FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

 

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

February 10, 2005

 


 

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

 

16483 Stockholm, Sweden

(Address of principal executive offices)

 


 

Indicate by check mark whether the registrant files or will file annual reports under cover 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 contained 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 ¨

 


 

Announcement of LM Ericsson Telephone company, dated February 10, 2005, regarding its Fourth Quarter Report 2004.


LOGO          

Fourth quarter report 2004

February 10, 2005

 

Ericsson reports full year profit of SEK 28 billion

 

  Net sales SEK 39.4 (36.2) b. in the quarter, full year SEK 132.0 (117.7) b.

 

  Net income SEK 6.0 (0.1) b. in the quarter, full year SEK 19.0 (-10.8) b.

 

  Earnings per share SEK 0.38 (0.01) in the quarter, full year SEK 1.20 (-0.69)

 

CEO COMMENTS

 

“We have experienced the strongest growth in mobile users ever. With 300 million new subscribers in 2004, 27% of the world’s population now has access to mobile communications,” says Carl-Henric Svanberg, President and CEO of Ericsson. “This is exciting for a company with a vision of an all-communicating world.

 

We are proud of our performance in 2004 with strong growth and high margins. This has been a year with a number of strategic business wins in both systems and professional services and we have clearly strengthened our market position further.

 

2004 was a breakthrough year for WCDMA with rollouts across Europe and parts of Asia Pacific. The total number of subscribers has now passed 16 million. In 2005 deployments will start in North America as well. Through a number of orders in WCDMA/HSDPA operators are confirming their confidence in our technology leadership.

 

The good growth of GSM and EDGE continues, especially in emerging markets, driven by the basic need for communication. Our introduction of more cost efficient solutions for low penetration areas as well as enhanced data communication capabilities further expands the potential,” concludes Carl-Henric Svanberg.

 

FINANCIAL HIGHLIGHTS

 

Income statement

 

     Fourth quarter

    Third quarter

    Full year

 

SEK b.


   2004

    2003

    Change

    2004

    Change

    2004

    2003

    Change

 

Orders booked, net

   37.9     29.5     29 %   29.0     31 %   133.0     113.0     18 %

Net sales

   39.4     36.2     9 %   31.8     24 %   132.0     117.7     12 %

Gross margin

   45.6 %   41.6 %1)   —       47.1 %   —       46.3 %   37.1 %1)   —    

Operating income

   9.5     6.32 )   —       7.2     —       28.9     5.2 2)   —    

Operating margin

   24.0 %   17.5 %2)   —       22.7 %   —       21.9 %   4.4 %2)   —    

Income after financial items

   9.3     5.92 )   —       7.0     —       28.4     4.4 2)   —    

Net income

   6.0     0.1     —       4.8     —       19.0     -10.8     —    

Earnings per share

   0.38     0.01     —       0.30     —       1.20     -0.69     —    

Cash flow before financing activities

   5.3     4.6     —       5.2     —       17.7     19.5     —    

1) Adjusted for restructuring charges in the fourth quarter 2003 SEK 0.8 b. and for the full year 2003 by SEK 4.8 b.
2) Adjusted for restructuring charges in the fourth quarter 2003, net, SEK 4.0 b. and for the full year 2003 by SEK 16.5 b.

 

Sales were up 24% sequentially due to seasonally strong demand and were up 12% for the full year with especially strong growth in Mobile Networks. All markets were up, except for North America, which was down both sequentially, and year-over-year due to the temporary impact of mergers between operators.

 

Currency exchange effects negatively impacted sales in the quarter by 5% and by 6% for the full year, compared to rates one year ago. In constant currencies sales for the full year grew by 18%.


Gross margin was slightly down sequentially, mainly due to a large number of new network rollouts in the quarter. The operating margin improved as a result of further decreasing operating expenses as a percentage of sales and an increase in other operating revenues, mainly attributable to licensing.

 

Net effects of currency exchange differences on operating income compared to the rates one year ago were SEK -1.2 b. in the quarter and SEK -3.7 b. for the full year.

 

Financial net has been negatively affected by SEK -0.2 b. due to costs associated with the repurchase of bonds as well as cancellation of a revolving credit facility.

 

Balance sheet, cash flow and other performance indicators

 

    

Full year


   

Nine months


 

SEK b.


   2004

    2003

    Change

    2004

 

Net cash

   42.9     27.0     59 %   36.8  

Interest bearing provisions and liabilities

   33.6     46.2     —       35.8  

Days sales outstanding

   75     79     -4     88  

Inventory turnover

   5.7     6.1     —       4.8  

Net customer financing

   3.6     4.0     —       3.4  

Equity ratio

   42.8 %   34.4 %   —       40.9 %

Cash flow before financing activities

   17.7     19.5     -1.8     12.4  

 

The financial position remained strong for the year, net cash increased with SEK 15.9 b. to SEK 42.9 (27.0) b.

 

Inventories were down in the quarter with SEK 2.5 b. to SEK 14.0 (11.0) b., mainly due to work in process in the field being completed. For the full year inventories increased by SEK 3.0 b., due to higher business activities.

 

Deferred tax assets were utilized by SEK 5.3 b. for the full year from SEK 27.1 b. to SEK 21.8 at year-end.

 

Debt has been reduced by SEK -1.8 b. in the quarter and for the full year by SEK 13.6 b. through repayment of maturing debt as well as repurchase of bonds.

 

Cash outlays with regards to restructuring amounted to SEK 5.7 b. for the full year. Of this SEK 1.0 b. was paid in the fourth quarter.

 

Ericsson has established a Swedish pension trust for the purpose of funding the pension liabilities under the Swedish ITP plan. Cash or cash equivalents of SEK 8.3 b. was transferred into the trust in January 2005.

 

MARKET AND BUSINESS HIGHLIGHTS

 

Long-term growth drivers of the industry remain solid. Voice and data traffic increases steadily as a result of new subscribers, new and improved services and lower tariffs. Consumer behavior drives business and technology development. Offering consumers ease of use and quality of service while reducing operating expenses is key for operators.

 

Our GSM success continued in 2004, with upgrades in all markets and rollouts especially in emerging markets. GSM is paving the way for deployment of WCDMA. Ericsson’s leading WCDMA position was expanded further during the year, and during the fourth quarter we gained key contracts in the U.S., Europe and Africa.

 

In close cooperation with operators we continue to add value through our services offering. Sales growth in Professional services has accelerated during the year, especially in systems integration, managed services and hosting. During the year we have gained a number of strategic contracts throughout the world.

 

2


The strong growth in fixed broadband continues and high-speed broadband access has become the generally expected level of service in many markets. We have won commercial agreements for delivery of 2 million next generation IP broadband access lines, representing a 15 to 20% share of this fast growing market.

 

Regional overview

 

Western Europe sales grew 12% for the full year. This was driven by accelerating deployment and consumer uptake of 3G services as well as additional capacity enhancements in GSM. Operators’ increasing tariff competition is stimulating traffic growth. Italy and Spain in particular showed strong sequential development in the fourth quarter.

 

Central Europe, Middle East and Africa sales grew 23% for the full year. The year ended with a strong sequential performance, particularly in Central Europe. GSM continues to be the prevailing standard in the market. However, there is also a growing demand for EDGE and WCDMA.

 

The Asia Pacific region shows strong development reflecting increased usage and number of subscribers. Sales grew 4% for the full year after a slower start of the year. In the fourth quarter sequential development was especially encouraging in China and India. The demand for GSM continues as operators invest in coverage and capacity enhancements. In parallel there is a growing demand for advanced mobile services in all markets.

 

North America showed a temporary slow down in capital expenditure due to operator consolidation, which is reflected in the full year sales decline. As competition accelerates, operators are increasing their focus on quality and coverage as well as the introduction of new services. This paves the way for a positive development going forward.

 

The activity level in Latin America has been high, with new GSM network rollouts and capacity enhancements, following successful operator consolidation. Argentina and Brazil have contributed strongly to make Latin America our strongest growing region for the year with sales up 46%.

 

Subscriber growth

 

During the fourth quarter, eleven new WCDMA networks were commercially launched, bringing the total to 56. We are a supplier to 35 of these networks. The number of WCDMA subscriptions grew from approximately 10 million to more than 16 million during the quarter. The number of CDMA2000 1xEV-DO subscriptions has now reached well over 11 million.

 

Net subscriber additions were 300 million in 2004, the largest growth to date. Worldwide subscription penetration is 27% with a total of 1.7 billion subscriptions, of which almost 1.3 billion are in GSM. The global number of subscriptions could pass 2 billion already during 2006. Approximately 50 million new fixed broadband subscriptions were added during the year, of which 8 million were next generation IP broadband.

 

OUTLOOK

 

All estimates are measured in USD and refer to market growth compared to previous year.

 

The traffic growth in the world’s mobile networks is expected to continue as a result of new services as well as new subscribers. 2004 was a strong growth year in terms of mobile infrastructure investments following a pent up demand. For 2005 we maintain our view that the global mobile systems market will show slight growth compared to 2004.

 

We maintain our view that the addressable market for professional services is expected to continue to show good growth.

 

With our technology leadership and global presence we are well positioned to take advantage of these market opportunities.

 

3


BUSINESS AND TECHNOLOGY MILESTONES 2004

 

GSM/GPRS

 

New customers and expansion contracts in all regions with particular growth in emerging markets such as Bangladesh, Brazil, China, India and Russia. Largest GSM contract announced to date with Guangdong Mobile in China. Contract wins for Ericsson Expander in all regions.

 

3G

 

The WCDMA footprint expanded in new regions such as Africa, Central Europe, and the U.S. New customers and expansion WCDMA contracts announced with Cingular, mobilkom Austria, MTN, ONE, Polkomtel, TeliaSonera in Denmark, and 3 Scandinavia.

 

Strategic breakthrough contract with Cingular for WCDMA/HSDPA in the U.S. Ongoing customer trials for HSDPA in a number of countries.

 

Announced EDGE contracts include AIS, Batelco, DiGi, Dishnet, EMT, Faroese Telecom, Jiangsu Mobile, MobilCom, Swisscom Mobile, T-Mobile Hungary, Telenor Mobil, and Ålands Mobiltelefon. New and expansion contracts for CDMA2000 1x in China and India.

 

Signed 25 IMS system contracts, of which 21 in 2004, for commercial launch or trial. The contracts are distributed over the Africa, Americas, Asia and Europe and include GSM/GPRS, WCDMA, CDMA2000 and wireline implementations.

 

Ericssons’s mobile softswitch in 18 commercially deployed networks of which nine were deployed during 2004.

 

Services

 

Announced managed services contracts include Auna, Bharti, Brasil Telecom, Chariton Valley Wireless Services, Indigo Wireless, Orange Switzerland, PSC Wireless and Warid Telecom. Subsequent to the close of the quarter a managed services deal was also announced with H3G in Italy, our largest managed services contract to date.

 

Announced contracts for hosting services include Tele2, Sun Cellular, Maxis, TeliaSonera, Telefónica Móvil, PanTel, Monortel, Invitel, Hungarotel, Emitel, Midwest Wireless, Rural Cellular Corporation, BT Mobile World and ALLTEL. Successful launch of Ericsson’s mobile music service M-USE.

 

Other business highlights

 

Ericsson Mobile Platforms (EMP) has strengthened its position and enjoy a 30% global market share in WCDMA handsets. During the year EMP announced contracts with Amoi, Bellwave, NEC and Sharp. Earlier announced contracts include Microcell, HTC, LG Electronics, Lite-On, Sony Ericsson and TCL Mobile.

 

Competitive next generation IP broadband access solution gaining momentum with contracts announced in Brazil, Finland, FYROM, India, Indonesia and Sweden.

 

4


SEGMENT RESULTS

 

Systems

 

     Fourth quarter

    Third quarter

    Full year

 

SEK b.


   2004

    2003

    Change

    2004

    Change

    2004

    2003

    Change

 

Orders booked

   35.3     27.6     28 %   27.4     29 %   125.0     105.4     19 %

Mobile Networks

   27.6     20.5     35 %   22.8     21 %   100.8     79.5     27 %

Fixed Networks

   1.6     1.1     40 %   0.7     136 %   4.5     6.3     -29 %

Professional Services

   6.1     6.0     2 %   3.9     57 %   19.7     19.6     0 %

Net sales

   36.8     33.6     10 %   29.6     24 %   122.9     108.7     13 %

Mobile Networks

   29.1     25.7     14 %   23.8     22 %   98.2     82.1     20 %

Fixed Networks

   1.5     2.2     -32 %   1.0     48 %   4.6     8.0     -43 %

Professional Services

   6.2     5.7     8 %   4.8     28 %   20.1     18.6     8 %

Operating income

   8.3     5.8 1)   —       6.5     —       25.3     6.6 1)   —    

Operating margin

   23 %   17 %1)   —       22 %   —       21 %   6 %1)   —    

1) Adjusted for restructuring charges in the fourth quarter 2003, net, SEK 3.6 b. and for the full year 2003 by SEK 12.7 b.

 

The growth in the GSM/WCDMA track is approximately 19% for the full year. WCDMA equipment and associated network rollout services share of total Mobile Networks sales amounted to 15% and of radio access sales 40% were WCDMA/EDGE related.

 

Sales within Professional Services has developed well during the year and grew 14% for the full year in local currencies and now represents approximately 16% of total Systems sales.

 

Other Operations

 

     Fourth quarter

    Third quarter

    Full year

 

SEK b.


   2004

    2003

    Change

    2004

    Change

    2004

    2003

    Change

 

Orders booked

   2.8     2.3     22 %   2.5     16 %   10.4     9.2     13 %

Net sales

   3.3     3.2     4 %   2.8     17 %   11.4     10.6     8 %

Operating income

   0.6     0.3 1)   —       0.3     —       1.5     -0.4 1)   —    

Operating margin

   18 %   8 %1)   —       9 %   —       13 %   -4 %1)   —    

1) Adjusted for restructuring charges in the fourth quarter 2003 SEK 0.8 b. and for the full year 2003 by SEK 3.8 b.

 

Within Other operations operating margin benefited from the reversal of provisions of SEK 0.1 b., the underlying operating margin was 15% (8%) during the quarter.

 

Development in Other operations was stable during the year and Ericsson Mobile Platforms showed positive operating income for the full year.

 

SONY ERICSSON MOBILE COMMUNICATIONS

 

For information on transactions with Sony Ericsson Mobile Communications please see Financial statements and additional statements.

 

Sony Ericsson Mobile Communications (Sony Ericsson) reported sustained growth in sales and profits. Sales increased 40% for the full year. Ericsson’s share in Sony Ericsson’s income before tax was SEK 2.1 b. for the full year, compared to SEK -0.6 b. in 2003.

 

“I am impressed by Sony Ericsson’s performance in 2004. They have established profitability and a product portfolio geared for further growth,” says Carl-Henric Svanberg, President and CEO of Ericsson. “Sony Ericsson is a strategic part of our end-to-end solutions based on in-depth consumer understanding.”

 

PARENT COMPANY INFORMATION

 

Net sales for the year amounted to SEK 2.6 (1.6) b. and income after financial items was SEK 7.4 (3.2) b. Restructuring costs are excluded in income after financial items for 2003.

 

5


Major changes in the Parent Company’s financial position for the year include decreased investments in subsidiaries of SEK 10.1 b. and increased short- and long-term receivables from subsidiaries of SEK 7.3 b. Current and long-term liabilities to subsidiaries increased by 14.9 b. Notes and bond loans, including short-term portion, have decreased by SEK 11.7 b. At year-end, cash and short-term cash investments amounted to SEK 71.7 (68.4) b.

 

In accordance with the conditions of the Stock Purchase Plans and Option Plans for Ericsson employees, 2,147,417 shares from treasury stock were sold or distributed to employees during the fourth quarter. The holding of treasury stock at December 31, 2004, was 299,715,117 Class B shares.

 

EFFECTS OF IFRS 2005 ON FINANCIAL REPORTING

 

As from 2005 Ericsson will issue consolidated financial statements in accordance with IFRS. A further comment on comparisons and information about effects on consolidated financial statement can be found under Financial statements and additional information, “Ericsson IFRS reporting,” at the end of the full report.

 

If IFRS had been applied to 2004 reporting, net income would have been adjusted negatively by SEK -1.5 b. This is mainly a net effect of increased amortization of capitalized development costs (since they are higher under IFRS) by SEK -2.7 b., no amortization of goodwill by SEK 0.5 b. and deferred taxes by SEK 0.7 b. The annual amortizations of capitalized development costs under IFRS compared to Swedish GAAP are estimated to SEK -1.1 b. for year 2005, 2006 and 2007 respectively.

 

During the first quarter 2005 Ericsson will publish restated tables according to IFRS on www.ericsson.com/investors. Time for publication will be communicated separately.

 

DIVIDEND PROPOSAL

 

The Board of Directors will propose to the Annual General Meeting a dividend of SEK 0.25 per share and Monday, April 11, 2005 as record day for payment of dividend.

 

ANNUAL REPORT

 

The annual report will be made available to shareholders at the Ericsson headquarters, Torshamnsgatan 23, Stockholm, two weeks prior to the Annual General Meeting 2005.

 

ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

The Annual General Meeting of shareholders will be held on April 6, 2005, 15.00 (CET) in Stockholm Globe Arena.

 

OTHER INFORMATION

 

Following industry practice, order intake will no longer be reported as of the first quarter 2005.

 

In accordance with the decision by the extraordinary general meeting on August 31, 2004, the process of changing the difference in voting rights between A and B shares in Ericsson has now been completed as announced on December 22, 2004. Following the change in voting rights each A share confers to one vote and each B share confers one tenth of a vote. The A shares are now representing 46.9% and the B shares 53.1% of the voting rights. The total number of shares in Ericsson is now 1,308,779,918 A shares and 14,823,478,760 B shares.

 

Stockholm, February 10, 2005

 

Carl-Henric Svanberg

President and CEO

 

Date for next report: April 22, 2005

 

6


AUDITORS’ REPORT

 

We have reviewed the report for the twelve-month period ended December 31, 2004, for Telefonaktiebolaget LM Ericsson (publ.). We conducted our review in accordance with the recommendation issued by FAR. A review is limited primarily to enquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

 

Based on our review, nothing has come to our attention that causes us to believe that the interim report does not comply with the requirements for interim reports in the Annual Accounts Act.

 

Stockholm, February 10, 2005

 

Bo Hjalmarsson

 

Peter Clemedtson

 

Thomas Thiel

Authorized Public Accountant

 

Authorized Public Accountant

 

Authorized Public Accountant

PricewaterhouseCoopers AB

 

PricewaterhouseCoopers AB

   

 

EDITOR’S NOTE

 

To read the complete report with tables please go to: http://www.ericsson.com/investors/financial_reports/2004/12month04-en.pdf

 

Ericsson invites the media, investors and analysts to a press conference at the Ericsson headquarters, Torshamnsgatan 23, Stockholm, at 09.00 (CET), February 10.

 

A analyst and media conference call will begin at 14.00 (CET).

 

Live audio webcast of the press conference and conference call as well as supporting slides will be available at www.ericsson.com/press and www.ericsson.com/investors

 

FOR FURTHER INFORMATION PLEASE CONTACT

 

Henry Sténson, Senior Vice President, Communications

Phone: +46 8 719 4044; E-mail: investor.relations@ericsson.com or press.relations@ericsson.com

 

Investors

 

Gary Pinkham, Vice President, Investor Relations

Phone: +46 8 719 0000; E-mail: investor.relations@ericsson.com

 

Lotta Lundin, Investor Relations

Phone: +46 8 719 6553; E-mail: investor.relations@ericsson.com

 

Glenn Sapadin, Investor Relations, North America

Phone: +1 212 843 8435; E-mail: investor.relations@ericsson.com

 

Media

 

Pia Gideon, Vice President, Market and External Communications

Phone: +46 8 719 2864, +46 70 519 8903; E-mail: press.relations@ericsson.com

 

Åse Lindskog, Director, Head of Media Relations

Phone: +46 8 719 9725, +46 730 244 872; E-mail: press.relations@ericsson.com

 

Ola Rembe, Director, Media Relations

Phone: +46 8 719 9727, +46 730 244 873;E-mail: press.relations@ericsson.com

 

Telefonaktiebolaget LM Ericsson (publ)

Org. number: 556016-0680

Torshamnsgatan 23

SE-164 83 Stockholm

Phone: +46 8 719 00 00

www.ericsson.com

 

7


Safe Harbor Statement of Ericsson under the Private Securities Litigation Reform Act of 1995;

 

All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”, “estimates”, “may”, “will”, “should”, “would”, “potential”, “continue”, and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; and (xii) plans to launch new products and services.

 

In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) further reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.

 

FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

 

     Page

Financial statements

    

Consolidated income statement

   9

Consolidated balance sheet

   10

Consolidated statement of cash flows

   11

Changes in stockholders’ equity

   12

Consolidated income statement - isolated quarters

   13
     Page

Additional information

    

Accounting policies and reporting

   14

Orders booked by segment by quarter

   15

Net sales by segment by quarter

   16

Operating income and operating margin

   17

Number of employees by segment by quarter

   17

Orders booked by market area by quarter

   18

Net sales by market area by quarter

   19

External orders booked by market area by segment

   20

External net sales by market area by segment

   20

Top ten markets in orders and sales

   21

Customer financing risk exposure

   21

Trend of net sales and operating expenses - isolated quarters

   21

Transactions with Sony Ericsson Mobile Communications

   21

Other information

   22

Ericsson IFRS reporting

   23

 

8


ERICSSON

CONSOLIDATED INCOME STATEMENT

 

     Oct - Dec

         Jan - Dec

 

SEK million


   2004

    2003

    Change

         2004

    2003

    Change

 

Net sales

   39,430     36,227     9 %        131,972     117,738     12 %

Cost of sales

   -21,451     -21,944     -2 %        -70,864     -78,901     -10 %
    

 

 

      

 

 

Gross margin

   17,979     14,283                61,108     38,837        

Research and development and other technical expenses

   -6,187     -7,309     -15 %        -20,861     -27,136     -23 %

Selling expenses

   -2,841     -4,227     -33 %        -9,693     -15,115     -36 %

Administrative expenses

   -1,236     -1,693     -27 %        -6,551     -8,762     -25 %
    

 

 

      

 

 

Operating expenses

   -10,264     -13,229     -22 %        -37,105     -51,013     -27 %

Other operating revenues and costs

   1,150     1,001                2,617     1,541        

Share in earnings of JV and associated companies

   609     256                2,318     -604        
    

 

            

 

     

Operating income

   9,474     2,311                28,938     -11,239        

Financial income

   656     1,240     -47 %        3,541     3,995     -11 %

Financial expenses

   -876     -1,721     -49 %        -4,081     -4,859     -16 %
    

 

 

      

 

 

Income after financial items

   9,254     1,830                28,398     -12,103        

Taxes

   -3,166     -1,607                -9,077     1,460        

Minority interest

   -111     -81                -297     -201        
    

 

            

 

     

Net income

   5,977     142                19,024     -10,844        

Other information

                                         

Average number of shares, basic (million)

   15,832     15,825                15,829     15,823        

Earnings per share, basic (SEK)

   0.38     0.01                1.20     -0.69        

Earnings per share, diluted (SEK)

   0.38     0.01                1.20     -0.69        

NOTE 1

                                         

Restructuring costs, net

   —       -4,022                —       -16,463        
    

 

            

 

     

Total

   —       -4,022                —       -16,463        

-of which in

                                         

Cost of sales

   —       -770                —       -4,790        

Operating expenses

   —       -3,145                —       -10,976        

Other operating revenues and costs

   —       -20                —       -345        

Share in earnings of JV and associated companies

   —       -87                —       -352        

NOTE 2

                                         
Key measurements, excluding restructuring costs                                          

Net sales

   39,430     36,227                131,972     117,738        

Gross margin

   17,979     15,053                61,108     43,627        

- as percentage of net sales

   45.6 %   41.6 %              46.3 %   37.1 %      

Operating expenses

   -10,264     -10,084                -37,105     -40,037        

- as percentage of net sales

   26.0 %   27.8 %              28.1 %   34.0 %      

Other operating revenues and costs

   1,150     1,021                2,617     1,886        

Share in earnings of JV and assoc. companies

   609     343                2,318     -252        
    

 

            

 

     

Operating income

   9,474     6,333                28,938     5,224        

Operating margin (%)

   24.0 %   17.5 %              21.9 %   4.4 %      

Income after financial items

   9,254     5,852                28,398     4,360        

 

9


ERICSSON

CONSOLIDATED BALANCE SHEET

 

SEK million


   Dec 31
2004


   Dec 31
2003


ASSETS

         

Fixed assets

         

Intangible assets

         

Capitalized development expenses

   4,343    4,784

Goodwill

   5,324    5,739

Other

   748    687

Tangible assets

   5,845    6,505

Financial assets

         

Equity in JV and associated companies

   4,150    2,970

Other investments

   543    433

Long-term customer financing

   2,150    3,027

Deferred tax assets

   21,815    27,130

Other long-term receivables

   1,236    1,342
    
  
     46,154    52,617
    
  

Current assets

         

Inventories

   14,003    10,965

Receivables

         

Accounts receivable - trade

   32,644    31,886

Short-term customer financing

   1,446    979

Other receivables

   12,239    12,718

Short-term cash investments, cash and bank

   76,554    73,207
    
  
     136,886    129,755
    
  

Total assets

   183,040    182,372
    
  

STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

         

Stockholders’ equity

   77,299    60,481
    
  

Minority interest in equity of consolidated subsidiaries

   1,057    2,299
    
  

Provisions

         

Pensions

   10,087    8,005

Other provisions

   25,199    28,063
    
  
     35,286    36,068
    
  

Long-term liabilities

   23,693    29,772
    
  

Current liabilities

         

Interest-bearing liabilities

   1,719    9,509

Accounts payable

   10,988    8,895

Other current liabilities

   32,998    35,348
    
  
     45,705    53,752
    
  

Total stockholders’ equity, provisions and liabilities

   183,040    182,372
    
  

Of which interest-bearing provisions and liabilities

   33,643    46,209

Net cash

   42,911    26,998

Assets pledged as collateral

   7,985    8,023

Contingent liabilities

   1,014    2,691

 

10


ERICSSON

CONSOLIDATED STATEMENT OF CASH FLOWS

 

     Oct - Dec

   Jan - Dec

SEK million


   2004

   2003

   2004

   2003

Net income

   5,977    142    19,024    -10,844

Adjustments to reconcile net income to cash

   2,916    4,160    9,005    6,387
    
  
  
  
     8,893    4,302    28,029    -4,457

Changes in operating net assets

                   

Inventories

   2,051    248    -3,432    2,286

Customer financing, short-term and long-term

   -850    -221    -65    7,999

Accounts receivable

   -2,436    -3,549    -1,403    4,131

Other

   -1,371    3,902    -650    12,908
    
  
  
  

Cash flow from operating activities

   6,287    4,682    22,479    22,867

Product development

   -354    -628    -1,146    -2,359

Other investing activities

   -598    504    -3,642    -1,053
    
  
  
  

Cash flow from investing activities

   -952    -124    -4,788    -3,412
    
  
  
  

Cash flow before financing activities

   5,335    4,558    17,691    19,455
    
  
  
  

Dividends paid

   -140    3    -292    -206

Other equity transactions

   6    3    15    8

Other financing activities

   -1,225    -738    -14,281    -11,726
    
  
  
  

Cash flow from financing activities

   -1,359    -732    -14,558    -11,924

Effect of exchange rate changes on cash

   -30    -171    214    -538
    
  
  
  

Net change in cash

   3,946    3,655    3,347    6,993

Cash and cash equivalents, beginning of period

   72,608    69,552    73,207    66,214
    
  
  
  

Cash and cash equivalents, end of period

   76,554    73,207    76,554    73,207
    
  
  
  

 

11


CHANGES IN STOCKHOLDERS’ EQUITY

 

SEK million


   Jan-Dec
2004


   Jan-Dec
2003


Opening balance

   60,481    73,607

Effect of changed accounting principle

   -1,275    —  
    
  

Opening balance in accordance with new accounting principle

   59,206    73,607

Stock issue, net

   —      158

Sale of own shares

   15    8

Stock Purchase and Option Plans

   159    151

Repurchase of own stock

   —      -158

Changes in cumulative translation effects due to changes in foreign currency exchange rates

   -1,107    -2,444

Adjustment of cost for stock issue 2002

   2    3

Net income

   19,024    -10,844
    
  

Closing balance

   77,299    60,481
    
  

 

12


ERICSSON

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

     2003

    2004

 

SEK million


   Q1

    Q2

    Q3

    Q4

    Q1

    Q2

    Q3

    Q4

 

Net sales

   25,859     27,613     28,039     36,227     28,111     32,595     31,836     39,430  

Cost of sales

   -18,862     -19,011     -19,084     -21,944     -15,544     -17,020     -16,849     -21,451  
    

 

 

 

 

 

 

 

Gross margin

   6,997     8,602     8,955     14,283     12,567     15,575     14,987     17,979  

Research and development and other technical expenses

   -6,897     -6,084     -6,846     -7,309     -4,792     -4,729     -5,153     -6,187  

Selling expenses

   -3,449     -4,085     -3,354     -4,227     -2,232     -2,243     -2,377     -2,841  

Administrative expenses

   -1,804     -1,842     -3,423     -1,693     -1,710     -2,217     -1,388     -1,236  
    

 

 

 

 

 

 

 

Operating expenses

   -12,150     -12,011     -13,623     -13,229     -8,734     -9,189     -8,918     -10,264  

Other operating revenues and costs

   -86     195     431     1,001     164     811     492     1,150  

Share in earnings of JV and assoc. companies

   -742     -365     247     256     517     538     654     609  
    

 

 

 

 

 

 

 

Operating income

   -5,981     -3,579     -3,990     2,311     4,514     7,735     7,215     9,474  

Financial income

   1,164     850     741     1,240     932     987     966     656  

Financial expenses

   -1,218     -856     -1,064     -1,721     -1,133     -909     -1,163     -876  
    

 

 

 

 

 

 

 

Income after financial items

   -6,035     -3,585     -4,313     1,830     4,313     7,813     7,018     9,254  

Taxes

   1,847     820     400     -1,607     -1,243     -2,450     -2,218     -3,166  

Minority interest

   -124     37     -33     -81     -77     -73     -36     -111  
    

 

 

 

 

 

 

 

Net income

   -4,312     -2,728     -3,946     142     2,993     5,290     4,764     5,977  

Other information

                                                

Average number of shares, basic (million)

   15,820     15,822     15,823     15,825     15,749     15,829     15,830     15,832  

Earnings per share, basic (SEK)

   -0.27     -0.17     -0.25     0.01     0.19     0.33     0.30     0.38  

Earnings per share, diluted (SEK)

   -0.27     -0.17     -0.25     0.01     0.19     0.33     0.30     0.38  

NOTE 1

                                                

Restructuring costs, net

   -3,193     -3,799     -5,449     -4,022     —       —       —       —    
    

 

 

 

 

 

 

 

Total

   -3,193     -3,799     -5,449     -4,022     —       —       —       —    

-of which in

                                                

Cost of sales

   -1,813     -1,096     -1,111     -770     —       —       —       —    

Operating expenses

   -1,359     -2,296     -4,176     -3,145     —       —       —       —    

Other operating revenues and costs

   -21     -142     -162     -20     —       —       —       —    

Share in earnings of JV and associated companies

   —       -265     —       -87     —       —       —       —    

NOTE 2

                                                
Key measurements, excluding restructuring costs                                                 

Net sales

   25,859     27,613     28,039     36,227     28,111     32,595     31,836     39,430  

Gross margin

   8,810     9,698     10,066     15,053     12,567     15,575     14,987     17,979  

- as percentage of net sales

   34.1 %   35.1 %   35.9 %   41.6 %   44.7 %   47.8 %   47.1 %   45.6 %

Operating expenses

   -10,791     -9,715     -9,447     -10,084     -8,734     -9,189     -8,918     -10,264  

- as percentage of net sales

   41.7 %   35.2 %   33.7 %   27.8 %   31.1 %   28.2 %   28.0 %   26.0 %

Other operating revenues and costs

   -65     337     593     1,021     164     811     492     1,150  

Share in earnings of JV and assoc. companies

   -742     -100     247     343     517     538     654     609  
    

 

 

 

 

 

 

 

Operating income

   -2,788     220     1,459     6,333     4,514     7,735     7,215     9,474  

Operating margin (%)

   -10.8 %   0.8 %   5.2 %   17.5 %   16.1 %   23.7 %   22.7 %   24.0 %

Income after financial items

   -2,842     214     1,136     5,852     4,313     7,813     7,018     9,254  

 

13


ACCOUNTING POLICIES AND REPORTING

 

ACCOUNTING POLICIES

 

Interim reports are prepared in accordance with RR20 “Interim Financial Reporting.”

 

CHANGED ACCOUNTING POLICIES AND REPORTING IN 2004

 

RR29 “Employee Benefits”, which is based on IAS 19 “Employee Benefits” issued by International Accounting Standards Committee (“IASC”), has been adopted as from January 1, 2004. When applying RR 29, defined benefit plans for pensions and other post-employment benefits are accounted for using consistent principles. Prior to 2004, such plans have been accounted for by using local principles for each country in the consolidated accounts. The effect of this standard is mainly a change in timing of pension costs compared to previous principles, so that pension costs for future salary increases are estimated and recognized during the service period. In accordance with the transition rules, a transition liability was determined as of 1 January 2004. This transition liability exceeded the liability for pensions recognized per December 31, 2003 in accordance with earlier principles and the net effect of the change in accounting principles at adoption has in accordance with RR29 been charged to stockholders’ equity. The one-time effect of adopting RR29 was an increase of the pension liability as of January 1, 2004, by SEK 1.8 billion. The effect on equity, net after taxes, was SEK 1.3 billion. RR29 has not had material impact on reported Net Income or Earnings Per Share.

 

The company has chosen to follow the guidance of the draft interpretation URA43 “Accounting for particular social taxes and wealth tax” issued by The Swedish Accounting Standards Council.

 

REPORTING

 

CHANGED DEFINITIONS COMPARED TO PREVIOUS ANNUAL REPORT

 

Items affecting comparability

 

During 2003 restructuring costs, non-operational capital gains/losses and capitalization of development expenses were reported as items affecting comparability. Due to the immateriality of the non-operational capital gains/losses for 2003 and the fact that the capitalization of development expenses are no longer, per se, affecting comparability, these items are no longer reported as items affecting comparability.

 

14


ORDERS BOOKED BY SEGMENT BY QUARTER

 

SEK million

 

     2003

         2004

 

Isolated quarters


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   24,996     26,336     26,518     27,592          31,107     31,191     27,369     35,304  

- Mobile Networks

   17,475     20,020     21,508     20,455          24,944     25,457     22,800     27,590  

- Fixed Networks

   1,990     1,724     1,513     1,128          1,173     1,081     670     1,579  

Total Network Equipment

   19,465     21,744     23,021     21,583          26,117     26,538     23,470     29,169  

- Of which Network Rollout

   2,542     2,000     2,025     2,153          2,705     3,226     2,581     4,615  

Professional Services

   5,531     4,592     3,497     6,009          4,990     4,653     3,899     6,135  

Other Operations

   2,587     2,312     1,963     2,330          2,384     2,703     2,454     2,837  

Less: Intersegment Orders

   -523     -300     -353     -458          -477     -782     -857     -274  
    

 

 

 

      

 

 

 

Total

   27,060     28,348     28,128     29,464          33,014     33,112     28,966     37,867  
    

 

 

 

      

 

 

 

     2003

         2004

 

Sequential change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   -12 %   5 %   1 %   4 %        13 %   0 %   -12 %   29 %

- Mobile Networks

   -16 %   15 %   7 %   -5 %        22 %   2 %   -10 %   21 %

- Fixed Networks

   4 %   -13 %   -12 %   -25 %        4 %   -8 %   -38 %   136 %

Total Network Equipment

   -15 %   12 %   6 %   -6 %        21 %   2 %   -12 %   24 %

- Of which Network Rollout

   -37 %   -21 %   1 %   6 %        26 %   19 %   -20 %   79 %

Professional Services

   -3 %   -17 %   -24 %   72 %        -17 %   -7 %   -16 %   57 %

Other Operations

   1 %   -11 %   -15 %   19 %        2 %   13 %   -9 %   16 %

Less: Intersegment Orders

   30 %   -43 %   18 %   30 %        4 %   64 %   10 %   -68 %
    

 

 

 

      

 

 

 

Total

   -12 %   5 %   -1 %   5 %        12 %   0 %   -13 %   31 %
    

 

 

 

      

 

 

 

     2003

         2004

 

Year over year change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   -34 %   -16 %   48 %   -3 %        24 %   18 %   3 %   28 %

- Mobile Networks

   -40 %   -13 %   73 %   -2 %        43 %   27 %   6 %   35 %

- Fixed Networks

   -26 %   -42 %   -14 %   -41 %        -41 %   -37 %   -56 %   40 %

Total Network Equipment

   -39 %   -16 %   62 %   -5 %        34 %   22 %   2 %   35 %

- Of which Network Rollout

   -46 %   -49 %   44 %   -46 %        6 %   61 %   27 %   114 %

Professional Services

   -2 %   -14 %   -7 %   5 %        -10 %   1 %   11 %   2 %

Other Operations

   -47 %   -52 %   -37 %   -9 %        -8 %   17 %   25 %   22 %

Less: Intersegment Orders

   -25 %   -61 %   -31 %   14 %        -9 %   161 %   143 %   -40 %
    

 

 

 

      

 

 

 

Total

   -35 %   -20 %   37 %   -4 %        22 %   17 %   3 %   29 %
    

 

 

 

      

 

 

 

     2003

         2004

 

Year to Date


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   24,996     51,332     77,850     105,442          31,107     62,298     89,667     124,971  

- Mobile Networks

   17,475     37,495     59,003     79,458          24,944     50,401     73,201     100,791  

- Fixed Networks

   1,990     3,714     5,227     6,355          1,173     2,254     2,924     4,503  

Total Network Equipment

   19,465     41,209     64,230     85,813          26,117     52,655     76,125     105,294  

- Of which Network Rollout

   2,542     4,542     6,567     8,720          2,705     5,931     8,512     13,127  

Professional Services

   5,531     10,123     13,620     19,629          4,990     9,643     13,542     19,677  

Other Operations

   2,587     4,899     6,862     9,192          2,384     5,087     7,541     10,378  

Less: Intersegment Orders

   -523     -823     -1,176     -1,634          -477     -1,259     -2,116     -2,390  
    

 

 

 

      

 

 

 

Total

   27,060     55,408     83,536     113,000          33,014     66,126     95,092     132,959  
    

 

 

 

      

 

 

 

     2003

         2004

 

YTD year over year change


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   -34 %   -25 %   -10 %   -9 %        24 %   21 %   15 %   19 %

- Mobile Networks

   -40 %   -28 %   -9 %   -7 %        43 %   34 %   24 %   27 %

- Fixed Networks

   -26 %   -34 %   -29 %   -32 %        -41 %   -39 %   -44 %   -29 %

Total Network Equipment

   -39 %   -29 %   -11 %   -10 %        34 %   28 %   19 %   23 %

- Of which Network Rollout

   -46 %   -47 %   -35 %   -38 %        6 %   31 %   30 %   51 %

Professional Services

   -2 %   -8 %   -8 %   -4 %        -10 %   -5 %   -1 %   0 %

Other Operations

   -47 %   -50 %   -46 %   -40 %        -8 %   4 %   10 %   13 %

Less: Intersegment Orders

   -25 %   -44 %   -40 %   -31 %        -9 %   53 %   80 %   46 %
    

 

 

 

      

 

 

 

Total

   -35 %   -28 %   -14 %   -12 %        22 %   19 %   14 %   18 %
    

 

 

 

      

 

 

 

 

15


NET SALES BY SEGMENT BY QUARTER

 

SEK million

 

     2003

         2004

 

Isolated quarters


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   23,961     25,224     25,907     33,574          26,092     30,380     29,627     36,798  

- Mobile Networks

   17,643     18,949     19,826     25,635          21,081     24,241     23,773     29,096  

- Fixed Networks

   1,898     2,177     1,670     2,220          896     1,129     1,027     1,519  

Total Network Equipment

   19,541     21,126     21,496     27,855          21,977     25,370     24,800     30,615  

- Of which Network Rollout

   2,577     2,532     2,791     3,213          2,205     2,490     2,648     3,621  

Professional Services

   4,420     4,098     4,411     5,719          4,115     5,010     4,827     6,183  

Other Operations

   2,363     2,534     2,508     3,174          2,449     2,806     2,828     3,306  

Less: Intersegment Sales

   -465     -145     -376     -521          -430     -591     -619     -674  
    

 

 

 

      

 

 

 

Total

   25,859     27,613     28,039     36,227          28,111     32,595     31,836     39,430  
    

 

 

 

      

 

 

 

     2003

         2004

 

Sequential change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   -28 %   5 %   3 %   30 %        -22 %   16 %   -2 %   24 %

- Mobile Networks

   -28 %   7 %   5 %   29 %        -18 %   15 %   -2 %   22 %

- Fixed Networks

   -38 %   15 %   -23 %   33 %        -60 %   26 %   -9 %   48 %

Total Network Equipment

   -29 %   8 %   2 %   30 %        -21 %   15 %   -2 %   23 %

- Of which Network Rollout

   -33 %   -2 %   10 %   15 %        -31 %   13 %   6 %   37 %

Professional Services

   -20 %   -7 %   8 %   30 %        -28 %   22 %   -4 %   28 %

Other Operations

   -39 %   7 %   -1 %   27 %        -23 %   15 %   1 %   17 %

Less: Intersegment Sales

   22 %   -69 %   159 %   39 %        -17 %   37 %   5 %   9 %
    

 

 

 

      

 

 

 

Total

   -30 %   7 %   2 %   29 %        -22 %   16 %   -2 %   24 %
    

 

 

 

      

 

 

 

     2003

         2004

 

Year over year change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   -28 %   -27 %   -15 %   1 %        9 %   20 %   14 %   10 %

- Mobile Networks

   -31 %   -30 %   -17 %   4 %        19 %   28 %   20 %   14 %

- Fixed Networks

   -42 %   -27 %   -30 %   -27 %        -53 %   -48 %   -39 %   -32 %

Total Network Equipment

   -32 %   -29 %   -18 %   1 %        12 %   20 %   15 %   10 %

- Of which Network Rollout

   -38 %   -34 %   -5 %   -16 %        -14 %   -2 %   -5 %   13 %

Professional Services

   -1 %   -15 %   2 %   3 %        -7 %   22 %   9 %   8 %

Other Operations

   -45 %   -44 %   -27 %   -18 %        4 %   11 %   13 %   4 %

Less: Intersegment Sales

   -32 %   -82 %   -29 %   37 %        -8 %   308 %   65 %   29 %
    

 

 

 

      

 

 

 

Total

   -30 %   -28 %   -16 %   -1 %        9 %   18 %   14 %   9 %
    

 

 

 

      

 

 

 

     2003

         2004

 

Year to Date


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   23,961     49,185     75,092     108,666          26,092     56,472     86,099     122,897  

- Mobile Networks

   17,643     36,592     56,418     82,053          21,081     45,322     69,095     98,191  

- Fixed Networks

   1,898     4,075     5,745     7,965          896     2,025     3,052     4,571  

Total Network Equipment

   19,541     40,667     62,163     90,018          21,977     47,347     72,147     102,762  

- Of which Network Rollout

   2,577     5,109     7,900     11,113          2,205     4,695     7,343     10,964  

Professional Services

   4,420     8,518     12,929     18,648          4,115     9,125     13,952     20,135  

Other Operations

   2,363     4,897     7,405     10,579          2,449     5,255     8,083     11,389  

Less: Intersegment Sales

   -465     -610     -986     -1,507          -430     -1,021     -1,640     -2,314  
    

 

 

 

      

 

 

 

Total

   25,859     53,472     81,511     117,738          28,111     60,706     92,542     131,972  
    

 

 

 

      

 

 

 

     2003

         2004

 

YTD year over year change


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   -28 %   -28 %   -24 %   -18 %        9 %   15 %   15 %   13 %

- Mobile Networks

   -31 %   -30 %   -26 %   -19 %        19 %   24 %   22 %   20 %

- Fixed Networks

   -42 %   -35 %   -34 %   -32 %        -53 %   -50 %   -47 %   -43 %

Total Network Equipment

   -32 %   -31 %   -27 %   -20 %        12 %   16 %   16 %   14 %

- Of which Network Rollout

   -38 %   -36 %   -28 %   -25 %        -14 %   -8 %   -7 %   -1 %

Professional Services

   -1 %   -9 %   -5 %   -3 %        -7 %   7 %   8 %   8 %

Other Operations

   -45 %   -45 %   -40 %   -35 %        4 %   7 %   9 %   8 %

Less: Intersegment Sales

   -32 %   -59 %   -51 %   -37 %        -8 %   67 %   66 %   54 %
    

 

 

 

      

 

 

 

Total

   -30 %   -29 %   -25 %   -19 %        9 %   14 %   14 %   12 %
    

 

 

 

      

 

 

 

 

16


OPERATING INCOME, OPERATING MARGIN AND EMPLOYEES BY SEGMENT BY QUARTER

 

SEK million

 

OPERATING INCOME AND MARGIN

 

     20031)

         2004

 

Year to date


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   -1,487     -503     863     6,646          4,199     10,514     17,011     25,345  

Phones

   -500     -683     -483     -183          435     960     1,565     2,143  

Other Operations

   -483     -833     -710     -447          45     606     868     1,469  

Unallocated 2)

   -318     -549     -779     -792          -165     169     20     -19  
    

 

 

 

      

 

 

 

Total

   -2,788     -2,568     -1,109     5,224          4,514     12,249     19,464     28,938  
    

 

 

 

      

 

 

 

     20031)

         2004

 

As percentage of net sales


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   -6 %   -1 %   1 %   6 %        16 %   19 %   20 %   21 %

Phones 3)

   —       —       —       —            —       —       —       —    

Other Operations

   -20 %   -17 %   -10 %   -4 %        2 %   12 %   11 %   13 %
    

 

 

 

      

 

 

 

Total

   -11 %   -5 %   -1 %   4 %        16 %   20 %   21 %   22 %
    

 

 

 

      

 

 

 

     20031)

         2004

 

Isolated quarters


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   -1,487     984     1,366     5,783          4,199     6,315     6,497     8,334  

Phones

   -500     -183     200     300          435     525     605     578  

Other Operations

   -483     -350     123     263          45     561     262     601  

Unallocated 2)

   -318     -231     -230     -13          -165     334     -149     -39  
    

 

 

 

      

 

 

 

Total

   -2,788     220     1,459     6,333          4,514     7,735     7,215     9,474  
    

 

 

 

      

 

 

 

     20031)

         2004

 

As percentage of net sales


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Systems

   -6 %   4 %   5 %   17 %        16 %   21 %   22 %   23 %

Phones3)

   —       —       —       —            —       —       —       —    

Other Operations

   -20 %   -14 %   5 %   8 %        2 %   20 %   9 %   18 %
    

 

 

 

      

 

 

 

Total

   -11 %   1 %   5 %   17 %        16 %   24 %   24 %   24 %
    

 

 

 

      

 

 

 


1)       2003 figures are reported excluding restructuring costs.

 

2)       “Unallocated” consists mainly of costs for corporate staffs and non-operational gains and losses

 

3)       Calculation not applicable

 

NUMBER OF EMPLOYEES

 

         

         

         

 

     2003

         2004

 
     0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   53,532     50,510     46,669     45,176          45,209     45,108     44,998     45,500  

Other Operations

   7,047     6,786     6,409     6,110          5,440     5,568     5,260     5,034  

Unallocated

   361     348     323     297          —       —       —       —    
    

 

 

 

 
  

 

 

 

Total

   60,940     57,644     53,401     51,583          50,649     50,676     50,258     50,534  
    

 

 

 

      

 

 

 

Of which Sweden

   29 068     27 657     25 234     24 408          22 702     22 427     21 842     21 296  
     2003

         2004

 

Change in percent


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Systems

   -25 %   -23 %   -25 %   -20 %        -16 %   -11 %   -4 %   1 %

Other Operations

   -34 %   -31 %   -27 %   -20 %        -23 %   -18 %   -18 %   -18 %

Unallocated

   -9 %   -22 %   -20 %   -23 %        —       —       —       —    
    

 

 

 

 
  

 

 

 

Total

   -26 %   -24 %   -26 %   -20 %        -17 %   -12 %   -6 %   -2 %
    

 

 

 

      

 

 

 

Of which Sweden

   -20 %   -19 %   -23 %   -19 %        -22 %   -19 %   -13 %   -13 %

 

17


ORDERS BOOKED BY MARKET AREA BY QUARTER

 

SEK million

 

     2003 1)

         2004 1)

 

Isolated quarters


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Europe, Middle East & Africa*

   14,081     14,425     14,140     11,521          17,836     17,749     15,846     21,402  

North America

   4,693     4,622     4,380     6,542          4,679     2,434     2,459     3,511  

Latin America

   2,621     1,669     2,245     2,547          3,700     4,587     4,460     2,934  

Asia Pacific

   5,665     7,632     7,363     8,854          6,799     8,342     6,201     10,020  
    

 

 

 

      

 

 

 

Total

   27,060     28,348     28,128     29,464          33,014     33,112     28,966     37,867  
    

 

 

 

      

 

 

 

* Of which Sweden

   1,406     1,190     967     854          964     1,317     977     1,511  

* Of which EU

   9,643     7,172     8,655     8,062          10,098     10,476     8,751     13,088  
     2003 1)

         2004 1)

 

Sequential change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Europe, Middle East & Africa*

   -25 %   2 %   -2 %   -19 %        55 %   0 %   -11 %   35 %

North America

   -16 %   -2 %   -5 %   49 %        -28 %   -48 %   1 %   43 %

Latin America

   —       -36 %   35 %   13 %        45 %   24 %   -3 %   -34 %

Asia Pacific

   -12 %   35 %   -4 %   20 %        -23 %   23 %   -26 %   62 %
    

 

 

 

      

 

 

 

Total

   -12 %   5 %   -1 %   5 %        12 %   0 %   -13 %   31 %
    

 

 

 

      

 

 

 

* Of which Sweden

   6 %   -15 %   -19 %   -12 %        13 %   37 %   -26 %   55 %

* Of which EU

   0 %   -25 %   21 %   -7 %        25 %   4 %   -16 %   50 %
     2003 1)

         2004 1)

 

Year over year change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Europe, Middle East & Africa*

   -28 %   -18 %   48 %   -38 %        27 %   23 %   12 %   86 %

North America

   -33 %   -21 %   -2 %   18 %        0 %   -47 %   -44 %   -46 %

Latin America

   -46 %   -50 %   58 %   —            41 %   175 %   99 %   15 %

Asia Pacific

   -46 %   -9 %   45 %   38 %        20 %   9 %   -16 %   13 %
    

 

 

 

      

 

 

 

Total

   -35 %   -20 %   37 %   -4 %        22 %   17 %   3 %   29 %
    

 

 

 

      

 

 

 

* Of which Sweden

   -42 %   -53 %   -28 %   -36 %        -31 %   11 %   1 %   77 %

* Of which EU

   -1 %   -47 %   110 %   -24 %        5 %   46 %   1 %   62 %
     2003 1)

         2004 1)

 

Year to date


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Europe, Middle East & Africa*

   14,081     28,506     42,646     54,167          17,836     35,585     51,431     72,833  

North America

   4,693     9,315     13,695     20,237          4,679     7,113     9,572     13,083  

Latin America

   2,621     4,290     6,535     9,082          3,700     8,287     12,747     15,681  

Asia Pacific

   5,665     13,297     20,660     29,514          6,799     15,141     21,342     31,362  
    

 

 

 

      

 

 

 

Total

   27,060     55,408     83,536     113,000          33,014     66,126     95,092     132,959  
    

 

 

 

      

 

 

 

* Of which Sweden

   1,406     2,596     3,563     4,417          964     2,281     3,258     4,769  

* Of which EU

   9,643     16,815     25,470     33,532          10,098     20,574     29,325     42,413  
     2003 1)

         2004 1)

 

YTD year over year change


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Europe, Middle East & Africa*

   -28 %   -23 %   -9 %   -17 %        27 %   25 %   21 %   34 %

North America

   -33 %   -27 %   -21 %   -12 %        0 %   -24 %   -30 %   -35 %

Latin America

   -46 %   -48 %   -32 %   -5 %        41 %   93 %   95 %   73 %

Asia Pacific

   -46 %   -30 %   -14 %   -3 %        20 %   14 %   3 %   6 %
    

 

 

 

      

 

 

 

Total

   -35 %   -28 %   -14 %   -12 %        22 %   19 %   14 %   18 %
    

 

 

 

      

 

 

 

* Of which Sweden

   -42 %   -47 %   -43 %   -42 %        -31 %   -12 %   -9 %   8 %

* Of which EU

   -1 %   -28 %   -7 %   -11 %        5 %   22 %   15 %   26 %

1) “Of which EU”: Restated due to new members since April 1, 2004.

 

18


NET SALES BY MARKET AREA BY QUARTER

 

SEK million

 

     2003 1)

         2004 1)

 

Isolated quarters


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Europe, Middle East & Africa*

   13,983     15,083     14,144     19,633          14,986     17,119     18,247     23,119  

North America

   3,940     4,217     4,271     5,199          4,404     4,939     3,328     2,800  

Latin America

   1,764     2,197     2,663     3,301          2,867     3,455     3,665     4,491  

Asia Pacific

   6,172     6,116     6,961     8,094          5,854     7,082     6,596     9,020  
    

 

 

 

      

 

 

 

Total

   25,859     27,613     28,039     36,227          28,111     32,595     31,836     39,430  
    

 

 

 

      

 

 

 

* Of which Sweden

   1,403     1,437     1,371     1,657          1,341     1,543     1,457     1,839  

* Of which EU

   8,584     8,847     8,488     12,224          8,167     10,144     10,053     14,002  
     2003 1)

         2004 1)

 

Sequential change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Europe, Middle East & Africa*

   -32 %   8 %   -6 %   39 %        -24 %   14 %   7 %   27 %

North America

   -40 %   7 %   1 %   22 %        -15 %   12 %   -33 %   -16 %

Latin America

   -26 %   25 %   21 %   24 %        -13 %   21 %   6 %   23 %

Asia Pacific

   -13 %   -1 %   14 %   16 %        -28 %   21 %   -7 %   37 %
    

 

 

 

      

 

 

 

Total

   -30 %   7 %   2 %   29 %        -22 %   16 %   -2 %   24 %
    

 

 

 

      

 

 

 

* Of which Sweden

   -32 %   2 %   -5 %   21 %        -19 %   15 %   -6 %   26 %

* Of which EU

   -36 %   2 %   -1 %   43 %        -33 %   24 %   -1 %   39 %
     2003 1)

         2004 1)

 

Year over year change


   Q1

    Q2

    Q3

    Q4

         Q1

    Q2

    Q3

    Q4

 

Europe, Middle East & Africa*

   -21 %   -21 %   -16 %   -5 %        7 %   13 %   29 %   18 %

North America

   -3 %   -30 %   -33 %   -21 %        12 %   17 %   -22 %   -46 %

Latin America

   -59 %   -29 %   -7 %   38 %        63 %   57 %   38 %   36 %

Asia Pacific

   -44 %   -41 %   -7 %   14 %        -5 %   16 %   -5 %   11 %
    

 

 

 

      

 

 

 

Total

   -30 %   -28 %   -16 %   -1 %        9 %   18 %   14 %   9 %
    

 

 

 

      

 

 

 

* Of which Sweden

   -29 %   -44 %   -18 %   -20 %        -4 %   7 %   6 %   11 %

* Of which EU

   -27 %   -27 %   -14 %   -8 %        -5 %   15 %   18 %   15 %
     2003 1)

         2004 1)

 

Year to date


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Europe, Middle East & Africa*

   13,983     29,066     43,210     62,843          14,986     32,105     50,352     73,471  

North America

   3,940     8,157     12,428     17,627          4,404     9,343     12,671     15,471  

Latin America

   1,764     3,961     6,624     9,925          2,867     6,322     9,987     14,478  

Asia Pacific

   6,172     12,288     19,249     27,343          5,854     12,936     19,532     28,552  
    

 

 

 

      

 

 

 

Total

   25,859     53,472     81,511     117,738          28,111     60,706     92,542     131,972  
    

 

 

 

      

 

 

 

* Of which Sweden

   1,403     2,840     4,211     5,868          1,341     2,884     4,341     6,180  

* Of which EU

   8,584     17,431     25,919     38,143          8,167     18,311     28,364     42,366  
     2003 1)

         2004 1)

 

YTD year over year change


   0303

    0306

    0309

    0312

         0403

    0406

    0409

    0412

 

Europe, Middle East & Africa*

   -21 %   -21 %   -19 %   -15 %        7 %   10 %   17 %   17 %

North America

   -3 %   -20 %   -25 %   -24 %        12 %   15 %   2 %   -12 %

Latin America

   -59 %   -47 %   -36 %   -22 %        63 %   60 %   51 %   46 %

Asia Pacific

   -44 %   -42 %   -33 %   -24 %        -5 %   5 %   1 %   4 %
    

 

 

 

      

 

 

 

Total

   -30 %   -29 %   -25 %   -19 %        9 %   14 %   14 %   12 %
    

 

 

 

      

 

 

 

* Of which Sweden

   -29 %   -38 %   -32 %   -29 %        -4 %   2 %   3 %   5 %

* Of which EU

   -27 %   -27 %   -23 %   -19 %        -5 %   5 %   9 %   11 %

1) “Of which EU”: Restated due to new members since April 1, 2004.

 

19


EXTERNAL ORDERS BOOKED BY MARKET AREA BY SEGMENT

 

SEK million

 

Jan - Dec 2004


   Systems

    Share of
Systems


    Other

    Share of
Other


    Total

    Share of
Total


 

Europe, Middle East & Africa

   65,886     54 %   6,947     74 %   72,833     55 %

North America

   12,526     10 %   557     6 %   13,083     10 %

Latin America

   15,432     12 %   249     3 %   15,681     12 %

Asia Pacific

   29,723     24 %   1,639     17 %   31,362     23 %
    

 

 

 

 

 

Total

   123,567</