REG - Telefon AB Ericsson - Ericsson makes provision in Q4 2022

Telefonaktiebolaget LM EricssonAnnouncement

12/01/2023 13:30

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RNS Number : 5766M  Telefonaktiebolaget Lm Ericsson  12 January 2023

Ericsson makes provision in fourth quarter of 2022 in relation to potential
DPA breach resolution with U.S. Department of Justice

Ericsson (NASDAQ: ERIC) announces that it is now in a position to make a
provision of SEK 2.3 billion (approx. USD 220 million) in relation to a
potential resolution with the U.S. Department of Justice (DOJ) regarding
previously announced, non-criminal, alleged breaches under its 2019 Deferred
Prosecution Agreement (DPA). Ericsson has not reached a resolution with the
DOJ regarding these alleged breaches and discussions are ongoing.

This charge, which will be booked in the Company's fourth quarter 2022
financial results, will be SEK 2.3 billion (approx. USD 220 million). The
Company believes that this is a sufficiently reliable estimate of the
financial penalty associated with any potential breach resolution, and this
provision also includes estimated expenses for the previously announced
extended monitorship. The provision will be booked as Other Operating Expenses
in the income statement of Segment Other.

The Company's internal investigation and its cooperation with authorities in
relation to the allegations in the 2019 Iraq-related internal investigation
report remain open and ongoing.

Since 2019, Ericsson has taken significant remedial measures, overseen by the
Board of Directors. These include enhancing its group-wide approach to risk
management and strengthening its compliance program and internal controls. The
Company agreed in December 2022 to extend its independent compliance
monitorship until June 2024 to further our efforts to embed best-in-class
compliance, risk management and internal controls frameworks across the
organization.

Background

In 2019, Ericsson entered into the DPA in order to resolve past (prior to
2017) Foreign Corrupt Practices Act (FCPA) violations relating to misconduct
in certain countries. The 2019 agreement provided that, in the event of any
breach of its ongoing DPA obligations, the Company could be prosecuted for the
historic FCPA violations covered by the DPA.

As announced in October 2021 and March 2022, the DOJ notified Ericsson that it
failed to provide documents and information to the DOJ in a timely manner and
did not adequately report to the DOJ certain information relating to a 2019
Iraq-related internal investigation.

The DOJ has not alleged or charged Ericsson with any new criminal misconduct
since the start of the DPA.

 

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MORE INFORMATION AT:

Ericsson Newsroom (https://www.ericsson.com/en/newsroom)

media.relations@ericsson.com  (+46 10 719 69 92)

investor.relations@ericsson.com  (+46 10 719 00 00)

Contact person

Peter Nyquist, Head of Investor Relations

Phone: +46 705 75 29 06

E-mail: peter.nyquist@ericsson.com (mailto:peter.nyquist@ericsson.com)

Additional contacts

Stella Medlicott, Senior Vice President, Marketing and Corporate Relations

Phone: +46 730 95 65 39

E-mail: media.relations@ericsson.com (mailto:media.relations@ericsson.com)

Media

Kirsty Fitzgibbon, Vice President, Head of External Relations, acting

Phone: +46 730 95 81 57

E-mail: media.relations@ericsson.com (mailto:media.relations@ericsson.com)

Kristoffer Edshage, Head of Financial and Regulatory Communication

Phone: +46 722 20 44 46

E-mail: media.relations@ericsson.com (mailto:media.relations@ericsson.com)

Media Relations

Phone: +46 10 719 69 92

E-mail: media.relations@ericsson.com (mailto:media.relations@ericsson.com)

ABOUT ERICSSON:

Ericsson enables communications service providers and enterprises to capture
the full value of connectivity. The company's portfolio spans the following
business areas: Networks, Cloud Software and Services, Enterprise Wireless
Solutions, Global Communications Platform, and Technologies and New
Businesses. It is designed to help our customers go digital, increase
efficiency and find new revenue streams. Ericsson's innovation investments
have delivered the benefits of mobility and mobile broadband to billions of
people globally. Ericsson stock is listed on Nasdaq Stockholm and on Nasdaq
New York. www.ericsson.com (http://www.ericsson.com)

Forward-looking statements

This release includes forward-looking statements, including statements
reflecting management's current views relating to the growth of the market,
future market conditions, future events, financial condition, and expected
operational and financial performance, including, in particular the following
risks and uncertainties:

- Our ability to reach a mutually agreeable resolution with DOJ regarding
alleged DPA breaches

- Any such potential resolution could involve a financial penalty that differs
materially from the provision

- Our ability to reach a full and final resolution that covers all past
conduct, including allegations of past conduct in Iraq

- Our goals, strategies, planning assumptions and operational or financial
performance expectations

- Industry trends, future characteristics and development of the markets in
which we operate

- Our future liquidity, capital resources, capital expenditures, cost savings
and profitability

- The expected demand for our existing and new products and services as well
as plans to launch new products and services including research and
development expenditures

- The ability to deliver on future plans and to realize potential for future
growth

- The expected operational or financial performance of strategic cooperation
activities and joint ventures

- The time until acquired entities and businesses will be integrated and
accretive to income

- Technology and industry trends including the regulatory and standardization
environment in which we operate, competition and our customer structure.

The words "believe," "expect," "foresee," "anticipate," "assume," "intend,"
"likely," "projects," "may," "could," "plan," "estimate," "forecast," "will,"
"should," "would," "predict," "aim," "ambition," "seek," "potential,"
"target," "might," "continue," or, in each case, their negative or variations,
and similar words or expressions are used to identify forward-looking
statements. Any statement that refers to expectations, projections or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements.

We caution investors that these statements are subject to risks and
uncertainties many of which are difficult to predict and generally beyond our
control that could cause actual results to differ materially from those
expressed in, or implied or projected by, the forward-looking information and
statements.

Important factors that could affect whether and to what extent any of our
forward-looking statements materialize include, but are not limited to, the
factors described in the section "Risk Factors" in the latest interim report,
and in "Risk Factors" in the Annual Report 2021.

These forward-looking statements also represent our estimates and assumptions
only as of the date that they were made. We expressly disclaim a duty to
provide updates to these forward-looking statements, and the estimates and
assumptions associated with them, after the date of this release, to reflect
events or changes in circumstances or changes in expectations or the
occurrence of anticipated events, whether as a result of new information,
future events or otherwise, except as required by applicable law or stock
exchange regulations.

This information is information that Telefonaktiebolaget LM Ericsson is
obliged to make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency of the contact
person set out above at 2:00 pm CET on January 12, 2023.

 

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