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

January 29, 2015

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

Torshamnsgatan 21, 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 orForm 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 STATEMENTS ON FORM F-3 (NO. 333-180880) AND ON FORM S-8 (Nos. 333-196453, 333-161683, 333-161684 AND 333-167643) OF TELEFONAKTIEBOLAGET LM ERICSSON (PUBL.) AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED WITH OR FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION.

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: January 29, 2015

Fourth quarter and full-year report 2014, Stockholm, January 27, 2015, as adjusted for incorporation by reference.

FOURTH QUARTER HIGHLIGHTS1)		Read more (page)
•	Sales in the quarter were SEK 68.0 (67.0) b., a growth of 1% YoY and 18% QoQ.		3
•	The sales growth YoY was mainly driven by the Middle East, Europe and Asia, offset by sales decline in North America.		2, 12
•	Gross margin increased YoY to 36.6% with improved margins across all segments despite normal high share of project completions in the quarter.		4
•	Operating income improved to SEK 6.3 b. driven primarily by higher software sales and efficiency enhancements. Increased operating expenses, and losses related to currency hedge contracts, impacted operating income negatively.		4
FULL-YEAR HIGHLIGHTS1)		Read more (page)
•	Sales were 228.0 (227.4) b., flat YoY.		5
•	Operating income was SEK 16.8 (17.8) b. with an operating margin of 7.4% (7.8%). Gross margin improved due to a higher share of capacity business, offset by increased operating expenses and currency hedge losses.		5
•	Segment Networks showed an operating margin of 12% (10%) driven by improved business mix and earlier actions to improve commercial and operational efficiency.		7
•	Cash flow from operating activities was SEK 18.7 (17.4) b. Cash conversion2) was 84%, above the target of 70%.		14
•	The Board of Directors proposes a dividend for 2014 of SEK 3.40 (3.00) per share.		2, 17

¹⁾  In this report, unless otherwise indicated, commentary on sales, gross margin and operating income reflects adjustments made for full year 2013 of SEK 2.1 b., and for Q4 2013 of SEK 3.7 b. for the initial payment from Samsung following the January 2014 licensing agreement with Samsung.

Commentary on net income and EPS reflects adjustments for full year 2013 of SEK 1.6 b. and for Q4 2013 of SEK 2.9 b.

Unless otherwise indicated, all tables display reported numbers.

Calculation of adjustments: The initial payment from Samsung in Q4 2013 was SEK 4.2 b. Half of this amount, SEK 2.1 b., relates to 2013. Dividing SEK 2.1 b. by 4 (quarters), and deducting this amount from the SEK 4.2 b. (total payment) gives the adjustment for Q4 2013 of SEK 3.7 b.

SEK b.	Q4 2014			Q4 2013			YoY change			Q3 2014			QoQ change			Full year 2014			Full year 2013
Net sales		68.0			67.0			1	%		57.6			18	%		228.0			227.4
Gross margin		36.6	%		37.1	%		—			35.2	%		—			36.2	%		33.6	%
Operating income		6.3			9.1			-30	%		3.9			63	%		16.8			17.8
Operating margin		9.3	%		13.5	%		—			6.7	%		—			7.4	%		7.8	%
Net income		4.2			6.4			-35	%		2.6			59	%		11.1			12.2
EPS diluted, SEK		1.29			1.97			-35	%		0.81			59	%		3.54			3.69
Cash flow from operating activities		8.6			14.6			-41	%		-1.4						18.7			17.4
Net cash, end of period2)		27.6			37.8						29.4			-6	%		27.6			37.8

2) Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 35.

Ericsson Fourth Quarter and Full-Year Report 2014 1

CEO Comments

Reported sales in the quarter increased by 1% YoY, with improved operating income in the core business.

In the quarter, strong sales growth in the Middle East, Europe and Asia was offset by a continued decline in North America.

Mobile broadband sales increased both YoY and QoQ as we continued to deliver on previously communicated key contracts. These contracts contributed to sales growth in mainland China, Taiwan, Japan, India and parts of Europe. In mainland China the majority of the business in the quarter was related to the continued LTE deployments.

Sales in North America were mainly driven by operator investments in capacity and quality enhancements also this quarter, although at a slower pace. Business activity slowed further in the quarter as operators remained focused on cash flow optimization in order to finance major acquisitions and spectrum auctions.

Consumer demand and mobile data traffic growth continues to be strong in North America. However, with current visibility, and for the reasons above, we anticipate the North American mobile broadband business to remain slow in the short-term.

Global Services showed stable growth with momentum for professional services driven by managed services and systems integration sales. During the quarter, 17 new managed services contracts were signed, including a pan-India contract.

Operating income in the fourth quarter improved YoY, primarily driven by higher software sales and efficiency enhancements. This was partly offset by higher operating expenses, related to the planned ramp up of investments in targeted areas. The net currency effect, when considering both transaction and translation exposure as well as volatility reductions, contributed somewhat positively to the operating income.

For the full year 2014, Ericsson showed stable sales development with solid operating margin. A sales

decline in North America of -8% was compensated by growth in the Middle East, Europe and Asia. Operating margin improved in the core business driven by higher share of capacity sales and efficiency enhancements. This was partly offset by currency hedge losses, investments in targeted areas as well as losses related to the modems operations.

The more than 100 IPR licensing agreements signed to date show the value of our R&D investments and enable industry players to continue to innovate and bring exciting products to the market. In 2014, IPR revenues showed a steady positive development. We remain committed to licensing our standard-essential patents on fair, reasonable and non-discriminatory (FRAND) terms.

At the Capital Markets Day (CMD) in November we outlined the progress on our Networked Society strategy, with focus on market development, growth agenda, transformation and profitability. In line with our strategy, we have invested into our targeted areas; IP networks, Cloud, TV & Media, Industry & Society and OSS & BSS. Sales in targeted areas showed a growth of more than 10% in 2014.

We continue to proactively identify efficiency opportunities in the Company. The cost and efficiency program presented at the CMD, with the ambition to achieve savings of approximately SEK 9 b. with full effect during 2017, is progressing. Activities for the discontinuation of the modems business are included in the program and are ahead of plan.

We improved cash flow from operating activities in 2014 and generated a full-year cash flow of SEK 18.7 (17.4) b. For the third consecutive year we have exceeded our cash conversion target of more than 70%. This resulted in a solid balance sheet, enabling us to continue to implement our strategy and to deliver consistent returns to our shareholders. The Board of Directors proposes a dividend for 2014 of SEK 3.40 (3.00) per share, an increase of 13%.

Hans Vestberg

President and CEO

Ericsson Fourth Quarter and Full-Year Report 2014 2

Financial highlights

SEK b.	Q4 2014			Q4 2013			YoY change			Q3 2014			QoQ change			Full year 2014			Full year 2013
Net sales		68.0			67.0			1	%		57.6			18	%		228.0			227.4
Of which Networks		34.1			34.8			-2	%		30.0			14	%		117.5			117.7
Of which Global Services		29.8			27.2			10	%		24.5			22	%		97.7			97.4
Of which Support Solutions		4.0			5.1			-21	%		3.1			31	%		12.7			12.2
Of which Modems		0.1			0.0			—			0.1			1	%		0.2			0.0
Gross income		24.9			24.9			0	%		20.3			23	%		82.4			76.4
Gross margin (%)		36.6	%		37.1	%		—			35.2	%		—			36.2	%		33.6	%
Research and development expenses		-9.7			-8.9			9	%		-9.3			4	%		-36.3			-32.2
Selling and administrative expenses		-8.1			-7.2			12	%		-6.0			35	%		-27.1			-26.3
Other operating income and expenses		-0.8			0.3			—			-1.1			-26	%		-2.2			0.1
Operating income		6.3			9.1			-30	%		3.9			63	%		16.8			17.8
Operating margin		9.3	%		13.5	%		—			6.7	%		—			7.4	%		7.8	%
for Networks		13	%		17	%		—			11	%		—			12	%		10	%
for Global Services		7	%		8	%		—			7	%		—			6	%		6	%
for Support Solutions		11	%		37	%		—			-4	%		—			0	%		12	%
for Modems		—			—			—			—			—			—			—
Financial net		-0.5			-0.1			222	%		-0.1			259	%		-1.0			-0.7
Taxes		-1.7			-2.5			-32	%		-1.1			49	%		-4.7			-4.9
Net income		4.2			6.4			-35	%		2.6			59	%		11.1			12.2
Restructuring charges		-0.8			-1.0			-16	%		-0.3			188	%		-1.5			-4.5

FOURTH QUARTER COMMENTS¹⁾

Net sales

Eight out of ten regions showed growth with the Middle East, Western and Central Europe and South East Asia as the main contributors. Sales in North America decreased as operators remained focused on cash flow optimization to finance major acquisitions and spectrum auctions.

Sales growth for segment Global Services YoY was driven by professional services.

Sales increased sequentially driven by mobile broadband coverage projects, primarily in Asia and Europe, higher software sales and IPR revenues. The increase was partly offset by the decline in capacity sales in North America. Global Services showed strong sequential growth driven by both Professional Services and Network rollout.

During the quarter the SEK has continued to weaken towards a number of currencies, including the USD, impacting sales positively in the quarter.

1) See note 1) on page 1

Ericsson Fourth Quarter and Full-Year Report 2014 3

Gross margin¹⁾

Despite the negative impact from increased LTE coverage projects in mainland China, gross margin increased YoY driven by higher software sales and efficiency enhancements.

Sequentially, the gross margin improved driven by higher software sales and increased IPR revenues. This was partly offset by coverage projects in mainland China and a higher share of Global Services sales with a large share of project completions in the quarter.

Restructuring charges

Restructuring charges were in line with Q4 last year. Sequentially, restructuring charges increased mainly related to implementation of the service delivery strategy. In the quarter, implementation started of the cost and efficiency program that was announced in November 2014. The program did not generate any significant restructuring charges in the quarter.

With current visibility, total restructuring charges for 2015 are estimated at approximately SEK 3-4 b.

Operating expenses (opex)

Total opex increased YoY, for R&D as well as for Selling and G&A expenses. The increase mainly relates to investments in the targeted areas and negative currency effects, partly offset by reduced expenses for the modems business.

Other operating income and expenses

The revaluation and realization effects from currency hedge contracts were SEK -1.0 b. of which the majority was realized, SEK -0.8 b. This is to be compared with the total impact from hedges of SEK -1.3 b. in Q3 2014 and SEK 0.1 b. in Q4 2013.

The negative effect derives mainly from the hedge contract balance in USD, which has further decreased in value. The SEK has weakened towards the USD between September 30 (SEK/USD rate 7.27) and December 31, 2014 (SEK/USD rate 7.79).

Operating income¹⁾

Operating income improved YoY. This was primarily driven by higher software sales and efficiency enhancements. Operating income was negatively impacted by higher operating expenses related to the planned increases in of investments in targeted areas as well as negative effects from currency hedge contracts. However, the net currency effect had a positive impact on operating income.

QoQ operating income improved driven by higher sales and improved gross margin. This was partly offset by increased opex and restructuring charges.

Financial net

The negative financial net increased YoY, mainly due to negative revaluation of foreign currencies and lower interest income from the portfolio of interest bearing assets. Sequentially, the negative financial net increased as an effect of lower interest income and currency revaluation effects.

Net income and EPS¹⁾

Net income and EPS diluted increased following the improved operating income.

1) See note 1) on page 1.

Ericsson Fourth Quarter and Full-Year Report 2014 4

FULL-YEAR COMMENTS¹⁾

Reported sales were flat and amounted to SEK 228.0 (227.4) b. Strong sales growth in China, the Middle East and India was offset by lower sales in North America and Japan, where several larger mobile broadband coverage projects were completed. During the year the SEK has weakened towards a number of currencies, including the USD, which has had a gradual positive impact on sales.

Segment Networks and Global Services sales were flat YoY, while Support Solutions sales grew by 3%.

IPR and licensing revenues amounted to SEK 9.9 (10.6) b. For 2013, IPR revenues included an initial payment of SEK 4.2 b. from Samsung for patent licensing.

The mix of sales by commodity was: Software 24% (24%), hardware 34% (34%) and services 42% (42%).

Restructuring charges amounted to SEK 1.5 (4.5) b. and were mainly related to the continued implementation of the service delivery strategy. Implementation started on the cost and efficiency program announced in November 2014. As part of its continuous business transformation, annual restructuring normally generates charges of approximately SEK 2 b. In addition, the cost and efficiency program will generate approximately SEK 3-4 b. in restructuring charges in 2015-2017.

With current visibility, total restructuring charges for 2015 are estimated at approximately SEK 3-4 b.

Gross margin increased to 36.2%, due to a business mix with higher share of capacity sales, lower restructuring charges and efficiency enhancements. The Global Services share of Group sales was flat at 43%, where the share of Network Rollout sales declined to 12% (14%) as a result of fewer large coverage projects.

Total opex increased to SEK 63.4 (58.5) b. due to increased organic expenses in targeted areas and acquisitions such as Microsoft Mediaroom as well as inclusion of the modems operations.

In line with the strategy to establish leadership in targeted areas, the company has increased its R&D activities, primarily in IP and Cloud. In addition the modems operations were taken over from the ST-Ericsson joint venture. This resulted in total R&D expenses of SEK 36.3 (32.2) b.

Other operating income and expenses decreased to SEK -2.2 (0.1) b. of which SEK -2.8 (0.5) b. relates to negative currency hedge effects. This derives from the hedge contract balance in USD, which has further decreased in value. The SEK has weakened towards the USD between December 31, 2013 (SEK/USD rate 6.46) and December 31, 2014 (7.79).

Operating income increased slightly to SEK 16.8 b., positively impacted by an improved gross margin. Operating income was negatively impacted by higher operating expenses and negative effects from hedge contracts. Operating margin was 7.4%.

Financial net amounted to SEK -1.0 (-0.7) b. The difference is mainly attributable to foreign currency revaluation effects.

The tax rate for 2014 was 30% compared with 29% in 2013. Tax costs were SEK -4.7 (-4.9) b.

Net income¹⁾ increased to SEK 11.1 b., for the same reasons as for the increase in operating income.

EPS diluted was SEK 3.54. EPS.

1) See note 1) on page 1

Ericsson Fourth Quarter and Full-Year Report 2014 5

Segment results

NETWORKS

SEK b.	Q4 2014			Q4 2013			YoY change			Q3 2014			QoQ change			Full year 2014			Full year 2013
Net sales		34.1			34.8			-2	%		30.0			14	%		117.5			117.7
Operating income		4.3			5.9			-26	%		3.2			36	%		13.5			11.3
Operating margin		13	%		17	%		—			11	%		—			12	%		10	%
Restructuring charges		-0.1			-0.3			-55	%		-0.1			78	%		-0.4			-2.2

FOURTH QUARTER COMMENTS¹⁾

Net sales

The mobile broadband business in North America was slow. At the same time sales were strong in Western and Central Europe, the Middle East, North East Asia as well as in Northern Europe and Central Asia.

Sales increased QoQ driven by growth in Japan, Taiwan and mainland China as a result of delivering on previously communicated key contracts. Sales related to Packet Core showed growth sequentially, driven by mobile data traffic growth in both developed and developing markets.

Operating income and margin

The operating income continued to develop well and improved YoY driven by strong software sales and efficiency enhancements. The improvement was partly offset by higher opex, primarily for R&D, and the negative impact from currency hedge contracts.

The negative effect from hedges was SEK -0.8 (0.1) b. YoY.

Sequentially, the improved operating income was mainly driven by larger volumes and higher software sales but was partly offset by higher opex and more LTE coverage projects.

Business update

The Ericsson Radio Dot system was taken into commercial operation in the quarter. Several advanced LTE technology innovations were demonstrated in the quarter, reflecting the company’s technology leadership.

The Ericsson solution for VoLTE continued to gain momentum across regions. Two customers in Japan launched commercial VoLTE services in the quarter.

To date 146 contracts for the multi-application IP router, SSR 8000, has been signed, since the launch in December 2011. During the quarter, 12 new contracts were signed of which two were for fixed networks.

1) See note 1) on page 1.

Ericsson Fourth Quarter and Full-Year Report 2014 6

FULL-YEAR COMMENTS¹⁾

Sales were lower in North America where two large LTE coverage projects were completed. In addition, operators in the US increased their focus on cash flow optimization during the second half of the year with reduced network investments as a consequence. The decline in the North American business was partly offset by increased mobile broadband sales in the Middle East. Large LTE network deployments continued in mainland China. In 2014, operators increased their focus on improving network performance as a key

differentiator. This, in combination with continued data traffic increase, and introduction of new services such as VoLTE, led to increased capacity business in Radio, IMS and IP.

Operating income improved significantly compared with last year due to increased capacity business, earlier actions to improve commercial and operational efficiency and lower restructuring charges. This was partly offset by a negative effect from currency hedges of SEK -2.1 (0.5) b. and higher operating expenses mainly in IP and Cloud. Restructuring charges amounted to SEK -0.4 (-2.2) b.

1) See note 1) on page 1

Ericsson Fourth Quarter and Full-Year Report 2014 7

GLOBAL SERVICES

SEK b.	Q4 2014			Q4 2013			YoY change			Q3 2014			QoQ change			Full year 2014			Full year 2013
Net sales		29.8			27.2			10	%		24.5			22	%		97.7			97.4
Of which Professional Services		21.4			18.8			14	%		17.8			20	%		70.8			66.4
Of which Managed Services		7.7			6.6			18	%		7.2			8	%		27.2			25.5
Of which Network Rollout		8.4			8.4			0	%		6.7			25	%		26.8			31.0
Operating income		1.9			2.1			-7	%		1.6			21	%		6.1			6.2
Of which Professional Services		2.5			2.6			-6	%		2.1			20	%		8.5			9.0
Of which Network Rollout		-0.5			-0.5			-1	%		-0.5			18	%		-2.5			-2.8
Operating margin		7	%		8	%		—			7	%		—			6	%		6	%
for Professional Services		12	%		14	%		—			12	%		—			12	%		14	%
for Network Rollout		-6	%		-6	%		—			-7	%		—			-9	%		-9	%
Restructuring charges		-0.6			-0.6			-3	%		-0.1			—			-0.8			-2.0

FOURTH QUARTER COMMENTS

Net sales

Sales increased YoY, driven by Professional Services with strong development in Managed Services and Consulting and Systems Integration.

Global Services reported sales increased in nine out of ten regions and Network Rollout sales were unchanged YoY.

Growth in Global Services sales QoQ was driven by higher project activity in Network Rollout and by Professional Services where Consulting and Systems Integration, as well as Network Design and Optimization, showed strong development. All ten regions showed double-digit growth QoQ.

Operating income and margin

Global Services operating income declined YoY, negatively impacted by currency hedge effects and a higher share of managed services contracts in the transformation phase. Although Network Rollout still shows negative result, good progress has been made in returning this business to profitability.

Sequentially Global Services operating income improved driven by higher sales in Professional Services.

Business update

During the quarter, 17 new managed services contracts were signed including a pan-India contract with Reliance Communications. There is continued momentum for Consulting and Systems Integration and during the quarter 22 significant contracts were signed. The business momentum for managed services continues as operators look to outsource operations to improve network performance, quality and reliability while maintaining cost control.

Ericsson Fourth Quarter and Full-Year Report 2014 8

FULL-YEAR COMMENTS

Sales for Global Services were flat YoY compared with 2013, despite strong development in Managed Services and in Network Design and Optimization. There was continued momentum for Professional Services with double-digit sales growth during the second half of the year. Sales in targeted areas developed positively and in line with plan. Network Rollout sales declined primarily due to a lower share of coverage projects.

Global Services operating income was flat YoY. Network Rollout margin gradually improved during the

year due to the declining dilutive effect from the European network modernization projects. Professional Services operating margin declined to 12% (14%) partly due to negative currency hedge effects and partly due to the high share of managed services contracts in the transformation phase.

Restructuring charges declined to SEK -0.8 (-2.0) b. The implementation of service delivery strategy, of moving local service delivery resources to global centers, continued but at a slower pace during the first half of the year.

Other information	Q4 2014		Q3 2014		Q2 2014		Q1 2014		Full year 2014		Full year 2013
Number of signed Managed Services contracts		17		17		21		16		71		84
Number of signed significant consulting & systems integration contracts 1)		22		13		12		9		56		31
Number of Ericsson services professionals, end of period		65,000		65,000		64,000		61,000		65,000		64,000

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

Ericsson Fourth Quarter and Full-Year Report 2014 9

SUPPORT SOLUTIONS

SEK b.	Q4 2014			Q4 2013			YoY change			Q3 2014			QoQ change			Full year 2014			Full year 2013
Net sales		4.0			5.1			-21	%		3.1			31	%		12.7			12.2
Operating income		0.4			1.9			-76	%		-0.1			—			0.0			1.5
Operating margin		11	%		37	%		—			-4	%		—			0	%		12	%
Restructuring charges		0.0			0.0			0	%		-0.1			-61	%		-0.1			-0.2

FOURTH QUARTER COMMENTS¹⁾

Net sales

Sales declined YoY. The overall transition from traditional telecom software license business models to recurrent license revenue deals continues, based on the Ericsson software model.

Sales increased QoQ with good development across the product portfolio.

Operating income and margin

Operating income recovered in the quarter, reaching a positive result of SEK 0.4 b. and double-digit operating margin. The YoY decline is primarily due to higher R&D investments in the targeted area of TV & Media.

Operating income improved QoQ due to higher sales, including higher IPR revenues.

Business update

Demand for OSS and BSS continued to be strong. Customer interest to partner with vendors that can

address an end-to-end suite of OSS and BSS solutions is increasing. With its complete OSS and BSS offerings, the company is well positioned to take on this role.

The activity is high in the media industry with mergers and acquisitions among leading players, driving the IP transformation of the industry. The company is well positioned through recent acquisitions and Ericsson MediaFirst, the new cloud-based TV platform.

FULL-YEAR COMMENTS¹⁾

Reported sales grew of 3% driven by growth in OSS and in TV & Media through the Mediaroom acquisition. Regions North America and North East Asia showed strong growth while Latin America and Sub-Saharan Africa declined, primarily due to lower BSS sales.

Operating income declined slightly, partly due to lower sales in legacy systems and partly due to acquired operating expenses.

1) See note 1) on page 1

Ericsson Fourth Quarter and Full-Year Report 2014 10

MODEMS

SEK b.	Q4 2014		Q4 2013		YoY change			Q3 2014		QoQ change			Full year 2014		Full year 2013
Net sales		0.1		0.0		—			0.1		1	%		0.2		—
Operating income		-0.1		-0.5		-84	%		-0.7		-88	%		-2.0		-0.5
Operating margin		—		—		—			—		—			—		—
Restructuring charges		0.0		0.0		—			0.0		—			0.0		—

Background

Ericsson took over the LTE thin modem operations as part of the breakup of the joint venture with STMicroelectronics in August 2013. Since the integration, the modems market developed in a direction that reduced the addressable market for thin modems. In addition, there is strong competition, price erosion and an accelerating pace of technology innovation. Success in this evolved market requires significant R&D investments. As a consequence, Ericsson announced, on September 18 2014, the discontinuation of further development of modems and the shift of approximately 500 R&D resources to Networks to pursue growth opportunities in the radio business.

Operating income

Operating income was SEK -0.1b. in the quarter and SEK -2.0 b. for the full year.

During the quarter good progress has been made with the discontinuation of the modems business and execution is ahead of plan. During the quarter end-of-life agreements were signed with existing customers.

The discontinuation of the modems business will lead to a significant reduction in costs. During the quarter good progress was made and activities are ahead of plan.

Ericsson Fourth Quarter and Full-Year Report 2014 11

Regional Sales

					Fourth quarter 2014									Change			Full year		Change
SEK b.	Networks		Global Services		Support Solutions		Modems		Total		YoY			QoQ			2014
North America		5.0		7.1		1.0		0.0		13.1		-5	%		-7	%		54.5		-8	%
Latin America		3.0		3.3		0.3		0.0		6.6		-3	%		12	%		22.6		3	%
Northern Europe and Central Asia		2.7		1.3		0.1		0.0		4.1		11	%		29	%		12.4		6	%
Western and Central Europe		2.7		3.3		0.2		0.0		6.1		17	%		31	%		19.7		7	%
Mediterranean		3.1		4.2		0.3		0.0		7.5		6	%		44	%		23.0		-5	%
Middle East		3.5		2.8		0.5		0.0		6.9		16	%		14	%		21.3		22	%
Sub-Saharan Africa		1.1		1.4		0.1		0.0		2.6		1	%		6	%		8.7		-13	%
India		1.2		1.0		0.2		0.0		2.4		20	%		18	%		7.7		25	%
North East Asia		6.5		2.6		0.2		0.0		9.2		7	%		31	%		27.6		1	%
South East Asia and Oceania		2.7		2.1		0.2		0.0		5.0		16	%		31	%		15.9		0	%
Other1)		2.8		0.8		1.0		0.1		4.7		-35	%		37	%		14.7		-2	%
Total		34.1		29.8		4.0		0.1		68.0		1	%		18	%		228.0		0	%

¹⁾  Region “Other” includes licensing revenues, broadcast services, power modules, mobile broadband modules, Ericsson-LG Enterprise and other businesses.

North America

Sales of mobile broadband in the quarter continued to be driven by network quality and capacity expansions, however at lower levels as operators remained focused on cash flow optimization to finance acquisitions and spectrum auctions. The professional services business was driven by network ICT transformation contracts, including modernization of OSS and BSS.

Full-year sales declined, driven by lower network sales as a result of large mobile network coverage projects coming to an end, and increased operator focus on cash flow in the second half of the year. Sales in Support Solutions and Professional Services continued to grow, driven by OSS and BSS modernization

Latin America

Sales decreased slightly YoY. The business continued to be driven primarily by operator investments in mobile broadband coverage projects and related services. Currency restrictions impacted investments in parts of the region.

Full-year sales increased driven by mobile broadband coverage projects and network quality investments, partly offset by currency restrictions.

Northern Europe and Central Asia

Sales grew driven primarily by mobile broadband infrastructure investments in Russia. Global Services sales increased driven by Professional Services business. TV & Media showed strong development in the quarter.

Full-year sales increased, driven primarily by mobile broadband deployments in Russia with sales of SEK 6.7 (5.6) b. Professional Services sales grew, driven by network design and optimization services. TV & Media business showed positive development improvement.

Western and Central Europe

Sales increased YoY driven primarily by mobile broadband deployments and investments in network quality. Demand for managed services continued as operators seek network quality and operational efficiencies.

The European modernization projects came to an end during in 2014. Sales growth was increasingly driven by investments in network quality and capacity during the year.

Mediterranean

Sales in the quarter increased YoY driven mainly by mobile broadband capacity expansion business and managed services.

Full-year sales decreased as the European modernization projects came to an end while managed services contributed positively to sales.

Middle East

Sales continued to show good growth YoY, driven by mobile broadband projects and capacity expansions across the region. Overall demand for mobile broadband is driven by the rapid increase in data traffic and coverage requirements for new mobile licenses.

Full-year sales growth was driven by mobile broadband investments related to new licenses and growth in data traffic in both advanced and developing markets.

Ericsson Fourth Quarter and Full-Year Report 2014 12

Sub-Saharan Africa

Sales increased YoY on the back of increased spending by customers in key markets. Lower handset prices is the key driver of mobile data traffic growth. This, together with regulatory quality requirements, drove mobile broadband investments.

Full-year sales declined but recovered in the second half of the year, mainly driven by operator focus on network traffic and quality management. This resulted in a continued demand for managed services.

India

Sales increased YoY mainly due to higher operator spending driven by continued growth in mobile data traffic. Global Services sales showed a strong development mainly as a result of the first pan-India managed services contract.

Full-year sales growth was driven by mobile broadband infrastructure investments. Increased smartphone penetration drove growth in mobile data usage.

North East Asia

The sales increase YoY was partly offset by continued lower network investment levels in Korea. Deliveries of previously awarded 4G/LTE contracts impacted sequential sales positively.

Full-year sales increased in mainland China and Taiwan as a result of delivering on previously awarded 4G/LTE contracts. The increase was partly offset by reduced network investment levels in Korea and Japan.

South East Asia and Oceania

Sales growth was predominantly driven by mobile broadband coverage projects. TV & Media developed favorably in the quarter, contributing to growth in Support Solutions.

Full-year sales remained flat. Growth in major rollout projects in Australia compensated for a decline in Indonesia where major 3G projects peaked in 2013 due to the timing of investment cycles.

Other

Sales declined YoY, impacted by last year’s initial payment from Samsung. Sales were strong sequentially, driven by licensing revenues.

Full-year sales declined somewhat due to exit of the telecom and power cable businesses in 2013 as well as lower IPR revenues. Broadcast services grew, driven by the acquired Red Bee media business that was fully consolidated during second half 2014.

Ericsson Fourth Quarter and Full-Year Report 2014 13

Cash flow

SEK b.	Q4 2014			Q4 2013			Q3 2014			Full year 2014			Full year 2013
Net income reconciled to cash		8.3			12.5			5.0			22.3			22.0
Changes in operating net assets		0.3			2.1			-6.3			-3.6			-4.6
Cash flow from operating activities		8.6			14.6			-1.4			18.7			17.4
Cash flow from investing activities		-1.7			-11.4			-0.7			-7.5			-11.1
Cash flow from financing activities		0.4			3.5			-1.3			-18.2			-9.5
Net change in cash and cash equivalents		8.9			6.9			-1.0			-1.1			-2.6
Cash conversion (%)1)		104	%		117	%		-27	%		84	%		79	%

FOURTH QUARTER COMMENTS

Cash flow from operating activities declined YoY, mainly as a result of delivery on previously awarded key contracts.

Investing activities amounted to SEK -1.7 b. and investments in property, plant and equipment were SEK -1.6 b.

Short-term investments was SEK 4.1 b.

No major financing activities occurred in the quarter.

Cash outlays regarding restructuring amounted to approximately SEK 0.2 b. in the quarter.

Despite negative effects from currency, days sales outstanding and inventory days decreased sequentially.

Accounts payable days decreased by one day.

Working capital KPIs, number of days	Jan-Dec 2014		Jan-Sep 2014		Jan-Jun 2014		Jan-Mar 2014		Jan-Dec 2013
Sales outstanding		105		111		113		112		97
Inventory		64		69		70		72		62
Payable		56		57		61		62		53

FULL-YEAR COMMENTS

Cash flow from operating activities was positive at SEK 18.7 (17.4) b.

Investments in property, plant and equipment were SEK 5.3 (4.5) b., representing 2% of sales, primarily related to test sites and equipment for R&D and network operation centers as well as manufacturing and repair operations.

Investments are being made in three new global ICT centers. The centers will support R&D and services in developing and verifying solutions more efficiently and bringing innovation faster to the market. The first center, in Linköping, Sweden, was opened in 2014.

Total investing activities amounted to SEK 7.5 (11.1) b. Acquisitions and divestments, net, were SEK 4.4 (2.7) b. The acquisitions are strategic investments made to strengthen the position in targeted areas.

In 2014, approximately SEK 8 b. of debt outstanding was repaid:

• A SEK 4 b. EIB loan, with original maturity in 2015, was repaid.

• A USD 300 m. bond, with original maturity in 2016, was repaid.

• A EUR 219 m. bond matured and was repaid in full.

Days sales outstanding (DSO) increased to 105 (97) days mainly due to geographical mix and negative currency effects. Inventory turnover days increased to 64 (62) days due to a larger share of projects and negative currency effects.

Accounts payable days increased to 56 (53) days.

Provisions amounted to SEK 4.4 (5.4) b. at year end reflecting implementation of previous years’ efficiency programs and headcount reductions.

1) Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 35.

Ericsson Fourth Quarter and Full-Year Report 2014 14

Financial Position

SEK b.	Dec 31 2014			Sep 30 2014			Jun 30 2014			Mar 31 2014			Dec 31 2013
+ Short-term investments		31.2			34.0			35.3			41.8			35.0
+ Cash and cash equivalents		41.0			32.0			33.1			38.1			42.1
Gross cash		72.2			66.1			68.4			79.9			77.1
- Interest bearing liabilities and post-employment benefits		44.5			36.6			35.9			36.3			39.3
Net cash1)		27.6			29.4			32.5			43.6			37.8
Equity		145.3			143.4			138.0			142.6			141.6
Total assets		293.6			274.0			265.5			267.2			269.2
Capital turnover (times)		1.2			1.2			1.2			1.1			1.3
Equity ratio (%)		49.5	%		52.3	%		52.0	%		53.4	%		52.6	%

FOURTH QUARTER COMMENTS

Gross cash increased in the quarter due to strong operating cash flow. However, net cash decreased in the quarter as a result of higher post-employment benefits of SEK 6.4 b. due to lower discount rates.

FULL-YEAR COMMENTS

The average maturity of long-term borrowings as of December 31, 2014, was 5.7 years, compared with 5.1 years 12 months ago.

The net cash decreased from SEK 37.8 to 27.6 b. as a result of increased post-employment benefits of SEK 10.6 b. due to lower discount rates.

Ericsson has an unutilized Revolving Credit Facility of USD 2.0 b.

Debt maturity profile, Parent Company, SEK b.

1) Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 35.

Ericsson Fourth Quarter and Full-Year Report 2014 15

Dividend, AGM and Annual Report

Dividend proposal

The Board of Directors will propose to the Annual General Meeting to resolve on a dividend of SEK 3.40 (3.00) per share, representing some SEK 11.2 (9.7) b., and April 16, 2015, as the record date for payment of dividend. The dividend reflects this year’s earnings and balance sheet structure, as well as coming years’ business plans and expected economic development.

Ericsson Annual General Meeting

The Annual General Meeting of shareholders will be held on April 14, 2015, 15.00 (CET) at Stockholm Waterfront Congress Centre, Stockholm, Sweden.

Annual Report

The annual report will be made available on our website www.ericsson.com and at the Ericsson headquarters, Torshamnsgatan 21, Kista, Stockholm, Sweden, in the first weeks of March.

Ericsson Fourth Quarter and Full-Year Report 2014 16

Other information

Ericsson Capital Markets Day 2014

On November 13, 2014, Ericsson held its Capital Markets Day (CMD) in Stockholm. The company gave an update on the progress of its Networked Society strategy, with focus on market development, growth agenda and profitability.

Ericsson announced additional improvement activities and ways to accelerate cost reductions to achieve savings of approximately SEK 9 b. with full effect during 2017.

To reach the targeted SEK 9 b. savings, and with current visibility, it is estimated that the new and accelerated activities will generate restructuring charges of SEK 3-4 b during the full duration of the three-year program. It is estimated that half of the savings will reduce Ericsson’s operating expenses and the other half will impact cost of sales.

Accelerated efficiency measures will primarily relate to five key areas: portfolio streamlining and ways of working in R&D; structural enhancements in IS/IT; accelerated service delivery transformation; supply chain efficiencies; as well as structural efficiency gains in G&A. Savings will include both headcount reductions and savings in external costs.

Measures will include both new and already initiated actions, such as the discontinuation of the modems operations and savings from establishment of global ICT centers. Progress updates will be included in Ericsson’s earnings reports.

Ericsson acquired Ambient Corporation

On October 1, 2014, Ericsson announced that it has completed the acquisition of Ambient Corporation, a US-based provider of smart grid communications technology for utilities. Ambient’s innovative platform enables utilities to deploy and integrate multiple smart grid applications and technologies, in parallel on a single communications infrastructure. The acquisition increases Ericsson’s ability to help utilities maximize their investments in smart grids.

Ambient also provides product and software maintenance and implementation services, as well as a variety of smart grid consulting services related to product development, network management, as well as smart grid architecture and deployment.

Ambient will be integrated into Ericsson’s Global Services organization.

POST-CLOSING EVENTS

Ericsson announced change in executive leadership team

On January 15, 2015, Ericsson announced that Johan Wibergh, Executive Vice President and Head of Segment Networks, will leave his position to take on a role outside of Ericsson. Wibergh joined Ericsson in 1996 and has since held a number of executive positions within the company. Since 2008, Wibergh has also been part of Ericsson’s Executive Leadership Team. Although stepping down from his position immediately, Johan Wibergh will remain available to Ericsson until April 30, 2015 when he formally leaves the company.

Effective January 15, 2015, Hans Vestberg will, in addition to his role as President and CEO, assume the role as Head of Segment Networks.

Ericsson took legal action against Apple

On January 12, 2015, Apple filed a lawsuit asking the United States District Court for the Northern District of California to find that it does not infringe a small subset of Ericsson’s patents. On January 14, 2015, following Apple’s legal action, Ericsson filed a complaint in the United States District Court for the Eastern District of Texas requesting a ruling on Ericsson’s proposed global licensing fees with Apple. During the past two years of negotiations, the companies have not been able to reach an agreement on licensing of Ericsson’s patents that enable Apple’s mobile devices to connect with the world and power many of their applications. Ericsson filed the suit in order to receive an independent assessment on whether Ericsson’s global licensing offer complies with Ericsson’s FRAND commitment.

The global license agreement for mobile technology between Ericsson and Apple has expired and Apple has declined to take a new license on offered FRAND terms.

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

During the fourth quarter of 2014, 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 611 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 fourth quarter of 2014 would be substantially lower than such gross revenues. During the fourth quarter of 2014 Ericsson and Sherkate Khadamate Ertebati Rightel (“Rightel”) has had discussions relating to potential future sales by Ericsson of telecommunications infrastructure related products and services to Rightel.

Ericsson Fourth Quarter and Full-Year Report 2014 17

Risk factors

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 2013. Compared to the risks described in the Annual Report 2013, no material, new or changed risk factors or uncertainties have been identified in the year.

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;

• 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, January 27, 2015

Telefonaktiebolaget LM Ericsson

Hans Vestberg, President and CEO

Org. Nr. 556016-0680

Date for next report: April 23, 2015

Ericsson Fourth Quarter and Full-Year Report 2014 18

Auditors’ review report

Introduction

We have reviewed the condensed interim financial information (interim report) of Telefonaktiebolaget LM Ericsson (publ.) as of December 31, 2014, and the twelve months period then ended. The board of directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410,Review of Interim Report Performed by the Independent Auditor of the Entity.

A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISA) and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.

Stockholm, January 27, 2015

PricewaterhouseCoopers AB

Peter Nyllinge

Authorized Public Accountant

Auditor in Charge

Bo Hjalmarsson

Authorized Public Accountant

Ericsson Fourth Quarter and Full-Year Report 2014 19

Editor’s note

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 21

SE-164 83 Stockholm

Phone: +46 10 719 00 00

Investors

Peter Nyquist, Vice President,

Investor Relations

Phone: +46 10 714 64 49, +46 70 575 29 06

E-mail: peter.nyquist@ericsson.com

Stefan Jelvin, Director,

Investor Relations

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

E-mail: stefan.jelvin@ericsson.com

Åsa Konnbjer, Director,

Investor Relations

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

E-mail: asa.konnbjer@ericsson.com

Rikard Tunedal, Director,

Investor Relations

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

E-mail: rikard.tunedal@ericsson.com

Media

Ola Rembe, Vice President,

Head of 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 Fourth Quarter and Full-Year Report 2014 20

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 Fourth Quarter and Full-Year Report 2014 21

Financial statements and additional information

Financial statements
23	Consolidated income statement
23	Statement of comprehensive income
24	Consolidated balance sheet
25	Consolidated statement of cash flows
26	Consolidated statement of changes in equity
27	Consolidated income statement - isolated quarters
28	Consolidated statement of cash flows - isolated quarters

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

Ericsson Fourth Quarter and Full-Year Report 2014 22

CONSOLIDATED INCOME STATEMENT

	Oct - Dec									Jan - Dec
SEK million	2013			2014			Change			2013			2014			Change
Net sales		67,032			67,986			1	%		227,376			227,983			0	%
Cost of sales		-42,171			-43,100			2	%		-151,005			-145,556			-4	%
Gross income		24,861			24,886			0	%		76,371			82,427			8	%
Gross margin (%)		37.1	%		36.6	%					33.6	%		36.2	%
Research and development expenses		-8,902			-9,668			9	%		-32,236			-36,308			13	%
Selling and administrative expenses		-7,223			-8,107			12	%		-26,273			-27,100			3	%
Operating expenses		-16,125			-17,775			10	%		-58,509			-63,408			8	%
Other operating income and expenses		328			-837						113			-2,156
Shares in earnings of JV and associated companies		-9			28						-130			-56			-57	%
Operating income		9,055			6,302			-30	%		17,845			16,807			-6	%
Financial income		184			179						1,346			1,277
Financial expenses		-327			-639						-2,093			-2,273
Income after financial items		8,912			5,842			-34	%		17,098			15,811			-8	%
Taxes		-2,468			-1,677						-4,924			-4,668
Net income		6,444			4,165			-35	%		12,174			11,143			-8	%
Net income attributable to:
- Stockholders of the Parent Company		6,410			4,223						12,005			11,568
- Non-controlling interests		34			-58						169			-425
Other information
Average number of shares, basic (million)		3,230			3,241						3,226			3,237
Earnings per share, basic (SEK)1)		1.98			1.30						3.72			3.57
Earnings per share, diluted (SEK)1)		1.97			1.29						3.69			3.54

STATEMENT OF COMPREHENSIVE INCOME

	Oct - Dec				Jan - Dec
SEK million	2013		2014		2013		2014
Net income		6,444		4,165		12,174		11,143
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefits pension plans incl. asset ceiling		983		-7,380		3,214		-10,017
Tax on items that will not be reclassified to profit or loss		-362		1,679		-1,235		2,218
Items that may be reclassified to profit or loss
Cash flow hedges
Gains/losses arising during the period		-14				251
Reclassification adjustments for gains/losses included in profit or loss		-124				-1,072
Revaulation of other investments in shares and participations
Fair value remeasurement		1		8		71		47
Changes in cumulative translation adjustments		777		3,058		-1,687		8,734
Share of other comprehensive income on JV and associated companies		32		217		-14		579
Tax on items that may be reclassified to profit or loss		26		5		179		5
Total other comprehensive income, net of tax		1,319		-2,413		-293		1,566
Total comprehensive income		7,763		1,752		11,881		12,709
Total comprehensive income attributable to:
Stockholders of the Parent Company		7,704		1,769		11,712		12,981
Non-controlling interest		59		-17		169		-272

¹⁾  Based on Net income attributable to stockholders of the Parent Company

Ericsson Fourth Quarter and Full-Year Report 2014 23

CONSOLIDATED BALANCE SHEET

SEK million	Dec 31 2013		Sep 30 2014		Dec 31 2014
ASSETS
Non-current assets
Intangible assets
Capitalized development expenses		3,348		2,925		3,570
Goodwill		31,544		35,179		38,330
Intellectual property rights, brands and other intangible assets		12,815		12,149		12,534
Property, plant and equipment		11,433		12,674		13,341
Financial assets
Equity in JV and associated companies		2,568		2,566		2,793
Other investments in shares and participations		505		567		591
Customer finance, non-current		1,294		1,940		1,932
Other financial assets, non-current		5,684		7,085		5,900
Deferred tax assets		9,103		11,325		12,778
		78,294		86,410		91,769
Current assets
Inventories		22,759		28,529		28,175
Trade receivables		71,013		70,624		77,893
Customer finance, current		2,094		2,452		2,289
Other current receivables		17,941		19,953		21,273
Short-term investments		34,994		34,011		31,171
Cash and cash equivalents		42,095		32,042		40,988
		190,896		187,611		201,789
Total assets		269,190		274,021		293,558
EQUITY AND LIABILITIES
Equity
Stockholders’ equity		140,204		142,339		144,306
Non-controlling interest in equity of subsidiaries		1,419		1,035		1,003
		141,623		143,374		145,309
Non-current liabilities
Post-employment benefits		9,825		13,972		20,385
Provisions, non-current		222		187		202
Deferred tax liabilities		2,650		2,846		3,177
Borrowings, non-current		22,067		20,647		21,864
Other non-current liabilities		1,459		1,809		1,797
		36,223		39,461		47,425
Current liabilities
Provisions, current		5,140		4,380		4,225
Borrowings, current		7,388		1,997		2,281
Trade payables		20,502		22,067		24,473
Other current liabilities		58,314		62,742		69,845
		91,344		91,186		100,824
Total equity and liabilities		269,190		274,021		293,558
Of which interest-bearing liabilities and post-employment benefits		39,280		36,616		44,530
Of which net cash1)		37,809		29,437		27,629
Assets pledged as collateral		2,556		2,499		2,525
Contingent liabilities		657		666		737

1) Reconciliations of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 35.

Ericsson Fourth Quarter and Full-Year Report 2014 24

CONSOLIDATED STATEMENT OF CASH FLOWS

	Oct - Dec				Jan - Dec
SEK million	2013		2014		2013		2014
Operating activities
Net income		6,444		4,165		12,174		11,143
Adjustments to reconcile net income to cash
Taxes		2,096		475		-1,323		-1,235
Earnings/dividends in JV and associated companies		138		-25		258		305
Depreciation, amortization and impairment losses		2,744		2,690		10,137		9,945
Other		1,101		965		756		2,185
		12,523		8,270		22,002		22,343
Changes in operating net assets
Inventories		5,337		1,203		4,868		-2,924
Customer finance, current and non-current		-163		174		1,809		-710
Trade receivables		-4,910		-4,661		-8,504		1,182
Trade payables		860		1,250		-2,158		1,265
Provisions and post-employment benefits		-1,731		-152		-3,298		-859
Other operating assets and liabilities, net		2,693		2,512		2,670		-1,595
		2,086		326		-4,613		-3,641
Cash flow from operating activities		14,609		8,596		17,389		18,702
Investing activities
Investments in property, plant and equipment		-1,251		-1,553		-4,503		-5,322
Sales of property, plant and equipment		179		56		378		522
Acquisitions/divestments of subsidiaries and other operations, net		-713		-1,747		-2,682		-4,394
Product development		-182		-986		-915		-1,523
Other investing activities		-1,195		-1,533		-1,330		-3,392
Short-term investments		-8,262		4,066		-2,057		6,596
Cash flow from investing activities		-11,424		-1,697		-11,109		-7,513
Cash flow before financing activities		3,185		6,899		6,280		11,189
Financing activities
Dividends paid		-208		-15		-9,153		-9,846
Other financing activities		3,746		371		-355		-8,379
Cash flow from financing activities		3,538		356		-9,508		-18,225
Effect of exchange rate changes on cash		209		1,691		641		5,929
Net change in cash and cash equivalents		6,932		8,946		-2,587		-1,107
Cash and cash equivalents, beginning of period		35,163		32,042		44,682		42,095
Cash and cash equivalents, end of period		42,095		40,988		42,095		40,988

Ericsson Fourth Quarter and Full-Year Report 2014 25

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Jan - Dec		Jan - Dec
SEK million	2013		2014
Opening balance		138,483		141,623
Total comprehensive income		11,881		12,709
Sale/repurchase of own shares		90		106
Stock purchase plan		388		717
Dividends paid		-9,153		-9,846
Transactions with non-controlling interests		-66		0
Closing balance		141,623		145,309

Ericsson Fourth Quarter and Full-Year Report 2014 26

CONSOLIDATED INCOME STATEMENT – ISOLATED QUARTERS

	2013												2014
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Net sales		52,032			55,331			52,981			67,032			47,505			54,849			57,643			67,986
Cost of sales		-35,394			-37,412			-36,028			-42,171			-30,184			-34,910			-37,362			-43,100
Gross income		16,638			17,919			16,953			24,861			17,321			19,939			20,281			24,886
Gross margin (%)		32.0	%		32.4	%		32.0	%		37.1	%		36.5	%		36.4	%		35.2	%		36.6	%
Research and development expenses		-7,877			-7,747			-7,710			-8,902			-8,275			-9,084			-9,281			-9,668
Selling and administrative expenses		-6,643			-6,629			-5,778			-7,223			-6,452			-6,541			-6,000			-8,107
Operating expenses		-14,520			-14,376			-13,488			-16,125			-14,727			-15,625			-15,281			-17,775
Other operating income and expenses		20			-1,040			805			328			21			-206			-1,134			-837
Shares in earnings of JV and associated companies		-32			-38			-51			-9			15			-109			10			28
Operating income		2,106			2,465			4,219			9,055			2,630			3,999			3,876			6,302
Financial income		180			304			678			184			401			268			429			179
Financial expenses		-565			-606			-595			-327			-612			-465			-557			-639
Income after financial items		1,721			2,163			4,302			8,912			2,419			3,802			3,748			5,842
Taxes		-517			-647			-1,292			-2,468			-727			-1,140			-1,124			-1,677
Net income		1,204			1,516			3,010			6,444			1,692			2,662			2,624			4,165
Net income attributable to:
- Stockholders of the Parent Company		1,205			1,469			2,921			6,410			2,120			2,579			2,646			4,223
- Non-controlling interests		-1			47			89			34			-428			83			-22			-58
Other information
Average number of shares, basic (million)		3,222			3,224			3,227			3,230			3,233			3,235			3,238			3,241
Earnings per share, basic (SEK)1)		0.37			0.46			0.91			1.98			0.66			0.80			0.82			1.30
Earnings per share, diluted (SEK) 1)		0.37			0.45			0.90			1.97			0.65			0.79			0.81			1.29

¹⁾  Based on Net income attributable to stockholders of the Parent Company

Ericsson Fourth Quarter and Full-Year Report 2014 27

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

	2013								2014
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Operating activities
Net income		1,204		1,516		3,010		6,444		1,692		2,662		2,624		4,165
Adjustments to reconcile net income to cash
Taxes		-1,849		-689		-881		2,096		-1,348		26		-388		475
Earnings/dividends in JV and associated companies		33		37		50		138		-16		356		-10		-25
Depreciation, amortization and impairment losses		2,411		2,436		2,546		2,744		2,360		2,414		2,481		2,690
Other		-201		183		-327		1,101		549		404		267		965
		1,598		3,483		4,398		12,523		3,237		5,862		4,974		8,270
Changes in operating net assets
Inventories		-1,426		600		357		5,337		-2,099		-1,188		-840		1,203
Customer finance, current and non-current		260		912		800		-163		558		-341		-1,101		174
Trade receivables		-1,934		3,084		-4,744		-4,910		7,957		-892		-1,222		-4,661
Trade payables		-2,948		518		-588		860		-110		1,644		-1,519		1,250
Provisions and post-employment benefits		1,155		-1,752		-970		-1,731		-464		-225		-18		-152
Other operating assets and liabilities, net		325		-2,554		2,206		2,693		323		-2,806		-1,624		2,512
		-4,568		808		-2,939		2,086		6,165		-3,808		-6,324		326
Cash flow from operating activities		-2,970		4,291		1,459		14,609		9,402		2,054		-1,350		8,596
Investing activities
Investments in property, plant and equipment		-1,196		-1,278		-778		-1,251		-1,034		-1,320		-1,415		-1,553
Sales of property, plant and equipment		91		11		97		179		274		53		139		56
Acquisitions/divestments of subsidiaries and other operations, net		-136		-39		-1,794		-713		-849		-1,512		-286		-1,747
Product development		-282		-214		-237		-182		-197		-185		-155		-986
Other investing activities		298		-203		-230		-1,195		-169		-388		-1,302		-1,533
Short-term investments		-2,860		9,209		-144		-8,262		-6,790		7,012		2,308		4,066
Cash flow from investing activities		-4,085		7,486		-3,086		-11,424		-8,765		3,660		-711		-1,697
Cash flow before financing activities		-7,055		11,777		-1,627		3,185		637		5,714		-2,061		6,899
Financing activities
Dividends paid		-61		-8,863		-21		-208		—		-9,828		-3		-15
Other financing activities		92		-4,236		43		3,746		-5,069		-2,393		-1,288		371
Cash flow from financing activities		31		-13,099		22		3,538		-5,069		-12,221		-1,291		356
Effect of exchange rate changes on cash		-214		2,357		-1,711		209		433		1,499		2,306		1,691
Net change in cash and cash equivalents		-7,238		1,035		-3,316		6,932		-3,999		-5,008		-1,046		8,946
Cash and cash equivalents, beginning of period		44,682		37,444		38,479		35,163		42,095		38,096		33,088		32,042
Cash and cash equivalents, end of period		37,444		38,479		35,163		42,095		38,096		33,088		32,042		40,988

Ericsson Fourth Quarter and Full-Year Report 2014 28

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, 2013, and should be read in conjunction with that annual report.

As from January 1, 2014, the Company has applied the following new or amended IFRSs and IFRICs:

Amendment to IAS 32, “Financial instruments: Presentation,” Offsetting Financial Assets and Financial Liabilities. This amendment is related to the application guidance in IAS 32, ‘Financial instruments: Presentation,’ and clarifies some of the requirements for offsetting financial assets and financial liabilities on the balance sheet.

IFRIC 21, “Levies.” This interpretation of IAS 37 “Provisions, contingent liabilities and contingent assets” sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to the need to pay a levy and when a liability should be recognized.

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 December 31, 2014 and IFRS as endorsed by the EU.

In the interim reports of 2013 disclosure was given in relation to IFRS 7 about fair valuation of financial instruments. Due to that the amounts are not considered material this disclosure will not be given in the interim reports as from the first quarter of 2014. Should amounts become material quarterly disclosure will be given as from then.

Ericsson Fourth Quarter and Full-Year Report 2014 29

NET SALES BY SEGMENT BY QUARTER

Segment Modems was consolidated as of October 1, 2013.

	2013												2014
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Networks		28,133			28,142			26,655			34,769			24,383			28,964			30,030			34,110
Global Services		21,452			24,851			23,974			27,166			20,356			23,059			24,467			29,777
Of which Professional Services		14,626			16,773			16,229			18,767			15,078			16,554			17,794			21,405
Of which Managed Services		5,888			6,754			6,264			6,574			5,754			6,485			7,175			7,741
Of which Network Rollout		6,826			8,078			7,745			8,399			5,278			6,505			6,673			8,372
Support Solutions		2,447			2,338			2,352			5,097			2,765			2,824			3,057			4,009
Modems		—			—			—			—			1			2			89			90
Total		52,032			55,331			52,981			67,032			47,505			54,849			57,643			67,986
	2013												2014
Sequential change, percent	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Networks		-20	%		0	%		-5	%		30	%		-30	%		19	%		4	%		14	%
Global Services		-24	%		16	%		-4	%		13	%		-25	%		13	%		6	%		22	%
Of which Professional Services		-23	%		15	%		-3	%		16	%		-20	%		10	%		7	%		20	%
Of which Managed Services		-13	%		15	%		-7	%		5	%		-12	%		13	%		11	%		8	%
Of which Network Rollout		-26	%		18	%		-4	%		8	%		-37	%		23	%		3	%		25	%
Support Solutions		-33	%		-4	%		1	%		117	%		-46	%		2	%		8	%		31	%
Modems		—			—			—			—			—			—			—			—
Total		-22	%		6	%		-4	%		27	%		-29	%		15	%		5	%		18	%
	2013												2014
Year over year change, percent	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Networks		3	%		1	%		-1	%		-1	%		-13	%		3	%		13	%		-2	%
Global Services		4	%		3	%		-1	%		-3	%		-5	%		-7	%		2	%		10	%
Of which Professional Services		-2	%		-1	%		-1	%		-1	%		3	%		-1	%		10	%		14	%
Of which Managed Services		3	%		4	%		-1	%		-3	%		-2	%		-4	%		15	%		18	%
Of which Network Rollout		19	%		13	%		-2	%		-8	%		-23	%		-19	%		-14	%		0	%
Support Solutions		-19	%		-33	%		-29	%		40	%		13	%		21	%		30	%		-21	%
Modems		—			—			—			—			—			—			—			—
Total		2	%		0	%		-3	%		0	%		-9	%		-1	%		9	%		1	%
	2013												2014
Year to date, SEK million	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec
Networks		28,133			56,275			82,930			117,699			24,383			53,347			83,377			117,487
Global Services		21,452			46,303			70,277			97,443			20,356			43,415			67,882			97,659
Of which Professional Services		14,626			31,399			47,628			66,395			15,078			31,632			49,426			70,831
Of which Managed Services		5,888			12,642			18,906			25,480			5,754			12,239			19,414			27,155
Of which Network Rollout		6,826			14,904			22,649			31,048			5,278			11,783			18,456			26,828
Support Solutions		2,447			4,785			7,137			12,234			2,765			5,589			8,646			12,655
Modems		—			—			—			—			1			3			92			182
Total		52,032			107,363			160,344			227,376			47,505			102,354			159,997			227,983
Year to date, year over year change, percent	2013												2014
	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec
Networks		3	%		2	%		1	%		0	%		-13	%		-5	%		1	%		0	%
Global Services		4	%		4	%		2	%		0	%		-5	%		-6	%		-3	%		0	%
Of which Professional Services		-2	%		-1	%		-1	%		-1	%		3	%		1	%		4	%		7	%
Of which Managed Services		3	%		4	%		2	%		1	%		-2	%		-3	%		3	%		7	%
Of which Network Rollout		19	%		16	%		9	%		4	%		-23	%		-21	%		-19	%		-14	%
Support Solutions		-19	%		-26	%		-27	%		-9	%		13	%		17	%		21	%		3	%
Modems		—			—			—			—			—			—			—			—
Total		2	%		1	%		0	%		0	%		-9	%		-5	%		0	%		0	%

Ericsson Fourth Quarter and Full-Year Report 2014 30

OPERATING INCOME BY SEGMENT BY QUARTER

	2013								2014
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Networks		1,565		1,335		2,557		5,861		2,476		3,574		3,175		4,319
Global Services		726		1,564		1,808		2,087		1,036		1,487		1,607		1,937
Of which Professional Services		1,837		2,285		2,279		2,628		1,893		2,095		2,059		2,472
Of which Network Rollout		-1,111		-721		-471		-541		-857		-608		-452		-535
Support Solutions		-29		-283		-113		1,880		12		-378		-108		443
Modems		—		—		—		-543		-745		-456		-739		-85
Unallocated 1)		-156		-151		-33		-230		-149		-228		-59		-312
Total		2,106		2,465		4,219		9,055		2,630		3,999		3,876		6,302
	2013								2014
Year to date, SEK million	Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec		Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec
Networks		1,565		2,900		5,457		11,318		2,476		6,050		9,225		13,544
Global Services		726		2,290		4,098		6,185		1,036		2,523		4,130		6,067
Of which Professional Services		1,837		4,122		6,401		9,029		1,893		3,988		6,047		8,519
Of which Network Rollout		-1,111		-1,832		-2,303		-2,844		-857		-1,465		-1,917		-2,452
Support Solutions		-29		-312		-425		1,455		12		-366		-474		-31
Modems		—		—		—		-543		-745		-1,201		-1,940		-2,025
Unallocated 1)		-156		-307		-340		-570		-149		-377		-436		-748
Total		2,106		4,571		8,790		17,845		2,630		6,629		10,505		16,807

OPERATING MARGIN BY SEGMENT BY QUARTER

As percentage of net sales, isolated quarters	2013												2014
	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Networks		6	%		5	%		10	%		17	%		10	%		12	%		11	%		13	%
Global Services		3	%		6	%		8	%		8	%		5	%		6	%		7	%		7	%
Of which Professional Services		13	%		14	%		14	%		14	%		13	%		13	%		12	%		12	%
Of which Network Rollout		-16	%		-9	%		-6	%		-6	%		-16	%		-9	%		-7	%		-6	%
Support Solutions		-1	%		-12	%		-5	%		37	%		0	%		-13	%		-4	%		11	%
Modems		—			—			—			—			—			—			—			—
Total		4	%		4	%		8	%		14	%		6	%		7	%		7	%		9	%
As percentage of net sales, Year to date	2013												2014
	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec
Networks		6	%		5	%		7	%		10	%		10	%		11	%		11	%		12	%
Global Services		3	%		5	%		6	%		6	%		5	%		6	%		6	%		6	%
Of which Professional Services		13	%		13	%		13	%		14	%		13	%		13	%		12	%		12	%
Of which Network Rollout		-16	%		-12	%		-10	%		-9	%		-16	%		-12	%		-10	%		-9	%
Support Solutions		-1	%		-7	%		-6	%		12	%		0	%		-7	%		-5	%		0	%
Modems		—			—			—			—			—			—			—			—
Total		4	%		4	%		5	%		8	%		6	%		6	%		7	%		7	%

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

Ericsson Fourth Quarter and Full-Year Report 2014 31

NET SALES BY REGION BY QUARTER

	2013												2014
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
North America		15,773			15,341			14,453			13,772			12,215			15,179			14,033			13,082
Latin America		4,374			5,565			5,294			6,749			4,710			5,414			5,882			6,564
Northern Europe & Central Asia1) 2)		2,283			2,708			2,949			3,678			2,436			2,717			3,151			4,069
Western & Central Europe2)		4,349			4,522			4,399			5,215			4,381			4,582			4,646			6,097
Mediterranean2)		5,271			6,159			5,659			7,067			4,785			5,487			5,218			7,513
Middle East		3,160			3,978			4,386			5,914			3,859			4,514			6,039			6,865
Sub Saharan Africa		2,131			2,653			2,693			2,572			1,813			1,886			2,447			2,603
India		1,606			1,279			1,280			1,973			1,695			1,645			2,000			2,362
North East Asia		6,054			6,642			6,053			8,649			4,908			6,406			7,033			9,225
South East Asia & Oceania		4,129			3,758			3,617			4,283			3,446			3,662			3,794			4,956
Other1) 2)		2,902			2,726			2,198			7,160			3,257			3,357			3,400			4,650
Total		52,032			55,331			52,981			67,032			47,505			54,849			57,643			67,986
1)        Of which in Sweden		1,020			1,276			798			1,333			999			1,008			1,090			1,047
2)        Of which in EU		9,782			10,816			10,111			12,835			9,720			10,320			10,736			14,325
	2013												2014
Sequential change, percent	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
North America		-7	%		-3	%		-6	%		-5	%		-11	%		24	%		-8	%		-7	%
Latin America		-33	%		27	%		-5	%		27	%		-30	%		15	%		9	%		12	%
Northern Europe & Central Asia1) 2)		-24	%		19	%		9	%		25	%		-34	%		12	%		16	%		29	%
Western & Central Europe2)		-20	%		4	%		-3	%		19	%		-16	%		5	%		1	%		31	%
Mediterranean2)		-25	%		17	%		-8	%		25	%		-32	%		15	%		-5	%		44	%
Middle East		-38	%		26	%		10	%		35	%		-35	%		17	%		34	%		14	%
Sub Saharan Africa		-40	%		24	%		2	%		-4	%		-30	%		4	%		30	%		6	%
India		0	%		-20	%		0	%		54	%		-14	%		-3	%		22	%		18	%
North East Asia		-41	%		10	%		-9	%		43	%		-43	%		31	%		10	%		31	%
South East Asia & Oceania		-9	%		-9	%		-4	%		18	%		-20	%		6	%		4	%		31	%
Other1) 2)		-3	%		-6	%		-19	%		226	%		-55	%		3	%		1	%		37	%
Total		-22	%		6	%		-4	%		27	%		-29	%		15	%		5	%		18	%
1)        Of which in Sweden		-20	%		25	%		-37	%		67	%		-25	%		1	%		8	%		-4	%
2)        Of which in EU		-24	%		11	%		-7	%		27	%		-24	%		6	%		4	%		33	%
	2013												2014
Year-over-year change, percent	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
North America		23	%		18	%		3	%		-19	%		-23	%		-1	%		-3	%		-5	%
Latin America		-9	%		6	%		-2	%		4	%		8	%		-3	%		11	%		-3	%
Northern Europe & Central Asia1) 2)		0	%		-19	%		9	%		23	%		7	%		0	%		7	%		11	%
Western & Central Europe2)		1	%		10	%		21	%		-4	%		1	%		1	%		6	%		17	%
Mediterranean2)		14	%		-1	%		5	%		0	%		-9	%		-11	%		-8	%		6	%
Middle East		0	%		7	%		21	%		17	%		22	%		13	%		38	%		16	%
Sub Saharan Africa		-3	%		-5	%		-4	%		-28	%		-15	%		-29	%		-9	%		1	%
India		13	%		-25	%		-26	%		23	%		6	%		29	%		56	%		20	%
North East Asia		-34	%		-21	%		-28	%		-16	%		-19	%		-4	%		16	%		7	%
South East Asia & Oceania		22	%		2	%		3	%		-5	%		-17	%		-3	%		5	%		16	%
Other1) 2)		2	%		-13	%		-34	%		141	%		12	%		23	%		55	%		-35	%
Total		2	%		0	%		-3	%		0	%		-9	%		-1	%		9	%		1	%
1)        Of which in Sweden		22	%		0	%		-52	%		5	%		-2	%		-21	%		37	%		-21	%
2)        Of which in EU		3	%		-3	%		-5	%		-1	%		-1	%		-5	%		6	%		12	%

Ericsson Fourth Quarter and Full-Year Report 2014 32

NET SALES BY REGION BY QUARTER (continued)

	2013												2014
Year to date, SEK million	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec
North America		15,773			31,114			45,567			59,339			12,215			27,394			41,427			54,509
Latin America		4,374			9,939			15,233			21,982			4,710			10,124			16,006			22,570
Northern Europe & Central Asia1) 2)		2,283			4,991			7,940			11,618			2,436			5,153			8,304			12,373
Western & Central Europe2)		4,349			8,871			13,270			18,485			4,381			8,963			13,609			19,706
Mediterranean2)		5,271			11,430			17,089			24,156			4,785			10,272			15,490			23,003
Middle East		3,160			7,138			11,524			17,438			3,859			8,373			14,412			21,277
Sub Saharan Africa		2,131			4,784			7,477			10,049			1,813			3,699			6,146			8,749
India		1,606			2,885			4,165			6,138			1,695			3,340			5,340			7,702
North East Asia		6,054			12,696			18,749			27,398			4,908			11,314			18,347			27,572
South East Asia & Oceania		4,129			7,887			11,504			15,787			3,446			7,108			10,902			15,858
Other1) 2)		2,902			5,628			7,826			14,986			3,257			6,614			10,014			14,664
Total		52,032			107,363			160,344			227,376			47,505			102,354			159,997			227,983
1)        Of which in Sweden		1,020			2,296			3,094			4,427			999			2,007			3,097			4,144
2)        Of which in EU		9,782			20,598			30,709			43,544			9,720			20,040			30,776			45,101
Year to date, year-over-year change, percent	2013												2014
	Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec			Jan - Mar			Jan - Jun			Jan - Sep			Jan - Dec
North America		23	%		21	%		14	%		5	%		-23	%		-12	%		-9	%		-8	%
Latin America		-9	%		-1	%		-2	%		0	%		8	%		2	%		5	%		3	%
Northern Europe & Central Asia1) 2)		0	%		-12	%		-5	%		2	%		7	%		3	%		5	%		6	%
Western & Central Europe2)		1	%		6	%		10	%		6	%		1	%		1	%		3	%		7	%
Mediterranean2)		14	%		6	%		5	%		4	%		-9	%		-10	%		-9	%		-5	%
Middle East		0	%		4	%		10	%		12	%		22	%		17	%		25	%		22	%
Sub Saharan Africa		-3	%		-4	%		-4	%		-11	%		-15	%		-23	%		-18	%		-13	%
India		13	%		-8	%		-14	%		-5	%		6	%		16	%		28	%		25	%
North East Asia		-34	%		-28	%		-28	%		-24	%		-19	%		-11	%		-2	%		1	%
South East Asia & Oceania		22	%		12	%		9	%		5	%		-17	%		-10	%		-5	%		0	%
Other 1) 2)		2	%		-6	%		-16	%		22	%		12	%		18	%		28	%		-2	%
Total		2	%		1	%		0	%		0	%		-9	%		-5	%		0	%		0	%
1)        Of which in Sweden		22	%		9	%		-18	%		-12	%		-2	%		-13	%		0	%		-6	%
2)        Of which in EU		3	%		-1	%		-2	%		-2	%		-1	%		-3	%		0	%		4	%

TOP 5 COUNTRIES IN SALES

	Q4						Jan - Dec
Country	2013			2014			2013			2014
UNITED STATES		21	%		20	%		26	%		24	%
CHINA		7	%		7	%		5	%		6	%
JAPAN		3	%		5	%		6	%		4	%
INDIA		3	%		4	%		3	%		4	%
ITALY		4	%		4	%		3	%		3	%

Ericsson Fourth Quarter and Full-Year Report 2014 33

NET SALES BY REGION BY SEGMENT

Revenue from Telcordia is reported 50/50 between segments Global Services and Support Solutions.

	Q4 2014															Jan - Dec 2014
SEK million	Networks			Global Services			Support Solutions			Modems			Total			Networks			Global Services			Support Solutions			Modems			Total
North America		4,979			7,126			977			0			13,082			26,061			24,981			3,467			0			54,509
Latin America		2,957			3,301			306			0			6,564			10,698			10,842			1,030			0			22,570
Northern Europe & Central Asia		2,688			1,278			103			0			4,069			7,958			4,133			282			0			12,373
Western & Central Europe		2,670			3,252			175			0			6,097			8,067			11,022			617			0			19,706
Mediterranean		3,069			4,183			261			0			7,513			9,595			12,592			816			0			23,003
Middle East		3,546			2,806			513			0			6,865			11,600			8,482			1,195			0			21,277
Sub Saharan Africa		1,099			1,364			140			0			2,603			3,919			4,275			555			0			8,749
India		1,198			987			177			0			2,362			4,079			3,139			484			0			7,702
North East Asia		6,472			2,571			182			0			9,225			18,017			8,895			660			0			27,572
South East Asia & Oceania		2,652			2,098			206			0			4,956			8,376			6,991			491			0			15,858
Other		2,780			811			969			90			4,650			9,117			2,307			3,058			182			14,664
Total		34,110			29,777			4,009			90			67,986			117,487			97,659			12,655			182			227,983
Share of Total		50	%		44	%		6	%		0	%		100	%		51	%		43	%		6	%		0	%		100	%

	Q4 2014
Sequential change, percent	Networks			Global Services			Support Solutions			Modems			Total
North America		-27	%		10	%		30	%		—			-7	%
Latin America		10	%		15	%		-8	%		—			12	%
Northern Europe & Central Asia		25	%		36	%		45	%		—			29	%
Western & Central Europe		51	%		20	%		14	%		—			31	%
Mediterranean		47	%		42	%		40	%		—			44	%
Middle East		-4	%		38	%		68	%		—			14	%
Sub Saharan Africa		-11	%		21	%		67	%		—			6	%
India		8	%		33	%		17	%		—			18	%
North East Asia		45	%		12	%		-34	%		—			31	%
South East Asia & Oceania		29	%		25	%		199	%		—			31	%
Other		43	%		18	%		43	%		1	%		37	%
Total		14	%		22	%		31	%		1	%		18	%
	Q4 2014
Year over year change, percent	Networks			Global Services			Support Solutions			Modems			Total
North America		-6	%		-4	%		-5	%		—			-5	%
Latin America		-16	%		13	%		3	%		—			-3	%
Northern Europe & Central Asia		15	%		1	%		24	%		—			11	%
Western & Central Europe		30	%		11	%		-23	%		—			17	%
Mediterranean		7	%		7	%		-11	%		—			6	%
Middle East		18	%		20	%		-11	%		—			16	%
Sub Saharan Africa		-15	%		28	%		-36	%		—			1	%
India		1	%		38	%		127	%		—			20	%
North East Asia		8	%		2	%		14	%		—			7	%
South East Asia & Oceania		12	%		20	%		26	%		—			16	%
Other		-42	%		127	%		-51	%		—			-35	%
Total		-2	%		10	%		-21	%		—			1	%
	Jan - Dec 2014
Year over year change, percent	Networks			Global Services			Support Solutions			Modems			Total
North America		-9	%		-12	%		34	%		—			-8	%
Latin America		-5	%		14	%		-10	%		—			3	%
Northern Europe & Central Asia		10	%		-1	%		10	%		—			6	%
Western & Central Europe		6	%		8	%		1	%		—			7	%
Mediterranean		-11	%		0	%		12	%		—			-5	%
Middle East		36	%		12	%		-11	%		—			22	%
Sub Saharan Africa		-21	%		3	%		-39	%		—			-13	%
India		32	%		15	%		55	%		—			25	%
North East Asia		8	%		-14	%		82	%		—			1	%
South East Asia & Oceania		-6	%		10	%		-4	%		—			0	%
Other		-10	%		61	%		-12	%		—			-2	%
Total		0	%		0	%		3	%		—			0	%

Ericsson Fourth Quarter and Full-Year Report 2014 34

PROVISIONS

	2013								2014
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Opening balance		8,638		9,499		7,716		6,414		5,362		4,928		4,579		4,567
Additions		1,915		1,215		658		911		625		430		675		996
Utilization/Cash out		-758		-2,365		-1,534		-1,364		-977		-642		-648		-794
Of which restructuring		-324		-1,001		-457		-307		-512		-246		-231		-213
Reversal of excess amounts		-209		-586		-191		-575		-88		-298		-132		-420
Reclassification, translation difference and other		-87		-47		-235		-24		6		161		93		78
Closing balance		9,499		7,716		6,414		5,362		4,928		4,579		4,567		4,427
	2013								2014
Year to date, SEK million	Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec		Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec
Opening balance		8,638		8,638		8,638		8,638		5,362		5,362		5,362		5,362
Additions		1,915		3,130		3,788		4,699		625		1,055		1,730		2,726
Utilization/Cash out		-758		-3,123		-4,657		-6,021		-977		-1,619		-2,267		-3,061
Of which restructuring		-324		-1,325		-1,782		-2,089		-512		-758		-989		-1,202
Reversal of excess amounts		-209		-795		-986		-1,561		-88		-386		-518		-938
Reclassification, translation difference and other		-87		-134		-369		-393		6		167		260		338
Closing balance		9,499		7,716		6,414		5,362		4,928		4,579		4,567		4,427

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

	2013								2014
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Additions
Property, plant and equipment		1,196		1,278		778		1,251		1,034		1,320		1,415		1,553
Capitalized development expenses		282		214		237		182		197		185		155		986
IPR, brands and other intangible assets		196		22		1,418		562		77		621		935		1,014
Total		1,674		1,514		2,433		1,995		1,308		2,126		2,505		3,553
Depreciation, amortization and impairment losses
Property, plant and equipment		1,008		983		1,008		1,210		1,004		1,048		1,078		1,187
Capitalized development expenses		303		342		388		374		333		315		311		342
IPR, brands and other intangible assets, etc.		1,100		1,111		1,150		1,160		1,023		1,051		1,092		1,161
Total		2,411		2,436		2,546		2,744		2,360		2,414		2,481		2,690

RECONCILIATION TABLE, NON-IFRS MEASUREMENTS

CASH CONVERSION

	2013												2014
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Net income		1,204			1,516			3,010			6,444			1,692			2,662			2,624			4,165
Net income reconciled to cash		1,598			3,483			4,398			12,523			3,237			5,862			4,974			8,270
Cash flow from operating activities		-2,970			4,291			1,459			14,609			9,402			2,054			-1,350			8,596
Cash conversion		-185.9	%		123.2	%		33.2	%		116.7	%		290.5	%		35.0	%		-27.1	%		103.9	%

NET CASH, END OF PERIOD

SEK million	Dec 31 2013		Mar 31 2014		Jun 30 2014		Sep 30 2014		Dec 31 2014
Cash and cash equivalents		42,095		38,096		33,088		32,042		40,988
+ Short term investments		34,994		41,779		35,310		34,011		31,171
- Borrowings, non-current		22,067		18,900		19,504		20,647		21,864
- Borrowings, current		7,388		5,737		3,525		1,997		2,281
- Post employment benefits		9,825		11,633		12,884		13,972		20,385
Net cash, end of period		37,809		43,605		32,485		29,437		27,629

Ericsson Fourth Quarter and Full-Year Report 2014 35

OTHER INFORMATION

	Oct - Dec						Jan - Dec
	2013			2014			2013			2014
Number of shares and earnings per share
Number of shares, end of period (million)		3,305			3,305			3,305			3,305
Of which class A-shares (million)		262			262			262			262
Of which class B-shares (million)		3,043			3,043			3,043			3,043
Number of treasury shares, end of period (million)		74			63			74			63
Number of shares outstanding, basic, end of period (million)		3,231			3,242			3,231			3,242
Numbers of shares outstanding, diluted, end of period (million)		3,262			3,275			3,262			3,275
Average number of treasury shares (million)		75			64			79			68
Average number of shares outstanding, basic (million)		3,230			3,241			3,226			3,237
Average number of shares outstanding, diluted (million)1)		3,261			3,274			3,257			3,270
Earnings per share, basic (SEK)		1.98			1.30			3.72			3.57
Earnings per share, diluted (SEK)1)		1.97			1.29			3.69			3.54
Ratios
Days sales outstanding		—			—			97			105
Inventory turnover days		55			60			62			64
Payable days		43			49			53			56
Equity ratio (%)		—			—			52.6	%		49.5	%
Capital turnover (times)		1.5			1.5			1.3			1.2
Cash conversion % 2)		116.7	%		103.9	%		79.0	%		83.7	%
Payment readiness, end of period		—			—			82,631			85,465
Payment readiness, as percentage of sales		—			—			36.3	%		37.5	%
Exchange rates used in the consolidation
SEK/EUR - average rate		—			—			8.67			9.11
- closing rate		—			—			8.90			9.47
SEK/USD - average rate		—			—			6.52			6.89
- closing rate		—			—			6.46			7.79
Other
Regional inventory, end of period,		14,652			17,142			14,652			17,142
Export sales from Sweden		35,216			34,628			108,944			113,734

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

²⁾  Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 35.

NUMBER OF EMPLOYEES

	2013								2014
End of period	Mar 31		Jun 30		Sep 30		Dec 31		Mar 31		Jun 30		Sep 30		Dec 31
North America		15,404		15,047		14,825		14,931		14,902		15,306		15,554		15,516
Latin America		11,153		11,412		11,402		11,445		9,731		11,179		10,901		11,066
Northern Europe & Central Asia1)		21,043		21,148		22,038		21,892		21,484		21,476		21,691		21,633
Western & Central Europe		11,118		11,235		11,612		11,530		11,455		12,624		12,606		12,617
Mediterranean		12,015		12,405		12,350		12,314		12,253		12,475		13,306		13,387
Middle East		3,951		3,951		3,766		3,752		3,749		3,736		3,831		3,858
Sub Saharan Africa		1,967		2,101		2,081		2,084		2,094		2,284		2,288		2,406
India		14,588		16,183		16,978		17,622		17,991		18,495		19,413		19,971
North East Asia		14,088		14,059		14,625		14,503		13,490		13,448		13,653		13,464
South East Asia & Oceania		4,321		4,264		4,312		4,267		4,234		4,359		4,265		4,137
Total		109,648		111,805		113,989		114,340		111,383		115,382		117,508		118,055
1)       Of which in Sweden		17,550		17,264		18,008		17,858		17,545		17,497		17,655		17,580

Ericsson Fourth Quarter and Full-Year Report 2014 36

RESTRUCTURING CHARGES BY FUNCTION

	2013								2014
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Cost of sales		-698		-707		-600		-652		-82		-116		-168		-663
Research and development expenses		-552		-117		-64		-139		-19		-80		-92		-113
Selling and administrative expenses		-589		-110		-55		-170		-29		-47		-19		-28
Total		-1,839		-934		-719		-961		-130		-243		-279		-804
	2013								2014
Year to date, SEK million	Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec		Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec
Cost of sales		-698		-1,405		-2,005		-2,657		-82		-198		-366		-1,029
Research and development expenses		-552		-669		-733		-872		-19		-99		-191		-304
Selling and administrative expenses		-589		-699		-754		-924		-29		-76		-95		-123
Total		-1,839		-2,773		-3,492		-4,453		-130		-373		-652		-1,456

RESTRUCTURING CHARGES BY SEGMENT

	2013								2014
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1		Q2		Q3		Q4
Networks		-1,251		-316		-299		-316		-93		-128		-80		-142
Global Services		-385		-586		-410		-616		-32		-81		-122		-600
Of which Professional Services		-270		-389		-290		-420		-25		-63		-85		-435
Of which Network Rollout		-115		-197		-120		-196		-7		-18		-37		-165
Support Solutions		-111		-34		-11		-30		-5		-34		-77		-30
Modems		—		—		—		—		—		—		—		-32
Unallocated		-92		2		1		1		—		—		—		—
Total		-1,839		-934		-719		-961		-130		-243		-279		-804
	2013								2014
Year to date, SEK million	Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec		Jan - Mar		Jan - Jun		Jan - Sep		Jan - Dec
Networks		-1,251		-1,567		-1,866		-2,182		-93		-221		-301		-443
Global Services		-385		-971		-1,381		-1,997		-32		-113		-235		-835
Of which Professional Services		-270		-659		-949		-1,369		-25		-88		-173		-608
Of which Network Rollout		-115		-312		-432		-628		-7		-25		-62		-227
Support Solutions		-111		-145		-156		-186		-5		-39		-116		-146
Modems		—		—		—		—		—		—		—		-32
Unallocated		-92		-90		-89		-88		—		—		—		—
Total		-1,839		-2,773		-3,492		-4,453		-130		-373		-652		-1,456

Ericsson Fourth Quarter and Full-Year Report 2014 37