Goodwill COURTESY TRANSLATION FROM THE GERMAN LANGUAGE FOR INTERPRETATION, THE GERMAN TEXT SHALL PREVAIL KABELNETZ NRW HoldCo GmbH, Cologne NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2003—(CONTINUED) The goodwill results from the consolidation of ish KS NRW GmbH & Co. KG (€40,382k) and Kabel-Service Gesellschaft des Handwerks mbH (€1,583k). Capital Reserve €25k of the capital reserve of results from the contribution of all the shares in KABELNETZ NRW Verwaltungs GmbH and €275,000k results from the contribution of the rights to recover possession of the shares in the group companies acquired at the auction on January 31, 2003. Accruals for Pensions The computation of the accruals for pensions for fiscal year 2003 is based on the following assumptions: Other Accruals Discount rate: 5.25% Annual salary increase (general): 2.75% Annual salary increase (non-tariff employees): 3.50% Adjustment of current pensions: 1.50% Attrition rate: 5.00% Other accruals break down as follows: Personnel 21,240 SWAP 12,590 Contractual risks 12,374 Building costs 6,867 Services 6,463 Cable operating costs 5,068 Marketing and sales 1,450 IT expenses 1,051 Other 718 352 €000 67,851 €11,676k of the personnel accruals relates to bonus payments and €7,140k to severance payments which were accrued by ish KG in the prior year in the amount of €15,530k within the scope of personnel adjustments. In order to hedge a portion of the interest rate risk arising from the drawdowns with variable interest made within the scope of the Senior Credit Agreement, Swap contracts were concluded with three banks in the financial year 2001. The total notional amount of the Swap contracts is €255,000k. The pending loss arising from the valuation of these hedge contracts by banks as per the balance sheet date was accrued.
COURTESY TRANSLATION FROM THE GERMAN LANGUAGE FOR INTERPRETATION, THE GERMAN TEXT SHALL PREVAIL KABELNETZ NRW HoldCo GmbH, Cologne NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR FISCAL YEAR 2003—(CONTINUED) Accruals for contractual risks in the amount of €7,200k relate to obligations within the scope of the mutual termination of a service contract with Callahan Associates International. In addition further risks from contractual disputes with third parties were accrued. Liabilities The following schedule of liabilities shows liabilities by their respective due dates: 353 Total within one year Thereof due between one and five years In more than five years (€000) (€000) (€000) (€000) Liabilities to banks 675,423 16,470 658,953 0 Trade payables 50,764 26,764 24,000 0 Capital lease liability 390,670 7,600 36,780 346,290 Other liabilities 114,376 14,376 100,000 0 1,231,233 65,210 819,733 346,290 Included in liabilities due to banks is a loan of €633,273k which derives from the Senior Credit Facility, which was renegotiated during the restructuring of ish NRW in 2002, with a lender consortium of which Citibank International Plc is agent. The total amount consists of two tranches, €518,273k of non-elevated secured debt and €115,000k of elevated secured debt. Both tranches have interest of 3% over LIBOR and are due upon the earlier October 1, 2006 or of the sale of ish NRW or refinancing (“Exit Event”). In addition to the loan under the Senior Credit Facility, the liabilities due to banks also include liabilities in the amount of €35,000k arising from a Term Facility Agreement (original amount: €115,000k) concluded in the 2002 financial year. This also elevated secured loan bears interest at 3.5% over LIBOR. Scheduled repayments in the amount of €15 million on each of July 1, 2003 and October 1, 2003 were made. In addition a special repayment of €50 million was made on December 17, 2003. Furthermore, repayments are due of €8.2 million on each of July 1, 2004, October 1, 2004 and July 1, 2005. Any unpaid amounts are due upon the earlier October 1, 2006 or of the sale of ish NRW or refinancing (“Exit Event”). Liabilities due to banks from the Senior Credit Facility and from the Term Facility are secured by the entire fixed and current assets of ish NRW. Both the Term Facility and the Senior Credit Facility contain certain restrictions regarding operational and financial issues. These include limitations on the sale of assets, on the occurrence of additional debt, on dividends to shareholders, on certain investments and acquisition. Additionally, the agreements require the satisfaction of certain financial covenants. Included in the liabilities due to banks is an amount of €7,150k for amendment fees in connection with the renegotiation of the Senior Credit Facility, and for restructuring fees in connection with the negotiation of the Term Facility in financial year 2002. These liabilities are payable upon the due date of the final instalment of the Term Facility.