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iesy Repository GmbH - Irish Stock Exchange

iesy Repository GmbH - Irish Stock Exchange

agreements. However,

agreements. However, upon request of the respective broadcasters some of the regionalized agreements are also still administered by MSG. We do not always negotiate directly with broadcasters with regard to carriage agreements, as in the case of the nationwide carriage agreements administered by MSG, where we rely on a service agreement with MSG to represent us in negotiations with these broadcasters. We cannot assure you that (i) MSG will represent our interests to the same extent as we would if we were to negotiate directly with the broadcasters, (ii) MSG will be able to renew these contracts on satisfactory terms or at all on our behalf, or (iii) upon a termination of the service agreement with MSG, or of some of the nationwide carriage agreements, we would be able to enter into satisfactory agreements or enter into agreements at all with these broadcasters. This situation especially applies to the programs which are the subject of carriage agreements which DTAG terminated to the end of 2005 or about which DTAG announced its intention to terminate by the end of 2006, and to the programming of Premiere, currently the only large commercial pay television operator in Germany, which is distributed pursuant to a carriage agreement concluded between MSG and Premiere that expires at the end of 2007. With respect to our direct (regionalized) contracts with program providers, we may not be able to renew these contracts on satisfactory terms or at all. In particular, we believe that, as we are dependent upon such carriers for provision of programs in order to attract subscribers, especially for our premium cable television offers, program providers may have considerable power to renegotiate the fees that we charge for carriage of their product or the license fees we pay them. In addition, program providers may elect to distribute their programming through other distribution platforms, such as satellite or digital terrestrial broadcasting or may enter into exclusive arrangements with other distributors. The success of our business depends on the quality and variety of the programming delivered to our subscribers and the loss of programs could have a material adverse effect on our business and results of operations. We do not have carriage agreements with a number of important private program providers such as RTL and Pro7, and we may not be able to reach agreements with these program providers. Currently, these program providers continue to pay carriage fees. We cannot assure you that these program providers will continue to pay carriage fees in the current amount or at all in the absence of any agreement. We also cannot assure you that we will continue to have access to content from these broadcasters. We currently license certain digital programs for our own existing premium pay television offering. We intend to negotiate for additional access to programming to expand our premium cable television offering beyond our current premium cable television packages or to enhance existing programming. Rights with respect to a significant amount of premium content are, however, already held by competing distributors and, to the extent such competitors obtain content on an exclusive basis, the availability of programs to us could be limited. Our ability to offer new programs may also be limited if broadcasters migrate to satellite distribution or digital terrestrial broadcasting of their programs. Broadcasters must generally pay variable carriage fees, based on subscriber volumes, to cable providers for cable distribution of programming. However, broadcasters may avoid paying variable fees to cable providers, such as us, if they transmit their programs using either satellite or digital terrestrial broadcasting. These distribution methods, in contrast to cable, involve fixed costs. As a consequence, we may be unable in the future to obtain attractive content on favorable terms, if at all. Our inability to obtain or retain attractively priced competitive programs on our networks would reduce demand for our existing and future television services limiting our ability to maintain or increase revenues from these services. We rely on MSG, a subsidiary of KDG, for the provision of certain digital playout services and because of changes in our relationship with MSG, our premium cable television services could be disrupted or may lead to higher costs. Existing contracts of MSG with third parties, especially Premiere, as well as our current agreements with MSG could adversely affect the development of our digital strategy. MSG was originally established as the digital playout center for the entire German Level 3 industry when the businesses were under the common ownership of DTAG. MSG was created as a shared platform in which the regional Level 3 operators shared both the operational costs and participated in strategic decision making. We have concluded several service agreements with MSG with respect to the provision of certain digital playout services, such as reception, decoding, multiplexing, encryption, conditional access management, uplinking and smartcard management for the distribution of our premium cable television offering, including Premiere, and we currently depend on these agreements. iesy and MSG have entered into several agreements under which MSG provides its digital platform services to iesy for the distribution of iesy’s foreign and English language programming packages. All these agreements either expired on December 31, 2004 or will be terminated as of September 30, 2005. New agreements are currently being negotiated but have not yet been finalized (see “Business—Business of iesy— Products and Services—Supply—Other significant supply 42

agreements—MSG”). We cannot assure you that iesy will reach new agreements on satisfactory terms, if at all, with MSG or that such services can be provided by ish’s NOC in Kerpen. ish and MSG have entered into an agreement under which MSG provides additional conditional access services to ish. Under this agreement, ish is entitled to use an “ish zone” on MSG smart cards for the individual activation and deactivation of ish’s digital offering. The agreement with MSG expires on July 31, 2005. Thereafter the “ish zone” will be removed from the MSG smart cards unless the parties agree to extend the agreement. If the “ish zone” is removed from the MSG smart cards, ish will no longer be able to reach all connected households which use MSG smart cards with its respective digital programs via its own digital platform, until ish provides its own smart cards. Inability to extend the agreement to deploy our own smart cards or replace the MSG smart cards may affect our business and our profitability substantially. A replacement of MSG smart cards will lead to operational and customer disruptions. ish and MSG have also entered into an agreement under which MSG provides digital platform services to ish for the distribution of ish’s foreign-language package. The agreement expired on December 31, 2004. ish is renegotiating the agreement but we cannot ensure that ish will reach a new agreement on satisfactory terms, if at all, with MSG or that such services can be provided by ish’s NOC in Kerpen. ish has its own NOC in Kerpen. We expect to be technically able to provide digital playout services to ish and iesy by the end of 2005. Any migration of our premium cable television offer from MSG to ish’s NOC will cause operational and customer disruption and may lead to significantly higher costs. A complete migration may not be possible at all. To migrate, we may have to renegotiate existing agreements with MSG, secure the necessary licenses for the operation of the digital playout services and conclude a carriage agreement with Premiere (see “Risk Factors—Risks Relating to Our Business—We do not have guaranteed access to programs and are dependent on agreements with third parties for our content and carriage fees, which may adversely affect our business.”). As a consequence, we may not be able to satisfactorily use ish’s NOC as the digital platform for the comprehensive distribution of our premium cable television services (including Premiere), if at all. This could adversely affect the development of our digital strategy and have a material adverse effect on our business, financial condition and results of operations. MSG has an obligation to feed in Premiere to all Level 3 operators on a secure basis until the end of 2007. Under certain circumstances, this obligation could give rise to an increase in MSG’s costs, of which we are to pay our share. See “Operating and Financial Review and Prospects of iesy—Factors Affecting Our Results of Operations— Other operating expenses—Costs relating to premium cable television programming” and “Business—Business of iesy—Products and Services—Supply—Other significant supply agreements—MSG” and “Business—Business of ish—Products and Services— Supply—Other significant supply agreements—MSG”. MSG uses a conditional access system to transmit encrypted digital programs over their digital platform, which is used for playout of our digital programs. Billing and revenues generation for these services rely on the proper functioning of the conditional access system. We believe that the security of the MSG system has been compromised in the past by illegal piracy. Even though MSG uses an advanced security standard for the conditional access system, the functionality of this system could be compromised by illegal piracy again in the future. Such illegal piracy could have a material adverse effect on our business. As described, MSG provides its digital playout facility on a shared basis to all Level 3 operators. MSG indicated that it intends to restrict the usage of certain transponder capacity on a shared basis regarding the distribution of certain programming that iesy obtains directly from broadcasters, for example iesy’s English language package. Any such restriction may lead to substantially higher costs for the use of the digital playout facility, could force us to discontinue certain of our premium cable television packages and prevent us from introducing new premium cable television packages in the future. This could have a material adverse effect on our business or results of operations. We depend on Nagravision S.A. and Betacrypt technology for the operation of our conditional access system and any discontinuation may adversely affect our business and profitability. Our conditional access system could also be compromised by illegal piracy. We operate, through ish, a conditional access system. In this connection, we entered into an agreement with Nagravision S.A. (“Nagra”) under which Nagra agreed to sell and install parts of the conditional access system, including hardware equipment; to grant licenses for the respective intellectual property rights for the conditional access system and to provide maintenance, support and security services. We use the Nagra conditional access system (including the related hardware and smart cards) to transmit encrypted digital programs, especially for the transmission of “ish Digital TV.” Billing and revenue generation for these services rely on the proper functioning of the Nagra system. We especially depend on the software licensed to us. 43

  • Page 1 and 2: PROSPECTUS iesy Repository GmbH €
  • Page 3 and 4: the market price of the Notes at a
  • Page 5 and 6: which the issue or the offer of sec
  • Page 7 and 8: “combined entity”, and “we”
  • Page 9 and 10: “Tele Columbus” refers to the c
  • Page 11 and 12: Revenue generating units, or “RGU
  • Page 13 and 14: CURRENCY PRESENTATION AND EXCHANGE
  • Page 15 and 16: end of 2005. Our subscribers can al
  • Page 17 and 18: populations, with approximately 2.7
  • Page 19 and 20: In April/May 2005, iesy entered int
  • Page 21 and 22: Our Corporate and Financing Structu
  • Page 23 and 24: THE OFFERING The summary below desc
  • Page 25 and 26: Optional Redemption We may redeem a
  • Page 27 and 28: SUMMARY FINANCIAL AND OPERATING INF
  • Page 29 and 30: iesy Other Financial Data (unaudite
  • Page 31 and 32: iesy Operational Data (unaudited) R
  • Page 33 and 34: ish Income Statement Data Audited y
  • Page 35 and 36: 35 Three months ended Year ended De
  • Page 37 and 38: 37 As of December 31, As of March 3
  • Page 39 and 40: RISK FACTORS You should carefully c
  • Page 41: acquiring content, purchasing servi
  • Page 45 and 46: In addition, most of our cable netw
  • Page 47 and 48: Strikes or other industrial actions
  • Page 49 and 50: acquisitions. In addition, any addi
  • Page 51 and 52: provision and may not be abusive. S
  • Page 53 and 54: €1,050.0 million would have been
  • Page 55 and 56: We depend on payments from our subs
  • Page 57 and 58: • Claims against the Issuer and s
  • Page 59 and 60: Senior Credit Facilities before the
  • Page 61 and 62: court rulings did not address the p
  • Page 63 and 64: THE ISH ACQUISITION The description
  • Page 65 and 66: In addition to the warranties, spec
  • Page 67 and 68: CAPITALIZATION The following table
  • Page 69 and 70: Unaudited Pro Forma Condensed Conso
  • Page 71 and 72: NOTES TO THE UNAUDITED PRO FORMA CO
  • Page 73 and 74: (€m, except percentages) Pro form
  • Page 75 and 76: Income Statement Data 75 Audited Ye
  • Page 77 and 78: (7) Number of subscribers at the en
  • Page 79 and 80: • iesy’s premium cable televisi
  • Page 81 and 82: egulated pricing model. Fees are pa
  • Page 83 and 84: Risks Relating to Our Indebtedness
  • Page 85 and 86: Legal, Consulting and Management Fe
  • Page 87 and 88: Subscribers iesy classifies its cus
  • Page 89 and 90: 2003 to €8.20 per subscriber in t
  • Page 91 and 92: • the senior credit facilities we
  • Page 93 and 94:

    average installation fees from July

  • Page 95 and 96:

    Cash flow from investing activities

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    In the three months ended March 31,

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    eview and optimization of services

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    Cash Flow from Operating Activities

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    oadcasters in television and radio.

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    educed or increased by a material a

  • Page 107 and 108:

    Income Statement Data Audited year

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    109 As of December 31, As of March

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    • ish’s premium cable televisio

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    In addition, ish markets pay-per-vi

  • Page 115 and 116:

    Cost of Materials and Services Cost

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    For accounting purposes, ish treats

  • Page 119 and 120:

    Subscribers ish classifies its cust

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    Competition ish faces significant c

  • Page 123 and 124:

    This decrease was primarily due to

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    Net Loss Net loss was €17.9 milli

  • Page 127 and 128:

    Pension Obligations As of March 31,

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    Term Sheets with DTAG, BRN-ish agre

  • Page 131 and 132:

    estructuring liabilities, while 200

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    accrual for pending losses. The exp

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    International Financial Reporting S

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    Content Providers Basic Television

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    Digital Home” and PrimaCom offers

  • Page 141 and 142:

    [GRAPHIC] [GRAPHIC] Level 4 is the

  • Page 143 and 144:

    shared access basis. In this case,

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    The following table shows several k

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    In the domestic market, the German

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    BUSINESS Unless otherwise indicated

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    Germany, with approximately 30.2 mi

  • Page 153 and 154:

    Prudently deploying capital. Our de

  • Page 155 and 156:

    iesy’s Current Basic Cable Televi

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    amounted to €8.0 million or 5.9%

  • Page 159 and 160:

    within iesy’s upgraded areas and

  • Page 161 and 162:

    Supply The following chart shows th

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    Term Sheet Service Duration Offer o

  • Page 165 and 166:

    y the new fiber system. See “Oper

  • Page 167 and 168:

    part of settling arbitration procee

  • Page 169 and 170:

    Business of ish Products and Servic

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    ish’s Current Basic Cable Televis

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    In addition to the monthly subscrip

  • Page 175 and 176:

    Customers who subscribe to Premiere

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    Sales ish’s sales team is divided

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    The following chart illustrates ish

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    Term Sheet Service Duration Co-use

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    Lease of space for broadband cable

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    Other Significant Supply Agreements

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    ights themselves. As an exception,

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    Competition The cable television an

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    Introduction REGULATION German law

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    We assume that we will be deemed to

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    The Amendment provides that provisi

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    • Providers who had a dominant po

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    in the Munich office of Apax Partne

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    Marketing for Germany and Austria,

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    Gerard Tyler is ish’s Treasurer.

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    CERTAIN RELATIONSHIPS AND RELATED P

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    Beneficial Ownership The following

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    DESCRIPTION OF OTHER INDEBTEDNESS T

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    period (unless the interest period

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    Subordinated Bridge Facility In con

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    • the ability of the Obligors (ot

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    owed by the Insolvent Obligor will

  • Page 219 and 220:

    DESCRIPTION OF THE NOTES The Issuer

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    in London, the Bank of New York, Ne

  • Page 223 and 224:

    Issuer have agreed that iesy Hessen

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    Subsidiary Guarantor outstanding wh

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    the amount of their secured claim.

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    provisions described under “—De

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    In addition, the Intercreditor Agre

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    Euro Note to and including February

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    circumstances referred to above exi

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    that it has unconditionally exercis

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    time outstanding not exceeding (i)

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    description of this covenant and no

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    Date of any Indebtedness that has b

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    (13) Investments in an aggregate am

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    supplement or other modification) t

  • Page 249 and 250:

    (1) the assumption by the transfere

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    Reports Whether or not required by

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    of the European Union on January 1,

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    contemporaneously with any such act

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    25% in principal amount of the outs

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    (2) provide for the assumption by a

  • Page 261 and 262:

    (6) an Officer’s Certificate stat

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    calculated based on the relevant cu

  • Page 265 and 266:

    “Bank Indebtedness” means any a

  • Page 267 and 268:

    Consolidated Net Income (excluding

  • Page 269 and 270:

    (9) the impact of capitalized inter

  • Page 271 and 272:

    “Exchange Act” means the U.S. S

  • Page 273 and 274:

    (iii) for the avoidance of doubt, a

  • Page 275 and 276:

    “Nationally Recognized Statistica

  • Page 277 and 278:

    (2) Investments in another Person i

  • Page 279 and 280:

    (15) Permitted Collateral Liens; (1

  • Page 281 and 282:

    (5) in the case of Apollo and Golde

  • Page 283 and 284:

    service level agreement as replaced

  • Page 285 and 286:

    “Unrestricted Subsidiary” means

  • Page 287 and 288:

    The Issuer and the Trustee and thei

  • Page 289 and 290:

    Secondary Market Trading The Book-E

  • Page 291 and 292:

    to trade tax. The taxable gain from

  • Page 293 and 294:

    date). A U.S. Holder’s adjusted t

  • Page 295 and 296:

    (c) for so long as the Notes are el

  • Page 297 and 298:

    PLAN OF DISTRIBUTION We, the Subsid

  • Page 299 and 300:

    LEGAL MATTERS Certain legal matters

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    WHERE YOU CAN FIND OTHER INFORMATIO

  • Page 303 and 304:

    Listing LISTING AND GENERAL INFORMA

  • Page 305 and 306:

    INDEX TO FINANCIAL STATEMENTS iesy

  • Page 307 and 308:

    Assets iesy Hessen GmbH & Co. KG, W

  • Page 309 and 310:

    I. Application of Legal Provisions

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    III. Explanation of Balance Sheet a

  • Page 313 and 314:

    Last year’s extraordinary expense

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    INDEPENDENT AUDITORS’ REPORT We h

  • Page 317 and 318:

    iesy Repository GmbH, Hamburg AMEND

  • Page 319 and 320:

    and remaining useful life for the i

  • Page 321 and 322:

    The movements in consolidated equit

  • Page 323 and 324:

    iesy Repository GmbH, Hamburg AMEND

  • Page 325 and 326:

    Assets iesy Repository GmbH, Hambur

  • Page 327 and 328:

    I. Basis of Presentation The consol

  • Page 329 and 330:

    V. Explanations to Material Items o

  • Page 331 and 332:

    Network infrastructure, rental, lea

  • Page 333 and 334:

    iesy Repository GmbH, Hamburg UNAUD

  • Page 335 and 336:

    1. Basis of Presentation iesy Repos

  • Page 337 and 338:

    5. Explanations to Material Items o

  • Page 339 and 340:

    Shareholdings of iesy Repository Gm

  • Page 341 and 342:

    iesy Hessen GmbH & Co. KG, Weiterst

  • Page 343 and 344:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 345 and 346:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 347 and 348:

    (1) General COURTESY TRANSLATION FR

  • Page 349 and 350:

    (3) Accounting and Valuation Princi

  • Page 351 and 352:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 353 and 354:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 355 and 356:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 357 and 358:

    The following auditors’ report (B

  • Page 359 and 360:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 361 and 362:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 363 and 364:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 365 and 366:

    Inventories COURTESY TRANSLATION FR

  • Page 367 and 368:

    Goodwill COURTESY TRANSLATION FROM

  • Page 369 and 370:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 371 and 372:

    Depreciation and Amortization COURT

  • Page 373 and 374:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 375 and 376:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 377 and 378:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 379 and 380:

    (1) General COURTESY TRANSLATION FR

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    COURTESY TRANSLATION FROM THE GERMA

  • Page 383 and 384:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 385 and 386:

    COURTESY TRANSLATION FROM THE GERMA

  • Page 387 and 388:

    Cost of materials COURTESY TRANSLAT

  • Page 389 and 390:

    [THIS PAGE INTENTIONALLY LEFT BLANK

  • Page 391 and 392:

    Goodwill. Under German GAAP, the di

  • Page 393 and 394:

    Under U.S. GAAP, loan origination f

  • Page 395 and 396:

    IFRS requires a purchase price allo

  • Page 397 and 398:

    financial liability incurred result

  • Page 399 and 400:

    €235,000,000 10 1 /8% Senior Note

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