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Nordic Semiconductor Annual Report 2009
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Annual Report
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ANNUAL REPORT 2009
NORDIC SEMICONDUCTOR
SALES OFFICES
DESIGN OFFICES
PRODUCTION
TABLE OF CONTENTS:
PAGE
Introduction...3
Letter from the CEO ...4
Report from the Board of Directors...6
Nordic Semiconductor Group Financial Statements...9
Standards of Corporate Governance...32
Auditor Opinion Letter...35
Sales and Marketing...36
Product Development...38
Shareholder Relations...40
Board of Directors...42
Executive Management...43
ULTRA LOW POWER WIRELESS SOLUTIONS
What are you doing today?
Maybe you'll work or browse on a personal computer. Play a video game at home. Watch television from your living room. Or will you do something more active? Maybe you will ride your bicycle, or exercise at the park or gym – checking your overall performance with a sports monitor.
What do these activities have in common? In every case, you will interact with electronic devices nearby. And in every case, your experience can be enhanced with the freedom and flexibility of wireless communication.
A wireless keyboard to connect with your PC. A wireless controller for your TV or video game. A wireless device to monitor your fitness. Within each of these products is an integrated solution for short-range communication. And these solutions require speed, reliability and low power consumption.
This is where Nordic Semiconductor enters the picture. We are a global leader in wireless solutions for short-range communication between devices. Our proprietary technology features high performance and ultra low power consumption. Our solutions can be found in PC peripherals, Audio and Media devices, Sports and Health monitors, Game controllers and Toys, among other applications. We are found in devices from leading global brands, the products that you use and trust every day.
Our company is a global team of specialists committed to developing leading edge wireless technology, and to helping our partners implement wireless solutions in their product lines. For more than ten years, we have been innovating and pushing the boundaries of wireless performance, serving our vision of being the preferred global vendor for short-range wireless solutions.
Sounds interesting?
Learn more about us at www.nordicsemi.com.
NORDIC SEMICONDUCTOR
Nordic Semiconductor 2009 Annual Report
LETTER FROM THE CEO
Dear Shareholders,
2009 was an outstanding year for Nordic Semiconductor. Our company achieved record revenues of MUSD 65.9, record operating profit of MUSD 12.0, and record cash flow from operations. Our sales momentum accelerated throughout the year as we successfully built upon our market position as a leader in short-range wireless solutions. As a result, we exited the year with a record high order backlog of MUSD 32.9 and a very promising start to 2010.
This performance is particularly noteworthy considering the adverse business climate that our company faced during the year. 2009 has been a difficult year for the semiconductor industry, a year in which major trade associations estimate that global semiconductor revenues declined by nearly ten percent. Nordic's business strategy of targeting areas of volume growth with its low-energy wireless solutions and carefully managing its operating expenses enabled the company to perform much better than the semiconductor industry as a whole.
The market environment was particularly challenging at the start of the year, but improved steadily as the year progressed. Nordic Semiconductor benefited from strong demand within its PC Peripherals segment, as vendors replaced older 27 MHz wireless technologies with Nordic's high-performance 2.4 GHz RF solutions. This adoption of Nordic's technology drove rapid growth among mass-market customers in Asian markets, offsetting a temporary recessionary decline in sales to long-term customers in developed markets during the first half of 2009.
As the market recovered during the second half of the year, both new and long-term customers significantly increased their order volumes. The PC Peripherals segment was again the leading driver of Nordic's revenue growth, but sales to the Sports / Health monitor and Audio / Media device business segments also increased substantially. A major contributor to this sales growth was the successful release in October of a new low-cost variant of Nordic's system-on-chip solutions. This product satisfied market demand for a wireless solution that was high-performance, low cost, and easy for vendors to design into electronic devices.
Credit for Nordic's performance must be given to all of the employees of the company. In addition to developing state-of-the-art wireless components and providing world-class customer support, the team at Nordic Semiconductor managed to grow its business without increasing its staffing during the year. This factor, supported by tight cost management and a weaker Norwegian krone, meant that total operating expenses in 2009 declined by over 9% from the prior year, despite the company's solid revenue growth. This performance demonstrates the scalability of Nordic's business model, in which the company focuses on R&D and customer support, while manufacturing and direct distribution are subcontracted to specialist partners.
Svenn-Tore Larsen
Chief Executive Officer
> “We expect 2010 to be a transformative year, with strong revenue and profit growth.”
With strong growth, improved gross margins, and a reduction in operating expenses, Nordic's operating profit grew from MUSD 4.2 to MUSD 12.0. At the same time, the company generated excellent free cash flow due to effective management of working capital and low capital expenditures, and will propose a dividend payment of NOK 2.00 per share at the next Annual General Meeting.
Future Outlook
The company expects 2010 to be a transformative year, with continued strong revenue and profit growth and the release of the company's first solutions based on the emerging Bluetooth low energy standard.
Nordic Semiconductor enters 2010 with a record high order backlog and excellent sales momentum. The primary driver of revenue growth in 2010 is expected to remain the PC Peripherals segment, as manufacturers continue to phase out older wireless products and replace them with new devices based on Nordic's 2.4 GHz technology. In addition, new product launches across all business segments are expected to increasingly contribute to revenue growth during 2010 and beyond.
Several of these emerging growth opportunities include:
- PC Peripherals:
Today, wired input devices (mouse and keyboard) are bundled with nearly all original PC shipments. We expect to see major PC vendors increasingly adopting wireless technologies in original PC shipments, starting in 2010 and accelerating in future years. This will significantly increase the available market for wireless PC peripherals.
Nordic Semiconductor 2009 Annual Report
Nordic Semiconductor 2009 Annual Report
5
Sports / Health monitors:
This has historically been a niche market dominated by sports-related monitors. In future years, the market will expand as an increasing number of wireless healthcare devices will be released (for example, wireless blood pressure or heart rate monitors) to provide cost-effective health monitoring for a growing elderly population.
Audio / Media devices:
Nearly all remote controls are currently based on infrared technologies, which have severe limitations regarding data transfer, range, and interference. With the growth of advanced media devices including web services targeted to the living room, there will be increased demand for new radio frequency-based remote controls similar to wireless mouse/keyboard solutions to facilitate more complex requirements for interactivity.
Game controllers:
The current generation of game consoles are currently paired with wireless game controllers utilizing classic Bluetooth technologies or older 2.4 GHz components. As a consequence, these controllers have relatively low battery lifetime. Nordic's components can significantly reduce power consumption and extend battery life within wireless game controllers, which is an important design criteria for new generations of interactive games and game consoles.
Other components:
Many new devices are being developed with short-range low energy wireless requirements, including radio frequency identification (RFID), remote-control toys, proximity sensors, and watch applications.
In addition, the Bluetooth low energy standard is expected to create new opportunities for product innovation and volume growth over the longer term. Bluetooth low energy is the first open standard for low-energy, short-range radio connectivity
between devices. Due to the expected integration of a Bluetooth low energy mode within the Bluetooth radio chip included in most mobile handsets, the Bluetooth low energy standard is expected to open mobile handsets and other Bluetooth devices for connectivity with low-energy sensors and monitors.
In June, the Bluetooth low energy standard was selected by the Continua Health Alliance, a coalition of more than 200 leading healthcare providers, medical device manufacturers and technology companies worldwide, to enable low power mobile devices to monitor a user's health and fitness levels. Bluetooth low energy is also a leading candidate to emerge as the standard for the next generation of consumer electronics remote controls.
Nordic Semiconductor has taken an active role in developing the Bluetooth low energy standard within the Bluetooth SIG, and expects to be first-to-market with single-mode Bluetooth low energy chipsets based on Nordic's existing 2.4 GHz platform. We consider this market to have excellent long-term growth potential, as a broad range of new low-power wireless applications are created to interact with an installed base of over one billion mobile phones and other Bluetooth devices.
While our company continues to grow, our commitment to the core values which have led Nordic Semiconductor to become the preferred vendor of low power wireless solutions for short-range communication remains unchanged.
- We will continue to develop market leading components and related technology for short-range wireless solutions, including the release of Bluetooth low energy components in 2010 as well as new versions of Nordic's solutions that push the boundaries of wireless performance.
- We will continue to maintain close and collaborative relations with all of our customers, supporting their development of low power wireless solutions across a range of product categories.
- We will continue to manage world-class delivery of our solutions through integrating our supply chain with leading third-party semiconductor manufacturers and distributors.
- We will continue to foster a professionally rewarding environment at the workplace, attracting top talent and ensuring our employees retain the inspiration, competence and teamwork that is the core of our company's success.
With these principles as our foundation, our competitive position has never been stronger and we look forward with confidence to continued success in 2010 and beyond.
REPORT FROM THE BOARD OF DIRECTORS
Nordic Semiconductor delivered strong growth in revenue and profitability during 2009, despite a severe cyclical downturn in the semiconductor industry. The company experienced increasing demand for its short-range wireless components throughout the year, and enters 2010 with significant sales momentum across its business segments.
Company Overview
Nordic Semiconductor is a fabless semiconductor company which designs, sells and delivers integrated circuits and related intellectual property for use in short-range wireless applications. Nordic Semiconductor is a market leader in this segment, and has developed its own proprietary technology for radio communications with ultra-low power requirements.
Nordic Semiconductor's components are manufactured by world-class subcontractors and sold through electronics distributors to manufacturers of branded consumer goods across a wide range of product categories. These categories include PC peripherals, Sports/Health monitors, Audio/Media devices, Gaming controllers, Industrial applications, and other products.
The company is headquartered in Trondheim and Oslo, Norway, and has offices in the US, China, Korea, Japan, Taiwan, and the Philippines.
Financial Summary
Income Statement
Nordic Semiconductor's revenue in 2009 grew by 14% to MUSD 65.9 (MUSD 57.6). Revenue declined during the first half of the year due to the impact of a weaker global economy but accelerated during the second half of the year as the demand environment for its products improved.
Revenue growth was primarily driven by the PC Peripherals business segment, which increased by 87% to MUSD 40.4 (MUSD 21.7), and represented 61% of the company's annual sales. Much of this revenue growth was due to the conversion of wireless PC Peripherals manufacturers from older 27 MHz radio frequency technology to Nordic's high performance 2.4 GHz solutions. This conversion accelerated toward the end of the year as Nordic Semiconductor released a lost-cost variant of its system-on-chip solution, which significantly reduced the cost differential with competitive 27 MHz technology.
In addition to PC Peripherals, the Audio/Media device business segment grew by 40.7% to MUSD 4.7 (MUSD 3.3) and the Sports/Health monitor segment grew by 21.0% to MUSD 5.2 (MUSD 4.3). Both business segments benefited from new product designs which resulted in increased sales to mass market customers. Other business segments such as Gaming controllers, Industrial applications, and other components declined on an annual basis as fewer new designs were released in a weaker market environment.
Gross margins in 2009 improved to 54.0% (52.4%), due to an increasing share of new smaller customers within the revenue mix.
Operating expenses including depreciation totaled MUSD 23.7 (MUSD 26.0), or 35.9% (45.2%) of revenue. This reduction in operating expenses reflects a strong focus on effective cost management during the year and also reflects a generally weaker Norwegian krone exchange rate against the US dollar.
Operating expenses within the company are primarily driven by the company's research and development activities. Development of new wireless components is essential to the company's continued competitiveness in a rapidly evolving market. At the end of 2009, R&D personnel represented over 60% of the company's employees. During 2009, R&D activities were primarily related to the launch of a low-cost variant of Nordic's system-on-chip solutions as well as the specification and development of Bluetooth low energy standard components.
Based on the company's revenue growth, improved gross margins and lower operating expenses, Nordic Semiconductor delivered an operating profit in 2009 of MUSD 12.0 (MUSD 4.2).
Net financial items were an expense of MUSD 2.2 in 2009, compared with income of MUSD 5.7 in 2008. This shift was caused by a revaluation of US dollar-based balance sheet items in Norwegian krone (primarily receivables), as a result of a decline in the value of the US dollar during 2009. During 2008, the reverse effect occurred as the USD appreciated against the Norwegian krone.
Profit before tax in 2009 was MUSD 9.8 (MUSD 9.8). Net profit after tax was MUSD 7.0 (MUSD 7.6), generating an earnings per share of USD 0.21 (USD 0.22).
Cash Flow and Balance Sheet
Cash inflow from operations totaled MUSD 13.9 (MUSD 12.6). Cash conversion was driven by strong working capital management throughout the year. Cash outflow for investments totaled MUSD 0.9 (MUSD 4.9). Cash outflows for investments such as capital expenditures and capitalized R&D expenses were offset by cash receipts of MUSD 1.8 related to deferred payments from the 2007 sale of the data converter business to Chip ID. Cash outflows for financing activities were MUSD 5.6 (MUSD 3.1) and were primarily composed of a dividend payment of MUSD 5.2 in May 2009.
Nordic Semiconductor 2009 Annual Report
In total, Nordic Semiconductor increased its cash balance by MUSD 11.2 during 2009. The company had a cash balance of MUSD 30.6 and no interest bearing debt at the end of the year. The remainder of the company's assets and liabilities primarily consists of net working capital items, which did not grow significantly during 2009.
Accounting Principles
The financial statements for 2009 have been prepared and presented in accordance with International Financial Reporting Standards and the Norwegian Accounting Act.
In December 2009, the company announced that it would change the functional currency of its financial reporting to the US dollar from the start of 2010. This change was driven by the evolution of the company's business from selling customized solutions to a regional customer base to selling standardized wireless components to global vendors of electronics equipment. As the company has progressed, the currency which it transacts its business has also changed so that its revenue and direct production costs are now almost entirely in US dollars.
To correspond with the change in functional currency from 2010, the company has prepared its 2009 financial statements with the US dollar as its presentation currency. This presentation currency facilitates the analysis and comparison of the company's historical financial results with the financial statements as they will be presented from 2010 onwards. Further information on the company's accounting principles is provided in Note 2 of the financial statements.
Financial Risk
Demand for Nordic Semiconductor's short-range wireless solutions is tied to the greater semiconductor and electronics markets and is sensitive to fluctuations in economic conditions. Despite strong growth in recent years, the market for short-range wireless solutions is still in its early stages of development. As demand increases, new competitors are expected to enter the market.
Nordic Semiconductor's success depends on its ability to anticipate customer needs and address these with competitive technical solutions and outstanding customer support. Furthermore, the company's outsourcing of manufacturing and direct distribution highlights the company's reliance on a close collaboration with third-party subcontractors and distributors.
Nordic Semiconductor's liquidity risk is very limited. The company maintained a cash balance of MUSD 30.6 at the end of 2009, and had no interest bearing debt. For this reason, the company's exposure to risk associated with interest rate fluctuations is also very limited.
The company is exposed to foreign exchange risk in its ordinary business activities, which can impact profit margins. The company's operating expenses are primarily in Norwegian krone and its sales and direct production costs are nearly entirely in US dollars. The company does not use financial instruments to hedge this risk.
Finally, the company is exposed to credit risk, although this has historically not resulted in significant losses. The company sells its components to leading international distributors of electronics components, primarily based in Asia. The company's receivables are not credit insured, but credit monitoring routines are in place for setting up credit lines, providing security (payment guarantees) and demanding advance payments when required. The company's losses on accounts receivables were less than 1% during the last year.
Personnel and Organization
At the end of 2009, Nordic Semiconductor had 120 (121) employees of whom 18 (15) were employed outside of Norway. Cooperation between management and the employee representatives functions well and makes a valuable contribution to addressing the challenges faced by the company.
There were 17 (15) female employees at the end of 2008, corresponding to 14% (12%) of total employees. There were 102 full-time employees in Norway, including 14 women, and 18 in Hong Kong, South Korea, Japan, the Philippines, Taiwan and the USA, including 3 women. The average salary for women was 66% of the average salary for men. Gender differences in employee salary are driven by both the location and function of the employees, with a larger proportion of women in administration functions and based in the Philippines. Gender equality is a fundamental principle of the company, and efforts are being made to ensure that there is no gender imbalance when recruiting for positions within the company.
Absence due to illness was 4.7% in 2009 compared to 1.2% in 2008. No occupational illnesses or injuries were reported in 2009.
The Board of Directors would like to thank all of the company's employees for their contribution to the business during the year.
Environmental Statement
Nordic Semiconductor does not own or operate manufacturing facilities. Manufacturing is done through third parties that comply with the ISO 14001 environmental standard, among others. Consequently, there is little pollution associated with the company's operations. Nordic Semiconductor seeks to limit resource consumption, prevent unnecessary environmental pollution and manage waste in an environment-friendly and resource-efficient manner.
The company has established routines to monitor these conditions, thereby meeting the requirements of ISO 9001:2000 certification. Nordic Semiconductor complies with all current laws
Nordic Semiconductor 2009 Annual Report
and regulations, and has already begun using the most environment-friendly casing for semiconductors that is available on the market. This enables the company to market itself as a "green" supplier, which also gives it an advantage with major customers who have their own, stringent environmental standards.
Corporate Governance
Nordic Semiconductor's guidelines for Corporate Governance are in accordance with the Norwegian Code of Practice for Corporate Governance, dated 21 October 2009, as required for all listed companies on the Oslo Stock Exchange. The guidelines are included separately in this annual report.
Going Concern
In accordance with Norwegian accounting regulations, the Board confirms that the prerequisites of a going concern have been met in the presentation of the annual financial statements.
Allocation of Net Profit
Nordic Semiconductor ASA, the parent company of the Nordic Semiconductor group, reported a net profit for the year of MUSD 6.9 during 2009. The net profit has been transferred in its entirety to other equity.
Unrestricted equity in the parent company amounted to MUSD 23.3 at year-end. Based on the company's market position and financial situation, the Board of Directors will propose to the forthcoming Annual General Meeting that a dividend is paid in the amount of NOK 2.00 per share. The Board evaluates the dividend amount on an annual basis.
Future Outlook
Nordic Semiconductor experienced increased demand for its components toward the end of 2009, and anticipates continued profitable growth during 2010. The primary contributor to growth in 2010 is expected to remain the PC Peripherals segment, as manufacturers continue to phase out older wireless products and replace them with new devices based on Nordic's 2.4 GHz technology. Over the long-term, the company expects that revenue growth will be driven by new opportunities to integrate wireless technology into wired devices, and by the release of new applications featuring ultra-low power wireless technology across all other business segments.
In addition, new components based on the Bluetooth low energy standard are projected to be a significant contributor to revenue in future years. The Bluetooth low energy standard is being established by the Bluetooth Special Interest Group as the first open standard for low-energy short-range radio connectivity. Due to the expected integration of a Bluetooth low energy mode within the classic Bluetooth radio chip included in most mobile handsets, The Bluetooth low energy standard is expected to open mobile handsets for connectivity with low-energy wireless sensor and monitoring devices.
Nordic Semiconductor has taken an active role in developing the Bluetooth low energy standard within the Bluetooth SIG, and expects to be first-to-market with single-mode Bluetooth low energy chipsets based on Nordic's existing 2.4 GHz platform.
In sum, Nordic Semiconductor enters 2010 with strong sales momentum, and is well positioned for longer-term market opportunities based on its industry leading proprietary technology, highly competent R&D and sales team, and extensive experience in ultralow power wireless solutions.
The Board of Directors and CEO confirm that:
- to the best of our knowledge, the financial statements for 2009 have been prepared in accordance with current accounting standards and give a true and fair view of the company and the group's assets, liabilities, financial position and results of the operations, and that
- the report by the Board of Directors provides a fair overview of the company and its development, financial results and position, and describes the company's key risks and uncertainties
Nordic Semiconductor 2009 Annual Report
Nordic Semiconductor Group Financial Statements
Nordic Semiconductor Group
Consolidated income statement
for the year ended 31 December 2009
| Amount in USD 1000 | Note | 2009 | 2008 |
|---|---|---|---|
| Total Revenue | 2.11/3 | 65 881 | 57 602 |
| Cost of materials | 4 | -29 367 | -27 311 |
| Direct project costs | -910 | -79 | |
| Gross profit | 35 604 | 30 212 | |
| Payroll expenses | 9/10/12/16 | -14 947 | -16 228 |
| Other operating expenses | 5/12/18 | -6 087 | -7 278 |
| Depreciation | 11/12 | -2 616 | -2 532 |
| Operating profit | 11 954 | 4 174 | |
| Net interest | 6/19 | 582 | 1 200 |
| Net foreign exchange gains (losses) | 6/19 | -2 733 | 4 453 |
| Profit before tax | 9 803 | 9 827 | |
| Income tax expense | 7 | -2 830 | -2 184 |
| Net profit after tax | 6 973 | 7 643 | |
| Attributable to | |||
| Equity holders of the parent | 6 973 | 7 643 | |
| Earnings per share | |||
| Ordinary earnings per share (USD) | 8 | 0,21 | 0,22 |
| Fully diluted earnings per share (USD) | 8 | 0,21 | 0,22 |
| Comprehensive Income | 2009 | 2008 | |
| Net profit after tax | 6 973 | 7 643 | |
| Currency translation differences | 6 993 | -10 672 | |
| Total Comprehensive Income | 13 966 | -3 029 |
Nordic Semiconductor 2009 Annual Report
Nordic Semiconductor Group Financial Statements
Nordic Semiconductor Group
As of 31 December 2009
Consolidated statement of financial position
| Amount in USD 1000 | Note | 2009 | 2008 | 1.1.2008 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Capitalized development expenses | 2.9/12 | 3 938 | 2 293 | 2 495 |
| Software and other intangible assets | 2.9/12 | 1 982 | 1 852 | 150 |
| Property assets | 2.8/11 | 484 | 463 | 681 |
| Equipment | 2.8/11 | 1 562 | 1 826 | 2 803 |
| Total non-current assets | 7 966 | 6 434 | 6 129 | |
| Current assets | ||||
| Inventory | 2.7/4 | 8 990 | 8 281 | 6 446 |
| Accounts receivable | 2.5/13 | 12 021 | 8 488 | 8 590 |
| Other short-term receivables | 1 667 | 2 517 | 6 102 | |
| Cash and cash equivalents | 2.4/14 | 30 578 | 19 331 | 20 016 |
| Total current assets | 53 256 | 38 617 | 41 154 | |
| TOTAL ASSETS | 61 222 | 45 051 | 47 283 | |
| EQUITY | ||||
| Share capital | 15 | 292 | 251 | 325 |
| Share premium | 15 | 14 253 | 11 954 | 15 464 |
| Treasury shares | 15 | -9 | -4 | |
| Retained earnings | 26 946 | 23 542 | 23 043 | |
| Currency translation difference | 416 | -1 830 | 748 | |
| TOTAL EQUITY | 41 907 | 33 908 | 39 576 | |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Pension liability | 2.12/16 | 2 330 | 1 577 | 1 078 |
| Deferred tax liability | 7 | 845 | 839 | 1 417 |
| Total non-current liabilities | 3 175 | 2 416 | 2 495 | |
| Current liabilities | ||||
| Accounts payable | 17 | 5 306 | 2 513 | 1 795 |
| Income taxes payable | 7 | 2 982 | 2 457 | 7 |
| Public duties | 17 | 813 | 721 | 828 |
| Other short-term debt | 17 | 7 039 | 3 036 | 2 582 |
| Total current liabilities | 16 140 | 8 727 | 5 212 | |
| TOTAL LIABILITES | 19 315 | 11 143 | 7 707 | |
| TOTAL EQUITY AND LIABILITIES | 61 222 | 45 051 | 47 283 |
Tore Engebretsen
Chairman
Terje Rogne
Board member
Jon Helge Nistad
Board member
Anne-Cecilie Fagerlie
Vice Chairman
Arnold Schia
Board member
Svenn-Tore Larsen
Chief Executive Officer
Kjell Bråthen
Board member
Markus Bakka Hjerto
Board member
Trondheim, 18 March 2010
Nordic Semiconductor 2009 Annual Report
Nordic Semiconductor Group Financial Statements
Nordic Semiconductor Group
Consolidated statement of changes in equity
for the year ended 31 December 2009
| Note | Share capital | Share premium | Treasury shares | Retained earnings | Currency translation difference | Total equity | |
|---|---|---|---|---|---|---|---|
| Amount in USD 1000 | |||||||
| Equity as of 01.01.2008 | 325 | 15 464 | -4 | 23 043 | 748 | 39 576 | |
| Net profit for the period | 7 643 | 7 643 | |||||
| Purchase of treasury shares | 15 | -6 | -2 633 | -2 639 | |||
| Currency difference with translation to USD | -74 | -3 510 | 1 | -4 511 | -2 578 | -10 672 | |
| Equity as of 31.12.2008 | 251 | 11 954 | -9 | 23 542 | -1 830 | 33 908 | |
| Net profit for the period | 6 973 | 6 973 | |||||
| Purchase of treasury shares | 15 | -2 | -505 | -507 | |||
| Cancellation of treasury shares | 15 | -11 | 11 | 0 | |||
| Corrected exercise of employee options | -207 | -207 | |||||
| Currency difference with translation to USD | 52 | 2 506 | 2 189 | 2 246 | 6 993 | ||
| Dividend to shareholders | -5 253 | -5 253 | |||||
| Equity as of 31.12.2009 | 292 | 14 253 | 0 | 26 946 | 416 | 41 907 |
Nordic Semiconductor 2009 Annual Report
Nordic Semiconductor Group Financial Statements
Nordic Semiconductor Group
Consolidated statement of cash flows
for the year ended 31 December 2009
| Amount in USD 1000 | 2009 | 2008 |
|---|---|---|
| Cash flows from operating activities | ||
| Profit before tax | 9 803 | 9 827 |
| Taxes paid for the period | -3 035 | 15 |
| Depreciation | 2 616 | 2 532 |
| Gain on sale of equipment | 4 | |
| Change in inventories, trade receivables and payables | -1 449 | -4 665 |
| Movement in pensions | 388 | 936 |
| Other operations related adjustments | 5 566 | 3 924 |
| Net cash flows from operating activities | 13 889 | 12 573 |
| Cash flows from investing activities | ||
| Capital expenditures (including software) | -328 | -3 304 |
| Proceeds from sales of equipment | 1 808 | 5 |
| Capitalized development expenses | -2 422 | -1 563 |
| Net cash flows from investing activities | -942 | -4 862 |
| Cash flows from financing activities | ||
| Dividends paid to shareholders | -5 192 | |
| Other financing related adjustments | 4 | |
| Changes in treasury stock | -441 | -3 122 |
| Net cash flows from financing activities | -5 633 | -3 118 |
| Effect of changes in currency exchange rates | 3 933 | -5 278 |
| Net change in cash and cash equivalents | 11 247 | -685 |
| Cash and cash equivalents as of 1.1. | 19 331 | 20 016 |
| Cash and cash equivalents as of 31.12. | 30 578 | 19 331 |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
13
Note 1 General
Nordic Semiconductor is a public limited company whose shares are listed on the Oslo Stock Exchange. The Group's head office is located at Otto Nielsens vei 12, 7052 Trondheim, Norway. The Group includes the parent company Nordic Semiconductor ASA and its wholly-owned subsidiary, Nordic Semiconductor Inc. The Group's principal activities are described in note 3.
The financial accounts were approved for publication by the Board of Directors on March 18, 2010, and will be presented for approval at the Annual General Meeting on June 9, 2010.
Note 2 Accounting Principles
All figures are in thousands of US Dollars.
2.1 Basis for preparation
The financial accounts for Nordic Semiconductor ASA ("the Parent Company") and its wholly-owned and controlled subsidiary, together called "the Group", are prepared in accordance with International Financial Reporting Standards (IFRS) as established by the EU.
The financial accounts are based on the principles of historic cost accounting, with the exception of the following assets:
- Financial instruments (money market fund) are measured at fair value, with changes in value recognized on the income statement.
2.2 Changes in accounting principles
Accounting principles have been applied consistently with the previous year, with the following exceptions:
Nordic Semiconductor will change the functional currency of its financial reporting from Norwegian krone to US dollars from January 1, 2010, according to a resolution from the Board. The change reflects the primary currency in which the Group's revenues and expenses are generated. During the last several years, Nordic Semiconductor's business has evolved from selling primarily low-volume customized solutions to a regional customer base to selling high-volume standardized wireless components to global vendors of electronics equipment. As the Group has progressed, the currency which it transacts its business has also changed so that revenue and direct production costs are now almost entirely in US dollars. The financial accounts prior to 2010 are presented in US dollars, with the Norwegian krone as the functional currency.
The Group has applied the following new and amended IFRS and IFRIC interpretations throughout the year. The application of these amended standards and interpretations have had no effect on the Group's accounts, but may have resulted in an increase in supplementary information.
IFRS 7 – Disclosures on financial instruments (effective January 1, 2009).
More information is required within the notes to the financial statements regarding the measurement of financial instruments which are recognized at fair value and regarding liquidity risk. The revised standard does not materially affect the Group accounts.
IFRS 8 – Operating Segments.
Replaces IAS 14 and makes the "management approach" the primary criteria for both identification of operating segments and reporting of related financial information.
Financial information which is presented in the disclosures must satisfy the standard's requirement for classification and measurement. With regard to measurement, financial information must be provided as it is presented to management without adjustments. The revised standard does not materially affect the Group accounts.
IAS 1 – Presentation of Equity.
The revised IAS 1 requires that shareholders equity be separated into categories relating to revenues / costs and ownership transactions from January 1, 2009. Comparative information for 2008 must also be provided.
The presentation of the Balance Sheet will be renamed "Statement of Financial Position". In addition, there is a requirement to present the opening balance for the earliest period shown in the "Statement of Financial Position" with retrospective changes based on new accounting principles, corrections of errors and reclassification. The revised standard does not materially affect the Group accounts.
IAS 23 – Borrowing cost.
A revised IAS 23 was released in March 2007, and is effective from January 1, 2009. IAS 23 requires that borrowing costs are capitalized if such expenses relate to the acquisition, construction or production of a qualified asset. This does not impact the Group accounts as the Group has no interest bearing debt.
IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements (effective January 1, 2009).
These standards have been revised to allow a limited scope exemption for puttable financial instruments to be classified as equity if they fulfill a number of specified criteria. The revision does not have an impact on the Group accounts.
Annual improvement project (effective from January 1, 2009).
Deals with changes in 23 standards. These changes are not expected to have an effect on the Group accounts.
IFRIC 9 and IAS 39 – Embedded Derivatives.
This amendment to IFRIC 9 requires an entity to assess
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
whether an embedded derivative must be separated from a host contract when the entity reclassifies a hybrid financial asset. The amendment does not have an impact on the Group accounts.
IFRIC 13 – Incentive programs for customers.
This interpretation is effective for accounting periods beginning January 1, 2009, and establishes requirements for the accounting of loyalty credits in customer incentive programs. The Group has no such arrangements and is therefore not affected.
IFRIC 14 – IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction.
IFRIC 14 addresses the interaction between a minimum funding requirement and the limit placed by paragraph 58 of IAS 19 on the measurement of the defined benefit asset or liability. The Group has made use of IFRIC 14 starting January 1, 2009, but the standard has not significantly affected the Group accounts.
Significant accounting judgements, estimates and assumptions.
The preparation of financial accounts in accordance with IFRS requires that management use assessments, estimates and assumptions that influence the amount reported in the financial statements and notes. Management bases its estimates and assessments on previous experience and on various other factors deemed to be reasonable and sensible given the specific circumstances. These assessments form the basis for evaluating the accounting value of assets and obligations which would not be possible based on other available sources. The actual earnings may differ from these estimates. The main areas of uncertainty for assessments and estimates on the balance sheet date, which represent a risk for creating significant changes to the value of assets and liabilities recorded in the accounts for the following financial year, are discussed below.
Estimates and assumptions:
The costs of the defined benefit pension plan are determined upon actuarial calculations. Actuarial calculations are based on expectations regarding the discount rate, expected return on pension funds, future increases in wages/salaries, annual adjustment in the national insurance base rate, annual adjustment of pensions, average turnover and death rates. Based on the natural long-term nature of these obligations, such estimates entail a large degree of uncertainty. Further details are provided in note 16. The book value of pension obligations as of December 31, 2009, 2008, and January 1, 2008 was USD 2,330,000, USD 1,577,000 and USD 1,078,000 respectively.
Developmement costs are capitalized in accordance with the principles in Note 2.9. In order to determine the amount to be capitalized, it is necessary for management to make
assumptions regarding expected future cash flow, discount rates and the expected period of benefits. Capitalized development costs are subject to amortization on a straight-line basis over the period of expected future benefit, normally 3-5 years. Uncertainty exists with respect to the estimated period of expected future benefit, as this depends on the future technological development in the market. The carrying amount of capitalized development costs as of December 31, 2009, 2008, and January 1, 2008 was USD 3,938,000, USD 2,293,000 and USD 2,495,000 respectively.
Estimates are continually reassessed based on changes in the underlying premises. Changes in accounting estimates are recognized in the period in which such changes occur. If such changes also apply to future periods, the effect is distributed between current and future periods.
Basis of consolidation:
A subsidiary is a company in which the Group has control over financial and operating activity. Control is normally achieved when the Group owns - directly or indirectly - more than 50% of the shares in the company. Such companies are included in the Group financial statements from the date at which the Group obtains control over the company and until the date that such control ceases.
All intra-group balances, income and expenses, and unrealized gains and losses are eliminated in full. The financial statements in the subsidiaries are prepared using consistent accounting policies as the parent company, for the same reporting period.
2.3 Foreign currency
The Group presents its financial statements in USD. The functional currency of the Parent Company is NOK but will changed to USD from January 1, 2010. See more information in Note 2.2. Transactions in foreign currency are converted at the exchange rate at the date of the transaction. Any foreign exchange gains or losses arising as a result of changes in the exchange rate between the time of the transaction and the time of payment are recognized in the income statement. A company with a different functional currency than the presentation currency is consolidated as follows:
- assets and liabilities translated at the exchange rate on the date
- income and expenses are translated at the average exchange rates per month
- all conversion differences are shown on a separate line within comprehensive income
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
15
2.4 Cash and cash equivalents
Cash includes cash balances and bank deposits. Cash equivalents are short-term liquid investments which do not involve significant risk factors and are convertible into a known amount of cash within three months.
2.5 Accounts receivable
Accounts receivable are valued at amortized cost, less impairment. Losses arising from impairment are recognized in the income statement.
2.6 Hedging
Hedge accounting is not employed. Efforts are made to reduce foreign currency risk by matching revenues and costs in the various currencies. Financial derivatives that are not designated as hedging instruments are recognized at fair value through profit or loss.
2.7 Inventory
Inventory, components and components under production are valued at the lower of cost and net realizable value after deduction for obsolescence. Net realizable value is estimated as the selling price less cost of completion and the cost necessary to make the sale. Costs are determined using the FIFO method.
2.8 Non-current assets
Non-current assets, with the exception of buildings, are stated at cost net of accumulated depreciation and impairment.
The company's building is an apartment stated at cost. No depreciation is made since the residual value of the apartment exceeds the cost.
Cost of non-current assets includes fees/taxes and direct costs associated with commissioning the non-current asset for use. Repair and maintenance costs are expensed when incurred.
Depreciation is calculated on a straight-line basis over the following periods of time:
| Office and lab equipment | 3-5 years |
|---|---|
| Computer equipment | 3-4 years |
| Installations in buildings | 5 years |
The assets' residual value, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if necessary.
Financial leases
The Group does not have any significant financial leases.
Operational leases
Leases where the most significant risk rests with the lessor are classified as operational leases. Lease payments are classified as operating costs and are expensed over the contract period.
2.9 Research and development
Research costs are expensed as incurred. Costs associated with development are capitalized if the following criteria are not met in full:
- the product or the process is clearly defined and the cost elements can be identified and measured reliably;
- the technical feasibility is demonstrated;
- the product or the process will be sold or used in the business;
- the asset will generate future financial benefits; and
- sufficient technical, financial and other resources for project completion are in place.
Costs which were expensed in prior accounting periods will not be capitalized.
Capitalized development costs are subject to amortization on a straight-line basis over the expected period of benefits, normally 3-5 years. Depreciation begins when the product is transferred from development to production. Uncertainty exists with respect to the expected period of benefits, as this depends on the future technological development in the market.
The fair value of capitalized development costs will be estimated when there is an indication of a decline in value or that the need for impairment charged in prior periods no longer exists.
2.10 Provision
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are reviewed each balance sheet date and the level reflects the best estimate of the obligation. When the time value is insignificant, the amount of the provision will be equal to the expenditure required to settle the obligation. When the time effect is significant, the amount of the provision will be equal to the present value of future expenditures to settle the obligation. Changes in the net present value of provisions resulting from discounting are recognized as finance costs.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
2.11 Revenue recognition
Revenue from sales of components is recognized at the time of delivery. The time of delivery is usually the time when the goods are transferred to the transport carrier.
Revenue from services is recognized as the services are rendered.
Royalties are recorded as revenue on a quarterly basis in accordance with contractual reporting from customers that shows the accrued royalty per quarter.
Interest earned is recorded as income as it is accrued
2.12 Employee benefits
Defined benefit pension plans
The Group offers a defined benefit pension plan to its employees who were hired before December 31, 2007.
Pension liabilities and pension costs are determined using a straight line formula which distributes future pension benefits on a straight line basis over the employment period and considers the pension rights earned by the employees in the course of a period as the pension cost for the year.
Net liability is calculated on the basis of the present value of future pension benefits which an employee has earned as of the balance sheet due date, after deduction of the actual value of pension assets. The discount rate corresponds to the rate on the 10-year government bond with an allowance to take the term into account. The calculations were performed by a qualified actuary.
Changes in pension assets and liabilities that are attributable to estimated changes and discrepancies from the calculation provisions are distributed over the assumed average residual vesting period if the deviation at the start of the year exceeds 10 percent of the greater of the gross pension obligations and pension funds (the corridor solution).
2.13 Government grants
Grants received are classified as operating grants. Operating grants are accounted for at the same time as the costs they are intended to cover. Tax refunds are accounted for as a cost reduction, whereas other public grants are accounted for as revenue.
2.14 Income taxes
Income tax expenses consist of taxes due and changes to the deferred tax. Deferred tax and tax credits are calculated based on all differences between the financial accounts and the value for tax purposes of assets and liabilities.
Deferred tax credits are recognized to the extent that it is probable that the individual company will have sufficient taxable income in later periods to utilize the tax credit. Similarly, the company will reduce recognition of the deferred tax benefit to the extent the company no longer deems it probable that it will be able to utilize such tax benefits.
Deferred tax liabilities are accounted for at the nominal value and classified as long-term obligations in the balance sheet.
Taxes payable and deferred taxes are recognized directly to equity to the extent that the tax loss carryforwards relate to equity transactions.
2.15 Segments
The Group's primary segment is defined as its end customer applications. These include PC Peripherals, Gaming controllers, Sports / Health monitors, Audio / Media devices, Industrial applications and Other components as well as Consulting services. The Group's secondary segment is the geographical market areas in which its products are sold. See note 3.
2.16 Events after the balance sheet date
Information available after the balance sheet date and applicable to conditions existing at the balance sheet date is included in the preparation of the financial statements. Events after the balance sheet date that do not affect the Group's financial position as of the balance sheet date, but that will affect the Group's financial position in the future, are disclosed if they are significant. See note 20.
2.17 Cash flow statement
The cash flow statement is prepared in accordance with the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term liquid investments.
2.18 Approved standards and interpretations not yet in effect
IFRS 1 (revised) (effective January 1, 2010)
In November 2008 IASB released a revised version of IFRS 1. The core elements are retained, but the structure has changed. In addition, the standard includes changes as a result of changes in IFRS's up to July 3, 2008. The change is not expected to have a material impact on the Group financial statements.
IFRS 3 (revised) – Business Combinations. (effective July 1, 2009)
The revised standard requires that all payments related to the purchase of a company are entered at actual value at the time of the purchase. Conditional payment is normally classified as debt and subsequent changes in value are en
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
tered as income. All transaction costs shall be entered as costs. The Group will make use of this standard if purchases arise that are completed after the effective date.
IAS 27 (revised) – Consolidated and Separate Financial Statements (effective July 1, 2009).
The revised standard requires that the effect of all transactions with non-controlling entities shall be accounted for directly in equity if there is no change in control. The revised standard requires that if a parent company sells its shareholding in a subsidiary so that the subsidiary is no longer consolidated within the Group, the profit or loss on the sale shall be recognized and the remaining ownership in the subsidiary will be measured at actual value (transaction value) at the time of the sale. This change is not expected to have a significant impact on the Group's accounts.
IAS 39 (amended) Financial Instruments: Recognition and Measurement (effective July 1, 2009).
This amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. The revision is not expected to have an impact on the Group's accounts.
Annual improvement project (effective from January 1, 2009).
Deals with changes in 23 standards. These changes are not expected to have an effect on the Group accounts.
IFRIC 12
Accounting of concession rights
IFRIC 15
Contracts of building of real property
IFRIC 16
Securing net investments in a foreign company
IFRIC 17
Distribution of assets other than cash to owners
IFRIC 18
Transfer of assets from customers. These changes are not expected to have an effect on the Group accounts.
Note 3: Segment information
All figures in USD 1000.
Segment information, primary:
The Group has only one segment which is the semiconductor. The Group classifies its revenues based on the end product applications in which the semiconductor is used.
The Group focuses on the sale of standard components for wireless communication. These standard components are broken into the following end product areas: PC Peripherals, Gaming controllers, Sports / Health monitors, Audio / Media devices, and Other standard components. In 2009, standard components accounted for 87% of sales versus 79% in 2008.
In addition to standard components, the Group sells customer-specific ASIC components (Application Specific Integrated Circuits) for its Industrial Applications product area. Finally, the Group sells consulting services related to the development of customer-specific ASIC components.
| 2009 | 2008 | |
|---|---|---|
| Income | ||
| PC peripherals | 40 418 | 21 657 |
| Game controllers | 795 | 6 163 |
| Sports / Health monitors | 5 197 | 4 294 |
| Audio / Media devices | 4 695 | 3 337 |
| Other components | 5 947 | 10 235 |
| Standard components | 57 052 | 45 686 |
| Industrial applications | 7 028 | 11 465 |
| Consulting services | 1 801 | 451 |
| Total revenues | 65 881 | 57 602 |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Segment information, secondary:
The Group also classifies its revenues based on its customers' location
| 2009 | 2008 | |
|---|---|---|
| Norway | 1 299 | 3 143 |
| Europe | 7 607 | 8 645 |
| USA/Canada | 6 807 | 4 210 |
| Asia | 50 139 | 41 164 |
| Other | 29 | 440 |
| Total revenues | 65 881 | 57 602 |
The Group has four customers that each represented more than 10% of the Group's total revenues in 2009. These four customers represented 30%, 12%, 12% and 11% of the Group's total revenues respectively. In comparison, three customers each provided more than 10% of the Group's total revenues in 2008, with 20%, 18% and 16% of revenues respectively. All of these customers are based in Asia. The customers act as the Group's distributors in the market and sell its products to end customers across the world.
Note 4 Cost of goods / component inventory
All figures in USD 1000.
| 2009 | 2008 | |
|---|---|---|
| Cost of goods, gross | 30 076 | 29 146 |
| Changes in inventory | -709 | -1 835 |
| Cost of goods, net | 29 367 | 27 311 |
| 2009 | 2008 | |
| Finished goods | ||
| At net realizable value | 4 484 | 7 466 |
| At cost price | 2 900 | 4 658 |
| Total Finished goods | 2 900 | 4 658 |
| Work in progress, at cost | 6 089 | 3 623 |
| Total inventory | 8 990 | 8 281 |
| Amount written down: | 302 | 105 |
Note 5 - Other operating expenses
All figures in USD 1000.
| 2009 | 2008 | |
|---|---|---|
| Service and maintenance | 1 307 | 1 243 |
| Other consultancy fees | 1 495 | 1 320 |
| Office rental expenses | 1 416 | 1 445 |
| Office rent | 339 | 470 |
| Material and components | 1 244 | 1 154 |
| Capitalized development expenses | (904) | (469) |
| Travel and meeting expenses | 772 | 1 380 |
| Other operating expenses | 418 | 735 |
| Total other operating expenses | 6 087 | 7 278 |
Auditor remuneration
Fees to the auditor are included in consultancy fees above.
| 2009 | 2008 | |
|---|---|---|
| Statutory audit services | 40 | 31 |
| Attestation services | 3 | 1 |
| Tax advisory services | 8 | |
| Other non-audit services | 6 | 10 |
| Total | 58 | 41 |
Note 6: Net financial items
All figures in USD 1000.
| 2009 | 2008 | |
|---|---|---|
| Interest income | 198 | 950 |
| Changes in money market fund, reported in the income statement | 454 | 252 |
| Foreign exchange gain | 1 413 | 13 546 |
| Financial income | 2 065 | 14 748 |
| Interest expenses | -70 | -2 |
| Changes in money market fund reported in the income statement | -5 | |
| Foreign exchange loss | -4 146 | -9 088 |
| Financial expenses | -4 216 | -9 095 |
Foreign exchange gain/loss includes the effect of changes in the rate of exchange between the time of the transaction and the time of payment on incoming/outgoing invoices, as well as the effect of changes in the rate of exchange between the time of the transaction and the balance sheet date on assets and liabilities in foreign currency.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Note 7: Tax
All figures in USD 1000.
Tax expense:
| Tax expense consists of: | 2009 | 2008 |
|---|---|---|
| Tax payable | -3 001 | -2 442 |
| Adjustment in prior year | -1 | 1 |
| Change in deferred tax / tax benefit | 172 | 256 |
| Tax expense | -2 830 | -2 184 |
| Reconciliation of taxes payable in balance sheet and income statement | 2009 | 2008 |
| --- | --- | --- |
| Taxes payable for year, in the balance sheet | -2 982 | -2 457 |
| Adjustment to prior year tax | 1 | |
| Currency effect from translation to USD | -19 | 16 |
| Taxes payable in income statement | -3 001 | -2 442 |
| Reconciliation of nominal and actual tax expense | 2009 | 2008 |
| --- | --- | --- |
| Profit before tax | 9 803 | 9 827 |
| Tax at nominal rate (28%) | -2 745 | -2 752 |
| Tax expense | -2 830 | -2 184 |
| Difference between nominal tax expense and tax expense | 85 | -568 |
| Difference consists of: | ||
| --- | --- | --- |
| Tax effect of permanent differences | -34 | -45 |
| Change of tax previous year | 1 | -1 |
| Currency effect from translation to USD | 117 | -522 |
| Difference | 85 | -568 |
| 2009 | 2008 | |
| --- | --- | --- |
| Earnings before tax | 9 803 | 9 827 |
| Discontinued operation | ||
| Government grants | -183 | -140 |
| Non-taxable changes in fair value | -30 | -99 |
| Withholding tax | ||
| Non-taxable interest | 65 | -2 |
| Non-deductible other expenses | 33 | 46 |
| Change in temporary differences | 590 | 2 056 |
| Currency effect of translation to USD | 375 | -1 976 |
| Used tax-loss carryforward | -933 | |
| Basis for payable tax | 10 652 | 8 778 |
| Payable tax on year’s earnings 28% | -2 982 | -2 457 |
| Deferred tax and deferred tax benefits: | Balance Sheet | |
| --- | --- | --- |
| 2009 | 2008 | |
| Deferred tax benefit | ||
| Inventory | 302 | 219 |
| Fixed assets | 404 | 154 |
| Tax loss carryforward | 0 | 0 |
| Shares | 36 | 30 |
| Pension obligation | 2 333 | 1 577 |
| Deferred tax benefit – gross | 3 074 | 1 979 |
| Deferred tax obligation | ||
| --- | --- | --- |
| Intangible assets | -2 352 | -748 |
| Gain and loss account | -3 337 | -3 439 |
| Accounts receivable | -8 | -523 |
| Work in progress | -398 | -266 |
| Deferred tax obligation – gross | -6 095 | -4 976 |
| Currency effect of translation to USD | 0 | 0 |
| Net deferred tax obligation/benefit | -846 | -839 |
| Change in deferred tax obligation/benefit | 0 | 0 |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Note 8: Earnings per share
| 2009 | 2008 | |
|---|---|---|
| Basis for calculation of basic earnings per share | ||
| Earnings for the year (USD '000) | 6 973 | 7 643 |
| Weighted average number of outstanding shares ('000) | 33 788 | 34 452 |
| Earnings per share (USD) | 0,21 | 0,22 |
| Basis for calculation of fully diluted earnings per share | ||
| Earnings for the year (USD '000) | 6 973 | 7 643 |
| Weighted average number of outstanding shares ('000) | 33 788 | 34 452 |
| Earnings per share (USD) | 0,21 | 0,22 |
| Reconciliation of average number of ordinary shares ('000) | ||
| Weighted average number of outstanding shares | 34 759 | 35 134 |
| Weighted average number of own shares | -971 | -682 |
| Weighted average number of outstanding shares, corrected for own shares | 33 788 | 34 452 |
The number of shares outstanding during 2009 was as follows:
| Date | Number of shares issued | Treasury shares | Shares outstanding | |
|---|---|---|---|---|
| 2009-01-01 | Balance at beginning of period | 35 134 120 | 1 206 800 | 33 927 320 |
| 2009-01-14 | Purchase of treasury shares | 5 000 | 33 922 320 | |
| 2009-02-26 | Purchase of treasury shares | 65 000 | 33 857 320 | |
| 2009-04-08 | Purchase of treasury shares | 110 000 | 33 747 320 | |
| 2009-09-23 | Amortization of shares | (1 386 800) | (1 386 800) | |
| 2009-12-31 | Balance at end of period | 33 747 320 | - | 33 747 320 |
Adjusted for treasury shares, the calculation of the weighted average number of outstanding shares is as follows: $(33\ 927\ 32015/366)+(33\ 922\ 32043/366)+(33\ 857\ 32041/366)+(33\ 747\ 320267/366) = 33\ 788$
Note 9: Payroll expenses
All figures in USD 1000.
Combined expenses for salary and other compensation are distributed as follows:
| 2009 | 2008 | |
|---|---|---|
| Salary and vacation pay | 12 730 | 12 797 |
| Other compensation | 1 094 | 1 096 |
| Payroll tax | 1 402 | 1 880 |
| Defined benefit pension | 1 089 | 1 436 |
| Defined contribution pension | 160 | 107 |
| Capitalized development expenses (hourly costs) | -1 528 | -1 088 |
| Total | 14 947 | 16 228 |
| Weighted average number of full-time employees | 117 | 114 |
Company's employees as of 31 December are distributed as follows:
| 2009 | 2008 | |
|---|---|---|
| Norway | 102 | 105 |
| China | 5 | 5 |
| South Korea | 1 | 1 |
| USA | 4 | 4 |
| Taiwan | 1 | 1 |
| Japan | 1 | 1 |
| Philippines | 6 | 4 |
| Total | 120 | 121 |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Note 10: Compensation to Group management and Board
All figures in USD 1000.
Combined payments for Board compensation came to:
| 2009 | 2008 | |
|---|---|---|
| Tore Engebretsen, chairman of the board | 56 | 62 |
| Kjell Bråthen, board member | 28 | 32 |
| Anne Cecilie Fagerlie, board member | 27 | 33 |
| Terje Rogne, board member | 28 | 0 |
| Arnhild Schia, board member | 0 | 0 |
| Markus Bakka Hjertø, employee representative | 0 | 0 |
| Jon Helge Nistad, employee representative | 10 | 0 |
| Kristin Skogen Lund, former board member | 0 | 31 |
| Alf Olsen, former board member | 0 | 33 |
| Annfrid Standal, former board member | 26 | 0 |
| Linda Kristoffersen, former employee representative | 0 | 11 |
| Lars Sundell, former employee representative | 10 | 11 |
Combined payroll expenses to the CEO and other executive personnel defined as the management group amounted to:
| 2009 | Salary | Bonus | Other compensation | Pension expenses | Total |
|---|---|---|---|---|---|
| Svenn-Tore Larsen, CEO | 373 | 86 | 2 | 28 | 489 |
| Robert Giori, CFO (from 6/2009) | 137 | 58 | 2 | 6 | 203 |
| Hans Petter Hauge, former CFO | 94 | 6 | 100 | ||
| Bertel-Eivind Flaten, R&D Director | 155 | 58 | 2 | 28 | 243 |
| Ebbe Rømcke, Quality Director | 135 | 29 | 3 | 25 | 192 |
| Geir Langeland, Sales & Marketing Director | 190 | 58 | 9 | 20 | 277 |
| Total | 1 084 | 288 | 19 | 113 | 1 504 |
| 2008 | Salary | Bonus | Other compensation | Pension expenses | Total |
| --- | --- | --- | --- | --- | --- |
| Svenn-Tore Larsen, CEO | 413 | 84 | 2 | 32 | 531 |
| Hans Petter Hauge, CFO | 271 | 56 | 2 | 29 | 358 |
| Bertel-Eivind Flaten, R&D Director | 171 | 56 | 3 | 26 | 256 |
| Ebbe Rømcke, Quality Director | 149 | 28 | 3 | 23 | 203 |
| Geir Langeland, Sales & Marketing Director | 211 | 56 | 10 | 18 | 295 |
| Total | 1 215 | 279 | 21 | 127 | 1 643 |
Compensation agreement - CEO
The CEO has a profit-sharing bonus agreement tied to the achievement of targets for revenue and operating profit. The bonus is limited to one year's salary. For 2009 and 2008 the conditions for bonus were fulfilled. The Group has no obligations to the CEO in the event of resignation over and above the normal resignation time of six (6) months, except that the resignation period increases to twelve (12) months in the event that the Group is acquired or merged with another company.
Policy for management compensation
The main principle in the Group's management salary policy is that management should be offered competitive compensation so that the Group avoids turnover within the management team. The Group should offer compensation representative for similar positions at comparable companies in Norway.
Salary and other compensation for management will be determined in accordance with this main principle in the present year.
Since the Parent company decided, at an extraordinary general meeting in December 2005, to terminate the company's stock options program, Nordic Semiconductor ASA has established a bonus arrangement for management tied to the achievement of targets for revenue and operating profits.
The company offers defined benefit pension plan to employees in Norway who were hired before 2008. At the beginning of 2008 the company offered a voluntary transfer to a contribution-based pension plan for those who were employed at that time. For employees hired after 2008, the company offers a defined contribution plan.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
All figures in USD 1000.
Note 11: Fixed assets
| 2009 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
|---|---|---|---|---|---|
| Acquisition cost | |||||
| Opening balance | 872 | 8 366 | 404 | 360 | 10 003 |
| Additions | 257 | 84 | 0 | 0 | 340 |
| Sale of assets | 0 | 0 | 0 | 0 | 0 |
| Acquisition cost as of 31.12 | 1 129 | 8 450 | 404 | 360 | 10 343 |
| Accumulated depreciation | |||||
| Opening balance | 788 | 6 172 | 162 | 0 | 7 122 |
| Depreciation expenses | 107 | 831 | 71 | 0 | 1 008 |
| Sale of assets | 0 | 0 | 0 | 0 | 0 |
| Accumulated depreciation as of 31.12 | 895 | 7 003 | 233 | 0 | 8 130 |
| Currency effect from translation to USD | 4 | -123 | -24 | -23 | -166 |
| Net carrying value as of 31.12 | 238 | 1 324 | 147 | 337 | 2 046 |
| Estimated useful life | 3 – 5 years | 3 - 4 years | 5 years | ||
| --- | --- | --- | --- | --- | |
| Depreciation method | Straight-line | Straight-line | Straight-line | Not depreciated*) | |
| Annual lease of | |||||
| non-recognized capital assets | 0 | 0 | 0 | 0 | |
| 2008 | Office and lab equipment | Computer equipment and machinery | Fixture and fittings | Property | Total |
| --- | --- | --- | --- | --- | --- |
| Acquisition cost | |||||
| Opening balance | 848 | 4 758 | 404 | 360 | 6 371 |
| Additions | 28 | 586 | 0 | 0 | 613 |
| Sale of assets | -5 | -64 | 0 | 0 | -68 |
| Acquisition cost as of 31.12 | 872 | 5 280 | 404 | 360 | 6 916 |
| Accumulated depreciation | |||||
| Opening balance | 675 | 2 129 | 83 | 0 | 2 886 |
| Depreciation expenses | 113 | 954 | 79 | 0 | 1 146 |
| Sale of assets | -67 | 0 | 0 | -67 | |
| Accumulated depreciation as of 31.12 | 788 | 3 016 | 162 | 0 | 3 965 |
| Currency effect from translation to USD | -23 | -499 | -57 | -82 | -661 |
| Net carrying value as of 31.12 | 61 | 1 765 | 185 | 278 | 2 289 |
Total depreciation expenses consist of depreciation of fixed assets and depreciation of intangible assets (note 13).
Non-depreciable real property assets:
The Parent company has an apartment in Trondheim for use by employees in the Oslo office while in Trondheim. The apartment is assessed at acquisition cost. The residual value is expected to be at least equal to the entered value.
Fully depreciated capital assets
Capital assets with a total cost price of combined USD 1,301,000 as of December 31, 2009 and USD 660,000 as of December 31, 2008, and USD 3,620,000 as of January 1, 2008 are fully depreciated, but are still in use.
Scrapped capital assets
All capital assets that are ready to be scrapped have been fully depreciated and have no residual book value.
Capital assets temporarily out of operation
The Group has no capital assets that are temporarily out of operation.
Leased equipment
The Group does not have any leased equipment.
Write-offs
There are no indicators that assets need to be written off.
Change in depreciation periods
There has been no basis for changing depreciation periods on fixed assets.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
All figures in USD 1000.
Note 12: Intangible assets
| 2009 | Purchased Software | Capitalized Development costs | Total |
|---|---|---|---|
| Acquisition cost | |||
| Opening balance | 5 648 | 5 532 | 11 180 |
| Additions | 4 | 2 404 | 2 408 |
| Accumulated cost as of 12.31 | 5 652 | 7 936 | 13 588 |
| Accumulated depreciation | |||
| Opening balance | 3 313 | 2 616 | 5 929 |
| Depreciation expenses | 244 | 1 364 | 1 608 |
| Total accumulated depreciation as of 12.31 | 3 557 | 3 980 | 7 537 |
| Currency effect of translation to USD | -113 | -18 | -131 |
| Net carrying amount | 1 982 | 3 938 | 5 920 |
| Non-capitalized R&D expenses: | |||
| Personnel expenses | 5 391 | 5 391 | |
| Other operating expenses | 1 575 | 1 575 | |
| Total cost recognized in income statement | 6 966 | 6 966 | |
| Total expenses for R&D | 9 370 | 9 370 | |
| Economic lifetime | 10 years | 1– 5 years | |
| Depreciation plan | Straight-line | Straight-line | |
| 2008 | Purchased Software | Capitalized Development costs | Total |
| Acquisition cost | |||
| Opening balance | 3 191 | 3 997 | 7 189 |
| Additions | 2 457 | 1 535 | 3 991 |
| Accumulated cost as of 12.31 | 5 648 | 5 532 | 11 180 |
| Accumulated depreciation | |||
| Opening balance | 3 041 | 1 502 | 4 544 |
| Depreciation expenses | 272 | 1 114 | 1 386 |
| Total accumulated depreciation as of 12.31 | 3 313 | 2 616 | 5 929 |
| Currency effect of translation to USD | -483 | -623 | -1 106 |
| Net carrying amount | 1 852 | 2 293 | 4 145 |
| Non-capitalized R&D expenses: | |||
| Personnel expenses | 5 946 | 5 946 | |
| Other operating expenses | 1 759 | 1 759 | |
| Total cost recognized in income statement | 7 704 | 7 704 | |
| Total expenses for R&D | 9 239 | 9 239 |
Fully depreciated intangible assets
Intangible assets with a total cost price of combined USD 2,261,000 as of December 31, 2009 and USD 22,000 as of December 31, 2008, and 0 as of January 1, 2008 are fully depreciated, but are still in use.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Note 13: Accounts Receivable
All figures in USD 1000.
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| Gross receivables | 12 034 | 8 590 | 8 781 |
| Provision for doubtful accounts | -13 | -102 | -191 |
| Accounts Receivable, net | 12 021 | 8 488 | 8 590 |
The provision for loss on debt receivables covers approx. 0.1% of the accounts receivable against 1.2% in 2008 and 2.2% at 1.1.2008. The provision will cover anticipated loss on claims in full. See detailed description in note 19.
Note 14: Cash and cash equivalents
All figures in USD 1000.
Cash and cash equivalents as of the balance sheet date were as follows:
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| Cash holdings | 17 009 | 8 517 | 19 366 |
| Tax deduction account | 657 | 571 | 650 |
| Short-term investments | 12 912 | 10 243 | 0 |
| Cash and cash equivalents | 30 578 | 19 331 | 20 016 |
Note 15: Share capital and shareholder information
All figures in USD 1000.
Share capital
The share capital in Nordic Semiconductor as of December 31, 2009 consists of one share class with a total of 33,747,320 shares with a face value of NOK 0.05, with a total share capital of NOK 1,687,366. Each share grants the same rights in the company, and in the event of any increase in capital existing shareholders have pre-emptive rights for any new shares.
During the year the following changes have been made in the number of shares, share capital and share premium:
| Number of shares | Share capital | Share premium | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2008 | 1.1.2008 | 2009 | 2008 | 1.1.2008 | 2009 | 2008 | 1.1.2008 | |
| Ordinary shares, issued and paid | |||||||||
| Holdings as of 1.1 | 35 134 120 | 35 134 120 | 35 134 120 | 251 | 325 | 281 | 11 954 | 15 464 | 13 377 |
| Cancellation of treasury shares | -1 386 800 | 11 | |||||||
| Correction of options exercise | -207 | ||||||||
| Currency effect from translation to USD | 30 | -74 | 44 | 2 506 | -3 510 | 2 087 | |||
| Holdings as of 12.31 | 33 747 320 | 35 134 120 | 35 134 120 | 292 | 251 | 325 | 14 253 | 11 954 | 15 464 |
Dividend
On February 10, 2010, the Board approved a resolution to propose a dividend of NOK 2 per share to the annual general meeting of shareholders, for a total dividend payment of NOK 67,495,000. A dividend of NOK 1 per share was paid in 2009, for a total dividend payment of NOK 33,747,000. No dividend was paid in 2008.
Authority to issue shares
The Board of the Parent company, based on a resolution from the annual general meeting on May 7, 2009, has the authority to increase the company's share capital by issuing up to 3,500,000 shares with a par value of NOK 175,000. The shareholders' preemptive right may be waived according to the Norwegian Private Limited Companies Act §10-4. This authority is valid until the company's annual general meeting in 2010. The resolution covers the issue of shares in connection with a merger.
Treasury shares
As of January 1, 2009, Nordic Semiconductor ASA had 1,206,800 treasury shares. During 2009, the company purchased 180,000 of its own shares through brokers at an average rate of USD 2.82. At the shareholders meeting on May 7, 2009, the Shareholders approved a resolution to cancel all of the company's treasury shares (1.386.800 shares) by reducing the share capital. The company owned no treasury shares on December 31, 2009.
Based on a resolution of the annual general meeting of May 7, 2009, the Board has authority to purchase the company's own shares with a limit of 3,300,000 shares with a combined face value of NOK 165,000. This authority is limited to 10% of the company's share capital, and the price per share that the company may pay for shares shall not be lower than the face value and not higher than NOK 200. This authority applies until the company's regular general meeting in 2010.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Shareholder overview
The largest shareholders in Nordic Semiconductor ASA were as follows as of December 31, 2009:
| Shareholder | Shares | Percentage |
|---|---|---|
| DNB NOR LUXEMBOURG S S/A ACCELERATOR LTD | 3 466 590 | 10,27% |
| ODIN NORGE | 3 127 910 | 9,27% |
| FOLKETRYGDFONDET JP MORGAN CHASE BANK | 2 468 550 | 7,31% |
| INAK 2 AS | 1 700 000 | 5,04% |
| GOLDMAN SACHS INT. - SECURITY CLIENT SEGR | 1 598 903 | 4,74% |
| ENGEBRETSEN TORE | 1 507 500 | 4,47% |
| ALDEN AS | 1 341 200 | 3,97% |
| AWILCO INVEST AS C/P AWILHELMSEN MANA | 1 134 000 | 3,36% |
| MÆLAND ARNE KRISTIAN | 1 000 000 | 2,96% |
| KLP LK AKSJER | 964 400 | 2,86% |
| ORKLA ASA | 750 000 | 2,22% |
| MP PENSJON | 702 950 | 2,08% |
| KRISTIANRO AS V/EIGIL STRAY SPETAL | 663 000 | 1,96% |
| FOUGNER INVEST AS | 606 000 | 1,80% |
| DnB NOR Bank ASA EGENHANDELSKONTO | 600 000 | 1,78% |
| KLP AKSJENORGE C/O JPMORGAN EUROPE | 503 300 | 1,49% |
| SEB ENSKILDA ASA EGENHANDELSKONTO | 410 000 | 1,21% |
| CANICA AS | 400 000 | 1,19% |
| THERMO TRADE COMPANY | 400 000 | 1,19% |
| PENSJONSKASSEN STATO C/O JP MORGAN CHASE | 395 000 | 1,17% |
| Sum for the 20 largest shareholders | 23 739 303 | 70,34% |
| Other shareholders | 10 008 017 | 29,66% |
| Total shares outstanding | 33 747 320 | 100,00% |
Shares held by the Board of directors and Executive management were as follows as of December 31, 2009.
| Name | Shares |
|---|---|
| Board of directors | |
| Tore Engebretsen | 1 537 500 |
| Terje Rogne | 250 000 |
| Kjell Bråthen | 914 250 |
| Anne Cecilie Fagerlie | 0 |
| Arnhild Schia | 0 |
| Jon Helge Nistad | 0 |
| Markus Bakka Hjertø | 0 |
| Management | |
| Svenn-Tore Larsen | 522 000 |
| Robert Giori | 5 000 |
| Geir Langeland | 32 600 |
| Bertel-Eivind Flaten | 205 000 |
| Ebbe Rømcke | 11 800 |
| Total primary insiders | 3 478 150 |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Note 16: Pensions and other long-term employee benefits
All figures in USD 1000.
The Norwegian company in the Group is required to have mandatory employment pension according to the Mandatory Employment Pension Act. As of January 1, 2008, the Company has chosen to have both a defined benefit and a defined contribution pension plan. Both pension plans satisfy the requirements of the law. Individual employees hired before January 1, 2008, could choose between retaining the original defined benefit pension plan, or moving to a defined contribution pension plan. All new employees after January 1, 2008 automatically enter the defined contribution pension plan. The two different types of pensions are described below:
Defined benefit pension:
Some employees in Norway have a defined benefit pension plan. The employee will receive 66% of salary based on 30 years of employment at the company. The plan includes disability pension. As of December 31, 2009 the plan had 71 members.
The obligation is calculated on a straight-line basis. Unrealized profits and loss as a result of changes in actuarial assumptions are distributed across the anticipated remaining average earning period.
The pension fund is managed by Vital Forsikring Finansforvaltning. At the end of 2009 the value of the pension fund was USD 4,944,000. As of December 31, 2009 the portfolio was invested as follows:
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| Equities | 9.9% | 3.8% | 24.8% |
| Bonds | 19.0% | 29.9% | 21.5% |
| Money market | 16.3% | 14.0% | 7.5% |
| Bonds held to maturity | 36.4% | 28.8% | 27.7% |
| Property | 17.1% | 16.8% | 15.6% |
| Other | 1.2% | 6.7% | 2.9% |
| Total | 100% | 100% | 100% |
Pension expense for the year was calculated as follows:
| 2009 | 2008 | |
|---|---|---|
| Current service cost | 799 | 1 073 |
| Interest expense | 266 | 351 |
| Expected return on plan assets | -227 | -266 |
| Amortization of actuarial gains / losses | 82 | 80 |
| Administration fee | 44 | 30 |
| Total pension expense excl. social security tax | 965 | 1 269 |
| Social security tax | 124 | 168 |
| Total pension expense incl. social security tax | 1 089 | 1 436 |
Net pension obligation for the year was calculated as follows:
| 2009 | 2008 | |
|---|---|---|
| Pension obligations | 11 240 | 6 825 |
| Plan assets | 4 944 | 3 525 |
| Estimated net pension obligations | -6 296 | -3 300 |
| Social security tax | -888 | -465 |
| Total actual net obligation incl. social security tax | -7 184 | -3 766 |
| Actuarial profits/loss not recognized | 4 254 | 1 918 |
| Estimated difference from social security tax | 600 | 270 |
| Net pension obligation 12.31 incl. social security tax | -2 330 | -1 577 |
Movement in pension obligations:
| 2009 | 2008 | |
|---|---|---|
| Net pension obligation 1.1 | 8 269 | 6 363 |
| Current service cost | 942 | 913 |
| Interest expense | 314 | 299 |
| Actuarial gain / loss | 1 734 | -734 |
| Pension payments | -19 | -16 |
| Pension obligation 12.31 | 11 240 | 6 825 |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Movement in pension assets:
| 2009 | 2008 | |
|---|---|---|
| Pension assets 1.1 | 4 271 | 3 747 |
| Expected return on plan assets | 268 | 226 |
| Actuarial gain / loss | -281 | -827 |
| Administration fee | -51 | -25 |
| Employer contribution | 757 | 419 |
| Pension payment | -19 | -16 |
| Pension assets 31.12. | 4 944 | 3 525 |
The following assumptions have been used as a basis for the calculation of pension expense and net pension obligation:
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| Discount rate | 4.4% | 3.8% | 4.7% |
| Expected return on plan assets | 5.6% | 5.8% | 5.75% |
| Expected future salary increase | 4.25% | 4.0% | 4.5% |
| Expected future increase in base amount | 4.0% | 3.75% | 4.25% |
| Expected future increase in pensions | 4.0% | 1.5% | 2.0% |
| Average turnover | 2.2% | 2.2% | 1.4% |
In the insurance company, risk of death and disability is distributed among all the insurance customers, and therefore this is the relevant indicator for future disability and life expectancy. Risk tables for death (mortality table K2005) and disability are based on general tables in Norway updated with historic data from the population of the insurance company. This data involves an adjustment of available tables
in the form of increased life expectancy and increased probability of disability. The average life expectancy for all age groups in the tables is 80 years for men and 84 years for women. Extracts from the tables are shown below. The table shows life expectancy and probably for disability and death respectively within one year for various age groups.
Life expectancy
| Age | Man | Woman |
|---|---|---|
| 20 | 61 | 64 |
| 40 | 41 | 45 |
| 60 | 22 | 25 |
| 80 | 8 | 10 |
Probability of death
| Age | Man | Woman |
|---|---|---|
| 20 | 0,01% | 0,01% |
| 40 | 0,07% | 0,04% |
| 60 | 0,63% | 0,36% |
| 80 | 5,90% | 3,90% |
Amounts for the current period and four previous fiscal years are as follows:
| 2009 | 2008 | 2007 | 2006 | |
|---|---|---|---|---|
| Pension obligation | -11 240 | -6 825 | -8 230 | -6 078 |
| Pension plan assets | 4 944 | 3 525 | 4 847 | 3 128 |
| Surplus/deficit | -6 296 | -3 300 | -3 383 | -2 949 |
Expected contribution to the plan in 2010 is: USD 789,000.
Defined contribution pension:
Some employees in Norway have a defined contribution pension plan. The main benefit is a contribution of 5% of salary between 1 and 6 basis points and 8% of salary between 6 and 12 basis points. Along with this the company has a disability pension of approximately 66% of salary including estimated social security based on 30 years of full employment. In 2009, the cost of the defined contribution pension was USD 160,000. As of December 31, 2009 the plan had 32 members.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Note 17: Current liabilities
All figures in USD 1000.
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| Accounts payable | 5 306 | 2 513 | 1 795 |
| Taxes payable | 2 982 | 2 457 | 7 |
| Social security tax | 813 | 721 | 828 |
| Holiday pay | 1 239 | 1 006 | 1 160 |
| Accrued expenses | 5 800 | 2 030 | 1 422 |
| Total Current liabilities | 16 140 | 8 727 | 5 212 |
Note 18: Leases
All figures in USD 1000.
Operational leases:
The company has several operational leases for machinery and office space.
The lease expenses consist of the following:
| 2009 | 2008 | |
|---|---|---|
| Office lease | 1 067 | 1 149 |
| Lease of machinery | 37 | 41 |
| Total lease expense | 1 104 | 1 190 |
The Group leases offices in Trondheim, Oslo, Hong Kong, Seoul, Tokyo, Manila and San Jose, California (USA). The lease amounts are fixed with index regulation based on Statistics Norway's consumer price index.
Conditions for major leases are:
Trondheim office:
The office lease was established on January 1, 2007, and expires on December 31, 2012 without notice of termination. Nordic Semiconductor has a pre-emptive right to renew the lease if the lessor does not wish to make use of the premises.
Oslo office:
The office lease was established on February 1, 2006, and expires on December 31, 2010, without notice of termination. Nordic has the option to renew the lease for five additional years.
Future minimum payments for non-cancellable leases are as follows:
| Within 1 year | 850 |
|---|---|
| 1 to 5 years | 864 |
| After 5 years | 0 |
| Total non-cancellable leases | 1 714 |
Note 19: Financial instruments
All figures in USD 1000.
Capital structure
Nordic Semiconductor's strategy relating to its capital structure is to maintain sufficient cash and cash equivalents to meet the Group's requirements for ongoing operations and for new investments. Management believes that it is especially important for a small company to retain a strong credit rating and significant liquidity as the Group competes in a global market against larger companies.
Nordic Semiconductor manages its capital structure and makes revisions in light of changes in the overall economy and its operating assumptions. In order to maintain or amend the capital structure, the company must purchase its own shares on the market, pay dividends to shareholders, pay back capital to shareholders or issue new shares. No changes were made in procedures or processes in the course of 2009.
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Nordic Semiconductor manages its capital structure based on an equity ratio. This relationship is calculated as total equity divided by total assets. In this phase of the company's development, the goal is to keep the equity ratio above 65%. This is a reduction from a 75% objective during 2008, due to the overall improvement in the economy and increasingly stable profitability of the company's operations. The remainder of the company's financing is made through short-term, non-interest-bearing debt. This financing typically consists of debt to suppliers, the public sector, employees or others.
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| Total equity | 41 907 | 33 908 | 39 576 |
| Total assets | 61 222 | 45 051 | 47 283 |
| Equity share | 68% | 75% | 84% |
| Fair value | Amortized cost | ||
| --- | --- | --- | --- |
| Money market fund | Receivables and loans | Other financial obligations | |
| Cash and cash equivalents | 12 912 | 17 666 | |
| Receivables and other short-term debt receivables | 13 688 | ||
| Total financial assets | 12 912 | 31 354 | - |
| Accounts payable and other short-term debt | 16 985 | ||
| Total financial liabilities | 16 985 |
Cash equivalents at fair value are assets held as short-term deposits in interest-bearing funds invested within high-quality issuers, with floating earnings and no set maturity date (Valuation category 1, prices in active markets for identical assets or liabilities).
Financial risk
As Nordic Semiconductor manages an international operation, the company is subject to financial risk, primarily credit risk and foreign currency risk. Procedures for control of financial risk have been adopted by the Board and are carried out by its finance department.
(i) Credit risk
The company's sale of components takes place through its distribution partners within defined geographic regions. The number of invoice recipients is thereby significantly lower than the end customer base, which increases the credit risk on customer receivables.
In order to manage credit risk, the company has established guidelines to ensure that each customer's outstanding receivables do not exceed established credit limits and that sales are only made to customers who have not had significant problems with previous payments. In the event of the bankruptcy of a distribution partner, end customer demand will be unchanged and a new distribution channel will have to be established. In 2009 30% of revenues compared to 20% in 2008 went through the largest distribution partner.
Age distribution of customer receivables was:
| 2009 | 2008 | 1.1.2008 | ||||
|---|---|---|---|---|---|---|
| Gross Total | Provision for doubtful accounts | Gross Total | Provision for doubtful accounts | Gross Total | Provision for doubtful accounts | |
| Not due | 10 285 | 5 487 | 7 109 | |||
| Past due 0-30 days | 1 513 | 633 | 617 | 6 | ||
| Past due 31-120 days | 130 | 1,686 | 4 | 132 | 38 | |
| Over 120 days | 106 | 13 | 784 | 98 | 923 | 147 |
| Total | 12 034 | 13 | 8 590 | 102 | 8 781 | 191 |
Based on its experience, it is not deemed necessary for the company to make a provision for accounts receivable that are not due (85% of receivables). Receivables to which interest applies are set aside in their entirety, as these receivables are generally difficult to collect. For the remaining receivables, loss provisions have been estimated based on the age of the receivables and the customer's payment history.
Changes in provisions for doubtful accounts:
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| January 1 | 102 | 191 | 221 |
| Currency translation difference | 22 | -43 | |
| Change in estimated loss provision | -104 | -4 | 211 |
| Actual losses | -7 | -42 | -241 |
| December 31 | 13 | 102 | 191 |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
The book value of financial assets represents the maximum credit exposure. The maximum exposure to credit risk on the balance sheet date was:
| 2009 | 2008 | 1.1.2008 | |
|---|---|---|---|
| Accounts receivable and other short-term receivables | 13 688 | 11 005 | 14 692 |
| Cash and cash equivalents | 30 578 | 19 331 | 20 016 |
| Total | 44 266 | 30 336 | 34 708 |
(ii) Liquidity risk
Procedures for investing the Group's surplus cash are made by the Board and implemented through a financial institution. Overall, the Group seeks to minimize risk in its investments. Investments can only be made in securities which have been approved by the Board. As of December 31, 2009, the Group had invested USD 12,912 thousand as short-term deposits in money market funds with a broad distribution of high-quality issuers, floating earnings and no set maturity. An additional USD 17,666 thousand was deposited in the bank.
The Group has no externally imposed capital requirements or agreements, and has no contracts or legal requirements which are not being upheld. The Group has the following due dates with regard to contracts for financial obligations as of December 31, 2009:
| Entered amount | Contractual cash flows | 6 months or less | 6-12 months | 1-2 years | 2-5 years | |
|---|---|---|---|---|---|---|
| Supplier debt and other short-term debt | 16 985 | -16 985 | -13 158 | -3 827 | ||
| Other contractual obligations | 0 | -1,714 | -425 | -425 | -850 | -14 |
(iii) Interest rate risk
The Group has no interest-bearing debt. Interest rate risk is related only to investment of surplus cash. The Group's requirements related to liquidity and risk determine the company's investment policy and consequent interest rates. The Group's policy is to maintain a short-term investment horizon for its surplus liquidity. The investment portfolio should not have a longer average duration than six (6) months.
Below is a sensitivity analysis of changes in the Norwegian interest rate level: The calculation is based on the Group's cash holdings as of December 31, 2009.
Earnings before tax
Norway's interest rate level +/- 0.25% 76
(iv) Foreign currency risk
The company is subject to foreign currency risk as it has its development and commercial activities in different countries. Nearly all revenues and cost of goods are in USD, while approximately 85% of the company's operating expenses are in NOK. The company does not hedge its exposure to foreign currency risk.
The table below shows sales in the most significant currencies:
| 2009 | 2008 | |||||
|---|---|---|---|---|---|---|
| Local currency | USD (1000) | Share of total revenues in % | Local currency | USD (1000) | Share of total revenues in % | |
| USD | 62 968 | 62 968 | 95,6 % | 54 159 | 54 159 | 94,0 % |
| EUR | 926 | 1 319 | 2,0 % | 129 | 209 | 0,4 % |
| NOK | 9 810 | 1 594 | 2,4 % | 17 917 | 3 234 | 5,6 % |
| Total | 65 881 | 100,0 % | 57 602 | 100,0 % |
Nordic Semiconductor 2009 Annual Report
Notes to Nordic Semiconductor Group Financial Statements
Below is a sensitivity analysis of the two most important currencies besides the Norwegian krone (NOK).
| Earnings before tax | |
|---|---|
| USD exchange rate 10% | 1 269 |
| EURO exchange rate 10% | 38 |
(v) Determination of fair value
As of December 31, 2009 the company had no financial assets where there is considered to be a difference between book value and fair value. The following financial instruments are not recognized at fair value: Cash and cash equivalents, customer receivables and other short-term debt receivables.
The book value of cash and bank deposits, accounts receivable, other short-term receivables and accounts payable are approximately equal to fair market value, as they have ultra-short collection cycles with low inherent risk.
Below is an overview of the company's financial instruments:
| 2009 | 2008 | 1.1.2008 | ||||
|---|---|---|---|---|---|---|
| Book value | Fair market value | Book value | Fair market value | Book value | Fair market value | |
| Financial assets | ||||||
| Cash and bank deposits | 17 666 | 17 666 | 9 088 | 9 088 | 20 016 | 20 016 |
| Interest-bearing funds | 12 912 | 12 912 | 10 243 | 10 243 | ||
| Accounts receivable | 12 021 | 12 021 | 8 488 | 8 488 | 8 590 | 8 590 |
| Financial debt liabilities | ||||||
| Accounts payable | 5 306 | 5 306 | 2 513 | 2 513 | 1 795 | 1 795 |
Note 20: Events after the balance sheet date
No events have occurred since the end of the fiscal year which are believed to affect the financial statements as of the balance sheet date.
Note 21: Related party transactions
The Group has the following related parties:
Management:
Management: See note 10, where the members of the Board and management group are listed. Board member Anne-Cecilie Fagerlie is General Manager in the Nordic countries for the consulting company Avanade. Avanade was selected by Nordic Semiconductor as a supplier of the company's ERP and CRM computer systems, which were implemented in 2008. Anne-Cecilie Fagerlie has not participated in preparatory case papers, discussions or decisions which the Board and management of Nordic Semiconductor have had in this area.
Nordic Semiconductor Inc.: Internal Group transactions between Nordic Semiconductor ASA its Nordic Semiconductor Inc. subsidiary consist of marketing and sales promotion which the subsidiary conducts on behalf of the Parent Company, as well as management, administration and accounting which the Parent Company undertakes on behalf of the subsidiary. These transactions are made on an normal business terms.
Nordic Semiconductor 2009 Annual Report
STANDARDS OF CORPORATE GOVERNANCE
The Board of Directors and management of Nordic Semiconductor aim to execute their respective tasks in accordance with the highest standards for corporate governance.
Nordic Semiconductor's standards for corporate governance provide a critical foundation for the company's management. These principles must be viewed in conjunction with the company's efforts to constantly promote a sound corporate culture throughout the organization. The company's core values of respect, trust, accountability and equal treatment are central to the Board's and management's efforts to build confidence in the company, both internally and externally. Nordic Semiconductor promotes the highest standards of integrity and ethical behaviour among its employees.
Nordic Semiconductor's principles for corporate governance are based on Norwegian law, regulations by the Oslo Stock Exchange and the Norwegian Code of Practice for corporate governance published on October 21, 2009. The company's policy on corporate governance is described in detail below.
Activities
Nordic Semiconductor's Articles of Association states, "The objects for which the company is established are industry and trade, and to participate with other enterprises associated with the company's activities."
Nordic Semiconductor designs, sells and delivers integrated circuits and related intellectual property for use in short-range wireless applications. The company specializes in ultra-low power components, based on its proprietary 2.4 GHz radio frequency technology. All manufacturing and direct distribution of components are outsourced to specialist subcontractors. The company is headquartered in Trondheim and Oslo, Norway, and has offices in the US, Hong Kong, Korea, Japan, Taiwan and the Philippines.
Equity and dividends
The company's growth philosophy, as well as the cyclicality of its business, means that the company will undertake to maintain a high equity ratio and considerable liquidity.
The company aims to provide shareholders with annual returns in the form of dividends based on surplus cash generated by the company. This assumes that the company's needs for financial strength relative to operational requirements and new investments are addressed. The company's dividend policy is reviewed each year by the Board of Directors.
The Board of Directors, in accordance with the resolution of the Annual General Meeting held May 7, 2009, has been authorized to buy back up to 3,300,000 own shares for a total par value of NOK 165,000.00 in one or more transactions. The authorization is limited to 10 percent of the company's share capital, and the price per share which the company may pay for shares acquired in this manner shall not be less than the par value nor greater than NOK 200. This power of attorney will remain in effect until the company's ordinary annual general meeting in 2010.
In accordance with the decision passed at the general meeting held May 7, 2009, the Board of Directors has the authority to increase the company's share capital by issuing up to 3,500,000 shares with a total par value of NOK 175,000.
Equal treatment of shareholders and transactions with related parties.
Nordic Semiconductor has one class of shares, where each share has one vote at the company's shareholders' meeting. Nordic Semiconductor strictly adheres to the principle of equal treatment of all shareholders. The company's transactions in its own shares are conducted in accordance with good stock exchange practice in Norway.
Existing shareholders' pre-emptive subscription rights under §10-4 in the Norwegian Companies Act can be waived. This authorization remains valid until the company's ordinary annual general meeting in 2010. This authorization to the Board of Directors covers the issuance of shares in connection with a merger. This authorization applies to payment for shares both in cash, in kind and the issuing of shares in relation to a merger.
The company is generally cautious with regards transactions with shareholders, members of the Board of Directors, senior employees or related parties to the above. To ensure that the best code of conduct applies, the company requires notification and review of any process or transaction in which both the company and a senior employee or member of the Board of Directors may have interests.
Nordic Semiconductor will seek to conform to the principles of equal treatment of related parties and possible transactions with related parties that are laid down in the Norwegian Code of Practice for Corporate Governance.
Freely Negotiable shares
Nordic Semiconductor's shares are freely tradable and there are no restrictions on the sale and purchase of the company's shares beyond those pursuant to Norwegian law.
Annual General Meeting
The Annual General Meeting is the company's highest body and the shareholders exert their authority in the company through the Annual General Meeting. Nordic Semiconductor encourages all shareholders to participate and exercise their rights in the Annual General Meeting.
Nordic Semiconductor has an ambition to hold the Annual Gen
Nordic Semiconductor 2009 Annual Report
Nordic Semiconductor 2009 Annual Report
33
eral Meeting in accordance with the Norwegian Code of Practice for Corporate Governance. The notice of the Annual General Meeting, including relevant information shall be announced and distributed at least 21 days in advance of the Annual General Meeting, and the final date for notification of attendance is three working days prior to the Annual General Meeting.
Shareholders who are unable to attend may vote by proxy. Members of the Board of Directors and the auditor attend the Annual General Meeting. The Annual General Meeting is chaired by a person independent of the company's Board of Directors and management.
Pursuant to the Articles of Association the following issues shall be discussed and decided at the Annual General Meeting:
- Approval of the profit and loss account and balance sheet, including the allocation of annual profits or the settlement of annual losses, and payment of dividends
- Appoint Board members and election committee
- Determine remunerations for Board members and the Auditors fee
- Any other matters mentioned in the notice to attend the meeting
Nomination Committee
Nordic Semiconductor has a Nomination Committee which is elected during the Annual General Meeting. The Nomination Committee's duties are to represent the interests of the shareholders in general, and propose substantiated candidates for the Annual General Meeting's election of the Board of Directors as well as propose the remuneration to the Board of Directors.
The Election Committee consists of three members who are shareholders or who represent the shareholders. The company's executive personnel are not represented on the Election Committee. The deadline for submitting proposals to the Election Committee is two months before the Annual General Meeting.
The members of the Election Committee are:
- John Harald Henriksen
- Bjørnar Olsen
- Tore Mengshoel
The composition and independence of the Board of Directors
The Board of Directors and the Chairman of the Board of Directors are elected by the Annual General Meeting on the basis of proposals from the Election Committee.
Both the Chairman and the shareholder-elected members of the Board of Directors are elected for a term of up to two years. The Board of Directors has a permanent Vice Chairman.
A more detailed description of the background, qualifications, and term of service of each member of the Board of Directors and the number of Nordic Semiconductor shares they own are provided in the annual report.
The composition of the Board of Directors meets the requirements of the Norwegian Code of Practice for Corporate Governance with respect to members' independence of the executive management and with respect to important business relationships. The independence of the members of the Board of Directors is also evident in the fact that there are few instances of disqualification in connection with matters dealt with at Board meetings. Representatives of the executive personnel are not members of the Board of Directors.
The work of the Board of Directors
The conduct of the Board of Directors is in accordance with the Board instructions of Nordic Semiconductor ASA. In accordance with the said instructions, the Board is responsible, to the degree necessary, for approving business strategies and budgets for the company. The Board is also responsible for ensuring that the company has a competent management with clear internal distribution of responsibility and work.
Each year, the Board of Directors adopts a specific meeting and activity plan for the following year. This plan covers strategic planning, monitoring of the business, and other relevant business issues. The Board's activity plan for 2010 stipulates eight meetings, two of which were scheduled for all day meetings to discuss and explore strategy and technology-specific issues.
The Board of Directors carries out an evaluation of its activities each year and on this basis discusses improvements in the organisation and implementation of its work.
Due to the limited size of the company, the Board frequently does not establish subcommittees in order to process specific issues. The Board has established a Remuneration Committee to discuss and decide the remuneration principles for the CEO and executive management.
The Board acts as the Audit Committee for the purpose of identifying, understanding and evaluating operational and financial risks. This shall include a thorough evaluation of the company's financial reporting, auditing, and control procedures. The Board holds biannual meetings with the company's appointed Auditor, one in the fall to discuss the preparations for the annual accounts and company audit, and one in the spring to discuss the final accounts and other findings.
Risk Management and internal control
The Board and management are committed to ensuring that the company maintains sound and effective internal controls to safeguard the shareholders' investment and the company's assets. Nordic Semiconductor's risk management system is fundamental to the achievement of its financial goals.
34 Nordic Semiconductor 2009 Annual Report
Management prepares a monthly financial report which is distributed and reviewed by the Board of Directors. The quarterly financial report is also subject to review and approval by the Board. The Board of Directors performs biannual reviews of the company's business strategy focusing on market development, technology updates, competitive positioning and risk factors.
The Board presents an in depth description and analysis of the company's financial status in the Report from the Board of Directors in the company's annual report. The report also describes the main drivers and risks related to the operation of the business.
Remuneration of the Board of Directors
All remuneration to the Board of Directors is disclosed in Note 10 of the Nordic Semiconductor Group annual accounts.
Members of the Board of Directors do not receive additional remuneration from the company beyond the compensation awarded to Board members. The remuneration to Board members is not performance based, and the company does not provide share options to Board members.
Remuneration of the Executive Management
The Board of Directors discuss and approve the terms and conditions for the CEO once a year and monitors the general terms and conditions for other senior employees of the group.
The main principle in Nordic's policy for remuneration and compensation is that the leading employees shall be offered competitive terms, so as to achieve the desired stability in the company's top management. Salary and other benefits for leading employees will in the current year be established in accordance with the above-mentioned main principle.
Following the termination of the company's options program in the Extraordinary General Meeting in December 2005, Nordic Semiconductor has established an incentive plan for the leading employees. A bonus is linked to the achievement of certain specific targets for the company's financial performance.
Information and Communications
Nordic Semiconductor strives to communicate actively and openly with the market. Nordic Semiconductor's accounting procedures are highly transparent and its financial statements are prepared and presented in accordance with the International Financial Reporting Standards (IFRS). The Board of Directors monitors the company's reporting.
Nordic Semiconductor's financial reporting calendar for 2010 has been announced to the Oslo Stock Exchange and can be found on the company's website. The company's annual and quarterly reports contain extensive information about the various aspects of the company's activities. The company's quarterly presentations are transmitted directly on the Internet and may be found on Nordic Semiconductor's websites together with the quarterly and annual reports. A comprehensive and detailed presentation of other information, reports and documents may also be found on Nordic Semiconductor's websites. The company always ensures that all shareholders are treated equally as regards access to financial information.
Nordic Semiconductor's Chief Financial Officer is responsible for contact with shareholders apart from the General Meeting. The Chief Financial Officer reports regularly to the Board about the company's investor relations activities. The Board has appointed an investor relations committee to further review the company's communications activities.
Takeovers
The Board of Directors will not seek to hinder or obstruct any takeover bid for the company's activities or shares unless there are particular reasons for doing so. In the event of a takeover bid, as discussed in item 14 of the Norwegian Code of Practice for Corporate Governance, the Board of Directors will seek to comply with the recommendations therein as well as complying with relevant legislation and regulations.
Auditor
Ernst & Young has been elected by the Annual General Meeting to act as auditor to confirm to the Annual General Meeting that Nordic Semiconductor's annual accounts have been prepared and presented in accordance with current laws and regulations. Fees paid to the Auditor are reported at the Annual General Meeting.
In the fall, the external auditor presents to the Board of Directors an evaluation of risk, internal control and the quality of reporting at Nordic Semiconductor, and the audit plan for the following year. The external auditor also takes part in the Board's discussions on the annual financial statements. On both occasions, the Board of Directors ensures that the Board and the external auditor are able to discuss relevant matters at a meeting at which the executive management is not present.
The auditor shall be independent of the company. As a consequence, Nordic Semiconductor does not engage the elected auditor for tasks other than the financial audit required by law. Nevertheless, the auditor is used for tasks that are naturally related to the audit, such as technical assistance with tax returns, annual accounts, understanding of accounting and tax rules and confirmation of financial information in various contexts.
AUDITOR OPINION LETTER
ERNST & YOUNG
Statsautoriserte revisorer
Ernst & Young AS
Havnegt, 9, NO-7010 Trondheim
Postboks 1299 Pirsenteret, NO-7462 Trondheim
Foretaksregisteret: NO 976 389 387 MVA
Tlf.: +47 73 54 68 00
Fax: +47 73 54 68 01
www.ey.no
Medlemmer av Den norske Revisorforening
To the Annual Shareholders' Meeting of
Nordic Semiconductor ASA
Auditor's report for 2009
We have audited the annual financial statements of Nordic Semiconductor ASA as of 31 December 2009, showing a profit of USD 6 945 000 for the Parent Company and a profit of USD 6 973 000 for the Group. We have also audited the information in the Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The financial statements comprise the financial statements for the Parent Company and the Group. The financial statements of the Parent Company comprise the balance sheet, the statements of income, comprehensive income, cash flows and changes in equity as well as the accompanying notes. The financial statements of the Group comprise the consolidated balance sheet, the statements of income, comprehensive income, cash flows and changes in equity as well as the accompanying notes. IFRSs as adopted by the EU have been applied in the preparation of the financial statements of the Parent Company and the Group. These financial statements and the Directors' report are the responsibility of the Company's Board of Directors and Chief Executive Officer. Our responsibility is to express an opinion on these financial statements and on other information according to the requirements of the Norwegian Act on Auditing and Auditors.
We conducted our audit in accordance with laws, regulations and auditing standards and practices generally accepted in Norway, including the auditing standards adopted by the Norwegian Institute of Public Accountants. These auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and auditing standards, an audit also comprises a review of the management of the company's financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion.
In our opinion,
- the financial statements of the Parent Company and the Group are prepared in accordance with laws and regulations and present fairly, in all material respects, the financial position of the Company and the Group as of 31 December 2009, and the results of its operations, cash flows and changes in equity for the year then ended, in accordance with IFRSs as adopted by the EU
- the Company's management has fulfilled its duty to properly record and document the Company's accounting information as required by law and bookkeeping practice generally accepted in Norway
- the information in the Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit is consistent with the financial statements and complies with law and regulations.
Trondheim, 18 March 2010
ERNST & YOUNG AS
Helge G. Lorentzen
State Authorised Public Accountant (Norway)
Note: The translation to English has been prepared for information purposes only.
A member firm of Ernst & Young Global Limited
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SALES & MARKETING
Nordic Semiconductor has a world-class sales organization composed of regional sales directors, technical sales managers, and local application engineers, headquartered in Norway with sales offices in the US, China, Japan, and Korea.
The sales organization works directly with Nordic's largest customers to build awareness and adoption of Nordic's solutions within these high-volume accounts. The Company uses a network of leading electronic component distributors for sales to small- and medium-size customers in the different sales regions. In addition, the Company outsources responsibility for all direct distribution to its distributors, including all warehousing, end-customer invoicing and logistics within the regions.
The sales process generally runs through a number of phases before volume shipments of a component can begin.
-
Evaluation of technology:
Nordic Semiconductor's components are compared with components from three or four other suppliers. -
Prototyping:
The customer makes a first model with components from Nordic Semiconductor, often based on modules or an evaluation kit. -
Pilot production:
A smaller series is produced to test the end product from a marketing perspective or with key customers. -
Regulatory Approval:
All end products must be approved in accordance with national and/or regional regulation for sales of electronics and radio frequency products. -
Volume production:
This is first achieved after the steps above have been completed and after the project has passed the internal product release criteria of customers.
The introductory sales and development phase usually takes 12-18 months, from the start of the evaluation phase until the finished end product.
Once a product is released with a Nordic Semiconductor wireless solution, customers are generally interested in building a platform for future releases of related products. This progress is an advantage to the Company as it speeds up development of subsequent products, and it also gives Nordic Semiconductor the opportunity to develop more application-specific solutions to serve the needs of the customer.
Market Segments
Nordic Semiconductor's business strategy is to be a leading provider of short-range wireless solutions with high data transfer capability, strong coexistence with other wireless products and
Geir Langeland
Sales and Marketing Director
> "Through successful execution of our strategy, Nordic Semiconductor has achieved a strong presence in key market segments."
ultra-low power consumption. Through a successful execution of this strategy, Nordic Semiconductor has achieved a strong market presence in several key market segments, including the following:
PC peripherals
Nordic Semiconductor's largest business segment is PC peripherals (e.g. wireless mice, keyboards). Currently, most wireless PC peripheral devices are purchased separately from PC units in the aftermarket, but total volumes of these devices are expected to grow significantly in the coming years as wireless PC peripherals are increasingly packaged and sold with initial PC purchases.
The market for PC peripherals has traditionally been dominated by older 27MHz wireless solutions, due to the large number of existing designs, low cost and mature nature of this technology. During 2009, the market shifted strongly towards 2.4GHz technology, and by the end of 2009, 2.4 GHz solutions were projected to have a higher market share in this segment than 27 MHz technologies. Nordic Semiconductor has benefited greatly from this trend, as it is the largest provider of 2.4 GHz solutions to the PC Peripherals product category.
Driving this trend is a shrinking price gap between 2.4GHz and 27MHz technologies, and a greater awareness and demand for features such as low interference, long battery lifetime, and small solution size where 2.4GHz has significant advantages over 27MHz.
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37
Gaming controllers
Between 2003 to 2005, Gaming accessories was Nordic Semiconductor's largest business segment due to sales to third party wireless controllers for Sony PS2 and Microsoft Xbox.
In 2006, a new generation of game consoles, the Sony PS3, the Nintendo Wii and the Microsoft Xbox360 was introduced which were bundled together with wireless controllers. In an effort to capture higher add-on sales, the console vendors took measures to control the aftermarket for game controller accessories.
For this reason, there is currently a limited third party aftermarket for wireless game controllers for the current generation of gaming consoles. However, the success of the Nintendo Wii consoles and its revolutionary controller has changed the gaming market and set a new standard for interactive gaming. The new standards have spawned an interest in new types of games and controllers from third parties, and represents an opportunity for Nordic to capture additional volumes in the game controller market.
Over the longer-term, the company expects that the game console vendors will reevaluate their wireless solutions with the next generation of game consoles. With its high-performance, low energy wireless solutions, Nordic Semiconductor will have an opportunity to penetrate one or more of the major game consoles with the next generation release.
Sports/Health monitors
While the market for wireless sports/health monitors is still at an early stage, sales continued to grow strongly in 2009. Currently, the main application is sports watches with wireless sensor accessories, for example heart rate belts and speed-distance meters. In previous years, these products were sold by premium brands and targeted to a high-end market, but new lower-cost applications were also released in 2009.
Sports/Health monitors are generally small and battery powered, and therefore size and power consumption are key purchase criteria for a short-range wireless solution. As neither Bluetooth nor 27MHz technologies meet these criteria, neither are major competitors in this market. Low frequency technology such as 5kHz has been the dominant technology, but has inherent range, coexistence and reliability weaknesses. Therefore, the major trend is toward 2.4GHz technologies, where Nordic Semiconductor has the leading market position with its ultra-low power wireless solutions.
In the future, the market for Sports/Health monitors will increasingly grow to include remote health monitoring for a growing elderly population as well as for patients with chronic health conditions such as high blood pressure, diabetes or heart conditions. Currently, these populations are monitored through expensive routine visits to a healthcare provider. Wireless technologies will enable these populations to be monitored in a closer and more cost-effective manner by transmitting data from a body-worn health sensor to a mobile phone or PC and further (via web services) to a healthcare provider to identify abnormalities and refer patients for follow up as needed.
In June 2009, the Continua Health Alliance, a coalition of more than 200 leading healthcare providers, medical device manufacturers and technology companies worldwide, selected Bluetooth low energy as the wireless standard to enable remote health monitoring. Nordic Semiconductor has taken an active role in developing the Bluetooth low energy standard within the Bluetooth SIG, and is well-positioned to capture additional volumes from this market opportunity.
Audio/Media devices
The market for Audio/Media devices is currently driven by audio streaming for wireless speakers, headsets and microphones. While mobile phone headsets with Bluetooth connectivity are the dominant application in this market, Nordic Semiconductor has developed a separate niche with its proprietary 2.4 GHz solutions for short-range audio streaming and for karaoke microphone applications.
The market for Audio/Media devices is expected to expand greatly in coming years, as infrared remote controls for home entertainment systems are replaced with radio frequency controls with greater functionality and more versatile communications. These RF remote controls will become a necessity for new generations of home entertainment devices (such as TV's and media set top boxes) as these devices integrate functionality such as web browsing and internet-based services which cannot be managed with infrared remote controls.
The replacement of infrared remote controls within home entertainment devices represents a significant market opportunity for Nordic Semiconductor as the product requirements for RF remote controls are very similar to that of PC peripherals, enabling the company to address this segment with a leading, proven technology.
Other Components / Industrial applications
In addition to the above segments, there are a variety of new product segments which are being developed with short-range low energy wireless requirements, including radio frequency identification (RFID), new remote-control toys, proximity sensors, and watch applications. With its leadership position in short-range wireless, Nordic Semiconductor is actively working on product development with customers in these areas.
Finally, Nordic Semiconductor is maintains an industrial applications business area which develops customer-specific ASIC components (application-specific integrated circuits) across a wide range of markets and facilitates the production and sale of these devices. In previous years, this was the largest portion of Nordic's revenues. Nordic Semiconductor has made a strategic decision to focus on standard components rather than customized solutions, and is only supporting existing customers in this segment.
PRODUCT DEVELOPMENT
Nordic Semiconductor is a world leader in developing standard components for low-power wireless communication in ISM frequency bands. Nordic Semiconductor's R&D department has a very highly qualified team of engineers, which provides a solid foundation for the development of new products. The company's primary focus is on developing wireless solutions within the 2.4 GHz frequency band, which is used worldwide and is therefore highly interesting for suppliers of consumer electronics products with a global market.
In addition to proprietary solutions, the Company has taken a leadership position in developing components based on the emerging Bluetooth low energy standard. Bluetooth low energy is the first wireless standard to combine interoperability and a "light" protocol optimized for ultra-low power consumption. The Bluetooth low energy standard will make it possible for small peripheral devices such as watches and health sensors to communicate wirelessly with mobile telephones and PCs equipped with Bluetooth technology.
The following core activities are involved in developing and supplying wireless solutions to customers:
- Radio Frequency Integrated Circuit (RFIC) Design
- System on Chip Integration
- Embedded Firmware Design
- Application Design
- Production
- Testing
Radio Frequency Integrated Circuit (RFIC) Design
Nordic Semiconductor began its development of short-range wireless solutions with low power consumption in 1996, based on research originating at NTNU university in Trondheim, Norway. Based on this expertise, the company has since 2002 sold wireless solutions within the 2.4 GHz frequency band to vendors of high volume consumer electronics products. Standard components from Nordic Semiconductor have been developed in collaboration with key customers and markets. The result of this development activity is a state-of-the-art transceiver design which provides excellent performance for data transfer, coexistence and ultra-low power consumption.
Maintaining a competitive advantage within integrated circuit technology for wireless communications requires a sustained focus on design methodology, production technology and the use of CAD tools. Nordic Semiconductor continues to develop its design methodology for mixed-mode design in collaboration with the world's leading semiconductor producer, Taiwan Semiconductor Manufacturing Company (TSMC), with an emphasis on 180 and 90 nanometer technologies. The Company also actively cooperates with major tool vendors and IEEE work groups to enhance the industry's methodologies and productivity for low-power design.
Bertel-Eivind Flaten
R&D Director
> “Maintaining a competitive advantage requires a sustained focus on design methodology, production technology and the use of CAD tools.”
Competence within production technology is also an important source of competitive advantage in integrated circuit design. Nordic Semiconductor focuses its R&D efforts on developing standard wireless components with cost-effective CMOS production technology. In order to improve wireless performance while maintaining low production costs, Nordic Semiconductor's design team concentrates on exploiting CMOS technology in new and unique ways.
Finally, Nordic Semiconductor uses state-of-the-art tools from leading CAD vendors in developing its integrated circuits. Its collection of CAD tools is among the most advanced in the Nordic region, where only a few major companies in telecommunications have comparable facilities.
Nordic Semiconductor has entered into agreements with two leading international suppliers of CAD tools to provide the Company with access to the latest CAD technology. The agreements allow the Company to choose freely from a pool of available CAD tools in accordance with its specific needs at any given time. Nordic Semiconductor is thereby able to avoid holding on to expensive CAD tools that are not needed during certain development phases. This results in better utilization of invested capital since the number of licenses can fluctuate according to need during different phases of product development.
System on Chip Integration
The integration of Nordic Semiconductor's transceivers with other electronics components is a critical factor for maximizing
Nordic Semiconductor 2009 Annual Report
the performance and reducing the total cost of the end product applications. In recent years, Nordic Semiconductor has created integrated system-on-chip solutions for customers, developing a single wireless component which combines Nordic's wireless transceivers with microcontrollers, memory, protocols and application peripheral software in an optimal and cost-efficient manner.
The company released two new system-on-ship solutions in October 2009, the nRF24LU1+ OTP and nRF24LE1 OTP components. These low cost system-on-chip solutions target price-sensitive product manufacturers by further reducing the cost difference between Nordic's high-performance 2.4 GHz RF solutions and older wireless technologies.
Embedded Firmware Design
Nordic Semiconductor provides application peripheral software and protocols for its system-on-chip solutions. The Company places particular focus on developing protocols to minimize energy consumption and to protect its units against disturbance from other radio equipment such as WLAN and Bluetooth. Gazell™ is Nordic Semiconductor's own proprietary protocol, and is customized for wireless mice, keyboards and remote control units. This protocol provides the lowest possible energy consumption and can coexist with other 2.4 GHz systems.
In addition to Nordic's proprietary protocol, Nordic Semiconductor has implemented the Bluetooth low energy protocol in its firmware. This ultra-low power implementation offers the customers all the functionality and performance of the Bluetooth low energy technology, while reducing the impact of the complexity of the underlying protocol on the system's performance.
Application Design
Nordic Semiconductor works closely with the manufacturers of end product applications in its strategic segments. In order to reduce time and cost requirements to design Nordic's technology into end products, a full suite of development tools has been created for Nordic's wireless solutions. This development suite includes a complete hardware and software development kit, as well as reference designs for end product applications.
New reference designs are being developed that are tailored to selected applications for each new component. This means that the customer receives a complete sample product design from Nordic, including hardware and circuit board layout as well as microcontroller software and protocols, so that the customer can test and build an application around an existing reference solution from Nordic. This results in shorter design time for Nordic Semiconductor's customers and ensures the highest possible quality of the end product.
In 2009, the nRFReady™ reference designs for wireless mouse, keyboard and remote control including a USB dongle were finalized. All these reference designs use the Gazell protocol for lowest possible power. The nRF24LU1 USB Reference Design is a production-ready reference design for a compact USB dongle for wireless peripherals using the nRF24LU1. It integrates the nRF24LU1, a low-cost PCB antenna, a 16 MHz crystal and all required passives in a 12x32 mm form factor including the USB connector. The reference design is FCC/ETSI compliant and USB compliant.
Production
Nordic Semiconductor manufactures its components through specialist subcontractors. Taiwan Semiconductor Manufacturing Company (TSMC) is Nordic Semiconductor's main wafer supplier, while Advanced Semiconductor Engineering (ASE) and Amkor Technology manages encapsulation and testing.
These suppliers are the largest in their fields. Because of their size, these companies are able to provide world-class manufacturing facilities as well as technological expertise and flexibility to support Nordic Semiconductor's growth and production requirements. Nordic Semiconductor's suppliers use well-established and documented methods for process control and are certified in accordance with all relevant industrial standards, including ISO 9001:2000 and ISO/TS 16949.
The manufacturing process begins with the production of a raw silicon wafer. The raw silicon wafer is refined through layered processing until there are a number of functional circuits, called integrated circuits (IC), spread over the surface. There can be hundreds or thousands of circuits on a single wafer. Processing takes place in what is referred to as a "wafer-fab". Modern wafer-fabs are characterized by complex technology, and the cost of such facilities may be in the billions of dollars. The production capacity of such units is often in the range of 100,000 wafers per month.
The next stage after processing is encapsulation. The main purpose of encapsulation is to connect the integrated circuit to the surroundings in a reliable manner. The processed wafer is cut and each individual circuit is positioned in a form of basic frame. The main function of the frame is to adapt the electrical connection to the specification of the manufacturer of the printed circuit board. The electrical connection is made in this example by connecting a thin gold thread from the connection point on the circuit to the equivalent points on the frame. Finally, the whole structure is molded into a protective cover, resulting in a mechanically robust unit.
Testing
The final stage of the production process for a semiconductor component is an electrical test, various other quality checks, and finally packing for dispatch. Management at Nordic Semiconductor believes testing capacity to be critical to avoid production bottlenecks, and has acquired its own operational testers to support its production requirements.
In addition to testing, Nordic Semiconductor regularly monitors and optimizes process-related factors that can improve production quality. The Company also carries out test chip measurements to ensure the quality of technology models. These quality assurance activities enable Nordic Semiconductor to manage its production with high yields and to avoid costly redesigns.
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SHAREHOLDER RELATIONS
The main objectives of the shareholder policy of Nordic Semiconductor are the following:
- The shareholders of the Company will over time achieve a competitive return relative to the underlying risk of the Company's operations. The return for shareholders will be a combination of appreciation and dividend.
- The company aims to provide shareholders with annual returns in the form of dividends based on surplus cash generated by the company. This assumes that the company's needs for financial strength relative to operational requirements and new investments are addressed.
- By following its growth philosophy and making substantial investments in research and development, the Company will endeavor to maintain a high proportion of equity and significant liquidity.
- The Company will create circumstances to increase the liquidity of Nordic Semiconductor's shares, not least through an open, transparent and reliable information policy.
Financial Reporting and Investor Relations
Nordic Semiconductor will publish financial reports for 2010 as follows:
Interim Report Q1 2010 April 28, 2010
Interim Report Q2 2010 July 16, 2010
Interim Report Q3 2010 October 26, 2010
Interim Report Q4 2010 February 10, 2011
The regularly scheduled General Meeting of Shareholders of the Company is planned to be held in the offices of
Robert Giori
Chief Financial Officer
“Nordic Semiconductor prioritizes open communication with investors and financial markets.”
the Company in Trondheim, at 2:00 pm, on Wednesday, June 9, 2010.
Presentations will be held for shareholders, brokers and analysts in connection with the publication of the annual and interim reports. The Company prioritizes open communication with investors and financial markets.
The intention is to increase knowledge about Nordic Semiconductor ASA through openness and adequate information, thereby encouraging interest in the Company and ensuring that the price of the Company's shares will reflect the fair value of the Company.
Weekly share price and volume trend
The Company will provide up-to-date information about events of significance for the determination of the fair value of the Company through announcements on the Oslo Stock Exchange, press releases and information on Nordic Semiconductor's website www.nordicsemi.com. The annual and quarterly reports of the Company will be available on the Company's website www.nordicsemi.com, as well as through the Oslo Stock Exchange.
Nordic Semiconductor 2009 Annual Report
Nordic Semiconductor 2009 Annual Report 41
Share Capital
The registered share capital in Nordic Semiconductor as of December 31, 2009 consists of one share class with a total of 33,747,320 shares with a face value of NOK 0.05, so that the total share capital is NOK 1,687,366. Each share grants the same rights in the company.
The Company's shares are registered in the Norwegian Central Securities Depository (VPS) under VPS No. ISIN NO 000 3055501. The evolution of the share capital is as shown in the table below.
| Changes | Date | Change in number of shares | Par value (NOK) | Changes in share capital (NOK) | New share capital (NOK) | Shares issued |
|---|---|---|---|---|---|---|
| Status | Jan 1996 | - | 1,00 | - | 1 000 000 | 1 000 000 |
| New share issue | Mar 1996 | 175 000 | 1,00 | 175 000 | 1 175 000 | 1 175 000 |
| New share issue | Feb 1997 | 117 000 | 1,00 | 117 000 | 1 292 000 | 1 292 000 |
| Share split (1:4) | Apr 1997 | 3 876 000 | 0,25 | - | 1 292 000 | 5 168 000 |
| Conversion | Sep 1997 | 141 119 | 0,25 | 35 280 | 1 327 280 | 5 309 119 |
| Conversion | Sep 1998 | 127 461 | 0,25 | 31 865 | 1 359 145 | 5 436 580 |
| Conversion | Jun 1999 | 30 791 | 0,25 | 7 698 | 1 366 843 | 5 467 371 |
| Conversion | Apr 2000 | 32 957 | 0,25 | 8 239 | 1 375 082 | 5 500 328 |
| Option exercise | Jun 2000 | 16 666 | 0,25 | 4 167 | 1 379 249 | 5 516 994 |
| New share issue | Oct 2000 | 550 000 | 0,25 | 137 500 | 1 516 749 | 6 066 994 |
| Conversion | Apr 2001 | 28 127 | 0,25 | 7 032 | 1 523 780 | 6 095 121 |
| Option exercise | Jun 2001 | 6 834 | 0,25 | 1 709 | 1 525 489 | 6 101 955 |
| Option exercise | Jun 2002 | 4 270 | 0,25 | 1 068 | 1 526 556 | 6 106 225 |
| Share split (1:5) | Apr 2004 | 24 424 900 | 0,05 | - | 1 526 556 | 30 531 125 |
| Option exercise | May 2004 | 601 938 | 0,05 | 30 097 | 1 556 653 | 31 133 063 |
| Option exercise | Jul 2004 | 600 000 | 0,05 | 30 000 | 1 586 653 | 31 733 063 |
| Option exercise | Apr 2005 | 200 000 | 0,05 | 10 000 | 1 596 653 | 31 933 063 |
| Option exercise | Apr 2005 | 400 000 | 0,05 | 20 000 | 1 616 653 | 32 333 063 |
| Option exercise | May 2005 | 756 837 | 0,05 | 37 842 | 1 654 495 | 33 089 900 |
| Option exercise | Feb 2006 | 2 044 220 | 0,05 | 102 211 | 1 756 706 | 35 134 120 |
| Amortization of shares | Sep 2009 | (1 386 800) | 0,05 | (69 340) | 1 687 366 | 33 747 320 |
Shareholder Structure
As of December 31, 2009, Nordic Semiconductor had 956 shareholders, of which 64 were foreign. These own a total of 18% of the company's shares. Based on the number of shares, the composition of shareholders is as follows:
Shareholders as of 31.12.2009
| Top 20 shareholders | 31.12.2008 Shareholding | Percent | 31.12.2009 Shareholding | Percent |
|---|---|---|---|---|
| DNB NOR Luxembourg | ||||
| SA S/A Accelerator Ltd. | 3 466 590 | 10,3 % | 3 466 590 | 9,9 % |
| Odin Norge | 3 127 910 | 9,3 % | 3 233 710 | 9,2 % |
| Folketrygdfondet | 2 468 550 | 7,3 % | 3 068 550 | 8,7 % |
| INAK 2 AS | 1 700 000 | 5,0 % | 1 740 000 | 5,0 % |
| Goldman Sachs Int. Equity | 1 598 903 | 4,7 % | 1 633 396 | 4,6 % |
| Tore Engebretsen | 1 507 500 | 4,5 % | 1 507 500 | 4,3 % |
| Alden AS | 1 341 200 | 4,0 % | 292 000 | 0,8 % |
| Awilco Invest AS | 1 134 000 | 3,4 % | - | 0,0 % |
| Arne-Kristian Møland | 1 000 000 | 3,0 % | 1 023 300 | 2,9 % |
| KLP LK Aksjer | 964 400 | 2,9 % | 1 586 400 | 4,5 % |
| Orkla ASA | 750 000 | 2,2 % | 1 782 500 | 5,1 % |
| MP Pensjon | 702 950 | 2,1 % | 702 950 | 2,0 % |
| Kristianro AS | 663 000 | 2,0 % | - | 0,0 % |
| Fougner Invest AS | 606 000 | 1,8 % | 167 700 | 0,5 % |
| DNB NOR Bank Egenhandelskonto | 600 000 | 1,8 % | 11 894 | 0,0 % |
| KLP Aksjenorge | 503 300 | 1,5 % | 794 600 | 2,3 % |
| SEB Enskilda Egenhandelskonto | 410 000 | 1,2 % | 700 000 | 2,0 % |
| Canica AS | 400 000 | 1,2 % | 808 100 | 2,3 % |
| Thermo Trade Company | 400 000 | 1,2 % | 400 000 | 1,1 % |
| Statoil Pensionskassen | 395 000 | 1,2 % | - | 0,0 % |
| 20 Largest Shareholders* | 23 739 303 | 70,3 % | 27 604 503 | 78,6 % |
| Other Shareholders | 10 008 017 | 29,7 % | 7 529 617 | 21,4 % |
| Total Shareholders | 33 747 320 | 100,0 % | 35 134 120 | 100,0 % |
- Reflects total shareholding of the 20 largest shareholders as of 31.12.09 and 31.12.08. Several of the largest shareholders as of 31.12.08 do not appear on the list of the 20 largest shareholders as of 31.12.09.
BOARD OF DIRECTORS
Tore Engebretsen (1951) - shareholder elected
Chairman of the Board
Tore Engebretsen has a cand. real. degree from the University of Oslo, with a major in theoretical physics (1978). He was one of the founders of VMETRO ASA, and the company CEO from the founding in 1986 until 2003. Prior to this he was employed by Norsk Data, among others. Engebretsen has been Chairman of Nordic Semiconductor since 2001, and is a Board member of Ferd Venture AS. He was Chairman of VMETRO ASA from 2003 until 2008, and has been a board member in the companies Profdoc ASA and Nera ASA. Engebretsen is a partner in the investment company Nunatak AS, and is a Chairman or Board member of several associated portfolio companies. Holdings in the company: 1 537 500 shares.
Kjell Bråthen (1964) - shareholder elected
Board member
Kjell Bråthen has a Masters degree in Business from BI, and is also an authorized financial analyst from NHH/NFF. He is currently involved in professional investment management through companies he owns. Previously, Bråthen worked as an investment manager in various pension and mutual funds, most recently in Alfred Berg Asset Management (1994-98). Bråthen is currently a Board member in several companies. Holdings in the company: 914 250 shares.
Terje Rogne (1954) - shareholder elected
Board member
Terje Rogne is currently Chairman of Vakt Service AS and Arvani AS, and a Board member of Apptix ASA and Unified Messaging Systems AS. From 1994 until 2004, Rogne was Chief Financial Officer of Tandberg ASA. Afterward, he then served as the Head of Operations and Investor Relations for Tandberg until 2008. Before his career in Tandberg, Rogne was Finance Director in Kværner AS. He has an MBA from the University of San Diego and a Bachelor of Business degree from the Oslo School of Business Administration. Holdings in the company: 250 000 shares.
Anne-Cecilie Fagerlie (1958) - shareholder elected
Vice-Chairman of the Board
Anne-Cecilie Fagerlie has an engineering degree from NTH (now NTNU). Afterward, she began working at Arthur Andersen/Andersen Consulting (now Accenture) where she became partner in 1993. In 2002, Fagerlie joined Aker Kværner as Senior Vice President of Group IT. In June 2006, she was appointed General Manager of Nordics in Avanade, an international consultancy owned by Accenture and Microsoft. Fagerlie is a Board member in Datarespons ASA.
Arnhild Schia (1963) - shareholder elected
Board member
Arnhild Schia has a Master in Computer Science degree from Strathclyde University and a Business degree from BI. Since 2005, Schia has been Senior Vice President for Comptel Corporation, as well as CEO for Comptel Communications AS (Comptel's subsidiary in Norway). Schia has previously served as CEO for EDB Telecom, as CEO for Incatel AS, as Executive Vice President of Telesciences Inc. and as IT director for Telenor.
Jon Helge Nistad (1981) - employee representative
Board member
Jon Helge Nistad has a Master degree in Electrical Engineering (analog and mixed signal design) from NTNU. Since 2006, he has been employed in Nordic Semiconductor, where he has worked with embedded software and hardware development. Nistad is the Chief Employee representative in Nordic Semiconductor.
Markus Bakka Hjertø (1977) - employee representative
Board member
Markus Bakka Hjertø has a Master of Science degree in Electrical engineering from NTNU and the University of Adelaide. He has been employed in Nordic Semiconductor since 2005, first within quality assurance and now as a R&D Engineer in Oslo. Before he was employed in Nordic Semiconductor, he was attached to Imagine Consulting AS through his own consultancy providing IT solutions to the SMB market.
Nordic Semiconductor 2009 Annual Report
EXECUTIVE MANAGEMENT
Svenn-Tore Larsen (1959)
Chief Executive Officer
Svenn-Tore Larsen is an Electronic Engineer from the University of Strathclyde, UK. He was appointed Chief Executive Officer of Nordic Semiconductor in February 2002. Mr. Larsen has a broad international experience in the semiconductor business, previous Director for the Nordic region for Xilinx Inc. He has also been working at Philips semiconductor. Larsen was member of the Board of Nordic Semiconductor from 2000-2002. Holdings in the company: 524 300 shares
Robert Giori (1970)
Chief Financial Officer
Robert Giori has an MBA from Harvard University and a Bachelors degree in International Relations from Stanford University. Giori was appointed Chief Financial Officer of Nordic Semiconductor in June 2009, and is also responsible for the administration functions within the company. Prior to joining Nordic Semiconductor, Giori has held positions as Chief Financial Officer of TeleComputing ASA, as Finance Director of Dell Norway, and as a consultant with McKinsey & Company. Holdings in the company: 7 300 shares
Geir Langeland (1970)
Sales and Marketing Director
Geir Langeland has a B.eng Honours degree in Electronics from University of Manchester Institute of Science and Technology (UMIST). He was appointed Product Manager Standard Components at Nordic Semiconductor in October 1999, before being appointed to Director Sales and Marketing September 2005. Before joining Nordic, Mr Langeland worked as Field Sales/Applications Engineer in Memec Norway, a leading global electronic components distribution company. Holdings in the company: 33 600 shares
Bertel-Eivind Flaten (1960)
R&D Director
Bertel-Eivind Flaten has a M.Sc. degree in Electrical Engineering from Norwegian University of Science and Technology (NTNU). He was appointed R&D Director of Nordic Semiconductor in 1996. Prior to taking up this position he held various research positions at SINTEF, latest as head of the microelectronics department from 1994. He was appointed at Nordic Semiconductor to establish the standard product division, and have since then been in charge of the development of the nRF family of wireless standard products. Holdings in the company: 206 000 shares
Ebbe Rømcke (1964)
Quality Director
Ebbe Rømcke has a M.Sc. degree in Electronics Engineering from Norwegian University of Science and Technology (NTNU). He was appointed Quality Director of Nordic Semiconductor in 2002. Prior to this Mr. Rømcke worked eight years in the company as Digital Designer, Project Manager and Group Manager. He has also experience from Digital Design and Project Management in Normarc AS (now Park Air Systems), a leading manufacturer of aviation systems. Holdings in the company: 12 300 shares
Nordic Semiconductor 2009 Annual Report
NORDIC
SEMICONDUCTOR
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