6-K 1 y54263e6-k.txt NERA ASA SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------- FORM 6-K Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For Q3-2001 Results Nera ASA Kokstadveien 23, P.O. Box 7090 N-5020 BERGEN Norway Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F X Form 40-F____ Indicate by check mark whether the registrant by furnishing the information continued in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes____ No X If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised. Nera ASA By: Bjorn Ove Skjeie (sign.) Name: Bjorn Ove Skjeie Title: President and Chief Operating Officer Dated: October 25, 2001 [NERA Letterhead] PRESS RELEASE, 25 October 2001 NERA ASA: RESULTS PER 3RD QUARTER 2001 BERGEN/NORWAY, 25 OCTOBER 2001; NERA ASA (OSE: NER, NASDAQ: NERAY) HAS ENDED A QUARTER WITH A SIGNIFICANT IMPACT FROM A CONTINUED WEAK WORLD ECONOMY AND INCREASED POLITICAL TENSION. DESPITE AN ACCUMULATED INCREASE IN SALES REVENUE OF 24 PER CENT, THE UNCERTAINTY HAS LEAD TO A DECREASE IN ORDERS RECEIVED FOR THE COMPANY. IN ADDITION, INCURRED WRITE-DOWNS/RESTRUCTURING COSTS OF 188 MNOK AS A RESULT OF A HALT IN THE DEVELOPMENT OF "VELOCITY" HAVE LEAD TO THE QUARTER COMING IN LOWER THAN THE MANAGEMENT'S EXPECTATIONS. IN THE QUARTERS AHEAD, THE COMPANY WILL FOCUS ON STRENGTHENING ITS MARKET POSITION IN THE TERRESTRIAL MARKET FOR WIRELESS INFRASTRUCTURE, COST CONTROL AND IMPROVING WORKING CAPITAL AND CASH FLOW. Operating Income per 31 September 2001: -248,5 MNOK (80,9 MNOK) Income before tax per 31 September 2001: -182,3 MNOK (133,5 MNOK) Transmission Networks had sales revenue of 1 661 MNOK (1 137 MNOK) in the first nine months. Growth expectations are reduced from 30 to 20 percent. Satellite Communications experiences increased demand in the market for terminals as a consequence of international tension. Nera ASA and Thrane & Thrane have entered into an agreement to merge Thrane & Thrane with Nera SatCom AS. Further reductions in the cost level in Wireless Broadband Access (WBA). The negative contribution from WBA may amount to 250 MNOK in 2001 The negative cash flow development has been reversed during the third quarter. A significant improvement is expected for the remainder of the year.

* Wireless Broadband Access - Last quarter developed completely different to what anyone could have foreseen. Still, on a positive note, we are pleased with the continued increase in sales within Transmission Networks in the third quarter. Although Nera continues to grow, the difficult market situation also influences the company, SAYS CEO BJORN OVE SKJEIE, and continues: [NERA Letterhead] - We are in no way pleased with the development so far this year. If one disregards factors beyond our control, we have a job to do as for working capital and cash flow, as well as for costs. These tasks, in combination with a continuous evaluation of opportunities for expansion, will be our focus in the coming months, says Skjeie. CONTINUED GROWTH WITHIN TRANSMISSION NETWORKS Transmission Networks booked new orders of 1 337 MNOK during the first nine months of this year. This is 148 MNOK less than in the same period last year. The reduction is attributable to the effects of the terror attacks on the US in September. As a consequence of fewer new orders this quarter Nera expects, as previously announced, lower volumes in the fourth quarter of this year and the first quarter of 2002. Transmission Networks has sales revenues of 1 661 MNOK as per the end of third quarter, compared to 1 137 MNOK in the same period last year. The reduction in demand is attributable to all regions, except South East-Asia where the level of activity is high. The operating income as per third quarter was 129,5 MNOK compared to 76,9 MNOK in the same period last year. As per the end of third quarter, Transmission Networks made an operating margin of 7,8 percent. This compares to 6,8 percent during the same period last year. This is satisfactory, but as a result of increased competition and capacity surplus the company expects mounting price pressure in the time ahead. SATELLITE COMMUNICATIONS: INCREASED DEMAND FOR MOBILE SATELLITE TERMINALS Satellite Communications booked new orders of 453 MNOK in the first nine months of this year. In the third quarter the company noticed an increase in demand for Nera WorldCommunicator as a direct consequence of increased focus on a need for backup communication solutions in the wake of the terror attacks on the US. Satellite Communications had sales revenues of 427 MNOK as per the end of third quarter. This represents a decrease of 119 MNOK compared to the same period last year. Operating income was 43,7 MNOK. Nera is pleased with having been able to maintain operating margins within this business area as well. During the third quarter Nera entered into an agreement with Thrane & Thrane to merge Nera's satellite communications activities with the Danish company. The agreement is expected to come into effect in mid-November. COST- AND DEVELOPMENT CUTS IN WIRELESS BROADBAND ACCESS The changes in Wireless Broadband Access (WBA) continued in the third quarter. During the quarter, Nera decided to halt the development of the "Velocity product" in Dallas, USA. WBA had sales revenues of 31 MNOK in the first nine months of this year, and incurred a negative operating income of 210 MNOK for the period. Nera will continue to adjust its level of activities within WBA according to the prevailing market conditions. PROSPECTS - We are amidst a period influenced by political unrest and increased economic uncertainty. Thus, we base our projections for Transmission Networks on low or no growth next year. This situation is not unique to Nera, and we believe it is possible to further strengthen our relative position. This, in combination with our solid financial position, opens up exciting opportunities in the time ahead, says Bjorn Ove Skjeie. [NERA Letterhead] The market adaptation of Wireless Broadband Access will continue, and the research and development activities will be limited. Sales and marketing activities will be concentrated towards Scandinavia and Southeast Asia, where we at the moment experience the highest level of activity. For the current year it is expected that the aggregate broadband business, including broadband via satellite, will make a negative operating contribution of around 250 MNOK. The level of broadband activities will be significantly lower in 2002. - A higher level of activity is expected for Satellite communications for the remainder of the year and going into 2002 as a consequence of the unstable global situation. We therefore believe it realistic to maintain a stable volume and annual operating margins of at least 10 percent, says Skjeie. In the longer perspective, growth in markets in which Nera operates is expected to return to previous levels. The reason is that the fundamental global demand for new and expanded telecom and data networks remains strong. Nera maintains its ambition to become the world's leading independent company within terrestrial wireless transmission. ABOUT NERA: Nera is a world-leading global supplier, developing, manufacturing and selling fixed, wireless and satellite communication equipment and systems. The company designs, develops, manufactures and market point-to-point and point-to-multipoint radio link equipment. satellite terminals and land earth stations for mobile and fixed satellite communications. Nera is a major supplier to INMARSAT. The Company is listed on NASDAQ in New York (ticker: NERAY) and on the Oslo Stock Exchange. Nera ASA has an associated company, Nera Telecommunications Ltd., listed in the Singapore Exchange Ltd. (ticker: Nera Tel). Nera's Web site: http://www.nera.no. Bergen, 25 October 2001 For further information please contact Chief Information Officer Helge Skaar, 55 22 58 20 00 (office), 90 14 20 40 (mobile) or hsk@nera.no Enclosure [NERA LOGO] INCOME STATEMENTS

3RD QUARTER RESULTS 2001 By CEO Bjorn Ove Skjeie, Oslo October 25th 2001 Ne01-3E-1 [NERA LOGO] NERA AS PER 30 SEPTEMBER, 2001: THIRD QUARTER WEAKER THAN EXPECTED - Accumulated growth of 24 percent, Transmission Network up 49 percent - Transmission Network: New orders received weaker in Q3, expected to increase gradually going forward. Well positioned to win market shares - Satellite Communication: Sale of terminals has increased. Agreement with Thrane & Thrane still in a process of due diligence - Wireless Broadband Access: Risk and cost level reduction in process. Write-downs of 188 MNOK. Continues to take on small contracts - Negative cash flow development halted in September, significant improvement of working capital expected in forthcoming quarters. Ne01-3E-2 [NERA LOGO] 1 KEY FIGURES

Ne01-3E-3 [NERA LOGO] TRANSMISSION NETWORKS: CHALLENGING MARKETS IN THE SHORT TERM, MAY HOLD GREAT POTENTIAL IN THE LONG TERM - Booking of new orders in the third quarter indicates a weak market in the short term, especially in the markets for mobile networks - Lack of financing and political uncertainty inhibits market development - 3G-markets expected to be initiated in the second half of 2002 - Larger clients increasingly emphasize supplier solidity - Market situation may result in fewer market players. Ne01-3E-4 [NERA LOGO] 2 ORDERS RECEIVED BY MARKET PERCENTAGE BY REGION PER 30. SEPTEMBER 2001 NORWAY 10,5% UK 4,6% REST OF EUROPE 24,6% ASIA 26,4% AMERICA 30,8% AFRICA 1,8% OCEANIA 1,4% Ne01-3E-5 [NERA LOGO] SATELLITE COMMUNICATIONS - Upturn in markets for mobile satellite terminals as a result of terror attacks - No notable changes in the market for marine terminals and land earth stations Ne01-3E-6 [NERA LOGO] 3 WIRELESS BROADBAND ACCESS - Market still slow but some positive signs: - Several new municipality contracts in Norway - A range of projects in process in Southeast Asia - No large volume expected in the short term, but important to gain market knowledge Ne01-3E-7 [NERA LOGO] INVOICING OF ORDER BACKLOG

Ne01-3E-8 [NERA LOGO] 4 ORDERS RECEIVED BY BUSINESS AREAS

Ne01-3E-9 [NERA LOGO] OPERATIONS - Transmission Networks reports continued high volume of sales in third quarter, up 32 percent compared to Q3-00 - Satisfactory ability to deliver for all products within Transmission Networks, capacity to be adjusted to the expected volume decrease in the next quarters. - Cost reductions in Satellite Communications in process - The negative contribution from operations in Wireless Broadband Access reduced from 79,7 MNOK in Q2-01 to 62,3 MNOK in Q3-01. - Velocity-product halted Ne01-3E-10 [NERA LOGO] 5 OPERATING REVENUE BY BUSINESS AREAS

Ne01-3E-11 [NERA LOGO] OPERATING MARGINS AND COSTS

Ne01-3E-12 [NERA LOGO] 6 OPERATING PROFIT BY BUSINESS AREAS

Ne01-3E-13 [NERA LOGO] INCOME STATEMENT

Ne01-3E-14 [NERA LOGO] 7 STATEMENTS OF CASH FLOWS

Ne01-3E-15 [NERA LOGO] BALANCE SHEETS

Ne01-3E-16 [NERA LOGO] 8 PROSPECTS - Growth ambitions for Transmission Networks approximately 20 percent current year - Low or no growth in this market next year - Satellite Communications: Ambition to stabilize volume and a 10 percent margin in 2001/2002 - Negative contribution from operations for aggregate broadband activities expected to be about 250 MNOK. Broadband activities will be significantly reduced in 2002 - Significant improvement of working capital expected in forthcoming quarters. - Capacity and cost level to be adjusted to market situation - Nera's solidity and product portfolio may be an advantage in the market - Increased market opportunities expected for Nera in the long term Ne01-3E-17 [NERA LOGO] THANK YOU Ne01-3E-18 [NERA LOGO] 9 APPENDIXES Ne01-3E-19 [NERA LOGO] KEY FIGURES PER 30 SEPT 2001

Ne01-3E-20 [NERA LOGO] 10 RESULTS BY QUARTER

Ne01-3E-21 [NERA LOGO] QUARTERLY ORDERS RECEIVED BY BUSINESS AREAS

Ne01-3E-22 [NERA LOGO] 11 QUARTERLY SALES REVENUE BY BUSINESS AREA

Ne01-3E-23 [NERA LOGO] ORDERS RECEIVED BY MARKET

Ne01-3E-24 [NERA LOGO] 12 SALES REVENUE BY MARKET

Ne01-3E-25 [NERA LOGO] OPERATING MARGINS* BEFORE R&D [BAR CHART] -------------------------------------------------------------------------------- 13.9% 11.4% 9.0% 14.2% 15.3% 16.3% 9.9 1996 1997 1998 1999 2000 01.01- 01.01- 30.09 30.09 2000 2001 --------------------------------------------------------------------------------

* OPERATING INCOME BEFORE R&D AS % OF SALES REVENUE RESEARCH & DEVELOPMENT -------------------------------------------------------------------------------- 287 269 (11,3%)* (12,7%)* 89 78 78 99 (7,3%)* (6,9%)* (6,6%)* (7,8%)* 62 92 193 204 200 216 58 1996 1997 1998 1999 2000 PR. 2001 PR. KVARTAL KVARTAL --------------------------------------------------------------------------------

* R&D AS % OF SALES REVENUE Ne01-3E-26 [NERA LOGO] 13 NERA ASA 3RD QUARTER RESULTS 2001 A CONTINUING WEAK ECONOMY AND INCREASED POLITICAL TENSION HAVE HAD A STRONG IMPACT ON NERA'S PERFORMANCE IN THE THIRD QUARTER. DESPITE AN ACCUMULATED INCREASE IN SALES REVENUE OF 24 PERCENT, THE UNCERTAINTY HAS LEAD TO A DECREASE IN ORDERS RECEIVED FOR THE COMPANY. IN ADDITION, INCURRED WRITE-DOWNS/RESTRUCTURING COSTS OF 188 MNOK AS A RESULT OF A HALT IN THE DEVELOPMENT OF "VELOCITY" HAVE LEAD TO THE QUARTER COMING IN LOWER THAN THE MANAGEMENT'S EXPECTATIONS. IN THE QUARTERS AHEAD, THE COMPANY WILL FOCUS ON STRENGTHENING ITS MARKET POSITION IN THE TERRESTRIAL MARKET FOR WIRELESS INFRASTRUCTURE, COST CONTROL AND IMPROVING WORKING CAPITAL AND CASH FLOW. The terror attacks on the US September 11 had a significant impact on the number of new orders received within Transmission Networks. All markets, except Southeast Asia, reported a heavy drop in the number of new orders during the quarter when compared to previous quarters. On the other hand, demand for CityLink products has increased, and also delivery and production capabilities for all product series are now at satisfactory levels. For Satellite Communications the attacks in the US lead to an increase in demand for satellite phones. During the quarter Nera ASA and Thrane & Thrane entered into an agreement in which a merger of all respective activities are suggested. As previously announced, the agreement is planned to come into effect in mid-November. Within Wireless Broadband Access the process of reducing risk and level of activity was carried on. The most important measure this quarter was to halt the introduction of "Velocity", and thereby the development of its own equipment for "wireless local loop". The decision more than halved the work force at Nera offices in Dallas, USA. In relation to this, the accounts for the quarter will take an extraordinary write-down and restructuring costs of 188 MNOK. Some new contracts were entered into, without the activities yet having reached a scope of significance to the Nera Group. Continued increases in inventory and trade receivables as well as a reduction in advances from customers, added to an additional increase in working capital in the first part of the quarter. This contributed to a continued negative cash flow development. The trend has turned in the last part of the quarter, and considerable improvements are expected in the fourth quarter. INCOME STATEMENTS, BALANCE SHEET, LIQUIDITY AND EQUITY. As at the end of September, The Nera Group had accumulated operating revenues of 2.119 MNOK, which is an increase of 24 percent compared to last year. Operating costs were 1.842 MNOK and depreciation were 68 MNOK, resulting in an operating income before R&D of 209 MNOK. This compares to 279 MNOK in 2000. The higher level of costs is associated with the broadband activities and the investments in the US. 1 R&D costs were 269 MNOK. This compares to 198 MNOK in the same period of 2000, and comprises 12,7 percent of revenues. Compared to the previous quarter the R&D costs have been reduced by 21 MNOK in the third quarter. The company had a negative operating income of 60 MNOK, against a positive operating income of 81 MNOK in the same period of last year. The operating income before Wireless Broadband Access for the first three quarters of the year was 150 MNOK, against 139 MNOK last year. The company has during the quarter incurred write-downs and restructuring costs of 188 MNOK, associated with a halt of "Velocity". The main item here is a write-down of goodwill of about 100 MNOK. Operating income after write-downs/restructuring costs was (248) MNOK. Continued positive developments for Nera Telecommunications Ltd, Singapore, has resulted in a considerable increase in income from investments in associated company, which was 27,2 MNOK, against 16,3 MNOK in the same period of last year. However, the Nera Group experienced net financial expenses of 5,4 MNOK during the third quarter. The reason for this is a weaker liquidity development and loss on foreign exchange as a result of a weaker US dollar. The Nera Group made a loss before tax of 182,3 MNOK, against an income before tax of 133,5 MNOK last year, whilst net loss was 201,3 MNOK against a net income of 97,7 MNOK last year. Nera's balance sheet was reduced from 3.436 MNOK to 3.125 MNOK during the quarter. This reduction is mainly attributable to the depreciation associated with the Velocity project in Dallas, USA. The company's equity ratio as at September 30th was 55,9 percent, a decrease of 2,3 percentage points since the start of the second quarter. The company's net liquid assets developed negatively in the third quarter, reported at 196 MNOK. This is primarily due to a further increase in working capital, mainly inventory and trade receivables. Reduced advances from customers and the buy back of own shares have also contributed to the development. However, the negative trend stopped in September, and a strong improvement is to be expected for the next quarters. NEW ORDERS AND ORDER BACKLOG New orders received by the Nera Group amounted to 1.799 MNOK. This compares to orders totaling 2.060 MNOK received in the same period last year. The decline is primarily attributable to a weak order intake for Transmission Networks in the month of September, which was instantly affected by the terror attacks in the US. New orders of 1.377 MNOK were received for Transmission Networks, 453 MNOK for Satellite Communications, and 9,0 MNOK for Wireless Broadband Access. The order backlog as at the end of the first nine months of 2001 was 818 MNOK, of which 542 MNOK will be invoiced during the fourth quarter. At the same time in 2000, the order backlog was 1.166 MNOK, of which 716 MNOK was to be invoiced in the fourth quarter of 2000. 2 PROSPECTS There are both negative and positive effects from the market development for Nera's transmission activities as a result of the international situation. In the following two to three quarters negative impulses seem to be predominant. For the current year, the company therefore has reduced growth expectations for the business area from closer to 30 percent to 20 percent. As for 2002, Nera expects low or no market growth. In order to grow, Nera has to acquire market share from other players. In order to achieve this, Nera will have to further develop relationships with system integrators, improve delivery and its product offering. Structural agreements may also be an important part of this. Nera's activities within Wireless Broadband Access will still systematically be adapted to the market situation. R&D activities will be limited, and sales- and market activities will be concentrated around Scandinavia and Southeast Asia, where activities are busiest at the moment. For the current year it is expected that the aggregate broadband business, including broadband via satellite, will make a negative operating contribution of around 250 MNOK. The level of broadband activities will be significantly lower in 2002. As for the activities in the US, they will continue, but the organization and scope of these activities will be subject to further assessment. Satellite Communications is expected to have a higher level of activity throughout the rest of the year, and into 2002, as a result of the instability in the world. The goal is to maintain stable volumes and a return of at least 10 percent. In the longer perspective, growth in the markets in which Nera operates is expected to return to previous levels, as the fundamental demand for new and expanded telecom and data networks is still strong. Nera maintains the ambition to become the world's leading independent company within terrestrial wireless transmission, and will continue to seek structural opportunities associated with this goal. The market uncertainty emphasizes the importance of the strong focus the company now sets on improving the cash flow, and adjusting costs and activity levels in many areas. The goal is to achieve a positive cash flow the next quarters and controlling costs without affecting the company's ability to deliver and its competitiveness. Bergen, October 24th, 2001 3

NERA ASA 6-K