Ericsson — Annual Report 2017

Apr 20, 2018

20-F/A 1 d648137d20fa.htm 20-F/A 20-F/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F/A

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-12033

TELEFONAKTIEBOLAGET LM ERICSSON

(Exact Name of Registrant as Specified in its Charter)

LM ERICSSON TELEPHONE COMPANY

(Translation of Registrant’s name into English)

Kingdom of Sweden

(Jurisdiction of incorporation or organization)

SE-164 83 Stockholm, Sweden

(Address of principal executive offices)

Jonas Stringberg, Vice President, Group Controller

Telephone: +46 10 716 53 20, jonas.stringberg@ericsson.com

SE-164 83 Stockholm, Sweden

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

| Title of Each
Class | Name of Each Exchange on
which Registered |
| --- | --- |
| American Depositary Shares (each representing one B share) | The NASDAQ Stock Market LLC |
| B Shares * | The NASDAQ Stock Market LLC |

• Not for trading, but only in connection with the registration of the American Depositary Shares representing such B Shares pursuant to the requirements of the Securities and Exchange Commission.

Securities registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

B shares (SEK 5.00 nominal value)	3,072,395,752
A shares (SEK 5.00 nominal value)	261,755,983
C shares (SEK 5.00 nominal value)	0

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company . See the definitions of “large accelerated filer” and “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☐ U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Explanatory Note

LM ERICSSON TELEPHONE COMPANY is filing this Amendment No. 1 (the “Form 20-F/A”) to its annual report on Form 20-F (the “Form 20-F”) for the fiscal year ended December 31, 2017, to:

• Submit the Interactive Data File (as defined in Rule 11 of Regulation S-T) with respect to the audited consolidated financial statements of LM ERICSSON TELEPHONE COMPANY (as defined in the Form 20-F) for that fiscal year as an exhibit to the Form 20-F pursuant to paragraph 101 under “Instructions as to Exhibits” of Form 20-F in accordance with Rule 405 of Regulation S-T.

• Correct typographical errors in Item 3.A “Key Information—Selected Financial Data.”

Other than as expressly set forth above, this Form 20-F/A does not, and does not purport to, amend, update or restate the information in any Item of the Form 20-F or reflect any events that have occurred after the Form 20-F was originally filed. The Form 20-F, as amended by this Form 20-F/A, continues to speak as of the initial filing date of the Form 20-F.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

We present below certain selected financial data derived from our consolidated financial statements as of and for the years ended December 31, 2017, 2016, 2015, 2014, and 2013 , included herein, prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). IFRS differs in certain significant respects from the accounting principles generally accepted in the United States, or “U.S. GAAP.”

The summary financial data should be read in conjunction with our consolidated financial statements and the notes thereto contained in this 2017 Form 20-F, as well as the information set forth under the heading “Item 5. Operating and Financial Review and Prospects” and the information set forth under the following headings of the 2017 Swedish Annual Report, which are incorporated herein by reference:

• Other Information

• Alternative Performance Measures

• Financial Terminology and Exchange rates

Net sales	201,303		–10 %	222,608	246,920	227,983	227,376
Operating expenses	–70,563		17 %	–60,501	–64,129	–63,408	–58,509
Operating income (loss)	–38,126		—	6,299	21,805	16,807	17,845
Net income (loss)	–35,063		—	1,895	13,673	11,143	12,174
Restructuring charges	8,501		12 %	7,567	5,040	1,456	4,453
Cash flow from operating activities	9,601		–31 %	14,010	20,597	18,702	17,389
Year-end position, SEK million
Total assets	260,544		–8 %	283,347	284,363	293,558	269,190
Property, plant and equipment	12,857		–23 %	16,734	15,901	13,341	11,433
Stockholders’ equity	99,540		–29 %	139,817	146,525	144,306	140,204
Non-controlling interest	636		–6 %	675	841	1,003	1,419
Per share indicators	636
Earnings (loss) per share, basic, SEK	–10.74		—	0.53	4.17	3.57	3.72
Earnings (loss) per share, diluted, SEK	–10.74		—	0.52	4.13	3.54	3.69
Dividends per share, SEK	1.00	1)	0 %	1.00	3.70	3.40	3.00
Dividends per share, USD	0.13	2)	13 %	0.11	0.39	0.41	0.46
Number of shares outstanding (in millions) end of period, basic	3,284		0 %	3,269	3,256	3,242	3,231
average, basic	3,277		0 %	3,263	3,249	3,237	3,226
average, diluted	3,317		0 %	3,303	3,282	3,270	3,257
Other information, SEK million
Additions to property, plant and equipment	3,877		–37 %	6,129	8,338	5,322	4,503
Depreciations and writedowns/impairments of property, plant and equipment	6,314		38 %	4,569	4,689	4,316	4,209
Acquisitions/capitalization of intangible assets	1,759		—	5,260	5,228	6,184	4,759
Amortization and write-downs/impairments of intangible assets	21,578		—	4,550	5,538	5,629	5,928
Research and development expenses	37,887		20 %	31,635	34,844	36,308	32,236
as percentage of net sales	18.8	%	—	14.2 %	14.1 %	15.9 %	14.2 %
Inventory turnover days	64		–7 %	69	64	64	62

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Alternative Performance Measures (APMs) — Gross margin	22.1 %	—	29.8 %	34.8 %	36.2 %	33.6 %
Operating margin	–18.9 %	—	2.8 %	8.8 %	7.4 %	7.8 %
EBITA margin	–10.7 %	—	4.0 %	10.5 %	9.3 %	9.8 %
Cash conversion	–58 %	—	175 %	85 %	84 %	79 %
Free cash flow	5,109	—	254	7,515	4,593	8,337
Capital employed, SEK million	158,230	–17 %	190,901	195,150	189,839	180,903
Return on equity	–29.4 %	—	1.2 %	9.3 %	8.1 %	8.7 %
Return on capital employed	–22.0 %	—	3.2 %	11.6 %	9.8 %	10.7 %
Equity ratio	38.4 %	—	49.6 %	51.8 %	49.5 %	52.6 %
Capital turnover	1.2	0 %	1.2	1.3	1.2	1.3
Working capital, SEK million	59,779	–33 %	89,039	104,811	103,246	106,940
Gross cash, SEK million	67,702	17 %	57,877	66,270	72,159	77,089
Net cash, SEK million	34,657	11 %	31,191	41,150	48,014	47,634
Statistical data, year-end
Number of employees	100,735	–10 %	111,464	116,281	118,055	114,340
of which in Sweden	13,864	–9 %	15,303	17,041	17,580	17,858
Export sales from Sweden, SEK million	86,812	–19 %	107,036	117,486	113,734	108,944

1) For 2017, as proposed by the Board of Directors.

2) For 2017, as proposed by the Board of Directors. Approximate USD Dividend Rate.

Exchange Rates

The following tables provide information with respect to the exchange rate for SEK per USD 1.00 based on the noon buying rate for cable transfers in SEK as certified for customs purposes by the Federal Reserve Bank of New York. The noon buying rate of 16 March 2018 was SEK 8.1960 per USD 1.00. The average exchange rate is computed using the noon buying rate on the last business day of each month during the period indicated.

Year ended December 31,
2013	6.5152
2014	6.9222
2015	8.4643
2016	8.5959
2017	8.4798

Month — October 2017	8.3803	8.0534
November 2017	8.4803	8.2769
December 2017	8.5053	8.1732
January 2018	8.2413	7.8549
February 2018	8.2694	7.8588

Effects of exchange rate fluctuations on our business is described in the Notes to the Consolidated Financial Statements—Note C20, “Financial Risk Management and Financial Instruments.”

Noon buying rates are not used in the preparation of our financial statements. The exchange rates used in the preparation of our consolidated financial statements are presented below:

SEK/EUR
Average rate 1)	9.64	9.44
Closing rate	9.83	9.56
SEK/USD
Average rate	8.53	8.56
Closing rate	8.20	9.06

1) Average rate is included for disclosure purposes only. Period income and expenses for each income statement are translated at period average exchange rates.

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PART III

ITEM 19 EXHIBITS

Exhibit Number	Description
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	XBRL Taxonomy Definition Linkbase Document.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document.

• In accordance with Rule 406T(b)(2) of Regulation S-T, such XBRL information will be furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, will be deemed not filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and otherwise will not be subject to liability under those sections.”

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SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to its Annual Report on Form 20-F on its behalf.

TELEFONAKTIEBOLAGET LM ERICSSON
By:	/s/ J ONAS S TRINGBERG
Name:	Jonas Stringberg
Title:	Vice President, Group Controller
By:	/s/ XAVIER DEDULLEN
Name:	Xavier Dedullen
Title:	Senior Vice President, Chief Legal Officer

Date: April 20, 2018

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