Introduction 1 - IM Internationalmedia AG

1
Introduction
Intermedia AG will be renamed
Internationalmedia prior to the IPO. Thus, the
name Internationalmedia will be used in the
future.
Internationalmedia is one of the global leaders
in developing and marketing high-quality international
feature films. Longterm arrangements
with several first class production companies
ensure us access to top US feature films.
Internationalmedia generates worldwide copyright
for all stages of the distribution chain and
has a highly efficient international distribution
network with local partners covering over 70
countries.
Internationalmedia operates in a dynamic,
expanding business environment. For certain
top independent producers, traditional film
production with major studios is becoming
increasingly unattractive because of the large
studio bureaucracies and the limited opportunity
to profit from the commercial success of a
film. In contrast, the strength of new organisations
like Internationalmedia is that we enable
these producers to benefit from quick decision-making
and to share in the profits we
make together.
With offices in Los Angeles, London and
Munich, Internationalmedia is represented in
the most important international film
centers and markets. Internationalmedia's
success is due not least to the reputation of
our senior executives and their contacts in the
film industry.
Internationalmedia's IPO will see the dawn of a
new chapter in the short history of the
Company as well as a new growth phase.
1 60
Florian Bollen

2
Film Supply
For decades, North America has dominated
the supply of high-quality feature films
suitable for marketing worldwide. The
American major studios mostly produce high
budget films.
The production costs for such high budget
films have risen appreciably in recent years.
The available funds at the major studios are
thus only sufficient for a limited number of
these films.
Internationalmedia has succeeded in supplying
the market with high quality films for worldwide
release by partnering with successful independent
production companies as well as the
American major studios.
Internationalmedia will further extend this strategy
in the future.
Nigel Sinclair
2 61

3
Film distribution
The distribution market is strongly focused on
North America and Europe.
The last 10–15 years have seen an increase in
demand for top American feature films. New
technical distribution methods and distribution
windows have led to a substantial rise in
exploitation revenues. This trend towards
increased demand conflicts with the flattening
in feature film production. The demand to see
films is characterized by a shift from public viewing
in cinemas to more individual forms of
consumption based on TV and video. The
technologies used for this are now available
worldwide. As a result, for high quality worldwide
release films, there are no longer small,
localized markets with local peculiarities, but
rather a global network of consumers.
The development of new technologies is leading
to dynamic growth forecasts for the film
industry. In the future, the Internet will play an
important role as an additional distribution
channel.
Internationalmedia has currently granted film
exploitation rights to local distributors covering
more than 70 countries throughout the world.
Furthermore, Internationalmedia is able to
position itself as a first-rate supplier for the
international buyers’ market maintaining
strong relationships with filmmakers in
Hollywood and Europe, by emphasizing the
marketing of its films in the various regions
and, above all, by supplying high-quality films.
3 62
Guy East

4
Content is King
- Internationalmedia's philosophy
With content becoming increasingly important
through the distribution of high-quality feature
films, Internationalmedia aims to become a
leading worldwide content company.
We will achieve this goal by strengthening our
core business and increasing our film throughput
by:
• Signing more first look deals
• Producer alliances with top film makers
• Film acquisitions
• Library acquisitions
• Soundtrack production
• Internet joint ventures
• Internet distribution
• Strengthening our worldwide distribution
base and acquiring content companies.
In line with our corporate strategy, we consciously
minimize the risks.
Internationalmedia focuses on audiovisual
entertainment, marketed on a multimedia
basis.
Internationalmedia will therefore also invest in
new distribution channels which will extend
the distribution network or introduce further
exploitation opportunities:
• Soundtrack distribution
• Broadband Internet distribution
• Alliances with Internet service providers
• Building our own template Web sites which
can be localized for the individual territories
• WAP.
Internationalmedia's success is based on the
quality of its films and optimizing
worldwide distribution.
Internationalmedia produces worldwide copyright
for all distribution windows:
• Unique financing structures facilitate costeffective
project financing and thus a high
film throughput
• Long-term agreements secure access to
top films
• Internationalmedia undertakes world
wide content marketing
• Internationalmedia owns a film library
of high artistic and commercial value.
A major international presence and control of
the value chain set Internationalmedia apart
from our rivals.
Moritz Bormann
4 63

5
Internationalmedia Business
Acquisition
Content, in the form of high-quality, internationally
marketable feature films, is a critical factor
in the media and entertainment sector.
Internationalmedia identifies successful film
projects, drives their creative process and, last
but not least, arranges their financing. Since
Internationalmedia leaves the physical production
to its strategic partners and other third
parties, the risks of production and financing
are generally mitigated. Internationalmedia
retains creative and artistic control throughout
the entire project. Internationalmedia acquires
the copyright and the distribution rights of
films in perpetuity and on a worldwide basis.
Internationalmedia's presence in the centers
of the international film industry means that we
are in a position to structure large film financing
deals, and our reputation enables us to
attract major banks to finance these projects.
Purchase contracts are usually concluded with
the film distributors in key territories before
production begins, thus minimizing the risks
involved in film exploitation before shooting
starts. Internationalmedia endeavours to conclude
contracts covering at least the equivalent
of the film budget before production ends.
5 64
One of Internationalmedia's key strengths is
our excellent relationships with prominent
international film producers which in turn gives
us access to the rights to promising film projects.
Internationalmedia enjoys long-term
business relationships with several of these
producers which are cemented by comprehensive
contractual agreements. Another of
Internationalmedia's significant competitive
advantages is that many of our employees
have now been working successfully in the
centers of the international film industry,
London and Los Angeles, for almost twenty
years and have gained the confidence of
many of the most important decision makers
and stars.

Distribution
As a result of our many years’ experience and
good contacts, Internationalmedia is now one
of the most important global distribution companies
for high-quality feature films. One of the
key reasons for our dynamic development is
our strong presence in the global film distribution
center: London.
Internationalmedia has proven ability to market
worldwide the high-quality films that we successfully
select in the creation process. This
requires good contacts with film distribution
companies in all territories, who assume
responsibility for the full-scale exploitation of
the films, from cinema distribution through
video and TV. Our customers include Miramax,
Universal, Paramount, Metro Goldwyn Meyer,
Kinowelt, Senator, CLT-UFA, Helkon, Warner
Bros, Buena Vista and many others.
Internationalmedia has output deals with distribution
partners in some countries, which guarantee
that they will aquire a certain number of
films per year. Contracts concluded with local
film distributors before production starts further
minimize the risk taken by
Internationalmedia.
Internationalmedia only grants limited licenses
to its clients. Internationalmedia retains the
copyright and thus the rights to further distribution.
The initial license term is normally between
seven and fifteen years. This is followed
by second and third cycle distribution.
5 65

6
Film Portfolio
At Internationalmedia, we currently have more
than 50 films on our books, with the focus
being on mainstream films. Consisting of
popular genres such as thrillers, comedy and
action, Internationalmedia’s film portfolio offers
content that can be exploited in the long term.
Internationalmedia’s film portfolio includes
major global successes such as "Dances with
Wolves", "Sliding Doors", "Hilary & Jackie" and
many more. Internationalmedia’s films have
won over 70 awards and nominations at international
film festivals in the past, including such
prestigious awards as American Academy
Awards (Oscars), British Academy Awards,
European Film Awards, Golden Globes and
many more. These awards underline the high
quality and extraordinarily high standards of
Internationalmedia’s films.
6 66
The Company will stick to this strategy in future
and will invest selectively in high-quality productions.
Since Internationalmedia generally acquires
the copyright in perpetuity, but only licenses
exploitation rights to local teritory-distributors
for 7-15 years, further revenues can be generated
from second and third-cycle distribution.

7
Investments and Balance Sheet Structure
All amounts shown are pro forma amounts
and reflect the Group structure that was only
established in 2000.
Investments
Total capital expenditures by
Internationalmedia in fiscal 1999 amounted to
€ 96.7 million. This represents a 50% increase
in the volume of investments as against the
previous year (1998 investments: € 62.9 million).
Internationalmedia again appreciably increased
its film assets in 1999 and thus further
enhanced the value of its film library.
Andreas Konle
Balance sheet structure
Internationalmedia's total assets amounted to
around € 279.5 million at the balance sheet
date December 31, 1999. Equity amounted to
€‚ 81.5 million, giving an equity ratio of around
29%; however, this will increase appreciably
due to the IPO in mid-2000.
The largest asset item is Internationalmedia's
film assets with a book value totaling € 102.0
million, as well as advances on films in production
of € 13.0 million. It should be noted that
around 83% of the film assets are written off
as soon as the films move into the first exploitation
cycle.
Internationalmedia's liabilities amounted to a
total of € 149.4 million at the balance sheet
date, with € 61.4 million accounted for by bank
borrowings. The majority of these bank borrowings
are production loans for films which
have not yet been delivered to
Internationalmedia's clients.
7 67

8
Revenues and Earnings
All amounts shown are pro forma amounts
and reflect the Group structure that was only
established in 2000.
Revenues
Internationalmedia has recorded above-average
growth since its formation. Total revenues
in fiscal year 1999 amounted to € 115.7 million.
Revenues of around € 191.8 million are expected
for the current year.
The IPO will create the financial resources to
allow Internationalmedia to realize further
growth potential.
8 68
Earnings
Internationalmedia's earnings were highly
encouraging in recent years. Income before
income taxes rose last year by around 120%
to € 12.2 million. Consolidated net income
after taxes was € 7.5 million, compared with €
3.8 million in the previous year.
Internationalmedia employed 41 staff last year.
The number of employees will grow in the
future but managment expects to maintain a
lean corporate structure in the long term.

9
Our IPO:
a cornerstone of our future success
Internationalmedia already started paving the
way for a successful future in early 2000. By
merging the Intermedia Group (UK) and the
Pacifica Group (US), Internationalmedia has
implemented the restructuring measures
necessary for an IPO.
Internationalmedia
- The Movie Partner
By merging the UK and US subsidiaries,
Internationalmedia will profit in the future from
further reinforcement of our market position.
The funds from the IPO will give the Company
the scope to continue driving forward our
dynamic development in our existing and new
business sectors.
In the future, Internationalmedia will invest
more heavily in alliances with prominent producers
and production companies so that we
can continue to influence promising projects
when the copyright is created. In addition to
the existing partnerships, for example with
Mirage Enterprises, Scott Free Productions,
Fountainbridge Films, Outlaw Productions and
many others, Internationalmedia will enter into
additional production alliances to further
expand our business.
9 69

10
Investor Relations
For Internationalmedia, 2000 will be the year
of the IPO.
In the run-up to the planned IPO,
Internationalmedia is trying to satisfy the interests
of our future investors by launching an
intensive, open information policy. In this campaign,
we are emphasizing our excellent prospects
for success, the Company's growth
potential as well as our exceptionally good
earnings record.
Internationalmedia has also made a commitment
to its shareholders to ensure open,
comprehensive information once the IPO has
been completed. Every decision and every
transaction by Internationalmedia will be made
with the aim of ensuring maximum shareholder
value. This will ensure that the Company's
strategy, planning and results will be transparent
in the future as well.
10 70
You can view the latest news at:
http://www.internationalmedia.de
For further Investor Relations information,
please contact:
Internationalmedia AG
Siebertstrasse 3
D-81675 Munich
Germany
Tel. +49 89 99818-500

11
Pro-Forma Consolidated Financial Statements as of
December 31, 1999, December 31, 1998 and
December 31, 1997
Index
• Pro-Forma Consolidated Balance Sheet as of December 31, 1999, December 31, 1998 and
December 31, 1997 (in accordance with US GAAP)
• Pro-Forma Consolidated Profit and Loss Account for the fiscal years 1999, 1998 and 1997
(in accordance with US GAAP)
• Pro-Forma Consolidated Cash Flow Statements for the fiscal years 1999, 1998 and 1997
(in accordance with US GAAP)
• Pro-Forma Consolidated Statement of Shareholders´ Equity for the fiscal years 1999, 1998 and
1997 (in accordance with US GAAP)
• Notes to the Pro Forma Consolidated Financial Statements for the fiscal years 1999, 1998
and 1997 (in accordance with US GAAP)
• Pro-Forma Consolidated Fixed Assets Schedule as of December 31, 1999, December 31, 1998
and December 31, 1997 (in accordance with US GAAP)
• Certificate on the Pro-Forma Consolidated Financial Statements as of December 31, 1999,
December 31, 1998 and December 31, 1997 (in accordance with US GAAP)
• Principles of US GAAP accounting and explanation of significant differences between German
accounting legislation and US GAAP
11 71

Pro-Forma Consolidated Balance Sheet as of December 31, 1999,
December 31, 1998 and December 31, 1997
(in accordance with US GAAP)
Assets 31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
A. Noncurrent assets
I. Intangible assets
Goodwill 33.979 33.979 33.979
Film assets 102.016 65.520 22.489
Payments on account 13.035 11.748 15.684
Total noncurrent assets 149.030 111.247 72.152
II. Plant and equipment
Other equipment, operating and office equipment 430 189 134
Total plant and equipment 430 189 134
III. Financial assets
Investments in affiliates 14 0 40
Total financial assets 14 0 40
Total noncurrent assets 149.474 111.436 72.326
B. Current assets
I. Inventories
Film development
costs and distribution costs 5.044 3.225 2.085
Total Inventories 5.044 3.225 2.085
II. Receivables and other assets
Trade accounts receivable 87.732 40.839 24.289
Receivables from stockholders 25 16.947 28.177
Other assets 6.782 2.142 617
Total receivables and other assets 94.539 59.928 53.083
III. Checks, cash in hand, central bank and bank balances 30.376 29.314 6.331
Total current assets 129.959 92.467 61.499
C. Prepaid expenses 114 60 33
D. Adjustment item for capital consolidation 0 1.799 7,892
Total Assets 279.547 205.762 141.750
11 72

Stockholders´ Equity and Liabilities 31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
A. Stockholders' equity
Capital stock 24.375 24.375 24.375
Additional paid-in capital 57.088 57.088 57.088
Net retained profits/net accumulated losses -1 0 0
Total stockholders' equity 81.462 81.463 81.463
B. Accrued liabilities
Accrued taxes 45.827 32.729 11.193
Other accrued liabilities 2.846 1.470 2.786
Total accrued liabilities 48.673 34.199 13.979
C. Liabilities
Bank loans and overdrafts 61.475 35.181 20.028
Payments received on account of orders 25.300 1.391 754
Trade accounts payable 50.542 45.683 21.815
Other liabilities 12.095 7.845 3.711
Total liabilities 149.412 90.100 46.308
Total Stockholders´ Equity and Liabilities 279.547 205.762 141.750
11 73

Pro-Forma Consolitated Profit and Loss Account for the
fiscal years 1999, 1998 and 1997
(in accordance with US GAAP)
11 74
1999 1998 1997
T€ T€ T€
Net sales 115.720 62.318 45.823
Cost of goods sold -97.041 -51.394 -42.042
Gross profit 18.679 10.924 3.781
Project development costs - 1.076 - 391 -288
Selling expenses -1.306 -1.188 -546
General and administrative expenses -3.865 -3.133 -1.042
Other operating income 502 32 198
Other operating expenses 0 -6 -81
Net financing costs -727 -686 -368
Income before extraordinary
items and income taxes 12.207 5.552 1.654
Extraordinary item -1.205 -13 127
Income before income taxes 11.002 5.539 1.781
Income taxes -3.517 -1.777 -472
Consolidated net income 7.485 3.762 1.309
Pro forma adjustments -7.486 -3.762 -1.309
Net retained profits/net accumulated losses -1 0 0

Pro-Forma Consolidated Cash Flow Statements for the fiscal
years 1999, 1998 and 1997 (in accordance with US GAAP)
1999 1998 1997
T€ T€ T€
Consolidated net income 7.485 3.762 1.309
Depreciation and amortization 58.583 23.765 9.994
Change in accrued liabilities -8.233 -1.368 2.881
Cash flow I 57.835 26.159 14.184
Change in receivables and other assets -51.533 -12.642 -25.472
Change in other current assets -73 4.924 749
Change in trade accounts payable and other liabilities 33.017 28.639 24.078
Change in working capital -18.589 20.921 -645
Cash flows from operating activities 39.246 47.080 13.539
Proceeds from sale of noncurrent assets 29 40 0
Capital expenditures -48.719 -20.418 -27.422
Cash flows from investing activities -48.690 -20.378 -27.422
Changes in stockholders' equity*) -7.486 -3.762 -1.309
Borrowings/loan redemption 17.992 43 19.447
Cash flows from financing activities 10.506 -3.719 18.138
Net change in cash and cash equivalents 1.062 22.983 4.255
Cash and cash equivalents at beginning of period 29.314 6.331 2.076
Cash and cash equivalents at end of period 30.376 29.314 6.331
*) pro forma only due to elimination of net income
11 75

Non-cash transactions 1999 1998 1997
T€ T€ T€
Change in accrued liabilities 22.707 21.589 10.993
Change in receivables and other assets 16.922 5.795 9.605
Capital expenditures -47.931 -42.495 -20.598
Borrowings/loan redemption 8.302 15.111 0
Total 0 0 0
Supplementary information 1999 1998 1997
T€ T€ T€
Taxes paid 7 23 0
Interest paid 439 595 34
11 76

Pro-Forma Consolidated Statement of Shareholders´ Equity for
the fiscal years 1999, 1998 and 1997
(in accordance with US GAAP)
Net retained
Additional
profits/net
accumulated
Capital stock paid-in capital losses Total
T€ T€ T€ T€
Balance at January 1, 1997 24.375 57.088 0 81.463
Consolidated net income 1997 0 0 1.309 1.309
Pro forma adjustment 0 0 -1.309 -1.309
Balance at
December 31, 1997 24.375 57.088 0 81.463
Consolidated net income1998 0 0 3.762 3.762
Pro forma adjustment 0 0 -3.762 -3.762
Balance at
December 31, 1998 24.375 57.088 0 81.463
Consolidated net income 1999 0 0 7.485 7.485
Pro forma adjustment 0 0 -7.486 -7.486
Balance at
December 31, 1999 24.375 57.088 -1 81.462
11 77

Notes to the Pro-Forma Consolidated
Financial Statements for the fiscal years
1999, 1998 and 1997
List of abbreviations
IMF Internationale Medien und Film
Gesellschaft mbH & Co. Produktions KG,
München
IMF KG
Intermedia AG, München
Intermedia AG
Intermedia Film Equities Ltd., London
Intermedia Ltd.
Pacifica Film Distribution LLC, Los Angeles
Pacifica Distribution
Pacifica Film Development Inc., Los Angeles
Pacifica Development
Millennium Mediaworks Inc., Los Angeles
Millennium Mediaworks
The Company
The primary purpose of Intermedia AG, Munich,
and its subsidiaries is the development of film
projects, the production of films and the global
distribution of film rights.
The Intermedia Pro-Forma Group consists of the
parent company Intermedia AG and the wholly
owned subsidiaries Pacifica Film Distribution LLC
(‘‘Pacifica Distribution’’), Los Angeles, Pacifica
Film Development Inc. (‘‘Pacifica Development’’),
Los Angeles, Intermedia Film Equities Ltd.
(‘‘Intermedia Ltd.’’), London, and the other companies
listed under section ‘‘Companies
consolidated’’. These companies are all subsidiaries
of Intermedia Ltd.
In order to show the economic development of
the group’s structure as of the time of preparation
of the submitted pro forma financial statements,
it was assumed – deviating from the actual
situation – that the Intermedia group already
existed on Jan 1,1997, and that all shares of included
subsidiaries were in the possession of the
group by that time. Deltaaquarii Beteiligungs
GmbH, Munich, however, the legal predecessor
of Intermedia AG was only founded in August
1999. This company was renamed in Intermedia
GmbH and then reorganized into a stock corpo-
11 78
ration. Shares in Intermedia Ltd, Pacifica
Distribution and Pacifica Development as well as
the business operations of IMF Internationale
Media und Film GmbH & Co. Produktions KG
were economically contributed to Intermedia AG
at the beginning of 2000. The equity capital of
Intermedia Ltd. to be consolidated was assumed
for consolidation purposes to be equal to the
book value on April 1, 2000. The equity capital of
Pacifica Distribution and Pacifica Development
was revalued to market value as of 1. April 2000
for consolidation purposes.
In those cases where the equity of the subsidiaries
did not exist in the past in the amount to be
consolidated, an adjustment item for capital
consolidation was set up. Goodwill arose during
capital consolidation because of the contribution
of the business operations of IMF KG and the
contribution of Pacifica Distribution and Pacifica
Development at fair value. This goodwill will be
written down over 20 years.
Intermedia AG, Munich
The original sole shareholder of deltaaquarii
Beteiligungs GmbH, formed on August 31, 1999
was KPMG Consulting Gesellschaft mit
beschränkter Haftung. The founding shareholder
transferred its interest in deltaaquarii Beteiligungs
GmbH to Mr. Moritz Bormann by way of a notarized
contract dated December 22, 1999. The
company’s share capital was then increased by €
25.000,00 and it was reorganized and renamed
Intermedia AG. Pacifica Development, Pacifica
Distribution and Intermedia Ltd. will be contributed
to Intermedia AG effective April 11, 2000
against the issuance of shares. The business
operations of IMF KG were contributed to
Intermedia AG effective January 1, 2000 against
the issuance of shares.
The business purpose of Intermedia AG is to hold
equity interests in the aforementioned subsidiaries,
the development of film projects, production
of films, distribution and dealing with film rights.
The Company prepares its accounts in accordance
with the ‘‘Grundsätze ordnungsgemäßer
Buchführung’’ (principles of proper accounting)
which constitute generally accepted accounting
principles in Germany.

Pacifica Film Distribution LLC,
Los Angeles
Pacifica Distribution, formerly Allied Pacific
Entertainment LLC, was formed on February 28,
1997.
This company’s purpose is the global distribution
of feature films in all media sectors. With the
exception of ‘‘The Calling’’, Pacifica Distribution
distributes the film rights for all films produced
and contributed by IMF KG to Intermedia AG.
Pacifica Distribution licences the film rights for the
North American market to one of the US Major
Studios, which in turn markets the film rights
across the entire distribution chain in North
America. With two exceptions (Nurse Betty and
The Crow III), Pacifica Distribution licences the
distribution rights for the films in the rest of the
world to Intermedia Ltd. Pacifica Distribution
licenced distribution rights to Nurse Betty and
The Crow III to non-Group companies.
This company prepares its accounts in accordance
with United States Generally Accepted
Accounting Principles (US GAAP). However, as it
has historically been a cash-basis taxpayer, this
company is not obliged to prepare annual financial
statements.
Pacifica Film Development Inc.,
Los Angeles
Pacifica Development, formerly One True Thing
Inc., was formed on December 15, 1997.
This company seeks out potentially successful
film material (‘‘properties’’), develops these properties
and packages productions.
The most promising projects are then acquired
for production by Intermedia AG.
This company prepares its accounts in accordance
with United States Generally Accepted
Accounting Principles (US GAAP). However, as it
has historically been a cash-basis taxpayer, this
company is not obliged to prepare annual financial
statements.
Intermedia Film Equities Ltd., London
Intermedia Ltd. was formed on November 28,
1995.
The primary purpose of Intermedia Ltd. is the global
distribution of film rights. As a rule,
Intermedia Ltd. licences the rights to the entire
film distribution chain to territorial distributors,
who in turn market the individual distribution stages
in their territory.
The films licenced by Intermedia Ltd. can generally
be divided into three categories:
1. Intermedia Ltd. distributes the film rights for all
distribution stages of the films produced by
the Intermedia AG parent and acquired by
Pacifica Distribution in all countries of the world
except North America.
2. Intermedia Ltd. organizes and structures the
financing of film projects and thus acquires the
copyright to these films. Ownership of these
rights and distribution rights enables Intermedia
Ltd. to distribute the film rights worldwide
(apart from the U.S.A. and Canada) for an
indefinite period. As a rule, the producers retain
the marketing rights to the films in North
America.
3. Intermedia Ltd. organizes the distribution of
films as a service provider without holding the
copyright and charges a distribution commission.
This company prepares its accounts in accor
dance with United Kingdom Generally
Accepted Accounting Principles (UK GAAP).
11 79

Accounting policies
General
The pro forma consolidated financial statements
of Intermedia AG for fiscal years 1997,
1998 and 1999 were prepared in accordance
with US GAAP. The format of the financel statemants
is in accordance with Art. 266 and
Art. 275 HGB (German Commercial Code).
The single-entity financial statements of
Intermedia AG and Intermedia Ltd. have been
adjusted to reconcile national GAAP to US
GAAP. At Intermedia Ltd., the adjustments are
limited mainly to the film assets and the related
deferred taxes. In addition to the film
assets, further items were required to be adjusted
at the parent company Intermedia AG to
ensure compliance with US GAAP.
Consolidated financial statements
and pro forma consolidated financial statements.
The Group structure existing at the time the
subsidiaries were contributed to the Group
(April 11, 2000) was reproduced retroactively
in pro forma consolidated financial statements
for fiscal years 1997, 1998 and 1999, and adjusted
to reflect the different times at which
the subsidiaries were formed.
Consolidation principles
All of Intermedia AG’s direct subsidiaries are
consolidated as business combinations using
the purchase method set out in APB 16.
Capital consolidation uses the purchase
method by eliminating the parent company’s
equity interest against the proportionate equity
of the subsidiaries at the time of initial consolidation.
Any difference arising on capital
consolidation (goodwill) is taken to intangible
assets and written down over 20 years.
Significant investments of between 20% and
50% are accounted for using the equity
method.
Significant investments of minor importance
for the Group’s financial position and results of
operations are carried at cost.
There were no other investments that would
have to be carried at cost less amortization.
Intercompany gains and losses, revenues,
expenses and income are eliminated, as are
11 80
receivables and liabilities between consolidated
companies. Deferred taxes are recognized
for the tax effects of consolidation procedures
affecting income.
Currency translation
Transactions denominated in foreign currencies
in the single-entity financial statements
are measured at the rate prevailing at the
transaction date. Losses and gains from
exchange rate movements are remeasured at
the balance sheet date.
In the consolidated financial statements, the
assets and liabilities in the single-entity financial
statements of the foreign companies are
translated at the middle rates at the balance
sheet date; all items in the income statement
are translated at the average rates for the
year.
Substantial operative activities of the company
are settled in USD, so that from the point of
view of US GAAP USD is the functional currency.
The pro forma financial statements were
done in USD. Differences from conversion into
the functional currency are shown under other
operating income respectively other operating
expenses. The Intermedia Group has decided
to do the pro forma financial statements in
Euro. Correspondingly, the pro forma financial
statement in USD including the comparing
time on the basis of a conversion relation as of
December 31 1999 of 1 USD 0,99285 € is
shown. The pro forma financial statement of
the Intermedia Group converted into Euro
shows the same developments that could be
seen with a display in USD.
Revenue recognition
The Company generates revenues from the
sale of licenses and from finance fees. The
revenues from the sale of licenses are divided
into minimum guarantees that are always collected
at a fixed amount, irrespective of the
box office of the sold film, and overages (profit-related
payments).
Minimum guarantees are normally recognized
at the start of the licensing period; overages
are recognized when they become payable by
territorial distributers.

All payments received from the delivery of film
rights are recognized as revenues at
Intermedia, irrespective of whether they are
owned films or service films. In return,
amounts to be remitted to third parties for
service films are disclosed under ‘‘Cost of
goods sold’’.
The distribution commissions are recognized
at the commencement of the licensing period
for the rights sold.
The finance fees are recognized when the
projects in question have been structured and
production has commenced.
Earnings per share
If there is dilution, two figures must be stated
for earnings per share: basic earnings per
share and diluted earnings per share. To arrive
at the basic earnings per share, the consolidated
net income is divided by the weighted
average number of shares outstanding.
Because no convertible bonds or options
were granted in the past, there is no requirement
to disclose diluted earnings per share.
For the purposes of the pro forma consolidated
financial statements, the number of shares
outstanding has been fixed at 24,375,000 for
all prior periods.
Intangible assets
In accordance with FAS 53, the film assets are
measured at historical cost less regular amortization
using the film forecast computation
method (FAS 53.10). Interest expenses incurred
for the development and production of
film projects are contained in the production
costs. Under the film forecast computation
method, the yearly amortization charge is
measured as the ratio of revenues
recognized during the period, discounted to
the time at which revenues are first recognized,
to the total present value of all revenues.
As a rule, a film must be amortized over a
maximum of 20 years.
Films are written down to the net realizable
value where required, in accordance with FAS
53.16. Any asset-side differences from capital
consolidation are written down over 20 years.
Plant and equipment
Plant and equipment is carried at cost less
depreciation. It is written down by straight-line
depreciation over the standard useful life. The
average standard useful life for the Group’s
plant and equipment is three years.
Probable sustained impairments in excess of
diminished value due to wear and tear are
recognized by exceptional write-downs.
Leasing
US GAAP includes rules for allocating ownership
of the leased asset to the lessee (as a
finance lease) or to the lessor (as an operating
lease)on the basis of benefits and risks.
Assets acquired under finance leases are
capitalized. Outstanding financial obligations
under finance leases are carried under liabilities.
Current assets
Current assets consist of inventories, receivables
and cash and cash equivalents, including
amounts due after more one year. Amounts
due after more than one year are disclosed
separately in the Notes.
Receivables are carried at their principal
amount, less specific valuation allowances for
identifiable default risks. The treatment of
foreign currency receivables is covered in
Section `Currency Translation´.
Inventories consist of film development and
distribution costs. Under FAS 53, costs incurred
for the development of film projects must
be capitalized. Where film projects are not
exploited, thecapitalized film development
costs are written off over three years.
The distribution expenses capitalized in inventories
are distribution costs that can be
oncharged to the subdistributors. Does a project
show as economically not useful or not
feasible, further development is terminated
entirely and the development costs accrued
are depreciated immediately.
11 81

Cash and cash equivalents and bank borrowings
are carried at their redemption values.
The treatment of foreign currency cash and
cash equivalents and bank borrowings is described
in Section `Currency Translation´.
Accrued liabilities
Accrued taxes and other accrued liabilities are
set up if there is an obligation to a third party,
utilization is probable and the probable
amount to be accrued can be reliably
estimated.
Estimates
Preparation of the annual financial statements
requires certain estimates and assumptions
relating to the reporting of assets and liabilities,
the disclosure of contingent liabilities at
the balance sheet date and the disclosure of
income and expenses during the period under
review. Actual results could differ from these
estimates.
New accounting standards
The film assets have been measured in accordance
with FAS 53. The exposure draft
‘‘Proposed Statement of Position —
Accounting by Producers and Distributors of
Films’’ dated October 16, 1998 was not
applied.
11 82

Companies consolidated
In addition to the parent company Intermedia AG, the consolidated financial statements include all
companies in which Intermedia AG directly or indirectly holds a majority of all voting rights. The
number of companies consolidated in the pro forma consolidated financial statements for 1997,
1998 and 1999 grew due to new start-ups as shown in the following list:
Company Operational Sector Year of initial
consolidation +
parent company’s
equity interest
in the company
1997 1998 1999
Intermedia AG Holding Muttergesellschaft
Pacifica Development Film development 100% 100% 100%
Pacifica Distribution Film distribution 100% 100% 100%
Intermedia Ltd. Film financing, production 100% 100% 100%
and distribution
Intermedia Film Equities USA Inc.* Film financing and 100% 100% 100%
distribution
Intermedia Film Distribution Ltd.* Film distribution 100% 100% 100%
Intermedia Film Land Girls Ltd.* Film production 100% 100% 100%
Intermedia Films MP Ltd.* Film production 100% 100% 100%
Intermedia Films SF Ltd.* Film production 100% 100% 100%
Intermedia Films JDP Ltd.* Film production 100% 100% 100%
Intermedia Films Villa Ltd.* Film production 100% 100%
Intermedia Films (FB) Ltd.* Film production 100% 100%
MEI Films Ltd.* Film production 100%
Intermedia Films (BD) Ltd.* Film production 100%
Intermedia Films (ACE) Ltd.* Film production 100%
Intermedia Films (HS) Ltd.* Film production 100%
Intermedia Films (LLL) Ltd.* Film production 100%
Intermedia Films (WD) Ltd.* Film production 100%
Intermedia Com Ltd.* Internet interests 100%
Intermedia Film Development Ltd.* Film development 100%
Intermedia Finance Ltd.* Film production 100%
Intermedia Films (Enigma) Ltd.* Film production 100%
Up at the Villa Productions Ltd.* Film production 100%
Codebreaker Productions Ltd.* Film production 100%
* Intermedia Ltd. is the parent company of these companies.
The 50% interest in Intermedia Arc Pictures Limited is consolidated in the pro forma consolidated
financial statements using the equity method.
The 50% interest in Village Intermedia Pictures Ltd. is consolidated at cost in the pro forma
consolidated financial statements. This company was not consolidated using the equity method
because it is insignificant for the Group’s financial position and results of operations.
11 83

Notes to the consolidated balance sheet
Intangible assets
The intangible assets include in particular the films produced by the parent company Intermedia
AG and the film rights owned by Intermedia Ltd. In addition, the positive difference arising during
capital consolidation that cannot be allocated to identifiable assets and liabilities is carried as
goodwill and amortized over 20 years. However, goodwill is first amortized in 2000 because the
companies were not contributed until the first half of 2000. The “Consolidated Fixed Assets
Schedule’’ (annex to the Notes) presents changes in the individual items of noncurrent
assets based on aggregate historical costs.
No exceptional write-downs on film assets under FAS 53.16 were required.
In 1999, the item ‘‘Payments on account’’ contains an advance payment by Intermedia AG for the
film The Wedding Planner. The payments on account in 1998 and 1999 are advance payments by
Intermedia Ltd. for the purchase of film distribution rights.
11 84
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Film distribution rights 33.979 33.979 33.979
Goodwill 102.016 65.520 22.489
Payments on account 13.035 11.748 15.684
Total 149.030 111.247 72.152
Plant and equipment
The “Consolidated Fixed Assets Schedule’’ (annex to the Notes) presents changes in the
individual items of noncurrent assets based on aggregate historical costs.
Plant and equipment is composed as follows:
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Leasehold improvements 0 18 27
Operating and office equipment 372 171 107
Vehicle fleet 58 0 0
Total 430 189 134
Financial assets
The financial assets include the investments of Intermedia Film Equities Ltd. in Intermedia Arc
Pictures Ltd., which was consolidated at equity in 1997, 1998 and 1999 at equity, and in Village
Intermedia Pictures Ltd., which was included at cost in 1997, 1998 and 1999. The
“Consolidated Fixed Assets Schedule” (annex to the Notes) presents changes in the
individual items of noncurrent assets based on aggregate historical costs.

Inventories
Inventories capitalized in the Group all relate to Intermedia Ltd. The following overview presents a
breakdown of inventories into film development and distribution costs.
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Film development costs 3.444 671 1.517
Development costs 1.600 2.554 568
Total 5.044 3.225 2.085
Trade accounts receivable, receivables from stockholders and other assets
Trade accounts receivable are carried at their principal amount. No specific valuation allowances
were recognized because no default risks can be identified. The trade accounts receivable can be
divided into trade accounts receivable from the sale of films and other trade accounts receivable:
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Trade accounts receivable 87.732 40.839 24.289
thereof
from the sale of films 85.983 40.135 24.149
other trade accounts receivable 1.749 704 140
Receivables from stockholders 25 16.947 28.177
Other assets 6.782 2.142 617
thereof
Recoverable income taxes 874 53 213
Recoverable VAT 3.478 0 82
Miscellaneous 2.430 2.089 322
Total 94.539 59.928 53.083
The trade accounts receivable are all due within one year (current assets). Receivables from
stockholders are described in Section ‘‘Stockholders’ equity’’.
11 85

Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances and time deposits with less than
three months to maturity. Cash and cash equivalents are equeal to the amount shown in the Pro-
Forma consolidated cash flow statements.
Prepaid expenses
Prepaid expenses relate to advance rent payments for the first months of the following year.
Adjustment item for capital consolidation
During capital consolidation for 1997, 1998 and 1999, the net income for future periods not yet
disclosed by the companies in the net retained profits was taken to the ‘‘Adjustment item for capital
consolidation’’ until the date of initial consolidation. This item is only used for purposes of the proforma
presentation.
The initial consolidation date of Intermedia Ltd., Pacifica Distribution and Pacifica Development
was April 1, 2000. For the purposes of the pro forma consolidated financial statements, one quarter
of the net profit for 2000 was added to the equity to be consolidated, and is therefore still contained
in the ‘‘Adjustment item for capital consolidation’’.
Stockholders´ equity
After the contribution having taken place the number of shares outstanding is 24.375.000 non-parvalue
bearer shares with a share in equity capital of € 1. The shares are equipped with a full entitlement
to dividend from Jan 1, 2000. The number of shares is only created with contribution of the
shares of Intermedia Ltd., Pacifica Development and Pacifica Distribution and the transfer of the
operative business of IMF KG. For the pro-forma financial statements the share capital as well as
the capital reserves was shown entirely. Past assets not yet contributed are shown under
`Receivables from Stockholders´, still outstanding amounts of capital consolidation under
`Adjustment item for capital consolidation´.
The merger of Intermedia AG, Intermedia Ltd., Pacifica Distribution and Pacifica Development will
take place in April 2000. The merger will be accounted according to APB 16 as Business
Combination. Intermedia AG will take over the other companies against allotment of shares as subsidiary.
According to SAB 48 fair values are assumed at balancing of the merger for Intermedia AG,
for Pacifica Distribution and for Pacifica Development. Intermedia Ltd. is contributed at book value.
Effective January 1, 2000 Intermedia AG will take over the operative Business of IMF KG. The takeover
of substantial assets and debt is effected against issuance of shares of Intermedia AG. This process
also is treated as business combination according to APB 16 with the operative business
being taken over at fair value. Within the framework of this transaction activities of IMF KG outside
film production, e.g. expenses for fund management as well as expenses for development of film
projects not yet realised are not included, since neither further development of these projects not
yet realised nor fund management are business activities of Intermedia AG. The expenses for development
of film projects of IMF KG not yet realised are partially covered through selling developed
projects to a third party.
11 86

All deviating amounts from capital consolidation to the amount of T€ 38.555 are allocated to assets
and debt taken over as far as possible. The amount of T€ 33.979 not allocated to the amount is
shown as goodwill. In the future depreciation of goodwill is effected linear over 20 years.
Pro-Forma consolidated financial statements
For the presentation of the pro forma financial statements, the capital stock and the additional
paid-in capital of the Group are disclosed in the amount of these items at the date of creation of
the Group.
Capital consolidation of the subsidiaries is also performed retroactively at the equity at the date of
contribution. The amounts not yet contained in the equity of the subsidiaries are disclosed
under the ‘‘Adjustment item for capital consolidation’’.
The assets and liabilities of IMF KG are contributed against the issuance of shares of Intermedia
AG. Because IMF KG’s film assets only arise over time, the film rights not yet contributed to
Intermedia AG over the years under review are disclosed under ‘‘Receivables from stockholders’’.
Without this pro forma presentation, the stockholders’ equity of the Company would have changed
as follows:
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Pro forma stockholders’ equity 81.462 81.463 81.463
less:
Receivables from stockholders 25 16.947 28.177
Adjustment item for capital consolidation 0 1.799 7.892
Total 81.437 62.717 45.394
Stock-based compensation
There was no stock-based compensation in the past at Intermedia. For the future, the Company
plans introducing a stock option program in which both the management and other employees of
Intermedia will participate. The planned stock option program is a fixed stock option program as
defined by APB Opinion No. 25.
11 87

Accrued liabilities
The accrued liabilities are largely composed as follows:
11 88
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Accrued personnel expenses 94 12 0
Accrued taxes 45.733 32.717 11.193
thereof deferred tax liabilities 45.273 31.877 11.193
Labour related accruals 880 166 496
Miscellaneous accrued liabilities 1.966 1.304 2.290
Total 48.673 34.199 13.979
The deferred tax liabilities and their maturity structure are described in Section ‘‘Income taxes’’.
The accrued liabilities are short-term with the exception of components of the deferred tax
liabilities.
Debt
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Bank borrowings due within one year 16.265 20.019 19.294
Bank borrowings due between one and five years 45.210 15.111 0
Liabilities on current account 0 51 734
Overdrafts 61.475 35.181 20.028
The bank borrowings relate to liabilities for film project finance. All of these liabilities involve first-ranking
liabilities which are secured by claims to the film rights and by purchase guarantees by the
purchasers of the film rights.
All liabilities on current account are due within one year.

Payments received on account of orders and trade accounts payable
The payments received on account of orders and trade accounts payable are
composed as follows:
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Payments received on account of orders 25.300 1.391 754
Trade accounts payable 50.542 45.683 21.815
thereof
Liabilities from the purchase and
production of films 26.662 25.218 8.526
Liabilities from film development 1.118 272 2.074
Payable to film rights holders and other
overage liabilities 20.455 20.026 10.926
Other liabilities 2.307 167 289
Total 75.842 47.074 22.569
The payments received on account of orders include amounts for the sale of film rights. Because all
films for which advances are received are delivered within one year, and the revenues are recognized
on delivery of the film, all payments received on account of orders are due within one year.
The trade accounts payable are due within one year.
11 89

Other liabilities
The other liabilities are presented in the following table:
11 90
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Liabilities to stockholders 2.056 2.169 3.006
Other non-current liabilities 6.173 4.571 0
thereof
Liabilities to Subdistributors 3.668 4.571 0
Liabilities from purchase of library 1.769 0 0
Miscellaneous other liabilities 736 0 0
Other current liabilities 3.866 1.105 0
there of
Tax liabilities 1.632 89 33
Sale-and-lease-back liabilities 1.180 0 0
Miscellaneous other liabilities 1.054 1.016 672
Total 12.095 7.845 3.711
The liabilities to stockholders are due between one and five years and belong to Intermedia Ltd..
The other non current liabilities are all due after one year, the other current libilities are due within
one year.

Notes to the consolidated profit and loss account
Net sales
The net sales of the pro forma Group can be broken down as follows:
1999 1998 1997
T€ T€ T€
Finance fees 4.875 2.513 984
Minimum guarantees 106.618 57.597 40.669
Overages 2.713 564 0
Library revenues 1.514 1.644 4.170
Consolidated net sales 115.720 62.318 45.823
The following table presents the Group’s net sales by geographic segment. The finance fees are
largely generated in North America and Europe. However, because they cannot be allocated to the
individual segments, they are disclosed separately below:
1999 1998 1997
T€ T€ T€
Net sales, Europe 60.477 32.145 18.693
Net sales, North America 31.674 11.752 18.003
Net sales, Asia 9.829 9.795 5.324
Net sales, rest of world 8.865 6.113 2.819
Finance fees 4.875 2.513 984
Total 115.720 62.318 45.823
11 91

Costs of goods sold
Costs of goods sold is composed as follows:
11 92
1999 1998 1997
T€ T€ T€
Costs of materials 37.560 26.761 31.740
Amortization of intangible assets (film assets),
plant and equipment 58.583 23.765 9.994
Personnel expenses 898 868 308
Total 97.041 51.394 42.042
The revenues generated by service films (films which are distributed by Intermedia AG on behalf of
third parties where Intermedia does not own the film rights) are carried in full in the consolidated
income statement. The revenues are remitted to the holders of the film rights after deduction of a
distribution commission. The portion of the revenues to be remitted is disclosed under the cost of
materials. Development costs for film projects are also disclosed under the cost of materials.
The item ‘‘Personnel expenses’’ shown above contains only the actual personnel expenses incurred
to generate revenues.

Other costs
1999 1998 1997
T€ T€ T€
Research and development costs 1.076 391 288
Selling expenses 1.306 1.188 546
General and administrative expenses 3.865 3.133 1.042
thereof
Personnel expenses 2.482 1.852 881
Other expenses 1.383 1.281 161
The research and development costs represent development costs for discontinued film projects
that are written off.
The selling costs relate solely to the personnel expenses of the sales organization.
The other general and administrative expenses are composed of communication, travel, office and
other costs.
Other operating income and other operating expenses
The other operating income and other operating expenses are composed of exchange differences
resulting from the translation of financial statements into the functional currency.
Net financing costs
1999 1998 1997
T€ T€ T€
Other interest and similar income 155 118 16
Other interest and similar expenses 882 804 384
thereof
Interest on liabilities to related parties 441 173 336
Interest on subdistributor loan 320 422 0
Interest on bank loan 36 69 0
Other interest 85 140 48
Total -727 -686 -368
The ’Other interest and similar income’ relate to bank deposits.
11 93

Income taxes
The income taxes are broken down as follows:
11 94
1999 1998 1997
T€ T€ T€
Current taxes 9.243 2.394 32
Deferred taxes - 5.726 - 617 440
Total 3.517 1.777 472
Under German corporation tax law, the imputation procedure is applied to the taxation of
corporations and stockholders. Under the tax law valid in 2000, retained earnings are initially taxed
at a corporation tax rate of 40% (1998 and 1997: 45%). There is also a solidarity surcharge of 5.5%
(1997: 7.5%) on the remitted corporation tax liability. When profits are distributed to
stockholders, the corporation tax rate is reduced to 30% plus the 5.5% (1997: 7.5%) solidarity
surcharge. In the case of distributions, stockholders with a tax liability in Germany also receive a
tax credit on their income tax in the amount of the corporation tax previously paid by the
Company.
The following table presents a reconciliation between the expected and the effective tax expense
for each year. An effective corporation tax rate of 42.2% (1998: 47.475% and 1997: 48375%) plus
an effective trade tax rate of 11.375% (1998: 10.336% and 1997: 10.159%) was applied to calculate
the deferred taxes.
1999 1998 1997
T€ T€ T€
Expected tax expense 5.894 3.210 1.043
Adjustment to tax rate for deferred taxes - 125 - 49 0
in Germany
Adjustment for different tax rates outside Germany - 2.247 - 1.414 - 551
Other - 5 30 - 20
Effective tax expense 3.517 1.777 472

The deferred tax assets and liabilities result from accounting differences in the following items:
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Operating loss carryforwards 0 216 216
Film assets 0 595 0
Receivables 0 18 0
Liabilities 0 11 47
0 840 263
Valuation allowances 0 0 0
Deferred tax assets 0 840 263
Film assets 45.273 32.691 11.455
Receivables 0 0 1
Other accrued liabilities 460 866 0
Deferred tax liabilities 45.733 33.557 11.456
Net amount 45.733 32.717 11.193
The deferred tax assets and liabilities are disclosed as follows after netting:
Deferred tax assets
Deferred tax liabilities
Net amount
Extraordinary item
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
total < 1 year total < 1 year total < 1 year
0 0 0 0 0 0
45.733 460 32.717 840 11.193 0
45.733 460 32.717 840 11.193 0
The extraordinary item results from the pro forma presentation of the financial statements in prior
periods. The portion of earnings resulting from the contribution of the business operations of IMF
KG is eliminated.
1999 1998 1997
T€ T€ T€
Extraordinary item - 1.205 - 13 127
11 95

Other disclosures
Segment reporting
FAS 131 requires segment reporting for fiscal years commencing after December 15, 1997.
In the past, Intermedia was active almost exclusively in the licensing of film rights. This covers both
the licensing of rights to owned films and to service films, for which only Intermedia’s distribution
network is provided to the owners of the film rights. These areas are therefore presented as
segments.
The internal financial control system is based largely on the accounting principles described above.
Intermedia measures the success of its segments on the basis of the ‘‘Gross profit’’. The gross profit
of a segment is calculated as net sales less the costs of goods sold. Information on the presentation
of net sales by geographic segments is contained in the notes on net sales.
1997 Owned Service
Films Films Other Eliminiations Group
T€ T€ T€ T€ T€
External revenues 13.378 31.461 984 0 45.823
Intragroup revenues 0 0 0 0 0
Total revenues 13.378 31.461 984 0 45.823
Gross profit 3.418 - 279 642 0 3.781
Segment non-current
assets 38.173 0 33.979 0 72.152
Depreciation 9.959 0 35 0 9.994
1998 Owned Service
Films Films Other Eliminiations Group
T€ T€ T€ T€ T€
External revenues 29.541 30.265 2.512 0 62.318
Intragroup revenues 10.009 0 0 - 10.009 0
Total revenues 39.550 30.265 2.512 - 10.009 62.318
Gross profit 6.216 3.504 1.204 0 10.924
Segment non-current
assets 77.268 0 33.979 0 111.247
Depreciation 23.672 0 93 0 23.765
11 96

1999 Owned Service
Films Films Other Eliminiations Group
T€ T€ T€ T€ T€
External revenues 72.635 38.210 4.875 0 115.720
Intragroup revenues 34.687 0 0 - 34.687 0
Total revenues 107.322 38.210 4.875 - 34.687 115.720
Gross profit 14.301 650 3.728 0 18.679
Segment non-current
assets 115.051 0 33.979 0 149.030
Depreciation 58.451 0 132 0 58.583
Financial instruments
The current market value of accounts receivable and liabilities from deliveries and performances, of
the other assets and liabilities as well as the current account liabilities and credit balance corresponds
to the book value due to the short-term character of this position. The current market value
of the financial assets is based of current conditions for long-term financing. The book value of the
position equals about the current market value.
The book values (BV) and market values (MV) of the financial instruments are shown in the following:
31.12.1999 31.12.1998 31.12.1997
In T€ BV MV BV MV BV MV
Assets
Investments in affiliates 14 14 0 0 40 40
Receivables and other assets 94.539 94.539 59.928 59.928 53.083 53.083
Cash and cash equivalents 30.376 30.376 29.314 29.314 6.331 6.331
Liabilities
Liabilities 149.412 149.412 90.100 90.100 46.308 46.308
11 97

Earnings per share
To enhance the comparability across all the years, the calculation is based on the capital stock of
the Company after the capital increase of € 24,375,000.00. The Company has no outstanding debt
securities or other obligations which would dilute the earnings per share.
The earnings per share are calculated as follows:
31.12.1999 31.12.1998 31.12.1997
Consolidated net income (in T€) 7.485 3.762 1.309
Number of shares (in T€) 24.375 24.375 24.375
Earnings per share (in T€) 0,31 0,15 0,05
Related party disclosures
In addition to the companies included in the consolidated financial statements, the following
persons and companies are related parties of Intermedia AG:
Moritz Bormann, stockholder and member of the Managing Board
Guy East, stockholder and member of the Managing Board
Nigel Sinclair, stockholder and member of the Managing Board
Hornbeam Holdings Limited, stockholder
Firm Juwel Limited
West Eleven Limited
Millennium Mediaworks Inc.
Onda Entertainment Inc.
The Company assumed a guarantee for a liability amounting to T€ 868 in favor of Firm Juwel
Limited, a company wholly owned by Guy East. The liability has now been settled by Firm Juwel
Limited.
The Company also has relations with West Eleven Ltd., which is owned by the wife of Guy East.
The relations are limited to the development and production of feature films. All transactions are
conducted on an arm’s length basis. During the years under review, the Company has paid the
following amounts to West Eleven Ltd. for film development:
11 98
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
West Eleven Films Limited 5.762 399 489
Film production is preceded by the development of film projects. The development of film projects
produced by Intermedia AG or by IMF KG which was absorbed by Intermedia AG is undertaken
by Millennium Mediaworks Inc., Los Angeles (‘‘Millennium’’). The sole shareholder of Millennium is
Moritz Bormann.

The following table presents the amounts payable by Intermedia to Millennium:
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Liabilities to Millennium 1.929 68 1.118
Nigel Sinclair received a consultancy fee of T€ 164 in 1997. This amount was contained in ‘‘Other
liabilities’’ in 1997.
In the past Onda Entertainment Inc. has carried out single services, for which, however a price like
by a third party was paid.
There were the following net liabilities to related parties:
31.12.1999 31.12.1998 31.12.1997
T€ T€ T€
Guy East 0 0 169
Nigel Sinclair 0 0 169
Hornbeam Holdings Limited 2.056 2.169 2.668
Total 2.056 2.169 3.006
Contingent liabilities
The Company received advances of T€ 31.505 from sale-and-lease-bank transactions in 1999.
These advances, which are held by a bank in escrow, serve to redeem the liabilities resulting from
the transaction. The liabilities amount to T€ 33.989 at December 31, 1999.
Other financial obligations
On 31 December 1999, financial liabilities for rent amounted to T€ 75.
Intermedia Film Equities Ltd. (or one of its subsidiaries) due to a loan agreement with a distribution
company is obliged to pay an additional interest payment to the amount of TUSD 1.354 to the lender,
should certain changes to the legal company structure become effective. This payment is done
in the form of a increased interest payment.
11 99

Employees
Average number of employees in the Group:
11 100
1999 1998 1997
Anzahl Anzahl Anzahl
Marketing and Sales 12 10 7
Administration 21 16 7
Finance and Legal 8 8 6
Total 41 34 20
Events after the balance sheet date
The Company is planning an IPO on the Neuer Markt in Frankfurt in May 2000. The merger of the
aforementioned companies to form a group for the purposes of the IPO and the resulting changes
and requirements in accounting and reporting are described in detail in the previous sections, and
in particular in Section `Stockholders’ equity´.

11 101

Pro-Forma Fixed Assets Schedule as of December 31, 1999
(in accordance with US GAAP)
Intangible assets
11 102
Historical cost
Brought
forward at Balance at
1.1.1999 Additions Disposals Transfers 31.12.1999
T€ T€ T€ T€ T€
Goodwill 33.979 0 0 0 33.979
Film assets 99.151 83.200 0 11.747 194.098
Payments on account 11.748 13.034 0 -11.747 13.035
144.878 96.234 0 0 241.112
Plant and equipment
Other equipment,
operating and office equipment 327 402 40 0 689
Financial assets
Investments in affiliates 0 14 0 0 14
TOTAL NONCURRENT ASSETS 145.205 96.650 40 0 241.815

Depreciation/amortization Book values
Brought Depreciation/
forward at amortization Balance at
1.1.1999 In the year Disposals 31.12.1999 31.12.1999 31.12.1998
T€ T€ T€ T€ T€ T€
0 0 0 0 33.979 33.979
33.631 58.451 0 92.082 102.016 65.520
0 0 0 0 13.035 11.748
33.631 58.451 0 92.082 149.030 111.247
138 132 11 259 430 189
0 0 0 0 14 0
33.769 58.583 11 92.341 149.474 111.436
11 103

Pro-Forma Fixed Assets Schedule as of December 31, 1998
(in accordance with US GAAP)
Intangible assets
Brought
forward at Balance at
1.1.1998 Additions Disposals Transfers 31.12.1998
T€ T€ T€ T€ T€
Goodwill 33.979 0 0 0 33.979
Film assets 32.448 51.019 0 15.684 99.151
Payments on account 15.684 11.748 0 -15.684 11.748
82.111 62.767 0 0 144.878
Plant and equipment
Other equipment,
operating and office equipment 179 148 0 0 327
Financial assets
Investments in affiliates 40 0 40 0 0
TOTAL NONCURRENT ASSETS 82.330 62.915 40 0 145.205
11 104
Historical cost

Depreciation/amortization Book values
Brought Depreciation/
forward at amortization Balance at
1.1.1998 In the year 31.12.1998 31.12.1998 31.12.1997
T€ T€ T€ T€ T€
0 0 0 33.979 33.979
9.959 23.672 33.631 65.520 22.489
0 0 0 11.748 15.684
9.959 23.672 33.631 111.247 72.152
45 93 138 189 134
0 0 0 0 40
10.004 23.765 33.769 111.436 72.326
11 105

11 106
Pro-Forma Fixed Assets Schedule as of December 31, 1997
(in accordance with US GAAP)
Intangible assets
Brought Balance at
forward at
1.1.1997 Additions 31.12.1997
T€ T€ T€
Goodwill 33.979 0 33.979
Film assets 236 32.212 32.448
Payments on account 0 15.684 15.684
34.215 47.896 82.111
Plant and equipment
Other equipment,
operating and office equipment
Financial assets
Historical cost
55 124 179
Investments in affiliates 40 0 40
TOTAL NONCURRENT ASSETS 34.310 48.020 82.330

Depreciation/amortization Book values
Brought Depreciation/
forward at amortization Balance at
1.1.1997 In the year 31.12.1997 31.12.1997 31.12.1996
T€ T€ T€ T€ T€
0 0 0 33.979 33.979
0 9.959 9.959 22.489 236
0 0 0 15.684 0
0 9.959 9.959 72.152 34.215
10 35 45 134 45
0 0 0 40 40
10 9.994 10.004 72.326 34.300
11 107

Certificate on the Pro-Forma Consolidated Financial Statements as of December
31, 1997, December 31, 1998 and December 31, 1999
(in accordence with US GAAP)
We have audited the pro forma consolidated
financial statements of Intermedia AG for the
years ended December 31, 1997, December
31, 1998 und December 31, 1999, consisting of
the balance sheets, income statements,
notes, statements of cash flows and statements
of equity for fiscal years 1997, 1998 and
1999. These pro forma consolidated financial
statements are the responsibility of the
management of the Company. Our responsibility
is to express an opinion, based on our
audit, as to whether the pro forma consolidated
financial statements comply with United
States Generally Accepted Accounting
Principles (US GAAP).
We conducted our audit in accordance with
German audit regulations and in compliance
with the generally accepted standards for the
audit of financial statements promulgated by
the Institut der Wirtschaftsprüfer (IDW), as well
as in compliance with the International
Standards on Auditing (ISA). Those standards
require that we plan and perform the audit to
obtain reasonable assurance about whether
the pro forma consolidated financial statements,
prepared on the basis of the assumptions
cited in the notes, are free of material
misstatements. Knowledge of the business
activities and the economic and legal environment
of the pro forma Group and evaluations
of possible misstatements are taken into
account in the determination of audit procedures.
An audit includes examining, on a test
basis, evidence supporting the amounts and
disclosures in the pro forma consolidated
financial statements. An audit also includes
assessing the accounting principles used and
significant estimates made by the legal representatives,
as well as evaluating the overall
presentation of the pro forma consolidated
financial statements. We believe that our audit
provides a reasonable basis for our opinion.
11 108
In our opinion, the pro forma consolidated
financial statements give, in accordance with
US GAAP, a view of the financial position of the
pro forma Group, and of the results of its operations
and its cash flows, that corresponds to
the notional situation assumed for the preparation
of these financial statements.
Munich, April 11, 2000
Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Dr. Merl Dirscherl
Wirtschaftsprüfer Wirtschaftsprüfer

Principles of US GAAP accounting and explanation of significant differences
between German accounting legislation and US GAAP
An explanation of accounting, measurement
and consolidation principles that differ from
the principles set out in German accounting
legislation is presented below.
Accounting and reporting by companies in
accordance with United States Generally
Accepted Accounting Principles (US GAAP) is
based on the objective of providing investors
with information that is relevant to their decisions.
This prohibits a conservative approach to profit
disclosure driven by creditor protection
considerations, as well as any adjustments to
earnings on the basis of carrying values motivated
by tax considerations ('umgekehrte
Maßgeblichkeit');
A consequence of the requirement of decision
usefulness is that recognition and measurement
rules are driven by the need to establish
the actual profits generated by the reporting
entity, rather than the distributable profits for
the purposes of creditor protection.
US GAAP accounting thus tends to place less
emphasis on prudence (conservatism) than
German accounting and reporting law.
Significant differences are as follows:
• Minimal opportunities for creating and rever
sing hidden reserves;
• Although the historical cost and revenue
recognition principles generally apply, 'unre
alized' earnings components must be
recognized in a number of specially defined
instances so that the actual profit for the
period can be identified;
• The requirement of consistency (recogni
tion, measurement, disclosure, consolida
tion) must be observed strictly; any changes
in accounting policies are permitted only if it
can be shown that these will enhance the
relevance and reliability of the financial
statements;
• Substance over form: Greater importance is
attached to the principle of substance over
form in US GAAP than in Germany. This prin
ciple sets out that the substance and economic
reality of a transaction is of greater
importance than its legal form.
US GAAP consolidated financial statements
comprise the following components:
• consolidated balance sheet,
• consolidated income statement,
• consolidated statement of cash flows,
• statement of changes in stockholders'
equity,
• notes to the consolidated financial
statements.
The income statement must use the 'cost of
sales' (function of expense) classification.
There is no prescribed fixed format for the
classification of the individual balance sheet or
income statement items.
Explanation of significant recognition
and measurement differences
between US GAAP and German
accounting legislation
The significant recognition and measurement
differences between US GAAP and German
accounting legislation that apply to the consolidated
financial statements of Intermedia AG
can be summarized as follows:
(1) Intangible assets – Film assets
Films produced by the Company itself
must be recognized in full. All costs associ
ated with the production of films are capi
talized and amortized over the probable
useful life of the films as the corresponding
revenues are recognized.
11 109

(2) Deferred taxes
Deferred tax assets must be recognized in
full. This principle also applies to tax loss
carryforwards, where deferred tax assets
must also be recognized if realization of
the related tax benefit in the future is pro
bable. The deferred tax assets must be
reviewed regularly for impairment. They
must be written down if necessary.
(3) Capitalization of development
costs
Under US GAAP, development costs must
be capitalized subject to certain restrictive
conditions. In contrast, pure basic research
cannot be capitalized under US GAAP.
(4) Other accrued liabilities
Provisions may only be set up for liabilities
to third parties ("external liabilities").
Provisions for possible future operating
expenses are generally not permitted.
11 110

12 Annual financial statements of deltaaquarii
Beteiligungs GmbH as of December 31, 1999
Index
• Balance Sheet as of December 31, 1999
• Profit and Loss Account for the short fiscal year
from August 16 to December 31, 1999
• Notes to the financial Stetments for the short fiscal year
from August 16 to December 31, 1999
• Management Report 1999
• Auditor´s Opinion
12 111

Balance sheet as of December 31, 1999
Assets Opening balance
sheet
31.12.1999 16.08.1999
€ €
A. Current assets
12 112
I. Other assets 55,75 0,00
II.Cash and cash equivalents 25.403,01 26.250,00
Summe Aktiva 25.458,76 26.250,00
Passiva Opening balance
sheet
31.12.1999 16.08.1999
€ €
A. Equity
I. Subscribed capital 25.000,00 25.000,00
II. Capital reserves 1.250,00 1.250,00
III. Net loss for the year - 791,24 -
Summe Eigenkapital 25.458,76 26.250,00
Summe Passiva 25.458,76 26.250,00

Profit and Loss Account for the short fiscal year August 16
to December 31, 1999
16.8. – 31.12.1999
€
Other operating expenses - 791,24
Result from ordinary activities - 791,24
Net loss for the year - 791,24
12 113

Notes to the financial statements for the short fiscal year
August 16 to December 31, 1999
Accounting policies
Accounting policies
The accompanying financial statements contain
all assets, expenses and income unless
otherwise prescribed by law.
Asset items have not been eliminated against
equity and liabilities. Expenses have not been
eliminated against income.
The current assets and equity are stated
separately in the balance sheet and are sufficiently
classified.
Measurement
Measurement is based on the going concern
principle. This is not precluded by actual or
legal circumstances.
Assets have been individually measured at the
closing date.
All items were conservatively measured. All
risks and losses arising before the closing date
have been recognized. Gains are recognized
only if they had been realized by the closing
date.
Receivables are generally carried at their principal
amount.
There are no liabilities secured by liens or similar
rights.
12 114
Notes to the income statement
The income statement is classified using the
total cost (type of expenditure) format.
Other disclosures
Apart from management, the Company had
no employees during the year under review.
The following persons were appointed
Managing Directors of the Company during
the year under review:
Rudolph Herfurth (until December 22, 1999)
Moritz Bormann (from December 22, 1999)
Florian Bollen (from December 22, 1999)
Munich, March 10, 2000
Intermedia GmbH
The Management

Management Report 1999
The Company was not operational up to the
closing date and has not generated any revenues
to date. The Company has not made any
investments up to the present. Only formation
costs have been incurred.
Following the close of the fiscal year under
review, there are plans to transfer the entire
business operations of IMF Internationale
Medien und Film Gesellschaft mbH & Co.
Produktions KG, ("IMF") to the Company. IMF
will receive shares in the Company in return. In
the future, the Company will continue the
business operations of IMF, i.e. the financing
and production of feature films as well as their
exploitation. The contribution will be implemented
with economic effect as 00:00 on
January 1, 2000.
After the contribution agreement has been
signed, Intermedia GmbH will be reorganized
as an Aktiengesellschaft (German public company)
through a change in legal form. The
shares of the new Intermedia AG will then be
admitted to the Neuer Markt of the Frankfurt
Stock Exchange. The reorganization and
transformation of the Company was resolved
by way of a notarized agreement dated
February 27, 2000.
There are also plans to transfer Intermedia
Film Equities Limited, domiciled in the United
Kingdom, and its subsidiaries, and Pacifica
Film Distribution LLC, domiciled in the United
States of America, to the Company against
the granting of equity interests as part of a
non-cash capital increase at Intermedia AG.
The purpose of Intermedia Film Equities
Limited is the production and distribution of
feature films and videos. It was formed in
England at the end of 1996.
The purpose of Pacifica Film Distribution LLC
is the global distribution of feature films in all
media sectors.
Via its future subsidiaries, Intermedia AG plans
to make and produce films itself and to market
film rights worldwide. The registered office of
the Company will remain in Munich. There are
no plans at present to establish branch offices
in other countries.
Munich, March 10, 2000
The Management of Intermedia GmbH
12 115

Auditor´s opinion
To Intermedia GmbH, formerly deltaaquarii
Beteiligungs GmbH, Munich
We have audited the annual financial statements
of deltaaquarii Beteiligungs GmbH,
Munich, including the accounting and the
management report, for the short fiscal year
August 16 to December 31, 1999. The accounting,
the financial statements and the management
report in accordance with the provisions
of the HGB (German Commercial Code) and
the supplementary provisions of the articles of
association are the responsibility of the
Company's management. Our responsibility is
to express an opinion, based on our audit, on
the annual financial statements, including the
accounting and the management report.
We conducted our audit in accordance with
section 317 of the HGB and the generally
accepted standards for the audit of financial
statements promulgated by the Institut der
Wirtschaftsprüfer (IDW). Those standards
require that we plan and perform the audit
such that material misstatements affecting the
presentation of the financial position and
results of operations in the annual financial
statements in accordance with German
accounting principles and in the management
report are detected with reasonable assurance.
Knowledge of the business activities and
the economic and legal environment of the
Company and evaluations of possible misstatements
are taken into account in the determination
of audit procedures. An audit includes
examining, largely on a test basis, the effectiveness
of the internal control system and the
evidence supporting the disclosures in the
accounting, the annual financial statements
and the management report. An audit also
includes assessing the accounting principles
used and significant estimates made by
management, as well as evaluating the overall
presentation of the financial statements and
the management report.
We believe that our audit provides a reasona-
12 116
ble basis for our opinion.
Our audit has not led to any reservations.
In our opinion, the annual financial statements
give, in accordance with German principles of
proper accounting, a true and fair view of the
financial position of the Company and of the
results of its operations.
Munich, March 10, 2000
Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Dr. Merl Dirscherl
Wirtschaftsprüfer Wirtschaftsprüfer