UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K/A

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of March 2006

 

DEUTSCHE TELEKOM AG

(Translation of registrant’s name into English)

 

Friedrich-Ebert-Allee 140

53113 Bonn

Germany

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ý   Form 40-F o

 

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o   No ý

 

This Report on Form 6-K/A is incorporated by reference into the registration statement on Form F-3, File No. 333-118932, and the registration statement on Form S-8, File No. 333-106591, and into each respective prospectus that forms a part of those registration statements.

 

 



 

Explanatory Note

 

In 2005, Deutsche Telekom for the first time based its financial reporting on International Financial Reporting Standards (IFRS). In prior years, we had reported under German GAAP. On November 18, 2005, we filed on Form 6-K with the United States Securities and Exchange Commission (SEC), unaudited consolidated financial statements as of and for the three months and nine months ended September 30, 2005 and 2004, and as of and for the year ended December 31, 2004, prepared in accordance with “International Financial Reporting Standards (IFRS) as adopted by the European Commission for use in the European Union” (EU GAAP). In connection with the preparation of our first-time adoption of EU GAAP for the periods ended December 31, 2005, we identified certain adjustments to our balance sheet as of January 1, 2003 and certain other financial information relating to quarterly periods in 2005 and 2004 and the year ended December 31, 2004. These adjustments are summarized as follows:

 

In 2002, in connection with certain previously issued financial liabilities, an interest rate step-up provision was triggered as a result of a downgrade in our credit rating by certain rating agencies. We subsequently determined that pursuant to International Accounting Standard (“IAS”) 39 Financial Instruments: Recognition and Measurement, we should have increased the book value of these financial liabilities to reflect the present value of the estimated future payments at the time of the interest rate change in 2002. This adjustment, amounting to a EUR 588 million increase in financial liabilities offset by deferred taxes of EUR 199 million, has now been reflected in our revised IFRS opening balance sheet as of January 1, 2003.  Subsequently, in April 2005, the rating agencies upgraded our credit rating, which triggered a corresponding downward adjustment to the interest rates relating to these financial liabilities. Pursuant to IAS 39, we should have adjusted, in the second quarter of 2005, the book value of these liabilities to reflect the present value of the associated estimated future payments as a result of the decrease in interest rates caused by the rating upgrade. Accordingly, we have adjusted financial income (expense), net, income taxes and net profit, for the three months and nine months ended September 30, 2005 and 2004 and the year ended December 31, 2004 to reflect the impact of the change in interest rates. The adjustments resulted in increases of EUR 29 million, EUR 28 million, EUR 289 million, EUR 48 million and EUR 70 million to net profit for the three months and nine months ended September 30, 2005 and 2004 and for the year ended December 31, 2004, respectively.  The adjustments also resulted in increases of EUR 0.01, EUR 0.01 EUR 0.01 and EUR 0.02 in basic and diluted earnings per share for the three months ended September 30, 2005 and 2004, the nine months ended September 30, 2004 and the year ended December 31, 2004, respectively. The adjustments resulted in an increase of EUR 0.07 and EUR 0.08 for the nine months ended September 30, 2005, in basic and diluted earnings per share, respectively.

 

We also identified adjustments to revenue including amounts relating to the recording of revenue for multiple element arrangements, leases embedded in service contracts and non-refundable up-front fees.  We recorded an aggregate adjustment of EUR 212 million as of January 1, 2003, primarily as a reduction in deferred revenue included in other liabilities and an offsetting adjustment of EUR 83 million to deferred taxes in the IFRS opening balance sheet. The adjustments, affecting primarily net revenues, cost of sales and income taxes, resulted in an increase of EUR 8 million, an increase of EUR 1 million, a decrease of EUR 38 million, an increase of EUR 4 million and a decrease of EUR 6 million to net profit for the three months ended September 30, 2005 and 2004, the nine months ended September 30, 2005 and 2004 and the year ended December 31, 2004, respectively. The adjustments also resulted in a decrease of EUR 0.01 in basic and diluted earnings per share for the nine months ended September 30, 2005. Basic and diluted earnings per share for the three months ended September 30, 2005 and 2004, the nine months ended September 30, 2004 and the year ended December 31, 2004 did not change as a result of these adjustments.

 

Further we identified and recorded a number of additional adjustments which are now reflected in the financial statements that follow this Explantory Note that resulted in an aggregate increase of EUR 59 million in shareholders’ equity at January 1, 2003. Those adjustments resulted in decreases of EUR 10 million, EUR 63 million, EUR 24 million, EUR 45 million and EUR 35 million to net profit for the three months ended September 30, 2005 and 2004, the nine months ended September 30, 2005 and 2004 and for the year ended December 31, 2004, respectively. The adjustments caused decreases of EUR 0.02, EUR 0.01, EUR 0.01 and EUR 0.01 in basic and diluted earnings per share for the three months ended September 30, 2004, the nine months ended September 30, 2005 and 2004, and the year ended December 31, 2004, respectively. Basic and diluted earnings per share for the three months ended September 30, 2005 did not change as a result of these adjustments.

 

The following tables show the impact of the adjustments on these consolidated income statements and balance sheets as and for the three months and nine months ended September 30, 2005 and 2004 and as of and for the year ended December 31, 2004.

 

 

 

As reported

 

As amended

 

Adjustments

 

 

 

For the three months
ended September 30,

 

For the year
ended
December 31,

 

For the three months
ended September 30,

 

For the year
ended
December 31,

 

For the three months
ended September 30,

 

For the year
ended
December 31,

 

 

 

2005

 

2004

 

2004

 

2005

 

2004

 

2004

 

2005

 

2004

 

2004

 

 

 

(millions of €, except where indiciated)

 

(millions of €, except where indiciated)

 

(millions of €, except where indiciated)

 

Net revenue

 

15,043

 

14,353

 

57,360

 

15,056

 

14,356

 

57,353

 

13

 

3

 

(7

)

Cost of sales

 

(7,697

)

(7,515

)

(31,559

)

(7,697

)

(7,514

)

(31,544

)

0

 

1

 

15

 

Gross profit

 

7,346

 

6,838

 

25,801

 

7,359

 

6,842

 

25,809

 

13

 

4

 

8

 

Selling expenses

 

(3,503

)

(3,032

)

(12,837

)

(3,513

)

(3,049

)

(12,870

)

(10

)

(17

)

(33

)

General and administrative expenses

 

(1,033

)

(1,016

)

(4,505

)

(1,022

)

(1,000

)

(4,476

)

11

 

16

 

29

 

Other operating income

 

200

 

405

 

1,718

 

200

 

405

 

1,718

 

0

 

0

 

0

 

Other operating expenses

 

(234

)

(2,852

)

(3,916

)

(234

)

(2,852

)

(3,916

)

0

 

0

 

0

 

Profit from operations

 

2,776

 

343

 

6,261

 

2,790

 

346

 

6,265

 

14

 

3

 

4

 

Net interest income (expense)

 

(689

)

(827

)

(3,354

)

(674

)

(809

)

(3,280

)

15

 

18

 

74

 

Share of profit (loss) of associates and joint ventures accounted for using the equity method

 

106

 

(88

)

945

 

106

 

(88

)

945

 

0

 

0

 

0

 

Other financial income (expense)

 

944

 

(109

)

(334

)

952

 

(105

)

(361

)

8

 

4

 

(27

)

Financial income (expense), net

 

361

 

(1,024

)

(2,743

)

384

 

(1,002

)

(2,696

)

23

 

22

 

47

 

Profit (loss) before income taxes

 

3,137

 

(681

)

3,518

 

3,174

 

(656

)

3,569

 

37

 

25

 

51

 

Income tax (expense)

 

(585

)

(543

)

(1,528

)

(595

)

(603

)

(1,552

)

(10

)

(60

)

(24

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit (loss) after income taxes

 

2,552

 

(1,224

)

1,990

 

2,579

 

(1,259

)

2,017

 

27

 

(35

)

27

 

Profit attributable to minority interests

 

137

 

135

 

426

 

137

 

134

 

424

 

0

 

(1

)

(2

)

Net profit (loss)

 

2,415

 

(1,359

)

1,564

 

2,442

 

(1,393

)

1,593

 

27

 

(34

)

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares (basic) (millions)

 

4,328

 

4,325

 

4,323

 

4,328

 

4,325

 

4,323

 

0

 

0

 

0

 

Outstanding shares (diluted) (millions)

 

4,329

 

4,325

 

4,328

 

4,329

 

4,325

 

4,328

 

0

 

0

 

0

 

Earnings per share(1) /ADS(2), basic (€)

 

0.56

 

(0.31

)

0.38

 

0.57

 

(0.32

)

0.39

 

0.01

 

(0.01

)

0.01

 

Earnings per share(1) /ADS(2), diluted (€)

 

0.56

 

(0.31

)

0.38

 

0.57

 

(0.32

)

0.39

 

0.01

 

(0.01

)

0.01

 

 

 

 

As reported

 

As amended

 

Adjustments

 

 

 

For the nine months
ended September 30,

 

For the nine months
ended September 30,

 

For the nine months
ended September 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

 

 

(millions of €, except where indiciated)

 

(millions of €, except where indiciated)

 

(millions of €, except where indiciated)

 

Net revenue

 

44,167

 

42,620

 

44,087

 

42,629

 

(80

)

9

 

Cost of sales

 

(22,872

)

(23,705

)

(22,910

)

(23,690

)

(38

)

15

 

Gross profit

 

21,295

 

18,915

 

21,177

 

18,939

 

(118

)

24

 

Selling expenses

 

(10,444

)

(9,311

)

(10,459

)

(9,331

)

(15

)

(20

)

General and administrative expenses

 

(3,128

)

(3,198

)

(3,095

)

(3,181

)

33

 

17

 

Other operating income

 

833

 

1,239

 

833

 

1,239

 

0

 

0

 

Other operating expenses

 

(831

)

(3,602

)

(807

)

(3,593

)

24

 

9

 

Profit from operations

 

7,725

 

4,043

 

7,649

 

4,073

 

(76

)

30

 

Net interest income (expense)

 

(2,224

)

(2,616

)

(1,845

)

(2,522

)

379

 

94

 

Share of profit (loss) of associates and joint ventures accounted for using the equity method

 

183

 

(62

)

183

 

(62

)

0

 

0

 

Other financial income (expense)

 

899

 

(266

)

879

 

(308

)

(20

)

(42

)

Financial income (expense), net

 

(1,142

)

(2,944

)

(783

)

(2,892

)

359

 

52

 

Profit (loss) before income taxes

 

6,583

 

1,099

 

6,866

 

1,181

 

283

 

82

 

Income tax (expense)

 

(1,834

)

(862

)

(1,892

)

(939

)

(58

)

(77

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit (loss) after income taxes

 

4,749

 

237

 

4,974

 

242

 

225

 

5

 

Profit attributable to minority interests

 

381

 

387

 

379

 

385

 

(2

)

(2

)

Net profit (loss)

 

4,368

 

(150

)

4,595

 

(143

)

227

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares (basic) (millions)

 

4,327

 

4,324

 

4,327

 

4,324

 

0

 

0

 

Outstanding shares (diluted) (millions)

 

4,331

 

4,330

 

4,331

 

4,330

 

0

 

0

 

Earnings per share(1) /ADS(2), basic (€)

 

1.03

 

(0.02

)

1.08

 

(0.02

)

0.05

 

0.00

 

Earnings per share(1) /ADS(2), diluted (€)

 

1.02

 

(0.02

)

1.08

 

(0.02

)

0.06

 

0.00

 

 


(1)   Earnings per share for each period are calculated by dividing net profit by the weighted average number of outstanding shares. For more information, see Note 11.

(2)   One ADS corresponds in economic terms to one ordinary share of Deutsche Telekom AG.

 

2



 

 

 

As reported

 

As amended

 

Adjustments

 

 

 

As of September 30,

 

As of
December 31,

 

As of September 30,

 

As of
December 31,

 

As of September 30,

 

As of
December 31,

 

 

 

2005

 

2004

 

2004

 

2005

 

2004

 

2004

 

2005

 

2004

 

2004

 

 

 

(millions of €)

 

(millions of €)

 

(millions of €)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

3,371

 

5,812

 

8,005

 

3,371

 

5,812

 

8,005

 

0

 

0

 

0

 

Trade and other receivables

 

7,401

 

7,178

 

6,732

 

7,400

 

7,177

 

6,731

 

(1

)

(1

)

(1

)

Current recoverable income taxes

 

389

 

317

 

317

 

389

 

317

 

317

 

0

 

0

 

0

 

Other current financial assets

 

1,346

 

1,779

 

1,237

 

1,346

 

1,779

 

1,237

 

0

 

0

 

0

 

Inventories

 

1,100

 

1,395

 

1,154

 

1,100

 

1,395

 

1,154

 

0

 

0

 

0

 

Other current assets

 

1,623

 

1,627

 

1,391

 

1,603

 

1,660

 

1,420

 

(20

)

33

 

29

 

 

 

15,230

 

18,108

 

18,836

 

15,209

 

18,140

 

18,864

 

(21

)

32

 

28

 

Noncurrent assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible assets

 

54,121

 

52,263

 

50,736

 

54,132

 

52,274

 

50,745

 

11

 

11

 

9

 

Property, plant and equipment

 

47,859

 

46,844

 

46,318

 

47,859

 

46,830

 

46,294

 

0

 

(14

)

(24

)

Investments accounted for using the equity method

 

1,766

 

3,090

 

2,667

 

1,766

 

3,090

 

2,667

 

0

 

0

 

0

 

Other noncurrent financial assets

 

840

 

922

 

1,678

 

799

 

922

 

1,636

 

(41

)

0

 

(42

)

Deferred tax assets

 

4,478

 

5,028

 

4,527

 

4,559

 

5,103

 

4,724

 

81

 

75

 

197

 

Other noncurrent assets

 

368

 

305

 

378

 

368

 

287

 

360

 

0

 

(18

)

(18

)

 

 

109,432

 

108,452

 

106,304

 

109,483

 

108,506

 

106,426

 

51

 

54

 

122

 

TOTAL ASSETS

 

124,662

 

126,560

 

125,140

 

124,692

 

126,646

 

125,290

 

30

 

86

 

150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current financial liabilities

 

11,340

 

16,027

 

12,515

 

11,396

 

16,050

 

12,592

 

56

 

23

 

77

 

Trade and other payables

 

5,550

 

4,969

 

6,116

 

5,550

 

4,969

 

6,116

 

0

 

0

 

0

 

Income tax liabilities

 

839

 

573

 

715

 

1,213

 

844

 

1,049

 

(374

)

271

 

334

 

Current provisions

 

3,210

 

3,544

 

3,698

 

3,030

 

3,273

 

3,546

 

(18

)

(271

)

(152

 

Other current liabilities

 

3,215

 

3,194

 

2,970

 

3,215

 

3,194

 

2,969

 

0

 

0

 

(1

)

 

 

24,154

 

28,307

 

26,014

 

24,404

 

28,330

 

26,272

 

250

 

23

 

258

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent financial liabilities

 

35,863

 

38,195

 

38,142

 

35,825

 

38,583

 

38,498

 

(38

)

388

 

356

 

Provisions for pensions and other employee benefits

 

4,481

 

4,320

 

4,209

 

4,480

 

4,320

 

4,209

 

(1

)

0

 

0

 

Other noncurrent provisions

 

2,953

 

2,866

 

3,077

 

2,757

 

2,866

 

2,883

 

(196

)

0

 

(194

)

Deferred tax liabilities

 

7,133

 

6,559

 

5,932

 

7,098

 

6,512

 

5,948

 

(35

)

(47

)

16

 

Other noncurrent liabilities

 

1,964

 

1,637

 

1,895

 

1,854

 

1,445

 

1,677

 

(110

)

(192

)

(218

)

 

 

52,394

 

53,577

 

53,255

 

52,014

 

53,726

 

53,215

 

(380

)

149

 

(40

)

Liabilities

 

76,548

 

81,884

 

79,269

 

76,418

 

82,056

 

79,487

 

(130

)

172

 

218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued capital

 

10,747

 

10,746

 

10,747

 

10,747

 

10,746

 

10,747

 

0

 

0

 

0

 

Capital reserves

 

49,549

 

49,519

 

49,523

 

49,549

 

49,519

 

49,528

 

0

 

0

 

5

 

Accumulated deficit, including carryforwards

 

(18,690

)

(17,693

)

(17,680

)

(18,747

)

(17,766

)

(17,766

)

(57

)

(73

)

(86

)

Other comprehensive income

 

(1,397

)

(2,232

)

(2,667

)

(1,401

)

(2,248

)

(2,678

)

(4

)

(16

)

(11

)

Net profit

 

4,368

 

(150

)

1,564

 

4,595

 

(143

)

1,593

 

227

 

7

 

29

 

Treasury shares

 

(8

)

(8

)

(8

)

(8

)

(8

)

(8

)

0

 

0

 

0

 

 

 

44,569

 

40,182

 

41,479

 

44,735

 

40,100

 

41,416

 

166

 

(82

)

(63

)

Minority interest

 

3,545

 

4,494

 

4,392

 

3,539

 

4,490

 

4,387

 

(6

)

(4

)

(5

)

Shareholders’ equity

 

48,114

 

44,676

 

45,871

 

48,274

 

44,590

 

45,803

 

160

 

(86

)

(68

)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

124,662

 

126,560

 

125,140

 

124,692

 

126,646

 

125,290

 

30

 

86

 

150

 

 

 

 

3



 

Other than the foregoing items and conforming changes related thereto (including changes to the notes to the condensed consolidated financial statements and Operating and Financial Review and Prospects), no part of the Report on Form 6-K filed on November 18, 2005 is being amended, and the filing of this Amended Report on Form 6-K/A should not be understood to mean that any other statements contained therein are true or complete as of any date subsequent to November 18, 2005.  Exhibits originally filed on November 18, 2005 have not been refilled herewith.

 

4



 

Defined Terms and Contact Information

 

The term “Report” refers to this Report on Form 6-K for the nine-month period ended September 30, 2005. Deutsche Telekom AG is a stock corporation organized under the laws of the Federal Republic of Germany. As used in this Report, unless the context otherwise requires, the term “Deutsche Telekom” refers to Deutsche Telekom AG and the terms “we,” “us,” “our,” “Group” and “the Company” refer to Deutsche Telekom and, as applicable, Deutsche Telekom and its direct and indirect subsidiaries as a group. Our registered office is at Friedrich-Ebert-Allee 140, 53113 Bonn, Germany, telephone number +49-228-181-0. Our agent for service of process in the United States is Deutsche Telekom, Inc., 600 Lexington Avenue, New York, N.Y. 10022.

 

Forward-Looking Statements

 

This Report contains forward-looking statements that reflect the current views of our management with respect to future events. Forward-looking statements generally are identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “aims,” “plans,” “will,” “will continue,” “seeks” and similar expressions. Forward-looking statements are based on current plans, estimates and projections, and therefore you should not place too much reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement in light of new information or future events, although we intend to continue to meet our ongoing disclosure obligations under the U.S. securities laws (such as our obligations to file annual reports on Form 20-F and periodic and other reports on Form 6-K) and under other applicable laws. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. We caution you that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, the forward-looking statements. These factors include, among other factors: the development of demand for our fixed and mobile telecommunications services, particularly for new, higher value service offerings; competitive forces, including pricing pressures, technological changes and alternative routing developments; regulatory actions and the outcome of disputes in which the company is involved or may become involved; the pace and cost of the rollout of new services, such as UMTS, which may be affected by the ability of suppliers to deliver equipment and other circumstances beyond our control; public concerns over health risks putatively associated with wireless frequency transmissions; risks associated with integrating our acquisitions; the development of asset values in Germany and elsewhere, the progress of our debt reduction and liquidity improvement initiatives; the development of our cost control and efficiency enhancement initiatives, including in the areas of procurement optimization, personnel reductions and our Excellence program; risks and uncertainties relating to benefits anticipated from our international expansion, particularly in the United States; the progress of our domestic and international investments, joint ventures and alliances; our ability to gain or retain market share in the face of competition; our ability to secure and retain the licenses needed to offer services; the effects of price reduction measures and our customer acquisition and retention initiatives; the availability, term and deployment of capital, particularly in view of our debt refinancing needs, actions of the rating agencies and the impact of regulatory and competitive developments on our capital outlays; delays in the planned merger of T-Online into Deutsche Telekom AG; the progress of our workforce adjustment initiative described in this Report and changes in currency exchange rates and interest rates. If these or other risks and uncertainties (including those described in “Forward-Looking Statements,” “Item 3. Key Information – Risk Factors” and elsewhere in our most recent Annual Report on Form 20-F for the year ended December 31, 2004 filed with the U.S. Securities and Exchange Commission) materialize, or if the assumptions underlying any of these statements prove incorrect, our actual results may be materially different from those expressed or implied by such statements.

 

World Wide Web addresses contained in this Report are for explanatory purposes only and they (and the content contained therein) do not form a part of and are not incorporated by reference into this Report.

 

Cautionary Note Regarding Historical Financial Information Prepared In Accordance With
International Financial Reporting Standards

 

This report contains financial information that has been prepared in accordance with International Financial Reporting Standards, or “IFRS,” and on the basis of the new strategic business areas, effective since January 1, 2005.

 

The IFRS financial information contained in this report was prepared on the basis of the assumption that all existing standards and interpretations that have been issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) will be fully endorsed by the European Commission for use in the European Union (EU GAAP).

 

Subject to outstanding EU endorsement of individual standards under IFRS and no further changes from the IASB, the information presented here is expected to form the basis for reporting Deutsche Telekom’s financial results for 2005, and for subsequent reporting periods. However, Deutsche Telekom cannot assure you that there will not be material changes in IFRS between the date of this Interim Report and the first date on which Deutsche Telekom is required to publish consolidated financial statements for the 2005 financial year. Any changes may also have an impact on the preliminary comparatives already published for the years 2004 or 2003.

 

For further information and explanations, see Notes (1) and (12) to the condensed consolidated financial statements contained in this Report.

 

5



 

Exchange Rates

 

Unless otherwise indicated, all amounts in this document are expressed in euros. As used in this document, “€,” “euro” or “EUR” means the single unified currency that was introduced in the Federal Republic of Germany (referred to as the “Federal Republic”) and ten other participating member states of the European Union on January 1, 1999. “U.S. dollar”, “$” or “USD” means the lawful currency of the United States of America. As used in this document, the term “noon buying rate” refers to the rate of exchange for euros, expressed in U.S. dollars per euro, as announced by the Federal Reserve Bank of New York for customs purposes as the rate in the City of New York for cable transfers in foreign currencies. The noon buying rate on September 30, 2005 was EUR 1.00 to USD 1.2058.

 

Amounts appearing in this report that were translated into euros from other currencies were translated in accordance with the principles described in the unaudited condensed consolidated financial statements contained in this Report under “Note (1) Transition to International Financial Reporting Standards (IFRS) and summary of accounting policies – Explanation of exemptions applied under IFRS 1 – Currency translation.”

 

6



 

DEUTSCHE TELEKOM AT A GLANCE(1) (Amended)

(Unaudited)

 

 

 

For the three months
ended September 30,

 

%

 

For the nine months
ended September 30,

 

%

 

For the year
ended
December 31,

 

 

 

2005

 

2004

 

Change

 

2005

 

2004

 

Change

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net revenues (total revenues excluding inter-segment revenues)

 

15,056

 

14,356

 

4.9

 

44,087

 

42,629

 

3.4

 

57,353

 

Domestic

 

8,397

 

8,567

 

(2.0

)

25,425

 

25,759

 

(1.3

)

34,741

 

International

 

6,659

 

5,789

 

15.0

 

18,662

 

16,870

 

10.6

 

22,612

 

Profit from operations

 

2,790

 

346

 

n.m.

 

7,649

 

4,073

 

87.8

 

6,265

 

Financial income (expense), net

 

384

 

(1,002

)

n.m.

 

(783

)

(2,892

)

72.9

 

(2,696

)

Depreciation, amortization and impairment losses

 

(2,590

)

(4,851

)

46.6

 

(7,734

)

(10,744

)

28.0

 

(13,127

)

of which: property, plant and equipment

 

(1,982

)

(1,919

)

(3.3

)

(5,889

)

(5,764

)

(2.2

)

(7,666

)

of which: intangible assets

 

(608

)

(2,932

)

79.3

 

(1,845

)

(4,980

)

63.0

 

(5,461

)

Net income

 

2,442

 

(1,393

)

n.m.

 

4,595

 

(143

)

n.m.

 

1,593

 

Earnings per share / ADS(2) (basic and diluted) (€)

 

0.57

 

(0.32

)

n.m.

 

1.08

 

(0.02

)

n.m.

 

0.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash from operating activities

 

4,267

 

3,919

 

8.9

 

10,082

 

11,123

 

(9.4

)

16,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity ratio (%)(3)

 

 

 

 

 

38.7

 

33.7

 

n.m.

 

34.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total financial liabilities(4)

 

 

 

 

 

47,221

 

54,633

 

(13.6

)

51,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of employees at balance sheet date (actual)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deutsche Telekom Group

 

 

 

 

 

243,418

 

247,891

 

(1.8

)

244,645

 

Non-civil servants

 

 

 

 

 

197,118

 

200,120

 

(1.5

)

197,482

 

Civil servants

 

 

 

 

 

46,300

 

47,771

 

(3.1

)

47,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telephone lines (including ISDN channels)(5)

 

 

 

 

 

55.5

 

57.4

 

(3.3

)

57.2

 

Broadband lines (in operation) (millions)

 

 

 

 

 

7.7

 

5.4

 

42.6

 

6.1

 

Mobile communications customers(6)

 

 

 

 

 

83.1

 

75.4

 

10.2

 

77.6

 

 

 


n.m. – not meaningful

 

(1)   All financial figures are calculated in accordance with IFRS, which are different from the amounts reported in the previous year due to the adoption of IFRS. See Note (1) to the financial statements for more information.

(2)   One ADS (American Depositary Share) corresponds in economic terms to one ordinary share of Deutsche Telekom AG.

(3)   The ratio equals total stockholders’ equity divided by total assets. Amounts proposed as dividends are treated as short-term debt rather than as equity for purposes of the calculation of this ratio.

(4)   Includes current and noncurrent financial liabilities (see “Condensed Consolidated Balance Sheets”) at the balance sheet date.

(5)   Number of telephone lines (including those used within the Group) as of the balance sheet date. All amounts are in millions.

(6)   The number of customers of the consolidated subsidiaries included within our Mobile Communications strategic business area as of the balance sheet date. Our methods for calculating this number are described in our Annual Report on Form 20-F for the year ended December 31, 2004. All numbers are in millions.

 

7



 

DEUTSCHE TELEKOM AG

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2005 AND 2004 AND
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
AND THE YEAR ENDED DECEMBER 31, 2004

 

(Unaudited) (Amended)
DEUTSCHE TELEKOM AG
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amended)

 

(millions of €, except

 

For the
three months
ended September 30,

 

For the
nine months
ended September 30,

 

For the year
ended
December 31,

 

where indicated)

 

2005

 

2004

 

2005

 

2004

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

15,056

 

14,356

 

44,087

 

42,629

 

57,353

 

Cost of sales

 

(7,697

)

(7,514

)

(22,910

)

(23,690

)

(31,544

)

Gross profit

 

7,359

 

6,842

 

21,177

 

18,939

 

25,809

 

Selling expenses

 

(3,513

)

(3,049

)

(10,459

)

(9,331

)

(12,870

)

General and administrative expenses

 

(1,022

)

(1,000

)

(3,095

)

(3,181

)

(4,476

)

Other operating income

 

200

 

405

 

833

 

1,239

 

1,718

 

Other operating expenses

 

(234

)

(2,852

)

(807

)

(3,593

)

(3,916

)

Profit from operations

 

2,790

 

346

 

7,649

 

4,073

 

6,265

 

Net interest income (expense)

 

(674

)

(809

)

(1,845

)

(2,522

)

(3,280

)

Share of profit (loss) of associates and joint ventures accounted for using the equity method

 

106

 

(88

)

183

 

(62

)

945

 

Other financial income (expense)

 

952

 

(105

)

879

 

(308

)

(361

)

Financial income (expense), net

 

384

 

(1,002

)

(783

)

(2,892

)

(2,696

)

Profit (loss) before income taxes

 

3,174

 

(656

)

6,866

 

1,181

 

3,569

 

Income tax (expense)

 

(595

)

(603

)

(1,892

)

(939

)

(1,552

)

 

 

 

 

 

 

 

 

 

 

 

 

Profit (loss) after income taxes

 

2,579

 

(1,259

)

4,974

 

242

 

2,017

 

Profit attributable to minority interests

 

137

 

134

 

379

 

385

 

424

 

Net profit (loss)

 

2,442

 

(1,393

)

4,595

 

(143

)

1,593

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares (basic) (millions)

 

4,328

 

4,325

 

4,327

 

4,324

 

4,323

 

Outstanding shares (diluted) (millions)

 

4,329

 

4,325

 

4,331

 

4,330

 

4,328

 

Earnings per share(1) /ADS(2), basic (€)

 

0.57

 

(0.32

)

1.08

 

(0.02

)

0.39

 

Earnings per share(1) /ADS(2), diluted (€)

 

0.57

 

(0.32

)

1.08

 

(0.02

)

0.39

 

 


(1)   Earnings per share for each period are calculated by dividing net profit by the weighted average number of outstanding shares. For more information, see Note 11.

(2)   One ADS corresponds in economic terms to one ordinary share of Deutsche Telekom AG.

 

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

 

8



 

DEUTSCHE TELEKOM AG
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amended)

 

 

 

As of
September 30,
2005

 

As of
September 30,
2004

 

As of
December 31,
2004

 

 

 

(millions of €)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

3,371

 

5,812

 

8,005

 

Trade and other receivables

 

7,400

 

7,177

 

6,731

 

Current recoverable income taxes

 

389

 

317

 

317

 

Other current financial assets

 

1,346

 

1,779

 

1,237

 

Inventories

 

1,100

 

1,395

 

1,154

 

Other current assets

 

1,603

 

1,660

 

1,420

 

 

 

15,209

 

18,140

 

18,864

 

Noncurrent assets

 

 

 

 

 

 

 

Intangible assets

 

54,132

 

52,274

 

50,745

 

Property, plant and equipment

 

47,859

 

46,830

 

46,294

 

Investments accounted for using the equity method

 

1,766

 

3,090

 

2,667

 

Other noncurrent financial assets

 

799

 

922

 

1,636

 

Deferred tax assets

 

4,559

 

5,103

 

4,724

 

Other noncurrent assets

 

368

 

287

 

360

 

 

 

109,483

 

108,506

 

106,426

 

TOTAL ASSETS

 

124,692

 

126,646

 

125,290

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Current financial liabilities

 

11,396

 

16,050

 

12,592

 

Trade and other payables

 

5,550

 

4,969

 

6,116

 

Income tax liabilities

 

1,213

 

844

 

1,049

 

Current provisions

 

3,030

 

3,273

 

3,546

 

Other current liabilities

 

3,215

 

3,194

 

2,969

 

 

 

24,404

 

28,330

 

26,272

 

Noncurrent liabilities

 

 

 

 

 

 

 

Noncurrent financial liabilities

 

35,825

 

38,583

 

38,498

 

Provisions for pensions and other employee benefits

 

4,480

 

4,320

 

4,209

 

Other noncurrent provisions

 

2,757

 

2,866

 

2,883

 

Deferred tax liabilities

 

7,098

 

6,512

 

5,948

 

Other noncurrent liabilities

 

1,854

 

1,445

 

1,677

 

 

 

52,014

 

53,726

 

53,215

 

Liabilities

 

76,418

 

82,056

 

79,487

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Issued capital

 

10,747

 

10,746

 

10,747

 

Capital reserves

 

49,549

 

49,519

 

49,528

 

Accumulated deficit, including carryforwards

 

(18,747

)

(17,766

)

(17,766

)

Other comprehensive income

 

(1,401

)

(2,248

)

(2,678

)

Net profit

 

4,595

 

(143

)

1,593

 

Treasury shares

 

(8

)

(8

)

(8

)

 

 

44,735

 

40,100

 

41,416

 

Minority interest

 

3,539

 

4,490

 

4,387

 

Shareholders’ equity

 

48,274

 

44,590

 

45,803

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

124,692

 

126,646

 

125,290

 

 

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

 

9



 

DEUTSCHE TELEKOM AG
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Amended)

 

 

 

Equity contributed

 

Consolidated shareholders’ equity generated

 

 

 

Issued
capital

 

Capital
reserves

 

Retained
Earnings

 

Carryforwards

 

Net profit

 

Total

 

 

 

(millions of €)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2004

 

10,746

 

49,500

 

(19,829

)

0

 

2,063

 

(17,766

)

Changes in the composition of the Group

 

 

 

 

 

 

 

 

 

 

 

0

 

Profit (loss) after income taxes

 

 

 

 

 

 

 

 

 

(143

)

(143

)

Unappropriated net profit (loss) carried forward

 

 

 

 

 

 

 

2,063

 

(2,063

)

0

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

0

 

Exercise of options and conversion rights

 

 

 

19

 

 

 

 

 

 

 

0

 

Change in other comprehensive income (not recognized in income statement)

 

 

 

 

 

 

 

 

 

 

 

0

 

Recognition of other comprehensive income in income statement

 

 

 

 

 

 

 

 

 

 

 

0

 

Balance at September 30, 2004

 

10,746

 

49,519

 

(19,829

)

2,063

 

(143

)

(17,909

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2005

 

10,747

 

49,528

 

(19,829

)

2,063

 

1,593

 

(16,173

)

Changes in the composition of the Group

 

 

 

 

 

 

 

 

 

 

 

0

 

Profit after income taxes

 

 

 

 

 

 

 

 

 

4,595

 

(4,595

)

Transfers to Retained Earnings

 

 

 

 

 

8

 

 

 

 

 

8

 

Unappropriated net profit carried forward

 

 

 

 

 

 

 

1,593

 

(1,593

)

0

 

Dividend payments

 

 

 

 

 

(2,586

)

 

 

 

 

(2,586

)

Exercise of options and conversion rights

 

 

 

21

 

 

 

 

 

 

 

0

 

Change in other comprehensive income (not recognized in income statement)

 

 

 

 

 

4

 

 

 

 

 

4

 

Recognition of other comprehensive income in income statement

 

 

 

 

 

 

 

 

 

 

 

0

 

Balance at September 30, 2005

 

10,747

 

49,549

 

(22,403

)

3,656

 

4,595

 

(14,152

)

 

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

 

10



 

 

 

Other comprehensive income

 

 

 

Fair value
measurement
of available-
for-sale
financial
assets

 

Fair value
measurement
of
derivatives

 

Revaluation
in the
context of
business
combinations

 

Deferred
taxes

 

Difference
from
currency
translation

 

Total

 

 

 

(millions of €)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2004

 

262

 

1,124

 

0

 

(436

)

(3,904

)

(2,954

)

Changes in the composition of the Group

 

 

 

 

 

 

 

 

 

 

 

0

 

Profit after income taxes

 

 

 

 

 

 

 

 

 

 

 

0

 

Unappropriated net profit carried forward

 

 

 

 

 

 

 

 

 

 

 

0

 

Dividend

 

 

 

 

 

 

 

 

 

 

 

0

 

Exercise of options and conversion rights

 

 

 

 

 

 

 

 

 

 

 

0

 

Change in other comprehensive income (not recognized in income statement)

 

127

 

(77

)

 

 

34

 

877

 

961

 

Recognition of other comprehensive income in income statement

 

(255

)

 

 

 

 

 

 

 

 

(255

)

Balance at September 30, 2004

 

134

 

1,047

 

0

 

(402

)

(3,027

)

(2,248

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2005

 

860

 

1,429

 

63

 

(556

)

(4,474

)

(2,678

)

Changes in the composition of the Group

 

 

 

 

 

 

 

 

 

 

 

0

 

Profit after income taxes

 

 

 

 

 

 

 

 

 

 

 

0

 

Transfers to Retained Earnings

 

 

 

 

 

 

 

 

 

 

 

0

 

Unappropriated net profit carried forward

 

 

 

 

 

 

 

 

 

 

 

0

 

Dividend

 

 

 

 

 

 

 

 

 

 

 

0

 

Exercise of option and conversion rights

 

 

 

 

 

 

 

 

 

 

 

0

 

Change in other comprehensive income (not recognized in income statement)

 

123

 

(475

)

(4

)

187

 

2,407

 

2,238

 

Recognition of other comprehensive income in income statement

 

(986

)

(15

)

 

 

(4

)

36

 

(961

)

Balance at September 30, 2005

 

(3

)

939

 

59

 

(365

)

(2,031

)

(1,401

)

 

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

 

11



 

 

 

Treasury
shares

 

Total
(equity
interest of
shareholders’
in parent
company)

 

Minority
interest
capital

 

 

 

(millions of €)

 

 

 

 

 

 

 

 

 

Balance at January 1, 2004

 

(8

)

39,518

 

4,316

 

Changes in the composition of the Group

 

 

 

0

 

(15

)

Profit after income taxes

 

 

 

(143

)

385

 

Unappropriated net profit carried forward

 

 

 

0

 

 

 

Dividend payments

 

 

 

0

 

(162

)

Exercise of options and conversion rights

 

 

 

19

 

 

 

Change in other comprehensive income (not recognized in income statement)

 

 

 

961

 

 

 

Recognition of other comprehensive income in income statement

 

 

 

(255

)

 

 

Balance at September 30, 2004

 

(8

)

40,100

 

4,524

 

 

 

 

 

 

 

 

 

Balance at January 1, 2005

 

(8

)

41,416

 

4,332

 

Changes in the composition of the Group

 

 

 

0

 

(1,009

)

Profit after income taxes

 

 

 

4,595

 

379

 

Transfers to Retained Earnings

 

 

 

8

 

 

 

Unappropriated net profit carried forward

 

 

 

0

 

 

 

Dividend

 

 

 

(2,586

)

244

 

Exercise of options and conversion rights

 

 

 

21

 

 

 

Change in other comprehensive income (not recognized in income statement)

 

 

 

2,242

 

4

 

Recognition of other comprehensive income in income statement

 

 

 

(961

)

 

 

Balance at September 30, 2005

 

(8

)

44,735

 

3,462

 

 

The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.

 

12



 

 

 

Minority interest

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

Revaluation
in the
context of
business
combinations

 

Difference
from
currency
translation

 

Other

 

Total

 

Total
(minority
interest in
equity)

 

Total
consolidated
shareholders’
equity

 

 

 

(millions of €)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2004

 

0

 

(97

)

1

 

(96

)

4,220

 

43,738

 

Changes in the composition of the Group

 

 

 

 

 

 

 

0

 

(15

)

(15

)

Profit after income taxes

 

 

 

 

 

 

 

0

 

385

 

242

 

Unappropriated net profit carried forward

 

 

 

 

 

 

 

0

 

0

 

0

 

Dividend

 

 

 

 

 

 

 

0

 

(162

)

(162

)

Exercise of option and conversion rights

 

 

 

 

 

 

 

0

 

0

 

19

 

Change in other comprehensive income (not recognized in income statement)

 

 

 

62

 

 

 

62

 

62

 

1,023

 

Recognition of other comprehensive income in income statement

 

 

 

 

 

 

 

0

 

0

 

(255

)

Balance at September 30, 2004

 

0

 

(35

)

1

 

(34

)

4,490

 

44,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2005

 

61

 

(7

)

1

 

55

 

4,387

 

45,803

 

Changes in the composition of the Group

 

7

 

(2

)

 

 

(5

)

(1,004

)

(1,004

)

Profit after income taxes

 

 

 

 

 

 

 

0

 

379

 

4,974

 

Transfers to Retained Earnings

 

 

 

 

 

 

 

0

 

0

 

8

 

Unappropriated net profit carried forward