the latest generation of its ultra-low power wireless solutions, called the nRF51 series. The nRF51 series improves upon the industry-leading specifications of the previous generation of Nordic's products -- with lower power consumption and a unique system-on-chip architecture which simplifies application development and improves processing power. The company has had great success with a broad range of new customers including world-leading consumer electronics companies following the launch of the nRF51 product, and expects to see many new product designs come to market with the nRF51 during the course of 2014 and into 2015.
Based on its market leadership in ultra-low power wireless solutions, its best-in-class product line including the new nRF51 platform, and its highly experienced team of engineers and sales professionals, Nordic Semiconductor is very well-positioned for growth as the wireless market expands into many new product categories.
Sales of Bluetooth Smart to triple in 2014 compared to 2013 (i.e. more than MUSD 63 in revenue). This growth is enabled through continued growth in wearable fitness monitors in addition to many new designs in emerging product categories.
Gross margins are expected to stabilize at approximately 50%. However operating expenses is expected to increase in 2015 as a result of higher R&D spending in order to take advantage of upcoming complementary standards.
| 3rd quarter | 01.01 - 30.09 | Year | |||
|---|---|---|---|---|---|
| Amounts in USD thousand (unaudited) | 2014 | 2013 | 2014 | 2013 | 2013 |
| Total Revenue | |||||
| Total Revenue | 48 952 | 35 352 | 121 867 | 88 803 | 124 390 |
| Cost of materials | (24 014) | (18 131) | (60 725) | (45 137) | (61 840) |
| Direct project costs | (62) | - | (63) | (1 113) | (1 006) |
| Gross profit | 24 875 | 17 221 | 61 079 | 42 553 | 61 543 |
| - | |||||
| Payroll expenses Other operating expenses |
(9 201) (4 080) |
(7 095) (3 246) |
(27 621) (12 060) |
(20 511) (9 694) |
(28 741) (14 393) |
| EBITDA | 11 594 | 6 880 | 21 398 | 12 348 | 18 409 |
| - | |||||
| Depreciation | (1 769) | (1 380) | (5 046) | (3 354) | (4 802) |
| Operating Profit (EBIT) | 9 825 | 5 501 | 16 353 | 8 994 | 13 607 |
| - | |||||
| Net interest | 24 | 80 | 170 | 258 | 330 |
| Net foreign exchange gains (losses) | 364 | (49) | 396 | 176 | 231 |
| Profit before tax | 10 212 | 5 532 | 16 919 | 9 429 | 14 168 |
| - | |||||
| Income tax expense | (3 196) | (1 569) | (5 115) | (3 137) | (4 590) |
| Net profit after tax | 7 016 | 3 963 | 11 803 | 6 292 | 9 577 |
| Earnings per share | |||||
| Basic | 0,043 | 0,025 | 0,073 | 0,039 | 0,059 |
| Fully Diluted | 0,043 | 0,024 | 0,072 | 0,039 | 0,059 |
| Weighted average number of shares (in '000) | |||||
| Basic | 162 255 | 161 050 | 162 426 | 161 341 | 161 268 |
| Fully Diluted | 162 255 | 161 759 | 163 452 | 161 610 | 161 854 |
| 3rd quarter | 01.01 - 30.09 | ||||
|---|---|---|---|---|---|
| Amounts in USD thousand (unaudited) | 2014 | 2013 | 2014 | 2013 | 2013 |
| Net profit after tax | 7 016 | 3 963 | 11 803 | 6 292 | 9 577 |
| Actuarial gain/loss recognized in equity | - | - | - | - | (943) |
| Difference with translation to USD | (6) | - | (0) | 0 | 0 |
| Comprehensive income for the period | 7 010 | 3 963 | 11 803 | 6 292 | 8 634 |
| Amounts in USD thousand (unaudited) | 30.09.14 | 30.09.13 | 31.12.13 |
|---|---|---|---|
| Capitalized development expenses | 7 349 | 6 942 | 7 498 |
| Software and other intangible assets | 4 436 | 2 525 | 3 451 |
| Deferred tax assets | 3 077 | 2 510 | 3 077 |
| Property assets | 795 | 588 | 583 |
| Equipment | 8 099 | 8 049 | 7 464 |
| Other long-term assets | 328 | 765 | 759 |
| Non-current assets | 24 085 | 21 380 | 22 832 |
| Inventory | 20 563 | 19 346 | 22 167 |
| Accounts receivable | 41 108 | 24 182 | 30 047 |
| Other short term receivables | 2 807 | 3 196 | 2 703 |
| Cash and cash equivalents | 24 415 | 28 479 | 26 082 |
| Current assets | 88 892 | 75 203 | 81 000 |
| TOTAL ASSETS | 112 977 | 96 583 | 103 832 |
| Shareholders' equity | 82 883 | 69 398 | 72 244 |
| Pension liability | 9 189 | 8 560 | 10 090 |
| Non-current liabilities | 9 189 | 8 560 | 10 090 |
| Accounts payable | 8 850 | 6 225 | 6 261 |
| Income taxes payable | 3 413 | 3 399 | 4 822 |
| Public duties | 1 265 | 1 487 | 2 405 |
| Other short-term liabilities | 7 378 | 7 515 | 8 011 |
| Current liabilities | 20 905 | 18 626 | 21 498 |
| TOTAL EQUITY AND LIABILITIES | 112 977 | 96 583 | 103 832 |
| 3rd quarter | 01.01 - 30.09 | |||
|---|---|---|---|---|
| Amounts in USD thousand (unaudited) | 2014 | 2013 | 2014 | 2013 |
| Equity at beginning of period | 75 497 | 64 941 | 72 244 | 65 826 |
| Net profit for the period | 7 016 | 3 963 | 11 803 | 6 292 |
| Purchase of treasury shares | (948) | - | (5 170) | (3 975) |
| Sale of treasury shares on options exercise | - | - | 6 154 | - |
| Share-based compensation | 1 323 | 494 | 3 667 | 1 254 |
| Cash settlement of options contract | - | - | (5 810) | - |
| Actuarial gain/loss recognized in equity | - | - | - | - |
| Difference with translation to USD | (6) | - | (6) | 0 |
| Equity at end of period | 82 883 | 69 398 | 82 883 | 69 398 |
| 3rd quarter | 01.01 - 30.09 | Year | |||
|---|---|---|---|---|---|
| Amounts in USD thousand (unaudited) | 2014 | 2013 | 2014 | 2013 | 2013 |
| Profit before tax | 10 212 | 5 532 | 16 919 | 9 429 | 14 168 |
| Taxes paid for the period | - | (5) | (6 578) | (6 813) | (7 041) |
| Depreciation | 1 769 | 1 380 | 5 046 | 3 354 | 4 802 |
| Change in inventories, trade receivables | - | - | |||
| and payables | 2 228 | 2 144 | (6 868) | (1 967) | (10 617) |
| Share-based compensation expense | 1 323 | 908 | 2 735 | 1 807 | 2 690 |
| Movement in pensions | (572) | 216 | (901) | (586) | (566) |
| Other operations related adjustments | 525 | 985 | (466) | (1 593) | 137 |
| Net cash flows from operating activities | 15 486 | 11 160 | 9 886 | 3 630 | 3 572 |
| - | - | ||||
| Capital expenditures (including software) | (1 259) | (600) | (5 140) | (7 126) | (8 456) |
| Capitalized development expenses | (306) | (927) | (1 589) | (4 400) | (5 410) |
| Net cash flows from investing activities | (1 566) | (1 528) | (6 728) | (11 526) | (13 866) |
| - | - | ||||
| Dividends paid to shareholders | - | - | - | - | - |
| Changes in Treasury stock | (948) | - | 984 | (3 975) | (3 975) |
| Cash settlement of options contract | - | - | (5 810) | - | - |
| Short-term loan facility | (8 000) | - | - | - | - |
| Net cash flows from financing activities | (8 948) | - | (4 825) | (3 975) | (3 975) |
| - | - | ||||
| Net change in cash and cash equivalents | 4 973 | 9 632 | (1 668) | (11 871) | (14 268) |
| Cash and cash equivalents at start of period | 19 442 | 18 847 | 26 082 | 40 350 | 40 350 |
| Cash and cash equivalents at end of period | 24 415 | 28 479 | 24 415 | 28 479 | 26 082 |
The condensed third quarter interim financial statements for the nine months ended 30 September 2014.
Nordic Semiconductor ASA develops and sells integrated circuits and related solutions for shortrange wireless communication. The company specializes in ultra-low power (ULP) components, based on its proprietary 2.4 GHz RF and Bluetooth Smart technology.
Nordic Semiconductor ASA is listed on the Oslo Stock Exchange and is a joint stock company registered in Norway. The Company's head office is located at Otto Nielsens vei 12, 7052 Trondheim.
The Group accounts for Nordic Semiconductor ASA and its wholly-owned subsidiaries, together called "the Group" have been prepared in accordance with IAS 34 Interim Financial Statements. The interim financial statements for 2014 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 2013.
The financial statements are presented in thousand USD, unless otherwise stated. As a result of rounding adjustments, the figures in one or more rows or columns included in the financial statements may not add up to the total of that row or column.
Major accounting principles are described in the Group annual accounts for 2013. The group accounts for 2013 were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, relevant interpretations of this, as well as additional Norwegian disclosure requirements described in the Norwegian GAAP and the Norwegian Securities Trading Act.
In the interim financial statements for 2014, judgements, 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 interim financial statements for 2014 and the major sources of uncertainty in the statements are similar to those found in the annual accounts for 2013.
In accordance with IFRS 8, the Group has only one business segment, which is the design and sale of integrated circuits and related solutions.
The Group classifies its revenues into the following market segments: Wireless components, ASIC components and consulting services. Within Wireless components, the Group reports its revenues based on the product category ("hub") with which its components communicate. These include:
PC/tablet accessories, Home electronics devices, Mobile/wearable devices, and Installed Sensor networks.
The Group also reports its Wireless component revenue by technology, including proprietary wireless and Bluetooth Smart protocols. Detailed reporting by market segment can be found on page 3 in this document.
On February 18, 2014, Nordic Semiconductor granted 5,843,712 share options to 176 employees. The options are exercisable after one year, and expire after three years. The options were granted at a strike price of NOK 38.43. If the company's share price exceeds a "cap" of NOK 150.00, the company may settle the option grant by compensating the employee the difference between the "cap" and the strike price. Of the share options granted in 2014, 350,000 have expired, and the remaining 5,493,712 options are still unvested.
According to the Black- Scholes option pricing model, the fair value of options granted in 2014 was NOK 6.153 per option. The Black-Scholes valuation of the option program was conducted by an independent advisory company. The options are expensed over the vesting period, in accordance with IFRS.
A description of risk factors can be found in Note 20 of Nordic Semiconductor's 2013 annual report. The company does not anticipate material changes to its risk profile during the remainder of 2014.
Nothing has happened since the end of the third quarter of 2014 that affects the evaluation of the submitted accounts.
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