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Ericsson — Interim / Quarterly Report 2004
Feb 6, 2004
2911_ffr_2004-02-06_050aa901-f5fd-46a6-abf0-887aa89f4691.zip
Interim / Quarterly Report
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6-K 1 d6k.htm ANNOUNCEMENT REGARDING FOURTH QUARTER REPORT Announcement regarding fourth quarter report
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 6, 2004
LM ERICSSON TELEPHONE COMPANY
(Translation of registrants 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 x
Announcement of LM Ericsson Telephone company, dated February 6, 2004, regarding fourth quarter report.
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| For the German market: Notification pursuant to Section 15 WpHG |
Ericsson reports strong gross margin development and full year profit before restructuring charges
Fourth quarter and twelve months summary
Net sales SEK 36.2 (36.7) b., full year SEK 117.7 (145.8) b.
Net income SEK 0.1 (-8.3) b., full year SEK-10.8 (-19.0) b.
Earnings per share SEK 0.01 (-0.58), full year SEK-0.69 (-1.51)
Adjusted gross margin 41.6% (32.6%) up 5.7%-points sequentially 1
Adjusted income after financial items SEK 5.5 (-2.1) b., full year SEK 2.8 (-14.0) b 2
Cash flow before financing SEK 4.6 b. net cash SEK 27.0 b.
Restructuring charges of SEK 4.0 (6.3) b., full year SEK 16.5 (12.0) b.
| SEK b. | Fourth quarter — 2003 | 2002 | Change | Third quarter — 2003 | Change | Twelve months — 2003 | 2002 | Change |
|---|---|---|---|---|---|---|---|---|
| Orders booked, net | 29.5 | 30.7 | -4 % | 28.1 | 5 % | 113.0 | 128.4 | -12 % |
| Net sales | 36.2 | 36.7 | -1 % | 28.0 | 29 % | 117.7 | 145.8 | -19 % |
| Adjusted gross margin (%) 1 | 41.6 % | 32.6 % | | 35.9 % | | 37.1 % | 32.3 % | |
| Adjusted operating income 2 | 6.0 | -2.3 | | 1.3 | | 3.7 | -12.5 | |
| Adjusted income after financial items 2 | 5.5 | -2.1 | | 1.0 | | 2.8 | -14.0 | |
| Net income | 0.1 | -8.3 | | -3.9 | | -10.8 | -19.0 | |
| Earnings per share | 0.01 | -0.58 | | -0.25 | | -0.69 | -1.51 | |
| Cash flow before financing activities | 4.6 | 1.6 | | 9.1 | | 19.5 | -7.1 | |
| Opex run rate, annualized | 37 | 51 | | 38 | | | | |
| Number of employees | 51,583 | 64,621 | | 53,401 | -3 % | 51,583 | 64,621 | -20 % |
1 Adjusted for restructuring charges SEK 0.8 (3.5) b. and for the full year SEK 4.8 (5.6) b.
2 Adjusted for restructuring charges, non-operational capital gains/losses, net, and capitalization of development expenses, net, SEK 3.6 (5.9) b. and for the full year SEK 14.9 (8.8) b.
Book-to-bill was below one as expected due to seasonally strong sales in the fourth quarter. Orders booked increased sequentially by 5% to SEK 29.5 (30.7) b. Net sales in the quarter grew 29% sequentially to SEK 36.2 (36.7) b. Currency exchange effects have had a negative impact on sales of 9% year-over-year.
Adjusted gross margin improved sequentially by 5.7 percentage points to 41.6% (32.6%) as a result of ongoing restructuring with cost of sales reductions, favorable product mix, as well as higher capacity utilization in the seasonally strong fourth quarter. Operating expense reductions are on track, reaching an annualized run rate of SEK 37 (51) b. Adjusted income after financial items was SEK 5.5 (-2.1) b. compared to SEK 1.0 b. in the third quarter. Net currency exchange effects, compared to rates one year ago, have had a negative impact of SEK 1.6 b. on operating income in the quarter.
Cash flow before financing was SEK 4.6 (1.6) b. primarily due to improved earnings and further capital rationalization. The financial position was strengthened with a net of financial assets and liabilities, i.e. net cash, of SEK 27.0 b. Payment readiness has further increased to SEK 75.3 (66.3) b.
CEO COMMENTS
The mobile infrastructure market has definitely stabilized, traffic continues to grow and operators are increasing their focus on network quality and capacity. The year ended with strong sales and we continue to further enhance our leading position, says Carl-Henric Svanberg, President and CEO of Ericsson.
Significant improvements in operating profit, gross margin and cash flow have been achieved through increased efficiency and cost of sales reductions. This is the result of the focus on returning the company to profitability including the accelerated efforts in reducing cost of sales. Although the major restructuring is over, with minor adjustments remaining to be completed, by the third quarter 2004, our relentless work to increase efficiency and cost awareness will continue.
As market leader we have together with our customers gained key learnings in the early stages of the 3G rollout. This experience provides important advantages and we are encouraged by the 3G sales during the quarter. This year will be important for our industry as commercial launches of 3G gather speed in preparation for a mass market in 2005.
We have the most comprehensive experience from all around the world and in all standards. Our leading position in both 2G and 3G is a decisive competitive advantage in supporting operators in all markets and phases of development. We have built this strong position on our cutting-edge technology, large volumes with economies of scale and our ability to offer end-to-end solutions.
Understanding consumer needs is increasingly important in this industry. The key challenge for both operators and us, as a business partner, is to understand which services consumers want, what they are willing to pay for them, and how to adapt business models accordingly. We must support our customers and partners in developing their business, choosing the right technology and operating it most efficiently. This will continue to be a key focus area going forward, concludes Carl-Henric Svanberg.
MARKET VIEW
Operators have considerably strengthened their financial position and are increasing their efforts in service and network quality. Many operators in mature, capacity driven markets are signaling constraints after several years of limited investments and the increasing use of voice and mobile data services. 3G is the main focus but there is also a need for investments in capacity enhancements of both 2G and 2.5G.
In addition, tariffing plays an important role for traffic development. The strong traffic growth in North America over the years has mainly been driven by flat rate pricing. Recently, similar tariffing schemes have started to surface in Europe and Asia-Pacific and are likely to stimulate traffic growth.
In emerging markets subscriber growth continues to be strong. In certain markets such as China, India and Russia, there is a continuous need for further capacity enhancements driven by the strong traffic growth.
Most of these markets are still primarily driven by coverage. Low tariffs and low subscriber spend have so far been important limiting factors for profitable build out. With technology optimized for coverage it is possible to address far more consumers with maintained healthy profitability. Growth potential in these markets is therefore likely to be higher than earlier projections.
2
Today, worldwide subscription penetration is only 21% with a total of 1.34 billion subscriptions. The global number of mobile subscriptions is estimated to reach two billion during 2008. We believe that our solutions for operators in emerging markets could increase this growth rate.
The number of GSM subscriptions is expected to exceed one billion during the first quarter 2004. The growth in number of WCDMA subscriptions is gaining momentum and by the end of the quarter there were 2.8 million subscriptions. EDGE is playing an increasingly important role as a complement to WCDMA in rural areas. Within the CDMA2000 1X standard, the number of users is growing rapidly and by the end of the quarter there were 70 million subscriptions.
More and more operators are considering outsourcing of network integration and management. We recognized this potential early on, and based on our competitive advantage in end-to-end solutions and our large installed base, we have the markets strongest service portfolio.
OUTLOOK
We believe that the market has stabilized and our view is that the global mobile systems market in 2004, measured in USD, will be in line with, or show slight growth, compared to 2003. This compares with our previous expectation that the mobile systems market in 2004 would be in line with 2003. The addressable market for professional services, also measured in USD, is expected to continue to show good growth.
We expect sales for the first quarter to show a sequential decrease due to seasonality but to show moderate growth year-over-year. However, we are monitoring the sustainability of this growth trend as some part could be operators catching up on last years limited investments.
OPERATIONAL REALIGNMENT
Annualized operating expense run rate was SEK 37 b., a SEK 1 b. reduction sequentially. The earlier announced reductions targeting an annualized operating expense run rate of SEK 33 b. by the third quarter 2004 remain. Total restructuring charges were SEK 4.0 b. during the quarter.
Total restructuring costs for 2003 were SEK 16.5 b., including SEK 0.4 b. for associated companies, concluding the announced restructuring charges. Restructuring costs refer mainly to severance pay, unutilized real estate and write down of assets. Cash outlays in the quarter were SEK 2.6 b. Of the originally anticipated cash outlays of SEK 20 b. associated with the restructuring, SEK 9.1 b. remains at year-end, of which approximately SEK 5 b. is expected to be paid in 2004. The cash flow effect after 2004 refers mainly to unutilized real estate.
During the quarter, headcount was reduced by 1,800, bringing the number of employees to 51,600 (64,600). The previous headcount target remains with total number of employees reaching 47,000 during 2004.
3
CONSOLIDATED ACCOUNTS
FINANCIAL REVIEW
Income
Order intake was SEK 31.0 b. However, due to a SEK 1.5 b. adjustment of prior years order backlog, orders booked were SEK 29.5 (30.7) b., an increase by 5% sequentially. The increase was driven by particularly strong development in the Americas and Asia-Pacific, compensating for weaker order intake in the Middle East and Western Europe. Central and Eastern Europe showed sequential growth. Adjusted for currency exchange effects the year-over-year increase was 9%.
Sales grew 29% sequentially to SEK 36.2 (36.7) b. Most markets increased with major contributions from China, India and the US. Though year-over-year sales were almost flat, adjusted for currency exchange effects, sales were up 8%.
Adjusted gross margin improved for the fourth consecutive quarter to 41.6% (32.6%), a sequential increase from 35.9%. Ongoing restructuring with cost of sales reductions, favorable product mix, as well as higher capacity utilization were the main contributors to the improved gross margin.
Adjusted operating expenses amounted to SEK 10.5 (14.3) b. Operating expenses include a SEK 0.5 b. increase in customer financing risk provisions. Adjusted operating income was SEK 6.0 (-2.3) b. compared to SEK 1.3 b. the previous quarter. Adjusted income after financial items was SEK 5.5 (-2.0) b. compared to SEK 1.0 b. in the third quarter. Adjusted income after financial items was SEK 2.8 (-14.0) b. for the full year.
Net effects of currency exchange differences on operating income compared to the rates one year ago were SEK -1.6 b. in the quarter and SEK -3.1 b. for the full year. Excluding effects from currency hedging this effect would have been SEK -4.0 b. for the full year.
Net income was SEK 0.1 (-8.3) b. for the quarter and SEK -10.8 (-19.0) b. for the full year.
Earnings per share were SEK 0.01 (-0.58) and SEK -0.69 (-1.51) for the full year.
Balance sheet and financing
The financial position improved significantly as the net of financial assets and debt, i.e. net cash, increased sequentially from SEK 20.5 b. to SEK 27.0 (4.8) b. Cash improved by SEK 3.7 b. sequentially.
Days sales outstanding (DSO) for trade receivables were 79 (92), a decrease by 14 days sequentially. Inventory turnover was more than 6.1 (5.1) turns.
Gross customer financing exposure increased sequentially by SEK 0.5 b. to SEK 12.3 (21.8) b. Net customer financing credits on balance sheet were reduced sequentially by SEK 0.3 b. to SEK 4.0 (14.0) b.
A one-time payment was made to a Swedish pension management company, reducing our pension liability by SEK 3.5 b. SEK 2.1 b. in long-term maturities were repaid during the quarter. The equity ratio was 34.4% (36.4%) compared to 34.5% at the end of the previous quarter.
Cash flow
Cash flow from operations, adjusted for restructuring and pension payment, was SEK 11.0 b. Cash flow before financing activities remained strong and amounted to SEK 4.6 (1.6) b. Cash flow from investing activities was SEK -0.1 b. net.
Payment readiness increased sequentially by SEK 3.9 b. to SEK 75.3 (66.3) b.
4
SEGMENT RESULTS
SYSTEMS
| SEK b. | Fourth quarter — 2003 | 2002 | Change | Third quarter — 2003 | Change | Twelve months — 2003 | 2002 | Change |
|---|---|---|---|---|---|---|---|---|
| Orders booked | 27.6 | 28.5 | -3 % | 26.5 | 4 % | 105.4 | 115.3 | -9 % |
| Mobile Networks | 20.5 | 20.9 | -2 % | 21.5 | -5 % | 79.5 | 85.5 | -7 % |
| Fixed Networks | 1.1 | 1.9 | -41 % | 1.5 | -25 % | 6.3 | 9.3 | -32 % |
| Professional Services | 6.0 | 5.7 | 5 % | 3.5 | 72 % | 19.6 | 20.5 | -4 % |
| Net sales | 33.6 | 33.2 | 1 % | 25.9 | 30 % | 108.7 | 132.0 | -18 % |
| Mobile Networks | 25.7 | 24.7 | 4 % | 19.8 | 29 % | 82.1 | 101.1 | -19 % |
| Fixed Networks | 2.2 | 3.0 | -27 % | 1.7 | 33 % | 8.0 | 11.7 | -32 % |
| Professional Services | 5.7 | 5.5 | 3 % | 4.4 | 30 % | 18.6 | 19.2 | -3 % |
| Adjusted operating income | 5.6 | -0.3 | | 1.2 | | 5.2 | -4.9 | |
| Adjusted operating margin (%) | 17 % | -1 % | | 5 % | | 5 % | -4 % | |
Systems orders increased sequentially by 4% to SEK 27.6 (28.5) b. Orders for Professional Services increased by 72% sequentially.
Systems sales increased 30% sequentially to SEK 33.6 (33.2) b. driven by good growth in both GSM and WCDMA. Despite the weak USD, sales were flat year-over-year.
The GSM/WCDMA track increased significantly both sequentially and year-over-year by 38% and 9%, respectively. Adjusted for currency exchange effects the year-over-year increase was 18%. WCDMA equipment and associated network rollout services share of total Mobile Networks sales was stable at 13%.
Sales of Professional Services increased significantly by 30% sequentially to SEK 5.7 (5.5) b., and continue to represent 17% of total Systems sales. Adjusted for currency exchange effects the year-over-year increase was 13%.
OTHER OPERATIONS
| SEK b. | Fourth quarter — 2003 | 2002 | Change | Third quarter — 2003 | Change | Twelve months — 2003 | 2002 | Change |
|---|---|---|---|---|---|---|---|---|
| Orders booked | 2.3 | 2.6 | -9 % | 2.0 | 19 % | 9.2 | 15.4 | -40 % |
| Orders booked less divestitures | 2.3 | 2.5 | -8 % | 2.0 | 19 % | 9.2 | 11.9 | -23 % |
| Net sales | 3.2 | 3.9 | -18 % | 2.5 | 27 % | 10.6 | 16.2 | -35 % |
| Net sales less divestitures | 3.2 | 3.8 | -16 % | 2.5 | 27 % | 10.6 | 12.3 | -14 % |
| Adj. operating income | 0.1 | -1.2 | | 0.1 | | -0.6 | -4.7 | |
| Adj. operating income less divestitures | 0.1 | -1.2 | | 0.1 | | -0.6 | -3.1 | |
| Adj. operating margin (%) | 3 % | -32 % | | 5 % | | -6 % | -29 % | |
| Adj. operating margin less divestitures (%) | 3 % | -31 % | | 5 % | | -6 % | -25 % | |
Orders booked for comparable units, excluding divested operations, were SEK 2.3 (2.5) b.
Sales for comparable units were up sequentially at SEK 3.2 (3.8) b.
Adjusted operating income was positive at SEK 0.1 (-1.2) b., indicating good progress in restructuring activities.
5
SONY ERICSSON MOBILE COMMUNICATIONS
Sony Ericsson Mobile Communications (Sony Ericsson) reported profit for the second consecutive quarter. Ericssons share in earnings, adjusted for restructuring costs, was SEK 0.3 (-0.3) b., compared to SEK 0.2 b. in the third quarter. Following restructuring in the first half of the year Sony Ericsson has established a solid operational platform. With a full portfolio of products now gaining momentum, the company is well positioned to exploit the opportunities in the fast growing mobile multimedia market.
The strategic focus areas of GSM and Japanese standards posted a 50% and 15% year-on-year growth in shipments, respectively, with the T610 phone continuing to capture market share in all markets. In the quarter, new high-end and entry-level GSM products were introduced as well as two new handsets for the Japanese market.
RELATED PARTY TRANSACTIONS
Transactions with Sony Ericsson Mobile Communications
| SEK m. | Fourth quarter 2003 | Fourth quarter 2002 |
|---|---|---|
| Sales to Sony Ericsson | 450 | 1,316 |
| Royalty from Sony Ericsson | 146 | 4 |
| Purchases from Sony Ericsson | 47 | 422 |
| Receivables from Sony Ericsson | 192 | 479 |
| Liabilities to Sony Ericsson | 447 | 809 |
PARENT COMPANY INFORMATION
Net sales for the fourth quarter amounted to SEK 1.6 (2.0) b. and income after financial items, excluding restructuring costs, was SEK 3.2 (2.5) b.
The financial statements for 2002 have been revised due to changes in accounting principles. These changes have not affected the consolidated financial statements.
Major changes in the companys financial position for the full year include decreased current and long-term commercial and financial receivables from subsidiaries of SEK 25.2 b. and increased cash and short-term cash investments of SEK 9.1 b. Short- and long-term internal borrowings decreased by SEK 9.6 b. Notes and bond loans, including short-term portion, have decreased by SEK 11.8 b. At the end of the year, cash and short-term cash investments amounted to SEK 68.4 (59.3) b.
In accordance with the conditions of the Stock Purchase Plans and Option Plans for Ericsson employees, 1,402,225 shares from treasury stock were sold or distributed to employees during the fourth quarter. The holding of treasury stock at December 31, 2003, was 306,139,953 Class B shares.
DIVIDEND PROPOSAL
The Board of Directors will propose to the Annual General Meeting that no dividend is paid out for 2003.
6
ANNUAL REPORT
The annual report will be made available to shareholders at our head office at Torshamnsgatan 23, Stockholm, two weeks prior to the Annual General Meeting 2004.
ANNUAL GENERAL MEETING OF SHAREHOLDERS
The Annual General Meeting of shareholders will be held on Tuesday, April 6, 2004, 3 p.m., in Stockholm Globe Arena.
Stockholm, February 6, 2004
Carl-Henric Svanberg
President and CEO
Date for next report: April 23, 2004
AUDITORS REPORT
We have reviewed the report for the fourth quarter ended December 31, 2003, 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 fourth quarter report does not comply with the requirements for interim reports in the Annual Accounts Act.
Stockholm, February 6, 2004
| Bo Hjalmarsson | Jeanette Skoglund | Thomas Thiel |
|---|---|---|
| Authorized Public Accountant | Authorized Public Accountant | Authorized Public Accountant |
| PricewaterhouseCoopers AB | PricewaterhouseCoopers AB |
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, managements 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.
A glossary of all technical terms is available at: http://www.ericsson.com/about and in the Annual Report.
To read the full report, please go to: http://www.ericsson.com/investors/12month03-en.pdf
7
FOR FURTHER INFORMATION PLEASE CONTACT
Henry Sténson, Senior Vice President, Communications
Phone: +46 8 719 4044; E-mail: [email protected] or
Investors
Gary Pinkham, Vice President, Investor Relations
Phone: +46 8 719 0000; E-mail: [email protected]
Lotta Lundin, Investor Relations
Phone: +46 8 719 6553; E-mail: [email protected]
Glenn Sapadin, Investor Relations
Phone: +1 212 843 8435; E-mail: [email protected]
Media
Pia Gideon, Vice President, Market and External Communications
Phone: +46 8 719 2864, +46 70 519 8903; E-mail: [email protected]
Å se Lindskog, Director, Media Relations
Phone: +46 8 719 9725, +46 730 244 872; E-mail: [email protected]
Ola Rembe, Director, Media Relations
Phone: +46 8 719 9727, +46 730 244 873; E-mail: [email protected]
Telefonaktiebolaget LM Ericsson (publ)
Org. number: 556016-0680
Torshamnsgatan 23
SE-164 83 Stockholm
Phone: +46 8 719 00 00
www.ericsson.com
8
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
| Page | |
|---|---|
| Financial Statements | |
| Consolidated income statement | 10 |
| Consolidated balance sheet | 11 |
| Consolidated statement of cash flows | 12 |
| Changes in stockholders equity | 13 |
| Consolidated income statement isolated quarters | 14 |
| Page | |
| Additional Information | |
| Accounting policies, reporting and definitions | 15 |
| Orders booked by segment by quarter | 16 |
| Net sales by segment by quarter | 17 |
| Adjusted operating income, operating margin | 18 |
| Employees by segment by quarter | 18 |
| Orders booked by market area by quarter | 19 |
| Net sales by market area by quarter | 20 |
| External orders booked by market area by segment | 21 |
| External net sales by market area by segment | 21 |
| Top ten markets in orders and sales | 22 |
| Customer financing risk exposure | 22 |
| Trend of net sales and operating expenses | 22 |
| Other information | 23 |
9
ERICSSON
CONSOLIDATED INCOME STATEMENT
| SEK million | Oct - Dec — 2003 | 2002 1) | Change | Jan - Dec — 2003 | 2002 1) | Change |
|---|---|---|---|---|---|---|
| Net sales | 36,227 | 36,749 | -1 % | 117,738 | 145,773 | -19 % |
| Cost of sales | -21,944 | -28,261 | -22 % | -78,901 | -104,224 | -24 % |
| Gross margin | 14,283 | 8,488 | 38,837 | 41,549 | ||
| Research and development and other technical expenses | -7,309 | -8,157 | -10 % | -27,136 | -30,510 | -11 % |
| Selling expenses | -4,227 | -5,521 | -23 % | -15,115 | -21,896 | -31 % |
| Administrative expenses | -1,693 | -2,503 | -32 % | -8,762 | -9,995 | -12 % |
| Operating expenses | -13,229 | -16,181 | -51,013 | -62,401 | ||
| Other operating revenues and costs | 1,001 | -495 | 1,541 | 773 | ||
| Share in earnings of JV and associated companies | 256 | -11 | -604 | -1,220 | ||
| Operating income | 2,311 | -8,199 | -11,239 | -21,299 | ||
| Financial income | 1,240 | 2,155 | -42 % | 3,995 | 4,253 | -6 % |
| Financial expenses | -1,721 | -1,906 | -10 % | -4,859 | -5,789 | -16 % |
| Income after financial items | 1,830 | -7,950 | -12,103 | -22,835 | ||
| Taxes | -1,607 | -292 | 1,460 | 4,165 | ||
| Minority interest | -81 | -87 | -201 | -343 | ||
| Net income | 142 | -8,329 | -10,844 | -19,013 | ||
| 1) In compliance with RR 9, figures are restated to report minority interest net of tax. | ||||||
| As a consequence, and in line with the statutory format for income statements, we now cease to report a subtotal Income before taxes. | ||||||
| Other information | ||||||
| Average number of shares, basic (million) | 15,825 | 15,818 | 15,823 | 12,573 | ||
| Earnings per share, basic (SEK) | 0.01 | -0.58 | -0.69 | -1.51 | ||
| Earnings per share, diluted (SEK) | 0.01 | -0.58 | -0.69 | -1.51 | ||
| NOTE 1 | ||||||
| Items affecting comparability | ||||||
| Non-operational capital gains/losses, net | 2 | -259 | -13 | -42 | ||
| Restructuring costs, net | -4,022 | -6,271 | -16,463 | -11,962 | ||
| Capitalization of development expenses, net | 376 | 644 | 1,584 | 3,200 | ||
| Total | -3,644 | -5,886 | -14,892 | -8,804 | ||
| -of which in | ||||||
| Cost of sales | -770 | -3,482 | -4,790 | -5,589 | ||
| Operating expenses | -2,769 | -1,834 | -9,392 | -3,092 | ||
| Other operating revenues and costs | -18 | -570 | -358 | -353 | ||
| Share in earnings of JV and associated companies / Phones | -87 | | -352 | 230 | ||
| NOTE 2 | ||||||
| Key measurements, excluding items affecting comparability | ||||||
| Net sales | 36,227 | 36,749 | 117,738 | 145,773 | ||
| Adjusted gross margin | 15,053 | 11,970 | 43,627 | 47,138 | ||
| - as percentage of net sales | 41.6 % | 32.6 % | 37.1 % | 32.3 % | ||
| Adjusted operating expenses | -10,460 | -14,347 | -41,621 | -59,309 | ||
| - as percentage of net sales | 28.9 % | 39.0 % | 35.4 % | 40.7 % | ||
| Adjusted other operating revenues and costs | 1,019 | 75 | 1,899 | 1,126 | ||
| Share in earnings of JV and assoc. companies | 343 | -11 | -252 | -1,450 | ||
| Adjusted operating income | 5,955 | -2,313 | 3,653 | -12,495 | ||
| Adjusted operating margin (%) | 16.4 % | -6.3 % | 3.1 % | -8.6 % | ||
| Adjusted income after financial items | 5,474 | -2,064 | 2,789 | -14,031 |
10
ERICSSON
CONSOLIDATED BALANCE SHEET
| SEK million | Dec 31 2003 | Dec 31 2002 1) |
|---|---|---|
| ASSETS | ||
| Fixed assets | ||
| Intangible assets | ||
| Capitalized development expenses | 4,784 | 3,200 |
| Goodwill | 5,739 | 8,603 |
| Other | 687 | 806 |
| Tangible assets | 6,505 | 9,964 |
| Financial assets | ||
| Equity in JV and associated companies | 2,970 | 1,835 |
| Other investments | 433 | 2,243 |
| Long-term customer financing | 3,027 | 12,283 |
| Deferred tax assets | 27,130 | 26,047 |
| Other long-term receivables | 1,342 | 2,132 |
| 52,617 | 67,113 | |
| Current assets | ||
| Inventories | 10,965 | 13,419 |
| Receivables | ||
| Accounts receivable - trade | 31,886 | 37,384 |
| Short-term customer financing | 979 | 1,680 |
| Other receivables | 12,718 | 23,303 |
| Short-term cash investments, cash and bank | 73,207 | 66,214 |
| 129,755 | 142,000 | |
| Total assets | 182,372 | 209,113 |
| STOCKHOLDERS EQUITY, PROVISIONS AND LIABILITIES | ||
| Stockholders equity | 60,481 | 73,607 |
| Minority interest in equity of consolidated subsidiaries | 2,299 | 2,469 |
| Provisions | ||
| Pensions | 8,005 | 10,997 |
| Other provisions | 28,063 | 21,357 |
| 36,068 | 32,354 | |
| Long-term liabilities | 29,772 | 37,066 |
| Current liabilities | ||
| Interest-bearing liabilities | 9,509 | 14,321 |
| Accounts payable | 8,895 | 12,469 |
| Other current liabilities | 35,348 | 36,827 |
| 53,752 | 63,617 | |
| Total stockholders equity, provisions and liabilities | 182,372 | 209,113 |
| Of which interest-bearing provisions and liabilities | 46,209 | 61,463 |
| Net cash | 26,998 | 4,751 |
| Assets pledged as collateral | 8,023 | 2,800 |
| Contingent liabilities | 2,691 | 3,116 |
1) Restated for change in accounting principle regarding financial instruments (RR 27), and with all deferred tax assets reported as long-term.
11
ERICSSON
CONSOLIDATED STATEMENT OF CASH FLOWS
| SEK million | Oct-Dec — 2003 | 2002 1) | Jan-Dec — 2003 | 2002 |
|---|---|---|---|---|
| Net income | 142 | -8,329 | -10,844 | -19,013 |
| Adjustments to reconcile net income to cash | 4,160 | 2,718 | 6,387 | -1,832 |
| 4,302 | -5,611 | -4,457 | -20,845 | |
| Changes in operating net assets | ||||
| Inventories | 248 | 6,899 | 2,286 | 8,599 |
| Customer financing, short-term and long-term | -221 | -2,840 | 7,999 | -2,140 |
| Accounts receivable | -3,549 | -679 | 4,131 | 9,839 |
| Other | 3,902 | 2,870 | 12,908 | -5,541 |
| Cash flow from operating activities | 4,682 | 639 | 22,867 | -10,088 |
| Product development | -628 | -783 | -2,359 | -3,442 |
| Other investing activities | 504 | 1,779 | -1,053 | 6,426 |
| Cash flow from investing activities | -124 | 996 | -3,412 | 2,984 |
| Cash flow before financing activities | 4,558 | 1,635 | 19,455 | -7,104 |
| Dividends paid | 3 | -213 | -206 | -645 |
| Other equity transactions | 3 | -15 | 8 | 28,942 |
| Other financing activities | -738 | -9,949 | -11,726 | -22,700 |
| Cash flow from financing activities | -732 | -10,177 | -11,924 | 5,597 |
| Effect of exchange rate changes on cash | -171 | 362 | -538 | -1,203 |
| Net change in cash | 3,655 | -8,180 | 6,993 | -2,710 |
| Cash and cash equivalents, beginning of period | 69,552 | 74,394 | 66,214 | 68,924 |
| Cash and cash equivalents, end of period | 73,207 | 66,214 | 73,207 | 66,214 |
1) Capitalization of development expenses, previously reported in Adjustments to reconcile net income to cash, are as from Q4 2002 included in Investing activities. Figures for 2002 are restated.
12
CHANGES IN STOCKHOLDERS EQUITY
| SEK million | Jan-Dec 2003 | Jan-Dec 2002 |
|---|---|---|
| Opening balance | 73,607 | 68,587 |
| Stock issue, net | 158 | 28,940 |
| Sale of own shares | 8 | 2 |
| Stock Purchase Plan | 151 | 12 |
| Conversion of debentures | | |
| Repurchase of own stock | -158 | |
| Dividends paid | | |
| Changes in cumulative translation effects due to changes in foreign currency exchange rates | -2,444 | -4,921 |
| Net income | -10,844 | -19,013 |
| Adjustment of cost for stock issue 2002 | 3 | |
| Closing balance | 60,481 | 73,607 |
13
ERICSSON
CONSOLIDATED INCOME STATEMENT ISOLATED QUARTERS
| SEK million | 2003 — Q1 | Q2 | Q3 | Q4 | 2002 1) — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 25,859 | 27,613 | 28,039 | 36,227 | 36,966 | 38,545 | 33,513 | 36,749 |
| Cost of sales | -18,862 | -19,011 | -19,084 | -21,944 | -25,253 | -26,469 | -24,241 | -28,261 |
| Gross margin | 6,997 | 8,602 | 8,955 | 14,283 | 11,713 | 12,076 | 9,272 | 8,488 |
| Research and development and other technical expenses | -6,897 | -6,084 | -6,846 | -7,309 | -7,624 | -6,561 | -8,168 | -8,157 |
| Selling expenses | -3,449 | -4,085 | -3,354 | -4,227 | -5,592 | -5,630 | -5,153 | -5,521 |
| Administrative expenses | -1,804 | -1,842 | -3,423 | -1,693 | -2,552 | -2,711 | -2,229 | -2,503 |
| Operating expenses | -12,150 | -12,011 | -13,623 | -13,229 | -15,768 | -14,902 | -15,550 | -16,181 |
| Other operating revenues and costs | -86 | 195 | 431 | 1,001 | 771 | 267 | 230 | -495 |
| Share in earnings of JV and assoc. companies | -742 | -365 | 247 | 256 | -56 | -524 | -629 | -11 |
| Operating income | -5,981 | -3,579 | -3,990 | 2,311 | -3,340 | -3,083 | -6,677 | -8,199 |
| Financial income | 1,164 | 850 | 741 | 1,240 | 889 | 640 | 569 | 2,155 |
| Financial expenses | -1,218 | -856 | -1,064 | -1,721 | -1,682 | -1,210 | -991 | -1,906 |
| Income after financial items | -6,035 | -3,585 | -4,313 | 1,830 | -4,133 | -3,653 | -7,099 | -7,950 |
| Taxes | 1,847 | 820 | 400 | -1,607 | 1,233 | 1,116 | 2,108 | -292 |
| Minority interest | -124 | 37 | -33 | -81 | -68 | -182 | -6 | -87 |
| Net income | -4,312 | -2,728 | -3,946 | 142 | -2,968 | -2,719 | -4,997 | -8,329 |
| 1) In compliance with RR 9, figures are restated to report minority interest net of tax. As a consequence, and in line with the statutory format for income statements, we now cease to report a | ||||||||
| subtotal Income before taxes. | ||||||||
| Other information | ||||||||
| Average number of shares, basic (million) | 15,820 | 15,822 | 15,823 | 15,825 | 10,950 | 10,950 | 12,573 | 15,818 |
| Earnings per share, basic (SEK) | -0.27 | -0.17 | -0.25 | 0.01 | -0.27 | -0.25 | -0.41 | -0.58 |
| Earnings per share, diluted (SEK) | -0.27 | -0.17 | -0.25 | 0.01 | -0.27 | -0.25 | -0.41 | -0.58 |
| NOTE 1 | ||||||||
| Items affecting comparability | ||||||||
| Non-operational capital gains/losses, net | 5 | -10 | -10 | 2 | 102 | -3 | 118 | -259 |
| Restructuring costs, net | -3,193 | -3,799 | -5,449 | -4,022 | | -1,482 | -4,209 | -6,271 |
| Capitalization of development expenses, net | 614 | 412 | 182 | 376 | 1,005 | 910 | 641 | 644 |
| Total | -2,574 | -3,397 | -5,277 | -3,644 | 1,107 | -575 | -3,450 | -5,886 |
| -of which in | ||||||||
| Cost of sales | -1,813 | -1,096 | -1,111 | -770 | | -438 | -1,669 | -3,482 |
| Operating expenses | -745 | -1,884 | -3,994 | -2,769 | 1,005 | -364 | -1,899 | -1,834 |
| Other operating revenues and costs | -16 | -152 | -172 | -18 | 102 | -3 | 118 | -570 |
| Share in earnings of JV and associated companies / Phones | | -265 | | -87 | | 230 | | |
| NOTE 2 | ||||||||
| Key measurements, excluding items affecting comparability | ||||||||
| Net sales | 25,859 | 27,613 | 28,039 | 36,227 | 36,966 | 38,545 | 33,513 | 36,749 |
| Adjusted gross margin | 8,810 | 9,698 | 10,066 | 15,053 | 11,713 | 12,514 | 10,941 | 11,970 |
| - as percentage of net sales | 34.1 % | 35.1 % | 35.9 % | 41.6 % | 31.7 % | 32.5 % | 32.6 % | 32.6 % |
| Adjusted operating expenses | -11,405 | -10,127 | -9,629 | -10,460 | -16,773 | -14,538 | -13,651 | -14,347 |
| - as percentage of net sales | 44.1 % | 36.7 % | 34.3 % | 28.9 % | 45.4 % | 37.7 % | 40.7 % | 39.0 % |
| Adjusted other operating revenues and costs | -70 | 347 | 603 | 1,019 | 669 | 270 | 112 | 75 |
| Share in earnings of JV and assoc. companies | -742 | -100 | 247 | 343 | -56 | -754 | -629 | -11 |
| Adjusted operating income | -3,407 | -182 | 1,287 | 5,955 | -4,447 | -2,508 | -3,227 | -2,313 |
| Adjusted operating margin (%) | -13.2 % | -0.7 % | 4.6 % | 16.4 % | -12.0 % | -6.5 % | -9.6 % | -6.3 % |
| Adjusted income after financial items | -3,461 | -188 | 964 | 5,474 | -5,240 | -3,078 | -3,649 | -2,064 |
14
ACCOUNTING POLICIES AND REPORTING
Interim reports are prepared in accordance with RR 20 Interim Financial Reporting.
CHANGED ACCOUNTING POLICIES AND REPORTING IN 2003
From January 1, 2003, Ericsson has adopted the following new recommendations issued by the Swedish Financial Accounting Standards Council (Redovisningsrådet):
Presentation of financial statements (RR22)
Investment property (RR24)
Segment reporting (RR25)
Events after the balance sheet date (RR26)
Financial instruments: Disclosure and presentation (RR27)
Accounting for government grants (RR28)
These changes have no impact on reported Net Income or Earnings Per Share. The presentation of certain items in the income statement will change and we will no longer report minority interests before tax and Income Before Tax. Instead, we will report Income after financial items and Net Income after deduction of Taxes and Minority interests. Minority interests will be reported net of taxes. The presentation of the Balance Sheet will not change, however, the reported amounts of certain items will be affected.
RR22 requires compliance with all recommendations issued by the Swedish Financial Accounting Standards Council. Prior to 2003, Ericsson deviated from the recommendations in two aspects:
In deviation from RR1:00, Consolidated Financial Statements, minority interests were divided in two items; share in income before taxes and share in taxes. From January 1, 2003, in accordance with RR1:00, we will report minority interest net of taxes.
In deviation from RR9, Income tax, deferred tax assets were prior to 2003 reported as both current and long-term. From January 1, 2003, all deferred taxes are reported as long term in accordance with RR9.
The new recommendation RR25, Segment reporting, has been adopted from January 1, 2003. As a consequence, we have reviewed our segments and decided to transfer internal service units from segment Other Operations to segment Systems, since the major part of the services are provided to Systems. This will reduce orders and sales previously reported in Other Operations and also reduce the amounts of eliminations of inter-segment sales. Employees in such service units will be transferred from Other Operations to Systems.
RR27 introduces changed rules for netting of assets and liabilities of similar nature. The effects in the Parent Company are increased financial receivables from and liabilities to subsidiaries. The effect on group level is that certain receivables for which the credit risks have been transferred to third parties can no longer be reported net without a formal three-party agreement. The amount for trade receivables and short-term borrowings will be affected.
DEFINITIONS NOT PREVIOUSLY INCLUDED IN THE ANNUAL REPORT
Adjusted Operating Income and Adjusted Income After Financial Items
These measures are reported with the following adjustments made to the original measure:
Restructuring costs are excluded
Net effect of capitalization of development expenses is reversed
Non-operational capital gains/losses are excluded
Operating expenses run rate
Annualized run rate in a quarter is calculated in two steps:
-
Total reported operating expenses are adjusted for restructuring costs and effects of capitalization of development costs plus risk provisions for customer financing, which are not considered related to size of operations
-
Such amount is adjusted for seasonality, where the first and third quarters are historically showing lower expenses than the average quarter and the fourth quarter correspondingly higher. To arrive at annualized run rate, adjusted quarterly amounts are then multiplied by four.
15
ORDERS BOOKED BY SEGMENT BY QUARTER
SEK million
| Isolated quarters | 2002 1) — Q1 | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Systems | 37,701 | 31,197 | 17,938 | 28,505 | 24,996 | 26,336 | 26,518 | 27,592 |
| - Mobile Networks | 29,344 | 22,900 | 12,439 | 20,865 | 17,475 | 20,020 | 21,508 | 20,455 |
| - Fixed Networks | 2,693 | 2,952 | 1,751 | 1,909 | 1,990 | 1,724 | 1,513 | 1,128 |
| Total Network Equipment | 32,037 | 25,852 | 14,190 | 22,774 | 19,465 | 21,744 | 23,021 | 21,583 |
| - Of which Network Rollout | 4,703 | 3,939 | 1,411 | 4,020 | 2,542 | 2,000 | 2,025 | 2,153 |
| Professional Services | 5,664 | 5,345 | 3,748 | 5,731 | 5,531 | 4,592 | 3,497 | 6,009 |
| Other Operations | 4,889 | 4,833 | 3,102 | 2,560 | 2,587 | 2,312 | 1,963 | 2,330 |
| Less: Intersegment Orders | -697 | -765 | -510 | -402 | -523 | -300 | -353 | -458 |
| Total | 41,893 | 35,265 | 20,530 | 30,663 | 27,060 | 28,348 | 28,128 | 29,464 |
| Sequential change | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|
| Systems | -17 % | -43 % | 59 % | -12 % | 5 % | 1 % | 4 % |
| - Mobile Networks | -22 % | -46 % | 68 % | -16 % | 15 % | 7 % | -5 % |
| - Fixed Networks | 10 % | -41 % | 9 % | 4 % | -13 % | -12 % | -25 % |
| Total Network Equipment | -19 % | -45 % | 60 % | -15 % | 12 % | 6 % | -6 % |
| - Of which Network Rollout | -16 % | -64 % | 185 % | -37 % | -21 % | 1 % | 6 % |
| Professional Services | -6 % | -30 % | 53 % | -3 % | -17 % | -24 % | 72 % |
| Other Operations | -1 % | -36 % | -17 % | 1 % | -11 % | -15 % | 19 % |
| Less: Intersegment Orders | 10 % | -33 % | -21 % | 30 % | -43 % | 18 % | 30 % |
| Total | -16 % | -42 % | 49 % | -12 % | 5 % | -1 % | 5 % |
| Year over year change | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| Systems | -34 % | -16 % | 48 % | -3 % |
| - Mobile Networks | -40 % | -13 % | 73 % | -2 % |
| - Fixed Networks | -26 % | -42 % | -14 % | -41 % |
| Total Network Equipment | -39 % | -16 % | 62 % | -5 % |
| - Of which Network Rollout | -46 % | -49 % | 44 % | -46 % |
| Professional Services | -2 % | -14 % | -7 % | 5 % |
| Other Operations | -47 % | -52 % | -37 % | -9 % |
| Less: Intersegment Orders | -25 % | -61 % | -31 % | 14 % |
| Total | -35 % | -20 % | 37 % | -4 % |
| Year to Date | 2002 1) — 0203 | 0206 | 0209 | 0212 | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|---|---|---|---|
| Systems | 37,701 | 68,898 | 86,836 | 115,341 | 24,996 | 51,332 | 77,850 | 105,442 |
| - Mobile Networks | 29,344 | 52,245 | 64,684 | 85,549 | 17,475 | 37,495 | 59,003 | 79,458 |
| - Fixed Networks | 2,693 | 5,645 | 7,396 | 9,305 | 1,990 | 3,714 | 5,227 | 6,355 |
| Total Network Equipment | 32,037 | 57,890 | 72,080 | 94,854 | 19,465 | 41,209 | 64,230 | 85,813 |
| - Of which Network Rollout | 4,703 | 8,642 | 10,053 | 14,073 | 2,542 | 4,542 | 6,567 | 8,720 |
| Professional Services | 5,664 | 11,008 | 14,756 | 20,487 | 5,531 | 10,123 | 13,620 | 19,629 |
| Other Operations | 4,889 | 9,722 | 12,824 | 15,384 | 2,587 | 4,899 | 6,862 | 9,192 |
| Less: Intersegment Orders | -697 | -1,462 | -1,972 | -2,374 | -523 | -823 | -1,176 | -1,634 |
| Total | 41,893 | 77,158 | 97,688 | 128,351 | 27,060 | 55,408 | 83,536 | 113,000 |
| YTD year over year change | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|
| Systems | -34 % | -25 % | -10 % | -9 % |
| - Mobile Networks | -40 % | -28 % | -9 % | -7 % |
| - Fixed Networks | -26 % | -34 % | -29 % | -32 % |
| Total Network Equipment | -39 % | -29 % | -11 % | -10 % |
| - Of which Network Rollout | -46 % | -47 % | -35 % | -38 % |
| Professional Services | -2 % | -8 % | -8 % | -4 % |
| Other Operations | -47 % | -50 % | -46 % | -40 % |
| Less: Intersegment Orders | -25 % | -44 % | -40 % | -31 % |
| Total | -35 % | -28 % | -14 % | -12 % |
1) Year 2002 restated to present Other Operations and Intersegment Orders excluding internal service operations
16
NET SALES BY SEGMENT BY QUARTER
SEK million
| Isolated quarters | 2002 1) — Q1 | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Systems | 33,323 | 34,781 | 30,612 | 33,239 | 23,961 | 25,224 | 25,907 | 33,574 |
| - Mobile Networks | 25,552 | 26,971 | 23,923 | 24,657 | 17,643 | 18,949 | 19,826 | 25,635 |
| - Fixed Networks | 3,287 | 2,983 | 2,380 | 3,049 | 1,898 | 2,177 | 1,670 | 2,220 |
| Total Network Equipment | 28,839 | 29,954 | 26,303 | 27,706 | 19,541 | 21,126 | 21,496 | 27,855 |
| - Of which Network Rollout | 4,183 | 3,842 | 2,928 | 3,834 | 2,577 | 2,532 | 2,791 | 3,213 |
| Professional Services | 4,484 | 4,827 | 4,309 | 5,533 | 4,420 | 4,098 | 4,411 | 5,719 |
| Other Operations | 4,327 | 4,554 | 3,430 | 3,890 | 2,363 | 2,534 | 2,508 | 3,174 |
| Less: Intersegment Sales | -684 | -790 | -529 | -380 | -465 | -145 | -376 | -521 |
| Total | 36,966 | 38,545 | 33,513 | 36,749 | 25,859 | 27,613 | 28,039 | 36,227 |
| Sequential change | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|
| Systems | 4 % | -12 % | 9 % | -28 % | 5 % | 3 % | 30 % |
| - Mobile Networks | 6 % | -11 % | 3 % | -28 % | 7 % | 5 % | 29 % |
| - Fixed Networks | -9 % | -20 % | 28 % | -38 % | 15 % | -23 % | 33 % |
| Total Network Equipment | 4 % | -12 % | 5 % | -29 % | 8 % | 2 % | 30 % |
| - Of which Network Rollout | -8 % | -24 % | 31 % | -33 % | -2 % | 10 % | 15 % |
| Professional Services | 8 % | -11 % | 28 % | -20 % | -7 % | 8 % | 30 % |
| Other Operations | 5 % | -25 % | 13 % | -39 % | 7 % | -1 % | 27 % |
| Less: Intersegment Sales | 15 % | -33 % | -28 % | 22 % | -69 % | 159 % | 39 % |
| Total | 4 % | -13 % | 10 % | -30 % | 7 % | 2 % | 29 % |
| Year over year change | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| Systems | -28 % | -27 % | -15 % | 1 % |
| - Mobile Networks | -31 % | -30 % | -17 % | 4 % |
| - Fixed Networks | -42 % | -27 % | -30 % | -27 % |
| Total Network Equipment | -32 % | -29 % | -18 % | 1 % |
| - Of which Network Rollout | -38 % | -34 % | -5 % | -16 % |
| Professional Services | -1 % | -15 % | 2 % | 3 % |
| Other Operations | -45 % | -44 % | -27 % | -18 % |
| Less: Intersegment Sales | -32 % | -82 % | -29 % | 37 % |
| Total | -30 % | -28 % | -16 % | -1 % |
| Year to Date | 2002 1) — 0203 | 0206 | 0209 | 0212 | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|---|---|---|---|
| Systems | 33,323 | 68,104 | 98,716 | 131,955 | 23,961 | 49,185 | 75,092 | 108,666 |
| - Mobile Networks | 25,552 | 52,523 | 76,446 | 101,103 | 17,643 | 36,592 | 56,418 | 82,053 |
| - Fixed Networks | 3,287 | 6,270 | 8,650 | 11,699 | 1,898 | 4,075 | 5,745 | 7,965 |
| Total Network Equipment | 28,839 | 58,793 | 85,096 | 112,802 | 19,541 | 40,667 | 62,163 | 90,018 |
| - Of which Network Rollout | 4,183 | 8,025 | 10,953 | 14,786 | 2,577 | 5,109 | 7,900 | 11,113 |
| Professional Services | 4,484 | 9,311 | 13,620 | 19,153 | 4,420 | 8,518 | 12,929 | 18,648 |
| Other Operations | 4,327 | 8,881 | 12,311 | 16,201 | 2,363 | 4,897 | 7,405 | 10,579 |
| Less: Intersegment Sales | -684 | -1,474 | -2,003 | -2,383 | -465 | -610 | -986 | -1,507 |
| Total | 36,966 | 75,511 | 109,024 | 145,773 | 25,859 | 53,472 | 81,511 | 117,738 |
| YTD year over year change | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|
| Systems | -28 % | -28 % | -24 % | -18 % |
| - Mobile Networks | -31 % | -30 % | -26 % | -19 % |
| - Fixed Networks | -42 % | -35 % | -34 % | -32 % |
| Total Network Equipment | -32 % | -31 % | -27 % | -20 % |
| - Of which Network Rollout | -38 % | -36 % | -28 % | -25 % |
| Professional Services | -1 % | -9 % | -5 % | -3 % |
| Other Operations | -45 % | -45 % | -40 % | -35 % |
| Less: Intersegment Sales | -32 % | -59 % | -51 % | -37 % |
| Total | -30 % | -29 % | -25 % | -19 % |
1) Year 2002 restated to present Other Operations and Intersegment Sales excluding internal service operations
17
ADJUSTED OPERATING INCOME, OPERATING MARGIN AND EMPLOYEES BY SEGMENT BY QUARTER
SEK million
ADJUSTED OPERATING INCOME AND MARGIN
| Year to date | 2002 — 0203 | 0206 | 0209 | 0212 | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|---|---|---|---|
| Systems | -2,799 | -3,495 | -4,604 | -4,907 | -2,097 | -1,523 | -341 | 5,234 |
| Phones | | -442 | -992 | -1,331 | -500 | -683 | -483 | -183 |
| Other Operations | -1,343 | -2,318 | -3,477 | -4,715 | -492 | -834 | -699 | -606 |
| Unallocated 1) | -305 | -700 | -1,109 | -1,542 | -318 | -549 | -779 | -792 |
| Total | -4,447 | -6,955 | -10,182 | -12,495 | -3,407 | -3,589 | -2,302 | 3,653 |
| As percentage of net sales | 2002 — 0203 | 0206 | 0209 | 0212 | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|---|---|---|---|
| Systems | -8 % | -5 % | -5 % | -4 % | -9 % | -3 % | 0 % | 5 % |
| Phones 2) | | | | | | | | |
| Other Operations | -31 % | -26 % | -28 % | -29 % | -21 % | -17 % | -9 % | -6 % |
| Total | -12 % | -9 % | -9 % | -9 % | -13 % | -7 % | -3 % | 3 % |
| Isolated quarters | 2002 — Q1 | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Systems | -2,799 | -696 | -1,109 | -303 | -2,097 | 574 | 1,182 | 5,575 |
| Phones | | -442 | -550 | -339 | -500 | -183 | 200 | 300 |
| Other Operations | -1,343 | -975 | -1,159 | -1,238 | -492 | -342 | 135 | 93 |
| Unallocated 1) | -305 | -395 | -409 | -433 | -318 | -231 | -230 | -13 |
| Total | -4,447 | -2,508 | -3,227 | -2,313 | -3,407 | -182 | 1,287 | 5,955 |
| As percentage of net sales | 2002 — Q1 | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Systems | -8 % | -2 % | -4 % | -1 % | -9 % | 2 % | 5 % | 17 % |
| Phones 2) | | | | | | | | |
| Other Operations | -31 % | -21 % | -34 % | -32 % | -21 % | -13 % | 5 % | 3 % |
| Total | -12 % | -7 % | -10 % | -6 % | -13 % | -1 % | 5 % | 16 % |
1) Unallocated consists mainly of costs for corporate staffs and non-operational gains and losses
2) Calculation not applicable
NUMBER OF EMPLOYEES
| 2002 1) — 0203 | 0206 | 0209 | 0212 | 2003 — 0303 | 0306 | 0309 | 0312 | |
|---|---|---|---|---|---|---|---|---|
| Systems | 70,957 | 65,899 | 62,543 | 56,590 | 53,532 | 50,510 | 46,669 | 45,176 |
| Other Operations | 10,659 | 9,876 | 8,774 | 7,646 | 7,047 | 6,786 | 6,409 | 6,110 |
| Unallocated | 396 | 446 | 406 | 385 | 361 | 348 | 323 | 297 |
| Total | 82,012 | 76,221 | 71,723 | 64,621 | 60,940 | 57,644 | 53,401 | 51,583 |
| Change in percent | 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|
| Systems | -25 % | -23 % | -25 % | -20 % |
| Other Operations | -34 % | -31 % | -27 % | -20 % |
| Unallocated | -9 % | -22 % | -20 % | -23 % |
| Total | -26 % | -24 % | -26 % | -20 % |
1) Employees in internal service units have been transferred from other Operations to Systems
18
ORDERS BOOKED BY MARKET AREA BY QUARTER
SEK million
| Isolated quarters | 2002 — Q1 | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Europe, Middle East & Africa* | 19,493 | 17,691 | 9,554 | 18,710 | 14,081 | 14,425 | 14,140 | 11,521 |
| North America | 7,003 | 5,834 | 4,473 | 5,567 | 4,693 | 4,622 | 4,380 | 6,542 |
| Latin America | 4,846 | 3,349 | 1,417 | -37 | 2,621 | 1,669 | 2,245 | 2,547 |
| Asia Pacific | 10,551 | 8,391 | 5,086 | 6,423 | 5,665 | 7,632 | 7,363 | 8,854 |
| Total | 41,893 | 35,265 | 20,530 | 30,663 | 27,060 | 28,348 | 28,128 | 29,464 |
| * Of which Sweden | 2,437 | 2,506 | 1,346 | 1,331 | 1,406 | 1,190 | 967 | 854 |
| * Of which EU | 8,877 | 12,439 | 3,844 | 8,843 | 8,805 | 6,643 | 8,054 | 6,726 |
| Sequential change | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|
| Europe, Middle East & Africa* | -9 % | -46 % | 96 % | -25 % | 2 % | -2 % | -19 % |
| North America | -17 % | -23 % | 24 % | -16 % | -2 % | -5 % | 49 % |
| Latin America | -31 % | -58 % | -103 % | | -36 % | 35 % | 13 % |
| Asia Pacific | -20 % | -39 % | 26 % | -12 % | 35 % | -4 % | 20 % |
| Total | -16 % | -42 % | 49 % | -12 % | 5 % | -1 % | 5 % |
| * Of which Sweden | 3 % | -46 % | -1 % | 6 % | -15 % | -19 % | -12 % |
| * Of which EU | 40 % | -69 % | 130 % | 0 % | -25 % | 21 % | -16 % |
| Year over year change | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| Europe, Middle East & Africa* | -28 % | -18 % | 48 % | -38 % |
| North America | -33 % | -21 % | -2 % | 18 % |
| Latin America | -46 % | -50 % | 58 % | |
| Asia Pacific | -46 % | -9 % | 45 % | 38 % |
| Total | -35 % | -20 % | 37 % | -4 % |
| * Of which Sweden | -42 % | -53 % | -28 % | -36 % |
| * Of which EU | -1 % | -47 % | 110 % | -24 % |
| Year to date | 2002 — 0203 | 0206 | 0209 | 0212 | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|---|---|---|---|
| Europe, Middle East & Africa* | 19,493 | 37,184 | 46,738 | 65,448 | 14,081 | 28,506 | 42,646 | 54,167 |
| North America | 7,003 | 12,837 | 17,310 | 22,877 | 4,693 | 9,315 | 13,695 | 20,237 |
| Latin America | 4,846 | 8,195 | 9,612 | 9,575 | 2,621 | 4,290 | 6,535 | 9,082 |
| Asia Pacific | 10,551 | 18,942 | 24,028 | 30,451 | 5,665 | 13,297 | 20,660 | 29,514 |
| Total | 41,893 | 77,158 | 97,688 | 128,351 | 27,060 | 55,408 | 83,536 | 113,000 |
| * Of which Sweden | 2,437 | 4,943 | 6,289 | 7,620 | 1,406 | 2,596 | 3,563 | 4,417 |
| * Of which EU | 8,877 | 21,316 | 25,160 | 34,003 | 8,805 | 15,448 | 23,502 | 30,228 |
| YTD year over year change | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|
| Europe, Middle East & Africa* | -28 % | -23 % | -9 % | -17 % |
| North America | -33 % | -27 % | -21 % | -12 % |
| Latin America | -46 % | -48 % | -32 % | -5 % |
| Asia Pacific | -46 % | -30 % | -14 % | -3 % |
| Total | -35 % | -28 % | -14 % | -12 % |
| * Of which Sweden | -42 % | -47 % | -43 % | -42 % |
| * Of which EU | -1 % | -28 % | -7 % | -11 % |
19
NET SALES BY MARKET AREA BY QUARTER
SEK million
| Isolated quarters | 2002 — Q1 | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Europe, Middle East & Africa* | 17,606 | 19,060 | 16,772 | 20,686 | 13,983 | 15,083 | 14,144 | 19,633 |
| North America | 4,072 | 6,063 | 6,381 | 6,552 | 3,940 | 4,217 | 4,271 | 5,199 |
| Latin America | 4,311 | 3,105 | 2,866 | 2,394 | 1,764 | 2,197 | 2,663 | 3,301 |
| Asia Pacific | 10,977 | 10,317 | 7,494 | 7,117 | 6,172 | 6,116 | 6,961 | 8,094 |
| Total | 36,966 | 38,545 | 33,513 | 36,749 | 25,859 | 27,613 | 28,039 | 36,227 |
| * Of which Sweden | 1,974 | 2,585 | 1,676 | 2,068 | 1,403 | 1,437 | 1,371 | 1,657 |
| * Of which EU | 10,867 | 11,068 | 9,193 | 12,268 | 7,885 | 8,070 | 7,950 | 11,330 |
| Sequential change | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|
| Europe, Middle East & Africa* | 8 % | -12 % | 23 % | -32 % | 8 % | -6 % | 39 % |
| North America | 49 % | 5 % | 3 % | -40 % | 7 % | 1 % | 22 % |
| Latin America | -28 % | -8 % | -16 % | -26 % | 25 % | 21 % | 24 % |
| Asia Pacific | -6 % | -27 % | -5 % | -13 % | -1 % | 14 % | 16 % |
| Total | 4 % | -13 % | 10 % | -30 % | 7 % | 2 % | 29 % |
| * Of which Sweden | 31 % | -35 % | 23 % | -32 % | 2 % | -5 % | 21 % |
| * Of which EU | 2 % | -17 % | 33 % | -36 % | 2 % | -1 % | 43 % |
| Year over year change | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| Europe, Middle East & Africa* | -21 % | -21 % | -16 % | -5 % |
| North America | -3 % | -30 % | -33 % | -21 % |
| Latin America | -59 % | -29 % | -7 % | 38 % |
| Asia Pacific | -44 % | -41 % | -7 % | 14 % |
| Total | -30 % | -28 % | -16 % | -1 % |
| * Of which Sweden | -29 % | -44 % | -18 % | -20 % |
| * Of which EU | -27 % | -27 % | -14 % | -8 % |
| Year to date | 2002 — 0203 | 0206 | 0209 | 0212 | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|---|---|---|---|
| Europe, Middle East & Africa* | 17,606 | 36,666 | 53,438 | 74,124 | 13,983 | 29,066 | 43,210 | 62,843 |
| North America | 4,072 | 10,135 | 16,516 | 23,068 | 3,940 | 8,157 | 12,428 | 17,627 |
| Latin America | 4,311 | 7,416 | 10,282 | 12,676 | 1,764 | 3,961 | 6,624 | 9,925 |
| Asia Pacific | 10,977 | 21,294 | 28,788 | 35,905 | 6,172 | 12,288 | 19,249 | 27,343 |
| Total | 36,966 | 75,511 | 109,024 | 145,773 | 25,859 | 53,472 | 81,511 | 117,738 |
| * Of which Sweden | 1,974 | 4,559 | 6,235 | 8,303 | 1,403 | 2,840 | 4,211 | 5,868 |
| * Of which EU | 10,867 | 21,935 | 31,128 | 43,396 | 7,885 | 15,955 | 23,905 | 35,235 |
| YTD year over year change | 2003 — 0303 | 0306 | 0309 | 0312 |
|---|---|---|---|---|
| Europe, Middle East & Africa* | -21 % | -21 % | -19 % | -15 % |
| North America | -3 % | -20 % | -25 % | -24 % |
| Latin America | -59 % | -47 % | -36 % | -22 % |
| Asia Pacific | -44 % | -42 % | -33 % | -24 % |
| Total | -30 % | -29 % | -25 % | -19 % |
| * Of which Sweden | -29 % | -38 % | -32 % | -29 % |
| * Of which EU | -27 % | -27 % | -23 % | -19 % |
20
EXTERNAL ORDERS BOOKED BY MARKET AREA BY SEGMENT
SEK million
| Jan - Dec 2003 | Systems | Share of Systems | Other | Share of Other | Total | Share of Total |
|---|---|---|---|---|---|---|
| Europe, Middle East & Africa | 47,817 | 46 % | 6,350 | 76 % | 54,167 | 48 % |
| North America | 19,672 | 19 % | 565 | 7 % | 20,237 | 18 % |
| Latin America | 8,764 | 8 % | 318 | 4 % | 9,082 | 8 % |
| Asia Pacific | 28,442 | 27 % | 1,072 | 13 % | 29,514 | 26 % |
| Total | 104,695 | 100 % | 8,305 | 100 % | 113,000 | 100 % |
| Share of Total | 93 % | 7 % | 100 % | |||
| Jan - Dec 2002 | Systems | Share of Systems | Other | Share of Other | Total | Share of Total |
| Europe, Middle East & Africa | 54,510 | 48 % | 10,938 | 77 % | 65,448 | 51 % |
| North America | 22,164 | 19 % | 713 | 5 % | 22,877 | 18 % |
| Latin America | 8,919 | 8 % | 656 | 5 % | 9,575 | 7 % |
| Asia Pacific | 28,583 | 25 % | 1,868 | 13 % | 30,451 | 24 % |
| Total | 114,176 | 100 % | 14,175 | 100 % | 128,351 | 100 % |
| Share of Total | 89 % | 11 % | 100 % | |||
| Change | Systems | Other | Total | |||
| Europe, Middle East & Africa | -12 % | -42 % | -17 % | |||
| North America | -11 % | -21 % | -12 % | |||
| Latin America | -2 % | -52 % | -5 % | |||
| Asia Pacific | 0 % | -43 % | -3 % | |||
| Total | -8 % | -41 % | -12 % |
EXTERNAL NET SALES BY MARKET AREA BY SEGMENT
SEK million
| Jan - Dec 2003 | Systems | Share of Systems | Other | Share of Other | Total | Share of Total |
|---|---|---|---|---|---|---|
| Europe, Middle East & Africa | 55,313 | 51 % | 7,530 | 77 % | 62,843 | 53 % |
| North America | 17,140 | 16 % | 487 | 5 % | 17,627 | 15 % |
| Latin America | 9,504 | 9 % | 421 | 4 % | 9,925 | 9 % |
| Asia Pacific | 26,039 | 24 % | 1,304 | 14 % | 27,343 | 23 % |
| Total | 107,996 | 100 % | 9,742 | 100 % | 117,738 | 100 % |
| Share of Total | 92 % | 8 % | 100 % | |||
| Jan - Dec 2002 | Systems | Share of Systems | Other | Share of Other | Total | Share of Total |
| Europe, Middle East & Africa | 62,724 | 48 % | 11,400 | 76 % | 74,124 | 51 % |
| North America | 22,444 | 17 % | 624 | 4 % | 23,068 | 16 % |
| Latin America | 11,803 | 9 % | 873 | 6 % | 12,676 | 9 % |
| Asia Pacific | 33,871 | 26 % | 2,034 | 14 % | 35,905 | 24 % |
| Total | 130,842 | 100 % | 14,931 | 100 % | 145,773 | 100 % |
| Share of Total | 90 % | 10 % | 100 % | |||
| Change | Systems | Other | Total | |||
| Europe, Middle East & Africa | -12 % | -34 % | -15 % | |||
| North America | -24 % | -22 % | -24 % | |||
| Latin America | -19 % | -52 % | -22 % | |||
| Asia Pacific | -23 % | -36 % | -24 % | |||
| Total | -17 % | -35 % | -19 % |
21
TOP 10 MARKETS IN ORDERS AND SALES
Year to date 2003
| Orders | Share of total orders | Sales | Share of total sales |
|---|---|---|---|
| United States | 17 % | United States | 14 % |
| China | 11 % | China | 9 % |
| Italy | 7 % | Italy | 7 % |
| Sweden | 4 % | Sweden | 5 % |
| Spain | 4 % | Spain | 4 % |
| India | 3 % | Saudi Arabia | 3 % |
| Russia | 3 % | Japan | 3 % |
| United Kingdom | 3 % | United Kingdom | 3 % |
| Brazil | 3 % | Mexico | 3 % |
| Australia | 3 % | Australia | 3 % |
CUSTOMER FINANCING RISK EXPOSURE
| (SEK billion) | Dec 31 2002 | Mar 31 2003 | Jun 30 2003 | Sep 30 2003 | Dec 31 2003 |
|---|---|---|---|---|---|
| On-balance-sheet credits | 21.1 | 21.1 | 15.6 | 10.4 | 10.6 |
| Off-balance-sheet credits | 1.5 | 1.6 | 1.8 | 1.8 | 2.0 |
| Total credits | 22.6 | 22.7 | 17.4 | 12.2 | 12.6 |
| Less third party risk coverage | -0.8 | -2.6 | -5.6 | -0.4 | -0.3 |
| Ericsson risk exposure | 21.8 | 20.1 | 11.8 | 11.8 | 12.3 |
| On-balance-sheet credits, net book value | 14.0 | 13.6 | 10.0 | 4.3 | 4.0 |
| Off-balance-sheet credits recorded as contingent liabilities | 1.3 | 1.3 | 1.6 | 1.5 | 1.7 |
| Financing commitments | 14.0 | 12.5 | 11.0 | 6.7 | 6.1 |
TREND OF NET SALES AND OPERATING EXPENSES ISOLATED QUARTERS
| SEK million | 2002 — Q1 | Q2 | Q3 | Q4 | 2003 — Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 36,966 | 38,545 | 33,513 | 36,749 | 25,859 | 27,613 | 28,039 | 36,227 |
| R&D and other technical expenses | -8,529 | -7,000 | -6,562 | -7,240 | -6,444 | -5,855 | -4,772 | -6,121 |
| Selling expenses | -5,592 | -5,033 | -4,944 | -4,853 | -3,153 | -2,667 | -3,092 | -3,053 |
| Administrative expenses | -2,652 | -2,505 | -2,145 | -2,254 | -1,808 | -1,605 | -1,765 | -1,286 |
| Capitalization of development expenses, net | 1,005 | 910 | 641 | 644 | 614 | 412 | 182 | 376 |
| Operating expenses | -15,768 | -13,628 | -13,010 | -13,703 | -10,791 | -9,715 | -9,447 | -10,084 |
| Operating expenses as percentage of net sales | 42.7 % | 35.4 % | 38.8 % | 37.3 % | 41.7 % | 35.2 % | 33.7 % | -27.8 % |
| Restructuring costs | | -1,274 | -2,540 | -2,478 | -1,359 | -2,296 | -4,176 | -3,145 |
| Operating expenses incl. restructuring costs | -15,768 | -14,902 | -15,550 | -16,181 | -12,150 | -12,011 | -13,623 | -13,229 |
| Items as % of net sales | ||||||||
| R&D and other technical expenses | 23.1 % | 18.2 % | 19.6 % | 19.7 % | 24.9 % | 21.2 % | 17.0 % | 16.9 % |
| Selling expenses | 15.1 % | 13.1 % | 14.8 % | 13.2 % | 12.2 % | 9.7 % | 11.0 % | 8.4 % |
| G&A expenses | 7.2 % | 6.5 % | 6.4 % | 6.1 % | 7.0 % | 5.8 % | 6.3 % | 3.5 % |
| Adjusted operating expenses, excluding capitalization of development | -16,773 | -14,538 | -13,651 | -14,347 | -11,405 | -10,127 | -9,629 | -10,460 |
| - as percentage of net sales | 45.4 % | 37.7 % | 40.7 % | 39.0 % | 44.1 % | 36.7 % | 34.3 % | 28.9 % |
| Opex run rate, annualized (SEK b.) | 68 | 57 | 52 | 51 | 47 | 42 | 38 | 37 |
22
ERICSSON
OTHER INFORMATION
| SEK million | Oct - Dec 2003 | Oct - Dec 2002 | Jan - Dec 2003 | Jan - Dec 2002 | ||
|---|---|---|---|---|---|---|
| Number of shares and earnings per share | ||||||
| Number of shares, end of period (million) | 16,132 | 15,974 | 16,132 | 15,974 | ||
| Number of treasury shares, end of period (million) | 306 | 154 | 306 | 154 | ||
| Number of shares outstanding, basic, end of period (million) | 15,826 | 15,820 | 15,826 | 15,820 | ||
| Average number of shares, basic (million) 1) | 15,825 | 15,818 | 15,823 | 12,573 | ||
| Average number of treasury shares (million) | 307 | 156 | 270 | 156 | ||
| Average number of shares, diluted (million) 1,2) | 15,839 | 12,124 | 15,841 | 12,684 | ||
| Earnings per share, basic (SEK) 1) | 0.01 | -0.58 | -0.69 | -1.51 | ||
| Earnings per share, diluted (SEK) 1,2) | 0.01 | -0.58 | -0.69 | -1.51 | ||
| Ratios | ||||||
| Equity ratio, percent | | | 34.4 | 36.4 | ||
| Capital turnover (times) | 1.3 | 1.0 | 1.0 | 1.0 | ||
| Accounts receivable turnover (times) | 4.8 | 3.7 | 3.4 | 3.0 | ||
| Inventory turnover (times) | 7.6 | 5.8 | 6.1 | 5.1 | ||
| Return on equity, percent | 0.9 | % | -42.6 % | -16.2 | % | -26.7 % |
| Return on capital employed, percent | 12.8 | % | -16.5 % | -5.9 | % | -11.3 % |
| Days Sales Outstanding | | | 79 | 92 | ||
| Payment readiness, end of period | | | 75,309 | 66,306 | ||
| Payment readiness, as percentage of sales | | | 64.0 | % | 45.5 % | |
| Exchange rates used in the consolidation | ||||||
| SEK / EUR - average rate | | | 9.14 | 9.15 | ||
| - closing rate | | | 9.07 | 9.15 | ||
| SEK / USD - average rate | | | 8.08 | 9.72 | ||
| - closing rate | | | 7.26 | 8.78 | ||
| Other | ||||||
| Additions to tangible fixed assets | 2,316 | 3) | 720 | 3,493 | 3) | 2,738 |
| - Of which in Sweden | 670 | 3) | 433 | 1,069 | 3) | 1,195 |
| Additions to capitalized development expenses | 627 | 783 | 2,358 | 3,442 | ||
| Depreciation of tangible and other intangible assets | 1,448 | 754 | 5,079 | 5,231 | ||
| Goodwill amortization | 232 | 351 | 1,941 | 1,064 | ||
| Amortization of development expenses | 252 | 139 | 775 | 242 | ||
| Total depreciation and amortization of tangible / intangible assets | 1,932 | 1,244 | 7,795 | 6,537 | ||
| Orders booked | 29,464 | 30,663 | 113,000 | 128,351 | ||
| Export sales from Sweden | 22,147 | 21,544 | 72,966 | 86,695 |
1) Adjusted for stock dividend element of stock issue in 2002.
2) Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share.
3) Due to reassessments of the nature of leases, according to the present interpretation of Swedish GAAP/IFRS, financial leases of SEK 1.7 b. have been reflected in the balance sheet as tangible assets and long-term liabilities.
23
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 authorized.
| T ELEFONAKTIEBOLAGET LM E RICSSON ( PUBL ) | |
|---|---|
| By: | /s/ C ARL O LOF B LOMQVIST |
| Carl Olof Blomqvist Senior Vice President and General councel |
| By: |
|---|
| Henry Sténson Senior Vice President Corporate Communications |
Date: February 6, 2004