Form 20-F PrimaCom AG

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 20-F
(Mark One)
n REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934. or
≤ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.
or
n TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EX-
CHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO .
Commission file number: 000-30004
PrimaCom AG
(Exact Name of Registrant as Specified in its Charter)
FEDERAL REPUBLIC OF GERMANY
(Jurisdiction of Incorporation or Organization)
An der Ochsenwiese 3
55 124 Mainz
011 49 6131 9440
(Address of Principal Executive Offices)
Securities registered to or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
None None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Bearer Ordinary Shares, with no nominal value
(Title of Class)
American Depositary Shares, each representing one-half of one Ordinary Share
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of
the close of the period covered by the Annual Report:
Bearer Ordinary Shares of DM: 15,782,842
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes ≤ No n
Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 n Item 18 ≤

TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS ***************************************************** 3
EXCHANGE RATE INFORMATION*******************************************************
PART I
3
Item 1. Description of Business******************************************************** 4
Item 2. Properties ******************************************************************* 16
Item 3. Legal Proceedings ************************************************************ 17
Item 4. Control of Registrant********************************************************** 18
Item 5. Nature of Trading Market ****************************************************** 19
Item 6. Exchange Controls and Other Limitations Affecting Security Holders ****************** 20
Item 7. Taxation ******************************************************************** 20
Item 8. Selected Financial Data******************************************************** 28
Item 9. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29
Item 9A. Quantitative and Qualitative Disclosures About Market Risks ************************* 39
Item 10. Directors and Officers ********************************************************* 39
Item 11. Compensation of Directors and Officers ****************************************** 43
Item 12. Options to Purchase Securities from Registrant or Subsidiaries************************ 44
Item 13. Interest of Management in Certain Transactions ************************************ 45
Item 14. Description of Securities to be Registered***************************************** 49
Item 15. Defaults upon Senior Securities *************************************************
PART III
49
Item 16. Changes in Securities, Changes in Security for Registered Securities and Use of Proceeds 49
Item 17. Financial Statements **********************************************************
PART IV
50
Item 18. Financial Statements ********************************************************** 50
Item 19. Financial Statements and Exhibits *********************************************** 69
2
Page

FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements which are subject to various risks and uncertainties.
Because the merger of KabelMedia Holdings AG and Süweda Elektronische Medien- und Kabelkommunikations
AG, which formed PrimaCom AG, was only completed on December 30, 1998, the forward-looking statements
made in this document have been made without management having had the benefit of a significant historical
operating experience of PrimaCom as a combined entity. These forward-looking statements involve known and
unknown risks and uncertainties which may cause actual results, performance or achievements of PrimaCom to
be materially different from any future results, performance or achievements that may be expressed or implied by
such forward-looking statements, including, among other things, the impact of future technological change and
its influence on the competitive environment for cable network operators, the impact of future regulatory change,
the ability of PrimaCom to successfully integrate the operations of Süweda and KabelMedia or to successfully
integrate the operations of cable operators acquired in the future, the ability of management to manage cable
assets in new geographic areas, the adequacy of PrimaCom’s capital resources and various other factors both
referenced and not referenced in this annual report.
EXCHANGE RATE INFORMATION
The following table sets forth, for the years 1994 to 1998, certain information concerning the exchange rate
between DM and U.S. dollars based on the noon buying rate in The City of New York for cable transfers in DM,
as certified for customs purposes by the Federal Reserve Bank of New York (the ‘‘Noon Buying Rate’’)
(expressed as DM per U.S. dollar). For the period starting on January 1, 1999, the table reflects the conversion of
the Noon Buying Rate for Euro to DM at the legally fixed conversion rate of 4 1.00 = DM1.95583. From
January 1, 1999, upon the introduction of the Euro, until December 31, 2001, Germany and each other country
which is part of the European Monetary Union may use two currencies (the Euro and its local currency). During
this transitional period, the exchange rate between Euro and DM is legally fixed at the exchange rate stated above.
On January 1, 2002, DM will cease to exist.
The rates stated below are provided solely for the convenience of the reader and are not necessarily the
exchange rates (if any) used by PrimaCom in the preparation of its consolidated financial statements included
elsewhere in this annual report. No representation is made that DM could have been, or could be, converted into
U.S. dollars at these rates or at any other rates, or at all.
Period-end
DM per U.S. Dollar
Average
Calendar Year Rate Rate (1)
High Low
1994*********************************************** 1.5495 1.6119 1.7627 1.4920
1995*********************************************** 1.4345 1.4261 1.5612 1.3565
1996*********************************************** 1.5387 1.5070 1.5835 1.4354
1997*********************************************** 1.7991 1.7394 1.8810 1.5413
1998*********************************************** 1.6670 1.7588 1.8542 1.6060
1999 (through March 30, 1999)************************* 1.8224 1.7644 1.8252 1.6558
(1) The average of the Noon Buying Rate on the last business day of each full month during the relevant period with the exception of 1999
which is the average of the last business day of each month and the average of each business day thereafter.
On March 30, 1999, the Noon Buying Rate for Euro as expressed in DM was DM1.8224 = $1.00.
Fluctuations in the exchange rate between the Euro and DM, on the one hand, and between DM and
U.S. dollars, on the other hand, will affect the U.S. dollar equivalent of the Euro denominated prices of the shares
and, as a result, will affect the market price of the ADSs in the United States. Cash dividends, if any, will be paid
by PrimaCom in DM and, ultimately, in Euro, and exchange rate fluctuations will also affect the foreign exchange
rate equivalent that shareholders who convert such dividends into a foreign currency will be able to receive.
3

Item 1. Description of Business
Introduction
PART I
PrimaCom owns and operates, acquires and constructs cable television networks that serve primarily
medium- and small-sized communities in Germany, the largest cable television market in Europe. PrimaCom
believes that it is the third largest private cable operator in Germany in terms of number of subscribers (excluding
Deutsche Telekom, which is not considered to be a private operator by the German cable television industry). As
of December 31, 1998, PrimaCom owned and operated cable networks passing 1,335,052 homes and serving
877,152 subscribers.
The merger of Süweda Elektronische Medien- und Kabelkommunikations AG (‘‘Süweda’’) into KabelMedia
Holding AG (‘‘KabelMedia’’), two similarly sized German cable television operators, was registered with the
German Commercial Register on December 30, 1998. KabelMedia then changed its name into PrimaCom and
started operating as a single entity. KabelMedia started operations in 1992 and had purchased 22 cable television
networks prior to the merger. Prior to the merger, KabelMedia owned and operated cable networks passing
approximately 660,000 homes and serving approximately 493,000 subscribers. Süweda has owned and operated
cable television networks since 1983 and prior to the merger, Süweda owned and operated cable networks passing
approximately 675,000 homes and serving approximately 384,000 subscribers.
KabelMedia historically followed a systematic approach in acquiring, consolidating and operating cable
television networks. PrimaCom intends to continue to use this approach. PrimaCom’s goal is to increase
operating cash flow while maintaining or improving service standards. In addition, as technology progresses,
PrimaCom intends to consider the introduction of new products such as digital television and Internet data
services. A key element of its strategy is to expand its existing regional clusters of cable television networks and
to establish new regional clusters of networks large enough to serve as cores for new operating regions. In
addition, once PrimaCom completes acquisitions, it intends to aggressively consolidate cable networks to
improve operating performance. PrimaCom intends to accomplish this by eliminating duplicative personnel and
office locations, utilizing or creating regional subscriber service centers and signal distribution facilities and
centralizing corporate support functions, including accounting, billing and administration services.
Following the merger, PrimaCom reorganized Süweda’s cable television networks into KabelMedia’s
existing six operating regions: the Chemnitz/Plauen Region, the Leipzig Region, the Berlin Region and the
Dresden Region, all of which are located within the new German states — those German States that comprised
the former East Germany, formally known as the German Democratic Republic — and the Wiesbaden/Mainz
Region and the Osnabrück/Aachen Region, both of which are located within the old German states — those
German states that comprised the former West Germany, formally known as The Federal Republic of Germany,
prior to the reunification of the new and old German States. The following table sets forth the homes passed,
subscriber and penetrations (subscriber divided by homes passed) of PrimaCom’s cable television networks
within each of these regions as of December 31, 1998.
Chemnitz/ Wiesbaden/ Osnabrück/
Plauen Leipzig Berlin Dresden Mainz Aachen
Region Region Region Region Region Region Total
Homes passed ******** 195,090 291,162 182,479 87,720 323,136 255,465 1,335,052
Subscribers*********** 145,681 232,872 155,556 67,994 164,679 110,370 877,152
Penetration *********** 74.7% 80.0% 85.2% 77.5% 51.0% 43.2% 65.7%
The German Cable Television Network and Market
The characteristics of the German cable television industry have been influenced by the regulatory
environment in which the industry operates. The German Telecommunications Act of August 1, 1996 (the ‘‘Act’’)
ended the network monopoly of Deutsche Telekom, the legal successor of Deutsche Bundespost Telekom
(references in this annual report to Deutsche Telekom include Deutsche Bundespost Telekom), by providing that
anyone meeting the requirements of the Act, who obtains a license, can provide telecommunications services,
4

including the provision of transmission capacity. Prior to that date, Deutsche Telekom had a monopoly on
telecommunications services and had in effect a right of first refusal to provide cable infrastructure and cable
television services to all new (i.e., uncabled) areas. However, in accordance with a declaration made in June 1983
(Gemeinsame Erklärung von Bundespost und Handwerk), Deutsche Telekom had generally agreed to limit its
ownership of cable infrastructure to those portions located on or in public land in the old German states. The
cabling inside private households is generally owned and operated by private cable companies or, in certain
circumstances, the owner of the building.
Cable networks in Germany are divided into categories, referred to as ‘‘levels,’’ depending on the function
the cable network has in the delivery of cable services to subscribers. These levels have developed as a result of
Deutsche Telekom’s ongoing position as the dominant supplier of terrestrial television signal and the incorporation
of certain cable television industry practices from the old German states. The network levels relevant to the
PrimaCom’s operations are described below.
Level 4 Networks. A network where the cable operator’s role is limited to extending the cable network
from the end of Deutsche Telekom’s principal transmission line at the ‘‘front door’’ of the home to the subscriber
is known as a ‘‘Level 4 Network.’’ In a Level 4 Network, the operator’s role is limited to concluding and
renewing subscription agreements. Level 4 Networks are the result of the exercise by Deutsche Telekom of its
historical right of first refusal with respect to a coverage area. In these coverage areas, Deutsche Telekom
continues to own and operate the head-end and the principal transmission lines. Cable network operators are
required to pay Deutsche Telekom a signal delivery fee pursuant to agreements known as signal delivery
contracts. As of December 31, 1998, approximately 5.8% of the PrimaCom’s subscribers were served by Level 4
Networks.
A variation of the Level 4 Network which developed in the old German states while Deutsche Telekom
enjoyed its network monopoly prior to August 1996 is the so-called ‘‘Level B-1.’’ Because of its monopoly
position, Deutsche Telekom was able to grant exclusive licenses to cable television operators in discrete
geographic areas which enabled those operators to operate a Level 4 Network. Under the terms of these exclusive
licenses and based on the size of the geographic area covered by the license, the cable operator committed itself
to enrolling a pre-determined number of subscribers. Licensing fees owed to Deutsche Telekom were typically
calculated on the basis of this pre-determined number of subscribers, whether or not the cable operator actually
succeeded in enrolling such subscribers. Agreements concluded with Deutsche Telekom in relation to a Level B-1
are referred to as ‘‘B-1 Agreements.’’ As of December 31, 1998, approximately 18.5% of PrimaCom’s
subscribers were served pursuant to B-1 Agreements.
Level 3 Networks. A network where the cable network operator has entered into a signal delivery contract
with Deutsche Telekom in lieu of owning and operating its own head-end is known as a ‘‘Level 3 Network.’’ In
addition to performing the tasks of an operator under a Level 4 Agreement, the operator is responsible for
delivering a signal from the connection point of Deutsche Telekom’s network to the ‘‘front-door’’ of the
subscriber. In a Level 3 Network, cable network operators are required to pay Deutsche Telekom a fee for access
to Deutsche Telekom’s network or signal, as the case may be. As of December 31, 1998, approximately 40.4% of
PrimaCom’s subscribers were served by Level 3 Networks.
Level 2 Networks. A network where the cable network operator owns and operates the entire cable
network, from the head-end to the in-house connection, is known as a ‘‘Level 2 Network.’’ Level 2 Networks are
akin to the networks operated by cable network operators in the United States and the United Kingdom. Under a
Level 2 Network, cable network operators do not pay signal delivery fees to Deutsche Telekom but receive
programming via satellite. As of December 31, 1998, approximately 35.3% of PrimaCom’s subscribers were
served by Level 2 Networks.
Level 1 Networks. A network where the cable network operator is responsible for program generation and
transmission, from the head-end to the in-house connection, is known as a ‘‘Level 1 Network.’’ PrimaCom, like
many private cable operation in Germany, does not own or operate any Level 1 Networks, since it is prohibited
from doing so by the media laws of several German states.
5

Level:
Description:
Program Generation/
Transmission
1 2 3 4
Signal Reception at
Head-end
Signal Distribution
from Head-end to
“Front Door”
Delivery of Signal from “Front
Door” to Wall Socket in Home
Deutsche Telekom is by far the largest cable television network operator in Germany. In the old German
states, Deutsche Telekom exercised its right of first refusal with respect to substantially all communities with over
10,000 cable households. Consequently, substantially all private cable networks in the old German states are
either Level 4 Networks (including Level B-1), or networks serving communities with less than 10,000 cable
households. In contrast, Deutsche Telekom did not exercise its right of first refusal in the majority of cases in the
new German states. Consequently, many of the communities in the new German states are served by private cable
networks operating either Level 2, Level 3 or Level 4 Networks.
Germany is the largest cable television market in Europe and the second largest in the world after the United
States. PrimaCom believes this market provides a favorable environment for cable television network acquisitions
and operations:
) Large, Fragmented Cable Television Market — Germany has a population of over 82 million people and
over 36 million homes. Deutsche Telekom is the dominant cable television provider, both as an operator and
distributor of programming signals. Its cable television distribution networks, either directly or indirectly
through private cable network operators, passed approximately 25 million homes and served over 17 million
cable subscribers as of December 31, 1997, Deutsche Telekom provides cable television signals to over
5,000 private cable system operators with over 100 subscribers each and to over 500 private cable network
operators with over 1,000 subscribers each. At the end of 1997, Deutsche Telekom announced that its
broadband cable business would be spun off to a new subsidiary, divided into regional companies and
partially sold off. Deutsche Telekom has more recently announced that it has organized a subsidiary to serve
as a financing entity and a holding company for all of Deutsche Telekom’s present shareholdings in regional
companies and any such companies established in the future. Deutsche Telekom’s announced plans are for
those regional companies to plan, operate and expand cable networks and market cable connections. The
plans call for an additional subsidiary to serve as a central service company for Deutsche Telekom’s cable
business, which includes developing and offering broadband cable and digital-TV services. Deutsche
Telekom has also announced plans to seek domestic and international investors in its cable business.
A large number of German cable network operators also receive their programming directly through their
own head-ends and provide that programming to a significant number of additional homes in Germany. This
large number of cable network operators provides PrimaCom with significant consolidation opportunities.
) Scope for Further Product Development — The market for premium programming and other new valueadded
services in Germany is in an early stage of development. PrimaCom believes the expansion of these
services present an opportunity to increase revenue per subscriber.
) High Population Density — Germany has an average population density of 369 persons per square mile,
compared to 46 persons per square mile in the United States and 386 persons per square mile in the United
Kingdom. Approximately 87% of Germany’s population resides in urban areas, compared to 76% in the
United States and 89% in the United Kingdom. In addition to the cost savings resulting from the lower
investment in cable plant per home passed in Germany as compared to the United States, such density is a
6

factor which permits PrimaCom to operate at a lower cost than comparable companies in the United States
because fewer technicians are required to service a given number of subscribers.
) High Penetration Rate — PrimaCom believes that in Germany subscribers as a percentage of homes passed
is approximately 66% but that this percentage is higher in the new German states than in the old German
states. Increased marketing of cable television services in the old German states could lead to new
subscribers which will result in an increase in penetration without the need to build additional networks.
) Low Churn Rate — PrimaCom estimates that its churn rate has historically been less than 12.5%, which is a
significantly lower churn rate than those which generally prevail in the U.S. and United Kingdom cable
television industries. PrimaCom believes such lower churn rate to be due primarily to the greater use of
preauthorized payment procedures, fewer alternative tiers of programming and, when compared with the
United States and the United Kingdom, a less transient population.
) Built-out Infrastructure — The German cable television market is substantially built-out. As of December
31, 1998, Deutsche Telekom, either directly or through cable transmission lines of private cable network
operators, passed approximately 66% of the homes in Germany. In addition, networks in which the head-end
is owned by a private cable network operator pass or provide cable signal to a significant number of
additional homes in Germany.
) Low Ongoing Capital Expenditures — On a per subscriber basis private German cable network operators
enjoy low capital expenditures related to ongoing repair, maintenance and upgrade expenditures. These
items are relatively low because the cable network was extensively built-out by Deutsche Telekom while it
still enjoyed its monopoly position. In many cases, the head-end and primary transmission lines continue to
be owned by Deutsche Telekom and cable network operators pay a fee for their use. In addition, capital
expenditures and maintenance costs are relatively low because of high population density and low churn
rates. Finally, cable networks in the new German states were built since reunification and accordingly
currently require low maintenance evidently.
) Cost of Programming and Signal Delivery — Historically, cable network operators in Germany have
generally been able to receive programming directly from program suppliers without any payments or
formal agreements or contracts. Cable network operators in Germany also have not paid program suppliers
for the retransmission of such programming. However, cable operators may have to pay programming costs
in the future if the programmers should claim programming fees or if copyright royalties in respect of
retransmission of programming should be imposed. Cable network operators who operate Level 3 and
Level 4 Networks pay signal delivery fees pursuant to signal delivery contracts with Deutsche Telekom and
would be subject to such future programming fees.
PrimaCom attributes the fact that programming is free in the German cable television industry principally to
the market strength of Deutsche Telekom compared to that of broadcasters. The supply of television
programming exceeds transmission capacity to the extent that some private broadcasters are even paying
Deutsche Telekom to transmit their programming. PrimaCom also believes that an additional factor is that
satellite broadcasters are seeking to increase market penetration and advertising revenues by providing
programming without charge and without assessing copyright royalties for retransmission of programming.
Even though GEMA, one of the German copyright royalty collecting societies, has indicated to PrimaCom
that the copyright royalty collecting societies intend to assess royalties for the retransmission of terrestrial
broadcasting, PrimaCom believes that, for the foreseeable future, the market conditions in Germany will
enable PrimaCom and other German cable system operators to keep programming costs as a percentage of
revenues at a relatively low level compared with those of cable television operators in the United States and
the United Kingdom.
) Wide Use of Preauthorized Payment Procedures — Over 70% of PrimaCom’s subscribers pay their
subscription fees through preauthorized payment procedures, whereby an automatic deduction is made from
the subscriber’s bank account, resulting in reduced working capital requirements.
7

PrimaCom’s Strategy
Although both Süweda and KabelMedia have historically been engaged in the same fundamental business of
operating cable networks, the operations of the pre-merger companies differed in several respects. KabelMedia
has emphasized Level 2 and Level 3 networks. Süweda has traditionally operated more Level 4 (including B-1)
networks. Due to the timing of its initial entry to the cable television market and its prior ownership of several
cable network construction enterprises, Süweda has had more experience in building out cable networks directly,
in addition to its acquisition experience. KabelMedia, on the other hand, entered the cable television market later
than Süweda and has relied more on growth through acquisitions. The following table reflects the historic
subscriber base of each company and PrimaCom, in each case as of December 31, 1998.
KabelMedia Süweda PrimaCom
Old German New German Old German New German Old German New German
States States States States States States
Level 2 ************ 46,064 230,015 33,083 — 79,147 230,015
Level 3 ************ 3,395 157,841 13,031 180,399 16,426 338,240
Level 4 (non B-1)**** 4,839 15,046 12,114 18,802 16,953 33,848
Level 4 (B-1) ******* 36,028 — 126,495 — 162,523 —
Total ************** 90,326 402,902 184,723 199,201 275,049 602,103
PrimaCom emphasizes high technological standards in its cable television networks and considers the
application of new technology on the basis of cost-effectiveness, enhancement of product quality and service
delivery and industry-wide acceptance. As of December 31, 1998, substantially all of PrimaCom’s cable
networks had bandwidths of at least 450MHz, were capable of distributing over 40 channels and were constructed
utilizing star architecture.
PrimaCom monitors and evaluates new technological developments on the basis of its ability to make
optimal use of its existing assets and to anticipate the introduction of new services and program delivery
capabilities. The use of fiber optic technology will significantly expand channel capacity, improving the
performance of cable television networks and providing Internet services. Fiber optic technology is capable of
carrying hundreds of video, data and voice channels, including Internet services. Based on discussions with
suppliers of equipment required to implement these technologies, PrimaCom believes that private cable system
operators with which it competes have not implemented fiber optic technology, except to a limited extent. During
1997, KabelMedia began to deploy fiber optic technology in one of the largest networks in its Leipzig Region. By
December 31, 1999, PrimaCom plans to consolidate approximately 70,000 subscribers onto one connection point
or head-end in that system through the use of fiber optic technology while continuing to assess the potential
benefits of this technology.
PrimaCom generally does not use addressable or two-way technology in its cable networks and, based on
discussions with relevant equipment suppliers, does not believe that its competitors have introduced such
technology other than on a modest basis. The principal benefits of addressable technology include remote
monitoring and extension of access to selected programming and termination of service for non-payment. Due to
the low churn rate and limited amount of multiple programming tiers and pay-per-view programming offered in
Germany, PrimaCom does not believe that the cost of addressable technology is currently justified. PrimaCom
intends to continue to assess the potential benefits of addressable technology.
New technological advances that are anticipated to become commercially viable in the foreseeable future
include digital compression and expanded bandwidth amplifiers, which offer cable operators the potential for a
dramatic expansion of channel capacity, and alternative communications delivery networks and digital delivery.
As these new technologies and related services become available, PrimaCom intends to assess the economic
return and market demand for them, with the goal of implementing additional services in a cost-effective manner.
8

PrimaCom’s objective is to enhance the value of its business by capitalizing on opportunities presented by
the large and fragmented German cable television market. PrimaCom’s business strategy focuses on the following
specific goals:
) Exploit Consolidation Opportunity in a Large, Fragmented Cable Television Market with Primary Emphasis
on Regional Clusters — A key element of PrimaCom’s strategy is to develop regional clusters of cable
television networks by acquiring cable networks that are either in close proximity to its existing networks or
large enough to serve as cores for new operating regions. PrimaCom has established regional clusters of
cable networks in the regions surrounding Chemnitz/Plauen, Leipzig, Berlin, Dresden, Wiesbaden/Mainz
and Osnabrück/Aachen. PrimaCom is not aware of any reliable or consistently presented published industry
data on the relative size of private cable system operators in Germany. However, on the basis of discussions
with competitors, PrimaCom believes that with more than 875,000 existing subscribers it is the third largest
private cable system operator in Germany in terms of subscribers. PrimaCom believes that its clustering
strategy and the scope of its operations have enabled it to recognize economies of scale. Since its inception
in 1992, KabelMedia has purchased 22 cable television networks before the merger.
) Improve Efficiency and Margins by Streamlining Operations — Upon completion of an acquisition,
PrimaCom generally implements extensive management, operational and organizational changes designed to
enhance operating cash flow and operating margins. PrimaCom maintains subscriber services in the region,
but transfers subscriber account processing and administrative services for acquired cable networks to one
centralized location, thereby reducing redundant overhead costs.
) Strengthen Subscriber Orientation — Each of PrimaCom’s operating regions is managed by a regional
manager who is responsible for both subscriber and technical services and local ongoing relationships with
local housing authorities within the region. PrimaCom believes that this regional operating structure enables
it to be more responsive to subscriber needs and to maintain good relationships with the local housing
authorities.
) Realize Further Internal Growth — PrimaCom seeks to increase revenues in acquired networks in a number
of ways. These include selective increases in rates for cable services, continuing its marketing program and
the introduction of new or improved programming. In particular, over time PrimaCom seeks to increase rates
in the new German states to levels similar to those in the old German states. PrimaCom intends to continue
the build-out of existing cable networks and implement marketing designed to increase penetration in the old
German states. These marketing activities include special price offers for the installation of cable services
and the increase of the proportion of local and regional programming.
) Upgrade the Technology of PrimaCom’s Network and Introduce New Network Services — PrimaCom strives
to maintain high technological standards in its cable television networks on a cost-effective basis and
continuously upgrades its cable networks to achieve this goal. PrimaCom monitors and evaluates new
technological developments on the basis of its ability to make optimal use of its existing assets and to
anticipate the introduction of new services and program delivery capabilities. Substantially all of
PrimaCom’s cable networks have bandwidths of at least 450MHz and are constructed utilizing star
architecture. These bandwidths are sufficiently broad to allow for the transmission of more signals than are
currently transmitted. Star architecture is a design feature of a network which provides for an independent
path from an individual subscriber to the system head-end or another central control point. This facilitates
the provision and charging for separate packages of programming and the disconnection of non-paying
subscribers. PrimaCom believes that the bandwidth and star architecture of its network will make it easier to
introduce new products such as digital television and Internet data services as soon as PrimaCom believes
there is a strong economic reason for doing so.
) Reduce Signal Delivery Fees — Especially in the old German states, PrimaCom relies to a large extent on
Deutsche Telekom to deliver the television signal for the subscribers in its network or to signal delivery
connection points. This relationship is governed by signal delivery contracts which provide in most instances
for payment of fees by PrimaCom, based upon, among other things, the number of subscribers and the
number of connections to Deutsche Telekom’s signal delivery network. PrimaCom’s policy is to seek to
reduce these fees and its reliance on Deutsche Telekom by consolidating the number of connection points to
9

the Deutsche Telekom network or constructing its own head-ends as an alternative source of programming
signal. However, in a number of instances the amount of fees paid is determined without regard to the actual
number of subscribers in the network or the number of connection points.
) Exploit Benefits of the Merger — PrimaCom started operations as a merged entity on December 30, 1998.
PrimaCom’s management has a track record of integrating network operations and achieving efficiencies
through improving economies of scale. In addition, PrimaCom will have greater financing opportunities and
a greater ability to pursue acquisitions as a result of having lower leverage.
Programming
PrimaCom’s networks typically offer a choice of at least two packages of basic cable television
programming service: a ‘‘ground’’ package (consisting generally of network and public terrestrial television
signals available over the air in the concession area) and a ‘‘standard package’’ or basic satellite programming
package (consisting primarily of satellite-delivered programming). Additionally, in certain markets, PrimaCom
offers either one or two additional packages of basic cable television programming service. Approximately 90%
of PrimaCom’s subscribers subscribe to at least the ‘‘standard package’’ package of service.
PrimaCom receives its programming either directly from broadcasters via a PrimaCom-owned head-end or
indirectly from broadcasters through signal delivery contracts with Deutsche Telekom. Approximately 35% of
PrimaCom’s customers are served by networks that obtained their programming directly from broadcasters via a
PrimaCom-owned head-end and approximately 65% of PrimaCom’s customers are served by networks that
obtained their programming indirectly via Deutsche Telekom connecting points.
Historically, PrimaCom has been able to (and PrimaCom believes, based on discussions with its competitors
and German copyright royalty collecting societies, that Deutsche Telekom and its competitors similarly have been
able to) receive such programming (whether directly or indirectly) at no cost and without any formal agreements
or contracts with approval or authorization from the broadcasters. PrimaCom further believes, based on those
discussions, that with the exception of possible claims for copyright royalties for the retransmission by
PrimaCom of terrestrial broadcasting received by PrimaCom on its own head-ends or via Deutsche Telekom’s
signal delivery points in the near future no further programming costs will be assessed. PrimaCom has no present
plans to enter into formal agreements with broadcasters for the acquisition of programming.
Copyright Royalties for Retransmission of Programming
The applicable provisions of the German Copyright Act regarding retransmission of programming were
amended recently to implement the EC Directive on Cable and Satellite Broadcasting. The new law provides for a
so-called compulsory license which requires both the broadcasters and the broadband cable network operators to
permit other cable network operators to retransmit programming against payment of a reasonable fee.
GEMA, one of the German copyright collecting societies which represent copyright owners in Germany,
expects to be mandated by the other German copyright collecting societies to collect cable retransmission
royalties in respect of terrestrial broadcasting. GEMA expects to assess a license fee which it estimates will be in
the range of 4%-5% of the revenues received by the cable system operators who carry such terrestrial
broadcasting. The license fee will be assessed whether such terrestrial broadcast is received on the operators’ own
head-ends or via Deutsche Telekom signal delivery points. PrimaCom has further been advised that this royalty is
expected to be collected retroactively for periods beginning either on January 1, 1997 or on July 1, 1997.
PrimaCom believes that if it becomes liable for copyright royalties, all German cable system operators in
Germany will similarly become liable for copyright royalties. PrimaCom further believes that, in the current
competitive environment, German cable operators will be able to increase subscriber fees in order to recover the
additional cost of such royalties from cable subscribers. However, PrimaCom’s ability to recover future copyright
royalty fees from subscribers cannot be assured and PrimaCom may be unable to pass on copyright royalties
assessed for past periods.
We have been informed that for a number of years Deutsche Telekom has been paying copyright royalties
for the retransmission of terrestrial broadcasting to GEMA. Deutsche Telekom has advised KabelMedia that it
10

elieves payment of this royalty permits Deutsche Telekom to allow private cable system operators connected to
Deutsche Telekom signal delivery points to retransmit terrestrial broadcasting on Level 4 Networks. Deutsche
Telekom has indemnified KabelMedia (but not Süweda) against claims by the German copyright collecting
societies for copyright royalties for Level 4 Network retransmission. The copyright royalty paid by Deutsche
Telekom does not, however, cover retransmission of programming on Level 2 and Level 3 Networks. The signal
delivery contracts between PrimaCom and Deutsche Telekom, with respect to Level 3 Networks, expressly
provide that PrimaCom will indemnify Deutsche Telekom in case of claims against Deutsche Telekom for breach
of retransmission rights by PrimaCom. Although Deutsche Telekom has publicly announced its intentions to
divest itself of its cable assets PrimaCom is not aware of any announcements that a central signal supply entity
will not continue to exist for the transmission of television signals.
Currently, royalties are not payable in respect of television programming delivered by satellite broadcasters.
Signal Delivery Contracts with Deutsche Telekom
For its Level 3 Networks and Level 4 Networks, PrimaCom has entered into signal delivery contracts with
Deutsche Telekom through which PrimaCom receives programming signals from Deutsche Telekom for delivery
to its subscribers.
The terms and conditions for PrimaCom’s signal delivery contracts vary. Most signal delivery contracts are
for a fixed period, usually 10 to 15 years, and are subject to negotiated renewal. PrimaCom typically pays
Deutsche Telekom either a flat fee or a fee per customer that is determined by reference to a published fee
schedule based on the number of homes connected to one connection point. A number of signal delivery contracts
provide for a scaling of fees during the first three to five years (Bauzeitenregelung) to ease the initial network
development costs of PrimaCom. The price term of certain signal delivery contracts allowed Deutsche Telekom to
institute a 15% increase in signal deliver fees on November 1, 1997. This rate increase could, and fee escalation
clauses in a number of signal delivery contracts will, result in an increase in the aggregate amount of signal
delivery fees paid by PrimaCom to Deutsche Telekom.
Historically, KabelMedia and Süweda have been able to increase their subscription rates following increases
in signal delivery fees.
Concession Agreements
PrimaCom’s cable television networks are generally operated pursuant to long-term public concession
agreements with local governmental authorities and private concession agreements with housing authorities or
housing companies that administer large housing blocks. These agreements were generally entered into prior to
the enactment of the German Telecommunications Act on August 1, 1996. Public concession agreements with
local governmental authorities provide PrimaCom with the right to use public rights-of-way. PrimaCom is
generally not obligated to make payments to the authorities for such use. Under the Act holders of
telecommunications licenses of category 3 (which includes broadband cable network operators like PrimaCom)
have the right to use public ways free of charge for telecommunications lines serving public purposes. Private
concession agreements with housing authorities provide PrimaCom with access to potential customers living in
the housing blocks and also regularly provide PrimaCom with the right to use the respective private property
owned by the housing authorities. Individual private concession agreements typically provide access to a
relatively small number of homes. As of December 31, 1998, the PrimaCom’s cable networks operated pursuant
to 156 public concession agreements with local governmental authorities and 1,566 private concession
agreements with housing authorities.
PrimaCom’s concession agreements typically contain standardized conditions, such as conditions of service
and limitations on commencement and completion of construction. Additionally, most of PrimaCom’s concession
agreements contain provisions that permit PrimaCom to raise the prices for its existing level of cable services
with reference to general inflation indices and to raise prices to cover increased costs of programming. By timing
rate increases to published cost of living increases or the introduction of new or improved programming,
PrimaCom has generally been able to increase the rates for its cable services without the objection of the relevant
housing authority.
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The Bundesgerichtshof, the highest civil court in Germany, has recently determined that concession
agreements with standard non-negotiated terms are contracts of adhesion and as such are terminable at any time
by either party if the duration of such contracts is longer than 20 years. In the same decision, the court appeared
in non-binding statement not central to its ruling to endorse a lower court holding that concession agreements
with a duration of less than 12 years are not so terminable as contracts of adhesion. The issue of whether
concession agreements for terms between 12 and 20 years are terminable remains unsettled and there can be no
assurance that concession agreements for terms between 12 to 20 years will not also be held to be terminable as
contracts of adhesion in a future court decision. See ‘‘Item 3. — Legal Proceedings.’’
Concession agreements covering 50% of PrimaCom’s subscribers have a duration of more than 20 years and
concession agreements covering a further 30% of our subscribers have a duration of more than 12 years (but not
more than 20 years) and therefore housing authorities may be able to terminate such concession agreements at
any time, including before the expiration of the concession agreement. The development, expansion and
continued operation of PrimaCom’s cable networks depend, among other things, on PrimaCom’s ability to secure
concession agreements for private rights-of-way on acceptable conditions and for a reasonable duration. There
can be no assurance that we will be able to continue to use our existing concession agreements for private rightsof-way
or that we will be able to enter into replacement concession agreements for private rights-of-way with
financial terms comparable to those of our current concession agreements. This could have a material adverse
effect on PrimaCom’s business, results of operations and financial conditions.
Most of PrimaCom’s private concession agreements with housing authorities provide that PrimaCom is the
exclusive provider of cable services in the concession area. Although PrimaCom generally does not pay
concession fees on any of its cable networks, in certain cases it pays housing authorities for billing and collecting
subscription fees from homes within the applicable apartment blocks pursuant to agreements entered into prior to
PrimaCom’s acquisition of the related cable system. In some limited cases, housing authorities and not the
end–user, receive the broadcasting signals as part of the agreements with PrimaCom. In these cases, the housing
authorities pay subscriber fees to PrimaCom but are otherwise entirely responsible for the handling of subscriber
relationships.
Competition
The cable television services business within Germany is highly competitive. PrimaCom competes in several
ways:
) For subscribers
) With other methods of delivering television signals
) With other communications and entertainment media
) For acquisitions of cable networks
Competition for subscribers comes from a growing number of sources of alternative programming as
delivery technology continues to develop. The ability of viewers to directly receive terrestrial broadcast television
signals impedes PrimaCom’s ability to obtain additional subscribers in areas where its cable networks have
already been installed. The extent of PrimaCom’s competition with direct reception of terrestrial broadcast
television signals varies depending on the quality of the reception to the subscriber and the zoning restrictions in
the subscriber’s region. In addition, PrimaCom face competition from other methods of delivering television
signals to the home, such as DTH (which can be both analog and digital) as well as SMATV systems.
A-DTH satellite users in Germany obtain programming from one of a number of different satellites,
including Astra and Eutelsat. In order to receive A-DTH satellite-delivered programming, the consumer must
have an outdoor reception dish, which generally is smaller and less expensive than the satellite dish typically used
in the United States. A-DTH satellite-delivered services are widely available in Germany. PrimaCom believes that
A-DTH satellite-delivered services will continue to provide significant competition in the future. However,
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PrimaCom believes cable television has a number of competitive advantages over A-DTH satellite-delivered
services for the following reasons:
) Cable television does not involve the up-front cost for the purchase of a dish and related equipment
required for A-DTH.
) Satellite dishes are often perceived as unsightly, and planning or zoning laws and regulations and
building rules often forbid their being affixed to buildings where cable television services are available.
) At present there is a wider range of national, and especially regional and local, programming generally
available on cable networks, due in part to the inability of A-DTH reception dishes to receive
programming from multiple satellites at any time or to switch to a further satellite without being
realigned by a technician.
) Cable service operators generally provide a local presence and service to their subscribers.
) Consumers have expressed concerns as to the level of fees that they will be required to pay to providers
of A-DTH satellite-delivered programming if and when DTH satellite signals are encrypted.
As a result, management believes that should A-DTH satellite signals be encrypted, PrimaCom could benefit
through an increase in the number of subscribers as former A-DTH users are incentivized to seek alternative
sources of television programming. PrimaCom believes that A-DTH satellite-delivery service may become more
competitive with cable service if digital compression technology is implemented in the industry such that satellite
services can provide more channels and direct specific programming, to particular subscribers.
In addition, PrimaCom faces competition from D-DTH satellite-delivered services. During the last two
years, DF1 and Premiere, two pay television service providers, have commenced D-DTH operations in the
German market. PrimaCom believes that D-DTH has not achieved meaningful penetration of the German market.
However, these competitors have substantial financial resources and PrimaCom believes that additional
penetration achieved by these competitors will frequently represent a loss of subscribers to cable network
operators in Germany, including PrimaCom’s networks.
In certain markets, primarily outside of Germany, cable television networks also compete with MMDS
systems, which use microwave frequencies to transmit video programming over the air to subscribers. MMDS
systems are less capital-intensive than cable television networks and are often developed in areas that are not
served by cable television networks. However, to date, the ability of MMDS systems to compete with cable
television networks has been limited by the need for unobstructed line-of-site over-the-air transmission.
Additionally, the development of MMDS systems in Germany is currently very limited but in the future the
Company anticipates that it may compete with MMDS. Cable television networks also face competition from
SMATV systems that serve condominiums, apartment complexes and other private residential developments.
PrimaCom also competes with other sources of news, information and entertainment such as newspapers,
movie theatres, live sporting events, interactive computer programs and home video products, including video
tape cassette recorders. The extent to which cable service is competitive depends, in part, upon the cable system’s
ability to provide a greater variety of programming at a reasonable price to consumers than that available through
alternative delivery systems. Advances in communications technology as well as changes in the marketplace and
the regulatory environment are occurring constantly. It is not possible to predict the effect that ongoing or future
developments might have on the cable industry.
The revenue per home passed of operating a cable system where a competing cable service exists (referred
to in the cable industry as an ‘‘overbuild’’) can be substantially lower than if there is no such competing service.
Although the potential for overbuild theoretically exists, PrimaCom is not aware of any other company that has
obtained permits or concessions for areas currently served by PrimaCom. Additionally, because a significant
portion of PrimaCom’s subscribers live in large apartment blocks with which PrimaCom has exclusive service
agreements, in most cases ‘‘overbuilding’’ would require PrimaCom’s competitors to obtain concessions from
local governmental authorities permitting them to engage in a significant amount of construction in public
rights-of-way. Consequently PrimaCom believes that its exposure to the risk of a competitor overbuilding is
mitigated. See ‘‘— Concession Agreements.’’
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The cable television industry in Germany is in the process of undergoing consolidation. PrimaCom
encounters competition for the acquisition of cable networks from both existing cable television operators and
financial investors. Many of these competitors or potential competitors, including the cable operations of
Deutsche Telekom, Bosch, o.tel.o and TSS/EWT, have significantly greater financial assets than PrimaCom. If
any of the existing or potential competitors significantly expand their acquisition activities in competition with
PrimaCom, PrimaCom’s ability to continue to implement its acquisition strategy could be materially adversely
affected.
Cable Television Licenses
The German Telecommunications Act (the ‘‘Act’’) came into force on August 1, 1996. The purposes of the
Act are, by means of regulation in the telecommunications sector, to foster competition, to ensure adequate
services nation-wide and to establish an administration system for band width frequencies. The Act ended the
network monopoly of Deutsche Telekom. Deutsche Telekom’s network monopoly was previously established in
the Telecommunications Installations Act of 1989. Telecommunications services, including the provision of
transmission capacity, may now be provided by anybody subject to the requirements established in the Act. The
Act sets forth licensing requirements for, amongst other things the operation of transmission paths which extend
beyond the borders of a single parcel of property and which are used to offer telecommunications services to the
public. The establishment and operation of cable television networks falls within the scope of the licensing
requirements set forth in the Act.
The Act establishes four different license classes:
— licenses for the operation of transmission line for mobile radio services to the public by the licensee or
another entity (license class 1: mobile radio license).
— licenses for the operation of transmission line for satellite radio services to the public by the licensee or
another entity (license class 2: satellite radio license).
— licenses for the operation of transmission line for telecommunications services to the public by the
licensee or another entity, to which provision license category 1 and 2 are not applicable (license
class 3).
— licenses for voice telephony services to the public based on self-operated telecommunications networks
(license class 4).
The operation of bi-directional transmission paths with back channel feasibility for the purpose of receipt
and distribution of broadcasting signals, which includes the operation of cable television networks, falls within
license class 3. PrimaCom believes that it has obtained all material class 3 licenses to operate its business. The
operation of the inhouse network (Level 4) is not subject to license.
Transmission lines for the operation of cable networks, including Level 3 and Level 4 system networks,
which have been operated under the legal provisions in affect prior to the entry into force of the Act continue to
be authorized and do not need licenses under the Act.
The Act subjects market-dominating telecommunications enterprises to special provisions, in particular with
regard to the regulation of tariffs, business terms and conditions and the granting of open network access,
including interconnection obligations. Tariffs for telecommunications services of market-dominating enterprises
are subject to the review of the Regulatory Authority. Such tariffs have to be based on the costs of efficient
service provision. Detailed regulations are included in the ‘‘Ordinance on Telecommunications Tariff Regulation’’
of October 1, 1996. The business terms and conditions of market-dominating enterprises are also subject to the
Regulatory Authority’s control. The Regulatory Authority has the right to object to business terms and conditions
which are not in conformance with relevant provisions of European Union law. With regard to open network
access and interconnection, the Act establishes an obligation of market-dominating operators of public
telecommunications networks to provide for interconnection between their networks and the public telecommunications
networks of other operators and to grant other users access to their networks. Detailed regulations are
included in the ‘‘Ordinance on Special Network Access’’ of October 23, 1996. Since courts have construed the
14

applicable markets in the cable broadcasting business narrowly, it is likely that PrimaCom will generally be
viewed to be market dominating.
The Telecommunication Customer Protection Ordinance of December 11, 1997 regulates the relationship
between providers of telecommunications services and their customers. It sets forth several specific obligations
for market-dominating providers and various obligations for all other providers. It specifies, for example, rules for
invoicing, universal service, quality parameters and limitations of liability. Contractual clauses which limit rights
which customers have under the Ordinance are invalid.
Cable Laying Approval
The Act also regulates the right of network operators to use public ways. According to the Act, public ways
may be used by licensees free of charge. This right is granted, however, only to licensees under the Act. In
addition, the consent of public authorities is required in case new telecommunications lines are laid or existing
telecommunications lines are changed. The Act establishes a number of obligations related to this free-of-charge
use of public ways.
Concession agreements concluded by PrimaCom prior to the effective date of the Act provide public
rights-of-way to PrimaCom during the remaining terms of those agreements.
Retransmission and Channel Line-up Provisions; Media Services
The retransmission of cable television programs within Germany through private cable television networks is
regulated at the joint-state level pursuant to The State Treaty on Broadcasting within the United Germany of 1994
(the ‘‘State Broadcasting Treaty’’) and at the state level pursuant to the media laws of the various states. The State
Broadcasting Treaty authorizes the various states to make decisions with respect to the assignment and use of
transmission capacities. The State Broadcasting Treaty also provides that the retransmission of cable television
programs which may be received nationwide and which have been produced in accordance with applicable
European legal provisions must be permitted by the federal states within the framework of existing technical
capabilities. State laws generally provide that the simultaneous retransmission of an unchanged and complete
cable television program is not subject to any licensing requirement, but does subject the operator to an obligation
to report the retransmission to the relevant state media institution.
Broadcasting activity (which is defined to exclude the simultaneous and unchanged retransmission of
programming), such as the insertion of local commercials, subjects the cable television operator to a different
regulatory regime. Private broadcasting companies require a broadcasting license issued in accordance with the
provisions of the State Broadcasting Treaty and the media laws of the states. While the State Broadcasting Treaty
sets forth the framework for the regulation of private broadcasting, the state media laws set forth the detailed
requirements with respect to diversity of opinion, observation of constitutional principles, professional ethics and
restrictions on advertisement.
Private cable television operators are required to observe channel line–up priorities established by the state
media institutions under the state media laws with reference to the technical capabilities of the cable television
networks in connection with the retransmission of cable television programs. Generally, the retransmission
priority has been established as follows: (1) programs which have been legally prescribed by the state,
(2) programs commonly received within the federal state (i.e., those programs which may otherwise be received
without additional antennae), (3) programs which may be received locally with the use of additional antennae and
(4) all other programs. In addition, certain state media laws have established priorities for programs falling within
category (4) for programming produced within the European Union. The EC commission has stated that ranking
decisions granting German programs a higher priority than programs from outside Germany could be
discriminatory and contrary to European law.
Recently, the Regulatory Authority announced its intent to issue an order in the near future which
discontinues the broadcasting use of certain cable channels using particular frequency bands on the grounds that
the existing use of such channels interferes with other essential telecommunications uses. This announcement
was heavily criticized by state media agencies, cable television operators and other interested parties. The
15

Regulatory Authority is presently reviewing the comments it received following its announcement. Should the
Regulatory Authority issue such order, this would affect PrimaCom’s business since it would limit the number of
cable channels which are available for broadcasting purposes.
The German states have signed a State Treaty on new media services which came into force on August 1,
1997, concurrently with the new Federal Act on the Utilization of Teleservices (the ‘‘Teleservices Act’’). The
State Treaty imposes various obligations on providers of ‘‘media services.’’ ‘‘Media services’’ are defined as
information and communication services which are addressed to the general public, as opposed to ‘‘tele-services’’
which are defined in the Teleservices Act as information and communication services for individual uses on the
basis of telecommunication transmission. Media services include distribution services offering directly the sale or
lease of objects or services (teleshopping), distribution services in the form of television text, radio text or similar
text services and certain ‘‘call–services’’ which offer text, sound or pictures in electronically stored form.
Providers of such media services include persons who offer their own or third party media services or who
provide access to media services. To the extent that PrimaCom is considered a provider of media services, it may
be subject to obligations under the State Treaty. The State Treaty includes, inter alia, rules on responsibility for
content, advertising, data protection and protection of minors. Similar rules apply for the provision of ‘‘teleservices’’
under the applicable Teleservices Act.
The State Treaty on ‘‘media services’’ and the new Teleservices Act have not to date materially affected
PrimaCom’s ability to make independent business decisions with respect to the rates charged for, or other matters
relating to the provision of, such services. There can be no assurance that legislation will not have a material
adverse effect on such matters in the future.
Telephony Deregulation
The Telecommunications Act establishes licensing requirements for the provision of voice telephony
services to the public on the basis of own or third–party operated transmission paths. Regulations governing
licenses for voice telephony services came into effect on January 1, 1998. PrimaCom could apply for a license to
operate voice telephony services over its networks, but at present has no plans to apply for such licenses.
Employees
At December 31, 1998, PrimaCom had 357 full-time and six part-time employees. PrimaCom’s employees
are not unionized and are not covered by a collective bargaining agreement. PrimaCom considers its relations
with its employees to be good.
Item 2. Properties
PrimaCom currently operates cable television networks in approximately 417 communities in Germany. In
connection with the operation of its cable networks, the Company owns or leases real property for signal
reception sites (antennae towers and head-ends) and business offices. PrimaCom’s central operation center is
located in approximately 11,000 square feet of leased space in Eschborn, Germany. PrimaCom intends to
establish its corporate offices and central operation center in Süweda’s former headquarters which is in an office
building located in Mainz and contains approximately 17,300 square feet of office space. PrimaCom also owns
office space in Friedrichsthal (near Mainz) of approximately 620 square feet. PrimaCom believes that its
properties, both owned and leased, are in good condition and are suitable and adequate for PrimaCom’s business
operations. All of PrimaCom’s operating assets are pledged as collateral under the revolving bank facility.
PrimaCom’s cables generally are buried in underground ducts or trenches. The physical components of
PrimaCom’s networks require maintenance and periodic upgrading to keep pace with technological advances.
PrimaCom owns 94.5% of its cable network while 5.5% of its network is subject to the sale-leaseback
agreements with Phillips and Bosch. German law generally provides that where an element, such as a cable
network, is built into real property, ownership of that element automatically passes to the owner of the real
property. However, where it can be demonstrated that the parties only intended that the network be on-site
16

‘‘temporarily,’’ title will remain with the party building the network, rather than the owner of the real property. It
is in each case a question of fact whether elements of a cable network have been built into real property and
whether it is the intention of the parties that the network will remain there temporarily. PrimaCom has indicated
in many of its concession agreements an intention that its network remain on the relevant real property only
temporarily, and believes that in such instances title to the cable network should be retained by PrimaCom. If a
court were to determine under these legal principles that legal title to the network has been transferred to the
owner of the real property, PrimaCom would be entitled under German law to payment of the value of its cable
network. There are no other significant encumbrances on PrimaCom’s cable network other than serving as
collateral as stated above.
Item 3. Legal Proceedings
PrimaCom may from time to time be involved in litigation incidental to the conduct of its business.
PrimaCom is not a party to any lawsuit or legal proceeding that, in the opinion of management, is likely to have a
material adverse effect on PrimaCom.
As a result of the merger, PrimaCom succeeded to certain litigation against Süweda or its affiliates. In order
to allocate the risks related to this litigation, KabelMedia and Wolfgang and Ludwig Preuss, two major
shareholders of Süweda, entered into an indemnity agreement under which Wolfgang and Ludwig Preuss, jointly
and severally, agreed to indemnify KabelMedia, PrimaCom and its successors, until November 20, 2003, from
any claim and damages arising out of or in connection with civil or criminal litigation or proceedings arising out
of events prior to the merger against Süweda, its affiliates, its officers or former officers, or KabelMedia in its
capacity as Süweda’s successor, including certain ongoing litigation. The ongoing civil litigation includes one
material civil litigation which was instituted in Brandenburg by the East German Privatization Agency against
Süweda and alleges damages in a maximum amount of DM16 million (U.S.$9.6 million) arising from the
purchase by Süweda of one of the ten regional organisations from the television service provider and distribution
conglomerate of the former East Germany. Recently, civil fraud proceedings pending against AGFB, Süweda and
Wolfgang Preuss were settled. These proceedings had been brought by a shareholder of AGFB on his own behalf
and on behalf of six other AFGB shareholders. The allegations in these proceedings arose from the factual
circumstances underlying certain criminal proceedings. AGFB and Süweda each paid DM800,000 of the total
DM1.6 million paid in the settlement. The amount paid by Süweda is covered by the indemnity agreement
described above Wolfgang and Ludwig Preuss repaid Süweda in full for the settlement portion paid by Süweda.
This indemnification also includes losses caused by several immaterial civil actions arising from the construction
of cable networks.
All litigation risks vis-a-vis manufacturers or users arising from the planning, manufacturing, operation and
distribution of wide-band cable networks, and all litigation risks arising in the ordinary course of business and
which do not exceed DM25,000 individually or DM1 million in the aggregate are excluded from this
indemnification. In the event the total claims exceed DM1 million, the liability under the indemnity agreement
will be limited to the amount of such excess. PrimaCom has the right to manage any litigation but Wolfgang and
Ludwig Preuss have the right to object to the settlement of any claim. The agreement provides that any dispute
between PrimaCom and Wolfgang and Ludwig Preuss regarding such settlement will be determined by an
independent lawyer.
During 1998, Grundstück-und Gebäudewirtschaftsgesellschaft mbH in Chemnitz, a housing authority which
is party to a concession agreement with Süweda, brought a civil action seeking to limit the ability of Süweda to
increase the subscriber fees charged by Süweda to tenants of the housing authority without the prior consent of
the housing authority. The housing authorities’ claim is based on a clause of the concession agreement making
increases in subscriber fees subject to the consent of the housing authority. Subsequently, Chemnitzer
Siedlungsgemneinschaft e.G., another housing authority in Chemnitz which is party to a concession agreement
with Süweda containing a similar clause, joined this civil action. PrimaCom serves 30,000 and 4,000 subscribers
under these concession agreements.
KabelMedia successfully defended a civil action brought in 1997 by Wohnungsbaugesellschaft Plauen,
another housing authority, seeking similar relief and based on a comparable clause in the applicable concession
17

agreement. In a court judgement rendered in that case during September, 1998, the clause in the concession
agreement at issue, which made fee increases subject to the housing authorities’ consent, was held to violate
German competition law and to be unenforceable as a matter of German law.
In October 1998, the court hearing the claim against Süweda in Chemnitz held in favor of the housing
authorities. Subsequently, those housing authorities gave notice of termination of the concession agreements with
effect from December 31, 1999, approximately 12 years prior to the end of their terms. The bases asserted for this
early termination were an alleged breach of the concession agreements when Süweda increased prices without the
consent of the housing authorities, the action which was the subject matter of the lawsuit; and an allegation that
the concession agreements allegedly contain standard non-negotiated terms and as such are contracts of adhesion
terminable by either party.
PrimaCom has appealed the decision of the Chemnitz court and believes that it will prevail on the same
grounds as KabelMedia did in the earlier case, although there can be no assurance that the appellate court in the
Chemnitz action will reach the same conclusion as the court in the earlier case. In addition, PrimaCom believes
that the purported grounds for termination of the concession agreement are not valid, irrespective of whether it is
successful in overturning the decision of the Chemnitz court. PrimaCom believes that even if the decision of the
Chemnitz court that the consent of the housing authorities was required in order to increase prices is upheld, the
past failure of Süweda to obtain such consent was not a valid ground for early termination of the relevant
concession agreements.
Further, PrimaCom believes that the Chemnitz concession agreements are not properly characterised as
contracts of adhesion under controlling legal authorities. If PrimaCom does not prevail in the pending proceeding,
the possible requirement to obtain the approval of housing authorities to past and future price increases under the
concession agreement at issue in the proceeding and under the majority of PrimaCom’s other concession
agreements, which contain similar clauses, could have a material adverse effect on PrimaCom. If PrimaCom does
not successfully resist the purported termination by the Chemnitz housing authorities of the relevant concession
agreements, such a failure, coupled with an adverse holding on the appeal to the decision of the Chemnitz court,
would result in the loss of 34,000 subscribers on December 31, 1999. In addition, if other similar cases were
successfully brought by other housing authorities and the relevant courts held that past breaches of concession
agreements give rise to an early termination right, the resulting possible early loss of subscribers could have a
material adverse effect on PrimaCom. Because the indemnity agreement referred to in the preceding paragraph
excludes coverage for certain Süweda activities, including the operation and distribution of broad-band cable
networks, that agreement would not appear to provide protection to PrimaCom in respect of the risks arising from
this litigation.
Item 4. Control of Registrant
On February 23, 1999, PrimaCom completed its initial public offering. The following table sets forth certain
information regarding the beneficial ownership of the share capital of PrimaCom as of the date hereof, by:
(1) each person known by PrimaCom to own beneficially 5.0% or more of the outstanding voting securities of
PrimaCom; and (2) each of the members of PrimaCom’s Management and Supervisory Board members; and
(3) all members of the Management and Supervisory Boards of PrimaCom as a group.
Except as indicated in the footnotes to this table, to PrimaCom’s knowledge the persons named in the table
have sole voting and investment power with respect to the share capital of PrimaCom shown as beneficially
owned by them, subject to community property laws where applicable. In connection with the merger of
KabelMedia and Süweda, AGFB (which was Süweda’s single largest shareholder) and the shareholders of
KabelMedia and Süweda have agreed that, subject to certain conditions, no earlier than August 23, 1999,
PrimaCom will merge with AGFB, with PrimaCom as the surviving corporation. At the AGFB shareholders’
meeting on September 25, 1998, when the AGFB shareholders voted to approve the merger of Süweda and
KabelMedia, the shareholders directed AGFB’s management to present to the shareholders of the AGFB for their
approval the merger of AGFB into PrimaCom when all conditions to such merger have been fulfilled. As a
18

condition to the merger, AGFB must have sufficient cash to provide for all of its direct and indirect liabilities and
must have sold of all its assets other than shares in PrimaCom and cash.
Shares
Beneficially Percentage
Name of Beneficial Owner Owned of Shares
Shareholders
AGFB ************************************************************** 3,750,000 19.01%
Wolfgang Preuss ***************************************************** 3,367,708 17.07%
Advent International (1) ************************************************* 3,032,683 15.37%
Ludwig Preuss ******************************************************* 1,122,569 5.69%
Morgan Stanley Capital Partners (2) ***************************************
Management and
Supervisory Boards
1,023,985 5.19%
Jacques Hackenberg (3) ************************************************* 185,448 0.94%
Paul Thomason (4) ***************************************************** 181,969 0.92%
All Management and Supervisory Board members as a group***************** 387,788 1.97%
(1) Represents shares held by European Special Situations Fund Limited Partnership, which holds 7.15% of the shares, Global Private
Equity II Limited Partnership, which holds 6.33% of the shares, Kabelgate L.L.C., which holds 5.11% of the shares, Advent Partners
Limited Partnership, which holds 0.30% of the shares, Advent Crown Fund C.V., which holds 0.29% of the shares, Advent
International Investors II Limited Partnership, which holds 0.01% of the shares, and Advent International Investors III Limited
Partnership, which holds 0.02% of the shares. The general partners or members of the above limited partnerships and limited liability
company are affiliates of Advent International and such shares may be deemed to be beneficially owned by Advent International.
Advent International disclaims beneficial ownership of shares held by such investment limited partnerships and limited liability
company, except to the extent of its pecuniary interest therein. The address for each of the above limited partnerships and limited
liability company is c/o Advent International Corporation, 75 State Street, Boston Mass. 02109. Massimo Prelz Oltramonti has indirect
beneficial ownership of 14,871 shares: 28 shares as a limited partner of Advent International Investors II Limited Partnership,
449 shares as a limited partner of Advent International Investors III Limited Partnership, and 14,394 shares as a limited partner of
Advent Partners Limited Partnership. Mr. Prelz Oltramonti disclaims beneficial ownership of the remaining shares held by the Advent
managed funds.
(2) Represents the shares held by Morgan Stanley Capital Partners III, L.P., which holds 5.74% of the shares, MSCP III 892 Investors, L.P.,
which holds 0.59% of the shares, and Morgan Stanley Capital Investors, L.P., which holds 0.18% of the shares. The general partner of
each of these investment limited partnerships is an affiliate of Morgan Stanley Dean Witter & Co., Inc. Morgan Stanley Dean Witter &
Co., Inc. disclaims beneficial ownership of shares held by such investment limited partnerships, except to the extent of its pecuniary
interest therein. The address for each of the above limited partnerships is c/o Morgan Stanley Capital Partners, 1221 Avenue of the
Americas, New York, New York 10020.
(3) Represents the shares purchased on November 12, 1998 which are subject to call options. See ‘‘Item 13. — Interest of Management in
Certain Transactions.’’
(4) Represents the shares purchased on July 21, 1996 and November 12, 1998 which are subject to call options. See ‘‘Item 13. — Interest
of Management in Certain Transactions.’’
Item 5. Nature of Trading Market
Since February 21, 1999, PrimaCom’s Ordinary Bearer Shares trade on the Neuer Markt segment of the
Frankfurt Stock Exchange under the symbol PCY and its Depositary Shares are quoted on the National Market
segment of the Nasdaq Stock Market under the symbol PCAG. Each Depositary Share represents one-half
Ordinary Bearer Share.
Ordinary Bearer Depositary
Shares Shares
1999 High Low High Low
5 5 US US
February 21–March 30 ************************************** 36.70 29.00 20.00 15.00
As of March 30, 1999, there were approximately three holders of record of the Depositary Shares.
[PrimaCom’s Ordinary Bearer Shares are held in bearer form and accordingly, PrimaCom cannot ascertain the
number of holders of record.] Based on information provided by the Depositary, the Company believes that as of
19

March 29, 1999, approximately 1.85% of the Ordinary Bearer Shares are held in the form of Depositary Shares in
the United States through the Bank of New York, as Depositary.
The Neuer Markt of the Frankfurt Stock Exchange
The Neuer Markt of the Frankfurt Stock Exchange is a new trading segment that was launched in March
1997. It is designed for ‘‘innovative,’’ small to mid-size companies in high growth industries or in traditional
industries that have an international orientation and that are willing to provide active investor relations. Issuers are
requested to provide investors on an ongoing basis with information such as annual and quarterly reports
(including cash flow statements) and a corporate action timetable. This information is required to be submitted in
English and German as well as in electronic form, thus enabling the stock exchange to disseminate corporate
information via the Internet.
Trading of shares listed on the Neuer Markt takes place on the floor of the stock exchange, but is
computer-aided. Markets in listed securities are generally of the auction type, but listed securities also change
hands in inter-bank dealer markets off the Frankfurt Stock Exchange. Price formation is determined by open bid
by state-appointed specialists (amtliche Makler) who are themselves exchange members, but who do not, as a
rule, deal with the public. Prices of currently traded securities are displayed continuously during trading hours.
At the half-way point of each trading day, a single standard quotation is determined for all shares.
The members’ association of the Frankfurt Stock Exchange publishes a daily list of prices which contains
the standard prices of all traded securities, as well as their highest and lowest quotations during the past year.
Shares traded on the Neuer Markt are also traded on a computer-aided system called Xetra. Trading takes
place on every business day between 8:30 am and 5:00 pm, Frankfurt time. Trading within the Xetra system is
done by banks and securities dealers who have been admitted to trading on at least one of Germany’s stock
exchanges. Xetra is integrated into the Frankfurt Stock Exchange and is subject to its rules and regulations.
Transactions on the Frankfurt Stock Exchange (including transactions within the Xetra system) are settled
on the second business day following trading. Transactions off the Frankfurt Stock Exchange (for large volumes
or if one of the parties is foreign) are generally also settled on the second business day following trading, unless
the parties have agreed upon a different date. Following a recent amendment to the conditions of German banks
for securities trading (Sonderbedingungen für Wertpapiergeschäfte), customers’ orders to buy or sell listed
securities must be executed on a stock exchange, unless the customer instructs otherwise. Trading can be
suspended by the Frankfurt Stock Exchange if orderly stock exchange trading is temporarily endangered or if a
suspension is in the public interest.
Item 6. Exchange Controls and Other Limitations Affecting Security Holders
At the present time, Germany does not restrict the export or import of capital, except for investments in areas
like Iraq and Libya in accordance with applicable resolutions adopted by the United Nations and the European
Union. However, for statistical purposes only, every individual or corporation residing in Germany (‘‘Resident’’)
must report to the German Central Bank (Deutsche Bundesbank), subject only to certain immaterial exceptions,
any payment received from or made to an individual or a corporation resident outside of Germany (‘‘Nonresident’’)
if such payment exceeds DM5,000 (or the equivalent in a foreign currency). In addition, Residents
must report any claims against or any liabilities payable to Non-residents if such claims or liabilities, in the
aggregate, exceed DM3 million (or the equivalent in a foreign currency) during any one month. Residents must
also report any direct investment outside Germany if such investment exceeds DM100,000. For a discussion of
the treatment of remittance of dividends, interest or other payments to nonresident holders of Preference Shares
or ADSs, see ‘‘Item 7. Taxation — German Taxation — Taxation of Dividends.’’
Item 7. Taxation
U.S. Federal Income Taxation
The discussion that follows describes the material United States federal income tax consequences of the
purchase, ownership, and disposition of PrimaCom’s Ordinary Bearer Shares (the ‘‘shares’’) or American
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Depositary Shares (‘‘ADSs’’), but it does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to a decision to purchase, own, or dispose of shares or ADSs. In particular,
this discussion of United States federal income tax matters deals only with holders that will hold shares or ADSs
as capital assets and does not address the tax treatment of the purchase, ownership, and disposition of shares or
ADSs under applicable state or local tax laws, or the laws of any jurisdiction other than the United States. In
addition, this discussion does not address special federal income tax situations, such as the United States federal
income tax treatment of holders (1) who are securities dealers, financial institutions, insurance companies, or tax
exempt organizations; (2) who are holding shares or ADSs as part of a hedging or larger integrated financial or
conversion transaction; (3) who are citizens or residents of a possession or territory of the United States; (4) who
are United States holders (as defined below) with a currency other than the U.S. dollar as their functional
currency; (5) who are holding shares or ADSs pursuant to certain retirement plans; (6) who are holding shares or
ADSs pursuant to the exercise of an employee stock option or otherwise as compensation; or (7) who own,
directly or indirectly, 10 percent or more of the voting stock of PrimaCom.
This discussion is based upon the federal income tax laws of the United States as in effect on the date of this
annual report, including the United States Internal Revenue Code of 1986, as amended (the ‘‘Code’’), which are
subject to change, possibly with retroactive effect. Subsequent developments could have a material effect on this
discussion.
The United States Treasury has expressed concerns that parties to whom ADSs are released may be taking
actions that are inconsistent with the claiming of foreign tax credits for United States holders of ADSs.
Accordingly, the analysis of the creditability of German taxes described below could be affected by future actions
that may be taken by the United States Treasury. For United States federal income tax purposes, a United States
holder of an ADS will be treated as the owner of the shares underlying the ADS.
United States Holders
As used herein, a ‘‘United States holder’’ means a beneficial owner of shares or ADSs who is a United States
person. A ‘‘United States person’’ is, for United States federal income tax purposes, (1) a citizen or resident of
the United States; (2) a corporation, partnership or other entity created or organized in or under the laws of the
United States or any state thereof (unless, in the case of a partnership, future Treasury regulations presently
authorized under the Code otherwise provide); (3) a partnership created or organized under the laws of a foreign
jurisdiction if future Treasury regulations presently authorized under the Code so provide; or (4) an estate or trust,
the income of which is subject to United States federal income tax regardless of its source. A ‘‘resident’’ of the
United States includes an individual that (1) is lawfully admitted for permanent residence in the United States;
(2) is present in the United States for 183 days or more during a calendar year; or (3)(a) is present in the United
States for 31 days or more during a calendar year, (b) is present in the United States for an aggregate of 183 days
or more, on a weighted basis, over a three-year period ending in such calendar year, and (c) does not have a closer
connection to a ‘‘tax home’’ that is located outside the United States.
United States Federal Income Taxation of the Company
The shares or ADSs will be properly characterized as equity interests in PrimaCom, and PrimaCom will so
characterize all such shares for all United States federal income tax purposes. PrimaCom will be classified as a
‘‘Corporation’’ for all United States federal income tax purposes.
PrimaCom’s taxable year for United States federal income tax purposes will be a calendar year. PrimaCom
intends to report as a DM (and, after conversion, a Euro) functional currency taxpayer to the extent relevant for
United States federal income tax purposes. PrimaCom will be tax resident in Germany under the terms of the tax
treaty between the United States and Germany.
PrimaCom is subject to United States federal income tax only to the extent it derives certain United States
source income or income that is effectively connected to the conduct of a trade or business in the United States.
PrimaCom intends to conduct its business operations in a manner so that it should not have any United States
source income or income effectively connected with the conduct of a trade or business within the United States
that would be subject to United States federal income or withholding tax.
21

United States Federal Income Taxation of Stockholders — United States Holders
Taxation of Dividends
A United States holder will be required to include in gross income as a dividend when received the gross
amount of any cash or the fair market value of any property distributed by PrimaCom in respect of the shares or
ADSs, including a pro rata redemption of its shares, to the extent of PrimaCom’s current and accumulated
earnings and profits as determined under United States federal income tax principles, which may include certain
earnings and profits accumulated by predecessors to PrimaCom. Dividends paid in any currency other than the
U.S. dollar will be translated into U.S. dollars at the spot rate on the date the dividends are received (which for
holders of ADSs, would be the date such dividend is received by the Depositary), regardless of whether the
dividends are in fact converted into U.S. dollars on that date.
Gain or loss, if any, realized on a sale or other disposition of such foreign currency will be ordinary income
or loss and will generally be income from sources within the United States for foreign tax credit limitation
purposes. If dividends paid in a foreign currency are converted into U.S. dollars on the day such currency is
received, United States holders generally should not be required to recognize foreign currency gain or loss in
respect of the dividend income.
A distribution by PrimaCom with respect to its shares in excess of its current and accumulated earnings and
profits, as determined under United States federal income tax principles, will be treated as a tax-free return of
basis in the shares to the extent of the United States holder’s adjusted basis in such shares, with the balance of the
distribution, if any, treated as gain realized by the United States holder from the sale, exchange, or other
disposition of the shares that is including in gross income.
The dividends paid by PrimaCom will not be eligible for the dividends received deduction generally allowed
to domestic corporate shareholders. For purposes of the United States foreign tax credit limitation, dividends paid
by PrimaCom generally will constitute foreign source ‘‘passive income’’ (or, in the case of a United States holder
that is a ‘‘financial services entity’’ as defined in regulations under the Code, ‘‘financial services income’’). The
amount of any German tax withheld on a distribution by PrimaCom (after application of the United
States — Germany income tax treaty) would be deductible by a United States holder, or, at the election of the
United States holder and subject to special rules and limitations under the Code, creditable (as foreign tax credit)
against the holder’s United States federal income tax liability attributable to the holder’s aggregate foreign source
taxable income classified as ‘‘passive income’’ (or, if applicable, ‘‘financial services income’’) for United States
foreign tax credit limitation purposes. All non-corporate United States holders, and all United States holders that
are corporations and which own less than 10 percent of the voting stock of PrimaCom, will not be entitled to
claim a foreign tax credit for any taxes paid by PrimaCom or its subsidiaries.
United States-Germany Tax Treaty
Under German law, German corporations are required to withhold tax on dividends in an aggregate amount
equal to 26.375% of the gross amount paid to resident and nonresident stockholders, consisting of a 25%
withholding tax plus a 1.375% surtax (described below). A partial refund of this withholding tax can be obtained
by United States holders under the Convention between the United States of America and the Federal Republic of
Germany for the Avoidance of Double Taxation and the Prevention or Fiscal Evasion With Respect to Taxes on
Income and Capital and to Certain other Taxes (the ‘‘Income Tax Treaty’’). Under United States federal income
tax law, United States holders are subject to United States income tax on dividends paid by German corporations
but may be eligible for a foreign tax credit for certain German income taxes paid with respect to such dividends.
The dividend will not be eligible for the dividends received deduction generally allowed to United States
corporations in respect of dividends received from other United States corporations.
For foreign tax credit limitation purposes, the dividend will be income from sources without the United
States, but generally will be treated separately, together with other times of ‘‘passive income’’ (or, in the case of
certain holders, ‘‘financial services income’’).
In the case of a United States holder, as defined below, (other than a U.S. corporation owning shares or
ADSs representing at least 10% of the voting stock of PrimaCom), the German withholding tax is partially
22

efunded under the Income Tax Treaty to reduce the withholding tax to 15% of the gross amount of the dividend.
In addition, so long as the German imputation system provides German resident individual stockholders with a
tax credit for corporate taxes with respect to dividends paid by German corporations, the Income Tax Treaty
provides that United States holders (other than U.S. corporations that own shares representing at least 10% of the
voting stock of PrimaCom) are entitled to a further refund equal to 5% of the gross amount of the dividend. For
United States federal income tax purposes, the benefit resulting from this refund is treated as a dividend received
by the United States holder with respect to German corporate taxes equal to 5.88% of the gross amount of the
dividend, subject to a withholding tax of 0.88% of the gross amount of the dividend (15% of 5.88%).
Thus, for each $100 of gross dividend paid by PrimaCom to a United States holder (other than a U.S.
corporation owning shares representing at least 10% of the voting stock of PrimaCom), such holder will initially
receive $73,625 ($100 less 26.375% withholding tax). The dividend after partial refund of the withholding tax
under the income Tax Treaty will be subject to a German withholding tax of $15. If the United States holder also
applies for the additional 5% refund, German withholding tax is effectively reduced to $10: the cash received per
$100 of gross dividend therefore is $90. For United States federal income tax purposes, the United States holder
is treated as receiving a total dividend of $105.88 (to the extent paid out of the current and accumulated earnings
and profits of PrimaCom as determined for United States federal income tax purposes), consisting of the $100
gross dividend and the deemed refund of German corporate tax of $5.88. Thus, for each $100 of gross dividend,
the United States holder will include $105.88 in gross income and will be entitled to a foreign tax credit of
$15.88, subject to the general limitations of United States federal income tax law. U.S. law in respect of any
portion of a foreign tax which the United States holder is entitled to have refunded, whether pursuant to the terms
of a tax treaty of foreign law.
Dividends paid in Deutsche Mark to a United States holder of Shares or ADSs will be included in income in
a U.S. dollar amount calculated by reference to the exchange rate in effect on the date the dividends (including
the deemed refund of German corporate tax) are received by such holder. If dividends paid in Deutsche Mark are
converted into U.S. dollars on the date received, United States holders generally should not be required to
recognise foreign currency gain or loss in respect of the dividend income. Generally, any gain or loss resulting
from currency exchange fluctuations during the period from the date the dividend payment is included in income
to the date such payment is converted into U.S. dollars will be treated as ordinary income or loss. Such gain or
loss will generally be income from sources within the United States for foreign tax credit limitation purposes.
Effective January 1, 1998, a 5.5% surtax on the German withholding tax is being levied on dividend
distributions paid by a German resident company. The surtax amounts to 1.375% (5.5% x 25%) of the gross
dividend amount. Since the Income Tax Treaty reduces the German withholding tax, United States holders are
entitled to a full refund of this surtax.
German Refund Procedures
In order to obtain the 5% tax credit-related refund, the refund of the German withholding tax in excess of
15%, and the refund of the 5.5% German surtax, United States holders of Shares must submit to the German tax
authorities directly (1) a claim for refund, (2) the original bank voucher (or certified copy thereof) issued by the
paying entity documenting the tax withheld, and (3) an IRS Form 6166. The claim for refund must be filed within
four years from the end of the calendar year in which the dividend is received.
Claims for refund are made on a special German claim for refund form, which must be filed with the
German tax authorities: Bundesamt fur Finanzen, Friedhofstrasse 1. 53225 Bonn, Germany. The German claim
for refund forms may be obtained from the German tax authorities at the same address where the applications are
filed, or from the Embassy of the Federal Republic of Germany, 4645 Reservoir Road, N.W. Washington D.C.
20007 – 1998.
U.S. Holders may obtain a Form 6166, which is a certification of the United States holders’ last filed United
States federal income tax return, by filing a request with the office of the Director of the Internal Revenue Service
Center at the following address: Internal Revenue Service Center, Philadelphia, Pennsylvania, Foreign Certificate
Request, P O Box 16347, Philadelphia, PA 19114 – 0447. Requests for certification are to be made in writing and
must include the United States holder’s name, social security number or employer identification number, tax
23

eturn form number, and tax period for which certification is requested. The Internal Revenue Service will send
the certification (IRS Form 6166) directly to the United States holders. The issued IRS Form 6166 will be valid
for a period of three years from the date of the last filed return to which it relates.
Refunds under the Treaty are not available in respect of shares or ADSs held in connection with a permanent
establishment or fixed base in Germany.
Taxation of Disposition of Shares or ADSs
Any gain or loss realized and recognized by a United States holder on the sale or other disposition of a share
or an ADS (including upon the liquidation or dissolution of PrimaCom or as a result of a non-pro rata redemption
of shares) will be subject to United States federal income tax, as a capital gain or loss, on an amount equal to the
difference between such United States holder’s adjusted tax basis in the share or ADS and the amount realized on
its disposition. A United States holder’s adjusted tax basis in a share or ADS will generally be equal to the
holder’s cost of acquiring the Share or ADS reduced (but not below zero) by the amount of any distribution that is
treated as a return of basis.
Any gain or loss recognized upon the sale or other disposition of a share or an ADS will be either short-term
capital gain or loss or, if held for more than one year, long-term capital gain or loss. For noncorporate United
States holders, the United States income tax rate applicable to a net long-term capital gain recognized for a year
currently will not exceed 20 percent. For corporate United States holders, a capital gain is currently taxed at the
same rate as ordinary income. The deductibility of a capital loss, however, is subject to limitations for both
noncorporate and corporate United States holders.
For purposes of the United States foreign tax credit limitation, a recognized gain arising on the disposition of
a Share or an ADS will be United States source income. There is a substantial risk, however, that a recognized
loss will be allocated against foreign source income by reference to the source of income received or expected to
be otherwise derived from the share.
Passive Foreign Investment Company Rules
Special United States federal income tax rules apply to holders of equity interests in a corporation classified
as a ‘‘passive foreign investment company’’ (‘‘PFIC’’) under the Code. A foreign corporation would constitute a
PFIC for United States federal income tax purposes if 75% or more of its gross income for a taxable year were to
consist of passive income, or 50% or more of its average assets held during a taxable year were to consist of
passive assets. Management of PrimaCom does not anticipate that the company has or will have sufficient passive
income or assets in any year to constitute a PFIC.
If PrimaCom were to constitute a PFIC, a United States holder could be subject to certain materially adverse
United States tax consequences. Prospective United States holders should consult with their own tax advisors
regarding the potential application of PFIC rules.
Federal Income Taxation of Stockholders — Non-United States Holders
Subject to the discussion of United States backup withholding tax below, a holder of shares or ADSs other
than a United States holder (a ‘‘non-United States holder’’) will not be subject to United States federal income or
withholding tax on income derived by PrimaCom, dividends paid to a stockholder by Primacom or gains realized
on the sale of shares or ADSs, provided that: (1) such income items are not effectively connected with the
conduct by the non-United States holder of a trade or business within the United States, (2) the non-United States
holder is not or was not present in, or does not have or did not have a permanent establishment in, the United
States, (3) there has not been a present or former connection between the non-United States holder and the United
States, including, without limitation, such non-United States holder’s status as a citizen or former citizen thereof
or resident or former resident thereof and (4) in the case of a gain from the sale or disposition of shares or ADSs
by an individual, the non-United States holder is not present in the United States for 183 days or more during the
taxable year of the sale or certain other conditions are met.
24

United States Backup Withholding Tax and Information Reporting
Generally, a 31% ‘‘backup’’ withholding tax and information reporting requirements apply to dividends paid
on shares of stock, and to proceeds from the sale of shares or ADSs, to a noncorporate United States holder if
such a holder fails to provide a correct taxpayer identification number and other information or fails to comply
with certain other requirements.
Currently, dividends paid on shares by PrimaCom will not be subject to United States backup withholding
tax or information reporting. However, after December 31, 1999, dividends paid on Shares to a United States
holder or a non-United States holder through a United States or United States-related person (i.e., a person other
than a ‘‘non-U.S. payor’’ or ‘‘non-U.S. middleman’’ as defined in Treasury regulations under the Code) will be
subject to United States backup withholding tax and information reporting, unless the holder has provided the
required certification of its non-United States status or has otherwise established an exemption. In addition, under
currently effective Treasury regulations, the proceeds from the sale of shares by a United States holder or a
non-United States holder through a United States or United States-related person will be subject to United States
backup withholding tax and information reporting, unless the holder has provided the required certification of its
non-United States status or has otherwise established an exemption.
A United States holder can establish an exemption from the imposition of backup withholding tax by
providing a duly completed IRS Form W-9 to the holder’s broker or paying agent, reporting the holder’s taxpayer
identification number (which for an individual will be his or her social security number), or by otherwise
establishing its corporate or exempt status. A non-United States holder can establish an exemption from the
imposition of backup withholding tax and information reporting by providing a duly completed IRS Form W-8 to
the holder’s broker or paying agent or by otherwise establishing the holder’s corporate, exempt, or non-United
States status.
Any amounts withheld under the backup withholding tax rules from a payment to a holder will be allowed as
a refund or a credit against such holder’s United States federal income tax, provided that the required information
is furnished to the IRS.
German Taxation
The following is a summary discussion of certain tax matters arising under German tax law. The discussion
does not purport to be a comprehensive description of all of the tax considerations which may be relevant to a
decision to purchase and/or to sell shares or ADSs of PrimaCom. The discussion is based on the tax laws of the
Federal Republic of Germany as in effect on the date of this annual report, which are subject to change, possibly
with retroactive effect. With the exception of certain illustrative data, the discussion is limited to the taxation of
dividends, capital gains, income, gifts and inheritance under German law, and does not address all aspects of
German taxation. The discussion does not consider any specific facts or circumstances that may apply to a
particular purchaser. In particular, this discussion does not comprehensively treat the tax considerations that will
be relevant to prospective investors who reside outside Germany. Any person who is in doubt as to his tax
position is urged to consult a tax adviser before purchasing shares.
A short discussion of German corporate taxation precedes the discussion of taxes applicable to shareholders.
Taxation of the Company
In general, German corporations are subject to corporate income tax at a rate of 40% on non-distributed
profits and of 30% on distributed profits. Since January 1, 1998, a surtax (Solidaritätszuschlag) has been charged
at a rate of 5.5% on the corporate income tax liability. For distributed profits generated since 1998, the effective
overall tax burden from corporate income tax and surtax amounts to 32.13%. The effective overall tax burden is
higher than the combination of the nominal rates of 31.65% (30% plus 5.5% thereof), because the corporate tax
imputation system does not apply to the surtax.
In addition, German corporations are subject to a trade tax which, depending upon the municipal district in
which their facilities are located, can amount to between 15% and 21% of net income. The trade tax is, however,
deductible from net income for the purpose of calculating the regular corporate tax. As a result, the effective
25

urden of the trade tax generally lies between 13% and 18% of net income. For purposes of assessing net income
subject to trade tax 50% of interest payable on long-term debt is added back.
Taxation of Dividends
Taxpayers resident in Germany are generally entitled to a tax credit in the amount of three-sevenths of the
gross amount (before dividend withholding tax) of profits received in distribution. This credit reduces their
personal or corporate income tax liability. The credit also reduces the basis for the 5.5% surtax on the German
taxpayer’s personal or corporate income tax liability. Shareholders who are not tax resident in Germany are not
entitled to such tax credit. Even shareholders who are tax residents in Germany are not entitled to this tax credit
under certain circumstances, for example when they receive dividends in distributions that were tax free pursuant
to an applicable income tax treaty.
Dividends paid by a German resident stock corporation (Aktiengesellschaft) are subject to withholding tax
equal to 25% of the amount of the gross dividend distributed plus a 5.5% surtax (Solidaritätszuschlag) on that
amount (corresponding to a tax of 1.375% of the gross dividend). The withholding tax and surtax retained by the
distributing stock corporation will be credited against the personal or corporate income tax liability of German
tax resident shareholders or will be refunded to them. Thus, German shareholders are effectively taxed in
advance.
For shareholders who are tax resident in Germany, the German corporate tax imputation system effectively
leads to a neutralization of the corporate income tax, i.e. the income underlying the dividend is taxed at the
individual income or corporate income tax rate of the shareholder. To achieve this, the income of the shareholder
is taxed on a grossed-up basis, i.e. the German tax resident shareholder receives for taxation purposes 51.54% of
the taxable dividend in cash, 17.5% as a tax credit resulting from withholding tax (plus 0.96% tax credit for the
surtax thereon) and 30% as a tax credit for the underlying corporate income tax. If the assessable personal or
corporate income tax plus surtax thereon of the shareholder is less than the tax credit of 48.46%, the excess tax
credit will be refunded; if the personal or corporate income tax is higher, additional personal or corporate income
tax plus surtax thereon becomes payable.
German tax resident individual shareholders whose shares are part of a business property and German tax
resident corporate shareholders are subject to trade tax on gross dividends received, unless the shareholder owns
10% or more of the nominal share capital of the company at the beginning of the calendar year. The applicable
trade tax burden generally amounts to between 15% and 21%, depending upon the trade tax rate fixed by the
municipality in which the business of the shareholder is located. Trade tax is a deductible expense for income or
corporate income tax purposes of the shareholder.
Under the provisions of any applicable income tax treaty, the level of the German withholding tax on a
dividend paid by a company tax resident in Germany to a shareholder not tax resident in Germany may be
reduced. The shareholder entitled to the reduced rate of withholding tax under the applicable double tax treaty is,
however, generally required to file a claim with the German tax authorities for repayment of the amount by which
the actual amount of withholding tax, including surtax thereon, exceeds the maximum amount of withholding tax
permitted to be collected by the applicable double tax treaty. See ‘‘— U.S. Federal Income Taxation — United
States Federal Income Taxation of Stockholders — United States Holders — Taxation of Dividends’’ and
‘‘— United States-Germany Tax Treaty.’’
Most of the double tax treaties applicable to dividends provide for further reductions in the withholding tax
rate if the recipient of the dividend is a joint stock company owning at least 10% of the shares of the distributing
company entitled to vote. The withholding tax on dividends distributed to holding companies may, in some
circumstances, be reduced to zero. In those cases the reduced withholding tax rates can be applied to the
distribution or withholding tax may be dispensed with if an application has been filed and if other conditions are
fulfilled. Broadly speaking, this applies only situations where the shareholder is a qualifying corporation not tax
resident in Germany but tax resident in one of the other member states of the European Union.
Where the shares are part of the business property of a permanent establishment or a fixed base of the
non-resident shareholder maintained in Germany, the shareholder will be taxed on the same basis as a shareholder
26

tax resident in Germany who holds the shares as business property in a German trade or business, and the
shareholder may be able to make use of the tax credits granted to German tax resident shareholders. Trade tax
will be payable under the same circumstances and at the same rate as in the case of a German tax resident
shareholder.
The corporate income tax rate for a shareholder not tax resident in Germany holding the shares as part of the
business property of a permanent establishment which the shareholder maintains in Germany is 42%. If the
permanent establishment earned no other income and had no expenses (such as interest on loans to finance the
shareholding or trade tax), the shareholder would be entitled to a repayment of tax amounting to 5.80%. There is
no withholding tax payable on transferring the dividend from a permanent establishment or fixed base in
Germany to a head office abroad.
Under German law, German corporations are required to withhold tax on dividends in an aggregate amount
equal to 26.375% of the gross amount paid to resident and nonresident stockholders, consisting of a 25%
withholding tax plus a 1.375% surtax. A partial refund of this withholding tax can be obtained by United States
holders under the Convention between the United States of America and the Federal Republic of Germany for the
Avoidance of Double Taxation and the Prevention or Fiscal Evasion With Respect to Taxes on Income and
Capital and to Certain other Taxes. See ‘‘ — U.S. Federal Income Taxation — United States Federal Income
Taxation of Stockholders — United States Holders — Taxation of Dividends — United States-Germany Tax
Treaty.’’
Taxation of Capital Gains
A shareholder tax resident in Germany who realises any capital gains upon the disposal of shares is subject
to taxes in Germany if the disposal is made within 12 months of the acquisition.
Under German tax law, a capital gain resulting from the disposal of shares is also subject to taxation in
Germany, regardless how long the shares have been held, if the shareholder directly or indirectly holds or at any
time during a period of five years before the disposal held more than 10% of the nominal share capital of the
company. Most Double Tax Treaties with Germany provide that shareholders not resident in Germany who do not
maintain a permanent establishment or fixed base in Germany are not subject to German income or trade tax on
such capital gains.
In addition thereto, irrespective of the term of the possession, any capital gains resulting from the disposal of
shares are subject to taxation in Germany if such shares were held as part of the business property of a permanent
establishment or fixed base maintained in Germany.
Gift and Inheritance Tax
Under German law, the transfer of shares will be subject to German inheritance and gift tax on a transfer by
reason of death or a gift, if:
(i) the shares were held by the donor or transferor as part of the business property for which an
establishment is maintained in Germany or for which a permanent representative has been appointed;
(ii) the donor or transferor or the heir, donee or other beneficiary is tax resident in Germany or, with
respect to German citizens who are not resident in Germany, if such donor, transferor or beneficiary
has not been continuously residing outside of Germany for a period of more than five years; or
(iii) the shareholder holds, alone or together with affiliated persons, directly or indirectly, ten percent or
more of the corporation’s nominal share capital.
The few German estate tax treaties currently in force (e.g., the treaty with the United States) usually provide
that German gift or inheritance tax may only be imposed in cases (i) and (ii) above.
27

Other German Taxes
There are no German transfer stamp or other similar taxes which would apply on the sale or transfer of the
shares. Wealth tax is no longer levied as of 1997 but it is possible that wealth tax will be reintroduced in
connection with the tax reform proposals.
From January 1, 2000, if a single shareholder, another person or a company directly or indirectly holds 95%
of PrimaCom shares, a 3.5% land transfer tax will be levied on the value of all land which is owned by PrimaCom
or one of its subsidiaries.
Item 8. Selected Financial Data
The selected consolidated statement of operations data set forth below for the years ended December 31,
1996, 1997 and 1998 and the selected consolidated balance sheet data set forth below as at December 31, 1996,
1997 and 1998 have been derived from the financial statements of PrimaCom AG included elsewhere in this
document, which have been audited by Schitag Ernst & Young AG, independent auditors. The selected
consolidated statement of operations data set forth below for the year ended December 31, 1995 and the
consolidated balance sheet data set forth below as at December 31, 1995 have been derived from the financial
statements of PrimaCom AG, which have been audited by Schitag Ernst & Young AG. PrimaCom has historically
maintained its financial records in accordance with German GAAP, which represents generally accepted
accounting principles in Germany. Generally accepted accounting principles in Germany vary in certain
significant respects from U.S. GAAP. Accordingly, PrimaCom has recorded certain adjustments in order that the
financial information presented herein be in accordance with U.S. GAAP. The selected consolidated data should
be read in conjunction with PrimaCom’s consolidated financial statements and notes thereto included elsewhere
in this prospectus.
Year Ended December 31,
1995 1996 1997 1998 1998 1998
DM’000 DM’000 DM’000 DM’000 5’000 $’000
Statement of Operations Data
Revenues **********************************************
Operating costs and expenses:
73,752 78,936 83,801 96,498 49,339 57,887
Operations******************************************* (17,038) (17,830) (20,023) (25,546) (13,061) (15,325)
Selling, general and administrative *********************** (18,242) (17,216) (15,976) (14,765) (7,549) (8,857)
Depreciation and amortization *************************** (26,729) (25,737) (26,529) (31,434) (16,072) (18,857)
Total ********************************************* (62,009) (60,783) (62,528) (71,745) (36,682) (43,039)
Operating profit ****************************************
Interest expense:
11,743 18,153 21,273 24,753 12,657 14,848
Related party***************************************** (827) (716) (563) (21) (11) (13)
Bank debt ******************************************* (6,180) (5,174) (5,121) (4,988) (2,550) (2,992)
Sale-leaseback**************************************** (9,435) (10,042) (9,946) (10,367) (5,301) (6,219)
Total ********************************************* (16,442) (15,932) (15,630) (15,376) (7,862) (9,224)
Other income (expense) **********************************
Income (loss) from continuing operations before minority interest
— — 23,578 (454) (233) (274)
and income taxes ************************************* (4,699) 2,221 29,221 8,923 4,562 5,350
Minority interest in net income of subsidiaries *************** (103) (1,192) (5,412) (592) (303) (355)
Income tax benefit (expense) ****************************** 3,186 (1,605) (4,435) (1,618) (826) (969)
Income (loss) from continuing operations ******************* (1,616) (576) 19,374 6,713 3,433 4,026
28

Year Ended December 31,
1995 1996 1997 1998 1998 1998
DM’000 DM’000 DM’000 DM’000 5’000 $’000
Discontinued operations:
Income (loss) from discontinued operations, net of income tax
benefit of DM736 and DM3,453 and income tax expense of
DM11,298 and DM5,665 for 1995, 1996, 1997 and 1998,
respectively **************************************** (122) 1,875 (13,645) (5,715) (2,922) (3,428)
Net income (loss) ***************************************
Earnings (loss) per share
(1,738) 1,299 5,729 998 511 598
(6)
Continuing operations ********************************* (0.10) (0.04) 1.22 0.42 0.23 0.26
Discontinued operations ******************************** (0.01) 0.12 (0.86) (0.36) (0.19) (0.22)
Net income (loss) ************************************* (0.11) 0.08 0.36 0.06 0.04 0.04
December 31,
1995 1996 1997 1998 1998 1998
DM’000 DM’000 DM’000 DM’000 5’000 $’000
Balance Sheet Data (at period end)
Total assets************************************* 261,687 249,371 259,147 1,191,549 609,127 714,786
Total debt ************************************** 295,545 285,148 289,195 650,701 332,698 390,342
Total liabilities ********************************** 327,846 311,639 309,334 721,226 368,655 432,649
Shareholders’ equity (deficiency) *******************
Cash Flow Data
(66,621) (65,322) (62,093) 469,461 240,032 281,620
Net cash provided by operating activities ************ 19,001 29,572 (6,097) 55,862 28,561 33,512
Net cash provided by (used in) investing activities ***** (35,198) (16,808) 31,237 16,528 8,450 9,916
Net cash provided by (used in) financing activities***** 12,030 (14,938) (6,473) (77,657) (39,705) (46,585)
Capital expenditures (excluding acquisitions) *********
Operations Data
(32,570) (19,398) (10) (6,082) (3,110) (3,648)
Homes passed (1) ********************************* 600,142 608,681 612,590 1,335,052
Number of subscribers (1) ************************** 312,438 325,514 329,010 877,152
Penetration (2) *********************************** 52.1% 53.5% 53.7% 65.7%
Average monthly revenue per subscriber (3) ************ 20.71 20.62 21.20 22.32 11.41 13.39
EBITDA (4) ************************************* 38,472 43,890 47,802 56,187 28,728 33,705
Average monthly EBITDA per subscriber ************ 10.80 11.47 12.09 12.99 6.64 7.79
EBITDA margin (5) ******************************* 52.2% 55.6% 57.0% 58.2%
(1) At end of the period.
(2) Subscribers as a percentage of homes passed.
(3) Historical average monthly revenue per subscriber equals (a) revenues for the period divided by the number of months in the period
divided by (b) the average monthly number of subscribers for such period.
(4) PrimaCom defines EBITDA as earnings (loss) before extraordinary items, minority interests, net interest expense, income taxes and
depreciation and amortization. PrimaCom’s management believes that EBITDA is a meaningful measure of performance because it is the
most commonly used measure in the cable television industry to analyze and compare cable television companies on the basis of
operating performance, leverage and liquidity. EBITDA is not a U.S. GAAP measure of income (loss) or cash flow from operations and
should not be considered as an alternative to net income as an indication of Süweda’s financial performance or as an alternative to cash
flow from operating activities as a measure of Süweda’s liquidity.
(5) EBITDA Margin is EBITDA divided by revenues.
(6) Earnings (loss) per share gives effect to the issuance of 8,364,914 shares in the merger and, accordingly, is based on 15,782,842 shares
outstanding.
Item 9. Management’s Discussion and Analysis of Financial Condition and Results of Operations
PrimaCom commenced operations as a combined entity following the merger of KabelMedia and Süweda,
two similarly sized German cable television operators, on December 30, 1998. In this merger, shares of
KabelMedia were issued to the shareholders of Süweda as consideration in the merger and KabelMedia was the
surviving corporate entity, which then changed its name to PrimaCom.
However, for purposes of US GAAP, the merger was accounted for under the purchase method as a reverse
acquisition of KabelMedia by Süweda and Süweda was treated as the accounting acquiror. As a result, Süweda’s
historical financial statements are treated as the historical financial statements of PrimaCom. The following
29

Management’s Discussion and Analysis of Financial Condition and Results of Operations refers to the financial
performance of Süweda for the years ended December 31, 1998, 1997 and 1996. It also contains a discussion of
liquidity and capital resources for Süweda on a historical basis and for PrimaCom for the near future. PrimaCom
did not exist as a combined entity during the historical periods presented and all references to PrimaCom in the
discussion of those periods are to Süweda prior to the merger.
Years Ended December 31, 1998 and 1997
On December 18, 1998 the Company acquired Nehls & Schulz GmbH (‘‘Nehls & Schulz’’) which serviced
18,250 customers. No operating results of Nehls & Schulz are included in the 1998 statement of operations. On
December 30, 1998 for U.S. GAAP accounting purposes PrimaCom acquired Kabelmedia Holding AG
(‘‘Kabelmedia’’). No operating results of Kabelmedia are included in the 1998 statement of operations.
Revenues. Revenues primarily include revenue earned from subscription fees and to a much lesser extent
installation revenue. Revenues increased 15.2% from DM83,801,000 in 1997 to DM96,498,000 in 1998.
Approximately DM5,151,000 of the total increase was attributable to a 9.4% increase (from 329,357 to 360,317)
in the average monthly number of subscribers and approximately DM7,546,000 of the total increase reflected a
5.3% increase (from DM21.20 to DM22.32) in the average monthly revenue per subscriber. The increase in
PrimaCom’s average monthly number of subscribers primarily resulted from the acquisition in January 1998 of
Comtel GmbH and CableStar GmbH which collectively served approximately 28,300 subscribers at the date of
acquisition and in September 1998 of Acotec which served approximately 6,500 subscribers at the date of
acquisition. An additional 1,893 subscribers were added through either the build out of existing cable networks or
increased penetration. The increase in the average monthly revenue per subscriber is attributable to rate increases
implemented since December 31, 1996. These rate increases were in large part related to and intended to offset a
rate increase in the signal delivery fees charged by Deutsche Telekom in November 1997. The full impact of
PrimaCom’s rate increases on revenue per subscriber was partially offset by the acquired subscribers which, at
the date of their acquisition, had lower average monthly revenue per subscriber than PrimaCom’s existing
subscribers.
Operations. Operating expenses primarily include signal delivery fees paid to Deutsche Telekom and costs
of personnel and third party contractors attributable to repair and maintenance of PrimaCom’s cable networks.
Operating expenses increased 27.6% from DM20,023,000 in 1997 to DM25,546,000 in 1998, principally as a
result of a DM2,834,000 increase in Deutsche Telekom fees related to escalation clauses and a rate increase in
November 1997 and increased costs associated with cable television systems acquired. As a percentage of
revenue, operating expenses increased from 23.9% for 1997 to 26.5% for 1998.
Selling, General and Administrative. Selling, general and administrative expenses primarily include costs
of premises, sales commissions required to operate the cable networks, personnel costs of senior management,
accounting and administrative personnel, legal, accounting and license fees for the billing and accounting systems
and billing costs and expenses. Selling, general and administrative expenses decreased 7.6% from DM15,976,000
in 1997 to DM14,765,000 in 1998 primarily as a result of a decrease in legal and accounting expenses, sales
commissions and a one time special receivable write-offs. As a percent of revenue, selling, general and
administrative expenses decreased from 19.1% in 1997 to 15.3% in 1998, reflecting higher revenue per subscriber
and increased efficiencies.
Depreciation and Amortization. Depreciation and amortization increased 18.4% from DM26,529,000 in
1997 to DM31,434,000 in 1998, principally as a result of increased depreciation and amortization expense
associated with the cable television systems acquired and cable television networks capitalized in connection with
sale-leaseback transactions subsequent to December 31, 1996.
Operating Profit. Operating profit increased 16.4% from DM21,273,000 in 1997 to DM24,753,000 in 1998
as a result of the factors discussed above. As a percent of revenue, operating profit increased from 25.4% in 1997
to 25.7% in 1998.
30

Interest Expense. Interest expense decreased 1.6% from DM15,630,000 in 1997 to DM15,376,000 in 1998
as a result of replacing higher interest rate debt with lower interest rate facilities and a reduction in average
indebtedness outstanding.
Other Income (Expense). Other income decreased from DM23,578,000 in 1997 to expense of DM454,000
in 1998. Other income in 1997 related to a nonrecurring one time gain on the sale of its 50% interest in Kabelcom
Essen. Kabelcom Essen was an equity investment acquired in 1990. Since the date of acquisition, Süweda had
been unable to exercise significant influence over Kabelcom Essen’s operating and financial policies and as a
result had accounted for this equity investment at historic cost.
Income (Loss) From Continuing Operations Before Minority Interest and Income Taxes. Income from
continuing operations before minority interest and income taxes decreased significantly from DM29,221,000 in
1997 to DM8,923,000 in 1998 primarily as a result of the reduction in other income from 1997 to 1998.
Excluding the impact of other income (expense) in 1997 and 1998, income from continuing operations before
minority interest and income taxes increased from DM5,643,000 in 1997 to DM9,377,000 in 1998.
Minority Interest in Net Income of Subsidiaries. The decrease in minority interest in net income of
subsidiaries from DM5,412,000 in 1997 to DM592,000 in 1998 is a result of the decreased minority holdings and
income of these subsidiaries.
Income Tax (Benefit) Expense. Current income tax expense in 1997 and 1998 was insignificant and was
principally attributable to certain of PrimaCom’s subsidiaries that generate small amounts of taxable income.
Income (Loss) From Continuing Operations. Income from continuing operations decreased from
DM19,374,000 in 1997 to DM6,713,000 in 1998 primarily as a result of the reduction in other income from 1997
to 1998. Excluding the impact of other income (expense), loss from continuing operations decreased from
DM4,204,000 to income of DM7,167,000.
Income (Loss) From Discontinued Operations. In September 1998, PrimaCom divested its remaining noncable
television businesses. Accordingly, the operating results of these non-cable television businesses have been
segregated from continuing operations and reported as a separate line item in the statements of operations. Net
loss from discontinued operations decreased from DM13,645,000 in 1997 to DM5,715,000 in 1998 principally as
a result of a write-off of net operating loss carryforward deferred tax assets related to the sale of a discontinued
operation.
Net Income. Net income decreased DM4,731,000 from DM5,729,000 in 1997 to DM998,000 in 1998 as a
result of the factors discussed above.
EBITDA. PrimaCom defines EBITDA as earnings (loss) before extraordinary items, minority interests, net
interest expense, income taxes and depreciation and amortization. PrimaCom believes that EBITDA is a
meaningful measure of performance because it is the most commonly used in the cable television industry to
analyze and compare cable television companies on the basis of operating performance, leverage and liquidity.
EBITDA is not a U.S. GAAP measure of income (loss) or cash flow from operations and should not be
considered as an alternative to net income as an indication of PrimaCom’s financial performance or as an
alternative to cash flow from operating activities as a measure of PrimaCom’s liquidity. EBITDA increased
17.5% from DM47,802,000 in 1997 to DM56,187,000 in 1998. Average monthly EBITDA per average subscriber
increased from DM12.09 in 1997 to DM12.99.
Years Ended December 31, 1997 and 1996
Revenues. Revenues increased 6.2% from DM78,936,000 in 1996 to DM83,801,000 in 1997. Approximately
DM2,570,000 of the total increase was primarily attributable to a 3.3% increase (from 318,976
to 329,357) in the average monthly number of subscribers and approximately DM2,300,000 of the total increase
reflected a 2.8% increase (from DM20.62 to DM21.20) in the average monthly revenue per subscriber from 1996
to 1997. The increase in the average monthly number of subscribers was primarily related to the build out of the
cable network and connection of new subscribers.
31

Operations. Operating expenses increased 12.3% from DM17,830,000 in 1996 to DM20,023,000 in 1997,
principally as a result of increased costs under Süweda’s signal delivery contracts with Deutsche Telekom and
increased personnel and material costs related to the increased number of subscribers. As a percent of revenue,
operating expenses increased from 22.6% in 1996 to 23.9% in 1997.
Selling, General and Administrative. Selling, general and administrative expenses decreased 7.2% from
DM17,216,000 in 1996 to DM15,976,000 in 1997, principally as a result of adding personnel to the sales
function, thereby saving on commissions previously paid to third party sales agents, and reductions in other
general and administrative expenses as a result of management cost savings initiatives. These reductions were
partially offset by increased legal costs related to certain contractual disputes. As a percent of revenue, selling,
general and administrative expenses decreased from 21.8% in 1996 to 19.1% in 1997.
Depreciation and Amortization. Depreciation and amortization increased 3.1% from DM25,737,000 in
1996 to DM26,529,000 in 1997, principally as a result of increased depreciation associated with the cable
television networks capitalized in connection with sale-leaseback transactions subsequent to December 31, 1996.
Operating Profit. Operating profit increased 17.2% from DM18,153,000 in 1996 to DM21,273,000 in 1997
as a result of the factors discussed above. As a percent of revenue, operating profit increased from 23.0% in 1996
to 25.4% in 1997.
Interest Expense. Interest expense decreased 1.9% from DM15,932,000 in 1996 to DM15,630,000 in 1997,
as a result of replacing higher interest rate debt with lower interest rate facilities, partially offset by somewhat
higher average borrowings.
Other Income (Expense). Süweda recorded a one-time non-recurring net gain in 1997 of DM23,578,000
(after closing costs and expenses) as the result of the sale of Kabelcom Essen.
Income (Loss) from Continuing Operations Before Minority Interest and Income Taxes. Income from
continuing operations before minority interest and income taxes increased from DM2,221,000 in 1996 to
DM29,221,000 in 1997 as a result of the factors discussed above.
Minority Interest in Net Income of Subsidiaries. The increase in minority interest from DM1,192,000 in
1996 to DM5,412,000 in 1997 was primarily a result of the minority interest in the gain on the sale of
Kabelcom Essen.
Income Tax Benefit (Expense). Süweda recorded approximately DM1,400,000 in current tax expense in
both 1996 and 1997 as a result of certain of its subsidiaries reporting taxable income. The overall effective tax
rate in both years was affected by non-taxable income items and other permanent differences. At December 31,
1997 Süweda and its subsidiaries had approximately DM4,000,000 in deferred tax assets related to cumulative
tax loss carryforwards, principally trade taxes. As a result of the uncertainty related to Süweda’s ability to use
certain of these loss carryforwards a valuation allowance of approximately DM3,000,000 has been recorded.
At December 31, 1997 Süweda had tax operating loss carryforwards from continuing operations for German
corporate and trade tax purposes of approximately DM1,798,000 and DM51,843,000, respectively, which have no
time limitation in respect of their usage.
Income (Loss) from Discontinued Operations. Income from discontinued operations was DM1,875,000 in
1996 compared to a loss of DM13,645,000 in 1997 due to the write-off of net operating loss carryforward
deferred tax assets related to the sale of a discontinued operation.
Net Income (Loss). Net income increased DM4,430,000 from DM1,299,000 in 1996 to DM5,729,000 in
1997 as a result of the factors discussed above.
EBITDA. PrimaCom defines EBITDA as earnings (loss) before extraordinary items, minority interests, net
interest expense, income taxes and depreciation and amortization. PrimaCom believes that EBITDA is a
meaningful measure of performance because it is the most commonly used measure in the cable television
industry to analyze and compare cable television companies on the basis of operating performance, leverage and
liquidity. EBITDA is not a U.S. GAAP measure of income (loss) or cash flow from operations and should not be
considered as an alternative to net income as an indication of PrimaCom’s financial performance or as an
32

alternative to cash flow operating activities as a measure of PrimaCom’s liquidity. EBITDA increased 8.9% from
DM43,890,000 in 1996 to DM47,802,000 in 1997, primarily as a result of revenues increasing at a faster rate that
the sum of operating, selling, general and administrative costs and expenses. Average monthly EBITDA per
subscriber increased 5.4% from DM11.47 per subscriber in 1996 to DM12.09 per subscriber in 1997.
Years ended December 31, 1996 and 1995
Revenues. Revenues increased 7.0% from DM73,752,000 in 1995 to DM78,936,000 in 1996. The entire
increase was primarily attributed to a 7.5% increase (from 296,738 to 318,976) in the average monthly number of
customers and was not significantly impacted by a slight decrease from DM20.71 to DM20.62 in the average
monthly revenue per customer from 1995 to 1996. The increase in PrimaCom’s additional customers is
principally a result of building out its existing cable networks subsequent to December 31, 1995. Most of the
build out was in the new German states where the average monthly revenue per subscriber has historically been
lower than the average monthly revenue per subscriber in the old German states. The change in the geographic
composition of the subscriber base resulted in a decline in PrimaCom’s overall average monthly revenue
per subscriber.
Operations. Operating expenses increased 4.6% from DM17,038,000 in 1995 to DM17,830,000 in 1996,
principally as a result of increased repair and maintenance expenses in 1996 related to the increased number of
subscribers. As a percent of revenue operating expenses decreased from 23.1% in 1995 to 22.6% in 1996 as a
result of stagnant personnel expenses in 1996.
Selling, General and Administrative. Selling general and administrative expenses decreased 5.6% from
DM18,242,000 in 1995 to DM17,216,000 in 1996, principally as a result of a decrease in commissions paid to
third party sales agents. This decrease was partially offset by increased professional services expenses and
various other general and administrative costs. As a percent of revenue, selling, general and administrative
expense decreased from 24.7% in 1995 to 21.8% in 1996.
Depreciation and Amortization. Depreciation and amortization decreased 3.7% from DM26,729,000 in
1995 to DM25,737,000 in 1996, principally as a result of decreased depreciation associated with the cable
television networks capitalized in connection with sale-leaseback transactions subsequent to December 31, 1995.
Operating Profit. Operating profit increased 54.6% from DM11,743,000 in 1995 to DM18,153,000 in 1996
as a result of the factors discussed above. As a percent of revenue, operating profit increased from 15.9% in 1995
to 23.0% in 1996.
Interest Expense. Interest expense decreased 3.1% from DM16,442,000 in 1995 to DM15,932,000 in 1996,
principally as a result of a decrease in high rate bank debt.
Income (Loss) from Continuing Operations Before Minority Interest and Income Taxes. Results from
continuing operations before minority interest and income taxes improved by DM6,920,000 from a loss of
DM4,699,000 in 1995 to income of DM2,221,000 in 1996 as a result of the items discussed above.
Minority Interest in Net Income of Subsidiaries. The increase in minority interest from DM103,000 in
1995 to DM1,192,000 in 1996, is the result of the increased income of these subsidiaries.
Income Tax Benefit (Expense). Income tax benefit was DM3,186,000 in 1995 compared to income tax
expense of DM1,605,000 in 1996. The 1995 effective tax rate reflected higher amounts of non-taxable income
than in 1996. Current tax expense in 1996 was somewhat higher compared to 1995 as a result of certain of
PrimaCom’s subsidiaries having more taxable income in 1996.
Income (Loss) from Discontinued Operations. The results from discontinued operations improved from a
loss of DM122,000 in 1995 to income of DM1,875,000 in 1996.
Net Income (Loss). Net loss decreased from a loss of DM1,738,000 in 1995 to net income of DM1,299,000
in 1996 as a result of the factors discussed above.
EBITDA. PrimaCom defines EBITDA as earnings (loss) before extraordinary items, minority interests, net
interest expense, income taxes and depreciation and amortization. PrimaCom believes that EBITDA is a
33

meaningful measure of performance because it is the most commonly used measure in the cable television
industry to analyze and compare cable television companies on the basis of operating performance, leverage and
liquidity. EBITDA is not a U.S. GAAP measure of income (loss) or cash flow from operations and should not be
considered as an alternative to net income as an indication of PrimaCom’s financial performance or as an
alternative to cash flow operating activities as a measure of PrimaCom’s liquidity. EBITDA increased 14.1%
from DM38,472,000 in 1995 to DM43,890,000 in 1996, primarily as a result of revenue increasing at a faster rate
than the sum of operating, selling, general and administrative costs and expenses. Average monthly EBITDA per
subscriber increased from DM10.80 per subscriber in 1995 to DM11.47 per subscriber in 1996.
Liquidity and Capital Resources
PrimaCom has historically relied on four sources for necessary funding:
) cash flow from operations;
) borrowings under its bank and overdraft facilities;
) financing from sale-leaseback transactions; and
) shareholder loans.
Upon consummation of the merger, PrimaCom’s capital obligations also included the obligations under the
13 5 /8% Senior Discount Notes due 2006 (the ‘‘Senior Notes’’) issued by KabelMedia.
Upon consummation of the merger, at December 31, 1998, PrimaCom’s aggregate consolidated indebtedness
was approximately DM650,901,000 which was comprised of DM281,395,000 of debt outstanding under its
credit facilities and bank loans, DM275,981,000 outstanding under its senior notes, DM86,382,000 of
sale-leaseback obligations, DM6,627,000 of deferred purchase obligations and DM516,000 of related party
liabilities.
PrimaCom generated cash flow from operating activities of DM55,862,000 for the year ended December 31,
1998. For the year ended December 31, 1998, PrimaCom generated cash from investing activities of
DM16,528,000, primarily related to acquisitions. Net cash used in financing activities amounted to
DM17,657,000, primarily related to the repayment of bank debt.
Capital expenditures of DM6,082,000 for the year ended December 31, 1998 related to the continued
expansion and upgrading of existing networks. PrimaCom has only minimal commitments to make capital
expenditure under the terms of its concession and other agreements.
PrimaCom believes EBITDA provides a more meaningful measure of fixed cost coverage than does a
deficiency of earnings to fixed charges. EBITDA amounts in each period are not solely available to satisfy cash
interest expense amounts payable by PrimaCom and may also be required for other corporate purposes, including
increases in working capital, principal payments on debt and capital expenditures. EBITDA for the year ended
December 31, 1998 was DM56,187,000.
At December 31, 1998, PrimaCom had borrowed DM5,378,000 from overdraft facilities. PrimaCom uses its
overdraft facilities from time to time to meet short-term cash needs.
Subsequent to December 31, 1998, PrimaCom substantially recapitalized its balance sheet through a series
of transactions including the consummation of its initial public offering, the tender offer of its senior notes and
the prepayment of certain capital lease obligations. PrimaCom intends to refinance the remainder of its capital
lease obligations within the next twelve months using cash flow from operations and borrowings under its
revolving bank facility. Currently, PrimaCom has approximately DM230,000,000 available under its
DM600,000,000 revolving bank facility which can be used to fund future capital expenditures, acquisitions and
working capital. PrimaCom has no major capital expenditure commitments in the near future.
PrimaCom completed the initial public offering of 3,945,710 of its ordinary bearer shares on February 23,
1999 for net proceeds of DM206,175,000. These funds were initially used to repay outstanding indebtedness
under PrimaCom’s revolving credit facility and reborrowed to fund the tender offer for the senior notes which
34

was commenced on February 26, 1999. On March 30, 1999, PrimaCom consummated the tender offer for total
cash consideration of DM275,891,000, of which DM20,807,000 was funded with proceeds from the sale of
existing foreign exchange contracts. The repurchase of all but $1.2 million of the senior notes with borrowings
under the revolving credit facility will result in substantial interest expense savings for PrimaCom. PrimaCom has
commenced redemption proceedings for the remaining $1.2 million of senior notes outstanding.
A description of PrimaCom’s revolving bank facility and its capital lease obligations is set forth below.
Under the terms and conditions of the revolving bank facility, PrimaCom has total committed availability of
DM600 million. Amounts outstanding under the revolving bank facility bear interest at the rate of LIBOR (as
defined in the revolving bank facility) plus a margin of between 0.75% and 1.75%, depending on the ratio of the
indebtedness of PrimaCom’s subsidiaries to EBITDA. On December 31, 1998, PrimaCom had approximately
DM270 million outstanding under the DM600 million revolving bank facility at a floating interest rate of LIBOR
plus 1.25% or 4.59125%. PrimaCom may use proceeds from the revolving bank facility for general corporate
purposes as well as future acquisition financing, senior note prepayments and repurchases of cable networks
under the sale-leaseback agreements. To date, PrimaCom has used the revolving bank facility to refinance its
bank debt.
PrimaCom closed on its revolving bank facility on December 23, 1998 and obtained funds on December 30,
1998 through its wholly-owned subsidiary KabelMedia Management GmbH under a credit agreement with Chase
Manhattan Plc, Dresdner Kleinwork Benson, ING Bank N.V., Nationsbank, N.A. and Paribas Group, as
arrangers, and Chase Manhattan Bank AG as agent for the banks and financial institutions named therein.
Pursuant to these agreements, the lenders agreed to lend KabelMedia Management GmbH up to DM600 million
which can make it available to PrimaCom’s wholly owned subsidiaries.
Under the terms of the revolving bank facility the available commitment amount is to be reduced in equal
quarterly amounts to the amounts reflected below as of December 31 of the years indicated:
Commitment
Year Ended Amount
1999**************************************************** 600,000,000
2000**************************************************** 600,000.000
2001**************************************************** 540,000,000
2002**************************************************** 480,000,000
2003**************************************************** 390,000,000
2004**************************************************** 300,000,000
2005**************************************************** 180,000,000
2006**************************************************** 60,000,000
2007**************************************************** 0
The revolving bank facility contains financial covenants common for financings of this type. PrimaCom’s
ability to borrow under the revolving bank facility depends on its continued compliance with these covenants.
Breach of these covenants may result in an event of default. In addition to tests measured by EBITDA described
below, there are restrictions on:
) incurring debt
) encumbering revenues or assets
) loaning funds to third parties or assuming liabilities
) disposing of property
) paying dividends or making distributions
35

The tests measured by EBITDA are as follows:
Senior Debt to Total Debt to Annualized EBITDA
Annualized Annualized EBITDA to to Proforma
Dates EBITDA EBITDA Cash Interest Debt Service
Period to December 31, 1999 ************** 6.0 6.5 2.5 —
January 1, 2000 to June 30, 2000 *********** 5.5 6.5 2.5 1.25
July 1, 2000 to December 31, 2000 ********* 5.25 6.25 2.5 1.25
January 1, 2001 to June 30, 2001 *********** 5.0 6.00 2.5 1.25
July 1, 2001 to December 31, 2001 ********* 4.75 5.75 2.5 1.25
January 1, 2002 to June 30, 2002 *********** 4.50 5.50 2.5 1.25
‘‘Senior Debt to Annualized EBITDA’’ is the sum of all debt obligations of PrimaCom’s subsidiaries which
are not expressly subordinated to the revolving bank facility divided by the product of the three most recent
months of PrimaCom’s subsidiaries’ EBITDA times four.
‘‘Total Debt to Annualized EBITDA’’ is the sum of all debt obligations of PrimaCom’s subsidiaries divided
by the product of the three most recent months of PrimaCom’s subsidiaries’ EBITDA times four.
The revolving bank facility contains standard events of default in addition to the following:
) loss of any concession which results in a material adverse change;
) termination of any contract which results in a material adverse change; and
) a material adverse change in the regulatory environment in which PrimaCom operates.
The occurrence of an event of default could result in all amounts outstanding under the revolving bank
facility becoming immediately due and payable and the cancellation of the revolving bank facility. It could also
result in the acceleration of amounts outstanding under PrimaCom’s other debt instruments.
The revolving bank facility is secured by, among other things, liens on receivables from cable television
subscribers, concession agreements, equipment, intercompany loans, partnership interests and shares of
PrimaCom’s subsidiaries, including KabelMedia Management.
PrimaCom also intends to repay its remaining obligations under its sale-leaseback obligations to Phillips. An
agreement in principle has been reached with Phillips whereby PrimaCom will prepay and repurchase all the
networks subject to the Phillips sale-leaseback agreements for approximately DM91 million ($54 million). Of
this amount, approximately DM51 million ($30 million) was paid on January 31, 1999 and the remaining
DM40 million ($23.7 million) is expected to be paid in January 2000. PrimaCom will use cash flow from
operations and borrowings under its revolving credit facility to prepay and repurchase the networks from Phillips.
The leases terminate on different dates between the years 2002 and 2008. PrimaCom has succeeded to the rights
and obligations of Süweda under the sale-leaseback agreements. On termination of the Philips sale-leaseback
agreements (which constitute a majority of the sale-leaseback agreements), Philips has the right to sell its
networks to PrimaCom. PrimaCom also has capital lease obligations under agreements with Bosch. The Bosch
sale-leaseback agreements provide PrimaCom with an option to purchase Bosch’s networks, but Bosch does not
have the right to sell its networks to PrimaCom upon termination. PrimaCom intends to repurchase the networks
subject to the Bosch sale-leaseback agreement as soon as practicable at negotiated prices. If these Bosch networks
are not repurchased prior to the end of the term of the sale-leaseback agreements, PrimaCom intends to exercise
its option to purchase the networks at that time for their residual value.
Introduction of the Euro and Year 2000 Compliance
We recognize the need to ensure that our operations will not be adversely affected by software failures
related to Germany’s participation in the European Monetary Union with the resultant introduction of the Euro on
January 1, 1999 and related to Year 2000 problems. We use licensed software for our financial accounting system
and subscriber management system. The financial accounting and subscriber management software is presently
Year 2000 compliant but not fully Euro compliant. We do not have any contingency plans in the event we do not
36

obtain the upgrades or have the software installed in a timely manner. The total cost of acquiring these upgrades
and achieving Euro compliance is not expected to have a material effect on our operations and our consolidated
financial position and results of operations. We are not expecting a competitive impact from the introduction of
the Euro because our operations all take place in Germany. However, while we expect that our networks will be
Euro compliant in a timely manner, we are still in the process of ascertaining whether our main contracting
parties, such as Deutsche Telekom, our banks and the main electricity providers to our cable networks will be
Euro and Year 2000 compliant in a timely manner. At this time, we cannot ascertain the magnitude of the impact
of non-compliance of our main contracting parties on our business and our financial condition.
Unaudited Pro Forma Consolidated Financial Statements
Since the merger of Süweda and KabelMedia occurred on December 30, 1998, all historical consolidated
financial information for PrimaCom in this annual report relates only to Süweda, the accounting acquiror in the
merger for purposes of US GAAP.
The following unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31,
1998 is based on the historical consolidated financial statements of PrimaCom adjusted as if the merger occurred
on January 1, 1998.
The unaudited pro forma financial information is provided for information purposes only and does not
purport to represent what PrimaCom’s results of operations and financial condition actually would have been if
the merger in fact had occurred on such dates, or to project PrimaCom’s results of operations or financial
condition for any future period.
The unaudited pro forma financial data should be read in conjunction with, and are qualified in their entirety
by reference to the Selected Financial Data and Management’s Discussion and Analysis of Financial Condition
and Results of Operations section and PrimaCom’s historical consolidated financial statements and notes thereto
appearing elsewhere in this annual report.
37

Pro Forma Consolidated Statement of Operations
Year Ended December 31, 1998
(Unaudited)
Historical Historical
Süweda KabelMedia Adjustments Pro forma for the Merger
DM’000 DM’000 DM’000 DM’000 5’000 $’000
Revenues***************************
Operating costs and expenses
96,498 87,545 184,043 94,100 110,404
Operations************************ 25,546 15,070 40,616 20,767 24,365
Selling, general and administrative **** 14,765 13,627 (2,500) (a)
25,892 13,238 15,531
Corporate overhead **************** 13,614 2,500 (a)
16,114 8,239 9,667
Depreciation and amortization******** 31,434 56,586 34,594 (b)(c)
122,614 62,691 73,554
Total ****************************** 71,745 98,897 34,594 205,236 104,935 123,117
Operating profit (loss) ****************
Interest expense:
24,753 (11,352) (34,594) (21,193) (10,835) (12,713)
Bank debt ************************ 4,988 13,686 18,674 9,548 11,202
Senior Notes********************** — 26,839 26,839 13,723 16,100
Sale-leaseback ******************** 10,367 — 10,367 5,301 6,219
Related party ********************* 21 — 21 11 13
Other expense*********************** 454 405 (405) (d)
454 233 274
Loss on sale of business **************
Income (loss) from continuing operations
before minority interest, income taxes
— 844 844 431 506
and extraordinary items ************* 8,923 (53,126) (34,189) (78,392) (40,082) (47,027)
Minority interest********************* 592 (8) 584 299 350
Income tax expense ******************
Net income (loss) from continuing
1,618 2,217 3,835 1,960 2,300
operations before extraordinary items**
Earnings (loss) per share from continuing
6,713 (55,335) (34,189) (82,811) (42,341) (49,677)
operations before extraordinary items (e)
(5.25) (2.68) (3.15)
(See accompanying notes to unaudited pro forma consolidated financial statements).
38

Notes to Unaudited Pro Forma Consolidated Financial Statements
(a) To reflect an estimate of Süweda’s corporate overhead currently reflected in selling, general and administrative
expense. Süweda has historically included corporate overhead expenses within selling, general and
administrative expenses.
(b) To reflect amortization over a 12 year period of the excess of purchase price over the estimated fair market
value of the net assets of KabelMedia, amounting to DM38,302,000 for the year ended December 31, 1998,
less goodwill amortization already recorded on Kabelmedia’s historical statement of operations of
DM13,811,000. The transaction is being accounted for as a reverse acquisition and, accordingly, the excess
purchase price over the preliminary estimate of the fair market value of the underlying assets of KabelMedia
of DM525,875,000 is allocated to goodwill. The valuation of KabelMedia in the merger was based on an
independent, third party valuation of KabelMedia undertaken in connection with the merger.
The preliminary allocation of the purchase price is as follows:
KabelMedia historical net assets ***************************************************
(’000)
(5,585)
Purchase price****************************************************************** 388,500
Excess ************************************************************************
Allocated to:
394,085
Deferred tax asset************************************************************* 72,794
Cable assets****************************************************************** 121,239
Intangible assets* ************************************************************* (165,731)
Other assets****************************************************************** (12,365)
Unamortized foreign currency discount ******************************************* 6,372
Senior notes ***************************************************************** (68,751)
Accrued expenses ************************************************************* (19,100)
Goodwill ******************************************************************** 459,627
394,085
* reflects elimination of historical KabelMedia goodwill.
(c) To reflect additional depreciation expense resulting from the allocation of a portion of the purchase price to
the cable assets of KabelMedia amounting to DM10,103,000 for the year ended December 31, 1998.
(d) To reverse non-recurring items.
(e) Pro forma earnings per share is based on a total of 15,782,842 shares outstanding calculated as follows:
Historical KabelMedia outstanding shares ***************************************** 7,417,928
Merger ********************************************************************** 8,364,914
Pro forma KabelMedia outstanding shares ***************************************** 15,782,842
Item 9A. Quantitative and Qualitative Disclosures About Market Risks
Not Applicable
Item 10. Directors and Officers
PrimaCom has a two-tiered board consisting of the Management Board and the Supervisory Board.
39

Management Board
The Management Board takes action by majority vote or, if there are only two members, by unanimous vote.
The current members of the Management Board, their ages and responsibilities, dates of appointment and
experience are set forth below.
Name Age Position on the Management Board
Jacques Hackenberg ************ 60 Chairman of the Management Board — Chief Executive
Officer (Vorstandsvorsitzender)
Paul Thomason**************** 43 Chief Financial Officer (Finanzvorstand)
Mr. Hackenberg has more than 10 years of experience in the cable television industry. He has been
Chairman of the Management Board — Chief Executive Officer of PrimaCom since the conversion on
September 16, 1998. He was Chief Executive Officer and Managing Director of KabelMedia from December 31,
1997 and Co-Managing Director of KabelMedia from July 1, 1997. From 1995 until June 1997, Mr. Hackenberg
served as CEO of United and Philips Communication B.V., the largest European private cable operator. From
1990 until 1995 he was managing director of Philips Cable Systems. From 1963 until 1990, Mr. Hackenberg held
various positions at Philips Electronics.
Mr. Thomason has more than 13 years experience in the communication and media industry. He has been
the Chief Financial Officer of PrimaCom since the merger and of KabelMedia from February 1996 to the merger.
Mr. Thomason has provided financial advice to KabelMedia since 1993. From 1980 until January 1996, he was
employed by the First Union National Bank of North Carolina, where he served as Senior Vice President in its
communications and media finance group from 1986 to January 1996.
Other Senior Officers
Mr. Ernst Uhlig has more than seven years experience in the cable industry and has served as the new
German states Chief Operating Officer since the merger and as the Chief Operating Officer of KabelMedia since
October 1995. Prior to joining KabelMedia, he held several positions at Bosch, including as Sales Director of its
broadband communications division and as Technical Director of Telenorma S.A. in Brussels, Belgium. In
addition, from October 1994 to September 1995, Mr. Uhlig was a member of the board of directors of the
broadband division of the Central Federation of the electronics industry.
Mr. George van der Hejden has more than six years of experience in the cable industry and has served as the
old German states Chief Operating Officer since the merger. Prior to the merger, he served as the Senior Manager
Cable Marketing of Süweda since 1994 and as its Director Retail Sales and Marketing since 1992. Prior to
joining Süweda, Mr. van der Hejden served over 30 years in several positions with Phillips Consumer
Electronics.
Supervisory Board
The Articles of Association of PrimaCom and the Rules of Procedure determined by the Supervisory Board
govern how the Supervisory Board shall conduct its activities. Currently, the members of the Supervisory Board
must meet no less than once every three months. All Supervisory Board resolutions are passed by simple majority
vote. However, in certain instances when the Standing Orders of the Management Board require that the
Supervisory Board approve certain actions of the Management Board, a 75% Supervisory Board vote is required.
The Supervisory Board elects a Chairman and two Vice Chairmen. The Chairman of the Supervisory Board is
authorized to represent the Supervisory Board and enforce its resolutions in all legal matters within and outside
of PrimaCom.
In accordance with PrimaCom’s Articles of Association, the Supervisory Board of PrimaCom consists of
nine members elected by the general meeting of shareholders, three of which are independent directors. Members
of the Supervisory Board are currently divided into three classes with two members in Class A, five members in
Class B and two members in Class C. The term of the members of the Class A expires at the shareholders’
meeting to approve the actions taken by the Supervisory Board during the second fiscal year after the merger and
40

the terms of the members of Class B and Class C expire at the shareholders’ meetings to approve the actions
taken by the Supervisory Board during the third and fourth fiscal years following commencement of their duties
as a members of the Supervisory Board, respectively. The fiscal year when the member was elected is not taken
into account when determined towards the duration of their terms. After their initial terms, members of the
Supervisory Board will be elected to terms which expire at the shareholders meeting to approve the actions taken
by the Supervisory Board during the fourth year subsequent to the beginning of their new term. Members of the
Supervisory Board replacing members of any class will have the term applicable to that class. German law
provides that members of the Supervisory Board may be removed prior to the expiration of their terms by 75% of
the votes cast at a general shareholders’ meeting.
Set forth below is certain information with respect to the members of PrimaCom’s Supervisory Board. Each
of the persons listed below became a member of the Supervisory Board at the consummation of the merger.
Mrs. Brigitta Preuss has agreed not to vote or otherwise take an active part in the activities of the Supervisory
Board. Mrs. Preuss is expected to resume active participation on the Supervisory Board upon the resolution of the
criminal proceedings against Wolfgang Preuss or at the time of the merger of AGFB into PrimaCom, if that
happens first. The criminal proceedings against Wolfgang Preuss were dismissed by the court in Koblenz on
March 22, 1999 but this decision may be appealed by the prosecution until April 22, 1999. There is no assurance
that the prosecution will not appeal.
Name Age Principal Occupation
Class A
John G. Berylson ************** 45 President of GCC Investments Inc., an affiliate of
General Cinema
Paul ’t Hoen ******************
Class B
53 Vice President Strategy — Lucent Technologies
Hilversum
Christian Schwarz-Schilling****** 68 Chairman of PrimaCom’s Supervisory Board
James S. Hoch **************** 38 Managing Director of Morgan Stanley & Co. Limited
Boris Augustin **************** 30 Broker
Stefan Schwenkedel ************ 39 Vice Chairman of PrimaCom’s Supervisory Board,
Professor of Business Administration and Finance at the
University of Applied Science in Wiesbaden and
Chairman of the Supervisory Board of AGFB
Klaus von Dohnanyi ***********
Class C
69 Special Advisor to the Board of Directors of
Bundesanstalt für Vereinigungsbedingte Sonderaufgaben
Massimo Prelz Oltramonti******* 44 Vice Chairman of PrimaCom’s Supervisory Board, a
Managing Director of Advent International plc and
Senior Vice President of Advent International
Brigitta Preuss **************** 38 General Manager of Kurhotel
Parkschlösschen Bad Wildstein GmbH
Mr. Berylson has served on the Supervisory Board, the Executive Committee of KabelMedia or on a
predecessor body carrying out comparable functions since January 1994. He is Senior Vice President and Chief
Investment Officer of GC Companies, Inc. and President of GCC Investments Inc., a subsidiary of GC Companies,
Inc., and is responsible for making equity investments with capital generated by the theater business of
GC Companies, Inc. He is also a director of Grandvision, Ltd., Fleetman Inc., and Youngworld Stores Group, Inc.
Prior to joining General Cinema in August 1993, he was Vice President and Managing Director of Advent
International Financial Services, Inc., which he joined in 1989. From 1984 to 1989, he was a partner and founder
of Cowen & Company’s corporate finance department. Before that he was a Vice President at Blyth Eastman
Paine Webber in its corporate finance group.
41

Mr. ’t Hoen has served on the Supervisory Board since March 1, 1999. Mr. ’t Hoen is currently serving as
Vice President Strategy at Lucent Technologies in Hilversum, the Netherlands. Since 1985 he has been a member
of the board of the Dutch PTT Telecom (now KPN Telecom). Since 1992 he has been the head of the Corporate
Development of KPN Telecom and since 1995 he has been Chief Executive Officer of KPN Telecom subsidiary,
Vision Networks N.V., which has cable networks in Great Britain (ComTel), France (RCF), Poland (Intercable),
the Czech Republic (Interkabel) and the Netherlands (Casenda).
Dr. Schwarz-Schilling has served on the Supervisory Board of PrimaCom as its Chairman since the merger.
From 1996 to 1998, he was the Head of the Advisory Committee of Aquila Beteiligungs GmbH. From 1993 to
1997, he was Chairman of the Supervisory Board of Grundig AG and since 1993 he has served as the President
and Managing Director of Dr. Schwarz-Schilling & Partner Telecommunications Consulting GmbH. Since 1995
he has been an International Mediator for the Federation Bosnia-Herzegovina. Since 1995 he has been a deputy
member of the Foreign Affairs Committee of the German Parliament and from 1995 to 1998, he was the
Chairman of its subcommittee for Human Rights and Humanitarian Aid, since 1998 as the Vice Chairman of that
committee. From 1994 to 1995, he was a member of the Foreign Affairs Committee of the German Parliament
and from 1993 to 1998 he has served as a deputy member of the Committee for Economics of the German
Parliament. From 1982 to 1992, he was the Federal Minister of Post and Telecommunications of the Federal
Republic of Germany and has been serving as a Member of the German Parliament since 1976. From 1957 to
1982 he was Managing Director of the family-owned Sonnenschein Akkumulatorenfabrik Berlin/Büdingen
GmbH.
Mr. Hoch has served on the Supervisory Board of PrimaCom, the Executive Committee of KabelMedia or
on a predecessor body carrying out comparable functions since September 1995. Since December 1998,
Mr. Hoch has been a Managing Director of Morgan Stanley & Co. Limited. From 1994 to 1998, Mr. Hoch was an
Executive Director of Morgan Stanley & Co. Limited and, from February 1993 to 1994, Mr. Hoch was a Principal
of Morgan Stanley & Co. Incorporated. Mr. Hoch is a director of Equant N.V. and First Telecom Group plc.
Mr. Augustin has served on the Supervisory Board since the merger. Since October 1, 1998, he has been
employed by Archelon Deutschland GmbH, engaged in EUREX market making operations. From 1994 to 1998,
he worked in the financial services industry, including derivatives trading with Lehman Brothers Bankhaus AG,
Banque National de Paris (Deutschland) OHG, and Banque Paribas (Deutschland) OHG. Mr. Augustin is the son
of a sister of Wolfgang, Ludwig and Manfred Preuss.
Prof. Dr. Stefan Schwenkedel has served on the Supervisory Board of PrimaCom as a Vice Chairman since
the merger and as Chairman of the Supervisory Board of AGFB since 1997. Since 1996, he has been professor of
business administration and finance at the University of Applied Sciences in Wiesbaden. From 1993 to 1996, he
served as Executive Manager (Chief Financial Officer) at Schöller-Budatej, the Hungarian subsidiary of Schöller
Lebensmittel GmbH & Co. AG, a company of the Südzucker Group. During that time period, he was also a
member of the Supervisory Board of MIRSA AGIN ALBERTIRSA in Hungary. Prior to 1993, he worked inter
alia in the German paper and printing industry.
Dr. von Dohnanyi has served on the Supervisory Board of PrimaCom, the Executive Committee of
KabelMedia or a predecessor body carrying out comparable functions since January 1996. From the Conversion
until the merger, he was Chairman of the Supervisory Board of KabelMedia and from December 31, 1997 until
the conversion he was Chairman of the Executive Committee of KabelMedia. Between 1954 and 1960, he worked
for Ford Motor Company, both in the United States and Germany. From 1960 to 1968, Dr. von Dohnanyi was a
co-owner and Managing Director of the Institut für Marktforschung und Unternehmensberatung Infratest,
Munich (Market and Social Research, Infratest) and, between 1968 and 1969, he was Permanent Secretary at the
German Ministry of Economics. Dr. von Dohnanyi was a Member of Parliament in Bonn from 1969 to 1981,
Parliamentary Undersecretary from 1969 to 1972, and Minister for Science, Technology and Education from
1972 to 1974. From 1976 to 1981, he was Deputy Foreign Minister (Staatsminister), in Bonn (in charge of
European affairs). From 1981 to 1988, he was Governor of the City State of Hamburg. From 1990 to 1994,
Dr. von Dohnanyi was Chairman of the Board of TAKRAF Heavy Machinery, Leipzig, and since 1994 he has
been a Special Advisor to the board of directors of the Treuhandanstalt (since January 1, 1995, Bundesanstalt für
Vereinigungsbedingte Sonderaufgaben), in Berlin.
42

Mr. Prelz Oltramonti has served on the Supervisory Board of PrimaCom as a Vice Chairman, the Executive
Committee, or on a predecessor body carrying out comparable functions, of KabelMedia since April 1993.
Mr. Prelz Oltramonti has been at Advent since 1991, most recently as a Managing Director of Advent
International plc and a Senior Vice President of Advent International. He assists in the management of Advent
International’s European investment activities, with a particular focus on the media and communications sectors.
Mr. Prelz Oltramonti is a director of ESAT Telecom Holdings plc.
Mrs. Preuss, the wife of Wolfgang Preuss, has served on the Supervisory Board of PrimaCom since the
merger and as the general manager of Kurhotel Parkschlösschen Bad Wildstein GmbH, Traben-Trabach since
January 1993. From July 1984 to December 1992, she served in various positions at Süweda.
Supervisory Board Committees
The Rules of Procedure for the Supervisory Board provide that the Supervisory Board may delegate any of
its powers to a committee or committees and require the establishment of an Investment Committee, a
Compensation Committee and an Audit Committee. However, the committees do not have the power to make
resolutions on behalf of PrimaCom and may only act in an advisory capacity. The members of the committees are
nominated by the two designated members of the Supervisory Board, provided, however, that a majority of the
members of the Audit Committee shall consist of independent members of the Supervisory Board and provided
that committee members shall represent at least two shareholder groups, for as long as these shareholder groups
hold the shares in PrimaCom. These shareholder groups include: Advent International Funds, Morgan Stanley
Funds, General Cinema, APAX, Vision Networks, Chase, a group associated with Ben Bartel, a shareholder and
former Chief Executive of KabelMedia, AGFB, and members of the Preuss family.
Investment Committee
The Investment Committee consists of Dr. Schwarz-Schilling, Massimo Prelz Oltramonti and Prof.
Dr. Stefan Schwenkedel. The task of the Investment Committee is to consider and evaluate certain proposed
investments by PrimaCom or any of its subsidiaries, any proposed sale of assets or shares by PrimaCom or any of
its subsidiaries, any proposed increase in capital, any mergers and any proposed transaction between PrimaCom
or any of its subsidiaries and any of their affiliates (other than transactions among PrimaCom and its wholly
owned subsidiaries) and to make recommendations to the Supervisory Board.
Compensation Committee
The Compensation Committee consists of Dr. Schwarz-Schilling, Massimo Prelz Oltramonti and Brigitta
Preuss. The task of the Compensation Committee is to consider and evaluate the compensation payable to
members of the Management Board and make recommendations to the Supervisory Board. The Compensation
Committee also evaluates and recommends stock option awards recommended by the Management Board.
Audit Committee
The Audit Committee consists of one independent director of PrimaCom, Klaus von Dohnanyi, James Hoch
and Boris Augustin. Its task is to consider and evaluate the financial statements and accounting policies of
PrimaCom and to make recommendations to the Supervisory Board, to undertake such investigations of
PrimaCom’s financial condition, operations, financial controls and reporting procedures as it deems necessary
and to take all other actions which are customarily included in the responsibility of an audit committee of a public
company and to report on its investigations and actions to the Supervisory Board.
Item 11. Compensation of Directors and Officers
On a yearly basis, the Chairman of the Supervisory Board receives DM80,000 ($47,898), the Vice Chairmen
receive DM40,000 ($23,949) and each other member of the Supervisory Board receives DM20,000 ($11,974). In
addition, each member of the Supervisory Board is entitled to reimbursement for any reasonable business
expenses incurred within Germany in the performance of his or her duties. PrimaCom will reimburse the
members of the Supervisory Board for any value added taxes payable on their compensation.
43

In 1998, KabelMedia paid an aggregate of DM260,000 ($155,670) and Süweda paid an aggregate of
DM9,000 ($5,389) to the members of their respective Supervisory Boards.
For the fiscal year ending December 31, 1998, prior to the formation of PrimaCom, KabelMedia and
Süweda paid an aggregate of DM4.0 million ($2.1 million) as compensation to its executive officers as a group. In
the fourth quarter of 1998, prior to the merger, KabelMedia paid a one-time bonus of approximately DM892,000
($534,000) to Mr. Hackenberg and approximately DM1,497,000 ($896,000) to Mr. Thomason. In addition,
Süweda made a one-time payment to Mr. Ludwig Preuss in connection with the termination of his employment
agreement and entering into a non-competition agreement. See ‘‘Item 13. Interest of Management in Certain
Transactions.’’
Item 12. Options to Purchase Securities from Registrant or Subsidiaries
Stock Option Plans
PrimaCom has adopted one stock option plan for the benefit of all of PrimaCom’s and its subsidiaries’
employees (the ‘‘Universal Stock Option Plan’’) and one stock option plan for PrimaCom’s and its subsidiaries’
executive officers (the ‘‘Executive Stock Option Plan’’). The two stock option plans provide for the issuance of
stock options allowing eligible employees and executive officers to acquire shares. PrimaCom has authorized
special conditional capital in the amount of DM5 million for the purpose of issuing a total of 1 million shares,
including 300,000 shares under the Universal Stock Option Plan and 700,000 shares under the Executive Stock
Option Plan. The options granted under the Stock Option Plans entitle participants to subscribe for shares at an
exercise price equal to the market price of the shares at the time of the grant. The initial option grants under the
Stock Option Plans described below will have an exercise price equal to the initial public offering price. Each
option is exercisable only after a two-year period from the date of grant and only if the average daily closing price
of the shares, calculated as the average over the five consecutive trading days on the Frankfurt Stock Exchange
immediately prior to the first option exercise, equals at least 120% of the price of the shares in the offering,
adjusted to account for any capital increases or reductions. An initial grant of options to purchase approximately
194,990 shares has been made under the Universal Stock Option Plan.
The options granted under both the Universal Stock Option Plan and the Executive Stock Option Plan vest
over a three-year period. One third of the options vest on the first anniversary of the grant and the remaining
options vest in equal monthly amounts over the next two years. The vested options are exercisable after the
second anniversary of the grant. If the participant’s employment agreement terminates before the options vest in
full, the participant’s options will be vested only in the portion of options computed by multiplying 1 /24 times the
number of full months of employment between the date of option grant and the date of termination. The options
granted under the Universal Stock Option Plan permit participant employees to purchase shares having an
aggregate exercise price ranging between 50% and 100% of the participant’s annual base salary at the date of
option grant. The number of options granted to an executive participant is dependent on that participant’s position
at PrimaCom. Each of the two members of the Management Board is entitled to options for 100,000 shares. The
options granted to other executives will be for between 5,000 and 25,000 shares. An initial grant of options to
purchase approximately 475,000 shares has been made under the Executive Stock Option Plan.
The options under both the Universal and Executive Stock Option Plans are non-transferable, not inheritable,
and expire on the termination of employment of the participant for whatever reason if termination occurs within
six months of the date of option grant. The participants in the Stock Option Plans are not restricted from selling
the shares, subject to applicable securities laws. PrimaCom may require that participants not sell the shares within
a six-month period from the date when the options were exercised. In the event of a merger of PrimaCom or a
restructuring of PrimaCom’s capital, participants will be given replacement shares or rights of a similar value.
Options also lapse when the exercise period expires and in the event of a levy of execution by the participant’s
creditors on the participant’s Stock Option Plan, or a bankruptcy of the participant or the termination of a
participant for cause.
44

Employment Agreements
In connection with the merger, all of the existing employment agreements with executive officers of
KabelMedia and Süweda were cancelled. PrimaCom has entered into employment agreements for three-year
terms with customary early termination provisions with Jacques Hackenberg and Paul Thomason.
Item 13. Interest of Management in Certain Transactions
Resignation of Manfred Preuss
Manfred Preuss resigned from the Management Board of PrimaCom on February 5, 1999. In consideration
for the termination of his employment agreement and entering into a non-competition agreement for a two year
term, Mr. Preuss received a one-time payment of DM2.5 million ($1.5 million) from PrimaCom.
Non-Competition and Consulting Agreements
On December 29, 1998, Süweda entered into a non-competition agreement with Ludwig Preuss, a
shareholder of PrimaCom and, for the period from 1987 to the merger, a member of the Management Board of
Süweda. The term of the non-competition agreement is five years and Süweda has paid a one-time payment of
DM2.5 million ($1.5 million) in consideration for Ludwig Preuss entering into the non-competition agreement
and for termination of his employment agreement with Süweda. On the same date, PrimaCom also entered into
an advisory services agreement with Ludwig Preuss. This agreement provides that Ludwig Preuss will act as a
cable television consultant to PrimaCom for a period of one year, will receive a fee of DM240,000 ($143,700)
payable in 12 monthly by installments and can be terminated upon notice of one month.
Disposition of Süweda Assets
As a pre-condition of the merger, Süweda disposed of its non-cable assets to Tekomag AG, a German stock
corporation owned 74% by members of the Preuss family and 26% by AGFB. This is the same percentage
ownership the Preuss family and AGFB had in Süweda prior to the merger. The assets sold to Tekomag AG
consisted principally of BFE Group, a cable installation and cable system construction company which operates
in the Mainz, Berlin and Chemnitz regions, Süweda Immobilien GmbH, a real estate development company, and
Delta System-und Kommunikations AG, a construction company involved in the construction of television
studios for television production companies.
The sale of BFE Group to Tekomag AG closed in December 1997. At the time of the sale, Mittelrheinische
Treuhand GmbH, a company of independent auditors, appraised the value of BFE Group as DM3,454,000
($2,068,000) and that was also the cash consideration received by Süweda.
The sale to Tekomag AG of Süweda’s shares of Süweda Immobilien with a nominal value of DM1,960,000
($1,174,000) closed in September 1998 and represented 98% of Süweda’s holding of these shares. The remaining
2% of Süweda’s shares of Süweda Immobilien with the nominal value of DM40,000 ($24,000) were sold to the
director of Süweda Immobilien. The cash consideration paid by Tekomag to Süweda was DM5,000,000 and
represented the net book value of the investments in Süweda Immobilien under German GAAP.
The sale of Süweda’s 338,004 shares of Delta System-und Kommunikations AG to Tekomag AG closed in
September 1998. The cash consideration received by Süweda was DM5,321,000 ($3,186,000).
The proposed merger of AGFB into PrimaCom is conditional on AGFB selling its 26% ownership interest in
Tekomag.
Contribution of AGFB’s Cable Assets to Süweda
On September 9, 1998, in preparation for the merger, AGFB contributed its 49% interest in 22 Süweda
operating subsidiaries to Süweda and forgave the loans described below in exchange for 68,255 ordinary shares
of Süweda, each with a DM50 nominal value.
45

Shareholder Loans granted by AGFB to Süweda
AGFB granted shareholder loans to 22 Süweda operating subsidiaries in an original amount of
DM160,204,000. The proceeds of these loans were utilized by Süweda for the construction of cable networks. Of
the original loan balance, DM149,564,000 bore interest at 12% per annum beginning on August 1, 1995, but
interest payments could be reduced to the extent the obligation to pay the highest rate of interest would result in a
net loss in any given year. DM10,640,000 of the original loan amount bore interest at 8% per annum to the extent
there was any remaining income. The loan balances could be repaid at any time and were due for payment on
August 1, 2006. These loans were contributed to Süweda’s share capital in preparation for the merger.
In January 1995, AGFB granted Süweda a loan for DM1,370,000, bearing interest at 8.5%, payable annually
at year-end. The loan was due to mature after 12 years and was repaid in full on December 31, 1997.
Construction Contracts
The BFE Group has performed cable network construction services for Süweda in all the regions in which
Süweda has had subscribers since 1983. In addition, the BFE Group has performed cable network construction
services for KabelMedia in Leipzig since July, 1998. The services are performed pursuant to framework contracts
which provide that either Süweda or KabelMedia will be billed for services rendered. These contracts have no
fixed term and may be cancelled by either party upon notice.
Certain Interests of Affiliates of the Underwriters
Funds managed by Morgan Stanley Capital Partners (the ‘‘MSCP Funds) are affiliates of Morgan Stanley &
Co. Incorporated, an underwriter of PrimaCom’s initial public offering and of Morgan Stanley & Co.
International Limited, a joint global coordinator of that offering, and collectively own approximately 5.19% of
the shares. Pursuant to the terms of the Shareholder Agreement dated July 18, 1996 and in full force and effect
until August 1998, MSCP III, L.P., as general partner of the MSCP Funds, had the right to appoint one member
of the Executive Committee of KabelMedia and an officer of Morgan Stanley served on the Executive Committee
of KabelMedia during this period. Pursuant to the Amended Shareholder Agreement dated August 1998 and in
full force and effect until the merger, MSCP III, L.P., as general partner of the MSCP Funds, had the same rights
with respect of the Supervisory Board of KabelMedia as it did with respect to the Executive Committee under the
Shareholder Agreement. The Second Amended Shareholder Agreement dated December 30, 1998, will be in full
force and effect from the merger until the consummation of this offering and provides that MSCP III, L.P., as
general partner of the MSCP Funds, is one of the KabelMedia Shareholders (as defined in the Amended
Shareholders Agreement and in the Second Amended Shareholder Agreement) which collectively have the right
to elect three members of the Supervisory Board and one independent member of the Supervisory Board. The
Second Amended Shareholder Agreement terminated upon the consummation of the offering and MSCP III, L.P.,
as general partner of the MSCP Funds retains residual rights not available to all former shareholders of
KabelMedia. See ‘‘— Amended Shareholder Agreement and Second Amended Shareholder Agreement.’’
Dresdner Bank AG, an affiliate of Dresdner Kleinwort Benson, a joint global coordinator of the offering and
Paribas Securities, an affiliate of Paribas, each of which was an underwriter of the offering, are members of the
syndicate of banks which granted PrimaCom its revolving bank facility. Dresdner Bank AG has loan
commitments to PrimaCom under the revolving bank facility of DM42 million, representing approximately 7% of
PrimaCom’s total loan commitments under the revolving bank facility.
Transactions with Ben Bartel
Ben Bartel was Managing Director of KabelMedia from its inception to July 1, 1997 and Co-Managing
Director from July 1, 1997 to December 31, 1997 when he resigned from KabelMedia. Mr. Bartel and
KabelMedia entered into an agreement on November 16, 1997. The agreement terminated Mr. Bartel’s
employment agreement with KabelMedia and Kabelmedia’s obligation to employ him. In addition, Mr. Bartel
was released from his obligations under his employment agreement not to compete with KabelMedia.
46

Mr. Bartel was also released from the obligations under an agreement dated as of July 15, 1996 which
provided that, in the event Mr. Bartel terminated his employment with KabelMedia or was terminated by
KabelMedia for cause, at any time before June 30, 1999, the shareholders of KabelMedia could purchase a
portion of his shares at a price of DM1.
Executive Share Purchase Agreements
As part of a capital increase on July 15, 1996, Paul Thomason and Ernst Uhlig, at that time the Chief
Financial Officer and Chief Operating Officer of KabelMedia, respectively, subscribed for 1.25% and 1%,
respectively, of the shares of KabelMedia, at an aggregate price equal to the nominal value thereof, DM2,500 and
DM2,000, respectively. The preemptive rights to subscribe for these shares at the price indicated were renounced
in favor of Mr. Thomason and Mr. Uhlig by KabelMedia shareholders, who had a statutory entitlement to those
rights.
Paul Thomason and Ernst Uhlig entered also into agreements, which were exhibits to their respective
employment agreements and which granted KabelMedia shareholders the right to re-purchase shares from these
executives upon termination of their respective employment for a DM1 per share. These agreements were fully
performed and the right to re-purchase the shares has expired.
Agreements Relating to Share Sales to Management
The Share Sale and Transfer Agreement was entered into on November 12, 1998 between existing
shareholders of KabelMedia, Jacques Hackenberg, Paul Thomason and Dr. Thomas Gelzer, as escrow agent. The
purpose of the Share Sale and Transfer Agreement was to align the interests of Messrs. Hackenberg and
Thomason with those of the other KabelMedia shareholders without effecting a capital increase by providing for
the sale of KabelMedia shares by the other KabelMedia shareholders to: (1) Paul Thomason to increase his
ownership from 1.25% to 2.50% of the then outstanding shares of KabelMedia and (2) Jacques Hackenberg to
provide him an ownership interest representing 2.5% of the total shares of KabelMedia at that time.
The purchase price for these shares was approximately DM15 per share, or an aggregate purchase price of
DM2,750,000 ($1,646,509) for Jacques Hackenberg and of DM1,375,000 ($823,254) for Paul Thomason. Ten
percent of each purchase price was paid in cash with the remainder evidenced by an interest bearing promissory
note from Paul Thomason and Jacques Hackenberg, respectively, maturing on the second anniversary of date of
this offering. The cash payment, the notes and the shares were transferred to the escrow agent who pledged the
shares to the selling shareholders as collateral for the notes.
The Share Sale and Transfer Agreement also includes a call option allowing the selling shareholders to
repurchase from Jacques Hackenberg and Paul Thomason declining percentages of the shares sold by them as the
valuation of the outstanding capital stock of PrimaCom increases, in specified circumstances. In addition, the
Share Sale and Transfer Agreement includes a put option allowing Jacques Hackenberg and Paul Thomason to
sell the shares to the existing shareholders for an amount equal to the purchase price plus accrued interest on the
notes, if any.
Registration Rights Agreements
KabelMedia and certain of its shareholders have entered into a Registration Rights Agreement dated
June 18, 1996, pursuant to which, in certain circumstances, such shareholders have the right to require
KabelMedia (and PrimaCom, as its successor) to register their shares under the United States Securities Act of
1933, as amended. On November 26, 1998, KabelMedia and its shareholders, in anticipation of the merger,
amended the registration rights agreement to include AGFB, Wolfgang, Ludwig and Manfred Preuss and to
amend certain other provisions. These shareholders have waived their registration right with respect to this
offering. See ‘‘Shares Eligible for Future Sale.’’
47

Amended Shareholder Agreement and Second Amended Shareholder Agreement
At the time of the merger, the shareholders of KabelMedia and Süweda prior to the merger entered into the
Second Amended Shareholder Agreement. The Second Amended Shareholder Agreement expires upon consummation
of this offering and provides for representation by the shareholder groups on the Management and
Supervisory Boards and gives the shareholders rights of first refusal in the event of a sale of shares by any
shareholder party to the agreement.
The Amended Shareholder Agreement was entered into in August, 1998 between KabelMedia and its then
existing shareholders and terminated upon the consummation of merger, except for the provisions relating to the
management of corporate opportunities. The Amended Shareholder Agreement provided for the conversion and
the accompanying capital increase. The Amended Shareholder Agreement also provided for significant share
transfer restrictions and gave the shareholders rights of first refusal in the event of a sale of shares by any
shareholder party to the agreement.
The Amended Shareholder Agreement superseded the Shareholder Agreement which was entered into on
July 18, 1996 with each of the then current shareholders of KabelMedia (the ‘‘Shareholder Agreement’’). The
Shareholder Agreement provided for the reorganization of KabelMedia and a related capital increase, the
establishment of the executive committee and the reservation of certain matters for shareholder approval. In
addition, the Shareholders Agreement contained significant transfer restrictions and rights of first refusal in the
event of a sale of shares.
Predecessor Transactions
KabelMedia traces its origins to September 1, 1992 with the purchase by a company affiliated with Ben
Bartel, the previous Chief Executive Officer of KabelMedia, of the ownership interests in a limited liability
company with cable network assets in Plauen. From September 1, 1992 to the consummation of its offering of the
senior notes and the accompanying reorganization on July 23, 1996, KabelMedia has engaged into a number of
loan and other transactions with its then existing shareholders (who in most cases, remain shareholders of
PrimaCom) as it acquired additional cable networks and expanded its operations.
Other Related Party Transactions
Chase Investment Bank Limited and Chase Manhattan Bank AG are affiliates of Chase Securities Inc., one
of the underwriters for the offering of the senior notes in July 1996, and are the co-arranger and the facility and
security agent, respectively, of the revolving bank facility, which acted in similar capacities in connection with
the two bank facilities KabelMedia entered into or amended since July 1996. The total loan commitments to
KabelMedia and PrimaCom during this period under these three facilities were DM1.325 billion and these Chase
entities were paid arrangement, commitment and agency fees in respect of these facilities totalling
DM15,185,000, of which a portion were paid by these Chase entities to other participating banks.
Certain affiliates of Chase Securities Inc. also collectively own approximately 3.67% of the capital stock of
PrimaCom prior to consummation of the offering. Pursuant to the terms of the Amended Shareholder Agreement
and the Second Amended Shareholder Agreement, such affiliates of Chase Securities Inc. in conjunction with the
other shareholders who were formerly KabelMedia shareholders had the right to appoint three members of the
Supervisory Board. Pursuant to the Shareholder Agreement, such affiliates of Chase Securities Inc. had the right
to appoint a member of the Executive Committee and an officer of such affiliates of Chase Securities Inc. served
on the Executive Committee of KabelMedia from July 1996 to August 1998. The Second Amended Shareholder
Agreement provided these affiliates of Chase Securities Inc. with the same rights as under the Amended
Shareholder Agreement and an officer of these affiliates served as a member of the Supervisory Board of
KabelMedia from August 1998 until the merger.
The Second Amended Shareholder Agreement terminated upon the consummation of the offering and the
affiliates of Chase Securities, Inc. do not retain any residual rights not available to all former KabelMedia
shareholders. See ‘‘— Amended Shareholder Agreement and the Second Amended Shareholder Agreement.’’
48

Item 14. Description of Securities to be Registered
Not Applicable.
Item 15. Defaults upon Senior Securities
Not Applicable.
Item 16. Changes in Securities, Changes in Security for Registered Securities and Use of Proceeds
On February 23, 1999, PrimaCom consummated the offering of 3,947,710 of its ordinary bearer shares (and
736,040 shares of selling shareholders) at an offering price of $32.55 per share ($16.27 per ADS) pursuant to a
registration statement on Form F-1 (File no. 333-9854) declared effective by the SEC on February 18, 1999. In
addition, the underwriters have exercised their overallotment option to purchase an additional 1,404,524 shares
from PrimaCom and 702,262 from the selling shareholders. The managing underwriters and joint global
coordinators for the Offering were Morgan Stanley Dean Witter and Dresdner Kleinwort Benson. The offering
has been terminated and all shares have been sold.
Aggregate proceeds to PrimaCom from the offering were DM233,797,000 ($134,250,000). PrimaCom
incurred the following expenses in connection with the Offering: underwriter’s discounts and commission of
DM16,366,000 ($9,820,000) and approximately DM11,256,000 ($6,750,000) in other expenses for total expenses
of DM27,622,000 ($16,500,000). No payments included in these expenses constituted direct or indirect payments
to directors, officers or general partners of PrimaCom or their associates, to persons owning 10% or more of any
class of equity securities of PrimaCom or to any affiliates of PrimaCom.
After deducting expenses, the net proceeds to PrimaCom from the offering were DM206,175,000. Due to the
fact that the offering occurred subsequent to December 31, 1998, the ending date of the reporting period, no net
proceeds from the offering were used by PrimaCom during the reporting period. Subsequent to December 31,
1998, PrimaCom launched a tender offer for all of its outstanding 135 /8% Senior Discount Notes due 2006 and
used all the net proceeds from the offering to repurchase $173,500,000 of the $174,700,000 outstanding
indebtedness on March 25, 1999. PrimaCom funded the remainder of the repurchase price with borrowings under
its revolving bank facility.
49

Item 17. Financial Statements
The Registrant has elected to furnish the information required by Item 18 of Form 20-F.
Item 18. Financial Statements
To the Board of Directors,
PRIMACOM AG
Independent Auditors Report
We have audited the accompanying consolidated balance sheets of PrimaCom AG and subsidiaries as of
December 31, 1998, 1997 and 1996 and related consolidated statements of operations, shareholders’ equity and
cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Germany and the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of PrimaCom AG and subsidiaries at December 31, 1998, 1997 and 1996 and the
consolidated results of their operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with accounting principles generally accepted in the United States of America.
Frankfurt, Germany
March 30, 1999
50
/s/ SCHITAG ERNST & YOUNG
SCHITAG ERNST & YOUNG
Deutsche Allgemeine Treuhand AG

PRIMACOM AG AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Years ended December 31,
1996 1997 1998 1998
DM DM DM U.S.$
Revenues ******************************************
Operating costs and expenses
78,936 83,801 96,498 57,887
Operations *************************************** 17,830 20,023 25,546 15,325
Selling, general and administrative******************** 17,216 15,976 14,765 8,857
Depreciation and amortization *********************** 25,737 26,529 31,434 18,857
Total ********************************************** 60,783 62,528 71,745 43,039
Operating profit *************************************
Interest expense:
18,153 21,273 24,753 14,848
Related party ************************************* 716 563 21 13
Bank debt**************************************** 5,174 5,121 4,988 2,992
Sale-leaseback ************************************ 10,042 9,946 10,367 6,219
15,932 15,630 15,376 9,224
Other income (expense) ******************************
Income from continuing operations before minority interest
— 23,578 (454) (274)
and income taxes ********************************** 2,221 29,221 8,923 5,350
Minority interest in net income of subsidiaries ************ 1,192 5,412 592 355
Income tax expense ********************************** 1,605 4,435 1,618 969
Income (loss) from continuing operations ****************
Discontinued operations:
Income (loss) from discontinued operations, net of income
tax benefit of DM3,453 and income tax expense of
DM11,298 and DM5,665 for 1996, 1997 and 1998,
(576) 19,374 6,713 4,026
respectively ************************************ 1,875 (13,645) (5,715) (3,428)
Net income*****************************************
Earnings (loss) per share:
Basic and diluted:
1,299 5,729 998 (598)
Continuing operations **************************** (0.04) 1.22 0.42 0.26
Discontinued operations ************************** 0.12 (0.86) (0.36) (0.22)
Net income************************************* 0.08 0.36 0.06 0.04
See accompanying notes to consolidated financial statements
51

PRIMACOM AG AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31,
1996 1997 1998 1998
DM DM DM U.S.$
Cash ******************************************* 332 20,608 15,347 9,206
Trade accounts receivable — net ******************** 3,654 4,645 5,444 3,266
Investment in and advances to affiliate**************** 4,507 — — —
Deferred tax asset — net*************************** 11,440 14,846 87,678 52,596
Property, plant and equipment — net***************** 188,932 174,093 544,393 326,570
Goodwill — net ********************************** 7,756 6,533 473,600 284,103
Foreign currency forward contracts ****************** — — 20,807 12,482
Other assets ************************************* 3,621 18,641 44,280 26,563
Net assets of discontinued operations***************** 29,129 19,781 — —
TOTAL ASSETS ********************************* 249,371 259,147 1,191,549 714,786
Accounts payable********************************* 4,376 2,904 8,990 5,393
Accrued expenses********************************* 18,225 10,466 51,732 31,033
Deferred revenue ********************************* 3,890 6,769 9,603 5,761
Deferred purchase obligations*********************** — — 6,627 3,975
Sale-leaseback obligations************************** 81,416 76,900 86,382 51,819
Related party liabilities **************************** 150,817 140,419 516 310
Bank and other debt ****************************** 52,915 71,876 281,395 168,803
Senior Notes************************************* — — 275,981 165,555
TOTAL LIABILITIES ***************************** 311,639 309,334 721,226 432,649
Minority interest**********************************
SHAREHOLDERS’ EQUITY (DEFICIENCY)
3,054 11,906 862 517
Registered capital********************************* 10,000 10,000 78,914 47,339
Additional paid-in capital ************************** 10,040 10,040 473,982 284,332
Accumulated deficit ******************************* (85,362) (82,133) (83,435) (50,051)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIENCY) **
TOTAL LIABILITIES AND SHAREHOLDERS’
(65,322) (62,093) 469,461 281,620
EQUITY (DEFICIENCY) ************************ 249,371 259,147 1,191,549 714,786
See accompanying notes to consolidated financial statements
52

PRIMACOM AG AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIENCY)
(in thousands)
Additional
Total
Shareholders’
Registered Paid-In (Accumulated Equity
Capital Capital Deficit) (Deficiency)
DM DM DM DM
Balance at December 31, 1995**************** 100 19,940 (86,661) (66,621)
Capital contribution ************************* 9,900 (9,900) — —
Net income******************************** — — 1,299 1,299
Balance at December 31, 1996**************** 10,000 10,040 (85,362) (65,322)
Dividend********************************** — — (2,500) (2,500)
Net income******************************** — — 5,729 5,729
Balance at December 31, 1997**************** 10,000 10,040 (82,133) (62,093)
Capital contribution ************************* 27,090 (27,090) — —
Shareholder contributions ******************** — 144,356 — 144,356
Dividend********************************** — — (2,300) (2,300)
Issuance of shares in reverse acquisition ******** 41,824 346,676 — 388,500
Net income******************************** — — 998 998
Balance at December 31, 1998**************** 78,914 473,982 (83,435) 469,461
See accompanying notes to consolidated financial statements
53

PRIMACOM AG AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years ended December 31,
1996 1997 1998 1998
DM DM DM U.S.$
Operating Activities
Net income*****************************************
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
1,299 5,729 998 599
Gain on sale of business ****************************** — (11,373) (1,891) (1,134)
Depreciation and amortization ************************* 27,737 26,529 31,614 18,965
Amortization of prepaid Telekom fees******************* — — 11,781 7,067
Accretion of related party interest ********************** 600 — — —
Amortization of deferred revenue*********************** (6,752) (10,896) (5,245) (3,146)
Net loss on sale of fixed assets ************************ (176) (335) (121) (72)
Minority interest ************************************ 2,755 12,029 592 355
Deferred income taxes********************************
Changes in assets and liabilities, net of effects of business
acquisitions and disposition:
(4,753) (3,228) 5,627 3,376
Trade accounts receivable ***************************** 1,646 (1,191) 1,865 1,119
Other assets **************************************** 1,725 (23,748) (8,559) (5,134)
Accounts payable************************************ (2,399) (1,710) (804) (483)
Accrued expenses *********************************** (2,795) (1,046) 19,074 11,442
Deferred revenue ************************************ 12,685 1,051 931 558
Net cash provided by (used in) operating activities ********
Investing Activities
29,572 (6,097) 55,862 33,512
Acquisitions of businesses, net of cash acquired*********** — — 23,194 13,914
Dividends of minority interest ************************* — (2,921) (11,117) (6,669)
Purchases of property, plant and equipment ************** (19,398) (10) (6,082) (3,648)
Proceeds from sale of property, plant and equipment******* 2,590 3,587 195 117
Proceeds from sale of business************************* — 30,581 10,338 6,202
Net cash provided by (used in) investing activities*********
Financing Activities
(16,808) 31,237 16,528 9,916
Proceeds from credit facilities ************************* 4,004 45,969 — —
Proceeds from bank debt****************************** 283 1,404 19,505 11,701
Repayments of credit facilities ************************* (6,122) (21,272) (17,836) (10,699)
Repayments of bank debt ***************************** (6,493) (13,175) (64,796) (38,870)
Net repayments of bank overdrafts********************** (3,537) (1,066) (279) (167)
Proceeds from related party liabilities ******************* 4,104 17,161 14,405 8,641
Repayments of related party liabilities******************* (5,549) (27,549) (12,257) (7,353)
Proceeds from sale-leaseback obligations **************** 6,002 4,054 — —
Repayments of sale-leaseback obligations **************** (7,332) (8,570) (11,169) (6,700)
Dividend distribution ********************************* — (2,500) (2,300) (1,380)
Net repayments of Deutsche Telekom loan *************** (898) (929) (2,930) (1,758)
Net cash used in financing activities ******************** (14,938) (6,473) (77,657) (46,585)
Net increase (decrease) in cash and cash equivalents ******* (2,174) 18,667 (5,267) (3,157)
Cash and cash equivalents at beginning of year *********** 4,121 1,947 20,614 12,363
Cash and cash equivalents at end of year **************** 1,947 20,614 15,347 9,206
See accompanying notes to consolidated financial statements
54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. FORMATION OF BUSINESS AND BASIS OF PRESENTATION
PrimaCom AG (‘‘PrimaCom or ‘‘the Company’’) a German stock corporation, was formed on December 30,
1998, by the merger (‘‘the Merger’’), of Süweda Elektronische Medien- und Kabelkommunikations-AG
(‘‘Süweda’’) into KabelMedia Holding AG (‘‘KabelMedia’’), two similarly sized German cable television
network operators. At the date of the merger, KabelMedia was renamed PrimaCom AG. KabelMedia and
Süweda, also German stock corporations, have been in existence since 1992 and 1983, respectively. Under
U.S. GAAP, the merger was accounted for under the purchase method as a reverse acquisition by Süweda of
KabelMedia even though KabelMedia issued shares to Süweda’s shareholders as consideration in the Merger and
is the surviving legal entity. Accordingly, the accompanying historical financial statements prior to December 30,
1998, are those of Süweda.
The accompanying financial statements have been prepared in accordance with United States generally
accepted accounting principles (‘‘U.S. GAAP’’) including those principles specific to the cable television
industry. The Company maintains its financial records in accordance with the German Commercial Code, which
represents generally accepted accounting principles in Germany (‘‘German GAAP’’). Generally accepted
accounting principles in Germany vary in certain significant respects from U.S. GAAP. Accordingly, the
Company has recorded certain adjustments in order that these financial statements be in accordance with
U.S. GAAP.
All amounts in the accompanying notes to the consolidated financial statements refer to continuing
operations unless otherwise noted (see Note 4).
Effective for companies with fiscal years beginning after December 15, 1997, comprehensive income and its
components are required to be reported in the financial statements in accordance with Statement of Financial
Accounting Standard No. 130, ‘‘Reporting Comprehensive Income’’. For the periods presented, the Company has
no comprehensive income.
Solely for the convenience of the reader, the accompanying consolidated financial statements as of and for
the year ended December 31, 1998 have been translated into United States dollars (‘‘U.S. $’’) at the rate of
DM 1.667 per U.S. $1.00, the approximate exchange rate on December 31, 1998. The translations should not be
construed as a representation that the amounts shown could have been, or could be, converted into U.S. dollars at
that or any other rate.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
Consolidation
The consolidated financial statements include the accounts of the Company and its majority owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Cash Equivalents
All highly liquid investments purchased with an original maturity of three months or less are considered
cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrated credit risks consist primarily of
cash and trade receivables. Credit risk on trade receivables is minimized as a result of the large and diverse nature
of the Company’s customer base. The Company maintains cash and cash equivalents with several major financial
institutions in Germany.
55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Revenue Recognition
Revenue is comprised of revenue earned from subscription fees and charges for installation and connections.
Subscription revenue is recognized at the time services are provided to customers. Charges for installation and
connections are deferred and amortized on a straight-line basis into income over periods ranging from 1 to
10 years based upon the related service agreements.
Property, Plant and Equipment
Property, plant, and equipment are stated at cost and are comprised principally of assets used in the
development and operation of cable television systems. These assets are depreciated or amortized in accordance
with Statement of Financial Accounting Standards No. 51 ‘‘Financial Reporting by Cable Television
Companies’’.
Depreciation is provided using the straight-line method over estimated useful lives as follows: cable
television systems: 12 years; equipment and fixtures: 5 to 10 years; buildings: 25 years; and purchased software:
3 to 5 years.
Goodwill
Goodwill consists of the excess purchase price over the fair value of the identifiable net assets acquired in
various acquisitions. Such amounts are generally amortized using the straight-line method over 12 years.
Accumulated amortization for goodwill at December 31, 1996, 1997 and 1998 was DM6,901,000, DM7,808,000
and DM9,544,000, respectively.
Impairment of Long Lived and Identifiable Intangible Assets
The Company evaluates the carrying value of long lived assets, identifiable intangible assets and goodwill
for potential impairment on an ongoing basis. An impairment loss would be recognized when the estimated
undiscounted future cash flows is less than the carrying amount of the asset.
Basic and Diluted Earnings Per Share
The Company calculates earnings per share in accordance with Financial Accounting Standards No. 128,
‘‘Earnings per Share’’ (SFAS 128). SFAS 128 replaced the calculation of primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share.
Income Taxes
The Company accounts for income taxes in accordance with Financial Accounting Standards No. 109,
‘‘Accounting for Income Taxes’’ (SFAS 109). Under this method, deferred tax assets and liabilities are based on
differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are expected to reverse. The effect of a change in tax
rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Deferred
tax assets are reduced by a valuation allowance when the Company cannot make the determination that it is more
likely than not that some portion or all of the related tax asset will be realized.
Fair Value of Financial Instruments
The carrying value of financial instruments such as cash, accounts receivable and accounts payable
approximates their fair value based on the short term maturities of these instruments. The carrying value of bank
debt approximates fair value based on quoted market prices for the same or similar issues as well as current rates
offered to the Company.
56

Use of Estimates
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications
Certain amounts in the prior years have been reclassified to conform with the 1998 consolidated financial
statement presentation.
3. THE MERGER
On December 30, 1998, Süweda was merged into Kabelmedia by the issuance of 8,354,914 Kabelmedia
shares to the former Süweda shareholders. Under U.S. accounting principles the Merger was accounted for under
the purchase method as a reverse acquisition by Süweda of Kabelmedia even though Kabelmedia issued shares to
Süweda’s shareholders as consideration in the merger and is the surviving legal entity. The shares issued by
Kabelmedia were treated as if issued by Süweda as the acquiror. The effects of the reverse acquisition have been
reflected for all share amounts in the accompanying financial statements. The assets and liabilities of Kabelmedia
are included in the consolidated balance sheet as of December 31, 1998. The purchase price of DM388,500,000
assigned to the Kabelmedia net assets was based on an independent third party valuation. The financial statements
reflect the preliminary allocation of purchase price as the purchase price allocation has not been finalized. The
preliminary allocation results in an excess of purchased price over the fair value of the Kabelmedia net assets of
DM459,627,000 which will be amortized on a straight-line basis over 12 years.
The following unaudited proforma information for the years ended December 31, 1997 and 1998 assumes
the reverse acquisition occurred January 1 of each year:
1997 1998
DM DM
(in thousands except
per share amounts)
Revenues ************************************************************** 159,434 184,043
Loss from continuing operations ******************************************* (71,927) (82,811)
Loss per share from continuing operations *********************************** (4.56) (5.25)
Net loss per share has been calculated on the basis of 15,782,842 shares outstanding for all periods.
4. DISCONTINUED OPERATIONS
On December 19, 1997, the Company sold its 100% interest in BFE Nachrichtentechnik GmbH, Mainz,
BFE Nachrichtentechnik Chemnitz, Chemnitz and BFE Fernmeldemontage GmbH, Berlin (the ‘‘BFE Group’’),
which companies were in non-cable television related businesses, to an entity under common control for a total
cash consideration of DM3,454,000. The sale resulted in no gain or loss. In connection with the decision to
dispose of the BFE Group, the Company wrote off and charged to discontinued operations DM11,225,000 of net
operating loss carryforward deferred tax assets related to the BFE Group which were not considered in the
determination of the price paid for the BFE Group.
On September 9, 1998, the Company divested its remaining non-cable television businesses by selling such
businesses to an entity under the common control of certain shareholders of Süweda. The Company has restated
its prior financial statements to present the operating results of these non-cable television businesses as
discontinued operations. Accordingly, the operating results of these non-cable television businesses, including the
BFE Group, have been segregated from continuing operations and reported as a separate line item in the
statements of operations and the net assets of the non-cable television businesses subject to the September 9,
1998 decision have been reclassified as a net position in the Company’s balance sheets.
57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Operating results from discontinued operations (exclusive of any corporate charges or interest expense) are
as follows:
1996 1997
(DM in thousands)
1998
Revenues ****************************************************** 84,090 60,418 1,195
Loss before income taxes ***************************************** (1,577) (13,572) (50)
Income tax benefit (expense) ************************************** 3,452 (73) (5,665)
Net income (loss) *********************************************** 1,875 (13,645) (5,715)
The assets and liabilities of the non-cable television businesses subject to the September 9, 1998 decision
have been reflected as a net position in the Company’s balance sheets. The components of such net assets at
December 31, 1996 and 1997 are as follows:
1996 1997
(DM in thousands)
Cash******************************************************************** 1,615 6
Accounts receivable — net************************************************** 6,368 3,146
Inventories *************************************************************** 21,797 4,274
Deferred tax asset — net *************************************************** 17,068 5,665
Property, plant and equipment — net ***************************************** 31,110 26,449
Goodwill **************************************************************** 3,997 —
Other assets ************************************************************** 5,288 1,999
Total assets ************************************************************ 87,243 41,539
Accounts payable ********************************************************* 5,035 2,431
Accrued expenses and other liabilities***************************************** 23,637 10,098
Bank debt *************************************************************** 29,279 8,810
Total liabilities ********************************************************* 57,951 21,339
Minority interest ********************************************************** 163 426
Net assets *************************************************************** 29,129 19,781
5. SIGNIFICANT BUSINESS ACQUISITIONS
On April 30, 1998, Süweda acquired the shares of CableStar Gesellschaft für Kommunikations-Systeme
GmbH (‘‘CableStar’’) for total cash consideration of DM7,089,000. CableStar passed approximately
16,132 homes and served 15,197 customers at the date of acquisition.
On April 30, 1998, Süweda acquired the shares of Comtel in Sachsen GmbH and Comtel Gorbitz GmbH
(together ‘‘Comtel’’) for total cash consideration of DM2,450,000. Comtel passed approximately 16,297 homes
and served 13,164 customers at the date of acquisition.
On September 21, 1998, Süweda acquired the shares of Acotec Kablevision GmbH (‘‘Acotec’’) for total
cash consideration of DM6,461,000. Acotec passed approximately 6,683 homes and served 6,535 customers at
the date of acquisition.
On December 9, 1998, Süweda acquired the shares of Nehls & Schulz GmbH (‘‘Nehls & Schulz’’) for
total cash consideration of DM9,732,000. Nehls & Schulz passed approximately 18,900 homes and served
18,250 customers at the date of the acquisition.
These acquisitions have been accounted for under the purchase method of accounting and accordingly the
results of operations of the acquired businesses have been included in the consolidated financial statement since
58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
the respective dates of acquisition. The acquisitions resulted in goodwill of DM1,668,000, which will be
amortized over 12 years.
The following unaudited proforma information for the years ended December 31, 1997 and 1998 assumes
the aforementioned acquisitions occurred January 1 of each year:
1997 1998
(DM in thousands)
Revenues ***************************************************************
The proforma impact on income from continuing operations is immaterial.
94,410 107,557
On September 9, 1998, in connection with the planned merger of Süweda with Kabelmedia, Süweda settled
its silent partnership loans (see Note 10) and purchased the minority interest in certain of its cable television
subsidiaries from AGFB in exchange for 68,255 ordinary shares of DM50 nominal amount each.
6. SIGNIFICANT BUSINESS DISPOSITIONS
In May 1990 the Company acquired a 44% ownership interest in Kabelcom Beteiligungsgesellschaft für
Breitbandkabelkommunikation mbH, Essen and in August 1990 it acquired a 50% ownership interest in
Kabelcom Gesellschaft für Breitbandkabelkommunikations mbH & Co. KG, Essen (together ‘‘Kabelcom Essen’’)
for a total cash consideration of DM2,144,000. Since the date of acquisition the Company has been involved in
various legal disputes with the majority owners of Kabelcom Essen, including refusal by the majority owners to
allow access to financial records that would enable the Company to record its equity share of Kabelcom Essen’s
profit and loss. As a result the Company has maintained its original investment balance in Kabelcom Essen
(including subsequent advances) since the date of acquisition. In October 1997, the Company sold its interest in
Kabelcom Essen to the majority owners for total cash consideration of DM27,127,000. The sale resulted in a gain
of DM23,578,000 which is recorded in other income.
7. ACCOUNTS RECEIVABLE
Trade accounts receivable consist of the following at December 31, 1996, 1997 and 1998 (in thousands):
1996 1997
(DM in thousands)
1998
Trade accounts receivable — gross*********************************** 7,155 6,435 7,812
Allowance for doubtful accounts ************************************ (3,501) (1,790) (2,368)
Trade accounts receivable — net ************************************ 3,654 4,645 5,444
59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
8. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are as follows:
1996
December 31,
1997
(DM in thousands)
1998
Cable television networks ************************************ 278,230 286,174 661,221
Equipment and fixtures ************************************** 48,145 50,306 69,818
Land and buildings ***************************************** 4,569 4,569 5,691
Other***************************************************** 1,241 917 5,048
Construction in progress ************************************* 1,138 3,189 18,186
Total ***************************************************** 333,323 345,155 759,964
Less accumulated depreciation ******************************** (144,391) (171,062) (215,571)
Property, plant and equipment — net*************************** 187,794 170,904 544,393
Depreciation expense on property, plant and equipment was DM24,117,000, DM24,906,000 and
DM29,698,000 for 1996, 1997 and 1998, respectively.
9. BANK AND OTHER DEBT
Bank and other debt consists of the following:
1996
December 31,
1997
(DM in thousands)
1998
Bank loans:
Bank of Nova Scotia, 8% loans ********************************* 4,141 — —
Kreissparkasse Bingen, 6.3% to 9.8% loans ***********************
Landesbank Saarbrücken, loans due in annual installments of TDM375
2,912 2,384 —
through 2007, plus interest of 6.25% ***************************
Sparkasse Mainz, loans due in monthly installments of approximately
2% of the original loan balance through September 1999, including
4,266 3,854 3,375
interest ranging from 7.18% to 8.45% ************************** 4,088 3,988 —
Other******************************************************* 556 399 1,228
15,963 10,625 4,603
Borrowings under credit facilities********************************** 31,767 56,464 270,000
Deutsche Telekom loans ***************************************** 3,641 2,712 1,413
Overdrafts***************************************************** 1,544 2,075 5,379
Total bank and other debt **************************************** 52,915 71,876 281,395
Current portion thereof ****************************************** 25,276 23,634 5,434
Effective December 30, 1998, a wholly owned subsidiary of the Company entered into a new credit facility
(hereafter the ‘‘Facility’’) with a number of banks. The total aggregate amount of the Facility was
DM600,000,000, comprised of a DM595,000,000 Revolving Credit Facility and a DM5,000,000 Overdraft
60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Facility. Under the terms of the Facility, the available commitment amount is reduced in equal quarterly amounts
to the amounts reflected below as of December 31 of the years indicated:
Year ended
Commitment
amount
(DM in thousands)
1999********************************************************** 600,000
2000********************************************************** 600,000
2001********************************************************** 540,000
2002********************************************************** 480,000
2003********************************************************** 390,000
2004********************************************************** 300,000
2005********************************************************** 180,000
2006********************************************************** 60,000
2007********************************************************** 0
Under the terms of the Revolving Credit Facility, the Company’s subsidiaries may borrow, repay and
reborrow, up to the commitment amounts, until December 31, 2007, when all amounts will become due and
payable. At December 31, 1998, the Company’s subsidiaries had unused availability under the Revolving Credit
Facility of DM325,000,000. The interest rate on the Revolving Credit Facility was 4.59% at December 31, 1998.
Under the Overdraft Facility, the Company’s subsidiaries may borrow, repay and reborrow, up to the
commitment amounts, until December 31, 2007, when all outstanding amounts will become due and payable. At
December 31, 1998, the Company’s subsidiaries had unused availability under the Overdraft Facility of
DM2,039,000. The interest rate on the Overdraft Facility was 4.59% at December 31, 1998.
The interest rates under the Facility are determined at the time of borrowing and are based on LIBOR plus a
margin of between 0.75% and 1.75% per annum depending on the ratio of Senior Debt to the Company’s
annualized operating cash flows. At December 31, 1998, the effective margin was 1.25% and LIBOR was 3.34%.
The Facility is secured by, among other things, liens on receivables from cable television subscribers,
concession agreements, equipment and interests in all shares of PrimaCom’s subsidiaries. In addition, the Facility
contains certain covenants which, among other things, require the Company to maintain specified ratios relating
to cash flow and total debt. Furthermore, there are restrictions on incurring debt, encumbering revenues or assets,
loaning funds to third parties or assuming liabilities, disposing of properties and paying dividends or making
distributions.
Bank financing fees of DM6,860,000 relating to the execution of the Facility have been capitalized in other
assets. These fees are being amortized and recorded as bank interest over a period of 9 years, representing the
term of the Facility. Commitment fees of 0.375% per year are charged on the unused portion of the Facility.
In addition, the Company has informal overdraft arrangements with certain other banks not subject to written
agreements. Borrowings under these arrangements totaled DM2,418,000 at December 31, 1998.
Years ended December 31,
1996 1997
(DM in thousands)
1998
Cash paid for interest during the period:
Bank debt *************************************************** 4,151 3,539 5,013
Shareholder loans (Note 10) ************************************ 7 2,676 21
Sale-leaseback transaction (Note 13) ***************************** 8,724 8,628 2,569
12,882 14,843 7,603
61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company has obtained numerous loans from Deutsche Telekom to finance its cable network
connections. The loan amount granted is in direct proportion to the number of subscribers connected to the
network. The payment plan is standardized for all loans and includes 96 installments each equal to 1/70 th of the
original loan balance.
Maturities of the bank loans and credit facilities for the next five years are DM5,434,000 in 1999,
DM375,000 in 2000, DM375,000 in 2001, DM375,000 in 2002, and DM375,000 in 2003 and DM274,461,000
thereafter.
10. RELATED PARTY TRANSACTIONS
Shareholder Loans
1996
December 31,
1997
(DM in thousands)
1998
AGFB — silent partnership loan ************************************ 141,432 139,884 —
AGFB — other loans ********************************************* 875 — —
Loan from majority shareholder ************************************ 7,567 452 —
Other ********************************************************** 43 83 516
149,917 140,419 516
AGFB Aktiengesellschaft für Beteiligungen an Telekommunikationsunternehmen (‘‘AGFB’’), a shareholder
of Süweda and formerly a 49% minority shareholder of the Süweda subsidiary Süweda Beteiligungs KG (‘‘the
Beteiligungs KG’’), granted the Beteiligungs KG several loans originally totaling DM160,204,000. On August 1,
1994, these loans with a remaining balance at that date of DM139,588,000 were converted into a ‘‘silent
partnership’’ loan. A silent partnership arrangement is a common form of investment under German business law,
whereby so-called ‘‘silent partners’’ provide financing to companies. The law allows for a wide range of designs
of such silent partnerships. Under the AGFB silent partnership, the loan assumed the same interest terms as the
original loans. DM149,564,000 of the original loan balance bore interest at 12% per annum beginning August 1,
1995, reduced to the extent it would result in a net loss in any given year. DM10,640,000 of the original loan
balance bore interest at 8% per annum beginning August 1, 1995, reduced to the extent it would result in a net
loss in any given year or increased by an additional 8% per annum to the extent income remains. The loan
balances could be repaid at any time. The silent partnership was cancelable by either party on August 1, 2006, at
which time the loan became due. The repayment terms included two installments due on the six month and one
year anniversaries of the cancellation date, including interest at 6%.
AGFB as minority shareholder also shared in profits to the extent of its ownership interest, which is reflected
in minority interest.
On September 9, 1998 AGFB contributed its 49% interest in the Beteiligungs KG and its 49% interest in
certain other Süweda subsidiaries to Süweda and forgave the silent partnership loans due from Süweda in
exchange for 68,255 ordinary shares of Süweda. These loans were contributed to Süweda’s share capital in
preparation for the Merger.
In January 1995, AGFB granted the Company another loan for DM1,370,000, bearing interest at 8.5%,
payable annually at year-end. The loan matured after 12 years. The loan balance totaled DM875,000 at
December 31, 1996. It had been fully paid at December 31, 1997.
In January 1990, the majority shareholder of the Company granted the Company a loan of DM10,000,000.
The loan carried interest at 8% per annum and was payable on demand with three months notice. Earlier
repayment was allowed. In January 1994, the loan agreement was revised to increase the interest rate to 9.5% per
annum. Interest payments are not payable until the entire principal on the existing loans is repaid. The balance
62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
totaled DM7,567,000 and DM452,000 at December 31, 1996 and 1997, respectively, and was fully repaid at
December 31, 1998.
Other
At December 31, 1996, the Company had a payable of DM900,000 to Kabelcom Essen, which was settled
upon the sale of this investment in October 1997 (see Note 6).
11. INCOME TAXES
The Company and its consolidated subsidiaries each file separate tax returns in accordance with German tax
laws. Under German corporate tax law, taxes on income are composed of corporate taxes and trade taxes. For
financial reporting purposes, the Company and its consolidated subsidiaries calculate their respective tax
liabilities on a separate return basis which are combined in the accompanying consolidated financial statements.
The provisions for income tax benefit (expense) consisted of the following:
Years ended December 31,
1996 1997
(DM in thousands)
1998
Current ********************************************************* (1,411) (1,487) (1,654)
Deferred ******************************************************** (194) (2,948) 36
(1,605) (4,435) (1,618)
A reconciliation between the German corporate statutory tax rate of 54% for 1996, 1997 and 1998 and the
Company’s effective tax rate is as follows:
Years ended December 31,
1996 1997
(DM in thousands)
1998
Computed income tax expense at German statutory rate **************** (1,199) (15,779) (4,817)
Change in valuation allowance ************************************* (145) (77) (4,649)
Non-taxable income********************************************** 2,367 14,622 8,979
Goodwill amortization ******************************************** (746) (531) (567)
Other, principally non-deductible expenses *************************** (1,882) (2,670) (564)
Total income tax expense ***************************************** (1,605) (4,435) (1,618)
63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities as of December 31, 1996, 1997 and 1998 are presented below:
1996
December 31,
1997
(DM in thousands)
1998
Deferred tax assets:
Net operating loss carryforwards ******************************** 5,929 7,889 147,769
Property, plant and equipment ********************************** 5,996 8,313 —
Senior Notes************************************************* — — 37,321
Sale-leaseback obligations************************************** 2,648 609 —
Capital lease obligations *************************************** — — 2,051
Accrued expenses********************************************* 2,157 772 8,582
Other******************************************************* — 443 989
16,730 18,026 196,712
less — valuation allowance************************************* (2,991) (3,068) (35,497)
Deferred tax liabilities:
13,739 14,958 161,215
Property, plant and equipment ********************************** — — (60,680)
Financing fees *********************************************** — — (5,770)
Minority interest********************************************** (538) (112) —
Sale-leaseback obligations************************************** — — (2,310)
Accrued expenses********************************************* — — (4,380)
Other******************************************************* (1,761) — (397)
Net deferred tax asset ******************************************* 11,440 14,846 87,678
As of December 31, 1998, the Company and its subsidiaries had available combined cumulative tax loss
carryforwards from continuing operations for corporate income tax of approximately DM140,943,000 and for
trade tax on income of approximately DM91,051,000. Under current German tax laws, these loss carryforwards
have an indefinite life and may be used to offset the future taxable income of the Company and its consolidated
subsidiaries. Cash paid for income taxes was DM899,000, DM1,506,000 and DM1,105,000 in 1996, 1997 and
1998 respectively.
12. COMMITMENTS
The Company obtains certain programming directly from Deutsche Telekom (‘‘Telekom’’) through various
signal delivery contracts. The signal delivery contracts with Telekom are generally for a fixed period of time and
are subject to negotiated renewal. Under these contracts the Company typically pays Telekom either a flat fee or a
fee per customer that is determined by reference to a published fee schedule. As of December 31, 1998, the
Company had a total commitment of approximately DM266,400,000 through 2014, the date upon which the
agreements expire. For the years ended December 31, 1996, 1997 and 1998, total Telekom fees expensed
amounted to approximately DM15,177,000, DM16,221,000 and DM20,534,000, respectively, and are included in
operations expense.
The Company leases certain office equipment and vehicles. Lease terms generally range from three to five
years with the option to renew at varying terms. Rental expense was DM431,000, DM446,000 and DM999,000 in
1996, 1997 and 1998, respectively.
64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Future minimum payments under non-cancelable operating leases with initial or remaining terms in excess
of one year consisted of the following at December 31, 1998:
(DM in
thousands)
1999 *************************************************** 1,690
2000 *************************************************** 1,512
2001 *************************************************** 1,122
2002 *************************************************** 1,000
2003 *************************************************** 462
Thereafter *********************************************** 1,360
Total *************************************************** 7,146
13. SALE-LEASEBACK
In October and March 1993, the Company entered into two master lease agreements governing the terms of
the majority of its cable network sale and leaseback transactions. Under the October 1993 agreement, the sale and
leaseback transactions have a lease term of 9 years and a monthly leasing rate of approximately 1.5% of the
original sales price. The Company has the option to terminate leases under this agreement at the end of 6 years at
an amount equal to approximately 11.5% percent of the original sales price plus the present value of remaining
unpaid monthly lease payments. The lessor has the right to require the Company to repurchase the cable networks
at the end of the lease term at an amount equal to approximately 11.5% of the original sales price. If the purchase
option is not exercised, the lease automatically renews for an additional 3 years. Under the March 1993
agreement, the sale and leaseback transactions have a lease term of 9 years and a monthly leasing rate of
approximately 1.6% of the original sales price. At the end of the lease term, the Company has the option to
extend leases under this agreement one year or to repurchase the cable networks at the higher of 10% of the
original sales price or the recorded net book value on the lessor’s books. The leases have been accounted for as
capital leases in accordance with Statement of Financial Accounting Standards No. 98.
1996
December 31,
1997
(DM in thousands)
1998
Borrowings under sale-leaseback obligations************************** 81,416 76,900 86,382
Current portion thereof ******************************************* 8,401 9,835 41,927
In December 1998, the Company negotiated the early repayment of certain of the sale-leaseback obligations
that had a balance of DM77,444,000 at December 31, 1998. The amounts will be repaid in January 1999 and
January 2000. Maturities of the sale-leaseback obligations for the next five years, after considering the negotiated
early repayments, are DM35,690,000 in 1999, DM39,141,000 in 2000, DM2,213,000 in 2001, DM1,789,000 in
2002, and DM809,000 in 2003 and DM503,000 thereafter.
Assets under capital leases are included within property, plant and equipment as follows:
1996
December 31,
1997
(DM in thousands)
1998
Cable television networks *************************************** 98,523 101,958 114,240
Less accumulated depreciation *********************************** 23,516 31,323 40,373
75,007 70,635 73,867
Depreciation expense on assets recorded under capital leases approximated DM7,467,000, DM7,807,000
and DM9,050,000 in 1996, 1997 and 1998, respectively.
65

14. CONTINGENCIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As a result of the Merger, PrimaCom succeeded to certain litigation against Süweda or its affiliates. In order
to allocate the risks related to this litigation, KabelMedia and two former major shareholders of Süweda, entered
into an indemnity agreement under which the shareholders agreed to indemnify PrimaCom until November 20,
2003 from any claim and damages arising out of or in connection with litigation or proceedings arising out of
events prior to the merger against Süweda, including certain ongoing litigation. The ongoing litigation includes
one material litigation which was instituted in Brandenburg by the East German Privatization Agency against
Süweda and alleges damages in a maximum amount of DM16,000,000 arising from the purchase by Süweda of
one of the ten regional organizations from the television service provider and distribution conglomerate of the
former East Germany. In addition, the ongoing litigation included fraud proceedings against AGFB, Süweda and
a former Süweda shareholder that were settled in March 1998. AGFB and PrimaCom each paid DM800,000 of
the total DM1,600,000 paid in the settlement. The amount paid by PrimaCom is covered by the indemnity
agreement and accordingly a receivable from the former Süweda shareholders has been recorded.
All litigation risks arising in the ordinary course of business and which do not exceed DM25,000
individually or DM1,000,000 in the aggregate are excluded from this indemnification. In the event the total
claims exceed DM1,000,000, the liability under the indemnity agreement will be limited to the amount of such
excess.
Various other legal matters are pending against the Company. In the opinion of management, the ultimate
resolution of such legal proceedings and claims, including the matters described above, will not have a material
effect on the consolidated financial position or results of operations of the Company.
15. SHAREHOLDERS’ EQUITY
The Company is incorporated as an Aktiengesellschaft (hereafter AG) under German law. Registered capital
of a AG is in the form of shares and represents negotiable securities. The minimum capital requirement for a AG
is DM100,000. The Company has authorized and issued 15,782,842 ordinary bearer shares with a pro rata share
in the registered capital of DM5 per share. Each ordinary bearer share is entitled to one vote.
Dividends may only be declared and paid from the accumulated retained earnings (after deduction of certain
reserves) shown in the Company’s annual German statutory unconsolidated accounts. Such amounts differ from
the total of shareholders’ deficiency as shown in the consolidated financial statements as a result of the
adjustments made to present the consolidated financial statements in accordance with U.S. GAAP. As of
December 31, 1998, the Company’s German statutory accounts reflect no retained earnings available for
distribution.
16. PENSION AND EMPLOYEE BENEFIT PLANS
The Company provides no significant pension, post retirement or post employment benefits to its employees.
17. OPERATIONS BY GEOGRAPHIC AREA
The Company operates in one business segment, which is to acquire, own and operate cable television
systems serving communities throughout Germany. All revenues are derived from operations within Germany.
66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
18. EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted earnings (loss) per share:
1996 1997 1998
DM DM DM
Numerator:
Numerator for basic and diluted earnings per share —
income (loss) from continuing operations (DM in
thousands) ***************************************
Denominator:
Denominator for basic and diluted earnings per share —
(576) 19,374 6,713
weighted average shares ****************************
Basic and diluted earnings (loss) from continuing operations
15,782,842 15,782,842 15,782,842
per share (DM) ************************************* (0.04) 1.22 0.42
19. SENIOR NOTES
The Senior Notes of $100,180,000 bear interest at 13.625% per annum and mature August 1, 2006. Cash
interest will not accrue on the Senior Notes prior to August 1, 2001. Thereafter, cash interest on the Senior Notes
will be payable at 13.625% per annum, semi-annually in arrears on each February 1 and August 1, commencing
February 1, 2002. The Senior Notes are unsecured senior obligations of the Company. Costs and expenses of
DM10,361,000 associated with the issuance of the Senior Notes have been capitalized in other assets and are
being amortized over the ten year term of the Senior Notes.
20. FOREIGN EXCHANGE
The Company has foreign currency forward contracts to hedge against the effect of exchange rate
fluctuations on the U.S. dollar denominated Senior Notes. The foreign currency forward contracts require the
Company to exchange Deutsche Marks for U.S. dollars and generally mature on the first call date of the Senior
Notes. The discount on the foreign currency forward contracts, representing the difference between the contracted
forward rate and the spot rate at the date of the contracts, is amortized into interest expense over the life of the
contracts. The contracts are adjusted to the year-end exchange rate and therefore are subject to fluctuations in
value. Such fluctuations, however, are generally offset by the U.S. dollar denominated Senior Notes which are
also adjusted to the year end exchange rate.
The Company does not hold or use financial instruments for speculative purposes. The counterparties to the
Company’s forward contracts are several major financial institutions. The Company’s policy is designed to limit
exposure to any one institution.
The fair values of the foreign currency forward contracts are estimated by obtaining quotes from brokers.
Information at December 31, 1997 and 1998 is as follows:
Notional Fair
Amount Value
December 31, 1997************************************** $130,000,000 $12,785,000
December 31, 1998************************************** $130,000,000 $ 6,810,000
21. SUBSEQUENT EVENTS
Effective January 31, 1999, the Company purchased certain equipment which had previously been subject to
a sale-leaseback transaction. The company recognized a loss of approximately DM10,503,000 as a result of the
67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
transaction, which represents the difference between the purchase price and the net book value of the assets which
had been recorded as capitalized leases.
On February 23, 1999, the Company concluded the initial public offering of 5,352,234 of its shares
(including an overallotment option of 1,404,524 shares) at an offering price of $32.55 per share. The Company
realized net proceeds of DM206,175,000 from the offering. Subsequent to the offering the Company’s shares
commenced trading on the Neuer Markt, a market segment of the Frankfurt Stock Exchange, under the symbol
PCY and the Company’s American Depositary Shares (‘‘ADS’’), each representing one-half of a share,
commenced trading on the Nasdaq National Market under the symbol PCAG.
On February 22, 1999, the Company adopted a stock option plan for the benefit of all of its employees and
those employees of its subsidiaries (the ‘‘Universal Stock Option Plan’’) and a stock option plan for its executive
officers and those executive officers of its subsidiaries (the ‘‘Executive Stock Option Plan’’). The two stock option
plans provide for the issuance of stock options allowing eligible employees and executive officers to acquire
shares. The Company has been authorized to issue a total of 1,000,000 shares, including 300,000 shares under the
Universal Stock Option Plan and 700,000 shares under the Executive Stock Option Plan. On February 22, 1999,
the Company issued options on 248,884 shares under the Universal Stock Option Plan and 425,000 shares under
the Executive Stock Option Plan at a price of DM56.72. The options vest over a two year period and are
exercisable during the five year period following the vesting period.
On March 30, 1999, the Company purchased and canceled its remaining Senior Notes for cash consideration
of DM275,981,000.
On March 24, 1999, in connection with the purchase of the Senior Notes, the Company sold its foreign
currency forward contracts for cash consideration of DM20,807,000.
Since December 31, 1998, the Company has been actively involved in acquiring the minority interest of its
majority owned subsidiary, Kabelcom Aachen GmbH. As of March 30, 1999, the Company had acquired an
additional 6.96% of the nominal capital for DM1,500,000, bringing its total ownership position to 24.87%. The
Company has commitments to acquire another 4.72% for total cash consideration of DM607,500. It is the
Company’s intention to acquire all remaining shares.
On March 19, 1999, tax legislation was passed lowering the German corporate tax rate from 45% to 40%. In
accordance with SFAS 109 the effects of changes in tax rates on deferred tax balances are recognized in the
period the new tax rates become effective. Accordingly, the Company will be required to remeasure its deferred
tax balances in the quarter ending March 31, 1999. The Company estimates that it will record a non-cash deferred
tax charge to operations amounting to approximately DM1,204,000 as a result of this change in the tax rate.
68

Item 19. Financial Statements and Exhibits
(a) The following financial statements are filed as part of this Form 20-F:
Report of Schitag Ernst & Young Deutsche Allgemeine Treuhand AG
Consolidated Statement of Operations for the years ended December 31, 1996, 1997 and 1998
(audited)
Consolidated Balance Sheets as of December 31, 1996, 1997 and 1998
Consolidated Statements of Shareholders’ Deficiency
Consolidated Statements of Cash Flows as at December 31, 1996, 1997 and 1998
Notes to the Consolidated Financial Statements
(b) The following documents are filed as exhibits to this Form 20-F:
Exhibit
Number Description of Exhibit
3.1 Articles of Association of PrimaCom (English translation) (Incorporated by reference to Registration
Statement on Form F-1 of PrimaCom AG (Registration No. 333-9854) filed January 29, 1999).
3.2 Standing Orders for Management Board (Incorporated by reference to Registration Statement on
Form F-1 of PrimaCom AG (Registration No. 333-9854) filed January 29, 1999).
3.3 Rules of Procedure for Supervisory Board (Incorporated by reference to Registration Statement on
Form F-1 of PrimaCom AG (Registration No. 333-9854) filed January 29, 1999).
4.1 Form of Deposit Agreement between PrimaCom AG, the Bank of New York and Owners and
Holders of American Depositary Receipts. (Incorporated by reference to Registration Statement on
Form F-1 of PrimaCom AG (Registration No. 333-9854) filed January 29, 1999).
69

SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies
that it meets all of the requirements for filing on Form 20-F and has duly caused this annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: March 31, 1999
PRIMACOM AG
By: /s/ JACQUES HACKENBERG
Jacques Hackenberg
Chief Executive Officer
By: /s/ PAUL THOMASON
70
Paul Thomason
Chief Financial Officer