Report by the Board of Directors

Research and Development

EB continued its investments in R&D in the automotive software products and tools in the Automotive Business Segment, and in products and product platforms for the defense and public safety markets in the Wireless Business Segment.

The total R&D investments for Continuing Operations during January-December 2013 were EUR 18.5 million (restated EUR 22.0 million, 1-12 2012), equaling 9.3% of the net sales (restated 12.6%, 1-12 2012). The share of R&D investments in the Automotive Business Segment was EUR 14.3 million (restated EUR 17.9 million, 1-12 2012) and in the Wireless Business Segment in Continuing Operations EUR 4.2 million (EUR 4.1 million, Continuing Operations, 1-12 2012).

EUR 0.0 million of R&D investments of the reporting period were capitalized (EUR 2.9 million, 1-12 2012). The amount of capitalized R&D investments at the end of December 2013 was EUR 12.0 million (EUR 13.5 million, 31.12.2012). A significant part of these capitalizations is related to customer agreements of the Automotive Business Segment, where future license fees, based on the actual car delivery volumes, are expected to accumulate in the coming years. Depreciations of R&D investments were EUR 1.6 million during the reporting period (EUR 0.9 million, 1-12 2012).

The total negative effect, caused from research and development investments, their capitalizations and their depreciation, on EBs income statement in 2013 was EUR 20.1 million (EUR 19.9 million, 2012).