6-K 1 d6k.htm ERICSSON FOURTH QUARTER REPORT 2002 Ericsson Fourth Quarter Report 2002

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

 

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

the Securities Exchange Act of 1934

 

February 7, 2003

 


 

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

 

126 25 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

 



 

LOGO

 

Fourth quarter report 2002

February 3, 2003

   

For the German market:

Notification pursuant to

Section 15 WpHG

 

Ericsson reports positive cash flow and continued progress in cost reductions

 

    Cash flow before financing SEK 1.6 b.
    Adjusted income before taxes SEK -2.2 b.
    Order intake SEK 33.0 b.*
    GSM/WCDMA sales up 4% sequentially

 

    

Fourth quarter


      

Twelve months


 

SEK b.

  

2002


    

2001


    

Change


      

2002


    

20012)


    

Change


 

Orders, net

  

30.7

 

  

39.9

 

  

-23

%

    

128.4

 

  

201.8

 

  

-36

%

— Systems

  

28.5

 

  

34.2

 

  

-17

%

    

115.3

 

  

183.3

 

  

-37

%

— Other operations

  

4.7

 

  

7.4

 

  

-37

%

    

22.7

 

  

27.4

 

  

-17

%

    

  

  

    

  

  

Sales

  

36.7

 

  

58.5

 

  

-37

%

    

145.8

 

  

210.8

 

  

-31

%

— Systems

  

33.2

 

  

50.1

 

  

-34

%

    

132.0

 

  

188.7

 

  

-30

%

— Other operations

  

6.0

 

  

10.2

 

  

-41

%

    

23.5

 

  

31.8

 

  

-26

%

    

  

  

    

  

  

Adjusted Operating Income 1)

  

-2.3

 

  

-4.2

 

           

-12.5

 

  

-18.2

 

      

— Systems

  

-0.3

 

  

0.4

 

           

-4.9

 

  

3.2

 

      

— Phones

  

-0.3

 

  

-0.7

 

           

-1.3

 

  

-14.6

 

      

— Other operations

  

-1.3

 

  

-3.2

 

           

-4.7

 

  

-5.1

 

      

— Unallocated

  

-0.4

 

  

-0.7

 

           

-1.6

 

  

-1.7

 

      
    

  

           

  

      

Adjusted Operating Margin 1)

  

-6

%

  

-7

%

           

-9

%

  

-9

%

      

— Systems

  

-1

%

  

1

%

           

-4

%

  

2

%

      

— Other operations

  

-21

%

  

-32

%

           

-20

%

  

-16

%

      
    

  

           

  

      

Adjusted Income Before Taxes 1)

  

-2.2

 

  

-5.1

 

           

-14.5

 

  

-21.1

 

      

Net Income

  

-8.3

 

  

-3.5

 

           

-19.0

 

  

-21.3

 

      

Earnings per share, diluted (SEK)

  

-0.58

 

  

-0.31

 

           

-1.51

 

  

-1.94

 

      

Cash flow before financing activities

  

1.6

 

  

19.9

 

           

-7.1

 

  

6.7

 

      

Number of employees

                         

64,621

 

  

85,198

 

      
                           

  

      

1) Adjusted for:

                                           

— Capital gain, Juniper

  

—  

 

  

—  

 

           

—  

 

  

5.5

 

      

— Non-operational capital gains

  

-0.3

 

  

0.2

 

           

—  

 

  

0.3

 

      

— Restructuring costs, net

  

-6.3

 

  

—  

 

           

-12.0

 

  

-15.0

 

      

— Capitalization of development expenses, net

  

0.6

 

  

—  

 

           

3.2

 

  

—  

 

      

2) 2001 figures are restated for:

                                           

—Changed accounting principles in Sweden 2002 regarding consolidation of companies with a controlling interest.

—Results from parts of Phones transferred to the joint venture Sony Ericsson Mobile Communications, reported under Share in earnings of JV and Associated Companies for the full year 2001.

* Gross order intake excluding cancellations


 

CEO COMMENTS

 

“Sales of GSM/WCDMA are up sequentially for the third quarter in a row and the order intake in Europe, Middle East and Africa (EMEA) improved significantly after a weak third quarter,” says Kurt Hellström, President and CEO of Ericsson.

 

We improved Systems operating margins once again this quarter. Our position in GSM/WCDMA remains solid and we are encouraged by our progress in CDMA2000 with key wins in Asia and Latin America. Sony Ericsson’s performance also improved in the quarter and the joint venture expects to start reporting profit during 2003.

 

The strategy to expand our Systems business through increased sales of professional services is proving successful. By capitalizing on our systems know-how we have taken an early lead in this growing market segment. The recurring nature of this business will make our revenue base more stable.

 

The sequential increase in sales and orders is more a factor of seasonality than an indication of a market recovery. However, with orders and sales at expected levels, good progress in our restructuring and positive cash flow, our fourth quarter results indicate that our business is beginning to stabilize.

 

Our overriding objective is to return to profit at some point in 2003 and improve cash flow. Our cost cutting is proceeding as planned with a significant reduction of operating expenses already evident. We will intensify our efforts to lower cost of sales to meet our gross margin target.

 

MARKET VIEW

 

There are now more than 1.1 billion mobile subscribers worldwide with approximately 51 million new subscribers added during the fourth quarter. For the full year we estimate about 190 million net subscriber additions, within our forecast of 175–215 million. We believe that the number of mobile subscribers remains on track to exceed 1.5 billion within three years with 165–180 million net additions anticipated in 2003.

 

In line with the industry consensus and our previous estimate, we believe that the mobile systems market declined about 20% to an estimated USD 42 b. during 2002. For 2003, we believe that the mobile systems market may decline by as much as 10%.

 

The telecommunications market correction is ongoing. We expect the historical correlation between operator capital expenditure (CAPEX) growth and revenue growth to eventually resume. However, the current level of lower CAPEX spending as a percentage of operator revenues will most likely remain.

 

An estimated 115 million mobile phones were sold through during the fourth quarter bringing the total for the year to approximately 395 million units. This compares with our full-year estimate of about 390 million units and approximately 390 million in 2001. We believe that the total units sold through during 2003 will be more than 430 million units.

 

The overall wireline systems market, which includes traditional circuit-switching, broadband access, optical transmission and multi-service networks, declined by over 30% during 2002 – in line with our estimate of a decline significantly more than 20%.

 

2


 

Complementing the infrastructure market, there is also a large and growing opportunity for providing services to network operators. Excluding network rollout services, which are embedded within the Systems market, the available market in 2003 for professional services is estimated to be more than USD 30 b. with a compound annual growth rate (CAGR) of more than 10%. Professional Services include systems integration, network operations outsourcing as well as a range of other advisory and operational support services.

 

COST REDUCTIONS AND OPERATIONAL REALIGNMENT

 

In the fourth quarter our operating expense annual run rate excluding restructuring costs was reduced to SEK 51 b. During the quarter we reduced our headcount by 7,100 employees, bringing our year-end headcount to 64,600. We remain on track to reach a SEK 38 b. run-rate for the fourth quarter 2003 and expect to be less than 60,000 employees by year-end.

 

Reduced excess capacity costs as well as improvements in processes and product design contributed to the stable gross margin level offsetting the negative effects of an unfavorable product mix.

 

During the quarter, restructuring charges were SEK 6.3 b. of which SEK 5.8 b. is related to redundancies. SEK 0.2 b. were related to the write-down of inventory and fixed assets as well as other costs for establishing more flexible operations. Of the SEK 28.6 b. planned restructuring costs SEK 5.5 b. remains. Cash outlays in 2003 are expected to be approximately SEK 10.8 b.

 

OPERATIONAL AND FINANCIAL REVIEW

 

SYSTEMS

 

Order intake in the quarter improved sequentially to SEK 30.8 b., mainly due to seasonality. Compared to the fourth quarter last year, order intake declined by 10%. Cancellations of SEK 2.3 b. negatively affected orders booked. The Europe, Middle East and Africa (EMEA) region showed strong improvement compared to the previous quarter, while Latin America was down, partly due to order cancellations but also weaker demand.

 

Table: Systems order development

 

(SEK b.)

  

Q1


    

Q2


    

Q3


    

Q4


 

2001

  

62.8

 

  

51.0

 

  

35.3

 

  

34.2

 

2002

  

39.8

 

  

33.7

 

  

23.3

 

  

30.8

 

Change

  

-37

%

  

-34

%

  

-34

%

  

-10

%

Cancellations 2002

  

-2.1

 

  

-2.5

 

  

-5.4

 

  

-2.3

 

2002 Net

  

37.7

 

  

31.2

 

  

17.9

 

  

28.5

 

Change

  

-40

%

  

-39

%

  

-49

%

  

-17

%

 

Sales in the quarter were SEK 33.2 b., up SEK 2.6 b. compared to the third quarter and down 34% compared to last year. Europe, Middle East and Africa (EMEA) and North America increased sequentially, while Latin America and Asia Pacific declined somewhat. The strongest parts of the Systems businesses were GSM, CDMA and professional services.

 

3


 

Adjusted operating income for Systems was SEK -0.3 (0.4) b Excluding risk provisions for customer financing of SEK 0.7 b. the result was SEK 0.4. b., compared to SEK 0.2 b. in the third quarter. Gross margin has kept up well and operating expenses have gradually been reduced through our restructuring activities.

 

As an extension of our System business, Global Services generated sales of SEK 9.5 b. in the quarter. Excluding products, which from 2003 are excluded from services, sales of professional services grew 29% sequentially to SEK 5.7 b. and now represent 17% of Systems sales.

 

Mobile Systems

 

Orders in the quarter for our GSM/WCDMA track increased 51% sequentially, mainly driven by the Europe, Middle East and Africa (EMEA) region. Sales of GSM/WCDMA grew 4% sequentially and declined only 14% for the full year, implying a sustained strong market position. Full year sales of WCDMA equipment and associated network rollout services represented 9% of Mobile Systems sales.

 

The sharp decline in TDMA and PDC systems continued and combined they now account for less than 10% of mobile systems sales.

 

Multi-Service Networks

 

Orders and sales in the quarter increased sequentially by 9% and 28% respectively, but declined compared to last year by 29% and 50%, primarily driven by continued weak demand for traditional circuit-switching equipment, although our ENGINE solution continues to develop favorably.

 

PHONES

 

Our 50% share of income from Sony Ericsson Mobile Communications is included in “Earnings from Joint Ventures and Associated Companies.

 

Sony Ericsson Mobile Communications (SEMC)

 

The joint venture increased its shipments by 42% to 7.1 million units during the quarter, mainly as a result of the expansion of their product portfolio. Our 50% share of income before taxes in the quarter was SEK -0.3 b., compared to SEK -0.5 b. in the third quarter and SEK -0.7 b. a year ago. As previously announced, Ericsson and Sony will each invest EUR 150 million into the joint venture during the first quarter of 2003.

 

OTHER OPERATIONS

 

After transferring a portion of our holdings in a Chinese subsidiary to Sony Ericsson Mobile Communications, the company has become an associated company. As a result, from this quarter phone operations in China are included in our results as share in earnings of Joint Ventures and Associated Companies.

 

Other Operations now include the following commercial businesses: Defense Systems, Network Technology, Enterprise Systems, the retained parts of Microelectronics as well as the investment areas of Mobile Platforms and Bluetooth.

 

Sales improved by 4% sequentially, driven by Defense Systems.

 

Compared to the third quarter, adjusted operating income in Other Operations was flat. Positive effects from the divestiture of parts of Microelectronics and profit from Defense Systems only partly offset losses in other units.

 

4


 

CONSOLIDATED ACCOUNTS

 

Income

Sales in the quarter were SEK 36.7 b., up 10% sequentially and down 37% compared to the fourth quarter of 2001.

 

Gross margin remained stable, with a reduction of cost of goods sold and excess capacity costs offsetting negative effects of an unfavorable product mix. The seasonally adjusted operating expense run rate was SEK 51 b. for the quarter excluding risk provisions of SEK 0.7 b. for customer financing. The run rate also excludes the effects of capitalization of development expenses since they currently affect comparability.

 

The capitalization of development costs was started in January 2002 to conform to changes in Swedish GAAP. As no such costs were reported in previous years, net capitalized amounts do not yet include a normal rate of depreciation of a capitalized base. Therefore, the positive net effect of this is deducted when reporting adjusted operating income and adjusted income before taxes.

 

Net capital losses were SEK 0.7 b. of which SEK 0.3 b. were related to restructuring, and SEK 0.3 b. related to write-downs and sales of shares. Share in earnings of associated companies was net zero, including the loss of SEK 0.3 b. in Sony Ericsson.

 

In the quarter, the net effect of changes in foreign currency exchange rates compared to rates one year ago was SEK -0.1 b. The net effect in the first, second and third quarters were SEK 0.4, 0.8 and 0.6 b., respectively and SEK 1.7 b. for the year.

 

Financial net improved by SEK 0.7 b., as a result of interest income on the proceeds from the rights offering in September 2002.

 

Adjusted income before taxes, excluding restructuring costs, non-operational capital gains and net effects of capitalization of development expenses, was SEK -2.2 b. in the quarter. Income before taxes in the previous quarters of 2002 adjusted in the same manner was SEK -5.3, -3.3 and -3.7 b., respectively and for the full year SEK -14.5 (-21.1) b

 

Net income was negatively affected by SEK 2.5 b. as certain tax costs were recognized in the quarter. Of these, SEK 0.8 b., relate to foreign withholding taxes that were not deductible due to insufficient taxable income and SEK 1.4 b. due to rulings by Swedish tax authorities disallowing deductions of capital discounts on convertible debentures and other costs.

 

Full-year diluted earnings per share were SEK -1.51 (-1.94). Prior periods have been adjusted for the stock dividend element of the stock issue.

 

Balance sheet and financing

The equity ratio was 37%, about the same level as last quarter, despite the loss incurred during the fourth quarter. Total assets were reduced during the quarter by SEK 28.9 b., of which SEK 8.2 b. is related to cash. Repayments of loans, including the lease arrangement for test plant equipment from December 2001, amounted to SEK 10.0 b

 

Net debt improved in the quarter from SEK -5.2 b. to SEK -5.6 b. with total cash continuing to exceed all interest bearing debts.

 

Lower purchase volumes and increased sales significantly reduced inventory during the quarter, with inventory turnover (ITO) improving to 5.1 turns from 4.3 last quarter.

 

5


 

Our days sales outstanding (DSO) improved sequentially from 103 days to 91 days. Even with the higher sales, we reduced accounts receivable by SEK 3.8 b. compared with the third quarter.

 

Customer financing risk exposure was reduced by SEK 3.1 b. in the quarter. As previously announced, the 2001 portfolio of customer credits was discontinued. The credits, including Mobilcom, were taken back on the balance sheet and an associated cash collateral released. Certain of these credits have subsequently been sold in the market and the Mobilcom credits are to be replaced with France Telecom convertible bonds.

 

Deferred tax assets at year-end were SEK 26.0 b., an increase of SEK 5.1 b. during 2002. Deferred tax assets are related to countries with long or indefinite periods of utilization.

 

Table: Customer financing risk exposure

 

(SEK b.)

  

Dec 31

2001


  

Mar 31

2002


  

Jun 30

2002


  

Sep 30

2002


  

Dec 31

2002


On-balance-sheet credits

  

18.7

  

16.8

  

16.6

  

18.9

  

21.1

Off-balance-sheet credits

  

12.8

  

12.9

  

11.5

  

6.8

  

1.5

    
  
  
  
  

Total credits

  

31.5

  

29.1

  

28.1

  

25.7

  

22.6

Less third party risk coverage

  

-4.7

  

-1.4

  

-0.3

  

-0.8

  

-0.8

    
  
  
  
  

Ericsson risk exposure

  

26.8

  

27.7

  

27.8

  

24.9

  

21.8

    
  
  
  
  

On-balance-sheet credits, net book value

  

14.8

  

12.7

  

12.4

  

12.7

  

14.0

Off-balance-sheet credits recorded as contingent liabilities

  

10.6

  

10.1

  

9.1

  

5.1

  

1.3

Financing commitments

  

31.2

  

28.1

  

25.3

  

14.0

  

14.0

 

Cash flow

 

Cash flow before financing activities was positive by SEK 1.6 b. The main contributing factors were reduced inventory and improved collection of receivables. The SEK -2.8 b. effect from customer financing was mitigated by the release of a cash collateral of SEK 1.2 b. for the 2001 Credit Portfolio.

 

With the discontinuance of pro forma reporting, capitalization of development expenses of SEK 0.8 b. are now reported among investing activities rather than as an item adjusting income.

 

Net income as well as items adjusting net income to cash was affected by the increased tax costs in the quarter.

 

Adjusted for exceptional items, cash flow was SEK 5.2 b. in the quarter. These items include the buyback of Mobilcom credits of SEK -4.1 b. and SEK 0.5 b. in proceeds from the divestiture of certain R&D operations.

 

OUTLOOK

 

In our last report we indicated that our fourth quarter Mobile Systems sales could decline more than the overall market due to our exposure to the sharply declining TDMA and PDC markets. For 2003, we believe that we will maintain our overall share of the mobile systems market with an increase in 3G sales partly offsetting lower sales of TDMA and PDC.

 

6


 

While we believe that the worst of the market decline is behind us, the market remains unpredictable. Normal seasonality will most likely prevail during the first quarter and sequential sales will consequently be down.

 

We are planning to return to profit at some point in 2003 by lowering our costs and adjusting to the prevailing market conditions.

 

PARENT COMPANY INFORMATION

 

The Parent Company business consists mainly of corporate management and holding company functions. It also includes activities performed on a commission basis by Ericsson Treasury Services AB and Ericsson Credit AB regarding internal banking and customer credit management. The Parent Company has branch- and representative offices in 16 (15) countries.

 

Net sales for the year amounted to SEK 2.0 (1.4) b. and income after financial items was SEK 2.3 (-6.4) b. Write-downs of investments in subsidiaries have affected income by SEK -3.8 (-19.0) b.

 

Major changes in the company’s financial position for the year were:

 

    Decreased current and long-term commercial and financial receivables from subsidiaries of SEK 35.5 b.

 

    Increased short-term and long-term customer financing of SEK 6.2 b.

 

    Increased investments in subsidiaries of SEK 6.1 b.

 

Short- and long-term internal borrowings decreased by SEK 37.2 b. Notes, bond loans and convertible debentures, including short-term portion, decreased by SEK 5.4 b. Stockholders’ equity has increased by SEK 30.1 b. and cash and short-term cash investments have increased by SEK 10.3 b., mostly due to the rights issue in September 2002. At year-end, cash and short-term cash investments amounted to SEK 59.3 (49.0) b.

 

In accordance with the conditions of the Stock Purchase Plan for Ericsson employees, 1,893,195 shares from treasury stock were distributed during the fourth quarter to employees who left Ericsson. An additional 291,635 shares were sold during the fourth quarter, in order to cover social security costs related to the Stock Purchase Plan. The holding of treasury stock at December 31, 2002, was 154,360,278 Class B shares.

 

DIVIDEND PROPOSAL

 

The Board of directors will propose to the Annual General Meeting that no dividend is paid out for 2002.

 

ANNUAL REPORT

 

The annual report will be made available to shareholders at our head office at Telefonplan, Stockholm, two weeks prior to the Annual General Meeting.

 

ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

The Annual General Meeting of shareholders will be held on Tuesday, April 8, 2003, in Stockholm Globe Arena.

 

7


 

ACCOUNTING PRINCIPLES

 

This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council’s recommendation RR 20, Interim reports.

 

We have changed accounting principles since our latest annual report.

 

The following Swedish GAAP recommendations are now implemented:

 

RR 1:00, Consolidated financial statements

 

RR 15, Intangible assets

 

RR 16, Provisions, contingent liabilities and contingent assets

 

RR 17, Impairment of assets

 

RR 19, Discontinuing operations

 

RR 21, Borrowing costs

 

RR 23, Related party disclosures

 

The only material effects of these new standards relate to RR1:00, regarding consolidation of controlled companies, and RR 15, regarding capitalization of development costs.

 

According to RR1:00 we have consolidated as subsidiaries certain finance companies previously accounted for under the equity method. We have restated previous year in our primary statements.

 

According to RR 15, starting from January 1, 2002 we have capitalized certain development costs. Stockholm, February 3, 2003

 

Kurt Hellström

 

President and CEO

 

Date for next report: April 28, 2003

 

Auditors’ Report

 

We have reviewed the Fourth Quarter Report as of December 31, 2002, for Telefonaktiebolaget LM Ericsson (publ). We conducted our review in accordance with the recommendation issued by FAR. A review is limited primarily to enquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

 

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

 

Stockholm, February 3, 2002

 

Carl-Eric Bohlin

 

Olof Herolf

 

Thomas Thiel

Authorized Public Accountant

 

Authorized Public Accountant

 

Authorized Public Accountant

PricewaterhouseCoopers AB

 

PricewaterhouseCoopers AB

   

 

8


 

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: www.ericsson.com/investors/12month02-en.pdf

 

FOR FURTHER INFORMATION PLEASE CONTACT

 

Henry Sténson, Senior Vice President, Corporate Communications

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

 

Investors

 

Gary Pinkham, Vice President, Investor Relations

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

 

Lotta Lundin, Manager, Investor Relations

Phone: +44 20 701 61 032; E-mail: lotta.lundin@clo.ericsson.se

 

Glenn Sapadin, Manager, Investor Relations

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

 

Lars Jacobsson, Vice President, Financial Reporting and Analysis

Phone: +46 8 719 9489, +46 70 519 9489; E-mail: lars.jacobsson@lme.ericsson.se

 

Media

 

Pia Gideon, Vice President, External Relations

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

 

Åse Lindskog, Director, Media Relations

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

 

9


 

 

ERICSSON

CONSOLIDATED INCOME STATEMENT

 

    

Oct-Dec


    

Jan-Dec


        

SEK million

  

2002


    

20011)


    

Change


    

2002


    

20011)


    

Change


    

20013)


 

Net sales

  

36,749

 

  

58,538

 

  

-37

%

  

145,773

 

  

210,837

 

  

-31

%

  

231,839

 

Cost of sales

  

-24,779

 

  

-42,648

 

  

-42

%

  

-98,635

 

  

-138,123

 

  

-29

%

  

-165,555

 

Restructuring costs

  

-3,482

 

  

-2,258

 

         

-5,589

 

  

-4,858

 

         

-8,345

 

    

  

         

  

         

Gross margin

  

8,488

 

  

13,632

 

         

41,549

 

  

67,856

 

         

57,939

 

Research and development and other technical expenses

  

-7,240

 

  

-9,530

 

  

-24

%

  

-29,331

 

  

-40,247

 

  

-27

%

  

-43,094

 

Selling expenses

  

-4,853

 

  

-8,165

 

  

-41

%

  

-20,422

 

  

-27,585

 

  

-26

%

  

-30,844

 

Administrative expenses

  

-2,254

 

  

-2,950

 

  

-24

%

  

-9,556

 

  

-11,175

 

  

-14

%

  

-12,584

 

Capitalization of development expenses, net

  

644

 

  

—  

 

         

3,200

 

  

—  

 

         

—  

 

Restructuring costs

  

-2,478

 

  

2,258

 

         

-6,292

 

  

-6,242

 

         

-6,655

 

    

  

         

  

         

Operating expenses

  

-16,181

 

  

-18,387

 

         

-62,401

 

  

-85,249

 

         

-93,177

 

Capital gains/losses 2)

  

-691

 

  

442

 

         

-722

 

  

6,126

 

         

6,126

 

Other operating revenues

  

196

 

  

902

 

  

-78

%

  

1,265

 

  

2,449

 

  

-48

%

  

2,447

 

Share in earnings of JV and assoc. companies

  

-11

 

  

-658

 

         

-1,220

 

  

-14,662

 

         

-715

 

Restructuring costs net, phones

  

—  

 

  

—  

 

         

230

 

  

-3,900

 

         

—  

 

    

  

         

  

         

Operating income *)

  

-8,199

 

  

-4,069

 

         

-21,299

 

  

-27,380

 

         

-27,380

 

Financial income

  

2,155

 

  

1,980

 

  

9

%

  

4,253

 

  

4,815

 

  

-12

%

  

4,815

 

Financial expenses

  

-1,906

 

  

-2,491

 

  

-23

%

  

-5,789

 

  

-6,589

 

  

-12

%

  

-6,589

 

    

  

         

  

         

Income after financial items

  

-7,950

 

  

-4,580

 

         

-22,835

 

  

-29,154

 

  

-22

%

  

-29,154

 

Minority interest in income before taxes

  

-103

 

  

-351

 

  

-71

%

  

-488

 

  

-1,155

 

  

-58

%

  

-1,155

 

    

  

         

  

         

Income before taxes

  

-8,053

 

  

-4,931

 

         

-23,323

 

  

-30,309

 

         

-30,309

 

Taxes

  

-276

 

  

1,431

 

         

4,310

 

  

9,045

 

         

9,045

 

    

  

         

  

         

Net income

  

-8,329

 

  

-3,500

 

         

-19,013

 

  

-21,264

 

         

-21,264

 

*) Of which items affecting comparability

                                                

Non-operational capital gains/losses, net

  

-259

 

  

179

 

         

-42

 

  

347

 

         

347

 

Capital gain, Juniper Networks

  

—  

 

  

—  

 

         

—  

 

  

5,453

 

         

5,453

 

Restructuring costs, net

  

-6,271

 

  

—  

 

         

-11,962

 

  

-15,000

 

         

-15,000

 

Capitalization of development expenses, net

  

644

 

  

—  

 

         

3,200

 

  

—  

 

         

—  

 

    

  

         

  

         

Total

  

-5,886

 

  

179

 

         

-8,804

 

  

-9,200

 

         

-9,200

 

Income statement measures adjusted for

                                                

items affecting comparability

                                                

Adjusted gross margin

  

11,970

 

  

15,890

 

  

-25

%

  

47,138

 

  

72,714

 

  

-35

%

  

66,284

 

Adjusted operating expenses

  

-14,347

 

  

-20,645

 

  

-31

%

  

-59,309

 

  

-79,007

 

  

-25

%

  

-86,522

 

Adjusted operating income

  

-2,313

 

  

-4,248

 

         

-12,495

 

  

-18,180

 

         

-18,180

 

Adjusted income before tax

  

-2,167

 

  

-5,110

 

         

-14,519

 

  

-21,109

 

         

-21,109

 

Above measures expressed as % of net sales

                                                

Adjusted gross margin

  

32.6

%

  

27.1

%

         

32,3

%

  

34.5

%

         

28.6

%

Adjusted operating expenses

  

39.0

%

  

35.3

%

         

40.7

%

  

37.5

%

         

37.3

%

Adjusted operating margin

  

-6.3

%

  

-7.3

%

         

-8.6

%

  

-8.6

%

         

-7.8

%

 

1)   2001 figures are restated for:
    Changed accounting principles in Sweden 2002 regarding consolidation of companies with a controlling interest.
    Results with parts of Phones transferred to the joint venture Sony Ericsson Mobile Communications accounted for under the equity method reported under Share in earnings of JV and Assoc. companies 2001

 

2)   Capital gains/losses in fourth quarter 2002 include SEK -311 million related to restructuring.

 

3)   Income statement as reported in 2001, including part of Phones transfered to Sony Ericsson Mobile Communications reported as consolidated subsidaries for nine months, restated for consolidation of companies with a controlling interest.

 

10


ERICSSON

CONSOLIDATED INCOME STATEMENT

ISOLATED QUARTERS

 

    

2001 1)


    

2002


 

SEK million

  

Q1


    

Q2


    

Q3


    

Q4


    

Q1


    

Q2


    

Q3


    

Q4


 

Net sales

  

49,760

 

  

55,535

 

  

47,004

 

  

58,538

 

  

36,966

 

  

38,545

 

  

33,513

 

  

36,749

 

Cost of sales

  

-29,341

 

  

-35,405

 

  

-30,729

 

  

-42,648

 

  

-25,253

 

  

-26,031

 

  

-22,572

 

  

-24,779

 

Restructuring costs

  

—  

 

  

-2,600

 

  

—  

 

  

-2,258

 

  

—  

 

  

-438

 

  

-1,669

 

  

-3,482

 

    

  

  

  

  

  

  

  

Gross margin

  

20,419

 

  

17,530

 

  

16,275

 

  

13,632

 

  

11,713

 

  

12,076

 

  

9,272

 

  

8,488

 

R&D and other technical expenses

  

-9,507

 

  

-11,461

 

  

-9,749

 

  

-9,530

 

  

-8,529

 

  

-7,000

 

  

-6,562

 

  

-7,240

 

Selling expenses

  

-7,504

 

  

-6,346

 

  

-5,570

 

  

-8,165

 

  

-5,592

 

  

-5,033

 

  

-4,944

 

  

-4,853

 

Administrative expenses

  

-2,804

 

  

-2,927

 

  

-2,494

 

  

-2,950

 

  

-2,652

 

  

-2,505

 

  

-2,145

 

  

-2,254

 

Capitalization of development expenses, net

  

—  

 

  

—  

 

  

—  

 

  

—  

 

  

1,005

 

  

910

 

  

641

 

  

644

 

Restructuring costs

  

—  

 

  

-8,500

 

  

—  

 

  

2,258

 

  

—  

 

  

-1,274

 

  

-2,540

 

  

-2,478

 

    

  

  

  

  

  

  

  

Operating expenses

  

-19,815

 

  

-29,234

 

  

-17,813

 

  

-18,387

 

  

-15,768

 

  

-14,902

 

  

-15,550

 

  

-16,181

 

Capital gains/losses 2)

  

5,712

 

  

67

 

  

-95

 

  

442

 

  

267

 

  

-261

 

  

-37

 

  

-691

 

Other operating revenues

  

285

 

  

713

 

  

549

 

  

902

 

  

504

 

  

298

 

  

267

 

  

196

 

Share in earnings of JV and assoc. companies

  

-5,511

 

  

-4,475

 

  

-4,018

 

  

-658

 

  

-56

 

  

-524

 

  

-629

 

  

-11

 

Restructuring costs, phones

  

—  

 

  

-3,900

 

  

—  

 

  

—  

 

  

—  

 

  

230

 

  

—  

 

  

—  

 

    

  

  

  

  

  

  

  

Operating income *)

  

1,090

 

  

-19,299

 

  

-5,102

 

  

-4,069

 

  

-3,340

 

  

-3,083

 

  

-6,677

 

  

-8,199

 

Financial income

  

1,234

 

  

625

 

  

976

 

  

1,980

 

  

889

 

  

640

 

  

569

 

  

2,155

 

Financial expenses

  

-1,529

 

  

-1,370

 

  

-1,199

 

  

-2,491

 

  

-1,682

 

  

-1,210

 

  

-991

 

  

-1,906

 

    

  

  

  

  

  

  

  

Income after financial items

  

795

 

  

-20,044

 

  

-5,325

 

  

-4,580

 

  

-4,133

 

  

-3,653

 

  

-7,099

 

  

-7,950

 

Minority interest in income before taxes

  

-185

 

  

-287

 

  

-332

 

  

-351

 

  

-107

 

  

-237

 

  

-41

 

  

-103

 

    

  

  

  

  

  

  

  

Income before taxes

  

610

 

  

-20,331

 

  

-5,657

 

  

-4,931

 

  

-4,240

 

  

-3,890

 

  

-7,140

 

  

-8,053

 

Taxes

  

-186

 

  

6,102

 

  

1,698

 

  

1,431

 

  

1,272

 

  

1,171

 

  

2,143

 

  

-276

 

    

  

  

  

  

  

  

  

Net income

  

424

 

  

-14,229

 

  

-3,959

 

  

-3,500

 

  

-2,968

 

  

-2,719

 

  

-4,997

 

  

-8,329

 

*) Of which items affecting comparability

                                                       

Non-operational capital gains/losses, net

  

42

 

  

-39

 

  

165

 

  

179

 

  

102

 

  

-3

 

  

118

 

  

-259

 

Capital gain, Juniper

  

5,453

 

  

—  

 

  

—  

 

  

—  

 

  

—  

 

  

—  

 

  

—  

 

  

—  

 

Restructuring costs, net

  

—  

 

  

-15,000

 

  

—  

 

  

—  

 

  

—  

 

  

-1,482

 

  

-4,209

 

  

-6,271

 

Capitalization of development expenses, net

  

—  

 

  

—  

 

  

—  

 

  

—  

 

  

1,005

 

  

910

 

  

641

 

  

644

 

    

  

  

  

  

  

  

  

Total

  

5,495

 

  

-15,039

 

  

165

 

  

179

 

  

1,107

 

  

-575

 

  

-3,450

 

  

-5,886

 

Income statement measures adjusted for

                                                       

items affecting comparability

                                                       

Adjusted gross margin

  

20,419

 

  

20,130

 

  

16,275

 

  

15,890

 

  

11,713

 

  

12,514

 

  

10,941

 

  

11,970

 

Adjusted operating expenses

  

-19,815

 

  

-20,734

 

  

-17,813

 

  

-20,645

 

  

-16,773

 

  

-14,538

 

  

-13,651

 

  

-14,347

 

Adjusted operating income

  

-4,405

 

  

-4,260

 

  

-5,267

 

  

-4,248

 

  

-4,447

 

  

-2,508

 

  

-3,227

 

  

-2,313

 

Adjusted income before tax

  

-4,885

 

  

-5,292

 

  

-5,822

 

  

-5,110

 

  

-5,347

 

  

-3,315

 

  

-3,690

 

  

-2,167

 

Above measures expressed as % of net sales

                                                       

Adjusted gross margin

  

41.0

%

  

36.2

%

  

34.6

%

  

27.1

%

  

31.7

%

  

32.5

%

  

32.6

%

  

32.6

%

Adjusted operating expenses

  

39.8

%

  

37.3

%

  

37.9

%

  

35.3

%

  

45.4

%

  

37.7

%

  

40.7

%

  

39.0

%

Adjusted operating margin

  

-8.9

%

  

-7.7

%

  

-11.2

%

  

-7.3

%

  

-12.0

%

  

-6.5

%

  

-9.6

%

  

-6.3

%

 

1)   2001 figures are restated for:
    Changed accounting principles in Sweden 2002 regarding consolidation of companies with a controlling interest.
    Results with parts of Phones transferred to the joint venture Sony Ericsson Mobile Communications accounted for under the equity method reported under Share in earnings of JV and Assoc. companies 2001
2)   Capital gains/losses in fourth quarter 2002 include SEK -311 million related to restructuring.

 

 

11


 

ERICSSON

CONSOLIDATED BALANCE SHEET

 

SEK million

  

Dec 31

2002


  

Dec 311)

2001


ASSETS

         

Fixed assets

         

Intangible assets

         

Capitalized development expenses

  

3,200

  

—  

Other

  

9,409

  

13,066

Tangible assets

  

9,964

  

16,641

Financial assets

         

Equity in JV and associated companies

  

1,835

  

3,135

Other investments

  

2,243

  

3,101

Long-term customer financing

  

12,283

  

7,933

Deferred tax assets

  

24,533

  

9,591

Other long-term receivables

  

2,132

  

6,980

    
  
    

65,599

  

60,447

    
  

Current assets

         

Inventories

  

13,419

  

24,910

Receivables

         

Accounts receivable – trade

  

36,538

  

57,236

Short-term customer financing

  

1,680

  

6,833

Other receivables

  

24,817

  

39,171

Short-term cash investments, cash and bank

  

66,214

  

68,924

    
  
    

142,668

  

197,074

    
  

Total assets

  

208,267

  

257,521

    
  

STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

         

Stockholders’ equity

  

73,607

  

68,587

    
  

Minority interest in equity of consolidated subsidiaries

  

2,469

  

3,653

    
  

Provisions

         

Pensions

  

10,997

  

10,104

Other provisions

  

21,357

  

22,831

    
  
    

32,354

  

32,935

    
  

Long-term liabilities

  

37,066

  

54,886

    
  

Current liabilities

         

Interest-bearing liabilities

  

13,475

  

25,690

Other current liabilities

  

49,296

  

71,770

    
  
    

62,771

  

97,460

    
  

Total stockholders’ equity, provisions and liabilities

  

208,267

  

257,521

    
  

Of which interest-bearing provisions and liabilities

  

60,617

  

89,879

Net debt

  

-5,597

  

20,955

Assets pledged as collateral

  

2,800

  

10,857

Contingent liabilities

  

3,116

  

12,299

 

1)   Restated for changed accounting principles in Sweden 2002 regarding consolidation of companies with a controlling interest.

 

12


 

ERICSSON

CONSOLIDATED STATEMENT OF CASH FLOWS

 

    

2002


  

Jan-Dec


SEK million

  

Q11)


  

Q21)


  

Q31)


  

Q4


  

2002


  

20012)


Net income

  

-2,968

  

-2,719

  

-4,996

  

-8,330

  

-19,013

  

-21,264

Adjustments to reconcile net income to cash

  

-2,306

  

-2,110

  

-136

  

2,719

  

-1,832

  

-13,557

    
  
  
  
  
  
    

-5,274

  

-4,828

  

-5,132

  

-5,611

  

-20,845

  

-34,821

Changes in operating net assets

                             

Inventories

  

-201

  

-794

  

2,695

  

6,899

  

8,599

  

20,103

Customer financing, short-term and long-term

  

1,952

  

-801

  

-451

  

-2,840

  

-2,140

  

3,903

Accounts receivable

  

4,817

  

1,757

  

3,944

  

-679

  

9,839

  

19,653

Other

  

-3,068

  

-74

  

-5,269

  

2,870

  

-5,541

  

-7,420

    
  
  
  
  
  

Cash flow from operating activities

  

-1,774

  

-4,740

  

-4,213

  

639

  

-10,088

  

1,418

Capitalized development expenses

  

-1 050

  

-947

  

-662

  

-783

  

-3 442

  

—  

Other investing activities

  

-1,237

  

3,732

  

2,152

  

1,779

  

6,426

  

5,251

    
  
  
  
  
  

Cash flow from investing activities

  

-2,287

  

2,785

  

1,490

  

996

  

2,984

  

5,251

Cash flow before financing activities

  

-4,061

  

-1,955

  

-2,723

  

1,635

  

-7,104

  

6,669

Dividends paid

  

-50

  

27

  

-409

  

-213

  

-645

  

-4,295

Stock issue

  

—  

  

—  

  

28,957

  

-15

  

28,942

  

155

Other financing activities

  

-8,403

  

-5,567

  

1,219

  

-9,949

  

-22,700

  

29,886

    
  
  
  
  
  

Cash flow from financing activities

  

-8,453

  

-5,540

  

29,767

  

-10,177

  

5,597

  

25,746

Effect of exchange rate changes on cash

  

-488

  

-876

  

-201

  

363

  

-1,203

  

738

    
  
  
  
  
  

Net change in cash

  

-13,002

  

-8,371

  

26,843

  

-8,179

  

-2,710

  

33,153

Cash and cash equivalents, beginning of period

  

68,924

  

55,922

  

47,551

  

74,394

  

68,924

  

35,771

    
  
  
  
  
  

Cash and cash equivalents, end of period

  

55,922

  

47,551

  

74,394

  

66,214

  

66,214

  

68,924

    
  
  
  
  
  

 

1)   Capitalization of development expenses, previously reported in Adjustments to reconcile net income to cash, is as from Q4 2002, included in Investing activities. Q1, Q2 and Q3 are restated.

 

2)   Restated for changed accounting principles in Sweden 2002 regarding consolidation of companies with a controlling interest.

 

13


 

CHANGES IN STOCKHOLDERS’ EQUITY

 

SEK million

  

Jan-Dec

2002


  

Jan-Dec 2001


Opening balance

  

68,587

  

91,686

Stock issue, net

  

28,942

  

155

Stock Purchase Plan

  

12

  

—  

Conversion of debentures

  

—  

  

11

Repurchase of own stock

  

—  

  

-156

Dividends paid

  

—  

  

-3,954

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

  

-4,921

  

2,110

Net income

  

-19,013

  

-21,264

Other changes

  

—  

  

-1

    
  

Closing balance

  

73,607

  

68,587

    
  

 

 

14


 

ADJUSTED OPERATING INCOME AND OPERATING MARGIN BY SEGMENT BY QUARTER

SEK million

 

   

2001 1)


   

2002


 

Year to date


 

0103


   

0106


   

0109


   

0112


   

0203


   

0206


   

0209


   

0212


 

Systems

 

1,966

 

 

2,215

 

 

2,861

 

 

3,239

 

 

-2,799

 

 

-3,495

 

 

-4,604

 

 

-4,907

 

Phones

 

-5,512

 

 

-9,964

 

 

-13,947

 

 

-14,649

 

 

—  

 

 

-442

 

 

-992

 

 

-1,331

 

Other operations

 

-603

 

 

-243

 

 

-1,863

 

 

-5,111

 

 

-1,343

 

 

-2,318

 

 

-3,477

 

 

-4,715

 

Unallocated 2)

 

-256

 

 

-673

 

 

-983

 

 

-1,659

 

 

-305

 

 

-700

 

 

-1,109

 

 

-1,542

 

   

 

 

 

 

 

 

 

Total

 

-4,405

 

 

-8,665

 

 

-13,932

 

 

-18,180

 

 

-4,447

 

 

-6,955

 

 

-10,182

 

 

-12,495

 

   

 

 

 

 

 

 

 

Items affecting comparability:

                                               

—Non-operational  capital gains/losses, net

 

42

 

 

3

 

 

168

 

 

347

 

 

102

 

 

99

 

 

217

 

 

-42

 

—Capital  gain Juniper Networks

 

5,453

 

 

5,453

 

 

5,453

 

 

5,453

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

—Restructuring  costs, net

 

—  

 

 

-15,000

 

 

-15,000

 

 

-15,000

 

 

—  

 

 

-1,482

 

 

-5,691

 

 

-11,962

 

—Capitalization  of development exp., net

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

1,005

 

 

1,915

 

 

2,556

 

 

3,200

 

   

 

 

 

 

 

 

 

Total

 

5,495

 

 

-9,544

 

 

-9,379

 

 

-9,200

 

 

1,107

 

 

532

 

 

-2,918

 

 

-8,804

 

   

 

 

 

 

 

 

 

   

2001 1)


   

2002


 

As percentage of Net Sales


 

0103


   

0106


   

0109


   

0112


   

0203


   

0206


   

0209


   

0212


 

Systems

 

4

%

 

2

%

 

2

%

 

2

%

 

-8

%

 

-5

%

 

-5

%

 

-4

%

Phones 3)

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Other operations

 

-8

%

 

-2

%

 

-9

%

 

-16

%

 

-24

%

 

-20

%

 

-20

%

 

-20

%

   

 

 

 

 

 

 

 

Total

 

-9

%

 

-8

%

 

-9

%

 

-9

%

 

-12

%

 

-9

%

 

-9

%

 

-9

%

   

 

 

 

 

 

 

 

   

2001 1)


   

2002


 

Isolated quarters


 

Q1


   

Q2


   

Q3


   

Q4


   

Q1


   

Q2


   

Q3


   

Q4


 

Systems

 

1,966

 

 

249

 

 

646

 

 

378

 

 

-2,799

 

 

-696

 

 

-1,109

 

 

-303

 

Phones

 

-5,512

 

 

-4,452

 

 

-3,983

 

 

-702

 

 

—  

 

 

-442

 

 

-550

 

 

-339

 

Other operations

 

-603

 

 

360

 

 

-1,620

 

 

-3,248

 

 

-1,343

 

 

-975

 

 

-1,159

 

 

-1,238

 

Unallocated 2)

 

-256

 

 

-417

 

 

-310

 

 

-676

 

 

-305

 

 

-395

 

 

-409

 

 

-433

 

   

 

 

 

 

 

 

 

Total

 

-4,405

 

 

-4,260

 

 

-5,267

 

 

-4,248

 

 

-4,447

 

 

-2,508

 

 

-3,227

 

 

-2,313

 

   

 

 

 

 

 

 

 

Items affecting comparability:

                                               

—Non-operational  capital gains/losses, net

 

42

 

 

-39

 

 

165

 

 

179

 

 

102

 

 

-3

 

 

118

 

 

-259

 

—Capital  gain Juniper Networks

 

5,453

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

—Restructuring  costs, net

 

—  

 

 

-15,000

 

 

—  

 

 

—  

 

 

—  

 

 

-1,482

 

 

-4,209

 

 

-6,271

 

—Capitalization  of development exp., net

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

1,005

 

 

910

 

 

641

 

 

644

 

   

 

 

 

 

 

 

 

Total

 

5,495

 

 

-15,039

 

 

165

 

 

179

 

 

1,107

 

 

-575

 

 

-3,450

 

 

-5,886

 

   

 

 

 

 

 

 

 

   

2001 1)


   

2002


 

As percentage of Net Sales


 

Q1


   

Q2


   

Q3


   

Q4


   

Q1


   

Q2


   

Q3


   

Q4


 

Systems

 

4

%

 

0

%

 

1

%

 

1

%

 

-8

%

 

-2

%

 

-4

%

 

-1

%

Phones 3)

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Other operations

 

-8

%

 

5

%

 

-27

%

 

-32

%

 

-24

%

 

-16

%

 

-20

%

 

-21

%

   

 

 

 

 

 

 

 

Total

 

-9

%

 

-8

%

 

-11

%

 

-7

%

 

-12

%

 

-7

%

 

-10

%

 

-6

%

   

 

 

 

 

 

 

 

 

1)   2001 figures are restated for:
    Changed accounting principles in Sweden 2002 regarding consolidation of companies with a controlling interest.
    Results with parts of Phones transferred to the joint venture Sony Ericsson Mobile Communications, accounted for under the equity method reported under Share in earnings of JV and Assoc. companies 2001
2)   “Unallocated” consists mainly of costs for corporate staffs and non-operational capital gains/losses
3)   Calculation not applicable

 

15


 

ORDERS BOOKED BY SEGMENT BY QUARTER

SEK million

 

    

2001 1)


  

2002


 

Year to date


  

0103


  

0106


  

0109


  

0112


  

0203


    

0206


    

0209


    

0212


 

Systems

  

62,822

  

113,779

  

149,085

  

183,281

  

37,701

 

  

68,898

 

  

86,836

 

  

115,341

 

of which Mobile System

  

54,731

  

98,568

  

129,932

  

161,433

  

35,008

 

  

63,253

 

  

79,440

 

  

106,036

 

Multi-Service Networks

  

8,091

  

15,211

  

19,153

  

21,848

  

2,693

 

  

5,645

 

  

7,396

 

  

9,305

 

Other operations

  

9,011

  

15,211

  

19,983

  

27,411

  

6,268

 

  

12,575

 

  

18,025

 

  

22,716

 

Less : Intersegment orders

  

-2,524

  

-5,249

  

-7,231

  

-8,925

  

-2,076

 

  

-4,315

 

  

-7,173

 

  

-9,706

 

    
  
  
  
  

  

  

  

Total

  

69,309

  

123,741

  

161,837

  

201,767

  

41,893

 

  

77,158

 

  

97,688

 

  

128,351

 

    
  
  
  
  

  

  

  

Change


  

0203


    

0206


    

0209


    

0212


 

Systems

  

-40

%

  

-39

%

  

-42

%

  

-37

%

of which Mobile System

  

-36

%

  

-36

%

  

-39

%

  

-34

%

Multi-Service Networks

  

-67

%

  

-63

%

  

-61

%

  

-57

%

Other operations

  

-30

%

  

-17

%

  

-10

%

  

-17

%

Less : Intersegment orders

  

—  

 

  

—  

 

  

—  

 

  

—  

 

    

  

  

  

Total

  

-40

%

  

-38

%

  

-40

%

  

-36

%

    

  

  

  

    

20011)


  

2002


 

Isolated quarters


  

Q1


  

Q2


  

Q3


  

Q4


  

Q1


    

Q2


    

Q3


    

Q4


 

Systems

  

62,822

  

50,957

  

35,306

  

34,196

  

37,701

 

  

31,197

 

  

17,938

 

  

28,505

 

of which Mobile Systems

  

54,731

  

43,837

  

31,364

  

31,501

  

35,008

 

  

28,245

 

  

16,187

 

  

26,596

 

Multi-Service Networks

  

8,091

  

7,120

  

3,942

  

2,695

  

2,693

 

  

2,952

 

  

1,751

 

  

1,909

 

Other operations

  

9,011

  

6,200

  

4,772

  

7,428

  

6,268

 

  

6,307

 

  

5,450

 

  

4,691

 

Less : Intersegment orders

  

-2,524

  

-2,725

  

-1,982

  

-1,694

  

-2,076

 

  

-2,239

 

  

-2,858

 

  

-2,533

 

    
  
  
  
  

  

  

  

Total

  

69,309

  

54,432

  

38,096

  

39,930

  

41,893

 

  

35,265

 

  

20,530

 

  

30,663

 

    
  
  
  
  

  

  

  

Change


  

Q1


    

Q2


    

Q3


    

Q4


 

Systems

  

-40

%

  

-39

%

  

-49

%

  

-17

%

of which Mobile Systems

  

-36

%

  

-36

%

  

-48

%

  

-16

%

Multi-Service Networks

  

-67

%

  

-59

%

  

-56

%

  

-29

%

Other operations

  

-30

%

  

2

%

  

14

%

  

-37

%

Less : Intersegment orders

  

—  

 

  

—  

 

  

—  

 

  

—  

 

    

  

  

  

Total

  

-40

%

  

-35

%

  

-46

%

  

-23

%

    

  

  

  

 

1)   2001 adjusted to reflect parts of Phones transferred to Sony Ericsson Mobile Communications.

 

NET SALES BY SEGMENT BY QUARTER

SEK million

 

    

20011)


  

2002


 

Year to date


  

0103


  

0106


  

0109


  

0112


  

0203


    

0206


    

0209


    

0212


 

Systems

  

44,367

  

95,429

  

138,576

  

188,697

  

33,323

 

  

68,104

 

  

98,716

 

  

131,955

 

of which Mobile Systems

  

37,046

  

80,167

  

117,503

  

161,554

  

30,036

 

  

61,834

 

  

90,066

 

  

120,256

 

Multi-Service Networks

  

7,321

  

15,262

  

21,073

  

27,143

  

3,287

 

  

6,270

 

  

8,650

 

  

11,699

 

Other operations

  

8,025

  

15,534

  

21,542

  

31,762

  

5,706

 

  

11,733

 

  

17,509

 

  

23,533

 

Less : Intersegment sales

  

-2,632

  

-5,668

  

-7,819

  

-9,622

  

-2,063

 

  

-4,326

 

  

-7,201

 

  

-9,715

 

    
  
  
  
  

  

  

  

Total

  

49,760

  

105,295

  

152,299

  

210,837

  

36,966

 

  

75,511

 

  

109,024

 

  

145,773

 

    
  
  
  
  

  

  

  

Change


  

0203


    

0206


    

0209


    

0212


 

Systems

  

-25

%

  

-29

%

  

-29

%

  

-30

%

of which Mobile Systems

  

-19

%

  

-23

%

  

-23

%

  

-26

%

Multi-Service Networks

  

-55

%

  

-59

%

  

-59

%

  

-57

%

Other operations

  

-29

%

  

-24

%

  

-19

%

  

-26

%

Less : Intersegment sales

  

—  

 

  

—  

 

  

—  

 

  

—  

 

    

  

  

  

Total

  

-26

%

  

-28

%

  

-28

%

  

-31

%

    

  

  

  

    

20011)


  

2002


 

Isolated quarters


  

Q1


  

Q2


  

Q3


  

Q4


  

Q1


    

Q2


    

Q3


    

Q4


 

Systems

  

44,367

  

51,062

  

43,147

  

50,121

  

33,323

 

  

34,781

 

  

30,612

 

  

33,239

 

of which Mobile Systems

  

37,046

  

43,121

  

37,336

  

44,051

  

30,036

 

  

31,798

 

  

28,232

 

  

30,190

 

Multi-Service Networks

  

7,321

  

7,941

  

5,811

  

6,070

  

3,287

 

  

2,983

 

  

2,380

 

  

3,049

 

Other operations

  

8,025

  

7,509

  

6,008

  

10,220

  

5,706

 

  

6,027

 

  

5,776

 

  

6,024

 

Less : Intersegment sales

  

-2,632

  

-3,036

  

-2,151

  

-1,803

  

-2,063

 

  

-2,263

 

  

-2,875

 

  

-2,514

 

    
  
  
  
  

  

  

  

Total

  

49,760

  

55,535

  

47,004

  

58,538

  

36,966

 

  

38,545

 

  

33,513

 

  

36,749

 

    
  
  
  
  

  

  

  

Change


  

Q1


    

Q2


    

Q3


    

Q4


 

Systems

  

-25

%

  

-32

%

  

-29

%

  

-34

%

of which Mobile Systems

  

-19

%

  

-26

%

  

-24

%

  

-31

%

Multi-Service Networks

  

-55

%

  

-62

%

  

-59

%

  

-50

%

Other operations

  

-29

%

  

-20

%

  

-4

%

  

-41

%

Less : Intersegment sales

  

—  

 

  

—  

 

  

—  

 

  

—  

 

    

  

  

  

Total

  

-26

%

  

-31

%

  

-29

%

  

-37

%

         

  

  

  

 

1)   2001 adjusted to reflect parts of Phones transferred to Sony Ericsson Mobile Communications.

 

16


 

ORDERS BOOKED BY MARKET AREA BY QUARTER

SEK million

 

    

20011)


  

2002


 

Year to date


  

0103


  

0106


  

0109


  

0112


  

0203


    

0206


    

0209


    

0212


 

Europe, Middle East, Africa*

  

37,329

  

59,083

  

81,096

  

92,702

  

19,493

 

  

37,184

 

  

46,738

 

  

65,448

 

North America

  

6,191

  

10,473

  

14,830

  

24,635

  

7,003

 

  

12,837

 

  

17,310

 

  

22,877

 

Latin America

  

11,581

  

20,847

  

24,731

  

31,083

  

4,846

 

  

8,195

 

  

9,612

 

  

9,575

 

Asia Pacific

  

14,208

  

33,338

  

41,180

  

53,347

  

10,551

 

  

18,942

 

  

24,028

 

  

30,451

 

    
  
  
  
  

  

  

  

Total

  

69,309

  

123,741

  

161,837

  

201,767

  

41,893

 

  

77,158

 

  

97,688

 

  

128,351

 

    
  
  
  
  

  

  

  

* Of which Sweden

  

1,827

  

4,665

  

5,654

  

8,675

  

2,437

 

  

4,943

 

  

6,289

 

  

7,620

 

* Of which EU

  

25,289

  

40,610

  

50,814

  

57,057

  

8,877

 

  

21,316

 

  

25,160

 

  

34,003

 

Change


  

0203


    

0206


    

0209


    

0212


 

Europe, Middle East, Africa*

  

-48

%

  

-37

%

  

-42

%

  

-29

%

North America

  

13

%

  

23

%

  

17

%

  

-7

%

Latin America

  

-58

%

  

-61

%

  

-61

%

  

-69

%

Asia Pacific

  

-26

%

  

-43

%

  

-42

%

  

-43

%

    

  

  

  

Total

  

-40

%

  

-38

%

  

-40

%

  

-36

%

    

  

  

  

* Of which Sweden

  

33

%

  

6

%

  

11

%

  

-12

%

* Of which EU

  

-65

%

  

-48

%

  

-50

%

  

-40

%

    

20011)


  

2002


 

Isolated quarters


  

Q1


  

Q2


  

Q3


  

Q4


  

Q1


    

Q2


    

Q3


    

Q4


 

Europe, Middle East, Africa*

  

37,329

  

21,754

  

22,013

  

11,606

  

19,493

 

  

17,691

 

  

9,554

 

  

18,710

 

North America

  

6,191

  

4,282

  

4,357

  

9,805

  

7,003

 

  

5,834

 

  

4,473

 

  

5,567

 

Latin America

  

11,581

  

9,266

  

3,884

  

6,352

  

4,846

 

  

3,349

 

  

1,417

 

  

-37

 

Asia Pacific

  

14,208

  

19,130

  

7,842

  

12,167

  

10,551

 

  

8,391

 

  

5,086

 

  

6,423

 

    
  
  
  
  

  

  

  

Total

  

69,309

  

54,432

  

38,096

  

39,930

  

41,893

 

  

35,265

 

  

20,530

 

  

30,663

 

    
  
  
  
  

  

  

  

* Of which Sweden

  

1,827

  

2,838

  

989

  

3,021

  

2,437

 

  

2,506

 

  

1,346

 

  

1,331

 

* Of which EU

  

25,289

  

15,321

  

10,204

  

6,243

  

8,877

 

  

12,439

 

  

3,844

 

  

8,843

 

Change


  

Q1


    

Q2


    

Q3


    

Q4


 

Europe, Middle East, Africa*

  

-48

%

  

-19

%

  

-57

%

  

61

%

North America

  

13

%

  

36

%

  

3

%

  

-43

%

Latin America

  

-58

%

  

-64

%

  

-64

%

  

-101

%

Asia Pacific

  

-26

%

  

-56

%

  

-35

%

  

-47

%

    

  

  

  

Total

  

-40

%

  

-35

%

  

-46

%

  

-23

%

    

  

  

  

* Of which Sweden

  

33

%

  

-12

%

  

36

%

  

-56

%

* Of which EU

  

-65

%

  

-19

%

  

-62

%

  

42

%

 

1) 2001 adjusted to reflect parts of Phones transferred to Sony Ericsson Mobile Communications.

 

NET SALES BY MARKET AREA BY QUARTER

SEK million

 

    

20011)


  

2002


 

Year to date


  

0103


  

0106


  

0109


  

0112


  

0203


    

0206


    

0209


    

0212


 

Europe, Middle East, Africa*

  

23,357

  

48,575

  

69,642

  

97,133

  

17,606

 

  

36,666

 

  

53,438

 

  

74,124

 

North America

  

5,528

  

11,077

  

16,984

  

25,190

  

4,072

 

  

10,135

 

  

16,516

 

  

23,068

 

Latin America

  

7,707

  

16,716

  

22,408

  

32,096

  

4,311

 

  

7,416

 

  

10,282

 

  

12,676

 

Asia Pacific

  

13,168

  

28,927

  

43,265

  

56,418

  

10,977

 

  

21,294

 

  

28,788

 

  

35,905

 

    
  
  
  
  

  

  

  

Total

  

49,760

  

105,295

  

152,299

  

210,837

  

36,966

 

  

75,511

 

  

109,024

 

  

145,773

 

    
  
  
  
  

  

  

  

* Of which Sweden

  

1,492

  

3,135

  

4,397

  

6,656

  

1,974

 

  

4,559

 

  

6,235

 

  

8,303

 

* Of which EU

  

14,901

  

30,568

  

43,626

  

59,206

  

10,867

 

  

21,935

 

  

31,128

 

  

43,396

 

Change


  

0203


    

0206


    

0209


    

0212


 

Europe, Middle East, Africa*

  

-25

%

  

-25

%

  

-23

%

  

-24

%

North America

  

-26

%

  

-9

%

  

-3

%

  

-8

%

Latin America

  

-44

%

  

-56

%

  

-54

%

  

-61

%

Asia Pacific

  

-17

%

  

-26

%

  

-33

%

  

-36

%

    

  

  

  

Total

  

-26

%

  

-28

%

  

-28

%

  

-31

%

    

  

  

  

* Of which Sweden

  

32

%

  

45

%

  

42

%

  

25

%

* Of which EU

  

-27

%

  

-28

%

  

-29

%

  

-27

%

    

20011)


  

2002


 

Isolated quarters


  

Q1


  

Q2


  

Q3


  

Q4


  

Q1


    

Q2


    

Q3


    

Q4


 

Europe, Middle East, Africa*

  

23,357

  

25,218

  

21,067

  

27,491

  

17,606

 

  

19,060

 

  

16,772

 

  

20,686

 

North America

  

5,528

  

5,549

  

5,907

  

8,206

  

4,072

 

  

6,063

 

  

6,381

 

  

6,552

 

Latin America

  

7,707

  

9,009

  

5,692

  

9,688

  

4,311

 

  

3,105

 

  

2,866

 

  

2,394

 

Asia Pacific

  

13,168

  

15,759

  

14,338

  

13,153

  

10,977

 

  

10,317

 

  

7,494

 

  

7,117

 

    
  
  
  
  

  

  

  

Total

  

49,760

  

55,535

  

47,004

  

58,538

  

36,966

 

  

38,545

 

  

33,513

 

  

36,749

 

    
  
  
  
  

  

  

  

* Of which Sweden

  

1,492

  

1,643

  

1,262

  

2,259

  

1,974

 

  

2,585

 

  

1,676

 

  

2,068

 

* Of which EU

  

14,901

  

15,667

  

13,058

  

15,580

  

10,867

 

  

11,068

 

  

9,193

 

  

12,268

 

Change


  

Q1


    

Q2


    

Q3


    

Q4


 

Europe, Middle East, Africa*

  

-25

%

  

-24

%

  

-20

%

  

-25

%

North America

  

-26

%

  

9

%

  

8

%

  

-20

%

Latin America

  

-44

%

  

-66

%

  

-50

%

  

-75

%

Asia Pacific

  

-17

%

  

-35

%

  

-48

%

  

-46

%

    

  

  

  

Total

  

-26

%

  

-31

%

  

-29

%

  

-37

%

    

  

  

  

* Of which Sweden

  

32

%

  

57

%

  

33

%

  

-8

%

* Of which EU

  

-27

%

  

-29

%

  

-30

%

  

-21

%

 

1) 2001 adjusted to reflect parts of Phones transferred to Sony Ericsson Mobile Communications.

 

17


 

EXTERNAL ORDERS BOOKED BY MARKET AREA

 

SEK million

 

Year to date 2002


  

Systems


    

Other


    

Total


    

Share of Total


 

Europe, Middle East & Africa

  

54,510

 

  

10,938

 

  

65,448

 

  

51

%

North America

  

22,164

 

  

713

 

  

22,877

 

  

18

%

Latin America

  

8,919

 

  

656

 

  

9,575

 

  

7

%

Asia Pacific

  

28,583

 

  

1,868

 

  

30,451

 

  

24

%

    

  

  

  

Total

  

114,176

 

  

14,175

 

  

128,351

 

  

100

%

    

  

  

  

Share of Total

  

89

%

  

11

%

  

100

%

      

 

EXTERNAL NET SALES BY MARKET AREA

 

SEK million

 

Year to date 2002


  

Systems


    

Other


    

Total


    

Share of Total


 

Europe, Middle East & Africa

  

62,724

 

  

11,400

 

  

74,124

 

  

51

%

North America

  

22,444

 

  

624

 

  

23,068

 

  

16

%

Latin America

  

11,803

 

  

873

 

  

12,676

 

  

9

%

Asia Pacific

  

33,871

 

  

2,034

 

  

35,905

 

  

24

%

    

  

  

  

Total

  

130,842

 

  

14,931

 

  

145,773

 

  

100

%

    

  

  

  

Share of Total

  

90

%

  

10

%

  

100

%

      

 

TOP 10 MARKETS IN ORDERS AND SALES

 

Year to date 2002

 

Orders


 

Share of

total orders


     

United States

 

17%

China

 

  8%

Italy

 

  8%

Saudi Arabia

 

  6%

Sweden

 

  6%

United Kingdom

 

  4%

Spain

 

  3%

Japan

 

  3%

India

 

  3%

Russia

 

  2%

 

Sales


 

Share of

total sales


     

United States

 

15%

China

 

  9%

Italy

 

  7%

Sweden

 

  6%

Japan

 

  4%

United Kingdom

 

  4%

Saudi Arabia

 

  4%

Spain

 

  3%

Mexico

 

  3%

India

 

  2%

 

NUMBER OF EMPLOYEES BY SEGMENT BY QUARTER

 

    

2001


  

2002


 
    

0103


  

0106


  

0109


  

0112


  

0203


    

0206


    

0209


    

0212


 

Systems

  

75,897

  

77,448

  

72,111

  

68,525

  

66,301

 

  

61,392

 

  

57,808

 

  

51,390

 

Phones

  

12,299

  

5,675

  

4,277

  

—  

  

—  

 

  

—  

 

  

—  

 

  

—  

 

Other operations1)

  

18,623

  

16,284

  

16,167

  

16,286

  

15,315

 

  

14,383

 

  

13,509

 

  

12,846

 

Unallocated

  

440

  

414

  

394

  

387

  

396

 

  

446

 

  

406

 

  

385

 

    
  
  
  
  

  

  

  

Total

  

107,259

  

99,821

  

92,949

  

85,198

  

82,012

 

  

76,221

 

  

71,723

 

  

64,621

 

    
  
  
  
  

  

  

  

Total excluding Phones

  

94,960

  

94,146

  

88,672

  

85,198

  

82,012

 

  

76,221

 

  

71,723

 

  

64,621

 

    
  
  
  
  

  

  

  

                                                 

Change in percent excluding Phones


                      

0203


    

0206


    

0209


    

0212


 

Systems

                      

-13

%

  

-21

%

  

-20

%

  

-25

%

Other operations

                      

-18

%

  

-12

%

  

-16

%

  

-21

%

Unallocated

                      

-10

%

  

8

%

  

3

%

  

-1

%

                        

  

  

  

Total

                      

-14

%

  

-19

%

  

-19

%

  

-24

%

                        

  

  

  

 

1) Includes Bluetooth, Mobile Platforms and selected parts of Phones not transferred to Sony Ericsson Mobile Communications.

 

18


 

ERICSSON

 

OTHER INFORMATION

 

SEK million

  

Jan-Dec

2002


    

Jan-Dec

2001


 

Number of shares and earnings per share

             

Number of shares, end of period (million)

  

15,974

 

  

8,066

 

Number of treasury shares, end of period (million)

  

154

 

  

157

 

Number of shares outstanding, basic, end of period (million)

  

15,820

 

  

7,909

 

Number of shares outstanding, diluted, end of period (million)

  

15,931

 

  

7,990

 

Average number of shares, basic (million) 1)

  

12,573

 

  

10,950

 

Average number of shares, diluted (million) 1,2)

  

12,684

 

  

11,072

 

Earnings per share, basic (SEK) 1)

  

-1.51

 

  

-1.94

 

Earnings per share, diluted (SEK) 1,2)

  

-1.51

 

  

-1.94

 

Ratios

             

Equity ratio, percent

  

36.5

 

  

28.1

 

Capital turnover (times) 3)

  

1.0

 

  

1.3

 

Accounts receivable turnover (times) 3)

  

3.1

 

  

3.1

 

Inventory turnover (times) 3)

  

5.1

 

  

4.0

 

Return on equity, percent

  

-26.7

%

  

-26.5

%

Return on capital employed, percent

  

-11.4

%

  

-14.3

%

Days Sales Outstanding

  

91

 

  

88

 

Other

             

Additions to tangible fixed assets

  

2,738

 

  

8,726

 

—Of which in Sweden

  

1,195

 

  

3,794

 

Additions to capitalized development expenses

  

3,442

 

  

—  

 

Total depreciation on tangible and intangible assets

  

6,537

 

  

7,860

 

—Of which goodwill

  

1,064

 

  

1,123

 

—Of which capitalized development expenses

  

242

 

  

—  

 

Orders booked

  

128,351

 

  

201,767

 

Export from Sweden

  

86,695

 

  

121,277

 

Exchange rates used in the consolidation

             

Euro—average rate

  

9.15

 

  

9.26

 

        —closing rate

  

9.15

 

  

9.37

 

USD—average rate

  

9.72

 

  

10.36

 

        —closing rate

  

8.78

 

  

10.63

 

 

1) Adjusted for stock dividend element of stock issue in 2002.

2) Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share.

3) Ratios reported for 2001 are excluding Phones activities transferred to Sony Ericsson Mobile Communications.

Including those activities the ratios were: Capital turnover 1,5, Accounts receivable turnover 3,4 and Inventory turnover 4,8.

 

19


 

February 3, 2003

Ericsson sales of WCDMA in 2002 corrected to 7%

 

In our fourth quarter interim report, we indicated that sales of WCDMA equipment and associated network rollout services were 9% of Mobile Systems sales for the full year. This indication was incorrect as it was a comparison that did not include all sales within Mobile Systems. We also misstated the YTD sales for the nine months period in the third quarter interim report. The correct level is 7% of Mobile System sales for the nine-month period as well as for the full year 2002.

 

Our outlook for 3G sales in 2003 is unaffected. We believe sales of WCDM equipment and associated network rollout services could amount to about 12% of Mobile Systems sales remains.

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

TELEFONAKTIEBOLAGET LM ERICSSON (PUBL)

By:

 

/s/    LARS JACOBSSON        


   

Lars Jacobsson

VP Financial Reporting

and Analysis External reporting

 

By:

 

/s/    HENRY STÉNSON        


   

Henry Sténson

Senior Vice President

Corporate Communications

 

February 7, 2003