Elektrobit Inc., a subsidiary of Elektrobit Corporation (EB) has entered into settlement with Internal Revenue Service concerning tax treatment of impairment of receivables from TerreStar companies

Stock exchange release

Free for publication on October 9, 2014 at 17.00 pm. (CEST+1)


Elektrobit Inc., a subsidiary of Elektrobit Corporation (EB) has entered into
settlement with Internal Revenue Service (IRS) concerning tax treatment of
impairment of receivables from TerreStar companies

Elektrobit Inc., a subsidiary of Elektrobit Corporation (EB) has entered into
settlement with Internal Revenue Service (IRS) concerning tax treatment of
impairment of receivables from TerreStar companies booked in 2010. Initially IRS
disallowed the deduction taken on Elektrobit Inc.'s federal income tax return.
Elektrobit Inc. appealed the IRS decision to the IRS Office of Appeals that
provided a proposal for a settlement. The parties have now accepted the
proposal.

According to the proposal one half of the USD 13.3 million (EUR 10.5 million as
per exchange rate of October 8, 2014) impairment booked in 2010, i.e. USD 6.6
million (EUR 5.2 million as per exchange rate of October 8, 2014) is deductible
in 2010 taxation and another half is allowed for the tax year ended December
31, 2011 and/or subsequent years.

As a result from the approval of the proposal Elektrobit Inc. will pay IRS USD
1.4 million (EUR 1.1 million as per exchange rate of October 8, 2014) taxes
including interests for fiscal year 2010 and at the same time will submit a
carryback claim of USD 1,3 million (EUR 1.0 million as per exchange rate of
October 8, 2014) for fiscal year 2011. The payment to IRS will happen on the
fourth quarter of 2014 and carryback refund is estimated to be received at the
latest by the end of 2015.

Elektrobit Inc. received on August 28, 2014 a cash payment of USD 1,075,000 (EUR
0.9 million as per exchange rate of October 8, 2014) as full and final
satisfaction of its claim against TerreStar Networks Inc. (additional
information provided in company's stock exchange release, published on August
29, 2014).

The settlement payment received in August formed the full and final satisfaction
of Elektrobit Inc.'s laid and open claims against TerreStar companies in their
reorganization cases. In consequence of receiving full and final settlement
payment and finishing of tax appeal process, EB's activities related to
TerreStar reorganization processes are expected to be concluded. EB will reverse
the remaining EUR 0.3 million provision made for legal and consulting costs. The
reversal of the provision and the EUR 0.9 million settlement payment will have
together approximately EUR 1.2 million non-recurring positive effect on
Elektrobit Corporation's third quarter 2014 operating result.

The above mentioned non-recurring items do not have effect on Elektrobit
Corporation's financial outlook for 2014. EB will report the non-recurring items
and tax items as part of its normal interim reporting.

Oulu, October 9, 2014

Elektrobit Corporation
Jukka Harju
CEO


Further information:

Jukka Harju
CEO
Tel. +358 40 344 5466

Veli-Pekka Paloranta
CFO
Tel. +358 40 344 2793

Distribution:

NASDAQ OMX Helsinki
Principal media

Elektrobit Corporation (EB)

EB creates advanced technology and turns it into enriching end-user experiences.
EB is specialized in demanding embedded software and hardware solutions for
wireless and automotive industries. The net sales in 2013 totaled EUR 199.3
million and operating profit was EUR 8.1 million. Elektrobit Corporation is
listed on NASDAQ OMX Helsinki. www.elektrobit.com

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