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TANDBERG’s 2003 operating
revenues were 1,577.6 MNOK
or 223.3 MUSD compared with
1,830.6 MNOK or 231.9 MUSD
in 2002. This is a decrease
of 13.8% measured in NOK or
3.7% in USD. Profit before
tax was 363.0 MNOK or 59.7
MUSD. As of 31 December 2003,
the Company had cash reserves
of 1,696.7 MNOK. The equity
ratio at year-end 2003 was
83%. Cash flow from operations
totaled 331.2 MNOK. The net
increase in liquid assets
was 394.9 MNOK over the previous
year.
The business environment
was generally characterized
by conservative spending and
long procurement cycles, especially
during the first quarter of
the year. However, the company
experienced solid profitability
combined with sequential quarter-over-quarter
growth for the remainder of
the year.
TANDBERG invested significantly
in talent during 2003, creating
a highly productive global
organization. By the end of
the year, TANDBERG had 539
employees, a 5% increase.
Key senior executives were
appointed in Europe, Asia,
and the Americas, fortifying
the management team.
TANDBERG introduced a number
of new hardware and software
products and software enhancements
during 2003 – including
several industry firsts –
expanding the portfolio of
end-to-end communications
solutions.
By the fourth quarter of
2003, TANDBERG’s global
market share was 37% in terms
of value and 22% in terms
of volume. New technology
and channel distribution partnerships
are driving growth, along
with a greater commitment
to marketing the TANDBERG
brand worldwide.
THE GLOBAL
MARKET
TANDBERG is the second largest
supplier of videoconferencing
equipment, both in terms of
value and volume. Hence, TANDBERG’s
performance had a significant
impact on the performance
of the whole industry. Compared
to the same periods of 2002,
the videoconferencing industry
experienced a 16% decline
in the first half, as federal
spending in the U.S. normalized
after the tragic events of
9/11, but showed 9% growth
in the second half. However,
the strong recovery in the
second half was not sufficient
to offset the weak first half,
causing a year-over-year decrease
of 4%, as measured in value.
The same trend was also reflected
in terms of volume.
TANDBERG Americas
TANDBERG’s revenues
in the Americas represented
58% of the company’s
total revenues and amounted
to 913 MNOK or 129 MUSD compared
with 1,110 MNOK or 140 MUSD
in 2002.
In the U.S., TANDBERG continues
to dominate the federal market
and, increasingly, to be the
supplier of choice for Fortune
500 and Global 1000 companies.
Sales to the federal market
grew 30% over 2002 for TANDBERG.
Lower sales to state and local
governments, hampered by depressed
budgets, were to some extent
offset by homeland security
purchasing.
TANDBERG’s overall
market presence and profitability
improved, particularly during
the second half of the year.
The company formed new alliances
with market-leading IP partners
and expanded the channel partner
program, including a greater
focus on IP partner education
and partner development.
TANDBERG EMEA
Revenues in Europe accounted
for 32% of the company’s
total revenues and amounted
to 500 MNOK or 71 MUSD compared
to 559 MNOK or 72 MUSD in
2002.
Yngve Nygaard was appointed
President for the EMEA region,
effective 1 January 2004.
The European market continues
to mature in IP; therefore
TANDBERG placed additional
resources in its Channel and
Vertical Markets, focused
on IP Video opportunities.
During 2003, TANDBERG increased
its penetration of Global
1000 accounts in Europe by
means of offering more network
products and value-added services.
Vertical applications for
the education, healthcare,
and security markets were
launched in Europe during
the year. TANDBERG’s
customer-focused sales model
coupled with investments in
the enhanced partner program
continue to show results.
TANDBERG Asia/Pacific
(APAC)
Revenues in Asia represented
10% of the company’s
total revenues and amounted
to 165 MNOK or 23 MUSD, from
162 MNOK or 19 MUSD in 2002,
an increase of 20% measured
in USD.
TANDBERG is being positioned
in Asia for even greater growth
in coming years. Partner development
and education are a priority.
Sales and marketing efforts
are being strengthened. During
2003, investments in the region
began paying off with key
wins in the public sector
and among manufacturing companies.
The region is largely project-focused,
with many government and telecom-related
tenders.
Åsmund Fodstad was
appointed Vice-President for
the APAC region, effective
May 2003. Furthermore, TANDBERG
made 23 additional hires including
a Director of Marketing and
a Director of Channel and
Business Development in the
fourth quarter of 2003, bringing
the total number of APAC employees
to 48.
PRODUCT
DEVELOPMENT AND LOGISTICS
TANDBERG’s performance
reflected what happened to
the industry overall in 2003.
The company delivered a total
of 19,229 systems in 2003,
down 2% from 2002, but shipped
a record 5,699 units in the
fourth quarter. The TANDBERG
880 and 2500, the company’s
mid-range systems, represented
49% of total systems sold.
High-end systems, including
the TANDBERG 6000, 7000, and
8000 and specialized systems
for the healthcare and distance-education
markets, represented 24% of
all systems sold, while the
TANDBERG 550 and 1000 accounted
for 27%.
The company spent 94 MNOK
on applied and basic research
and product development in
2003. The company introduced
a number of groundbreaking
new first-to-market enhancements
to its product portfolio consisting
of end-point systems, network
products and value-added services.
Total revenue from Network
Products increased continuously
throughout the year, ultimately
accounting for 10% of total
revenue in the fourth quarter.
TANDBERG’s technological
leadership allowed the company
to enjoy a 15% market share
in the fourth quarter of 2003,
one year after introducing
its first Network Product.
TANDBERG outsources functions
such as procurement, production,
transportation, and warehouse
services. In 2003, four production
partners in Norway, one in
Denmark, and two in the United
States were contracted. Gross
margins remained at the 67%
level as a result of continuous
process improvements and cost
reductions.
ORGANIZATION
TANDBERG headquarters are
in Oslo, Norway and New York,
United States. The company
has offices and representation
in the United States, Canada,
U.K., Sweden, France, Spain,
Germany, Singapore, China,
Japan, Hong Kong, Australia
and India. TANDBERG provides
sales, support, and value-added
services in more than 90 countries
worldwide. The number of employees
increased in 2003 from 512
to 539, of which approximately
60% work in sales and marketing,
30% in research and product
development and 10% in accounting,
finance, logistics, and administration.
Training has been a steady
focus at all levels. For managers,
semi-annual global leadership
conferences and management
development programs were
conducted. Sales representatives
attended a global sales training
program. All new employees
attended TANDBERG University
for training in sales, product
knowledge, and company values.
On 2 April 2003, Tharald
Brøvig announced his
resignation from the Board
of Directors for personal
reasons. The Board of Directors
would like to express its
gratitude to Tharald Brøvig
for his 20 years as a prominent
member. Grace Reksten Skaugen
and Amund Skarholt were elected
to the Board in April and
June 2003, respectively. Patricia
S. Auseth and Hallgrim Sagen
are the representatives of
TANDBERG employees.
CORPORATE
GOVERNANCE
At the Annual General Meeting,
a Nomination Committee was
elected and is currently comprised
of Halvor Løken, Åge
Korsvold and Jan Penne.
To further improve communication
with shareholders, TANDBERG
began providing mid-quarter
market updates.
A separate section of this
annual report outlines the
company’s guidelines
for Corporate Governance.
EQUAL
OPPORTUNITY POLICY
TANDBERG is a socially responsible
company committed to equal
opportunity in the workplace.
Equal opportunity in the workplace
is a TANDBERG policy, approved
and promoted by the board
of directors and management.
TANDBERG management believes
that all employees should
have equal access to opportunities
whatever their gender, race,
religion, national origin,
age, or disabilities. A separate
section of this annual report
further outlines the company
policy on equal opportunity.
TANDBERG encourages diversity.
People with diverse backgrounds
and perspectives are critical
to innovation, and innovation
is critical to TANDBERG’s
success.
TANDBERG has a strong corporate
culture built around core
values that include speed
and precision, enthusiasm
and integrity, exceeding expectations,
fun and profit, and TANDBERG
First. The strength of TANDBERG’s
corporate culture is what
sets the company apart from
competition.
The working environment at
TANDBERG is congenial, safe,
and productive. Absence due
to illness in 2003 was approximately
1%. No accidents or incidents
involving personal injury
or material damage occurred.
MISCELLANEOUS
In accordance with Norwegian
accounting law, it is confirmed
that the annual financial
statements have been prepared
on a going-concern basis.
The company does not pollute
the environment.
U.S.-DOLLAR
REPORTING
The TANDBERG Board of Directors
has decided that from January
2004 the company will cease
reporting its results in NOK
and report henceforth in USD,
starting with the first quarter
financials presented on 15
April 2004.
This move is being made
for strategic reasons. TANDBERG
believes that the USD will
give the company financial
reports that most accurately
measure the performance in
world markets. In terms of
revenue and cost, it is the
most significant operating
currency. And as TANDBERG
continues to grow worldwide
its USD-based operations are
likely to dominate in the
future.
SHAREHOLDERS
As of 1 January 2003, there
were 128,817,283 shares outstanding.
On 6 March 2003, a share issue
of 75.5 MNOK was made to employees,
through the issue of 2,867,860
new shares. At year-end 2003
there were 131,685,143 shares
outstanding. The company had
6,276 shareholders. Fifty
percent of the shares were
owned by Norwegian shareholders,
25% by U.S.-based shareholders,
7% by U.K.-based shareholders
and 16% by other European-based
shareholders.
FUTURE
OUTLOOK
As the 2003 results demonstrate,
TANDBERG is a company able
to deliver strong profitability
and cash flow through economic
cycles. In 2004, the company
expects normal seasonal patterns
with marginal improvement
in market conditions. TANDBERG
is well equipped to capitalize
on rising world demand for
faster and more efficient
communications systems. In
particular, the growing adoption
of IP networks for business-critical
communications will be important
to TANDBERG in 2004 as voice
and video converge on a single
platform.
ALLOCATION
OF THE YEAR’S PROFIT
The net profit of the parent
company, TANDBERG asa, was
NOK 232,931,000. The Board
recommends the following allocation
of net profit for 2003, hereunder
a dividend of NOK 0.40 per
share, equivalent to a payout
ratio of 23% of net profit
for 2003:
The holding company’s
total equity as of 31 December
2003 was NOK 1,900,742,000,
of which distributable equity
amounted to NOK 1,162,068,000.
Lysaker, Norway, 25 February
2004.
Board of Directors of TANDBERG
asa
Jan Chr. Opsahl, Chairman
Andrew M. Miller
Ralph Høibakk
Amund Skarholt
Grace Reksten Skaugen
Patricia S. Auseth
Hallgrim Sagen
Per H. Kogstad, President
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