iesy Repository GmbH - Irish Stock Exchange

Risks Relating to Our Indebtedness and Our Structure—Our high leverage and debt service obligations could materially
adversely affect our business, financial 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.” Services and facilities provided under the SLAs are governed by their respective Term Sheets. iesy has
favorably renegotiated the Term Sheets in 2002, and has terminated certain services under the Term Sheets where they were
no longer required.
During 2005, iesy will replace AMTV radio links with leased fiber solutions to establish a more integrated network
capable of distributing television signals from a single, central feed-in point, without any significant capital investment or
increase in operating expenditures. This will allow iesy to more cost-effectively deliver premium cable television services in
the future. iesy leases antenna space for its AMTV equipment from DTAG, and these leases will, in most cases, terminate as
of December 31, 2005. Under the BRN-iesy agreement, DTAG installs, makes available and operates a fixed-line broadband
and broadcasting distribution network in the 630 MHz spectrum. This network, which is made up of optical leased lines, will
replace the AMTV technology as well as the Diamant system. See “Business—Business of iesy—Supply—SLAs with
DTAG.”
Personnel Expenses
Personnel expenses include salaries and wages, and social security, pension, and other benefits of the permanent staff.
It also includes other forms of compensation such as overtime and stand-by pay, and does not include temporary staff
expenses, which are included as other operating expenses. Personnel expenses were €5.3 million for the three months ended
March 31, 2005, and €22.0 million for the year ended December 31, 2004.
Many of the terms and conditions to the collective bargaining agreements with the labor union representing many of
iesy’s employees are now more than two years out of date; accordingly, iesy recently gave notice to terminate its main
collective bargaining agreements providing for a requirement of six months’ notice in order to renegotiate these terms and
increase the flexibility ahead of the roll-out of iesy’s new products and services during 2005. See “Risk Factors—Risks
Relating to Our Business—Strikes or other industrial actions as well as the negotiation of a new collective bargaining
agreement could disrupt our operations or make it more costly to operate our facilities” and “Business—Business of iesy—
Employees.”
Depreciation and Amortization
iesy records depreciation expenses relating to property, plant and equipment and intangible assets. A substantial
proportion of iesy’s depreciation and amortization expenses related to the amortization of its customer base due to the step-up
resulting from the application of purchase accounting in connection with the original acquisition from DTAG in 2000. See
“—The iesy Acquisition.” In addition, iesy has significant depreciation expenses relating to capital expenditures made prior
to the original acquisition in 2000. Furthermore, in our consolidated accounts, we have recognized an increased amortization
of goodwill in the fourth quarter of 2004 as a result of the contribution of interests of New iesy to the Issuer by the minority
shareholders of New iesy. The minority shareholders of New iesy, representing an equity interest of approximately 18%,
contributed their interests in New iesy to iesy Repository in exchange for new shares issued by iesy Repository, which
resulted in a recognition of goodwill for the year ended December 31, 2004. This goodwill has been accounted for in
accordance with existing accounting policies, and thereby will result in increased depreciation and amortization expenses in
future years. In the near future, we anticipate an increase in iesy’s capital expenditures and, as a result, iesy’s depreciation
expense will increase accordingly. See “—Capital Expenditures.”
iesy also expects a significant increase in its depreciation and amortization expenses related to the amortization of
goodwill recognized in connection with the ish Acquisition. See “Unaudited Pro Forma Condensed Consolidated Financial
Statements of iesy.”
Other Operating Expenses
Other operating expenses include copyright license fees, costs relating to premium cable television services, rental and
leasing fees, sales and marketing expenses, legal, consulting, and management fees, and miscellaneous other operating
expenses.
Copyright License Fees
iesy is required under German law to pay royalties to the holders of copyrights and related rights for the retransmission
of radio and television programs that include, among other things, literary, scientific or artistic works protected
by copyright law. iesy pays these fees pursuant to a collective agreement (Kabelglobalvertrag) between members of the cable
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