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TANDBERG Reports Third Quarter 2009 Results

Revenue of 234.7 MUSD and Operating Profit of 50.0 MUSD in 3Q09

OSLO and NEW YORK, October 15, 2009 – TANDBERG® (OSLO: TAA.OL), today announced financial results for the third quarter ended September 30, 2009.

Overview of 3Q09:

• Revenue of 234.7 MUSD (+11.6%)
• Operating profit of 50.0 MUSD (+10.2%)
• Cash flow from operations of 72.0 MUSD (+35%)
• Continued telepresence innovation
• Recommended voluntary cash offer from Cisco

FINANCIALS
Third quarter revenues were 234.7 MUSD compared with 210.3 MUSD in the same quarter last year, representing 11.6% year-over-year growth.  Gross margin for the quarter was 65.6%, compared with 65.9% in the same quarter last year.  Selling, General & Administrative (SG&A) expenses for 3Q09 totaled 89.5 MUSD, compared with 81.7 MUSD in 3Q08.  Operating profit was 50.0 MUSD compared with 45.3 MUSD in the same quarter last year.  Earnings per share (after tax) was 0.23 USD in 3Q09 compared with 0.35 USD in the same quarter in 2008. 

The Company generated cash flow from operations of 72.0 MUSD in the quarter, which after a net cash outflow from investments of 14.1 MUSD and the Codian loan note payment of 20.0 MUSD, gave a total cash inflow of 37.9 MUSD.  As of September 30, the Company had a cash balance of 245.7 MUSD, no debt, and an equity ratio of 64.8%.    

FINANCIAL TABLES
Click for financial tables.

OPERATIONS
Reviewing third quarter results, Fredrik Halvorsen, Chief Executive Officer, stated, "Consistent execution and strong performance from the Public Sector team in the US drove third quarter results. Moreover, TANDBERG continued to expand the market with the strongest total solution.  The Company continued to generate strong cash flow and maintain a healthy balance sheet.

To meet growing customer demand, TANDBERG continued to drive innovation in the telepresence market by introducing the new immersive TANDBERG Telepresence T1. The immersive T1 provides the same rich experience, multi-vendor interoperability and intuitive interface as the award-winning TANDBERG Telepresence T3. The T1 received excellent reviews at the recent EMEA Partner Summit and will enable the Company's partners to bring immersive telepresence to a wider user base.  The announcement enhances TANDBERG's award-winning telepresence portfolio, including the TANDBERG T3, the TANDBERG Codec C90, and the best-in-class TANDBERG Telepresence Servers."

MARKETS
In 3Q09, TANDBERG sold 18,260 endpoints compared with 17,487 endpoint units in the same quarter last year, a 4% year-on-year increase.  Revenue from network products grew 34%, and service revenues grew 18% year-on-year.

AMERICAS
Revenue in the Americas during 3Q09 totaled 129.7 MUSD compared with 109.1 MUSD the same quarter last year. 

Public Sector outperformed in the quarter, driven by the strongest team in the industry. In particular, Federal performance was very strong, and the State and Local business in the East also showed good growth. The Company continued to invest in the Public Sector, aggressively expanding the team during the quarter. Mixed performance and execution issues in State and Local West were also addressed in the quarter.

The Commercial business continued to experience prolonged sales cycles, but the team executed well in all areas and gained momentum in network sales. 

Partners and customers reacted positively to the Cisco offer.

EMEA
Revenue in EMEA during 3Q09 totaled 78.1 MUSD, compared with 77.4 MUSD in the same quarter last year.  Focus on the Public Sector paid off in the quarter, in particular in the UK. Good performance was also reported in the Netherlands, Germany, France and Sweden.  Norway, Russia and Central Eastern Europe experienced a challenging quarter.

The EMEA team exercised good cost control and performance management. Strong services sales continued across all markets. The Theatre also saw record high participation at the Partner Summit and a positive reaction from partners and customers around the Cisco offer.

The EMEA team will focus on establishing a strong position in the mid-market, and on executing on the Public Sector and Channels initiative.

ASIA PACIFIC
Revenue in APAC during 3Q09 totaled 26.9 MUSD, compared with 23.8 MUSD in the same quarter last year. 

The North Asia team showed good growth in China. The South Asia team experienced good traction for telepresence products throughout the region, as well as solid wins in the Judicial and Defense segments in South East Asia.  The Company continued to invest in the organization and in channels.
 

RECOMMENDED VOLUNTARY CASH OFFER BY CISCO
On October 1, TANDBERG announced a recommended voluntary cash offer by Cisco to acquire 100% of the shares of TANDBERG ASA. The proposal was recommended unanimously by TANDBERG's Board of Directors.

For clarification, the Board wants to emphasize that the management team will continue in their existing functions, and with their existing total compensation packages.

The offer period started on Friday 9 October 2009 and ends 9 November 2009 at 17:30 CET. The offer document has been sent to all registered shareholders of TANDBERG as of 2 October 2009 and is available on www.carnegie.no.

The acquisition is expected to close during the first half of calendar year 2010, subject to customary closing conditions, including regulatory review in the United States and elsewhere.

OSLO and NEW YORK, October 15, 2009
The Board of Directors of TANDBERG asa

Jan Chr. Opsahl (sign.) 
Chairman

Fredrik Halvorsen (sign.)
Chief Executive Officer

WEBCAST/CONFERENCE CALL DETAILS

Today at 5:45 pm Central European Time and 11:45 am Eastern Time, Fredrik Halvorsen, Chief Executive Officer, will host a live webcast/conference call.  Additionally, a PowerPoint presentation will accompany the webcast /conference call.  To access the webcast, please visit:   https://tandbergevents.webex.com

For those who prefer to dial-in, the conference call can be accessed at +1.617.614.4912 (international), +1.800.591.6948 (U.S. callers) and 0808.234.7616 (U.K.callers). The audience passcode for the call is TANDBERG. 

Fourth quarter results will be presented on February 3, 2010 at 5:45 pm CET / 11:45 am ET.   For further information please contact Geir Olsen, ph. +44 7766254782.

FINANCIAL TABLES
Click for full press release plus financial tables.

FINANCIAL STATEMENTS - BASIS FOR PREPARATION
The enclosed consolidated condensed financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting".

SIGNIFICANT ACCOUNTING POLICIES
The accounting policies and methods of computation used in the preparation of the financial statements are consistent with the policies used in the annual financial statements for the year ended December 31, 2008, revised for new standards and interpretations adopted for 2009 as explained in note 1 to the 2008 annual financial statements. The enclosed consolidated condensed financial statements should be read in conjunction with the 2008 annual financial statements, which include a full description of the Group’s accounting policies.

ABOUT TANDBERG
TANDBERG is the leading provider of telepresence, high-definition video conferencing and mobile video products and services.  The Company has dual headquarters in New York and Oslo.  TANDBERG designs, develops and markets systems and software for video, voice and data communication.  The Company provides sales, support and value-added services in more than 90 countries worldwide.  TANDBERG is publicly traded on the Oslo Stock Exchange under the ticker TAA.OL.  Please visit www.tandberg.com for more information.

TANDBERG is a registered trademark or trademark in the U.S. and certain other countries. All other trademarks are property of their respective owners.