---

 

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

 

April 23, 2004

 

---

 

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 April 23, 2004, regarding first quarter report 2004.

---

		First quarter report 2004 April 23, 2004

 

Ericsson reports good development in profitability, orders and sales

 

First quarter summary

 

•

Net sales SEK 28.1 (25.9) b., up 9% year-over-year

 

•

Gross margin 44.7% (34.1%)1) – up 3.1%-points sequentially

 

•

Operating margin 16.1% (-10.8%)2)

 

•

Income after financial items SEK 4.3 (-2.8) b.2)

 

•

Net income SEK 3.0 (-4.3) b., up SEK 2.9 b. sequentially

 

•

Earnings per share SEK 0.19 (-0.27)

 

		First quarter									Fourth quarter
SEK b.		2004			2003			Change			2003			Change
Orders booked, net		33.0			27.1			22	%		29.5			12	%
Net sales		28.1			25.9			9	%		36.2			-22	%
Gross margin (%)		44.7	%		34.1	%1)		—			41.6	%1)		—
Operating income		4.5			-2.8	2)		—			6.3	2)		—
Income after financial items		4.3			-2.8	2)		—			5.9	2)		—
Net income		3.0			-4.3			—			0.1			—
Earnings per share		0.19			-0.27			—			0.01			—
Cash flow before financing activities		2.9			0.7			—			4.6			—

 

1)

Adjusted for restructuring charges in the first quarter 2003 SEK 1.8 b. and in the fourth quarter 2003 SEK 0.8 b.

 

2)

Adjusted for restructuring charges in the first quarter 2003, net, SEK 3.2 b. and in the fourth quarter 2003 SEK 4.0 b.

 

Orders booked in the quarter grew by 22% year-over-year and by 12% sequentially to SEK 33.0 (27.1) b. Net sales in the quarter grew by 9% year-over-year to SEK 28.1 (25.9) b. and declined 22% sequentially due to seasonality. Currency exchange effects have had a negative impact on sales of 8% year-over-year.

 

Gross margin improved sequentially by 3.1 percentage points to 44.7% (34.1%), mainly attributable to the benefits of cost of sales reduction activities and a favorable product mix. Operating expense reductions are on track, with an annualized run rate of SEK 35 (47) b. in the quarter. Income after financial items was SEK 4.3 (-2.8) b. compared to SEK 5.9 b. in the fourth quarter. Net currency exchange effects, compared to rates one year ago, have had a negative impact of SEK 0.8 b. on operating income in the quarter.

 

Cash flow before financing was SEK 2.9 (0.7) b. with positive effects from improved earnings. Cash flow was however also affected by increased work in progress as a result of the higher business activity. The financial position remained strong, with a net of financial assets and liabilities, i.e. net cash, of SEK 26.8 b.

 

CEO COMMENTS

 

“We have clearly strengthened our market position since last summer,” says Carl-Henric Svanberg, President and CEO of Ericsson. “Our year has started well with a number of contracts in key growth areas. A stronger customer focus, including our commitment to operational excellence, is clearly contributing to this achievement.

 

---

We also continued to improve operating results. Gross margin development exceeded our earlier expectations. We are benefiting from our restructuring efforts and going forward we will continue to strive for best-in-class cost efficiency. Our financial position is now one of the industry’s strongest.

 

The rollout of 3G continues. We are a major supplier in close to 50 networks that will be or have been commercially launched by year-end. EDGE plays an important complementary role and continues to grow quickly. Over time we expect most GSM networks to be upgraded with EDGE. In addition, the new Ericsson Expander has been well received as an enabler for communication in rural areas in developed as well as in high-growth markets.

 

The long-term growth drivers of the industry remain solid. The business environment is becoming more multifaceted, with new business models and more advanced solutions. The vendor’s ability to support operators with total solutions that combine technical know-how with consumer awareness is quickly growing in importance. As a result, our traditional role as vendor is transforming more into the role of a strategic partner,” concludes Carl-Henric Svanberg.

 

MARKET VIEW

 

Last year saw considerably improved financials among operators and an increased need for investments in capacity and network quality. This is a result of the underlying growth in mobile communications, driven by increased voice and mobile data traffic and operator investment into capacity enhancements of both 2G and 2.5G. Increased competition among operators is likely to continue to stimulate traffic growth, especially in Western Europe.

 

The 3G rollout is a reality with a large number of initial commercial launches expected by year-end. In addition, more than 75 operators in 50 countries are committed to deploy EDGE. The number of WCDMA subscriptions grew 57% in the quarter to 4.4 million subscriptions. The number of CDMA2000 1X subscriptions grew 35% to 95 million.

 

Demand for seamless services will drive the convergence of mobile and fixed networks, including voice over IP. This will have a positive impact on advanced mobile services and applications. Consumer mobility behavior will drive demand and traffic patterns in such converged seamless networks.

 

The service market segment continues to show good growth potential. In the more complex business environment operators show growing interest in services enabling them to focus on business development, how to attract and retain customers as well as driving cost efficiency.

 

Today, worldwide subscription penetration is only 23% with a total of 1.4 billion subscriptions. The global number of mobile subscriptions has been estimated to reach 2 billion during 2008 with particularly strong growth in emerging markets. The favorable reception of the Ericsson Expander solution in coverage-driven markets indicates that growth should develop beyond these projections.

 

OUTLOOK

 

We estimate that the global mobile systems market in 2004, measured in USD, will show slight to moderate growth, compared to 2003. This improved outlook is mainly driven by growing traffic, network expansions and continued 3G rollout. There is also an element of operators catching up on previous years’ limited investments.

 

Our previous estimate of the global mobile systems market was to be in line with, or show slight growth, compared to 2003.

 

2

---

We maintain our view that the addressable market for professional services, also measured in USD, is expected to continue to show good growth.

 

Through our technology leadership and global presence we are well positioned to benefit from the market opportunities.

 

CONSOLIDATED ACCOUNTS

 

FINANCIAL REVIEW

 

All comparative numbers are stated excluding restructuring charges.

 

Income

 

Orders booked were SEK 33.0 (27.1) b., an increase by 22% year-over-year, driven by generally strong development in Asia-Pacific, Central Europe, Middle East and Africa. Sequentially, orders booked increased by 12%.

 

Sales were SEK 28.1 (25.9) b., an increase by 9% year-over-year. High-growth markets such as China, Brazil and Mexico, were main contributors to this development. Currency exchange effects were 8%. Due to seasonality sales declined by 22% sequentially.

 

Gross margin improved to 44.7% (34.1%), a sequential increase from 41.6%. The main reasons for the improvement were better than anticipated benefits from cost of sales reductions activities and a favorable product mix.

 

Operating expenses amounted to SEK 8.7 (10.8) b. The annualized run rate was SEK 35 (47) b., down from SEK 37 b. in the previous quarter. The earlier announced reduction target of an annualized operating expense run rate of SEK 33 b. by the third quarter 2004 remains.

 

Operating income was SEK 4.5 (-2.8) b. compared to SEK 6.3 b. the previous quarter. Income after financial items was SEK 4.3 (-2.8) b. compared to SEK 5.9 b. in the fourth quarter.

 

Net effects of currency exchange differences on operating income compared to the rates one year ago were SEK -0.8 b. in the quarter. Excluding effects from currency hedging the effects would have been -1.0 b.

 

Net income was SEK 3.0 (-4.3) b. for the quarter.

 

Earnings per share were SEK 0.19 (-0.27).

 

The number of employees amounted to 50,650 (60,940) at the end of the quarter. Excluding some 2,000 employees added through managed services contracts as well as employees notified but still included in the company’s payroll, the original headcount target of 47,000 has been reached.

 

Balance sheet and financing

 

The financial position remained strong with net of financial assets and debt, i.e. net cash, at SEK 26.8 b. compared to SEK 27.0 b. at year-end 2003. Cash improved by SEK 1.2 b. sequentially to SEK 74.4 b.

 

Days sales outstanding (DSO) for trade receivables were 102 (109), an increase by 23 days sequentially, mainly due to seasonality. Inventory, including work in progress, increased by SEK 3.5 b. sequentially to SEK 14.4 (14.5) b., due to the higher business activity.

 

Gross customer financing exposure decreased sequentially by SEK 1.0 b. to SEK 11.2 (20.1) b. Net customer financing credits on balance sheet were reduced sequentially by SEK 0.1 b. to SEK 3.9 (13.6) b.

 

3

---

Effective from 2004, Ericsson has adopted Swedish accounting principles, RR29 Employee benefits, in its financial reporting. The effect of this accounting change has been reported as increased pension provisions of SEK 1.8 b. and decreased equity, net after taxes, by SEK 1.3 b.

 

The equity ratio was 35.0% (34.9%) compared to 34.4% at the end of the previous quarter. Excluding the change in pension accounting principles the equity ratio would have been 35.7%.

 

Cash flow

 

Cash flow from operations remained strong at SEK 3.2 b. Cash flow before financing activities amounted to SEK 2.9 (0.7) b. Cash flow from investing activities was SEK -0.3 b. net. The cash flow is affected by increased work in progress as a result of the higher business activity.

 

Payment readiness increased sequentially by SEK 3.1 b. to SEK 78.4 (66.5) b., mainly due to improved earnings.

 

Cash outlays of SEK 5 b., with regard to restructuring, are expected during 2004. Of this SEK 2.1 b. was paid in the first quarter.

 

SEGMENT RESULTS

 

SYSTEMS

 

		First quarter									Fourth quarter
SEK b.		2004			2003			Change			2003			Change
Orders booked		31.1			25.0			24	%		27.6			13	%
Mobile Networks		24.9			17.5			43	%		20.5			22	%
Fixed Networks		1.2			2.0			-41	%		1.1			4	%
Professional Services		5.0			5.5			-10	%		6.0			-17	%
Net sales		26.1			24.0			9	%		33.6			-22	%
Mobile Networks		21.1			17.6			19	%		25.7			-18	%
Fixed Networks		0.9			1.9			-53	%		2.2			-60	%
Professional Services		4.1			4.4			-7	%		5.7			-28	%
Operating income		4.2			-1.5	1)		—			5.8	1)		—
Operating margin (%)		16	%		-6	%1)		—			17	%1)		—

 

1)

Adjusted for restructuring charges in the first quarter 2003, net, SEK 3.1 b. and in the fourth quarter 2003 SEK 3.6 b.

 

Systems orders increased sequentially by 13% to SEK 31.1 (25.0) b. Year-over-year Systems orders increased by 24%. Systems sales decreased 22% sequentially to SEK 26.1 (24.0) b. due to seasonality. Year-over-year Systems sales increased by 9%.

 

Mobile Networks orders increased both sequentially and year-over-year by 43% and 22% respectively, mainly driven by GSM and 3G. Sales decreased sequentially by 18% due to seasonality. WCDMA equipment and associated network rollout services share of total Mobile Networks sales were stable at 12%.

 

The business development trend for Professional Services continues with an increasing number of managed services and hosting contracts. Sales can however vary between quarters and were flat year-over-year, adjusted for currency exchange effects. Professional Services represents 16% of total Systems sales.

 

4

---

OTHER OPERATIONS

 

		First quarter									Fourth quarter
SEK b.		2004			2003			Change			2003			Change
Orders booked		2.4			2.6			-8	%		2.3			2	%
Net sales		2.4			2.4			4	%		3.2			-23	%
Operating income		0.0			-0.5	1)		—			0.3	1)		—
Operating margin (%)		2	%		-20	%1)		—			8	%1)		—

 

1)

Adjusted for restructuring charges in the fourth quarter 2003 SEK 0.8 b.

 

Orders booked showed a slight sequential increase. Sales decreased sequentially mainly as a result of seasonality and effects of prior restructuring activities. Ericsson Mobile Platforms had strong sales growth both year-over-year and sequentially.

 

SONY ERICSSON MOBILE COMMUNICATIONS

 

Sony Ericsson Mobile Communications (Sony Ericsson) reported a strong increase in shipments and record profits for the first quarter 2004. Ericsson’s share in Sony Ericsson’s income after financial items was SEK 0.5 b. compared to SEK 0.3 b. in the previous quarter. In an overall strong mobile phone market, shipments from Sony Ericsson reached an all-time high as its product offering in the mid- and entry-level segments continued to gain momentum. Units shipped in the quarter posted a 63% increase compared to the same period last year. As average sales price also increased slightly, sales were up 66% compared to the same period last year.

 

Market share is estimated to have increased during the quarter thanks to strong demand and increased operational excellence. Sony Ericsson has increased its estimates for the global market for 2004 from approximately 520 million units to over 550 million units.

 

Transactions with Sony Ericsson Mobile Communications

 

SEK m.		First quarter 2004		First quarter 2003
Sales to Sony Ericsson		504		576
Royalty from Sony Ericsson		140		56
Purchases from Sony Ericsson		334		265
Shareholder contribution		—		1,384
Receivables from Sony Ericsson		45		541
Liabilities to Sony Ericsson		124		115

 

PARENT COMPANY INFORMATION

 

Net sales for the first quarter amounted to SEK 0.5 (0.5) b. and income after financial items was SEK 0.9 (1.2) b. Restructuring costs are excluded in income after financial items for 2003.

 

Major changes in the company’s financial position for the first quarter include decreased current and long-term commercial and financial receivables from subsidiaries of SEK 5.3 b. Short- and long-term internal borrowings decreased by SEK 6.5 b. At the end of the quarter, cash and short-term cash investments amounted to SEK 69.4 (68.4) b.

 

In accordance with the conditions of the Stock Purchase Plans and Option Plans for Ericsson employees, 2,072,000 shares from treasury stock were sold or distributed to employees during the first quarter. The Annual General Meeting decided, as previously announced, to amend one parameter in the Stock Purchase Plan 2003 (SPP 2003) by removing the SEK 50,000 annual restriction on individual investments in shares under SPP 2003, while retaining 7.5% of annual salary as the maximum for investments in shares. The holding of treasury stock at March 31, 2004 was 304,067,953 Class B shares.

 

5

---

OTHER INFORMATION

 

The Annual General Meeting decided, as previously announced, in accordance with the proposal from the Board of Directors that no dividend will be paid for 2003. The Annual General Meeting also decided to implement a long-term incentive plan 2004 directed at 4,700 senior managers and key contributors.

 

For more information regarding the long-term incentive plan 2004 and changed accounting principles regarding pensions see Accounting policies and reporting.

 

Stockholm, April 23, 2004

 

Carl-Henric Svanberg

President and CEO

 

Date for next report: July 21, 2004

 

AUDITORS’ REPORT

 

We have reviewed the report for the three-month period ended March 31, 2004, 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 interim report does not comply with the requirements for interim reports in the Annual Accounts Act.

 

Stockholm, April 23, 2004

 

Bo Hjalmarsson		Peter Clemedtson		Thomas Thiel
Authorized Public Accountant		Authorized Public Accountant		Authorized Public Accountant
PricewaterhouseCoopers AB		PricewaterhouseCoopers AB

 

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

 

All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, 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/3month04-en.pdf

 

6

---

FOR FURTHER INFORMATION PLEASE CONTACT

 

Henry Sténson, Senior Vice President, Communications

Phone: +46 8 719 4044

E-mail: investor.relations@ericsson.com or press.relations@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: investor.relations@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: press.relations@ericsson.com

 

Åse Lindskog, Director, Head of Media Relations

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

 

Ola Rembe, Director, Media Relations

Phone: +46 8 719 9727, +46 730 244 873; E-mail: press.relations@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

 

FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

 

		Page
Financial Statements
Consolidated income statement		8
Consolidated balance sheet		9
Consolidated statement of cash flows		10
Changes in stockholders’ equity		11
Consolidated income statement isolated quarters		12
		Page
Additional Information
Accounting policies and reporting		13
Orders booked by segment by quarter		14
Net sales by segment by quarter		15
Operating income, operating margin		16
Number of employees		16
Orders booked by market area by quarter		17
Net sales by market area by quarter		18
External orders booked by market area by segment		19
External net sales by market area by segment		19
Top ten markets in orders and sales		20
Customer financing risk exposure		20
Trend of net sales and operating expenses isolated quarters		20
Other information		21

 

7

---

ERICSSON

CONSOLIDATED INCOME STATEMENT

 

		Jan-Mar									Jan - Dec 2003
SEK million		2004			2003			Change
Net sales		28,111			25,859			9	%		117,738
Cost of sales		-15,544			-18,862			-18	%		-78,901
Gross margin		12,567			6,997						38,837
Research and development and other technical expenses		-4,792			-6,897			-31	%		-27,136
Selling expenses		-2,232			-3,449			-35	%		-15,115
Administrative expenses		-1,710			-1,804			-5	%		-8,762
Operating expenses		-8,734			-12,150						-51,013
Other operating revenues and costs		164			-86						1,541
Share in earnings of JV and associated companies		517			-742						-604
Operating income		4,514			-5,981						-11,239
Financial income		932			1,164			-20	%		3,995
Financial expenses		-1,133			-1,218			-7	%		-4,859
Income after financial items		4,313			-6,035						-12,103
Taxes		-1,243			1,847						1,460
Minority interest		-77			-124						-201
Net income		2,993			-4,312						-10,844
Other information
Average number of shares, basic (million)		15,749			15,820						15,823
Earnings per share, basic (SEK)		0.19			-0.27						-0.69
Earnings per share, diluted (SEK)		0.19			-0.27						-0.69
NOTE 1
Restructuring costs, net		—			-3,193						-16,463
Total		—			-3,193						-16,463
-of which in
Cost of sales		—			-1,813						-4,790
Operating expenses		—			-1,359						-10,976
Other operating revenues and costs		—			-21						- 345
Share in earnings of JV and associated companies / Phones		—			—						- 352
NOTE 2
Key measurements, excluding restructuring costs
Net sales		28,111			25,859						117,738
Gross margin		12,567			8,810						43,627
- as percentage of net sales		44.7	%		34.1	%					37.1	%
Operating expenses		-8,734			-10,791						-40,037
- as percentage of net sales		31.1	%		41.7	%					34.0	%
Other operating revenues and costs		164			-65						1,886
Share in earnings of JV and assoc. companies		517			-742						-252
Operating income		4,514			-2,788						5,224
Operating margin (%)		16.1	%		-10.8	%					4.4	%
Income after financial items		4,313			-2,842						4,360

 

8

---

ERICSSON

CONSOLIDATED BALANCE SHEET

 

SEK million		Mar 31 2004		Dec 31 2003
ASSETS
Fixed assets
Intangible assets
Capitalized development expenses		4,710		4,784
Goodwill		5,854		5,739
Other		656		687
Tangible assets		6,081		6,505
Financial assets
Equity in JV and associated companies		3,407		2,970
Other investments		442		433
Long-term customer financing		2,556		3,027
Deferred tax assets		26,675		27,130
Other long-term receivables		1,071		1,342
		51,452		52,617
Current assets
Inventories		14,427		10,965
Receivables
Accounts receivable - trade		32,791		31,886
Short-term customer financing		1,331		979
Other receivables		13,664		12,718
Short-term cash investments, cash and bank		74,405		73,207
		136,618		129,755
Total assets		188,070		182,372
STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES
Stockholders’ equity		63,371		60,481
Minority interest in equity of consolidated subsidiaries		2,447		2,299
Provisions
Pensions		10,093		8,005
Other provisions		27,409		28,063
		37,502		36,068
Long-term liabilities		30,357		29,772
Current liabilities
Interest-bearing liabilities		8,102		9,509
Accounts payable		9,298		8,895
Other current liabilities		36,993		35,348
		54,393		53,752
Total stockholders’ equity, provisions and liabilities		188,070		182,372
Of which interest-bearing provisions and liabilities		47,559		46,209
Net cash		26,846		26,998
Assets pledged as collateral		8,062		8,023
Contingent liabilities		2,175		2,691

 

9

---

ERICSSON

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Jan-Mar				Jan-Dec
SEK million		2004		2003		2003
Net income		2,993		-4,312		-10,844
Adjustments to reconcile net income to cash		1,777		629		6,387
		4,770		-3,683		-4,457
Changes in operating net assets
Inventories		-3,027		-400		2,286
Customer financing, short-term and long-term		446		-29		7,999
Accounts receivable		-42		4,733		4,131
Other		1,083		1,901		12,908
Cash flow from operating activities		3,230		2,522		22,867
Product development		-235		-737		-2,359
Other investing activities		-67		-1,123		-1,053
Cash flow from investing activities		-302		-1,860		-3,412
Cash flow before financing activities		2,928		662		19,455
Dividends paid		-6		-3		-206
Other equity transactions		3		—		8
Other financing activities		-1,723		506		-11,726
Cash flow from financing activities		-1,726		503		-11,924
Effect of exchange rate changes on cash		-4		-165		-538
Net change in cash		1,198		1,000		6,993
Cash and cash equivalents, beginning of period		73,207		66,214		66,214
Cash and cash equivalents, end of period		74,405		67,214		73,207

 

10

---

CHANGES IN STOCKHOLDERS’ EQUITY

 

SEK million		Jan-Mar 2004		Jan-Dec 2003		Jan-Mar 2003
Opening balance		60,481		73,607		73,607
Effect of changed accounting principle		-1,275		—		—
Opening balance in accordance with new accounting principle		59,206		73,607		73,607
Stock issue, net		—		158		—
Sale of own shares		3		8		1
Stock Purchase and Stock Option Plans		30		151		17
Repurchase of own stock		—		-158		—
Changes in cumulative translation effects due to changes in foreign currency exchange rates		1,139		-2,444		-320
Adjustment of cost for stock issue 2002		—		3		—
Net income		2,993		-10,844		-4,312
Closing balance		63,371		60,481		68,993

 

11

---

ERICSSON

CONSOLIDATED INCOME STATEMENT ISOLATED QUARTERS

 

		2004			2003
SEK million		Q1			Q1			Q2			Q3			Q4
Net sales		28,111			25,859			27,613			28,039			36,227
Cost of sales		-15,544			-18,862			-19,011			-19,084			-21,944
Gross margin		12,567			6,997			8,602			8,955			14,283
Research and development and other technical expenses		-4,792			-6,897			-6,084			-6,846			-7,309
Selling expenses		-2,232			-3,449			-4,085			-3,354			-4,227
Administrative expenses		-1,710			-1,804			-1,842			-3,423			-1,693
Operating expenses		-8,734			-12,150			-12,011			-13,623			-13,229
Other operating revenues and costs		164			-86			195			431			1,001
Share in earnings of JV and assoc. companies		517			-742			-365			247			256
Operating income		4,514			-5,981			-3,579			-3,990			2,311
Financial income		932			1,164			850			741			1,240
Financial expenses		-1,133			-1,218			-856			-1,064			-1,721
Income after financial items		4,313			-6,035			-3,585			-4,313			1,830
Taxes		-1,243			1,847			820			400			-1,607
Minority interest		-77			-124			37			-33			-81
Net income		2,993			-4,312			-2,728			-3,946			142
Other information
Average number of shares, basic (million)		15,749			15,820			15,822			15,823			15,825
Earnings per share, basic (SEK)		0.19			-0.27			-0.17			-0.25			0.01
Earnings per share, diluted (SEK)		0.19			-0.27			-0.17			-0.25			0.01
NOTE 1
Restructuring costs, net		—			-3,193			-3,799			-5,449			-4,022
Total		—			-3,193			-3,799			-5,449			-4,022
-of which in
Cost of sales		—			-1,813			-1,096			-1,111			-770
Operating expenses		—			-1,359			-2,296			-4,176			-3,145
Other operating revenues and costs		—			-21			-142			-162			-20
Share in earnings of JV and associated companies / Phones		—			—			-265			—			-87
NOTE 2
Key measurements, excluding restructuring costs
Net sales		28,111			25,859			27,613			28,039			36,227
Gross margin		12,567			8,810			9,698			10,066			15,053
- as percentage of net sales		44.7	%		34.1	%		35.1	%		35.9	%		41.6	%
Operating expenses		-8,734			-10,791			-9,715			-9,447			-10,084
- as percentage of net sales		31.1	%		41.7	%		35.2	%		33.7	%		27.8	%
Other operating revenues and costs		164			-65			337			593			1,021
Share in earnings of JV and assoc. companies		517			-742			-100			247			343
Operating income		4,514			-2,788			220			1,459			6,333
Operating margin (%)		16.1	%		-10.8	%		0.8	%		5.2	%		17.5	%
Income after financial items		4,313			-2,842			214			1,136			5,852

 

12

---

ACCOUNTING POLICIES AND REPORTING

 

ACCOUNTING POLICIES

 

Interim reports are prepared in accordance with RR20 “Interim Financial Reporting.”

 

CHANGED ACCOUNTING POLICIES AND REPORTING IN 2004

 

RR29 “Employee Benefits,” which is based on IAS 19 “Employee Benefits” issued by International Accounting Standards Committee (“IASC”), has been adopted as from January 1, 2004. When applying RR 29, defined benefit plans for pensions and other post-employment benefits are accounted for using consistent principles. Prior to 2004, such plans have been accounted for using local principles for each country in the consolidated accounts. The effect of this standard is mainly a change in timing of pension costs compared to previous principles, so that pension costs for future salary increases are estimated and recognized during the service period. In accordance with the transition rules, a transition liability was determined as of January 1, 2004. This transition liability exceeded the liability for pensions recognized per December 31, 2003 in accordance with earlier principles and the net effect of the change in accounting principles at adoption has in accordance with RR29 been charged to stockholders’ equity. The one-time effect of adopting RR29 was an increase of the pension liability as of January 1, 2004, by SEK 1.8 billion. The effect on equity, net after taxes, was SEK 1.3 billion. RR29 has not had material impact on reported Net Income or Earnings Per Share.

 

The company has chosen to follow the guidance of the draft interpretation URA43 “Accounting for particular social taxes and wealth tax” issued by The Swedish Accounting Standards Council.

 

REPORTING

 

LONG TERM INCENTIVE PLAN 2004

 

The Annual General Meeting decided to implement a Long Term Incentive Plan 2004 (LTI 2004) directed to 200 senior managers and 4,500 other key contributors. Participation in the LTI 2004 presupposes that the employees participate in the Stock Purchase Plan 2003 (SPP 2003) directed to all employees, i.e. save money for the purchase of shares in Ericsson.

 

In addition to the regular one matching share under the SPP 2003, participants in the LTI 2004 will be entitled to additional matching of shares free of consideration. 4,500 key contributors will be entitled to an additional match of one share for each one purchased. Further, 150 senior managers and 50 top senior managers may be entitled to an additional performance match of up to four shares or six shares respectively for each one purchased. The performance match is based on average annual percentage growth rate in earnings per share.

 

For more information regarding the Stock Purchase Plan 2003 see the 2003 Annual Report.

 

CHANGED DEFINITIONS COMPARED TO PREVIOUS ANNUAL REPORT

 

Items affecting comparability

 

During 2003 restructuring costs, non-operational capital gains/losses and capitalization of development expenses were reported as items affecting comparability. Due to the immateriality of the non-operational capital gains/losses for 2003 and the fact that the capitalization of development expenses are no longer, per se, affecting comparability, these items are no longer reported as items affecting comparability.

 

13

---

ORDERS BOOKED BY SEGMENT BY QUARTER

SEK million

 

		2003												2004 Q1
Isolated quarters		Q1			Q2			Q3			Q4
Systems		24,996			26,336			26,518			27,592			31,107
- Mobile Networks		17,475			20,020			21,508			20,455			24,944
- Fixed Networks		1,990			1,724			1,513			1,128			1,173
Total Network Equipment		19,465			21,744			23,021			21,583			26,117
- Of which Network Rollout		2,542			2,000			2,025			2,153			2,705
Professional Services		5,531			4,592			3,497			6,009			4,990
Other Operations		2,587			2,312			1,963			2,330			2,384
Less: Intersegment Orders		-523			-300			-353			-458			-477
Total		27,060			28,348			28,128			29,464			33,014
		2003												2004 Q1
Sequential change		Q1			Q2			Q3			Q4
Systems		-12	%		5	%		1	%		4	%		13	%
- Mobile Networks		-16	%		15	%		7	%		-5	%		22	%
- Fixed Networks		4	%		-13	%		-12	%		-25	%		4	%
Total Network Equipment		-15	%		12	%		6	%		-6	%		21	%
- Of which Network Rollout		-37	%		-21	%		1	%		6	%		26	%
Professional Services		-3	%		-17	%		-24	%		72	%		-17	%
Other Operations		1	%		-11	%		-15	%		19	%		2	%
Less: Intersegment Orders		30	%		-43	%		18	%		30	%		4	%
Total		-12	%		5	%		-1	%		5	%		12	%
		2003												2004 Q1
Year over year change		Q1			Q2			Q3			Q4
Systems		-34	%		-16	%		48	%		-3	%		24	%
- Mobile Networks		-40	%		-13	%		73	%		-2	%		43	%
- Fixed Networks		-26	%		-42	%		-14	%		-41	%		-41	%
Total Network Equipment		-39	%		-16	%		62	%		-5	%		34	%
- Of which Network Rollout		-46	%		-49	%		44	%		-46	%		6	%
Professional Services		-2	%		-14	%		-7	%		5	%		-10	%
Other Operations		-47	%		-52	%		-37	%		-9	%		-8	%
Less: Intersegment Orders		-25	%		-61	%		-31	%		14	%		-9	%
Total		-35	%		-20	%		37	%		-4	%		22	%
		2003												2004 0403
Year to Date		0303			0306			0309			0312
Systems		24,996			51,332			77,850			105,442			31,107
- Mobile Networks		17,475			37,495			59,003			79,458			24,944
- Fixed Networks		1,990			3,714			5,227			6,355			1,173
Total Network Equipment		19,465			41,209			64,230			85,813			26,117
- Of which Network Rollout		2,542			4,542			6,567			8,720			2,705
Professional Services		5,531			10,123			13,620			19,629			4,990
Other Operations		2,587			4,899			6,862			9,192			2,384
Less: Intersegment Orders		-523			-823			-1,176			-1,634			-477
Total		27,060			55,408			83,536			113,000			33,014
		2003												2004 0403
YTD year over year change		0303			0306			0309			0312
Systems		-34	%		-25	%		-10	%		-9	%		24	%
- Mobile Networks		-40	%		-28	%		-9	%		-7	%		43	%
- Fixed Networks		-26	%		-34	%		-29	%		-32	%		-41	%
Total Network Equipment		-39	%		-29	%		-11	%		-10	%		34	%
- Of which Network Rollout		-46	%		-47	%		-35	%		-38	%		6	%
Professional Services		-2	%		-8	%		-8	%		-4	%		-10	%
Other Operations		-47	%		-50	%		-46	%		-40	%		-8	%
Less: Intersegment Orders		-25	%		-44	%		-40	%		-31	%		-9	%
Total		-35	%		-28	%		-14	%		-12	%		22	%

 

14

---

NET SALES BY SEGMENT BY QUARTER

SEK million

 

		2003												2004 Q1
Isolated quarters		Q1			Q2			Q3			Q4
Systems		23,961			25,224			25,907			33,574			26,092
- Mobile Networks		17,643			18,949			19,826			25,635			21,081
- Fixed Networks		1,898			2,177			1,670			2,220			896
Total Network Equipment		19,541			21,126			21,496			27,855			21,977
- Of which Network Rollout		2,577			2,532			2,791			3,213			2,205
Professional Services		4,420			4,098			4,411			5,719			4,115
Other Operations		2,363			2,534			2,508			3,174			2,449
Less: Intersegment Sales		-465			-145			-376			-521			-430
Total		25,859			27,613			28,039			36,227			28,111
		2003												2004 Q1
Sequential change		Q1			Q2			Q3			Q4
Systems		-28	%		5	%		3	%		30	%		-22	%
- Mobile Networks		-28	%		7	%		5	%		29	%		-18	%
- Fixed Networks		-38	%		15	%		-23	%		33	%		-60	%
Total Network Equipment		-29	%		8	%		2	%		30	%		-21	%
- Of which Network Rollout		-33	%		-2	%		10	%		15	%		-31	%
Professional Services		-20	%		-7	%		8	%		30	%		-28	%
Other Operations		-39	%		7	%		-1	%		27	%		-23	%
Less: Intersegment Sales		22	%		-69	%		159	%		39	%		-17	%
Total		-30	%		7	%		2	%		29	%		-22	%
		2003												2004 Q1
Year over year change		Q1			Q2			Q3			Q4
Systems		-28	%		-27	%		-15	%		1	%		9	%
- Mobile Networks		-31	%		-30	%		-17	%		4	%		19	%
- Fixed Networks		-42	%		-27	%		-30	%		-27	%		-53	%
Total Network Equipment		-32	%		-29	%		-18	%		1	%		12	%
- Of which Network Rollout		-38	%		-34	%		-5	%		-16	%		-14	%
Professional Services		-1	%		-15	%		2	%		3	%		-7	%
Other Operations		-45	%		-44	%		-27	%		-18	%		4	%
Less: Intersegment Sales		-32	%		-82	%		-29	%		37	%		-8	%
Total		-30	%		-28	%		-16	%		-1	%		9	%
		2003												2004 0403
Year to Date		0303			0306			0309			0312
Systems		23,961			49,185			75,092			108,666			26,092
- Mobile Networks		17,643			36,592			56,418			82,053			21,081
- Fixed Networks		1,898			4,075			5,745			7,965			896
Total Network Equipment		19,541			40,667			62,163			90,018			21,977
- Of which Network Rollout		2,577			5,109			7,900			11,113			2,205
Professional Services		4,420			8,518			12,929			18,648			4,115
Other Operations		2,363			4,897			7,405			10,579			2,449
Less: Intersegment Sales		-465			-610			-986			-1,507			-430
Total		25,859			53,472			81,511			117,738			28,111
		2003												2004 0403
YTD year over year change		0303			0306			0309			0312
Systems		-28	%		-28	%		-24	%		-18	%		9	%
- Mobile Networks		-31	%		-30	%		-26	%		-19	%		19	%
- Fixed Networks		-42	%		-35	%		-34	%		-32	%		-53	%
Total Network Equipment		-32	%		-31	%		-27	%		-20	%		12	%
- Of which Network Rollout		-38	%		-36	%		-28	%		-25	%		-14	%
Professional Services		-1	%		-9	%		-5	%		-3	%		-7	%
Other Operations		-45	%		-45	%		-40	%		-35	%		4	%
Less: Intersegment Sales		-32	%		-59	%		-51	%		-37	%		-8	%
Total		-30	%		-29	%		-25	%		-19	%		9	%

 

15

---

OPERATING INCOME, OPERATING MARGIN AND EMPLOYEES BY SEGMENT BY QUARTER

SEK million

 

OPERATING INCOME AND MARGIN

 

		2003 1)												2004 0403
Year to date		0303			0306			0309			0312
Systems		-1,487			-503			863			6,646			4,199
Phones		-500			-683			-483			-183			435
Other Operations		-483			-833			-710			-447			45
Unallocated 2)		-318			-549			-779			-792			-165
Total		-2,788			-2,568			-1,109			5,224			4,514
		2003 1)												2004 0403
As percentage of net sales		0303			0306			0309			0312
Systems		-6	%		-1	%		1	%		6	%		16	%
Phones 3)		—			—			—			—			—
Other Operations		-20	%		-17	%		-10	%		-4	%		2	%
Total		-11	%		-5	%		-1	%		4	%		16	%
		2003 1)												2004 Q1
Isolated quarters		Q1			Q2			Q3			Q4
Systems		-1,487			984			1,366			5,783			4,199
Phones		-500			-183			200			300			435
Other Operations		-483			-350			123			263			45
Unallocated 2)		-318			-231			-230			-13			-165
Total		-2,788			220			1,459			6,333			4,514
		2003 1)												2004 Q1
As percentage of net sales		Q1			Q2			Q3			Q4
Systems		-6	%		4	%		5	%		17	%		16	%
Phones 3)		—			—			—			—			—
Other Operations		-20	%		-14	%		5	%		8	%		2	%
Total		-11	%		1	%		5	%		17	%		16	%
1)       2003 figures are reported excluding restructuring costs.
2)       “Unallocated” consists mainly of costs for corporate staffs and non-operational gains and losses
3)       Calculation not applicable
NUMBER OF EMPLOYEES
		2003												2004 0403
		0303			0306			0309			0312
Systems		53,532			50,510			46,669			45,176			45,209
Other Operations		7,047			6,786			6,409			6,110			5,440
Unallocated		361			348			323			297			—
Total		60,940			57,644			53,401			51,583			50,649
Change in percent		0303			0306			0309			0312			0403
Systems		-25	%		-23	%		-25	%		-20	%		-16	%
Other Operations		-34	%		-31	%		-27	%		-20	%		-23	%
Unallocated		-9	%		-22	%		-20	%		-23	%		—
Total		-26	%		-24	%		-26	%		-20	%		-17	%

 

16

---

ORDERS BOOKED BY MARKET AREA BY QUARTER

SEK million

 

		2003												2004 Q1
Isolated quarters		Q1			Q2			Q3			Q4
Europe, Middle East & Africa*		14,081			14,425			14,140			11,521			17,836
North America		4,693			4,622			4,380			6,542			4,679
Latin America		2,621			1,669			2,245			2,547			3,700
Asia Pacific		5,665			7,632			7,363			8,854			6,799
Total		27,060			28,348			28,128			29,464			33,014
* Of which Sweden		1,406			1,190			967			854			964
* Of which EU		8,805			6,643			8,054			6,726			9,382
		2003												2004 Q1
Sequential change		Q1			Q2			Q3			Q4
Europe, Middle East & Africa*		-25	%		2	%		-2	%		-19	%		55	%
North America		-16	%		-2	%		-5	%		49	%		-28	%
Latin America		—			-36	%		35	%		13	%		45	%
Asia Pacific		-12	%		35	%		-4	%		20	%		-23	%
Total		-12	%		5	%		-1	%		5	%		12	%
* Of which Sweden		6	%		-15	%		-19	%		-12	%		13	%
* Of which EU		0	%		-25	%		21	%		-16	%		39	%
		2003												2004 Q1
Year over year change		Q1			Q2			Q3			Q4
Europe, Middle East & Africa*		-28	%		-18	%		48	%		-38	%		27	%
North America		-33	%		-21	%		-2	%		18	%		0	%
Latin America		-46	%		-50	%		58	%		—			41	%
Asia Pacific		-46	%		-9	%		45	%		38	%		20	%
Total		-35	%		-20	%		37	%		-4	%		22	%
* Of which Sweden		-42	%		-53	%		-28	%		-36	%		-31	%
* Of which EU		-1	%		-47	%		110	%		-24	%		7	%
		2003												2004 0403
Year to date		0303			0306			0309			0312
Europe, Middle East & Africa*		14,081			28,506			42,646			54,167			17,836
North America		4,693			9,315			13,695			20,237			4,679
Latin America		2,621			4,290			6,535			9,082			3,700
Asia Pacific		5,665			13,297			20,660			29,514			6,799
Total		27,060			55,408			83,536			113,000			33,014
* Of which Sweden		1,406			2,596			3,563			4,417			964
* Of which EU		8,805			15,448			23,502			30,228			9,382
		2003												2004 0403
YTD year over year change		0303			0306			0309			0312
Europe, Middle East & Africa*		-28	%		-23	%		-9	%		-17	%		27	%
North America		-33	%		-27	%		-21	%		-12	%		0	%
Latin America		-46	%		-48	%		-32	%		-5	%		41	%
Asia Pacific		-46	%		-30	%		-14	%		-3	%		20	%
Total		-35	%		-28	%		-14	%		-12	%		22	%
* Of which Sweden		-42	%		-47	%		-43	%		-42	%		-31	%
* Of which EU		-1	%		-28	%		-7	%		-11	%		7	%

 

17

---

NET SALES BY MARKET AREA BY QUARTER

SEK million

 

		2003												2004 Q1
Isolated quarters		Q1			Q2			Q3			Q4
Europe, Middle East & Africa*		13,983			15,083			14,144			19,633			14,986
North America		3,940			4,217			4,271			5,199			4,404
Latin America		1,764			2,197			2,663			3,301			2,867
Asia Pacific		6,172			6,116			6,961			8,094			5,854
Total		25,859			27,613			28,039			36,227			28,111
* Of which Sweden		1,403			1,437			1,371			1,657			1,341
* Of which EU		7,885			8,070			7,950			11,330			7,616
		2003												2004 Q1
Sequential change		Q1			Q2			Q3			Q4
Europe, Middle East & Africa*		-32	%		8	%		-6	%		39	%		-24	%
North America		-40	%		7	%		1	%		22	%		-15	%
Latin America		-26	%		25	%		21	%		24	%		-13	%
Asia Pacific		-13	%		-1	%		14	%		16	%		-28	%
Total		-30	%		7	%		2	%		29	%		-22	%
* Of which Sweden		-32	%		2	%		-5	%		21	%		-19	%
* Of which EU		-36	%		2	%		-1	%		43	%		-33	%
		2003												2004 Q1
Year over year change		Q1			Q2			Q3			Q4
Europe, Middle East & Africa*		-21	%		-21	%		-16	%		-5	%		7	%
North America		-3	%		-30	%		-33	%		-21	%		12	%
Latin America		-59	%		-29	%		-7	%		38	%		63	%
Asia Pacific		-44	%		-41	%		-7	%		14	%		-5	%
Total		-30	%		-28	%		-16	%		-1	%		9	%
* Of which Sweden		-29	%		-44	%		-18	%		-20	%		-4	%
* Of which EU		-27	%		-27	%		-14	%		-8	%		-3	%
		2003												2004 0403
Year to date		0303			0306			0309			0312
Europe, Middle East & Africa*		13,983			29,066			43,210			62,843			14,986
North America		3,940			8,157			12,428			17,627			4,404
Latin America		1,764			3,961			6,624			9,925			2,867
Asia Pacific		6,172			12,288			19,249			27,343			5,854
Total		25,859			53,472			81,511			117,738			28,111
* Of which Sweden		1,403			2,840			4,211			5,868			1,341
* Of which EU		7,885			15,955			23,905			35,235			7,616
		2003												2004 0403
YTD year over year change		0303			0306			0309			0312
Europe, Middle East & Africa*		-21	%		-21	%		-19	%		-15	%		7	%
North America		-3	%		-20	%		-25	%		-24	%		12	%
Latin America		-59	%		-47	%		-36	%		-22	%		63	%
Asia Pacific		-44	%		-42	%		-33	%		-24	%		-5	%
Total		-30	%		-29	%		-25	%		-19	%		9	%
* Of which Sweden		-29	%		-38	%		-32	%		-29	%		-4	%
* Of which EU		-27	%		-27	%		-23	%		-19	%		-3	%

 

18

---

EXTERNAL ORDERS BOOKED BY MARKET AREA BY SEGMENT

SEK million

 

Year to date first quarter 2004		Systems			Share of Systems			Other			Share of Other			Total			Share of Total
Europe, Middle East & Africa		16,272			53	%		1,564			73	%		17,836			54	%
North America		4,571			15	%		108			5	%		4,679			14	%
Latin America		3,640			12	%		60			3	%		3,700			11	%
Asia Pacific		6,384			20	%		415			19	%		6,799			21	%
Total		30,867			100	%		2,147			100	%		33,014			100	%
Share of Total		93	%					7	%					100	%
Year to date first quarter 2003		Systems			Share of Systems			Other			Share of Other			Total			Share of Total
Europe, Middle East & Africa		12,206			50	%		1,875			80	%		14,081			52	%
North America		4,554			18	%		139			6	%		4,693			17	%
Latin America		2,541			10	%		80			3	%		2,621			10	%
Asia Pacific		5,400			22	%		265			11	%		5,665			21	%
Total		24,701			100	%		2,359			100	%		27,060			100	%
Share of Total		91	%					9	%					100	%
Change		Systems						Other						Total
Europe, Middle East & Africa		33	%					-17	%					27	%
North America		0	%					-22	%					0	%
Latin America		43	%					-25	%					41	%
Asia Pacific		18	%					57	%					20	%
Total		25	%					-9	%					22	%
EXTERNAL NET SALES BY MARKET AREA BY SEGMENT SEK million
Year to date first quarter 2004		Systems			Share of Systems			Other			Share of Other			Total			Share of Total
Europe, Middle East & Africa		13,364			52	%		1,622			72	%		14,986			53	%
North America		4,251			16	%		153			7	%		4,404			16	%
Latin America		2,735			11	%		132			6	%		2,867			10	%
Asia Pacific		5,515			21	%		339			15	%		5,854			21	%
Total		25,865			100	%		2,246			100	%		28,111			100	%
Share of Total		92	%					8	%					100	%
Jan - Mar 2003		Systems			Share of Systems			Other			Share of Other			Total			Share of Total
Europe, Middle East & Africa		12,338			52	%		1,645			77	%		13,983			54	%
North America		3,838			16	%		102			5	%		3,940			15	%
Latin America		1,697			7	%		67			3	%		1,764			7	%
Asia Pacific		5,840			25	%		332			15	%		6,172			24	%
Total		23,713			100	%		2,146			100	%		25,859			100	%
Share of Total		92	%					8	%					100	%
Change		Systems						Other						Total
Europe, Middle East & Africa		8	%					-1	%					7	%
North America		11	%					50	%					12	%
Latin America		61	%					97	%					63	%
Asia Pacific		-6	%					2	%					-5	%
Total		9	%					5	%					9	%

 

19

---

TOP 10 MARKETS IN ORDERS AND SALES

Year to date first quarter 2004

 

Orders		Share of total orders			Sales		Share of total sales
United States		12	%		United States		14	%
China		7	%		China		9	%
Spain		6	%		Italy		5	%
India		5	%		Sweden		5	%
Italy		5	%		Spain		4	%
Nigeria		4	%		Nigeria		4	%
Brazil		4	%		Russian Federation		3	%
Mexico		4	%		Brazil		3	%
United Kingdom		3	%		United Kingdom		3	%
Switzerland		3	%		Mexico		3	%

 

CUSTOMER FINANCING RISK EXPOSURE

 

(SEK billion)		Dec 31 2002		Mar 31 2003		Jun 30 2003		Sep 30 2003		Dec 31 2003		Mar 31 2004
On-balance-sheet credits		21.1		21.1		15.6		10.4		10.6		10.3
Off-balance-sheet credits		1.5		1.6		1.8		1.8		2.0		1.2
Total credits		22.6		22.7		17.4		12.2		12.6		11.5
Less third party risk coverage		-0.8		-2.6		-5.6		-0.4		-0.3		-0.3
Ericsson risk exposure		21.8		20.1		11.8		11.8		12.3		11.2
On-balance-sheet credits, net book value		14.0		13.6		10.0		4.3		4.0		3.9
Off-balance-sheet credits recorded as contingent liabilities		1.3		1.3		1.6		1.5		1.7		1
Financing commitments		14.0		12.5		11.0		6.7		6.1		3.7

 

TREND OF NET SALES AND OPERATING EXPENSES ISOLATED QUARTERS

 

		2003												2004 Q1
SEK million		Q1			Q2			Q3			Q4
Net sales		25,859			27,613			28,039			36,227			28,111
R&D and other technical expenses		-6,444			-5,855			-4,772			-6,121			-4,718
Selling expenses		-3,153			-2,667			-3,092			-3,053			-2,232
Administrative expenses		-1,808			-1,605			-1,765			-1,286			-1,710
Capitalization of development expenses, net		614			412			182			376			-74
Operating expenses		-10,791			-9,715			-9,447			-10,084			-8,734
Operating expenses as percentage of net sales		41.7	%		35.2	%		33.7	%		27.8	%		31.1	%
Restructuring costs		-1,359			-2,296			-4,176			-3,145			—
Operating expenses incl. restructuring costs		-12,150			-12,011			-13,623			-13,229			-8,734
Items as % of net sales
R&D and other technical expenses		24.9	%		21.2	%		17.0	%		16.9	%		16.8	%
Selling expenses		12.2	%		9.7	%		11.0	%		8.4	%		7.9	%
G&A expenses		7.0	%		5.8	%		6.3	%		3.5	%		6.1	%
Operating expenses, excluding capitalization of development		-11,405			-10,127			-9,629			-10,460			-8,660
- as percentage of net sales		44.1	%		36.7	%		34.3	%		28.9	%		30.8	%
Opex run rate, annualized (SEK b.)		47			42			38			37			35

 

20

---

ERICSSON

OTHER INFORMATION

 

SEK million		Jan - Mar 2004			Jan - Dec 2003			Jan - Mar 2003
Number of shares and earnings per share
Number of shares, end of period (million)		16,132			16,132			15,974
Number of treasury shares, end of period (million)		304			306			153
Number of shares outstanding, basic, end of period (million)		15,828			15,826			15,821
Average number of shares, basic (million)		15,749			15,823			15,820
Average number of tresury shares (million)		306			270			153
Average number of shares, diluted (million) 1)		15,780			15,841			15,934
Earnings per share, basic (SEK)		0.19			-0.69			-0.27
Earnings per share, diluted (SEK)1)		0.19			-0.69			-0.27
Ratios
Equity ratio, percent		35.0	%		34.4	%		34.9	%
Capital turnover (times)		1.0			1.0			0.8
Accounts receivable turnover (times)		3.5			3.4			2.9
Inventory turnover (times)		4.9			6.1			4.9
Return on equity, percent		19.3	%		-16.2	%		-24.2	%
Return on capital employed, percent		19.6	%		-5.9	%		-14.2	%
Days Sales Outstanding		102			79			109
Payment readiness, end of period		78,426			75,309			66,452
Payment readiness, as percentage of sales		69.7	%		64.0	%		64.2	%
Exchange rates used in the consolidation
SEK / EUR - average rate		9.19			9.14			9.20
- closing rate		9.26			9.07			9.26
SEK / USD - average rate		7.41			8.08			8.59
- closing rate		7.58			7.26			8.50
Other
Additions to tangible fixed assets		413			3,4932	)		414
- Of which in Sweden		164			1,0692	)		139
Additions to capitalized development expenses		235			2,358			737
Depreciation of tangible and other intangible assets		704			5,079			1,263
Goodwill amortization		100			1,941			222
Amortization of development expenses		309			775			123
Total depreciation and amortization of tangible / intangible assets		1,113			7,795			1,608
Orders booked		33,014			113,000			27,060
Export sales from Sweden		21,399			72,966			17,214

 

1)

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

 

2)

Due to reassessments of the nature of leases, according to the present interpretation of Swedish GAAP/IFRS, financial leases of SEK 1.7 b. have been reflected in the balance sheet as tangible assets and long-term liabilities.

 

21

---

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.

 

 

 

Date: April 23, 2004