Telefonaktiebolaget LM Ericsson (ERIC) 6-K Current report (foreign)

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

July 19, 2013

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

Torshamnsgatan 23, Kista

SE-164 83, 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

THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM F-3 (NO. 333-180880) OF TELEFONAKTIEBOLAGET LM ERICSSON (PUBL.) AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

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/ NINA MACPHERSON
	Nina Macpherson
	Senior Vice President and
	General Counsel
By:	/s/ HELENA NORRMAN
	Helena Norrman
	Senior Vice President
	Corporate Communications

Date: July 19, 2013

ERICSSON

second QUARTER

REPORT 2013

This report on Form 6-K shall be deemed to be incorporated by reference in the registration statement on Form F-3 (No.333-180880) of Telefonaktiebolaget LM Ericsson (publ.) and to be part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished

Ericsson second quarter report 2013, adjusted for registration statement on form F-3 (No.333-180880)

JULY 18, 2013

SECOND QUARTER HIGHLIGHTS

• Sales were flat YoY at SEK 55.3 b.

• Operating income incl. JV was SEK 2.5 (2.1) b. with an operating margin of 4.5% (3.8%).

• The quarter was negatively impacted by one-time items of SEK -0.9 b. from losses due to divestments and exiting the telecom and power cable operations.

• Net income was SEK 1.5 (1.2) b.

• EPS diluted was SEK 0.45 (0.34). Cash flow from operating activities was SEK 4.3 b.

CONTENTS

3	Financial highlights
5	Segment results
9	Regional sales overview
11	Parent Company information
12	Other information
14	Assessment of risk environment
15	Editor’s note
16	Safe harbor statement
17	Financial statements and additional information

SEK b.	Q2 2013			Q2 2012			YoY Change			Q1 2013			QoQ Change			6 months 2013			6 months 2012
Net sales		55.3			55.3			0	%		52.0			6	%		107.4			106.3
Of which Networks		28.1			27.8			1	%		28.1			0	%		56.3			55.1
Of which Global Services		24.9			24.1			3	%		21.5			16	%		46.3			44.7
Of which Support Solutions		2.3			3.5			-33	%		2.4			-4	%		4.8			6.5
Gross margin		32.4	%		32.0	%		—			32.0	%		—			32.2	%		32.6	%
Operating income excl JV		2.5			3.3			-24	%		2.1			17	%		4.6			13.8
Operating margin excl JV		4.5	%		5.9	%		—			4.1	%		—			4.3	%		13.0	%
Of which Networks		5	%		5	%		—			6	%		—			5	%		5	%
Of which Global Services		6	%		6	%		—			3	%		—			5	%		6	%
Of which Support Solutions		-12	%		12	%		—			-1	%		—			-7	%		6	%
Operating income incl JV		2.5			2.1			19	%		2.1			17	%		4.6			11.2
Operating margin incl JV		4.5	%		3.8	%		—			4.0	%		—			4.3	%		10.5	%
Net income		1.5			1.2			26	%		1.2			26	%		2.7			10.0
EPS diluted, SEK		0.45			0.34			32	%		0.37			22	%		0.82			3.10
Cash flow from operating activities		4.3			-1.4			—			-3.0			—			1.3			-0.6
*Net cash, end of period		27.4			25.9			6	%		32.2			-15	%		27.4			25.9

* Reconciliations of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 31

Ericsson Second Quarter Report 2013 1

Comments from Hans Vestberg, President and CEO

Reported sales were flat YoY, due to continued currency headwind,” said Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC).

“There was continued high project activity in Europe as well as in North America where two large mobile broadband coverage projects have peaked in first half 2013. North East Asia had another challenging quarter following continued structural decline in GSM investments in China, FX in Japan and lower business activity in South Korea due to spectrum delays.

The business mix, with a higher share of coverage projects than capacity projects, started to shift slightly towards more capacity during the quarter.

We implemented our strategy to capture new market share in the network modernization projects in Europe starting in 2010, despite their initial lower margins. Now that these projects gradually come to an end, we can conclude that we have been successful in gaining market share and regained leadership in Europe. It is also encouraging to see that we are now starting to engage in new business, based on this footprint, regarding capacity and LTE projects in Europe.

We continue to strengthen our leading position in 4G/LTE. The vendor selection processes for 4G/LTE in Russia and China continue and to date we have been awarded contracts by two large operators in Russia.

During the quarter we also reached one billion subscribers in networks managed by Ericsson. This clearly shows the confidence our customers have in our ability to create value for them.

Profitability improved YoY, adjusted for one-time effects related to exiting the telecom and power cable operations and the divestment of Applied Communication Sciences (ACS). The improvement was driven by higher gross margins and lower operating expenses. This was partly offset by currency headwind.

With the announcement in April and July of the intended acquisitions of Microsoft’s Mediaroom and Red Bee Media, we continue to strengthen our position in TV and media. As TV and media converge with telecom we can leverage our strength in media management and managed services. Video is already the single largest contributor to traffic in mobile networks and is expected to grow by 60% annually until 2018.

While the macroeconomic situation in Europe remains challenging and the political uncertainty in parts of Region Middle East, such as Egypt, increases, the long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market,” concludes Vestberg.

Ericsson Second Quarter Report 2013 2

Financial highlights – second quarter

INCOME STATEMENT

Networks sales increased 1% YoY, with strong growth in North America and Latin America as well as Western and Central Europe, while sales continued to decline in North East Asia. Networks sales were flat QoQ, with strong sales in Latin America. CDMA sales continued to decline rapidly both YoY and QoQ.

Global Services grew 3% YoY, driven by continued high activity in Network Rollout. Professional Services sales declined -1% YoY, negatively impacted by FX effects. Sequentially, Global Services grew by 16% and Professional Services grew by 15%. Services-related sales in North America were strong in the quarter.

Support Solutions sales declined -33% YoY and -4% QoQ. The YoY decline is mainly due to the divestment of Multimedia Brokering (IPX) in Q312 and continued decline in Media Management sales following the strong first half 2012 sales in IPTV and compression.

Restructuring charges for Ericsson amounted to SEK 0.9
(0.6) b.

Gross margin increased YoY to 32.4% (32.0%), and from 32.0% Q113, despite higher services share QoQ from 41% to 45%. The margin increase was primarily driven by improved hardware and services margins.

The business mix, with a higher share of coverage projects than capacity projects, started to shift slightly towards more capacity during the quarter.

Total operating expenses decreased YoY by SEK 0.6 b. to SEK 14.4 (15.0) b. due to earlier implemented efficiency measures. R&D expenses amounted to SEK 7.7 (8.1) b. Selling and general administrative expenses (SG&A) amounted to SEK 6.6 (6.9) b.

Ericsson Second Quarter Report 2013 3

Other operating income and expenses amounted to SEK -1.0 (0.5) b. due to costs for exiting the telecom and power cable operations of SEK -0.6 b., a loss related to the divestment of ACS¹⁾ of SEK -0.3 b. and a revaluation effect for new hedges taken in 2013 of SEK -0.2 b. For these new hedges we do not apply hedge accounting (see Accounting Policies). Ericsson’s share in ST-Ericsson’s income before tax was SEK 0.0
(-1.3) b.

Operating income, including JV, increased to SEK 2.5 (2.1) b. In Q412, Ericsson made a provision of SEK 3.3 b. which provides for Ericsson’s share of obligations for the wind-down of ST-Ericsson. As of December 31, 2012 there are no remaining investments related to ST-Ericsson on Ericsson’s balance sheet and therefore no result from ST-Ericsson is included in Ericsson’s result.

Operating income was positively impacted by reduced operating expenses and improved gross margin, partly offset by one-time effects of SEK -0.9 b. from losses due to divestments and exiting the telecom and power cable operations and FX.

Operating margin, including JV, was 4.5% (3.8%). Financial net amounted to SEK -0.3 (-0.3) b. and improved QoQ from SEK -0.4 b. Tax costs were SEK -0.6 (-0.6) b.

Net income increased to SEK 1.5 (1.2) b.

EPS diluted was SEK 0.45 (0.34).

¹⁾ ACS, formerly the research and engineering of Telcordia Technologies, was established in 2012 following Ericsson’s acquisition of Telcordia and was never operationally integrated into Ericsson.

BALANCE SHEET AND OTHER PERFORMANCE INDICATORS – SECOND QUARTER

Trade receivables decreased QoQ to SEK 63.1 (65.1) b. Inventory decreased slightly QoQ to SEK 29.7 (29.8) b. Trade payables increased QoQ to 20.8 (19.9) b. following the high business activity.

During the quarter we have signed a new USD 2 b. multi-currency revolving credit facility and refinanced a credit facility signed in 2007. The new facility has a tenure of five years, with two extension options of one year each, and the facility serves for general corporate purposes. During the quarter we also repaid SEK 2.9 b. of maturing debt.

Cash, cash equivalents and short-term investments amounted to SEK 64.8 (72.1) b. The *net cash position decreased QoQ by SEK -4.8 b. to SEK 27.4 (32.2) b., due to shareholder dividend payments of SEK -8.9 b. offset by positive operating cash flow.

During the quarter, approximately SEK 2.4 b. of provisions were utilized, of which SEK 1.0 b. were related to restructuring. Additions of SEK 1.2 b. were made, of which SEK 0.3 b. related to restructuring. Reversals of SEK 0.6 b. were made. Cash outlays of SEK 2.3 b. remain to be made from the restructuring provision.

Cash flow from operating activities was SEK 4.3 b. driven by reduced working capital. *Cash conversion year-to-date is 26%.

The total number of employees increased QoQ to 111,805 (109,648) primarily due to new managed services contracts and closing of acquisitions.

* Reconciliations of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 31

Ericsson Second Quarter Report 2013 4

Segment results

NETWORKS

SEK b.	Q2 2013			Q2 2012			YoY Change			Q1 2013			QoQ Change			6 months 2013			6 months 2012
Network sales		28.1			27.8			1	%		28.1			0	%		56.3			55.1
Operating income		1.3			1.3			6	%		1.6			-15	%		2.9			2.9
Operating margin		5	%		5	%		—			6	%		—			5	%		5	%

Sales was driven by mobile broadband deployments with LTE and HSPA, mainly in North America and Latin America. The strong sales in HSPA and LTE radio networks is a result of operators’ focus on enhancing data user experience and smart phone efficiency. Networks sales were flat QoQ.

The structural decline in GSM sales in China and in CDMA sales in North America continued as anticipated. CDMA sales declined by -54% YoY and -31% QoQ to SEK 0.9 b. In South Korea we saw lower business activity due to delays in releasing additional LTE spectrum. Sales related to circuit-switched core continued to decline.

During the quarter we reached an important milestone in our IP strategy by launching the third application on our multi-application router for both fixed and mobile networks. With the latest Smart Services Router (SSR 8000) application, Broadband Network Gateway (BNG) for fixed networks, we now address the converged IP Edge market with one router platform. Out of 15 new SSR contracts signed in the quarter,

four were BNG. In the quarter, we secured several break-in contracts for Evolved Packet Core (EPC), demonstrating our leading position in LTE and Packet Core.

Service providers increasingly focus on indoor and outdoor network performance as the key differentiator and a prime driver for customer retention. This drives the interest for Ericsson’s solutions around heterogeneous networks. The approach of building coordinated macro and small cells networks is gaining momentum as the preferred solution to offer superior mobile broadband user experience.

Excluding one-time items of SEK 0.6 (0.0) b. related to exiting the telecom and power cable operations, operating income improved due to declining negative impact from the network modernization projects in Europe as well as continued operational efficiency gains.

Restructuring charges amounted to SEK 0.3 (0.2) b. in the quarter.

Ericsson Second Quarter Report 2013 5

GLOBAL SERVICES

SEK b.	Q2 2013			Q2 2012			YoY Change			Q1 2013			QoQ Change			6 months 2013			6 months 2012
Global Services sales		24.9			24.1			3	%		21.5			16	%		46.3			44.7
Of which Professional Services		16.8			16.9			-1	%		14.6			15	%		31.4			31.8
Of which Managed Services		6.8			6.5			4	%		5.9			15	%		12.6			12.2
Of which Network Rollout		8.1			7.1			13	%		6.8			18	%		14.9			12.9
Operating income		1.6			1.4			15	%		0.7			115	%		2.3			2.6
Of which Professional Services		2.3			2.1			7	%		1.8			24	%		4.1			4.0
Of which Network Rollout		-0.7			-0.8			7	%		-1.1			35	%		-1.8			-1.4
Operating margin		6	%		6	%		—			3	%		—			5	%		6	%
Of which Professional Services		14	%		13	%		—			13	%		—			13	%		13	%
Of which Network Rollout		-9	%		-11	%		—			-16	%		—			-12	%		-11	%

Sales was driven by Network Rollout and Managed Services primarily due to high activities in North America. Professional Services sales decreased -1% YoY negatively impacted by FX. Global Services sales growth QoQ was 16%. We continue to see good momentum for Professional Services and QoQ sales grew 15%.

Operating margin for Global Services was flat YoY with Professional Services margin improving from 13% to 14% due to continued efficiency gains.

Global Services operating margin improved QoQ with reduced losses in Network Rollout. This was partly an effect

of gradually decreasing negative effects from the network modernization projects in Europe.

Professional Services margin improved QoQ driven by higher sales, offset by the divestment of ACS, which resulted in a loss of SEK -0.3 b., equally divided between Professional Services and Support Solutions.

Restructuring charges amounted to SEK 0.6 (0.4) b. in the quarter.

Other information	Q2 2013		Q1 2013		Full year 2012
No. of signed Managed Services contracts		19		21		52
Of which expansions/extensions		5		8		19
No. of signed significant consulting & systems integration contracts1)		8		8		24
Number of subscribers in networks managed by Ericsson, end of period2)		1 b.		~ 950 m.		~ 950 m.
Of which in network operations contracts		600 m.		550 m.		550 m.
Number of Ericsson services professionals, end of period		64,000		61,000		60,000

¹⁾  In the areas of OSS and BSS, IP, Service Delivery Platforms and data center build projects.

²⁾  The figure includes network operations contracts and field operation contracts.

Ericsson Second Quarter Report 2013 6

SUPPORT SOLUTIONS

SEK b.	Q2 2013			Q2 2012			YoY Change			Q1 2013			QoQ Change			6 months 2013			6 months 2012
Support Solutions sales		2.3			3.5			-33	%		2.4			-4	%		4.8			6.5
Operating income		-0.3			0.4			—			0.0			—			-0.3			0.4
Operating margin		-12	%		12	%		—			-1	%		—			-7	%		6	%

The sales decline was driven by lower Media Management sales following the strong first half 2012 sales in IPTV and compression as well as a temporary decline in BSS sales in Latin America and Middle East. This was partly offset by growth in OSS.

Demand for OSS and BSS continues to be strong driven by operators’ focus on improving efficiency and adapting to mobile broadband business requirements. Sales cycles in these areas are typically long and volumes vary between quarters.

We have maintained our market position and during the quarter leading industry analyst firm Gartner ranked Ericsson first worldwide for OSS, BSS and next generation service delivery solutions and services.

We continue to invest in our support solution strategy targeting OSS and BSS, TV and Media and M-commerce. During the quarter we announced the intention to acquire Microsoft’s TV solution business Mediaroom, further strengthening our position in the growing media management market.

Operating margin was negatively impacted by lower sales volumes and the divestment of ACS, which resulted in a loss of SEK -0.3 b., equally divided between Global Services and Support Solutions.

The number of subscriptions served by Ericsson’s charging and billing solutions was 2 billion at end of the period.

Ericsson Second Quarter Report 2013 7

ST-ERICSSON

As announced on March 18, 2013, ST-Ericsson will be split between the parents. Ericsson will take on the design, development and sales of the LTE multimode thin modem business products, including 2G, 3G and 4G multimode. STMicroelectronics will take on the existing ST-Ericsson products, other than the LTE multimode thin modems and related business, as well as certain assembly and test facilities. The remaining parts of ST-Ericsson will be closed down. Both parents are assuming equal funding of the wind-down related activities. The formal transfer of the relevant parts of ST-Ericsson to the parent companies is expected to be completed during the third quarter of 2013, subject to regulatory approvals.

Ericsson’s share in ST-Ericsson’s income before tax was SEK 0.0 (-1.3) b. As of December 31, 2012 there are no remaining investments related to ST-Ericsson on Ericsson’s balance sheet and therefore no result from ST-Ericsson is included in Ericsson’s result.

In Q412, Ericsson made a provision of SEK 3.3 b., which provides for Ericsson’s share of obligations for the wind-down of ST-Ericsson and resulted in a net exposure of SEK 1.6 b. at the end of the quarter.

We are progressing as planned toward a Q313 transaction close to separate the thin modem business from ST-Ericsson and integrate into Ericsson. Our focus is on continued execution during the transition period and to continue the engagement with customer development teams.

Once the multimode thin modem business has been fully integrated into Ericsson in Q413 the operation will continue to be reported as a segment. Our current best estimate is that it will generate operating losses of approximately SEK -0.5 b. in Q413, primarily related to R&D expenses.

Ericsson Second Quarter Report 2013 8

Regional sales overview

REGIONAL SALES

	Second quarter 2013								Growth
SEK b.	Networks		Global Services		Support Solutions		Total		YoY			QoQ
North America		7.4		7.4		0.5		15.3		18	%		-3	%
Latin America		3.0		2.3		0.3		5.6		6	%		27	%
Northern Europe and Central Asia		1.6		1.0		0.1		2.7		-19	%		19	%
Western and Central Europe		2.0		2.4		0.1		4.5		10	%		4	%
Mediterranean		2.9		3.1		0.2		6.2		-1	%		17	%
Middle East		1.8		2.0		0.2		4.0		7	%		26	%
Sub-Saharan Africa		1.2		1.1		0.3		2.7		-5	%		24	%
India		0.5		0.7		0.1		1.3		-25	%		-20	%
North East Asia		3.8		2.8		0.1		6.6		-21	%		10	%
South East Asia and Oceania		2.0		1.6		0.1		3.8		2	%		-9	%
Other1)		1.9		0.3		0.5		2.7		-13	%		-6	%
Total		28.1		24.9		2.3		55.3		0	%		6	%

¹⁾  Region “Other” includes licensing revenues, sales of cables, broadcast services, power modules and other businesses.

In the regional dimension, all of the Telcordia sales are reported in the Support Solutions segment except for North America where it is split 50/50 between Global Services and Support Solutions. The acquired Technicolor Broadcast Service Division is reported in region “Other”. Multimedia brokering (IPX) was previously reported in each region in segment Support Solutions. For the first three quarters 2012 it was part of region “Other”. IPX was divested end Q312.

North America

Sales grew with continued high activity levels in large mobile broadband coverage projects that peaked in first half 2013. CDMA equipment sales continued to decline. Network evolution and professional services remain a growth theme in North America.

Latin America

YoY sales growth was primarily driven by network quality investments in 3G and initial LTE rollouts, although still at slow pace. The business in several countries was impacted by currency depreciations.

Northern Europe and Central Asia

Sales declined YoY mainly due to very high project levels in Russia in Q212. Selection of LTE vendors in Russia is still ongoing, and deployment of the recently announced LTE contracts will start second half 2013. During the quarter we achieved new wins with non-operator customers in the Nordics and Baltics.

Western and Central Europe

YoY sales growth continued, driven by high activity level in network modernization projects. Continued demand for professional services where systems integration grew YoY.

Mediterranean

Modernization projects in France and high project activity in North West Africa continued to drive YoY sales, offset by lower investments in Spain and Italy. Macroeconomic development remained weak in parts of the region.

Middle East

Initial LTE deployments are ongoing but are still a small share of sales. Demand continued to be good for professional services as operators focus on network performance and operational efficiencies. Political unrest prevails and is still impacting sales.

Ericsson Second Quarter Report 2013 9

Sub-Saharan Africa

The growth in services is mainly fuelled by new managed services contracts. 3G as well as initial 4G deployments are ongoing. The majority of networks sales are, however, related to 2G.

India

Business volumes declined as operators continued to invest cautiously mainly due to sustained regulatory uncertainty and weak macroeconomic development. The growth in services was driven by a new managed services contract.

North East Asia

Sales continued to decline YoY mainly due to the continued structural decline in GSM investments in China combined with negative FX in Japan and lower business activity in South Korea due to delayed spectrum auctions.

South East Asia and Oceania

Sales were basically flat YoY, where a peak in deployment of major projects in Indonesia offset lower business activity in Australia in the quarter.

Other

IPX was divested at the end of Q312 impacting Support Solutions sales YoY comparison. Licensing revenues continued to show stable development YoY. Sales of broadcast services, cables, power modules and other businesses are also included in “Other”.

Ericsson Second Quarter Report 2013 10

Parent company information

Income after financial items was SEK 2.7 (7.0) b. The Parent Company’s financial position had the following major changes during the year; decreased cash, cash equivalents and short-term investments of SEK 13.0 b. and decreased current and non-current receivables from subsidiaries of SEK 5.9 b.

During the quarter, the dividend payment of SEK 8.9 b., as decided by the Annual General Meeting, was made. At the end of the quarter, cash, cash equivalents and short-term investments amounted to SEK 44.4 (57.4) b.

In accordance with the conditions of the long-term variable remuneration program (LTV) for Ericsson employees, 2,465,083 shares from treasury stock were sold or distributed to employees during the second quarter. The holding of treasury stock at June 30, 2013, was 79,744,080 Class B shares.

Ericsson Second Quarter Report 2013 11

Other information

Samsung litigation

On November 27, 2012, Ericsson filed two patent infringement lawsuits in the US District Court for the Eastern District of Texas against Samsung. Ericsson seeks damages and an injunction. Ericsson also asked the Court to adjudge that Samsung breached its commitment to license any standard-essential patents it owns on fair, reasonable, and non-discriminatory terms and to declare Samsung’s allegedly standard essential patents to be unenforceable. On November 30, 2012, Ericsson filed a complaint with the US International Trade Commission (ITC) seeking an exclusion order blocking Samsung from importing certain products into the US. On December 21, 2012, Samsung filed a complaint with the ITC seeking an exclusion order blocking Ericsson from import of certain products into the US.

On March 18, 2013, Samsung filed its answers and counterclaims in the Ericsson suits (above) in Texas, USA.

Airvana litigation

In February 2012, Airvana Networks Solutions Inc (Airvana) filed a complaint against Ericsson in the Supreme Court of the State of New York, USA, alleging that Ericsson has violated key contract terms and misappropriated Airvana trade secrets and proprietary information. Airvana is seeking damages of USD 330 million and to enjoin Ericsson from developing, deploying or commercializing Ericsson products allegedly based on Airvana’s proprietary technology.

On March 19, 2013, the Court issued a preliminary injunction barring Ericsson or any party in privity with Ericsson from using, operating, testing or deploying certain Airvana-based EV-DO hardware unless it is executing software that is licensed from Airvana.

The Court also conducted a separate related hearing in April on a second preliminary injunction motion filed by Airvana seeking to prevent deployment of the Digital Baseband Advanced (“DBA”) hardware with any EV-DO software other than Airvana’s. That hearing did not conclude at that time. Thereafter, the parties entered in settlement negotiations which have resulted in a non-binding letter of intent. The parties are presently negotiating a definitive, binding agreement.

Settlement of H3G S.p.A. (H3G) dispute

In 2007, H3G S.p.A. filed arbitral proceedings in Italy against Ericsson. H3G claimed compensation from Ericsson for alleged breach of contract. In June 2013, the parties settled the dispute.

Ericsson to acquire Microsoft Mediaroom

On April 8, 2013, Ericsson announced that the company has reached an agreement with Microsoft to acquire its TV solution business Mediaroom. This will make Ericsson a leading provider of IPTV and multi-screen solutions with a market share of over 25%. Closing is expected in the second half of 2013 subject to customary regulatory approvals and other conditions.

Acquisition of Devoteam Telecom & Media

On May 2, 2013, Ericsson closed the acquisition of Devoteam Telecom & Media in France, bringing 400 IT-services professionals. The intention to acquire parts of Devoteam was originally announced on January 21, 2013.

Divestment of power cables operation to NKT Cables

On May 3, 2013, Ericsson announced a conditional agreement with Danish company NKT Cables to divest its power cables operation. As a result of the agreement approximately 320 employees and consultants will transfer to NKT Cables. The value of the transaction is SEK 250 million and the transaction was closed on July 1, 2013.

Divestment of Applied Communication Sciences

On May 15, 2013, Ericsson completed the sale of Applied Communication Sciences (ACS), the former research and engineering arm of Telcordia Technologies. The operation was acquired by the SI Organization, Inc in the US. ACS, a leading provider of applied research, technical consulting and technology solutions to U.S. defense and intelligence agencies, U.S. civil government organizations and commercial customers, was established in January 2012 when Ericsson acquired Telcordia and has never been integrated operationally into Ericsson.

Ericsson Second Quarter Report 2013 12

Exit of telecom cable manufacturing

On May 21, 2013, Ericsson initiated union negotiations to close down its telecom cables operation. This primarily impacts operations in Hudiksvall and Stockholm, Sweden.

Expected to be completed during second half 2013.

On new positions

As of July 1, 2013, Peter Laurin is appointed Head of Global Customer Unit Vodafone and a member of Ericsson’s Global Leadership Team. Laurin previously held the position as Head of Customer Unit T-Mobile within Region North America.

As of August 1, 2013, Valter D’Avino is appointed Head of Region Western & Central Europe and a member of Ericsson’s Global Leadership Team. D’Avino currently holds the position as Head of Managed Services within Business Unit Global Services.

Ericsson’s nomination committee appointed

On May 31, 2013, Ericsson announced the appointment of the Nomination Committee for the Annual General Meeting 2014, in accordance with the Instruction for the Nomination Committee resolved by the Annual General Meeting 2013.

Composition of the Board of Directors

On April 9, 2013, Ericsson announced that in accordance with the proposal of the Nomination Committee, the Annual General Meeting resolved to re-elect Leif Johansson as Chairman of the Board of Directors and Roxanne S. Austin, Sir Peter L. Bonfield, Börje Ekholm, Alexander Izosimov, Ulf J. Johansson, Sverker Martin-Löf, Hans Vestberg, and Jacob Wallenberg were re-elected as members of the Board of Directors. Nora Denzel, Kristin Skogen Lund and Pär Östberg were elected new members of the Board of Directors. Board members appointed by the unions are Pehr Claesson, Kristina Davidsson and Karin Åberg. Deputy board members appointed by the unions are Rickard Fredriksson, Karin Lennartsson and Roger Svensson.

POST-CLOSING EVENTS

Ericsson to acquire leading media services company Red Bee Media

On July 1, 2013, Ericsson announced its intention to acquire Red Bee Media from an entity controlled by Macquarie Advanced Investment Partners, L.P. The acquisition, which is subject to regulatory approvals, supports Ericsson’s strategy to grow in the broadcast services market. It will bring 1,500 employees, as well as media services and operations facilities in the UK, France, Germany, Spain and Australia.

Ruling in Wi-LAN litigation

In October 2010, Canadian company Wi-LAN sued Ericsson, in Texas, alleging that Ericsson’s RBS 3000 and RBS 6000 series base stations sold in the US infringe three patents that Wi-LAN claimed to be essential to HSDPA.

In October 2012, Wi-LAN filed a second lawsuit against Ericsson, in Florida, alleging that Ericsson’s LTE-compliant base stations sold in the US infringe three other patents that Wi-LAN claimed to be essential to the LTE standard.

In June 2013, a District Court Judge in the Florida case granted Ericsson’s request for a Summary Judgment and dismissed Wi-LAN’s claims against Ericsson.

On July 15, 2013, a jury in Tyler, Texas, found in Ericsson’s favor in the Texas case. The jury recognized that although Ericsson’s base stations comply with mandatory HSDPA and 3G standards, the patents Wi-LAN was asserting do not apply to these standards, nor do Ericsson’s base stations infringe any of those patents. The jury also agreed with every one of Ericsson and the other defendants’ invalidity challenges to the asserted patents, and finally, determined that Wi-LAN is not entitled to any damages from Ericsson or the other defendants.

DISCLOSURE PURSUANT TO SECTION 219 OF THE IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT OF 2012 (ITRA)

During the second quarter of 2013, Ericsson made sales of telecommunications infrastructure related products and services in Iran to MTNIrancell and to Mobile Communication Company of Iran, which generated gross revenues (reported as net sales) of approximately SEK 175 million. Ericsson does not normally allocate quarterly net profit (reported as net income) on a country-by-country or activity-by-activity basis, other than as set forth in Ericsson’s consolidated financial statements prepared in accordance with IFRS as issued by the IASB. However, Ericsson has estimated that its net profit from such sales, after internal cost allocation, during the second quarter of 2013 would be substantially lower than such gross revenues.

Ericsson Second Quarter Report 2013 13

Assessment of risk environment

Ericsson’s operational and financial risk factors and uncertainties along with our strategies and tactics to mitigate risk exposures or limit unfavorable outcomes are described in our Annual Report 2012. Compared to the risks described in the Annual Report 2012, no material, new or changed risk factors or uncertainties have been identified in the quarter.

Risk factors and uncertainties in focus short-term for the Parent Company and the Ericsson Group include:

• Potential negative effects on operators’ willingness to invest in network development due to uncertainty in the financial markets and a weak economic business environment, or reduced consumer telecom spending, or increased pressure on us to provide financing;

• Uncertainty regarding the financial stability of suppliers, for example due to lack of financing;

• Effects on gross margins and/or working capital of the product mix in the Networks segment between sales of upgrades and expansions (mainly software) and new build-outs of coverage (mainly hardware);

• Effects on gross margins of the product mix in the Global Services segment including proportion of new network build-outs and share of new managed services deals with initial transition costs;

• A continued volatile sales pattern in the Support Solutions segment or variability in our overall sales seasonality could make it more difficult to forecast future sales;

• Effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. with postponed investments and intensified price competition as a consequence;

• Implementation of the strategic option for our joint venture ST-Ericsson and related capital need;

• Changes in foreign exchange rates, in particular USD, JPY and EUR;

• Political unrest or instability in certain markets;

• Effects on production and sales from restrictions with respect to timely and adequate supply of materials, components and production capacity and other vital services on competitive terms;

• Natural disasters and other events, affecting business, production, supply and transportation.

Ericsson stringently monitors the compliance with all relevant trade regulations and trade embargos applicable to dealings with customers operating in countries where there are trade restrictions or trade restrictions are discussed. Moreover, Ericsson operates globally in accordance with Group policies and directives for business ethics and conduct.

Stockholm, July 18, 2013

Telefonaktiebolaget LM Ericsson (publ)

Hans Vestberg, President and CEO

Org. Nr. 556016-0680

This report has not been reviewed by Telefonaktiebolaget LM Ericsson’s auditors.

Date for next report: October 24, 2013

Ericsson Second Quarter Report 2013 14

Editor’s note

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), July 18, 2013. An analysts, investors and media conference call will begin at 15.00 (CET).

For further information, please contact:

Helena Norrman, Senior Vice President,

Communications

Phone: +46 10 719 34 72

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

media.relations@ericsson.com

Telefonaktiebolaget LM Ericsson (publ)

Org. number: 556016-0680

Torshamnsgatan 23

SE-164 83 Stockholm

Phone: +46 10 719 00 00

Investors

Stefan Jelvin, Director,

Investor Relations

Phone: +46 10 714 20 39, +46 70 986 02 27

E-mail: investor.relations@ericsson.com

Åsa Konnbjer, Director,

Investor Relations

Phone: +46 10 713 39 28, +46 73 082 59 28

E-mail: investor.relations@ericsson.com

Rikard Tunedal, Director,

Investor Relations

Phone: +46 10 714 54 00, +46 761 005 400

E-mail: investor.relations@ericsson.com

Media

Ola Rembe, Vice President,

External Communications

Phone: +46 10 719 97 27, +46 73 024 48 73

E-mail: media.relations@ericsson.com

Corporate Communications

Phone: +46 10 719 69 92

E-mail: media.relations@ericsson.com

Ericsson Second Quarter Report 2013 15

Safe harbor statement

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; (xii) plans to launch new products and services; (xiii) assessments of risks; (xiv) integration of acquired businesses; (xv) compliance with rules and regulations and (xvi) infringements of intellectual property rights of others.

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) 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 or interest rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.

Ericsson Second Quarter Report 2013 16

Financial statements and additional information

Financial statements
18	Consolidated income statement
18	Statement of comprehensive income
19	Consolidated balance sheet
20	Consolidated statement of cash flows
21	Consolidated statement of changes in equity
22	Consolidated income statement—isolated quarters
23	Consolidated statement of cash flows—isolated quarters

Additional information
24	Accounting policies
25	Accounting policies (continued)
26	Net sales by segment by quarter
27	Operating income by segment by quarter
27	Operating margin by segment by quarter
28	Net sales by region by quarter
29	Net sales by region by quarter (cont.)
29	Top 5 countries in sales
30	Net sales by region by segment
31	Provisions
31	Information on investments in assets subject to depreciation, amortizations, impairment and write-downs
31	Reconciliation table, non-IFRS measurements
32	Other information
32	Number of employees
33	Restructuring charges by function
33	Restructuring charges by segment

Ericsson Second Quarter Report 2013 17

CONSOLIDATED INCOME STATEMENT

	Apr - Jun									Jan - Jun
SEK million	2012			2013			Change			2012			2013			Change
Net sales		55,319			55,331			0	%		106,293			107,363			1	%
Cost of sales		-37,611			-37,412			-1	%		-71,596			-72,806			2	%
Gross income		17,708			17,919			1	%		34,697			34,557			0	%
Gross margin (%)		32.0	%		32.4	%					32.6	%		32.2	%
Research and development expenses		-8,097			-7,747			-4	%		-16,113			-15,624			-3	%
Selling and administrative expenses		-6,855			-6,629			-3	%		-13,087			-13,272			1	%
Operating expenses		-14,952			-14,376			-4	%		-29,200			-28,896			-1	%
Other operating income and expenses		530			-1,040						8,279	1)		-1,020
Operating income before shares in earnings of JV and associated companies		3,286			2,503			-24	%		13,776			4,641			-66	%
Operating margin before shares in earnings of JV and associated companies (%)		5.9	%		4.5	%					13.0	%		4.3	%
Shares in earnings of JV and associated companies		-1,208			-38			-97	%		-2,611			-70			-97	%
Operating income		2,078			2,465			19	%		11,165			4,571			-59	%
Financial income		618			304						880			484
Financial expenses		-924			-606						-1,197			-1,171
Income after financial items		1,772			2,163			22	%		10,848			3,884			-64	%
Taxes		-567			-647						-839			-1,164
Net income		1,205			1,516			26	%		10,009			2,720			-73	%
Net income attributable to:
- Stockholders of the Parent Company		1,110			1,469						10,060			2,674
- Non-controlling interests		95			47						-51			46
Other information
Average number of shares, basic (million)		3,215			3,224						3,213			3,223
Earnings per share, basic (SEK)2)		0.35			0.46						3.13			0.83
Earnings per share, diluted (SEK)2)		0.34			0.45						3.10			0.82

STATEMENT OF COMPREHENSIVE INCOME

	Apr - Jun				Jan - Jun
SEK million	2012		2013		2012		2013
Net income		1,205		1,516		10,009		2,720
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefits pension plans incl. asset ceiling		-1,201		954		-765		1,773
Revaluation of other investments in shares and participations
Fair value remeasurement		1		69		1		69
Tax on items that will not be reclassified to profit or loss		403		-333		264		-721
Items that may be reclassified to profit or loss
Cash flow hedges
Gains/losses arising during the period		-586		-36		199		138
Reclassification adjustments for gains/losses included in profit or loss		70		-297		-143		-763
Adjustments for amounts transferred to initial carrying amount of hedged items		—		—		92		—
Changes in cumulative translation adjustments		1,323		1,404		-681		686
Share of other comprehensive income on JV and associated companies		34		120		-18		104
Tax on items that may be reclassified to profit or loss		142		80		-111		142
Total other comprehensive income		186		1,961		-1,162		1,428
Total comprehensive income		1,391		3,477		8,847		4,148
Total comprehensive income attributable to:
Stockholders of the Parent Company		1,229		3,394		8,879		4,087
Non-controlling interests		162		83		-32		61

¹⁾  Includes gain on sale of Sony Ericsson SEK 7.7 billion in Q1 2012

²⁾  Based on Net income attributable to stockholders of the Parent Company

Ericsson Second Quarter Report 2013 18

CONSOLIDATED BALANCE SHEET

	Dec 31		Mar 31		Jun 30
SEK million	2012		2013		2013
ASSETS
Non-current assets
Intangible assets
Capitalized development expenses		3,840		3,819		3,691
Goodwill		30,404		30,297		30,855
Intellectual property rights, brands and other intangible assets		15,202		14,205		13,405
Property, plant and equipment		11,493		11,461		11,766
Financial assets
Equity in JV and associated companies		2,842		2,799		2,883
Other investments in shares and participations		386		389		495
Customer finance, non-current		1,290		1,146		1,109
Other financial assets, non-current		3,964		4,180		4,807
Deferred tax assets		12,321		12,132		12,299
		81,742		80,428		81,310
Current assets
Inventories		28,802		29,811		29,685
Trade receivables		63,660		65,101		63,084
Customer finance, current		4,019		3,869		2,998
Other current receivables		20,065		19,206		19,552
Short-term investments1)		32,026		34,641		26,335
Cash and cash equivalents		44,682		37,444		38,479
		193,254		190,072		180,133
Total assets		274,996		270,500		261,443
EQUITY AND LIABILITIES
Equity
Stockholders’ equity		136,883		137,668		132,326
Non-controlling interest in equity of subsidiaries		1,600		1,501		1,540
		138,483		139,169		133,866
Non-current liabilities
Post-employment benefits2)		9,503		11,132		10,907
Provisions, non-current		211		247		281
Deferred tax liabilities		3,120		3,281		3,326
Borrowings, non-current		23,898		23,638		22,471
Other non-current liabilities		2,377		2,407		2,330
		39,109		40,705		39,315
Current liabilities
Provisions, current		8,427		9,252		7,435
Borrowings, current		4,769		5,084		4,018
Trade payables		23,100		19,898		20,760
Other current liabilities2)		61,108		56,392		56,049
		97,404		90,626		88,262
Total equity and liabilities		274,996		270,500		261,443
Of which interest-bearing liabilities and post-employment benefits		38,170		39,854		37,396
Of which net cash		38,538		32,231		27,418
Assets pledged as collateral		520		2,534		2,587
Contingent liabilities		613		601		586

¹⁾ Including loan to ST-Ericsson of SEK 982 million as of June 30, 2013 (SEK 540 million as of March 31, 2013, SEK 0 million as of December 31, 2012)

²⁾  The provision for the Swedish special payroll taxes, amounting to SEK 1.8 (1.8) billion, which was previously included in Other current liabilities, has been re-classified as pension liability in line with the implementation of IAS19R on January 1, 2013

Ericsson Second Quarter Report 2013 19

CONSOLIDATED STATEMENT OF CASH FLOWS

	Apr - Jun				Jan - Jun					Jan - Dec
SEK million	2012		2013		2012			2013		2012
Operating activities
Net income		1,205		1,516		10,009			2,720		5,938
Adjustments to reconcile net income to cash
Taxes		-1,185		-689		-2,303			-2,538		-1,140
Earnings/dividends in JV and associated companies		1,193		37		2,483			70		11,769
Depreciation, amortization and impairment losses		2,401		2,436		4,716			4,847		9,889
Other		-466		183		-7,488			-18		-7,441
		3,148		3,483		7,417			5,081		19,015
Changes in operating net assets
Inventories		43		600		-16			-826		2,752
Customer finance, current and non-current		0		912		282			1,172		-1,259
Trade receivables		-5,427		3,084		-1,705			1,150		-1,103
Trade payables		1,717		518		-996			-2,430		-1,311
Provisions and post-employment benefits		-353		-1,752		-2,124			-597		-1,920
Other operating assets and liabilities, net		-492		-2,554		-3,491			-2,229		5,857
		-4,512		808		-8,050			-3,760		3,016
Cash flow from operating activities		-1,364		4,291		-633			1,321		22,031
Investing activities
Investments in property, plant and equipment		-994		-1,278		-2,642			-2,474		-5,429
Sales of property, plant and equipment		-10		11		299			102		568
Acquisitions/divestments of subsidiaries and other operations, net		-110		-39		-1,840	1)		-175		-2,077	1)
Product development		-525		-214		-776			-496		-1,641
Other investing activities		-520		-203		-325			95		1,540
Short-term investments		8,133		9,209		4,134			6,349		2,151
Cash flow from investing activities		5,974		7,486		-1,150			3,401		-4,888
Cash flow before financing activities		4,610		11,777		-1,783			4,722		17,143
Financing activities
Dividends paid		-8,252		-8,863		-8,252			-8,924		-8,632
Other financing activities		1,112		-4,236		-206			-4,144		-753
Cash flow from financing activities		-7,140		-13,099		-8,458			-13,068		-9,385
Effect of exchange rate changes on cash		599		2,357		272			2,143		-1,752
Net change in cash		-1,931		1,035		-9,969			-6,203		6,006
Cash and cash equivalents, beginning of period		30,638		37,444		38,676			44,682		38,676
Cash and cash equivalents, end of period		28,707		38,479		28,707			38,479		44,682

¹⁾  Includes payment of external loan of SEK -6.2 billion attributable to the acquisition of Telcordia in Q1 2012

Ericsson Second Quarter Report 2013 20

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Jan - Jun		Jan - Jun		Jan - Dec
SEK million	2012		2013		2012
Opening balance		145,270		138,483		145,270
Total comprehensive income		8,847		4,148		1,830
Sale/repurchase of own shares		159		40		-93
Stock issue		-126		—		159
Stock purchase plan		218		193		405
Dividends paid		-8,252		-8,924		-8,632
Transactions with non-controlling interests		-369		-73		-456
Closing balance		145,747		133,867		138,483

Ericsson Second Quarter Report 2013 21

CONSOLIDATED INCOME STATEMENT – ISOLATED QUARTERS

	2012												2013
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2
Net sales		50,974			55,319			54,550			66,936			52,032			55,331
Cost of sales		-33,985			-37,611			-37,970			-46,133			-35,394			-37,412
Gross income		16,989			17,708			16,580			20,803			16,638			17,919
Gross margin (%)		33.3	%		32.0	%		30.4	%		31.1	%		32.0	%		32.4	%
Research and development expenses		-8,016			-8,097			-7,473			-9,247			-7,877			-7,747
Selling and administrative expenses		-6,232			-6,855			-5,797			-7,139			-6,643			-6,629
Operating expenses		-14,248			-14,952			-13,270			-16,386			-14,520			-14,376
Other operating income and expenses		7,749	1)		530			341			345			20			-1,040
Operating income before shares in earnings of JV and associated companies		10,490			3,286			3,651			4,762			2,138			2,503
Operating margin before shares in earnings of JV and associated companies (%)		20.6	%		5.9	%		6.7	%		7.1	%		4.1	%		4.5	%
Shares in earnings of JV and associated companies		-1,403			-1,208			-555			-8,565	2)		-32			-38
Operating income		9,087			2,078			3,096			-3,803			2,106			2,465
Financial income		262			618			390			438			180			304
Financial expenses		-273			-924			-275			-512			-565			-606
Income after financial items		9,076			1,772			3,211			-3,877			1,721			2,163
Taxes		-272			-567			-1,027			-2,378			-517			-647
Net income		8,804			1,205			2,184			-6,255			1,204			1,516
Net income attributable to:
- Stockholders of the Parent Company		8,950			1,110			2,177			-6,462			1,205			1,469
- Non-controlling interests		-146			95			7			207			-1			47
Other information
Average number of shares, basic (million)		3,212			3,215			3,217			3,219			3,222			3,224
Earnings per share, basic (SEK)3)		2.79			0.35			0.68			-2.01			0.37			0.46
Earnings per share, diluted (SEK) 3)		2.76			0.34			0.67			-1.99			0.37			0.45

¹⁾ Includes gain on sale of Sony Ericsson SEK 7.7 billion in Q1 2012

²⁾  Negatively impacted by a non-cash charge related to ST-Ericsson of SEK -8.0 billion in Q4 2012

³⁾  Based on Net income attributable to stockholders of the Parent Company

Ericsson Second Quarter Report 2013 22

CONSOLIDATED STATEMENT OF CASH FLOWS—ISOLATED QUARTERS

	2012									2013
Isolated quarters, SEK million	Q1			Q2		Q3		Q4		Q1		Q2
Operating activities
Net income		8,804			1,205		2,184		-6,255		1,204		1,516
Adjustments to reconcile net income to cash
Taxes		-1,118			-1,185		-886		2,049		-1,849		-689
Earnings/dividends in JV and associated companies		1,290			1,193		579		8,707		33		37
Depreciation, amortization and impairment losses		2,315			2,401		2,394		2,779		2,411		2,436
Other		-7,022			-466		413		-366		-201		183
		4,269			3,148		4,684		6,914		1,598		3,483
Changes in operating net assets
Inventories		-59			43		-650		3,418		-1,426		600
Customer finance, current and non-current		282			—		-164		-1,377		260		912
Trade receivables		3,722			-5,427		2,882		-2,280		-1,934		3,084
Trade payables		-2,713			1,717		-1,455		1,140		-2,948		518
Provisions and post-employment benefits		-1,771			-353		-175		379		1,155		-1,752
Other operating assets and liabilities, net		-2,999			-492		1,851		7,497		325		-2,554
		-3,538			-4,512		2,289		8,777		-4,568		808
Cash flow from operating activities		731			-1,364		6,973		15,691		-2,970		4,291
Investing activities
Investments in property, plant and equipment		-1,648			-994		-1,461		-1,326		-1,196		-1,278
Sales of property, plant and equipment		309			-10		17		252		91		11
Acquisitions/divestments of subsidiaries and other operations, net		-1,730	1)		-110		-357		120		-136		-39
Product development		-251			-525		-435		-430		-282		-214
Other investing activities		195			-520		1,652		213		298		-203
Short-term investments		-3,999			8,133		-938		-1,045		-2,860		9,209
Cash flow from investing activities		-7,124			5,974		-1,522		-2,216		-4,085		7,486
Cash flow before financing activities		-6,393			4,610		5,451		13,475		-7,055		11,777
Financing activities
Dividends paid		—			-8,252		-381		1		-61		-8,863
Other financing activities		-1,318			1,112		1,062		-1,609		92		-4,236
Cash flow from financing activities		-1,318			-7,140		681		-1,608		31		-13,099
Effect of exchange rate changes on cash		-327			599		-1,994		-30		-214		2,357
Net change in cash		-8,038			-1,931		4,138		11,837		-7,238		1,035
Cash and cash equivalents, beginning of period		38,676			30,638		28,707		32,845		44,682		37,444
Cash and cash equivalents, end of period		30,638			28,707		32,845		44,682		37,444		38,479

¹⁾  Includes payment of external loan of SEK -6.2 billion attributable to the acquisition of Telcordia in Q1 2012

Ericsson Second Quarter Report 2013 23

Accounting policies

The Group

This interim report is prepared in accordance with IAS 34. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2012, and should be read in conjunction with that annual report.

Change of hedge accounting

Due to cost efficiency reasons Ericsson has changed the hedge accounting.

Ericsson hedges highly probable forecast transactions related to sales and purchases with the purpose to limit the impact related to currency fluctuations on these forecasted transactions. This will not be changed.

Ericsson has, however, decided to discontinuehedge accountingfor this type of hedges. Until 2012 Ericsson applied cash flow hedge accounting for highly probable forecast transactions. Revaluation of these hedges (incepted prior to January 1, 2013) are prior to release reported under “Other comprehensive income” (OCI) and is at release recycled to sales, cost of sales and R&D expenses respectively.

As from 2013, revaluation of new hedges (inception as from January 1, 2013) are reported under “Other operating income and expenses” in the Income statement.

As from January 1, 2013, the Company has applied the following new or amended IFRSs and IFRICs:

Amendment to IAS 1, “Financial statement presentation” regarding Other comprehensive income. The main change resulting from this amendment is a requirement for entities to group items presented in “other comprehensive income” (OCI) on the basis of whether they are potentially recycled to profit or loss subsequently (reclassification adjustments). The amendment does not address which items are presented in OCI.

Amendment to IAS 19, “Employee benefits” eliminates the corridor approach and calculates finance costs on a net funding basis. The Company implemented the immediate and full recognition of actuarial gains/losses in other “Other comprehensive income” (OCI) in 2006, meaning that the corridor method has not been applied by the Company as from that date and therefore the transition to the revised IAS 19 has not had an effect on the present obligation. The main issue to address is the implementation of the net interest cost/gain, which integrates the interest cost and expected return on assets to be based on a common discount rate. An analysis of fiscal year 2012 in relation to this amendment indicated an impact on pension costs for 2012 with an increase of approximately SEK 0.4 (–0.1) billion. The Company also needs to address the taxes to be incorporated into the defined benefit obligation. This amendment relates to the Swedish special payroll taxes to be reclassified from “Other current liabilities” to “Post-employment benefits” with an estimated amount of SEK 1.8 (1.8) billion as per December 31, 2012 *. The amendment also includes additional disclosure requirements on yearly financial and demographic assumptions, sensitivity analysis, duration and multi-employer plans.

Amendment to IFRS 7, “Financial instruments: Disclosures’ on asset and liability offsetting”.This amendment requires disclosure of gross amounts related to financial instruments for which offset has been made.

* See also footnote under the balance sheet.

Ericsson Second Quarter Report 2013 24

Accounting policies (continued)

IFRS 10, “Consolidated financial statements”.The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities to present consolidated financial statements. It defines the principle of control, and establishes control as the basis for consolidation. It sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee. An entity controls an investee if the entity has power over the investee, has the ability to use the power and is exposed to variable returns. It also sets out the accounting requirements for the preparation of consolidated financial statements.

IFRS 11, “Joint arrangements”is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Proportional consolidation of joint ventures is no longer allowed. The Company did not apply the proportionate consolidation method prior to 2013.

IFRS 12, “Disclosures of interests in other entities” includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles.

IFRS 13, “Fair value measurement” does not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. This standard has also added disclosure requirements in IAS 34, Interim Financial Reporting regarding the disclosure for financial instruments.

IAS 27 (revised 2011), “Separate financial statements” includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.

IAS 28 (revised 2011), “Associates and joint ventures” includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11.

None of the new or amended standards and interpretations has had any significant impact on the financial result or position of the Company. There is no significant difference between IFRS effective as per June 30, 2013 and IFRS as endorsed by the EU.

Disclosures required by the IASB on an interim basis as from 2013

Fair valuation of financial instruments

The fair value of the Company’s financial instruments, recognized at fair value, is determined based on quoted market prices or rates. Financial instruments, measured according to the category “Fair value through profit or loss” showed a net fair value measurement negative effect of SEK 0.4 billion. The amount is recognized in the balance sheet as per June 30, 2013.

Book value for “Notes and bond loans” amounts to SEK 14.9 billion and fair value to SEK 16.9 billion. Fair values of “Current part of non-current borrowings”, “Other borrowings non-current” as well as “Other financial instruments” are not estimated to materially differ from book values.

For further information about valuation principles, please see Note C1, “Significant accounting policies” in the Annual Report of 2012.

Ericsson Second Quarter Report 2013 25

NET SALES BY SEGMENT BY QUARTER

Segments Sony Ericsson and ST-Ericsson are reported in accordance with the equity method, thus their sales are not included.

	2012												2013
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2
Networks		27,314			27,766			26,939			35,266			28,133			28,142
Global Services		20,631			24,074			24,296			28,042			21,452			24,851
Of which Professional Services		14,884			16,947			16,388			18,873			14,626			16,773
Of which Managed Services		5,708			6,468			6,306			6,752			5,888			6,754
Of which Network Rollout		5,747			7,127			7,908			9,169			6,826			8,078
Support Solutions		3,029			3,479			3,315			3,628			2,447			2,338
Total		50,974			55,319			54,550			66,936			52,032			55,331
	2012												2013
Sequential change, percent	Q1			Q2			Q3			Q4			Q1			Q2
Networks		-18	%		2	%		-3	%		31	%		-20	%		0	%
Global Services		-24	%		17	%		1	%		15	%		-24	%		16	%
Of which Professional Services		-18	%		14	%		-3	%		15	%		-23	%		15	%
Of which Managed Services		-6	%		13	%		-3	%		7	%		-13	%		15	%
Of which Network Rollout		-35	%		24	%		11	%		16	%		-26	%		18	%
Support Solutions		-11	%		15	%		-5	%		9	%		-33	%		-4	%
Total		-20	%		9	%		-1	%		23	%		-22	%		6	%
	2012												2013
Year over year change, percent	Q1			Q2			Q3			Q4			Q1			Q2
Networks		-18	%		-17	%		-17	%		6	%		3	%		1	%
Global Services		18	%		26	%		19	%		4	%		4	%		3	%
Of which Professional Services		18	%		26	%		11	%		4	%		-2	%		-1	%
Of which Managed Services		16	%		37	%		19	%		12	%		3	%		4	%
Of which Network Rollout		18	%		28	%		38	%		3	%		19	%		13	%
Support Solutions		33	%		47	%		29	%		6	%		-19	%		-33	%
Total		-4	%		1	%		-2	%		5	%		2	%		0	%
	2012												2013
Year to date, SEK million	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun
Networks		27,314			55,080			82,019			117,285			28,133			56,275
Global Services		20,631			44,705			69,001			97,043			21,452			46,303
Of which Professional Services		14,884			31,830			48,219			67,092			14,626			31,399
Of which Managed Services		5,708			12,176			18,482			25,234			5,888			12,642
Of which Network Rollout		5,747			12,875			20,782			29,951			6,826			14,904
Support Solutions		3,029			6,508			9,823			13,451			2,447			4,785
Total		50,974			106,293			160,843			227,779			52,032			107,363
Year to date,	2012												2013
year over year change, percent	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun
Networks		-18	%		-17	%		-17	%		-11	%		3	%		2	%
Global Services		18	%		23	%		21	%		16	%		4	%		4	%
Of which Professional Services		18	%		22	%		18	%		14	%		-2	%		-1	%
Of which Managed Services		16	%		26	%		24	%		20	%		3	%		4	%
Of which Network Rollout		18	%		23	%		29	%		20	%		19	%		16	%
Support Solutions		33	%		40	%		36	%		26	%		-19	%		-26	%
Total		-4	%		-1	%		-1	%		0	%		2	%		1	%

Ericsson Second Quarter Report 2013 26

OPERATING INCOME BY SEGMENT BY QUARTER

	2012										2013
Isolated quarters, SEK million	Q1			Q2		Q3		Q4			Q1		Q2
Networks		1,649			1,255		1,341		2,812			1,565		1,335
Global Services		1,267			1,362		1,835		1,762			726		1,564
Of which Professional Services		1,908			2,142		2,293		2,768			1,837		2,285
Of which Network Rollout		-641			-780		-458		-1,006			-1,111		-721
Support Solutions		-28			420		480		278			-29		-283
Unallocated 1)		-97			-43		6		-133			-156		-151
Subtotal Segments excluding Sony Ericsson and ST-Ericsson		2,791			2,994		3,662		4,719			2,106		2,465
Sony Ericsson		7,691	2)		347		-1		-11			—		—
ST-Ericsson		-1,395			-1,263		-565		-8,511	3)		—		—
Subtotal Sony Ericsson and ST-Ericsson		6,296			-916		-566		-8,522			—		—
Total		9,087			2,078		3,096		-3,803			2,106		2,465
	2012										2013
Year to date, SEK million	Jan - Mar			Jan - Jun		Jan - Sep		Jan - Dec			Jan - Mar		Jan - Jun
Networks		1,649			2,904		4,245		7,057			1,565		2,900
Global Services		1,267			2,629		4,464		6,226			726		2,290
Of which Professional Services		1,908			4,050		6,343		9,111			1,837		4,122
Of which Network Rollout		-641			-1,421		-1,879		-2,885			-1,111		-1,832
Support Solutions		-28			392		872		1,150			-29		-312
Unallocated 1)		-97			-140		-134		-267			-156		-307
Subtotal Segments excluding Sony Ericsson and ST-Ericsson		2,791			5,785		9,447		14,166			2,106		4,571
Sony Ericsson		7,691	2)		8,038		8,037		8,026			—		—
ST-Ericsson		-1,395			-2,658		-3,223		-11,734	3)		—		—
Subtotal Sony Ericsson and ST-Ericsson		6,296			5,380		4,814		-3,708			—		—
Total		9,087			11,165		14,261		10,458			2,106		4,571

OPERATING MARGIN BY SEGMENT BY QUARTER

As percentage of net sales, isolated quarters	2012												2013
	Q1			Q2			Q3			Q4			Q1			Q2
Networks		6	%		5	%		5	%		8	%		6	%		5	%
Global Services		6	%		6	%		8	%		6	%		3	%		6	%
Of which Professional Services		13	%		13	%		14	%		15	%		13	%		14	%
Of which Network Rollout		-11	%		-11	%		-6	%		-11	%		-16	%		-9	%
Support Solutions		-1	%		12	%		14	%		8	%		-1	%		-12	%
Subtotal excluding Sony Ericsson and ST-Ericsson		5	%		5	%		7	%		7	%		4	%		4	%
As percentage of net sales, Year to date	2012												2013
	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun
Networks		6	%		5	%		5	%		6	%		6	%		5	%
Global Services		6	%		6	%		6	%		6	%		3	%		5	%
Of which Professional Services		13	%		13	%		13	%		14	%		13	%		13	%
Of which Network Rollout		-11	%		-11	%		-9	%		-10	%		-16	%		-12	%
Support Solutions		-1	%		6	%		9	%		9	%		-1	%		-7	%
Subtotal excluding Sony Ericsson and ST-Ericsson		5	%		5	%		6	%		6	%		4	%		4	%

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

²⁾  Includes gain on sale of Sony Ericsson SEK 7.7 billion in Q1 2012

³⁾  Negatively impacted by a non-cash charge related to ST-Ericsson of SEK -8.0 billion in Q4 2012

Ericsson Second Quarter Report 2013 27

NET SALES BY REGION BY QUARTER

	2012												2013
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2
North America		12,775			12,987			14,037			16,950			15,773			15,341
Latin America		4,822			5,243			5,424			6,517			4,374			5,565
Northern Europe & Central Asia1) 2)		2,292			3,358			2,697			2,998			2,283			2,708
Western & Central Europe2)		4,306			4,094			3,630			5,448			4,349			4,522
Mediterranean2)		4,620			6,214			5,401			7,064			5,271			6,159
Middle East		3,157			3,701			3,637			5,061			3,160			3,978
Sub Saharan Africa		2,200			2,791			2,800			3,558			2,131			2,653
India		1,421			1,700			1,737			1,602			1,606			1,279
North East Asia		9,154			8,423			8,373			10,246			6,054			6,642
South East Asia & Oceania		3,374			3,674			3,505			4,515			4,129			3,758
Other1) 2)		2,853			3,134			3,309			2,977			2,902			2,726
Total		50,974			55,319			54,550			66,936			52,032			55,331
1) Of which Sweden		834			1,282			1,649			1,268			1,020			1,276
2) Of which EU		9,502			11,201			10,604			12,923			9,782			10,816
	2012												2013
Sequential change, percent	Q1			Q2			Q3			Q4			Q1			Q2
North America		14	%		2	%		8	%		21	%		-7	%		-3	%
Latin America		-31	%		9	%		3	%		20	%		-33	%		27	%
Northern Europe & Central Asia1) 2)		-39	%		47	%		-20	%		11	%		-24	%		19	%
Western & Central Europe2)		-18	%		-5	%		-11	%		50	%		-20	%		4	%
Mediterranean2)		-44	%		35	%		-13	%		31	%		-25	%		17	%
Middle East		-39	%		17	%		-2	%		39	%		-38	%		26	%
Sub Saharan Africa		-32	%		27	%		0	%		27	%		-40	%		24	%
India		-7	%		20	%		2	%		-8	%		0	%		-20	%
North East Asia		-16	%		-8	%		-1	%		22	%		-41	%		10	%
South East Asia & Oceania		-16	%		9	%		-5	%		29	%		-9	%		-9	%
Other1) 2)		-14	%		10	%		6	%		-10	%		-3	%		-6	%
Total		-20	%		9	%		-1	%		23	%		-22	%		6	%
1) Of which Sweden		-8	%		54	%		29	%		-23	%		-20	%		25	%
2) Of which EU		-29	%		18	%		-5	%		22	%		-24	%		11	%
	2012												2013
Year-over-year change, percent	Q1			Q2			Q3			Q4			Q1			Q2
North America		-3	%		5	%		16	%		51	%		23	%		18	%
Latin America		20	%		6	%		-10	%		-7	%		-9	%		6	%
Northern Europe & Central Asia1) 2)		-32	%		-26	%		-24	%		-21	%		0	%		-19	%
Western & Central Europe2)		-10	%		-6	%		-21	%		3	%		1	%		10	%
Mediterranean2)		-4	%		12	%		3	%		-14	%		14	%		-1	%
Middle East		3	%		4	%		0	%		-3	%		0	%		7	%
Sub Saharan Africa		-1	%		26	%		11	%		11	%		-3	%		-5	%
India		-55	%		-39	%		-24	%		5	%		13	%		-25	%
North East Asia		6	%		-7	%		-13	%		-6	%		-34	%		-21	%
South East Asia & Oceania		9	%		21	%		-6	%		13	%		22	%		2	%
Other1) 2)		9	%		27	%		49	%		-10	%		2	%		-13	%
Total		-4	%		1	%		-2	%		5	%		2	%		0	%
1) Of which Sweden		-10	%		16	%		75	%		40	%		22	%		0	%
2) Of which EU		-5	%		9	%		4	%		-4	%		3	%		-3	%

Ericsson Second Quarter Report 2013 28

NET SALES BY REGION BY QUARTER (continued)

	2012												2013
Year to date, SEK million	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun
North America		12,775			25,762			39,799			56,749			15,773			31,114
Latin America		4,822			10,065			15,489			22,006			4,374			9,939
Northern Europe & Central Asia1) 2)		2,292			5,650			8,347			11,345			2,283			4,991
Western & Central Europe2)		4,306			8,400			12,030			17,478			4,349			8,871
Mediterranean2)		4,620			10,834			16,235			23,299			5,271			11,430
Middle East		3,157			6,858			10,495			15,556			3,160			7,138
Sub Saharan Africa		2,200			4,991			7,791			11,349			2,131			4,784
India		1,421			3,121			4,858			6,460			1,606			2,885
North East Asia		9,154			17,577			25,950			36,196			6,054			12,696
South East Asia & Oceania		3,374			7,048			10,553			15,068			4,129			7,887
Other1) 2)		2,853			5,987			9,296			12,273			2,902			5,628
Total		50,974			106,293			160,843			227,779			52,032			107,363
1) Of which Sweden		834			2,116			3,765			5,033			1,020			2,296
2) Of which EU		9,502			20,703			31,307			44,230			9,782			20,598
Year to date,	2012												2013
year-over-year change, percent	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun
North America		-3	%		1	%		6	%		16	%		23	%		21	%
Latin America		20	%		13	%		4	%		0	%		-9	%		-1	%
Northern Europe & Central Asia1) 2)		-32	%		-29	%		-27	%		-25	%		0	%		-12	%
Western & Central Europe2)		-10	%		-8	%		-13	%		-8	%		1	%		6	%
Mediterranean2)		-4	%		5	%		4	%		-2	%		14	%		6	%
Middle East		3	%		4	%		2	%		1	%		0	%		4	%
Sub Saharan Africa		-1	%		13	%		12	%		12	%		-3	%		-4	%
India		-55	%		-48	%		-41	%		-34	%		13	%		-8	%
North East Asia		6	%		0	%		-5	%		-5	%		-34	%		-28	%
South East Asia & Oceania		9	%		15	%		7	%		9	%		22	%		12	%
Other1) 2)		9	%		18	%		27	%		15	%		2	%		-6	%
Total		-4	%		-1	%		-1	%		0	%		2	%		1	%
1) Of which Sweden		-10	%		4	%		27	%		30	%		22	%		9	%
2) Of which EU		-5	%		2	%		3	%		1	%		3	%		-1	%

TOP 5 COUNTRIES IN SALES

	Q2						Jan - Jun
Country	2012			2013			2012			2013
UNITED STATES		23	%		27	%		24	%		28	%
JAPAN		7	%		7	%		8	%		7	%
CHINA		6	%		4	%		5	%		4	%
ITALY		4	%		3	%		4	%		3	%
BRAZIL		4	%		3	%		4	%		3	%

Ericsson Second Quarter Report 2013 29

NET SALES BY REGION BY SEGMENT

Revenue from Telcordia is reported 50/50 between segments Global Services and Support Solutions. In the regional dimension, all of Telcordia sales is reported in Support Solutions, except for North America where it is split 50/50.

IPX was divested Q3 2012. For the first nine months of 2012, IPX was included in Support Solutions and region Other.

	Q2 2013, SEK million												Jan - Jun 2013, SEK million
	Net- works			Global Services			Support Solutions			Total			Net- works			Global Services			Support Solutions			Total
North America		7,421			7,431			489			15,341			16,599			13,540			975			31,114
Latin America		2,984			2,298			283			5,565			4,987			4,315			637			9,939
Northern Europe & Central Asia		1,621			1,028			59			2,708			2,886			1,982			123			4,991
Western & Central Europe		1,951			2,434			137			4,522			3,842			4,775			254			8,871
Mediterranean		2,923			3,072			164			6,159			5,365			5,760			305			11,430
Middle East		1,816			1,991			171			3,978			3,233			3,463			442			7,138
Sub Saharan Africa		1,248			1,135			270			2,653			2,348			1,957			479			4,784
India		484			719			76			1,279			1,342			1,346			197			2,885
North East Asia		3,778			2,806			58			6,642			7,155			5,396			145			12,696
South East Asia & Oceania		2,016			1,632			110			3,758			4,616			3,053			218			7,887
Other		1,900			305			521			2,726			3,902			716			1,010			5,628
Total		28,142			24,851			2,338			55,331			56,275			46,303			4,785			107,363
Share of Total		51	%		45	%		4	%		100	%		52	%		43	%		5	%		100	%

	Q2 2013
Sequential change, percent	Net- works			Global Services			Support Solutions			Total
North America		-19	%		22	%		1	%		-3	%
Latin America		49	%		14	%		-20	%		27	%
Northern Europe & Central Asia		28	%		8	%		-8	%		19	%
Western & Central Europe		3	%		4	%		17	%		4	%
Mediterranean		20	%		14	%		16	%		17	%
Middle East		28	%		35	%		-37	%		26	%
Sub Saharan Africa		13	%		38	%		29	%		24	%
India		-44	%		15	%		-37	%		-20	%
North East Asia		12	%		8	%		-33	%		10	%
South East Asia & Oceania		-22	%		15	%		2	%		-9	%
Other		-5	%		-26	%		7	%		-6	%
Total		0	%		16	%		-4	%		6	%
	Q2 2013
Year over year change, percent	Net- works			Global Services			Support Solutions			Total
North America		21	%		21	%		-33	%		18	%
Latin America		30	%		-8	%		-36	%		6	%
Northern Europe & Central Asia		-21	%		-15	%		-35	%		-19	%
Western & Central Europe		45	%		-6	%		-19	%		10	%
Mediterranean		7	%		-7	%		-3	%		-1	%
Middle East		16	%		11	%		-50	%		7	%
Sub Saharan Africa		-20	%		21	%		-9	%		-5	%
India		-48	%		11	%		-36	%		-25	%
North East Asia		-27	%		-10	%		-58	%		-21	%
South East Asia & Oceania		7	%		-1	%		-21	%		2	%
Other		-10	%		69	%		-38	%		-13	%
Total		1	%		3	%		-33	%		0	%
	Jan - Jun 2013
Year over year change, percent	Net- works			Global Services			Support Solutions			Total
North America		22	%		25	%		-26	%		21	%
Latin America		14	%		-14	%		-6	%		-1	%
Northern Europe & Central Asia		-11	%		-11	%		-28	%		-12	%
Western & Central Europe		33	%		-7	%		-30	%		6	%
Mediterranean		13	%		0	%		-10	%		6	%
Middle East		12	%		0	%		-17	%		4	%
Sub Saharan Africa		-17	%		13	%		7	%		-4	%
India		-16	%		6	%		-23	%		-8	%
North East Asia		-37	%		-8	%		-44	%		-28	%
South East Asia & Oceania		25	%		0	%		-21	%		12	%
Other		3	%		118	%		-46	%		-6	%
Total		2	%		4	%		-26	%		1	%

Ericsson Second Quarter Report 2013 30

PROVISIONS

	2012								2013
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2
Opening balance		6,265		5,930		5,318		5,243		8,638		9,499
Additions		1,003		616		810		4,582		1,915		1,215
Utilization/Cash out		-980		-850		-664		-981		-758		-2,365
Of which restructuring		-401		-342		-160		-267		-324		-1,001
Reversal of excess amounts		-370		-453		-95		-155		-209		-586
Reclassification, translation difference and other		12		75		-126		-51		-87		-47
Closing balance		5,930		5,318		5,243		8,638		9,499		7,716
	2012								2013
Year to date, SEK million	Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec		Jan - Mar		Jan - Jun
Opening balance		6,265		6,265		6,265		6,265		8,638		8,638
Additions		1,003		1,619		2,429		7,011		1,915		3,130
Utilization/Cash out		-980		-1,830		-2,494		-3,475		-758		-3,123
Of which restructuring		-401		-743		-903		-1,170		-324		-1,325
Reversal of excess amounts		-370		-823		-918		-1,073		-209		-795
Reclassification, translation difference and other		12		87		-39		-90		-87		-134
Closing balance		5,930		5,318		5,243		8,638		9,499		7,716

INFORMATION ON INVESTMENTS IN ASSETS SUBJECT TO DEPRECIATION, AMORTIZATION, IMPAIRMENT AND WRITE-DOWNS

	2012								2013
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2
Additions
Property, plant and equipment		1,648		994		1,461		1,326		1,196		1,278
Capitalized development expenses		251		525		435		430		282		214
IPR, brands and other intangible assets		5,570		992		341		409		196		22
Total		7,469		2,511		2,237		2,165		1,674		1,514
Depreciation, amortization and impairment losses
Property, plant and equipment		914		982		1,035		1,081		1,008		983
Capitalized development expenses		245		259		265		555		303		342
IPR, brands and other intangible assets, etc.		1,156		1,160		1,094		1,143		1,100		1,111
Total		2,315		2,401		2,394		2,779		2,411		2,436

RECONCILIATION TABLE, NON-IFRS MEASUREMENTS

CASH CONVERSION

	2012												2013
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2
Net income		8,804			1,205			2,184			-6,255			1,204			1,516
Net income reconciled to cash		4,269			3,148			4,684			6,914			1,598			3,483
Cash flow from operating activities		731			-1,364			6,973			15,691			-2,970			4,291
Cash conversion		17.1	%		-43.3	%		148.9	%		226.9	%		-185.9	%		123.2	%

NET CASH, END OF PERIOD

	Dec 31		Mar 31		Jun 30
SEK million	2012		2013		2013
Cash and cash equivalents		44,682		37,444		38,479
+ Short term investments		32,026		34,641		26,335
- Borrowings, non-current		23,898		23,638		22,471
- Borrowings, current		4,769		5,084		4,018
- Post employment benefits		9,503		11,132		10,907
Net cash, end of period		38,538		32,231		27,418

Ericsson Second Quarter Report 2013 31

OTHER INFORMATION

	Apr - Jun				Jan - Jun						Jan - Dec
	2012		2013		2012			2013			2012
Number of shares and earnings per share
Number of shares, end of period (million)		3,305		3,305		3,305			3,305			3,305
Of which class A-shares (million)		262		262		262			262			262
Of which class B-shares (million)		3,043		3,043		3,043			3,043			3,043
Number of treasury shares, end of period (million)		90		80		90			80			85
Number of shares outstanding, basic, end of period (million)		3,215		3,225		3,215			3,225			3,220
Numbers of shares outstanding, diluted, end of period (million)		3,245		3,257		3,245			3,257			3,251
Average number of treasury shares (million)		69		81		65			82			76
Average number of shares outstanding, basic (million)		3,215		3,224		3,213			3,223			3,216
Average number of shares outstanding, diluted (million)1)		3,245		3,256		3,243			3,255			3,247
Earnings per share, basic (SEK)		0.35		0.46		3.13			0.83			1.80
Earnings per share, diluted (SEK)1)		0.34		0.45		3.10			0.82			1.78
Ratios
Days sales outstanding		—		—		111			103			86
Inventory turnover days		80		73		84			73			73
Payable days		57		50		63			55			57
Equity ratio (%)		—		—		52.5	%		51.2	%		50.4	%
Capital turnover (times)		1.2		1.3		1.1			1.2			1.3
Payment readiness, end of period		—		—		72,727			74,246			84,951
Payment readiness, as percentage of sales		—		—		34.2	%		34.6	%		37.3	%
Exchange rates used in the consolidation
SEK/EUR - average rate		—		—		8.87			8.56			8.70
- closing rate		—		—		8.77			8.79			8.58
SEK/USD - average rate		—		—		6.82			6.53			6.73
- closing rate		—		—		6.96			6.73			6.51
Other
Regional inventory, end of period,		22,266		20,284		22,266			20,284			19,353
Export sales from Sweden		25,794		23,555		52,988			49,709			106,997

¹⁾  Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share

NUMBER OF EMPLOYEES

	2012								2013
End of period	Mar 31		Jun 30		Sep 30		Dec 31		Mar 31		Jun 30
North America		16,281		15,872		15,486		15,501		15,404		15,047
Latin America		11,538		11,176		10,920		11,219		11,153		11,412
Northern Europe & Central Asia1)		21,341		21,457		21,334		21,211		21,043		21,148
Western & Central Europe		10,900		10,837		11,897		11,257		11,118		11,235
Mediterranean		11,858		11,986		12,321		12,205		12,015		12,405
Middle East		4,361		4,231		4,065		3,992		3,951		3,951
Sub Saharan Africa		2,317		2,277		1,669		2,014		1,967		2,101
India		12,567		12,644		13,269		14,303		14,588		16,183
North East Asia		13,016		13,233		13,853		14,157		14,088		14,059
South East Asia & Oceania		4,372		4,382		4,400		4,396		4,321		4,264
Total		108,551		108,095		109,214		110,255		109,648		111,805
1)Of which Sweden		17,767		17,890		17,768		17,712		17,550		17,264

Ericsson Second Quarter Report 2013 32

RESTRUCTURING CHARGES BY FUNCTION

	2012								2013
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2
Cost of sales		-496		-389		-455		-885		-698		-707
Research and development expenses		-19		-107		-33		-693		-552		-117
Selling and administrative expenses		-54		-98		-82		-136		-589		-110
Subtotal Ericsson excluding ST-Ericsson		-569		-594		-570		-1,714		-1,839		-934
Share in ST-Ericsson charges		-30		-190		-46		-46		—		—
Total		-599		-784		-616		-1,760		-1,839		-934
	2012								2013
Year to date, SEK million	Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec		Jan - Mar		Jan - Jun
Cost of sales		-496		-885		-1,340		-2,225		-698		-1,405
Research and development expenses		-19		-126		-159		-852		-552		-669
Selling and administrative expenses		-54		-152		-234		-370		-589		-699
Subtotal Ericsson excluding ST-Ericsson		-569		-1,163		-1,733		-3,447		-1,839		-2,773
Share in ST-Ericsson charges		-30		-220		-266		-312		—		—
Total		-599		-1,383		-1,999		-3,759		-1,839		-2,773

RESTRUCTURING CHARGES BY SEGMENT

	2012								2013
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2
Networks		-87		-167		-94		-905		-1,251		-316
Global Services		-473		-415		-441		-601		-385		-586
Of which Professional Services		-358		-302		-305		-371		-270		-389
Of which Network Rollout		-115		-113		-136		-230		-115		-197
Support Solutions		-9		-12		-29		-196		-111		-34
Unallocated		—		—		-6		-12		-92		2
Subtotal Ericsson excluding ST-Ericsson		-569		-594		-570		-1,714		-1,839		-934
ST-Ericsson		-30		-190		-46		-46		—		—
Total		-599		-784		-616		-1,760		-1,839		-934
	2012								2013
Year to date, SEK million	Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec		Jan - Mar		Jan - Jun
Networks		-87		-254		-348		-1,253		-1,251		-1,567
Global Services		-473		-888		-1,329		-1,930		-385		-971
Of which Professional Services		-358		-660		-965		-1,336		-270		-659
Of which Network Rollout		-115		-228		-364		-594		-115		-312
Support Solutions		-9		-21		-50		-246		-111		-145
Unallocated		—		—		-6		-18		-92		-90
Subtotal Ericsson excluding ST-Ericsson		-569		-1,163		-1,733		-3,447		-1,839		-2,773
ST-Ericsson		-30		-220		-266		-312		—		—
Total		-599		-1,383		-1,999		-3,759		-1,839		-2,773

Ericsson Second Quarter Report 2013 33