Exhibit 99.1
Ciao AG, Munich
Consolidated Financial Statements for the
Years ending December 31, 2002, 2003 and 2004
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REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND TO THE BOARD OF DIRECTORS, CIAO AG, MUNICH
We have audited the accompanying consolidated balance sheets of Ciao AG as of
December 31, 2003 and 2004, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2004. 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 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. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management and
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 Ciao AG at
December 31, 2003 and 2004, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31, 2004
in conformity with accounting principles generally accepted in Germany.
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Accounting principles generally accepted in Germany vary in certain significant
respects from accounting principles generally accepted in the United States of
America. Information relating to the nature and effect of such differences for
2003 and 2004 are presented in Note VII to the consolidated financial
statements.
Mannheim, Germany
February 17, 2005, except for Note VII as to which the date is
April 6, 2005
Ernst & Young AG
Wirtschaftsprufungsgesellschaft
Fluck Horn
Wirtschaftsprufer Wirtschaftsprufer
3/42
CIAO AG, MUNICH
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2003 AND 2004
31.12.2003 31.12.2004
Notes EUR '000 EUR '000
---------------- ---------- ----------
ASSETS
A. FIXED ASSETS
II. 9., II. 11.,
I. PURCHASED SOFTWARE AND LICENSES III. 1. 250 371
----- ------
II. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment and machines 224 657
2. Other equipment, furniture and fixtures 82 178
----- ------
II. 10., II. 11.
III. 2. 306 835
----- ------
556 1.206
----- ------
B. CURRENT ASSETS
I. RECEIVABLES AND OTHER ASSETS
1. Trade receivables II. 13., III. 3. 3.000 4.316
2. Other assets III. 4. 99 135
----- ------
3.099 4.451
----- ------
II. SECURITIES
1. Treasury shares III. 8. 9 9
2. Marketable securities II. 12. 1.118 6.523
----- ------
1.127 6.532
----- ------
III. CASH AND CASH EQUIVALENTS III. 5. 2.724 1.204
----- ------
6.950 12.187
----- ------
C. PREPAID EXPENSES III. 6. 45 51
----- ------
7.551 13.444
===== ======
See accompanying notes to financial statements.
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CIAO AG, MUNICH
CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2003 AND 2004
31.12.2003 31.12.2004
Notes EUR '000 EUR '000
---------------- ---------- ----------
SHAREHOLDERS' EQUITY AND LIABILITIES
A. SHAREHOLDERS' EQUITY
I. SHARE CAPITAL III. 7. 10.114 10.114
(thereof preferred: EUR 7.053 in 2003 and 2004)
II. CAPITAL SURPLUS 16.194 16.194
III. RESERVE FOR TREASURY SHARES III. 8. 9 9
IV. CUMULATED TRANSLATION ADJUSTMENT II. 4. -75 -112
V. ACCUMULATED DEFICIT -22.082 -16.538
------- -------
4.160 9.667
------- -------
B. ACCRUED LIABILITIES
1. Tax accruals III. 10. 0 1.301
2. Other accruals II. 14., III. 10. 925 1.173
------- -------
925 2.474
------- -------
C. OTHER LIABILITIES
1. Silent partnership loan III. 9. 1.518 0
2. Trade payables II. 15., III. 10. 401 454
3. Other liabilities II. 15., III. 10. 547 849
------- -------
2.466 1.303
------- -------
7.551 13.444
======= =======
See accompanying notes to financial statements.
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CIAO AG, MUNICH
CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002, 2003 AND
2004
2002 2003 2004
Notes EUR '000 EUR '000 EUR '000
-------------- -------- -------- --------
1. Sales II. 5., IV. 1. 4.132 10.151 18.115
2. Other operating income IV. 2. 253 30 130
------ ------ -------
4.385 10.181 18.245
------ ------ -------
3. Cost of purchased services IV. 3. -860 -1.565 -3.364
4. Personnel expenses
a) Wages and salaries -1.868 -2.853 -4.487
b) Social security -342 -519 -724
5. Allowance and depreciation -1.434 -385 -436
6. Other operating expenses IV. 4. -2.351 -1.405 -2.337
------ ------ -------
Total cost without interest -6.855 -6.727 -11.348
------ ------ -------
7. Interest income IV. 5. 79 49 48
8. Interest expenses IV. 5. -97 -102 -75
------ ------ -------
Interest expense, net -18 -53 -27
------ ------ -------
9. Result from ordinary operations -2.488 3.401 6.870
10. Income taxes 0 -4 -1.326
------ ------ -------
11. Net income/loss for the year -2.488 3.397 5.544
====== ====== =======
See accompanying notes to financial statements.
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CIAO AG, MUNICH
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31,
2002, 2003 AND 2004
Currency
Share Capital Reserve for Translation Accumulated
Notes Capital*) Reserve treasury shares Adjustment Deficit Total
EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000
-------- -------- -------- --------------- ----------- ----------- --------
January 1, 2002 10.114 16.194 4 -73 -22.986 3.253
Net loss 0 0 0 0 -2.488 -2.488
Currency translation
adjustment II. 4. 0 0 0 -1 0 -1
Provision to reserve for
treasury shares VII. 6. 0 0 -53 0 53 0
Release of reserve for
treasury shares VII. 6. 0 0 70 0 -70 0
------ ------ --- --- ------- ------
December 31, 2002 10.114 16.194 21 -74 -25.491 764
Net income 0 0 0 0 3.397 3.397
Currency translation
adjustment II. 4. 0 0 0 -1 0 -1
Provision to reserve for
treasury shares VII. 6. 0 0 -16 0 16 0
Release of reserve for
treasury shares VII. 6. 0 0 4 0 -4 0
------ ------ --- --- ------- ------
December 31, 2003 10.114 16.194 9 -75 -22.082 4.160
Net income 0 0 0 0 5.544 5.544
Currency translation
adjustment II. 4. 0 0 0 -37 0 -37
------ ------ --- --- ------- ------
December 31, 2004 10.114 16.194 9 -112 -16.538 9.667
====== ====== === === ======= ======
*) Thereof preferred shares: EUR 7.053
See accompanying notes to financial statements.
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CIAO AG, MUNICH
CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002, 2003
AND 2004
2002 2003 2004
EUR '000 EUR '000 EUR '000
-------- -------- --------
1. CASH FLOW FROM OPERATING ACTIVITIES
Net income/loss -2.488 3.397 5.544
Depreciation and amortization 1.434 385 436
Increase (+)/decrease (-) in accruals -130 548 1.549
Gain (-)/loss (+) on disposals of fixed assets 43 3 1
Gain (-)/loss (+) on sale of treasury shares 45 14 0
Increase (-)/decrease (+) in trade
receivables and other assets -596 -1.659 -1.361
Increase (+)/decrease (-) in trade
payables and other liabilities -96 94 356
------ ------ ------
Cash flow from operating activities -1.788 2.782 6.525
------ ------ ------
2. CASH FLOW FROM INVESTING ACTIVITIES
Cash received (+) from disposals of property, plant and equipment 1 0 0
Cash paid (-) for investments in property, plant and equipment -40 -102 -837
Cash paid (-) for investments in purchased software and licenses -18 -210 -250
------ ------ ------
Cash flow from investing activities -57 -312 -1.087
------ ------ ------
3. CASH FLOW FROM FINANCING ACTIVITIES
Cash received (+) from equity contributions
(capital increases, sale of treasury shares, etc.) 8 2 0
Cash paid (-) to shareholders -70 -4 0
Cash repayments (-) of silent partnership loan 0 0 -1.514
------ ------ ------
Cash flow from financing activities -62 -2 -1.514
------ ------ ------
4. EFFECT OF FOREIGN CURRENCY -1 -1 -37
------ ------ ------
5. CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
Change in
cash and cash equivalents (subtotal of 1 to 4) -1.908 2.467 3.887
Cash and cash equivalents at the beginning of the period 3.282 1.374 3.841
------ ------ ------
Cash and cash equivalents at the end of the period 1.374 3.841 7.728
====== ====== ======
6. COMPOSITION OF FUNDS
Cash and cash equivalents 249 2.723 1.204
Marketable securities 1.125 1.118 6.524
------ ------ ------
Funds at the end of the period 1.374 3.841 7.728
====== ====== ======
Interest paid 75 75 75
Income taxes paid 0 0 4
See accompanying notes to financial statements.
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CIAO AG, MUNICH
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED
IN ACCORDANCE WITH GERMAN-GAAP FOR THE YEARS ENDED DECEMBER
31, 2002, 2003 and 2004
(all amounts in `000 Euro, except shares data)
I. THE COMPANY
The Company was founded in May 1999 under the name of Provista Zweiundzwanzigste
Vermogensverwaltungs-Aktiengesellschaft, Hamburg. The Company relocated to
Munich and changed its name to ciao.com AG in August 1999. The Company has been
operating under the name of Ciao AG (hereinafter also referred to as the
"Company" or "Ciao") since July 2002.
Ciao AG is a global media company providing Internet services to consumers and
businesses through its worldwide network of online properties. The Company's
properties and services for consumers and businesses reside in two main areas:
(i) Comparison Shopping, and (ii) Survey Solutions. Ciao's service offerings are
available without charge to consumers. The Company sells performance-based
advertising services as well as data collection and survey solutions to
businesses across its properties and services.
Ciao AG has the following wholly-owned subsidiaries:
- Ciao France SAS, Paris, France
- Ciao International Inc., Delaware, USA
- Ciao Spain S.L., Madrid, Spain
- Ciao Romania S.R.L., Timisoara, Romania
- Ciao Italia, Milan, Italy
- Ciao Media GmbH, Munich
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Furthermore, the Company operates a branch in London, UK.
Ciao International Inc. was founded in 2003.
Ciao Romania S.R.L. was founded in 2004.
Ciao Italy was legally liquidated in 2002 and the business transferred to Ciao
France SAS, who runs the Italian business for the Company.
Ciao Media GmbH was dormant and liquidated in 2003.
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II. SUMMARY OF SIGNIFICANT ACCOUNTING AND VALUATION PRINCIPLES
1. Basis of Presentation
These consolidated financial statements have been prepared in accordance with
secs. 290 et seq. HGB ("Handelsgesetzbuch": German Commercial Code).
The Company maintains its books and records in accordance with generally
accepted accounting principles applicable in Germany (German-GAAP).
The accounts of those companies included in the Group financial statements were
prepared according to consistent accounting and valuation principles.
Details regarding the balance sheet and the income statement are presented in
the footnotes. The income statement is presented in accordance with cost by
nature.
2. Principles of Consolidation
The consolidated financial statements include the financial statements of Ciao
AG and its wholly-owned and controlled subsidiaries. The following subsidiaries
are included in the consolidated financial statements.
Interest
Company Location % Consolidated in the years
- ------- -------- -------- -------------------------
Ciao France SAS Paris/France 100 All
Ciao International Inc. Delaware/USA 100 2003 and 2004
Ciao Spain S.L. Madrid/Spain 100 All
Ciao Romania srl Timisoara/Romania 100 2004
Ciao Italia Milan/Italy 100 2002
Ciao Media GmbH Munich/Germany 100 2002 and 2003
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3. Principles of Consolidation
All assets, liabilities, revenues and expenses of the Company's wholly-owned
or controlled subsidiaries are included in the consolidated statements. All
intercompany receivables and liabilities, revenues, expenses and income as well
as intercompany profits and losses are eliminated in consolidation.
4. Foreign Currency Translation
The functional currency of each of the Company's subsidiaries is the local
currency of the country in which each subsidiary in located. Accordingly, with
the exception of shareholders' equity which was translated at the exchange rate
valid on the respective date of a transaction, all balance sheet accounts were
translated into the reporting currency (EUR) at the rate valid at the balance
sheet dates. Income and expense accounts were translated at the average rates of
the fiscal year. Any differences resulting from currency translation are
recorded in a separate item under shareholders' equity ("cumulated translation
adjustment") until the subsidiary is sold or otherwise liquidated.
5. Revenue Recognition
Ciao AG generates its revenues from e-commerce commissions and advertising
income (in the "Comparison Shopping" business segment), and from the sale of
market research data (in the "Online Surveys" business segment).
In the "Comparison Shopping" business segment, the Company's core business
consists of attracting visitors to its websites, and referring these visitors to
the websites of its merchant clients. Whenever a visitor is referred from Ciao
to a client's website, a "click-through" is recorded both by the Company and by
the client. At the end of each month, the total number of click-throughs in that
month is calculated, multiplied by the cost-per-click-through (CPC) agreed
contractually with the client, and the resulting sum is invoiced and recognized
as revenue in that month ("e-commerce commissions"). Advertising revenues are
generated from the display of customer advertising on the Company's websites. In
this case, an advertising serving software is used to measure the number of
pageviews which the advertising message has received in each month. Both the
Company and its advertising customers have access to this software for
controlling purposes. The Company only invoices and recognizes revenues once an
advertising campaign agreed with a
12/42
customer has been achieved in full, i.e. when the number of pageviews (priced in
cost-per thousand, or CPM) agreed contractually has been reached and there are
no reasons to doubt the customer's satisfaction with the display of its campaign
on the Company's sites.
The Company realizes a part of the advertising revenues in connection with
similar barter transactions shown as advertising expenses in other expenses. The
respective revenues and advertising expenses amount to EUR 770 (2002), EUR 89
(2003) and EUR 0 (2004).
In the "Online Surveys" business segment, the Company conducts consumer surveys
for market research agencies and other clients by e-mail. At the start of a
project, clients specify the number of completed surveys they wish to obtain
from a specific target group. The Company then quotes a price per completed
survey to the client, and a total sum (so-called "proposal"). Once the client
approves the Company's proposal, it becomes a "project" and the Company sets out
to identify, contact and incentivize the relevant consumers to complete the
specific survey. When the total number of completed surveys has been reached,
the data is formatted to the client's specifications and sent to the client for
approval. Once approval has been obtained, the project is invoiced and revenues
are recognized. The level of revenues for each project depends on both the size
of the project (number of completed surveys delivered), and the complexity of
the target group (price per completed survey).
6. Advertising Expenses
Advertising costs are expensed as incurred.
7. Research and Development Expenses
Research and development costs are expensed generally as incurred. Development
costs concerning defined software products for internal use have been
capitalized (2002 EUR 0, 2003: EUR 97, 2004: EUR 146).
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8. Estimates
The preparation of consolidated financial statements in conformity with
German-GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates include the allowance for
uncollectible accounts receivable, accruals for incentives and other provisions,
and the recoverability of long-lived assets. Actual results could differ from
those estimates.
9. Purchased software and licenses
Purchased software and licenses are recognized at acquisition cost and amortized
over their useful lives on a straight-line basis as follows:
- - Purchased software 3 - 5 years
- - Licenses 10 years
Licenses relate to trademarks and domains.
10. Property, plant and equipment
Property, plant and equipment are capitalized at acquisition cost less
depreciation and impairment charges. Depreciation is recorded straight line over
useful lives as follows:
- - Technical equipment and machines 3 - 4 years
- - Other equipment, furniture and fixtures 3 - 8 years
Upon sale or scrapping, the assets are removed from fixed assets; any profits or
losses realized are recognized in the income statement.
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11. Impairment of long-lived assets including purchased software and licenses
Long-lived assets including purchased software and licenses are tested for
impairment if events or changes indicate that the carrying amount of an asset is
no longer recoverable. If facts or circumstances give reason to conclude that
the value has been impaired, the carrying amount of the assets is compared to
the expected future non-discounted cash flows from the use of the assets. If the
expected future non-discounted cash flows are less than the carrying amount,
then the asset is written down to its fair market value. The fair market value
is based on the discounted cash flows for assets held for use. Assets held for
sale are recorded at their net realizable values.
12. Marketable Securities
For German-GAAP purposes, marketable securities represent investments in money
market funds. Unrealized holding gains are recorded when realized. Losses are
recorded in the income statement in each period if the fair market value is
lower than the cost basis.
13. Receivables
Receivables are reported at nominal value less allowances for bad debts (net
realizable value). Bad debt allowances are recognized if receivables are partly
or wholly uncollectible, or uncollectibility is probable and the amount is
reasonably determinable.
14. Accrued liabilities
Other provisions and accruals are recorded to cover all potential losses and
uncertain liabilities, which are deemed probable by management.
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15. Other Liabilities
Liabilities are recorded at the face amount repayable at the due date.
16. Lease Agreements
All lease agreements are accounted for as operating leases.
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III. OTHER NOTES TO THE BALANCE SHEET
1. Purchased software and licenses
The break down is as follows:
December 31,
2003 2004
EUR EUR
--- ---
Purchased software 753 960
Accumulated amortization 509 633
-----------
Purchased software, net 244 327
--- ---
Licenses 97 135
Accumulated amortization 91 91
--- ---
Licenses, net 6 44
--- ---
Purchased software and licenses, net 250 371
=== ===
Amortization on purchased software and licenses amounted to EUR 831 in 2002, EUR
115 in 2003 and EUR 128 in 2004.
In 2002, an impairment of EUR 467 was recorded (EUR 0 in 2003 and 2004) related
to software not used anymore. The software was replaced by new software and
fully written off. The charge is included in current depreciation.
In 2003, management re-assessed the useful lives of the purchased software and
determined that the actual useful lives are longer than originally assumed. This
assessment was based on an analysis of the actual useful lives of purchased
software performed in 2003 by management. As a result, the useful life was
increased from three to four respectively five years for some specific purchased
software. Depreciation in fiscal year 2003 was EUR 60 less than what would have
been charged had the shorter useful lives that applied in fiscal year 2002 been
used.
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2. Property, Plant and Equipment
Property, plant and equipment break down as follows:
December 31,
2003 2004
EUR EUR
----- -----
Technical equipment and machines 1.774 2.442
Furniture and fixtures 314 455
----- -----
2.088 2.897
Accumulated depreciation 1.782 2.062
----- -----
Property, plant and equipment, net 306 835
===== =====
Depreciation of property, plant and equipment amounted to EUR 603 in fiscal year
2002, EUR 270 in 2003 and EUR 308 in 2004.
In 2003, management re-assessed the useful lives of the assets and determined
that the actual useful lives are longer than originally assumed. This assessment
was based on an analysis of the actual useful lives of some property, plant and
equipment items (server hardware) performed in 2003 by management. As a result,
the useful life was increased from three to four or five years for some
property, plant and equipment items. Depreciation in fiscal year 2003 was EUR 59
less than what would have been charged had the shorter useful lives that applied
in 2002 been used.
Property, plant and equipment break down by region as follows:
December 31,
2003 2004
EUR EUR
--- ---
Germany 260 751
Europe (excluding Germany) 44 81
United States of America 2 3
--- ---
306 835
=== ===
For a break down of additions, disposals, cost and depreciation/amortization of
long-lived assets including purchased software and licenses, reference is made
to Exhibit 1 (2002), Exhibit 2 (2003) and Exhibit 3 (2004).
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3. Trade Accounts Receivable
Receivables break down as follows:
December 31,
2003 2004
EUR EUR
---- ----
Trade accounts receivable 3.035 4.409
Less bad debt allowance 34 93
----- -----
Receivables, net 3.001 4.316
===== =====
All receivables are due within one year.
4. Other Assets
Other assets include security deposits given to landlords as collateral and a
loan to a management board member of EUR 8. The loan bears interest at 5,5 % and
has no fixed maturity. All other assets are due within one year (unchanged from
2003).
5. Cash and Cash Equivalents
For German-GAAP purposes, Cash and cash equivalents of EUR 2.724 (2003) and EUR
1.204 (2004) mainly relate to current bank accounts. Time deposits of EUR 33 in
2003 and EUR 58 in 2004 have been pledged as collateral for lease guarantees.
6. Prepaid Expenses
Prepaid expenses include deferred service fee for the silent partnership loan of
EUR 10 (2003) and EUR 0 (2004). Furthermore, prepaid expenses include advance
maintenance contract payments, prepaid expenses for the use of internet based
services and insurance premiums prepaid for the subsequent year.
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7. Shareholders' equity - Share capital
The Company's share capital amounts to EUR 10.114. It is divided into 3.060.566
no-par value common shares and 7.053.226 no-par value preferred shares.
The shares are registered in the names of each of the shareholders. The shares
may only be transferred with the Company's written consent.
The holders of preferred shares have preference over other shareholders in the
event of liquidation as follows:
Prior to May 2003
A liquidation preference of approximately EUR 35 million existed with respect to
preferred shares and the repayment of remaining liabilities.
Subsequent to May 2003
The liquidation proceeds will first be used to repay the remaining liabilities.
The remaining proceeds will be used as follows:
- - 15 % will be paid out to the holders of 3.060.566 common shares (plus a
maximum of 505.689 common shares which the Company may potentially issue
to common shareholders) equally per share;
- - 85 % will be paid out to the holders of preferred shares and distributed
equally per share amongst them.
The above regulations apply until the total amount paid to the holders of the
preferred shares reaches EUR 5.000 (i.e. this form of payment applies until a
total amount of EUR 5.882 is paid out). The remaining amount is paid out to all
shareholders in equal amounts per share (common or preferred). The common and
preferred shares have equal voting rights. Preferred shares can be converted
into common shares upon request of the shareholders' of preferred shares.
As of December 31, 2004, a trustee holds a total of 107.862 shares in trust for
the Company. These shares are disclosed as treasury shares in the Company's
balance sheet and are primarily earmarked for the employee stock option plan.
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8. Treasury Shares
Treasury shares all consist of common shares.
As of the balance sheet dates, the book value of treasury shares was EUR 21 in
2002, and EUR 9 in 2003 and 2004 representing 2,3 % and 1,1 % (both 2003 and
2004), respectively of capital stock. The Company acquired 424.916 treasury
shares in 2002 and 50.000 treasury shares in 2003 and sold 582.199 treasury
shares in 2002 and 171.660 treasury shares in 2003 as part of the process to
streamline the shareholder structure which began in the year 2002. The shares
were sold to management board members and their relatives as well as to a
supervisory board member.
number
-------
Balance Jan 1, 2002 386.805
Purchase 424.916
Sale 582.199
-------
Balance Dec 31, 2002 229.522
Purchase 50.000
Sale 171.660
-------
Balance Dec 31, 2003 107.862
Purchase 0
Sale 0
-------
Balance Dec 31, 2004 107.862
=======
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9. Silent Partnership Loan
December 31,
2003 2004
EUR EUR
----- -----
tbg Technologie-Beteiligungs-Gesellschaft mbH
of Deutsche Ausgleichsbank 1.519 0
===== ====
Under the incentive program "equity for small technology companies", the Company
concluded the following agreement with tbg Technologie-Beteiligungs-Gesellschaft
mbH of Deutsche Ausgleichsbank, Bonn ("tbg"):
By agreement dated March 16, 2000, tbg provided a loan of EUR 1.500 to the
Company. tbg withheld a service fee of 1,0 % of the agreed contribution. This
fee of EUR 15 was being amortized over the term of the agreement.
The silent partnership was established for a limited term until December 31,
2010.
tbg was to receive a minimum return of 5,0 % p.a. on its loan, regardless of the
net income achieved by the Company and does not share any losses. This interest
was payable every six months in arrears on March 31 and September 30.
In addition, tbg was entitled to claim 8 % of the amount invested for each year
after the end of the fifth full year of investment (final compensation) at the
end of the investment term. Under the agreement dated March 16, 2000, tbg was
also entitled to claim an appreciation fee of 30 % of the amount invested at the
end of the investment term as compensation for the value accumulated during the
investment period.
In a supplementary agreement dated October 2002, tbg's claim regarding the
appreciation fee for years one to five was finally settled by an upfront fee of
EUR 125. The upfront fee was paid and charged to other operating expenses in
2002. No amounts were recorded in prior years related to the final compensation
nor the appreciation fee.
The Company terminated the agreement effective December 31, 2004 and repaid the
loan in total at the end of 2004 and thereby was released from any and all
obligations from the silent partnership. The remaining book value of the
unamortized service fee of EUR 10 was expensed in 2004.
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10. Accrued Liabilities and Other Liabilities
Tax accruals in fiscal year 2004 amount to EUR 1.301 and relate to income taxes
in Germany, UK and the USA.
Other accruals include a management bonus of EUR 227 in 2003 and EUR 0 in 2004,
and incentive payments owed to the Company's online community members of EUR 306
in 2003 and EUR 874 in 2004. The incentives earned by the community members
expire after a certain period. Management determines the accrual for incentives
on the basis of historic expiration rates.
Other liabilities mainly relate to tax liabilities (primarily VAT) of EUR 265 in
2003 and EUR 501 in 2004. Furthermore, personnel-related social security
withholdings of EUR 152 in 2003 and EUR 238 in 2004 are included.
Summary of liabilities in EUR:
December 31, 2003 December 31, 2004
Maturity Maturity
---------------------- ----------------------
more more
up to than up to than
Type of liability 1 year 5 years total 1 year 5 years total
------ ------- ----- ------ ------- -----
1. Liability owed to
silent partner 0 1.518 1.518 0 0 0
2. Trade accounts
payable 401 0 401 454 0 454
3. Other liabilities 547 0 547 849 0 849
- from tax 265 0 265 501 0 501
- from social security 152 0 152 238 0 238
All claims regarding the liabilities are not collateralized.
23/42
11. Stock-based compensation
The Company introduced a stock option plan on November 29, 2000 which grants key
employees and management board members the right to acquire common stock in the
Company. This stock option plan supersedes the prior stock option plan issued by
the Company. Under the current stock option plan, employees may be granted
options to acquire common shares in the Company's capital stock. The Company
held 107.862 treasury shares for this purpose as of December 31, 2003 and 2004.
These shares are maintained by a trustee. All option rights granted under this
plan expire on December 31, 2005 (78.000 shares) or December 31, 2010 (30.000
shares).
The plan provides for the grant of options with a term of five years (granted in
2000) and six years (granted in 2004) and a vesting period of three years from
the date of employment (options granted in 2000) or date of grant (options
granted in 2004). The options vest ratably over three years.
All stock option plans were approved by the general shareholders' meeting.
An overview of the stock options granted, including those exercised or
forfeited, is presented below:
Common stock
------------
Outstanding as of December 31, 2001 122.772
Granted 68.328
Exercised 0
Forfeited -97.500
------------
Outstanding as of December 31, 2002 93.600
------------
Granted 0
Exercised 0
Forfeited 0
------------
Outstanding as of December 31, 2003 93.600
------------
Granted 30.000
Exercised 0
Forfeited -15.600
------------
Outstanding as of December 31, 2004 108.000
============
24/42
The following table summarizes information on remaining terms and exercise
prices of the Company's stock options as of December 31, 2004
Outstanding Exercisable
-------------------------------------- ---------------------
Number Remaining term Exercise price Number Date
------ -------------- -------------- ------ -------------
Common stock 78.000 1 year EUR 1,30 78.000 immediately
Common stock 30.000 6 years EUR 8,90 10.000 July 29, 2005
10.000 July 29, 2006
10.000 July 29, 2007
25/42
IV. NOTES TO THE INCOME STATEMENT
1. Sales
Sales by Region
Sales break down by region as follows:
2002 2003 2004
EUR EUR EUR
----- ------ ------
Domestic - Germany 2.597 3.654 4.900
Europe (excluding Germany) 1.515 5.336 9.009
Rest of world 20 1.161 4.206
----- ------ ------
4.132 10.151 18.115
===== ====== ======
Regions were determined based on location of customers.
Sales by business segments
Sales break down by business unit as follows:
2002 2003 2004
EUR EUR EUR
----- ------ ------
Online Surveys 1.510 6.155 13.218
Comparison Shopping 1.842 3.907 4.897
Other 780 89 0
----- ------ ------
4.132 10.151 18.115
===== ====== ======
Other includes sales from barter advertising of EUR 770 in 2002 and EUR 89 in
2003.
2. Other operating income
Other operating income mainly includes releases of provisions from prior years
and in come from foreign currency exchange gains.
26/42
3. Cost of purchased services
Cost of purchased services represent traffic cost, incentives to the Company's
online community members for participation in online surveys and survey data
from third parties regarding areas or panelists not covered by the Company. All
costs are recorded as incurred.
4. Other operating expenses
Other operating expenses mainly comprise office lease expenses, software
development expenses, expenses for marketing and web-content, barter advertising
costs, consulting, administrative expenses and other taxes not on income. The
latter amounted to EUR -2 in 2002, EUR 13 in 2003 and EUR 12 in 2004.
5. Interest expenses
Interest expenses of EUR 97 in 2002, EUR 102 in 2003 and EUR 75 in 2004 mainly
concern interest expense for the silent partnership loan in the amount of EUR 75
for all years.
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V. OTHER NOTES
1. Transactions with related parties
There are no transactions with related parties other than the purchases and
sales of shares in the Company to employees, management board members and a
member of the supervisory board as described under Note III. 8, a loan to a
management board member as described under Note III. 4, fees to management board
members (Note VI. 1) and fees to supervisory board members (Note VI. 2).
The compensation of the management board is determined and approved by the
supervisory board. It is linked to the performance and has a fixed and variable
component. The fixed component is paid monthly. The variable management bonus is
directly related to defined financial goals and paid on a quarterly basis.
The compensation for the three years reported was as follows
2002 2003 2004
EUR EUR EUR
---- ---- ----
Fix compensation 305 363 363
Variable management bonus 0 488 440
---- ---- ----
Total management compensation 305 851 803
==== ==== ====
For the year 2004 management waived the bonus for the fourth quarter.
The number of shares in Ciao AG held by members of the management board and the
supervisory board as of December 31, 2003 and 2004 is presented as follows:
December 31,
2003 2004
--------- ---------
Management board
Maximilian Cartellieri 1.131.035 1.131.035
Frederick Paul 1.127.135 1.127.135
Gunnar Piening 100.422 100.422
Supervisory board
Dr. Peter Nussbaum 25.250 25.250
Dr. Harald Einsmann 50.000 50.000
28/42
2. Contingent liabilities and other financial obligations
Lease Agreements and Other Obligations
As of December 31, 2004, the minimum payments for non-cancelable license, lease
and rent agreements and other obligations were as follows:
Fiscal year EUR
- ----------- -----
2005 506
2006 395
2007 361
2008 293
2009 286
Thereafter 175
-----
2.016
=====
The lease agreements mainly relate to the rent for offices in Munich, Madrid,
Paris and London and company cars. The annually lease expense for the years
2002, 2003 and 2004 amount to EUR 235, EUR 303, EUR 314 respectively.
Litigation
The Company may become involved in litigation in the course of their ordinary
business operations. For the years 2002 to 2004, the Company's management were
not aware of any claims which could materially affect the business, net assets,
financial position or results of the Company.
3. Events after the balance sheet date
New Office Space
After the balance sheet date the Company signed a contract for new office
premises in London with annual lease payments amounting to EUR 50 for the first
year and EUR 77 for the following two years and total lease commitments over a
period of three years amounting to EUR 204.
29/42
Other
No further events took place after the balance sheet date, which have a
significant effect on the Company's net assets, financial position or results of
operations.
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VI. OTHER INFORMATION
1. Management Board
The Company is represented by a managing board of directors with following
members:
Maximilian Cartellieri, MBA, BA, MA, co-CEO, Munchen
Frederick Paul, MBA, BA, MA, co-CEO, Lindau/Bodensee
Gunnar Piening, MA, Managing Director, Munchen
Total remuneration paid to the management board members amounted to EUR 305 in
2002, EUR 851 in 2003 and EUR 803 in 2004. At the end of the fiscal years,
members of the management board held 2.258.170 shares (2002) and 2.358.592
shares (2003 and 2004).
2. Supervisory Board
Total remuneration paid to the supervisory board members in fiscal 2002 amounted
to EUR 25, in fiscal year 2003 EUR 18 and in fiscal year 2004 to EUR 20. At the
end of the fiscal years, members of the supervisory board held a total of
125.250 shares (2002) resp. 75.250 shares (2003 and 2004).
3. Average Number of Employees
During the three years under report, the average number of employees developed
as follows:
2002 48, thereof temporary 13
2003 62, thereof temporary 15
2004 105, thereof temporary 11
31/42
VII. RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA
The Company's accounting policies are in accordance with German-GAAP, which
differs in certain respects from accounting principles generally accepted in the
United States of America ("US-GAAP").
The following tables summarize the adjustments to consolidated net income and
shareholders' equity that would be required if US-GAAP had been applied instead
of German-GAAP:
December 31,
2003 2004
Notes EUR EUR
------ ------ ------
Net income as reported under German-GAAP 3.397 5.544
Deferred taxes VII. 1 0 5.121
Loss from sale of treasury shares VII. 6 14 0
Interest income VII. 4 0 36
----- ------
Net income under US-GAAP 3.411 10.701
===== ======
December 31,
2003 2004
Notes EUR EUR
------ ------ ------
Shareholders' equity as reported under
German-GAAP 4.160 9.667
Deferred tax assets, net VII. 1 0 5.121
Interest income from marketable securities VII. 4 0 36
Treasury shares VII. 5 -9 -9
----- ------
Shareholders' equity in accordance with US-GAAP 4.151 14.815
===== ======
32/42
Shareholders' equity under US-GAAP develops as follows:
Notes EUR
------ ------
Shareholders' equity as of January 1, 2003 743
Net income 3.411
Loss from sale of treasury shares - paid in capital VII. 6. -14
Change in cumulative translation adjustment II. 4. -1
Change in treasury shares VII. 5. 12
------
Shareholders' equity as of December 31, 2003 4.151
------
Net income 10.701
Change in cumulative translation adjustment II. 4. -37
------
Shareholders' equity as of December 31, 2004 14.815
======
1. Taxes
Deferred Taxes
Under US-GAAP deferred taxes have to be reported for the tax effect of
differences between the financial statements carrying value and the tax bases of
assets and liabilities and for certain available tax attributes, such as tax
loss carry forwards ("NOL carry-forwards"). A valuation allowance is recorded to
reduce the deferred tax asset to an amount, which the Company expects that it is
more likely than not to realize.
The Company has established a tax asset for German trade and corporate income
tax NOL carry-forwards using a combined effective statutory tax rate of
approximately 41% for all three years, and approximately 34% and 35% for foreign
NOL carry-forwards in France and Spain, respectively.
The approximate amounts and the remaining expiration periods for the NOL
carry-forwards as of December 31, 2004 are as follows:
Country Approximate Amount Expiration
- ------- ------------------ ----------
Germany 12,700 unlimited
France 3.000 unlimited
Spain 1.000 13 years
33/42
The deferred tax asset consisted of the tax effect of the following:
December 31,
2003 2004
EUR EUR
------ ------
NOL carry-forwards 8.343 6.555
Other items, net 73 -88
Less valuation allowance -8.416 -1.346
------ ------
Net deferred tax asset 0 5.121
====== ======
In Germany, the usage of a NOL carry-forward is limited annually to an amount of
EUR 1 million and 60 % of taxable income exceeding EUR 1 million.
The realization of the benefit of the deferred tax assets depends upon the
availability of sufficient taxable income in the future. In arriving at a
conclusion, all available positive and negative objective evidence is
considered.
Cumulative net losses in the previous three years prior to 2004 were considered
substantial negative evidence and thus the Company determined that the
realization of its NOL carry-forwards was not more likely than not as of either
December 31, 2002 or 2003. Accordingly, it recorded a full valuation allowance
against its NOL carry-forwards as of those dates.
In 2003 and 2004, the Company utilized approximately EUR 3.600 and EUR 4.000 of
the NOL carry-forwards in Germany, respectively. In 2004, NOL carry-forwards of
approximately EUR 100 were also utilized in Spain and France each. As of
December 31, 2004, the Company was no longer in a three year cumulative net loss
position for either its consolidated operations or its operations in Germany
(parent company). Based on projections of future taxable income in Germany and
considering available objective evidence, the Company believes that the
realisation of the remaining German NOL carry-forwards is now more likely than
not. Accordingly, the valuation allowance for the deferred tax assets in Germany
was released in 2004, which increased the deferred tax benefit and net income.
The remaining valuation allowance as of December 31, 2004 relates to France (EUR
991) and Spain (EUR 355).
34/42
The benefit for deferred income taxes, which represents a difference between
German and US-GAAP, consisted of the following:
December 31,
2003 2004
EUR EUR
---- ------
Germany, Release of Valuation Allowance 0 -5.121
Foreign Operations 0 0
-- ------
Benefit for deferred income taxes 0 -5.121
== ======
Tax Contingencies
Under German tax law, the use of NOL carry-forwards may, under certain
conditions, be limited if or when both a change in ownership of a legal entity
occurs and if the new owners also permit certain facts and circumstances to
arise. These events previously occurred, and the Company considers the
measurement date for the events to be April 2000 and has excluded its broad
estimate of the tax effect of pre April 2000 NOL carry-forwards (EUR 3.200) from
the recognition of deferred tax assets and the above disclosure of the remaining
NOL carry-forwards. Uncertainty exists as to the exact date this limitation was
triggered, April 2000 or potentially a later date, and as a result the exact
amount of limitation. The Company believes that the positions that it has taken
are reasonable and supportable if challenged. However, there can be no
assurances that the April 2000 measurement will not be challenged by tax
authorities in the future, and to the extent challenged that the Company would
prevail in its positions. To the extent it did not prevail, the entirety of
German NOL carry-forwards remaining at December 31, 2004 might be lost and the
Company might also be subject to incremental current taxes of approximately EUR
200.
Due to the ultimate change in ownership of Ciao AG in April 2005 (see below),
the existing NOL carry-forwards as of the end of 2004 may become subject to
further limitations should the new owners let certain facts and circumstances,
as specified in the German tax law, arise. Certain NOL carry-forwards in other
tax jurisdictions might also be subject to limitation upon a change in
ownership.
35/42
As the Company's business continues to grow, it might be exposed to increased
scrutiny from the tax authorities both in Germany and abroad. Scrutiny might
occur in the area of "transfer pricing" as well as other areas of the tax
calculations. Given the centralization of the Company's core infrastructure in
Germany, with service delivery operations located abroad, a specific risk exists
that tax inspectors might challenge the Company's cost allocation and thus
taxable profits between its German and foreign taxing jurisdictions, and also
the level of documentation required to support its tax assertions. The Company
believes that its methods are reasonable and its documentation supports
positions taken. While it has not been challenged by tax authorities on this
topic to date, there can be no assurances that this and or other matters will
not be evaluated by tax authorities in the future.
The ultimate outcome of the aforementioned uncertainties have not been reflected
in the accompanying consolidated financial statements and or US-GAAP
reconciliation information.
2. Expenses for Fund Raising
In 2000, the Company incurred EUR 219 legal and advisory fees in connection with
the raising of additional shareholders' equity. Under German-GAAP, these amounts
have been expensed. Under US-GAAP these amounts, net of income taxes, are offset
against paid-in capital. There is no difference in total shareholders' equity.
3. Marketable Securities and Restricted Cash
Under German-GAAP marketable securities are recorded at the lower of acquisition
cost or market value. These amounts have been combined with other cash balances
during the preparation of the German-GAAP statement of cash flows. Under US-GAAP
these marketable securities should be classified as cash and cash equivalents
since they are highly liquid investments with a maturity of three months or
less.
Under US-GAAP interest income is increased by EUR 0 in 2003 and EUR 62 in 2004
less income taxes of EUR 26.
Time deposits of EUR 33 in 2003 and EUR 58 in 2004 are treated as cash and cash
equivalents under German-GAAP. Under US-GAAP, these amounts would be classified
as restricted cash, since they have maturities greater than three months.
36/42
4. Intangible assets
No significant additions to the intangibles assets have been recorded in 2002.
In 2003, additions to the intangible assets are software applications for the
Customer Management Tool (EUR 97). In 2004, the additions refer to software
applications for the Customer Management Tool (EUR 146), domains (EUR 40),
standard application and finance software (EUR 45). Deletions in 2002, 2003 and
2004 were insignificant.
The estimated aggregate amortization is EUR 96 for 2005, EUR 25 for 2006, EUR 20
for 2007, EUR 4 for 2008 and EUR 4 for 2009.
The weighted average amortization periods for 2002, 2003 and 2004 are as
follows:
2002 2003 2004
---- ---- ----
Rights and licenses 10,0 10,0 10,0
Software 3,2 4,1 4,2
Total 3,3 4,3 5,7
5. Restrictions to Retained Earnings
Under German Corporation Law a corporation can only pay dividends to its
shareholders, if it is reporting positive retained earnings in the
shareholders' equity of the statutory balance sheet. As of December 31, 2004
Ciao AG is reporting in its balance sheet an accumulated deficit of EUR 14.777.
Any adjustments resulting from application of US-GAAP are not effective in the
statutory books and thus do not effect the basis for a dividend payment.
6. Shareholders Equity and Share Based Compensation
Under German-GAAP, the Company shows the treasury shares as an asset in the
financial statements. Under US-GAAP, the treasury shares are deducted from
shareholders' equity. Under German-GAAP the Company also records a reserve for
treasury shares within equity with a debit to accumulated deficit at the cost of
the treasury shares. Under US-GAAP no reserve is recorded in shareholders'
equity. This amount is reversed to reduce accumulated deficit, with no net
effect on
37/42
shareholders' equity. In 2003 and earlier years, the Company incurred losses
from the sale of treasury shares. Under German-GAAP these amounts have been
expensed in the respective years. Under US-GAAP these amounts, net of taxes, are
offset against paid-in capital.
For US-GAAP purposes, the Company applies the provisions of Accounting
Principles Board Opinion No. 25 Accounting for Stock Issued to Employees ("APB
25") with respect to options granted. All such option grants have been accounted
for as fixed grants under APB 25 and no associated compensation expense has been
provided for US-GAAP purposes.
7. Foreign Operations
The Company is headquartered in Germany and maintains operations in several
foreign countries such as France, Spain, UK, USA and Romania. The results from
ordinary operations for 2003 and 2004 include aggregate income (- loss) from
foreign operations of EUR -138 (2003) and EUR 1.231 (2004).
The aggregate exchange gain amounts to TEUR 2 in 2003 and TEUR 5 in 2004. The
respective loss amounts to TEUR 16 in 2003 and TEUR 180 in 2004.
8. Income from release of prior year provisions
Under German-GAAP, provisions which are not needed because the actual amount of
the liabilities is less than previously estimated are released and the amount is
reported in other operating income. The releases in 2002 amounted to EUR 170, in
2003 EUR 15, in 2004 EUR 12. Under US-GAAP these amounts are netted against the
expenses, to which the provision was originally recorded.
9. Barter Advertising
The Company reports sales and advertising expenses from barter transactions of
EUR 770 in 2002, EUR 89 in 2003 and EUR 0 in 2004. Under US-GAAP such revenues
and expenses would not be recorded.
38/42
10. Income Statement Presentation:
Under German-GAAP the income statement is presented according to cost by nature.
Under SEC Rules and Regulations income and expenses are presented by activity as
follows (amounts are German-GAAP):
2002 2003 2004
Notes EUR EUR EUR
--------------- ------ ------ ------
Sales II. 5., IV. 1. 4.132 10.151 18.115
Cost of sales -1.305 -1.934 -3.946
------ ------ ------
Gross profit 2.827 8.217 14.169
------ ------ ------
Research and development II. 7. -994 -282 -531
General and administrative expenses -4.386 -4.512 -6.859
Other operating income 83 31 118
------ ------ ------
-5.297 -4.763 -7.272
------ ------ ------
Other operating income (loss) before interest
and income taxes -2.470 3.454 6.897
------ ------ ------
Interest income IV. 5. 79 49 48
Interest expenses IV. 5. -97 -102 -75
------ ------ ------
Interest expense net -18 -53 -27
------ ------ ------
Income before income taxes -2.488 3.401 6.870
Income taxes 0 -4 -1.326
------ ------ ------
Net income/loss for the year -2.488 3.397 5.544
====== ====== ======
39/42
11. Comprehensive Income
The Company reports comprehensive income under US-GAAP as follows:
Cumulative
other
comprehensive comprehensive
income income
EUR EUR
------------- -------------
Balance as of December 31, 2002 -74
Net income 2003 3.411
Foreign currency translation adjustment -1 -1
------------- -------------
comprehensive income 2003 3.410
=============
Balance as of December 31, 2003 -75
=============
Net income 2004 10.701
Foreign currency translation adjustment -37 -37
-------------
Comprehensive income 2004 10.664
------------- =============
Balance as of December 31, 2004 -112
=============
The accumulated other comprehensive income represents translation adjustments.
40/42
12. Statement of Cash Flows
The accompanying consolidated statements of cash flows have been computed in
accordance with German-GAAP and presented based on an indirect cash flow format
outlined in US-GAAP Statement of Financial Accounting Standards No. 95 Statement
of Cash Flows ("FAS 95"). The Company operates in multiple geographic locations
and while operations are primarily conducted in Euro, transactions in other
currencies do exist. The primary difference between the accompanying 2002 and
2003 German-GAAP consolidated statements of cash flows and consolidated
statements of cash flow prepared in accordance with US-GAAP is that:
- - Included under the heading "effect of foreign currency" are EUR 1 in 2003
and EUR 37 in 2004 of foreign currency translations adjustments. Under
US-GAAP, these foreign currency translation adjustments are allocated to
the various financial statement fluctuations to which they originated,
which in the case of the Company would primarily be property and
equipment, and inter-company balances.
- - Included as a component of net income are EUR 14 in 2003 and EUR 175 in
2004 in foreign currency exchange losses. Under US-GAAP the impact of
these transactional losses are allocated to the net monetary assets to
which they originated, which with respect to the Company would primarily
be accounts receivable and current liabilities.
13. Subsequent Event - Acquisition of the Company
On April 6, 2005, Greenfield Online, Inc (Nasdaq: "SRVY"), a leading provider of
Internet survey solutions to marketing research and consulting companies
completed the acquisition of the Company for aggregate consideration valued at
approximately 154 million USD. The consideration for the acquisition consists of
57,7 million euros in cash and 3,9 million shares of Greenfield Online common
stock valued at 20,19 USD per share. The amount of consideration is subject to
certain post closing adjustments.
41/42
14. Customers
During the fiscal year 2004 one customer accounted for 16 % and 15 % of the
Company's total revenues and total trade receivables, respectively and in 2003
two customers accounted for 29 % and 26 % of the Company's total revenues and
total trade receivables, respectively.
Munich, February 17, 2005, except for Note VII as to which the date is April 6,
2005
Maximilian Cartellieri Frederick Paul Gunnar Piening
42/42
EXHIBIT 1
CIAO AG, MUNCHEN
ANALYSIS OF LONG-LIVED ASSETS FOR FISCAL YEAR 2002
Acquisition and production cost Accumulated amortization/depreciation
Jan 1, 2002 Additions Disposals Dec 31, 2002 Jan 1, 2002 Additions Disposals Dec 31, 2002
EUR EUR EUR EUR EUR EUR EUR EUR
----------- --------- --------- ------------ ----------- --------- --------- ------------
I. PURCHASED SOFTWARE AND LICENSES 1.497 17 745 769 413 831 738 506
----- -- --- ----- ----- ----- --- -----
1.497 17 745 769 413 831 738 506
----- -- --- ----- ----- ----- --- -----
II. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment and machines 1.639 37 10 1,666 900 532 8 1.424
2. Other equipment, furniture and fixtures 336 2 36 303 106 71 1 176
----- -- --- ----- ----- ----- --- -----
1.975 39 46 1.969 1.006 603 9 1.600
----- -- --- ----- ----- ----- --- -----
3.472 56 791 2.738 1.419 1.434 747 2.106
===== == === ===== ===== ===== === =====
Net book values
Dec 31, 2002 Dec 31, 2001
EUR EUR
------------ ------------
I. PURCHASED SOFTWARE AND LICENSES 263 1.084
--- -----
263 1.084
--- -----
II. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment and machines 242 739
2. Other equipment, furniture and fixtures 127 230
--- -----
369 969
--- -----
632 2.053
=== =====
CIAO AG, MUNCHEN EXHIBIT 2
ANALYSIS OF LONG-LIVED ASSETS FOR FISCAL YEAR 2003
Acquisition and production cost Accumulated amortization/depreciation
Jan 1, 2003 Additions Disposals Dec 31, 2003 Jan 1, 2003 Additions Disposals Dec 31, 2003
EUR EUR EUR EUR EUR EUR EUR EUR
----------- --------- --------- ------------ ----------- --------- --------- ------------
I. PURCHASED SOFTWARE AND LICENSES 769 102 22 849 506 115 22 599
----- --- --- ----- ----- --- --- -----
769 102 22 849 506 115 22 599
----- --- --- ----- ----- --- --- -----
II. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment and machines 1.666 199 91 1.774 1.424 213 87 1.550
2. Other equipment, furniture and fixtures 303 12 1 314 176 57 1 232
----- --- --- ----- ----- --- --- -----
1.969 211 92 2.088 1.600 270 88 1.782
----- --- --- ----- ----- --- --- -----
2.738 313 114 2.937 2.106 385 110 2.381
===== === === ===== ===== === === =====
Net book values
Dec 31, 2003 Dec 31, 2002
EUR EUR
------------ ------------
I. PURCHASED SOFTWARE AND LICENSES 250 263
--- ---
250 263
--- ---
II. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment and machines 224 242
2. Other equipment, furniture and fixtures 82 127
--- ---
306 369
--- ---
556 632
=== ===
EXHIBIT 3
CIAO AG, MUNCHEN
ANALYSIS OF LONG-LIVED ASSETS FOR FISCAL YEAR 2004
Acquisition and production cost Accumulated amortization/depreciation
Jan 1, 2004 Additions Disposals Dec 31, 2004 Jan 1, 2004 Additions Disposals Dec 31, 2004
EUR EUR EUR EUR EUR EUR EUR EUR
----------- --------- --------- ------------ ----------- --------- --------- ------------
I. PURCHASED SOFTWARE AND LICENSES 849 250 5 1.094 599 128 4 723
----- ----- -- ----- ----- --- -- -----
849 250 5 1.094 599 128 4 723
----- ----- -- ----- ----- --- -- -----
II. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment and machines 1,774 668 0 2.442 1.550 235 0 1.785
2. Other equipment, furniture and fixtures 314 169 28 455 232 73 28 277
----- ----- -- ----- ----- --- -- -----
2,088 837 28 2.897 1.782 308 28 2.062
----- ----- -- ----- ----- --- -- -----
2,937 1.087 33 3.991 2.381 436 32 2.785
===== ===== == ===== ===== === == =====
Net book values
Dec 31, 2004 Dec 31, 2003
EUR EUR
------------ ------------
I. PURCHASED SOFTWARE AND LICENSES 371 250
----- ---
371 250
----- ---
II. PROPERTY, PLANT AND EQUIPMENT
1. Technical equipment and machines 657 224
2. Other equipment, furniture and fixtures 178 82
----- ---
835 306
----- ---
1.206 556
===== ===