The fair values of quoted financial investments and derivatives are based on quoted market prices or rates. If official rates or market prices are not available, fair values are calculated by discountingtreasury share transactions’, the expected future cash flows at prevailing interest rates. Valuations of FX options and Interest Rate Guarantees (IRG) are made by using a Black-Scholes formula. Inputs to the valuations are market prices for implied volatility, foreign exchange and interest rates.

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling or repurchasing in the near term.

~~Derivatives are classified as held for trading, unless they are designated as hedges. Assets in this category are classified as current assets.~~

Gains or losses arising from changes in the fair values of the “financial assets at fair value through profit or loss”—category (excl derivatives) are presented in the income statement within Financial income in the period in which they arise. Derivatives are presented in the income statement either as cost of sales, financial income or financial expense, dependingamendments expand on the ~~intent with~~guidance in IFRIC 11 to address the ~~transaction.~~

~~Receivables are subsequently measured at amortized cost using~~classification of group arrangements that were not covered by the ~~effective interest rate method, less allowances for impairment charges. Trade receivables include amounts due from customers.~~interpretation. The ~~balance represents amounts billed~~new guidance is not expected to ~~customer and amounts where risk and rewards~~ have ~~been transferred to~~a material impact on the ~~customer but the invoice~~Group’s financial statements. The EU has not yet ~~been issued.~~endorsed.

~~Collectibility of the receivables is assessed for purposes of initial revenue recognition.~~

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

~~Dividends on available-for-sale equity instruments are recognized in the income statement as part of financial income when the Company’s right to receive payments is established.~~

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analyzed between translation differences resulting from changes in amortized cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognized in profit or loss; translation differences on non-monetary securities are recognized in equity. Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognized in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statement.

At each balance sheet date, the Company assesses whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a

significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss—measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss—is removed from equity and recognized in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

An assessment of impairment of receivables is performed when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the income statement within selling expenses. When a trade receivable is finally established as uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against selling expenses in the income statement.

~~Financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.~~

~~Financial liabilities are derecognized when they are extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires.~~

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

~~Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.~~

~~Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.~~

Certain derivative instruments do not qualify for hedge accounting and are accounted for at fair value through profit or loss. Changes in the fair value of these derivative instruments that do not qualify for hedge accounting are recognized immediately in the income statement either as cost of sales, financial income or financial expense depending on the intent of the transaction.

Derivatives are initially recognized at fair value at trade date and subsequently re-measured at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as either:

Improvements to IFRSs, published in April 2009 and effective from January 1, 2010. None of these improvements are expected to have a material impact on the Company’s financial statements. The EU has not yet endorsed.

At the inception of the transaction, the Company documents the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes are disclosed in Note C20, “Financial Risk Management and Financial Instruments”. Movements in the hedging reserve in stockholders’ equity are shown in Note C16, “Equity”.

The fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Company only applies fair value hedge accounting for hedging fixed interest risk on borrowings. Both gains and losses relating to the interest rate swaps hedging fixed rate borrowings and the changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk are recognized in the income statement within Financial expenses. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity. The gain or loss relating to an ineffective portion is recognized immediately in the income statement within financial income or expense.

Amounts deferred in equity are recycled in the income statement in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place), either in Net Sales or Cost of Sales. When the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognized

in Cost of Sales in case of inventory or in Depreciation in case of fixed assets. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss which at that time remains in equity is recognized in the income statement when the forecasted transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within financial income or expense.

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in equity. A gain or loss relating to an ineffective portion is recognized immediately in the income statement within financial income or expense. Gains and losses deferred in equity are included in the income statement when the foreign operation is partially disposed of or sold.

~~Financial guarantee contracts are initially recognized at fair value (i.e. usually the fee received). Subsequently, these contracts are measured at the higher of~~

~~the amount determined as the best estimate of the net expenditure required to settle the obligation according to the guarantee contract, and~~

~~the recognized contractual fee less cumulative amortization when amortized over the guarantee period, using the straight-line-method.~~

~~The best estimate of the net expenditure comprises future fees and cash flows from subrogation rights.~~

~~Inventories are measured at the lower of cost or net realizable value on a first-in, first-out (FIFO) basis.~~

~~Risks of obsolescence have been measured by estimating market value based on future customer demand and changes in technology and customer acceptance of new products.~~

Intangible assets other than goodwill comprise capitalized development expenses and acquired intangible assets, such as patents, customer relations, brands and software. At initial recognition, capitalized development expenses are stated at cost while acquired intangible assets related to business combinations are stated at fair value. Subsequent to initial recognition, both capitalized development expenses and acquired intangible assets are stated at initially recognized amounts less accumulated amortization and impairment. Amortization and any impairment losses are included in Research and development expenses, mainly for capitalized development expenses and patents, in Selling and administrative expenses, mainly for customer relations and brands, and in Cost of sales.

Costs incurred for development of products to be sold, leased or otherwise marketed or intended for internal use are capitalized as from when technological and economical feasibility has been established until the product is available for sale or use. These capitalized expenses are mainly generated internally and include direct labor

and directly attributable overhead. Amortization of capitalized development expenses begins when the product is available for general release. Amortization is made on a product or platform basis according to the straight-line method over periods not exceeding five years. Research and development expenses directly related to orders from customers are accounted for as a part of Cost of sales. Other research and development expenses are charged to income as incurred.

Amortization of acquired intangible assets, such as patents, customer relations, brands and software, is made according to the straight-line method over their estimated useful lives, normally not exceeding ten years.

~~The Company has not recognized any intangible assets with indefinite useful life other than goodwill.~~

Impairment tests are performed whenever there is an indication of possible impairment. However, intangible assets not yet available for use are tested annually. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of the value in use and the fair value less costs to sell. In assessing value in use, the estimated future cash flows after tax are discounted to their present value using an after-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Application of after tax amounts in calculation, both in relation to cash flows and discount rate is applied due to that available models for calculating discount rate include a tax component. However, when performing final assessments the discount rate and cash flows are adjusted to reflect pre-tax conditions. Corporate assets have been allocated to cash-generating units in relation to each unit’s proportion of total net sales. The amount related to corporate assets is not significant. Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amounts and if the recoverable amount is higher than the carrying value. An impairment loss is reversed only to the extent that the asset’s carrying amount after reversal does not exceed the carrying amount, net of amortization, which would have been reported if no impairment loss had been recognized.

As from the acquisition date, goodwill acquired in a business combination is allocated to each cash-generating unit (CGU) of the Company expected to benefit from the synergies of the combination. Three of Ericsson’s four operating segments have been identified as CGUs. No goodwill is assigned to Segment Phones.

An annual impairment test for the CGUs to which goodwill has been allocated is performed in the fourth quarter, or when there is an indication of impairment. Impairment testing as well as recognition of impairment of goodwill is performed in the same manner as for intangible assets other than goodwill, see description under “Intangible assets other than goodwill” above. An impairment loss in respect of goodwill is not reversed.

Certain specific disclosures are required in relation to goodwill impairment testing. These disclosures are given in Note C2, “Critical Accounting Estimates and Judgments” below and in note C10, “Intangible Assets”.

~~Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.~~

Depreciation is charged to income, generally on a straight-line basis, over the estimated useful life of each component of an item of property, plant and equipment, including buildings. Estimated useful lives are, in general, 25–50 years for buildings, 20 years for land improvements, 3–10 years for machinery and equipment, and up to 5 years for rental equipment. Depreciation and any impairment charges are included in Cost of sales, Research and development or Selling and administrative expenses.

~~The Company recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing a component and derecognizes the residual value of the replaced component.~~

Impairment testing as well as recognition or reversal of impairment of property, plant and equipment is performed in the same manner as for intangible assets other than goodwill, see description under “Intangible assets other than goodwill” above.

Gains and losses on disposals are determined by comparing the proceeds less costs to sell with the carrying amount and are recognized within Other operating income and expenses in the income statement.

Leases on terms in which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that type of asset, although the depreciation period must not exceed the lease term.

Other leases are operating leases, and the leased assets under such contracts are not recognized on the balance sheet. Costs under operating leases are recognized in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Leasing contracts with the Company as lessor are classified as finance leases when the majority of risks and rewards are transferred to the lessee, and otherwise as operating leases. Under a finance lease, a receivable is recognized at an amount equal to the net investment in the lease and revenue is recognized in accordance with the revenue recognition principles.

~~Under operating leases, a balance sheet item of property, plant and equipment is reported and revenue as well as depreciation is recognized on a straight-line basis over the lease term.~~

Income taxes in the consolidated financial statements include both current and deferred taxes. Income taxes are reported in the income statement unless the underlying item is reported directly in equity. For those items, the related income tax is also reported directly in equity. A current tax liability or asset is recognized for the estimated taxes payable or refundable for the current year or prior years.

Deferred tax is recognized for temporary differences between the book values of assets and liabilities and their tax values and for unutilized tax loss carry forwards. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences and tax loss carry forwards can be utilized. Deferred tax is not recognized for the following temporary differences: goodwill not deductible for tax purposes, for the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and for differences related to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

Deferred tax is measured at the tax rate that is expected to be applied to the temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting date. An adjustment of deferred tax asset/liability balances due to a change in the tax rate is recognized in the income statement, unless it relates to a temporary difference earlier recognized directly in equity, in which case the adjustment is also recognized in equity.

The measurement of deferred tax assets involves judgment regarding the deductibility of costs not yet subject to taxation and estimates regarding sufficient future taxable income to enable utilization of unused tax losses in different tax jurisdictions. All deferred tax assets are subject to annual review of probable utilization. The largest amounts of tax loss carry forwards relate to Sweden, with indefinite period of utilization.

Provisions are made when there are legal or constructive obligations as a result of past events and when it is probable that an outflow of resources will be required to settle the obligations and the amounts can be reliably estimated. When the effect of the time value of money is material, discounting is made of estimated outflows. However, the actual outflows as a result of the obligations may differ from such estimates.

The provisions are mainly related to warranty commitments, restructuring, projects and other obligations, such as unresolved income tax and value added tax issues, claims or obligations as a result of patent infringement and other litigations, supplier claims and customer finance guarantees.

Product warranty commitments consider probabilities of all material quality issues based on historical performance for established products and expected performance for new products, estimates of repair cost per unit, and volumes sold still under warranty up to the reporting date.

A restructuring obligation is considered to have arisen when the Company has a detailed formal plan for the restructuring (approved by management), which has been communicated in such a way that a valid expectation has been raised among those affected.

Project related provisions include estimated losses on onerous contracts, contractual penalties and undertakings. For losses on customer contracts, a provision equal to the total estimated loss is recorded when a loss from a contract is anticipated and possible to estimate reliably. These contract loss estimates include any probable penalties to a customer under a loss contract.

Other provisions include provisions for income taxes, value added tax issues, litigations, supplier claims, customer finance and other provisions. The Company provides for estimated future settlements related to patent infringements based on the probable outcome of each infringement. The ultimate outcome or actual cost of settling an individual infringement may vary from the Company’s estimate.

The Company estimates the outcome of any potential patent infringement made known to the Company through assertion and through the Company’s own monitoring of patent-related cases in the relevant legal systems. To the extent that the Company makes the judgment that an identified potential infringement will more likely than not result in an outflow of resources, the Company records a provision based on the Company’s best estimate of the expenditure required to settle with the counterpart.

In the ordinary course of business, the Company is subject to proceedings, lawsuits and other unresolved claims, including proceedings under laws and government regulations and other matters. These matters are often

resolved over a long period of time. The Company regularly assesses the likelihood of any adverse judgments in or outcomes of these matters, as well as potential ranges of possible losses. Provisions are recognized when it is probable that an obligation has arisen and the amount can be reasonably estimated based on a detailed analysis of each individual issue.

Certain present obligations are not recognized as provisions as it is not probable that an economic outflow will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Such obligations are reported as contingent liabilities. For further detailed information we refer to C24 Contingent liabilities.

Pensions and other post-employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Company’s only obligation is to pay a fixed amount to a separate entity (a pension trust fund) with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits. The related actuarial and investment risks fall on the employee. The expenditures for defined contribution plans are recognized as expenses during the period when the employee provides service. Under a defined benefit plan, it is the Company’s obligation to provide agreed benefits to current and former employees. The related actuarial and investment risks fall on the Company.

The present value of the defined benefit obligations for current and former employees is calculated using the Projected Unit Credit Method. The discount rate for each country is determined by reference to market yields on high-quality corporate bonds that have maturity dates approximating the terms of the Company’s obligations. In countries where there is no deep market in such bonds, the market yields on government bonds are used, considering the medium term trend of such bonds. The calculations are based upon actuarial assumptions, assessed on a quarterly basis, and are as a minimum prepared annually. Actuarial assumptions are the Company’s best estimate of the variables that determine the cost of providing the benefits. When using actuarial assumptions, it is possible that the actual result will differ from the estimated result or that the actuarial assumptions will change from one period to another. These differences are reported as actuarial gains and losses. They are for example caused by unexpectedly high or low rates of employee turnover, changed life expectancy, salary changes, changes in the discount rate and differences between actual and expected return on plan assets. Actuarial gains and losses are recognized in equity in the period in which they occur. The Company’s net liability for each defined benefit plan consists of the present value of pension commitments less the fair value of plan assets and is recognized net on the balance sheet. When the result is a net benefit to the Company, the recognized asset is limited to the total of any cumulative past service cost and the present value of any future refunds from the plan or reductions in future contributions to the plan.

The net of return on plan assets and interest on pension liabilities is reported as financial income or expense, while the current service cost and any other items in the annual pension cost are reported as operating income or expense.

~~Payroll taxes related to actuarial gains and losses are reported in equity together with the recognition of actuarial gains and losses.~~

Share-based compensation is related to remuneration to employees, including key management personnel and the Board of Directors. Under IFRS, a company shall recognize compensation costs for share-based compensation programs to employees based on a measure of the value to the company of services received from the employees under the plans.

~~In accordance with IFRS 1 and IFRS 2, Ericsson has chosen not to apply IFRS 2 to equity instruments granted before November 7, 2002.~~

IFRS 2 is applied to the equity settled employee option program granted after November 7, 2002 (i.e. on program where the vesting period ended 2005). Ericsson recognizes compensation costs representing the fair value at grant date of the outstanding employee options. In the balance sheet, the corresponding amounts are accounted for as equity. The fair value of the options is calculated using an option-pricing model. The total costs are recognized during the vesting period, i.e. the period during which the employees had to fulfill vesting requirements. When the options are exercised, social security charges are to be paid in certain countries on the value of the employee benefit; generally based on the difference between the market price of the share and the strike price. Such social security charges are accrued during the vesting period.

For stock purchase plans, compensation costs are recognized during the vesting period, based on the fair value of the Ericsson share at the employee’s investment date. The fair value is based upon the share price at investment date, adjusted for the fact that no dividends will be received on matching shares prior to matching. The employees pay a price equal to the share price at investment date for the investment shares. The investment date is considered as the grant date. In the balance sheet, the corresponding amounts are accounted for as equity. Vesting conditions are non-market based and affect the number of shares that Ericsson will match. When calculating the compensation costs for shares under performance-based matching programs, the Company at each reporting date assesses the probability of meeting the performance targets. Compensation expenses are based on estimates of the number of shares that will match at the end of the vesting period. When shares are matched, social security charges are to be paid in certain countries on the value of the employee benefit. The employee benefit is generally based on the market value of the shares at the matching date. During the vesting period, estimated amounts for such social security charges are accrued.

During 2008, the Company introduced a share-based compensation program as a part of the remuneration to the Board of Directors. The program gives non-employed Directors elected by the General Meeting of Shareholders a right to receive part of their remuneration as a future payment of an amount which corresponds to the market value of a share of class B in the Company at the time of payment, as further disclosed in Note C29, “Information Regarding Employees, Members of the Board of Directors and Management”. The cost for cash settlements is measured based on the estimated costs for the program on a pro rata basis during the service period, being one year. The estimated costs are remeasured during and at the end of the service period.

~~Financial information is provided to the Board of Directors for both primary and secondary segments. These segments are subject to risks and returns that are different from those of other segments.~~

A primary segment is a business segment consisting of a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of the other business segments. Mainly the following factors have been considered when identifying the differences:

~~Differences in products and services regarding: technology and standardization, research and development, production and service.~~

~~For which market and to what type of customers the segment’s products and/or services are aimed.~~

~~Through which distribution channels products and services are sold.~~

~~Secondary, geographical segments are defined based on differences in economic and market conditions, risks and returns for particular geographical environments.~~

~~The Company does not capitalize any borrowing costs. Such costs are expensed as incurred.~~

To be classified as an asset (or disposal group) held for sale, the asset (or disposal group) must be available for immediate sale in its present condition and its sale must be highly probable, requiring that the appropriate level of management has authorized the plan to sell and that there is an active plan to complete the sale.

~~Non-current assets (or disposal groups) held for sale are measured at the lower of carrying amount and fair value less costs to sell.~~

~~Government grants are recognized when there is a reasonable assurance of compliance with conditions attached to the grants and that the grants will be received.~~

For the Company, government grants are linked to performance of research or development work or to capital expenditures that are subsidized as governmental stimulus to employment or investments in a certain country or region. Government grants linked to research and development are normally deducted in reporting the related expense, whereas grants related to assets are accounted for deducting the grant when establishing the acquisition cost of the asset.

A number of issued new standards, amendments to standards and interpretations are not yet effective for the year ended December 31, 2008, and have not been applied in preparing these consolidated financial statements:

IFRS 8 “Operating Segments”. This standard prescribes measurement and presentation of segments and replaces IAS 14 “Segment reporting”. The new standard requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting to the

Amendment to IAS 32 Classification of Rights Issues (published in October 2009 and effective for periods beginning after February 1, 2010). This amendment prescribes the accounting treatment of a contract that will or may be settled in the Company’s own equity instruments. The amendment is not expected to have a significant impact on the Company’s financial statements and is planned to be applied as from January 1, 2011.

IFRIC 17,”Distributions of Non-cash Assets to Owners”. This interpretation is not expected to have a material impact on the Company’s financial statements.

Amendments to IFRIC 14, ‘Prepayment of a minimum funding requirement’ (effective from January 1, 2011). These new amendments are not expected to have a material impact on the group’s financial statements. The EU has not yet endorsed.

IFRIC19, ‘Extinguishing financial liabilities with equity instruments’ (effective for periods beginning after July 1, 2010). This new IFRIC is not expected to have a material impact on the group’s financial statements. The EU has not yet endorsed.

IAS 24 (revised) ‘Related party disclosures’ (effective from January 1, 2011). This amendment only impact disclosures. The EU has not yet endorsed.

IFRS 9 ‘Financial Instruments’ (effective from January 1, 2013). The objective of this IFRS is to establish principles for the financial reporting of financial assets that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of the entity’s future cash flows. The Company has not yet evaluated the impact of this new standard. The EU has not yet endorsed.

The preparation of financial statements and application of accounting standards often involve management’s judgment and the use of estimates and assumptions deemed to be reasonable at the time they are made. However, other results may be derived with different judgments or using different assumptions or estimates, and events may occur that could require a material adjustment to the carrying amount of the asset or liability affected. Following are the accounting policies subject to such judgments and the key sources of estimation uncertainty that the Company believes could have the most significant impact on the reported results and financial position.

Key sources of estimation uncertainty.

Judgments management has made in the process of applying the Company’s accounting policies.

IAS 1 (Revised), ‘Presentation of financial statements’ (effective from January 1, 2009). The revised standard will prohibit the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The Company will apply this revised standard as from January 1, 2009.

Revised IAS 23 “Borrowing Costs” removes the option to expense borrowing costs as incurred and requires that a company capitalizes borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised IAS 23 will become mandatory for the Company’s 2009 financial statements and will constitute a change in accounting policy for the Group. In accordance with the transitional provisions, the Company will apply the revised IAS 23 prospectively to design or construction of qualifying assets from the effective date January 1, 2009. The revised standard is not expected to have a significant impact on the financial statements of the Company.

IAS 27 (Amendment) “Consolidated and Separate Financial Statements” (effective from July 1, 2009). The amendment to the standard is still subject to endorsement by the EU. The change implies, among other things, that minority interest shall always be recognized even if the minority interest is negative, transactions with minority interests shall always be recorded in equity, and, in those cases when a partial disposal of a subsidiary results in that the entity loses control of the subsidiary, any remaining interest should be revalued to fair value. The change in the standard will influence the accounting of future transactions. At present, the Company plans to apply the standard from January 1, 2010.

IAS 32 and IAS 1 (Amendments) “Puttable Financial Instruments” and “Obligations Arising on Liquidation” (Effective from January 1, 2009). The amended standards require entities to classify puttable financial instruments and instruments, or components of instruments, that impose an obligation on the entity to deliver to another party a pro rata share of the net assets of the entity only on liquidation, as equity, provided the financial instruments have particular features and meet specific conditions. The amendments are not expected to have any impact on the Company’s financial statements.

IAS 39 (Amendment) “Financial instruments: Recognition and Measurement—Eligible hedged Items” (effective from July 1, 2009). The amendment to the standard is still subject to endoresement by the EU. The amendment clarifies how the existing principles underlying hedge accounting should be applied in two particular situations. It clarifies the designation of:

Revenue recognition

Key sources of estimation uncertainty

Estimates are necessary in evaluation of contractual performance and estimated total contract costs for assessing whether any loss provisions are to be made or if customers will reach conditional purchase volumes triggering contractual discounts to be given.

Judgments made in relation to accounting policies applied

Parts of the Company’s sales are generated from large and complex customer contracts. Managerial judgment is applied regarding, among other aspects, conformance with acceptance criteria and if transfer of risks and rewards to the buyer has taken place to determine if revenue and costs should be recognized in the current period, degree of completion and the customer credit standing to assess whether payment is likely or not to justify revenue recognition.

Trade and customer finance receivables

Key sources of estimation uncertainty

The Company monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual receivables will be paid. Total allowances for estimated losses as of December 31, 2009, were SEK 1.7 (1.8) billion or 2.4 (2.2) percent of gross trade and customer finance receivables.

Credit risks for outstanding customer finance credits are regularly assessed as well, and allowances are recorded for estimated losses.

Inventory valuation

Key sources of estimation uncertainty

Inventories are valued at the lower of cost and net realizable value. Estimates are required in relation to forecasted sales volumes and inventory balances. In situations where excess inventory balances are identified, estimates of net realizable values for the excess volumes are made. Inventory allowances for estimated losses as of December 31, 2009, amounted to SEK 3.0 (3.5) billion or 12 (11) percent of gross inventory.

Investments in joint ventures and associated companies

Key sources of estimation uncertainty

Impairment testing is performed after initial recognition whenever there is an indication of impairment.

At December 31, 2009, the amount of joint ventures and associated companies amounted to SEK 11.6 (8.0) billion.

Deferred taxes

Key sources of estimation uncertainty

Deferred tax assets are recognized for temporary differences between the carrying amounts for financial reporting purposes of assets and liabilities and the amounts used for taxation purposes and for tax loss carry-forwards. The largest amounts of tax loss carry-forwards are reported in Sweden, with an indefinite period of utilization (i.e. with no expiry date). The valuation of tax loss carry-forwards, deferred tax assets and the Company’s ability to utilize tax losses is based upon management’s estimates of future taxable income in different tax jurisdictions. For further detailed information, please refer to note C8, “Taxes”.

At December 31, 2009, the value of deferred tax assets amounted to SEK 14.3 (14.9) billion. The deferred tax assets related to loss carryforwards are reported as non-current assets.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounting for income-, value added- and other taxes

Key sources of estimation uncertainty

Accounting for these items is based upon evaluation of income-, value added- and other tax rules in all jurisdictions where we perform activities. The total complexity of rules related to taxes and the accounting for these require management’s involvement in judgments regarding classification of transactions and in estimates of probable outcomes of claimed deductions and/or disputes.

Capitalized development expenses

Key sources of estimation uncertainty

Impairment testing is performed after initial recognition whenever there is an indication of impairment. Intangible assets not yet available for use are tested annually. The impairment testing amounts are based on estimates of future cash flows for the respective products.

At December 31, 2009, the capitalized development expenses amounted to SEK 2.1 (2.8) billion. An impairment charge of SEK 0.2 (0.5) billion was recognized as a part of the restructuring program. Under this program decisions where taken to phase out certain products. The impairment charge relates to balances for these products.

Judgments made in relation to accounting policies applied

Development costs that meet IFRS’ intangible asset recognition criteria for products that will be sold, leased or otherwise marketed as well as those intended for internal use are capitalized. The starting point for capitalization is based upon management’s judgment that technological and economical feasibility is confirmed, usually when a product development project has reached a defined milestone according to the Company’s established project management model. Capitalization ceases and amortization of capitalized development costs begins when the product is available for general release.

The definition of amortization periods and the evaluation of impairment indicators also require management’s judgment.

Acquired intellectual property rights and other intangible assets, including goodwill

Key sources of estimation uncertainty

At initial recognition, future cash flows are estimated, to ensure that the initial carrying values do not exceed the expected discounted cash flows for the items of this type of assets. After initial recognition impairment testing is performed whenever there is an indication of impairment, except for goodwill for which impairment testing is performed at least once per year. Negative deviations in actual cash flows compared to estimated cash flows as well as new estimates that indicate lower future cash flows might result in recognition of impairment charges. One source of uncertainty related to future cash flows is long-term movements in exchange rates.

The market capitalization of the Company as per year-end 2009 well exceeded the value of the Company’s net assets.

For further discussion on goodwill, see Note C1, “Significant Accounting Policies” and C10, “Intangible Assets”. Estimates related to acquired intangible assets are based on similar assumptions and risks in assumptions as for goodwill.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2009, the amount of acquired intellectual property rights and other intangible assets amounted to SEK 46.1 (45.5) billion, including goodwill of SEK 274 (24.9) billion. An impairment charge of SEK 4.3 billion was recognized as a part of the restructuring program. Under this program decisions where taken to phase out certain products. The impairment charge relates to balances for these products.

Judgments made in relation to accounting policies applied

At initial recognition and subsequent remeasurement, management judgments are made, both for key assumptions and regarding impairment indicators. In the purchase price allocation made for each acquisition, the purchase price shall be assigned to the identifiable assets, liabilities and contingent liabilities based on fair values for these assets. Any remaining excess value is reported as goodwill. This allocation requires management judgment as well as the definition of cash generating units for impairment testing purposes. Other judgments might result in significantly different results and financial position in the future.

Provisions

Warranty provisions

Key sources of estimation uncertainty

Provisions for product warranties are based on current volumes of products sold still under warranty and on historic quality rates for mature products as well as estimates and assumptions on future quality rates for new products and estimates of costs to remedy the various qualitative issues that might occur. Total provisions for product warranties as of December 31, 2009, amounted to SEK 2.5 (1.9) billion.

Provisions other than warranty provisions

Key sources of estimation uncertainty

Provisions, other than warranty provisions, mainly comprise amounts related to contractual obligations and penalties to customers and estimated losses on customer contracts, restructuring, risks associated with patent and other litigations, supplier or subcontractor claims and/or disputes, as well as provisions for unresolved income tax and value added tax issues. The estimates related to the amounts of provisions for penalties, claims or losses receive special attention from the management. At December 31, 2009, provisions other than warranty commitments amounted to SEK 9.9 (12.4) billion. For further detailed information, see Note C18, “Provisions”.

Judgments made in relation to accounting policies applied

Whether a present obligation is probable or not requires judgment. The nature and type of risks for these provisions differ and management’s judgment is applied regarding the nature and extent of obligations in deciding if an outflow of resources is probable or not.

Pension and other post-employment benefits

Key sources of estimation uncertainty

Accounting for the costs of defined benefit pension plans and other applicable post-employment benefits is based on actuarial valuations, relying on key estimates for discount rates, expected return on plan assets, future salary increases, employee turnover rates and mortality tables. The discount rate assumptions are based on rates for high-quality fixed-income investments with durations as close as possible to the Company’s pension plans.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Expected returns on plan assets consider long-term historical returns, allocation of assets and estimates of future long-term investment returns. At December 31, 2009, defined benefit obligations for pensions and other post-employment benefits amounted to SEK 30.7 (28.0) billion and fair value of plan assets to SEK 23.2 (19.0) billion. For more information on estimates and assumptions, see Note C17, “Post-Employment Benefits”.

Financial instruments, hedge accounting and foreign exchange risks

Key sources of estimation uncertainty

Foreign exchange risk in highly probable sales and purchases in future periods are hedged using foreign exchange derivative instruments designated as cash-flow hedges. Forecasts are based on estimations of future transactions, a forecast is therefore per definition uncertain to some degree.

Judgments made in relation to accounting policies applied

Establishing highly probable sales volumes involves gathering and evaluating sales and purchases estimates for future periods as well as analyzing actual outcome versus estimates on a regular basis in order to fulfill effectiveness testing requirements for hedge accounting. Changes in estimates of sales and purchases might result in that hedge accounting is discontinued.

For further information regarding risks in financial instruments see, Note C20, “Financial Risk Management and Financial Instruments”.

C3 SEGMENT INFORMATION

Operating segments

The Company has the following five operating segments:

Networksdelivers products and solutions for mobile and fixed broadband access, core networks and transmission as well as related network rollout services. The offering includes:

Radio access solutions interconnect with devices such as mobile phones, notebooks and PCs, supporting different standardized mobile technologies, such as GSM and WCDMA on the same platform.

~~a one-sided risk in a hedged item (hedging with options), and~~

Fixed access solutions; increase the customers’ ability to modernize fixed networks to enable new IP-based services with higher bandwidth.

~~inflation in a financial hedged item.~~

Ericsson’s core network solutions include industry leading softswitches, IP infrastructure for EDGE- and core routing, IP Multimedia Subsystem (IMS) and media gateways.

~~It is not expected to have a material impact on the Company’s financial statements.~~

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

IFRS 1 and IAS 27 (Amendments) “Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate” (effective from January 1, 2009). The amended standard allows first-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements. These amendments are not applicable, as the Company is not a first-time adopter.

IFRS 2 (Amendment), “Share-based payment” (effective from January 1, 2009). The amended standard deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. As such these features would need to be included in the grant date fair value for transactions with employees and others providing similar services, that is, these features would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The Company will apply IFRS 2 (Amendment) from January 1, 2009, but is not expected to have a material impact on the consolidated financial statements. The Company will apply this new standard as from January 1, 2009.

IFRS 3 (Amendment) “Business Combinations” (effective from July 1, 2009). The amendment to the standard is still subject to endorsement by the EU. The amendment will have an effect on how future business combinations are accounted for, i.e. the accounting of transaction costs, possible contingent considerations, and business combinations achieved in stages. At present, the Company plans to apply the standard from January 1, 2010.

IFRIC 13 “Customer Loyalty Programmes” addresses the accounting by companies that operate, or otherwise participate in, customer loyalty programmes for their customers. IFRIC 13 relates to customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services. IFRIC 13, which becomes mandatory for the Company’s 2009 financial statements, is not expected to have any significant impact on the consolidated financial statements.

IFRIC 15 “Agreements for Construction of Real Estate” (effective from January 1, 2009). The interpretation clarifies whether IAS 18, ‘Revenue’, or IAS 11, ‘Construction contracts’ should be applied to particular transactions. It is likely to result in IAS 18 being applied to a wider range of transactions. IFRIC 15 is not expected to have significant impact on the Company’s financial result and position. This interpretation is still subject to endorsement by the EU.

IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” (effective from October 1, 2008). IFRIC 16 clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency, not presentation currency, and hedging instruments may be held anywhere in the Company. The requirements of IAS 21, ‘The effects of changes in foreign exchange rates’, do apply to the hedged item. The Company will apply IFRIC 16 from January 1, 2009. It is not expected to have a material impact on the Company’s financial statements.

IFRIC 17, “Distributions of Non-cash Assets to Owners” (mandatory for accounting periods beginning on or after July 1, 2009). This interpretation is still subject to endorsement by the EU. IFRIC 17 clarifies that a dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity, and that this payable should be measured at the fair value of the net asset to be distributed. When an entity settles the dividend payable, it should recognize the difference between the dividend paid and the carrying amount of the net asset distributed in profit or loss. IFRIC 17 also clarifies that IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” should be applied for non-current assets classified as held for distribution to owners. The Company will apply IFRIC 17 to distributions of non-cash assets, as well as pro rata distributions of non-cash assets, prospectively from January 1, 2010.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

IFRIC 18 “Transfers of Assets from Customers” (effective for transfers of property, plant and equipment or cash from a customer, received on or after July 1, 2009). This interpretation is still subject to endorsement by the EU. IFRIC 18 clarifies the requirements for agreements in which an entity receives an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services. The interpretation clarifies e.g. the circumstances in which the definition of an asset is met, the recognition of the asset and the measurement of its cost on initial recognition, and also the recognition of revenue. The evaluation of this interpretation is not finalized.

~~Improvements to IFRSs, published in May 2008 and effective from January 1, 2009. None of these improvements are expected to have a material impact on the Company’s financial statements.~~

~~C2 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS~~

~~The information in this note is grouped as per:~~

~~Key sources of estimation uncertainty.~~

~~Judgments management has made in the process of applying the Company’s accounting policies.~~

~~REVENUE RECOGNITION~~

~~Key sources of estimation uncertainty~~

~~Judgments made in relation to accounting policies applied~~

~~TRADE AND CUSTOMER FINANCE RECEIVABLES~~

~~Key sources of estimation uncertainty~~

The Company monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual receivables will be paid. Total allowances for estimated losses as of December 31, 2008, were SEK 1.8 (1.6) billion or 2.2 (2.5) percent of gross trade and customer finance receivables.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Credit risks for outstanding customer finance credits are regularly assessed as well, and allowances are recorded for estimated losses.~~

~~INVENTORY VALUATION~~

~~Key sources of estimation uncertainty~~

Inventories are valued at the lower of cost and net realizable value. Estimates are required in relation to forecasted sales volumes and inventory balances. In situations where excess inventory balances are identified, estimates of net realizable values for the excess volumes are made. Inventory allowances for estimated losses as of December 31, 2008, amounted to SEK 3.5 (2.8) billion or 11 (11) percent of gross inventory.

~~DEFERRED TAXES~~

~~Key sources of estimation uncertainty~~

~~At December 31, 2008, the value of deferred tax assets amounted to SEK 14.9 (11.7) billion. The deferred tax assets related to loss carryforwards are reported as non-current assets.~~

~~ACCOUNTING FOR INCOME-, VALUE ADDED- AND OTHER TAXES~~

~~Key sources of estimation uncertainty~~

~~CAPITALIZED DEVELOPMENT EXPENSES~~

~~Key sources of estimation uncertainty~~

Impairment testing is performed after initial recognition whenever there is an indication of impairment. Intangible assets not yet available for use are tested annually. The impairment amounts are based on estimates of future cash flows for the respective products.

At December 31, 2008, the amount of capitalized development expenses amounted to SEK 2.8 (3.7) billion. An impairment charge of SEK 0.5 billion was recognized as a part of the restructuring program. Under this program decisions where taken to phase out certain products. The impairment charge relates to balances for these products.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Judgments made in relation to accounting policies applied~~

Development costs that meet IFRS’ intangible asset recognition criteria for products that will be sold, leased or otherwise marketed as well as those intended for internal use are capitalized. The starting point for capitalization is based upon management’s judgment that technological and economical feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. Capitalization ceases and amortization of capitalized development costs begins when the product is available for general release.

~~The definition of amortization periods as well as the evaluation of impairment indicators also requires management’s judgment.~~

~~ACQUIRED INTELLECTUAL PROPERTY RIGHTS AND OTHER INTANGIBLE ASSETS, INCLUDING GOODWILL~~

~~Key sources of estimation uncertainty~~

At initial recognition, future cash flows are calculated, ensuring that the initial carrying values do not exceed the discounted cash flows for the items of this type of assets. Impairment testing is performed after initial recognition whenever there is an indication of impairment, except for goodwill for which impairment testing is performed at least once per year. Negative deviations in actual cash flows compared to estimated cash flows as well as new estimates that indicate lower future cash flows might result in recognition of impairment charges. One source of uncertainty related to future cash flows is long-term movements in exchange rates.

~~The market Capitalization of the Company as per year end 2008 well exceeded the value of net assets of the Company.~~

~~At December 31, 2008, the amount of acquired intellectual property rights and other intangible assets amounted to SEK 45.5 (46.8) billion, including goodwill of SEK 24.9 (22.8) billion.~~

~~Judgments made in relation to accounting policies applied~~

At initial recognition and subsequent measurement, management judgments are made, both for key assumptions and regarding impairment indicators. In the purchase price allocation made for each acquisition, the purchase price shall be assigned to the identifiable assets, liabilities and contingent liabilities based on fair values for theses net assets. Any remaining excess value is reported as goodwill. This allocation requires management judgment as well as the definition of cash generating units for impairment testing purposes. Other judgments might result in significantly different results and financial position in the future.

~~PROVISIONS~~

~~Pension and other post-employment benefits~~

~~Key sources of estimation uncertainty~~

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

salary increases, turnover rates and mortality tables. The discount rate assumptions are based on rates for high-quality fixed-income investments with durations as close as possible to the Company’s pension plans. Expected returns on plan assets consider long-term historical returns, allocation of assets and estimates of future long-term investment returns. At December 31, 2008 defined benefit obligations for pensions and other post-employment benefits amounted to SEK 28.0 (25.2) billion and fair value of plan assets to SEK 19.0 (20.2) billion. For more information on estimates and assumptions, see Note C17, “Post-Employment Benefits”.

~~Warranty provisions~~

~~Key sources of estimation uncertainty~~

~~Provisions other than warranty provisions~~

~~Key sources of estimation uncertainty~~

Provisions, other than warranty provisions, mainly comprise amounts related to contractual obligations and penalties to customers and estimated losses on customer contracts, restructuring, risks associated with patent and other litigations, supplier or subcontractor claims and/or disputes, as well as provisions for unresolved income tax and value added tax issues. The estimates related to the amounts of provisions for penalties, claims or losses receive special attention from the management. At December 31, 2008, Provisions other than warranty commitments amounted to SEK 12.4 (7.9) billion. For further detailed information, see Note C18, “Provisions”.

~~Judgments made in relation to accounting policies applied~~

~~FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING~~

~~Hedge accounting and foreign exchange risks~~

~~Key sources of estimation uncertainty~~

~~Foreign exchange risk in highly probable sales and purchases in future periods are hedged using foreign exchange derivative instruments designated as cash-flow hedges.~~

~~Judgments made in relation to accounting policies applied~~

Establishing highly probable sales volumes involves gathering and evaluating sales and purchases estimates for future periods as well as analyzing actual outcome to estimates on a regular basis in order to fulfill effectiveness testing requirements for hedge accounting. Changes in estimates of sales and purchases might result in that hedge accounting is discontinued.

~~For further information regarding risks in financial instruments see, Note C20, “Financial Risk Management and Financial Instruments”.~~

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~C3 SEGMENT INFORMATION~~

~~Primary segments~~

~~Ericsson has the following business segments:~~

~~Networks~~~~delivers products and solutions for mobile and fixed broadband access, core networks and transmission as well as related network rollout services. The offering includes:~~

~~radio access solutions interconnect with devices such as mobile phones, notebooks and PCs, supporting different standardized mobile technologies, such as GSM and WCDMA on the same platform.~~

~~access solutions, recently expanded by acquisitions, increase the customers’ ability to modernize fixed networks to enable new IP-based services with higher bandwidth.~~

~~our core network solutions include industry-leading softswitches, IP infrastructure for EDGE- and core routing, IP Multimedia Subsystem (IMS) and media gateways.~~

~~transmission; microwave and optical transmission solutions for mobile and fixed networks.~~

~~related network rollout services.~~

~~GSM and WCDMA share a common core network, preserving investments. IMS is a platform that enables converged services to be transparently provided indepent~~

Transmission/backhaul; micro-wave and optical transmission solutions for mobile and fixed networks.

Related network rollout services.

Network management tools; supporting operator activities for management of existing networks as well as for introduction of new network architectures, technologies and services.

GSM and WCDMA share a common core network, preserving investments. IMS is a platform that enables converged services to be transparently provided independent of the type of access used.

Professional Servicesdelivers managed services, systems integration, consulting, education and general customer support services. The offering includes:

~~managed~~Managed services comprise network operations (the ~~managment~~management of day-to-day operations of customer networks) and hosting of service layer platforms and applications.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~systems~~Systems integration; Ericsson integrates equipment from multiple suppliers and handles technology change programs as well as design and integration of new solutions.

~~consulting;~~Consulting; experts in business and technology strategy provide support (decision making, planning and execution) to customers in improving and growing their business.

~~education;~~Education; tailored programs to ensure operator personnel have the right skills and competence to manage their increasingly complex systems.

~~customer~~Customer support services; staff world-wide provide around-the-clock support and advice to ensure network uptime and performance.

Multimedia ~~delivers~~provides enablers and applications ~~that the~~enabling operators ~~need~~ to deliver a rich user experience seamlessly on any device, any time and anywhere.

The offering includes:

TV ~~solutions,~~solutions; end-to-end solutions for operators, service providers, advertisers and content providers.

~~customer~~Customer and business applications; multimedia solutions for the consumer and enterprise markets.

~~multimedia~~Multimedia brokering solutions which facilitate payment and distribution of content.

~~service delivering~~Service delivery and provisioning platforms enabling operators and service providers to create, sell and manage multimedia offerings and multi-play offerings.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~mobile platforms; platform technology for GSM/EDGE and WCDMA/HSPA used in mobile devices and PCs.~~

~~Phones,~~Sony Ericsson, consisting of ~~Ericsson’s investment and share in earnings of~~ the joint venture Sony Ericsson Mobile ~~Communications joint venture.~~Communications. Sony Ericsson delivers innovative and feature-rich mobile phones ~~accessories~~ and ~~PC-cards.~~accessories.

~~SECONDARY SEGMENTS~~ST-Ericsson, consisting of the joint venture ST-Ericsson. ST-Ericsson is an industry leader in design, development, and creation of cutting-edge mobile platforms and wireless semiconductors. ST-Ericsson was formed on February 2, 2009, by merging ST-NXP Wireless and Ericsson Mobile Platforms.

~~Ericsson~~Unallocated

Some revenues, costs, assets and liabilities are not identified as part of any operating segment and are therefore not allocated. Examples of such items are costs for corporate staff, IT costs and general marketing costs.

Geographical areas

The Company operates world-wide and reports its operations divided in five ~~main~~ geographical areas: (1) Western Europe, (2) Central and Eastern Europe, Middle East and Africa, (3) Asia Pacific, (4) North America and (5) Latin America. ~~These areas represent the geographical segments.~~

~~BUSINESS SEGMENTS (PRIMARY)~~

2008
   Networks Professional
Services Multimedia Phones    Unallocated    Eliminations    Group
Net sales
   142,050 48,978 17,902 —      —      —      208,930
Inter-segment sales
   —   —   —   —      —      —      —

Total net sales
   142,050 48,978 17,902 —      —      —      208,930

Share in earnings of JV and associated companies
   -25 92 -2 -503    —      —      -436

Operating income
   11,145 6,346 -118 -503    -618    —      16,252

Operating margin (%)
   8 % 13 % -1 % —      —      —      8 %
Financial income
            3,458
Financial expenses
            -2,484

Income after financial items
            17,226

Taxes
            -5,559

Net income
            11,667

Assets¹⁾²⁾
   119,351 42,701 20,771 —      94,873    —      277,696
Equity in joint ventures and associated companies
   852 322 120 6,694    —      —      7,988

Total assets
   120,203 43,023 20,891 6,694    94,873    —      285,684

Liabilities³⁾⁴⁾
   58,739 25,868 5,363 —      53,630    —      143,600

1)	Segment assets include property, plant and equipment, intangible assets, current and non-current customer finance, accounts receivable, inventory, prepaid expenses, accrued revenues, derivatives and other current assets.

2)	~~Unallocated assets include mainly cash and cash equivalents, short-term investments and deferred tax assets.~~

3)	~~Segment liabilities include accounts payable, provisions, accrued expenses and deferred revenues, advances from customers and other current liabilities.~~

4)	~~Unallocated liabilities include accrued interests, tax liabilities, interest-bearing liabilities and post-employment benefits.~~

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~Other segment items~~Major customers

The Company does not have any customer for which revenues from transactions have exceeded 10 percent of the Company’s total revenues for the years 2009, 2008 or 2007.

OPERATING SEGMENTS

2008
   Networks    Professional
Services    Multimedia    Phones    Unallocated    Eliminations    Group
Property, plant and equipment and intangible assets

Additions to property plant and equipment
   3,085    735    257    —      56    —      4,133
Acquisitions/capitalization of intangible assets
   693    11    583    —      —      —      1,287
Depreciation
   -2,347    -532    -228    —      -1    —      -3,108
Amortization
   -3,210    -368    -1,429    —      1    —      -5,006
Impairment losses
   -547    —      -19    —      —      —      -566
Reversals of impairment losses
   6    1    —      —      —      —      7
Restructuring expenses
   -5,131    -1,272    -337    -846    -20    —      -7,606
Gains/losses from divestments
   9    -16    992    —      113    —      1,098

~~GEOGRAPHICAL SEGMENTS (SECONDARY)~~


2009	Networks		Professional Services		Multi- media		Sony Ericsson		ST- Ericsson		Total Segments		Unallo- cated	Elimi- nations³⁾	Group
Segment sales	136,312		56,065		12,996		71,984		13,535		290,892		—	–85,519	205,373
Inter–segment sales	770		58		276		164		5,731		6,999		—	–5,895	1,104

Net sales	137,082		56,123		13,272		72,148		19,266		297,891		—	–91,414	206,477

Operating income	6,879	²⁾	6,990	¹⁾	655		–10,820		–2,615		1,089		–855	5,684	5,918

Operating margin (%)	5	%	12	%	5	%	–15	%	–14	%	0	%	—	—	3	%
Financial income															1,874
Financial expenses															–1,549

Income after financial items															6,243

Taxes															–2,116

Net income															4,127

Other segment items
Share in earnings of joint ventures and associated companies	37		33		–1		–5,693		–1,762		–7,386		–14	—	–7,400
Amortization	–2,673		–574		–910		–165		–828		–5,150		—	941	–4,209
Depreciation	–2,768		–627		–155		–1,124		–997		–5,671		—	2,121	–3,550
Impairment losses	–4,333	²⁾	—		–80		—		–46		–4,459		—	46	–4,413
Reversals of impairment losses	38		9		2		—		—		49		—	—	49
Restructuring expenses	–8,748	²⁾	–2,044		–385		–1,754		–890		–13,821		–82	1,322	–12,581
Gains/losses from divestments	10		777	¹⁾	41		—		47		875		–32	—	843

Total assets	116,226		33,515		17,650		33,586		22,187		223,164		92,101	–45,456	269,809

2008
   Net sales    Total assets    Additions/
capitalization of
PP&E and
intangible assets
Western Europe
   51,570    214,501    4,065
—of which Sweden
   8,876    189,827    2,909
Central and Eastern Europe, Middle East and Africa
   53,080    13,628    93
Asia Pacific
   63,307    38,407    370
—of which China
   15,068    13,937    140
—of which India
   15,176    12,705    85
North America
   17,925    8,164    739
—of which United States
   14,132    7,761    697
Latin America
   23,048    10,984    153

Total
   208,930    285,684    5,420

—of which EU
   57,601    222,401    4,101

~~For employee information, see Note C29, “Information Regarding Employees, Members of the Board of Directors and Management”.~~

1)	In Q2 2009, the TEMS business was divested, resulting in a capital gain of SEK 0.8 billion.

2)	Including impairment losses related to restructuring activities of SEK 4.3 billion.

3)	Sony Ericsson and ST-Ericsson are accounted for in accordance with the equity method. The difference between what is reported to the CODM and externally is eliminated.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~BUSINESS SEGMENTS (PRIMARY)~~GEOGRAPHICAL AREAS

2007
   Networks Professional
Services Multimedia¹⁾ Phones    Unallocated    Eliminations    Group
Net sales
   128,985 42,892 15,903 —      —      —      187,780
Inter-segment sales
   32 10 2 —      —      -44    0

Total net sales
   129,017 42,902 15,905 —      —      -44    187,780

Share in earnings of JV and associated companies
   61 66 -3 7,108    —      —      7,232

Operating income
   17,398 6,394 -135 7,108    -119    —      30,646

Operating margin (%)
   13 % 15 % -1 % —      —      —      16 %
Financial income
            1,778
Financial expenses
            -1,695

Income after financial items
            30,729

Taxes
            -8,594

Net income
            22,135
Assets²⁾³⁾
   107,819 36,974 18,739 —      70,682    —      234,214
Equity in joint ventures and associated companies
   850 298 206 9,549    —      —      10,903

Total assets
   108,669 37,272 18,945 9,549    70,682    —      245,117

Liabilities⁴⁾⁵⁾
   39,819 19,101 4,915 —      46,230    —      110,065


2009	Net sales	Non-current assets¹⁾
Western Europe	44,579	56,118
—of which Sweden	4,096	43,574
Central and Eastern Europe, Middle East and Africa	50,725	1,202
Asia Pacific	65,770	1,630
—of which China	18,455	903
—of which India	15,252	225
North America	25,350	8,359
—of which United States	21,538	8,100
Latin America	20,053	2,066

Total	206,477	69,375
—of which EU	49,313	49,158

1)	Total non-current assets excluding financial instruments, deferred tax assets, and post-employement benefit assets.

For employee information, see Note C29, “Information Regarding Members of the Board of Directors, the Management and Employees”.

OPERATING SEGMENTS


2008	Networks		Professional Services		Multi- media¹⁾		Sony Ericsson		Total Segments		Unallo- cated	Elimi- nations²⁾	Group
Segment sales	142,031		48,940		12,614		108,492		312,077		—	–108,492	203,585
Inter-segment sales	19		38		5,288		261		5,606		—	–261	5,345

Net sales	142,050		48,978		17,902		108,753		317,683		—	–108,753	208,930

Operating income	11,145		6,346		–118		–1,094		16,279		–618	591	16,252

Operating margin (%)	8	%	13	%	–1	%	0	%	5	%	—	—	8	%
Financial income													3,458
Financial expenses													–2,484

Income after financial items													17,226

Taxes													–5,559

Net income													11,667

Other segment items
Share in earnings of joint ventures and associated companies	–25		91		1		-503		–436		—	—	–436
Amortization	–3,210		–368		–1,429		–53		–5,060		1	53	–5,006
Depreciation	–2,347		–532		–228		–1,138		–4,245		–1	1,138	–3,108
Impairment losses	–547		—		–19		—		–566		—	—	–566
Reversals of impairment losses	6		1		—		—		7		—	—	7
Restructuring expenses	–5,131		–1,272		–337		–1,692		–8,432		–20	846	–7,606
Gains/losses from divestments	9		–16		992		—		985		113	—	1,098

Total assets	131,127	³⁾	32,099	³⁾	20,891		48,837		232,954		94,873	–42,143	285,684

1)	Multimedia figures include the Mobile Platforms business which from 2009 is part of ST-Ericsson.

2)	Sony Ericsson is accounted for in accordance with the equity method. The difference between what is reported to the CODM and externally is eliminated.

3)	Amounts for 2007 and 2008 have been restated to be consistent with asset allocation method applied as from 2009.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

GEOGRAPHICAL AREAS


2008	Net sales	Non-current assets¹⁾
Western Europe	51,570	53,019
—of which Sweden	8,876	46,458
Central and Eastern Europe, Middle East and Africa	53,080	1,178
Asia Pacific	63,307	1,436
—of which China	15,068	688
—of which India	15,176	156
North America	17,925	8,917
—of which United States	14,132	8,829
Latin America	23,048	1,676

Total	208,930	66,226
—of which EU	57,601	52,945

1)	Total non-current assets excluding financial instruments, deferred tax assets, and post-employement benefit assets.

For employee information, see Note C29, “Information Regarding Members of the Board of Directors, the Management and Employees”.

OPERATING SEGMENTS


2007	Networks		Professional Services		Multi- media^1,2)		Sony Ericsson		Total Segments		Unallo- cated	Elimi- nations³⁾	Group
Segment sales	128,985		42,892		11,997		119,068		302,942		—	–119,068	183,874
Inter-segment sales	32		10		3,908		333		4,283		—	–377	3,906

Net sales	129,017		42,902		15,905		119,401		307,225		—	–119,445	187,780

Operating income	17,398		6,394		–135		14,270		37,927		–119	–7,162	30,646

Operating margin (%)	13	%	15	%	–1	%	12	%	12	%	—	—	16	%
Financial income													1,778
Financial expenses													–1,695

Income after financial items													30,729

Taxes													–8,594

Net income													22,135

Other segment items
Share in earnings of joint ventures and associated companies	61		66		–3		7,108		7232		—	—	7,232
Amortization	–4,630		–237		–566		—		–5,433		—	—	–5,433
Depreciation	–2,601		–367		–152		–1,052		–4,172		–1	1,052	–3,121
Impairment losses	–105		–1		—		—		–106		—	—	–106
Reversals of impairment losses	297		—		—		—		297		—	—	297
Gains/losses from divestments	—		—		—		—		—		280	—	280

Total assets	117,863	⁴⁾	28,078	⁴⁾	18,945		50,832		215,718		70,682	–41,283	245,117

1)	Multimedia figures include the Enterprise PBX business which was divested in 2008.

~~Segment assets~~Multimedia figures include ~~property, plant and equipment, intangible assets, current and non-current customer finance, accounts receivable, inventory, prepaid expenses, accrued revenues, derivatives and other current assets.~~the Mobile Platforms business which from 2009 is part of ST-Ericsson

3)	~~Unallocated assets include mainly cash~~Sony Ericsson is accounted for in accordance with the equity method. The difference between what is reported to the CODM and ~~cash equivalents, short-term investments and deferred tax assets.~~externally is eliminated.

4)	~~Segment liabilities include accounts payable, provisions, accrued expenses~~Amounts for 2007 and ~~deferred revenues, advances~~2008 have been restated to be consistent with asset allocation method applied as from ~~customers and other current liabilities.~~2009.

5)	~~Unallocated liabilities include accrued interests, tax liabilities, interest-bearing liabilities and post-employment benefits.~~

~~Other segment items~~

2007
Networks Professional
Services Multimedia¹⁾ Phones Unallocated Eliminations Group
Property, plant and equipment and intangible assets

Additions to property plant and equipment
3,264 806 249 —   —   —   4,319
Acquisitions/capitalization of intangible assets
15,401 2,973 11,464 —   —   —   29,838
Depreciation
-2,601 -367 -152 —   -1 —   -3,121
Amortization
-4,630 -237 -566 —   —   —   -5,433
Impairment losses
-105 -1 —   —   —   —   -106
Reversals of impairment losses
297 —   —   —   —   —   297
Gains/losses from divestments
—   —   —   —   280 —   280

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

GEOGRAPHICAL ~~SEGMENTS (SECONDARY)~~AREAS

2007
   Net sales    Total assets    Additions/
capitalization of
PP&E and
intangible assets
Western Europe
   52,685    160,606    12,127
—of which Sweden
   8,395    117,887    2,671
Central and Eastern Europe, Middle East and Africa
   48,661    10,737    230
Asia Pacific
   54,629    26,852    1,124
—of which China
   13,598    9,915    704
—of which India
   10,517    6,642    71
North America
   13,422    32,815    20,528
—of which United States
   10,529    31,573    17,668
Latin America
   18,383    14,107    148

Total
   187,780    245,117    34,157

—of which EU
   58,978    161,251    10,609

~~For employee information, see Note C29, “Information Regarding Employees, Members of the Board of Directors and Management”.~~

~~BUSINESS SEGMENTS (PRIMARY)~~

2006¹⁾
   Networks Professional
Services Multimedia²⁾ Phones    Unallocated Eliminations    Group
Net sales
   127,518 36,813 13,877 —      1,613 —      179,821
Inter-segment sales
   176 34 17 —      2 -229    0

Total net sales
   127,694 36,847 13,894 —      1,615 -229    179,821

Share in earnings of JV and associated companies
   18 21 43 5,852    —   —      5,934

Operating income
   21,722 5,309 714 5,852    2 231 ⁷⁾ —      35,828

Operating margin (%)
   17 % 14 % 5 % —      —   —      20 %
Financial income
         1,954
Financial expenses
         -1,789

Income after financial items
         35,993

Taxes
         -9,557

Net income
         26,436
Assets³⁾⁴⁾
   100,792 21,141 6,657 —      76,941 —      205,531
Equity in joint ventures and associated companies
   918 170 280 8,041    —   —      9,409

Total assets
   101,710 21,311 6,937 8,041    76,941 —      214,940

Liabilities⁵⁾⁶⁾
   42,837 17,718 4,011 —      29,479 —      94,045


2007	Net sales	Non-current assets¹⁾
Western Europe	52,685	57,537
—of which Sweden	8,395	49,283
Central and Eastern Europe, Middle East and Africa	48,661	1,158
Asia Pacific	54,629	1,313
—of which China	13,598	618
—of which India	10,517	124
North America	13,422	8,794
—of which United States	10,529	8,668
Latin America	18,383	1,846

Total	187,780	70,648
—of which EU	58,978	57,148

1)	~~Ericsson has reorganized its operating structure as of January 1, 2007. Comparative figures for 2006 are restated accordingly. For further details see note C1, Significant Accounting Policies.~~

2)	~~Multimedia figures include the Enterprise PBX business which was divested in 2008.~~

3)	~~Segment~~Total non-current assets include property, plant and equipment, intangible assets, current and non-current customer finance, accounts receivable, inventory, prepaid expenses, accrued revenues, derivatives and other current assets.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

4)	~~Unallocated assets include mainly cash and cash equivalents, short-term investments and~~excluding financial instruments, deferred tax ~~assets.~~

5)	~~Segment liabilities include accounts payable, provisions, accrued expenses~~assets, and ~~deferred revenues, advances from customers and other current liabilities.~~

6)	~~Unallocated liabilities include accrued interests, tax liabilities, interest-bearing liabilities and post-employment benefits.~~

7)	~~Unallocated operating income include the effect of the divesture of the Defense business by SEK 2,963 million.~~

~~Other segment items~~

2006¹⁾
Networks Professional
Services Multimedia²⁾ Phones Unallocated Eliminations Group
Property, plant and equipment and intangible assets

Additions to property, plant and equipment
3,462 291 74 —   —   —   3,827
Acquisitions/capitalization of intangible assets
16,403 1,512 404 —   —   —   18,319
Depreciation
-2,689 -271 -47 —   —   —   -3,007
Amortization
-4,015 -116 –68 —   -38 —   -4,237
Impairment losses
-303 —   —   —   —   —   -303
Reversals of impairment losses
31 —   —   —   —   —   31
Restructuring expenses
-2,400 -402 -106 —   —   —   -2,908
Gains/losses from divestments
—   —   —   —   2,945 —   2,945

~~GEOGRAPHICAL SEGMENTS (SECONDARY)~~

2006
   Net sales¹⁾    Total assets    Additions/
capitalization of
PP&E and
intangible assets
Western Europe
   53,182    158,773    20,704
—of which Sweden
   7,809    125,578    17,819
Central and Eastern Europe, Middle East and Africa
   46,413    8,139    147
Asia Pacific
   47,884    24,853    419
—of which China
   11,776    9,088    206
—of which India
   7,359    5,936    39
North America
   15,862    10,893    798
—of which United States
   13,878    10,231    739
Latin America
   16,480    12,282    78

Total
   179,821    214,940    22,146

—of which EU²⁾
   58,983    160,074    20,763

1)	Revenues from intellectual property rights (IPR) related to products are as from 2007 reported in Net sales with related costs reported as Cost of sales. Comparative figures for 2006 have been restated accordingly.

2)	~~Restated for Bulgaria and Romania which entered into the European Union as from 2007.~~post-employement benefit assets.

For employee information, see Note C29, “Information Regarding ~~Employees,~~ Members of the Board of Directors, the Management and ~~Management”~~Employees”.

C4 NET SALES


	2009	2008	2007
Sales of products and network rollout services	145,873	150,846	138,011
Of which:
—Delivery-type contracts	*144,908*	148,358	130,890
—Construction-type contracts	*965*	2,488	7,121
Professional Services sales	56,123	48,978	42,892
License revenues¹⁾	4,481	9,106	6,877

Net sales	206,477	208,930	187,780
Export sales from Sweden	94,829	109,254	102,486

1)	The ST-Ericsson joint venture was formed in February 2009, figures for 2007 and 2008 include licenses revenues from Mobile Platforms.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~C4 NET SALES~~

   2008    2007    2006¹⁾
Sales of products and network rollout services
   150,846    138,011    137,758
Of which:

—Delivery-type contracts
   148,358    130,890    123,206
—Construction-type contracts
   2,488    7,121    14,552
Professional Services sales
   48,978    42,892    36,813
License revenues
   9,106    6,877    5,250

Net sales
   208,930    187,780    179,821
Export sales from Sweden
   109,254    102,486    98,694

1)	Revenues from intellectual property rights (IPR) related to products are as from 2007 reported in Net sales with related costs reported as Cost of sales. Comparative figures for 2006 have been restated accordingly.

C5 EXPENSES BY NATURE


	2008	2007	2006	2009	2008	2007
Goods and services	138,298	113,195	108,033	124,627	138,298	113,195
Amortization and depreciation	8,114	8,554	7,244	7,759	8,114	8,554
Impairments, net of reversals	2,680	1,435	876
Impairments and obsolescence allowances, net of reversals				5,637	2,680	1,435
Employee remunerations	51,297	44,771	42,821	54,877	51,297	44,771
Interest expenses	2,484	1,695	1,789	1,549	2,484	1,695
Taxes	5,559	8,594	9,557	2,116	5,559	8,594

Expenses incurred	208,432	178,244	170,320	196,565	208,432	178,244
Less:
Inventory changes¹⁾	3,761	802	3,791	–4,784	3,761	802
Additions to Capitalized development	1,409	1,053	1,353	1,443	1,409	1,053

Expenses charged to the Income Statement	203,262	176,389	165,176	199,906	203,262	176,389

1)	The inventory changes are based on changes of gross inventory values prior to ~~allowances (gross value).~~obsolescence allowances.

The ~~change~~increase in ~~Impairments,~~impairments and obsolescence allowances, net of reversals, is mainly ~~relate~~due to ~~an increase~~restructuring-related impairments of intangible assets, somewhat offset by decreased obsolescence allowances infor inventories ~~impairments of Capitalized development expenses and an increase in~~as well as decreased impairments of trade ~~receivables.~~receivables and capitalized development expenses.

The restructuring charges relate to activities to reduce production cost, reduce product variants and platforms, increase the re-use of software, consolidate R&D activities, and improve administrative processes. In the product portfolio reviews, opportunities to reduce the number of platforms and solutions were identified, resulting in write-downs of capitalized development costs and acquired IPR assets for the affected products.

For ~~2008,~~2009, restructuring charges amounted to SEK ~~6.7~~11.3 billion. Restructuring charges are included in the expenses presented above.

~~RESTRUCTURING CHARGES BY FUNCTION~~Restructuring charges by function


	2008	2007	2006	2009	2008	2007
Cost of sales	2,540	—	1,566	4,180	2,540	—
R&D expenses	2,648	—	595	6,045	2,648	—
Selling and administrative expenses	1,572	—	747	1,034	1,572	—

Total restructuring charges	6,760	—	2,908	11,259	6,760	—

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C6 OTHER OPERATING INCOME AND EXPENSES

   2008    2007    2006¹⁾
Gains on sales of intangible assets and PP&E
   302    78    27
Losses on sales of intangible assets and PP&E
   -190    -104    -158
Gains on sales of investments and operations
   1,236    296    3,038
Losses on sales of investments and operations
   -138    -16    -93

Capital gains/losses, net
   1,210    254    2,814

Other operating revenues
   1,767    1,480    1,089

Total other operating income and expenses
   2,977    1,734    3,903

1)	Revenues from intellectual property rights (IPR) related to products are as from 2007 reported in Net sales with related costs reported as Cost of sales. Comparative figures for 2006 have been restated accordingly.


	2009	2008	2007
Gains on sales of intangible assets and PP&E	193	302	78
Losses on sales of intangible assets and PP&E	–126	–190	–104
Gains on sales of investments and operations	962	1,236	296
Losses on sales of investments and operations	–119	–138	–16

Capital gains/losses, net	910	1,210	254

Other operating revenues	2,172	1,767	1,480

Total other operating income and expenses	3,082	2,977	1,734

C7 FINANCIAL INCOME AND EXPENSES


	2008		2007		2006		2009		2008		2007
	Financial income	Financial expenses	Financial income	Financial expenses	Financial income	Financial expenses	Financial income	Financial expenses	Financial income	Financial expenses	Financial income	Financial expenses
Contractual interest from financial assets	2,938		2,293		1,952
Of which from financial assets at fair value through profit or loss	*2,282*		1,094		1,190
Contractual interest from financial liabilities		-2,023		-1,543		-1,416
Of which from financial liabilities at fair value through profit or loss		—		—		—
Contractual interest on financial assets							1,287		2,938		2,293
Of which on financial assets at fair value through profit or loss							*814*		2,282		1,094
Contractual interest on financial liabilities								–1,616		–2,023		–1,543
Of which on financial liabilities at fair value through profit or loss								—		—		—
Net gain/loss on:
Instruments at fair value through profit or loss¹⁾	322	280	-181	-60	-60	-366	635	155	322	280	–181	–60
Of which included in fair value hedge relationships	—	*-32*	—	-7	—	-414		*155*	—	–32	—	–7
Available for sale	—	—	—	—	—	—	—	—	—	—	—	—
Loans and receivables	191	—	-342	—	—	-160	–53		191	—	–342	—
Liabilities at amortized cost	—	-656	—	11	—	383		–2	—	–656	—	11
Other financial income and expenses	7	-85	8	-103	62	-230	5	–86	7	–85	8	–103

Total	3,458	-2,484	1,778	-1,695	1,954	-1,789	1,874	–1,549	3,458	–2,484	1,778	–1,695

1)	Excluding net ~~loss~~gain from operating assets and liabilities, ~~which was~~SEK 2,247 million (net loss of SEK 4,234 ~~(762)~~ million in 2008, net loss of SEK 762 million in 2007), reported as Cost of Sales.

~~C8 TAXES~~

On December 10, 2008 the Swedish Parliament decided to reduce the company tax rate from 28 percent to 26,3 percent. This new tax rate will become applicable from the income year of 2009, and has affected the assessment of deferred tax assets and deferred tax debts. In summary, the Group tax expense for the year was SEK 5,559 (8,594) million or 32.3 (28.0) percent of the income after financial items.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~INCOME~~C8 TAXES ~~RECOGNIZED IN THE INCOME STATEMENT~~

The Company’s expense for the year was SEK 2,116 (5,559) million or 33.9 (32.3) percent of the income after financial items, mainly due to a lower tax rate from the loss making joint venture companies. The tax rate excluding joint ventures and associated companies was 25.7 percent.

Income taxes recognized in the income statement

The following items are included in ~~Taxes:~~taxes:


	2008	2007	2006	2009	2008	2007
Current income taxes for the year	-5,574	-4,115	-4,565	–4,605	–5,574	–4,115
Current income taxes related to prior years	167	-294	-169
Current income taxes related to previous years				441	167	–294
Deferred tax income/expense (–)	-297	-2,227	-3,582	661	–297	–2,227

Sub total				*–3,503*	–5,704	–6,636
Share of taxes in joint ventures and associated companies	145	-1,958	-1,241	1,387	145	–1,958

Taxes	-5,559	-8,594	-9,557	–2,116	–5,559	–8,594

A reconciliation between actual tax expense for the year and the theoretical tax expense that would arise when applying statutory tax rate in Sweden, 26.3 percent, on income before taxes is shown in the table below.

RECONCILIATION OF ~~ACTUAL INCOME TAX RATE TO THE~~ SWEDISH INCOME TAX ~~RATE:~~TO THE ACTUAL INCOME TAX

   2008 2007 2006
Tax rate in Sweden
   -28.0 % -28.0 % -28.0 %
Effect of foreign tax rates
   0.1 % 0.2 % -0.4 %
Current income taxes related to prior years
   1.0 % -1.0 % -0.5 %
Recognition/remeasurement of tax losses related to prior years
   -1.0 % -0.7 % 1.2 %
Recognition/remeasurement of deductible temporary differences related to prior years
   0.4 % 1.5 % 0.2 %
Tax effect of non-deductible expenses
   -5.7 % -2.6 % -3.7 %
Tax effect of non-taxable income
   1.8 % 2.8 % 4.5 %
Tax effect of changes in tax rates
   -0.9 % -0.2 % 0.1 %

Actual tax rate
   -32.3 % -28.0 % -26.6 %


	2009	2008	2007
Tax rate in Sweden (26.3 %)	–1,643	–4,823	–8,604
Effect of foreign tax rates	–812	22	62
Of which joint ventures and associated companies	*–550*	1	63
Current income taxes related to previous years	441	167	–294
Recognition/remeasurement of tax losses related to previous years	8	–169	–204
Recognition/remeasurement of deductible temporary differences related to previous years	267	62	472
Tax effect of non-deductible expenses	–1,155	–986	–810
Tax effect of non-taxable income	630	327	853
Tax effect of changes in tax rates	148	–159	–69

Taxes	–2,116	–5,559	–8,594

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

~~DEFERRED TAX BALANCES~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred tax balances

Tax effects of temporary differences and ~~unutilized~~ tax loss carryforwards are attributable as shown in the table below:

TAX EFFECTS OF TEMPORARY DIFFERENCES AND ~~UNUTILIZED~~ TAX LOSS CARRYFORWARDS


	2008				2007			2009				2008
	Deferred tax assets	Deferred tax liabilities		Net balance	Deferred tax assets	Deferred tax liabilities	Net balance	Deferred tax assets	Deferred tax liabilities		Net balance	Deferred tax assets	Deferred tax liabilities		Net balance
Intangible assets and property, plant and equipment	313	4,081			438	4,044		359	2,264			313	4,081
Current assets	2,056	80			1,878	14		2,481	53			2,056	80
Post-employment benefits	1,054	138			1,121	100		852	472			1,054	138
Provisions	2,473	—			1,693	5		2,240	—			2,473	—
Equity	2,941	—			708	97		1,901	—			2,941	—
Other	3,743	897	¹⁾		3,647	1,553		4,343	1,291	¹⁾		3,743	897	¹⁾
Loss carryforwards	4,736	—			5,219	—		3,961	—			4,736	—

Deferred tax assets/liabilities	17,316	5,196			14,704	5,813		16,137	4,080			17,316	5,196
Netting of assets/liabilities	-2,458	-2,458			-3,014	-3,014		–1,810	–1,810			–2,458	–2,458

Net deferred tax balances	14,858	2,738		12,120	11,690	2,799	8,891	14,327	2,270		12,057	14,858	2,738		12,120

1)	~~Refer~~Referring mainly to R&D credits and intellectual property ~~rights~~rights.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~CHANGES IN DEFERRED TAXES

~~CHANGE IN DEFERRED TAXES:~~


	2008	2007	2009	2008
Opening balance, net	8,891	13,182	12,120	8,891
Recognized in income statement	-296	-2,227	661	–296
Recognized in equity	2,330	-73
Recognized in OCI			–1,040	2,330
Acquisitions/disposals of subsidiaries	861	-2,120	186	861
Translation differences	334	129	130	334

Closing balance, net	12,120	8,891	12,057	12,120

Tax effects reported directly in ~~equity~~Other Comprehensive Income amount to SEK ~~2,330~~–1,040 (2,330) million, of which ~~hedge accounting~~actuarial gains and losses related to pensions SEK ~~1,399~~173 (931) million, cash flow hedges SEK –1,059 (1,225) million and ~~actuarial gains/ losses on pensions~~changes in cumulative translations adjustments SEK ~~931~~–154 (174) million.

Deferred tax assets are only recognized in countries where the Company expects to be able to generate corresponding taxable income in the future to benefit from tax reductions.

~~The significant~~Significant tax loss carryforwards are related to countries with long or indefinite periods of utilization, mainly Sweden and the US. Of the total deferred tax assets for tax loss carryforwards, SEK ~~4,736~~3,961 million, SEK ~~2,436~~2,420 million relate to Sweden with indefinite time of utilization. ~~With our~~Due to the Company’s strong current financial position and ~~profitability~~taxable income during ~~2008, we have~~2009, Ericsson has been able to utilize part of ~~our~~its tax loss carryforwards during the ~~year, and we are convinced~~year. The assessment is that Ericsson will be able to generate sufficient income in the coming years to also utilize ~~also~~the remaining parts.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

~~INVESTMENTS IN SUBSIDIARIES~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investments in subsidiaries

Due to losses in certain subsidiary companies, the book value of certain investments in those subsidiaries are less than the tax value of these investments. Since deferred tax assets have been reported with respect also to losses in these companies, and due to the uncertainty as to which deductions can be realized in the future, no additional deferred tax assets are reported.

~~TAX LOSS CARRYFORWARDS~~Tax loss carryforwards

Deferred tax assets regarding tax loss carryforwards are reported to the extent that realization of the related tax benefit through future taxable profits is probable also when considering the period during which these can be utilized, as described below. Tax loss carryforwards for Sony Ericsson and ST-Ericsson are not included, as they are accounted for in accordance with the equity method.

At December 31, ~~2008, these unutilized~~2009, the available tax loss carryforwards amounted to SEK ~~16,327 (17,734)~~14,493 (16,327) million. The tax effect of these tax loss carryforwards are reported as an asset. The final years in which these loss carryforwards can be utilized are shown in the following table:

Year of expiration
   Tax loss
carryforwards    Tax
effect
2009
   345    83
2010
   199    33
2011
   223    36
2012
   173    32
2013
   408    81
2014 or later
   14,979    4,471

Total
   16,327    4,736

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~


Year of expiration	Tax loss carryforwards	Tax effect
2010	28	7
2011	41	8
2012	101	20
2013	256	55
2014	379	96
2015 or later	13,688	3,775

Total	14,493	3,961

C9 EARNINGS PER SHARE

~~BASIC, EARNINGS PER SHARE~~

   2008    2007¹⁾    2006¹⁾
Net income attributable to stockholders of the Parent Company (SEK million)
   11,273    21,836    26,251
Average number of shares outstanding, basic (millions)
   3,183    3,178    3,174

Earnings per share, basic (SEK)
   3.54    6.87    8.27

~~DILUTED, EARNINGS PER SHARE~~


	2008	2007¹⁾	2006¹⁾	2009	2008	2007¹⁾
Basic
Net income attributable to stockholders of the Parent Company (SEK million)				3,672	11,273	21,836
Average number of shares outstanding, basic (millions)				3,190	3,183	3,178

Earnings per share, basic (SEK)				1.15	3.54	6.87

Diluted
Net income attributable to stockholders of the Parent Company (SEK million)	11,273	21,836	26,251	3,672	11,273	21,836
Average number of shares outstanding, basic (millions)	3,183	3,178	3,174	3,190	3,183	3,178
Dilutive effect for stock option plans	1	2	4	—	1	2
Dilutive effect for stock purchase plans	18	13	11	22	18	13
Average number of shares outstanding, diluted (millions)	3,202	3,193	3,189	3,212	3,202	3,193

Earnings per share, diluted (SEK)	3.52	6.84	8.23	1.14	3.52	6.84

1)	A reverse split 1:5 was made in June 2008. Comparative figures are restated accordingly.

~~C10 INTANGIBLE ASSETS~~

Capitalized development expenses Goodwill     Intellectual property rights (IPR),
trade-marks and other
intangible assets
2008
To be
marketed Acquired
costs for
internal use Internal
costs for
internal use Total IPR,
trademarks
and similar
rights Patents
and
acquired
R&D Total
Accumulated acquisition costs

Opening balance
12,478 1,640 1,096 15,214 22,826 10,372 19,758 30,130
Acquisitions/capitalization
1,107 181 121 1,409 —   20 —   20
Balances regarding divested/ acquired businesses
—   —   —   —   30 -172 —   -172
Sales/disposals
-8,067 —   —   -8,067 -60 -1,212 ¹⁾ -31 -1,243
Reclassification²⁾
—   —   —   —   -912 -209 —   -209
Translation difference
—   —   —   —   2,993 630 723 1,353

Closing balance
5,518 1,821 1,217 8,556 24,877 9,429 20,450 29,879

Accumulated amortization

Opening balance
-7,911 -1,562 -1,042 -10,515 —   -2,072 -4,086 -6,158
Amortization
-1,726 —   —   -1,726 —   -674 -2,606 -3,280
Sales/disposals
8,067 —   —   8,067 —   496 8 504
Translation difference
—   —   —   —   —   -175 -169 -344

Closing balance
-1,570 -1,562 -1,042 -4,174 —   -2,425 -6,853 -9,278

Accumulated impairment losses

Opening balance
-974 -38 -26 -1,038 —   —   -14 -14
Impairment losses
-534 ³⁾ -17 -11 -562 —   —   —   —

Closing balance
-1,508 -55 -37 -1,600 —   —   -14 -14

Net carrying value
2,440 204 138 2,782 24,877 7,004 13,583 20,587

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C10 INTANGIBLE ASSETS


	Capitalized development expenses				Goodwill	Intellectual property rights (IPR), trade-marks and other intangible assets
2009	To be marketed	For internal use		Total		Trademarks and similar rights	Patents and acquired R&D	Total
2009	To be marketed	Acquired costs	Internal costs	Total		Trademarks and similar rights	Patents and acquired R&D	Total
Accumulated acquisition costs
Opening balance	5,518	1,821	1,217	8,556	24,877	9,429	20,450	29,879
Acquisitions/capitalization	1,045	239	159	1,443	—	602	2	604
Balances regarding divested/acquired businesses¹⁾	—	—	—	—	3,534	811	5,021	5,832
Sales/disposals	—	—	—	—	–21	–142	—	–142
Contribution to joint ventures	–1,342	—	—	–1,342	—	—	—	—
Translation difference	—	—	—	—	–1,015	–76	–575	–651

Closing balance	5,221	2,060	1,376	8,657	27,375	10,624	24,898	35,522

Accumulated amortization
Opening balance	–1,570	–1,562	–1,042	–4,174	—	–2,425	–6,853	–9,278
Amortization	–534	–68	–45	–647	—	–360	–3,202	–3,562
Sales/disposals	—	—	—	—	—	131	—	131
Translation difference	—	—	—	—	—	15	180	195

Closing balance	–2,104	–1,630	–1,087	–4,821	—	–2,639	–9,875	–12,514

Accumulated impairment losses
Opening balance	–1,508	–55	–37	–1,600	—	—	–14	–14
Impairment losses²⁾	–157	—	—	–157	—	—	–4,255	–4,255

Closing balance	–1,665	–55	–37	–1,757	—	—	–4,269	–4,269

Net carrying value	1,452	375	252	2,079	27,375	7,985	10,754	18,739

1)	~~Divestment of data centers in the UK.~~During 2009, Ericsson acquired Nortel SEK 8.7 billion.

2)	~~Reclassification~~The write-down (impairment charge) of ~~deferred tax assets, goodwill and intangible assets due to finalized purchase price allocation. For more information, see Note C26, “Business Combinations”.~~

3)	~~Part~~SEK 4.255 billion is a consequence of the restructuring ~~program.~~program decision to phase out certain products.

The goodwill is allocated to the ~~business~~operating segments Networks ~~(SEK 15.3 billion),~~SEK 16.5 (15.3) billion, Professional Services ~~(SEK 2.8 billion)~~SEK 3.7 (2.8) billion and Multimedia ~~(SEK 6.8 billion).~~SEK 7.2 (6.8) billion.

The recoverable amounts for cash-generating units are established as the present value of expected future cash flows. Estimation of future cash flows includes assumptions mainly for the following key financial parameters:

sales growth,

development of operating income (based on operating margin or cost of goods sold and operating expenses relative to sales),

development of working capital and capital expenditure requirements.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The assumptions regarding revenue growth, approved by group management and each ~~business~~operating segment’s management, ~~regarding revenue growth~~ are based on industry sources and projections made within the Company for the development ~~2008-2013~~2010–2014 for key industry parameters:

the number of global mobile subscriptions is estimated to grow from ~~3.9~~4.5 billion by the end of ~~2008~~2009 to approximately ~~6.5~~7.1 billion. Of these, some hundred millions will have mobile PC connections, while more than 2 billion will have a mobile broadband connection.

Mobile PC includes USB dongles and embedded modules for CDMA2000 EV-DO, HSPA, LTE, Mobile WiMax and TDSCDMA and can also be used for fixed applications.

Mobile Broadband includes CDMA2000 EV-DO, HSPA, LTE, Mobile WiMax and TDSCDMA. It includes handsets, USB dongles and embedded modules. The vast majority is handsets.

Fixed broadband subscriptions will grow from slightly above 400 million to almost 600 million in the same time perspective.

~~fixed and mobile broadband subscriptions from 0.6 billion to approximately 3 billion.~~

~~mobile~~Mobile traffic volume ~~as well as~~is estimated to increase more than 10 times, while the fixed Internet traffic and fixed IPTV traffic is estimated to increase ~~approximately 10 times.~~around 7–8 times, however from a much larger base.

The demand for multimedia solutions is driven by the opportunities for new types of service offerings enabled by IP technology and high-speed broadband.

The demand for professional services is also driven by an increasing business and technology complexity. Therefore, operators review their business models and look for vendor partners that can take on a broader responsibility, including outsourcing of network operations.

The assumptions are also based upon information gathered in the Company’s long-term strategy process, including assessments of new technology, the Company’s competitive position and new types of business and customers, driven by the continued integration of telecom, data and media industries.

The impairment testing is based on specific estimates for the first five years and with a reduction of nominal annual growth rate to an average GDP growth of 3 (3) percent per year thereafter. The impairment ~~test~~tests for goodwill did not result in any impairment.

A number of sensitivity tests have been made, for example applying lower levels of revenue and operating income. Also when applying these estimates no goodwill impairment is indicated.

As per year end ~~2008,~~2009, the market capitalization of the Company well exceeded the value of the Company’s net ~~assets of the Company.~~

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

assets.

An after-tax discount rate of 12 (12) percent has for all cash generating units been applied for the discounting of projected after-tax cash flows.

~~The application of one rate is made due to that differences in risks between the cash generating units have been considered in the estimated cash flows.~~

In Note C1, “Significant Accounting Policies”, and Note C2, “Critical Accounting Estimates and Judgments”, further disclosures are given regarding goodwill impairment testing.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Capitalized development expenses					Intellectual property rights (IPR), trade-marks and other intangible assets					Capitalized development expenses					Goodwil		Intellectual property rights (IPR), trade-marks and other intangible assets
2007	To be marketed	Acquired costs for internal use	Internal costs for internal use	Total	Goodwill	IPR, trademarks and similar rights		Patents and acquired R&D		Total
2008											To be marketed		For internal use		Total		Trademarks and similar rights			Patents and acquired R&D		Total
2008											To be marketed		Acquired costs	Internal costs					Goodwil	Patents and acquired R&D		Total
Accumulated acquisition costs															Total		Trademarks and similar rights
Opening balance	12,388	1,602	1,070	15,060	6,824	5,317		13,479		18,796	12,478		1,640	1,096	15,214		22,826			10,372			19,758	30,130
Acquisitions/capitalization	989	38	26	1,053	—	178		63		241	1,107		181	121	1,409	—		20			—		20
Balances regarding divested/acquired businesses	—	—	—	—	16,917	5,132	¹⁾	6,495	¹⁾	11,627	—		—	—	—	30		–172			—		–172
Sales/disposals	-899	—	—	-899	-1	-57		-1		-58	–8,067		—	—	–8,067	–60		–1,212	¹⁾		–31		–1,243
Reclassification²⁾											—		—	—	—	–912		–209			—		–209
Translation difference	—	—	—	—	-914	-198		-278		-476	—		—	—	—	2,993		630			723		1,353

Closing balance	12,478	1,640	1,096	15,214	22,826	10,372		19,758		30,130	5,518		1,821	1,217	8,556	24,877		9,429			20,450		29,879

Accumulated amortization
Opening balance	-6,439	-1,562	-1,042	-9,043	—	-1,180		-1,953		-3,133	–7,911		–1,562	–1,042	–10,515	—		–2,072			–4,086		–6,158
Amortization	-2,371	—	—	-2,371	—	-913		-2,149		-3,062	–1,726		—	—	–1,726	—		–674			–2,606		–3,280
Sales/disposals	899	—	—	899	—	41		—		41	8,067		—	—	8,067	—		496			8		504
Translation difference	—	—	—	—	—	-20		16		-4	—		—	—	—	—		–175			–169		–344

Closing balance	-7,911	-1,562	-1,042	-10,515	—	-2,072		-4,086		-6,158	–1,570		–1,562	–1,042	–4,174	—		–2,425			–6,853		–9,278

Accumulated impairment losses
Opening balance	-958	-38	-26	-1,022	—	—		-14		-14	–974		–38	–26	–1,038	—		—			–14		–14
Impairment losses	-16	—	—	-16	—	—		—		—	–534	³⁾	–17	–11	–562	—		—			—		—

Closing balance	-974	-38	-26	-1,038	—	—		-14		-14	–1,508		–55	–37	–1,600	—		—			–14		–14

Net carrying value	3,593	40	28	3,661	22,826	8,300		15,658		23,958	2,440		204	138	2,782	24,877		7,004			13,583		20,587

1)	~~During 2007, Ericsson acquired Redback, Tandberg~~Divestment of data centers in the UK.

Reclassification of deferred tax assets, goodwill and LHS. The acquisitions consist of IPR, SEK 6.4 billion, trademarks and customer relationships, SEK 4.8 billion and goodwill, SEK 16 billion. The amortization period related to the intellectual property rights, trademarks and other intangible assets ~~from Redback, Tandberg and LHS is between five and ten years.~~due to finalized purchase price allocation. For more information, see Note C26, “Business Combinations”.

3)	Part of the restructuring program.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C11 PROPERTY, PLANT AND EQUIPMENT


2008	Real estate	Machinery and other technical assets	Other equipment, tools and installations	Construction in process and advance payments	Total
2009						Real estate	Machinery and other technical assets	Other equipment, tools and installations	Construction in process and advance payments	Total
Accumulated acquisition costs
Opening balance	4,611	5,697	16,672	675	27,655	4,054	6,131	18,058	795	29,038
Additions	210	805	1,729	1,389	4,133	362	657	1,699	1,288	4,006
Balances regarding divested/acquired businesses	—	-5	-21	—	-26	—	–183	–95	–1	–279
Sales/disposals	-1,208	-775	-2,835	-33	-4,851	–282	–1,241	–2,184	–148	–3,855
Reclassifications	21	-50	1,284	-1,255	—	240	151	947	–1,338	—
Translation difference	420	459	1,229	19	2,127	–157	–217	–338	–18	–730

Closing balance	4,054	6,131	18,058	795	29,038	4,217	5,298	18,087	578	28,180

Accumulated depreciation
Opening balance	-1,470	-4,013	-12,485	—	-17,968	–1,545	–4,211	–12,967	—	–18,723
Depreciation	-241	-865	-2,002	—	-3,108	–303	–735	–2,512	—	–3,550
Balances regarding divested businesses	—	5	18	—	23	—	112	191	—	303
Sales/disposals	308	875	2,407	—	3,590	174	1,188	1,873	—	3,235
Reclassifications	-1	55	-54	—	—	–75	–51	126	—	—
Translation difference	-141	-268	-851	—	-1,260	57	140	231	—	428

Closing balance	-1,545	-4,211	-12,967	—	-18,723	–1,692	–3,557	–13,058	—	–18,307

Accumulated impairment losses, net
Accumulated impairment losses
Opening balance	-117	-118	-148	—	-383	–47	–125	–148	—	–320
Impairment losses	—	-4	—	—	-4	—	—	–1	—	–1
Reversals of impairment losses	—	—	7	—	7	—	33	16	—	49
Sales/disposals	78	—	—	—	78	—	—	—	—	—
Translation difference	-8	-3	-7	—	-18	2	1	2	—	5

Closing balance	-47	-125	-148	—	-320	–45	–91	–131	—	–267

Net carrying value	2,462	1,795	4,943	795	9,995	2,480	1,650	4,898	578	9,606

Contractual commitments for the acquisition of property, plant and equipment as per December 31, 2009, amounted to SEK 236 (229) million.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The reversal of impairment losses have been reported under Cost of sales.


2008	Real estate	Machinery and other technical assets	Other equipment, tools and installations	Construction in process and advance payments	Total
Accumulated acquisition costs
Opening balance	4,611	5,697	16,672	675	27,655
Additions	210	805	1,729	1,389	4,133
Balances regarding divested/acquired businesses	—	–5	–21	—	–26
Sales/disposals	–1,208	–775	–2,835	–33	–4,851
Reclassifications	21	–50	1,284	–1,255	—
Translation difference	420	459	1,229	19	2,127

Closing balance	4,054	6,131	18,058	795	29,038

Accumulated depreciation
Opening balance	–1,470	–4,013	–12,485	—	–17,968
Depreciation	–241	–865	–2,002	—	–3,108
Balances regarding divested businesses	—	5	18	—	23
Sales/disposals	308	875	2,407	—	3,590
Reclassifications	–1	55	–54	—	—
Translation difference	–141	–268	–851	—	–1,260

Closing balance	–1,545	–4,211	–12,967	—	–18,723

Accumulated impairment losses
Opening balance	–117	–118	–148	—	–383
Impairment losses	—	–4	—	—	–4
Reversals of impairment losses	—	—	7	—	7
Sales/disposals	78	—	—	—	78
Translation difference	–8	–3	–7	—	–18

Closing balance	–47	–125	–148	—	–320

Net carrying value	2,462	1,795	4,943	795	9,995

Contractual commitments for the acquisition of property, plant and equipment as per December 31, 2008, amounted to SEK 229 (176) million.

The reversal of impairment losses have been reported under Cost of sales.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2007
   Real estate    Machinery and
other technical
assets    Other
equipment, tools
and installations    Construction in
process and
advance
payments    Total
Accumulated acquisition costs

Opening balance
   4,551    5,005    15,135    457    25,148
Additions
   471    617    2,111    1,120    4,319
Balances regarding divested/acquired businesses
   10    170    104    —      284
Sales/disposals
   -200    -311    -1,795    -77    -2,383
Reclassifications
   -186    135    864    -813    —
Translation difference
   -35    81    253    -12    287

Closing balance
   4,611    5,697    16,672    675    27,655

Accumulated depreciation

Opening balance
   -1,212    -3,679    -11,738    —      -16,629
Depreciation
   -246    -573    -2,302    —      -3,121
Balances regarding divested businesses
   4    7    17    —      28
Sales/disposals
   14    294    1,759    —      2,067
Reclassifications
   —      -8    8    —      —
Translation difference
   -30    -54    -229    —      -313

Closing balance
   -1,470    -4,013    -12,485    —      -17,968

Accumulated impairment losses, net

Opening balance
   -306    -154    -178    —      -638
Impairment losses
   -84    —      -6    —      -90
Reversals of impairment losses
   263    9    25    —      297
Sales/disposals
   1    27    10    —      38
Translation difference
   9    —      1    —      10

Closing balance
   -117    -118    -148    —      -383

Net carrying value
   3,024    1,566    4,039    675    9,304

C12 FINANCIAL ASSETS, NON-CURRENT

EQUITY IN JOINT VENTURES AND ASSOCIATED COMPANIES


	Joint ventures		Associated companies				Total		Joint ventures			Associated companies			Total
	2008	2007	2008		2007		2008	2007	2009		2008	2009		2008	2009	2008
Opening balance	9,549	8,041	1,354		1,368		10,903	9,409	6,694		9,549	1,294		1,354	7,988	10,903
Share in earnings	-503	7,108	67		124		-436	7,232	–7,455		–503	55		67	–7,400	–436
Taxes	151	-1,957	-6		-1		145	-1,958	1,388		151	–1		–6	1,387	145
Translation difference	1,084	304	130		55		1,214	359	–277		1,084	–17		130	–294	1,214
Change in hedge reserve	36	4	—		—		36	4	6		36	—		—	6	36
Pensions	4	-2	—		—		4	-2	21		4	—		—	21	4
Dividends	-3,627	-3,949	-236		-273		-3,863	-4,222	—		–3,627	–70		–236	–70	–3,863
Capital contribution	—	—	46		103		46	103
Stock Purchase and Stock Option Plans	—	—	—		-19		—	-19
Contributions to joint ventures and associated companies									9,941	¹⁾	—	2		46	9,943	46
Reclassification	—	—	-1		—		-1	—	–1		—	–2		–1	–3	–1
Disposals	—	—	-60		-3		-60	-3	—		—	—		–60	—	–60

Closing balance	6,694	9,549	1,294	¹⁾	1,354	¹⁾	7,988	10,903	10,317	²⁾	6,694	1,261	³⁾	1,294	11,578	7,988

1)	Including contribution of SEK 5.0 billion paid to STMicroelectronics.

2)	Including goodwill for ST-Ericsson of SEK 1,341 million

3)	Goodwill, net, amounts to SEK 16 million (SEK 1916 million in ~~2007)~~2008).

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

ERICSSON’S SHARE OF ASSETS, LIABILITIES AND INCOME IN JOINT VENTURE SONY ERICSSON MOBILE COMMUNICATIONS


	2008	2007	2009	2008	2007
Non-current assets	3,228	2,701	4,003	3,228	2,701
Current assets	21,190	22,714	12,790	21,190	22,714
Non-current liabilities	157	121	130	157	121
Current liabilities	17,593	15,745	14,675	17,593	15,745

Net assets	6,668	9,549	1,988	6,668	9,549

Net sales	54,377	59,700	36,074	54,377	59,700
Income after financial items	-400	7,276	–5,540	–400	7,276
Income taxes	151	-1,957	1,252	151	–1,957

Net income	-249	5,319	–4,288	–249	5,319

Net income attributable to:
Stockholders of the Parent Company	-353	5,151	–4,441	–353	5,151
Minority interest	104	168	153	104	168
Assets pledged as collateral	—	—	182	—	—
Contingent liabilities	20	12	17	20	12

~~Both these companies apply IFRS in the reporting to Ericsson.~~

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ERICSSON’S SHARE OF ASSETS, LIABILITIES AND INCOME IN ASSOCIATED COMPANY ERICSSON NIKOLA TESLA D.D.¹⁾


	2008	2007	2009	2008	2007
Non-current assets	394	363	311	394	363
Current assets	695	728	754	695	728
Non-current liabilities	6	1	3	6	1
Current liabilities	253	263	240	253	263

Net assets	830	827	822	830	827

Net sales	1,182	1,100	994	1,182	1,100
Income after financial items	139	124	90	139	124
Income taxes	-5	-1	1	–5	–1

Net income	134	123	91	134	123

Net income attributable to:
Stockholders of the Parent Company	134	123	91	134	123
Minority interest	—	—	—	—	—
Assets pledged as collateral	5	5	5	5	5
Contingent liabilities	172	64	151	172	64

1)	Ericsson’s share is 49.07 percent.

All three companies apply IFRS, as issued by the IASB, in the reporting to Ericsson.

ERICSSON’S SHARE OF ASSETS, LIABILITIES AND INCOME IN JOINT VENTURE ST-ERICSSON


		2009
Non-current assets		7,238
Current assets		3,856
Non-current liabilities		129
Current liabilities		2,691

Net assets		8,274

Net sales		9,633
Income after financial items		–1,762
Income taxes		136

Net income		–1,626

Net income attributable to:
Stockholders of the Parent Company		–1,626
Minority interest		—
Assets pledged as collateral		—
Contingent liabilities		6

ST-Ericsson:On February 2, 2009, the 50/50 joint venture consisting of ST-NXP wireless business and Ericsson Mobile Platforms was established.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ST-Ericsson is an industry leader in design, development, and the creation of new generations of mobile platforms and wireless semiconductors. ST-Ericsson is a key supplier to four of the industry’s top five handset manufacturers, who together represent about 80 percent of global handset shipments, as well as to other leading companies in the industry.

Ericsson contributed with net cash and net assets, of which SEK 5.0 billion was paid to STMicroelectronics.

The joint venture is headquartered in Geneva, Switzerland, and employs approximately 8,000 persons.

OTHER FINANCIAL ASSETS, NON-CURRENT


	Other investments in shares and participations			Customer finance, non-current		Derivatives, non-current		Other financial assets, non-current		Other investments in shares and participations			Customer finance, non-current		Derivatives, non-current		Other financial assets, non-current
	2008		2007	2008	2007	2008	2007	2008	2007	2009	2008		2009	2008	2009	2008	2009	2008
Accumulated acquisition costs
Opening balance	2,019		1,999	1,221	2,270	96	116	4,092	3,447	1,783	2,019		1,082	1,221	2,814	96	3,557	4,092
Additions	3		—	623	892	—	—	292	175	1	4		408	623	—	—	389	292
Business combinations	—		—	—	—	—	—	—	166	—	—		—	—	—	—	—	—
Disposals/repayments/deductions	-469		—	-761	-1,940	—	—	-713	-245	–36	–462	²⁾	–258	–761	—	—	–244	–713
Change in value in funded pension plans¹⁾	—		—	—	—	—	—	-307	447	—	—		—	—	—	—	–521	–307
Reclassifications	—		—	—	—	—	—	—	—	–1	—		—	—	—	—	—	—
Revaluation	—		—	—	—	2,718	-20	—	—	—	—		—	—	–1,971	2,718	—	—
Translation difference	37		20	-1	-1	—	—	193	102	–87	222		—	–1	—	—	16	193

Closing balance	1,590		2,019	1,082	1,221	2,814	96	3,557	4,092	1,660	1,783	²⁾	1,232	1,082	843	2,814	3,197	3,557

Accumulated impairment losses/allowances
Opening balance	-1,281		-1,278	-209	-349	—	—	-1,270	-1,154	–1,474	–1,281		–236	–209	—	—	–1,454	–1,270
Impairment losses/allowance	—		2	-48	41	—	—	-14	-58	–3	—		–222	–48	—	—	–74	–14
Business combinations	—		—	—	—	—	—	—	—	—	—		—	—	—	—	—	—
Disposals/repayments/deductions	—		—	21	98	—	—	—	—	—	–7		56	21	—	—	—	—
Reclassifications	—		—	—	—	—	—	—	—
Translation difference	—		-5	—	1	—	—	-170	-58	73	–186		—	—	—	—	65	–170

Closing balance	—		-1,281	-236	-209	—	—	-1,454	-1,270	–1,404	–1,474		–402	–236	—	—	–1,463	–1,454

Net carrying value	309	²⁾	738	846	1,012	2,814	96	2,103	2,822	256	309		830	846	843	2,814	1,734	2,103

1)	For further information, see Note C17, “Post-employment benefits”.

2)	~~Fair value per December 31,~~In 2008, ~~for listed~~the divestment of shares ~~was SEK 0 (11) million~~in Symbian, with a ~~net carrying value~~cash flow effect of SEK ~~0 (11) million.~~1,256 million, is included in divestments of subsidiaries and other operations.

C13 INVENTORIES


	2008	2007	2009	2008
Raw materials, components, consumables and manufacturing work in progress	7,413	7,476	6,190	7,413
Finished products and goods for resale	7,616	5,338	6,621	7,616
Contract work in progress	12,807	10,338	9,907	12,807
Less advances from customers¹⁾	—	-677

Inventories, net	27,836	22,475	22,718	27,836

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

1)	~~Effective from this annual report, advances from customers are presented under Note C21, “Other current liabilities”.~~

Contract work in progress includes amounts related to delivery-type contracts, service contracts and construction-type contracts with ongoing work in progress.

Reported amounts are net of obsolescence allowances of SEK ~~3,493 (2,752)~~2,961 (3,493) million.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

MOVEMENTS IN OBSOLESCENCE ALLOWANCES


	2008	2007	2006	2009	2008	2007
Opening balance	2,752	2,578	2,519	3,493	2,752	2,578
Additions, net	1,553	1,276	857	562	1,553	1,276
Utilization	-1,039	-1,114	-693	–1,297	–1,039	–1,114
Translation difference	250	17	-81	2	250	17
Balances regarding acquired/divested businesses	-23	-5	-24	201	–23	–5

Closing balance	3,493	2,752	2,578	2,961	3,493	2,752

The amount of inventories recognized as an expense and included in Cost of sales was SEK ~~58,155 (52,864)~~52,255 (58,155) million.

~~CONSTRUCTION-TYPE CONTRACTS IN PROGRESS~~

       2008            2007
For construction-type contracts in progress:

Aggregate amounts of costs incurred
   2,156    9,599
Aggregate amount of recognized profits (less recognized losses)
   971    2,007
Gross amount due from customers¹⁾
   204    733
Gross amount due to customers²⁾
   406    1,643

1)	~~For all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceeds progress billings.~~

2)	~~For all contracts in progress for which progress billings exceed costs incurred plus recognized profits (less recognized losses).~~

The aggregate amounts of costs incurred relate to all construction-type contracts that were not finalized as per December 31, 2008, and include all costs incurred since the start of these projects, including any costs incurred prior to January 1, 2008. Net sales for construction-type contracts for 2008 amount to SEK 2,488 (7,121) million, see Note C4, “Net Sales”.

C14 TRADE RECEIVABLES AND CUSTOMER FINANCE


	2008	2007	2009	2008
Trade receivables excluding associated companies and joint ventures	76,827	60,669	67,133	76,827
Allowances for impairment	-1,471	-1,351	–924	–1,471

Trade receivables, net	75,356	59,318	66,209	75,356
Trade receivables related to associated companies and joint ventures	535	1,174	201	535

Trade receivables, total	75,891	60,492	66,410	75,891

Customer finance	3,147	3,649	3,046	3,147
Allowances for impairment	-326	-275	–772	–326

Customer finance, net	2,821	3,374	2,274	2,821
Of which short term	*1,975*	2,362
of which short term			*1,444*	1,975

Credit commitments for customer finance	3,811	4,185	3,027	3,811

Days Sales Outstanding were 106 ~~(102)~~(106) in December, ~~2008.~~2009.

MOVEMENTS IN ALLOWANCES FOR IMPAIRMENT


	Trade receivables			Customer finance
	2009	2008	2007	2009	2008	2007
Opening balance	1,471	1,351	1,372	326	275	418
Additions	388	651	564	595	90	49
Utilization	–583	–492	–554	–67	–3	–43
Reversal of excess amounts	–312	–81	–137	–37	–74	–141
Reclassification	10	–69	56	—	—	—
Translation difference	–43	115	50	–45	38	–8
Balances regarding acquired/divested business	–7	–4	—	—	—	—

Closing balance	924	1,471	1,351	772	326	275

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~MOVEMENTS IN ALLOWANCES FOR IMPAIRMENT~~

   Trade receivables    Customer finance
   2008    2007    2006    2008    2007    2006
Opening balance
   1,351    1,372    1,382    275    418    1,755
Additions
   651    564    686    90    49    79
Utilization
   -492    -554    -139    -3    -43    -284
Reversal of excess amounts
   -81    -137    -527    -74    -141    -1,082
Reclassification
   -69    56    56    —      —      -5
Translation difference
   115    50    -86    38    -8    -45
Balances regarding acquired/divested business
   -4    —      —      —      —      —

Closing balance
   1,471    1,351    1,372    326    275    418

AGING ANALYSIS AS PER DECEMBER 31, ~~2008~~2009

   Amount    Of which
neither
impaired
nor
past due    Of which
impaired,
not
past due    Of which
past due in the
following time intervals
Of which
past due and impaired in
the following time intervals
            less than
90 days    90 days
or more    less than
90 days    90 days
or more
Trade receivables excluding associated companies and joint ventures
   76,827    67,482    157    4,003    2,711    844    1,630
Allowances for impairment of receivables
   -1,471    —      -121    —      —      -362    -988
Customer finance
   3,147    2,530    347    5    27    47    191
Allowances for impairment of customer finance
   -326    —      -97    —      —      -38    -191

~~AGING ANALYSIS AS PER DECEMBER 31, 2007~~


	Amount	of which neither impaired nor past due	of which impaired, not past due	of which past due in the following time intervals		of which past due and impaired in the following time intervals
	Amount	of which neither impaired nor past due	of which impaired, not past due	less than 90 days	90 days or more	less than 90 days	90 days or more
Trade receivables excluding associated companies and joint ventures	67,133	58,727	43	2,962	2,081	774	2,546
Allowances for impairment of receivables	–924	—	–8	—	—	–180	–736
Customer finance	3,046	1,292	1,314	9	1	145	285
Allowances for impairment of customer finance	–772	—	–342	—	—	–145	–285

   Amount    Of which
neither
impaired
nor
past due    Of which
impaired,
not
past due    Of which
past due in the
following time intervals
Of which
past due and impaired in
the following time intervals
            less than
90 days    90 days
or more    less than
90 days    90 days
or more
Trade receivables excluding associated companies and joint ventures
   60,669    52,560    —      3,723    1,577    773    2,036
Allowances for impairment of receivables
   -1,351    —      —      —      —      -422    -929
Customer finance
   3,649    2,476    305    410    293    1    164
Allowances for impairment of customer finance
   -275    —      -110    —      —      -1    -164

AGING ANALYSIS AS PER DECEMBER 31, 2008


	Amount	of which neither impaired nor past due	of which impaired, not past due	of which past due in the following time intervals		of which past due and impaired in the following time intervals
	Amount	of which neither impaired nor past due	of which impaired, not past due	less than 90 days	90 days or more	less than 90 days	90 days or more
Trade receivables excluding associated companies and joint ventures	76,827	67,482	157	4,003	2,711	844	1,630
Allowances for impairment of receivables	–1,471	—	–121	—	—	–362	–988
Customer finance	3,147	2,530	347	5	27	47	191
Allowances for impairment of customer finance	–326	—	–97	—	—	–38	–191

~~CREDIT RISK~~Credit risk

Credit risk is divided into three categories: credit risk in trade receivables, customer finance risk and financial credit risk (see ~~C20)~~C20, Financial Risk Management and Financial Instruments).

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Credit risk in trade receivables

Credit risk in trade receivables is governed by a policy applicable for all legal entities in Ericsson. The purpose of the policy is to:

Avoid credit losses through establishing internal standard credit approval routines in all Ericsson legal entities.

Ensure monitoring and risk mitigation of defaulting accounts, i.e. events of non-payment and/or delayed payments from customers.

Ensure efficient credit management within the ~~Group~~Company and thereby improve Days Sales Outstanding and Cash Flow.

Ensure payment terms are commercially justifiable.

Define escalation path and approval process for payment terms and customer credit limits.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The credit worthiness of all customers is regularly assessed and a credit limit is set. Through credit management system functionality, credit checks are performed every time a sales order or an invoice is generated in the source ~~system~~system. This is based ~~upon~~on the credit risk set on the customer. Credit blocks appear if the credit limit set on customer is exceeded or if past due receivables are higher than permitted levels. Release of a credit block requires authorization.

Letters of credits are used as a method for securing payments from customers operating in emerging markets, in particular in markets with unstable political and/or economic environment. By having banks confirming the letters of credit, the political and commercial credit risk exposures to Ericsson are mitigated.

Trade receivables amounted to SEK ~~76,827 (60,669)~~67,133 (76,827) million as of December 31, ~~2008.~~2009. Provisions for expected losses are regularly assessed and amounted to SEK ~~1,471 (1,351)~~924 (1,471) million as of December 31, ~~2008.~~2009. Ericsson’s nominal credit losses have, however, historically been low. The amounts of trade receivables closely follow ~~closely~~ the distribution of Ericsson’s sales and do not include any major concentrations of credit risk by customer or by geography. The ~~top 5~~five largest customers represent 2726 percent of the total trade receivables.

Customer finance credit risk

All major ~~customer~~commitments to finance ~~commitments~~customers are ~~subject to~~made only after the approval by the Finance Committee of the Board of Directors according to athe established credit approval ~~policy.~~process.

Prior to the approval of new facilities reported as customer finance, an internal credit risk assessment is conducted in order to assess the credit rating of each transaction (for political and ~~commerical~~commercial risk) ~~of each transaction.~~. The credit risk analysis is made by using an ~~assessement~~assessment tool, where the political risk rating is identical to the rating used by all Export Credit Agencies within the OECD. The commercial risk is assessed by analyzing a large number of parameters, which may affect the level of the future commercial credit risk exposure. The output from the ~~assessement~~assessment tool for the credit rating is also ainclude an internal pricing of the ~~risk,~~risk. This is expressed as a risk margin per annum over funding cost. The reference pricing for political ~~risk~~ and commercial risk, on which the tool is based, is reviewed using information from Export Credit Agencies and prevailing pricing in the bank loan market for structured financed deals. The objective is that the internally set risk margin shall reflect the assessed risk and that the pricing is as close as possible to the current market pricing. A reassessment of the credit rating for each customer finance facility is made on a regular basis.

��

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Risk provisions related to customer finance risk exposures are only made upon events ~~occuring~~which occur after the financing arrangement has become effective and which are expected to have a significant adverse impact on the borrower’s ability and/or willingness to service the outstanding debt. These events can be political (normally outside the control of the borrower) or commercial, e.g. a borrower’s ~~deteriorating~~deteriorated creditworthiness.

As of December 31, ~~2008,~~2009, Ericsson’s total outstanding exposure related to customer finance was SEK ~~3,147 (3,649)~~3,046 (3,147) million. As of ~~that date,~~December 31, 2009, Ericsson also had unutilized customer finance commitments of SEK ~~3,811 (4,185)~~3,027 (3,811) million. During 2009 Ericsson transferred certain customer finance assets to third parties, and continues to recognize a part of such assets corresponding to the extent of its continuing involvement. The total carrying amount of the original assets transferred is SEK 560 million, the amount of the assets that Ericsson continues to recognize is SEK 28 million, and the carrying amount of the associated liabilities is SEK 28 million. Customer finance is arranged for infrastructure projects in different geographic markets and tofor a large number of customers. As of December 31, ~~2008,~~2009, there were a total of ~~69 (75)~~68 (69) customer finance arrangements originated by or guaranteed by Ericsson. The five largest facilities represented ~~44 (48)~~43 (44) percent of the total credit exposure.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Of Ericsson’s total outstanding customer finance exposure as of December 31, ~~2008, 58 (47)~~2009, 57 (58) percent ~~were~~was related to Central and Eastern Europe, Middle East &and Africa, ~~20 (23)~~15 (22) percent to ~~Latin~~ America, ~~18 (14)~~14 (18) percent to Western Europe, ~~2 (14)~~and 14 (2) percent to Asia ~~Pacific and 2 (2) percent to North America.~~Pacific.

The effect of risk provisions and reversals for customer finance affecting the income statement amounted to a net negative impact of SEK 16480 (16) million in ~~2008 compared to a positive impact of SEK 92 million in 2007.~~2009. Credit losses incurred were SEK ~~3 (43)~~67 (3) million.

Security arrangements for customer finance facilities normally include pledges of equipment, pledges of certain ofassets belonging to the ~~borrower’s assets~~borrower and pledges of shares in the operating company.

Restructuring efforts for cases of troubled debt may lead to temporary holdings of equity interests. If available, third-party risk coverage ~~may also be~~is as a rule arranged. “Third-party risk coverage” means that a financial payment guarantee covering the credit risk has been issued by a bank, an export credit agency or other financial institution. ~~It may also be a~~A credit risk transfer under a ~~so called “sub~~sub participation ~~arrangement”~~arrangement with a bank ~~whereby~~can also be arranged. In this case the entire credit risk and the funding is taken care of by the bank for the part ~~covered by the bank.~~that they cover. A credit risk cover from a third party may also be issued by an insurance company. During ~~2008,~~2009, Ericsson has not taken possession of any collateral it holds as security or called on any other credit ~~enhancements.~~enhancement.

Information about guarantees related to customer finance is included in note C24.

The table below summarizes Ericsson’s outstanding customer finance as of December 31, ~~2008~~2009 and ~~2007.~~2008.

OUTSTANDING CUSTOMER FINANCE


	2008	2007	2009	2008
Total customer finance	3,147	3,649	3,046	3,147
Accrued interest	81	63	57	81
Less third-party risk coverage	-162	-511	–382	–162

Ericsson’s risk exposure	3,066	3,201	2,721	3,066

C15 OTHER CURRENT RECEIVABLES


	2009	2008
Prepaid expenses	2,403	3,134
Accrued revenues	1,538	1,885
Advance payments to suppliers	776	1,278
Derivatives with a positive value¹⁾	1,760	2,796
Taxes	4,830	4,130
Other	3,839	4,595

Total	15,146	17,818

1)	Also see Note C20 “Financial Risk Management and Financial Instruments”

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~C15~~C16 EQUITY AND OTHER ~~CURRENT RECEIVABLES~~

       2008            2007
Prepaid expenses
   3,134    2,527
Accrued revenues
   1,885    1,661
Advance payments to suppliers
   1,278    679
Derivatives with a positive value
   2,796    1,530
Taxes
   4,130    4,610
Other
   4,595    4,055

Total
   17,818    15,062

~~C16 EQUITY~~COMPREHENSIVE INCOME

Capital stock ~~2008~~2009

Capital stock at December 31, ~~2008,~~2009, consisted of the following:


Parent Company	Number of shares	Capital stock	Number of shares	Capital stock
Class A shares	261,755,983	1,309	261,755,983	1,309
Class B shares	2,984,595,752	14,923	3,011,595,752	15,058

Total	3,246,351,735	16,232	3,273,351,735	16,367

The capital stock of the Parent Company is divided into two classes: Class A shares (quota value SEK 5.00) and Class B shares (quota value SEK 5.00). Both classes have the same rights of participation in the net assets and ~~earnings of the Company.~~earnings. Class A shares, however, are entitled to one vote per share while Class B shares are entitled to one tenth of one vote per share.

At December 31, ~~2008,~~2009, the total number of treasury shares was ~~61,066,097 (46,398,309~~78,978,533 (61,066,097 in 2008 and 46,398,309¹⁾ in ~~2007 and 50,202,778~~¹⁾ ~~in 2006)~~2007) Class B shares. ~~There were 19,900,000~~Ericsson repurchased 27,000,000 shares ~~repurchased by Ericsson~~ in ~~2008, due to delivery and sale of shares~~2009, in relation to the Stock Purchase Plans and the Stock Option Plans.

RECONCILIATION OF NUMBER OF SHARES

   Number of shares Capital
stock
Number of shares Jan 1, 2008
   3,226,452,736 ¹⁾ 16,132
Number of shares Dec 31, 2008
   3,246,351,735 16,232


	Number of shares	Capital stock
Number of shares Jan 1, 2009	3,246,351,735	16,232
Number of shares Dec 31, 2009	3,273,351,735	16,367

For further information about number of shares, see chapter Share information.

The Annual Meeting on April 9, 2008, decided on a reverse split 1:5 of the Company’s shares. The reverse split has the effect that five shares of Class A and five shares of Class B, respectively, are consolidated into one share of Class A and one share of Class B, respectively. Numbers of shares and earnings per share for comparison periods have been restated accordingly.

Dividend proposal

The Board of Directors will propose to the Annual General Meeting ~~2009~~2010 a dividend of SEK ~~1.85~~2.00 per share.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Additional paid in capital

Relates to payments made by owners and includes share premiums paid.

Revaluation of other investments in shares and participations

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognized or impaired.

Cash flow hedges

The cash flow ~~hedging~~hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash-flow-hedging instruments related to hedged transactions that have not yet occurred.

1)	A reverse split 1:5 was made in June 2008. Comparative figures are restated accordingly.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cumulative translation adjustments

The cumulative translation ~~reserve~~adjustments comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, changes regarding revaluation of goodwill in local currency as well as from the translation of liabilities that hedge the Company’s net investment in foreign subsidiaries.

Retained earnings

Retained earnings, including net income for the year, comprise the earned profits of the Parent Company and its share of net income in subsidiaries, joint ventures and associated companies. Actuarial gains and losses related to pensions are included in retained earnings.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


2008	Capital stock	Additional paid in capital	Revaluation of other investments in shares and participations	Cash flow hedges		Cumulative translation adjustments		Retained earnings	Stock- holders’ equity	Minority interests	Total equity
January 1, 2008	16,132	24,731	5	307		-6,345		99,282	134,112	940	135,052

Actuarial gains and losses related to pensions
Group	—	—	—	—		—		-4,019	-4,019	—	-4,019
Joint ventures and associates	—	—	—	—		—		4	4		4
Revaluation of other investments in shares and participations
Fair value measurement reported in equity
Group	—	—	-6	—		—		—	-6	—	-6
Joint ventures and associates	—	—	-1	—		—		—	-1	—	-1
Cash flow hedges
Fair value remeasurement of derivatives reported in equity
Group	—	—	—	-5,116		—		—	-5,116	—	-5,116
Joint ventures and associates	—	—	—	36		—		—	36	—	36
Transferred to income statement for the period	—	—	—	1,192	¹⁾	—		—	1,192	—	1,192
Changes in cumulative translation adjustments
Group	—	—	—	—		7,081	²⁾	—	7,081	233	7,314
Joint ventures and associates	—	—	—	—		1,214		—	1,214	—	1,214
Tax on items reported directly in/or transferred from equity	—	—	1	1,225		174	³⁾	930	2,330	—	2,330

Total transactions reported directly in equity	—	—	-6	-2,663		8,469		-3,085	2,715	233	2,948
2009												Capital stock	Additional paid in capital	Revaluation of other investments in shares and participations	Cash flow hedges		Cumulative translation adjustments		Retained earnings	Stock- holders’ equity	Minority interests	Total equity
January 1, 2009												16,232	24,731	–1	–2,356		2,124		100,093	140,823	1,261	142,084

Net income
Group	—	—	—	—		—		11,564	11,564	394	11,958	—	—	—	—		—		9,685	9,685	455	10,140
Joint ventures and associates	—	—	—	—		—		-291	-291	—	-291
Joint ventures and associated companies												—	—	—	—		—		–6,013	–6,013	—	–6,013

Total income and expenses recognized for the period	—	—	-6	-2,663		8,469		8,188	13,988	627	14,615
Other comprehensive income
Actuarial gains and losses, and the effect of the asset ceiling, related to pensions
Group												—	—	—	—		—		–633	–633	—	–633
Joint ventures and associated companies												—	—	—	—		—		28	28	—	28
Revaluation of other investments in shares and participations
Fair value remeasurement
Group												—	—	–2	—		—		—	–2	—	–2
Joint ventures and associated companies												—	—	—	—		—		—	—	—	—
Cash flow hedges
Gains/losses arising during the year
Group												—	—	—	665		—		—	665	—	665
Joint ventures and associated companies												—	—	—	7		—		—	7	—	7
Reclassification adjustments for gains/losses included in profit or loss												—	—	—	3,850	¹⁾	—		—	3,850	—	3,850
Adjustments for amounts transferred to initial carrying amount of hedged items												—	—	—	–1,029		—		—	–1,029	—	–1,029
Changes in cumulative translation adjustments
Group												—	—	—	—		–1,013	²⁾	—	–1,013	–54	–1,067
Joint ventures and associated companies												—	—	—	—		–294		—	–294	—	–294
Tax on items relating to components of OCI³⁾												—	—	–1	–1,059		–154	⁴⁾	174	–1,040	—	–1,040
										��
Total other comprehensive income												—	—	–3	2,434		–1,461		–431	539	–54	485

Total comprehensive income												—	—	–3	2,434		–1,461		3,241	4,211	401	4,612

Transactions with owners
Stock issue	100	—	—	—		—		—	100	—	100	135	—	—	—		—		—	135	—	135
Sale of own shares	—	—	—	—		—		88	88	—	88	—	—	—	—		—	��	75	75	—	75
Repurchase of own shares	—	—	—	—		—		-100	-100	—	-100	—	—	—	—		—		–135	–135	—	–135
Stock Purchase and Stock Option Plans
Group	—	—	—	—		—		589	589	—	589	—	—	—	—		—		658	658	—	658
Joint ventures and associates	—	—	—	—		—		—	—	—	—
Joint ventures and associated companies												—	—	—	—		—		—	—	—	—
Dividends paid	—	—	—	—		—		-7,954	-7,954	-286	-8,240	—	—	—	—		—		–5,897	–5,897	–421	–6,318
Business combinations	—	—	—	—		—		—	—	-20	-20	—	—	—	—		—		—	—	–84	–84

December 31, 2008	16,232	24,731	-1	-2,356		2,124		100,093	140,823	1,261	142,084
December 31, 2009												16,367	24,731	–4	78		663		98,035	139,870	1,157	141,027

1)	SEK ~~416~~3,720 million is recognized in Net Sales, ~~and~~ SEK ~~776~~698 million is recognized in Cost of ~~Sales.~~Sales and SEK –568 million is recognized in R&D.

Changes in cumulative translation adjustments include changes regarding revaluation of goodwill in local currency of SEK -1,015 million (SEK 2,993 million ~~(SEK-914~~in 2008, SEK –914 million in ~~2007, SEK-701 million in 2006)~~2007), gain/loss from hedging activities of foreign entities, ~~SEK-660~~SEK 586 million ~~(SEK-52~~(SEK –660 in ~~2007,~~2008, SEK ~~123~~–52 million in ~~2006)~~2007) and SEK 10 million (SEK 13 million ~~(SEK-70~~in 2008, SEK –70 million in ~~2007, SEK-1 million in 2006)~~2007) of realized gain/losses net from sold/liquidated companies.

3)	For further disclosures, see note C8 “Taxes”.

4)	Deferred tax on gains/losses on hedges on investments in foreign entities.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


2007	Capital stock	Additional paid in capital	Revaluation of other investments in shares and participations	Cash flow hedges	Cumulative translation adjustments	Retained earnings	Stock holders’ equity	Minority interests	Total equity
January 1, 2007	16,132	24,731	3	877	-5,569	83,939	120,113	782	120,895

Actuarial gains and losses related to pensions
Group	—	—	—	—	—	1,210	1,210	—	1,210
Joint ventures and associates						-2	-2		-2
Revaluation of other investments in shares and participations
Fair value measurement reported in equity	—	—	2	—	—		2	—	2
Cash flow hedges
Fair value remeasurement of derivatives reported in equity
Group	—	—	—	580	—	—	580	—	580
Joint ventures and associates	—	—	—	4	—	—	4	—	4
Transferred to income statement for the period	—	—	—	-1,390	—	—	-1,390	—	-1,390
Changes in cumulative translation adjustments
Group	—	—	—	—	-1,155	—	-1,155	-1	-1,156
Joint ventures and associates	—	—	—	—	359	—	359	—	359
Tax on items reported directly in/or transferred from equity	—	—	—	236	20	-329	-73	—	-73

Total transactions reported directly in equity	—	—	2	-570	-776	879	-465	-1	-466
2008										Capital stock	Additional paid in capital		Revaluation of other investments in shares and participations	Cash flow hedges		Cumulative translation adjustments	Retained earnings	Stock- holders’ equity	Minority interests	Total equity
2008										Capital stock							Retained earnings	Stock- holders’ equity	Minority interests	Total equity
January 1, 2008										16,132	Additional paid in capital	24,731		Cash flow hedges	5	Cumulative translation adjustments	307	–6,345	99,282	134,112	940	135,052

Net income
Group	—	—	—	—	—	16,562	16,562	299	16,861	—	—		—	—		—	11,564	11,564	394	11,958
Joint ventures and associates	—	—	—	—	—	5,274	5,274		5,274
Joint ventures and associated companies										—	—		—	—		—	–291	–291	—	–291

Total income and expenses recognized for the period	—	—	2	-570	-776	22,715	21,371	298	21,669
Other comprehensive income
Actuarial gains and losses related to pensions
Group										—	—		—	—		—	–4,019	–4,019	—	–4,019
Joint ventures and associated companies										—	—		—	—		—	4	4		4
Revaluation of other investments in shares and participations
Fair value remeasurement
Group										—	—		–6	—		—	—	–6	—	–6
Joint ventures and associated companies										—	—	��	–1	—		—	—	–1	—	–1
Cash flow hedges
Gains/losses arising during the year
Group										—	—		—	–5,116		—	—	–5,116	—	–5,116
Joint ventures and associated companies										—	—		—	36		—	—	36	—	36
Reclassification adjustments for gains/losses included in profit or loss										—	—		—	1,192		—	—	1,192	—	1,192
Adjustments for amounts transferred to initial carrying amount of hedged items										—	—		—	—		—	—	—	—	—
Changes in cumulative translation adjustments
Group										—	—		—	—		7,081	—	7,081	233	7,314
Joint ventures and associated companies										—	—		—	—		1,214	—	1,214	—	1,214
Tax on items relating to components of OCI										—	—		1	1,225		174	930	2,330	—	2,330

Total other comprehensive income										—	—		–6	–2,663		8,469	–3,085	2,715	233	2,948

Total comprehensive income										—	—		–6	–2,663		8,469	8,188	13,988	627	14,615

Transactions with owners
Stock issue										100	—		—	—		—	—	100	—	100
Sale of own shares	—	—	—	—	—	62	62	—	62	—	—		—	—		—	88	88	—	88
Repurchase of own shares										—	—		—	—		—	–100	–100	—	–100
Stock Purchase and Stock Option Plans
Group	—	—	—	—	—	528	528	—	528	—	—		—	—		—	589	589	—	589
Joint ventures and associates	—	—	—	—	—	-19	-19	—	-19
Joint ventures and associated companies										—	—		—	—		—	—	—	—	—
Dividends paid	—	—	—	—	—	-7,943	-7,943	-189	-8,132	—	—		—	—		—	–7,954	–7,954	–286	–8,240
Business combinations	—	—	—	—	—	—	—	49	49	—	—		—	—		—	—	—	–20	–20

December 31, 2007	16,132	24,731	5	307	-6,345	99,282	134,112	940	135,052
December 31, 2008										16,232	24,731		–1	–2,356		2,124	100,093	140,823	1,261	142,084

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2006
Capital
stock Additional
paid in
capital Revaluation
of other
investments
in shares and
participations Cash flow
hedges Cumulative
translation
adjustments Retained
earnings Stock
holders’
equity Minority
interests Total
equity
January 1, 2006
16,132 24,731 5 -704 -2,493 63,951 101,622 850 102,472

Actuarial gains and losses related to pensions

Group
—   —   —   —   —   437 437 —   437
Joint ventures and associates
—   —   —   —   —   3 3 —   3
Revaluation of other investments in shares and participations

Fair value measurement reported in equity
—   —   -2 —   —   —   -2 1 -1
Cash flow hedges

Fair value remeasurement of derivatives reported in equity

Group
—   —   —   4,133 —   —   4,133 —   4,133
Joint ventures and associates
—   —   —   -33 —   —   -33 —   -33
Transferred to income statement for the period
—   —   —   -1,990 —   —   -1,990 —   -1,990
Transferred to balance sheet for the period
—   —   —   99 —   —   99 —   99
Changes in cumulative translation adjustments

Group
—   —   —   —   -2,597 —   -2,597 -91 -2,688
Joint ventures and associates
—   —   —   —   -431 —   -431 —   -431
Tax on items reported directly in/or transferred from equity
—   —   —   -628 -48 -93 -769 —   -769

Total transactions reported directly in equity
—   —   -2 1,581 -3,076 347 -1,150 -90 -1,240

Net income

Group
—   —   —   —   —   20,317 20,317 185 20,502
Joint ventures and associates
—   —   —   —   —   5,934 5,934 5,934

Total income and expenses recognized for the period
—   —   -2 1,581 -3,076 26,598 25,101 95 25,196

Sale of own shares
—   —   —   —   —   58 58 —   58
Stock Purchase and Stock Option Plans
—   —   —   —   —   473 473 —   473
Dividends paid
—   —   —   —   —   -7,141 -7,141 -202 -7,343
Stock issue, net
—   —   —   —   —   —   —   70 70
Business combinations
—   —   —   —   —   —   —   -31 -31

December 31, 2006
16,132 24,731 3 877 -5,569 83,939 120,113 782 120,895


2007	Capital stock	Additional paid in capital	Revaluation of other investments in shares and participations	Cash flow hedges	Cumulative translation adjustments	Retained earnings	Stock- holders’ equity	Minority interests	Total equity
January 1, 2007	16,132	24,731	3	877	–5,569	83,939	120,113	782	120,895

Net income
Group	—	—	—	—	—	16,562	16,562	299	16,861
Joint ventures and associated companies	—	—	—	—	—	5,274	5,274	—	5,274

Other comprehensive income
Actuarial gains and losses related to pensions
Group	—	—	—	—	—	1,210	1,210	—	1,210
Joint ventures and associated companies						–2	–2		–2
Revaluation of other investments in shares and participations
Fair value remeasurement	—	—	2	—	—	—	2	—	2
Group	—	—	—	—	—	—	—	—	—
Joint ventures and associated companies	—	—	—	—	—	—	—	—	—
Cash flow hedges
Gains/losses arising during the year
Group	—	—	—	580	—	—	580	—	580
Joint ventures and associated companies	—	—	—	4	—	—	4	—	4
Reclassification adjustments for gains/losses included in profit or loss	—	—	—	–1,390	—	—	–1,390	—	–1,390
Adjustments for amounts transferred to initial carrying amount of hedged items	—	—	—	—	—	—	—	—	—
Changes in cumulative translation adjustments
Group	—	—	—	—	–1,155	—	–1,155	–1	–1,156
Joint ventures and associated companies	—	—	—	—	359	—	359	—	359
Tax on items relating to components of OCI	—	—	—	236	20	–329	–73	—	–73

Total other comprehensive income	—	—	2	–570	–776	879	–465	–1	–466

Total comprehensive income	—	—	2	–570	–776	22,715	21,371	298	21,669

Transactions with owners
Sale of own shares	—	—	—	—	—	62	62	—	62
Stock Purchase and Stock Option Plans
Group	—	—	—	—	—	528	528	—	528
Joint ventures and associated companies	—	—	—	—	—	–19	–19	—	–19
Dividends paid	—	—	—	—	—	–7,943	–7,943	–189	–8,132
Business combinations	—	—	—	—	—	—	—	49	49

December 31, 2007	16,132	24,731	5	307	–6,345	99,282	134,112	940	135,052

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C17 POST-EMPLOYMENT BENEFITS

Ericsson sponsors a number of post-employment benefit plans throughout the ~~Group,~~Company, which are in line with market practice in each country. The year ~~2008~~2009 was ~~characterized~~characterised by ~~the economic turmoil affecting the~~a positive return onof plan assets and ~~the fluctuation of discount rates.~~significant employer contributions.

This note is divided into the following sections:

Amount Recognized in the Consolidated Balance Sheet

Total Pension Expenses Recognized in the Income Statement

Change in the Defined Benefit Obligation, DBO

Change in the Plan Assets

Actuarial Gains and Losses Reported Directly in ~~Equity (SORIE)~~OCI

Actuarial Assumptions

Summary Information on Pension Plans per Geographical Zone

~~SECTION ONE: AMOUNT RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET~~Section One: Amount Recognized in the Consolidated Balance Sheet


							Sweden	UK	Euro zone	US	Other	Total
2009
Defined benefit obligation (DBO)¹⁾							16,150	5,688	3,840	2,781	2,258	30,717
Fair value of plan assets²⁾							10,927	5,336	2,406	1,974	2,563	23,206

Deficit/Surplus (+/-)							5,223	352	1,434	807	–305	7,511
Unrecognized past service costs							—	—	–14	—	–79	–93

Closing balance							5,223	352	1,420	807	–384	7,418

Plans with net surplus³⁾							—	190	29	—	896	1,115

Provision for post-employment benefits⁴⁾							5,223	542	1,449	807	512	8,533
	Sweden	UK	Euro zone	US	Other	Total
2008
Defined benefit obligation (DBO)¹⁾	14,866	4,867	3,557	2,789	1,931	28,010	14,866	4,867	3,557	2,789	1,931	28,010
Fair value of plan assets²⁾	8,181	4,407	2,330	2,289	1,830	19,037	8,181	4,407	2,330	2,289	1,830	19,037

Deficit/Surplus (+/-)	6,685	460	1,227	500	101	8,973	6,685	460	1,227	500	101	8,973
Unrecognized past service costs	—	—	1	—	-75	-74	—	—	1	—	–75	–74

Closing balance	6,685	460	1,228	500	26	8,899	6,685	460	1,228	500	26	8,899

Plans with net surplus³⁾	—	35	304	171	464	974	—	35	304	171	464	974

Provision for post-employment benefits⁴⁾	6,685	495	1,532	671	490	9,873	6,685	495	1,532	671	490	9,873

2007
Defined benefit obligation (DBO)¹⁾	12,512	5,606	3,079	2,238	1,791	25,226
Fair value of plan assets²⁾	9,463	4,854	2,104	1,779	2,036	20,236

Deficit/Surplus (+/-)	3,049	752	975	459	-245	4,990
Unrecognized past service costs	—	—	—	—	-83	-83

Closing balance	3,049	752	975	459	-328	4,907

Plans with net surplus³⁾	—	39	426	99	717	1,281

Provision for post-employment benefits⁴⁾	3,049	791	1,401	558	389	6,188

1)	For details on DBO, please refer to section three of this note.

2)	For details on plan assets, please refer to section four of this note.

3)	Plans with a net surplus, i.e. where plan assets exceed DBO, are reported as Other financial assets, non-current (please see Note C12 “Financial Assets”). None of the Company’s plans with net surplus are affected by restrictions on asset recognition.

4)	Plans with net liabilities are reported in the Balance Sheet as Post-employment benefits, non-current.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~SECTION TWO: TOTAL PENSION EXPENSES RECOGNIZED IN THE INCOME STATEMENT~~Section Two: Total Pension Expenses Recognized in the Income Statement

The expenses for post-employment benefits within Ericsson are distributed between defined contribution plans and defined benefit plans, with a trend toward defined contribution plans.


								Sweden	UK	Euro zone	US	Other	Total
2009
Pension cost for defined contribution plans								1,686	73	385	124	185	2,453
Pension cost for defined benefit plans¹⁾								674	66	202	49	144	1,135

Total								2,360	139	587	173	329	3,588

Total pension cost expressed as a percentage of wages and salaries													8.7	%
	Sweden	UK	Euro zone	US	Other	Total
2008
Pension cost for defined contribution plans	1,607	40	345	114	72	2,178		1,607	40	345	114	72	2,178
Pension cost for defined benefit plans¹⁾	625	156	179	35	33	1,028		625	156	179	35	33	1,028

Total	2,232	196	524	149	105	3,206		2,232	196	524	149	105	3,206

Total pension cost expressed as a percentage of wages and salaries						8.3	%						8.3	%

2007
Pension cost for defined contribution plans	1,166	265	370	105	148	2,054		1,166	265	370	105	148	2,054
Pension cost for defined benefit plans¹⁾	471	279	128	42	100	1,020		471	279	128	42	100	1,020

Total	1,637	544	498	147	248	3,074		1,637	544	498	147	248	3,074

Total pension cost expressed as a percentage of wages and salaries						9.0	%						9.0	%

2006
Pension cost for defined contribution plans	1,350	—	195	93	82	1,720
Pension cost for defined benefit plans¹⁾	347	249	300	49	44	989

Total	1,697	249	495	142	126	2,709

Total pension cost expressed as a percentage of wages and salaries						8.4	%

1)	See cost details in table below.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

COST DETAILS ~~FOR~~FORD DEFINED BENEFIT PLANS RECOGNIZED IN THE INCOME STATEMENT


							Sweden	UK	Euro zone	US	Other	Total
2009
Current service cost							594	205	138	35	131	1,103
Interest cost							590	284	194	171	155	1,394
Expected return on plan assets							–366	–270	–125	–156	–208	–1,125
Past service cost							—	—	5	—	25	30
Curtailments and settlements							–144	–153	–10	–1	41	–267

Total							674	66	202	49	144	1,135
	Sweden	UK	Euro zone	US	Other	Total
2008
Current service cost	539	186	141	29	122	1,017	539	186	141	29	122	1,017
Interest cost	549	299	160	142	133	1,283	549	299	160	142	133	1,283
Expected return on plan assets	-431	-310	-143	-137	-201	-1,222	–431	–310	–143	–137	–201	–1,222
Past service cost	—	—	11	—	8	19	—	—	11	—	8	19
Curtailments and settlements	-32	-19	10	1	-29	-69	–32	–19	10	1	–29	–69

Total	625	156	179	35	33	1,028	625	156	179	35	33	1,028

2007
Current service cost	473	257	186	33	140	1,089	473	257	186	33	140	1,089
Interest cost	435	307	135	139	109	1,125	435	307	135	139	109	1,125
Expected return on plan assets	-412	-285	-125	-135	-163	-1,120	–412	–285	–125	–135	–163	–1,120
Past service cost	—	—	—	3	8	11	—	—	—	3	8	11
Curtailments and settlements	-25	—	-68	2	6	-85	–25	—	–68	2	6	–85

Total	471	279	128	42	100	1,020	471	279	128	42	100	1,020

2006
Current service cost	431	228	279	47	92	1,077
Interest cost	406	177	133	146	104	966
Expected return on plan assets	-352	-169	-103	-140	-145	-909
Past service cost	—	31	—	5	13	49
Curtailments and settlements	-138	-18	-9	-9	-20	-194

Total	347	249	300	49	44	989

Sections three to six focus on the defined benefit plans

~~SECTION THREE: CHANGE IN THE DEFINED BENEFIT OBLIGATION,~~Section Three: Change in the Defined Benefit Obligation, DBO

The DBO is the gross pension liability.


	Sweden	UK	Euro zone	US	Other	Total	Sweden	UK	Euro zone	US	Other	Total
2008
2009
Opening balance	12,512	5,606	3,079	2,238	1,791	25,226	14,866	4,867	3,557	2,789	1,931	28,010
Current service cost	539	186	141	29	122	1,017	594	205	138	35	131	1,103
Interest cost	549	299	160	142	133	1,283	590	284	194	171	155	1,394
Employee contributions	—	43	4	—	12	59	—	14	4	—	12	30
Pension payments	–74	-87	-133	-144	-86	-524	–107	–108	–90	–172	–142	–619
Actuarial gain/loss (–/+)	1,372	-436	-185	38	25	814
Actuarial gain/loss (-/+)							351	543	204	143	–120	1,121
Settlements	—	—	—	—	-16	-16	—	—	—	—	–1	–1
Curtailments	-32	-19	10	1	-13	-53	–144	–153	–14	—	—	–311
Business combinations¹⁾	—	—	-14	—	—	-14
Business combinations							—	—	—	—	–13	–13
Other	—	-7	7	19	-7	12	—	–13	74	26	40	127
Translation difference	—	-718	488	466	-30	206	—	49	–227	–211	265	–124

Closing balance	14,866	4,867	3,557	2,789	1,931	28,010	16,150	5,688	3,840	2,781	2,258	30,717

Of which medical benefit schemes	—	—	��	639	—	639	—	—	—	631	—	631

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	Sweden	UK	Euro zone	US	Other	Total	Sweden	UK	Euro zone	US	Other	Total
2007

2008
Opening balance	11,772	5,713	3,241	2,399	1,487	24,612	12,512	5,606	3,079	2,238	1,791	25,226
Current service cost	473	257	186	33	140	1,089	539	186	141	29	122	1,017
Interest cost	435	307	135	139	109	1,125	549	299	160	142	133	1,283
Employee contributions	—	59	4	—	15	78	—	43	4	—	12	59
Pension payments	-72	-119	-89	-195	-68	-543	–74	–87	–133	–144	–86	–524
Actuarial gain/loss (–/+)	-71	-777	-482	-12	83	-1,259
Actuarial gain/loss (-/+)							1,372	–436	–185	38	25	814
Settlements	—	—	—	-2	-40	-42	—	—	—	—	–16	–16
Curtailments	-25	—	-68	2	6	-85	–32	–19	10	1	–13	–53
Business combinations¹⁾	—	440	20	—	-6	454	—	—	–14	—	—	–14
Other	—	-8	-9	22	-42	-37	—	–7	7	19	–7	12
Translation difference	—	-266	141	-148	107	-166	—	–718	488	466	–30	206

Closing balance	12,512	5,606	3,079	2,238	1,791	25,226	14,866	4,867	3,557	2,789	1,931	28,010

Of which medical benefit schemes	—	—	—	533	—	533	—	—	—	639	—	639

1)	Business combinations in 2008 are related to the ~~divestiture~~divesture of the Enterprise Business. ~~Business combinations in 2007 are related to the acquisition of Tandberg Television ASA.~~

~~FUNDED STATUS~~Funded Status

The funded ratio, defined as total plan assets in relation to the total defined benefit obligation (DBO), was 75.5 percent in 2009, compared to 68.0 percent in ~~2008, compared to 80.2 percent in 2007.~~2008.

The following table summarizes the value of the DBO per geographical area ~~in relation to~~based on whether ~~or not~~ there are plan assets wholly or partially funding each pension plan.

Sweden

Euro zone

Other

Total

Sweden

Euro zone

Other

Total

DBO, closing balance

16,150

5,688

3,840

2,781

2,258

30,717

Of which partially or fully funded

15,660

5,688

2,659

2,119

1,813

27,939

Of which unfunded

490

—

1,181

662

445

2,778

2008

DBO, closing balance

14,866

4,867

3,557

2,789

1,931

28,010

14,866

4,867

3,557

2,789

1,931

28,010

Of which partially or fully funded

14,375

4,867

2,355

2,118

1,522

25,237

14,375

4,867

2,355

2,118

1,522

25,237

Of which unfunded

491

—

1,202

671

409

2,773

491

—

1,202

671

409

2,773

2007

DBO, closing balance

12,512

5,606

3,079

2,238

1,791

25,226

Of which partially or fully funded

12,043

5,606

1,945

1,680

1,440

22,714

Of which unfunded

469

—

1,134

558

351

2,512

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~SECTION FOUR: CHANGE IN THE PLAN ASSETS~~Section Four: Change in the Plan Assets

A majority of pension plans have assets managed by local Pension Trust funds, whose sole purpose is to secure the future pension payments to the employees.


							Sweden	UK		Euro zone	US	Other	Total
2009
2009
Opening balance							8,181		4,407		2,330	2,289	1,830	19,037
Expected return on plan assets							366	270		125	156	208	1,125
Actuarial gain/loss (+/-)							1,076	342		–136	–253	162	1,191
Employer contributions							1,305	387		213	49	122	2,076
Employee contributions							—	14		4	—	12	30
Pension payments							—	–122		–75	–115	–125	–437
Settlements							—	—		—	—	—	—
Business combinations							—	—		–1	—	–11	–12
Other							–1	—		90	—	–2	87
Translation difference							—	38		–144	–152	367	109

Closing balance							10,927	5,336		2,406	1,974	2,563	23,206
	Sweden	UK	Euro zone	US	Other	Total
2008
Opening balance	9,463	4,854	2,104	1,779	2,036	20,236	9,463	4,854		2,104	1,779	2,036	20,236
Expected return on plan assets	431	310	143	137	201	1,222	431	310		143	137	201	1,222
Actuarial gain/loss (+/–)	-1,713	-595	-343	19	-320	-2,952
Actuarial gain/loss (+/-)							–1,713	–595		–343	19	–320	–2,952
Employer contributions	—	527	132	61	85	805	—	527		132	61	85	805
Employee contributions	—	43	4	—	12	59	—	43		4	—	12	59
Pension payments	—	-95	-30	-88	-73	-286	—	–95		–30	–88	–73	–286
Settlements	—	—	—	—	-16	-16	—	—		—	—	–16	–16
Business combinations¹⁾	—	—	-2	—	—	-2	—	—		–2	—	—	–2
Other	—	—	—	—	-5	-5	—	—		—	—	–5	–5
Translation difference	—	-637	322	381	-90	-24	—	–637		322	381	–90	–24

Closing balance	8,181	4,407	2,330	2,289	1,830	19,037	8,181	4,407		2,330	2,289	1,830	19,037

2007
Opening balance	9,141	3,897	1,959	1,818	1,580	18,395
Expected return on plan assets	412	285	125	135	163	1,120
Actuarial gain/loss (+/–)	-89	—	-173	73	130	-59
Employer contributions	-1	622	128	13	83	845
Employee contributions	—	59	4	—	15	78
Pension payments	—	-127	-19	-142	-55	-343
Settlements	—	—	—	-2	-41	-43
Business combinations¹⁾	—	349	—	—	3	352
Other	—	—	-10	—	-18	-28
Translation difference	—	-231	90	-116	176	-81

Closing balance	9,463	4,854	2,104	1,779	2,036	20,236

1)	Business combinations in 2008 are related to the ~~divestiture~~divesture of the Enterprise Business. ~~Business combinations in 2007 are related to the acquisition of Tandberg Television ASA.~~

Refunds from or reductions in future contributions to plan assets are recognized if they are available and firmly decided.

ACTUAL RETURN ON PLAN ASSETS


	Sweden	UK	Euro zone	US	Other	Total	Sweden	UK	Euro zone	US	Other	Total
2009							1,441	612	–10	–97	370	2,316
2008	-1,283	-284	-200	156	-119	-1,730	–1,283	–284	–200	156	–119	–1,730
2007	323	285	-48	208	293	1,061

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

ASSET ALLOCATION


							Sweden	UK	Euro zone	US	Other	Total
2009
Equities							3,824	1,825	1,094	1,069	394	8,063
Interest-bearing securities							7,103	2,801	1,051	741	1,747	13,586
Other							—	710	261	164	422	1,557

Total							10,927	5,336	2,406	1,974	2,563	23,206
Of which Ericsson securities							—	—	—	—	—	—
	Sweden	UK	Euro zone	US	Other	Total
2008
Equities	2,577	1,674	900	831	306	6,288	2,577	1,674	900	831	306	6,288
Interest-bearing securities	5,604	2,161	1,291	1,256	1,258	11,570	5,604	2,161	1,291	1,256	1,258	11,570
Other	—	572	139	202	266	1,179	—	572	139	202	266	1,179

Total	8,181	4,407	2,330	2,289	1,830	19,037	8,181	4,407	2,330	2,289	1,830	19,037
Of which Ericsson securities	—	—	—	—	—	—	—	—	—	—	—	—

2007
Equities	2,943	1,874	1,159	1,442	479	7,897
Interest-bearing securities	6,520	2,387	847	316	1,381	11,451
Other	—	593	98	21	176	888

Total	9,463	4,854	2,104	1,779	2,036	20,236
Of which Ericsson securities	—	—	—	—	—	—

Equity instruments amount to 3335 percent of the total assets, interest bearing instruments amount to ~~60.8~~59 percent of the total assets, and other instruments amount to ~~6.2~~6 percent of the total assets.

The ~~expected~~ contributions to the defined benefit plans ~~during 2009~~for the upcoming year will be ~~slightly higher than~~based on the development of the financial markets as well as on the growth of the pension liability, and how these developments affect the target funding ratio of the Company.

Section Five: Actuarial Gains and Losses Reported Directly in ~~2008.~~

~~SECTION FIVE: ACTUARIAL GAINS AND LOSSES REPORTED DIRECTLY IN EQUITY~~OCI


	2008	2007	2009	2008
Cumulative gain/loss (-/+) at beginning of year	1,806	3,065	5,402	1,806
Recognized gain/loss (-/+) during the year	3,765	-1,200	–70	3,765
Other¹⁾	-7	-4	–	–7
Translation difference	-162	-55	–6	–162

Cumulative gain/loss (-/+) at end of year	5,402	1,806	5,326	5,402

1)	The gain in 2008 is related to terminated pension plans. ~~The gain in 2007 is related to the acquisition of Tandberg Television ASA.~~

Since January 1, 2006, Ericsson applies immediate recognition of actuarial gains and losses directly in ~~equity,~~OCI, as disclosed in the statement of ~~recognized income and expense (SORIE).~~OCI. Actuarial gains and losses may arise from either a change in actuarial assumptions or in deviations between estimated and actual outcome.

~~MULTI-YEAR~~MULTI- YEAR SUMMARY


	2008	2007	2006	2005	2004	2009	2008	2007	2006	2005
Plan assets	19,037	20,236	18,395	16,784	5,764	23,206	19,037	20,236	18,395	16,784
DBO	28,010	25,226	24,612	22,314	16,820	30,717	28,010	25,226	24,612	22,314

Deficit/Surplus (-/+)	-8,973	-4,990	-6,217	-5,530	-11,056	–7,511	–8,973	–4,990	–6,217	–5,530
Actuarial gains and losses (-/+)
Experience-based adjustments of pension obligations	57	-76	232	-415	-56	310	57	–76	232	–415
Experience-based adjustments of plan assets	2,952	59	-358	-706	-146	–1,191	2,952	59	–358	–706

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~SECTION SIX: ACTUARIAL ASSUMPTIONS~~Section Six: Actuarial Assumptions


	Sweden		UK		Euro zone¹⁾		US		Other¹⁾		Sweden		UK		Euro zone¹⁾		US¹⁾		Other¹⁾
2009
Discount rate											4.00	%	5.60	%	5.26	%	5.89	%	8.91	%
Expected return on plan assets for the year											4.55	%	6.00	%	6.31	%	7.00	%	9.34	%
Future salary increases											3.25	%	4.90	%	2.92	%	4.50	%	6.77	%
Inflation											2.00	%	3.60	%	2.17	%	2.50	%	3.80	%
Health care cost inflation, current year											n/a		n/a		n/a		9.00	%	n/a
Life expectancy after age 65 in years, males											21		21		22		18		18
Life expectancy after age 65 in years, females											24		24		25		20		22
2008
Discount rate	4.00	%	5.50	%	5.86	%	6.25	%	8.53	%	4.00	%	5.50	%	5.86	%	6.25	%	8.53	%
Expected return on plan assets for the year	4.55	%	6.40	%	6.51	%	7.50	%	10.05	%	4.55	%	6.40	%	6.51	%	7.50	%	10.05	%
Future salary increases	3.25	%	4.30	%	3.00	%	4.50	%	6.81	%	3.25	%	4.30	%	3.00	%	4.50	%	6.81	%
Inflation	2.00	%	3.00	%	2.25	%	2.50	%	4.23	%	2.00	%	3.00	%	2.25	%	2.50	%	4.23	%
Health care cost inflation, current year	n/a		n/a		n/a		9.00	%	n/a		n/a		n/a		n/a		9.00	%	n/a
Life expectancy after age 65 in years, males	21		21		22		18		18		21		21		22		18		18
Life expectancy after age 65 in years, females	24		24		25		20		22		24		24		25		20		22
2007
Discount rate	4.40	%	5.60	%	5.42	%	6.25	%	8.84	%
Expected return on plan assets for the year	4.55	%	6.75	%	6.14	%	7.50	%	9.75	%
Future salary increases	3.25	%	4.60	%	3.08	%	4.50	%	6.76	%
Inflation	2.00	%	3.30	%	2.17	%	2.50	%	4.10	%
Health care cost inflation, current year	n/a		n/a		n/a		9.50	%	n/a
Life expectancy after age 65 in years, males	21		21		22		18		18
Life expectancy after age 65 in years, females	24		24		25		20		22

1)	Weighted average

Actuarial assumptions are assessed on a quarterly basis.

The discount rate for each country is determined by reference to market yields on high-quality corporate bonds. In countries where there is no deep market in such bonds, the market yields on government bonds are used.

The overall expected long-term return on plan assets is a weighted average of each asset category’s expected rate of return. The expected return on interest-bearing investments is set in line with each country’s market yield. Expected return on equities is derived from each country’s risk free rate with the addition of a risk premium.

Salary increases are partially affected by fluctuations in inflation rate.

The net periodic pension cost and the present value of the DBO for current and former employees are calculated using the Projected Unit Credit (PUC) actuarial cost method, where the objective is to spread the cost of each employee’s benefits over the period that the employee works for the ~~company.~~Company.

~~SENSITIVITY ANALYSIS FOR MEDICAL BENEFIT SCHEMES~~Sensitivity Analysis for Medical Benefit Schemes

The effect (in SEK million) of a one percentage point change in the assumed trend rate of medical cost would have the following effect:


	1 percent increase	1 percent decrease	1 percent increase	1 percent decrease
Net periodic post-employment medical cost	3	-3	4	–3
Accumulated post-employment benefit obligation for medical costs	57	-50	59	–50

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~SECTION SEVEN: SUMMARY INFORMATION ON PENSION PLANS PER GEOGRAPHICAL ZONE~~Section Seven: Summary Information on Pension Plans per Geographical Zone

Applicable to all countries: In ~~2008,~~2009, the ~~global economic turmoil has led to an overall lower than expected performance~~positive return of plan assets ~~resulting~~resulted in ~~a significant~~an actuarial ~~loss~~gain and ~~a decrease~~an increase in the total value of the plan assets. The actuarial ~~loss~~gain on plan assets is the difference between the expected return on plan assets and the actual return on plan assets. ~~The expected return for 2008 was a positive SEK 1,222 million, and the actual return was a negative SEK 1,730 million. Consequently the actuarial loss was a SEK 2,952 million.~~ Changes in discount rate ~~have also~~ resulted in an overall actuarial loss and an increase in the defined benefit obligation. ~~All geographical regions were affected by the~~The net actuarial ~~loss on plan assets. Mostly affected by the actuarial loss on both plan assets and defined benefit obligation was Sweden.~~gain amounted to SEK 70 million.

Sweden:

In ~~2008,~~2009, the Swedish discount rate ~~decreased, resulting in an increase in the defined benefit obligation~~is unchanged compared to 2008. The actuarial loss was purely due to experience-based adjustments on pension obligations and ~~an actuarial loss.~~plan assets. Sweden was ~~also negatively~~positively affected by the positive performance of the plan assets ~~which has resulted in a decrease in~~and the ~~value of~~employer contribution to the ~~assets and an actuarial loss. The voluntary redundancy plans reduced the defined benefit obligation by SEK 32 million.~~Swedish Trust fund.

As before, Ericsson has secured the disability- and survivors’ pension part of the ITP Plan through an insurance solution with the insurance company Alecta. Although this part of the plan is classified as a multi-employer defined benefit plan, it has not been possible for Ericsson to get sufficient information to apply defined benefit accounting, and therefore, it has been accounted for as a defined contribution plan. ~~At the end of 2008,~~

Alecta ~~reported~~has a ~~surplus of 12~~collective funding ratio which is a buffer for its insurance commitments to protect against fluctuations in investment return and insurance risks. Alecta’s target ratio is 140 percent ~~(52 percent in 2007). Such surplus~~and reflects the fair value of Alecta’s plan assets as a percentage of plan commitments, then measured in accordance with Alecta’s actuarial assumptions, which are different from those in IAS 19. ~~Alecta’s surplus may be distributed to the members of the plan and/or plan participants.~~

UK:

The ~~decrease~~increase in the discount rate was more than offset by the rise in inflation and future salary ~~increases’ percentage resulted in an actuarial gain, while the decrease in discount rate resulted in an actuarial loss. These two changes together~~increases, which resulted in an overall ~~decrease~~actuarial loss. The restructuring of the UK operations resulted in ~~the defined benefit obligation, and consequently an actuarial gain.~~a curtailment of approximately SEK 150 million.

Euro zone:

Germany, Italy and Ireland are the countries with the most significant defined benefit pension plans within the Euro zone.

The discount rate for the Euro zone ~~increased,~~decreased, resulting in ~~a decrease~~an increase in the defined benefit obligation and an actuarial ~~gain. The divestment of the Enterprise business decreased the defined benefit obligation by SEK 14 million.~~loss.

US:

The discount rate ~~is unchanged compared to 2007. The~~decreased resulting in an increase in the defined benefit obligation and an actuarial ~~loss was purely due to experience-based adjustments of pension obligations and plan assets.~~loss.

Other:

Brazil is the country included in Other with the most significant defined benefit pension plan.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C18 PROVISIONS

   Warranty
commitments    Restructuring    Project
related    Other    Total
2008

Opening balance
   1,814    1,051    2,619    4,242    9,726
Additions
   1,568    4,328    3,960    2,105    11,961
Reversal of excess amounts
   -392    -131    -799    -493    -1,815
Negative effect on Income Statement
               10,146
Utilization/Cash out
   -1,150    -1,756    -2,164    -970    -6,040
Balances regarding divested/acquired businesses
   -30    -2    -51    -15    -98
Reclassification
   1    71    45    -173    -56
Translation differences
   120    269    184    99    672

Closing balance
   1,931    3,830    3,794    4,795    14,350

2007

Opening balance
   2,961    2,277    3,272    5,372    13,882
Additions
   1,472    676    1,795    1,216    5,159
Reversal of excess amounts
   -861    -400    -1,080    -1,409    -3,750
Negative effect on Income Statement
               1,409
Utilization/Cash out
   -1,755    -1,680    -1,383    -1,490    -6,308
Balances regarding divested/acquired businesses
   22    —      —      -11    11
Reclassification
   -24    123    -5    510    604
Translation differences
   -1    55    20    54    128

Closing balance
   1,814    1,051    2,619    4,242    9,726

~~PROVISIONS~~


	Warranty commitments	Restructuring	Project related	Other	Total
2009
Opening balance	1,931	3,830	3,794	4,795	14,350
Additions	2,141	4,920	1,952	2,129	11,142
Reversal of excess amounts	–171	–210	–451	–915	–1,747
Negative effect on Income Statement					*9,395*
Utilization/Cash out	–1,427	–4,248	–3,459	–1,595	–10,729
Balances regarding divested/acquired businesses	96	—	—	16	112
Reclassification	19	146	–128	–595	–558
Translation differences	–56	–139	–14	70	–139

Closing balance	2,533	4,299	1,694	3,905	12,431

2008
Opening balance	1,814	1,051	2,619	4,242	9,726
Additions	1,568	4,328	3,960	2,105	11,961
Reversal of excess amounts	–392	–131	–799	–493	–1,815
Negative effect on Income Statement					*10,146*
Utilization/Cash out	–1,150	–1,756	–2,164	–970	–6,040
Balances regarding divested/acquired businesses	–30	–2	–51	–15	–98
Reclassification	1	71	45	–173	–56
Translation differences	120	269	184	99	672

Closing balance	1,931	3,830	3,794	4,795	14,350

Risk assessment in the ongoing business is performed monthly to identify the need for new additions and reversals. Management uses its best judgment to estimate provisions based on this assessment. ~~The actual utilization for 2008 was SEK 6.0 billion compared with the estimated SEK 6 billion.~~

~~For 2008, new or additional provisions amounting to SEK 12.0 billion were made, and SEK 1.8 billion were reversed. Of the total provisions, SEK 311 (368) million are classified as non-current.~~ In certain circumstances, provisions are no longer required due to more favorable outcomes than anticipated, which affect the provisions balance as a reversal. In other cases the outcome can be negative, and if so, a charge is recorded in the income statement.

For 2009, new or additional provisions amounting to SEK 11.1 billion were made, and SEK 1.7 billion were reversed. The actual utilization for 2009 was SEK 10.7 billion compared with the estimated SEK 9 billion. The expected utilization in ~~2009~~2010 is approximately SEK 98 billion.

Of the total provisions, SEK 461 (311) million are classified as non-current. For more information, see Note C1, “Significant Accounting Policies” and Note C2, “Critical Accounting Estimates and Judgments”.

~~WARRANTY COMMITMENTS~~Warranty commitments

Warranty provisions are based on historic quality rates for established products as well as estimates regarding quality rates for new products and costs to remedy the various types of faults predicted. The actual utilization for ~~2008~~2009 was SEK ~~1.2~~1.4 billion and in line with the expected SEK 1 billion. Provisions amounting to SEK ~~1.6~~2.1 billion were made and due to more favorable outcomes in certain cases reversals of SEK ~~0.4~~0.2 billion were made. The ~~expected~~ utilization of warranty provisions during year ~~2009~~2010 is estimated to approximately SEK 12 billion.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~RESTRUCTURING~~Restructuring

In January, 2009, cost reduction activities were initiated. In the third quarter 2009, it was ~~announced~~reported that the program was ahead of plan and that additional opportunities for efficiency improvements had evolved. This would lead to further restructuring charges ~~would be taken in~~during the ~~fourth quarter.~~last three quarters of the program. As part of this cost reduction plan, SEK ~~4.3~~4.9 billion in ~~provisions~~provision were made. The actual utilization was SEK ~~1.8~~4.2 billion, where SEK ~~0.6~~2.6 billion was related to restructuring programs initiated before ~~2008.~~2009. The ~~expected~~ utilization for ~~2009~~2010 is estimated to approximately SEK 3 billion.

~~PROJECT RELATED~~Project related

Project ~~related~~ provisions ~~include~~relate to estimated losses on onerous contracts, including probable contractual ~~penalties and undertakings.~~penalties. The utilization of project related provisions were SEK ~~2.2~~3.5 billion and in line with the estimated SEK 23 billion. Provisions amounting to SEK ~~4.0~~2.0 billion were made and SEK ~~0.8~~0.5 billion were reversed due to a more favorable outcome than expected. The ~~expected~~ utilization for ~~2009~~2010 is estimated to be approximately SEK 31 billion.

~~OTHER~~Other

Other provisions include provisions for ~~income taxes, value added~~ tax issues, litigations, supplier claims, ~~off balance-customer finance~~ and ~~other provisions.~~other. The utilization was SEK ~~1.0~~1.6 billion in ~~2008~~2009 compared to the estimate of SEK 2 billion. During ~~2008~~2009, new provisions amounting to SEK 2.1 billion were made and SEK ~~0.5~~0.9 billion were reversed during the year due to a more favorable outcome. For ~~2009,~~2010, the ~~expected~~estimated utilization is approximately SEK 2 billion.

C19 INTEREST-BEARING LIABILITIES

As of December 31, 2009, Ericsson’s outstanding interest-bearing liabilities were SEK ~~30.5 (27.2) billion as of December 31, 2008.~~32.1 (30.5) billion.

INTEREST-BEARING LIABILITIES


	2008	2007	2009	2008
Borrowings, current
Current part of non-current borrowings¹⁾	3,903	3,065	684	3,903
Other current borrowings	1,639	2,831	1,440	1,639

Total current borrowings	5,542	5,896	2,124	5,542

Borrowings, non-current
Notes and bond loans	18,879	19,380	23,801	18,879
Other borrowings, non-current	6,060	1,940	6,195	6,060

Total non-current interest-bearing liabilities	24,939	21,320	29,996	24,939

Total interest-bearing liabilities	30,481	27,216	32,120	30,481

1)	Including notes and bond loans of SEK ~~3,794 (2,898)~~0 (3,794) million.

All outstanding notes and bond loans are issued by the Parent Company under its Euro ~~Medium Term~~Medium-Term Note (EMTN) program. Bonds issued at a fixed interest rate are swapped to a floating interest rate using interest rate swaps, resulting in a weighted average interest rate of ~~6.46~~2.88 percent at December 31, ~~2008.~~2009. These bonds are revalued based on changes in benchmark interest rates according to the fair value hedge methodology stipulated in IAS 39.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On ~~June 5, 2008,~~May 20, 2009, the ~~GBP~~USD bond issued in ~~2001~~1999 of ~~226~~483 million matured and was repaid. ~~With this GBP bond repaid, Ericsson does not have any interest rate payments on bonds linked to credit rating.~~

On ~~July 2,~~June 22, 2009, a new EUR fixed rate bond was issued under the EMTN program. The nominal amount of the issue was 600 million EUR and the maturity date 24 June 2013.

On June 23, 2009, Ericsson signed a seven year floating rate loan of USD 625 million with Svensk Exportkredit. This loan is issued under the EMTN program.

On November 30, 2009, Ericsson called the EUR bond issued in 2003 of EUR 471 million with maturity date 28 November 2010 at par.

In 2008 Ericsson signed a seven year loan of SEK 4.0 billion with the European Investment Bank. The loan supports Ericsson’s R&D activities to develop the next generation of mobile broadband technology at sites in Kista, Gothenburg and Linköping in Sweden.

NOTES AND BOND LOANS


Issued-maturing	Nominal amount		Coupon		Currency	Book value (SEK m.)		Maturity date (yy-mm-dd)		Unrealized hedge gain/loss (incl. in book value)	Nominal amount	Coupon		Currency	Book value (SEK m.)		Maturity date (yy-mm-dd)		Unrealized hedge gain/loss (incl. in book value)
1999-2009	483		6.500	%	USD	3,794	²⁾	09-05-20		-62
2003-2010	471	¹⁾	6.750	%	EUR	5,256	²⁾	10-11-28		-189
2004-2012	450		3.340	%	SEK	450		12-12-07	³⁾		450	1.275	%	SEK	450		12-12-07	²⁾
2007-2012	1,000		5.100	%	SEK	1,079	²⁾	12-06-29		-80	1,000	5.100	%	SEK	1,058	¹⁾	12-06-29		–59
2007-2012	2,000		2.728	%	SEK	2,000		12-06-29	⁴⁾		2,000	0.730	%	SEK	2,000		12-06-29	³⁾
2007-2014											375	1.006	%	EUR	3,863		14-06-27	⁴⁾
2007-2017	500		5.380	%	EUR	5,987	²⁾	17-06-27		-547	500	5.380	%	EUR	5,714	¹⁾	17-06-27		–591
2007-2014	375		3.319	%	EUR	4,107		14-06-27	⁵⁾
2009-2013											600	5.000	%	EUR	6,229	¹⁾	13-06-24		–81
2009-2016											625	3.29875	%	USD	4,487		16-06-23	⁵⁾

Total						22,673				-878					23,801				–731

1)	~~The EUR 471 million bond is callable after 2007; the fair value of the embedded derivative is included in the book value of the bond.~~

2)	Interest rate swaps are designated as fair value hedges.

3)2)	~~Contractual~~Next contractual repricing date ~~2009-06-08.~~2010-06-03 (semi annual).

3)	Next contractual repricing date 2010-03-25 (quarterly).

4)	~~Contractual~~Next contractual repricing date ~~2009-03-29.~~2010-03-25 (quarterly).

5)	~~Contractual~~Next contractual repricing date ~~2009-03-27.~~2010-03-19 (quarterly).

C20 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Ericsson’s financial risk management is governed by a policy approved by the Board of Directors. The Finance Committee of the Board of Directors is responsible for overseeing the capital structure and financial management of the Company and approving certain matters (such as acquisitions, investments, customer finance commitments, guarantees and borrowing) and is continuously monitoring the exposure to financial risks.

Ericsson defines its managed capital as the total ~~Group~~Company equity. For Ericsson, a robust financial position with a strong equity ratio, investment grade rating, low leverage and ample liquidity is deemed important. This provides the financial flexibility and independence to operate and manage variations in working capital needs as well as to capitalize on business opportunities.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s overall capital structure should support the financial targets: to grow faster than the market, deliver best-in-class margins and generate a healthy cash flow. The capital structure is managed by balancing equity, debt financing and liquidity in such a way that we secure funding of our operations at a reasonable cost of capital. Regular borrowings are complemented with committed credit facilities to give additional flexibility to manage unforeseen funding needs. We strive to finance our growth, normal capital expenditures and dividends to shareholders by generating sufficient positive cash flows from operating activities.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Our capital objectives are:

an equity ratio above 40 percent.

a cash conversion rate above 70 percent.

to maintain a positive net cash position.

to maintain a solid investment grade rating by Moody’s and Standard & Poor’s.

CAPITAL OBJECTIVES RELATED INFORMATION


	2008	2007	2009	2008
Capital (SEK billion)	142	135	141	142
Equity ratio (percent)	50	55	52	50
Cash conversion rate (percent)	92	66	117	92
Positive net cash (SEK billion)	34.7	24.3	36.1	34.7

Credit rating
Moody’s	Baa1	Baa1	Baa1	Baa1
Standard & Poor’s	BBB+	BBB+	BBB+	BBB+

Ericsson has a treasury function with the principal role to ensure that appropriate financing is in place through loans and committed credit facilities, to actively manage the ~~Group’s~~Company��s liquidity as well as financial assets and liabilities, and to manage and control financial risk exposures in a manner consistent with underlying business risks and financial policies. Hedging activities, cash management and insurance management are largely centralized to the treasury function in Stockholm.

Ericsson also has a customer finance function with the main objective to find suitable third-party financing solutions for customers and to minimize recourse to Ericsson. To the extent customer loans are not provided directly by banks, the Parent Company provides or guarantees vendor credits. The customer finance function monitors the exposure from outstanding vendor credits and credit commitments.

Ericsson classifies financial risks as:

foreign exchange risk.

interest rate risk.

credit risk.

liquidity and refinancing risk.

market price risk in own and other equity instruments.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Board of Directors has established risk limits for defined exposures to foreign exchange and interest rate risks as well as to political risks in certain countries.

For further information about accounting policies, please see Note C1, “Significant Accounting Policies”.

~~FOREIGN EXCHANGE RISK~~Foreign exchange risk

Ericsson is a global company with sales mainly outside Sweden. Revenues and costs are to a large extent in currencies other than SEK and therefore the financial results of the ~~Group~~Company are impacted by currency fluctuations.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Ericsson reports the financial accounts in SEK and movements in exchange rates between currencies will affect:

specific line items such as Net sales and Operating income.

the comparability of our results between periods.

the carrying value of assets and liabilities.

reported cash flows.

~~The results of operations and financial position of non-Swedish subsidiaries are reported in other currencies than SEK, and translated into SEK upon consolidation.~~

~~CURRENCY EXPOSURE~~

   Overall Exposure Transaction Exposure in
SEK entities
Currency
   Net Sales Purchases Internal Sales²⁾ Purchases³⁾
USD¹⁾
   43 % 32 % 52 % 38 %
EUR
   25 % 25 % 27 % 23 %
GBP
   3 % 3 % 2 % 0 %
SEK
   4 % 19 % 1 % 37 %
JPY
   3 % 2 % 7 % 1 %
AUD
   2 % 1 % 2 % 0 %
INR
   4 % 3 % 0 % 0 %
CNY
   7 % 5 % 0 % 0 %
Other
   10 % 9 % 9 % 1 %

1)	~~Including USD related currencies except CNY.~~

2)	~~Eliminated upon consolidation. However, net impact on Cost of Sales as the Internal purchases normally is in functional currency of the buying company.~~

3)	~~41 percent of overall purchases, offsetting Internal Sales.~~

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~OUTSTANDING DERIVATIVES~~

   2008    2007
Fair value
   Asset Liability    Asset Liability
Currency derivatives

Maturity within 3 months
   2,671 2,489    432 537
Maturity between 3 and 12 months
   1,639 4,022    413 474
Maturity 1 to 3 years
   40 589    145 83
Maturity 3 to 5 years
   —   —      —   —
Maturity more than 5 years
   —   —      —   —

Total currency derivatives
   4,350 ²⁾ 7,100    990 1,094

of which designated in cashflow hedge relations
   —   3,503    416 13

of which designated in net investment hedge relations
   8 179    -69 ¹⁾ 10

Interest rate derivatives

Maturity within 3 months
   —   —      —   1
Maturity between 3 and 12 months
   315 121    194 53
Maturity 1 to 3 years
   129 25    226 56
Maturity 3 to 5 years
   105 —      32 3
Maturity more than 5 years
   711 53    184 3

Total interest rate derivatives
   1,260 ²⁾ 199    636 ²⁾ 116

of which designated in fair value hedge relations
   1,152 —      478 —

1)	~~Negative amounts relate to effects from one exposure of a derivative that is positive/negative while the total effect of the derivative is the opposite.~~

2)	~~Of which 2,814 million is reported as non-current assets for 2008 and 96 million for 2007.~~

Net sales and Operating ~~income~~Income are affected by changes in foreign exchange rates from two different kinds of ~~exposures:~~exposures, translation exposure and transaction exposure. In the Operating Income we are primarily exposed to transaction exposure which is partially addressed by hedging.

CURRENCY EXPOSURE


	Net Sales				Net Cost
	Exposure		Of which Translation Exposure		Exposure		Of which Translation Exposure
USD	42	%	13	%	21	%	13	%
EUR	22	%	16	%	25	%	19	%
CNY	8	%	8	%	5	%	7	%
INR	5	%	7	%	3	%	7	%
JPY	3	%	3	%	2	%	3	%
BRL	3	%	3	%	3	%	4	%

Translation exposure

Translation exposure relates to Sales and Cost of sales in foreign entities when translated into SEK upon consolidation. These exposures can not be addressed by hedging, but as the Income Statement is translated using average rate, the impact of volatility in foreign currency rates is reduced.

Transaction exposure

Transaction exposure relates to Sales and Cost of sales in non-reporting currencies in individual group companies. ~~To a large extent the exposure is concentrated to the Swedish subsidiary Ericsson AB.~~

~~These exposures are addressed by hedging.~~

~~Translation exposure~~

~~Sales and Cost of sales in foreign entities are translated into SEK.~~

~~These exposures cannot be addressed by hedging.~~

The current policy for hedging transaction exposures and the fact that translation exposure related to forecasted results cannot be hedged, results in that only around a fifth of the Group’s foreign exchange exposure in Net sales is hedged. The hedge effect on operating margin is larger, as it is a net of Net sales, Cost of sales and Operating expenses.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Transaction exposure~~

Foreign exchange risk is as far as possible concentrated to Swedish group companies, primarily Ericsson AB. Sales to foreign subsidiaries are normally denominated in the functional currency of the receiving

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

entity, and export sales from Sweden to external customers are normally denominated in USD or other foreign currency. In order to limit the exposure toward exchange rate fluctuations on future revenues or expenditures, committed and forecasted future sales and purchases in major currencies are hedged, for the coming 6–12 months.

According to Company policy, transaction exposure in subsidiaries’ balance sheets (i.e. trade receivables and payables and customer finance receivables) should be fully hedged, except for ~~unhedgable~~non-tradable currencies. Group Treasury has a mandate to leave selected transaction exposures in local companies’ balance sheets ~~un-hedged~~unhedged up to an aggregate Value at Risk (VaR) of SEK 20 million, given a confidence level of 99 percent and a 1-day horizon.

~~External forward contracts are designated as cash flow hedges of the net exposure for the main currencies and companies of the Group.~~

~~Other foreign~~Foreign exchange exposures in balance sheet items are hedged through offsetting balances or derivatives.

As of December 31, ~~2008,~~2009, outstanding foreign exchange derivatives hedging transaction exposures had a ~~negative~~positive net market value of SEK ~~2.9 (positive 0.1)~~0.3 (negative 2.9) billion. The market value is partly deferred in the hedge reserve in ~~equity~~OCI to offset the gains/losses on hedged future sales in foreign currency. ~~The remaining negative balance corresponds to the change in value of trade receivable balances being remeasured at higher rates compared to the exchange rates prevailing when originated.~~

Cash flow hedges

The purpose of hedging future cash flows is to ~~protect operating margin and~~ reduce volatility in the income statement. Hedging is done by selling or buying foreign currencies against the functional currency of the hedging entity using FX forwards.

Hedging is done based on a rolling 12-month exposure forecast. Ericsson uses a layered hedging approach, where the closest quarters are hedged to a higher degree than later quarters. Each consecutive quarter is hereby hedged on several occasions and is covered by an aggregate of hedging contracts initiated at various points in time, which supports the objective of reducing volatility in the income statement from changes in foreign exchange rates.

Translation exposure in net assets

Ericsson has many subsidiaries operating outside Sweden with other functional currencies than SEK. The results and net assets of such companies are exposed to exchange rate fluctuations, which affect the consolidated income statement and balance sheet when translated to SEK. Translation risk related to forecasted results from foreign operations ~~cannot~~can not be hedged, but net assets can be addressed by hedging.

Translation exposure in foreign subsidiaries is hedged according to the following policy established by the Board of Directors:

Translation risk related to net assets in foreign subsidiaries is hedged up to 20 percent in selected companies. The translation differences reported in ~~equity~~OCI during ~~2008~~2009 were ~~positive,~~negative, SEK ~~8.5~~1.4 billion, including hedging ~~loss~~gain of SEK ~~0.7~~0.6 billion.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Net investment hedges~~

The purpose of net investment hedges is to protect the value in SEK of net investments in foreign entities from changes in the relevant foreign exchange rates. Hedging is done selling the relevant foreign currency against SEK using FX forwards.

~~INTEREST RATE RISK~~Interest rate risk

Ericsson is exposed to interest rate risk through market value fluctuations in certain balance sheet items and through changes in interest revenues and expenses. The net cash position was SEK ~~34.7 (24.3)~~36.1 (34.7) billion at the end of ~~2008,~~2009, consisting of cash, cash equivalents and short-term investments of SEK ~~75.0 (57.7)~~76.7 (75.0) billion and interest-bearing liabilities and post-employment benefits of SEK ~~40.4 (33.4)~~40.7 (40.4) billion.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Ericsson manages the interest rate risk by (i) matching fixed and floating interest rates in interest-bearing balance sheet items and (ii) avoiding significant fixed interest rate exposure in Ericsson’s net cash position. The policy is that interest-bearing assets shall have an average interest duration between 10 and 14 months and interest-bearing liabilities an average interest duration shorter than 6 months, taking derivative instruments into consideration. Treasury has a mandate to deviate from the asset management benchmark given by the Board and take FX positions up to an aggregate risk of VaR SEK 30 m. given a confidence level of 99 percent and a 1-day horizon.

As of December 31, ~~2008, 87 (92)~~2009, 88 (87) percent of Ericsson’s interest-bearing liabilities and ~~100~~61 (100) percent of Ericsson’s interest-bearing assets had floating interest rates, i.e. interest periods of less than 12 months.

When managing the interest rate exposure, Ericsson uses derivative instruments, such as interest rate swaps. Derivative instruments used for converting fixed rate debt into floating rate debt are designated as fair value hedges.

Fair value hedges

The purpose of fair value hedges is to hedge the variability in the fair value of fixed-rate debt (issued bonds) from changes in the relevant benchmark yield curve for its entire term by converting fixed interest payments to a floating rate (e.g. STIBOR or LIBOR) by using interest rate swaps (IRS). The credit risk/spread is not hedged.

The fixed leg of the IRS is matched against the cash flows of the hedged bond. Hereby the fixed-rate bond/debt is converted into a floating-rate debt in accordance with the policy.

~~SENSITIVITY ANALYSIS~~OUTSTANDING DERIVATIVES


	2009			2008
Fair value	Asset		Liability	Asset		Liability
Currency derivatives
Maturity within 3 months	580		500	2,671		2,489
Maturity between 3 and 12 months	910		423	1,639		4,022
Maturity 1 to 3 years	90		44	40		589
Maturity 3 to 5 years	84		—	—		—
Maturity more than 5 years	3		—	—		—
Total currency derivatives	1,666	¹⁾	967	4,350	¹⁾	7,100
of which designated in cash flow hedge relations	96		—	—		3,503
of which designated in net investment hedge relations	—		62	8		179

Interest rate derivatives
Maturity within 3 months	—		—	—		—
Maturity between 3 and 12 months	28		40	315		121
Maturity 1 to 3 years	49		151	129		25
Maturity 3 to 5 years	175		40	105		—
Maturity more than 5 years	685		58	711		53
Total interest rate derivatives	937	¹⁾	289	1,260	¹⁾	199
of which designated in fair value hedge relations	845		—	1,152		—

1)	Of which 843 (2,814) million is reported as non-current assets.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Sensitivity analysis

Ericsson uses the VaR methodology to measure foreign exchange and interest rate risks in portfolios managed by Treasury. This statistical method expresses the maximum potential loss that can arise with a certain degree of probability during a certain period of time. For the VaR measurement, Ericsson has chosen a probability level of 99 percent and a 1-day time horizon. The daily VaR measurement uses market volatilities and correlations based on historical daily data (one year).

The average VaR calculated for ~~2008~~2009 was for the interest rate mandate SEK ~~20.5 (16.1)~~14.3 (20.5) million and for the transaction exposure mandate SEK ~~14.4 (13.5)~~13.9 (14.4) million. No VaR-limits were exceeded during ~~2008.~~

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~2009.

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~FINANCIAL CREDIT RISK~~Financial credit risk

Financial instruments carry an element of risk in that counterparts may be unable to fulfill their payment obligations. This exposure arises in the investments in cash, cash equivalents, short-term Investments and from derivative positions with positive unrealized results against banks and other counterparties.

Ericsson mitigates these risks by investing cash primarily in well-rated securities such as treasury bills, commercial papers, and mortgage covered bonds with short-term ratings of at least A-1/P-1 and long-term ratings of AAA. Separate credit limits are assigned to each counterpart in order to minimize risk concentration. We have had no sub-prime exposure in our investments. All derivative transactions are covered by ISDA netting agreements to reduce the credit risk. No credit losses were incurred during ~~2008,~~2009, neither on external investments nor on derivative positions.

At December 31, ~~2008,~~2009, the credit risk in financial cash instruments was equal to the instruments’ carrying value. Credit exposure in derivative instruments was SEK ~~5.6 (1.6)~~2.6 (5.6) billion.

~~LIQUIDITY RISK~~Liquidity risk

Liquidity risk is that Ericsson is unable to meet its short-term payment obligations due to insufficient or illiquid cash reserves.

Ericsson maintains sufficient liquidity through centralized cash management, investments in highly liquid interest-bearing securities, and by having sufficient committed credit lines in place to meet potential funding needs. For information about contractual obligations, please see ~~the Board of Directors’ Report.~~Note C33, “Contractual obligations”. The current cash position is deemed to satisfy all short-term liquidity requirements.

During ~~2008,~~2009, cash and bank and short-term investments increased by SEK ~~17.3~~1.7 billion to SEK ~~75.0~~76.7 billion. The increase was mainly due to positive operating cash ~~flow and issuance of non-current debt.~~flow.

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS


	Remaining time to maturity					Remaining time to maturity
(SEK billion)	< 3 months	< 1 year	1–5 years	>5 years	Total	< 3 months	< 1 year	1–5 years	>5 years	Total
2009						31.8	2.6	34.4	7.9	76.7
2008	43.5	23.7	5.9	1.9	75.0	43.5	23.7	5.9	1.9	75.0
2007	29.8	18.0	8.9	1.0	57.7

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The instruments are either classified as held for trading or as assets available for sale with maturity less than one year and therefore short-term investments. Cash, Cash Equivalents and short-term investments are mainly held in SEK unless off-set by EUR-funding.

~~REFINANCING RISK~~Refinancing risk

Refinancing risk is the risk that Ericsson is unable to refinance outstanding debt at reasonable terms and conditions, or at all, at a given point in time.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

REPAYMENT SCHEDULE OF LONG-TERM ~~BORROWINGS~~BORR OWINGS¹⁾


Nominal amount (SEK billion)	Current maturities of long- term debt	Notes and bonds (non-current)	Liabilities to financial institutions (non-current)	Total	Current maturities of long- term debt	Notes and bonds (non-current)	Liabilities to financial institutions (non-current)	Total
2009	3.7	—	0.1	3.8
2010	—	5.1	0.2	5.3	0.5	—	—	0.5
2011	—	—	0.1	0.1	—	—	0.6	0.6
2012	—	3.5	0.1	3.6	—	3.5	—	3.5
2013	—	—	0.1	0.1	—	6.2	—	6.2
2014	—	4.1	—	4.1	—	3.9	0.1	4.0
2015	—	—	4.0	4.0	—	—	4.0	4.0
2016	—	—	—	—	—	4.5	—	4.5
2017	—	5.5	—	5.5	—	5.2	0.1	5.3
2018					—	—	—	—

Total	3.7	18.2	4.6	26.5	0.5	23.3	4.8	28.6

1)	Excluding finance leases reported in Note C27, “Leasing”.

Debt financing is mainly carried out through borrowing in the Swedish and international debt capital markets.

Bank financing is used for certain subsidiary funding and to obtain committed credit facilities.

FUNDING PROGRAMS


	Amount	Utilized	Unutilized	Amount	Utilized	Unutilized
Euro Medium-Term Note program (USD m.)	5,000	2,730	2,270	5,000	3,158	1,842
Euro Commercial Paper program (USD m.)	1,500	—	1,500	1,500	—	1,500
Swedish Commercial Paper program (SEK m.)	5,000	—	5,000	5,000	—	5,000
Long-term Committed Credit facility (USD m.)	2,000	—	2,000	2,000	—	2,000
European Investment Bank (SEK m.)	4,000	4,000	—	4,000	4,000	—
Indian Commercial Paper program (INR m.)	5,000	200	4,800	5,000	4,000	1,000

At year-end, Ericsson’s ~~creditratings~~credit ratings remained at Baa1 (Baa1) by Moody’s and BBB+ (BBB+) by Standard & Poor’s, both considered to be “Solid Investment Grade”.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL ~~INSTRUMENTS CARRIED AT OTHER THAN FAIR VALUE~~STATEMENTS—(Continued)

Financial instruments carried at other than fair value

The fair value of the majority of the Company’s financial instruments are determined based on quoted market prices or rates. In the following tables, carrying amounts and fair values of financial instruments that are carried in the financial statements at other than fair values are presented. Assets valued at fair value through profit or loss showed a net ~~loss~~gain of SEK ~~0,3~~2.1 billion. For further information about valuation principles, please see Note C1, “Significant accounting policies”.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~FINANCIAL INSTRUMENTS, CARRYING AMOUNTS~~

SEK billion
Customer
finance
C14 Trade
receivables
C14 Short-term
investments Cash and
cash
equivalents Borrowings
C19 Trade
payables
C22 Other
financial
assets
C12 Other
current
receivables
C15 Other
current
liabilities
C21 2008 2007
Assets at fair value through profit or loss
37.2 8.9 2.8 -7.3 41.6 39.1
Loans and receivables
2.8 75.9 4.2 4.5 87.4 67.8
Available for sale assets
0.3 0.3 1.1
Financial liabilities at amortized cost
-30.5 -23.5 -54.0 -44.6

Total
2.8 75.9 37.2 13.1 -30.5 -23.5 4.8 2.8 -7.3 75.3 63.4

FINANCIAL INSTRUMENTS CARRIED AT OTHER THAN FAIR VALUE¹⁾


	Carrying amount		Fair value		Carrying amount		Fair value
SEK billion	2008	2007	2008	2007	2009	2008	2009	2008
Current maturities of non-current borrowings	3.9	2.9	4.0	3.1	0.7	3.9	0.7	4.0
Notes and bonds	18.9	19.4	15.9	19.4	23.8	18.9	22.8	15.9
Other borrowings non-current	4.6	—	3.7	—	4.8	4.6	4.0	3.7

Total	27.4	22.3	23.6	22.5	29.3	27.4	27.5	23.6

1)	Excluding finance leases reported in Note C27, “Leasing”.

Financial instruments excluded from the tables, such as trade receivables and payables, are carried at amortized cost which is deemed to be equal to fair value. When a market price is not readily available and there is insignificant interest rate exposure affecting the value, the carrying value is considered to represent a reasonable estimate of fair value.

~~MARKET PRICE RISK IN OWN SHARES AND OTHER LISTED EQUITY INVESTMENTS~~Market price risk in own shares and other listed equity investments

Risk related to our own share price

Ericsson is exposed to the development of its own share price through stock option and stock purchase plans for ~~employees.~~employees and synthetic share-based compensations to the Board of Directors. The obligation to deliver shares, or pay compensation amounts, under these plans is covered by holding Ericsson Class B shares as treasury stock and warrants for issuance of new Ericsson Class B ~~shares.~~shares or provisions. An increase in the share price will result in social security charges, which represents a risk to both income and cash flow. The cash flow exposure is fully hedged through the holding of Ericsson Class B shares as treasury stock to be sold to generate funds to cover also social security payments, and through the purchase of call options on Ericsson Class B shares. For further information about the stock option and stock purchase plans, please see note C29, “Information Regarding Members of the Board of Directors, the Management and Employees”.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FINANCIAL INSTRUMENTS, CARRYING AMOUNTS


SEK billion	Customer finance C14	Trade receivables C14	Short-term investments	Cash equivalents	Borrowings C19	Trade payables C22	Other financial assets C12	Other current receivables C15	Other current liabilities C21	2009	2008
Assets at fair value through profit or loss			53.9	1.6				1.8	–1.3	56.0	41.6
Loans and receivables	2.3	66.4		2.8			2.2			73.7	87.4
Available for sale assets										—	0.3
Financial liabilities at amortized cost					–32.1	–18.9				–51.0	–54.0

Total	2.3	66.4	53.9	4.4	–32.1	–18.9	2.2	1.8	–1.3	78.7	75.3

C21 OTHER CURRENT LIABILITIES


	2008	2007	2009	2008
Income tax liabilities	2,213	1,126	1,890	2,213
Advances from customers	4,412	3,419	4,903	4,412
Liabilities to associated companies	93	49
Liabilities to associated companies and joint ventures			152	93
Accrued interest	421	466	378	421
Accrued expenses, of which	24,289	21,369	29,957	24,289
employee related	*10,369*	9,443	*10,137*	10,369
other¹⁾	*13,920*	11,926	*19,820*	13,920
Deferred revenues	9,204	5,961	8,267	9,204
Derivatives with a negative value	7,299	1,210
Other²⁾	13,101	11,395
Derivatives with a negative value²⁾			1,255	7,299
Other³⁾			5,727	13,101

Total	61,032	44,995	52,529	61,032

1)	Major balance relates to accrued expenses for customer projects.

2)	See Note C20, “Financial Risk Management and Financial Instruments”.

3)	Includes items such as VAT and withholding tax payables, social security payables and other payroll deductions, and liabilities for ~~delivered~~ goods received where invoice is not yet received.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C22 TRADE PAYABLES


	2008	2007	2009	2008
Payables to associated companies and joint ventures	83	90	1,186	83
Other	23,421	17,337	17,678	23,421

Total	23,504	17,427	18,864	23,504

C23 ASSETS PLEDGED AS COLLATERAL


	2008	2007	2009	2008
Assets pledged as collateral	—	1,639
Chattel mortgages	149	130	167	149
Bank deposits	267	230	383	267

Total	416	1,999	550	416

C24 CONTINGENT LIABILITIES


	2008	2007	2009	2008
Contingent liabilities	1,080	1,182	1,245	1,080

Total	1,080	1,182	1,245	1,080

Contingent liabilities assumed by Ericsson include guarantees of loans to other companies of SEK ~~72 (73)~~76 (72) million. Ericsson has SEK ~~568 (492)~~542 (568) million issued to guarantee the performance of a third party. All ongoing legal and tax proceedings have been evaluated, their potential economic outflows and probability estimated and necessary provisions made.

Financial guarantees for third party amounted to SEK 52 million as of December 31, 2009. Maturity date for major part of the issued guarantees occurs in 2018 at latest.

~~ERICSSON ANNUAL REPORT ON FORM 20-F 2008~~

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

In addition to the above, Ericsson has issued guarantees for a long-term loan granted to Sony Ericsson Mobile Communications AB (SEMC) with a maximum amount of SEK 3,606 million. The parent companies of Ericsson and Sony Corporation have issued guarantees for this loan on a 50/50 basis, without joint responsibility. Ericsson’s part thus amounted to SEK 1,803 million. As of December 31, 2009, Ericsson’s part of the principal amount outstanding amounted to SEK 779 million inclusive of accrued interest SEK 6 million. Maturity date for the maximum amount of the issued guarantees occurs in 2011 (SEK 1,030 million) and 2010 (SEK 773 million). See also Note C30, “Related Party Transactions”.

C25 STATEMENT OF CASH FLOWS

Interest paid in ~~2008~~2009 was SEK 772 million (SEK 1,689 million ~~(SEK~~in 2008, SEK 1,513 million in ~~2007, SEK 1,353 million in 2006)~~2007) and interest received was SEK 1,900 million (SEK 2,375 million ~~(SEK~~in 2008, SEK 1,864 million in ~~2007, SEK 1,539 million in 2006)~~2007). Taxes paid, including withholding tax, were SEK 4,427 million (SEK 4,274 million ~~(SEK~~in 2008, SEK 5,116 million in ~~2007,~~2007).

Cash and cash equivalents includes cash of SEK ~~3,649~~18,372 million (SEK 28,939 million in ~~2006)~~2008) and temporary investments of SEK 4,426 million (SEK 8,874 million in 2008).

For more information regarding the disposition of cash and cash equivalents and unutilized credit commitments, see Note C20, “Financial Risk Management and Financial Instruments”.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cash restricted due to currency ~~restrictions~~regulations or other legal restrictions in certain countries amounted to SEK 8,907 million (SEK 8,197 million ~~(SEK~~in 2008, SEK 5,797 million in ~~2007, SEK 5,794 million in 2006)~~2007).

~~In 2008 the divestment of shares in Symbian, with a cash flow effect of SEK 1,256 million, is included in divestments in subsidiaries and other operations.~~

ADJUSTMENTS TO RECONCILE NET INCOME TO CASH


	2008	2007	2006	2009	2008	2007
Property, plant and equipment
Depreciation	3,108	3,121	3,007	3,550	3,108	3,121
Impairment losses/reversals of impairments	-3	-207	30	–48	–3	–207

Total	3,105	2,914	3,037	3,502	3,105	2,914

Intangible assets
Amortization
Capitalized development expenses	1,726	2,371	2,277	647	1,726	2,371
Intellectual Property Rights, brands and other intangible assets	3,280	3,062	1,960	3,562	3,280	3,062

Total amortization	5,006	5,433	4,237	4,209	5,006	5,433

Impairments
Capitalized development expenses	562	16	242	157	562	16
Intellectual Property Rights, brands and other intangible assets				4,255	–	–

Total	5,568	5,449	4,479	8,621	5,568	5,449

Total depreciation, amortization and impairment losses on property, plant and equipment and intangible assets	8,673	8,363	7,516	12,123	8,673	8,363

Taxes	1,032	1,119	4,282	–1,011	1,032	1,119
Dividends from joint ventures/associated companies	3,863	4,223	1,262
Undistributed earnings in joint ventures/associated companies	291	-5,636	-4,233
Dividends from joint ventures/associated companies¹⁾				70	3,863	4,223
Undistributed earnings in joint ventures/associated companies¹⁾				6,013	291	–5,636
Gains/losses on sales of investments and operations, intangible assets and
PP&E, net	-1,210	-254	-2,815
Other non-cash items¹⁾	1,669	-643	48
PP&E, net²⁾				–910	–1,210	–254
Other non-cash items^{2) 3)}				571	1,669	–643

Total adjustments to reconcile net income to cash	14,318	7,172	6,060	16,856	14,318	7,172

1)	See also note C12, “Financial Assets, Non-Current”.

2)	See also note C26, “Business Combinations”.

3)	Refers mainly to unrealized foreign exchange, gains/losses on financial instruments.

ACQUISITIONS/DIVESTMENTS OF SUBSIDIARIES AND OTHER OPERATIONS


2009	Acquisitions	Divestments
Cash flow from business combinations¹⁾	–9,633	1,239
Capital contribution to joint venture	–9,688	–

Total	–19,321	1,239

1)	See also note C26, “Business Combinations”.

ERICSSON ANNUAL REPORT ON FORM 20-F ~~2008~~2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

C26 BUSINESS COMBINATIONS

~~ACQUISITIONS AND DIVESTMENTS~~Acquisitions and divestments

Acquisitions


	2008	2007	2006	2009	2008	2007
Intangible assets	-209	11,627	15,648	5,832	–209	11,627
Property, plant and equipment	—	325	1,257	297	—	325
Goodwill	-882	16,917	163	3,534	–882	16,917
Other assets	887	4,266	4,422	1,235	887	4,266
Provisions, including post-employment benefits	—	-127	-812	—	—	–127
Other liabilities	278	-6,227	-2,689	–1,270	278	–6,227
Purchase of minority holdings	—	45	89	—	—	45
Cash and cash equivalents	—	2,387	1,781	5	—	2,387

Total purchase price	74	29,213	19,859	9,633	74	29,213

Less:
Cash and cash equivalents	—	2,387	1,781	—	—	2,387
Consideration payable	—	534	—	—	—	534

Cash flow effect	74	26,292	18,078	9,633	74	26,292

In ~~2008,~~2009, Ericsson made acquisitions with a cash flow effect amounting to SEK 9,633 million (SEK 74 million ~~(SEK 26,292~~in 2008), primarily:

Nortel:On July 25, the Company announced that it had entered into an asset purchase agreement to acquire the parts of the Carrier networks division of Nortel relating to CDMA and LTE technology. The purchase is structured as an asset acquisition deal at a cash purchase price of USD 1.18 billion on cash and debt free basis. The acquisition strengthens Ericsson’s ability to serve North America’s leading wireless operators in the evolution to LTE. Nortel employs approximately 2,500 persons. Net sales for acquired Nortel business amounted to approximately SEK 2,711 million for the period November 13–December 31, 2009. The acquired Nortel business had a positive impact on the result. The main reasons for that part of the acquisition costs are recognized as goodwill, representing 30 percent of total assets acquired, are that future synergies are estimated and also the value of the acquired assembled work force. Transaction costs for the acquisition amounted to SEK 96 million.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NORTEL BUSINESS


Net assets acquired	Book value	Fair value adjustments	Fair value
Net assets acquired	Book value	Fair value adjustments	Fair value
Intangible assets
Intellectual property rights	—	4,979	4,979
Customer relationships	—	811	811
Goodwill	—	2,957	2,957
Other assets and liabilities
Inventory	187	—	187
Property, plant and equipment	261	—	261
Other assets	392	—	392
Other liabilities	–1,242	—	–1,242

Total purchase price			8,345

Less:
Cash and cash equivalents	—	—	—

Cash flow effect			8,345

The determination of purchase price allocation and fair values of assets acquired and liabilities assumed is based on preliminary appraisal; therefore, these values may be subject to adjustments.

Bizitek:On May 28, the Company announced that it has acquired all shares in ~~2007).~~Bizitek, a Turkish systems integrator of business support systems. With this acquisition Ericsson will strengthen its local R&D force as well as its leadership in the field of systems integration. The acquisition gives Ericsson an additional competence to provide end-to-end solutions in business support systems for charging, provisioning, billing and customer relations management. The purchase price was TTL 5,840 million. All 116 employees were transferred to Ericsson.

Elcoteq:On June 17, the Company announced the purchase of Elcoteq’s manufacturing operations in Tallinn, Estonia, to secure manufacturing capacity. Elcoteq SE is a leading electronics manufacturing Services Company in the communications technology field. The purchase price was EUR 30 million, mainly relating to inventory and some minor assets. The agreement includes transfer of about 1,200 employees.

LHS:On July 3, the Company announced that it has acquired additional shares in LHS, thereby increasing its ownership in the German company to 99.83 percent. In addition goodwill increased by SEK 560 million.

ERICSSON ANNUAL REPORT ON FORM 20-F 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

OTHER


Net assets acquired	Book value	Fair value adjustments	Fair value
Intangible assets
Customer relationships	—	42	42
Goodwill	—	577	577
Other assets and liabilities
Inventory	298	—	298
Property, plant and equipment	36	—	36
Other assets	358	—	358
Cash and cash equivalents	5	—	5
Other liabilities	–28	—	–28

Total purchase price			1,288

Less:
Cash and cash equivalents			—

Cash flow effect			1,288

The determination of purchase price allocation and fair values of assets acquired and liabilities assumed is based on preliminary appraisal; therefore, these values may be subject to minor adjustments.

In 2008 the preliminary purchase price allocations made in 2007 related to acquired businesses were finalized ~~in 2008~~ with the following effects:

Redback:An increase in deferred tax assets of SEK 593 million, goodwill decreased correspondingly.

Tandberg:Decreased intangible assets by SEK 209 million, increased goodwill by SEK 71 million and increased deferred tax assets by SEK 138 million.

~~Entrisphere (included in Other):~~Entrisphere:An increase in deferred tax assets of SEK 130 million, goodwill ~~decreased~~decrease correspondingly.

In addition goodwill decreased by SEK 260 million, regarding Entrisphere, since the additional consideration never was materialized.

In ~~2008, Ericsson~~2009, the Company made divestments with a cash flow effect amounting to SEK 1,239 million (SEK 654 million ~~(SEK 84 million~~ in ~~2007)~~2008), primarily:

~~Enterprise:~~TEMS:~~As per May 1, 2008,~~On March 23, 2009, the ~~PBX solutions~~Company announced an agreement to divest its TEMS branded products business, consisting of tools for air interface monitoring and radio network planning, to Ascom. The purchase price was ~~sold to Aastra Technologies.~~CHF 190 million, excluding net of assets and liabilities. The agreement involves transfer of approximately 300 employees. Sales in ~~2007~~2009 amounted to approximately SEK ~~3.0 billion.~~256 million.

Divestments in 2008 refer mainly to Enterprise PBX solutions business with a gain amounting to SEK 151 million and a Cash flow effect of SEK 637 million.

~~NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~DIVESTMENTS 2007–2009


Title of Each Class		Name of Each Exchange on Which Registered
American Depositary Shares		The NASDAQ Stock Market LLC
B Shares*		The NASDAQ Stock Market LLC


B shares (SEK ~~1.00~~5.00 nominal value)		~~14,823,478,760~~3,011,595,752
A shares (SEK ~~1.00~~5.00 nominal value)		~~1,308,779,918~~261,755,983
C shares (SEK 1.00 nominal value)		0


Form 20-F ~~2008~~2009 Cross Reference Table		i

~~This is Ericsson~~2009 Milestones		1

2009 Snapshot		3

Letter from the CEO		36

Five-Year Summary		510

Letter from the Chairman		611

Board of Directors’ Report		712

Report of Independent Registered Public Accounting Firm		4043

Consolidated Financial Statements		4144

Notes to the Consolidated Financial Statements		4549

Risk Factors		~~135~~142

Forward-Looking Statements		150

Share Information		152

Market Trends		159

Information on the Company		~~143~~167

~~Forward-Looking Statements~~Remuneration		~~164~~

~~Share Information~~		~~166~~180

Shareholder Information		~~172~~

~~Corporate Responsibility~~		~~174~~

~~Remuneration~~		~~179~~188

Corporate Governance Report ~~2008~~2009		~~183~~190

Uncertainties in the Future		~~215~~217

Management’s Report on Internal Control Over Financial Reporting		~~216~~218

Supplemental Information		~~217~~219

Financial Terminology and Glossary		~~230~~234


Form 20-F Item Heading			Location in this document	Page Number
PART I
1	Identity of Directors, Senior Management and Advisers		Not applicable

2	Offer Statistics and Expected Timetable		Not applicable

3	Key Information
	A	Selected Financial Data	Five-Year Summary	5
			~~Supplemental Information~~
			~~Exchange Rates~~	~~217~~10
	B	Capitalization and Indebtedness	Not applicable
	C	Reason for the Offer and Use of Proceeds	Not applicable
	D	Risk Factors	Risk Factors	~~135~~142

4	Information on the Company
	A	History and Development of the Company	Board of Directors’ Report
		~~Summary~~	7
			Business ~~Focus 2008~~Drivers 2009	1013
			Capital Expenditures (capex)	26
			~~Acquisitions and Divestments~~	3224
			Notes to the Consolidated Financial Statements
			Note C26 Business Combinations	~~114~~119
			Note C32 Events After the Balance Sheet Date	~~134~~140
			Information on the Company
			Company History ~~Development~~ and ~~Strategy~~Development	~~143~~167
			General Facts on the Company	~~146~~
			~~Organization~~	~~162~~170
	B	Business Overview	~~Information on the Company~~Board of Directors’ Report	~~143~~
			Sustainability and Corporate Responsibility	35
			Notes to the Consolidated Financial Statements
			Note C3 Segment Information	6770
			Risk Factors	~~135~~142
			~~Board of Directors’ Report~~Information on the Company
			~~Corporate Responsibility~~Company History and Development	34167
			Market Environment	171
			Segment Overview	173
			Supplemental Information
			Operating Results	219
	C	Organizational Structure	Information on the Company
			General Facts on the Company	~~146~~170
			Supplemental Information
			Investments	~~228~~232
	D	Property, Plants and Equipment	Information on the Company
			Sourcing, Manufacturing and ~~Assembly~~Supply and Availability of Materials	~~161~~175


Form 20-F Item Heading			Location in this document	Page Number
			Notes to the Consolidated Financial Statements
			Note C11 Property, Plant and Equipment	84
			Note C27 Leasing	~~118~~124
			Board of Directors’ Report
			Capital Expenditures (capex)	2624

4A	Unresolved staff comments		Not applicable

5	Operating and Financial Review and Prospects
	A	Operating Results	Market Trends	159
			Board of Directors’ Report
			Business Results	1425
			Supplemental Information ~~on the Company~~
			~~Market Trends~~Operating Results	~~147~~219
			Restructuring in 2008 and 2009	221
			Notes to the Consolidated Financial Statements
			Note C1 Significant Accounting Policies	4549
			Note C2 Critical Accounting Estimates and Judgments	6366
			Note C20 Financial Risk Management and Financial Instruments	~~103~~
			~~Supplemental Information~~
			~~Operating Results~~	~~217~~108
			Risk Factors	~~135~~142
			Board of Directors’ Report
			Risk Management	37
	B	Liquidity and Capital Resources	Board of Directors’ Report
			Financial Position	2220
			Cash Flow	2523
			~~Financial~~ Capital Expenditures	24
			Risk Management	2937
			Notes to the Consolidated Financial Statements
			Note C19 Interest-bearing Liabilities	~~102~~107
			Note C20 Financial Risk Management and Financial Instruments	~~103~~108
			Note C25 Statement of Cash Flows	~~113~~117
	C	Research and Development, Patents and Licenses, etc	Five-Year Summary	10
			Board of Directors’ Report
			~~Research and Development~~Financial Results of Operations	3017
			Consolidated Balance Sheet	46
			Information on the Company
			~~Innovation for~~ Technology and Services Leadership	~~145~~
			~~Intellectual Property Rights (IPR) and Licensing~~	~~145~~168
	D	Trend Information	Board of Directors’ Report
			Business Results	14
			~~Information on the Company~~	25
			Market Trends	~~147~~159
	E	Off-Balance Sheet Arrangements	Board of Directors’ Report
			Sony Ericsson Borrowings Guaranteed	23
			Off Balance Sheet Arrangements	2523


FINANCIAL RESULTS IN SHORT

NET SALES		NET CASH

SEK 206.5 billion		SEK 36.1 billion (Dec. 31, 2009)

OPERATING INCOME*

SEK 24.6 billion		EARNINGS PER SHARE

OPERATING MARGIN*		SEK 1.14

12 percent


SEK million	2008		2007		2006		2005		2004
Income statement items
Net sales	208,930		187,780		179,821		153,222		131,972
Operating income	16,252		30,646		35,828		33,084		26,706
Financial net	974		83		165		251		-540
Net income	11,667		22,135		26,436		24,460		17,836

YEAR-END POSITION
Total assets	285,684		245,117		214,940		209,336		186,186
Working capital	99,951		86,327		82,926		86,184		69,268
Capital employed	182,439		168,456		142,447		133,332		115,144
Net cash	34,651		24,312		40,728		50,645		42,911
Property, plant and equipment	9,995		9,304		7,881		6,966		5,845
Stockholders’ equity	140,823		134,112		120,113		101,622		80,445
Minority interests	1,261		940		782		850		1,057
Interest-bearing liabilities and post-employment benefits	40,354		33,404		21,552		30,860		33,643

OTHER INFORMATION
Earnings, per share, basic, SEK	3.54		6.87		8.27		7.67		5.54
Earnings, per share, diluted, SEK	3.52		6.84		8.23		7.64		5.54
Cash dividends per share, SEK	1.85	¹⁾	2.50		2.50		2.25		1.25
Stockholders’ equity per share, SEK	44.21		42.17		37.82		32.03		25.40
Number of shares outstanding (in millions)
—at end of period, basic	3,185		3,180		3,176		3,173		3,167
—average, basic	3,183		3,178		3,174		3,169		3,166
—average, diluted	3,202		3,193		3,189		3,181		3,179
Additions to property, plant and equipment	4,133		4,319		3,827		3,365		2,452
Depreciation of property, plant and equipment	3,108		3,121		3,007		2,804		2,434
Acquisitions/capitalization of intangible assets	1,287		29,838		18,319		2,250		1,950
Amortization of intangible assets	5,006		5,433		4,237		3,269		4,452
Research and development expenses	33,584		28,842		27,533		24,059		23,421
—as percentage of net sales	16.1	%	15.4	%	15.3	%	15.7	%	17.7	%

RATIOS
Operating margin	7.8	%	16.3	%	19.9	%	21.6	%	20.2	%
Operating margin excluding Sony Ericsson	8.0	%	12.5	%	16.7	%	20.1	%	18.6	%
EBITDA margin	11.9	%	20.8	%	24.1	%	25.4	%	25.5	%
Cash conversion	92	%	66	%	57	%	47	%	80	%
Return on equity	8.2	%	17.2	%	23.7	%	26.7	%	24.2	%
Return on capital employed	11.3	%	20.9	%	27.4	%	28.7	%	26.4	%
Equity ratio	49.7	%	55.1	%	56.2	%	49.0	%	43.8	%
Capital turnover	1.2		1.2		1.3		1.2		1.2
Inventory turnover	5.4		5.2		5.2		5.1		5.7
Trade receivables turnover	3.1		3.4		3.9		4.1		4.1
Payment readiness, SEK million	84,917		64,678		67,454		78,647		81,447
—as percentage of net sales	40.6	%	34.4	%	37.5	%	51.3	%	61.7	%

STATISTICAL DATA, YEAR-END
Number of employees	78,740		74,011		63,781		56,055		50,534
—of which in Sweden	20,155		19,781		19,094		21,178		21,296
Export sales from Sweden, SEK million	109,254		102,486		98,694		93,879		86,510


SEK million	2009		Change		2008		2007		2006		2005
Income statement items
Net sales	206,477		–1	%	208,930		187,780		179,821		153,222
Operating income	5,918		–64	%	16,252		30,646		35,828		33,084
Financial net	325		–67	%	974		83		165		251
Net income	4,127		–65	%	11,667		22,135		26,436		24,460

Year-end position
Total assets	269,809		–6	%	285,684		245,117		214,940		209,336
Working capital	99,079		–1	%	99,951		86,327		82,926		86,184
Capital employed	181,680		—		182,439		168,456		142,447		133,332
Net cash	36,071		4	%	34,651		24,312		40,728		50,645
Property, plant and equipment	9,606		–4	%	9,995		9,304		7,881		6,966
Stockholders’ equity	139,870		–1	%	140,823		134,112		120,113		101,622
Minority interests	1,157		–8	%	1,261		940		782		850
Interest-bearing liabilities and post-employment benefits	40,653		—		40,354		33,404		21,552		30,860

Other information
Earnings, per share, basic, SEK	1.15		–68	%	3.54		6.87		8.27		7.67
Earnings, per share, diluted, SEK	1.14		–68	%	3.52		6.84		8.23		7.64
Cash dividends per share, SEK	2.00	¹⁾	8	%	1.85		2.50		2.50		2.25
Stockholders’ equity per share, SEK	43.79		–1	%	44.21		42.17		37.82		32.03
Number of shares outstanding (in millions)
—end of period, basic	3,194		—		3,185		3,180		3,176		3,173
—average, basic	3,190		—		3,183		3,178		3,174		3,169
—average, diluted	3,212		—		3,202		3,193		3,189		3,181
Additions to property, plant and equipment	4,006		–3	%	4,133		4,319		3,827		3,365
Depreciation and write-downs/impairments of property, plant and equipment	3,502		13	%	3,105		2,914		3,038		2,438
Acquisitions/capitalization of intangible assets	11,413		—		1,287		29,838		18,319		2,250
Amortization and write-downs/impairments of intangible assets	8,621		55	%	5,568		5,459		4,479		3,364
Research and development expenses	33,055		–2	%	33,584		28,842		27,533		24,059
—as percentage of net sales	16.0	%	—		16.1	%	15.4	%	15.3	%	15.7	%

Ratios
Operating margin excluding joint ventures	6.5	%	—		8.0	%	12.5	%	16.7	%	20.1	%
Operating margin	2.9	%	—		7.8	%	16.3	%	19.9	%	21.6	%
EBITDA margin	8.7	%	—		11.9	%	20.8	%	24.1	%	25.4	%
Cash conversion	117	%	—		92	%	66	%	57	%	47	%
Return on equity	2.6	%	—		8.2	%	17.2	%	23.7	%	26.7	%
Return on capital employed	4.3	%	—		11.3	%	20.9	%	27.4	%	28.7	%
Equity ratio	52.3	%	—		49.7	%	55.1	%	56.2	%	49.0	%
Capital turnover	1.1		—		1.2		1.2		1.3		1.2
Inventory turnover days	68		—		68		70		71		74
Trade receivables turnover	2.9		—		3.1		3.4		3.9		4.1
Payment readiness, SEK million	88,960		5	%	84,917		64,678		67,454		78,647
—as percentage of net sales	43.1	%	—		40.6	%	34.4	%	37.5	%	51.3	%

Statistical data, year-end
Number of employees	82,493		5	%	78,740		74,011		63,781		56,055
—of which in Sweden	18,217		–10	%	20,155		19,781		19,094		21,178
Export sales from Sweden, SEK million	94,829		–13	%	109,254		102,486		98,694		93,879


~~Summary~~Business Drivers 2009		713
Operational Goals and Results		14
Vision and Strategy		9
~~Business Focus 2008~~		10
~~Goals and Results~~		11
~~Business Results~~		1416
Financial Results of Operations		2117
Financial Position		2220
Cash Flow		23
Business Results		25
Legal and Tax Proceedings		32
Material Contracts		33
Corporate Governance		33
Sustainability and Corporate Responsibility		35
Risk Management		27
~~Other Information~~		29
~~Corporate Responsibility~~		34
~~Corporate Governance~~		3637
Parent Company		3740
~~Post-closing~~Post-Closing Events		3942
Board Assurance		42


SEK billion	Non-IFRS measures 2009		Non-IFRS measures 2008		Percent change		Restructuring charges 2009	Restructuring charges 2008	IFRS 2009		IFRS 2008
Net sales	206.5		208.9		–1	%			206.5		208.9
Cost of sales	–132.1		–132.1		0	%	–4.2	–2.5	–136.3		–134.6

Gross income	74.4		76.8		–3	%	–4.2	–2.5	70.2		74.3
Gross margin %	36.0	%	36.8	%					34.0	%	35.5	%

Operating expenses	–52.9		–56.4		–6	%	–7.1	–4.2	–60.0		–60.6
Operating expenses as % of sales	25.6	%	27.0	%					29.0	%	29.0	%

Other operating income and expenses	3.1		3.0		4	%			3.1		3.0
Operating income before share in earnings of JVs and associated companies	24.6		23.4		5	%	–11.3	–6.7	13.3		16.7
Operating margin % before share in earnings of JVs and associated companies	11.9	%	11.2	%					6.5	%	8.0	%

Share in earnings of JVs and associated companies	–6.1		0.4				–1.3	–0.9	–7.4		–0.4

Operating income	18.5		23.9		–22	%	–12.6	–7.6	5.9		16.3

Operating margin %	9.0	%	11.4	%					2.9	%	7.8	%


Financial income and expense, net									0.3		1.0
Taxes									–2.1		–5.6
Net income									4.1		11.7
EPS diluted (SEK)									1.14		3.52


December 31, SEK billion	2009	2008
ASSETS
Non-current assets, total	87.4	87.2
—of which intangible assets	*48.2*	48.2
—of which property, plant and equipment	*9.6*	10.0
—of which financial assets	*15.3*	14.1
—of which deferred tax assets	*14.3*	14.9
Current assets, total	182.4	198.5
—of which inventory	*22.7*	27.8
—of which trade receivables	*66.4*	75.9
—of which other receivables/financing	*16.6*	19.8
—of which short-term investments, cash and cash equivalents	*76.7*	75.0
Total assets	269.8	285.7

EQUITY AND LIABILITIES
Equity	141.0	142.1
Non-current liabilities	43.3	39.5
—of which post-employment benefits	*8.5*	9.9
—of which borrowings	*30.0*	24.9
—of which other non-current liabilities	*4.8*	4.7
Current liabilities	85.5	104.1
—of which provisions	*12.0*	14.0
—of which current borrowings	*2.1*	5.5
—of which trade payables	*18.9*	23.5
—of which other current liabilities	*52.5*	61.0
Total equity and liabilities¹⁾	269.8	285.7



SEK billion	Net- works		Prof. Services		Multi- media		Total		Percent change
Western Europe	23.8		18.3		2.4		44.6		–14	%
CEMA¹⁾	32.7		12.9		5.1		50.7		–4	%
Asia Pacific	50.5		12.2		3.1		65.8		4	%
Latin America	13.0		5.9		1.1		20.1		–13	%
North America	17.1		6.7		1.6		25.4		41	%
Total	137.1		56.1		13.3		206.5		–1	%

Share of total	66.4	%	27.2	%	6.4	%	100	%
Percent Change	–3	%	15	%	5	%	–1	%


Total SEK billion	IFRS 2008		Restructuring charges	Non-IFRS measures 2008		IFRS 2007
Net sales	208.9		—	208.9		187.8
Cost of sales	-134.6		2.5	-132.1		-114.1

Gross income	74.3		2.5	76.8		73.7
Gross margin %	35.5	%		36.8	%	39.3	%

Operating expenses	-60.6		4.2	-56.4		-52.0
Opex as % of sales	29	%		27	%	28	%

Other operating income and expenses	3.0		—	3.0		1.7
Share in earnings of JV and associated companies	-0.4		0.9	0.5		7.2

Operating income	16.3		7.6	23.9		30.6
Operating margin %	7.8	%		11.4	%	16.3	%

Less share in Sony Ericsson	-0.5		0.9	0.4		7.1

Operating income excl Sony Ericsson	16.8		6.7	23.5		23.5
Operating margin % excl Sony Ericsson	8.0	%		11.3	%	12.5	%


	Payment due by period
(SEK billion)	Total	<1 year	1–3 years	3–5 years	>5 years
Long-term debt²⁾³⁾	27.4	4.4	5.5	3.7	13.8
Capital lease obligations⁴⁾	2.2	0.2	0.4	0.3	1.3
Operating leases⁴⁾	13.9	3.4	4.9	2.7	2.9
Other non-current liabilities	1.6	—	0.1	—	1.5
Purchase obligations⁵⁾	13.1	13.1	—	—	—
Trade Payables	23.5	23.5	—	—	—
Commitments for customer financing⁶⁾	3.8	3.8	—	—	—

Total	85.5	48.4	10.9	6.7	19.5


Amount to be paid to the shareholders		SEK ~~6,005,750,710~~6,546,703,470
Amount to be retained by the Parent Company		SEK ~~35,948,343,168~~35,406,164,930

Total non-restricted equity of the Parent Company		SEK ~~41,954,093,878~~41,952,868,400


Years ended December 31, SEK million	Notes	2008		2007		2006¹⁾
Net sales	C3, C4	208,930		187,780		179,821
Cost of sales		-134,661		-114,059		-104,875

Gross income		74,269		73,721		74,946
Gross margin %		35.5	%	39.3	%	41.7	%

Research and development expenses		-33,584		–28,842		–27,533
Selling and administrative expenses		-26,974		–23,199		–21,422

Operating expenses		-60,558		–52,041		–48,955

Other operating income and expenses	C6	2,977		1,734		3,903
Share in earnings of joint ventures and associated companies	C12	-436		7,232		5,934

Operating income		16,252		30,646		35,828
Operating margin %		7.8	%	16.3	%	19.9	%

Financial income	C7	3,458		1,778		1,954
Financial expenses	C7	-2,484		–1,695		–1,789

Income after financial items		17,226		30,729		35,993

Taxes	C8	-5,559		–8,594		–9,557

Net income		11,667		22,135		26,436

Net income attributable to:
Stockholders of the Parent Company		11,273		21,836		26,251
Minority interest		394		299		185

Other information
Average number of shares, basic (million)²⁾	C9	3,183		3,178		3,174
Earnings per share attributable to stockholders of the Parent Company, basic (SEK)²⁾	C9	3.54		6.87		8.27
Earnings per share attributable to stockholders of the Parent Company, diluted (SEK)²⁾	C9	3.52		6.84		8.23


Business Drivers 2009		13
Operational Goals and Results		14
Vision and Strategy		16
Financial Results of Operations		17
Financial Position		20
Cash Flow		23
Business Results		25
Legal and Tax Proceedings		32
Material Contracts		33
Corporate Governance		33
Sustainability and Corporate Responsibility		35
Risk Management		37
Parent Company		40
Post-Closing Events		42
Board Assurance		42


Amount to be paid to the shareholders		SEK 6,546,703,470
Amount to be retained by the Parent Company		SEK 35,406,164,930

Total non-restricted equity of the Parent Company		SEK 41,952,868,400


December 31, SEK million	Notes	2009	2008
ASSETS
Non-current assets
Intangible assets	C10
Capitalized development expenses		2,079	2,782
Goodwill		27,375	24,877
Intellectual property rights, brands and other intangible assets		18,739	20,587

Property, plant and equipment	C11, C26, C27	9,606	9,995
Financial assets
Equity in joint ventures and associated companies	C12	11,578	7,988
Other investments in shares and participations	C12	256	309
Customer finance, non-current	C12	830	846
Other financial assets, non-current	C12	2,577	4,917
Deferred tax assets	C8	14,327	14,858

		87,367	87,159
Current assets
Inventories	C13	22,718	27,836

Trade receivables	C14	66,410	75,891
Customer finance, current	C14	1,444	1,975
Other current receivables	C15	15,146	17,818

Short-term investments	C20	53,926	37,192
Cash and cash equivalents	C25	22,798	37,813

		182,442	198,525
Total assets		269,809	285,684

EQUITY AND LIABILITIES
Equity
Stockholders’ equity	C16	139,870	140,823
Minority interest in equity of subsidiaries	C16	1,157	1,261

		141,027	142,084
Non-current liabilities
Post-employment benefits	C17	8,533	9,873
Provisions, non-current	C18	461	311
Deferred tax liabilities	C8	2,270	2,738
Borrowings, non-current	C19, C20	29,996	24,939
Other non-current liabilities		2,035	1,622

		43,295	39,483
Current liabilities
Provisions, current	C18	11,970	14,039
Borrowings, current	C19, C20	2,124	5,542
Trade payables	C22	18,864	23,504
Other current liabilities	C21	52,529	61,032

		85,487	104,117
Total equity and liabilities¹⁾		269,809	285,684


January–December, SEK million	Notes	2009	2008	2007
Operating activities
Net income		4,127	11,667	22,135
Adjustments to reconcile net income to cash	C25	16,856	14,318	7,172

		20,983	25,985	29,307

Changes in operating net assets
Inventories		5,207	–3,927	–445
Customer finance, current and non-current		598	549	365
Trade receivables		7,668	–11,434	–7,467
Trade payables		–3,522	4,794	–1,558
Provisions and post-employment benefits		–2,950	3,830	–4,401
Other operating assets and liabilities, net		–3,508	4,203	3,409

		3,493	–1,985	–10,097

Cash flow from operating activities		24,476	24,000	19,210

Investing activities
Investments in property, plant and equipment	C11	–4,006	–4,133	–4,319
Sales of property, plant and equipment		534	1,373	152
Acquisitions of subsidiaries and other operations	C25, C26	–19,321	–74	–26,292
Divestments of subsidiaries and other operations	C25, C26	1,239	1,910	84
Product development	C10	–1,443	–1,409	–1,053
Other investing activities		2,606	944	396
Short-term investments		–17,071	–7,155	3,499

Cash flow from investing activities		–37,462	–8,544	–27,533

Cash flow before financing activities		–12,986	15,456	–8,323

Financing activities
Proceeds from issuance of borrowings		14,153	5,245	15,587
Repayment of borrowings		–9,804	–4,216	–1,291
Sale of own stock and options exercised		69	3	94
Dividends paid		–6,318	–8,240	–8,132
Other financing activities		199	–	–

Cash flow from financing activities		–1,701	–7,208	6,258

Effect of exchange rate changes on cash		–328	1,255	406
Net change in cash		–15,015	9,503	–1,659

Cash and cash equivalents, beginning of period		37,813	28,310	29,969

Cash and cash equivalents, end of period	C25	22,798	37,813	28,310


C1	Significant Accounting Policies	49
C2	Critical Accounting Estimates and Judgments	66
C3	Segment Information	70
C4	Net Sales	75
C5	Expenses by Nature	76
C6	Other Operating Income and Expenses	77
C7	Financial Income and Expenses	77
C8	Taxes	78
C9	Earnings per Share	80
C10	Intangible Assets	81
C11	Property, Plant and Equipment	84
C12	Financial Assets, Non-Current	86
C13	Inventories	88
C14	Trade Receivables and Customer Finance	89
C15	Other Current Receivables	92
C16	Equity and Other Comprehensive Income	93
C17	Post-Employment Benefits	98
C18	Provisions	106
C19	Interest-bearing Liabilities	107
C20	Financial Risk Management and Financial Instruments	108
C21	Other Current Liabilities	116
C22	Trade Payables	117
C23	Assets Pledged as Collateral	117
C24	Contingent Liabilities	117
C25	Statement of Cash Flows	117
C26	Business Combinations	119
C27	Leasing	124
C28	Tax Assessment Values in Sweden	125
C29	Information Regarding Members of the Board of Directors, the Management and Employees	126
C30	Related Party Transactions	137
C31	Fees to Auditors	140
C32	Events after the Balance Sheet Date	140
C33	Contractual Obligations	141


	Finance leases	Operating leases	Finance leases		Operating leases
2009	208	3,429			Operating leases
			Finance leases	Finance leases		Operating leases
	199	2,757		Finance leases		Operating leases
2011	156	2,153	168		2,611
2012	144	1,673	166		2,102
2013	144	984	164		1,270
2014 and later	1,381	2,951
2014			209		935
2015 and later			1186		2,371

Total	2,232	13,947	2,070		12,474

Future finance charges¹⁾	-804	n/a	–676		n/a

Present value of finance lease liabilities	1,428	13,947	1,394		12,474


1.	Remuneration to the Board of Directors	126
2.	Remuneration to the Group Management	127
	Remuneration costs for the Group Management	127
	Remuneration Policy for Group Management	129
3.	Long-Term Variable Remuneration	131
	Stock Purchase Plan	131
	The Key Contributor Retention Plan	131
	The Executive Performance Stock Plan	131
	Stock option plans	132
	Shares for all plans	133
4.	Employee numbers, wages and salaries	135
	Employee numbers	135
	Employee wages and salaries	136


	Board fees	Number of synthetic shares/ portion of Board fee		Value at grant date of synthetic shares allocated 2009 A	Number of previously allocated synthetic shares	Net change in value of allocated synthetic shares¹⁾ B	Committee fees	Total fees paid in cash²⁾ C	Total recognized costs 2009 (A+B+C)
Board member
Michael Treschow	3,750,000	40,747/75	%	2,812,500	38,323.80	+227,763	250,000	1,187,500	4,227,763
Marcus Wallenberg	750,000	2,716/25	%	187,500	2,554.80	+15,153	125,000	687,500	890,153
Sverker Martin–Löf	750,000	0/0	%	—	—	—	—	750,000	750,000
Roxanne S. Austin	750,000	8,149/75	%	562,500	7,664.60	+45,524	250,000	437,500	1,045,524
Sir Peter L. Bonfield	750,000	2,716/25	%	187,500	2,554.80	+15,153	250,000	812,500	1,015,153
Börje Ekholm	750,000	8,149/75	%	562,500	7,664.60	+45,524	125,000	312,500	920,524
Ulf J. Johansson	750,000	8,149/75	%	562,500	7,664.60	+45,524	350,000	537,500	1,145,524
Nancy McKinstry	750,000	5,433/50	%	375,000	7,664.60	+53,904	125,000	500,000	928,904
Anders Nyrén	750,000	0/0	%	—	—	—	125,000	875,000	875,000
Carl-Henric Svanberg	—	—		—	—	—	—	—	—
Employee Representatives
Jan Hedlund	18,000	—			—	—	—	18,000	18,000
Anna Guldstrand	21,000	—			—	—	—	21,000	21,000
Karin Åberg	19,500	—			—	—	—	19,500	19,500
Monica Bergström	19,500	—			—	—	—	19,500	19,500
Kristina Davidsson	21,000	—			—	—	—	21,000	21,000
Pehr Claesson	21,000	—			—	—	—	21,000	21,000

Total	9,870,000	76,059		5,250,000	74,091.80	+448,545	1,600,000	6,220,000	11,918,545


SEK	The President	Other Members of Group Management	Total
Salary	15,981,000	45,672,309	61,653,309
Provisions for annual variable remuneration earned 2009 to be paid 2010	6,226,920	15,137,637	21,364,557
Long-term variable remuneration provision	1,261,476	1,910,875	3,172,351
Pension costs	18,917,620	28,656,277	47,573,897
Other benefits	59,664	2,363,773	2,423,437

Total	42,446,680	93,740,871	136,187,551


As per December 31, 2009 Number of Class B shares	The President	Other Members of Group Management
Stock Purchase Plans 2006, 2007, 2008 and 2009 and Executive Performance Stock Plans 2007, 2008 and 2009	410,123	553,688


Plan	Contribution period	Number of participants at launch	Take-up rate–percent of all employees
Stock Purchase plan 2006	August 2006–July 2007	17,000	29	%
Stock Purchase plan 2007	August 2007–July 2008	19,000	26	%
Stock Purchase plan 2008	August 2008–July 2009	19,000	25	%
Stock Purchase plan 2009	August 2009–July 2010	18,000	25	%


Plan	Base year EPS¹⁾	Target average annual EPS growth range²⁾	Matching share vesting range³⁾	Maximum opportunity as percentage of fixed salary⁴⁾	Percentage vesting



Performance Stock Plan 2004⁵⁾	3.45	5% to 25%	0 to 4 0 to 6	30% 45%	100% 100%
Performance Stock Plan 2005⁶⁾	6.68	3% to 15%	0 to 4 0 to 6	30% 45%	0% 0%
Performance Stock Plan 2006	7.58	3% to 15%	0 to 4 0 to 6 0 to 8	30% 45% 72%	0% 0% 0%
Performance Stock Plan 2007	8.83	5% to 15%	0.67 to 4 1 to 6 1.33 to 8	30% 45% 72%
Performance Stock Plan 2008	4.43	5% to 15%	0.67 to 4 1 to 6 1.33 to 8	30% 45% 72%
Performance Stock Plan 2009	2.90	5% to 15%	0.67 to 4 1 to 6 1.33 to 8	30% 45% 72%


Ongoing plans 2009	Grant/expiry date	Exercise price¹⁾ (SEK)	Vesting period from grant date	Number of participants at grant	Number of participants end of 2009


Stock Option Plan 2002²⁾	11 Nov 2002/11 Nov 2009	39.00	1/3 after 1 year, 1/3 after 2 years, 1/3 after 3 years	12,800	—


Plan (million shares)	Originally designated¹⁾ A	Outstanding beginning of 2009 B	Awarded during 2009 C	Exercised/ matched during 2009 D	Forfeited/ expired during 2009 E	Outstanding end of 2009 F=B+C-D-E		Compensation costs charged during 2009 (MSEK) G
2002 Stock Option Plan	10.8	3.8	—	3.4	0.4	—	²⁾	—
2005 Stock Purchase Plan, Key Contributor and Executive Performance Stock Plans	6.3	3.2	—	2.7	0.5	—		25	⁴⁾
2006 Stock Purchase Plan, Key Contributor and Executive Performance Stock Plans	6.4	4.6	—	1.2	0.1	3.3		126	⁴⁾
2007 Stock Purchase Plan, Key Contributor and Executive Performance Stock Plans	9.7	9.4	—	0.5	0.3	8.6	³⁾	189	⁴⁾
2008 Stock Purchase Plan, Key Contributor and Executive Performance Stock Plans	16.5	3.7	8.3	0.4	0.3	11.3	³⁾	183	⁴⁾
2009 Stock Purchase Plan, Key Contributor and Executive Performance Stock Plans	22.4	—	2.5	—	—	2.5	³⁾	6	⁴⁾

Total	72.1	24.7	10.8	8.2	1.6	25.7		529	⁵⁾


Employees by region	2008	2007
Western Europe¹⁾	41,618	41,517
Central and Eastern Europe, Middle East and Africa	7,976	7,329
Asia Pacific	15,165	13,120
Latin America	8,247	6,547
North America	5,734	5,498

Total²⁾	78,740	74,011


1) Of which Sweden	*20,155*	19,781
2) Of which EU	*43,093*	42,387


Employees per segment	2008	2007
Networks	45,823	44,661
Professional Services	23,244	19,790
Multimedia	9,673	9,560

Total	78,740	74,011


	Female		Male		Percent of total
Under 25 years old	790		2,502		4	%
26–35 years old	6,099		21,757		35	%
36–45 years old	6,730		23,754		39	%
46–55 years old	2,530		10,562		17	%
Over 55 years old	799		3,237		5	%

Percent of total	21	%	79	%	100	%


	2008	2007
Salary and other remuneration	316	266
Of which annual variable remuneration	41	43
Pension costs	36	28


		2009
Related party transactions
Sales		740
Purchases		624
Ericsson’s share of dividends		—

Related party balances
Receivables		244
Liabilities		365