Axelspringer GB 2001(GB)

Group key data

Financial calendar in d million 1997 1998 1999 2000 2001 Page

Sales 2 351 2 460 2 664 2 902 2 864 15 Annual results press conference 28 May 2002 ANNUAL REPORT 2001 Change in % 4.1 4.6 8.3 8.9 – 1.3 Annual shareholders’ meeting 26 June 2002

Interim report 28 August 2002 Profit 15 Net income/loss for the year 108 141 151 98 – 198 ANNUAL REPORT 2001 REPORT ANNUAL Return on sales in % 4.6 5.7 5.7 3.4 – 6.9 Return on average equity in % 28.3 31.8 29.5 17.6 – 42.1 DVFA/SG income/loss 103 99 100 65 – 119 EBITA 223 287 262 217 331) Share details

Balance sheet 17 d in 2000 2001 If you would like more information Balance sheet total 1 387 1 526 1 603 1 707 1 613 about the Annual Report, please contact: Dividend 1.43 – Fixed assets 674 699 807 869 904

Axel Springer Verlag AG Fixed assets cover in % 60.1 69.0 67.0 65.7 41.0 Tax credit 0.61 – Finance and Accounting/ Cash and cash equivalents 351 366 285 321 62 Dividend including Corporate Controlling Equity (excluding retained earnings) 405 482 540 571 370 tax credit 2.04 – Axel-Springer-Platz 1 20350 Hamburg Equity ratio in % 29.2 31.6 33.7 33.4 23.0 DVFA/SG income Germany Long-term liabilities 126 89 90 67 80 (excluding tax credit) 1.92 – 3.50 Telephone: ++ 49 (0)40 / 3 47-2 35 23 Year-end price 104.0 58.0 Fax: ++ 49 (0)40 / 3 47-2 42 89 Capital expenditure 202 145 243 204 234 E-mail: [email protected] Highest price 153.5 101.5 Depreciation 115 123 99 141 158

The Annual Report and other Cash flow 229 271 251 223 46 Lowest price 83.0 50.0 information about Axel Springer Verlag Average price 112.8 71.8 are also available on the Internet: 2) d http://www.asv.de Share in per share 15 Security identification number 550 135 DVFA/SG income/loss 3.02 2.91 2.94 1.92 – 3.50

ISIN DE0005501357 Dividend 1.02 1.33 1.43 1.43 – Bonus 0.2–––– Reuters SPRGn.F Year-end price 64.4 71.6 118.5 104.0 58.0 Bloomberg SPR GR Design: HGB Hamburger Geschäftsberichte GmbH & Co. Photography: Number of employees 20 Corporate Photo Annual average 12 195 12 052 12 504 13 590 14 069 Jens Waldenmaier, Hamburg Portraits: Ralf Tooten, Hamburg VERLAG AXEL SPRINGER 1) Before extraordinary items. 2) Figures for the years 1997 - 1999 adjusted to the 1:10 share split in 2000 to facilitate comparison. Aquarium photo on page 42 with the kind cooperation of Meereszentrum Fehmarn GmbH. Group key data

Financial calendar in d million 1997 1998 1999 2000 2001 Page

Sales 2 351 2 460 2 664 2 902 2 864 15 Annual results press conference 28 May 2002 ANNUAL REPORT 2001 Change in % 4.1 4.6 8.3 8.9 – 1.3 Annual shareholders’ meeting 26 June 2002

Electronic Media Distribution Further equity holdings Newspapers starting on page 26 Sales breakdown Electronic Media starting on page 46 Sales breakdown

d d in million 2000 2001 9% Other countries in million 2000 2001 2% Other countries 100% Buch- und Zeitschriftenverlags- 0.15% Axel Springer Media 88.5829% AKTUELL Presse-Fern- 100% CompuTel 100% "Overbruck" Spedition 100% VVDG Verlags- und 1) 2) beteiligungsgesellschaft mbH Österreich GmbH, sehen GmbH & Co. KG, Telefonservice GmbH, GmbH, Industrieversicherungsdienste & Co. KG, Innsbruck/Austria 99.85% Vienna/Austria 10.0815%2) Hamburg Hamburg Hamburg GmbH, Berlin Sales 1 570 1 492 Sales 108 88 Capital: ATS 35.0 million Capital: ATS 327.511 million Capital: DEM 100.36 million Capital: DEM 0.1 million Capital: DEM 3.0 million Capital: DEM 0.15 million

EBITA 183 81 EBITA 14 – 25 65% Alpenländische Medien- 65% Moser Holding AG, 5.6% ProSiebenSAT.1 Media AG,3) 100% Bild.de AG, 5) 100% Z.Z.-Verlagsservice 100% ASV Direktmarketing 1) verwaltungsgesellschaft Innsbruck/Austria Unterföhring Berlin Eichberg GmbH & Co. KG, GmbH, mbH & Co. KG, Capital: ATS 11.5 million 5.9% Capital: Capital: EUR 1.0 million Mörfelden-Walldorf Berlin Depreciation 45 41 Depreciation 7 11 Innsbruck/Austria EUR 194.4864 million Capital: DEM 0.05 million Capital: DEM 0.05 million Capital: ATS 50.0 million Capital expenditure 57 44 Capital expenditure 19 40

1) 5) 65% Schlüsselwerbung Moser 100% Schlüsselwerbung J.S. 7.6% KG Hamburg 1 Fernsehen 100% AS Content GmbH, 100% Axel Springer Verlag 74.9% GMZ Druckerei Number of employees 6 303 6 326 Number of employees 397 435 Ges.mbH & Co. OHG, Moser Ges.mbH, Beteiligungs GmbH & Co., Hamburg Vertriebsgesellschaft mbH, GmbH & Co., 91% Germany 98% Germany Innsbruck/Austria Innsbruck/Austria Hamburg Capital: EUR 0.025 million Hamburg Berlin Capital: ATS 1.0 million Capital: ATS 0.5 million Capital: DEM 10.0 million Capital: DEM 0.262 million Capital: DEM 6.0 million

65% TT-Medienholding 100% TT-Verlags- und 100% AS TV-Produktions- und 70% AutoEuro GmbH & Co. KG, 60.68% Buch- und Presse- 90% PPS Presse-Programm- Ges.mbH, Management Ges.mbH, Vertriebsgesellschaft mbH, Hamburg Großvertrieb Hamburg Service GmbH, Magazines starting on page 34 Sales breakdown Printing starting on page 50 Sales breakdown Innsbruck/Austria Innsbruck/Austria Hamburg Capital: DEM 0.1 million GmbH & Co. KG, Hamburg Berlin Capital: ATS 0.5 million Capital: ATS 0.5 million Capital: DEM 0.1 million Capital: DEM 0.75 million Capital: DEM 0.05 million

d d in million 2000 2001 in million 2000 2001 6% Other countries 48.5% V.V.Vertriebs-Vereinigung 100% Intergraphik Ges.mbH, 100% MOHO Medien- 49% ISPR Internationale Sport- 100% Interactive Media 1) 24.5% Kieler Zeitung GmbH & Co. 24% Other countries Berliner Zeitungs- und Innsbruck/Austria verwaltung GmbH, rechte-Verwertungsgesell- CCSP AG, Offsetdruck KG, Sales 750 758 Sales 679 643 Zeitschriften Grossisten Capital: ATS 0.5 million Innsbruck/Austria schaft mbH, Munich Hamburg Kiel GmbH & Co. KG, Berlin Capital: ATS 0.8 million Capital: DEM 1.0 million Capital: EUR 0.901 million Capital: DEM 5.0 million Capital: EUR 0.11 million EBITA 33 13 EBITA 5 1

1) 1) Depreciation 25 22 Depreciation 55 33 100% TT-Logistik Ges.mbH, 100% Schlüsselverlag 100% Axel Springer TV 100% AS Venture GmbH, 32% Presse-Vertrieb Pfalz Innsbruck/Austria J.S. Moser Ges.mbH, Productions GmbH, Potsdam GmbH & Co. KG, Capital: ATS 0.5 million Innsbruck/Austria Hamburg Capital: EUR 7.5 million Frankenthal Capital expenditure 31 27 Capital expenditure 93 89 Capital: ATS 33.0 million Capital: DEM 0.25 million Capital: DEM 0.5 million

Number of employees 2 553 2 829 76% Germany Number of employees 3 065 2 977 100% Multimedia 100% Axel Springer TV 1) 25% Booxtra GmbH & Co. KG, 47.52% dsb Abo-Betreuung GmbH, 94% Germany Produktions Ges.mbH, NEWS GmbH, Augsburg Neckarsulm Innsbruck/Austria Hamburg Capital: EUR 0.5 million Capital: DEM 0.25 million Capital: ATS 0.5 million Capital: EUR 0.025 million

51% Sportmagazin Verlags GmbH, 100% Schwartzkopff TV-Produc- 100% ZZ-Kurier Gesellschaft für 1) Books starting on page 42 Sales breakdown Group Sales breakdown Vienna/Austria tions GmbH & Co. KG, Equity holdings in Zeitungs- und Zeitschriften- Capital: ATS 0.6 million Hamburg 7 radio stations vertrieb mbH, Hamburg Capital: EUR 0.026 million Capital: DEM 0.05 million Companies consolidated: in d million 2000 2001 in d million 2000 2001 13% Other countries 16% Other countries Fully consolidated Sales 92 167 Sales 2 902 2 864 75.079% Axel Springer Praha a.s., 100% Commerz-Film Equity holdings in Prague/Czech Republic Mediengesellschaft mbH, 8 wholesale companies Capital: CSK 94.7 million Hamburg in the new German states Consolidated on a pro rata basis EBITA – 22 – 46 EBITA 217 33 Capital: DEM 0.2 million 1) Control/profit and loss transfer agreement Depreciation 3 2 Depreciation 141 158 with the parent company. 2) Via 'Axel Springer Verlag' Capital expenditure 1 1 Capital expenditure 204 234 Beteiligungsgesellschaft mbH, Berlin. 3) Via SAT.1 Beteiligungs GmbH, Mainz and Number of employees 245 467 Number of employees 13 590 14 069 Berlin, and Media1 Beteiligungs GmbH, Berlin. 87% Germany 84% Germany 4) 82.85% via KH Invest Investitionsberatung GmbH, Budapest/Hungary and Postabank Press EBITA for 2001 have been adjusted for extraordinary items. Werbeagentur für Anzeigenorganisation AG, The depreciation figures do not include goodwill amortisation. Budapest/Hungary. 5) Consolidated for the first time.

Date: December 2001

89 90 Segments

Electronic Media Distribution Further equity holdings Newspapers starting on page 26 Sales breakdown Electronic Media starting on page 46 Sales breakdown

Date: December 2001

89 90 Contents

Foreword 2 Board Members 6 Management Report Group and Axel Springer Verlag AG 9 Economic environment 9 The company 12 Risk management 21 Prospects 23 Concluding statement pursuant to § 312 paragraph 3 of the German Companies Act (AktG) 24 Divisions 25 Newspapers 26 Magazines and International Affairs 34 Books 42 Electronic Media 46 Printing 50 Employees 54 Environmental protection 56 Financial statements Group and Axel Springer Verlag AG 59 Report by the Supervisory Board 86 List of equity holdings 88 Foreword August A. Fischer

August A. Fischer, Chairman of the Management Board of Axel Springer Verlag AG from 1 January 1998 to 31 December 2001, passed responsibility for the company on to Dr Mathias Döpfner at the end of the year. They review the 2001 financial year and talk about the strategic alignment and future prospects of the company.

Dr Mathias Döpfner

2 Foreword Board Members

Mr Fischer, you are leaving the company in troubled times. What is your résumé of the past year, for which Axel Springer Verlag is reporting a loss for the first time?

Fischer: This Annual Report covers 2001 – a year when a dramatic slump in advertising revenues hit the entire industry while Axel Springer Verlag – at the same time – made investments of extreme strategic importance for the future. We established and acquired new publications in our magazines business, continued the modernisation of our printing plants, restructured the online business and reached a leading position on the book market by acquiring Heyne. In addition we successfully defended our markets against free newspapers.

What problems is the company facing at the moment?

Fischer: Costs have increased too much during the long period of very successful years. A close examination needs to be made of the structures in all areas in order to further eliminate costs. Clear targets have been specified in this context, primarily a reduction of ten per cent in staff by the end of 2003.

Döpfner: We will be exploiting new sources of revenue as well as cutting costs, however. As a pre- requisite, it is essential for us to be even more customer-minded in our operations. Customer orien- tation matters for advertising sales and retail business as much as it does for the journalistic quality of our publications. Combination of the editorial staff and publishing activities of BERLINER MORGEN- POST and DIE WELT is one example of this. Readers are receiving higher quality, advertising customers are benefitting from better quotations and we are reducing costs at the same time.

3 Dr Döpfner, are you starting your tenure as Chairman at a particularly bad time?

Döpfner: My tenure as Chairman is starting in a particularly negative market environment and in a difficult phase of corporate restructuring. Tough measures are vital, even if they involve painful decisions. My Management Board colleagues and I will be continuing to take the necessary action systematically.

Fischer: Adaptation to unfavourable general conditions and cost reduction are part and parcel of responsible management. However, strategic alignment and the long-term prospects are just as important – and I am very optimistic about them.

Is the change to a new generation on the Management Board part of the long-term concept, too?

Fischer: Very much so. I am delighted that we have now succeeded in enabling management continuity with Mathias Döpfner and his Management Board colleagues after a long period of frequent changes in the Management Board.

Dr Döpfner, strategic decisions characterised Mr Fischer’s term of office. In a nut- shell: development from a German publishing house to an international media company. Will you be continuing this strategy?

Döpfner: It goes without saying that we will be continuing the process of internationalisation. How- ever, we have defined three strategic priorities: 1. Market leadership in the core German-speaking business. Our most important objective. There is potential in the print business. Our core skills are up-to-the- minute information and entertaining mass journalism. We will be continuing to strengthen them.

4 Foreword Board Members

2. Internationalisation in the core business. Here we will be continuing the approach that has been adopted systematically, concentrating on the European market. 3. Digitisation in the core business. Exploitation of our brands and capabilities in digital distribution channels is our objective. Thereby, we will extend the added value chain of our editorial output.

You are putting particular emphasis on the core business in your strategy.

Döpfner: Yes, the strong brands and know-how in the print business are the basis for reaching our goals. We need to increase efficiency and quality. The implementation of a central editorial team for our TV guides and the close editorial cooperation between BILD and BILD AM SONNTAG are successful examples from the recent past. We draw our optimism from the abilities and motiv- ation of the people who work for this company and I would like to take this opportunity to express my special thanks to the staff for their commitment.

Dr Döpfner, responsibility is now in your hands. What can the shareholders expect in the next few years?

Döpfner: We are cutting costs and focussing our strategy. The shareholders therefore can expect that Axel Springer Verlag will be increasing its profit- ability substantially.

5 Dr Mathias Döpfner

Board Members

Rudolf Knepper

Hubertus Meyer-Burckhardt

Steffen Naumann

Dr Andreas Wiele

A list of the members of the Management Board in the 2001 financial year with information about their membership of other legally prescribed supervisory boards can be found on page 78.

6 Foreword Board Members

Management Board

Dr Mathias Döpfner, 39, studied musicology, German and theatrical arts in Frankfurt and Boston. He started his career as a journalist at the »Frankfurter Allgemeine Zeitung« in 1982. He was director of a PR agency from 1988 to 1990. In 1992 he worked on the staff of the international director of the Gruner + Jahr publishing company in Paris and later became assistant to the CEO of Gruner + Jahr in Hamburg. He then held further positions in journalism as editor-in-chief of »Wochenpost« in Berlin (1994 – 1996) and »Hamburger Morgenpost« (1996 – 1998). He has been with Axel Springer Verlag since 1998. Initially as editor-in-chief of DIE WELT. Dr Mathias Döpfner became the member of the Management Board responsible for the Multimedia Division in July 2000 and took charge of the Newspapers Division as well in October 2000. He has been CEO and head of the Newspapers Division since January 2002.

Rudolf Knepper, 57, studied mechanical engineering and business administration in Berlin and Munich. He has been with Axel Springer Verlag since 1973. His first positions in the Printing Division were: assistant to the printing director, head of the planning staff and technical director of the printing plant in Hamburg. He was at the same time assigned to manage the offset printing project in Ahrensburg in 1980 and the newspaper printing operations in 1985. Rudolf Knepper was appointed to the Management Board with responsibility for printing in 1994 and took charge of logistics too in November 2001. He has been Deputy Chairman of the Management Board and head of the Printing and Logistics Division since January 2002.

Hubertus Meyer-Burckhardt, 45, studied at the television and film university in Munich as well as history and philosophy in Hamburg and Berlin. Following a position as agency producer at TC-E in Düsseldorf, he became a TV producer at neue deutsche Filmgesellschaft (ndF) in Munich. He moved to the agency BBDO, Düsseldorf, in 1988 to be creative director, head of TV and a member of the board. In 1993 he liaised with ndF to set up the Akzente Film- und Fernsehproduktion in Munich. He was appointed managing director of Multimedia, Hamburg, a joint venture between Axel Springer Verlag AG and Studio Hamburg GmbH, in 1999. Hubertus Meyer-Burck- hardt has been head of the Electronic Media and Books Divisions since December 2001.

Steffen Naumann, 35, studied business administration and economics in Germany, France and the United States. Following an initial position as finance trainee with Ford Europe, he became assistant to the chairman of the management board of Bertelsmann AG in 1990. After further assignments with McKinsey & Company, in the corporate development department of Bertelsmann Buch AG and in the Bertelsmann AG corporate tax and accounting departments, he was appointed to be a member of the management board and chief financial officer of Bertelsmann Buch AG in 1998. In 2000 he became executive vice-president and chief financial officer of Random House in New York, the biggest general-interest publishing house in the world and a division of Bertels- mann. Steffen Naumann has been Chief Operating Officer and Chief Financial Officer since November 2001.

Dr Andreas Wiele, 39, studied law at Dijon, Salzburg and Munich Universities. He worked first of all as an editor at »Hamburger Morgenpost«, before he became assistant to the chairman of the Gruner + Jahr management board in 1988. In 1990 he took over responsibility for the »Capital« project at the Prisma Presse publishing company in Paris, where he became publishing manager of »Capital« and »Geo« in 1991. In 1994, he moved to New York to join Gruner + Jahr USA Publishing, initially as senior vice-president and general manager of »Family Circle« and »McCall’s« and from 1997 onwards as executive vice-president and chief operating officer for the publishing company as a whole. Dr Andreas Wiele was appointed the member of the Management Board responsible for International Affairs in October 2000 and has been head of the Magazines and International Affairs Division since November 2000. 7 Supervisory Board*

Prof Dr Dr h. c. Bernhard Servatius, Lawyer, Hamburg Chairman AWD Holding AG pre-IPO AG

Friede Springer, Businesswoman, Berlin Deputy Chairwoman

Peter Boenisch, Wolfgang Steinriede, Publicist, Gmund am Tegernsee Banker, Berlin (until 30 April 2001) Allbank Allgemeine Privatkundenbank AG (until 30 June 2001) BerlinHyp AG (until 30 September 2001) Dr Gerd Freihalter, intra-Unternehmensberatung AG (until 30 April 2001) Lawyer, Tax Consultant and Systracom Bank AG (until 30 April 2001) Certified Public Accountant, Augsburg (until 31 March 2001) Dr Joachim Theye, Lawyer and Notary Public, Bremen Dr Leo Kirch, Businessman, Munich Deutsche Babcock AG Gerling-Konzern Globale Rückversicherungs-AG Klaus Krone, Gerling-Konzern Versicherungs-Beteiligungs-AG Businessman, Berlin Gerling-Konzern Rheinische Versicherungsgruppe AG I-D Media AG Lobster Technology Holding AG Messe Berlin GmbH (until 29 March 2001) Metro AG Dr Michael Otto, Chairman of the Management Board of Otto Versand Dr Giuseppe Vita, (GmbH & Co), Hamburg Senior Adviser, Lazard & Co. GmbH, Berlin (since 27 June 2001) Deutsche Bank AG Gerling-Konzern Versicherungs-Beteiligungs-AG Hugo Boss AG Schwab Versand GmbH Schering AG Allianz-Lebensversicherungs-AG Axel Sven Springer, BEWAG AG Journalist, Hamburg Continental AG (since 27 June 2001) Degussa AG Dussmann AG & Co. KGaA

* And their membership of other legally prescribed supervisory boards.

8 Management Report Group and Axel Springer Verlag AG

Economic environment

Axel Springer Verlag generated a positive operating result in the 2001 financial year. Low level of economic activity It is lower than in the previous year because Growth rates declined all over the world in the 2001 of a decline in advertising revenues, an financial year. The Gross Domestic Product in Germany increase in paper prices and further high increased only 0.6%. Economic output in the new German expenditure on strengthening and expanding states even decreased (– 0.8%). Economic growth in the core business. The net loss for the year Germany was lower than in any year since 1993 and was amounted to d 197.9 million. In view of depressed in addition by increased uncertainty following the continuing weakness of the economy and the attacks on 11 September. the charges in connection with the reorganisation measures that have been initiated, Private consumption proved to be a source of relatively the Management Board is expecting the operating high growth. The tax relief measures that took effect at result to improve only moderately in 2002. the beginning of 2001 increased private households’ disposable income appreciably (+ 3.6%). This higher income was not spent completely on consumption, however: on the one hand the savings ratio went up by 0.3 percentage points to 10.1% on average for the year due to additional savings. A major proportion of the additional purchasing power was, on the other hand, absorbed by the large increases in the costs of heating oil, fuel and food. On average over the year, private consumer expenditure grew by 1.4%. State spending on consumption was 1.3% higher.

Exports rose by 5.1%, a considerably lower rate than in the previous year (+ 13.2%) because of the global economic downswing. The export balance remained positive, however, because imports (+ 2.0%) also increased less than the year before.

9 Retail newspaper market Retail magazine market Total sales (IVW), index: 1997 = 100 Total sales (IVW), index: 1997 = 100

1997 1998 1999 2000 2001 1997 1998 1999 2000 2001

115 115

110 110

105 105

100 100

95 95

90 90

Circulation Circulation Number of newspapers Number of magazines

Advertising revenues in the Breakdown of classic media advertising revenues in 20011) Gross advertising expenditure in a million

2% 1997 1998 1999 2000 20011) Special-interest magazines

Newspapers 5% 3% Posters (excluding classified ads) 3 027 3 516 3 741 4 040 3 618 Radio

General-interest magazines 3 348 3 519 3 703 4 164 3 852

Special-interest magazines 428 448 456 471 405 22 % 45 % Newspapers Television (excluding Television 6 037 6 538 6 943 7 978 7 555 classified ads) Radio 837 851 967 1 043 925

Posters 352 421 426 470 467 23 % Total 14 029 15 293 16 236 18 166 16 822 General-interest magazines 1) Adjusted for statistical distortion due to the inclusion of new publications/stations.

Source: ACNielsen Werbeforschung.

10 Economic environment The company Risk management Prospects

IVW reported a reduction in the number of registered general-interest magazines of 19 to 815. Total sales per issue fell by 0.6% to 127.7 million copies. While subscription magazines (including club and membership magazines) reached The downswing in Germany is characterised by a relatively the previous year’s level, there was a substantial drop in large drop in investment. Capital expenditure on plant and demand for newsstand magazines. Total paid circulation fell equipment fell by 3.4% in 2001. Both global and domestic by 3.7%. demand decreased considerably in the course of last year and reduced the willingness to invest. Capital expenditure on Reader loyalty continued to decline in the crowded and high- buildings declined 5.7% in 2001. Thus the downward trend ly segmented magazine market. Whereas low-priced publi- of the last years in the construction industry continued. cations stimulated the market for young women’s magazines, biweekly women’s publications experienced a further The overall stagnation of the economy also influenced the decrease. job market in Germany last year. The number of unemployed increased substantially in the course of 2001. The average Illustrated magazines and news magazines recorded slight figure for the year (3.85 million) was, however, still slightly growth. Business magazines developed in line with the stock lower than in 2000. The average unemployment rate of market and fell substantially short of the boom year in 2000. 9.0% was almost exactly the same as in the previous year.

Large drop in the advertising market Slump in demand on retail press markets The German advertising industry reported lower advertising The downtrend in demand for daily newspapers and general- revenues in 2001 – for the first time in more than 30 years. interest magazines intensified as a result of the general weak- Gross advertising revenues in the classic media (excluding ness of the economy. Total paid circulation decreased by 2.5%, classified ads) were a 1.3 billion (– 7.4%) lower than in the while revenues went down 1.0% in spite of numerous price previous year after adjustments to take account of statistical increases prior to the introduction of the euro and greater distortions. Total advertising expenditure by branded goods interest in news following the attacks on 11 September. manufacturers, service providers and the major retailers amounted to a 16.8 billion. The total paid circulation of daily and Sunday newspapers in 2001 as recorded by the circulation auditing organisation Advertising expenditure by the information and communica- IVW were 28.2 million copies or 0.9% lower than the average tion industry, the financial community, food manufacturers in 2000. Both subscriptions and newsstand sales lost 1.1%. and the service sector in particular was much lower than in BILD succeeded in bucking the trend with average total the previous year. The introduction of the euro and the repeal sales of 4.4 million copies (+ 0.4%) and thus played a major of German discount legislation hardly stimulated the market role in boosting total newsstand sales of newspapers again. at all. There were practically no company flotations and The total number of newspapers registered with IVW corporate mergers, which had been large sources of turnover decreased from 390 to 386. in 2000. The terrorist attacks in the USA accelerated the negative market trend that had started at the beginning of the year. Contrary to the general development, special forwarders (+ 28%) and the insurance industry (+ 15%) invested more in communication measures.

11 Management Report

All the different media were affected by the decline in advertising in 2001. Advertising revenues generated by the print media (excluding classified ads) were 9.2% lower than in the previous year, with newspapers experiencing a drop of The company 10.5%. Regional subscription newspapers (– 9.6%) and particularly national newspapers (– 18.9%) suffered from a sharp fall in advertising business. The large decline in business on the advertising markets and higher paper prices were crucial features of the 2001 finan- Advertising volume in regional newspapers including cial year. Group sales amounted to a 2 863.5 million classified ads decreased by a total of 12.7%. All types of (– 1.3%). Axel Springer Verlag is responding to the difficult classified ads were down on the previous year. Considerable economic situation and the increased paper prices by imple- shortfalls were recorded with job recruitment ads (– 18.8%) menting a systematic programme of reorganisation and port- and national classified ads (– 27.4%) in particular. folio optimisation. A start was made on reducing personnel throughout the Group ten per cent by the end of 2003. General-interest magazines reported adjusted gross advertising income of a 3.9 billion (– 7.5%) in 2001. The decrease in advertising expenditure is attributable to a large extent to Investments in the core markets continued sales shortfalls with current affairs magazines (– 12.8%), the Further development of the core business continued to enjoy business press (– 18.4%) and TV guides (– 6.9%). However, high priority in spite of the difficult market conditions. The women’s magazines, which are among the best-selling types market position of existing publications was strengthened of magazine, managed to increase their advertising sales and numerous new activities were started in Germany and again by 6.1% from a high level. The youth magazine segment abroad. developed very differently from the general trend, increasing advertising business by 74.3%. In the newspaper operations, BILD and DIE WELT succeeded in increasing circulation figures against the general trend. Commercial television lost 5.3% of revenues (including HAMBURGER ABENDBLATT consolidated its position on the advertising broadcast free of charge). The public-service Hamburg newspaper market with a revised design. television channels suffered a drop in revenues of 15.9%, while the private TV stations recorded a shortfall (– 4.4%) After the Schibsted Group announced its withdrawal from for the first time ever. Germany, Axel Springer Verlag concluded its successful battle against the distribution of daily newspapers free of Radio advertising revenues developed worse than the market charge by discontinuing KÖLN EXTRA in July 2001. average in 2001 (– 11.3%), in spite of double-digit price increases. The public-service radio stations recorded a drop of 14.1%, whereas advertising volume at their private counterparts fell by 8.8%.

12 Economic environment The company Risk management Prospects

The emphasis in the magazines business was on systematic progress in the development of existing publications, the introduction of new ones and the consolidation of current activities.

Axel Springer Verlag launched a licensed edition of MAXIM Axel Springer Verlag increased its existing holding in on the German market in May 2001, thus entering the seg- PROPERTYGATE.com AG from 25.1% to 100% in August. ment of men’s lifestyle magazines. The magazine immediately PROPERTYGATE is to be expanded into the Group-wide real succeeded in establishing itself as the market leader in its estate platform. The Internet portal AUTOBILD.DE went segment. online in September 2001. This portal for consumers offers not only information and service but also the first second- Axel Springer Verlag increased its holding in Finanzen hand car exchange in Germany that covers all manufacturers. Verlag, Munich, which publishes the magazines EURO AM SONNTAG and FINANZEN, to 100%. Modernisation of the printing locations was continued systematically in the Printing Division. The rotogravure printing All the rights to the magazines and Internet domains of az plant in Ahrensburg is being modernised thoroughly with Auto Verlag, Meldorf, and "Autotest & Tuning Verlag", investment of about a 70 million. The existing equipment is Wiesbaden, were acquired with effect from the beginning of being replaced by more modern and efficient machines by 2001. Two new car magazines were launched on the market the end of 2003. too: AUTO BILD MOTORSPORT and AUTOBILD TEST & TUNING. AUTO BILD ALLES ALLRAD appeared for the first Axel Springer Verlag and the Georg von Holtzbrinck pub- time in January 2002. Thereby the company is exploiting lishing group concluded long-term printing contracts for the successful AUTO BILD brand to build up a family of car production of the Holtzbrinck publications »Handelsblatt« magazines. and »Tagesspiegel« in 2001. About a 90 million are being invested in expansion of the Spandau printing plant and the Axel Springer Verlag strengthened its book operations by Kettwig offset printing plant over the next two years in this buying Wilhelm Heyne Verlag, Munich, with effect from context. 1 January 2001. One of the biggest general-interest book publishing companies in Germany has been created by combining it with the existing book publishing houses to form the new group Ullstein Heyne List.

An extensive partnership was agreed with T-Online Inter- national AG in the electronic media field: T-Online Inter- national AG took over an interest of 37% in Bild.de AG and of 50% in Interactive Media CCSP AG. The news and entertainment portal BILD.DE went online in its first phase on 1 August and has been supplemented by more and more new content since then.

13 Share price development Index: 2 January 2001 = 100

Expansion of operations abroad

January 2001 March 2002 Axel Springer Polska launched two new publications in 2001: the weekly news magazine NEWSWEEK POLSKA and the monthly business magazine PROFIT. Both of these publications took over as market leaders in their different seg- 100 ments as soon as they appeared. Axel Springer Polska’s operations are to be expanded to include telemarketing, audiotex 80 and mobile services following the acquisition of "Kontakt Telemarketing", the name of which has now been changed to Axel Springer Kontakt. 60 Axel Springer Verlag strengthened its activities in the Czech Republic by acquiring an interest of about 75% in the Auto- 40 media publishing company, Prague. The new company is

Axel Springer Verlag AG called Axel Springer Praha and produces such publications MDAX as the weekly car magazine SVE˘T MOTORU˚ and AUTO TIP, the biweekly licensed edition of AUTO BILD.

In Hungary, Axel Springer Verlag acquired the publishing company Zöld Újság, which produces the biggest Hungarian daily business newspaper VILÁGGAZDASÁG, on 1 January 2001. Axel Springer Verlag expanded its operations in France by taking over the licensed edition of the monthly magazine MEN’S HEALTH.

Foreign sales Reorganisation measures intensified by segments A decision was taken to combine the editorial staff and publishing activities of BERLINER MORGENPOST and DIE WELT newspapers that appear in Berlin as part of the restructuring exercise that had been initiated. The contents of both newspapers will be produced by a single editorial team under the 1% Electronic management of a joint editor-in-chief as a result. The editor- Media 10 % ial staffs of BERLINER MORGENPOST and DIE WELT will be Printing combined in the course of 2002. Both newspapers are con- 6% tinuing to appear as independent publications. The Munich Books regional edition of DIE WELT was discontinued. 35 % Newspapers Systematic portfolio review and optimisation was the central assignment in the Multimedia Division in the year under review. In view of the ongoing expansion of sport reporting by BILD.DE, Axel Springer Verlag sold its 25.5% holding in the online portal SPORT1. 48 % Magazines

14 Economic environmentThe company Risk management Prospects

The DVFA/SG loss amounted to a 119.1 million (income in The Internet portal SHEEGO.COM that was launched with the previous year: a 65.4 million). Otto Versand was withdrawn again at the end of November 2001 following a six-month test phase. The search engine In view of the loss generated in the year under review, the INFOSEEK ceased to operate after a change was made in the Management Board suggests that a dividend is not paid shareholder structure. (previous year: a 1.43 per share).

In accordance with the company’s strategic realignment and focus on general-interest magazines with large sales, the Development of the Axel Springer share vocational information magazine REBONDIR and the special- The Axel Springer share started the year by reaching a high interest magazine PROFESSION FONCTIONNAIRE were sold of a 101.5 in January 2001. A downward movement then in France. Publication of AMBIENTES, JUEGOS Y CIA and began, reaching a low for the year of a 50.0 on 27 August DREAMCAST in Spain and of the magazine MIESKAJ in 2001. The share was hit particularly hard by the negative Poland was discontinued as part of the decision to concen- developments on the stock market because of the small free trate on core magazines. float. The share price in Frankfurt at the end of the year was a 58.0.

Results depressed by slump in advertising business and decision to restructure Retail sales increased The net loss for the year under review amounted to a 197.9 Group sales in 2001 amounted to a 2 863.5 million, a 38.4 million (net income in the previous year: a 97.9 million). million (– 1.3%) lower than in the previous year. The figures The net loss for the year at Axel Springer Verlag AG alone for the previous year were not adjusted to take account of totalled a 175.8 million (net income in the previous year: the differences in the companies consolidated, because an a 78.9 million). adjustment would not have led to material changes. Foreign sales increased by a 21.2 million (+ 4.9%) and totalled The operating result was a 14.1 million. This was lower than a 451.6 million. This means that Axel Springer Verlag recorded the figure of a 198.9 million recorded in the previous year 15.8% of its sales outside Germany. because of the decline in advertising business, the increase in paper prices, further high expenditure on strengthening Advertising sales dropped sharply to a 1 113.4 million, and expanding the core business and depreciation of rights a 121.9 million (– 9.9%) lower than in the previous year. and stocks at the book publishing companies. The decrease was particularly large with the newspapers. Advertising revenues amounted to 38.9% of total sales. The net loss for the year was attributable essentially to expenditure on the restructuring exercise that was decided Retail sales increased by a 52.4 million (+ 4.9%) and and to depreciation of financial assets. Results are also lower amounted to a 1 127.4 million. Both newspapers and maga- than in the previous years because of amortisation of good- zines contributed to this growth. Retail revenues accounted will in the income statement in accordance with a recom- for 39.4% of total sales. mendation made by the German Accounting Standards Com- mittee.

15 Sales by sectors Sales by divisions in a million in a million

1997 1998 1999 2000 2001 1997 1998 1999 2000 2001

3000 3000

2500 2500

2000 2000

1500 1500

1000 1000

500 500

0 0 2351 2460 2664 2902 2864 2351 2460 2664 2902 2864

Miscellaneous Other revenues Books Advertisements Contract printing Magazines Retail Electronic Media Newspapers

Balance sheet structure Capital expenditure, in a million depreciation and cash flow in a million Assets Equity and liabilities 2000 2001 2001 2000 1997 1998 1999 2000 2001

1500 300

250

1000 200

150

500 100

0 0 1707 1613 1613 1707 229 271 251 223 46

Fixed assets Cash flow Current assets Investments in tangible and intangible assets Equity Investments in financial assets Long- and medium-term debt Depreciation Short-term debt 16 Economic environmentThe company Risk management Prospects

Newspapers hit by slump in advertising revenues Newspaper sales amounted to a 1 483.6 million in the year under review and were therefore a 80.5 million (– 5.1%) lower than in the previous year. The newspapers were once again the main source of sales in the Group, accounting for 51.8% of total revenues. Other revenues higher The other revenues increased by a 31.1 million (+ 5.3%) to Advertising revenues totalled a 818.3 million and were thus a 622.7 million. This growth can be broken down as follows: a 109.7 million (– 11.8%) down on the previous year. All Books recorded higher sales than in the previous year of the newspapers published by Axel Springer Verlag were a 75.3 million (+ 82.1%) because of the acquisition of affected by the drop in advertising. Wilhelm Heyne Verlag. Merchandise sales increased by a 2.5 million (+ 5.9%) to a 44.7 million. Electronic Media Retail newspaper revenues developed positively: they sales revenues decreased by a 19.6 million (– 18.6%). This amounted to a 665.3 million and were therefore a 29.2 mil- reduction is attributable mainly to lower TV production lion (+ 4.6%) higher than in the previous year. This increase sales. Contract printing revenues were down a 17.1 million was attributable in particular to BILD, BILD AM SONNTAG, (– 10.0%) at a 154.0 million. Transport revenues amounted DIE WELT and HAMBURGER ABENDBLATT. to a 112.8 million (– 4.1%).

Slight increase in magazine sales Balance sheet structure The company’s magazines contributed 26.4% of Group sales The consolidated balance sheet total decreased by a 94.2 in the year under review. Magazine sales increased by a 11.0 million (– 5.5%) to a 1 612.8 million in the year under million (+ 1.5%) over the previous year and totalled a 757.2 review. million. Advertising revenues decreased by a 12.2 million (– 4.0%) and amounted to a 295.1 million. Increased rev- Fixed assets increased by a 35.2 million (+ 4.1%) to enues with new magazines, the youth magazines, BILD DER a 904.2 million. Intangible assets were a 7.4 million (+ 2.6%) FRAU and a number of publications abroad were not large higher than in the previous year because of newly acquired enough to make up for all of the shortfalls with the other goodwill and totalled a 296.7 million. Tangible assets magazines. amounted to a 487.6 million and were therefore up a 78.2 million (+ 19.1%) on the previous year. This increase was The retail revenues generated by the magazines increased by attributable primarily to the new building in Berlin and the a 23.2 million (+ 5.3%) to a 462.1 million in the year investments at the Ahrensburg printing plant. The financial under review. Domestic growth was achieved by BILD DER assets were a 50.4 million (– 29.6%) lower than in the pre- FRAU and the two youth magazines POPCORN and YAM!. vious year at a 119.9 million, particularly because of re- The higher retail sales abroad were due in particular to classifications to current assets. new magazines.

17 Consolidated statement of cash flows

in d ’000 2001 2000 Consolidated net loss for the year (previous year: consolidated net income) – 197 891 97 890 Depreciation/appreciation of fixed assets 218 436 140 436 Change in provisions 95 472 – 17 413 Other expenses/income with no cash effect 14 450 – 23 097 Profits/losses from the disposal of fixed assets – 17 675 6 505 Change in inventories – 8 308 – 23 697 Change in trade accounts receivable – 8 201 – 2 603 Change in other assets that are not attributable to investment or financing activities 13 869 33 573 Change in trade accounts payable – 46 280 37 573 Change in other liabilities that are not attributable to investment or financing activities – 39 430 27 437 Cash flow from current business activities 24 442 276 604

Proceeds from the disposal of intangible assets 1 986 1 832 Proceeds from the disposal of tangible assets 19 816 4 138 Proceeds from the disposal of financial assets 10 206 39 429 Spending on investments in intangible assets – 21 894 – 15 812 Spending on investments in tangible assets – 165 569 – 154 250 Spending on investments in financial assets – 46 089 – 34 045 Spending on the acquisition of consolidated companies – 96 389 – 33 908 Cash flow from investment activities – 297 933 – 192 616

Dividends paid – 48 620 – 48 675 Dividends paid by subsidiaries to minority shareholders – 4 347 – 4 374 Inflow of funds due to the obtainment of loans 78 018 13 000 Outflow of funds due to the repayment of loans – 10 716 – 7 866 Cash flow from financing activities 14 335 – 47 915 Total cash flows – 259 156 36 073

Funds on 31.12.2001 61 832 1) – Funds on 01.01.2001 – 321 040 2) +/– Changes in funds due to differences in the exchange rates 509 +/– Changes in funds due to differences in the companies consolidated – 457 Change in funds with cash effect – 259 156

1) Of which from companies consolidated on a pro rata basis: a 4 117 000. 2) Of which from companies consolidated on a pro rata basis: a 10 428 000.

18 Economic environmentThe company Risk management Prospects

The current assets (including prepaid expenses) amounted to a 708.6 million and were therefore a 129.4 million (– 15.4%) lower than in the previous year. The growth of a 63.7 million (+ 49.4%) in inventories to a 192.5 million is attributable to the increase in stocks of books and licences following consolidation of Wilhelm Heyne Verlag for the first time in Investments in financial assets totalled a 46.1 million 2001. The accounts receivable and other assets amounted to (previous year: a 34.0 million). The acquisition of equity a 451.2 million and were therefore a 69.6 million (+ 18.2%) holdings in Eastern Europe and France were the major items. higher than in the previous year due to reclassifications from fixed assets. Securities and liquid assets decreased by Depreciation at a 218.9 million was a 78.2 million higher a 259.2 million to a 61.8 million because of high capital than the previous year’s level of a 140.7 million. The expenditure and the unfavourable development of business. increase in depreciation is attributable essentially to the amortisation of goodwill in the income statement (in con- Shareholders’ equity was a 200.1 million lower at a 370.4 trast to the previous years) in accordance with the recom- million due to the retained loss. The equity ratio amounted mendation issued by the German Accounting Standards to 23.0%. Fixed assets cover (the ratio of equity to fixed Committee. assets) totalled 41.0%.

Medium- and long-term debt increased by a 56.6 million to Lower cash flow a 444.1 million in the year under review. Short-term debt The flows of funds are divided up into the three different went up by a 49.3 million to a 798.3 million. areas of business, investment and financing activities in the consolidated statement of cash flows, which was compiled in accordance with the German accounting standard no. 2 Further increase in capital expenditure (DRS 2). Marketable securities and liquid assets are shown Capital expenditure by Axel Springer Verlag in the 2001 in the funds at the end of the statement. financial year amounted to a 233.6 million, an increase of a 29.5 million over the previous year. The cash flow1) amounted to a 45.9 million and was therefore lower than in the previous year because of the difficul- The company invested a 21.9 million in intangible assets ties experienced in business performance. A further amount (previous year: a 15.8 million). Most of the investments of a 21.5 million was committed to working capital. The were in rights and licences. cash flow from current business activities therefore amounted to a 24.4 million. As a result, the cash flow was not suf- Capital expenditure on tangible assets amounted to a 165.6 ficient to finance the high capital expenditure. Cash and cash million, which was a 11.3 million higher than the previous equivalents were reduced accordingly. Additionally, loans year’s figure of a 154.3 million. Major individual items were obtained. were the modernisation of the Ahrensburg printing plant and the new the building in Berlin. The balance of current business, investment and financing activities amounted to a 259.2 million and was taken from the funds, which totalled a 61.8 million at the end of the year.

1) Net loss for the year + depreciation/amortisation – write-ups +/– change in the pension provisions +/– change in the special reserves with an equity portion.

19 Personnel structure

1997 1998 1999 2000 2001

14000

12000

10000 8000 Increase in personnel due to new operations 6000 Axel Springer Verlag had an average of 14 069 employees (excluding apprentices and trainees) in 2001. The increase of 4000 479 in company staff was due to the start of new operations 2000 and the consolidation of additional companies. 0 12195 12052 12504 13590 14069 In the market-oriented areas (publishing, electronic media, marketing) 65.2% of staff (9 177 employees) were employed.

Editorial staff There were 1 480 employees in the service areas and 3 412 Salaried employees in the technical areas. Wage-earning employees The number of editorial staff increased by 165 to 3 555. The number of salaried and wage-earning employees went up by 314 to 10 514.

The average length of service in the year under review was about 12 years; 46.1% of staff have been with the company for more than ten years.

Personnel cost structure in 2001 Disabled employees accounted for an average of 4.5% of staff (ASV AG: 5.4%) over the year. The statutory quotas for employment of the disabled were therefore largely met.

A decision was taken to make a ten per cent reduction in Group personnel by the end of 2003 as part of the restructuring exercise that was initiated. This plan is to be implemented 3% Retirement pensions by taking advantage of such proven measures as part-time 12 % and financial support working for older employees, natural wastage, a restrictive Social security contributions recruitment policy and internal transfers.

9% Fringe benefits 58 % Wages and salaries 18 % Non-productive time

20 Economic environmentThe company Risk management Prospects

Risk management

Axel Springer Verlag considers further development and expansion of the risk management system above and beyond the legal obligations to be a very important assignment. All the risks within the Group were recorded in 2001 on the Higher personnel cost ratio basis of the risk management guidelines approved in the pre- Personnel costs rose by 10.2% to a 980.6 million in 2001. vious year. The anticipated loss potential of these risks was The ratio of personnel costs to total company output calculated with both gross and net values for the first time. increased by 4.4 percentage points to 32.8%. Measures to counter or avoid the risks and the probability of risk occurrence were taken into account in this calculation. Wages and salaries accounted for 58.3% of total personnel costs. The remaining 41.7% were attributable to incidental The risks were determined at all the main organisational pay costs, which include social security contributions, retire- units within the Group and were then combined at Group ment pensions and financial support, payments for non-pro- level, in order to be able to identify and evaluate interdepend- ductive time (e.g. annual holidays, public holidays, illness, encies between individual risks. This exercise was docu- etc.) as well as fringe benefits (Christmas bonus, holiday mented in a risk manual. pay, anniversary bonus, long-service bonus and capital formation payments). The anticipated loss associated with each of the risks determined was calculated and the risks were classified as follows in relation to the planned company profits: Pensions Expenditure on retirement pensions and financial support • Major amounted to a 28.9 million in the year under review. Retire- • To be monitored ment pensions accounted for a 25.5 million. a 11.3 million • Others were transferred to the pension provisions. No risks were identified that could jeopardise the survival of In the course of last year, an average of 6 713 former em- the company. ployees or their dependants received regular payments totalling a 14.3 million. On the balance sheet date, 1 541 As in the previous year, the presentation below only includes former employees held claims against the company with risks that would have major impact on the Group’s net worth, respect to non-forfeitable pension rights. financial position and earnings if they materialised in the next 24 months. Risks for which full insurance coverage can be obtained or which can be passed on are not listed here.

Risks of relevance to this report as specified in the risk manual were identified in the following four categories:

21 Management Report

Lack of success in the exploitation of rights and stocks in book publishing may lead to poorer results. This risk is countered by carrying out valuations on a conservative basis.

Market and strategic risks Political/legal risks The advertising revenues of the Axel Springer Verlag print The continuing political debate about a ban on the advertis- publications are generated to some extent by classified ad ing of tobacco products at EU level and further changes to business. These revenues are facing more and more intensive legislation and regulations that are being planned and dis- market pressure from the increasingly large number of clas- cussed represent a major risk. Profit shortfalls could be the sified ad services in the Internet. Axel Springer Verlag has short-term outcome of legal changes in spite of the com- started to exploit most of the central sources of revenue in pany’s active involvement in associations and its constant the Internet, such as the car, property and job recruitment observation of the political and legal environment. markets. The existing print brands are being extended to the Internet on an ongoing basis. A loss of print advertisements to rival media cannot be ruled out in 2002 in spite Financial risks of these activities. Axel Springer Verlag is exposed to different financial risks as a media company with international operations. The general rules for financial management and for the deployment Profit risks in business operations of derivative financial instruments in order to avoid interest There is the risk of a further advertising recession in 2002 and exchange rate risks have been specified in a financial following the drop in advertising revenues in 2001 due to code of conduct. Strict formal control systems make sure the economic climate. Axel Springer Verlag is tackling this that this financial code of conduct is observed. problem by carrying out detailed planning, which enables the company to identify deviations and take countermeasures The switch to the euro went according to plan. The adminis- at an early stage. trative systems were changed to the new currency as early as May 2001. All the systems of relevance to the market were If the economic climate remains unchanged, there is a risk switched when the euro was introduced as the official means that revenues planned for 2002 in the online activities may of payment in January 2002. not be generated either. Axel Springer Verlag is dealing with this risk by optimising and linking its online presentations. Cooperation agreements have also been concluded with Further development of the strong partners like T-Online International AG. risk management system Further progress will be made on continuing the development of the risk management system in 2002 as well. One of the emphases will be the identification and systematic monitoring of additional early warning signals.

22 Economic environment The company Risk management Prospects

Prospects

The indications to date suggest that Gross Domestic Product An improvement on the retail press markets is expected in growth of 0.6% can be expected in Germany in 2002. It is the second half of 2002 at the earliest, in line with overall assumed that the German economy will be picking up from economic developments. The expectations here are based not the second half of 2002 onwards – primarily because of an only on an improvement in overall consumption patterns but improvement in the US economy. German exports will be also on greater demand for news in the run-up to the general decreasing slightly in the first half of 2002 because of the election in Germany. slow development of the global economy. A gradual recovery is likely to start in the second half of the year. Total Advertising revenues in the classic media are expected to export volume in 2002 will only be slightly higher than in develop slowly. Advertising revenue growth is estimated at the previous year (+ 1.4%). The estimated increase in private between one and two per cent depending, however, to a household consumer spending is 0.8%, which is lower than decisive extent on whether the forecast for the economy as the increase in 2001. As far as investments are concerned, it a whole proves to be accurate. Supposedly the advertising is expected that capital expenditure on both plant and equip- market in 2002 will be stimulated primarily by an increase ment (– 4.2%) and buildings (– 0.5%) will be continuing to in expenditure by the insurance industry, the retail trade, the decline and will not improve again until the anticipated media and the pharmaceutical industry. The German general recovery of the world economy occurs in the course of 2002. election campaign and the Football World Cup are likely to The basic assumption here is that the positive profit expect- provide an additional boost. Campaigns by the telecommuni- ations in the USA have a rapid impact on the climate for cations industry in connection with the introduction of investment in Germany. The situation on the job market is UMTS terminals are expected to have a positive impact, too. likely to continue deteriorating until mid-2002. A small It is predicted that the Internet will become an increasingly increase in employment is only expected towards the end of important advertising medium in 2002. the year. The average number of unemployed over the year as a whole will be about four million. 2002 will be a year of further consolidation and restructuring measures for Axel Springer Verlag. Substantial additional investment in the future of the company will also be necessary in order to be able to create a sound basis for new growth.

23 Management Report

Axel Springer Verlag is expecting to increase sales by only Concluding statement pursuant to up to two per cent in 2002 in view of the difficult market § 312 paragraph 3 of the German conditions that continue on the advertising and retail mar- Companies Act (AktG) kets. Due to the unfavourable overall economic situation and the costs incurred in connection with the reorganisation Axel Springer Verlag AG was dependent on Axel Springer measures that have been initiated, the Management Board Gesellschaft für Publizistik GmbH & Co, Berlin, under the anticipates that there will only be a moderate improvement terms of § 17 of the German Companies Act (AktG) in the in the operating result in 2002. 2001 financial year. As no control agreement had been concluded with the latter company in accordance with § 291 of Following a decision taken by the Management Board and the German Companies Act, the Management Board of Axel the Supervisory Board, Axel Springer Verlag at the end of Springer Verlag AG was obliged to compile a report about January 2002 exercised the option agreed with the Kirch the relationships to affiliated companies in accordance with Group to sell its shares in ProSiebenSAT.1Media AG and § 312 of the German Companies Act. In accordance with ISPR Internationale Sportrechte-Verwertungsgesellschaft § 312 paragraph 3 of the German Companies Act, the Man- mbH at the end of the period arranged for the purpose. agement Board states at the end of the report: “Under the circumstances known to it at the time, Axel Springer Verlag AG received fair and adequate compensation for each and every legal transaction conducted with an affiliated company. During the period under review, Axel Springer Verlag AG neither took any action nor refrained from taking any action at the behest or in the interests of the controlling company or one of its affiliates.”

24 Divisions

Newspapers 26

Magazines and International Affairs 34

Books 42

Electronic Media 46

Printing 50

25 Newspapers The Reichstag Building in Berlin – the centre of German political life and the place where important decisions are taken. Many interested people visit this historical building every day. The parliamentary reporters at WELT AM SONNTAG look behind the scenes and have their ears extremely close to the political ground, because the main editorial staff of WELT AM SONNTAG have been based in Berlin since July 2001. The journalists report directly and comprehensively about the week in politics from here. A varied blend of different subjects, exclusive news and in-depth background reports: it is the information behind the news that turns a report into a story. Close observation, thorough research and precise questions are the keys. So that readers are excellently informed on Sunday too. Newspaper sales in Germany Net paid circulation IVW, average per issue in 2001

Bild 4 362 983 Bild am Sonntag 2 439 039 Computer Bild 925 068 Computer Bild Spiele 625 538

Die Welt 254 904 Welt am Sonntag 439 201 Euro am Sonntag 146 387 Finanzen 114 136 The Newspapers Division consists of newsstand Hamburger Abendblatt 289 340 papers, Sunday newspapers, national and regional subscription newspapers, business Berliner Morgenpost 162 353 publications and free advertising publi- B.Z. 262 3481) cations. The Division also includes the maga- B.Z. am Sonntag 148 556 zines COMPUTER BILD and COMPUTER BILD SPIELE and equity holdings in newspaper publishing 1) Change in the reporting system since the companies in Germany and other countries. 4th quarter of 2001.

BILD group expands leading position The BILD group with the publications BILD, BILD AM SONNTAG, COMPUTER BILD and COMPUTER BILD SPIELE strengthened the leading position it holds in all market segments in the 2001 financial year. Newspaper sales outside Germany Average net paid circulation in 2001 In spite of the decline in sales of newsstand papers, BILD – the biggest daily newspaper in Europe with 11.5 million Austria1) readers and average paid circulation of 4.4 million copies – Tiroler Tageszeitung 89 719 succeeded in increasing circulation over the previous year. It was attributable to a large extent to the new editorial team Switzerland2) appointed at the beginning of the year that the most extensive HandelsZeitung 36 597 price increase in the newspaper’s recent history did not Stocks 26 966 have any significant impact on circulation.

1) ÖAK statistics. 2) WEMF statistics.

28 Newspapers Magazines and International AffairsBooks Electronic Media Printing

There were already signs of a slowdown in advertising revenues on the regional markets at the beginning of the year, which developed to include the national advertising revenues from the middle of the year onwards as well. Restructuring measures were initiated in response to the intensified cost Further progress was made on improving the quality of the pressure caused by increases in the price of paper, too. The paper’s presentation: following last year’s successful intro- BILD group strengthened its regional management in order to duction of comprehensive four-colour printing, a considerably guarantee more effective implementation of these measures. more topical magazine section was launched. Both readers and The successful concept of the production of 32 regional edi- advertising customers are benefitting from this improvement. tions by regional editorial teams is being continued. BILD AM SONNTAG was unable to escape the impact of the Axel Springer Verlag won the contest on the market for free downturn in advertising business in spite of the campaign it newspapers. Following an editorial repositioning exercise, started to increase advertising revenues. the newspaper KÖLN EXTRA that was launched in a move to stop free newspaper distribution as long ago as 1999 reached COMPUTER BILD strengthened its leading position on the a status on the market that forced the Norwegian publishing market in a competitive environment characterised by aggres- company Schibsted to discontinue publication of its free sive pricing and free gifts. COMPUTER BILD sold more than newspaper in Cologne in July 2001 and to give up its plans 900 000 copies on average and reached almost three million to expand in Germany. As had always been announced before- readers with its sound service tips and buying advice, in spite hand, Axel Springer Verlag then withdrew its free newspaper of consumers’ general reluctance to buy on the PC market. from the market, too. A test with a newsstand paper based on Although overall advertising volume decreased, shortfalls the concept of KÖLN EXTRA and aimed at a young reader- with trade customers and a lack of advertising from the new ship was ended in October 2001 becuase the paper did not economy were made up to some extent by sales to branded achieve economically viable circulation. goods manufacturers.

With an average of 2.4 million buyers and 10.3 million readers, BILD AM SONNTAG reinforced its clear lead on the Sunday newspaper market. Rejuvenation of the newspaper’s concept and addition of new journalistic elements led to increasing acceptance of the newspaper by young readers in particular. Based on a cooperation agreement with the television station VIVA, the weekly supplement VIVABAMS is now published. The supplement is implemented by the BILD AM SONNTAG editorial team and is designed to reach a young target group.

29 Divisions

The introduction of trips for readers and the development of new communication formats led to strong qualitative and quantitative growth in the BILD merchandising field. The brands BILD REISE and BILD SHOP were launched with great success alongside the BILD MUSIC, BILD INTERACTIVE and COMPUTER BILD SPIELE continued its steady circulation BILD BUCH product lines that continued to operate success- growth impressively in the third year of its existence. Average fully. The involvement of cooperation partners from the retail paid circulation in 2001 increased by 9.5% compared with trade in all areas from product development to distribution the previous year to about 625 000 copies. This makes COM- turned out to be effective in the BILD SHOP activities follow- PUTER BILD SPIELE the second-largest computer magazine in ing initial tests. Europe after COMPUTER BILD and at the same time the largest European game and console magazine. A complementary BILD.DE went through a process of editorial and organisa- CD with at least one full version of a game has proved to be tional realignment in 2001. Bild.de AG was spun off to form a key element of the magazine that is very attractive. an independently operating business unit. It is redesigning the Internet presentation of the BILD brand in the form of a news and entertainment portal. Within the framework of an extensive strategic partnership between Axel Springer Verlag and Deutsche Telekom, T-Online International AG acquired 37% of Bild.de AG. The Web site, which was launched in its new design in August 2001 and has been expanded steadily since then, has taken over a position as one of the largest German general-interest portals due to its attractive content. The number of monthly visits has increased to up to 16 million.

30 Newspapers Magazines and International AffairsBooks Electronic Media Printing

Further increase in circulation by DIE WELT DIE WELT continued to develop successfully, winning the “World’s Best Designed Newspaper” award for national quality papers. DIE WELT improved its position on the market for national daily newspapers and increased its circulation to 255 000 copies with about 827 000 readers per day. The addition of Madrid as one of the printing locations has improved availability of DIE WELT in Spain and Portugal as WELT ONLINE was one of the most successful Web sites on well as on the Balearic and Canary Islands and has led to an the daily newspaper market in 2001. In a comparison made increase in circulation abroad. by IVW, WELT.DE finished in first place among quality national newspapers with about 130 million page impres- DIE WELT expanded its regionalisation concept in North sions per year. The growth was driven not only by the exten- Germany in the year under review. The Munich regional edi- sive editorial coverage but also, for example, by the detailed tion was discontinued in connection with the paper’s concen- and well-received special presentations about CeBIT or the tration on core markets. DIE WELT succeeded in stimulating Tour de France as well as the introduction of a full-page the advertising industry by implementing innovative adver- archive. Registered users can now obtain up-to-the-minute tising concepts with such customers as AOL. On the occa- news from WELT.DE by e-mail, too. sion of the first German Football League home game played by Hamburger SV in the new AOL stadium, DIE WELT In spite of a change in the competitive situation following appeared nationally with a blue front page. Systematic ad- the launch of the »Frankfurter Allgemeine Sonntagszeitung« vantage was also taken of synergy potential between DIE Sunday newspaper, WELT AM SONNTAG maintained its pos- WELT and WELT AM SONNTAG. ition as the biggest quality Sunday paper with paid circulation of about 439 000 copies, after it reached the highest DIE WELT will be cooperating more closely with BERLINER circulation in its history with about 465 000 copies in the MORGENPOST from 2002 onwards. Substantial journalistic 3rd quarter. The WELT AM SONNTAG staff moved their base and economic synergy benefits are being exploited as a to Berlin in the year under review. This enables them to take result of this cooperation. DIE WELT is concentrating here better advantage of the political institutions there and to on national reporting, while BERLINER MORGENPOST is optimise cooperation with DIE WELT. contributing its regional market capabilities. Readers are benefitting from the pooling of journalistic skills in a national and regional editorial team. This combination is part of the cost-cutting and restructuring programme that was initiated in the spring of 2001.

31 Divisions

Berlin newspaper group defends position as market leader The intensive competition on the Berlin newspaper market continues and has an effect on the Berlin newspaper group. BERLINER MORGENPOST in particular suffered losses on the retail and advertising markets. The group reacted to the Business publications hit hard by the difficult economic situation by carrying out extensive editor- advertising crisis ial optimisation, by implementing systematic cost-cutting Although Axel Springer Verlag was able to improve the pos- measures and by combining DIE WELT and BERLINER ition of its information-oriented finance and business publica- MORGENPOST. The online operations have been strengthened, tions in 2001, it was a difficult financial year because of the too, particularly in the regional classified ad business with slump on the international capital markets. The equity hold- print/online combinations. ing in Finanzen Verlag, Munich, was increased to 100%. B.Z. and B.Z. AM SONNTAG confirmed their successful EURO AM SONNTAG increased its readership against the mar- position on the Berlin market again. Systematic personnel ket trend, whereas FINANZEN recorded small circulation losses. restructuring of the editorial staff has led to a considerable The online operations of Finanzen Verlag and the majority- increase in productivity as well as to substantially lower owned company Smarthouse Media GmbH were combined. costs. B.Z. continues to be the biggest newspaper in Berlin These companies are providing external customers with con- and Brandenburg. It reaches an average of 576 000 readers tent on a commercial basis to an increasing extent, too, in every day. B.Z. and B.Z. AM SONNTAG remain overall lead- addition to their own platform FINANZEN.NET. ers of the advertising market among newsstand papers. This position has been strengthened successfully by new print/ HANDELSZEITUNG, which appears in Switzerland, continued online combinations. to strengthen its position on the management readership market, although it felt the impact of the reduction in advertising business. The paid circulation of the Swiss investors’ magazine STOCKS, which was certified for the first time, was up to the planned level at 27 000 copies. STOCKS ex- ceeded its advertising sales target substantially in 2001, its first complete financial year. The six management and finance trade magazines that also belong to the Handelszei- tung publishing group proved to be largely independent of economic fluctuations and recorded higher advertising sales than in the previous year.

32 Newspapers Magazines and International AffairsBooks Electronic Media Printing

HAMBURGER ABENDBLATT – market leader with Stable performance by affiliated an innovative design newspaper companies Every third inhabitant of Hamburg, the second-largest The regional newspapers LÜBECKER NACHRICHTEN, city in Germany, and the surrounding area over the age of KIELER NACHRICHTEN, OSTSEE-ZEITUNG and LEIPZIGER 14 now reads HAMBURGER ABENDBLATT. With about VOLKSZEITUNG were once again among the most successful 718 000 readers per day, HAMBURGER ABENDBLATT there- papers in their regions in the year under review. These publi- fore continues to be the clear leader on the Hamburg market. cations have strong local roots and a sound economic basis. HAMBURGER ABENDBLATT took important forward-looking The free advertising publications that concentrate on the steps in 2001 to build on this excellent position. Following extremely competitive markets in the Berlin, Hamburg and an extensive redesign in August, it provides high-quality Dresden areas developed positively in 2001, too. journalism and up-to-the-minute reports in a fresher new look. Successful progress has at the same time been made on link- TIROLER TAGESZEITUNG fought an intensive battle with its ing print and online activities. The HAMBURGER ABENDBLATT two competitors on the local market in 2001. Restructuring online portal established itself as a prominent player in the measures were taken in response to the severe slump on the city’s media environment last year with up to 5.2 million advertising market. The local strategy was expanded and the page impressions per month. content and design of the paper were revamped.

In spite of the slump in advertising business, specifically in classified ads that are so important for regional newspapers, HAMBURGER ABENDBLATT succeeded in defending its position as the most important market place in the city. Job recruitment ads, property ads, travel or retail ads: HAMBURGER ABENDBLATT was far ahead of its rivals in every category once again in 2001.

33 Magazines and International Affairs Products and people, business and boardrooms – it is not that easy to keep up with the actions of global players these days. Axel Springer Polska, a subsidiary of Axel Springer Verlag in Warsaw, therefore launched the monthly business magazine PROFIT successfully in Poland in April 2001. PROFIT acts as a competent modern guide about all business issues for young self-employed professionals and corporate decision makers. In addition to investigative journalism, the editorial staff of the successful magazine provide the latest market information, practical tips on how to invest money and plenty of service sections. PROFIT has developed into the market leader for business magazines within a very short time. Divisions

The Magazines and International Affairs Division includes TV guides as well as women’s, men’s, lifestyle, family and youth magazines. The German portfolio is completed by numerous high-quality special-interest Dynamic progress was at the same time made in expanding magazines and a number of equity holdings. the business by making a total of four acquisitions and by The main activities outside Germany in launching six new publications. Eastern Europe are in Poland, Hungary and the Czech Republic, while France and Spain In Germany, the promising men’s market was entered by are the focal points in Western Europe. launching the magazine MAXIM, while the strong position held by the magazine AUTO BILD was reinforced by the acquisition of the magazines published by az Auto Verlag Market position maintained in core segments – and "Autotest & Tuning" Verlag. The increases made in the further promising new markets entered copy price of all seven weekly magazines in Germany did The Magazines and International Affairs Division not have any significant impact on paid circulation. The strengthened the market position of its publications again in international operations were expanded in Poland, France spite of the poor economic situation and a slump in advertis- and the Czech Republic in particular. A systematic portfolio ing business throughout the industry. In the core business, shake-out was at the same time made, with six magazines uncompromising cost management was continued and many being sold or discontinued. different publishing and editorial measures were taken.

TV guides firmly established on the market Almost 100% of German households buy TV guides. Axel Springer Verlag strengthened the leading position it holds in Magazine sales in Germany this extremely competitive segment, although its TV guides Net paid circulation HÖRZU, FUNK UHR, TVNEU and BILDWOCHE were unable IVW, average per issue in 2001 to avoid the effects of the cut-throat competition either. Initial synergy benefits were generated by combining the TV Hörzu 2 015 851 guide editorial staffs. The potential of the TV guides will be Funk Uhr 1 097 990 safeguarded in future too by exploiting further advantages of TVneu 464 596 resource pooling. Bildwoche 428 815

HÖRZU improved its position as market leader in the high- Bild der Frau 1 756 021 priced, weekly TV guide segment slightly. Advertisers again Journal für die Frau 381 235 proved to be convinced by the attractive structure of the Allegra 218 063 HÖRZU readership – well-educated adults with above-aver- Auto Bild 761 776 age incomes. Modernisation of the editorial coverage and Auto Bild Motorsport 65 9411) premium positioning by the new editor-in-chief are making Sport Bild 512 973 sure that the magazine remains successful.

Maxim 289 7071)

Familie&Co 256 652

YAM! 351 166 Mädchen 329 973 Popcorn 314 674 Musikexpress 72 771 Hammer 54 433

1) Average figures for the 3rd and 4th quarters of 2001. 36 Newspapers Magazines and International Affairs Books Electronic Media Printing

FUNK UHR, the TV guide designed mainly for female readers, succeeded in expanding its position slightly on the retail market by comparison with its direct competitor.

The generally negative trend in advertising business and aggressively priced competition in the biweekly TV guide segment had an effect on TVNEU, too.

BILDWOCHE was repositioned and lengthened in connection ALLEGRA, the publication with the classiest image on the with its integration in the TV guide operations. market for high-quality monthly women’s magazines, has been appearing in two different formats since the July edition: the classic format and a smaller pocket format. Since Women’s magazines defend strong position in a then, ALLEGRA has been the only one of the established hotly contested market magazines in this segment to record consistent newsstand New entrants continued the cut-throat competition in the mar- sales growth. This encouraging circulation development and ket for women’s magazines in the year under review, too. The ALLEGRA’s attractive readership are strengthening its pos- three magazines produced by Axel Springer Verlag – BILD ition on the advertising market. DER FRAU, JOURNAL FÜR DIE FRAU and ALLEGRA – maintained their excellent market position and were in some cases even able to improve their status. New men’s magazines The retail and advertising markets for car magazines was BILD DER FRAU broke the record it set in the previous year, affected directly by the economic problems experienced by reaching more than five million readers. This meant that the car industry. AUTO BILD felt the impact of this as well, BILD DER FRAU was the only magazine in this segment to but was able to defend its position as the biggest newsstand reach circulation above the previous year throughout 2001. car magazine emphatically. Costs were cut in response to In contrast to the generally negative trend, advertising the particularly negative trend in car advertisements. income was in fact higher than in the previous year. The strength and editorial skills of the AUTO BILD brand are Competitive pressure was particularly high in the classic being exploited systematically to win market share. AUTO segment of biweekly women’s magazines and this had an BILD MOTORSPORT was launched in January 2001. The spe- impact on JOURNAL FÜR DIE FRAU, too. Market share was cial-interest magazine RALLYE RACING was integrated in won in newsstand sales and advertising business thanks to a this biweekly magazine. The first edition of the special- thorough restyling of the magazine at the beginning of the interest magazine AUTO BILD TEST & TUNING, which reports year. about the tuning world at monthly intervals, appeared in December 2001. AUTO BILD ALLES ALLRAD, a magazine about leisure-oriented vehicles that can be driven on- and off-road, came onto the market in January 2002.

37 Magazine sales in Spain and France Average net paid circulation in 2001, publishers’ statistics

Spain ’000 copies

Interior design magazines Micasa 131 Nuevo Estilo 99 The Axel Springer Verlag Internet car portal Computer magazines WWW.AUTOBILD.DE was launched in time for the Inter- Computer Hoy 125 national Car Exhibition in September 2001. This consumer PC Today 50 portal is being operated as part of the central AUTO BILD PC Manía 34 brand and provides users with an objective and comprehensive platform for obtaining information and service. It also PC games magazines includes the first second-hand car exchange in Germany that Hobby Consolas 64 covers all manufacturers. Nintendo 59 Play Manía 59 Sports magazines are in competition with a wide range of Computer Hoy Juegos 33 sports coverage in the electronic media. The lack of major Micromanía 32 sports events to boost sales caused a small decrease in both

France retail and advertising business at SPORT BILD. An editorial concept that concentrates on a combination of the latest TV guide news and background reporting is being implemented to Télé Magazine 545 stop the negative trends on the retail market.

Axel Springer Verlag launched the German licensed edition Magazine sales in Poland of the men’s lifestyle magazine MAXIM with great success in Average net paid circulation in 2001, May 2001. The magazine immediately reached a paid circu- publishers’ statistics lation of about 300 000 copies. The magazine is published in ten different countries and is one of the most successful Women’s magazines ’000 copies men’s magazines in the world. The monthly magazine has Olivia 423 been modified for the German market, with the addition of Pani Domu 421 new elements. It is designed for the modern generation of Illustrated magazine men and provides a blend of news, reports, photography, Na Zywo 134 high-quality fashion pages and service.

True story magazines Cienie i Blaski 157 Sekrety Serca 117

Computer magazines Komputer Swiat 134 Komputer Swiat Gry 93

Car magazines Auto Swiat 146 Auto Sukces 46

Business/News magazines Newsweek Polska 326 Profit 59

Youth magazines Dziewczyna 147 Popcorn 142

38 Newspapers Magazines and International Affairs Books Electronic Media Printing

FAMILIE&CO increases subscription circulation The overall market for parent and family magazines is declining – particularly in the newsstand sales area – and FAMILIE&CO was affected by this trend, too. Although the magazine succeeded in increasing subscription circulation, Expansion in France advertising business was unsatisfactory throughout the seg- Axel Springer Verlag expanded its publishing operations in ment. Purposeful marketing activities and publication of France by taking over the licensed edition of MEN’S HEALTH. the special issues “Kids & Co”, “Travel” and “Computers” The weekly TV guide TÉLÉ MAGAZINE succeeded in resist- helped to ease the difficult situation. ing the general trend and recorded sizable circulation growth thanks to an improvement in editorial quality.

Successful year for youth magazines Axel Springer Verlag took initial steps towards systematic The youth and music magazines managed by AS Young expansion of its business in France with the help of a broader Mediahouse – YAM!, MÄDCHEN, POPCORN, MUSIKEXPRESS portfolio and the existing joint venture with EMAP France and HAMMER – developed very encouragingly in the year to publish the magazine AUTO PLUS and will be continuing under review. YAM! and POPCORN in particular increased this process in 2002. their circulation substantially by comparison with the previous year. POPCORN expanded its position as market leader The vocational information magazine REBONDIR and the for monthly magazines impressively and generated the high- special-interest magazine PROFESSION FONCTIONNAIRE were est sales for more than four years. MUSIKEXPRESS defended sold in connection with the company’s strategic realignment its position as market leader for general music magazines. and focus on general-interest magazines with large advertis- Advertising business developed extremely positively, too. ing volumes and sales.

New sources of revenue were exploited by publishing a number of special issues, by acquiring magazine licences and by Progress with computer magazines in Spain entering the sound recording media business. The maga- Business development in the computer magazine market was zines’ online operations were also expanded by launching encouraging. PC TODAY, the purpose of which was to defend new MUSIKEXPRESS and HAMMER Web sites. COMPUTER HOY’s position as leader of the computer magazine market against activities by the competition, was launched successfully in 2000. PC TODAY immediately established Convincing development by special-interest itself as the second-biggest magazine, while COMPUTER HOY magazines confirmed its role as market leader clearly. The special-interest magazines that are published in a joint venture with Jahr-Verlag developed very successfully thanks to the considerable resource pooling benefits and uncompromising cost management.

39 Newspaper and magazine sales in Hungary Average net paid circulation in 2001, publishers’ statistics

Komitat newspapers ’000 copies Baranya 49 Kecskemét 41 Somogy 38 Szolnok 31 Békéscsaba 30 Heves 23 Komárom 21 Tolna 20 Intensive competition on the market for Spanish interior Sunday newspaper design magazines led to lower advertising and retail rev- Vasárnap Reggel 96 enues at NUEVO ESTILO and MICASA. The company is responding to this development by revamping the editorial Business newspaper coverage and by applying strict cost management. The maga- Világgazdaság 13 zine AMBIENTES was discontinued in the year under review as part of the policy of concentration on core publications. TV guides TVR-Hét 376 TV Kéthetes 175 TVR-Újság 128 Improvement of the market position in Színes Kéthetes 73 Poland and Hungary Axel Springer Polska managed to launch two magazines of Women’s magazines major strategic importance on the market successfully in Kiskegyed 249 2001. The monthly business and finance magazine PROFIT Hölgyvilág 84 that appeared for the first time in the spring immediately Gyöngy 46 assumed the position of segment leader. The company entered the promising market for news magazines by intro- Puzzle magazines ducing NEWSWEEK POLSKA extremely successfully, taking Ügyes 126 Kópé 53 over as market leader at once here as well. The successful Jó Vicc 23 start of NEWSWEEK POLSKA in particular broadened the company’s operations and reinforced emphatically its exist- True story magazine ing strong market position as the second-biggest publisher of Csók es Könny 67 general-interest magazines in Poland. The established magazines PANI DOMU, AUTO SWIAT, KOMPUTER SWIAT and Interior design magazine OLIVIA continue to contribute solidly to company results. Lakáskultúra 63 The trade magazine »Media i Marketing Polska« chose Axel Springer Polska as the publishing company of the year in Cooking magazines 2001. Kiskegyed Konyhája 46 Recept-Tár 29

Youth magazines Popcorn 61 100 X Szép 53

40 Newspapers Magazines and International Affairs Books Electronic Media Printing

Axel Springer Verlag has established a substantial presence in the third candidate for EU entry – alongside Poland and Hun- gary – by obtaining this majority holding. The Czech Republic is considered to be one of the most attractive markets in East- Axel Springer Verlag succeeded once again in expanding its ern Europe. The publishing house that has been acquired leading position on the Hungarian newspaper market while represents a good platform for continuing expansion of the entering a new segment at the same time by buying the re- publishing operations there. The activities carried out by spected business newspaper VILÁGGAZDASÁG. The company Axel Springer Verlag to date via the subsidiary AS Young is creating a cost-effective structure by the modern organisa- Mediahouse a.s., which publishes the two youth magazines tion of the editorial operations of the Hungarian newspapers POPCORN and TOP DÍVKY, are being strengthened by this in a central editorial team. The Hungarian magazine market broader publishing basis. also suffered from a decline in advertising business and a trend towards lower circulation in 2001. The company is applying systematic cost management principles to counter this development. A printing plant was in addition bought in Kecskemét.

Extension of international operations in the Czech Republic Axel Springer Verlag acquired 75.08% of the publishing house Automedia a.s., Prague, in June. The company has in the meantime been renamed Axel Springer Praha and is the leading publisher of car magazines in the Czech Republic: its activities include publication of SVE˘T MOTORU˚, the biggest weekly car magazine, and AUTO TIP, the biweekly licensed edition of AUTO BILD.

41 Books Taking a fascinating look at unfamiliar worlds – stimulating the imagination and making new discoveries while doing so. Practically no other medium is more suitable for doing this than books. Books not only broaden horizons but also teach new lessons. Axel Springer Verlag acquired Wilhelm Heyne Verlag in Munich at the beginning of 2001 and integrated it successfully in the book publishing group Ullstein Heyne List. One of the biggest book publishing companies in Ger- many has been created as a result, the extensive programme of which ranges from literature and non-fiction to service titles, illustrated books and CDs or MCs. A professional team of marketing staff makes sure that such German and inter- nationally acknowledged best-selling authors as John le Carré, Hellmuth Karasek, Amelie Fried, John Grisham, Stephen King and Stuart Harrison reach their readers. Divisions

One of the leading companies on the German book market has been created by the takeover of Wilhelm Heyne Verlag on 1 January 2001 and the formation of the Ullstein Heyne List publishing group. The literature, non-fiction, paperback and service title publishers in the group sold a total of 37.5 million books in the 2001 financial year. The paperback publishing houses reached the status of market leader in Germany by making large investments in obtaining the rights to German and inter- List Verlag stands for highbrow entertainment and non-fiction. national best-selling authors. The top books The new book by John le Carré, DER EWIGE GÄRTNER, and published by the group filled an average of the author Eoin Colfer, who had been unknown in Germany more than 15% of the positions on the best- beforehand, with ARTEMIS FOWL contributed most to the seller lists. company’s success in 2001. The memoirs of Marina Picasso and Rut Brandt provoked a broad response from the press and the public. Combination to form the new Ullstein Heyne List group Ullstein Verlag, the publishing house in the group with the The focal point of the strategic publishing activities was the richest tradition, achieved its greatest successes with the new combination of Wilhelm Heyne Verlag, which was acquired Stephen King novel, DUDDITS, and the photographic book at the beginning of 2001, with the existing publishing unit TIPPI AUS AFRIKA, the new thriller by Rita Mae Brown, Econ Ullstein List to form the new Ullstein Heyne List RACHE AUF LEISEN PFOTEN, and the non-fiction book group. Extensive restructuring measures were carried out, a by Ernst Peter Fischer, DIE ANDERE BILDUNG. There was move was made to a joint office building, the EDP systems an impressive response to the memoirs of Paul Spiegel, were standardised and the accounting systems were har- WIEDER ZU HAUSE?, and the novel BETRUG by Hellmuth monised. Karasek.

The most outstanding success achieved by Wilhelm Heyne The literary Claassen Verlag made a good choice when Verlag, one of the leading general-interest publishing houses, it acquired all the German rights to the British novelist was the new book by John Grisham, DIE BRUDERSCHAFT. Vidiadhar S. Naipaul in July 2001. The author won the Demand from readers for the new books by Mary Higgins Nobel Prize for Literature in October. Clark, DU ENTKOMMST MIR NICHT, Nicholas Sparks, WEG DER TRÄUME, and Amelie Fried, GLÜCKSSPIELER, In the non-fiction field, titles published by Econ – DER was also very high. HORIZONT HAT FLÜGEL by Daniel Goeudevert, the book by Guido Knopp about the television series DIE GROSSE FLUCHT and the memoirs of the top manager Jack Welch, WAS ZÄHLT – were on the best-seller lists for months.

44 Newspapers Magazines and International AffairsBooks Electronic Media Printing

The autobiography of Hans-Olaf Henkel, DIE MACHT DER FREIHEIT, managed to hold on to a top position for as long as over twelve months. There was broad interest not only in the new book by Herbert A. Henzler and Lothar Späth, JENSEITS VON BRÜSSEL, but also in the standard work by Germany’s best sommeliere Paula Bosch, WEINGENUSS.

The most successful non-fiction books published by Propy- läen included Gregor Schöllgen’s biography of Willy Brandt, which was on all the best-seller lists for a long time. Our publishing houses were quick to respond to readers’ interest after 11 September: the biography of Osama bin Market leadership for paperback Laden by Michael Pohly and Khalid Durán appeared in publishing companies paperback as early as the first week of October. The book Heyne improved its paperback market position considerably. by Karla Schefter, who ran a hospital in Afghanistan under Its biggest successes were the new novel by Thomas Harris, the Taliban regime, also aroused great interest. HANNIBAL, DAS TESTAMENT by John Grisham and DAS SCHWEIGEN DES GLÜCKS by Nicholas Sparks. The book by the married couple and therapists from New Zealand Allan Repositioning of the service title publishers and Barbara Pease published in paperback by Ullstein, Our publishing houses almost succeeded in matching the WARUM MÄNNER NICHT ZUHÖREN UND FRAUEN SCHLECHT previous year’s sales in the fiercely competitive market for EINPARKEN, led the best-seller lists for months. List also what are generally four-colour book productions about nutri- recorded excellent sales figures in the first full financial tion, health and fitness, in spite of the fact that they reduced year of its paperback publishing operations, which concen- the number of titles by half. This was attributable in particu- trate on highbrow entertainment and non-fiction books. lar to a successful visual relaunch and innovative marketing campaigns. The publishing houses Ansata and Integral, which specialise in spiritual literature, generated dispropor- tionately high sales growth.

45 Electronic Media Bistro & Co. are popular places to meet. Either to exchange information or simply to have fun. What do you do, however, when everything has been said and there is nothing to keep you amused? BILD.DE, the major information and entertainment portal, went online in August 2001. Innovative technology and modern design – BILD.DE provides first-hand information and entertainment, round the clock. Everyone is enthusiastic about the portal thanks to the variety of its content, with news, politics, business, sport, travel, games, showbiz and e-commerce. The editors make the right arrangements so that users can chat with their stars live. Sarah Connor, Edmund Stoiber or Jürgen Kohler – chatting with celebrities is a great way to enjoy yourself, whatever mood you are in. Record numbers of users and long visits confirm BILD.DE’s success. Divisions

The Electronic Media Division consists of the company’s television, radio, Internet, teletext and audiotex operations. The portfolio also includes equity holdings in TV and radio stations as well as TV production companies, Internet joint ventures and a corporate venture capital company.

Radio: stable audiences Exclusive agreement with ZDF The seven radio stations in which Axel Springer Verlag has Axel Springer Verlag concluded an exclusive three-year direct equity holdings continue to have stable audiences. agreement with the ZDF television channel in September They lead their respective markets as regards both private 2001 to produce the successful gala events “Die Goldene stations and the public-service stations competing with them Kamera”, “Das Goldene Lenkrad” and “Ein Herz für that are partly financed by advertising. The negative overall Kinder”. These gala events will be produced by Schwartz- economic situation did, however, have an impact on the radio kopff TV-Productions, which is as a result entering a new operations, too, leading to a reduction in advertising volume area of business alongside talkshows. in the second half of the financial year. The two joint ventures between Axel Springer Verlag and Studio Hamburg GmbH – Cinecentrum and Multimedia – performed well in a financial year that was difficult for classic contract producers.

IVW-audited Web sites operated by Establishment of the new multimedia unit Axel Springer Verlag AS Interactive Axel Springer Verlag restructured its multimedia operations Address Page impressions in the autumn of 2001. The three main areas of business cov- in ’000 ered by the new unit are: audiotex/mobile services, Web-/ 12/2000 12/2001 teletext/content production and content marketing as well as Newspapers TV/media services. This means that Axel Springer Verlag’s www.abendblatt.de 2 036 4 9981) customers receive content, applications and format concepts www.bild.de 21 733 71 881 for a wide range of different digital channels from a single, www.welt.de 7 300 11 797 integrated source.

Magazines www.allegra.de 5 830 3 852 AS Interactive will in addition be acting as the company’s www.autobild.de 3 321 4 595 central multimedia unit and will be making sure in close www.familie.de 1 278 1 3211) liaison with the publishing operations that progress is made www.yam.de - 5 2701) in digitisation of the core business.

Services www.berlin1.de - 11 742 www.finanzen.net 1 197 1 465

Equity holdings www.gamigo.de - 33 467

1) November 2001.

48 Newspapers Magazines and International AffairsBooks Electronic Media Printing

Online marketing by Interactive Media The Axel Springer Verlag online marketing company, which has been called Interactive Media CCSP AG since the spring of this year, continued to defend its strong market position, although it was also affected by the generally difficult market situation. The company’s involvement in the search engine INFOSEEK T-Online International AG became a 50% equity partner for was discontinued at the end of 2001 following a change in Interactive Media CCSP AG in December 2001. This move the shareholder structure. The Internet portal for women, is making the joint venture one of the biggest online mar- SHEEGO.COM, a joint venture with Otto Versand, was not keting companies in Germany. The objective is to use this continued after a test run of six months. In view of the on- strong basis to take over a leading position at the European going expansion of sport reporting by BILD.DE, Axel Springer level as well. Verlag sold its 25.5% holding in the online portal SPORT1.

Management of multimedia equity holdings Put option exercised by AS Venture Following a decision taken by the Management Board and The market environment for the Axel Springer Verlag equity the Supervisory Board, Axel Springer Verlag at the end of holdings in the new media was extremely difficult in the January 2002 exercised the option agreed with the Kirch year under review. The equity holdings portfolio was opti- Group to sell its shares in ProSiebenSAT.1Media AG and mised systematically under the management of the corporate ISPR Internationale Sportrechte-Verwertungsgesellschaft venture capital company AS Venture GmbH, a wholly-owned mbH at the end of the period arranged for the purpose. subsidiary of Axel Springer Verlag.

PROPERTYGATE.COM, the portal for exclusive property, was taken over completely and was restructured so that it can be expanded into the company’s central property platform. The book portal BOOXTRA, in which Axel Springer Verlag owns a 25% holding, succeeded in positioning itself among the three biggest retailers in the German online book market by taking over its rival buecher.de. The portal for online games (WWW.GAMIGO.DE), in which Axel Springer Verlag has an interest of about 14%, has established itself firmly on the market.

49 Printing Good advice is the best way to cope with everyday life in many situations. The German edition of the international men’s magazine MAXIM, which has been published by Axel Springer Verlag since June 2001, therefore includes tips and tricks for the male community in addition to an entertaining blend of lifestyle issues and news. Like other company magazines, MAXIM is presented in a quality of printing that is the result of state-of-the-art magazine production. The printing experts monitor all the operations very closely to guarantee this. Axel Springer Verlag is setting new standards for the high- quality production of print brands by carrying out a comprehensive project to modernise its rotogravure printing plant in Ahrensburg by the end of 2003. With its first-rate products, the Ahrensburg rotogravure printing plant provides readers and advertising customers with maximum topicality, colour and quality. Divisions

The Axel Springer Verlag Printing Division operates printing plants of its own to produce its print publications. These plants guarantee the highest possible flexibility, quality and independence. Some of the print Axel Springer Verlag is setting new standards for magazine runs of the company’s national publications production with the extensive modernisation project at the are also produced at 15 third-party printing rotogravure printing plant in Ahrensburg, too. Some of the plants in Germany and abroad. Contract print- existing machinery is being replaced in stages by more mod- ing orders help to utilise free capacity. ern and more efficient equipment by the end of 2003 at an investment cost of about a 70 million. The large remodelling exercise involves the installation of two new rotary presses, 2 955 staff in total were employed at the Group’s own print- complete modernisation of the cylinder production facilities ing plants in the 2001 financial year. This means that the and the replacement of ten gathering and stitching machines. number of staff was reduced again. A total of 500 000 tonnes of paper were printed to produce newspapers, maga- A start was made on the first stage of an extensive invest- zines and contract printing orders. ment programme at the Ahrensburg offset printing plant in 2000. The necessary building extension was completed in The newspaper printing plants in Ahrensburg, Berlin-Span- 2001. Four of the seven planned rotary printing machines dau and Essen-Kettwig processed 225 000 tonnes of paper in were brought into operation. These printing presses have the year under review. The rotogravure printing plants in state-of-the-art equipment and are making it possible to Ahrensburg and Darmstadt printed 275 000 tonnes of paper. increase productivity considerably thanks to their higher running speed and greater automation. Two of a total of six new processing machines came into operation, too. Technical innovations in the core business Investments in the core printing business continue to be of existential importance to Axel Springer Verlag. It is at the printing plants that Axel Springer Verlag creates the technical basis for the future of its newspapers and magazines.

Two company printing locations with a long tradition have been expanded into the most modern printing plants in Europe over the past two years: a 80 million have been invested in rebuilding Essen-Kettwig and safeguarding its long-term future, while a 55 million have been spent on replacing rotogravure presses in Darmstadt.

52 Newspapers Magazines and International Affairs Books Electronic Media Printing

A long-term contract about production of »Tagesspiegel« at the Spandau printing plant from 2004 onwards was concluded with the Holtzbrinck publishing group. The buildings and technical equipment at the plant will be extended for this Personnel development and qualification purpose. When production has been completely transferred The Printing Division continued the extensive training and to Spandau, the GMZ Druckerei plant will be shut down. qualification programme for its staff systematically in 2001, too. Basic and advanced training events are developed and held at all the printing locations on the basis of modern Capacity utilisation optimised by contract printing training requirement analyses. Particularly high priority is On the basis of the amount of paper processed, contract given to personnel development and management training. printing accounted for about 14% of business at the newspaper printing plants and about 49% at the rotogravure An innovative suggestion scheme involves staff in the con- printing plants in the year under review. figuration of their workplaces, which helps considerably to increase added value in the printing plants. The Axel Springer Verlag rotogravure printing plants succeeded in utilising their capacities in spite of the continuing pressure on prices and the progressive expansion and con- Personnel reduction without redundancies centration of rotogravure printing capacities on the German As in the previous years, Printing Division personnel was magazine market. This was done partly by extending existing reduced smoothly by means of early retirement, natural periodical printing orders and by concluding new agree- wastage or amicable agreement with employees. Redundan- ments about non-periodical contract printing orders. cies were avoided completely. The company scheme allow- ing older employees to switch to part-time jobs continues to Contract printing sales in newspaper printing have been play an important role in this context. guaranteed by long-term agreements. A long-term contract about printing further runs at the new printing plant in Essen-Kettwig from January 2004 onwards has, for example, been concluded with the Holtzbrinck publishing group in addition to the existing agreement about printing some of the »Handelsblatt« at the Spandau printing plant from Sep- tember 2001 onwards.

53 Further information Employees

Knowledge is the raw material of the future in the information era. It decides whether existing markets can be defended and new ones can be entered successfully. It is very important in this context that the know-how of our staff is updated continu- ously and accurately to satisfy new requirements. This is crucial for the expansion of Axel Springer Verlag’s position in national and international business operations.

Excellent response to basic and advanced training programmes Investments in sound basic and advanced training have always enjoyed high priority at Axel Springer Verlag. They not only safeguard our economic success but also open up new career prospects for our employees, improve their decision-making abilities and increase their potential influence. Creativity and enjoyment of their work is improved at the same time.

54 Employees Environmental protection

One of the emphases in the company’s training activities was the Internet. The participants had an opportunity to learn how to use browser programs, search engines and subject Grant programme continued catalogues reliably and purposefully by attending a course The grant programme run by the company provided 23 for- consisting of four different modules, with the possibility of mer apprentices of the company with financial support while obtaining an Internet driving licence at the end. Extensive studying for a degree. The conditions for inclusion in this training about the ongoing IT changes was another focal programme are excellent examination results and outstand- point. ing appraisals by the company departments in which the candidates were deployed during their apprenticeships. The English courses organised by the company, which staff attend in their spare time, are also very popular. Many of the 25 university graduates are preparing to take over respon- participants have in the meantime passed the Cambridge sible positions as specialists or managers in the company First Certificate exam. trainee programme. 90 up-and-coming young journalists were trained at the Axel Springer Journalism School. We have made it possible for employees who are on mater- nity leave and are considering a return to work on a full- or part-time basis to take part in our internal advanced training A vote of thanks to all employees programmes. Thereby we want to make it easier for them The Management Board would like to express its thanks to to pick up their careers again. all members of staff for their hard work and dedication. Our deceased colleagues are remembered with gratitude and More than 6 400 employees in total participated in one of affection. the training courses or information events that the company organised.

Presentations at the company about topical issues Several hundred participants attended events about topical issues. Members of the Management Board and leading representatives from specialised fields or editorial teams informed the staff about the structures and prospects of their particular areas of the business in presentations with subsequent opportunities for discussion.

55 Further information

Environmental protection

Axel Springer Verlag has operated an exem- plary environmental management system for many years now. Prominent features of it are the promotion of environmental awareness among readers, business partners and staff as well as the encouragement of environmentally sound raw material production by exerting The sustained management report and the complete audit influence on suppliers. The principles in- report by PwC Deutsche Revision Aktiengesellschaft clude the use of environmentally efficient Wirtschaftsprüfungsgesellschaft can be downloaded from technologies and materials in all areas of www.asv.de/nachhaltigkeit. the company too, however. The avoidance or reduction of environmental pollution by cut- The next sustained management report about 2001/2002 will ting energy and water requirements, emissions be published in 2003. and waste per unit produced also have high priority. Prize for sustained management report The German Auditors’ Society awarded Axel Springer Verlag From environmental protection to sustained second prize in the category of “Best Sustained Management management Reporting”. The jury for this competition consists of audit- Axel Springer Verlag was one of the first German companies ors, journalists, advertising experts and representatives of to present a sustained management report in June 2001. It industry. contains not only the environmental information provided in the environmental reports produced to date but also insights into the social and economic aspects of the company’s activ- Environmental efficiency increased in almost ities. The subjects covered include basic and advanced train- all areas ing measures, equal opportunities for women and men, the The sustained management report for 2000 documents an company suggestion scheme and the social involvement of increase in environmental efficiency in almost all areas. The the company in the “Partners in Tolerance” project. In pro- specific indicators for emissions, printing inks, energy, ducing this report, Axel Springer Verlag is following the paper, effluent and waste were improved in the period under concept of “sustained development” specified ten years ago review – to a considerable extent in some cases. at the environmental conference for heads of state and gov- ernment held in Rio de Janeiro.

56 Employees Environmental protection

The specific environmental indicators for the printing locations are calculated as follows:

Material and energy flows = resource efficiency Area of paper printed Efficient use of printing inks and energy The amount of printing ink required per square metre of paper in rotogravure printing decreased by 1.9%. Absolute Substantial decrease in emissions consumption of rotogravure printing inks increased by 6.4% The reduction in toluene emissions in magazine rotogravure to about 11 800 tonnes in a comparison between 1998 and printing is a major success. In spite of higher production, 2000 because of higher production and the start-up of new direct and indirect emissions of non-methane hydrocarbons rotary presses. (NMVOC) fell by a total of 7.6% in 2000 by comparison with 1998. This was attributable in particular to the rotogravure Ink consumption per square metre of paper increased by printing plant in Ahrensburg, where direct toluene emissions 5.1% in offset printing because of the in some cases consid- dropped by 46.9%. This was achieved, for example, by filter- erable expansion of multicolour newspaper printing. Abso- ing out activated charcoal particles that had become ineffect- lute consumption of newspaper printing ink increased by ive. The introduction of new, low-emission washing agents at 14.8% to about 4 170 tonnes in a comparison between 1998 the Ahrensburg and Essen-Kettwig offset printing plants had and 2000. This is attributable to the restart of full printing a positive effect, too. production in Essen-Kettwig.

The energy consumption per square metre of printed material was reduced by a further 5.0%, too. The company’s absolute energy requirement (printing and publishing locations) rose by 1.4% in a comparison between 1998 and 2000 because of higher production.

57 Further information

Environmental controlling and sustained management The environmental controlling function is not just responsible for generating the specific environmental indicators. The aim is to carry out comprehensive environmental control. The assignments include the analysis, evaluation and presentation of connections between ecology and economics as well as the preparation and monitoring of optimisation measures.

Axel Springer Verlag is cooperating with Lüneburg and St Gallen Universities on a research project called “Sustain- ability Balanced Scorecard” about value-oriented sustained management. The Spandau printing plant has been chosen as the pilot business unit for this project. The aim of the project is to integrate strategically relevant social and environmental aspects in the balanced scorecard.

Expansion of environmental controlling Specific environmental indicators for energy and water consumption as well as for waste and emissions are to be produced in future not only for the printing plants but also for the publishing operations in Berlin and Hamburg.

58 Financial statements Group and Axel Springer Verlag AG

Consolidated balance sheet 60

Consolidated income statement 61

Balance sheet Axel Springer Verlag AG 62

Income statement Axel Springer Verlag AG 63

Movement of fixed assets Group 64

Movement of fixed assets Axel Springer Verlag AG 66

Notes – Group and Axel Springer Verlag AG 68

Proposal for appropriation of the loss 84

Audit certificate 85

59 Financial statements

Consolidated balance sheet

Assets 31.12.2001 31.12.2000 Note no. dd’000 A. Fixed assets 6 I. Intangible assets 7 296 722 921 289 246 II. Tangible assets 487 624 182 409 436 III. Financial assets 8 119 857 442 170 335 904 204 545 869 017

B. Current assets I. Inventories 9 192 478 507 128 797 II. Accounts receivable and other assets 10 451 169 108 381 650 III. Securities 4 155 504 126 766 IV. Liquid assets 11 57 676 038 194 274 705 479 157 831 487

C. Prepaid expenses 12 3 078 711 6 505 1 612 762 413 1 707 009

Equity and liabilities 31.12.2001 31.12.2000 Note no. dd’000 A. Equity I. Subscribed capital 13 102 000 000 102 000 II. Revenue reserves 14 456 110 888 455 348 III. Consolidated retained loss (previous year: retained earnings) – 202 263 314 48 620 IV. Minority interests 15 14 539 066 13 133 370 386 640 619 101

B. Special reserves with an equity portion 16 16 818 534 2 273

C. Provisions 17 589 166 604 482 689

D. Liabilities 18 586 095 204 553 522

E. Deferred income 19 50 295 431 49 424 1 612 762 413 1 707 009

60 Balance sheet Income statement Movement of fixed assets Notes

Consolidated income statement

2001 2000 Note no. dd’000 1. Sales 22 2 863 520 291 2 901 881 2. Change in inventories of finished goods and work in progress – 1 032 008 4 403 3. Other operating income 23 92 766 183 162 084 4. Cost of materials 24 – 1 076 085 028 – 1 012 260 5. Gross profit 1 879 169 438 2 056 108

6. Personnel costs 25 – 980 637 788 – 889 862 7. Depreciation/Amortisation of intangible and tangible assets 27 – 171 854 249 – 125 557 8. Other operating expenses 28 – 870 641 294 – 858 383 9. Income from equity holdings 29 37 723 177 49 539 10. Net interest income 30 – 6 102 140 1 121 11. Depreciation of financial assets and securities held as current assets 27 – 47 067 138 – 15 220 12. Expenditure on assumption of losses 31 – 2 489 956 – 155 13. Profit from ordinary operations – 161 899 950 217 591

14. Taxes 32 – 35 991 150 – 119 701 15. Consolidated net loss for the year (previous year: net income) – 197 891 100 97 890

16. Transfer to other revenue reserves 0 – 43 151 17. Profit attributable to minority shareholders – 4 372 214 – 6 119 18. Consolidated retained loss (previous year: retained earnings) – 202 263 314 48 620

61 Financial statements

Balance sheet Axel Springer Verlag AG

Assets 31.12.2001 31.12.2000 Note no. dd’000 A. Fixed assets 6 I. Intangible assets 7 11 756 086 13 935 II. Tangible assets 399 920 097 322 924 III. Financial assets 8 502 632 363 440 963 914 308 546 777 822

B. Current assets I. Inventories 9 61 451 681 54 706 II. Accounts receivable and other assets 10 360 951 442 310 146 III. Securities 0 109 370 IV. Liquid assets 11 32 313 834 173 636 454 716 957 647 858

C. Prepaid expenses 12 334 080 2 524 1 369 359 583 1 428 204

Equity and liabilities 31.12.2001 31.12.2000 Note no. dd’000 A. Equity I. Subscribed capital 13 102 000 000 102 000 II. Revenue reserves 14 328 504 076 328 504 III. Retained loss (previous year: retained earnings) – 175 841 468 48 620 254 662 608 479 124

B. Special reserves with an equity portion 16 15 687 649 995

C. Provisions 17 436 344 000 386 153

D. Liabilities 18 631 026 707 531 096

E. Deferred income 19 31 638 619 30 836 1 369 359 583 1 428 204

62 Balance sheet Income statement Movement of fixed assets Notes

Income statement Axel Springer Verlag AG

2001 2000 Note no. dd’000 1. Sales 22 1 789 426 012 1 902 381 2. Change in inventories of finished goods and work in progress 3 339 064 -222 3. Other operating income 23 107 870 306 174 224 4. Cost of materials 24 – 602 579 069 – 610 617 5. Gross profit 1 298 056 313 1 465 766

6. Personnel costs 25 – 649 071 367 – 617 554 7. Depreciation of intangible and tangible assets 27 – 67 799 870 – 94 117 8. Other operating expenses 28 – 596 212 998 – 592 560 9. Income from equity holdings 29 46 565 182 85 130 10. Net interest income 30 337 899 5 639 11. Depreciation of financial assets and securities held as current assets 27 – 62 812 268 – 47 949 12. Expenditure on assumption of losses 31 – 127 584 076 – 25 127 13. Profit from ordinary operations – 158 521 185 179 228

14. Taxes 32 – 17 320 283 – 100 310 15. Net loss for the year (previous year: income) – 175 841 468 78 918

16. Transfer to other revenue reserves 0 – 30 298 17. Retained loss (previous year: retained earnings) – 175 841 468 48 620

63 Financial statements

Movement of fixed assets Group

Historical and production cost

Changes in the companies 1.1.2001 consolidated Additions Disposals dddd Rights and licences 192 139 962 182 591 13 617 962 3 691 848 Goodwill 233 212 620 77 926 481 23 147 0 Advance payments 4 441 905 – 684 251 8 252 546 140 294 Intangible assets 429 794 487 77 424 821 21 893 655 3 832 142

Land, leasehold rights and buildings, including buildings on land owned by third parties 469 492 257 0 12 026 438 7 922 717 Machinery and equipment 835 722 133 0 45 062 064 40 164 257 Other fixtures, furniture and office equipment 197 764 807 2 941 332 30 656 753 20 966 853 Advance payments and fixed assets under construction 83 762 134 0 77 824 532 433 619 Tangible assets 1 586 741 331 2 941 332 165 569 787 69 487 446

Shares in affiliated companies 52 359 234 11 951 436 21 888 255 2 158 959 Loans to affiliated companies 8 329 213 0 1 811 809 103 832 Equity holdings 152 850 990 14 761 20 528 745 50 140 841 Loans to associated companies 2 507 341 0 1 047 024 330 583 Securities held as fixed assets 2 092 840 0 257 650 317 654 Other loans 4 405 600 35 790 555 160 1 098 491 Financial assets 222 545 218 12 001 987 46 088 643 54 150 360 Fixed assets – Group 2 239 081 036 92 368 140 233 552 085 127 469 948

64 Balance sheet Income statementMovement of fixed assets Notes

Depreciation Book value

In the Reclassifications Write-ups Total financial year 31.12.2001 31.12.2000 dddd dd’000 373 292 0 127 147 436 22 674 292 75 474 523 85 293 – 509 129 0 94 792 619 61 066 808 215 860 500 199 511 43 021 0 6 525 029 6 525 029 5 387 898 4 442 – 92 816 0 228 465 084 90 266 129 296 722 921 289 246

2 554 747 0 291 294 262 9 759 966 184 856 463 182 580 43 982 172 0 750 403 528 41 630 644 134 198 584 88 103

1 429 853 0 156 529 808 30 191 470 55 296 084 54 991

– 47 873 956 0 6 040 6 040 113 273 051 83 762 92 816 0 1 198 233 638 81 588 120 487 624 182 409 436

8 547 560 0 54 220 676 28 950 700 38 366 850 37 998 639 115 0 9 845 591 1 811 809 830 714 934 – 8 161 776 0 41 392 072 15 982 077 73 699 807 124 562 – 1 024 899 0 828 470 234 006 1 370 413 1 105 0 0 228 325 4 351 1 804 511 1 809 0 482 454 112 912 80 658 3 785 147 3 927 0 482 454 106 628 046 47 063 601 119 857 442 170 335 0 482 454 1 533 326 768 218 917 850 904 204 545 869 017

65 Financial statements

Movement of fixed assets Axel Springer Verlag AG

Historical and production cost

1.1.2001 Additions Disposals ddd Rights and licences 44 754 667 4 735 029 3 188 361 Advance payments 3 979 373 6 857 183 6 838 692 Intangible assets 48 734 040 11 592 212 10 027 053

Land, leasehold rights and buildings, including buildings on land owned by third parties 366 808 478 9 819 918 7 002 628 Machinery and equipment 720 528 026 39 260 411 41 616 832 Other fixtures, furniture and office equipment 135 771 056 20 230 213 13 389 621 Advance payments and fixed assets under construction 81 110 277 77 505 582 283 386 Tangible assets 1 304 217 837 146 816 124 62 292 467

Shares in affiliated companies 345 218 253 126 486 121 4 082 368 Loans to affiliated companies 96 441 246 9 588 935 0 Equity holdings 131 279 304 16 060 994 28 954 491 Loans to associated companies 639 115 0 0 Other loans 2 744 194 346 116 762 818 Financial assets 576 322 112 152 482 166 33 799 677 Fixed assets – Axel Springer Verlag AG 1 929 273 989 310 890 502 106 119 197

66 Balance sheet Income statementMovement of fixed assets Notes

Depreciation Book value

In the Reclassifications Total financial year 31.12.2001 31.12.2000 ddddd’000 361 896 38 565 796 5 536 884 8 097 435 9 955 – 339 213 0 0 3 658 651 3 980 22 683 38 565 796 5 536 884 11 756 086 13 935

4 208 060 239 015 457 6 392 841 134 818 371 129 540 40 774 486 639 573 420 36 490 871 119 372 671 78 407

367 179 110 209 837 19 379 274 32 768 990 33 867

– 45 372 408 0 0 112 960 065 81 110 – 22 683 988 798 714 62 262 986 399 920 097 322 924

8 547 560 136 779 029 48 027 880 339 390 537 253 551 639 115 25 603 839 1 811 808 81 065 457 73 288 – 8 547 560 29 968 918 12 972 580 79 869 329 111 400 – 639 115 0 0 0 0 0 20 452 0 2 307 040 2 724 0 192 372 238 62 812 268 502 632 363 440 963 0 1 219 736 748 130 612 138 914 308 546 777 822

67 Financial statements

Notes Group and Axel Springer Verlag AG

General information

1. Preliminary remarks

To simplify reporting procedures and avoid repetition, the notes relating to the Group and to Axel Springer Verlag AG have been combined. Unless indicated otherwise, the notes refer to both sets of financial statements.

In the interests of clarity, individual items in the balance sheet and the income statement have been combined and presented separately in the notes. As in the previous years, the income statement was compiled by the cost summary method. When applicable, all the amounts have been rounded to the nearest thousand.

2. Consolidated companies

Number of consolidated companies

31.12.2001 31.12.2000 Germany 45 44 Other countries 25 28 Total 70 72

In 2001, 65 subsidiaries (previous year: 67) were consolidated in addition to ASV AG. Four joint ventures (previous year: four) were also consolidated on a pro rata basis.

All the companies consolidated are shown in the list of equity holdings on page 88 ff.

The exemption rules stipulated by § 264b of the German Commercial Code (HGB) were applied.

The changes in the companies consolidated did not have any material impact on comparability with the previous year’s consolidated financial statements. The other subsidiaries were not included in the companies consolidated as they only play a minor role (both individually and col- lectively) as far as the presentation of a true and fair view of the net worth, financial position and earnings situation is concerned.

68 Balance sheet Income statement Movement of fixed assets Notes

3. Consolidation principles

Capital consolidation of the newly consolidated companies and of the increases in holdings in consolidated subsidiaries was carried out by the book value method, i.e. the investment amount was offset against the pro rata equity. The qualifying date for capital consolidation of the companies consolidated for the first time is the beginning of the financial year.

Consolidation for the first time and the increases in holdings in consolidated subsidiaries led to differences of a 80.1 million on the assets side and a 0.9 million on the equity and liabilities side. The relevant amount is shown as goodwill and – like the goodwill created by capital consolidation in the previous years – will be amortised over a period of ten years. In accordance with the recommendation made by the German Accounting Standards Committee, a switch was made in the year under review from offsetting goodwill write-offs against revenue reserves with no effect on net earnings to amortisation of the goodwill created by capital consolidation in the income statement.

The proportions of the equity and profits of the subsidiaries that are attributable to external shareholders have been shown in the minority interests item.

Intercompany receivables and liabilities were eliminated. The sales generated by the companies included in the consolidated financial statements as well as the other trade income were offset against the relevant expenses incurred in the consolidated income statement.

4. Accounting and valuation principles

The same accounting and valuation principles were applied as in 2000, with the exception of the treatment of the goodwill amortisation. Goodwill amortisation in connection with capital consolidation amounts to a 60.5 million.

As a result of accounting measures taken in accordance with § 285 no. 5 and § 314 paragraph 1 no. 5 of the German Commercial Code (HGB), the net loss for the year at Axel Springer Ver- lag AG increased by about three per cent, while the consolidated net loss for the year increased by about two per cent. The consequent reductions in depreciation charges will lead to higher taxes on income in the subsequent years.

The same classification and valuation methods as at Axel Springer Verlag AG were applied in the consolidated financial statements. Consistent use of valuation options and the same balance sheet date at all consolidated companies as chosen for the financial statements of Axel Springer Verlag AG maximise the information value of the consolidated financial statements.

The following notes apply to the valuation of the individual balance sheet items:

Intangible assets and tangible assets were valued at historical or production cost. Scheduled depreciation of intangible assets was made according to the probable or contractually agreed useful life.

69 Financial statements

Scheduled depreciation of tangible assets was made according to their assumed useful life. The decreasing-balance depreciation method was applied in all cases, followed by a switch to the straight-line method at a later date. Goodwill that is not created by capital consolidation was amortised over 15 years in accordance with the tax regulations, whereas minor-value assets were written off in full in their year of acquisition.

The shares in affiliated companies, the equity holdings and the interest-bearing loans were valued at the lower of their historical cost or current value. The equity valuation method was not applied to associated companies, as the impact of this on the Group’s net worth, financial position and earnings situation would be minimal.

Current assets were valued at acquisition or production cost, taking the lower of cost or market principle into account.

Production costs include not only material costs and manufacturing expenses but also an appropriate amount to cover the proportions of overheads that require capitalisation under tax law and depreciation.

Trade accounts receivable were stated at their nominal value after making specific provisions to take account of all discernible risks. Lump-sum provisions were made to allow for general risks.

The pension provisions were determined in accordance with actuarial principles.

The other provisions were determined in accordance with sound commercial judgement.

Liabilities were valued at their redemption amount.

5. Currency translation

Receivables and liabilities denominated in foreign currencies outside Euroland were translated at the mean exchange rate on the entry date or the lower/higher exchange rate on the balance sheet date. The balance sheet items and the expenditure and income items of consolidated subsidiaries from outside the Currency Union were translated at the mean exchange rate prevailing on the balance sheet date. Translation differences were offset against the Group’s revenue reserves with no effect on net earnings.

70 Balance sheet Income statement Movement of fixed assets Notes

Explanatory notes about the balance sheets

6. Fixed assets

The changes in the individual fixed asset items in the year under review are shown in the fixed asset movement schedules for the Group and Axel Springer Verlag AG.

The changes to the companies consolidated are shown in a separate column in the Group fixed asset movement schedule.

7. Intangible assets

The main items included in intangible assets apart from goodwill are publication rights, title rights, supply rights, licences and data processing software.

8. Financial assets

The main equity holdings of Axel Springer Verlag AG can be found in the list of equity holdings on page 88 ff. of the Annual Report.

In accordance with § 287 and § 313 paragraph 4 of the German Commercial Code (HGB), the list of equity holdings of Axel Springer Verlag AG and the Group has been deposited with the Commercial Register at the Berlin-Charlottenburg local court.

9. Inventories

Group ASV AG in d ’000 2001 2000 2001 2000 Raw materials and supplies 152 135 95 992 53 460 49 962 Work in progress 18 197 11 269 7 145 3 806 Finished goods and merchandise 22 147 21 536 847 938 Total 192 479 128 797 61 452 54 706

The largest items included in the raw materials and supplies are licence rights acquired within the Group at a 93.1 million (ASV AG: a 1.4 million) and paper stocks at a 42.4 million (ASV AG: a 38.1 million). The licence rights were increased by the consolidation for the first time of Wilhelm Heyne Verlag GmbH & Co. KG.

71 Financial statements

10. Accounts receivable and other assets

Group ASV AG in d ’000 2001 2000 2001 2000 Trade accounts receivable 258 949 232 095 117 344 111 124 – of which due in more than one year 1 299 65 59 0 Receivables from affiliated companies 18 650 20 435 123 769 108 577 – of which due in more than one year 0 422 0 10 647 Receivables from associated companies 39 187 42 133 34 744 32 996 – of which due in more than one year 796 1 145 796 1 145 Other assets 134 383 86 987 85 094 57 449 – of which due in more than one year 8 356 5 541 8 420 8 340 Total 451 169 381 650 360 951 310 146 – of which due in more than one year 10 451 7 173 9 275 20 132

Group trade accounts receivable can be broken down as follows: retail business a 126.9 million, advertising business a 77.3 million and contract printing a 15.3 million.

Other assets include reclassifications of financial assets, claims on the tax authorities and a large number of smaller individual items.

11. Liquid assets

Group ASV AG in d ’000 2001 2000 2001 2000 Cheques 3 732 3 946 3 344 2 608 Cash in hand and Bundesbank deposits 549 1 924 358 487 Bank deposits 53 395 188 404 28 612 170 541 Total 57 676 194 274 32 314 173 636

12. Prepaid expenses

This item on the balance sheet includes in particular payments for bought-in services.

72 Balance sheet Income statement Movement of fixed assets Notes

13. Subscribed capital

The subscribed capital of a 102 000 000 has been fully paid up and is the same as in the previous year. It is divided up into 34 000 000 registered shares with no par value that can only be transferred with the company’s approval.

On the balance sheet date, the following shareholders were registered as holding interests of more than 50% and 25%: Axel Springer Gesellschaft für Publizistik GmbH & Co, Berlin, (50% + 10 shares) and PrintBeteiligungs GmbH, Unterföhring, (40.3%).

14. Revenue reserves

Group ASV AG in d ’000 2001 2000 2001 2000 Legal reserve 10 200 10 200 10 200 10 200 Other revenue reserves 445 911 445 148 318 304 318 304 Total 456 111 455 348 328 504 328 504

The other revenue reserves developed as follows: in d ’000 Group ASV AG Balance on 1.1.2001 445 148 318 304 Change resulting from deconsolidation – 132 – Currency translation difference 895 – Balance on 31.12.2001 445 911 318 304

15. Minority interests

Minority interests developed as follows: in d ’000 Balance on 1.1.2001 13 133 Changes resulting from consolidation and deconsolidation 1 307 Dividend payments – 4 347 Shares of profits in 2001 4 627 Shares of losses in 2001 – 255 Currency translation difference 74 Balance on 31.12.2001 14 539

73 Financial statements

16. Special reserves with an equity portion

In the case of Axel Springer Verlag AG, the special reserves with an equity portion include reserves in accordance with § 6b of the German Income Tax (EStG), while the Group has additional reserves relating to investment allowances under the terms of § 10 of the Austrian Income Tax Act.

17. Provisions

Group ASV AG in d million 2001 2000 2001 2000 Provisions for pensions and similar commitments 253.5 242.6 228.2 219.1 Tax provisions 38.3 31.0 30.0 22.4 Other provisions 297.4 209.1 178.1 144.7 Total 589.2 482.7 436.3 386.2

The pension provisions include the obligations arising from direct pension commitments. An interest rate of six per cent was applied when calculating the current value of the pension commitments.

The tax provisions relate primarily to taxes on income from previous years. Provisions for deferred taxes amounting to a 2.9 million (ASV AG: a 1.7 million) are also included here.

The main items included in the other provisions were as follows:

Group ASV AG in d million 2001 2000 2001 2000 Structural measures 57.4 21.8 31.3 18.9 Returns, discount credits and bonus credits 48.7 39.5 16.4 17.5 Outstanding suppliers’ invoices 34.1 18.6 21.6 9.5 Part-time working scheme for older employees 30.2 23.8 25.7 19.2 Holiday entitlements 26.3 24.5 18.7 17.5 Commercial agents’ claims to compensation 20.3 23.3 15.9 18.2

The other provisions also include amounts for anniversary bonuses, loyalty bonuses and losses anticipated from pending business transactions.

74 Balance sheet Income statement Movement of fixed assets Notes

18. Liabilities

Group ASV AG in d ’000 2001 2000 2001 2000 Accounts payable to banks 153 731 65 909 121 972 46 625 – of which due within one year 101 152 9 032 80 840 1 979 Advances received on orders 4 228 3 753 992 697 – of which due within one year 4 228 3 753 992 697 Trade accounts payable 224 196 239 484 109 087 133 540 – of which due within one year 203 855 233 655 109 087 133 540 Accounts payable to affiliated companies 32 161 31 361 274 440 182 149 – of which due within one year 32 161 31 361 274 440 182 149 Accounts payable to associated companies 10 274 17 126 3 016 7 338 – of which due within one year 10 274 17 124 3 016 7 338 Other liabilities 161 505 195 889 121 520 160 747 – of which due within one year 154 115 192 021 118 998 156 894 – of which taxes 26 307 61 613 14 323 48 870 – of which social security 19 499 19 136 12 639 12 931 Total 586 095 553 522 631 027 531 096 – of which due within one year 505 785 486 946 587 373 482 597

Accounts payable in more than five years amounting to a 34 332 000 (ASV AG: a 26 662 000) are included in the accounts payable to banks, while an amount of a 3 393 000 (ASV AG: a 1 827 000) is included in the other liabilities, making a total of a 37 725 000 (ASV AG: a 28 489 000).

Liabilities secured by mortgages amounted to a total of a 100 409 000 (ASV AG: a 88 076 000) in the year under review. a 56 371 000 (ASV AG: a 44 646 000) of the accounts payable to banks and a 44 038 000 (ASV AG: a 43 430 000) of the other liabilities were secured by mortgages.

19. Deferred income

Deferred income relates primarily to prepaid subscriptions and deferred investment grants.

75 Financial statements

20. Contingent liabilities

In the year under review, the contingent liabilities consisted of guarantee commitments and declarations of support to lenders, amounting to a 68 860 000 (previous year: a 67 116 000) in the Group and a 47 243 000 (previous year: a 30 835 000) at ASV AG.

21. Other financial commitments

The commitments arising from rental, leasehold and leasing agreements can be broken down by maturity dates as follows:

in d ’000 Group ASV AG Due in 2002 48 810 30 882 Due between 2003 and 2006 129 703 102 042 Due after 2006 152 062 140 372

Miscellaneous financial commitments, which relate among other things to investment projects (e.g. purchasing commitments), amounted to a 119 581 000 (ASV AG: a 126 114 000). The other financial commitments to affiliated companies at Axel Springer Verlag AG totalled a 15 884 000.

Explanatory notes about the income statements

22. Sales

Breakdown by sectors Group ASV AG in d million 2001 2000 2001 2000 Retail 1 127.4 1 075.0 821.9 794.0 Advertisements 1 113.4 1 235.3 737.4 840.1 Miscellaneous 622.7 591.6 230.1 268.3 Total 2 863.5 2 901.9 1 789.4 1 902.4

Breakdown by divisions Group ASV AG in d million 2001 2000 2001 2000 Newspapers 1 483.6 1 564.1 1 072.4 1 116.8 Magazines 757.2 746.2 486.9 517.3 Books 167.0 91.7 0.3 0.3 Electronic Media 85.7 105.3 0.0 22.4 Contract Printing 154.0 171.1 204.3 223.1 Other revenues 216.0 223.5 25.5 22.5 Total 2 863.5 2 901.9 1 789.4 1 902.4

76 Balance sheet Income statement Movement of fixed assets Notes

Sales outside Germany amounted to a 451.6 million (previous year: a 430.4 million). The foreign sales by Axel Springer Verlag AG totalled a 87.3 million (previous year: a 102.1 million). This corresponds to 15.8% of total sales (ASV AG: 4.9%).

23. Other operating income

The other operating income consisted essentially of the following items:

Group ASV AG in d ’000 2001 2000 2001 2000 Income from: fixed asset disposals and write-ups 20 186 5 219 18 756 39 386 the release of provisions 17 804 18 192 8 051 14 089 the release of special reserves with an equity portion 243 23 494 0 23 378

Other items that are included are income from canteens and auxiliary operations, income from the release of special provisions and lease/rent income.

The services charged to Group companies are included here, too, at Axel Springer Verlag AG.

24. Cost of materials

Group ASV AG in d ’000 2001 2000 2001 2000 Raw materials, supplies and purchased merchandise 479 180 432 551 346 479 342 996 Purchased services 596 905 579 709 256 100 267 621 Total 1 076 085 1 012 260 602 579 610 617

The expenditure on raw materials, supplies and purchased merchandise relates essentially to paper and ink consumption.

25. Personnel costs

Group ASV AG in d ’000 2001 2000 2001 2000 Wages and salaries 832 497 748 304 548 266 518 971 Social security contributions 118 087 112 057 75 701 74 206 Retirement pensions 25 480 25 180 22 904 22 148 Financial support 4 574 4 321 2 200 2 229 Total 980 638 889 862 649 071 617 554

77 Financial statements

The average number of employees during the year by occupational category was as follows:

Group ASV AG Number 2001 2000 2001 2000 Editorial staff 3 555 3 390 1 815 1 823 Salaried employees 7 385 7 027 3 648 3 617 Wage-earning employees 3 129 3 173 2 409 2 499 Total 14 069 13 590 7 872 7 939

781 employees worked for joint ventures on average over the year.

26. Supervisory Board and Management Board

The members of the Supervisory Board and their membership of other legally prescribed supervisory boards are listed on page 8 of the Annual Report. The members of the Management Board appointed in the 2001 financial year were:

Dr Mathias Döpfner, Dr Ralf Kogeler, Journalist Diplomkaufmann Chairman Finance (since 1 January 2002) (until 31 October 2001) Newspapers • ProSiebenSAT.1 Media AG Electronic Media/Multimedia (until 30 November 2001) (until 30 November 2001) • Media Transfer AG • Bild.de AG • Feedback AG • Interactive Media CCSP AG • ProSiebenSAT.1 Media AG Hubertus Meyer-Burckhardt, (since 6 December 2001) TV producer • Schering AG Electronic Media and Books (since 1 December 2001) August A. Fischer, Verlagskaufmann Steffen Naumann, Chairman Diplombetriebswirt and Diplomvolkswirt (until 31 December 2001) Chief Operating Officer and Chief Financial Officer Rudolf Knepper, (since 1 November 2001) Diplomingenieur and Diplomwirtschaftsingenieur Dr Andreas Wiele, Deputy Chairman Jurist (since 1 January 2002) Magazines and International Affairs Printing and Logistics

78 Balance sheet Income statement Movement of fixed assets Notes

The remuneration paid to the members of the Supervisory Board amounted to a 65 000 in the year under review.

The remuneration paid to the Management Board amounted to a 9 211 000. a 2 917 000 were paid to former members of the Management Board and their dependants, while a 27 000 were paid to former members of special executive bodies. Pension provisions totalling a 23 418 000 have been made in respect of former members of the Management Board and their dependants, whereas the pension provisions made in respect of former members of special executive bodies amount to a 234 000.

27. Depreciation

Extraordinary depreciation in accordance with § 253 paragraphs 2 and 3 of the German Commercial Code (HGB): in d ’000 Group ASV AG Fixed assets 82 492 62 812 Securities held as current assets 4 0 Total 82 496 62 812

28. Other operating expenses

This item consists essentially of postal and forwarding costs, advertising costs, third-party services, commission, repairs and maintenance, rent and lease charges, travel and incidental costs as well as provisions for bad debts. At Axel Springer Verlag AG this item also includes the costs of services rendered by Group companies. The transfers to special reserves with an equity portion amounted to a 14 692 000 (ASV AG: a 14 692 000).

29. Income from equity holdings

This item includes income from profit and loss transfer agreements amounting to a 427 000 (previous year: a 692 000) at the Group and a 263 000 (previous year: a 7 700 000) at Axel Springer Verlag AG. Income from affiliated companies amounted to a 2 439 000 (previous year: a 4 687 000) at the Group and a 4 417 000 (previous year: a 32 150 000) at Axel Springer Verlag AG.

79 Financial statements

30. Net interest income

Group ASV AG in d ’000 2001 2000 2001 2000 Income from financial asset loans 596 431 3 761 4 181 – of which from affiliated companies 44 48 3 638 3 992 Other interest and similar income 7 518 17 208 16 912 24 761 – of which from affiliated companies 2 540 2 960 13 721 12 278 Interest and similar expenses – 14 216 – 16 518 – 20 335 – 23 303 – of which from affiliated companies – 1 031 – 2 334 – 10 444 – 12 349 Total – 6 102 1 121 338 5 639

31. Expenditure on assumption of losses

The expenditure on assumption of losses amounted to a 2 490 000 (previous year: a 155 000) at the Group and a 127 584 000 (previous year: a 25 127 000) at Axel Springer Verlag AG. The increase at Axel Springer Verlag AG is attributable mainly to the profit and loss transfer agreement concluded with 'Axel Springer Verlag' Beteiligungsgesellschaft mbH in the financial year.

32. Taxes

Group ASV AG in d ’000 2001 2000 2001 2000 Taxes on income 31 503 115 741 15 918 98 704 Other taxes 4 488 3 960 1 402 1 606 Total 35 991 119 701 17 320 100 310

The taxes on income at Axel Springer Verlag AG relate to tax expenditure for previous years. Additional tax expenditure at Group level was incurred in particular at the consolidated subsidiaries abroad.

80 Balance sheet Income statement Movement of fixed assets Notes

Other notes

33. Segment reporting

The Newspapers segment consists of newsstand and Sunday newspapers, national and regional subscription newspapers as well as free advertising publications. It also includes equity holdings in newspaper publishers in Germany and abroad.

The Magazines segment consists of TV guides as well as women’s, men’s, youth, computer, business and family magazines. The range is supplemented by a large number of special-interest magazines. This segment also includes equity holdings in magazine publishers in Germany and abroad.

The Books segment consists primarily of literature, non-fiction, service titles, paperbacks and illustrated books. It also includes equity holdings in book publishing companies.

The Electronic Media segment consists of the activities in the teletext, audiotex, online and TV production fields as well as equity holdings in radio, television, the Internet and rights trading. The corporate venture capital company is also included in this segment.

The Printing segment consists of four offset printing plants, two rotogravure printing plants and equity holdings in two printing companies abroad. The purpose of the printing plants is to make sure the necessary printing capacities are available for the internal demand; they aim to reach break-even in their operations.

The miscellaneous/consolidation column includes transport, distribution, direct marketing and insurance operations as well as the assets, debts, expenses and income that cannot be allocated to the individual segments. The miscellaneous/consolidation column has the additional purpose of reconciliation to the figures shown under commercial law and does not represent a separate segment of its own.

81 Financial statements

Segment data Newspapers Magazines Books in d million 2001 2000 2001 2000 2001 2000 External sales 1 483.6 1 564.0 757.2 746.2 167.0 91.7 Internal sales 8.0 5.5 0.9 3.4 0.1 0.2 Division sales 1 491.6 1 569.5 758.1 749.6 167.1 91.9

Sales in Germany 1 355.7 1 440.8 573.0 582.9 145.7 80.4 Sales outside Germany 135.9 128.7 185.1 166.7 21.4 11.5 Division sales 1 491.6 1 569.5 758.1 749.6 167.1 91.9

EBITA 80.7 182.6 12.5 32.5 – 45.9 – 21.7 – of which depreciation – 40.8 – 45.2 – 22.2 – 25.3 – 1.6 –2.6 – of which income from equity holdings 11.9 13.9 8.1 8.5 – 1.1 0.1

Segment assets 826.0 705.6 301.1 352.9 251.3 145.5 – of which equity holdings 60.0 53.8 14.3 34.6 4.5 4.9

Investments 43.5 56.9 27.3 31.0 1.3 1.4

Segment debts 452.2 433.8 223.7 229.1 326.0 132.8

Employees 6 326 6 303 2 829 2 553 467 245

The standard international indicator EBITA (Earnings before Interest, Tax and Amortisation) is used to indicate the segment results. In view of the high expenditure essentially for restructuring exercises that have been decided and for write-downs of equity holdings, the segment results were adjusted by – a 127.9 million for the first time in 2001 to take account of extraordinary items. No adjustments were made to take account of extraordinary items in the previous years because of the minor role they played.

The sales made between the individual segments are shown as internal sales. They are allocated on the basis of the costs incurred (cost centre principle).

Assets used by more than one segment and debts incurred by more than one segment are allocated to the segments by applying appropriate formulae.

82 Balance sheet Income statement Movement of fixed assets Notes

Electronic Media Printing Miscellaneous/consolidation Consolidated financial statements 2001 2000 2001 2000 2001 2000 2001 2000 85.7 105.3 154.0 171.1 216.0 223.6 2 863.5 2 901.9 2.5 2.2 489.0 508.2 87.9 84.3 88.2 107.5 643.0 679.3 303.9 307.9

86.6 104.0 605.0 632.4 226.4 234.9 1.6 3.5 38.0 46.9 77.5 73.0 88.2 107.5 643.0 679.3 303.9 307.9

– 24.5 14.4 0.9 4.5 9.0 4.2 32.7 216.5 – 11.2 – 7.4 – 32.5 – 54.6 9.6 16.9 0.9 0.9

151.5 160.2 348.0 288.2 – 265.1 – 45.4 1 612.8 1 707.0 20.4 64.9 1.9 1.2

39.5 19.3 88.7 93.2

158.6 91.2 324.7 263.5 – 242.8 – 52.5 1 242.4 1 087.9

435 397 2 977 3 065

34. Consolidated statement of cash flows

The consolidated statement of cash flows is shown on page 18 of the Annual Report.

83 Financial statements

Proposal for appropriation of the loss

The financial statements for the 2001 financial year report a retained loss of

a 175 841 468.

The Management Board proposes that the retained loss is carried forward to new account and that no dividend is paid.

Berlin, 12 March 2002

Axel Springer Verlag AG

(Dr Mathias Döpfner) (Rudolf Knepper)

(Hubertus Meyer-Burckhardt) (Steffen Naumann) (Dr Andreas Wiele)

84 Audit certificate

Auditor’s certificate

We have audited the financial statements (including the bookkeeping records) and the consolidated financial statements of Axel Springer Verlag Aktiengesellschaft, Berlin, with combined Notes and the combined management report for the financial year from 1 January to 31 December 2001. According to German commercial law, the Management Board of the company is responsible for compiling the bookkeeping records and for preparing these documents. Our assignment is to make a judgement about the financial statements (including the bookkeeping records) and the consolidated financial statements as well as the combined management report on the basis of the audit we have completed.

We have made our audit of the financial statements and the consolidated financial statements in accordance with § 317 of the German Commercial Code (HGB) and observing the principles governing the proper conduct of audits as issued by the German Institute of Auditors (IDW). According to these regulations and principles, the audit must be planned and implemented in such a way that inaccuracies and violations which have substantial impact on the picture of the net worth, financial position and earnings situation presented by the financial statements and the consolidated financial statements (in compliance with the principles of proper bookkeeping) and by the combined management report are identified with sufficient certainty. Information about the business operations and the economic and legal environment of the company and the Group as well as expectations about possible mistakes are taken into account when specifying the audit procedures. The effectiveness of the internal accounting control system and the supporting evidence confirming the information provided in the bookkeeping records, financial statements, consolidated financial statements and combined management report are checked mainly by taking random samples in the course of the audit. The audit consists in the case of the financial statements of an evaluation of the accounting principles applied and in the case of the consolidated financial statements of an evaluation of the financial statements of the companies included in the consolidated financial statements, specification of the companies consolidated and the accounting and consolidation principles applied and for both sets of financial statements an evaluation of the main elements of company management by the Management Board as well as an assessment of the overall presentation of the financial statements, the consolidated financial statements and the combined management report. We are of the opinion that our audit forms a reliable enough basis for making a sound judgement.

Our audit has not led to any objections being raised.

In our considered opinion, the financial statements and the consolidated financial statements comply with the principles of proper bookkeeping and present a true and fair picture of the net worth, financial position and earnings situation of Axel Springer Verlag Aktiengesellschaft, Berlin, and the Group. The combined management report gives an appropriate overall description of the situation of the company and the Group and presents the future risks in an accurate way.

Hamburg, 22 March 2002 PwC Deutsche Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Nienborg p.p. Muchow Auditor Auditor

85 Report by the Supervisory Board

During the period under review, the Supervisory Board received regular written and oral reports from the Manage- ment Board. The Supervisory Board and its committees met regularly in order to discuss the current situation and future development of the company as well as strategic corporate planning, personnel planning, major investments and projects and other basic issues of corporate policy in detail with the Management Board. The conduct of the company’s business by the Management Board was monitored regularly in accordance with the legal stipulations and the provisions of the company’s articles of association. The Supervisory Board also discussed important individual matters that are central to the further development of the company and took decisions about the legal transactions and measures which require its approval in accordance with the legal stipulations, the provisions of the company’s articles of association or the Man- agement Board’s rules of procedure. This applied in particular to the company’s finance plan. The chairman of the Super- visory Board and the chairman of the Management Board held regular information and consultation meetings.

The main issues that claimed the attention of the Super- visory Board in the year under review were as follows: measures to improve the competitive position of the newspapers, restructuring of the newspaper groups, the development of the Sunday market and the free newspaper market, the international business in the magazines division, the book publishing companies, the equity holdings in the electronic media field, modernisation of the printing operations, distribution, logistics, restructuring exercises throughout the company to guarantee market-oriented management and stricter cost management, management development in the editorial staff departments (including the appointment of publishers and editors-in-chief) and changes to the Management Board.

86 The Supervisory Board and its committees (working commit- the report in accordance with § 312 paragraph 3 of the Ger- tee and personnel committee) held a total of 16 meetings dur- man Companies Act (AktG). ing the year under review, including six meetings of the full Supervisory Board that were spread over the different quarters The results of the main investigations carried out by the of the year and were attended – with only a few exceptions – auditors at the request of the Supervisory Board confirmed by all the committee members in each case. The auditor also that the business had been conducted properly and carefully. attended the meeting at which the financial statements and the They related to conversion to the euro at Axel Springer Ver- audit reports, which had been submitted to all the members lag and the new building in Berlin (system investigation/use). of the Supervisory Board three weeks in advance, were discussed, while the Chairman of the Management Board and the The Supervisory Board agreed unanimously on the follow- Chief Financial Officer for their part attended the final meeting changes to the membership of the Management Board ing with the auditor. and to the allocation of assignments within the Board of Management: The financial statements and the consolidated financial statements prepared by the Management Board as well as the man- Mr Steffen Naumann (35) was appointed to the Management agement report and the combined management report for the Board with effect from 1 November 2001 to assume respon- 2001 financial year have been audited by PwC Deutsche sibility for the central departments (including finance). Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Mr Hubertus Meyer-Burckhardt (45) was appointed to the Hamburg, who issued an unqualified audit certificate. Management Board with effect from 1 December 2001; he has been commissioned to head the Electronic Media and The Supervisory Board has noted and approved the results of Book Divisions. the audit. Following the completion of its own internal review, the Supervisory Board approves the financial statements, the Dr Mathias Döpfner (39) was appointed Chairman of the consolidated financial statements and the management report Management Board with effect from 1 January 2002; he prepared by the Management Board. The financial statements continues to be responsible for the Newspapers Division. have therefore been adopted. Mr Rudolf Knepper (57), head of the Printing and Logistics Division, was appointed to be Deputy Chairman of the Man- The Management Board also provided the Supervisory Board agement Board on the same date. Dr Ralf Kogeler resigned with the report about the relationships to affiliated companies from the Management Board with effect from 31 October in accordance with § 312 of the German Companies Act (AktG) 2001; he was followed by Mr August A. Fischer on 31 De- as well as the relevant audit report prepared by PwC Deutsche cember 2001. Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hamburg, about this. The audit report reads as follows: The Supervisory Board would like express its thanks to the Management Board and company staff – those who have left “On the basis of the audit and evaluation we have made in the company in particular – for their high commitment, accordance with professional standards, we confirm that many achievements and good cooperation.

1. the factual details of the report are correct, Berlin, 7 May 2002

2. the payments made by the company in respect of the legal transactions listed in the report were not unreason- ably high.” The Supervisory Board The Supervisory Board reviewed this report by the Manage- Prof Dr Dr h. c. Bernhard Servatius ment Board too, taking note of and approving the report sub- Chairman mitted about it by the auditor. The Supervisory Board agrees with the declaration made by the Management Board about

87 List of equity holdings

Publishers

100% AS Auto-Verlag GmbH, 1) 24.5% Kieler Zeitung Verlags- und 100% WBV Wochenblatt Verlag 100% Axel Springer Polska Sp.zo.o., Hamburg Druckerei KG-GmbH & Co.-, GmbH, Warsaw/Poland Capital: EUR 0.025 million Kiel Hamburg Capital: PLN 5.0 million Capital: DEM 1.8 million Capital: EUR 1.73 million

100% AS Zeitschriften 1)5) 23.438 % A. Beig Druckerei u. Verlag 100% Berliner Wochenblatt 1) 70.25% Grupa Wydawnicza Berlin GmbH, GmbH & Co. KG, Verlag GmbH, Axel Springer Sp.zo.o., Berlin Pinneberg Berlin 29.75% Warsaw/Poland Capital: EUR 0.025 million Capital: DEM 0.32 million Capital: EUR 0.06 million Capital: PLN 1.7 million

100% Wilhelm Heyne Verlag 5) 49% Lübecker Nachrichten GmbH, 100% "Sächsischer Bote" 1) 88.36% Handelszeitung und Finanz- GmbH & Co. KG, Lübeck Wochenblatt Verlag GmbH, rundschau AG, Munich Capital: EUR 1.6 million Dresden Zurich/Switzerland Capital: DEM 8.0 million Capital: DEM 0.05 million Capital: CHF 0.5 million

74% ZS Verlag Zabert 5) 24.8% "Lühmanndruck" Harburger 100% Punkt Direktvertriebs 100% Handelszeitung Sandmann GmbH, Zeitungsgesellschaft GmbH, Fachverlag AG, Munich mbH & Co. KG, Hamburg Berlin Zurich/Switzerland Capital: DEM 0.75 million Capital: DEM 1.0 million Capital: DEM 0.101 million Capital: CHF 0.2 million

100% 'Axel Springer Verlag' 1) 100% Bergedorfer Buchdruckerei 75% Niendorfer Wochenblatt 92.93% AXEL SPRINGER- Beteiligungsgesellschaft mbH, von Ed.Wagner (GmbH&Co.), Verlag GmbH & Co. KG, BUDAPEST GmbH, Berlin Hamburg Hamburg Budapest/Hungary Capital: DEM 11.26 million Capital: DEM 1.0 million Capital: DEM 0.04 million Capital: HUF 30.0 million

100% Ullstein GmbH, 100% Weltkunst Verlag GmbH, 1) 100% Finanzen Verlagsgesellschaft 93.52% Axel Springer-Ungarn Berlin Munich für Kapitalmarktinformationen GmbH, Capital: EUR 3.2 million Capital: DEM 0.5 million mbH, Munich Tatabánya/Hungary Capital: DEM 0.2 million Capital: HUF 281.8 million

100% Ullstein Media 1) 50% Ostsee-Zeitung 100% as extra medien GmbH, 1) 100% Zöld Újság Massen- 4) Marketing GmbH, GmbH & Co. KG, Hamburg medien- und Verlags-AG, Berlin Rostock Capital: EUR 0.03 million Budapest/Hungary Capital: EUR 0.03 million Capital: EUR 5.114 million Capital: HUF 100.0 million

100% Econ Ullstein List Verlag 100% OZ-Lokalzeitungs- 1) 100% Axel Springer France S.A.S., 5) 94% Petöfi Zeitungs- und 2) GmbH & Co. KG, Verlag GmbH, Puteaux/France Buchverlag GmbH, Munich Rostock Capital: EUR 36.0 million Kecskemét/Hungary Capital: EUR 12.375 million Capital: EUR 0.026 million Capital: HUF 65.0 million

50% Cora Verlag GmbH & Co. KG, 50% Leipziger Verlags- und 100% Les Publications 94% Népújság GmbH, 2) Hamburg Druckereigesellschaft Grand Public SA, Békéscsaba/Hungary Capital: EUR 0.102 million mbH & Co. KG, Leipzig Puteaux/France Capital: HUF 75.0 million Capital: EUR 21.0 million Capital: EUR 17.64 million

50% Jahr Top Special 100% Axel Springer Young 1) 100% Tamaloo S.A.S., 100% GRUPO AXEL SPRINGER Verlag GmbH & Co. KG, Mediahouse GmbH, Paris/France S.L., Hamburg Munich Capital: FRF 0.055 million Madrid/Spain Capital: EUR 2.01 million Capital: EUR 0.05 million Capital: EUR 12.6 million

100% Koralle Verlag GmbH, 100% Axel Springer Young 50% EMAP France/ Axel Springer 100% HOBBY PRESS S.A., Hamburg Onlinehouse GmbH & Co. (EMAS) S.E.N.C., Madrid/Spain Capital: DEM 0.15 million KG, Munich Paris/France Capital: EUR 1.2 million Capital: EUR 0.05 million Capital: FRF 1.0 million

88 Segments

Electronic Media Distribution Further equity holdings Newspapers starting on page 26 Sales breakdown Electronic Media starting on page 46 Sales breakdown

Date: December 2001

89 90 Segments

Electronic Media Distribution Further equity holdings Newspapers starting on page 26 Sales breakdown Electronic Media starting on page 46 Sales breakdown

Date: December 2001

89 90 Group key data

Financial calendar in d million 1997 1998 1999 2000 2001 Page

Sales 2 351 2 460 2 664 2 902 2 864 15 Annual results press conference 28 May 2002 ANNUAL REPORT 2001 Change in % 4.1 4.6 8.3 8.9 – 1.3 Annual shareholders’ meeting 26 June 2002

Financial calendar in d million 1997 1998 1999 2000 2001 Page

Sales 2 351 2 460 2 664 2 902 2 864 15 Annual results press conference 28 May 2002 ANNUAL REPORT 2001 Change in % 4.1 4.6 8.3 8.9 – 1.3 Annual shareholders’ meeting 26 June 2002