Third quarter report 2003 October 30, 2003

 

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

 

October 30, 2003

 


 

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

 

16483 Stockholm, Sweden

(Address of principal executive offices)

 


 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.  

Form 20-F  x  Form 40-F  ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  Yes  ¨  No  x

 


 

Announcement of LM Ericsson Telephone company, dated October 30, 2003, regarding third quarter report.


s LOGO

       

Third quarter report 2003

October 30, 2003

 

For the German market:

Notification pursuant to

Section 15 WpHG

 

Ericsson reports profit in the third quarter, restructuring excluded

 

Third quarter summary

 

  Net sales SEK 28.0 b. – book-to-bill above 1 for third consecutive quarter
  Net income SEK -3.9 b. – adjusted income after financial items SEK 1.0 b.
  Earnings per share SEK -0.25
  Adjusted gross margin 35.9%—up 0.8%-points sequentially despite weakening USD
  Operating expense run rate SEK 38 b. – down SEK 4 b. sequentially
  Cash flow before financing SEK 9.1 b. – net of financial assets and liabilities SEK 20.5 b.

 

     Third quarter

    Second quarter

 

SEK b.


   2003

 

  2002

 

  Change

 

  2003

 

  Change

 

Orders booked, net

   28.1     20.5     37 %   28.3     -1 %

Net sales

   28.0     33.5     -16 %   27.6     2 %

Adjusted gross margin (%)

   35.9 %   32.6 %   —       35.1 %   —    

Adjusted operating income

   1.3     -3.2     —       -0.2     —    

Adjusted income after financial items

   1.0     -3.6     —       -0.2     —    

Net income

   -3.9     -5.0     —       -2.7     —    

Earnings per share

   -0.25     -0.41     —       -0.17     —    

Cash flow before financing activities

   9.1     -2.7     —       5.1     —    

Opex run rate, annualized

   38     52     -27 %   42     -9 %

Number of employees

   53,401     71,723     -26 %   57,644     -7 %
    

 

 

 

 

 

Book-to-bill was above one for the third consecutive quarter. Order bookings decreased sequentially by 1% to SEK 28.1 (20.5) b. Net sales in the third quarter grew 2% sequentially to SEK 28.0 (33.5) b. Currency exchange effects have had a negative impact on sales of 9% year-over-year.

 

Adjusted gross margin improved sequentially by 0.8 percentage points to 35.9% (32.6%) as a result of ongoing restructuring. Operating expense reductions are well on track, reaching an annualized run rate of SEK 38 (52) b. Adjusted income after financial items was SEK 1.0 (-3.6) b. compared to SEK -0.2 b. in the second quarter. Net currency exchange effects have had a negative impact of SEK 0.9 b. on operating income in the quarter.

 

Cash flow before financing was SEK 9.1 (-2.7) b. with major contributions from reductions in working capital and customer financing. The financial position was significantly strengthened with a net of financial assets and liabilities of SEK 20.5 b. Payment readiness remains high at SEK 71.4 (66.6) b.


2

 

CEO COMMENTS

 

“Ericsson is back to profit, which is an important milestone, but a lot still remains to be done before we reach good profitability,” says Carl-Henric Svanberg, President and CEO of Ericsson. “The cost savings, as well as cash flow and gross margin improvements are the result of dedicated employees with a clear understanding of the need to be in control of our own destiny.

 

Our direction is clear. We are targeting an operating expenses run rate of SEK 33 b. by Q3 2004 and will continue to focus on cost and operational excellence. We must respond even quicker to customers’ changing needs and leverage our technology and market leadership. This is the way to secure the profitability and cost advantages attainable by the market leader.

 

We are well positioned to capture new opportunities and are encouraged by our continued leading position in the market. We have gained a number of key contracts within the rapidly expanding markets for 3G/EDGE and MMS. Our solid 2G GSM position remains an important platform for further business expansion. We also see an increasing interest in our strong service offering where professional services have become a natural extension of our network contracts.

 

Leadership in this changing industry requires a clear understanding of operator and consumer needs in different markets. The ability to support operators in their launch of new services, changing business models and high quality standards in end-to-end solutions is crucial. A prerequisite is operational excellence in all aspects of our business,” concludes Carl-Henric Svanberg.

 

MARKET VIEW

 

Applications with rich consumer experience like sending and receiving pictures, downloading music, accessing e-mail and checking news over the mobile phone are gaining momentum. This drives the need for higher capacity and speeds, improved interoperability and higher quality of service in the mobile networks.

 

New service applications are of interest to the operator not only to drive new business but also to attract and retain high volume voice users, as such users are early adopters of new services. Today there are more than 160 commercially launched MMS installations of which we have 50% market share.

 

Broadband in fixed networks, with its dramatically improved speed, is growing strongly. Mobility has built its tremendous success on the advantages of convenience and reachability. 3G now combines mobility and broadband capabilities opening obvious new opportunities.

 

The number of WCDMA subscriptions is accelerating and by the end of the quarter there were 1.7 million subscriptions. The introduction pace mirrors the rollout of GSM, ten years ago. Major operators are now working toward confirmed launch dates. Within the CDMA standard, the number of CDMA2000 users is growing rapidly.

 

The global number of mobile subscriptions continues to grow on pace to reach close to 2 billion subscriptions during 2008. The growth is particularly strong in China, India and Russia partly driven by tariff reductions. Today, world penetration is only 20% with a total of 1.28 billion subscriptions. Asia-Pacific still only has 12% penetration in mobile subscriptions while Western Europe and North America has 80% and 51% respectively. We expect between 165 and 180 million net additions this year.


3

 

The industry is recovering. Operators are successfully reducing debt and strengthening their financial position. The gradual shift in focus from financial restructuring to business development leads us to believe that the market is stabilizing and that the dramatic market decline is behind us.

 

OUTLOOK

 

We maintain our view that the global mobile systems market, measured in USD, could decline by more than 10% this year compared with 2002. The addressable market for professional services is expected to continue to show good growth.

 

We expect to maintain our shares of the mobile systems and professional services markets this year. Due to currency exchange effects, our reported sales in SEK will decline more than the overall market, which is estimated in USD. Due to seasonality, sales for the fourth quarter are expected to show significant sequential growth.

 

We expect the mobile systems market in 2004 to be in line with 2003.

 

OPERATIONAL REALIGNMENT

 

The cost of sales projects contributed to an improvement of the adjusted gross margin to 35.9% (32.6%), a sequential increase of 0.8 percentage points from 35.1%. The targeted annualized run rate of operating expenses of SEK 38 b. was achieved one quarter ahead of schedule and was reduced by SEK 4 b. sequentially. The earlier announced reduction targets in cost of sales and operating expenses by the third quarter 2004 remains.

 

Total restructuring charges were SEK 5.4 b. during the quarter and SEK 12.4 b. year-to-date. Estimated total restructuring costs for 2003 remain at SEK 16.3 b., which concludes the announced restructuring programs. Cash outlays in the quarter were SEK 2.7 b.

 

During the quarter, headcount was reduced by 4,200, bringing the number of employees to 53,400 (71,700). The previous headcount target remains with total number of employees reaching 47,000 during 2004.

 

CONSOLIDATED ACCOUNTS

 

FINANCIAL REVIEW

 

Income

 

Both orders and sales were essentially flat compared to the second quarter. The book-to-bill ratio remained above 1.0 for the third consecutive quarter.

 

Orders booked were SEK 28.1 (20.5) b. Year-over-year orders increased by 37%, largely due to substantial improvement in demand in China and India. Adjusted for currency exchange effects and cancellations in the third quarter 2002 the increase was 16%.

 

Increased order development in Western Europe compensated for weaker order intake in Central and Eastern Europe. Orders in Asia Pacific were slightly down from the second quarter. The Americas was slightly up mainly due to increased orders booked in Latin America and stable demand in the US.

 

Sales grew 2% sequentially to SEK 28.0 (33.5) b. but declined 16% year-over-year. Currency adjusted sales were down 7% year-over-year. Sales in Asia Pacific and Latin America increased sequentially with major contributions from China, Japan and Mexico. The increase was offset by lower sales in Europe, while Middle East and Africa sales continued to develop favorably.

 

Gross margin adjusted for restructuring costs improved for the third consecutive quarter to 35.9% (32.6%), a sequential increase from 35.1%. Continued cost reductions and improved capacity utilization were the main contributors.


4

 

Adjusted operating expenses were reduced SEK 0.5 b. sequentially to SEK 9.6 (13.7) b. Operating expenses include a SEK 0.5 b. customer financing risk provision. The annualized run rate was SEK 38 (52) b., down from SEK 42 b. in the second quarter.

 

Adjusted operating income was SEK 1.3 (-3.2) b. compared to SEK -0.2 b. the previous quarter. Adjusted income after financial items was SEK 1.0 (-3.6) b. compared to SEK -0.2 b. in the second quarter. Net effects of currency exchange differences on operating income compared to rates one year ago were SEK -0.9 b. in the quarter and SEK -1.5 b. year-to-date. Excluding effects from currency hedging contracts this effect would have been SEK -2.2 b. year-to-date.

 

Net income was SEK -3.9 (-5.0) b. for the quarter. Financial expenses increased somewhat during the quarter due to increased interest rates tied to our credit rating.

 

Earnings per share were SEK -0.25 (-0.41).

 

Balance sheet and financing

 

The financial position improved significantly as the net of financial assets and debt increased sequentially from SEK 11.0 b. to SEK 20.5 (3.8) b. Cash improved by SEK 7.2 b. sequentially.

 

Days sales outstanding (DSO) for trade receivables were 93 (109), a decrease by eight days sequentially. Inventory turnover was more than 5.7 (4.3) turns.

 

Customer financing risk exposure remained unchanged at SEK 11.8 (24.9) b. in the quarter. Customer financing credits on balance sheet were reduced sequentially from SEK 10.0 b. to SEK 4.3 (12.7) b., largely due to payments received from credits sold in the second quarter, including the France Telecom bonds. Certain credit commitments expired unutilized, reducing the balance of outstanding commitments from SEK 11.0 in the second quarter to SEK 6.7 (14.0) b.

 

A credit facility of USD 1 b. scheduled to expire in 2004 was extended to 2007.

 

The equity ratio was 34.5% (36.0%) compared to 36.0% at the end of the previous quarter.

 

Cash flow

 

Cash flow before financing activities improved significantly sequentially and amounted to SEK 9.1 (-2.7) b. of which net payments received for customer financing credits contributed with SEK 5.3 b. Cash flow from investing activities was SEK -0.8 b. net.

 

Payment readiness increased sequentially by SEK 2.6 b. to SEK 71.4 (66.6) b. Payment readiness is expected to remain at approximately SEK 70 b. at year-end, including repayments of approximately SEK 2.2 b. of debt scheduled for the fourth quarter.

 

SEGMENT RESULTS

 

SYSTEMS

 

     Third quarter

    Second quarter

 

SEK b.


   2003

 

  2002

 

  Change

 

  2003

 

  Change

 

Orders booked

   26.5     17.9     48 %   26.3     1 %

Mobile Networks

   21.5     12.4     73 %   20.0     7 %

Fixed Networks

   1.5     1.8     -14 %   1.7     -12 %

Professional Services

   3.5     3.7     -7 %   4.6     -24 %

Net sales

   25.9     30.6     -15 %   25.2     3 %

Mobile Networks

   19.8     23.9     -17 %   18.9     5 %

Fixed Networks

   1.7     2.4     -30 %   2.2     -23 %

Professional Services

   4.4     4.3     2 %   4.1     8 %

Adjusted operating income

   1.2     -1.1     —       0.6     —    

Adjusted operating margin (%)

   5 %   -4 %   —       2 %   —    
    

 

 

 

 

 


5

 

Systems orders grew sequentially to SEK 26.5 (17.9) b. Orders for Mobile Networks increased by 7%, mainly driven by 3G orders, WCDMA as well as CDMA2000.

 

Systems sales increased 3% sequentially to SEK 25.9 (30.6) b., with encouraging strong performance in professional services. The GSM/WCDMA track decreased by 4% sequentially and was down 9% year-over-year, adjusted for currency exchange effects. The WCDMA equipment and associated network rollout services share of total Mobile Network sales remained stable.

 

Sales of Professional Services increased by 8% sequentially to SEK 4.4 (4.3) b., and now represents 17% of total Systems sales. Adjusted for currency exchange effects year-over-year growth was 12%.

 

Benefits of the restructuring programs contributed to the increase of adjusted operating income to SEK 1.2 (-1.1) b.

 

OTHER OPERATIONS

 

     Third quarter

    Second
quarter


 

SEK b.


   2003

 

  2002

 

  Change

 

  2003

 

  Change

 

Orders booked

   2.0     3.1     -35 %   2.3     -13 %

Orders booked less divestitures

   2.0     2.4     -17 %   2.3     -13 %

Net sales

   2.5     3.4     -26 %   2.5     0 %

Net sales less divestitures

   2.5     2.6     -4 %   2.5     0 %

Adjusted operating income

   0.1     -1.2     —       -0.3     —    

Adjusted operating income less divestitures

   0.1     -0.7     —       -0.3     —    

Adjusted operating margin (%)

   5 %   -35 %   —       -14 %   —    

Adjusted operating margin less divestitures (%)

   5 %   -27 %   —       -14 %   —    
    

 

 

 

 

 

Orders booked for comparable units, excluding divested operations, declined 17% year-over-year and 13% sequentially.

 

Sales for comparable units were flat year-over-year as well as sequentially. Adjusted operating income improved sequentially partly due to some positive one-time effects.

 

PHONES

 

The operating results of Sony Ericsson Mobile Communications (SEMC) improved in the quarter. Ericsson’s share in earnings was SEK 0.2 (-0.6) b., compared to SEK -0.2 b. in the second quarter. This improvement was due to positive market acceptance of new imaging phones, supply chain improvements and increased operating efficiency. Year-over-year, GSM unit shipments increased 73% and shipments to the Japanese market increased 130%, primarily driven by high demand for imaging phones.

 

SEMC expects to be profitable for the second half of 2003. Volume and sales are expected to grow during the fourth quarter but due to an increased proportion of lower priced models in the product mix the current level of profitability may not be sustained in the next quarter.

 


6

 

RELATED PARTY TRANSACTIONS

 

Transactions with Sony Ericsson Mobile Communications (SEMC)

 

SEK m.


   Third quarter 2003

   Third quarter 2002

Sales to SEMC

   989    1,684

Royalty from SEMC

   145    61

Purchases from SEMC

   590    1,049

Receivables from SEMC

   249    361

Liabilities to SEMC

   495    1,046
    
  

 

PARENT COMPANY INFORMATION

 

Net sales for the nine-month period amounted to SEK 1.3 (1.2) b. and income after financial items, excluding restructuring costs, was SEK 3.5 (0.3) b.

 

Major changes in the company’s financial position for the nine-month period were increased current and long-term commercial and financial receivables from subsidiaries of SEK 23.2 b., which were financed primarily through increased internal borrowings of SEK 26.6 b. At the end of the quarter, cash and short-term cash investments amounted to SEK 65.3 (59.3) b.

 

In accordance with the conditions of the 2001 Stock Purchase Plan for Ericsson employees, 2,010,687 shares from treasury stock were sold or distributed to employees during the third quarter. The holding of treasury stock at September 30, 2003 was 307,542,178 Class B shares.

 

Stockholm, October 30, 2003

 

Carl-Henric Svanberg

President and CEO

 

Date for next report: February 6, 2004

 

AUDITORS’ REPORT

 

We have reviewed the report for the nine-month period ended September 30, 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 third quarter report does not comply with the requirements for interim reports in the Annual Accounts Act.

 

Stockholm, October 30, 2003

 

Carl-Eric Bohlin    Bo Hjalmarsson    Thomas Thiel
Authorized Public Accountant    Authorized Public Accountant    Authorized Public Accountant
PricewaterhouseCoopers AB    PricewaterhouseCoopers AB     

 


7

 

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

 

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

 

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

 

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/9month03-en.pdf

 

FOR FURTHER INFORMATION PLEASE CONTACT

 

Henry Sténson, Senior Vice President, Communications

Phone: +46 8 719 4044; E-mail: henry.stenson@ericsson.com

 

Investors

 

Gary Pinkham, Vice President, Investor Relations

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

 

Lotta Lundin, Investor Relations

Phone: +46 8 719 6553; E-mail: lotta.lundin@ericsson.com

 

Glenn Sapadin, Investor Relations

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

 

Media

 

Pia Gideon, Vice President, Market and External Communications

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

 

Åse Lindskog, Director, Media Relations

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

 

Ola Rembe, Director, Media Relations

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

 

Telefonaktiebolaget LM Ericsson (publ)

Org. number: 556016-0680

Torshamnsgatan 23

SE-164 83 Stockholm

Phone: +46 8 719 00 00

www.ericsson.com

 


8

 

FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

 

Financial Statements

   Page

Consolidated income statement

   9

Consolidated balance sheet

   10

Consolidated statement of cash flows

   11

Changes in stockholders’ equity

   12

Consolidated income statement isolated quarters

   13

Additional Information

   Page

Accounting policies and reporting

   14

Orders booked by segment by quarter

   15

Net sales by segment by quarter

   16

Adjusted operating income, operating margin and employees by segment by quarter

   17

Orders booked by market area by quarter

   18

Net sales by market area by quarter

   19

External orders booked by market area by segment

   20

External net sales by market area by segment

   20

Top ten markets in orders and sales

   21

Customer financing risk exposure

   21

Trend of net sales and operating expenses

   21

Other information

   22

 


9

 

ERICSSON

CONSOLIDATED INCOME STATEMENT

 

     Jul – Sep

    Jan – Sep

 

SEK million


   2003

    20021)

    Change

    2003

    20021)

    Change

 

Net sales

   28,039     33,513     -16 %   81,511     109,024     -25 %

Cost of sales

   -19,084     -24,241     -21 %   -56,957     -75,963     -25 %
    

 

       

 

     

Gross margin

   8,955     9,272           24,554     33,061        

Research and development and other technical expenses

   -6,846     -8,168     -16 %   -19,827     -22,353     -11 %

Selling expenses

   -3,354     -5,153     -35 %   -10,888     -16,375     -34 %

Administrative expenses

   -3,423     -2,229     54 %   -7,069     -7,492     -6 %
    

 

       

 

     

Operating expenses

   -13,623     -15,550           -37,784     -46,220        

Other operating revenues and costs

   431     230           540     1,268        

Share in earnings of JV and associated companies

   247     -629           -860     -1,209        
    

 

       

 

     

Operating income

   -3,990     -6,677           -13,550     -13,100        

Financial income

   741     569     30 %   2,755     2,098     31 %

Financial expenses

   -1,064     -991     7 %   -3,138     -3,883     -19 %
    

 

       

 

     

Income after financial items

   -4,313     -7,099           -13,933     -14,885        

Taxes

   400     2,108           3,067     4,457        

Minority interest

   -33     -6           -120     -256        
    

 

       

 

     

Net income

   -3,946     -4,997           -10,986     -10,684        

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)

                     15,822     11,458        

Earnings per share, basic (SEK)

   -0.25     -0.41           -0.69     -0.93        

Earnings per share, diluted (SEK)

   -0.25     -0.41           -0.69     -0.93        

NOTE 1

                                    

Items affecting comparability

                                    

Non-operational capital gains/losses, net

   -10     118           -15     217        

Restructuring costs, net

   -5,449     -4,209           -12,441     -5,691        

Capitalization of development expenses, net

   182     641           1,208     2,556        
    

 

       

 

     

Total

   -5,277     -3,450           -11,248     -2,918        

– of which in

                                    

Cost of sales

   -1,111     -1,669           -4,020     -2,107        

Operating expenses

   -3,994     -1,899           -6,623     -1,258        

Other operating revenues and costs

   -172     118           -340     217        

Share in earnings of JV and associated companies / phones

   —       —             -265     230        

NOTE 2

                                    

Key measurements, excluding items affecting comparability

                                    

Net Sales

   28,039     33,513           81,511     109,024        

Adjusted gross margin

   10,066     10,941           28,574     35,168        

—  as percentage of net sales

   35.9 %   32.6 %         35.1 %   32.3 %      

Adjusted operating expenses

   -9,629     -13,651           -31,161     -44,962        

—  as percentage of net sales

   34.3 %   40.7 %         38.2 %   41.2 %      

Adjusted other operating revenues and costs

   603     112           880     1,051        

Share in earnings of JV and assoc. companies

   247     -629           -595     -1,439        
    

 

       

 

     

Adjusted operating income

   1,287     -3,227           -2,302     -10,182        

Adjusted operating margin (%)

   4.6 %   -9.6 %         -2.8 %   -9.3 %      

Adjusted income after financial items

   964     -3,649           -2,685     -11,967        

 


10

 

ERICSSON

CONSOLIDATED BALANCE SHEET

SEK million


  

Sep 30

2003


  

Dec 31

20021)


  

Sep 30

20021)


ASSETS

              

Fixed assets

              

Intangible assets

              

Capitalized development expenses

   4,408    3,200    2,556

Goodwill

   6,231    8,603    8,440

Other

   716    806    1,710

Tangible assets

   6,400    9,964    12,436

Financial assets

              

Equity in JV and associated companies

   2,662    1,835    1,978

Other investments

   548    2,243    2,252

Long-term customer financing

   3,041    12,283    11,194

Deferred tax assets

   28,875    26,047    26,266

Other long-term receivables

   1,802    2,132    3,298
    
  
  
     54,683    67,113    70,130
    
  
  

Current assets

              

Inventories

   11,381    13,419    20,595

Receivables

              

Accounts receivable—trade

   29,047    37,384    41,757

Short-term customer financing

   1,296    1,680    1,516

Other receivables

   17,161    23,303    30,205

Short-term cash investments, cash and bank

   69,552    66,214    74,394
    
  
  
     128,437    142,000    168,467
    
  
  

Total assets

   183,120    209,113    238,597
    
  
  

STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

              

Stockholders’ equity

   60,860    73,607    82,839
    
  
  

Minority interest in equity of consolidated subsidiaries

   2,239    2,469    2,947
    
  
  

Provisions

              

Pensions

   11,581    10,997    10,846

Other provisions

   23,470    21,357    21,391
    
  
  
     35,051    32,354    32,237
    
  
  

Long-term liabilities

   28,124    37,066    37,935
    
  
  

Current liabilities

              

Interest-bearing liabilities

   10,448    14,321    22,608

Accounts payable

   8,568    12,469    13,834

Other current liabilities

   37,830    36,827    46,197
    
  
  
     56,846    63,617    82,639
    
  
  

Total stockholders’ equity, provisions and liabilities

   183,120    209,113    238,597
    
  
  

Of which interest-bearing provisions and liabilities

   49,018    61,463    70,579

Net debt

   -20,534    -4,751    -3,815

Assets pledged as collateral

   7,631    2,800    3,499

Contingent liabilities

   3,003    3,116    8,044

 

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

     Jul—Sep

   Jan—Sep

   Jan—Dec

SEK million


   2003

   20021)

   2003

   20021)

   2002

Net income

   -3,946    -4,996    -10,986    -10,683    -19,013

Adjustments to reconcile net income to cash

   455    -136    2,227    -4,551    -1,832
    
  
  
  
  
     -3,491    -5,132    -8,759    -15,234    -20,845

Changes in operating net assets

                        

Inventories

   1,106    2,695    2,038    1,700    8,599

Customer financing, short-term and long-term

   5,273    -451    8,220    700    -2,140

Accounts receivable

   882    3,944    7,680    10,518    9,839

Other

   6,150    -5,269    9,006    -8,411    -5,541
    
  
  
  
  

Cash flow from operating activities

   9,920    -4,213    18,185    -10,727    -10,088

Product development

   -458    -662    -1,731    -2,659    -3,442

Other investing activities

   -357    2,152    -1,556    4,647    6,426
    
  
  
  
  

Cash flow from investing activities

   -815    1,490    -3,287    1,988    2,984
    
  
  
  
  

Cash flow before financing activities

   9,105    -2,723    14,898    -8,739    -7,104
    
  
  
  
  

Dividends paid

   -192    -409    -209    -432    -645

Other equity transactions

   3    28,957    5    28,957    28,942

Other financing activities

   -1,453    1,219    -10,988    -12,751    -22,700
    
  
  
  
  

Cash flow from financing activities

   -1,642    29,767    -11,192    15,774    5,597

Effect of exchange rate changes on cash

   -269    -201    -368    -1,566    -1,203
    
  
  
  
  

Net change in cash

   7,194    26,843    3,338    5,470    -2,710

Cash and cash equivalents, beginning of period

   62,358    47,551    66,214    68,924    68,924
    
  
  
  
  

Cash and cash equivalents, end of period

   69,552    74,394    69,552    74,394    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-Sep

2003


  

Jan-Dec

2002


  

Jan-Sep

2002


Opening balance

   73,607    68,587    68,587

Stock issue, net

   158    28,940    28,958

Sale of own shares

   5    2    —  

Stock Purchase Plan

   125    12    —  

Conversion of debentures

   —      —      —  

Repurchase of own stock

   -158    —      —  

Dividends paid

   —      —      —  

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

   -1,891    -4,921    -4,022

Net income

   -10,986    -19,013    -10,684

Other changes

   —      —      —  
    
  
  

Closing balance

   60,860    73,607    82,839
    
  
  


13

 

ERICSSON

CONSOLIDATED INCOME STATEMENT ISOLATED QUARTERS

 

     2002 1)

    2002 1)

 

SEK million


   0203

    0206

    0209

    0212

    Q1

    Q2

    Q3

    Q4

 

Net sales

   36,966     75,511     109,024     145,773     36,966     38,545     33,513     36,749  

Cost of sales

   -25,253     -51,722     -75,963     -104,224     -25,253     -26,469     -24,241     -28,261  
    

 

 

 

 

 

 

 

Gross margin

   11,713     23,789     33,061     41,549     11,713     12,076     9,272     8,488  

Research and development and other technical expenses

   -7,624     -14,185     -22,353     -30,510     -7,624     -6,561     -8,168     -8,157  

Selling expenses

   -5,592     -11,222     -16,375     -21,896     -5,592     -5,630     -5,153     -5,521  

Administrative expenses

   -2,552     -5,263     -7,492     -9,995     -2,552     -2,711     -2,229     -2,503  
    

 

 

 

 

 

 

 

Operating expenses

   -15,768     -30,670     -46,220     -62,401     -15,768     -14,902     -15,550     -16,181  

Other operating revenues and costs

   771     1,038     1,268     773     771     267     230     -495  

Share in earnings of JV and assoc. companies

   -56     -580     -1,209     -1,220     -56     -524     -629     -11  
    

 

 

 

 

 

 

 

Operating income

   -3,340     -6,423     -13,100     -21,299     -3,340     -3,083     -6,677     -8,199  

Financial income

   889     1,529     2,098     4,253     889     640     569     2,155  

Financial expenses

   -1,682     -2,892     -3,883     -5,789     -1,682     -1,210     -991     -1,906  
    

 

 

 

 

 

 

 

Income after financial items

   -4,133     -7,786     -14,885     -22,835     -4,133     -3,653     -7,099     -7,950  

Taxes

   1,233     2,349     4,457     4,165     1,233     1,116     2,108     -292  

Minority interest

   -68     -250     -256     -343     -68     -182     -6     -87  
    

 

 

 

 

 

 

 

Net income

   -2,968     -5,687     -10,684     -19,013     -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)

   10,950     10,950     11,458     12,573                          

Earnings per share, basic (SEK)

   -0.27     -0.52     -0.93     -1.51     -0.27     -0.25     -0.41     -0.58  

Earnings per share, diluted (SEK)

   -0.27     -0.52     -0.93     -1.51     -0.27     -0.25     -0.41     -0.58  

NOTE 1

                                                

Items affecting comparability

                                                

Non-operational capital gains/losses, net

   102     99     217     -42     102     -3     118     -259  

Restructuring costs, net

   —       -1,482     -5,691     -11,962     —       -1,482     -4,209     -6,271  

Capitalization of development expenses, net

   1,005     1,915     2,556     3,200     1,005     910     641     644  
    

 

 

 

 

 

 

 

Total

   1,107     532     -2,918     -8,804     1,107     -575     -3,450     -5,886  

-of which in

                                                

Cost of sales

   —       -438     -2,107     -5,589     —       -438     -1,669     -3,482  

Operating expenses

   1,005     641     -1,258     -3,092     1,005     -364     -1,899     -1,834  

Other operating revenues and costs

   102     99     217     -353     102     -3     118     -570  

Share in earnings of JV and associated companies / phones

   —       230     230     230     —       230     —       —    

NOTE 2

                                                

Key measurements, excluding items affecting comparability

                                                

Net sales

   36,966     75,511     109,024     145,773     36,966     38,545     33,513     36,749  

Adjusted gross margin

   11,713     24,227     35,168     47,138     11,713     12,514     10,941     11,970  

—  as percentage of net sales

   31.7 %   32.1 %   32.3 %   32.3 %   31.7 %   32.5 %   32.6 %   32.6 %

Adjusted operating expenses

   -16,773     -31,311     -44,962     -59,309     -16,773     -14,538     -13,651     -14,347  

—  as percentage of net sales

   45.4 %   41.5 %   41.2 %   40.7 %   45.4 %   37.7 %   40.7 %   39.0 %

Adjusted other operating revenues and costs

   669     939     1,051     1,126     669     270     112     75  

Share in earnings of JV and assoc. companies

   -56     -810     -1,439     -1,450     -56     -754     -629     -11  
    

 

 

 

 

 

 

 

Adjusted operating income

   -4,447     -6,955     -10,182     -12,495     -4,447     -2,508     -3,227     -2,313  

Adjusted operating margin (%)

   -12.0 %   -9.2 %   -9.3 %   -8.6 %   -12.0 %   -6.5 %   -9.6 %   -6.3 %

Adjusted income after financial items

   -5,240     -8,318     -11,967     -14,031     -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. The effect 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.

 


15

 

ORDERS BOOKED BY SEGMENT BY QUARTER

SEK million

 

     20021)

    2003

 

Isolated quarters


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Systems

   37,701    31,197     17,938     28,505     24,996     26,336     26,518  

—  Mobile Networks

   29,344    22,900     12,439     20,865     17,475     20,020     21,508  

—  Fixed Networks

   2,693    2,952     1,751     1,909     1,990     1,724     1,513  

Total Network Equipment

   32,037    25,852     14,190     22,774     19,465     21,744     23,021  

—  Of which Network Rollout

   4,703    3,939     1,411     4,020     2,542     2,000     2,025  

Professional Services

   5,664    5,345     3,748     5,731     5,531     4,592     3,497  

Other Operations

   4,889    4,833     3,102     2,560     2,587     2,312     1,963  

Less: Intersegment Orders

   -697    -765     -510     -402     -523     -300     -353  
    
  

 

 

 

 

 

Total

   41,893    35,265     20,530     30,663     27,060     28,348     28,128  
    
  

 

 

 

 

 

                                           
     20021)

    2003

 

Sequential change


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Systems

        -17 %   -43 %   59 %   -12 %   5 %   1 %

—  Mobile Networks

        -22 %   -46 %   68 %   -16 %   15 %   7 %

—  Fixed Networks

        10 %   -41 %   9 %   4 %   -13 %   -12 %

Total Network Equipment

        -19 %   -45 %   60 %   -15 %   12 %   6 %

—  Of which Network Rollout

        -16 %   -64 %   185 %   -37 %   -21 %   1 %

Professional Services

        -6 %   -30 %   53 %   -3 %   -17 %   -24 %

Other Operations

        -1 %   -36 %   -17 %   1 %   -11 %   -15 %

Less: Intersegment Orders

        10 %   -33 %   -21 %   30 %   -43 %   18 %
         

 

 

 

 

 

Total

        -16 %   -42 %   49 %   -12 %   5 %   -1 %
         

 

 

 

 

 

                                           
                            2003

 

Year over year change


                          Q1

    Q2

    Q3

 

Systems

                          -34 %   -16 %   48 %

—  Mobile Networks

                          -40 %   -13 %   73 %

—  Fixed Networks

                          -26 %   -42 %   -14 %

Total Network Equipment

                          -39 %   -16 %   62 %

—  Of which Network Rollout

                          -46 %   -49 %   44 %

Professional Services

                          -2 %   -14 %   -7 %

Other Operations

                          -47 %   -52 %   -37 %

Less: Intersegment Orders

                          -25 %   -61 %   -31 %
                           

 

 

Total

                          -35 %   -20 %   37 %
                           

 

 

                                           
     20021)

    2003

 

Year to Date


   0203

   0206

    0209

    0212

    0303

    0306

    0309

 

Systems

   37,701    68,898     86,836     115,341     24,996     51,332     77,850  

—  Mobile Networks

   29,344    52,245     64,684     85,549     17,475     37,495     59,003  

—  Fixed Networks

   2,693    5,645     7,396     9,305     1,990     3,714     5,227  

Total Network Equipment

   32,037    57,890     72,080     94,854     19,465     41,209     64,230  

—  Of which Network Rollout

   4,703    8,642     10,053     14,073     2,542     4,542     6,567  

Professional Services

   5,664    11,008     14,756     20,487     5,531     10,123     13,620  

Other Operations

   4,889    9,722     12,824     15,384     2,587     4,899     6,862  

Less: Intersegment Orders

   -697    -1,462     -1,972     -2,374     -523     -823     -1,176  
    
  

 

 

 

 

 

Total

   41,893    77,158     97,688     128,351     27,060     55,408     83,536  
    
  

 

 

 

 

 

                                           
                            2003

 

YTD year over year change


                          0303

    0306

    0309

 

Systems

                          -34 %   -25 %   -10 %

—  Mobile Networks

                          -40 %   -28 %   -9 %

—  Fixed Networks

                          -26 %   -34 %   -29 %

Total Network Equipment

                          -39 %   -29 %   -11 %

—  Of which Network Rollout

                          -46 %   -47 %   -35 %

Professional Services

                          -2 %   -8 %   -8 %

Other Operations

                          -47 %   -50 %   -46 %

Less: Intersegment Orders

                          -25 %   -44 %   -40 %
                           

 

 

Total

                          -35 %   -28 %   -14 %
                           

 

 

 

1)   Year 2002 restated to present Other Operations and Intersegment Orders excluding internal service operations

 


16

 

NET SALES BY SEGMENT BY QUARTER

SEK million

 

     20021)

    2003

 

Isolated quarters


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Systems

   33,323    34,781     30,612     33,239     23,961     25,224     25,907  

—  Mobile Networks

   25,552    26,971     23,923     24,657     17,643     18,949     19,826  

—  Fixed Networks

   3,287    2,983     2,380     3,049     1,898     2,177     1,670  

Total Network Equipment

   28,839    29,954     26,303     27,706     19,541     21,126     21,496  

—  Of which Network Rollout

   4,183    3,842     2,928     3,834     2,577     2,532     2,791  

Professional Services

   4,484    4,827     4,309     5,533     4,420     4,098     4,411  

Other Operations

   4,327    4,554     3,430     3,890     2,363     2,534     2,508  

Less: Intersegment Sales

   -684    -790     -529     -380     -465     -145     -376  
    
  

 

 

 

 

 

Total

   36,966    38,545     33,513     36,749     25,859     27,613     28,039  
    
  

 

 

 

 

 

                                           
     20021)

    2003

 

Sequential change


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Systems

        4 %   -12 %   9 %   -28 %   5 %   3 %

—  Mobile Networks

        6 %   -11 %   3 %   -28 %   7 %   5 %

—  Fixed Networks

        -9 %   -20 %   28 %   -38 %   15 %   -23 %

Total Network Equipment

        4 %   -12 %   5 %   -29 %   8 %   2 %

—  Of which Network Rollout

        -8 %   -24 %   31 %   -33 %   -2 %   10 %

Professional Services

        8 %   -11 %   28 %   -20 %   -7 %   8 %

Other Operations

        5 %   -25 %   13 %   -39 %   7 %   -1 %

Less: Intersegment Sales

        15 %   -33 %   -28 %   22 %   -69 %   159 %
         

 

 

 

 

 

Total

        4 %   -13 %   10 %   -30 %   7 %   2 %
         

 

 

 

 

 

                                           
                            2003

 

Year over year change


                          Q1

    Q2

    Q3

 

Systems

                          -28 %   -27 %   -15 %

—  Mobile Networks

                          -31 %   -30 %   -17 %

—  Fixed Networks

                          -42 %   -27 %   -30 %

Total Network Equipment

                          -32 %   -29 %   -18 %

—  Of which Network Rollout

                          -38 %   -34 %   -5 %

Professional Services

                          -1 %   -15 %   2 %

Other Operations

                          -45 %   -44 %   -27 %

Less: Intersegment Sales

                          -32 %   -82 %   -29 %
                           

 

 

Total

                          -30 %   -28 %   -16 %
                           

 

 

                                           
     20021)

    2003

 

Year to Date


   0203

   0206

    0209

    0212

    0303

    0306

    0309

 

Systems

   33,323    68,104     98,716     131,955     23,961     49,185     75,092  

—  Mobile Networks

   25,552    52,523     76,446     101,103     17,643     36,592     56,418  

—  Fixed Networks

   3,287    6,270     8,650     11,699     1,898     4,075     5,745  

Total Network Equipment

   28,839    58,793     85,096     112,802     19,541     40,667     62,163  

—  Of which Network Rollout

   4,183    8,025     10,953     14,786     2,577     5,109     7,900  

Professional Services

   4,484    9,311     13,620     19,153     4,420     8,518     12,929  

Other Operations

   4,327    8,881     12,311     16,201     2,363     4,897     7,405  

Less: Intersegment Sales

   -684    -1,474     -2,003     -2,383     -465     -610     -986  
    
  

 

 

 

 

 

Total

   36,966    75,511     109,024     145,773     25,859     53,472     81,511  
    
  

 

 

 

 

 

                                           
                            2003

 

YTD year over year change


                          0303

    0306

    0309

 

Systems

                          -28 %   -28 %   -24 %

—  Mobile Networks

                          -31 %   -30 %   -26 %

—  Fixed Networks

                          -42 %   -35 %   -34 %

Total Network Equipment

                          -32 %   -31 %   -27 %

—  Of which Network Rollout

                          -38 %   -36 %   -28 %

Professional Services

                          -1 %   -9 %   -5 %

Other Operations

                          -45 %   -45 %   -40 %

Less: Intersegment Sales

                          -32 %   -59 %   -51 %
                           

 

 

Total

                          -30 %   -29 %   -25 %
                           

 

 

 

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                                           
     2002

    2003

 

Year to date


   0203

    0206

         0209     

         0212     

    0303

    0306

    0309

 

Systems

   -2,799     -3,495     -4,604     -4,907     -2,097     -1,523     -341  

Phones

   —       -442     -992     -1,331     -500     -683     -483  

Other Operations

   -1,343     -2,318     -3,477     -4,715     -492     -834     -699  

Unallocated1)

   -305     -700     -1,109     -1,542     -318     -549     -779  
    

 

 

 

 

 

 

Total

   -4,447     -6,955     -10,182     -12,495     -3,407     -3,589     -2,302  
    

 

 

 

 

 

 

     2002

    2003

 

As percentage of net sales


   0203

    0206

    0209

    0212

    0303

    0306

    0309

 

Systems

   -8 %   -5 %   -5 %   -4 %   -9 %   -3 %   0 %

Phones2)

   —       —       —       —       —       —       —    

Other Operations

   -31 %   -26 %   -28 %   -29 %   -21 %   -17 %   -9 %
    

 

 

 

 

 

 

Total

   -12 %   -9 %   -9 %   -9 %   -13 %   -7 %   -3 %
    

 

 

 

 

 

 

     2002

    2003

 

Isolated quarters


   Q1

    Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Systems

   -2,799     -696     -1,109     -303     -2,097     574     1,182  

Phones

   —       -442     -550     -339     -500     -183     200  

Other Operations

   -1,343     -975     -1,159     -1,238     -492     -342     135  

Unallocated1)

   -305     -395     -409     -433     -318     -231     -230  
    

 

 

 

 

 

 

Total

   -4,447     -2,508     -3,227     -2,313     -3,407     -182     1,287  
    

 

 

 

 

 

 

     2002

    2003

 

As percentage of net sales


   Q1

    Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Systems

   -8 %   -2 %   -4 %   -1 %   -9 %   2 %   5 %

Phones2)

   —       —       —       —       —       —       —    

Other Operations

   -31 %   -21 %   -34 %   -32 %   -21 %   -13 %   5 %
    

 

 

 

 

 

 

Total

   -12 %   -7 %   -10 %   -6 %   -13 %   -1 %   5 %
    

 

 

 

 

 

 

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

2)  Calculation not applicable

NUMBER OF EMPLOYEES                                           
     20021)

    2003

 
     0203

    0206

    0209

    0212

    0303

    0306

    0309

 

Systems

   70,957     65,899     62,543     56,590     53,532     50,510     46,669  

Other Operations

   10,659     9,876     8,774     7,646     7,047     6,786     6,409  

Unallocated

   396     446     406     385     361     348     323  
    

 

 

 

 

 

 

Total

   82,012     76,221     71,723     64,621     60,940     57,644     53,401  
    

 

 

 

 

 

 

Change in percent


                           0303

    0306

    0309

 

Systems

                           -25 %   -23 %   -25 %

Other Operations

                           -34 %   -31 %   -27 %

Unallocated

                           -9 %   -22 %   -20 %
                            

 

 

Total

                           -26 %   -24 %   -26 %
                            

 

 

 

1)   Employees with internal service units have been transferred from Other Operations to Systems

 


18

 

ORDERS BOOKED BY MARKET AREA BY QUARTER

 

SEK million

 

     2002

    2003

 

Isolated quarters


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Europe, Middle East & Africa*

   19,493    17,691     9,554     18,710     14,081     14,425     14,140  

North America

   7,003    5,834     4,473     5,567     4,693     4,622     4,380  

Latin America

   4,846    3,349     1,417     -37     2,621     1,669     2,245  

Asia Pacific

   10,551    8,391     5,086     6,423     5,665     7,632     7,363  
    
  

 

 

 

 

 

Total

   41,893    35,265     20,530     30,663     27,060     28,348     28,128  
    
  

 

 

 

 

 

* Of which Sweden

   2,437    2,506     1,346     1,331     1,406     1,190     967  

* Of which EU

   8,877    12,439     3,844     8,843     8,805     6,643     8,054  
     2002

    2003

 

Sequential change


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Europe, Middle East & Africa*

        -9 %   -46 %   96 %   -25 %   2 %   -2 %

North America

        -17 %   -23 %   24 %   -16 %   -2 %   -5 %

Latin America

        -31 %   -58 %   -103 %         -36 %   35 %

Asia Pacific

        -20 %   -39 %   26 %   -12 %   35 %   -4 %
         

 

 

 

 

 

Total

        -16 %   -42 %   49 %   -12 %   5 %   -1 %
         

 

 

 

 

 

* Of which Sweden

        3 %   -46 %   -1 %   6 %   -15 %   -19 %

* Of which EU

        40 %   -69 %   130 %   0 %   -25 %   21 %
                            2003

 

Year over year change


                          Q1

    Q2

    Q3

 

Europe, Middle East & Africa*

                          -28 %   -18 %   48 %

North America

                          -33 %   -21 %   -2 %

Latin America

                          -46 %   -50 %   58 %

Asia Pacific

                          -46 %   -9 %   45 %
                           

 

 

Total

                          -35 %   -20 %   37 %
                           

 

 

* Of which Sweden

                          -42 %   -53 %   -28 %

* Of which EU

                          -1 %   -47 %   110 %
     2002

    2003

 

Year to date


   0203

   0206

    0209

    0212

    0303

    0306

    0309

 

Europe, Middle East & Africa*

   19,493    37,184     46,738     65,448     14,081     28,506     42,646  

North America

   7,003    12,837     17,310     22,877     4,693     9,315     13,695  

Latin America

   4,846    8,195     9,612     9,575     2,621     4,290     6,535  

Asia Pacific

   10,551    18,942     24,028     30,451     5,665     13,297     20,660  
    
  

 

 

 

 

 

Total

   41,893    77,158     97,688     128,351     27,060     55,408     83,536  
    
  

 

 

 

 

 

* Of which Sweden

   2,437    4,943     6,289     7,620     1,406     2,596     3,563  

* Of which EU

   8,877    21,316     25,160     34,003     8,805     15,448     23,502  
                            2003

 

YTD year over year change


                          0303

    0306

    0309

 

Europe, Middle East & Africa*

                          -28 %   -23 %   -9 %

North America

                          -33 %   -27 %   -21 %

Latin America

                          -46 %   -48 %   -32 %

Asia Pacific

                          -46 %   -30 %   -14 %
                           

 

 

Total

                          -35 %   -28 %   -14 %
                           

 

 

* Of which Sweden

                          -42 %   -47 %   -43 %

* Of which EU

                          -1 %   -28 %   -7 %

 


19

 

NET SALES BY MARKET AREA BY QUARTER

 

SEK million

 

     2002

    2003

 

Isolated quarters


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Europe, Middle East & Africa*

   17,606    19,060     16,772     20,686     13,983     15,083     14,144  

North America

   4,072    6,063     6,381     6,552     3,940     4,217     4,271  

Latin America

   4,311    3,105     2,866     2,394     1,764     2,197     2,663  

Asia Pacific

   10,977    10,317     7,494     7,117     6,172     6,116     6,961  
    
  

 

 

 

 

 

Total

   36,966    38,545     33,513     36,749     25,859     27,613     28,039  
    
  

 

 

 

 

 

* Of which Sweden

   1,974    2,585     1,676     2,068     1,403     1,437     1,371  

* Of which EU

   10,867    11,068     9,193     12,268     7,885     8,070     7,950  
     2002

    2003

 

Sequential change


   Q1

   Q2

    Q3

    Q4

    Q1

    Q2

    Q3

 

Europe, Middle East & Africa*

        8 %   -12 %   23 %   -32 %   8 %   -6 %

North America

        49 %   5 %   3 %   -40 %   7 %   1 %

Latin America

        -28 %   -8 %   -16 %   -26 %   25 %   21 %

Asia Pacific

        -6 %   -27 %   -5 %   -13 %   -1 %   14 %
         

 

 

 

 

 

Total

        4 %   -13 %   10 %   -30 %   7 %   2 %
         

 

 

 

 

 

* Of which Sweden

        31 %   -35 %   23 %   -32 %   2 %   -5 %

* Of which EU

        2 %   -17 %   33 %   -36 %   2 %   -1 %
                            2003

 

Year over year change


                          Q1

    Q2

    Q3

 

Europe, Middle East & Africa*

                          -21 %   -21 %   -16 %

North America

                          -3 %   -30 %   -33 %

Latin America

                          -59 %   -29 %   -7 %

Asia Pacific

                          -44 %   -41 %   -7 %
                           

 

 

Total

                          -30 %   -28 %   -16 %
                           

 

 

* Of which Sweden

                          -29 %   -44 %   -18 %

* Of which EU

                          -27 %   -27 %   -14 %
     2002

    2003

 

Year to date


   0203

   0206

    0209

    0212

    0303

    0306

    0309

 

Europe, Middle East & Africa*

   17,606    36,666     53,438     74,124     13,983     29,066     43,210  

North America

   4,072    10,135     16,516     23,068     3,940     8,157     12,428  

Latin America

   4,311    7,416     10,282     12,676     1,764     3,961     6,624  

Asia Pacific

   10,977    21,294     28,788     35,905     6,172     12,288     19,249  
    
  

 

 

 

 

 

Total

   36,966    75,511     109,024     145,773     25,859     53,472     81,511  
    
  

 

 

 

 

 

* Of which Sweden

   1,974    4,559     6,235     8,303     1,403     2,840     4,211  

* Of which EU

   10,867    21,935     31,128     43,396     7,885     15,955     23,905  
                            2003

 

YTD year over year change


                          0303

    0306

    0309

 

Europe, Middle East & Africa*

                          -21 %   -21 %   -19 %

North America

                          -3 %   -20 %   -25 %

Latin America

                          -59 %   -47 %   -36 %

Asia Pacific

                          -44 %   -42 %   -33 %
                           

 

 

Total

                          -30 %   -29 %   -25 %
                           

 

 

* Of which Sweden

                          -29 %   -38 %   -32 %

* Of which EU

                          -27 %   -27 %   -23 %


20

 

EXTERNAL ORDERS BOOKED BY MARKET AREA BY SEGMENT

 

SEK million

 

Jan—Sep 2003


   Systems

    Share of
Systems


    Other

    Share of
Other


    Total

    Share of
Total


 

Europe, Middle East & Africa

   37,857     49 %   4,789     76 %   42,646     51 %

North America

   13,215     17 %   480     8 %   13,695     16 %

Latin America

   6,372     8 %   163     3 %   6,535     8 %

Asia Pacific

   19,849     26 %   811     13 %   20,660     25 %
    

 

 

 

 

 

Total

   77,293     100 %   6,243     100 %   83,536     100 %
    

 

 

 

 

 

Share of Total

   93 %         7 %         100 %      

Jan—Sep 2002


   Systems

    Share of
Systems


    Other

    Share of
Other


    Total

    Share of
Total


 

Europe, Middle East & Africa

   37,833     45 %   8,905     76 %   46,738     47 %

North America

   16,668     19 %   642     5 %   17,310     18 %

Latin America

   8,955     10 %   657     6 %   9,612     10 %

Asia Pacific

   22,460     26 %   1,568     13 %   24,028     25 %
    

 

 

 

 

 

Total

   85,916     100 %   11,772     100 %   97,688     100 %
    

 

 

 

 

 

Share of Total

   88 %         12 %         100 %      

Change


   Systems

          Other

          Total

       

Europe, Middle East & Africa

   0 %         -46 %         -9 %      

North America

   -21 %         -25 %         -21 %      

Latin America

   -29 %         -75 %         -32 %      

Asia Pacific

   -12 %         -48 %         -14 %      
    

       

       

     

Total

   -10 %         -47 %         -14 %      
    

       

       

     
EXTERNAL NET SALES BY MARKET AREA BY SEGMENT

SEK million

Jan—Sep 2003


   Systems

    Share of
Systems


    Other

    Share of
Other


    Total

    Share of
Total


 

Europe, Middle East & Africa

   37,920     50 %   5,290     77 %   43,210     53 %

North America

   12,080     16 %   348     5 %   12,428     15 %

Latin America

   6,384     9 %   240     4 %   6,624     8 %

Asia Pacific

   18,311     25 %   938     14 %   19,249     24 %
    

 

 

 

 

 

Total

   74,695     100 %   6,816     100 %   81,511     100 %
    

 

 

 

 

 

Share of Total

   92 %         8 %         100 %      

Jan—Sep 2002


   Systems

    Share of
Systems


    Other

    Share of
Other


    Total

    Share of
Total


 

Europe, Middle East & Africa

   44,962     46 %   8,476     76 %   53,438     49 %

North America

   15,996     16 %   520     5 %   16,516     15 %

Latin America

   9,577     10 %   705     6 %   10,282     9 %

Asia Pacific

   27,304     28 %   1,484     13 %   28,788     27 %
    

 

 

 

 

 

Total

   97,839     100 %   11,185     100 %   109,024     100 %
    

 

 

 

 

 

Share of Total

   90 %         10 %         100 %      

Change


   Systems

          Other

          Total

       

Europe, Middle East & Africa

   -16 %         -38 %         -19 %      

North America

   -24 %         -33 %         -25 %      

Latin America

   -33 %         -66 %         -36 %      

Asia Pacific

   -33 %         -37 %         -33 %      
    

       

       

     

Total

   -24 %         -39 %         -25 %      
    

       

       

     


21

 

TOP 10 MARKETS IN ORDERS AND SALES

Year to date third quarter 2003

 

Orders


 

Share of

total orders


     

Sales


 

Share of

total sales


United States

  15%       United States   14%

China

  10%       China   8%

Italy

  8%       Italy   6%

Sweden

  4%       Sweden   5%

Spain

  4%       Japan   4%

India

  4%       Spain   4%

Russia

  3%       Saudi Arabia   3%

Brazil

  3%       United Kingdom       3%

United Kingdom            

  3%       Russia   3%

Germany

    2%       Australia     3%
   
         

 

CUSTOMER FINANCING RISK EXPOSURE                         

(SEK billion)


   Sep 30
2002


   Dec 31
2002


   Mar 31
2003


   Jun 30
2003


   Sep 30
2003


On-balance-sheet credits

   18.9    21.1    21.1    15.6    10.4

Off-balance-sheet credits

   6.8    1.5    1.6    1.8    1.8
    
  
  
  
  

Total credits

   25.7    22.6    22.7    17.4    12.2

Less third party risk coverage

   -0.8    -0.8    -2.6    -2.6    -0.4
    
  
  
  
  

Ericsson risk exposure