SAAB — Interim / Quarterly Report 2015

Oct 23, 2015

RECORD HIGH ORDER BACKLOG

In September, the order from the Brazilian government for 36 Gripen NG was received. It is the largest export order in Saab's history, and also one of the largest Swedish export orders ever. The order value was SEK 39.3 billion and was booked in the third quarter.

Saab has now an order backlog of SEK 105 billion, which is more than four times annual sales. Our focus is to secure efficient deliveries to the customer. At the same time, Saab shall take advantage of the improved market position in order to develop further and continue to increase order bookings.

Increased sales

During the year's first nine months, sales amounted to MSEK 17,116 (16,102), an increase of 6 per cent compared to last year. The business area Aeronautics increased sales considerably as a result of part deliveries of Gripen for Sweden and Brazil.

The operating income amounted to MSEK 553 (901) during the period, and the operating margin was 3.2 per cent (5.6). The operating income was impacted by continued investments in the cooperation with Boeing in order to participate in the U.S. Air Force's upcoming procurement regarding trainer aircraft, the so called T-X program, and an operating loss in business area Dynamics following low order bookings previous years.

The cash flow was strengthened during the third quarter, mainly due to milestone payments within Saab Kockums and the Gripen programmes.

Complex defence market

The defence market is still strongly affected by major geopolitical changes and the global economy. The defence industry invests large amounts, which is increasingly self-funded, on technology development in projects with long lead times. Furthermore, large defence procurements are preceded by political

processes, which often are difficult to assess, both in terms of timing and outcome.

The interest in Saab's large systems, such as the combat aircraft system Gripen, the submarine system A26 and radar systems, is growing. This means sizeable business opportunities for Saab, despite the market conditions. However, it also places high demands on Saab to maintain a certain capacity also in between large projects, such as continuous investments in R&D and also that some work is done before a contract is signed in order to uphold and increase competitiveness.

Continued focus on efficiencies

We expect an organic sales growth during 2015. This can mostly be handled with existing resources; meanwhile we see possibilities for efficiency improvements to increase profitability. As a first step towards increased efficiency and greater market focus, we will as of 1 January 2016 implement an organisational change. The business area Security and Defence Solutions (SDS) will dissolve and its business units will be moved to other business areas. The assessment is that this enables increased synergies in the operation and secures market focus. Simultaneously with the organisational change, we will strengthen the functional processes within Saab. The purpose of this is to reduce administrational costs, create internal synergies and increase the focus on performance management.

Unchanged outlook statement 2015

During the year, a number of important business opportunities have entailed increased development and marketing efforts. The outcome of these business opportunities may have a significant effect on this year's income statement and balance sheet. The outlook for 2015 remains unchanged.

INTERIM REPORT JANUARY-SEPTEMBER 2015

Q3

Håkan Buskhe, President and CEO

UNCHANGED OUTLOOK STATEMENT 2015:

• In 2015, we estimate sales to increase more than Saab's long-term goal: annual organic sales growth of 5 per cent.
• The operating margin 2015 excluding material non-recurring items is expected to be in line with the operating margin in 2014. In 2015, increased internally funded research and development efforts within Aeronautics will have a negative impact on the operating margin.

Financial highlights

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015	Q3 2014	Full Year 2014
Order bookings	62,599	10,199	514	43,603	2,073	22,602
Order backlog	105,486	54,910	92			60,128
Sales	17,116	16,102	6	5,787	5,130	23,527
Gross income	3,956	4,226	-6	1,282	1,330	6,077
Gross margin, %	23.1	26.2		22.2	25.9	25.8
EBITDA	1,259	1,536	-18	429	477	2,523
EBITDA margin, %	7.4	9.5		7.4	9.3	10.7
Operating income (EBIT)	553	901	-39	186	258	1,659
Operating margin, %	3.2	5.6		3.2	5.0	7.1
Net income	293	582	-50	36	170	1,168
Earnings per share before dilution, SEK	2.47	5.40		0.25	1.57	10.86
Earnings per share after dilution, SEK	2.45	5.36		0.24	1.55	10.78
Return on equity, % ¹⁾	7.8	7.6				9.9
Free cash flow	-1,595	-2,100		487	-710	-1,094
Free cash flow per share after dilution, SEK	-14.99	-19.59		4.57	-6.64	-10.23

1) The return on equity is measured over a rolling 12-month period.

Significant orders, 3rd quarter

	MSEK
Gripen NG	39,334
Giraffe AMB radar systems	610

Defence/Civil A total of 96 per cent

(70) of order bookings was attributable to defence-related operations during the first nine months of 2015.

Market

A total of 79 per cent (64) of order bookings was related to markets outside Sweden during the first nine months of 2015.

Large orders

Orders where the total order value exceeded MSEK 100 represented 87 per cent (35) of total order bookings during the first nine months of 2015.

Order backlog duration:

• 2015: SEK 7.7 billion
• 2016: SEK 18.2 billion
• 2017: SEK 14.0 billion
• 2018: SEK 10.9 billion
• After 2018: SEK 54.7 billion

Orders

Third quarter 2015

In August, orders were received from the UK Ministry of Defence for Giraffe AMB radar systems plus upgrades of the existing British Giraffe systems.

The agreement with Brazil regarding Gripen came into effect in September and Saab received an order from the Brazilian government regarding development and production of 36 Gripen NG. Deliveries will be undertaken from 2019 to 2024.

January-September 2015

In addition to the above mentioned, orders received included a contract with FMV, signed in June, for the construction of two submarines, Type A26, as well as conducting mid-life upgrades of two Gotland class submarines. The orders cover the period 2015-2024 and the total order value attributable to the period is SEK 8.6 billion. Saab received a major order for delivery of underwater systems. The total order value amounts to approximately MSEK 429.

In March, follow-on orders were received from Hindustan Aeronautic Limited (HAL), India, for an integrated electronic warfare self-protection system for installation on the Indian armed forces' Advanced Light Helicopter Dhruv.

In February, a contract was signed with FMV for continued development of the New Lightweight Torpedo plus maintenance agreements for underwater weapon systems and the Hydra sonar system. Saab also received two orders for ammunition components for the weapon system Carl-Gustaf.

For a list of significant orders received during 2015, see note 3.

During the first nine months 2015, index and price changes had a positive effect on order bookings of MSEK 152 compared to MSEK 294 in the same period 2014.

The order backlog at the end of the period amounted to MSEK 105,486 compared to MSEK 60,128 at the beginning of the year.

Order bookings by region

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %
Sweden	13,326	3,661	264
EU excluding Sweden	3,562	2,615	36
Rest of Europe	933	432	116
Americas	40,786	1,485	2,647
Asia	3,007	1,166	158
Africa	388	333	17
Australia, etc.	597	507	18
Total	62,599	10,199	514

Sales

Third quarter 2015

Sales during the third quarter 2015 amounted to MSEK 5,787 (5,130), an increase of 13 per cent. Acquisitions had a net effect of 0 per cent (2) on sales and currency effects had a positive effect of 2 per cent (1). The organic sales growth was 11 per cent (6).

January-September 2015

Sales during the first nine months 2015 increased by 6 per cent compared to the same period 2014. Acquisitions and the deconsolidation of Saab Grintek Technologies (Pty) Ltd had a positive net effect of 4 per cent (0). Currency effects had a positive effect of 2 per cent (0) on sales. The organic sales growth was 0 per cent (-2).

Sales in markets outside of Sweden amounted to MSEK 9,235 (9,149), or 54 per cent (57), of total sales. 79 per cent (78) of sales were related to the defence market.

Sales per region

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %
Sweden	7,880	6,953	13
EU excluding Sweden	2,979	2,570	16
Rest of Europe	376	382	-2
Americas	2,570	1,987	29
Asia	2,267	2,888	-22
Africa	357	430	-17
Australia, etc.	687	892	-23
Total	17,116	16,102	6

Sales per market segment

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %
Air	7,257	7,176	1
Land	3,494	3,607	-3
Naval	2,995	2,050	46
Civil Security	1,492	1,597	-7
Commercial Aeronautics	1,564	1,321	18
Other	314	351	-11
Total	17,116	16,102	6

Sales, MSEK

Jan-Sep 2012 Jan-Sep 2013 Jan-Sep 2014 Jan-Sep 2015

Gross margin, %

Jan-Sep 2012 Jan-Sep 2013 Jan-Sep 2014 Jan-Sep 2015

Operating margin, %

Jan-Sep 2012 Jan-Sep 2013 Jan-Sep 2014 Jan-Sep 2015

Earnings per share after dilution, SEK

Jan-Sep 2012 Jan-Sep 2013 Jan-Sep 2014 Jan-Sep 2015

Income Third quarter 2015

The gross margin during the third quarter was 22.2 per cent (25.9), the decrease is attributable to a changed product and project mix and lower sales in the business area Electronic Defence Systems.

The operating income amounted to MSEK 186 (258) with an operating margin of 3.2 per cent (5.0). The decrease in operating margin was mainly due to an operating loss in business areas Electronic Defence Systems and Support and Services.

January-September 2015

The gross margin during the first nine months 2015 was 23.1 per cent (26.2), which was lower than in the same period 2014, mainly due to lower sales in the business areas Electronic Defence Systems and Dynamics. Total depreciation and amortisation amounted to 706 (642). Depreciation of tangible fixed assets amounted to MSEK 329 (291).

Internally funded expenditures in research and development (R&D) amounted to MSEK 991 (951), of which a total of MSEK 149 (119) was capitalised. The internally funded investments in development are mainly attributable to radar and sensor technology as well as development related to the T-X program. Amortisation of intangible fixed assets amounted to MSEK 377 (344), of which amortisation of

capitalised development expenditures amounted to MSEK 242 (239).

The share of income in associated companies amounted to MSEK 23 (-3).

The operating income amounted to MSEK 553 (901) with an operating margin of 3.2 per cent (5.6). The operating margin was lower mainly due to a negative operating income in Dynamics for the period and development related to the T-X program.

During the first nine months 2015 and 2014, reversal of risk provisions attributable to the remaining risks related to the ongoing termination of Saab's leasing fleet of turbo prop aircraft (SAL), contributed positively to the operating income.

Financial net

Jan-Sep 2015	Jan-Sep 2014
-49	-42
-50	8
-52	2
-7	-86
-158	-118

Financial net related to pensions is the financial cost for net pension obligations recognised in the balance sheet. See note 10 for more information regarding defined-benefit pension plans.

Net interest items refer to return on liquid assets and short-term investments and to interest expenses on short-term and long-term interest-bearing liabilities.

Currency gains/losses reported in financial net are mainly related to hedges of the tender portfolio, which are valued at fair value. In the first nine months, the valuation was to a large extent impacted by changes in the market valuation of derivatives with exposure in the currencies USD and EUR.

Other net financial items consist of costs attributable to the programme for the sale of trade receivables, unrealised results from the market valuation of short-term investments, and other currency effects, for example changes related to liquid assets in currencies other than SEK.

In 2013, Saab invested in the Indian company Pipavav Defence and Offshore Engineering Company Limited. A combination of negative currency effects and share price development resulted in a value decline of MSEK 19 during the first nine months 2014, which is recognised in other financial items.

Tax

Current and deferred taxes amounted to MSEK -102 (-201), the equivalent to an effective tax rate of 26 per cent (26).

Return on capital employed and equity

The pre-tax return on capital employed was 8.1 per cent (9.7) and the after-tax return on equity was 7.8 per cent (7.6), both measured over a rolling 12-month period.

Change in net debt Jan-Sep 2015

	MSEK
Net liquidity (+) / net debt (-), 31 Dec 2014	-2,113
Cash flow from operating activities	-799
Change in net pension obligation	383
Net investments	-796
Financial lease	-444
Dividend	-501
Currency impact and unrealised
results from financial investments	-57
Net liquidity (+) / net debt (-),
30 Sep 2015	-4,327

-2,013 -2,100

Free cash flow, MSEK

Jan-Sep 2012 Jan-Sep 2013 Jan-Sep 2014 Jan-Sep 2015

-1,595

-660

Financial position and liquidity

At the end of September 2015, the net debt amounted to MSEK 4,327, an increase of MSEK 2,214 during 2015 compared to the year-end 2014.

Cash flow from operating activities was negative and amounted to MSEK -799.

Provisions for pensions, excluding special employers' contribution, as of 30 September 2015 amounted to MSEK 2,145, compared to MSEK 2,528 at year-end 2014. This had a positive impact of MSEK 383 on net debt. The decrease in provisions was mainly due to the increase in the discount rate used in the valuation of pension obligations from 2.50 per cent to 3.00 per cent during the period. This was partially offset by the change of the inflation assumption for calculating the pension obligation from 1.50 per cent to 1.75 per cent. For more information about Saab's defined-benefit plans, see note 10.

During the first nine months 2015, net debt also increased due to net investments amounting to approximately MSEK 796. Saab has also signed a financial lease agreement regarding an aircraft intended for business travel, education and training. This has increased net debt with MSEK 444 during the period. Furthermore, a payment of dividend to the parent company's shareholders of MSEK 501 was made during the period.

Currency exchange rate differences in liquid assets and unrealised results from financial investments had an impact on net debt of MSEK -57.

In order to strengthen the company's financial flexibility, the long-term external funding was increased by MSEK 1,000 and the short-term external funding was increased by MSEK 1,652 during the first nine months 2015. As at 30 September 2015, short-term investments and liquid assets amounted to MSEK 3,013.

Capitalised development costs on the balance sheet amounted to MSEK 865 at 30 September 2015 and to MSEK 952 at 31 December 2014.

Inventories increased by more than one billion SEK during the first nine months 2015 partly due to activity in large projects in Dynamics where deliveries are expected to be made later during the year. Inventories are recognised after deducting utilised advances.

Tangible assets increased, mainly as a result of the above mentioned financial lease of an aircraft. Trade receivables decreased in several large projects, meanwhile accrued revenues increased, which was mainly related to Gripen E.

Capital expenditures

The cash flow effect of capital expenditures in tangible fixed assets amounted to MSEK 585 (541). Investments in intangible assets amounted to MSEK 205 (154), of which MSEK 149 (119) was related to capitalised development costs and MSEK 56 (35) to other intangible assets.

Cash flow

Cash flow from operating activities excluding taxes and other financial items amounted to MSEK -371 (-1,354), see note 8.

Saab has an established programme to sell trade receivables to strengthen its financial position and increase financial flexibility. As of 30 September 2015, net receivables of MSEK 1,290 were sold, compared to MSEK 1,071 as of 31 December 2014. This had a positive impact on cash flow from operating activities of MSEK 219 during the first nine months 2015.

The operational cash flow amounted to MSEK -1,153 (-1,950). It is defined as cash flow from operating activities, excluding taxes and other financial items, acquisitions and divestments of intangible assets, tangible assets and lease assets. The improved operational cash flow in the first nine months 2015, compared to the same period 2014, is mainly attributable to milestone payments in Saab Kockums and the Gripen programmes. Free cash flow amounted to MSEK -1,595 (-2,100). For more detailed information about the cash flow, see note 8.

Key indicators of financial position and liquidity

MSEK	30 Sep 2015	30 Sep 2014	Change	31 Dec 2014
Net liquidity / debt ¹⁾	-4,327	-2,994	-1,333	-2,113
Intangible fixed assets	6,250	6,547	-297	6,351
Goodwill	5,072	4,942	130	5,015
Capitalised development costs	865	1,229	-364	952
Other intangible fixed assets	313	376	-63	384
Tangible fixed assets, etc ²⁾	4,737	3,975	762	4,024
Inventories	6,914	5,777	1,137	5,819
Accounts receivable	3,078	2,883	195	3,414
Other receivables	5,034	3,779	1,255	4,255
Accrued revenues ³⁾	4,529	3,280	1,249	3,505
Advance payments from customers	998	963	35	856
Equity/assets ratio, %	35.1	40.1		38.5
Return on equity, % ⁴⁾	7.8	7.6		9.9
Equity per share, SEK ⁵⁾	108.36	103.41	4.95	107.02

1) The Group's net liquidity/debt refers to liquid assets, short-term investments and interest-bearing receivables less interest-bearing liabilities and provisions for pensions excluding provisions for pensions attributable to special employers' contribution. For a detailed break-down of interest-bearing receivables and interest-bearing liabilities, see note 6.

2) Including tangible fixed assets, biological assets and investment properties.

3) Amounts due from customers relate to long-term customer contracts according to the percentage of completion method.

4) The return on equity is measured over a rolling 12-month period.

5) Number of shares excluding treasury shares; 2015 Sep: 105,843,298; 2014 Sep: 105,377,052; 2014 Dec: 105,499,980.

Business area structure

Saab implemented changes to the business area structure as of 1 January 2015. The new business area Industrial Products and Services includes the business units Aerostructures (previously in business area Aeronautics), Avionics Systems (previously in business area Electronic Defence Systems), the independent technology consulting firm Combitech (previously a business area), Saab Ventures' product portfolio (previously part of Saab Corporate) and a development project, which up until year-end 2014 was part of Saab Corporate.

BUSINESS AREA AERONAUTICS

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015	Q3 2014	Full Year 2014
Order bookings	36,350	501	7,155	35,689	-66	6,213
Order backlog	58,590	22,509	160			26,388
Sales	4,148	3,621	15	1,686	998	5,454
EBITDA	233	269	-13	129	33	439
EBITDA margin, %	5.6	7.4		7.7	3.3	8.0
Operating income (EBIT)	204	238	-14	120	23	398
Operating margin, %	4.9	6.6		7.1	2.3	7.3
Operational cash flow	-352	-221		-193	28	-401
Defence/Civil (% of sales)	99/1	98/2		99/1	99/1	99/1
No. of FTE's	2,699	2,678	1			2,690

For a description of the business area activities, see note 3. Comparative numbers for 2014 have been restated following structural changes, see the annual report 2014, note 50, for more information.

Orders

• During the third quarter, the agreement with the Brazilian government regarding development and production of 36 Gripen NG came into effect. Of the total order of SEK 39.3 billion, approximately SEK 35.5 billion was attributable to Aeronautics.

Sales, income and margin

• Sales increased during the first nine months 2015, compared to the same period 2014, mainly due to invoicing related to Gripen NG for Brazil and Gripen E for Sweden.
• The operating margin during the first nine months 2015 was lower than for the same period 2014, mainly as a result of higher development costs related to the T-X program.
• The operating income in the third quarter was positively affected by the fact that the agreement regarding 36 Gripen NG came into effect.

Cash flow

• Operational cash flow was negative, primarily due to investments in the T-X program.

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015	Q3 2014	Full Year 2014
Order bookings	3,530	1,257	181	568	408	2,325
Order backlog	5,496	3,769	46			3,915
Sales	1,961	2,045	-4	763	599	2,974
EBITDA	-34	84	-140	61	-11	226
EBITDA margin, %	-1.7	4.1		8.0	-1.8	7.6
Operating income/loss (EBIT)	-75	38	-297	47	-26	165
Operating margin, %	-3.8	1.9		6.2	-4.3	5.5
Operational cash flow	-626	-177		-419	-144	-69
Defence/Civil (% of sales)	83/17	84/16		88/12	81/19	84/16
No. of FTE's	1,542	1,477	4			1,461

For a description of the business area activities, see note 3.

Orders

• Order bookings were substantially higher during the first nine months 2015, compared to the same period 2014, and included an order from FMV regarding continued development of the New Lightweight Torpedo and maintenance agreements for underwater weapon systems and the Hydra sonar system. The Finnish Defence Forces ordered deliveries of the NLAW anti-tank weapon.
• In the third quarter, Saab received the first order for the new portable weapon system Carl-Gustaf M4 from the Slovak army. Moreover, an order was received from the US army for the portable antitank weapon system AT4 CS RS (Reduced Sensitivity).

Sales, income and margin

• Sales decreased somewhat during the first nine months 2015, compared to the same period 2014, following a changed product and project mix and low order bookings in 2013 and 2014.
• The negative operating income during the first nine months is primarily attributable to a changed product mix and a lower activity level.
• During the third quarter 2015, sales and operating margin improved compared to the same period 2014 as a result of increased deliveries and a changed product mix.

Cash flow

• The operational cash flow was negative during the first nine months 2015 as a result of negative operating income and activity in orders that will be delivered during 2015.

Large orders Orders where the total order value exceeded MSEK 100 represented 52 per cent (0) of total order bookings during the first nine months of 2015.

Market Sales related to markets outside Sweden accounted for 80 per cent (83) during the first nine months of 2015.

Orders where the total order value exceeded MSEK 100 represented 98 per cent (38) of total order bookings during the first nine months of 2015.

Market Sales related to markets outside Sweden accounted for 23 per

cent (11) during the first nine months of 2015.

Large orders

BUSINESS AREA ELECTRONIC DEFENCE SYSTEMS

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015	Q3 2014	Full Year 2014
Order bookings	5,467	1,637	234	3,023	322	2,484
Order backlog	9,174	6,591	39			6,365
Sales	2,528	2,898	-13	731	953	4,052
EBITDA	339	433	-22	99	201	625
EBITDA margin, %	13.4	14.9		13.5	21.1	15.4
Operating income/loss (EBIT)	26	125	-79	-7	100	211
Operating margin, %	1.0	4.3		-1.0	10.5	5.2
Operational cash flow	-257	-789		-28	-410	-589
Defence/Civil (% of sales)	98/2	98/2		96/4	99/1	97/3
No. of FTE's	2,186	2,182	0			2,190

For a description of the business area activities, see note 3. Comparative numbers for 2014 have been restated following structural changes, see the annual report 2014, note 50, for more information.

Orders

• Order bookings during the first nine months 2015 increased compared to the same period 2014 and included SEK 1.7 billion related to the Brazilian government's Gripen order, and an order from the Indian armed forces related to an integrated self-protection system.
• The UK Ministry of Defence ordered additional Giraffe AMB radar systems plus upgrades of the existing British Giraffe radars and associated equipment.

Sales, income and margin

• Sales during the first nine months decreased following lower order bookings in 2013 and 2014.
• The negative operating income in the third quarter 2015 was a result of changed product mix and continued investments in research and development.

Cash flow

• The operational cash flow was negative during the first nine months 2015 due to a continued high activity level in some projects and continued high investments in product development.

Large orders

Orders where the total order value exceeded MSEK 100 represented 77 per cent (29) of total order bookings during the first nine months of 2015.

Market Sales related to markets outside Sweden accounted for 74 per cent (77) during the first nine months of 2015.

BUSINESS AREA SECURITY AND DEFENCE SOLUTIONS

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015	Q3 2014	Full Year 2014
Order bookings	12,689	3,900	225	1,375	827	6,110
Order backlog	15,169	6,494	134			6,823
Sales	4,312	3,763	15	1,394	1,367	5,762
EBITDA	269	210	28	71	101	468
EBITDA margin, %	6.2	5.6		5.1	7.4	8.1
Operating income (EBIT)	170	134	27	38	71	356
Operating margin, %	3.9	3.6		2.7	5.2	6.2
Operational cash flow	310	-325		296	-119	157
Defence/Civil (% of sales)	74/26	65/35		75/25	68/32	68/32
No. of FTE's	3,102	3,318	-7			3,234

For a description of the business area activities, see note 3.

Orders

• During 2015, orders were received from FMV for two submarines type A26, and mid-life upgrade
• of two Gotland class submarines. The total order value in the period amounted to SEK 8.6 billion.
• An order for training equipment was received from the Austrian army during the third quarter.

Sales, income and margin

• Sales increased during the first nine months 2015, compared to the same period 2014, primarily as a result of the acquisition of Saab Kockums.
• During the third quarter, sales increased in the business units Traffic Management and Saab Kockums, compared to the same period 2014.
• The operating income for the first nine months 2015 was strengthened, compared to the same period 2014, as a result of a strong operating income in Saab Kockums and improved operating income in Traffic Management.

Cash flow

• The operational cash flow was positive as a result of timing differences between activity and milestone payments, mainly within Saab Kockums, during the period.

Personnel

• The number of FTE's decreased during the first nine months 2015, compared to year-end 2014, following continuous adjustments of operations.

Large orders

Orders where the total order value exceeded MSEK 100 represented 78 per cent (42) of total order bookings during the first nine months of 2015.

Market Sales related to markets outside Sweden accounted for 57 per cent (77) during the first nine months of 2015.

BUSINESS AREA SUPPORT AND SERVICES

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015	Q3 2014	Full Year 2014
Order bookings	3,813	2,085	83	2,811	339	4,720
Order backlog	9,079	6,338	43			7,976
Sales	2,743	2,531	8	804	794	3,570
EBITDA	166	266	-38	1	48	394
EBITDA margin, %	6.1	10.5		0.1	6.0	11.0
Operating income (EBIT)	152	252	-40	-4	43	376
Operating margin, %	5.5	10.0		-0.5	5.4	10.5
Operational cash flow	-215	-90		6	-171	-32
Defence/Civil (% of sales)	71/29	76/24		70/30	73/27	76/24
No. of FTE's	1,831	1,798	2			1,818

For a description of the business area activities, see note 3.

Orders

• Order bookings in the first nine months were strong with regards to the volume of small and midsized orders. In September, order bookings were further strengthened following the Brazilian government's order for Gripen NG. SEK 2.1 billion was attributable to Support and Services.

Sales, income and margin

• Sales increased during the first nine months 2015, compared to the same period 2014, as a result of a continued strong invoicing pace in small and mid-sized projects.
• The operating margin decreased in the first nine months 2015, compared to the same period 2014, as a result of a changed product and project mix.

Cash flow

• The operational cash flow was negative during the first nine months 2015, mainly due to timing differences between activity and milestone payments during the period.

BUSINESS AREA INDUSTRIAL PRODUCTS AND SERVICES

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015	Q3 2014	Full Year 2014
Order bookings	2,753	1,931	43	993	453	2,604
Order backlog	9,742	9,876	-1			9,537
Sales	2,540	2,448	4	762	773	3,465
EBITDA	139	56	148	19	9	143
EBITDA margin, %	5.5	2.3		2.5	1.2	4.1
Operating income (EBIT)	109	33	230	8	1	112
Operating margin, %	4.3	1.3		1.0	0.1	3.2
Operational cash flow	-58	-176		-26	-68	-320
Defence/Civil (% of sales)	38/62	42/58		37/63	39/61	43/57
No. of FTE's	2,374	2,342	1			2,370

For a description of the business area activities, see note 3. Comparative numbers for 2014 have been restated following structural changes, see the annual report 2014, note 50, for more information.

Orders

• Orders bookings during the first nine months 2015 increased, compared to the same period 2014, mainly due to orders received in the business unit Avionics Systems related to the Brazilian government's order for Gripen NG.

Sales, income and margin

• Sales were somewhat higher in the first nine months, compared to the same period 2014, mainly due to more deliveries within the business unit Aerostructures.In May, Saab and DigitalGlobe Inc., a leading global provider of high-resolution earth imagery solutions, announced the creation of a joint venture – Vricon Inc.
• The operating margin was strengthened in the first nine months 2015, compared to the same period 2014, as a result of improved operating income in Avionics Systems and holdings in Saab Ventures and Vricon.

Cash flow

• The operational cash flow was negative in the first nine months 2015, mainly due to a high activity level connected to preparations for future deliveries within Aerostructures.

Large orders Orders where the total order value exceeded

MSEK 100 represented 31 per cent (28) of total order bookings during the first nine months of 2015.

Market Sales related to markets outside Sweden accounted for 46 per cent (46) during the first

nine months of 2015.

order bookings during the first nine months of 2015. Market

Large orders Orders where the total order value exceeded MSEK 100 represented 62 per cent (35) of total

Sales related to markets outside Sweden accounted for 44 per cent (36) during the first nine months of 2015.

Owners

According to SIS Ägarservice, Saab's largest shareholders as of 30 September 2015 were:

Investor AB

Wallenberg foundations Swedbank Robur funds AFA Insurance Unionen SHB funds Nordea bank AB DFA funds (USA) Lannebo funds Nordea funds

Personnel

	30 Sep 2015	1 Jan 2015
Number of
employees	14,709	14,716
FTE's	14,556	14,561

Corporate

Corporate reported an operating income of MSEK -33 (81) in the first nine months 2015.

Reversal of risk provisions, attributable to the remaining risks related to the ongoing termination of Saab's leasing fleet of turboprop aircraft, contributed positively to the operating income during the first nine months 2015 and 2014.

In 2014, the owned share of the lease portfolio was divested and the part held via operating leases was reduced. As of 30 September 2015, Saab has a lease portfolio of 0 (13) aircraft, consisting of an owned share of 0 (4) and a leased share of 0 (9). The agreements for the leased aircraft expired in January and the lease portfolio will be discontinued during 2015.

Operational cash flow attributable to Corporate amounted to MSEK 45 during the period. Sale of trade receivables had a positive effect of MSEK 219. See more information on cash flow on page 4.

Acquisitions and divestments 2015

No significant acquisitions or divestments were made or announced during the first nine months 2015.

Share repurchase

Saab held 3,307,046 treasury shares as of 30 September 2015, compared to 3,650,364 at year-end 2014. The Annual General Meeting on 15 April 2015 authorised the Board of Directors to repurchase up to 10 per cent of Saab's shares to hedge the Share Matching Plan and Performance Share Plan.

Risks and uncertainties

Saab's operations primarily involve the development, production and supply of technologically advanced hardware and software to customers around the world.

Projects generally entail significant investments, long periods of time and technological development or refinement of the product. In addition to customer and supplier relations, international operations involve joint ventures and collaborations with other industries in addition to the establishment of operations abroad.

Operations can entail various degrees of risk. The key risk areas are political, operating and financial. Various policies and instructions govern the management of significant risks. Saab conducts significant development projects and manages the associated risks.

The market is characterised by challenging conditions where customers' orders are deferred to the future partially due to financial reasons. During the first nine months, political standpoints have had a negative impact. Altogether, this has increased the market risk and the increased risk is expected to remain in 2015.

For a general description of the risk areas, see pages 50-53 of the annual report 2014.

Nomination committee

The members have been appointed based on the shareholder structure on 31 August 2015 in accordance with a resolution by the Saab Annual General Meeting.

Members of the Saab Nomination Committee for the Annual General Meeting 2016 are; Marcus Wallenberg, Chairman of the Board of Saab AB, Petra Hedengran, Investor AB, Peter Wallenberg Jr, Knut and Alice Wallenberg's Foundation, Tomas Hedberg, Swedbank Robur Funds, and Anders Algotsson, AFA Insurance.

The Nomination Committee is assigned to prepare proposals regarding Chairman of the Annual General Meeting, Board of Directors, Chairman of the Board and remuneration to the Board and the Auditor.

The Annual General Meeting of Saab AB will be held in Linköping on Thursday, 14 April, 2016.

Gripen for Brazil order

In October 2014, Saab announced an agreement with the Brazilian government regarding development and production of 36 Gripen NG. The total order value amounts to approximately SEK 39.3 billion and was booked on 10 September 2015, as all required conditions were fulfilled. Deliveries of Gripen NG to the Brazilian Air Force will be undertaken from 2019 to 2024.

Other significant events January-September 2015

• In January 2015, Saab signed a revolving credit facility of SEK 4 billion with an initial term of five years and a possibility to extend the term with one plus one year. This was done in order to refinance the existing facility with maturity 2016 and to be used for general corporate purposes.
• Saab announced that it is teaming with Dutch shipbuilder Damen Shipyards Group to explore future opportunities in the international submarine market.
• The Annual General Meeting (AGM) on 15 April 2015 decided on a dividend to shareholders of SEK 4.75 per share (total MSEK 501).
• The AGM decided to re-elect all Board members: Håkan Buskhe, Johan Forssell, Sten Jakobsson, Sara Mazur, Per-Arne Sandström, Cecilia Stegö Chilò, Lena Treschow Torell, Marcus Wallenberg, and Joakim Westh. Marcus Wallenberg was re-elected as Chairman of the Board.
• The AGM decided to re-elect PricewaterhouseCoopers AB as Auditor for the term until the close of the Annual General Meeting of 2019.
• Saab and Embraer have signed an agreement that establishes a partnership regarding the procurement of Gripen for Brazil. The partnership agreement is part of Saab's commitment to deliver industrial co-operation in relation to the procurement. Embraer will have a leading role in the programme and also undertake an extensive share of work in the production and delivery of both the single and two-seat versions of the Gripen NG, Brazil's next-generation fighter jet.
• In April, Saab signed a revolving credit facility of SEK 2 billion with maturity 2020-01-15 and a possibility to extend the term with one plus one year. The facility will be used for general corporate purposes and strengthens Saab's financial flexibility.
• As of April 2015 air traffic control at Örnsköldsvik Airport is operated with Remote Tower Services by the Swedish air navigation service provider LFV at the Remote Tower Center in Sundsvall, Sweden.
• In May, Saab and DigitalGlobe, Inc., a leading global provider of high-resolution earth imagery solutions, announced the creation of a joint venture – Vricon, Inc. to produce photo-realistic 3D products and digital elevation models globally for enterprise and government geospatial markets.
• In September, Saab increased the existing Medium Term Note programme (MTN) from SEK 3 billion to SEK 6 billion.

For information regarding significant orders received between January and September 2015, see page 2 and the comments regarding Business Areas on pages 5 to 7 and also note 3.

Significant events after the conclusion of the period

• In October, Saab issued 3 year Medium Term Notes of total MSEK 350 with maturity on 10 December 2018. The total size of the MTN programme is SEK 6 billion and Saab has now issued bonds amounting to SEK 4.15 billion under the programme.

Saab serves the global market with world-leading products, services and solutions ranging from military defence to civil security. Saab has operations and employees on all continents and constantly develops, adopts and improves new technology to meet customers' changing needs.

Short facts

• Saab's series B share is listed on Nasdaq Stockholm Large Cap. Ticker: SAAB B.
• Saab has approximately 14,700 employees
• Local presence in 33 countries
• Customers in more than 100 countries

Vision

It is a human right to feel safe.

' Mission

To make people safe by pushing intellectual and technological boundaries.

Business concept

Saab constantly develops, adopts and improves new technology to meet changing customer needs. Saab serves the global market of governments, authorities and corporations with products, services and solutions for defence, aviation and civil security.

ORGANISATION

Saab's operations are divided into six business areas for control and reporting purposes: Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, Support and Services and Industrial Products and Services. In addition, Corporate comprises Group staff and departments as well as secondary operations such as Saab Aircraft Leasing.

To ensure presence in local key markets, Saab also has five market areas: Nordic & Baltic, Europe, Middle East & Africa, North America, Latin America, and Asia Pacific.

REVENUE MODEL

Saab's earnings are primarily generated by long-term customer contracts, service assignments and sale of goods. Margins vary depending on the nature of the project.

Long-term customer contracts entail the development and manufacture of complex systems. These account for nearly 60 per cent of sales. Long-term contracts are continually recognised in revenue, meaning that income and expenses are recognised as the project is completed. Cash flows for these contracts depend on the timing of advance payments and milestone payments during the order and execution period.

Service assignments, which account for around 25 per cent of Saab's sales, are comprised of consulting and support services. Examples include training and ongoing maintenance associated with previous deliveries.

The third part of Saab's sales model is the sale of products and spare parts that Saab manufactures and stocks or purchases on behalf of customers.

SAAB'S STRATEGY

Saab's strategy is built on four priority areas. Our aim is to create longterm value by accomplishing these strategic priorities. Saab shall also maintain a solid balance sheet, focus on capital efficiency and generate strong cash flow.

Profitable growth

Local presence on prioritised markets enables us to strengthen the relationship with our customers. We focus on markets where we have a strong market position and on product areas with good growth opportunities.

Performance

We have a long tradition of integrating high-tech systems and we reconsider and develop our tools, methods, and work procedures continuously. This enables us to offer high performance and cost efficient solutions.

Portfolio

The portfolio is focused on areas with significant competitive advantages and growth potential. Investments are made in product innovation, development of prioritised products and system integration expertise. Acquisition of businesses shall strengthen key areas and add to our local presence.

People

Saab shall be an employer of choice in the global market. We are focusing on securing and developing the right skills for current and future needs. Motivated, driven and high performing employees are the backbone of our offering, efficiency and growth.

Sales

The organic sales growth should average 5 per cent annually over a business cycle.

Operating margin

The operating margin (EBIT) should be at least 10 per cent per year – the target is formulated as an average over a business cycle.

Equity/assets ratio

The equity/assets ratio should be over 30 per cent.

Dividend

The long-term dividend objective is to distribute 20–40 per cent of net income to shareholders over a business cycle.

CONSOLIDATED INCOME STATEMENT

MSEK	Note	Jan-Sep 2015	Jan-Sep 2014	Rolling 12 Months	Full Year 2014
Sales	3	17,116	16,102	24,541	23,527
Cost of goods sold		-13,160	-11,876	-18,734	-17,450
Gross income		3,956	4,226	5,807	6,077
Gross margin, %		23.1	26.2	23.7	25.8
Other operating income		99	169	360	430
Marketing expenses		-1,492	-1,515	-2,121	-2,144
Administrative expenses		-931	-881	-1,264	-1,214
Research and development costs		-1,084	-1,071	-1,500	-1,487
Other operating expenses		-18	-24	-15	-21
Share in income of associated companies and joint ventures		23	-3	44	18
Operating income (EBIT) ¹⁾	3	553	901	1,311	1,659
Operating margin, %		3.2	5.6	5.3	7.1
Financial income		37	51	89	103
Financial expenses		-195	-169	-265	-239
Net financial items		-158	-118	-176	-136
Income before taxes		395	783	1,135	1,523
Taxes		-102	-201	-256	-355
Net income for the period		293	582	879	1,168
of which Parent Company's shareholders' interest		261	574	840	1,153
of which non-controlling interest		32	8	39	15
Earnings per share before dilution, SEK ²⁾		2.47	5.40	7.95	10.86
Earnings per share after dilution, SEK ³⁾		2.45	5.36	7.89	10.78
1) Includes depreciation/amortisation and write-downs		-706	-642	-936	-872
of which depreciation of leasing aircraft		-	-7	-1	-8
2) Average number of shares before dilution		105,653,013	106,354,716	105,599,389	106,125,666
3) Average number of shares after dilution.		106,401,289	107,175,504	106,403,115	106,916,255

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

MSEK	Jan-Sep 2015	Jan-Sep 2014	Rolling 12 Months	Full Year 2014
Net income for the period	293	582	879	1,168
Other comprehensive income/loss:
Items that will not be reversed in the income statement:
Revaluation of net pension obligations	500	-1,047	327	-1,220
Tax attributable to revaluation of net pension obligations	-110	230	-74	266
Total	390	-817	253	-954
Items that may be reversed in the income statement:
Translation differences	46	343	220	517
Available-for-sale financial assets	63	17	73	27
Cash flow hedges	-210	-848	-525	-1,163
Tax attributable to cash flow hedges	50	186	117	253
Total	-51	-302	-115	-366
Other comprehensive income/loss for the period	339	-1,119	138	-1,320
Net comprehensive income/loss for the period	632	-537	1,017	-152
of which Parent Company's shareholders' interest	632	-548	1,013	-167
of which non-controlling interest	-	11	4	15

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

MSEK Note	30 Sep 2015	31 Dec 2014	30 Sep 2014
ASSETS
Fixed assets:
Intangible fixed assets 5	6,250	6,351	6,547
Tangible fixed assets	4,414	3,702	3,647
Biological assets	290	289	297
Investment properties	33	33	31
Shares in associated companies and joint ventures	422	397	479
Financial investments	376	292	295
Long-term receivables 10	179	152	123
Deferred tax assets	505	656	644
Total fixed assets	12,469	11,872	12,063
Current assets:
Inventories	6,914	5,819	5,777
Derivatives	858	469	229
Tax receivables	280	60	112
Accounts receivable	3,078	3,414	2,883
Other receivables	5,034	4,255	3,779
Prepaid expenses and accrued income	1,258	1,113	1,244
Short-term investments	1,627	1,270	333
Liquid assets 8	1,386	1,284	947
Total current assets	20,435	17,684	15,304
TOTAL ASSETS	32,904	29,556	27,367
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity:
Parent Company's shareholders' interest	11,469	11,291	10,897
Non-controlling interest	82	82	83
Total shareholders' equity	11,551	11,373	10,980
Long-term liabilities:
Long-term interest-bearing liabilities 6	3,523	2,105	1,694
Other liabilities	134	141	154
Provisions for pensions 10	2,669	3,149	2,926
Other provisions	894	1,234	1,426
Deferred tax liabilities	41	48	87
Total long-term liabilities	7,261	6,677	6,287
Current liabilities:
Short-term interest-bearing liabilities 6	1,964	264	419
Advance payments from customers	998	856	963
Accounts payable	1,675	1,840	1,480
Derivatives	1,674	1,400	815
Tax liabilities	31	47	29
Other liabilities	756	978	741
Accrued expenses and deferred income	6,529	5,609	5,138
Provisions	465	512	515
Total current liabilities	14,092	11,506	10,100
Total liabilities	21,353	18,183	16,387
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	32,904	29,556	27,367

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

MSEK	Capital stock	Other capital contri butions	Net result of cash flow hedges	Translation reserve	Available-for sale and revaluation reserve	Retained earnings	Total parent company's shareholders' interest	Non controlling interest	Total shareholders' equity
Opening balance, 1 January 2014	1,746	543	346	-353	11	9,843	12,136	91	12,227
Net comprehensive income/loss for the period January-September 2014 Transactions with shareholders:			-663	341	17	-243	-548	11	-537
Repurchase of shares						-252	-252		-252
Share matching plan						37	37		37
Dividend						-479	-479		-479
Acquisition and sale of non-controlling
interest						3	3	-19	-16
Closing balance, 30 September 2014	1,746	543	-317	-12	28	8,909	10,897	83	10,980
Net comprehensive income/loss for the period October-December 2014			-245	173	10	443	381	4	385
Transactions with shareholders: Repurchase of shares						-	-		-
Share matching plan						13	13		13
Dividend						-	-	-5	-5
Closing balance, 31 December 2014	1,746	543	-562	161	38	9,365	11,291	82	11,373
Opening balance, 1 January 2015	1,746	543	-562	161	38	9,365	11,291	82	11,373
Net comprehensive income/loss for the
period January-September 2015			-134	52	63	651	632	-	632
Transactions with shareholders: Share matching plan						47	47		47
Dividend						-501	-501	-	-501
Closing balance, 30 September 2015	1,746	543	-696	213	101	9,562	11,469	82	11,551

CONSOLIDATED STATEMENT OF CASH FLOWS

MSEK Note	Jan-Sep 2015	Jan-Sep 2014	Full Year 2014
Operating activities:
Income after financial items	395	783	1,523
Adjustments for items not affecting cash flows	440	669	725
Income tax paid	-244	-385	-394
Cash flow from operating activities before changes in working capital	591	1,067	1,854
Cash flow from changes in working capital:
Increase(-)/Decrease(+) in inventories	-1,162	-1,134	-856
Increase(-)/Decrease(+) in current receivables	-742	409	-282
Increase(+)/Decrease(-) in advance payments from customers	162	135	21
Increase(+)/Decrease(-) in other current liabilities	647	-1,890	-914
Increase(+)/Decrease(-) in provisions	-295	-338	-536
Cash flow from operating activities	-799	-1,751	-713
Investing activities:
Investments in intangible fixed assets	-56	-35	-68
Capitalised development costs	-149	-119	-171
Investments in tangible fixed assets	-585	-541	-732
Sales and disposals of tangible fixed assets	8	6	15
Sales and disposals of lease assets	-	93	105
Sale of and investments in short-term investments	-359	1,663	720
Investments in other financial assets	-89	-1	-
Sale of other financial assets	-	27	40
Investments in operations and associated companies, net effect on liquidity 9	-18	162	152
Sale of subsidiaries and associated companies, net effect on liquidity	4	86	299
Cash flow from investing activities	-1,244	1,341	360
Financing activities:
Repayments of loans	-746	-314	-468
Raising of loans	3,398	600	1,000
Repurchase of shares	-	-252	-252
Dividend paid to Parent Company's shareholders	-501	-479	-479
Dividend paid to non-controlling interest	-	-	-5
Cash flow from financing activities	2,151	-445	-204
Cash flow for the period	108	-855	-557
Liquid assets at the beginning of the period	1,284	1,764	1,764
Exchange rate difference in liquid assets	-6	38	77
Liquid assets at end of period 8	1,386	947	1,284

QUARTERLY INCOME STATEMENT

MSEK	Q3 2015	Q2 2015	Q1 2015	Q4 2014	Q3 2014	Q2 2014	Q1 2014	Q4 2013
Sales	5,787	5,940	5,389	7,425	5,130	5,692	5,280	7,279
Cost of goods sold	-4,505	-4,582	-4,073	-5,574	-3,800	-4,157	-3,919	-5,426
Gross income	1,282	1,358	1,316	1,851	1,330	1,535	1,361	1,853
Gross margin, %	22.2	22.9	24.4	24.9	25.9	27.0	25.8	25.5
Other operating income	23	54	22	261	77	47	45	83
Marketing expenses	-460	-553	-479	-629	-511	-520	-484	-565
Administrative expenses	-305	-329	-297	-333	-300	-301	-280	-338
Research and development costs	-346	-380	-358	-416	-322	-385	-364	-490
Other operating expenses Share of income in associated companies and joint	-8	-6	-4	3	-10	-7	-7	-19
ventures	-	13	10	21	-6	4	-1	10
Operating income (EBIT) ¹⁾	186	157	210	758	258	373	270	534
Operating margin, %	3.2	2.6	3.9	10.2	5.0	6.6	5.1	7.3
Financial income	-36	46	27	52	19	10	22	15
Financial expenses	-89	9	-115	-70	-48	-64	-57	-189
Net financial items	-125	55	-88	-18	-29	-54	-35	-174
Income before taxes	61	212	122	740	229	319	235	360
Taxes	-25	-45	-32	-154	-59	-83	-59	-73
Net income for the period	36	167	90	586	170	236	176	287
of which Parent Company's shareholders' interest	26	151	84	579	166	233	175	281
of which non-controlling interest	10	16	6	7	4	3	1	6
Earnings per share before dilution, SEK ²⁾	0.25	1.43	0.80	5.49	1.57	2.19	1.64	2.64
Earnings per share after dilution, SEK ³⁾	0.24	1.42	0.79	5.45	1.55	2.17	1.63	2.57

1) includes depreciation/amortisation and write-downs	-243	-235	-228	-230	-221	-211	-210	-278
of which depreciation of leasing aircraft	-	-	-	-1	-2	-1	-4	-2
2) average number of shares before dilution	105,781,884	105,643,700	105,533,455	105,438,516	106,060,673	106,549,332	106,454,142	106,342,403
3) average number of shares after dilution	106,529,247	106,442,012	106,402,040	106,239,161	106,888,805	107,422,230	107,299,002	109,150,344

2013 has been restated according to the changed accounting principles for joint arrangements (IFRS 11).

As of 2014, the dilution of shares is calculated based on the effects of all potential shares (Share Matching Plan and Performance Share Plan) that give rise to a dilution effect. Previously, a simplified method was used where the dilution effect was calculated based on all treasury shares.

QUARTERLY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

MSEK	Q3 2015	Q2 2015	Q1 2015	Q4 2014	Q3 2014	Q2 2014	Q1 2014	Q4 2013
Net income for the period	36	167	90	586	170	236	176	287
Other comprehensive income/loss:
Items that will not be reversed in the income statement:
Revaluation of net pension obligations	-233	1,257	-524	-173	-324	-42	-681	68
Tax attributable to revaluation of net pension obligations	51	-276	115	36	71	9	150	-24
Total	-182	981	-409	-137	-253	-33	-531	44
Items that may be reversed in the income statement:
Translation differences	-63	-156	265	174	169	148	26	28
Net gain/loss on available-for-sale financial assets	-6	-3	72	10	-77	94	-	116
Net gain/loss on cash flow hedges	-187	56	-79	-315	-517	-251	-80	-174
Tax attributable to net gain/loss on cash flow hedges	49	-14	15	67	114	53	19	39
Total	-207	-117	273	-64	-311	44	-35	9
Other comprehensive income/loss for the period	-389	864	-136	-201	-564	11	-566	53
Net comprehensive income/loss for the period	-353	1,031	-46	385	-394	247	-390	340
of which Parent Company's shareholders' interest	-335	1,024	-57	381	-398	237	-387	335
of which non-controlling interest	-18	7	11	4	4	10	-3	5

KEY RATIOS BY QUARTER

MSEK	Q3 2015	Q2 2015	Q1 2015	Q4 2014	Q3 2014	Q2 2014	Q1 2014	Q4 2013
Equity/assets ratio, (%)	35.1	37.2	37.0	38.5	40.1	42.7	44.4	44.0
Return on capital employed, % ¹⁾ Return on equity, % ¹⁾	8.1 7.8	8.7 8.6	10.6 9.3	11.1 9.9	9.7 7.6	9.8 7.7	8.3 5.5	9.1 6.3
Equity per share, SEK ²⁾	108.36	111.48	106.54	107.02	103.41	108.20	110.47	114.04
Free cash flow, MSEK Free cash flow per share after dilution, SEK ³⁾	487 4.57	-1,141 -10.72	-941 -8.84	1,006 9.47	-710 -6.64	-1,074 -10.00	-316 -2.95	553 5.07
1) Measured over a rolling 12-month period 2) Number of shares excluding treasury shares 3) Average number of shares after dilution			105,843,298 105,720,470 105,566,929 105,499,980 105,377,052 106,604,525 106,494,139 106,414,144 106,529,247 106,442,012 106,402,040 106,239,161 106,888,805 107,422,230 107,299,002 109,150,344

2013 has been restated according to the changed accounting principles for joint arrangements (IFRS 11).

As of 2014, the dilution of shares is calculated based on the effects of all potential shares (Share Matching Plan and Performance Share Plan) that give rise to a dilution effect. Previously, a simplified method was used where the dilution effect was calculated based on all treasury shares.

QUARTERLY INFORMATION PER BUSINESS AREA

MSEK	Q3 2015	Operating margin	Q2 2015	Operating margin	Q1 2015	Operating margin	Q4 2014	Operating margin
Sales
Aeronautics	1,686		1,364		1,098		1,833
Dynamics	763		570		628		929
Electronic Defence Systems	731		922		875		1,154
Security and Defence Solutions	1,394		1,626		1,292		1,999
Support and Services	804		1,010		929		1,039
Industrial Products and Services	762		912		866		1,017
Internal sales	-353		-464		-299		-546
Total	5,787		5,940		5,389		7,425
Operating income/loss
Aeronautics	120	7.1%	30	2.2%	54	4.9%	160	8.7%
Dynamics	47	6.2%	-94	-16.5%	-28	-4.5%	127	13.7%
Electronic Defence Systems	-7	-1.0%	4	0.4%	29	3.3%	86	7.5%
Security and Defence Solutions	38	2.7%	68	4.2%	64	5.0%	222	11.1%
Support and Services	-4	-0.5%	73	7.2%	83	8.9%	124	11.9%
Industrial Products and Services	8	1.0%	67	7.3%	34	3.9%	79	7.8%
Corporate	-16		9		-26		-40
Total	186	3.2%	157	2.6%	210	3.9%	758	10.2%

MSEK	Q3 2014	Operating margin	Q2 2014	Operating margin	Q1 2014	Operating margin
Sales
Aeronautics	998		1,295		1,328
Dynamics	599		730		716
Electronic Defence Systems	953		1,093		852
Security and Defence Solutions	1,367		1,240		1,156
Support and Services	794		898		839
Industrial Products and Services	773		888		787
Internal sales	-354		-452		-398
Total	5,130		5,692		5,280
Operating income/loss
Aeronautics	23	2.3%	108	8.3%	107	8.1%
Dynamics	-26	-4.3%	36	4.9%	28	3.9%
Electronic Defence Systems	100	10.5%	50	4.6%	-25	-2.9%
Security and Defence Solutions	71	5.2%	75	6.0%	-12	-1.0%
Support and Services	43	5.4%	122	13.6%	87	10.4%
Industrial Products and Services	1	0.1%	20	2.3%	12	1.5%
Corporate	46		-38		73
Total	258	5.0%	373	6.6%	270	5.1%

2014 has been restated according to the structural changes described in the annual report 2014, note 50.

MULTI-YEAR OVERVIEW

MSEK	2014	2013	2012	2011	2010
Order bookings	22,602	49,809	20,683	18,907	26,278
Order backlog at 31 December	60,128	59,870	34,151	37,172	41,459
Sales	23,527	23,750	24,010	23,498	24,434
Sales in Sweden, %	45	41	36	37	38
Sales in EU excluding Sweden, %	16	17	19	19	19
Sales in Americas, %	12	13	12	8	9
Sales in Rest of the world, %	27	30	33	36	34
Operating income (EBIT)	1,659	1,345	2,050	2,941	975
Operating margin, %	7.1	5.7	8.5	12.5	4.0
EBITDA	2,523	2,367	3,186	4,088	2,187
EBITDA margin, %	10.7	10.0	13.3	17.4	9.0
Income after financial items	1,523	979	2,003	2,783	776
Net income for the year	1,168	742	1,560	2,217	454
Total assets	29,556	27,789	28,938	31,799	29,278
Free cash flow	-1,094	-1,460	-396	2,477	4,349
Return on capital employed, %	11.1	9.1	14.6	22.2	7.9
Return on equity, %	9.9	6.3	12.8	18.1	4.1
Equity/assets ratio, %	38.5	44.0	39.0	41.1	39.1
Earnings per share before dilution, SEK ²⁾ ⁴⁾	10.86	6.98	15.00	21.19	4.12
Earnings per share after dilution, SEK ³⁾ ⁴⁾	10.78	6.79	14.52	20.38	3.97
Dividend per share, SEK	4.75	4.50	4.50	4.50	3.50
Equity per share, SEK ¹⁾	107.02	114.04	105.43	122.94	107.66
Number of employees at year-end	14,716	14,140	13,968	13,068	12,536

1) Number of shares excluding treasury shares as of 31 December 2014: 105,499,980; 2013: 106,414,144; 2012: 105,930,829; 2011: 105,331,958; 2010: 104,717,729.

2) Average number of shares 2014: 106,125,666; 2013: 106,125,107; 2012: 105,632,911; 2011: 104,982,315; 2010: 105,217,786.

3) Average number of shares 2014: 106,916,255; 2010-2013: 109,150,344.

4) Net income for the year less non-controlling interest divided by the average number of shares.

2013 has been restated according to the changed accounting principles for joint arrangements (IFRS 11). 2012 has been restated according to the changed accounting principles for pensions (IAS 19). Financials for 2011 and earlier periods are not restated.

KEY RATIOS AND TARGETS

	Long-term target	Jan-Sep 2015	Jan-Sep 2014	Full Year 2014
Organic sales growth, %	5	0	-2	-3
Operating margin, %	10	3.2	5.6	7.1
Equity/assets ratio, %	30	35.1	40.1	38.5

PARENT COMPANY INCOME STATEMENT

MSEK	Jan-Sep 2015	Jan-Sep 2014	Full Year 2014
Sales	10,979	11,175	16,175
Cost of goods sold	-8,776	-8,326	-11,869
Gross income	2,203	2,849	4,306
Gross margin, %	20.1	25.5	26.6
Operating income and expenses	-2,307	-2,291	-3,106
Operating income (EBIT)	-104	558	1,200
Operating margin, %	-0.9	5.0	7.4
Financial income and expenses	77	217	706
Income after financial items	-27	775	1,906
Appropriations	-	-	-419
Income before taxes	-27	775	1,487
Taxes	-59	-192	-317
Net income for the period	-86	583	1,170

Parent company

Sales and income

The Parent Company includes units within the business areas Aeronautics, Electronic Defence Systems, Security and Defence Solutions, Support and Services, and Industrial Products and Services. Group staff and Group support are included as well. The business area Dynamics is a subsidiary to Saab AB and is not a part of the Parent Company.

The Parent Company's sales in the first nine months of 2015 amounted to MSEK 10,979 (11,175). Operating income was MSEK -104 (558).

Net financial income and expenses was MSEK 77 (217). After appropriations of MSEK 0 (0) and taxes of MSEK -59 (-192), net income for the period amounted to MSEK -86 (583).

Liquidity, financing, capital expenditures and number of employees

The Parent Company's net debt amounted to MSEK 4,526 at 30 September 2015 compared to MSEK 2,577 at 31 December 2014. Gross capital expenditure in tangible fixed assets amounted to

MSEK 461 (445). Investments in intangible assets amounted to MSEK 45 (32). At the end of the period, the Parent Company had 8,652 employees, compared to 8,695 at the beginning of the year.

A major part of the Group's operations are included in the Parent Company. Separate notes to the Parent Company's financial statements and a separate description of risks and uncertainties for the Parent Company have therefore not been included in this interim report.

PARENT COMPANY BALANCE SHEET

MSEK Note	30 Sep 2015	31 Dec 2014	30 Sep 2014
ASSETS
Fixed assets:
Intangible fixed assets	892	1,117	1,171
Tangible fixed assets	2,842	2,574	2,540
Financial fixed assets	7,767	8,057	8,043
Total fixed assets	11,501	11,748	11,754
Current assets:
Inventories, etc.	5,090	4,490	4,381
Current receivables	8,137	8,251	7,285
Short term investments	1,627	1,270	327
Liquid assets	716	377	163
Total current assets	15,570	14,388	12,156
TOTAL ASSETS	27,071	26,136	23,910
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity:
Restricted equity	2,983	2,983	2,989
Unrestricted equity	4,946	5,486	4,880
Total shareholders' equity	7,929	8,469	7,869
Provisions and liabilities:
Untaxed reserves	1,979	1,979	1,560
Provisions	532	778	1,438
Liabilities 6	16,631	14,910	13,043
Total provisions and liabilities	19,142	17,667	16,041
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	27,071	26,136	23,910

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 Corporate information

Saab AB (publ.), corporate identity no. 556036-0793, with registered office in Linköping, Sweden. The company's head office is located at Gustavslundsvägen 42, Bromma, with the mailing address P.O. Box 12062, SE-102 22 Stockholm, Sweden, and the telephone number +46-8-463 00 00. Saab's B shares are listed on Nasdaq Stockholm since 1998 and on the large cap list as of October 2006. The company's operations, including subsidiaries and associated companies, are described in the annual report 2014.

NOTE 2 Accounting principles

The consolidated accounts for the first nine months of 2015 are prepared according to IAS 34 Interim Financial Reporting and the Annual Accounts Act. The Parent Company's accounts have been prepared according to the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2, Reporting by Legal Entities. The Group's accounting principles are described on pages 78 to 84 in the annual report 2014.

The Group and the Parent Company apply the same accounting principles and methods of computation as described in the annual report 2014.

The interim report is abbreviated and does not contain all the information and disclosures available in the annual report and as such should be read together with the annual report 2014.

NOTE 3 Segment reporting

Saab is a leading high-technology company, with its main operations in defence, aviation and civil security. Operations are primarily focused on well-defined areas in defence electronics, missile systems, and naval systems as well as military and commercial aviation. Saab is also active in technical services and maintenance. Saab has a strong position in Sweden and the main part of sales is generated in Europe. In addition Saab has a local presence in South Africa, Australia, the US and other selected countries globally. Saab's operating and management structure is divided into six business areas which also represent operating segments; Aeronautics, Dynamics, Electronic Defence Systems, Security and Defence Solutions, Support and Services, and Industrial Products and Services. In addition, Corporate comprises Group staff and departments as well as other operations that are not core operations.

Aeronautics

Aeronautics operates in the aerospace and defence industry and engages in advanced development of military and civil aviation technology. The product portfolio consists mainly of the Gripen fighter. Aeronautics also manufactures aircraft components for Saab's own passenger aircraft.

Dynamics

Dynamics offers a highly competitive product portfolio comprising ground combat weapons, missile systems, torpedoes, unmanned underwater vehicles and signature management systems for armed forces as well as unmanned underwater vehicles for the offshore industry.

Electronic Defence Systems

These operations are based on Saab's close interaction with customers requiring efficient solutions for surveillance and for threat detection, location and protection. This has created a unique competence in the area of radar, self-protection, and electronic warfare, and a product portfolio covering airborne, land-based and naval radar, electronic support measures and self-protection systems.

Security and Defence Solutions

The operations comprise combat management systems for the navy, air force and army, and also design, construction and maintenance of submarines and surface vessels. The portfolio in addition includes systems for training and simulation, security systems, solutions for secure communication as well as systems for maritime and air traffic management.

Support and Services

Support and Services offers reliable, cost-efficient service and support for all of Saab's markets. This primarily includes integrated support solutions, technical maintenance and logistics, and products, solutions and services for military and civil missions in locations with limited infrastructure.

Industrial Products and Services

Operations are dominated by business with industrial clients, some of which require that integrity towards Saab's other operations is maintained. The portfolio includes one of Sweden's largest technology consulting firms, Combitech, as well as development, production and global sales of flight safety critical structures and systems in civil and military aircraft. The business area also includes the Venture portfolio, which develops spin-in and spin-off businesses to and from Saab.

Order bookings per business area

	Jan-Sep	Jan-Sep	Change,	Q3		Q3 Full Year
MSEK	2015	2014	%	2015	2014	2014
Aeronautics	36,350	501	7,155	35,689	-66	6,213
Dynamics	3,530	1,257	181	568	408	2,325
Electronic Defence Systems	5,467	1,637	234	3,023	322	2,484
Security and Defence Solutions	12,689	3,900	225	1,375	827	6,110
Support and Services	3,813	2,085	83	2,811	339	4,720
Industrial Products and Services Internal	2,753 -2,003	1,931 -1,112	43	993 -856	453 -210	2,604 -1,854
Total	62,599	10,199	514	43,603	2,073	22,602

Order backlog per business area

MSEK	30 Sep 2015	31 Dec 2014	30 Sep 2014
Aeronautics	58,590	26,388	22,509
Dynamics	5,496	3,915	3,769
Electronic Defence Systems	9,174	6,365	6,591
Security and Defence Solutions	15,169	6,823	6,494
Support and Services	9,079	7,976	6,338
Industrial Products and Services	9,742	9,537	9,876
Internal	-1,764	-876	-667
Total	105,486	60,128	54,910

NOTE 3 Continued

Significant orders received (approx. values MSEK)	Country	Order value
Gripen NG	Brazil	39,334
Submarine A26 and mid-life upgrade for Gotland-class submarines	Sweden	8,650
Self-protection system for the Indian armed forces' Dhruv helicopter	India	740
Giraffe AMB radar systems	UK	610
Underwater systems		429

Sales per business area

MSEK	Jan-Sep 2015	Jan-Sep 2014	Change, %	Q3 2015		Q3 2014 Rolling 12 Months	Full Year 2014
Aeronautics	4,148	3,621	15	1,686	998	5,981	5,454
of which external sales	3,936	3,490	13	1,616	953	5,688	5,242
of which internal sales	212	131	62	70	45	293	212
Dynamics	1,961	2,045	-4	763	599	2,890	2,974
of which external sales	1,891	1,952	-3	746	578	2,779	2,840
of which internal sales	70	93	-25	17	21	111	134
Electronic Defence Systems	2,528	2,898	-13	731	953	3,682	4,052
of which external sales	2,429	2,740	-11	690	909	3,556	3,867
of which internal sales	99	158	-37	41	44	126	185
Security and Defence Solutions	4,312	3,763	15	1,394	1,367	6,311	5,762
of which external sales	4,235	3,673	15	1,381	1,348	6,197	5,635
of which internal sales	77	90	-14	13	19	114	127
Support and Sercvices	2,743	2,531	8	804	794	3,782	3,570
of which external sales	2,667	2,392	11	778	749	3,646	3,371
of which internal sales	76	139	-45	26	45	136	199
Industrial Products and Services	2,540	2,448	4	762	773	3,557	3,465
of which external sales	1,912	1,871	2	571	613	2,629	2,588
of which internal sales	628	577	9	191	160	928	877
Corporate/eliminations	-1,116	-1,204		-353	-354	-1,662	-1,750
of which external sales	46	-16		5	-20	46	-16
of which internal sales	-1,162	-1,188		-358	-334	-1,708	-1,734
Total	17,116	16,102	6	5,787	5,130	24,541	23,527

MSEK	Jan-Sep 2015	% of sales	Jan-Sep 2014	% of sales	Full Year 2014	% of sales
Sweden	7,880	46	6,953	43	10,512	45
Rest of EU	2,979	17	2,570	16	3,770	16
Rest of Europe	376	2	382	2	592	3
Total Europe	11,235	66	9,905	62	14,874	64
North America	1,645	10	1,615	10	2,387	10
Latin America	925	5	372	2	508	2
Asia	2,267	13	2,888	18	4,007	17
Africa	357	2	430	3	573	2
Australia, etc.	687	4	892	6	1,178	5
Total	17,116	100	16,102	100	23,527	100

Sales per region Information on large customers

In the first nine months of 2015, Saab had one customer that accounted for 10 per cent or more of the Group's sales: the Swedish Defence Materiel Administration (FMV). FMV is a customer of all business areas and total sales amounted to MSEK 6,317 (5,263).

Seasonal variation

A major part of Saab's business is related to large projects where the revenue is recognised by using the percentage of completion method. The costs incurred in these projects are normally lower during the third quarter compared to the other quarters. The fourth quarter is also usually affected by a higher number of deliveries, mainly within Dynamics.

Operating income per business area

MSEK	Jan-Sep 2015	% of sales	Jan-Sep 2014	% of sales	12 Months	Rolling Full Year 2014
Aeronautics	204	4.9	238	6.6	364	398
Dynamics	-75	-3.8	38	1.9	52	165
Electronic Defence Systems	26	1.0	125	4.3	112	211
Security and Defence Solutions	170	3.9	134	3.6	392	356
Support and Services	152	5.5	252	10.0	276	376
Industrial Products and Services	109	4.3	33	1.3	188	112
The business area's
total operating income	586	3.4	820	5.1	1,384	1,618
Corporate	-33		81		-73	41
Total	553	3.2	901	5.6	1,311	1,659

Depreciation/amortisation and write-downs per business area

		Jan-Sep Jan-Sep	Change,	Q3	Q3		Rolling Full Year
MSEK	2015	2014	%	2015		2014 12 Months	2014
Aeronautics	29	31	-6	9	10	39	41
Dynamics	41	46	-11	14	15	56	61
Electronic Defence Systems	313	308	2	106	101	419	414
Security and Defence Solutions	99	76	30	33	30	135	112
Support and Services	14	14	-	5	5	18	18
Industrial Products and Services	30	23	30	11	8	38	31
Corporate – lease aircraft	-	7	-100	-	2	1	8
Corporate – other	180	137	31	65	50	230	187
Total	706	642	10	243	221	936	872

Operational cash flow per business area

	Jan-Sep Jan-Sep		Q3	Q3		Rolling Full Year
MSEK	2015	2014	2015		2014 12 Months	2014
Aeronautics	-352	-221	-193	28	-532	-401
Dynamics	-626	-177	-419	-144	-518	-69
Electronic Defence Systems	-257	-789	-28	-410	-57	-589
Security and Defence Solutions	310	-325	296	-119	792	157
Support and Services	-215	-90	6	-171	-157	-32
Industrial Products and Services	-58	-176	-26	-68	-202	-320
Corporate	45	-172	1,017	31	274	57
Total	-1,153	-1,950	653	-853	-400	-1,197

Capital employed per business area

MSEK	30 Sep 2015	31 Dec 2014	30 Sep 2014
Aeronautics	2,049	2,152	1,991
Dynamics	2,721	2,186	2,178
Electronic Defence Systems	4,560	4,621	4,665
Security and Defence Solutions	4,330	4,257	4,283
Support and Services	2,573	2,214	2,160
Industrial Products and Services	1,787	1,626	1,355
Corporate	1,222	-727	-1,118
Total	19,242	16,329	15,514

Full time equivalents (FTE's) per business area

Number at end of the period	30 Sep 2015	31 Dec 2014	30 Sep 2014
Aeronautics	2,699	2,690	2,678
Dynamics	1,542	1,461	1,477
Electronic Defence Systems	2,186	2,190	2,182
Security and Defence Solutions	3,102	3,234	3,318
Support and Services	1,831	1,818	1,798
Industrial Products and Services	2,374	2,370	2,342
Corporate	822	798	767
Total	14,556	14,561	14,562

NOTE 4 Dividend to Parent Company's shareholders

At the Annual General Meeting 2015 on 15 April, it was decided that the Parent Company's shareholders should receive a dividend of SEK 4.75 per share, totalling MSEK 501.

The record date for the dividend was 17 April 2015 and payment was made on 22 April 2015.

NOTE 5 Intangible fixed assets

MSEK	30 Sep 2015	31 Dec 2014	30 Sep 2014
Goodwill	5,072	5,015	4,942
Capitalised development costs	865	952	1,229
Other intangible assets	313	384	376
Total	6,250	6,351	6,547

NOTE 6 Net liquidity/debt

MSEK	30 Sep 2015	31 Dec 2014	30 Sep 2014
Assets:
Liquid assets	1,386	1,284	947
Short-term investments	1,627	1,270	333
Total liquid investments	3,013	2,554	1,280
Short-term interest-bearing receivables	44	5	5
Long-term interest-bearing receivables	107	83	78
Long-term receivables attributable to
pensions	59	59	36
Long-term interest-bearing financial
investments	141	142	141
Total interest-bearing assets	3,364	2,843	1,540
Liabilities:
Liabilities to credit institutions	4,649	2,001	1,760
Liabilities to associated companies and
joint ventures	224	244	223
Other interest-bearing liabilities	614	124	130
Provisions for pensions ¹⁾	2,204	2,587	2,421
Total interest-bearing liabilities and
provisions for pensions	7,691	4,956	4,534
Net liquidity (+) / net debt (-)	-4,327	-2,113	-2,994

1) Excluding provisions for pensions attributable to special employers' contribution.

NOTE 6 Continued

Committed credit lines				Parent Company
MSEK	Facilities	Drawings	Available
Revolving credit facility (Maturity 2020)	6,000	-	6,000
Overdraft facility (Maturity 2015)	97	-	97
Total	6,097	-	6,097

MSEK		30 Sep 2015 31 Dec 2014 30 Sep 2014
Long-term liabilities to credit institutions	3,000	2,000	1,600
Short-term liabilities to credit institutions	1,648	-	160
Total	4,648	2,000	1,760

In December 2009, Saab established a Medium Term Note programme (MTN) in order to enable the issuance of long-term loans on the capital market. In September 2015, the MTN programme was increased from SEK 3 billion to SEK 6 billion. Under the terms of this programme Saab has issued bonds and Floating Rate Notes (FRN) of SEK 3.8 billion, of which MSEK 800 was settled in October. After the conclusion of the period additional bonds and FRN of MSEK 350 have been issued.

NOTE 7 Financial instruments

Classification and categorisation of financial assets and liabilities*

30 Sep 2015	Fair value through profit and loss for trading	Fair value through other comprehen sive income as available for sale	Designated as at fair value through profit and loss	Held-to maturity investments	Loans receivable and accounts receivable	Financial liabilities	Derivatives identified as cash flow hedges	Derivatives identified as fair value hedges	Total financial assets and liabilities	Measured at fair value
Financial assets:
Financial investments	-	184	51	141	-	-	-	-	376	379
Long-term receivables	-	-	-	-	179	-	-	-	179	179
Derivatives
Forward exchange contracts	45	-	-	-	-	-	791	9	845	845
Currency options	9	-	-	-	-	-	-	-	9	9
Interest rate swaps	-	-	-	-	-	-	-	-	-	-
Electricity derivatives	4	-	-	-	-	-	-	-	4	4
Total derivatives	58	-	-	-	-	-	791	9	858	858
Accounts receivable and other receivables	-	-	-	-	8,601	-	-	-	8,601	8,601
Short-term investments	-	-	1,627	-	-	-	-	-	1,627	1,627
Liquid assets	-	-	-	-	1,386	-	-	-	1,386	1,386
Total financial assets	58	184	1,678	141	10,166	-	791	9	13,027	13,030
Financial liabilities:
Interest-bearing liabilities	-	-	-	-	-	5,487	-	-	5,487	5,490
Derivatives
Forward exchange contracts	25	-	-	-	-	-	1,495	2	1,522	1,522
Currency options	10	-	-	-	-	-	-	-	10	10
Interest rate swaps	-	-	-	-	-	-	123	-	123	123
Electricity derivatives	5	-	-	-	-	-	14	-	19	19
Total derivatives	40	-	-	-	-	-	1,632	2	1,674	1,674
Other liabilities	-	-	-	-	-	4,763	-	-	4,763	4,763
Total financial liabilities	40	-	-	-	-	10,250	1,632	2	11,924	11,927

* Derivatives with positive values are recognised as assets and derivatives with negative values are recognised as liabilities. Derivatives with a legal right of offset amount to MSEK 725.

Valuation methods for financial assets and liabilities

The fair value of listed financial assets is determined using market prices. Saab also applies various valuation methods to determine the fair value of financial assets that are traded on an inactive market or are unlisted holdings. These valuation methods are based on the valuation of similar instruments, discounted cash flows or customary valuation methods such as Black-Scholes.

The following instruments were valued at fair value according to listed (unadjusted) prices on an active market on the closing date (Level 1):

• Bonds and interest-bearing securities
• Electricity derivatives
• Shares and participations

The following instruments were valued at fair value according to accepted valuation models based on observable market data (Level 2):

• Forward exchange contracts: Future payment flows in each currency are discounted by current market rates to the valuation day and valued to SEK at period-end exchange rates.
• Options: The Black-Scholes option pricing model is used in the market valuation of all options.
• Interest rate swaps: Future variable interest rates are calculated with the help of current forward rates. These implicit interest payments are discounted to the valuation date using current market rates. The market value of interest rate swaps is obtained by contrasting the discounted variable interest payments with the discounted present value of fixed interest payments.

Unlisted shares and participations: Valued according to accepted principles; e.g. for venture capital firms (Level 3).

NOTE 7 Continued

There has been no change between levels in 2015. As of 30 September 2015, the Group had the following financial assets and liabilities at fair value:

Assets at fair value

MSEK	30 Sep 2015	Level 1	Level 2	Level 3
Bonds and interest-bearing securities	1,627	1,627	-	-
Forward exchange contracts	845	-	845	-
Currency options	9	-	9	-
Interest rate swaps	-	-	-	-
Electricity derivatives	4	4	-	-
Shares and participations	235	184	-	51
Total	2,720	1,815	854	51

Liabilities at fair value

MSEK	30 Sep 2015	Level 1	Level 2	Level 3
Forward exchange contracts	1,522	-	1,522	-
Currency options	10	-	10	-
Interest rate swaps	123	-	123	-
Electricity derivatives	19	19	-	-
Total	1,674	19	1,655	-

NOTE 8 Supplemental information on Statement of cash flows

Liquid assets
MSEK	30 Sep 2015	31 Dec 2014	30 Sep 2014
The following components are included in liquid assets:
Cash and bank balances	986	1,284	947
Bank deposits	400	-	-
Total according to balance sheet	1,386	1,284	947
Total according to statement of
cash flows	1,386	1,284	947

Free cash flow vs. statement of cash flows

MSEK	Jan-Sep 2015	Jan-Sep 2014	Full Year 2014
Free cash flow	-1,595	-2,100	-1,094
Investing activities – interest-bearing:
Short-term investments	-359	1,663	720
Other financial investments and receivables	-89	27	21
Financing activities:
Repayments of loans	-746	-314	-468
Raising of loans	3,398	600	1,000
Repurchase of shares	-	-252	-252
Dividend paid to the Parent Company's shareholders	-501	-479	-479
Dividend paid to non-controlling interest	-	-	-5
Cash flow for the period	108	-855	-557

Specification of free cash flow

MSEK	Saab excl. Acquisitions/ divestments	Acquisitions and divestments	Total Group Jan-Sep 2015	Total Group Jan-Sep 2014
Cash flow from operating activities before changes in working capital ¹⁾	1,019	-	1,019	1,464
Cash flow from changes in working capital:
Inventories	-1,162	-	-1,162	-1,134
Current receivables	-742	-	-742	409
Advance payments from customers	162	-	162	135
Other current liabilities	647	-	647	-1,890
Provisions	-295	-	-295	-338
Change in working capital	-1,390	-	-1,390	-2,818
Cash flow from operating activities ²⁾	-371	-	-371	-1,354
Investing activities:
Investments in intangible fixed assets	-205	-	-205	-154
Investments in tangible fixed assets	-585	-	-585	-541
Sales and disposals of tangible fixed assets	8	-	8	6
Sales and disposals of lease assets	-	-	-	93
Cash flow from investing activities ³⁾	-782	-	-782	-596
Operational cash flow	-1,153	-	-1,153	-1,950
Taxes and other financial items	-428	-	-428	-397
Sale of and investments in shares etc.	-	-	-	-1
Acquisitions of subsidiaries and associated companies	-	-18	-18	162
Sale of subsidiaries and associated companies	-	4	4	86
Free cash flow	-1,581	-14	-1,595	-2,100

1) Cash flow from operating activities before changes in working capital excluding taxes and other financial items.

2) Cash flow from operating activities excluding taxes and other financial items.

3) Cash flow from investing activities excluding change in short-term investments and other interest-bearing financial assets and excluding sale of and investment in financial assets, investments in operations and associated companies and sale of subsidiaries and associated companies.

No significant acquisitions were made or announced during the first nine months of 2015.

NOTE 10 Defined-benefit plans

Saab has defined-benefit pension plans where post-employment compensation is based on a percentage of the recipient's salary. According to IAS 19, the estimated value of the defined-benefit obligation amounted to MSEK 7,826 at 30 September 2015 compared to MSEK 7,778 at 30 September 2014 and the value of the plan assets amounted to MSEK 5,681 at 30 September 2015 compared to MSEK 5,393 at 30 September 2014. Provisions for pensions attributable to special employers' contribution amounted to MSEK 465 at 30 September 2015 and to MSEK 505 at 30 September 2014. Total provisions for pensions amount to MSEK 2,610, of which MSEK 59 is reported as long-term receivables.

NOTE 11 Contingent liabilities

During the period guarantees related to the order of Gripen NG to Brazil have arisen. With regard to the Group's performance guarantees for commitments to customers, the likelihood of an outflow of resources is estimated as remote and, as a result, no value is recognised.

NOTE 12 Transactions with related parties

No significant transactions have occurred during the period.

Related parties with which the Group has transactions are described in the annual report 2014, note 43.

NOTE 13 Restated accounting 2014 regarding new structure

Saab has implemented changes to the business area structure as of 1 January 2015. In order to create a stronger and more coherent platform for business-to-business focused business units the new business area Industrial Products and Services was formed. Industrial Products and Services will include the business units Aerostructures (previously in business area Aeronautics), Avionics Systems (previously in business area Electronic Defence Systems), the independent technology consulting firm Combitech, Saab Ventures' product portfolio (previously in Saab Corporate) and a development project, which up until year-end 2014 was a part of Saab Corporate.

Comparative numbers for 2014 have been restated following structural changes, see the annual report 2014, note 50, for more information.

NOTE 14 Definitions

Capital employed

Total assets less non-interest-bearing liabilities.

Earnings per share

Net income for the period attributable to Parent Company's shareholders, divided by the average number of shares before and after full dilution. There is no dilution impact if the result is negative.

EBITDA

Operating income before depreciation/amortisation and write-downs less depreciation/amortisation and write-downs of lease aircraft.

EBITDA margin

Operating income before depreciation/amortisation and write-downs less depreciation/amortisation and write-downs of lease aircraft as a percentage of sales.

Equity/assets ratio

Equity in relation to total assets.

Equity per share

Equity attributable to the Parent Company's shareholders divided by the number of shares, excluding treasury shares, at the end of the period.

Gross margin

Gross income as a percentage of sales.

Net liquidity/net debt

Liquid assets, short-term investments and interest-bearing receivables less interest-bearing liabilities and provisions for pensions excluding provisions for pensions attributable to special employers' contribution.

Free cash flow per share

Free cash flow divided by the average number of shares after dilution.

Operating margin

Operating income (EBIT) as a percentage of sales.

Return on capital employed

Operating income plus financial income as a percentage of average capital employed (measured over a rolling 12-month period).

Return on equity

Net income for the period as a percentage of average equity (measured over a rolling 12-month period).

GLOSSARY

EKN

The Swedish Export Credits Guarantee Board

FMV Swedish Defence Materiel Administration

FRN Floating Rate Note

FTE Full Time Equivalent, corresponds to one employee working full-time for one year

IAS International Accounting Standards IFRS International Financial Reporting Standards

LFV Air Navigation Services of Sweden

MTN Medium Term Note, bonds with a duration of 1-15 years

SAL Saab Aircraft Leasing, relates to Saab's leasing fleet of turboprop aircraft

Linköping, 23 October 2015

Håkan Buskhe President and CEO

REVIEW REPORT

Introduction

We have reviewed the condensed interim financial information of Saab AB for the period from 1 January to 30 September 2015. The board of directors and the president are responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410 Review of Interim report performed by the Independent auditor of the entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, the conclusion expressed based on a review does not give the same level of assurance as conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts act for the Group, and with the Swedish Annual Accounts act for the parent company.

Stockholm 23 October 2015 PricewaterhouseCoopers AB

Anna-Clara af Ekenstam

Authorised Public Accountant Auditor in charge

Saab AB is disclosing the information here in pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at 7:30 (CET) on 23 October 2015.

MEDIA:

Saab press center ph +46 734 18 00 18 Sebastian Carlsson, Press Officer ph +46 734 18 71 62

FINANCIAL MARKET: Ann-Sofi Jönsson, Head of Investor Relations ph +46 734 18 72 14

Press and financial analyst conference

23 October 2015 at 10.00 (CET) Grand Hôtel, Venue: New York, Blasieholmshamnen 8, Stockholm

Contact Marie Bergström to register and more information, ph +46 8 463 02 45

You are welcome to participate on site at Grand Hôtel, watch the live webcast or dial in to the conference call. It is possible to post questions also over the web and conference call.

Live webcast:

saab-interimreport.creo.se/151023

Conference call:

Please, dial in using one of the numbers below. UK: +44 20 342 814 09 US: +1 866 385 9214 SE: +46 8 566 426 66

The interim report, the presentation material and the webcast will be available on saabgroup.com.

CONTACT CALENDAR

YEAR-END REPORT 2015 PUBLISHED 10 FEBRUARY 2016

ANNUAL GENERAL MEETING 14 APRIL 2016

INTERIM REPORT JANUARY–MARCH 2016 PUBLISHED 21 APRIL 2016

INTERIM REPORT JANUARY–JUNE 2016 PUBLISHED 21 JULY 2016

INTERIM REPORT JANUARY–SEPTEMBER 2016 PUBLISHED 25 OCTOBER 2016