iesy Repository GmbH - Irish Stock Exchange

condition or results of operations” and “—Risks Relating to the Notes, the Subsidiary Guarantees and the Security—We have
not included IFRS or U.S. GAAP financial information in this Prospectus, and there may be certain significant differences
between our financial position and results of operations under German GAAP, IFRS or U.S. GAAP.”
Copyright Agreements
See “—Other Operating Expenses—Copyright License Fees.”
Financial Debt
In connection with the ish Acquisition and the Financing, iesy was required to repay ish’s existing debt an estimated
€692.3 million (approximately €583.3 million relating to ish’s bank loan, €100.0 million relating to notes outstanding and
approximately €9.0 million relating to swaps) upon completion of the ish Acquisition.
Other Liabilities
Other liabilities include €1.6 million which relates to accrued interest on loans due after the balance sheet date.
Deferred Income
Deferred income consists of €55.8 million prepayments received from customers for cable television services to be
provided after December 31, 2004.
Pension Obligations
As of December 31, 2004, 9.75% of ish’s employees were covered by a pension program, which was transferred to ish
from DTAG. The covered employees receive a percentage of the previous year’s gross income, multiplied by a variable age
factor. As of December 31, 2004, ish has €3.4 million reserved on its balance sheet with respect to its exposure with respect
to pension obligations. See “Risk Factors—Risks Relating to our Business—We have unfunded liabilities tied with respect to
our pension plans and other post-retirement benefits.”
As of December 31, 2004, 18.5% of ish’s workforce participated in a pension plan with DTAG. ish is required to make
monthly payments to DTAG for each employee concerned. These payments equal 30% of the covered individual’s gross civil
servant salary (“versorgungsfähige Beamtenbezüge”) and amount to approximately €700 to €1,500 per month per eligible
person. See “Risk Factors—Risks Relating to Our Business—We have unfunded liabilities with respect to our pension plans
and other post retirement benefits.”
ish is also involved, from time to time, in lawsuits, claims, investigations and proceedings, including copyright,
environmental, human resources, workplace health and safety, and commercial matters that arise in the ordinary course of
business. See “Risk Factors—Risks Relating to Our Business—Uncertainties as to copyright laws may adversely affect our
ability to conduct our business” and “Business—Business of iesy—Legal Proceedings.”
Qualitative and Quantitative Disclosure of Market Risk
Currency Risk
ish’s reporting currency is the euro. ish has no revenues, and few expenses or liabilities, that are denominated in
currencies other than the euro. In the future, if ish incurs other debt denominated in other currencies, such as dollar
denominated bank or bond debt, ish could incur additional currency risk and related hedging costs.
Interest Rate Risk
ish’s exposure to market risk for changes in interest rates relates primarily to its debt obligations. ish currently pays
interest on bank loans and finance loans relating to loan agreements with a consortium of lenders as well as finance loans
granted by ish’s creditors in fiscal year 2002 in connection with the reorganization.
In 2003, ish paid approximately €47.0 million in bank and finance loan interest. In addition, in 2003, ish accounted for
€27.0 million as interest expenses from the capital lease payments, relating to the capital lease agreement with DTAG for coutilization
rights for cable ducts.
To hedge the interest rate risk of the floating rate senior debt, interest swap transactions were concluded by ish in fiscal
year 2001. At December 31, 2004, ish had interest rate swaps relating to €255.0 million of floating rate senior debt. Due to
changes in interest rates, the fair value of these swap transactions as of the balance sheet date gave rises to a decrease of the
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